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, 2024

☐ 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		82-4233771
(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 8, 2024, there were 6,633,511 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, 2024

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		20

Item 3. Quantitative and Qualitative Disclosure About Market Risk		26

Item 4. Controls and Procedures		26

PART II – OTHER INFORMATION		27

Item 1. Legal Proceedings		27

Item 1A. Risk Factors		27

Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities		27

Item 3. Defaults Upon Senior Securities		27

Item 4. Mine Safety Disclosures		27

Item 5. Other Information		27

Item 6. Exhibits		28

SIGNATURES		29

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,
	2024			2023

ASSETS
Current assets:
Cash and cash equivalents	$	11,272		$	6,118
Payroll tax credit, current portion		233			450
Vendor deposits		9			399
Inventory		2,033			1,114
Prepaid expenses and other current assets		467			442
Total current assets		14,014			8,523
Property and equipment, net		237			342
Payroll tax credit, noncurrent portion		55			169
Other assets		761			387
Total assets	$	15,067		$	9,421

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,896		$	3,118
Deferred revenue		20			1,252
Other current liabilities		2,317			1,529
Total current liabilities		4,233			5,899
Noncurrent liabilities:
Early exercised stock option liability		—			23
Other noncurrent liabilities		583			50
Total noncurrent liabilities		583			73
Total liabilities		4,816			5,972

Commitments and contingencies (Note 10)

Stockholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized at September 30, 2024 and December 31, 2023; no shares issued and outstanding at September 30, 2024 and December 31, 2023		—			—
Common stock, $0.0001 par value, 500,000,000 and 150,000,000 shares authorized at September 30, 2024 and December 31, 2023, respectively; 6,633,511 and 3,723,218 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		10			6
Additional paid-in capital		153,732			127,823
Accumulated deficit		(143,491	)		(124,380	)
Total stockholders’ equity		10,251			3,449
Total liabilities and stockholders’ equity	$	15,067		$	9,421

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,
	2024			2023			2024			2023

Revenue	$	50		$	—		$	902		$	—

COSTS AND EXPENSES:
Cost of revenue		845			—			2,440			—
Research and development		3,404			5,636			9,198			13,701
Sales, general and administrative		3,180			3,443			8,794			9,965
Total costs and expenses		7,429			9,079			20,432			23,666

Loss from operations		(7,379	)		(9,079	)		(19,530	)		(23,666	)

Other income (expense), net:
Interest and other income, net		178			117			419			341
Other income (expense), net		178			117			419			341

Net loss and total comprehensive loss	$	(7,201	)	$	(8,962	)	$	(19,111	)	$	(23,325	)

Net loss per share, basic and diluted	$	(1.06	)	$	(2.65	)	$	(3.33	)	$	(7.99	)

Weighted average shares used in computing net loss per share, basic and diluted		6,816,339			3,380,763			5,733,007			2,921,201

See accompanying notes to condensed consolidated financial statements.

Movano Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(Unaudited)

					Additional					Total
	Common Stock				Paid-In		Accumulated			Stockholders’
Three Months Ended September 30, 2023	Shares		Amount		Capital		Deficit			Equity
Balance at June 30, 2023		3,376,444	$	5	$	122,283	$	(109,460	)	$	12,828
Stock-based compensation		—		—		757		—			757
Issuance of common stock		10,619		—		173		—			173
Issuance of common stock warrants		—		—		124		—			124
Vesting of early exercised stock options		—		—		24		—			24
Net loss		—		—		—		(8,962	)		(8,962	)
Balance at September 30, 2023		3,387,063	$	5	$	123,361	$	(118,422	)	$	4,944

					Additional					Total
	Common Stock				Paid-In		Accumulated			Stockholders’
Nine Months Ended September 30, 2023	Shares		Amount		Capital		Deficit			Equity
Balance at December 31, 2022		2,243,964	$	3	$	103,009	$	(95,097	)	$	7,915
Stock-based compensation		—		—		2,252		—			2,252
Issuance of common stock upon February 2023 public offering, net of issuance costs		356,040		1		5,179		—			5,180
Issuance of warrants upon February 2023 public offering		—		—		1,473		—			1,473
Issuance of common stock upon June 2023 public offering, net of issuance costs		613,334		1		8,065		—			8,066
Issuance of common stock		157,335		—		3,061		—			3,061
Issuance of common stock upon exercise of options		16,390		—		109		—			109
Issuance of common stock warrant		—		—		124		—			124
Vesting of early exercised stock options		—		—		89		—			89
Net loss		—		—		—		(23,325	)		(23,325	)
Balance at September 30, 2023		3,387,063	$	5	$	123,361	$	(118,422	)	$	4,944

					Additional						Total
	Common Stock				Paid-In			Accumulated			Stockholders’
Three Months Ended September 30, 2024	Shares		Amount		Capital			Deficit			Equity
Balance at June 30, 2024		6,596,565	$	10	$	153,058		$	(136,290	)	$	16,778
Stock-based compensation		—		—		534			—			534
Common stock issuance costs		—		—		(65	)		—			(65	)
Issuance of common stock warrants		—		—		60			—			60
Issuance of common stock		36,946		—		141			—			141
Vesting of early exercised stock options		—		—		4			—			4
Net loss		—		—		—			(7,201	)		(7,201	)
Balance at September 30, 2024		6,633,511	$	10	$	153,732		$	(143,491	)	$	10,251

					Additional					Total
	Common Stock				Paid-In		Accumulated			Stockholders’
Nine Months Ended September 30, 2024	Shares		Amount		Capital		Deficit			Equity
Balance at December 31, 2023		3,723,218	$	6	$	127,823	$	(124,380	)	$	3,449
Stock-based compensation		—		—		2,695		—			2,695
Issuance of common stock in April 2024 sale, net of issuance costs		2,806,898		4		12,890		—			12,894
Issuance of pre-funded warrants in April 2024 sale		—		—		980		—			980
Issuance of common stock warrants in April 2024 sale		—		—		8,756		—			8,756
Issuance of common stock warrants		—		—		60		—			60
Issuance of common stock		100,728		—		490		—			490
Issuance of common stock upon exercise of options		2,667		—		15		—			15
Vesting of early exercised stock options		—		—		23		—			23
Net loss		—		—		—		(19,111	)		(19,111	)
Balance at September 30, 2024		6,633,511	$	10	$	153,732	$	(143,491	)	$	10,251

See accompanying notes to condensed consolidated financial statements.

Movano Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Nine Months Ended September 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(19,111	)	$	(23,325	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		128			118
Stock-based compensation		2,695			2,252
Noncash lease expense		157			(11	)
Non-cash compensation related to common stock warrants issued to strategic advisory group		60			—
Loss on disposal of property and equipment		2			13
Changes in operating assets and liabilities:
Payroll tax credit		331			129
Inventory		(919	)		—
Prepaid expenses, vendor deposits and other current assets		365			(626	)
Other assets		(31	)		(40	)
Accounts payable		(1,216	)		1,398
Deferred revenue		(1,232	)		—
Other current and noncurrent liabilities		793			(836	)
Net cash used in operating activities		(17,978	)		(20,928	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(3	)		(51	)
Net cash used in investing activities		(3	)		(51	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock and warrants upon February 2023 public offering, net of issuance costs		—			6,653
Issuance of common stock upon June 2023 public offering, net of issuance costs		—			8,066
Issuance of common stock, pre-funded warrants and common stock warrants in April 2024 sale, net of issuance costs		22,630			—
Issuance of common stock, net of issuance costs		490			3,061
Issuance of common stock upon exercise of stock options		15			109
Net cash provided by financing activities		23,135			17,889

Net increase/(decrease) in cash and cash equivalents		5,154			(3,090	)
Cash and cash equivalents at beginning of period		6,118			10,759
Cash and cash equivalents at end of period	$	11,272		$	7,669

NONCASH INVESTING AND FINANCING ACTIVITIES:
Vesting of common stock issued upon early exercise	$	23		$	89
Warrants issued upon February 2023 public offering	$	—		$	1,473
Issuance of common stock warrant	$	—		$	124
Issuance of common stock warrants in April 2024 sale	$	8,756		$	—
Right of use asset recorded for operating lease liability	$	514		$	—

See accompanying notes to condensed consolidated financial statements.

Movano Inc.

Notes to Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2024 and 2023

(Unaudited)

Note 1 – Business Organization, Nature of Operations

Movano Inc., dba Movano Health (the “Company”, “Movano”, “Movano Health”, “we”, “us” or “our”) was incorporated in Delaware on January 30, 2018 as Maestro Sensors Inc. and changed its name to Movano Inc. on August 3, 2018. The Company is an early-stage technology company and is developing a platform to deliver purpose-driven healthcare solutions at the intersection of medical and consumer devices. Movano is on a mission to make medical grade data more accessible and actionable for all.

The Company’s solutions provide vital health information, including heart rate, heart rate variability (HRV), sleep, respiration rate, temperature, blood oxygen saturation (SpO₂), steps, and calories as well as glucose and blood pressure data, in a variety of form factors to meet individual style needs and give users actionable feedback to improve their quality of life.

On April 28, 2021, the Company established Movano Ireland Limited, organized under the laws of Ireland, as a wholly owned subsidiary of the Company. Operations and activity at the wholly owned subsidiary were not significant for the three and nine months ended September 30, 2024 and 2023, respectively.

Since inception, the Company has engaged in only limited research and development of product candidates and underlying technology and the commercialization of the Company’s first commercial product, the Evie Ring. For the three months and nine months ended September 30, 2024, the Company recorded revenue for this product of $0.1 million and $0.9 million, respectively.

On April 2, 2024, the Company entered into a securities purchase agreement for the private placement (“April 2024 Private Placement”) of an aggregate of 3,015,172 units with each unit consisting of (1) one share of the Company’s common stock or at the election of the purchaser, a pre-funded warrant to purchase one share of common stock, and (2) one warrant to purchase one share of common stock. The purchase price paid for each unit was $8.00. Certain directors and officers participated in the transaction and purchased 19,168 of the units at an offering price of $8.48 per unit.

Pre-funded warrants totaling 209,936 shares were issued as part of the April 2024 Private Placement. Each pre-funded warrant has an exercise price equal to $0.015 per share or calculated pursuant to the cashless exercise provision. The pre-funded warrants were immediately exercisable on the date of issuance and do not expire.

Warrants totaling 3,015,172 shares were issued as part of the April 2024 Private Placement. Each warrant that was issued to holders other than the Company’s officers and directors has an exercise price equal to $6.11 per share or calculated pursuant to the cashless exercise provision. The warrants issued to the Company’s officers and directors have an exercise price equal to $6.60 or calculated pursuant to the cashless exercise provision. The warrants were exercisable immediately and expire on the fifth anniversary of the initial exercise date of the warrant. After April 4, 2025, the warrants may be redeemed in whole or in part at the option of the Company with at least thirty days’ notice to the holder of the warrant, which notice may not be given before, but may be given at any time after the date on which (i) the closing price of the Company’s common stock has equaled or exceeded $75.00 for ten consecutive trading days and (ii) the daily trading volume of the common stock has exceeded 6,667 shares on each of such ten trading days. The redemption price is $0.38 per warrant share.

The gross proceeds of the April 2024 Private Placement were approximately $24.1 million, before deducting offering fees and expenses of approximately $1.5 million. The April 2024 Private Placement closed on April 5, 2024. Common stock shares of 2,806,898 were issued.

The Company has incurred losses from operations and has generated negative cash flows from operating activities since inception. The Company expects to continue to incur net losses for the foreseeable future as it continues the development of its technology. The Company’s ultimate success depends on the outcome of its research and development and commercialization activities, for which it expects to incur additional losses in the future. Through September 30, 2024, the Company has relied primarily on the proceeds from equity offerings to finance its operations. The Company expects to require additional financing to fund its future planned operations, including research and development and commercialization of its products. The Company will likely raise additional capital through the issuance of equity, borrowings, or strategic alliances with partner companies. However, if such financing is not available at adequate levels, the Company would need to reevaluate its operating plans.

Liquidity and Going Concern

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred significant losses and has an accumulated deficit of $143.5 million as of September 30, 2024. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales. The Company’s existence is dependent upon management’s ability to obtain additional funding sources. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.

Adequate additional financing may not be available to the Company on acceptable terms, or at all. If the Company is unable to raise additional capital and/or enter into strategic alliances when needed or on attractive terms, it would be forced to delay, reduce, or eliminate its product or any commercialization efforts. There can be no assurance that the Company’s efforts will result in the resolution of the Company’s liquidity needs. The accompanying condensed consolidated financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern.

Movano Inc.

Notes to Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2024 and 2023

(Unaudited)

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary and have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation. Intercompany transactions are eliminated in the condensed consolidated financial statements. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the preceding fiscal year contained in the Company’s Annual Report on Form 10-K filed on April 16, 2024 with the United States Securities and Exchange Commission (the “SEC”) and amended on April 29, 2024.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024. The condensed consolidated balance sheet as of December 31, 2023 has been derived from audited financial statements at that date but does not include all the information required by GAAP for complete financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods.

Significant estimates and assumptions reflected in these condensed consolidated financial statements include but are not limited to the fair value of stock options and warrants, and income taxes. Estimates are periodically reviewed considering changes in circumstances, facts, and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates or assumptions.

Reverse Stock Split

On October 29, 2024, the Company completed a 1-for-15 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, each share of common stock issued and outstanding immediately prior to October 29, 2024 were automatically reclassified and converted into one-fifteenth (1/15^th, “Reverse Stock Split Ratio”) of a share of common stock. The Reverse Stock Split affected all common stockholders uniformly and did not alter any stockholder's percentage interest in the Company's equity, except to the extent that the Reverse Stock Split resulted in a stockholder of record owning a fractional share. Stockholders of record who were otherwise entitled to receive a fractional share, instead automatically had their fractional shares rounded up to the next whole share. No cash was issued for fractional shares as part of the Reverse Stock Split.

The Reverse Stock Split did not change the par value of the common stock or the authorized number of shares of common stock. Proportionate adjustments were made to the exercise prices and the number of shares underlying the Company’s equity plans and grants thereunder, as applicable. Additionally, proportionate adjustments were made to the exercise prices and the number of shares underlying all outstanding warrants, as required by the terms of these securities.

All common share and per-share amounts in this Form 10-Q have been retroactively restated to reflect the effect of the Reverse Stock Split.

Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment. The Company’s chief operating decision maker is the Chief Executive Officer.

Cash and Cash Equivalents

The Company invests its excess cash primarily in money market funds. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Movano Inc.

Notes to Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2024 and 2023

(Unaudited)

Concentrations of Credit Risk and Off-Balance Sheet Risk

Cash and cash equivalents are financial instruments that are potentially subject to concentrations of credit risk. Substantially all cash and cash equivalents are held in United States financial institutions. Cash equivalents consist of interest-bearing money market accounts. The amounts deposited in the money market accounts exceed federally insured limits. Further, the Company has amounts in excess of federally insured limits as of September 30, 2024 at one financial institution that totaled approximately $0.3 million. The Company has not experienced any losses related to this account and believes the associated credit risk to be minimal due to the financial condition of the depository institution in which those deposits are held.

The Company is dependent on third-party manufacturers to supply products for manufacturing as well as research and development activities. These programs could be adversely affected by a significant interruption in the supply of such materials.

The Company has no financial instruments with off-balance sheet risk of loss.

Inventory

Inventory, which consists of raw materials and finished goods, is stated at the lower of cost or net realizable value. Cost comprises purchase price and incidental expenses incurred in bringing the inventory to its present location and condition. Cost is computed using the weighted-average cost method.

The Company writes down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimate net realized value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, inventory write-downs may be required.

Software Development Costs

Costs associated with the planning and design phase of software development are classified as research and development costs and are expensed as incurred. Once technological feasibility has been established, a portion of the costs incurred in development, including coding, testing and quality assurance, are capitalized until available for general release to customers, and subsequently reported at the lower of unamortized cost or net realizable value. Amortization is calculated on a solution-by-solution basis based on the estimated lives of the underlying asset and is included in cost of revenue on the condensed consolidated statements of operations and comprehensive loss. During the three and nine months ended September 30, 2024 and 2023, no software development costs were capitalized, and no amortization was recognized.

Revenue

The Company recognizes revenue from contracts with customers upon transfer of control of promised goods or services at the transaction price which reflects the consideration the Company expects to be entitled in exchange for those goods or services. The transaction price is calculated as selling price net of variable consideration which may include estimates for future returns and sales incentives related to current period product revenue.

The Company generates revenue from the sale of Evie Rings, portable chargers, charging cables, ring sizers, and mobile applications. As part of the purchase, customers also receive customer support and future unspecified software updates. These products and services are collectively referred to as the Evie Ring Elements, each of which is distinct and a separate performance obligation.

The Company allocates the transaction price to all distinct performance obligations based on their relative stand-alone selling price (“SSP”). When available, the Company uses observable prices to determine SSP. When observable prices are not available, SSPs are established that reflect the Company’s best estimates of what the selling prices of the performance obligations would be if they were sold regularly on a stand-alone basis. The Company’s process for estimating SSPs without observable prices considers multiple factors that may vary depending upon the unique facts and circumstances related to each performance obligation including, where applicable, prices charged by the Company for similar offerings, market trends in the pricing for similar offerings, product-specific business objectives and the estimated cost to provide the performance obligation.

Movano Inc.

Notes to Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2024 and 2023

(Unaudited)

Revenue associated with the Evie Ring, portable charger, charging cable, ring sizer, and mobile application performance obligations is recognized upon delivery to customers. The performance obligation for the embedded right to receive, on a when-and-if-available basis, customer support and future unspecified software updates, is recognized to revenue on a straight-line basis over the estimated life of the product and is not material in the periods presented. The Company allocates revenue and any related discounts to these performance obligations based on their relative SSPs. Because the Company lacks observable prices for the undelivered performance obligations, the allocation of revenue is based on the Company’s estimated SSPs.

Sales of the Evie Ring Elements include an assurance warranty.

Contract balances represent amounts presented in the condensed consolidated balance sheets when the Company has transferred goods or services to the customer, or the customer has paid consideration to the Company under the contract. Customer payments are made up-front upon the purchase of products and services. The Company has no accounts receivable as of September 30, 2024, December 31, 2023, or December 31, 2022, respectively. There were no contract assets at September 30, 2024, December 31, 2023, or December 31, 2022.

The Company records a contract liability for deferred revenue when cash payments from customers are received prior to the transfer of control or satisfaction of the related performance obligations. Deferred revenue at September 30, 2024, December 31, 2023, and December 31, 2022 was $20,000, $1.3 million and $0, respectively. During the three and nine months ended September 30, 2024, deferred revenue of $0.1 million and $1.3 million, respectively, was recognized in revenue. However, customer refunds and returns during the three and nine months ended September 30, 2024 offset the recognition of revenue, which resulted in $0.1 million and $0.9 million of revenue during the three and nine months ended September 30, 2024.

The Company offers limited rights of return for a 30-day right of return, whereby customers may return the Evie Ring Elements. The Company’s estimate of future returns requires significant judgement. The Company estimates reserves based on data specific to each reporting period and historical trends to date. The estimate is adjusted each period for actual returns received. The returns reserve is recorded as a reduction of revenue and recognized in other current liabilities. As of September 30, 2024, December 31, 2023, and December 31, 2022, the balance of product return provisions included in other current liabilities is $15,000, $0 and $0, respectively.

The Company collects sales taxes at the point of sale and remits the taxes to the proper state authorities. Sales tax is excluded from the measurement of the transaction price.

Shipping and handling costs are incurred as part of fulfillment activities with customers and are included as a component of cost of revenue.

Costs of Revenue

Costs of revenue consists primarily of material costs, freight charges, purchasing and receiving costs, inspection costs, royalties, customer support and other costs, which are directly attributable to the production of the Company’s product. Write-down of inventory to lower of cost or net realizable value is also recorded in cost of goods sold.

Advertising Costs

The Company expenses advertising costs as they are incurred. Advertising expenses were $49,000 and $0.5 million for the three months ended September 30, 2024 and 2023, and $0.2 million and $1.0 million for the nine months ended September 30, 2024 and 2023, respectively. These costs are included in sales, general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive loss.

Stock-Based Compensation

The Company measures equity classified stock-based awards granted to employees, directors, and nonemployees based on the estimated fair value on the date of grant and recognizes compensation expense of those awards on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. This valuation model for stock-based compensation expense requires the Company to make assumptions and judgments about the variables used in the calculation including the expected term, the volatility of the Company’s common stock, and an assumed risk-free interest rate. The Company accounts for forfeitures as they occur.

Movano Inc.

Notes to Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2024 and 2023

(Unaudited)

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the financial statement and tax basis of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. As the Company maintained a full valuation allowance against its deferred tax assets, the changes resulted in no provision or benefit from income taxes during the three and nine months ended September 30, 2024 and 2023, respectively.

The Company accounts for unrecognized tax benefits using a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company establishes a liability for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. The Company records an income tax liability, if any, for the difference between the benefit recognized and measured and the tax position taken or expected to be taken on the Company’s tax returns. To the extent that the assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. The liability is adjusted considering changing facts and circumstances, such as the outcome of a tax audit. The provision for income taxes includes the impact of liability provisions and changes to the liability that are considered appropriate. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

For interim periods, the Company estimates its annual effective income tax rate and applies the estimated rate to the year-to-date income or loss before income taxes. The Company computes the tax provision or benefit related to items reported separately and recognizes the items net of their related tax effect in the interim periods in which they occur. The Company recognizes the effect of changes in enacted tax laws or rates in the interim periods in which the changes occur.

Net Loss per Share

Basic net loss per share is calculated by dividing the net loss by the weighted average number of shares of common stock outstanding during the period, without consideration for common stock equivalents. The weighted average number of common shares used in calculating basic and diluted net loss per share includes the weighted-average pre-funded common stock warrants outstanding during the period as they are exercisable at any time for nominal cash consideration. Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are antidilutive.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The disclosure requirements must be applied retrospectively to all prior periods presented in the financial statements. The effective date for the standard is for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effects adoption of this guidance will have on the consolidated financial statements for fiscal year 2024.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, to require disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The effective date for the standard is for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effects adoption of this guidance will have on the consolidated financial statements.

Note 3 – FAIR VALUE MEASUREMENTS

Financial assets and liabilities are recorded at fair value. The Company uses a three-level hierarchy, which prioritizes, within the measurement of fair value, the use of market-based information over entity-specific information for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. Fair value focuses on an exit price and is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs or methodology used for valuing financial instruments are not necessarily an indication of the risk associated with investing in those financial instruments.

Movano Inc.

Notes to Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2024 and 2023

(Unaudited)

A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:

Level 1 –

Quoted prices in active markets for identical assets or liabilities.

Level 2 –

Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly.

Level 3 –

Significant unobservable inputs that cannot be corroborated by market data.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s Level 1 financial assets are money market funds whose fair values are based on quoted market prices. The carrying amounts of prepaid expenses and other current assets, payroll tax credit, vendor deposits, inventory, accounts payable, deferred revenue, and other current liabilities approximate fair value due to the short-term nature of these instruments.

The following tables provide a summary of the assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 (in thousands):

Fair Value Measurements

	September 30, 2024
	Fair Value		Level 1		Level 2		Level 3

Cash equivalents:
Money market funds	$	10,659	$	10,659	$	—	$	—
Total cash equivalents	$	10,659	$	10,659	$	—	$	—

	December 31, 2023
	Fair Value		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	4,393	$	4,393	$	—	$	—
Total cash equivalents	$	4,393	$	4,393	$	—	$	—

Note 4 – CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of the following (in thousands):

	September 30,		December 31,
	2024		2023
Cash and cash equivalents:
Cash	$	613	$	1,725
Money market funds		10,659		4,393
Total cash and cash equivalents	$	11,272	$	6,118

Movano Inc.

Notes to Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2024 and 2023

(Unaudited)

Note 5 – BALANCE SHEET COMPONENTS

Inventory as of September 30, 2024 and December 31, 2023, consisted of the following (in thousands):

	September 30,		December 31,
	2024		2023
Raw materials	$	1,852	$	1,114
Finished goods		181		—
Total inventory	$	2,033	$	1,114

Property and equipment, net, as of September 30, 2024 and December 31, 2023, consisted of the following (in thousands):

	September 30,			December 31,
	2024			2023
Office equipment and furniture	$	255		$	266
Software		144			144
Test equipment		310			310
Total property and equipment		709			720
Less: accumulated depreciation		(472	)		(378	)
Total property and equipment, net	$	237		$	342

Total depreciation and amortization expense related to property and equipment for the three and nine months ended September 30, 2024 was approximately $30,000 and $100,000, respectively. Total depreciation and amortization expense related to property and equipment for the three and nine months ended September 30, 2023 was approximately $40,000 and $118,000, respectively.

Note 6 – Other Current Liabilities

Other current liabilities as of September 30, 2024 and December 31, 2023 consisted of the following (in thousands):

	September 30,		December 31,
	2024		2023
Accrued compensation	$	1,184	$	299
Accrued research and development		335		461
Accrued inventory		148		—
Accrued vacation		295		246
Accrued severance payment		—		5
Lease liabilities, current portion		102		217
Other		253		301
	$	2,317	$	1,529

Movano Inc.

Notes to Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2024 and 2023

(Unaudited)

Note 7 – Common Stock

As of September 30, 2024 and December 31, 2023, the Company was authorized to issue 500,000,000 and 150,000,000, shares of common stock, respectively, with a par value of $0.0001 per share. As of September 30, 2024 and December 31, 2023, 6,633,511 and 3,723,218 shares were outstanding, respectively.

On July 9, 2024, the Company filed a Certificate of Amendment to its Third Amended and Restated Certificate of Incorporation increasing the number of authorized shares of common stock from 150,000,000 to 500,000,000 shares.

On October 29, 2024, the Company completed a 1-for-15 reverse stock split of its issued and outstanding common stock. As a result of the Reverse Stock Split, each share of common stock issued and outstanding immediately prior to October 29, 2024 were automatically reclassified and converted into one-fifteenth (1/15th) of a share of common stock.

At-the-Market Issuance of Common Stock

On August 15, 2022, the Company entered into an At-the-Market Issuance Agreement (the “Issuance Agreement”) with B. Riley Securities, Inc. (the “Sales Agent”). Pursuant to the terms of the Issuance Agreement, the Company may sell from time to time through the Sales Agent shares of the Company’s common stock having an aggregate offering price of up to $50,000,000 (the “Shares”). Sales of Shares, if any, may be made by means of transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, including block trades, ordinary brokers’ transactions on the Nasdaq Capital Market or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices or by any other method permitted by law.

Under the terms of the Issuance Agreement, the Company may also sell Shares to the Sales Agent as principal for its own accounts at a price to be agreed upon at the time of sale. Any sale of Shares to the Sales Agent as principal would be pursuant to the terms of a separate agreement between the Company and the Sales Agent.

The Company has no obligation to sell any of the Shares under the Issuance Agreement and may at any time suspend solicitation and offers under the Issuance Agreement.

In June 2024, the Company replaced B. Riley Securities with Jones Trading as the Sales Agent for the Issuance Agreement.

During the three months ended September 30, 2024 and 2023, the Company issued and sold an aggregate of 35,279 and 10,619 shares of common stock through the Issuance Agreement at a weighted-average public offering price of $5.51 and $17.96 per share and received net proceeds of $0.2 million and $0.2 million, respectively. During the nine months ended September 30, 2024 and 2023, the Company issued and sold an aggregate of 99,061 and 157,335 shares of common stock through the Issuance Agreement at a weighted-average public offering price of $6.64 and $20.14 per share and received net proceeds of $0.6 million and $3.1 million, respectively. As of September 30, 2024, an aggregate offering price amount of approximately $43.7 million remained available to be issued and sold under the Issuance Agreement.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance at September 30, 2024 is summarized as follows:

	September 30,
	2024
Warrants to purchase common stock		3,564,375
Stock options outstanding		755,105
Stock options available for future grants		801,236
Total		5,120,716

Early Exercised Stock Option Liability

During the three and nine months ended September 30, 2024 and 2023, no additional shares were issued upon the early exercise of common stock options. The Exercise Notice (Early Exercise) Agreement states that the Company has the option to repurchase all or a portion of the unvested shares in the event of the separation of the holder from service to the Company. The shares continue to vest in accordance with the original vesting schedules of the former option agreements.

As of September 30, 2024 and December 31, 2023, the Company has recorded a repurchase liability for approximately $0 and $23,000 for 0 and 2,917 shares that remain unvested, respectively. As of September 30, 2024, there are no remaining unvested shares.

Movano Inc.

Notes to Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2024 and 2023

(Unaudited)

Note 8 – Common Stock Warrants

Preferred A and B Placement Warrants

During May 2024, the Board approved the amendment of 19,536 Preferred A Placement Warrants and 30,920 Preferred B Placement Warrants to extend the maturity to April 2025. The maturity of the Series A Placement Warrants were previously extended by amendment in February 2023, September 2023, and November 2023. The Company assessed the accounting treatment of the warrant amendments and determined that the amendments are modifications for accounting purposes. The Company determined the modifications had an insignificant impact on the consolidated financial statements.

April 2024 Pre-funded and Common Stock Warrants

On April 2, 2024, the Company entered into a securities purchase agreement for the private placement of an aggregate of 3,015,172 units with each unit consisting of (1) one share of the Company’s common stock or at the election of the purchaser, a pre-funded warrant to purchase one share of common stock, and (2) one warrant to purchase one share of common stock. The purchase price paid for each unit was $8.00. Certain directors and officers participated in the transaction and purchased 19,168 of the units at an offering price of $8.48 per unit.

Pre-funded warrants totaling 209,936 shares were issued. Each pre-funded warrant has an exercise price equal to $0.015 per share or calculated pursuant to the cashless exercise provision. The pre-funded warrants were immediately exercisable on the date of issuance and do not expire.

Warrants totaling 3,015,172 shares were issued. Each warrant that was issued to holders other than the Company’s officers and directors has an exercise price equal to $6.11 per share or calculated pursuant to the cashless exercise provision. The warrants issued to the Company’s officers and directors have an exercise price equal to $6.60 or calculated pursuant to the cashless exercise provision. The warrants were exercisable immediately and expire on the fifth anniversary of the initial exercise date of the warrant. After April 4, 2025, the warrants may be redeemed in whole or in part at the option of the Company with at least thirty days’ notice to the holder of the warrant, which notice may not be given before, but may be given at any time after the date on which (i) the closing price of the Company’s common stock has equaled or exceeded $75.00 for ten consecutive trading days and (ii) the daily trading volume of the common stock has exceeded 6,667 shares on each of such ten trading days. The redemption price is $0.38 per warrant share.

The warrants were recorded on a relative fair value basis at the date of issuance using the Black-Scholes model, which was recorded as a debit to issuance costs and a credit to additional paid-in capital on the condensed consolidated balance sheets. The warrants are not remeasured in future periods as the warrants meet the conditions for equity classification. The relative fair value of the April 2024 Pre-funded warrants was $1.0 million and the relative fair value of the April 2024 Warrants at the issuance date was $8.8 million.

The following assumptions were used to calculate the fair value of the pre-funded and common stock warrants at issuance date:

Expected term	5.0 years
Expected volatility		59.5	%
Risk-free interest rate		4.4	%
Expected dividends		0.0	%

August 2024 Common Stock Warrants

On August 14, 2024, in connection with a strategic advisory agreement, the Company issued warrants to purchase 22,097 shares of the Company’s common stock (the “August 2024 Warrants”). The August 2024 Warrants have a five-year term and an exercise price of $6.11 per share. The August 2024 Warrants may be exercised at any time prior to the expiration date of August 14, 2029. Each outstanding August 2024 Warrant not exercised on or before the expiration date will become void. The August 2024 Warrants are not subject to restrictions on transfers and each holder is permitted to transfer the August 2024 Warrants. The August 2024 Warrants can be exercised on a cashless basis at the option of the holder.

The August 2024 Warrants had a grant-date fair value of $2.72 at issuance and are fully vested. The Company recognized the aggregate fair value of $0.1 million within sales, general and administrative expense in its condensed consolidated statements of operations and comprehensive loss during the three and nine months ended September 30, 2024, respectively, and a credit to additional paid-in capital on the condensed consolidated balance sheets as of September 30, 2024. The warrants are not remeasured in future periods as the warrants meet the conditions for equity classification.

The following table provides quantitative information regarding inputs used in the Black-Scholes option-pricing model to determine the fair value of the August 2024 Warrants as of August 14, 2024:

Expected term			5.0 years
Expected volatility

SEC Form 10-Q filed by Movano Inc.