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~~SEPTEMBER 30, ~~2022~~2023

☐ 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~~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 ~~11, 2022,~~10, 2023, there were ~~33,616,189~~50,805,951 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, ~~2022~~2023

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		2821

Item 3. Quantitative and Qualitative Disclosure About Market Risk		3426

Item 4. Controls and Procedures		3526

PART II – OTHER INFORMATION		3628

Item 1. Legal Proceedings		3628

Item 1A. Risk Factors		3628

Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities		3628

Item 3. Defaults Upon Senior Securities		3628

Item 4. Mine Safety Disclosures		3628

Item 5. Other Information		3628

Item 6. Exhibits		3729

SIGNATURES		3830

EXHIBIT INDEX

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Movano Inc.

~~Movano Inc.~~

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)

	September 30,			December 31,			September 30,			December 31,
	2022			2021			2023			2022

ASSETS
Current assets:
Cash and cash equivalents	$	15,945		$	17,675		$	7,669		$	10,759
Short-term investments		822			15,921
Payroll tax credit, current portion		379			166			250			379
Vendor deposits								601			103
Prepaid expenses and other current assets		942			1,296			657			405
Total current assets		18,088			35,058			9,177			11,646
Property and equipment, net		460			529			363			443
Payroll tax credit, noncurrent portion		417			630			667			667
Other assets		488			48			386			487
Total assets	$	19,453		$	36,265		$	10,593		$	13,243

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	621		$	311		$	1,955		$	557
Other current liabilities		3,746			2,907			3,578			4,421
Total current liabilities		4,367			3,218			5,533			4,978
Noncurrent liabilities:
Early exercised stock option liability		171			281			47			136
Other noncurrent liabilities		258			36			69			214
Total noncurrent liabilities		429			317			116			350
Total liabilities		4,796			3,535			5,649			5,328

Commitments and contingencies (Note 12)
Commitments and contingencies (Note 11)

Stockholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized at September 30, 2022 and December 31, 2021; no shares issued and outstanding at September 30, 2022 and December 31, 2021		—			—

Common stock, $0.0001 par value, 75,000,000 shares authorized at September 30, 2022 and December 31, 2021; 33,492,251 and 32,772,060 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		3			3
Preferred stock, $0.0001 par value, 5,000,000 shares authorized at September 30, 2023 and December 31, 2022; no shares issued and outstanding at September 30, 2023 and December 31, 2022								—			—
Common stock, $0.0001 par value, 150,000,000 shares authorized at September 30, 2023 and 75,000,000 at December 31, 2022; 50,805,951 and 33,659,460 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively								5			3
Additional paid-in capital		101,829			97,506			123,361			103,009
Accumulated other comprehensive loss		(5	)		(11	)
Accumulated deficit		(87,170	)		(64,768	)		(118,422	)		(95,097	)
Total stockholders’ equity		14,657			32,730			4,944			7,915
Total liabilities and stockholders’ equity	$	19,453		$	36,265		$	10,593		$	13,243

See accompanying notes to condensed consolidated financial statements.

Movano Inc.

~~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,
2022 2021 2022 2021
OPERATING EXPENSES:
Research and development $ 5,146 $ 3,803 $ 13,849 $ 8,928
General and administrative 3,511 1,376 8,592 4,563
Total operating expenses 8,657 5,179 22,441 13,491

Loss from operations (8,657 ) (5,179 ) (22,441 ) (13,491 )

Other income (expense), net:
Interest expense — — — (883 )
Change in fair value of warrant liability — — — (1,581 )
Change in fair value of derivative liability — — — 121
Forgiveness of Paycheck Protection Program Loan — — — 351
Interest and other income, net 55 6 39 15
Other income (expense), net 55 6 39 (1,977 )

Net loss (8,602 ) (5,173 ) (22,402 ) (15,468 )

Accretion and dividends on redeemable convertible preferred stock — — — (2,489 )
Net loss attributable to common stockholders $ (8,602 ) $ (5,173 ) $ (22,402 ) $ (17,957 )

Net loss $ (8,602 ) $ (5,173 ) $ (22,402 ) $ (15,468 )
Other comprehensive loss:
Change in unrealized gain (loss) on available-for-sale securities 7 (2 ) (3 ) (3 )
Total comprehensive loss $ (8,595 ) $ (5,175 ) $ (22,405 ) $ (15,471 )

Net loss per share attributable to common stockholders, basic and diluted $ (0.26 ) $ (0.16 ) $ (0.68 ) $ (0.74 )

Weighted average shares used in computing net loss per share attributable to common stockholders, basic and diluted 32,949,649 32,268,890 32,829,940 24,200,475
Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
OPERATING EXPENSES:
Research and development $ 5,636 $ 5,146 $ 13,701 $ 13,849
Sales, general and administrative 3,443 3,511 9,965 8,592
Total operating expenses 9,079 8,657 23,666 22,441

Loss from operations (9,079 ) (8,657 ) (23,666 ) (22,441 )

Other income (expense), net:
Interest and other income, net 117 55 341 39
Other income (expense), net 117 55 341 39

Net loss $ (8,962 ) $ (8,602 ) $ (23,325 ) $ (22,402 )

Net loss $ (8,962 ) $ (8,602 ) $ (23,325 ) $ (22,402 )
Other comprehensive income (loss):
Change in unrealized loss on available-for-sale securities — 7 — (3 )
Total comprehensive loss $ (8,962 ) $ (8,595 ) $ (23,325 ) $ (22,405 )

Net loss per share, basic and diluted $ (0.18 ) $ (0.26 ) $ (0.53 ) $ (0.68 )

Weighted average shares used in computing net loss per share, basic and diluted 50,711,449 32,949,649 43,818,011 32,829,940
See accompanying notes to condensed consolidated financial statements.
2

Movano Inc.
Condensed Consolidated Statements of ~~Redeemable Convertible Preferred Stock and~~ Stockholders’ Equity
(in thousands, except share data)
(Unaudited)

Redeemable Convertible Preferred Stock
Series A Series B Common Stock Additional
Paid-In Other
Comprehensive Accumulated Total
Stockholders’
Three Months Ended September 30, 2022 Shares Amount Shares Amount Shares Amount Capital Loss Deficit Equity
Balance at June 30, 2022 — $ — — $ — 32,818,060 $ 3 $ 99,077 $ (15 ) $ (78,569 ) $ 20,497
Stock-based compensation — — — — — — 797 — — 797
Issuance of common stock, net of issuance costs — — — — 673,191 — 1,921 — — 1,921
Issuance of common stock upon exercise of options — — — — 1,000 — — — — —
Vesting of early exercised stock options — — — — — — 34 — — 34
Other comprehensive gain —   — — — — — — 10 — 10
Net loss — — — — — — — — (8,602 ) (8,602 )
Balance at September 30, 2022 — $ — — $ — 33,492,251 $ 3 $ 101,829 $ (5 ) $ (87,170 ) $ 14,657

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
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 Preferred Stock Additional Other Total
Series A Series B Common Stock Paid-In Comprehensive Accumulated Stockholders’
Nine Months Ended September 30, 2022 Shares Amount Shares Amount Shares Amount Capital Loss Deficit Equity
Balance at December 31, 2021 — $ — — $ — 32,772,060 $ 3 $ 97,506 $ (11 ) $ (64,768 ) $ 32,730
Stock-based compensation — — — — — — 2,273 — — 2,273
Issuance of common stock, net of issuance costs — — — — 673,191 — 1,921 — — 1,921
Issuance of common stock upon exercise of options — — — — 47,000 — 19 — — 19
Vesting of early exercised stock options — — — — — — 110 — — 110
Other comprehensive gain — — — — — — — 6 — 6
Net loss — — — — — — — — (22,402 ) (22,402 )
Balance at September 30, 2022 — $ — — $ — 33,492,251 $ 3 $ 101,829 $ (5 ) $ (87,170 ) $ 14,657

Redeemable Convertible Preferred Stock Additional Other Total
Stockholders’
Series A Series B Common Stock Paid-In Comprehensive Accumulated Equity
Nine Months Ended September 30, 2021 Shares Amount Shares Amount Shares Amount Capital Loss Deficit (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, net of issuance costs (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

Additional Other Total
Common Stock Paid-In Comprehensive Accumulated Stockholders’
Three Months Ended September 30, 2022 Shares Amount Capital Loss Deficit Equity
Balance at June 30, 2022 32,818,060 $     3 $ 99,077 $     (15 ) $ (78,568 ) $   20,497
Stock-based compensation — — 797 — — 797
Issuance of common stock, net of issuance costs 673,191 — 1,921 — — 1,921
Issuance of common stock upon exercise of options 1,000 — — — — —
Vesting of early exercised stock options — — 34 — — 34
Other comprehensive gain — — — 10 — 10
Net loss — — — — (8,602 ) (8,602 )
Balance at September 30, 2022 33,492,251 $ 3 $ 101,829 $ (5 ) $ (87,170 ) $ 14,657

Additional Other Total
Common Stock Paid-In Comprehensive Accumulated Stockholders’
Nine Months Ended September 30, 2022 Shares Amount Capital Loss Deficit Equity
Balance at December 31, 2021 32,772,060 $          3 $ 97,506 $     (11 ) $ (64,768 ) $   32,730
Stock-based compensation — — 2,273 — — 2,273
Issuance of common stock, net of issuance costs 673,191 — 1,921 — — 1,921
Issuance of common stock upon exercise of options 47,000 — 19 — — 19
Vesting of early exercised stock options — — 110 — — 110
Other comprehensive gain — — — 6 — 6
Net loss — — — — (22,402 ) (22,402 )
Balance at September 30, 2022 33,492,251 $ 3 $ 101,829 $ (5 ) $ (87,170 ) $ 14,657

Additional Other Total
Common Stock Paid-In Comprehensive Accumulated Stockholders’
Three Months Ended September 30, 2023 Shares Amount Capital Loss Deficit Equity
Balance at June 30, 2023 50,646,661 $ 5 $ 122,283 $    — $ (109,460 ) $ 12,828
Stock-based compensation — — 757 — — 757
Issuance of common stock 159,290 — 173 — — 173
Issuance of common stock warrant
—

—

124

—

—
124
Vesting of early exercised stock options — — 24 — — 24
Net loss — — — — (8,962 ) (8,962 )
Balance at September 30, 2023 50,805,951 $ 5 $ 123,361 $ — $ (118,422 ) $ 4,944

Additional Other Total
Common Stock Paid-In Comprehensive Accumulated Stockholders’
Nine Months Ended September 30, 2023 Shares Amount Capital Loss Deficit Equity
Balance at December 31, 2022 33,659,460 $ 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 5,340,600 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 9,200,000 1 8,065 — — 8,066
Issuance of common stock 2,360,036 — 3,061 — — 3,061
Issuance of common stock upon exercise of options 245,855 — 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 50,805,951 $ 5 $ 123,361 $ — $ (118,422 ) $ 4,944
See accompanying notes to condensed consolidated financial statements.

3

Movano Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Nine Months Ended
September 30,
2023 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (23,325 ) $ (22,402 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 118 109
Stock-based compensation 2,252 2,273
Noncash lease expense (11 ) (9 )
Accretion of discount on short-term investments — 101
Loss on disposal of property and equipment 13 44
Changes in operating assets and liabilities:
Payroll tax credit 129 —
Prepaid expenses, vendor deposits and other current assets (626 ) 354
Other assets (40 ) (6 )
Accounts payable 1,398 310
Other current and noncurrent liabilities (836 ) 636
Net cash used in operating activities (20,928 ) (18,590 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (51 ) (84 )
Maturities of short-term investments — 15,004
Net cash provided by (used in) investing activities (51 ) 14,920

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, net of issuance costs 3,061 1,921
Issuance of common stock upon exercise of stock options 109 19
Net cash provided by financing activities 17,889 1,940

Net decrease in cash and cash equivalents (3,090 ) (1,730 )
Cash and cash equivalents at beginning of period 10,759 17,675
Cash and cash equivalents at end of period $ 7,669 $ 15,945

NONCASH INVESTING AND FINANCING ACTIVITIES:
Vesting of common stock issued upon early exercise $ 89 $ 110
Warrants issued upon February 2023 public offering $ 1,473 $ —
Issuance of common stock warrant $ 124 $ —
Nine Months Ended
September 30,
2022 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (22,402 ) $ (15,468 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 109 40
Forgiveness of Paycheck Protection Program loan — (351 )
Stock-based compensation 2,273 1,247
Noncash lease expense (9 ) —
Accretion of debt discount on convertible promissory notes — 772
Accrued interest on convertible promissory notes — 115
Accretion of discount on short-term investments 101 111
Non-employee services under convertible promissory notes — 50
Compensation of non-employee services upon issuance of common stock — 74
Change in fair value of derivative liability — (121 )
Change in fair value of warrant liability — 1,581
Loss on disposal of property and equipment 44 —
Changes in operating assets and liabilities:
Payroll tax credit — 88
Prepaid expenses and other current assets 354 (672 )
Other assets (6 ) (47 )
Accounts payable 310 115
Other current and noncurrent liabilities 636 1,399
Net cash used in operating activities (18,590 ) (11,067 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (84 ) (322 )
Purchases of short-term investments — (23,312 )
Maturities of short-term investments 15,004 1,029
Net cash provided by (used in) investing activities 14,920 (22,605 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock – net of issuance costs 1,921 —
Issuance of common stock upon exercise of stock options 19 76
Proceeds from issuance of shares upon Initial Public Offering - net of issuance costs — 45,019
Net cash provided by financing activities 1,940 45,095

Net (decrease) increase in cash and cash equivalents (1,730 ) 11,423
Cash and cash equivalents at beginning of period 17,675 5,710
Cash and cash equivalents at end of period $ 15,945 $ 17,133

NONCASH INVESTING AND FINANCING ACTIVITIES:
Accretion of Series A redeemable convertible preferred stock $ — $ 686
Accretion of Series B redeemable convertible preferred stock $ — $ 1,803
Conversion of preferred stock to common stock upon initial public offering $ — $ 35,307
Reclassification of liability-classified warrants upon initial public offering $ — $ 3,130
Issuance of underwriter warrants upon initial public offering $ — $ 2,349
Issuance of convertible promissory notes for completion of non-employee services $ — $ 500
Beneficial conversion feature upon issuance of convertible promissory note $ — $ 471
Conversion of convertible promissory notes upon initial public offering $ — $ 12,550
Vesting of common stock issued upon early exercise $ 110 $ 109
Issuance of common stock for non-employee services $ — $ 11
Reclassification of deferred offering costs upon initial public offering $ — $ 497
Property and equipment purchases in account payable $ — $ 180
See accompanying notes to condensed consolidated financial statements.
4

Movano Inc.
~~Movano Inc.~~
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022
(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 in the development-stage 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 are being developed to provide vital health information, including heart rate, ~~HRV,~~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 nine months ended September 30, ~~2022.~~2023 and 2022, respectively.
Since inception, the Company has engaged in only limited research and development of product candidates and underlying ~~technology.~~technology and the commercialization of our first proposed commercial product, the Evie Ring. As of September 30, ~~2022,~~2023, the Company had not yet completed ~~the development of~~ its first product launch and had not yet recorded any revenues.
In December 2019, a novel coronavirus and the resulting disease (“COVID-19”) was reported, and in January 2020, the World Health Organization (“WHO”) declared it a Public Health Emergency of International Concern. InOn February 2020, the WHO raised its assessment of the COVID-19 threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and in March 2020, the WHO characterized COVID-19 as a pandemic. The Company is continuing to ascertain the long-term impact of the COVID-19 pandemic on its business, but given the uncertainty about the situation,6, 2023, the Company ~~cannot estimate the impact to its financial statements from the economic crisis arising from COVID-19.~~
The Company’s Registration Statement on Form S-1, as amended (Reg. No. 333-252671), was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on March 23, 2021. The registration statement registered the securities offered in the Company’s initialcompleted a $7.5 million underwritten public offering ~~(“IPO”). In the IPO, the Company sold 9,775,000~~of 5,340,600 shares of its common stock and warrants to purchase up to 2,670,300 shares of common stock, ~~at a price to the public of $5.00 per share,~~ including the full exercise of the underwriter’s overallotment option. The warrants were offered at the rate of one warrant for every two shares of purchased common stock and are exercisable at a price per share of $1.57. The public offering price per share, before the underwriters’ ~~option to purchase additional shares.~~discount and commissions, for each share of common stock and accompanying warrant was $1.40. The IPO closed on March 25, 2021 and the underwriters exercised their overallotment option as of March 25, 2021, as a result of which the Company raised net proceeds of $44.3 million after deducting $3.3 million in underwriting discounts, commissions, and expenses and $1.3 million in offering expenses paid by the Company. National Securities Corporation (“NSC”) was the underwriter for the IPO, and also received a warrant related to the IPO, which is discussed in Note 10. No portion of the net proceeds from the ~~IPO~~offering were ~~used for payments made by~~approximately $6.7 million (See Note 8).
On June 15, 2023, the Company ~~to its directors or officers or persons owning ten percent or more~~completed a $9.2 million underwritten public offering of 9,200,000 shares of its common stock, ~~or to their associates, or to~~including the ~~Company’s affiliates, other than payments in~~full exercise of the ~~ordinary course~~underwriter’s overallotment option. The public offering price per share, before the underwriters’ discount and commissions, for each share of ~~business to officers for salaries and to nonemployee directors as compensation for board or board committee service.~~common stock was $1.00. The net proceeds from the offering were approximately $8.1 million (See Note 8).
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, ~~2022,~~2023, the Company has relied primarily on the proceeds from equity offerings to finance its operations. Through September 30, 2022, the Company has received proceeds of approximately $1.9 million from an at-the-market issuance program, and an aggregate offering price amount of approximately $48 million remains available to be issued. (See Note 9.) 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 ~~interim~~ 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 ~~$87.2~~$118.4 million as of September ~~2022.~~30, 2023. 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~~these 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 ~~interim~~ condensed consolidated financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern.

5

Movano Inc.
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022
(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 March 30, ~~2022~~2023 with the United States Securities and Exchange Commission (the ~~SEC)~~“SEC”).
The results of operations for the three and nine months ended September ~~2022~~30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2022.~~2023. The condensed consolidated balance sheet as of December 31, ~~2021~~2022 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 financial statements, and the reported amounts of expenses during the reporting periods.
Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the accrual of research and development expenses, the valuation of common stock, stock options and warrants, ~~the valuation of the embedded redemption derivative liability~~ 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.
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, Cash Equivalents and Short-term Investments
The Company invests its excess cash primarily in money market funds, commercial paper and short-term debt securities. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. ~~The~~As of September 30, 2023 and December 31, 2022, the Company ~~classifies all marketable securities for use in current operations, even if the security matures beyond 12 months, and presents them as~~did not hold any short-term ~~investments in the condensed consolidated balance sheets.~~investments.
6

Movano Inc.
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022
(Unaudited)

The Company determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified and accounted for the purchased marketable securities as available-for-sale. After considering the Company’s capital preservation objectives, as well as its liquidity requirements, the Company may sell securities prior to their stated maturities. The Company carries its available-for-sale short-term investments at fair value. The Company reports the unrealized gains and losses, net of taxes, as a component of stockholders’ equity, except for unrealized losses determined to be credit-related, which are recorded as other income (expense), net in the condensed consolidated statements of operations and comprehensive loss and reports an allowance for credit losses in short-term investments on the balance sheet, if any. The Company determines any realized gains or losses on the sale of short-term investments on a specific identification method and records such gains and losses as a component of other income (expense), net. Interest earned on cash, cash equivalents, and short-term investments is recorded in interest and other income, net in the accompanying condensed consolidated statements of operations and comprehensive loss and was insignificant during the three and nine months ended September 30, 2022 and 2021.
The Company’s investment policy only allows purchases of high credit quality instruments and provides guidelines on concentrations and credit quality to ensure minimum risk of loss. The Company evaluates whether the unrealized loss on available-for-sale short-term investments is the result of the credit worthiness of the securities it held, or other non-credit-related factors such as liquidity by reviewing a number of factors such as the implied yield of the corporate note based on the market price, the nature of the invested entity’s business or industry, market capitalization relative to debt, changes in credit ratings, and the market prices of the instruments subsequent to the period end.
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. ~~All~~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, 2023 at one financial institution that totaled approximately $0.2 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 institutions in which those deposits are held.
The Company is dependent on third-party manufacturers to supply products for 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.
~~Convertible Financial Instruments~~
Warrants
Warrants are accounted for as either equity-classified or liability-classified instructions based on an assessment of the warrant’s specific terms and applicable authoritative guidance. The ~~Company bifurcates embedded redemption and conversion options from their host~~assessment considers whether the warrants are freestanding financing instruments and ~~accounts~~met the definition of a derivative or a liability and whether the warrants meet all the requirements for ~~them~~equity classification. The assessment, which requires the use of professional judgement, is conducted at the time of warrant issuance and as ~~freestanding~~of each subsequent quarterly period end date while the warrants are outstanding. If the warrant does meet the characteristics of a liability or a derivative, ~~financial instruments~~the warrant is measured at fair ~~value if certain criteria~~value. The derivative liabilities are ~~met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related~~remeasured at each period end, on a recurring basis, to the ~~economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at~~estimated fair value ~~under otherwise applicable GAAP~~ with the changes in fair value ~~reported~~reflected as current period income or loss until the warrant is exercised, extinguished, or expires. If the warrant does not meet the characteristics of a liability or a derivative, the warrant is classified as equity and recorded at its fair value on the date of issuance. The fair value is estimated using the Black-Scholes option pricing model or the Monte Carlo methodology which contain estimates and assumptions that require careful consideration and judgment.
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 ~~earnings~~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~~occur.
Early Exercised Stock Option Liability
Upon the early exercise of stock options by employees, the Company records as a liability the purchase price of unvested common stock that the Company has a right to repurchase if and ~~(c)~~when the employment of the stockholder terminates before the end of the requisite service period. The proceeds originally recorded as a ~~separate instrument with the same terms~~liability are reclassified to additional paid-in capital as the ~~embedded derivative instrument would be considered~~Company’s repurchase right lapses.
Leases
The Company determines if an arrangement is a ~~derivative instrument. Debt discounts under these arrangements~~lease or implicitly contains a lease at inception based on the lease definition, and if the lease is classified as an operating lease or finance lease in accordance with Accounting Standards Codification 842, Leases (“ASC 842”). Operating leases are ~~amortized~~included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the Company’s condensed consolidated balance sheets. ROU assets represent the Company’s right to ~~interest expense using~~use an underlying asset for the ~~interest method~~lease term. Lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date for existing leases based on the present value of lease payments over the ~~earlier~~lease term using an estimated discount rate.
For leases which do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments over a similar term. In determining the estimated incremental borrowing rate, the Company considers relevant banking rates and the Company’s costs incurred for underwriting discounts and financing costs in its previous equity financings. The ROU assets also include any lease payments made and exclude lease incentives. For operating leases, lease expense is recognized on a straight-line basis over the lease term. Lease and non-lease components within a contract are generally accounted for separately. Short-term leases of twelve months or less, if any. are expensed as incurred which approximates the straight-line basis due to the short-term nature of the ~~term of the related debt or their earliest date of redemption.~~leases.
7

Movano Inc.
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022
(Unaudited)
From time to time, the Company issues convertible financial instruments to nonemployees in payment for services that are provided. Until the services are completely rendered, the Company will expense the principal and any interest earned prior to the service completion to the representative expense account for the services performed and will record a noncurrent liability for the expected amount of the principal balance. Upon completion of the services, the Company will reclassify the noncurrent liability balance to the balance of an outstanding convertible financial instrument and assess the embedded redemption and conversion options that are applicable at that time.
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, ~~2022~~2023 and ~~2021.~~2022.
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.
~~Stock-Based Compensation~~
The Company measures equity classified stock-based awards granted to employees, non-employee directors, and nonemployees based on the estimated grant date fair value of the awards. For stock-based awards with only service conditions, compensation expense is recognized over the requisite service period, which is generally the vesting period of the respective award, using the straight-line method. For stock-based awards that include performance conditions, compensation expense is not recognized until the performance condition is probable to occur. The Company uses the Black-Scholes option pricing model to estimate the fair value of its stock-based awards. The Black-Scholes option pricing model requires the Company to make assumptions and judgements about the variables used in the calculations, including the fair value of common stock, expected term, expected volatility of the Company’s common stock, risk-free interest rate and expected dividend yield. The Company accounts for forfeitures of stock-based awards as they occur.

8
~~Movano Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~For the three months and nine months ended September 30, 2022 and 2021~~
~~(Unaudited)~~
~~Early Exercised Stock Option Liability~~
Upon the early exercise of stock options by employees, the Company records as a liability the purchase price of unvested common stock that the Company has a right to repurchase if and when the employment of the stockholder terminates before the end of the requisite service period. The proceeds originally recorded as a liability are reclassified to additional paid-in capital as the Company’s repurchase right lapses.
Net Loss per Share ~~Attributable to Common Stockholders~~
Basic net loss per share ~~attributable to common stockholders~~ is calculated by dividing the net loss ~~attributable to common stockholders~~ by the weighted average number of shares of common stock outstanding during the period, without consideration for common stock equivalents. The net loss attributable to common stockholders is calculated by adjusting the net loss of the Company for the accretion on the Series A and B redeemable convertible preferred stock and cumulative dividends on Series A and B redeemable convertible preferred stock. Diluted net loss per share ~~attributable to common stockholders~~ is the same as basic net loss per share, ~~attributable to common stockholders,~~ since the effects of potentially dilutive securities are antidilutive.
Recently Adopted Accounting Pronouncements

~~Adoption~~In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) — Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in this update reduce the number of ~~ASU No. 2016-02~~
accounting models for convertible debt instruments and convertible preferred stock, resulting in fewer embedded conversion features being recognized separately from their host contracts. The pronouncement also revises the derivatives scope exception for contracts in an entity’s own equity and improves the consistency of earnings per share calculations as that relates to convertible instruments. The Company ~~adopted FASB’s ASU No. 2016-02,~~ ~~Leases~~ ~~(“ASC 842”),~~has early-adopted this pronouncement as of January 1, ~~2022,~~2023 using the modified retrospective ~~approach which provides a~~ method ~~for recording existing leases at the beginning~~ of ~~the period of adoption.~~
In addition, the Company elected the package of practical expedients and other expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification and not to restate the comparative periods prior to the adoption and to combine lease and non-lease components for all asset classes. The Company made an accounting policy election not to recognize right of use assets and lease liabilities for leases with a lease term of 12 months or less, including renewal options that are reasonably certain to be exercised, that also do not include an option to purchase the underlying asset that is reasonably certain of exercise. Instead, lease payments for these leases are recognized as lease expense on a straight-line basis over the lease term. The disclosures required under ASC 842 are not presented for periods before the date of adoption. For the comparative periods prior to adoption, the Company presented the disclosures which were required under the previous accounting guidance.transition. The adoption ~~of the new standard~~ did not have ~~a material~~any impact ~~on the Company’s results of operations or cash flows.~~
Operating lease right of use (“ROU”) assets represent the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Adoption of the new standard resulted in the recording of operating lease liabilities of $429,000 and ROU assets of $380,000 as of January 1, 2022. The difference between the ROU assets and lease liabilities represents the net book value of deferred rent recognized as of December 31, 2021, which was adjusted against the ROU asset upon adoption. The ROU asset is included in other assets on the Company’s condensed consolidated balance sheet. At adoption, operating lease liabilities of $166,000 and $263,000, respectively, were included in other current liabilities and other noncurrent liabilities on the Company’s condensed consolidated balance sheet.
As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is included in research and development expenses and general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur.financials.

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.
98

Movano Inc.
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022
(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 Company measures its cash equivalents ~~short-term investments and derivative financial instruments~~ at fair value. The Company classifies its cash equivalents ~~and short-term investments~~ within Level 1 or Level 2 because the Company values these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs. The fair value of the Company’s Level 1 financial assets is based on quoted market prices of the identical underlying security. The fair value of the Company’s Level 2 financial assets is based on inputs that are directly or indirectly observable in the market, including the readily-available pricing sources for the identical underlying security that may not be actively traded.
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.
Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. On December 31, 2020, the warrants related to the Series A preferred stock issuance, the Series B preferred stock issuance, and the convertible promissory notes and the derivative liability related to the issuance of convertible promissory notes were classified within level 3 of the valuation hierarchy. However, these instruments are not present on March 31, 2021 in light of accounting ramifications of the IPO, which are discussed further in Note 7 and Note 8.
The carrying amounts of prepaid expenses, payroll tax credit, accounts payable and accrued 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, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):
Fair Value Measurements
September 30, 2023
Fair Value Level 1 Level 2 Level 3

Cash equivalents:
Money market funds $ 7,090 $ 7,090 $ — $ —
Total cash equivalents $ 7,090 $ 7,090 $ — $ —

December 31, 2022
Fair Value Level 1 Level 2 Level 3
Cash equivalents:
Money market funds $ 8,171 $ 8,171 $     — $       —
Total cash equivalents $ 8,171 $ 8,171 $ — $ —
September 30, 2022
Fair Value Level 1 Level 2 Level 3

Cash equivalents:
Money market funds $ 11,550 $ 11,550 $ — $ —
Total cash equivalents $ 11,550 $ 11,550 $ — $ —

Short-term investments:
Corporate notes $ 822 $ — $ 822 $ —
Total short-term investments $ 822 $ — $ 822 $ —
December 31, 2021
Fair Value Level 1 Level 2 Level 3

Cash equivalents:
Money market funds $ 16,830 $ 16,830 $ — $ —
Total cash equivalents $ 16,830 $ 16,830 $ — $ —

Short-term investments:
Certificate of deposit $ 250 $ — $ 250 $ —
Commercial paper 2,210 — 2,210 —
Corporate notes 12,024 — 12,024 —
Municipal bonds 1,437 — 1,437 —
Total short-term investments $ 15,921 $ — $ 15,921 $ —
109

Movano Inc.
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022
(Unaudited)
Note 4 – CASH AND CASH EQUIVALENTS ~~AND SHORT-TERM INVESTMENTS~~

Cash and cash equivalents ~~and short-term investments~~ consist of the following (in thousands):

September 30, December 31,
2022 2021
Cash and cash equivalents:
Cash $ 4,395 $ 845
Money market funds 11,550 16,830
Total cash and cash equivalents $ 15,945 $ 17,675

Short-term investments:
Certificate of deposit $ — $ 250
Commercial paper — 2,210
Corporate notes 822 12,024
Municipal bonds — 1,437
Total short-term investments $ 822 $ 15,921
~~The contractual maturities of short-term investments classified as available-for-sale as of September 30, 2022 were as follows (in thousands):~~
September 30,
2022

Due within one year $ 822
Due after one year through five years -
Total $ 822
The following table summarizes the unrealized gains and losses related to short-term investments classified as available-for-sale on the Company’s condensed consolidated balance sheet (in thousands):
September 30, 2022
Amortized
Cost Gross Unrealized Gains Gross Unrealized Losses Aggregate Estimated Fair Value
Short-term investments:
Corporate notes $ 827 $            - $           (5 ) $     822
Total short-term investments $ 827 $ - $ (5 ) $ 822
December 31, 2021
Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Aggregate
Estimated
Fair Value
Short-term investments:
Certificate of deposit $ 250 $               — $                 — $ 250
Commercial paper 2,210 — — 2,210
Corporate notes 12,035 — (11 ) 12,024
Municipal bonds 1.437 — — 1,437
Total short-term investments $ 15,932 $ — $ (11 ) $ 15,921
As of September 30, 2022 and December 31, 2021, the gross unrealized loss on available-for-sale short-term investments was immaterial and there were no expected credit losses related to the Company’s available-for-sale debt securities. The Company has determined that all unrealized losses are temporary. As of September 30, 2022 and December 31, 2021, no allowance for credit losses in short-term investments was recorded.
~~No sales of available-for-sale short-term investments occurred during the three and nine months ended September 30, 2022 and 2021.~~
September 30, December 31,
2023 2022
Cash and cash equivalents:
Cash $ 579 $ 2,588
Money market funds 7,090 8,171
Total cash and cash equivalents $ 7,669 $ 10,759

11
~~Movano Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~For the three months and nine months ended September 30, 2022 and 2021~~
~~(Unaudited)~~
Note 5 – Property and Equipment
Property and equipment, net, as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, consisted of the following (in thousands):
September 30, December 31,
2023 2022
Office equipment and furniture $ 274 $ 263
Software 144 131
Test equipment 291 277
Total property and equipment 709 671
Less: accumulated depreciation (346 ) (228 )
Total property and equipment, net $ 363 $ 443

September 30, December 31,
2022 2021
Office equipment and furniture $ 263 $ 237
Software 131 115
Test equipment 256 278
Total property and equipment 650 630
Less: accumulated depreciation (190 ) (101 )
Total property and equipment, net $ 460 $ 529
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. Total depreciation and amortization expense related to property and equipment for the three and nine months ended September 30, 2022 was approximately $36,000 and $109,000, respectively. ~~Total depreciation and amortization expense related to property and equipment for the three and nine months ended September 30, 2021 was approximately $22,000 and $40,000, respectively.~~
Note 6 – Other Current Liabilities
Other current liabilities as of September 30, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of the following (in thousands):
September 30, December 31, September 30, December 31,
2022 2021 2023 2022
Accrued compensation $ 1,809 $ 2,708
Accrued research and development $ 168 $ 289 833 536
Accrued compensation 2,592 2,211
Accrued vacation 343 276 323 243
Accrued consulting 251 —
Accrued severance payment 61 517
Accrued sales and marketing 134 —
Lease liabilities, current portion 216 — 204 212
Other 176 131 214 205
$ 3,746 $ 2,907 $ 3,578 $ 4,421
~~NOTE 7 – CONVERTIBLE PROMISSORY NOTES~~
On various dates between February 2020 and December 2020, the Company received total proceeds of approximately $11.8 million from the issuance of subordinated convertible promissory notes (“Convertible Notes”) to investors. The Convertible Notes accrued interest at 4% per year and the principal balance of the Convertible Notes, plus all accrued interest would have been due on February 28, 2022 (the Maturity Date).
1210

Movano Inc.
~~Movano Inc.~~
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022
(Unaudited)
~~The Convertible Notes were convertible upon the occurrence of certain events, including upon a change in control or a next equity financing. The conversion features are described as follows:~~
~~Conversion Event~~ ~~Description~~ ~~Conversion Price~~
~~Automatic Conversion – Next Qualified Equity Financing~~ Upon the closing of a Next Qualified Equity Financing (defined as greater than $5,000,000), the Convertible Notes are converted into shares issued equal to the outstanding balance divided by the Conversion Price. An amount equal to the lower of (i) 80% of the lowest per-share selling price of such stock sold by the Company at the Next Qualified Equity Financing or (ii) the implied per share price determined by dividing $60,000,000 by the total number of Common Stock Equivalents (defined as fully diluted common shares for all outstanding securities, excluding common shares reserved for issuance or exercise of options or grants in the future) immediately prior to Next Qualified Equity Financing closing.
~~Automatic Conversion – Change of Control (defined as consolidation or merger of the Company or transfer of a majority of share ownership or disposition of substantially all assets of the Company)~~ If at any time before payment or conversion of the balance, the Company effects a Change of Control, all of the balance outstanding immediately prior to such Change of Control will automatically convert into the most senior series of Preferred Stock outstanding immediately prior to such Change of Control at the Conversion Price. ~~An amount equal to the implied per share price determined by dividing $60,000,000 by the total number of Common Stock Equivalents immediately prior to such Change of Control.~~
~~Automatic Conversion – Maturity Date~~ If the Company has not paid or otherwise converted the entire balance before the Maturity Date, then on the Maturity Date, all of the balance then outstanding will automatically convert into the most senior series of Preferred Stock outstanding as of the Maturity Date at the Conversion Price then in effect. ~~An amount equal to the implied per share price determined by dividing $60,000,000 by the total number of Common Stock Equivalents as of the Maturity Date.~~
~~Automatic Conversion – IPO~~ If at any time before payment or conversion of the balance, the Company consummates an IPO, all of the balance outstanding immediately prior to the IPO will automatically convert into Common Stock at the Conversion Price. An amount equal to the lower of (i) 80% of the lowest per-share selling price of the Common Stock sold by the Company in an IPO or (ii) the implied per share price determined by dividing $60,000,000 by the total number of Common Stock Equivalents immediately prior to closing of an IPO.
~~Optional Conversion~~ If at any time while the Convertible Notes are still outstanding the Company sells stock in a single transaction or in a series of related transactions that does not constitute a Next Qualified Equity Financing (and thus is defined as a Non-qualified Financing), then, at the closing of the Nonqualified Financing, the balance then outstanding may be converted, at the option of the holder, into that number of shares of Non-qualified Preferred Stock (preferred stock sold in the Non-qualified Financing) determined by dividing (i) the balance by (ii) the Conversion Price then in effect. ~~An amount equal to the lowest per share selling price of Nonqualified Preferred Stock sold by the Company for new cash investment in the Non-Qualified Financing.~~
13
~~Movano Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~For the three months and nine months ended September 30, 2022 and 2021~~
~~(Unaudited)~~
~~As part of the Convertible Note financing, the Company agreed to issue subordinated convertible promissory notes to nonemployees in exchange for services totaling $747,000.~~
During the three months ended March 31, 2021, nonemployee services of $50,000 were completed, which were recorded as a component of other noncurrent liabilities. In connection with the IPO, a Convertible Note for $500,000 was issued for nonemployee services and $300,000 of the nonemployee services that remained to be completed was recorded in prepaid and other current expenses on the condensed consolidated balance sheets. The Company calculated a BCF of approximately $500,000 upon the issuance of this Convertible Note.
In connection with the Convertible Notes, the Company issued 10,000 and 204,500 warrants to purchase common stock, to a noteholder and its brokers, respectively. The warrants have a five-year life and are initially exercisable into common stock at $2.97 per share. (See Note 10 – Common Stock Warrants for fair value computation and discussion of the change in the exercise price). During March 2021, 42,220 of these warrants to purchase common stock were cancelled.
~~Issuance costs and commissions to brokers to obtain the Convertible Notes were recorded as a debt discount in the amount of approximately $83,000 and $612,000, respectively.~~
The Company determined that the terms that would result in Convertible Notes automatically converting at (i) 80% of the lowest per-share selling price of the stock sold by the Company in the Next Qualified Equity Financing or (ii) 80% of the lowest per-share selling price of the Conversion Stock sold by the Company in an IPO are deemed a redemption feature. The Company also concluded that those redemption features require bifurcation from the Convertible Notes and subsequent accounting in the same manner as a freestanding derivative. Accordingly, subsequent changes in the fair value of these redemption features are measured at each reporting period and recognized in the condensed consolidated statements of operations and comprehensive loss.
The sum of the fair value of the warrants, the fair value of the embedded redemption derivative liability, issuance costs, BCF and commission payments for the Convertible Notes were recorded as debt discounts to be amortized to interest expense over the respective term using the effective interest method. During the three and nine months ended September 30, 2021, the Company recognized interest expense of approximately $0 and $0.8 million, respectively, from the accretion of those debt discounts.
14

~~Movano Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~For the three months and nine months ended September 30, 2022 and 2021~~
~~(Unaudited)~~
The Convertible Notes automatically converted upon the closing of the IPO at the implied per share price determined by dividing $60,000,000 by the total number of Common Stock Equivalents immediately prior to the closing of the IPO. The outstanding principal ($12.5 million) and interest due ($0.4 million) under the Convertible Notes, in an aggregate amount of $12.9 million, was converted into 5,015,494 shares of the Company’s common stock at the implied per share conversion of $2.5736. The carrying value of the Convertible Notes was credited to common stock and additional paid-in capital on the condensed consolidated balance sheet. The remaining unamortized discount of $0.4 million was recorded to additional paid-in capital and no gain or loss was recognized on the conversion. The remaining unamortized discount related to the BCF of $0.5 million was recognized immediately as interest expense in the condensed consolidated statement of operations and comprehensive loss.
~~Derivative Liability~~
As described above, the redemption provisions embedded in the Convertible Notes required bifurcation and measurement at fair value as a derivative. The fair value of the Convertible Note embedded redemption derivative liability was calculated by determining the value of the debt component of the Convertible Notes at various conversion or maturity dates using a Probability Weighted Expected Return valuation method. The fair value calculation placed greater probability on the occurrence of the conversion or the maturity date scenario, with little or no weight given to other scenarios. The fair value of the embedded redemption derivative liability is significantly influenced by the discount rate, the remaining term to maturity and the Company’s assumptions related to the probability of a qualified financing or no financing prior to maturity. The Financing Date is the estimated date of an automatic conversion as the result of a Next Qualified Equity Financing or an IPO.
The embedded redemption derivative liability no longer had significant value as of the date of the Company’s IPO since the conversion of the Convertible Notes occurred via a redemption feature that was not bifurcated as a derivative. Upon the conversion of the Convertible Notes at the IPO, the Company recorded a final change in the fair value of the derivative liability of $0.1 million in the condensed consolidated statement of operations and comprehensive loss, and the derivative liability was extinguished.
~~The changes in the fair value of the derivative liability for the three and nine months ended September 30, 2021 was the same and is presented as follows (in thousands):~~
December 31, Fair Value at Change in September 30,
Warrant Issuance 2020 issuance date fair value 2021
Derivative liability $ 121 — (121 ) $ —
15
~~Movano Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~For the three months and nine months ended September 30, 2022 and 2021~~
~~(Unaudited)~~
Note 87 – REDEEMABLE Convertible Preferred Stock
On March 28, 2019, the Company’s Second Amended and Restated Certificate of Incorporation was filed with the Delaware Secretary of State which (i) increased the number of shares of common stock the Company is authorized to issue to 22,069,652; (ii) increased the number of shares of preferred stock the Company was authorized to issue to 7,930,348, of which 2,692,253 shares were designated as Series A preferred stock and 5,238,095 shares were designated as Series B preferred stock; (iii) amended and set a fixed conversion price of Series A preferred stock to $1.40; and (iv) extended the IPO Commitment Date from April 1, 2020 to no later than March 31, 2021.
The Series B preferred stock was measured and recorded at the transaction price net of issuance costs, resulting in an initial value of $9.3 million. The accretion to the carrying value of the Series B preferred stock was recorded as a charge to additional paid in capital. The accumulated accretion as of the IPO date was $11.5 million, which resulted in an adjusted Series B preferred stock carrying value of $20.8 million.
The accretion to the carrying value of the Series A preferred stock was recorded as a charge to additional paid-in capital. The accumulated accretion as of the IPO date was $8.2 million, which resulted in an adjusted Series A preferred stock carrying value of $14.5 million.
~~Upon the IPO, the redeemable convertible preferred stock converted in to 11,436,956 shares of common stock and no shares of redeemable convertible preferred stock remain outstanding.~~
On March 24, 2021, the Company’s Third Amended and Restated Certificate of Incorporation was filed with the Delaware Secretary of State which (i) eliminated the Company’s Series A and Series B preferred stock, (ii) increased the authorized number of shares of common stock to 75,000,000 and (iii) authorized 5,000,000 shares of preferred stock at par value of $0.0001 per share. The significant rights and preferences of the preferred stock will be established by the Company’s Board of Directors (the “Board”) upon issuance of any such series of preferred stock in the future.
On June 21, 2023, the Company filed a Certificate of Amendment to its Third Amended and Restated Certificate of Incorporation with the Delaware Secretary of State which (i) increased the authorized number of shares of common stock to 150,000,000 and (ii) authorized 5,000,000 shares of preferred stock at a par value of $0.0001 per share, for a total of 155,000,000 authorized shares.
Note 98 – Common Stock
As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company was authorized to issue 150,000,000 and 75,000,000 shares of common stock, respectively, with a par value of $0.0001 per share. As of September 30, ~~2022~~2023 and December 31, ~~2021, 33,492,251~~2022, 50,805,951 and ~~32,772,060~~33,659,460 shares were outstanding, respectively.

~~Conversion~~January and February 2023 Issuance of ~~Redeemable Convertible Preferred~~Common Stock
~~In connection with~~On February 6, 2023, the ~~closing~~Company completed a $7.5 million underwritten public offering of ~~the IPO, on March 25, 2021, the outstanding~~5,340,600 shares of ~~the Company’s Series A~~its common stock and ~~Series B redeemable convertible preferred stock were converted into 11,436,956 shares of the Company’s common stock.~~
16
~~Movano Inc.~~
~~Notes~~warrants to ~~Condensed Consolidated Financial Statements~~
~~For the three months and nine months ended September 30, 2022 and 2021~~
~~(Unaudited)~~
~~Conversion of Convertible Notes~~
In connection with the funding of the IPO, on March 25, 2021, the principal and interest due under the Company’s Convertible Notes, in an aggregate amount of $12.9 million, was converted into 5,015,494 shares of the Company’s common stock.
~~Third Amended and Restated Certificate of Incorporation~~
~~In connection with the IPO, the Third Amended and Restated Certificate of Incorporation became effective and authorized 75,000,000~~purchase up to 2,670,300 shares of common stock, including the full exercise of the underwriter’s overallotment option. The warrants were offered at ~~par value~~the rate of ~~$0.0001 per share. Dividends may be declared and paid on the~~one warrant for every two shares of purchased common stock ~~when~~ and ~~if determined by~~are exercisable at a price per share of $1.57 (See Note 9). The public offering price per share, before the ~~Board of Directors. Upon liquidation, each common stockholder is entitled to receive an equal portion of the distribution. Each holder of common stock will have one vote in respect of~~underwriters’ discount and commissions, for each share of common stock ~~held.~~and accompanying warrant was $1.40. The ~~rights~~Company used the relative fair value method to allocate the gross proceeds of approximately $7.5 million between the common stock and ~~privileges listed above will be subject~~the warrants. The net proceeds from the offering were approximately $6.7 million after the deduction of underwriting discounts, commissions and other offering expenses that were approximately $0.8 million. The Company recorded the fair value of the warrants of $1.5 million as additional costs of issuance, thus reducing the net proceeds of $6.7 million to ~~preferential rights~~$5.2 million as presented in the accompanying condensed consolidated statements of ~~any then outstanding~~stockholders’ equity.
June 2023 Issuance of Common Stock
On June 15, 2023, the Company completed a $9.2 million underwritten public offering of 9,200,000 shares of ~~preferred stock.~~
Atits common stock, including the ~~IPO date,~~full exercise of the ~~Company issued 17,000 shares~~underwriter’s overallotment option. The public offering price per share, before the underwriters’ discount and commissions, for each share of common stock ~~for nonemployee services valued at $85,000.~~and accompanying warrant was $1.00. The net proceeds from the offering were approximately $8.1 million after the deduction of underwriting discounts, commissions and other offering expenses that were approximately $1.1 million.
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 terms 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.
11
Movano Inc.
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, 2023 and 2022
(Unaudited)
During the ~~three~~nine months ended September 30, ~~2022,~~2023, the Company issued and sold an aggregate of ~~674,191~~2,360,036 shares of common stock through the Issuance Agreement at a weighted-average public offering price of ~~$2.94~~$1.34 per share and received net proceeds of ~~$1.9~~$3.1 million. As of September 30, ~~2022,~~2023, an aggregate offering price amount of approximately ~~$48~~$44.5 million remains 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, ~~2022~~2023 is summarized as follows:
September 30,
~~2022~~2023
Warrants to purchase common stock ~~1,938,143~~4,757,256
Stock options outstanding ~~7,384,771~~7,829,066
Stock options available for future grants ~~6,276,188~~5,556,038
Total ~~15,599,102~~18,142,360

~~Restricted Stock Purchase Agreements~~
In 2018, 400,000 shares were issued to the Company’s founder at inception pursuant to a Restricted Stock Purchase Agreement. The Restricted Stock Purchase Agreement stipulates that in the event of the voluntary or involuntary termination of the Company’s founder’s continuous service status for any reason (including death or disability), with or without cause, the Company or its assignees(s) shall have an option (“Repurchase Option”) to repurchase all or any portion of the shares held by the Purchaser as of the termination date which have not yet been released from the Company’s Repurchase Option at the original purchase price of $0.0125 per share. Shares are to be released from the Repurchase Option over four years. The initial 12/48ths of the shares were released on January 30, 2019, and an additional 1/48th of the shares are being released monthly thereafter. As of September 30, 2022 and December 31, 2021, none and 8,333 of the shares issued to the Company’s founder remain subject to the Repurchase Option, respectively. These shares were originally purchased by the Company’s founder at $0.0125 per share.
In 2018, 3,640,000 shares were also issued pursuant to a Restricted Stock Purchase Agreement. The holders of these shares are considered related parties of the Company because the holders are directly related either to the founder or to the legal counsel of the Company. The same terms described above apply to these issuances. As of September 30, 2022 and December 31, 2021, none and 75,833 of the shares issued to these holders remain subject to the Repurchase Option, respectively. These shares were originally purchased by the holders at $0.0125 per share.
17
~~Movano Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~For the three months and nine months ended September 30, 2022 and 2021~~
~~(Unaudited)~~
Early Exercised Stock Option Liability
During the three and nine months ended September 30, 2023 and 2022, no shares ~~were issued upon the early exercise of common stock options. During the three and nine months ended September 30, 2021, none and 50,000 shares, respectively,~~ 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, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company has recorded a repurchase liability for approximately ~~$171,000~~$47,000 and ~~$281,000~~$136,000 for ~~338,335~~87,501 and ~~567,397~~266,147 shares that remain unvested, respectively. The weighted average remaining vesting period is ~~1.4 years.~~less than one year.

Note 109 – Common Stock Warrants
~~Preferred A Placement Warrants~~
~~In connection with~~During February 2023, the ~~closing~~Board approved the amendment of the Series A preferred stock offering, the Company issued warrants (“Preferred A Placement Warrants”) to purchase a total of 133,648 shares of its common stock to NSC on March 14, 2018 and April 23, 2018. The293,042 Preferred A Placement Warrants ~~included an adjustment~~to extend the maturity date by six months for each warrant and to remove the cashless exercise provision ~~pursuant to which upon completion of~~in the ~~IPO,~~warrant agreements. The amended maturity dates for 234,197 and the conversion of the Series A preferred stock in connection therewith, the number of shares issuable upon exercise of the warrants was adjusted to be equal to 10% of the aggregate number of common stock shares issued by the Company upon conversion of 1,336,485 shares of Series A preferred stock (the “Preferred A Adjustment Provision”). In August 2019, the58,845 Preferred A Placement Warrants were ~~amended~~in September 2023 and ~~reissued~~October 2023, respectively. The Company assessed the accounting treatment of the warrant amendments and determined that the ~~total number of warrant shares increased to 242,847.~~amendments are modifications for accounting purposes. The Company determined the modifications had an insignificant impact on the condensed consolidated financial statements.
~~In connection with the IPO, pursuant to~~During March 2023, the Preferred A ~~Adjustment Provision variable settlement provision, the number of~~Lead Investor Warrants for 52,500 shares of common stock ~~subject to~~expired.
During September 2023, the Board approved an additional amendment of 234,197 Preferred A Placement Warrants ~~settled, resulting in an additional 50,195 shares of common stock.~~
~~Preferred A Lead Investor Warrants~~
~~During February 2021, a total of 52,500 warrants~~to extend the maturity date from September 2023 to October 2023 for ~~common stock were issued to advisors to~~each warrant. The Company assessed the ~~Company at a weighted average exercise price of $0.0125 per share. The resulting fair value~~accounting treatment of the ~~warrants~~warrant amendment and determined that the amendment is a modification for ~~common stock is not significant.~~accounting purposes. The Company determined the modification had an insignificant impact on the condensed consolidated financial statements.
~~Preferred B Placement Warrants~~
On April 16, 2019, in connection with the Series B preferred stock offering, the Company issued warrants (“Preferred B Placement Warrants”) to purchase 414,270 shares of its common stock to NSC, Newbridge Securities Corporation, and five individuals at LVP. The Preferred B Placement Warrants have a term of five years and their exercise price is equal to $2.10, the conversion price of Series B preferred stock. The Preferred B Placement Warrants included an adjustment provision pursuant to which upon completion of the IPO, and the conversion of the Series B preferred stock in connection therewith, the number of shares issuable upon exercise of the warrants was adjusted to be equal to 10% of the aggregate number of common stock shares issued by the Company upon conversion of 4,142,270 shares of Series B preferred stock (the “Preferred B Adjustment Provision”).
In connection with the IPO, pursuant to the Preferred B Adjustment Provision variable settlement provision, the number of shares of common stock subject to the Preferred B Placement Warrants settled, resulting in an additional 49,528 shares of common stock.
~~Convertible Note Placement Warrants~~
In connection with the Convertible Notes, the Company issued 10,000 and 214,050 warrants to purchase common stock, to a noteholder and its brokers, respectively. The warrants have a five-year life and were initially exercisable into common stock at $2.97 per share with the warrants ultimately being exercisable into common stock at the final Conversion Price of the Convertible Notes. When the Convertible Notes converted at the IPO date as described in Note 8, the exercise price of the warrants was adjusted to equal the Conversion Price, which is $2.57. During March 2021, 42,220 of these warrants to purchase common stock were cancelled.
1812

Movano Inc.
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022
(Unaudited)
~~Underwriter~~January and February 2023 Warrants
In connection with the ~~IPO,~~sale of common stock during January and February 2023, the Company issued ~~the underwriter a warrant~~warrants to purchase shares of common stock ~~equal~~ to ~~9.79%~~common stockholders and to the underwriter for 2,322,000 and 348,300 shares, respectively. The warrants are exercisable upon issuance at $1.57 per share and have a 5-year term.
Beginning with the one-year anniversary of the issuance dates, the Company may redeem the outstanding warrants in whole or in part at $0.25 per warrant at any time after the date on which (i) the closing price of the Company’s common stock has equaled or exceeded $4.87 for ten consecutive trading days and (ii) the daily trading volume of the Company’s common stock has exceeded 100,000 shares on each of ten trading days. A minimum of thirty days prior written notice of redemption is required.
August 2023 Warrants
In August 2023, the Company issued warrants to purchase 201,613 shares of common stock ~~sold in the IPO or 956,973 shares. The warrant is exercisable at $6.00 per share and has~~to a 5-year term. Additionally, the underwriter has contractually agreed that it will not sell, transfer, assign, pledge, or hypothecate this warrant or the securities underlying this warrant, nor will it engage in any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of this warrant or the underlying securities for a period of 540 days (approximately 18 months) from the IPO. third-party professional services firm.
The following is a summary of the Company’s warrant activity for the nine months ended September 30, 2022:
Warrant Issuance Issuance Exercise
Price Outstanding,
December 31,
2021 Granted Exercised Canceled/
Expired Variable Settlement Provision Adjustment Outstanding,
September 30,
2022 Expiration
Preferred A Placement Warrants March and April 2018 and August 2019 $ 1.40 293,042 — — — — 293,042 March and April 2023
Preferred A Lead Investor Warrants February 2021 $ 0.0125 52,500 — — — — 52,500 March 2023
Preferred B Placement Warrants April 2019 $ 2.10 463,798 — — — — 463,798 April 2024
Convertible Notes Placement Warrants August 2020 $ 2.57 171,830 — — — — 171,830 August 2025
Underwriter Warrants March 2021 $ 6.00 956,973 — — — — 956,973 March 2026
1,938,143 — — — — 1,938,143
Warrant Issuance Issuance Exercise Price Outstanding, December 31, 2021 Granted Exercised Canceled/ Expired Variable Settlement Provision Adjustment Outstanding, September 30, 2022 Expiration
Preferred A Placement Warrants March and April 2018 and August 2019 $ 1.40 293,042 — — — — 293,042 March and April 2023
Preferred A Lead Investor Warrants February 2021 $ 0.0125 52,500 — — — — 52,500 March 2023
Preferred B Placement Warrants April 2019 $ 2.10 463,798 — — — — 463,798 April 2024
Convertible Notes Placement Warrants August 2020 $ 2.57 171,830 — — — — 171,830 August 2025
Underwriter Warrants March 2021 $ 6.00 956,973 — — — — 956,973 March 2026
1,938,143 — — — — — 1,938,143
13
Movano Inc.
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, 2023 and 2022
(Unaudited)
The following is a summary of the Company’s warrant activity for the nine months ended September 30, ~~2021:~~2023:
Warrant Issuance Issuance Exercise Price Outstanding, December 31, 2020 Granted Exercised Canceled/ Expired Variable Settlement Provision Adjustment Outstanding, September 30, 2021 Expiration Issuance Exercise
Price Outstanding,
December 31,
2022 Granted Exercised Canceled/
Expired Variable Settlement Provision Adjustment Outstanding,
September 30,
2023 Expiration
Preferred A Placement Warrants March and April 2018 and August 2019 $ 1.40 242,847 — — — 50,195 293,042 March and April 2023 March and April 2018 and August 2019 $ 1.40 293,042 — — — — 293,042 October 2023
Preferred A Lead Investor Warrants February 2021 $ 0.0125 — 52,500 — — — 52,500 March 2023 February 2021 $ 0.0125 52,500 — — (52,500 ) — — March 2023
Preferred B Placement Warrants April 2019 $ 2.10 414,270 — — — 49,528 463,798 April 2024 April 2019 $ 2.10 463,798 — — — — 463,798 April 2024
Convertible Notes Placement Warrants August 2020 $ 2.57 214,050 — — (42,220 ) — 171,830 August 2025 August 2020 $ 2.57 171,830 — — — — 171,830 August 2025
Underwriter Warrants March 2021 $ 6.00 — 956,973 — — — 956,973 March 2026 March 2021 $ 6.00 956,973 — — — — 956,973 March 2026
January 2023 warrants January 2023 $ 1.57 — 2,322,000 — — — 2,322,000 January 2028
February 2023 warrants February 2023 $ 1.57 — 348,000 — — — 348,000 February 2028
August 2023 warrants August 2023 $ 1.24 — 201,613 — — — 201,613 August 2028
871,167 1,009,473 — (42,220 ) 99,723 1,938,143 1,938,143 2,871,613 — (52,500 ) — 4,757,256
Warrants Classified as Equity
All of the Company’s outstanding warrants are classified as equity instruments since they do not meet the characteristics of a liability or a derivative and are recorded at fair value on the date of issuance.
January and February 2023 Warrants
The warrants are classified as an equity instrument because they are both indexed to the Company’s own stock and classified in stockholders’ equity. The fair value of the warrants was estimated using a Monte Carlo simulation approach. Subsequent changes in fair value are not recognized as long as the warrants continue to be classified in equity. The fair value at the issuance date was calculated utilizing the Monte Carlo univariate pricing model, which simulates a distribution of stock prices for Movano throughout the remaining performance period, based on certain assumptions of stock price behavior.
The following major assumptions were used: (1) the stock price of the Company follows a geometric Brownian motion; (2) the daily stock price for the Company is simulated until the termination date using a volatility estimate based on term-match daily stock price returns of peer companies; and (3) the valuation is done under a risk-neutral framework using the term-matched zero-coupon risk-free interest rate.
1914

Movano Inc.
~~Movano Inc.~~
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022
(Unaudited)
~~Warrants Classified as Liabilities~~
~~Preferred A Placement Warrants and Preferred B Placement Warrants~~
The Preferred A Placement Warrants and Preferred B Placement Warrants were initially classified as a derivative liability because their variable terms did not qualify these as being indexed to the Company’s own common stock and will be measured at fair value on a recurring basis.major inputs were:
As a result of the conversion of the Preferred Stock into common stock in connection with the IPO, and the related impact of the Preferred A Adjustment Provision and the Preferred B Adjustment Provision, the number of warrant shares that are convertible is no longer variable. Accordingly, the Preferred A Placement Warrants and Preferred B Placement Warrants were determined to be indexed to the Company’s own common stock and will no longer be measured at fair value on a recurring basis. Instead, the Preferred A Placement Warrants and the Preferred B Placement Warrants were determined to be equity instruments, and the liability was recorded at fair value with the change in fair value recorded in the condensed consolidated statement of operations and comprehensive loss and reclassified to additional paid-in capital at their estimated fair value at the IPO date.
~~Convertible Notes Placement Warrants~~
The Convertible Notes Placement Warrants were classified as a derivative liability because the exercise price was variable, thus these did not qualify as being indexed to the Company’s own common stock and were measured at fair value on a recurring basis.
As a result of the conversion of the Convertible Notes into common stock in connection with the IPO, the exercise price is no longer variable. Accordingly, the Convertible Notes Placement Warrants were determined to be indexed to the Company’s own common stock and will no longer be measured at fair value on a recurring basis. Instead the Convertible Notes Placement Warrants were determined to be equity instruments, and the liability was recorded at fair value with the change in fair value recorded in the condensed consolidated statement of operations and comprehensive loss and reclassified to additional paid-in capital at their estimated fair value at the IPO date.
20

Issuance
Date
Dividend yield 0 %
Expected volatility 60.83 %
Risk-free interest rate 3.54 %
Expected life 5.0 years
Valuation date common stock price $ 1.39
~~Movano Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~For the three months and nine months ended September 30, 2022 and 2021~~
~~(Unaudited)~~
~~Estimated Fair Value of Outstanding Warrants Classified as Liabilities~~
The ~~estimated fair value of outstanding warrants classified as liabilities is determined at each balance sheet date. Any decrease or increase in the estimated~~ fair value of the ~~warrant liability since~~January and February 2023 warrants at the ~~most recent balance sheet~~issuance date is ~~recorded in the condensed consolidated statements of operations and comprehensive loss as a change in fair value of warrant liability.~~approximately $1.5 million.
~~There were no warrants classified as liabilities outstanding as of September 30, 2022 and December 31, 2021.~~
~~The changes in fair value of the outstanding warrants classified as liabilities for the nine months ended September 30, 2021 were as follows (in thousands):~~August 2023 Warrants
Warrant liability, December 31, 2020 Fair value of warrants granted Fair value of warrants exercised Change in fair value of warrants Reclassified to additional paid-in capital Warrant liability September 30, 2021
Preferred A Placement Warrants $ 518 $         — $       — $ 575 $ (1,093 ) $        —
Preferred B Placement Warrants 708 — — 800 (1,508 ) —
Convertible Notes Placement Warrants 323 — — 206 (529 ) —
$ 1,549 $ — $ — $ 1,581 $ (3,130 ) $ —
~~The fair values of the outstanding warrants accounted for as liabilities at the IPO date are calculated using the Black-Scholes option pricing model with the following assumptions:~~
Black-Scholes Fair Value Assumptions at IPO Date
Warrant Issuance Dividend Yield Expected Volatility Risk-Free Interest Rate Expected Life
Preferred A Placement Warrants — % 59.21 % 0.14 % 2.0 years
Preferred B Placement Warrants — % 58.51 % 0.30 % 3.0 years
Convertible Note Placement Warrants — % 52.28 % 0.82 % 4.4 years
Upon the conversion of the redeemable convertible preferred stock and the Convertible Notes into common stock at the IPO date, the estimated fair value of the outstanding warrants accounted for as liabilities of $3.1 million was reclassified to additional paid-in capital.
~~Warrants Classified as Equity~~
~~Certain~~The warrants are classified as equity instruments since they do not meet the characteristics of a liability or a derivative and are recorded at fair value on the date of issuance using the Black-Scholes option pricing model with the following assumptions. The fair value as determined at the issuance date is recorded as ~~an issuance cost of~~a debit to prepaid expenses and other current assets in the related stock. There were no warrants classified as equity issued during the three and nine months ended September 30, 2022, nor during the three months ended September 30, 2021. Those warrants and thecondensed consolidated balance sheet. The assumptions used to calculate the fair value at issuance are as follows for the warrants issued during the ~~nine~~three months ended September 30, ~~2021:~~2023. There were no warrants issued during the three months ended September 30, 2022.
The major inputs were:
Issuance
Date
Dividend yield 0 %
Expected volatility 57.06 %
Risk-free interest rate 4.42 %
Expected life 5.0 years
Valuation date common stock price $ 1.24
The fair value of August 2023 warrants at the issuance date is approximately $0.1 million.
Black-Scholes Fair Value Assumptions
Warrant Issuance Issuance Date Fair Value (in ooo’s) Dividend Yield Expected Volatility Risk-Free Interest Rate Expected Life
Underwriter Warrants March 2021 $ 2,349 — % 52.58 % 0.82 % 5.0 years
2115

Movano Inc.
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022
(Unaudited)
Note 1110 – Stock-based Compensation
2019 Equity Incentive Plan
Effective as of November 18, 2019, the Company adopted the 2019 Omnibus Incentive Plan (“2019 Plan”) administered by the Board. The 2019 Plan provides for the issuance of incentive stock options, non-statutory stock options, and restricted stock awards, for the purchase of up to a total of 4,000,000 shares of the Company’s common stock to employees, directors, and consultants and replaces the previous plan. The Board or a committee of the Board has the authority to determine the amount, type, and terms of each award. The options granted under the 2019 Plan generally have a contractual term of ten years and a vesting term of four years with a one-year cliff. The exercise price for options granted under the 2019 Plan must generally be at least equal to 100% of the fair value of the Company’s common stock at the date of grant, as determined by the Board. The incentive stock options granted under the 2019 Plan to 10% or greater stockholders must have an exercise price at least equal to 110% of the fair value of the Company’s common stock at the date of grant, as determined by the Board, and have a contractual term of ten years.
~~In connection with the closing of the IPO, effective as of March 25, 2021~~ Subsequent amendments to the 2019 Plan ~~was amended and restated as a result of which~~increased the aggregate number of shares of common stock that may be issued pursuant to the 2019 Plan ~~was increased from 6,000,000 to 7,400,000.~~
~~On April 15, 2022, the Board approved, subject to stockholder approval, an increase in the aggregate number of shares of common stock that may be issued pursuant to the 2019 Plan from 7,400,000~~ to 13,400,000. ~~On June 21, 2022, the stockholders approved this increase.~~
As of September 30, ~~2022,~~2023, the Company had ~~5,046,188~~4,240,204 shares available for future grant pursuant to the 2019 Plan.
2021 Employment Inducement Plan
On September 15, 2021 the Company’s Board adopted the Movano, Inc. 2021 Inducement Award Plan (the “Inducement Plan”) without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Stock Market LLC listing rules (“Rule 5635(c)(4)”). In accordance with Rule 5635(c)(4), awards under the Inducement Plan may only be made to a newly hired employee who has not previously been a member of the Company’s Board, or an employee who is being rehired following a bona fide period of non-employment by the Company or a subsidiary, as a material inducement to the employee’s entering into employment with the Company or its subsidiary. An aggregate of 2,000,000 shares of the Company’s common stock have been reserved for issuance under the Inducement Plan.
During the nine months ended September 30, 2022, awards totaling 1,015,000 were issued under the Inducement Plan. The exercise price was $2.60 per share for 720,000 of the inducement stock option awards and for $2.54 for 295,000 of the inducement stock option awards. All of the inducement stock option awards remain unvested at September 30, 2022.
As of September 30, ~~2022,~~2023, the Company had ~~1,230,000~~1,315,834 shares available for future grant under the Inducement Plan.
22

~~Movano Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~For the three months and nine months ended September 30, 2022 and 2021~~
~~(Unaudited)~~
Stock Options
Stock option activity for the nine months ended September 30, ~~2022~~2023 was as follows (in thousands, except share, per share, and remaining life data):

Number of Options Weighted Average Exercise Price Weighted Average Remaining Life Intrinsic Value
Outstanding at December 31, 2021 5,592,137 $ 2.29 8.6 years $ 9,912
Granted 2,275,000 $ 2.85
Exercised (47,000 ) $ 0.41
Cancelled (435,366 ) $ 3.48
Outstanding at September 30, 2022 7,384,771 $ 2.40 8.4 years $ 6,153
Exercisable as of September 30, 2022 3,615,908 $ 1.64 7.9 years $ 5,097

Vested and expected to vest as of September 30, 2022 7,234,571 $ 2.38 8.4 years $ 6,034
Number of
Options Weighted
Average
Exercise
Price Weighted
Average
Remaining
Life Intrinsic
Value
Outstanding at December 31, 2022 6,919,894 $ 2.34 8.2 years $ 2,034
Granted 1,535,375 $ 1.25
Exercised (245,855 ) $ 0.44
Cancelled (380,348 ) $ 3.21
Outstanding at September 30, 2023 7,829,066 $ 2.16 7.8 years $ 1,390

Exercisable as of September 30, 2023 4,968,590 $ 1.89 7.4 years $ 1,327

Vested and expected to vest as of September 30, 2023 7,778,866 $ 2.17 7.8 years $ 1,354

The weighted-average grant date fair value of options granted during the nine months ended September 30, 2023 and 2022, was $0.75 and ~~2021, was~~ $1.51, ~~and $2.76,~~ respectively. During the nine months ended September 30, 2023 and 2022, 245,855 and ~~2021,~~ 47,000 ~~and 134,531~~ options were exercised for proceeds of ~~$19,000~~$109,000 and ~~$76,000,~~$19,000, respectively. The fair value of the ~~1,370,977~~1,384,174 and ~~598,988~~1,370,977 options that vested during the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 was approximately ~~$2.9~~$2.2 million and ~~$0.4~~$2.9 million, respectively.
16
Movano Inc.
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, 2023 and 2022
(Unaudited)
On June 21, 2022, the Company granted an award of 100,000 options to the Company’s founder at an exercise price of $5.00 per share. The options ~~will vest~~would have vested in full upon the shipment of 20,000 product units on or before June 30, 2023. ~~If the shipments have not occurred by June 30, 2023, the options will be cancelled and forfeited.~~ For the ~~three and~~ nine months ended September 30, ~~2022,~~2023, the Company has not recognized stock compensation expense of approximately ~~$0.1 million~~$100,000 related to this award as the successful achievement of the performance ~~conditions is~~condition was not ~~yet probable.~~probable, and the award has been cancelled.
23

~~Movano Inc.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~For the three months and nine months ended September 30, 2022 and 2021~~
~~(Unaudited)~~
The Company estimated the fair value of stock options using the Black-Scholes option pricing model. The fair value of the stock options was estimated using the following weighted average assumptions for the nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022.

Nine Months Ended
September 30,
2022 2021

Dividend yield — % — %
Expected volatility 61.91 % 67.54 %
Risk-free interest rate 2.63 % 0.76 %
Expected life 6.07 years 6.06 years
Nine Months Ended
September 30,
2023 2022
Dividend yield — % — %
Expected volatility 61.88 % 61.91 %
Risk-free interest rate 3.73 % 2.63 %
Expected life 5.97 years 6.07 years
Dividend Rate—The expected dividend rate was assumed to be zero, as the Company had not previously paid dividends on common stock and has no current plans to do so.
Expected Volatility—The expected volatility was derived from the historical stock volatilities of several public companies within the Company’s industry that the Company considers to be comparable to the business over a period equivalent to the expected term of the stock option grants.
Risk-Free Interest Rate—The risk-free interest rate is based on the interest yield in effect at the date of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the option’s expected term.
Expected Term—The expected term represents the period that the Company’s stock options are expected to be outstanding. The expected term of option grants that are considered to be “plain vanilla” are determined using the simplified method. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options. For other option grants not considered to be “plain vanilla,” the Company determined the expected term to be the contractual life of the options.
Forfeiture Rate—The Company recognizes forfeitures when they occur.
The Company has recorded stock-based compensation expense for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 related to the issuance of stock option awards to employees and nonemployees in the condensed consolidated statement of operations and comprehensive loss as follows (in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30, Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021 2023 2022 2023 2022
Research and development $ 295 $ 217 $ 901 $ 467 $ 228 $ 295 $ 678 $ 901
General and administrative 502 335 1,372 780
Sales, general and administrative 529 502 1,574 1,372
$ 797 $ 552 $ 2,273 $ 1,247 $ 757 $ 797 $ 2,252 $ 2,273
As of September 30, ~~2022,~~2023, unamortized compensation expense related to unvested stock options (excluding the performance award previously ~~described)~~described above) was approximately ~~$8.2~~$5.3 million, which is expected to be recognized over a weighted average period of ~~2.7~~2.2 years.
2417

Movano Inc.
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022
(Unaudited)
Note 1211 – Commitments and Contingencies
Operating Leases
As of September 30, ~~2022,~~2023, the Company had one office lease for the corporate headquarters and laboratory space.
On April 15, 2021, the Company executed a lease agreement for corporate office space. The lease commenced on May 14, 2021 when the improvements were completed by the landlord and the Company had access to the facility. The lease term is 40 months, and the base rent is approximately $14,000 per month for the first twelve months, with subsequent escalation provisions for future months. The Company paid a security deposit of approximately $47,000.
On April 22, 2022, the Company executed an amendment to its corporate office lease agreement for additional corporate office space. The lease term for the additional space is 36 months from the expansion commencement date of June 23, 2022. The base rent is approximately $5,100 per month for the first twelve months, with subsequent escalation provisions for future months. The Company paid an additional security deposit of approximately $5,500.
The balances of the operating lease related accounts as of September 30, 2023 and December 31, 2022 are as follows (in thousands):
Operating leases As of
September 30,
2023 As of
December 31,
2022
Right-of-use assets $ 248 $ 389
Operating lease liabilities - Short-term $ 204 $ 212
Operating lease liabilities - Long-term $ 69 $ 214

On January 1, 2022, the Company adopted ASC 842. Under this new guidance, lessees are required to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases. Upon adoption, the Company recognized ROU assets of $380,000 and corresponding lease liabilities of $429,000 for the one operating lease of the Company at the adoption date.
The components of lease expense and supplemental cash flow information as of and for the three and nine months ended September 30, 2023 and 2022 are as follows (in thousands):
Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022

Lease Cost:
Operating lease cost $ 65 $ 69 $ 193 $ 163

Other Information:
Cash paid for amounts included in the measurement of lease liabilities for the year ended $ 61 $ 59 $ 180 $ 149
Weighted average remaining lease term - operating leases (in years) 1.2 2.2 1.2 2.2
Average discount rate - operating lease 10.00 % 10.00 % 10.00 % 10.00 %
Operating leases As of September 30, 2022
Right-of-use assets $ 433
Operating lease liabilities - Short-term $ 216
Operating lease liabilities - Long-term $ 258
Three Months Ended Nine Months Ended
September 30, 2022 September 30, 2022
Lease Cost:
Operating lease cost $ 69 $ 163

Other Information:
Cash paid for amounts included in the measurement of lease liabilities $ 59 $ 149
Weighted average remaining lease term - operating leases (in years) 2.21 2.21
Average discount rate - operating lease 10.00 % 10.00 %
2518

Movano Inc.
~~Movano Inc.~~
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022
(Unaudited)
Future minimum lease payments for the operating lease are as follows as of September 30, ~~2022~~2023 (in thousands):
2023 $ 61
2024 203
2025 28
Total lease payments 292
Less: Interest (19 )
Total operating lease liability $ 273

2022 $ 59
2023 242
2024 203
2025 27
Total lease payments 531
Less: Interest (57 )
Total operating lease liability $ 474
Rent expense for the three months ended September 30 2022 and 2021 was $69,000 and $57,000, respectively. Rent expense for the nine months ended September 30, 2022 and 2021 was $162,000 and $105,000, respectively.Litigation
~~Litigation~~
From time to time, the Company may become involved in various litigation and administrative proceedings relating to claims arising from its operations in the normal course of business. Management is not currently aware of any matters that may have a material adverse impact on the Company’s business, financial position, results of operations or cash flows.
~~Indemnification~~
Indemnification
The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third party with respect to its technology. The term of these indemnification agreements is generally perpetual after the execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable because it involves claims that may be made against the Company in the future, but have not yet been made. The Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements.
The Company has entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of the individual.
No amounts associated with such indemnifications have been recorded as of September 30, ~~2022.~~2023.
Non-cancelable Obligations
The Company also had approximately $10,000 of non-cancelable contractual commitments as of September 30, 2023, primarily related to its vendor arrangements. These commitments are generally due within one to three months.
2619

Movano Inc.
Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022
(Unaudited)
Note 1312 – NET LOSS PER SHARE ~~ATTRIBUTABLE TO COMMON STOCKHOLDERS~~
The following table ~~computes~~provides the computation of the basic and diluted net loss per share ~~attributable to common stockholders~~ during the three and nine months ended September 30, ~~2022~~2023 and ~~2021 is as follows~~2022 (in thousands, except share and per share data):

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
Numerator:
Net loss and comprehensive loss $ (8,602 ) $ (5,173 ) $ (22,402 ) $ (15,468 )
Accretion and dividends on redeemable convertible preferred stock — - — (2,489 )
Net loss attributable to common stockholders $ (8,602 ) $ (5,173 ) $ (22,402 ) $ (17,957 )
Denominator:
Weighted-average common shares outstanding 32,949,649 32,268,890 32,829,940 24,200,475

Net loss per share attributable to common stockholders, basic and diluted $ (0.26 ) $ (0.16 ) $ (0.68 ) $ (0.74 )
Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
Numerator:
Net loss $ (8,962 ) $ (8,602 ) $ (23,325 ) $ (22,402 )
Denominator:
Weighted average shares used in computing net loss per share, basic and diluted 50,711,449 32,949,649 43,818,011 32,829,940

Net loss per share, basic and diluted $ (0.18 ) $ (0.26 ) $ (0.53 ) $ (0.68 )

The potential shares of common stock that were excluded from the computation of diluted net loss per share ~~attributable to common stockholders~~ for the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 because including them would have been antidilutive are as follows:
Nine Months Ended
September 30,
2022 2021
Non-vested shares under restricted stock grants — 336,666
Shares subject to options to purchase common stock 7,384,771 4,877,637
Shares subject to warrants to purchase common stock 1,938,143 1,938,143
Total 9,322,914 7,152,446

Nine Months Ended
September 30,
2023 2022
Shares subject to options to purchase common stock 7,778,866 7,834,771
Shares subject to warrants to purchase common stock 4,757,256 1,938,143
Total 12,536,122 9,772,914
For the three and nine months ended September 30, ~~2022, performance based option awards for 150,200 shares of common stock, respectively, and for the three and nine months ended September 30, 2021, performance based~~2023, performance-based option awards for 50,200 shares of common stock ~~respectively,~~ are not included in in the table above or considered in the calculation of diluted earnings per share ~~until~~because the performance conditions of the option award are not considered probable by the Company. For the three and nine months ended September 30, 2022, performance-based option awards for 150,200 shares of common stock are not included in the table above or considered in the calculation of diluted earnings per share because the performance conditions of the option award are not considered probable by the Company.
Note 1413 – ~~Subsequent Events~~SUBSEQUENT EVENTS
~~Management~~During November 2023, the Board authorized the Company to undertake a public offering of the Company evaluated events that have occurred after the balance sheet dates through the date these condensed consolidated financial statements were issued. Based upon the review, management did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.
~~On November 9, 2022, the Company approved~~Company’s common stock ~~option awards covering~~in a ~~total~~firm commitment underwritten public offering up to the amount available under the Company’s shelf registration statement in common stock with the number of ~~250,000~~ shares of common stock to ~~non-executive employees.~~be sold, the price at which such shares are sold and other terms to be determined by the designated and authorized pricing committee.
2720

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the “safe harbor” created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “would,” “could,” “seek,” “intend,” “plan,” “goal,” “project,” “estimate,” “anticipate,” “strategy”, “future”, “likely” or other comparable terms and references to future periods. All statements other than statements of historical facts included in this Form 10-Q regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expectations for revenues, cash flows and financial performance, the anticipated results of our development efforts, product features and the timing for receipt of required regulatory approvals and product launches.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:
● our limited operating history and our ability to achieve profitability;
● our ability to continue as a going concern and our need for and ability to obtain additional capital in the future;
● our ability to demonstrate the feasibility of and develop products and their underlying technologies;
● the impact of competitive or alternative products, technologies and pricing;
● ~~the impact of the COVID-19 on our business and local and global economic conditions;~~
● our ability to attract and retain highly qualified personnel;
● our dependence on consultants to assist in the development of our technologies;
● our ability to manage the growth of our Company and to realize the benefits from any acquisitions or strategic alliances we may enter in the future;
● the impact of macroeconomic and geopolitical conditions, including increases in prices caused by rising inflation;
● our dependence on the successful commercialization of ~~our proposed solution;~~the Evie Ring;
● our dependence on third parties to design, manufacture, market and distribute our proposed products;
● the adequacy of protections afforded to us by the patents that we own and the success we may have in, and the cost to us of, maintaining, enforcing and defending those patents;
● our ability to obtain, expand and maintain patent protection in the future, and to protect our non-patented intellectual property;
● the impact of any claims of intellectual property infringement, trade secret misappropriation, product liability, product recalls or other claims;
2821

● our need to secure required FCC, FDA and other regulatory approvals from governmental authorities in United States;
● the impact of healthcare regulations and reform measures;
● the accuracy of our estimates of market size for our ~~planned solution;~~products;
● our ability to implement and maintain effective control over financial reporting and disclosure controls and procedures; ~~and~~
● our success at managing the risks involved in the foregoing items.
The risks included above are not exhaustive. Other important risks and uncertainties are described in the Risk Factors and in Management’s Discussion and Analysis of Financial Condition and Results of Operations sections of ~~the 2021~~our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”) and subsequently filed Quarterly Reports on Form 10-Q. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
Overview
Movano is developing a platform to deliver purpose-driven healthcare solutions atto bring medical-grade, high-quality data to the ~~intersection~~forefront of ~~medical and~~ consumer health devices. ~~Our mission is to make medical-grade data accessible and actionable for everyone.~~
Our proprietary platform uses RF technology, which we believe will enable the creation of low-cost and scalable sensors that are small enough to fit into wearables and other small form factors. Combined with our mobile app and cloud infrastructure, we expect that our platform will provide users with the ability to measure and continuously monitor vital health data and provide actionable feedback to jumpstart changes in behaviors.
Our ~~platform is the foundation for our first~~initial commercial product in development is the Evie Ring, which is a ~~smart ring.~~wearable designed specifically for women. The ~~ring~~Evie Ring combines health and ~~its accompanying app will combine medical-grade data with personalized intelligent feedback and is designed for women~~wellness metrics to give a full picture of ~~all ages, who are traditionally an afterthought when it comes to wearable technology. Once developed,~~one’s health, which we expect ~~the ring will measure~~to include resting heart rate, ~~HRV, sleep, respiration~~heart rate ~~temperature,~~variability (“HRV”), blood oxygen saturation (“SpO₂”), respiration rate, skin temperature variability, period and ovulation tracking, menstrual symptom tracking, activity profile, including steps, active minutes and calories burned, sleep stages and ~~incorporate women-centric features~~duration, and ~~design.~~mood tracking. The device will provide ~~users~~women and their network of caregivers with continuous health data distilled down to simple, yet meaningful, insights to help ~~users~~them make manageable lifestyle changes and take a more proactive approach that could mitigate the risks of chronic disease. ~~A fundamental part~~
We expect to initially launch the Evie Ring as a general wellness device without any FDA premarket clearances, but plan to seek FDA clearances on its vital signs monitoring capabilities which would make it one of the first consumer wearables that offers an FDA cleared device and not only software for medical use. In July of 2023, we filed our ~~corporate development strategy~~first 510(k) submission to the FDA for the Evie Ring’s pulse oximeter to monitor heart and SpO2 data, following a successful pivotal hypoxia trial during the fourth quarter of 2022. The submission has been reviewed with the FDA, and we are corresponding with the FDA to address the review commentary. The FDA clearance of these metrics would ensure confidence of the Evie Ring’s vital signs monitoring capabilities and could make the device attractive for doctors and in clinical trials for patient monitoring.
In addition to the Evie Ring, we are developing the smallest ever patented and proprietary System-on-a-Chip (“SoC”) designed specifically for blood pressure or continuous glucose monitoring (“CGM”) systems. We built the integrated sensor from the ground up with multiple antennas and a variety of frequencies to achieve an unprecedented level of precision in health monitoring. We are currently conducting clinical trials with the SoC and developing algorithms that, if successful, will enable us to develop wearables that can monitor glucose non-invasively and blood pressure without a cuff. Our end goal is to ~~establish one or more strategic partnerships~~bring a Class II FDA-cleared device to the market that ~~would allow us to more fully exploit~~includes CGM and cuffless blood pressure monitoring capabilities. Over time, our technology could also enable the ~~potential~~measurement and continuous monitoring of ~~our technology.~~other health data.
~~On April 28, 2021, the Company established Movano Ireland Limited, organized under the laws of Ireland, as a wholly owned subsidiary of the Company.~~
Financial Operations Overview
We are a development stage company with a limited operating history. To date, we have invested substantially all of our efforts and financial resources into (i) the research and development of the products we are developing, including conducting clinical studies and related sales, general and administrative ~~costs.~~costs, and (ii) the commercialization of our first proposed commercial product, the Evie Ring. To date, we have funded our operations primarily from the sale of our equity securities.
2922

~~Adoption of New Accounting Pronouncement - Leases~~
~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~ (ASC 842) which requires lessees to recognize leases on the balance sheet by recording a right-of-use asset and lease liability. We adopted this new guidance as of January 1, 2022 and applied the modified retrospective approach, whereby prior comparative periods will not be retrospectively presented in the condensed consolidated financial statements. We elected the package of practical expedients not to reassess prior conclusions related to contracts containing leases and lease classification and the lessee practical expedient to combine lease and non-lease components for all asset classes. We made a policy election to not recognize right-of-use assets and lease liabilities for short-term leases for all asset classes. See Note 12 Commitments and Contingencies~~to our condensed consolidated financial statements covered under Part I, Item 1 of this Quarterly Report on Form 10-Q for further details.~~
Upon adoption on January 1, 2022, we recognized right-of-use assets and lease liabilities for operating leases of $380,000 and $429,000, respectively. The difference between the right-of-use asset and lease liability primarily represents the net book value of deferred rent recognized as of December 31, 2021, which was adjusted against the right-of-use asset upon adoption.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material. There have been no material changes in our critical accounting policies and estimates during the three and nine months ended September 30, ~~2022,~~2023, as compared to those disclosed in ~~“Management’s Discussion and Analysis of Financial Condition and~~ the 2022 Form 10-K.
Results of Operations ~~— Critical Accounting Policies and Significant Judgments and Estimates.”~~
30
~~Results of Operations~~
Three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022
Our condensed consolidated statements of operations for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 as discussed herein are presented below.

Three Months Ended September 30, Change Nine Months Ended September 30, Change Three Months Ended
September 30, Change Nine Months Ended
September 30, Change
2022 2021 $ % 2022 2021 $ % 2023 2022 $ % 2023 2022 $ %
(in thousands, except share and per share data) (in thousands, except share and per share data) (in thousands, except share and per share data) (in thousands, except share and per share data)
OPERATING EXPENSES:
Research and development $ 5,146 $ 3,803 $ 1,343 35 % $ 13,849 $ 8,928 $ 4,921 55 % $5,636 $5,146 $490 10 % $13,701 $13,849 $(148) -1 %
General and administrative 3,511 1,376 2,135 155 % 8,592 4,563 4,029 88 %
Sales, general and administrative 3,443 3,511 (68 ) -2 % 9,965 8,592 1,373 16 %
Total operating expenses 8,657 5,179 3,478 (67 )% 22,441 13,491 8,950 66 % 9,079 8,657 422 5 % 23,666 22,441 1,225 5 %

Loss from operations (8,657 ) (5,179 ) (3,478 ) (67 )% (22,441 ) (13,491 ) (8,950 ) (66) % (9,079 ) (8,657 ) (422 ) -5 % (23,666 ) (22,441 ) (1,225 ) -5 %

Other income (expense), net:
Interest expense — — — — (883 ) 883 100 %
Change in fair value of warrant liability — — — — (1,581 ) 1,581 100 %
Change in fair value of derivative liability — — — — 121 (121 ) (100) %
Forgiveness of Paycheck Protection Program Loan — — — — 351 (351 ) 100 %
Interest and other income, net 55 6 49 817 % 39 15 24 160 % 117 55 62 113 % 341 39 302 774 %
Other income (expense), net 55 6 49 (817 )% 39 (1,977 ) 2,016 102 % 117 55 62 113 % 341 39 302 774 %

Net loss $ (8,602 ) $ (5,173 )
$
(3,429 ) (66 )% $ (22,402 ) $ (15,468 ) $ (6,934 ) (45) % $ (8,962 ) $ (8,602 ) $ (360 ) 4 % $ (23,325 ) $ (22,402 ) $ (923 ) -4 %

Research and Development
Research and development expenses totaled ~~$5.1~~$5.6 million and ~~$3.8~~$5.1 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. This increase of ~~$1.3~~$0.5 million was due primarily to an increase in research and laboratory expenses, which was partially offset by lower Company headcount with respect to research and development employees, and lower other professional fees. Research and development expenses for the ~~growth~~three months ended September 30, 2023 included expenses related to employee compensation of ~~the Company~~$1.6 million, other professional fees of $1.6 million, research and ~~its activities~~laboratory expenses of $2.1 million, and ~~increased salary and benefit expenses.~~other expenses of $0.3 million. Research and development expenses for the three months ended September 30, 2022 included expenses related to employee compensation of $2.5 million, other professional fees of $1.9 million, research and laboratory expenses of $0.5 million, and other expenses of $0.2 million. Research and development expenses for the three months ended September 30, 2021 included expenses related to employee compensation of $1.8 million, tolls and equipment expenses of $0.4 million, other professional fees of $1.5 million, and other expenses of $0.1 million.
31
Research and development expenses totaled ~~$13.8~~$13.7 million and ~~$8.9~~$13.8 million for the nine months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively. ~~The increase~~This decrease of ~~$4.9~~$0.1 million was due primarily to lower Company headcount with respect to research and development employees and lower other professional fees, which was partially offset by an increase in research and laboratory expenses. Research and development expenses for the ~~growth~~nine months ended September 30, 2023 included expenses related to employee compensation of ~~the Company~~$5.0 million, other professional fees of $4.1 million, research and ~~its activities.~~laboratory expenses of $3.8 million, and other expenses of $0.8 million. Research and development expenses for the nine months ended September 30, 2022 included expenses related to employee compensation of $7.2 million, other professional fees of $5.0 million, research and laboratory expenses of $1.0 million, and other expenses of $0.6 million. Research and development expenses for the nine months ended September 30, 2021 included expenses related to employee compensation of $4.3 million, tools and equipment expenses of $0.7 million, other professional fees of $3.6 million, rent of $0.1 million, and other expenses of $0.2 million.
23
Sales, General and Administrative
~~General~~Sales, general and administrative expenses totaled ~~$3.5~~$3.4 million and ~~$1.4~~$3.5 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. This ~~increase~~decrease of ~~$2.1~~$0.1 million was due primarily to the ~~growth~~lower Company headcount and administrative activities. Sales, general and administrative expenses for the three months ended September 30, 2023 included expenses related to employee and board of ~~the Company~~director compensation of $1.7 million, professional and ~~its activities. General~~consulting fees of $0.6 million, and other expenses of $1.1 million. Sales, general and administrative expenses for the three months ended September 30, 2022 included expenses related to employee and board of director compensation of $1.6 million, professional and consulting fees of $0.8 million, and other expenses of $1.1 million. General and administrative expenses for the three months ended September 30, 2021 included expenses related to employee and board of director compensation of $0.6 million, professional and consulting fees of $0.4 million, and other expenses of $0.4 million.
~~General~~Sales, general and administrative expenses totaled ~~$8.6~~$10.0 million and ~~$4.6~~$8.6 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. This increase of ~~$4.0~~$1.4 million was due primarily to the growth of the Company and its activities. ~~General~~Sales, general and administrative expenses for the nine months ended September 30, 2023 included expenses related to employee and board of director compensation of $5.1 million, professional and consulting fees of $1.8 million, and other expenses of $3.1 million. Sales, general and administrative expenses for the nine months ended September 30, 2022 included expenses related to employee and board of director compensation of $4.3 million, professional and consulting fees of $2.2 million, and other expenses of $2.1 million. General and administrative expenses for the nine months ended September 30, 2021 included expenses related to employee and board of director compensation of $2.4 million, professional and consulting fees of $1.3 million, and other expenses of $0.9 million.
Loss from Operations
Loss from operations was $9.1 million for the three months ended September 30, 2023, as compared to $8.7 million for the three months ended September 30, ~~2022, as compared to $5.2 million for the three months ended September 30, 2021.~~2022.
Loss from operations was ~~$22.4 million for the nine months ended September30, 2022, as compared to $13.5~~$23.7 million for the nine months ended September 30, ~~2021.~~2023, as compared to $22.4 million for the nine months ended September 30, 2022.
Other Income (Expense), Net
Other income (expense), net for the three months ended September 30, ~~2022~~2023 was a net other income of ~~$55,000~~$117,000 as compared to a net other income of ~~$6,000~~$55,000 for the three months ended September 30, ~~2021.~~ 2022.
Other income (expense), net for the nine months ended September 30, ~~2022~~2023 was a net other income of ~~$39,000~~$341,000 as compared to a net other ~~expense~~income of ~~$2.0 million~~$39,000 for the nine months ended September 30, 2021. Other income (expense), net for the nine months ended September 30, 2021 included interest expense of $0.9 million related to the accrual of interest and amortization of debt discounts on the convertible promissory notes, $1.6 million related to the change in fair value of the warrant liability, $0.1 million related to the change in the fair value of the derivative liability, and forgiveness of the Paycheck Protection Program Loan of $0.4 million.2022.
32

Net Loss
As a result of the foregoing, net loss was $9.0 million for the three months ended September 30, 2023, as compared to $8.6 million for the three months ended September 30, ~~2022, as compared to $5.2 million for the three months ended September 30, 2021.~~  2022.
As a result of the foregoing, net loss was $23.3 million for the nine months ended September 30, 2023, as compared to $22.4 million for the nine months ended September 30, ~~2022, as compared to $15.5 million for the nine months ended September 30, 2021.~~2022.
Liquidity and Capital Resources
At September 30, ~~2022,~~2023, we had cash and cash equivalents ~~and short-term investments~~ totaling ~~$16.8~~$7.7 million. During the nine months ended September 30, ~~2022, the Company~~2023, we used ~~$18.6~~$20.9 million of cash in our operating activities. ~~The~~Our cash and ~~short-term investments~~cash equivalents are ~~not~~ expected to be sufficient to enable us to complete the development and ~~commercialization~~initial commercial launch of our first proposed ~~planned solution.~~ commercial product, the Evie Ring. However, our cash and cash equivalents are not expected to be sufficient to fund our operations for the next twelve months after the date these condensed consolidated financial statements are issued.
In August 2022, we entered into an at-the-market issuance (“ATM”) agreement with B. Riley Securities Inc., or B. Riley, to sell shares of our common stock for aggregate gross proceeds of up to $50.0 million, from time to time, through an ATM equity offering program under which B. Riley acts as sales agent. During the ~~three~~nine months ended September 30, ~~2022,~~2023, the Company sold an aggregate of ~~674,191~~2,360,036 shares of common stock through the ATM program for proceeds of approximately ~~$1.9~~$3.1 million, net of commissions paid. Approximately $44.5 million remains available on the ATM equity offering program at September 30, 2023.
24
We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. We anticipate that our expenses will increase substantially as we:
● advance the engineering design and development of ~~our proposed wearable~~the Evie Ring and other potential products;
● prepare applications required for marketing approval of ~~our proposed planned solution~~the Evie Ring in the United States;
● develop our plans for manufacturing, distributing and marketing ~~our proposed wearable~~the Evie Ring and other potential products; and
● add operational, financial and management information systems and personnel, including personnel to support our product development, planned commercialization efforts and our operation as a public company.
Until we can generate a sufficient amount of revenue from our planned products, if ever, we expect to finance future cash needs through public or private equity offerings, debt financings or corporate collaborations and licensing arrangements. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate one or more of our research or development programs or our commercialization ~~efforts.~~efforts or it may become impossible for us to remain in operation. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional dilution, and debt financing, if available, may involve restrictive covenants. To the extent that we raise additional funds through collaborations and licensing arrangements, it may be necessary to relinquish some rights to our technologies or applications or grant licenses on terms that may not be favorable to us. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time.
These circumstances raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. Our condensed consolidated financial statements do not include adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. Our ability to continue as a going concern depends on our ability to raise additional capital ~~through the sale of equity or debt securities~~as described above to support our future operations.
33
The following table summarizes our cash flows for the periods indicated (in thousands):

Nine Months Ended September, Nine Months Ended
September 30,
2022 2021 2023 2022

Net cash used in operating activities $ (18,590 ) $ (11,067 ) $ (20,928 ) $ (18,590 )
Net cash provided by (used in) investing activities 14,920 (22,605 )
Net cash provided by / (used in) investing activities (51 ) 14,920
Net cash provided by financing activities 1,940 45,095 17,889 1,940
Net (decrease) increase in cash and cash equivalents $ (1,730 ) $ 11,423
Net decrease in cash and cash equivalents $ (3,090 ) $ (1,730 )
Operating Activities
During the nine months ended September 30, ~~2022,~~2023, the Company used cash of ~~$18.6~~$20.9 million in operating activities, as compared to ~~$11.1~~$18.6 million used in operating activities during the nine months ended September 30, ~~2021.~~2022.
The $20.9 million used in operating activities during the nine months ended September 30, 2023 was primarily attributable to our net loss of $23.3 million during the period. The net loss was offset by non-cash items, including stock-based compensation of $2.3 million and depreciation of $0.1 million.

The $18.6 million used in operating activities during the nine months ended September 30, 2022 was primarily attributable to our net loss of $22.4 million during the period and changes in our operating assets and liabilities totaling $1.3 million. These items were offset by non-cash items, including stock-based compensation of $2.3 million, depreciation of $0.1 million, and accretion of discount on short-term investments of $0.1 million.
~~The $11.1 million used in operating activities during~~Investing Activities
During the nine months ended September 30, ~~2021 was primarily attributable to our net loss~~2023 the Company used cash of ~~$15.5 million during the period~~$51,000 in investing activities, consisting of purchases of property and changes in our operating assets and liabilities totaling $0.9 million. These items were offset by non-cash items, including stock-based compensation of $1.2 million, accretion of the debt discount on our convertible promissory notes of $0.8 million, the forgiveness of our PPP loan of $0.4 million, accrued interest on our convertible promissory notes of $0.1 million, accretion of discount on short-term investments of $0.1 million, compensation of nonemployee services upon the issuance of common stock of $0.1 million, the change in the fair value of the derivative liability of $0.1 million and the change in the fair value of the warrant liability of $1.6 million.equipment.
~~Investing Activities~~
During the nine months ended September 30, 2022 the Company was provided cash of $14.9 million in investing activities, consisting primarily of $15.0 million from maturities of short-term investments and offset by purchases of property and equipment of $0.1 million.
25
Financing Activities
During the nine months ended September 30, ~~2021~~2023, the Company ~~used~~was provided cash of ~~$22.6~~$17.9 million which included net proceeds of $6.7 million and $8.1 million from the issuance of common stock in ~~investing activities, consisting~~public offerings in February 2023 and June 2023, respectively, net proceeds of ~~$23.3~~$3.1 million ~~in purchases~~from the issuance of ~~marketable securities~~common stock through the ATM equity offering program and ~~$0.3~~$0.1 million ~~for~~from the ~~purchase~~issuance of ~~office and laboratory equipment, offset by maturities~~common stock upon the exercise of ~~short-term investments of $1.0 million.~~common stock options.
~~Financing Activities~~
During the nine months ended September 30, 2022, the Company was provided cash of $1.9 million from the issuance of common stock, after issuance costs of $0.1 million.
During the nine months ended September 30, 2021, the Company was provided cash of $45.1 million from financing activities, comprised of $45.0 million from the net proceeds of our initial public offering and $0.1 million from the issuance of common stock.
Off-Balance Sheet Transactions
At September 30, ~~2022,~~2023, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.
Non-cancelable Obligations
The Company also had approximately $10,000 of non-cancelable contractual commitments as of September 30, 2023, primarily related to its vendor arrangements. These commitments are generally due within one to three months.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item 3.
34
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We are responsible for maintaining disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Based on our management’s evaluation (with the participation of our principal executive officer and our principal financial officer) of our disclosure controls and procedures as required by Rule 13a-15 under the Exchange Act, our principal executive officer and our principal financial officer have concluded that, due to the previously identified material weakness in our internal controls over financial reporting that is described below, our disclosure controls and procedures were not effective as of September 30, ~~2022,~~2023, the end of the period covered by this report.
26
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. WeAs previously disclosed in our 2022 Form 10-K, we identified one material weakness in our internal control over financial reporting at ~~September 30,~~December 31, 2022 related to ineffective design and operation of our financial close and reporting controls. Specifically, we did not design and maintain effective controls over certain account reviews and analyses and certain information technology general controls. Although we are making efforts to remediate these issues, these efforts may not be sufficient to avoid similar material weaknesses in the future.
Inherent Limitations on Effectiveness of Controls
Our management, including our principal executive officer and our principal financial officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of control effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the nine months ended September 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
3527

PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently a party to any pending legal proceedings that we believe will have a material adverse effect on our business or financial condition. We may, however, be subject to various claims and legal actions arising in the ordinary course of business from time to time.
Item 1A. Risk Factors
We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in this report, the risks and uncertainties that we believe are most important for you to consider are discussed in Part I, “Item 1A. Risk Factors” in the ~~2021~~2022 Form ~~10-K. There have been no material changes to the risk factors described in the 2021~~10-K and subsequently filed Quarterly Reports on Form ~~10-K.~~10-Q.
Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
~~Use~~On August 16, 2023, we issued warrants to purchase 201,613 shares of ~~Proceeds from Initial Public Offering~~our common stock to a third-party professional services firm for services pursuant to an engagement letter with such service provider. The warrants have an exercise price of $1.24 per share, with a term of five years. The warrants were issued in a private placement pursuant to Regulation D promulgated under the Securities Act of 1933, as amended.
In connection with the IPO, on March 22, 2021, our Registration Statement on Form S-1, as amended (Reg. No. 333-252671) was declared effective by the SEC and, on March 23, 2021, our Registration Statement on Form S-1 (Reg. No. 333-254602) became effective upon filing with the SEC.
~~There has been no material change in the planned use of proceeds from the Offering as described in the prospectus for the Offering.~~
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
~~Not applicable.~~

Securities Trading Plans of Directors and Executive Officers
During the three months ended September 30, 2023, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
3628

Item 6. Exhibits
Exhibit
Number Description
3.1 Third Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the ~~Company’s~~Registrant’s Current Report on Form 8-K filed on March 25, 2021)
3.2 Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on June 21, 2023)
3.3 Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the ~~Company’s~~Registrant’s Current Report on Form 8-K filed on March 25, 2021)
4.1 Specimen Certificate representing shares of common stock of the Registrant (incorporated by reference to Exhibit 4.1 to the ~~Company’s~~Registrant’s Registration Statement on Form S-1 filed on March 10, 2021)
~~4.2~~ ~~Form of Underwriter Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1 filed on March 10, 2021)~~
~~4.3~~ Form of Amended and Restated Warrant to Purchase Common Stock issued to the placement agent in the Registrant’s 2018 private placement offering (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-1 filed on February 2, 2021)
~~4.4~~ Form of Amended and Restated Warrant to Purchase Common Stock issued to the placement agent in the Registrant’s 2019 private placement offering (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-1 filed on February 2, 2021)
~~4.6~~ ~~Form of Warrant to Purchase Common Stock issued in 2020 (incorporated by reference to Exhibit 4.6 to the Company’s Registration Statement on Form S-1 filed on February 2, 2021)~~
31.1 Certification of Periodic Report by Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14a and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2 Certification of Periodic Report by Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14a and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1 Certification of Periodic Report by Chief Executive Officer and Chief Financial Officer pursuant to ~~U.S.C.~~U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101.INS Inline XBRL Instance Document (filed herewith)
101.SCH Inline XBRL Taxonomy Extension Schema Document (filed herewith)
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith)
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
3729

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MOVANO INC.
Date: November 14, ~~2022~~2023 By: /s/ John Mastrototaro
John Mastrototaro
Chief Executive Officer
(Principal Executive Officer)
MOVANO INC.
Date: November 14, ~~2022~~2023 By: /s/ J. Cogan
J. Cogan
Chief Financial Officer
(Principal Financial and Accounting Officer)
3830

~~0.16~~0.18 0.26 0.53 0.68 ~~0.74 24200475 32268890~~ 32829940 32949649 43818011 50711449 32829940 32949649 43818011 50711449 0.18 0.26 0.53 0.68 false --12-31 Q3 0001734750 iso4217:USD xbrli:shares

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
OPERATING EXPENSES:
Research and development	$	5,146		$	3,803		$	13,849		$	8,928
General and administrative		3,511			1,376			8,592			4,563
Total operating expenses		8,657			5,179			22,441			13,491

Loss from operations		(8,657	)		(5,179	)		(22,441	)		(13,491	)

Other income (expense), net:
Interest expense		—			—			—			(883	)
Change in fair value of warrant liability		—			—			—			(1,581	)
Change in fair value of derivative liability		—			—			—			121
Forgiveness of Paycheck Protection Program Loan		—			—			—			351
Interest and other income, net		55			6			39			15
Other income (expense), net		55			6			39			(1,977	)

Net loss		(8,602	)		(5,173	)		(22,402	)		(15,468	)

Accretion and dividends on redeemable convertible preferred stock		—			—			—			(2,489	)
Net loss attributable to common stockholders	$	(8,602	)	$	(5,173	)	$	(22,402	)	$	(17,957	)

Net loss	$	(8,602	)	$	(5,173	)	$	(22,402	)	$	(15,468	)
Other comprehensive loss:
Change in unrealized gain (loss) on available-for-sale securities		7			(2	)		(3	)		(3	)
Total comprehensive loss	$	(8,595	)	$	(5,175	)	$	(22,405	)	$	(15,471	)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.26	)	$	(0.16	)	$	(0.68	)	$	(0.74	)

Weighted average shares used in computing net loss per share attributable to common stockholders, basic and diluted		32,949,649			32,268,890			32,829,940			24,200,475


	Redeemable Convertible Preferred Stock
	Series A						Series B						Common Stock				Additional Paid-In			Other Comprehensive			Accumulated			Total Stockholders’
Three Months Ended September 30, 2022	Shares			Amount			Shares			Amount			Shares		Amount		Capital			Loss			Deficit			Equity
Balance at June 30, 2022		—		$	—			—		$	—			32,818,060	$	3	$	99,077		$	(15	)	$	(78,569	)	$	20,497
Stock-based compensation		—			—			—			—			—		—		797			—			—			797
Issuance of common stock, net of issuance costs		—			—			—			—			673,191		—		1,921			—			—			1,921
Issuance of common stock upon exercise of options		—			—			—			—			1,000		—		—			—			—			—
Vesting of early exercised stock options		—			—			—			—			—		—		34			—			—			34
Other comprehensive gain		—			—			—			—			—		—		—			10			—			10
Net loss		—			—			—			—			—		—		—			—			(8,602	)		(8,602	)
Balance at September 30, 2022		—		$	—			—		$	—			33,492,251	$	3	$	101,829		$	(5	)	$	(87,170	)	$	14,657

	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
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 Preferred Stock																Additional			Other						Total
	Series A						Series B						Common Stock				Paid-In			Comprehensive			Accumulated			Stockholders’
Nine Months Ended September 30, 2022	Shares			Amount			Shares			Amount			Shares		Amount		Capital			Loss			Deficit			Equity
Balance at December 31, 2021		—		$	—			—		$	—			32,772,060	$	3	$	97,506		$	(11	)	$	(64,768	)	$	32,730
Stock-based compensation		—			—			—			—			—		—		2,273			—			—			2,273
Issuance of common stock, net of issuance costs		—			—			—			—			673,191		—		1,921			—			—			1,921
Issuance of common stock upon exercise of options		—			—			—			—			47,000		—		19			—			—			19
Vesting of early exercised stock options		—			—			—			—			—		—		110			—			—			110
Other comprehensive gain		—			—			—			—			—		—		—			6			—			6
Net loss		—			—			—			—			—		—		—			—			(22,402	)		(22,402	)
Balance at September 30, 2022		—		$	—			—		$	—			33,492,251	$	3	$	101,829		$	(5	)	$	(87,170	)	$	14,657

	Redeemable Convertible Preferred Stock																Additional			Other						Total Stockholders’
	Series A						Series B						Common Stock				Paid-In			Comprehensive			Accumulated			Equity
Nine Months Ended September 30, 2021	Shares			Amount			Shares			Amount			Shares		Amount		Capital			Loss			Deficit			(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, net of issuance costs		(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

	September 30, 2023
	Fair Value		Level 1		Level 2		Level 3

Cash equivalents:
Money market funds	$	7,090	$	7,090	$	—	$	—
Total cash equivalents	$	7,090	$	7,090	$	—	$	—

	December 31, 2022
	Fair Value		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	8,171	$	8,171	$	—	$	—
Total cash equivalents	$	8,171	$	8,171	$	—	$	—

	September 30, 2022
	Fair Value		Level 1		Level 2		Level 3

Cash equivalents:
Money market funds	$	11,550	$	11,550	$	—	$	—
Total cash equivalents	$	11,550	$	11,550	$	—	$	—

Short-term investments:
Corporate notes	$	822	$	—	$	822	$	—
Total short-term investments	$	822	$	—	$	822	$	—

	December 31, 2021
	Fair Value		Level 1		Level 2		Level 3

Cash equivalents:
Money market funds	$	16,830	$	16,830	$	—	$	—
Total cash equivalents	$	16,830	$	16,830	$	—	$	—

Short-term investments:
Certificate of deposit	$	250	$	—	$	250	$	—
Commercial paper		2,210		—		2,210		—
Corporate notes		12,024		—		12,024		—
Municipal bonds		1,437		—		1,437		—
Total short-term investments	$	15,921	$	—	$	15,921	$	—

	September 30,
	2022

Due within one year	$	822
Due after one year through five years		-
Total	$	822

	September 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Aggregate Estimated Fair Value
Short-term investments:
Corporate notes	$	827	$	-	$	(5	)	$	822
Total short-term investments	$	827	$	-	$	(5	)	$	822

	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Aggregate Estimated Fair Value
Short-term investments:
Certificate of deposit	$	250	$	—	$	—		$	250
Commercial paper		2,210		—		—			2,210
Corporate notes		12,035		—		(11	)		12,024
Municipal bonds		1.437		—		—			1,437
Total short-term investments	$	15,932	$	—	$	(11	)	$	15,921

~~Conversion Event~~	~~Description~~	~~Conversion Price~~
~~Automatic Conversion – Next Qualified Equity Financing~~	Upon the closing of a Next Qualified Equity Financing (defined as greater than $5,000,000), the Convertible Notes are converted into shares issued equal to the outstanding balance divided by the Conversion Price.	An amount equal to the lower of (i) 80% of the lowest per-share selling price of such stock sold by the Company at the Next Qualified Equity Financing or (ii) the implied per share price determined by dividing $60,000,000 by the total number of Common Stock Equivalents (defined as fully diluted common shares for all outstanding securities, excluding common shares reserved for issuance or exercise of options or grants in the future) immediately prior to Next Qualified Equity Financing closing.

~~Automatic Conversion – Change of Control (defined as consolidation or merger of the Company or transfer of a majority of share ownership or disposition of substantially all assets of the Company)~~	If at any time before payment or conversion of the balance, the Company effects a Change of Control, all of the balance outstanding immediately prior to such Change of Control will automatically convert into the most senior series of Preferred Stock outstanding immediately prior to such Change of Control at the Conversion Price.	~~An amount equal to the implied per share price determined by dividing $60,000,000 by the total number of Common Stock Equivalents immediately prior to such Change of Control.~~

~~Automatic Conversion – Maturity Date~~	If the Company has not paid or otherwise converted the entire balance before the Maturity Date, then on the Maturity Date, all of the balance then outstanding will automatically convert into the most senior series of Preferred Stock outstanding as of the Maturity Date at the Conversion Price then in effect.	~~An amount equal to the implied per share price determined by dividing $60,000,000 by the total number of Common Stock Equivalents as of the Maturity Date.~~

~~Automatic Conversion – IPO~~	If at any time before payment or conversion of the balance, the Company consummates an IPO, all of the balance outstanding immediately prior to the IPO will automatically convert into Common Stock at the Conversion Price.	An amount equal to the lower of (i) 80% of the lowest per-share selling price of the Common Stock sold by the Company in an IPO or (ii) the implied per share price determined by dividing $60,000,000 by the total number of Common Stock Equivalents immediately prior to closing of an IPO.

~~Optional Conversion~~	If at any time while the Convertible Notes are still outstanding the Company sells stock in a single transaction or in a series of related transactions that does not constitute a Next Qualified Equity Financing (and thus is defined as a Non-qualified Financing), then, at the closing of the Nonqualified Financing, the balance then outstanding may be converted, at the option of the holder, into that number of shares of Non-qualified Preferred Stock (preferred stock sold in the Non-qualified Financing) determined by dividing (i) the balance by (ii) the Conversion Price then in effect.	~~An amount equal to the lowest per share selling price of Nonqualified Preferred Stock sold by the Company for new cash investment in the Non-Qualified Financing.~~

	December 31,		Fair Value at		Change in			September 30,
Warrant Issuance	2020		issuance date		fair value			2021
Derivative liability	$	121		—		(121	)	$	—

	September 30,
	~~2022~~2023
Warrants to purchase common stock		~~1,938,143~~4,757,256
Stock options outstanding		~~7,384,771~~7,829,066
Stock options available for future grants		~~6,276,188~~5,556,038
Total		~~15,599,102~~18,142,360

Warrant Issuance	Issuance	Exercise Price		Outstanding, December 31, 2021		Granted		Exercised		Canceled/ Expired		Variable Settlement Provision Adjustment		Outstanding, September 30, 2022		Expiration
Preferred A Placement Warrants	March and April 2018 and August 2019	$	1.40		293,042		—		—		—		—		293,042	March and April 2023
Preferred A Lead Investor Warrants	February 2021	$	0.0125		52,500		—		—		—		—		52,500	March 2023
Preferred B Placement Warrants	April 2019	$	2.10		463,798		—		—		—		—		463,798	April 2024
Convertible Notes Placement Warrants	August 2020	$	2.57		171,830		—		—		—		—		171,830	August 2025
Underwriter Warrants	March 2021	$	6.00		956,973		—		—		—		—		956,973	March 2026
					1,938,143		—		—		—		—		1,938,143

Warrant Issuance	Issuance		Exercise Price		Outstanding, December 31, 2021		Granted		Exercised		Canceled/ Expired			Variable Settlement Provision Adjustment		Outstanding, September 30, 2022		Expiration
Preferred A Placement Warrants		March and April 2018 and August 2019	$	1.40		293,042		—		—		—			—		293,042		March and April 2023
Preferred A Lead Investor Warrants		February 2021	$	0.0125		52,500		—		—		—			—		52,500		March 2023
Preferred B Placement Warrants		April 2019	$	2.10		463,798		—		—		—			—		463,798		April 2024
Convertible Notes Placement Warrants		August 2020	$	2.57		171,830		—		—		—			—		171,830		August 2025
Underwriter Warrants		March 2021	$	6.00		956,973		—		—		—			—		956,973		March 2026
						1,938,143		—		—		—	—		—		1,938,143

Warrant Issuance	Issuance		Exercise Price		Outstanding, December 31, 2020		Granted		Exercised		Canceled/ Expired			Variable Settlement Provision Adjustment		Outstanding, September 30, 2021		Expiration		Issuance	Exercise Price		Outstanding, December 31, 2022		Granted		Exercised		Canceled/ Expired			Variable Settlement Provision Adjustment		Outstanding, September 30, 2023		Expiration
Preferred A Placement Warrants		March and April 2018 and August 2019	$	1.40		242,847		—		—		—			50,195		293,042		March and April 2023	March and April 2018 and August 2019	$	1.40		293,042		—		—		—			—		293,042	October 2023
Preferred A Lead Investor Warrants		February 2021	$	0.0125		—		52,500		—		—			—		52,500		March 2023	February 2021	$	0.0125		52,500		—		—		(52,500	)		—		—	March 2023
Preferred B Placement Warrants		April 2019	$	2.10		414,270		—		—		—			49,528		463,798		April 2024	April 2019	$	2.10		463,798		—		—		—			—		463,798	April 2024
Convertible Notes Placement Warrants		August 2020	$	2.57		214,050		—		—		(42,220	)		—		171,830		August 2025	August 2020	$	2.57		171,830		—		—		—			—		171,830	August 2025
Underwriter Warrants		March 2021	$	6.00		—		956,973		—		—			—		956,973		March 2026	March 2021	$	6.00		956,973		—		—		—			—		956,973	March 2026
January 2023 warrants																				January 2023	$	1.57		—		2,322,000		—		—			—		2,322,000	January 2028
February 2023 warrants																				February 2023	$	1.57		—		348,000		—		—			—		348,000	February 2028
August 2023 warrants																				August 2023	$	1.24		—		201,613		—		—			—		201,613	August 2028
						871,167		1,009,473		—		(42,220	)		99,723		1,938,143							1,938,143		2,871,613		—		(52,500	)		—		4,757,256

	Issuance Date
Dividend yield		0	%
Expected volatility		60.83	%
Risk-free interest rate		3.54	%
Expected life		5.0 years
Valuation date common stock price	$	1.39

	Warrant liability, December 31, 2020		Fair value of warrants granted		Fair value of warrants exercised		Change in fair value of warrants		Reclassified to additional paid-in capital			Warrant liability September 30, 2021
Preferred A Placement Warrants	$	518	$	—	$	—	$	575	$	(1,093	)	$	—
Preferred B Placement Warrants		708		—		—		800		(1,508	)		—
Convertible Notes Placement Warrants		323		—		—		206		(529	)		—
	$	1,549	$	—	$	—	$	1,581	$	(3,130	)	$	—

	Black-Scholes Fair Value Assumptions at IPO Date
Warrant Issuance	Dividend Yield		Expected Volatility			Risk-Free Interest Rate			Expected Life
Preferred A Placement Warrants	—	%		59.21	%		0.14	%	2.0 years
Preferred B Placement Warrants	—	%		58.51	%		0.30	%	3.0 years
Convertible Note Placement Warrants	—	%		52.28	%		0.82	%	4.4 years

	Black-Scholes Fair Value Assumptions
Warrant Issuance	Issuance Date	Fair Value (in ooo’s)		Dividend Yield		Expected Volatility			Risk-Free Interest Rate			Expected Life
Underwriter Warrants	March 2021	$	2,349	—	%		52.58	%		0.82	%	5.0 years

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Life		Intrinsic Value
Outstanding at December 31, 2021		5,592,137		$	2.29		8.6 years	$	9,912
Granted		2,275,000		$	2.85
Exercised		(47,000	)	$	0.41
Cancelled		(435,366	)	$	3.48
Outstanding at September 30, 2022		7,384,771		$	2.40		8.4 years	$	6,153
Exercisable as of September 30, 2022		3,615,908		$	1.64		7.9 years	$	5,097

Vested and expected to vest as of September 30, 2022		7,234,571		$	2.38		8.4 years	$	6,034

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Life		Intrinsic Value
Outstanding at December 31, 2022		6,919,894		$	2.34		8.2 years	$	2,034
Granted		1,535,375		$	1.25
Exercised		(245,855	)	$	0.44
Cancelled		(380,348	)	$	3.21
Outstanding at September 30, 2023		7,829,066		$	2.16		7.8 years	$	1,390

Exercisable as of September 30, 2023		4,968,590		$	1.89		7.4 years	$	1,327

Vested and expected to vest as of September 30, 2023		7,778,866		$	2.17		7.8 years	$	1,354

Operating leases	As of September 30, 2023		As of December 31, 2022
Right-of-use assets	$	248	$	389
Operating lease liabilities - Short-term	$	204	$	212
Operating lease liabilities - Long-term	$	69	$	214

Operating leases	As of September 30, 2022
Right-of-use assets	$	433
Operating lease liabilities - Short-term	$	216
Operating lease liabilities - Long-term	$	258

	Three Months Ended			Nine Months Ended
	September 30, 2022			September 30, 2022
Lease Cost:
Operating lease cost	$	69		$	163

Other Information:
Cash paid for amounts included in the measurement of lease liabilities	$	59		$	149
Weighted average remaining lease term - operating leases (in years)		2.21			2.21
Average discount rate - operating lease		10.00	%		10.00	%

2023	$	61
2024		203
2025		28
Total lease payments		292
Less: Interest		(19	)
Total operating lease liability	$	273

	Nine Months Ended September 30,
	2022		2021
Non-vested shares under restricted stock grants		—		336,666
Shares subject to options to purchase common stock		7,384,771		4,877,637
Shares subject to warrants to purchase common stock		1,938,143		1,938,143
Total		9,322,914		7,152,446

	●	our limited operating history and our ability to achieve profitability;

	●	our ability to continue as a going concern and our need for and ability to obtain additional capital in the future;

	Three Months Ended September 30,						Change						Nine Months Ended September 30,						Change						Three Months Ended September 30,						Change						Nine Months Ended September 30,						Change
	2022			2021			$			%			2022			2021			$			%			2023			2022			$			%			2023			2022			$			%
	(in thousands, except share and per share data)												(in thousands, except share and per share data)												(in thousands, except share and per share data)												(in thousands, except share and per share data)
OPERATING EXPENSES:
Research and development	$	5,146		$	3,803		$	1,343			35	%	$	13,849		$	8,928		$	4,921			55	%	$5,636			$5,146			$490			10		%	$13,701			$13,849			$(148)			-1		%
General and administrative		3,511			1,376			2,135			155	%		8,592			4,563			4,029			88	%
Sales, general and administrative																										3,443			3,511			(68	)		-2	%		9,965			8,592			1,373			16	%
Total operating expenses		8,657			5,179			3,478			(67	)%		22,441			13,491			8,950			66	%		9,079			8,657			422			5	%		23,666			22,441			1,225			5	%

Loss from operations		(8,657	)		(5,179	)		(3,478	)		(67	)%		(22,441	)		(13,491	)		(8,950	)		(66)	%		(9,079	)		(8,657	)		(422	)		-5	%		(23,666	)		(22,441	)		(1,225	)		-5	%

Other income (expense), net:
Interest expense		—			—			—						—			(883	)		883			100	%
Change in fair value of warrant liability		—			—			—						—			(1,581	)		1,581			100	%
Change in fair value of derivative liability		—			—			—						—			121			(121	)		(100)	%
Forgiveness of Paycheck Protection Program Loan		—			—			—						—			351			(351	)		100	%
Interest and other income, net		55			6			49			817	%		39			15			24			160	%		117			55			62			113	%		341			39			302			774	%
Other income (expense), net		55			6			49			(817	)%		39			(1,977	)		2,016			102	%		117			55			62			113	%		341			39			302			774	%

Net loss	$	(8,602	)	$	(5,173	)	$	(3,429	)		(66	)%	$	(22,402	)	$	(15,468	)	$	(6,934	)		(45)	%	$	(8,962	)	$	(8,602	)	$	(360	)		4	%	$	(23,325	)	$	(22,402	)	$	(923	)		-4	%

	Nine Months Ended September,						Nine Months Ended September 30,
	2022			2021			2023			2022

Net cash used in operating activities	$	(18,590	)	$	(11,067	)	$	(20,928	)	$	(18,590	)
Net cash provided by (used in) investing activities		14,920			(22,605	)
Net cash provided by / (used in) investing activities								(51	)		14,920
Net cash provided by financing activities		1,940			45,095			17,889			1,940
Net (decrease) increase in cash and cash equivalents	$	(1,730	)	$	11,423
Net decrease in cash and cash equivalents							$	(3,090	)	$	(1,730	)

Exhibit Number		Description
3.1		Third Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the ~~Company’s~~Registrant’s Current Report on Form 8-K filed on March 25, 2021)
3.2		Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on June 21, 2023)
3.3		Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the ~~Company’s~~Registrant’s Current Report on Form 8-K filed on March 25, 2021)
4.1		Specimen Certificate representing shares of common stock of the Registrant (incorporated by reference to Exhibit 4.1 to the ~~Company’s~~Registrant’s Registration Statement on Form S-1 filed on March 10, 2021)
~~4.2~~		~~Form of Underwriter Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1 filed on March 10, 2021)~~
~~4.3~~		Form of Amended and Restated Warrant to Purchase Common Stock issued to the placement agent in the Registrant’s 2018 private placement offering (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-1 filed on February 2, 2021)
~~4.4~~		Form of Amended and Restated Warrant to Purchase Common Stock issued to the placement agent in the Registrant’s 2019 private placement offering (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-1 filed on February 2, 2021)
~~4.6~~		~~Form of Warrant to Purchase Common Stock issued in 2020 (incorporated by reference to Exhibit 4.6 to the Company’s Registration Statement on Form S-1 filed on February 2, 2021)~~
31.1		Certification of Periodic Report by Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14a and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2		Certification of Periodic Report by Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14a and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1		Certification of Periodic Report by Chief Executive Officer and Chief Financial Officer pursuant to ~~U.S.C.~~U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101.INS		Inline XBRL Instance Document (filed herewith)
101.SCH		Inline XBRL Taxonomy Extension Schema Document (filed herewith)
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith)
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).