Movano(MOVE) - 2021 Q4 - Annual Report

Part I Business Movano Inc. is a development-stage company creating a healthcare platform with the Movano Ring, targeting FDA clearance for non-invasive continuous glucose and cuffless blood pressure monitoring - Movano is developing a healthcare platform based on proprietary RF technology, with its initial product being the Movano Ring, a smart ring designed for women[16][17][18] - The company's long-term goal is to achieve Class II FDA clearance for its technology to provide non-invasive continuous glucose monitoring (CGM) and cuffless blood pressure monitoring[19][61] - Movano has conducted several IRB-approved clinical trials to collect data for refining its blood pressure and glucose monitoring algorithms, completing its largest blood pressure trial on 110 participants in December 2021[49][52][53] - As of December 31, 2021, the company's intellectual property portfolio includes 6 issued patents and 42 pending U.S. patent applications[59] - The company faces competition from major players in the wellness market (Apple, Samsung, Oura), CGM market (DexCom, Abbott), and blood pressure monitoring market (OMRON, Philips)[77][78][79] Risk Factors The company faces substantial risks including limited operating history, ongoing losses, capital needs, intense competition, regulatory hurdles, and reliance on third parties - The company is a development-stage entity with no revenue history, an accumulated deficit of approximately $64.8 million as of December 31, 2021, and may never achieve profitability[95][96] - There is substantial uncertainty about the company's ability to continue as a going concern, as its current cash is insufficient to complete the development and commercialization of its proposed solution[97] - The business is highly dependent on the success of its proposed solution, which requires substantial clinical development and regulatory clearance or approval from the FDA, which may be difficult to achieve[113][128] - The company expects to depend on third-party OEMs, VARs, and distributors for the design, manufacture, and sale of its products, but currently has no such relationships[114][115] - As an "emerging growth company," Movano is subject to reduced disclosure requirements, which may make its common stock less attractive to investors[165] Unresolved Staff Comments There are no unresolved staff comments - Not applicable[172] Properties The company's principal office is located in Pleasanton, California - The company's principal office is located at 6800 Koll Center Parkway, Pleasanton, California[173] Legal Proceedings The company is not currently a party to any material legal proceedings - The company is not currently involved in any pending legal proceedings expected to have a material adverse effect on its business[174] Mine Safety Disclosures This section is not applicable to the company - Not applicable[175] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Movano's common stock began trading on Nasdaq in March 2021, with the company having never paid dividends and no material change in IPO proceeds use - The company's common stock has been listed on the Nasdaq Capital Market under the symbol "MOVE" since March 23, 2021[178] - The company has never paid cash dividends and does not plan to in the foreseeable future, retaining any future earnings for business reinvestment[180] - The company's Registration Statement on Form S-1 (Reg. No. 333-252671) was declared effective on March 22, 2021, for its IPO[182] Management's Discussion and Analysis of Financial Condition and Results of Operations Movano's net loss increased to $21.8 million in 2021 due to higher R&D and G&A expenses, with $33.6 million in cash deemed sufficient for 12 months of operations but not full product commercialization | | Year Ended December 31, | Change | |---|---|---|---| | | 2021 | 2020 | $ | | (in thousands) | | | | | Research and development | $13,427 | $8,373 | $5,054 | | General and administrative | $6,376 | $2,734 | $3,642 | | Total operating expenses | $19,803 | $11,107 | $8,696 | | Loss from operations | ($19,803) | ($11,107) | ($8,696) | | Net loss | ($21,773) | ($13,031) | ($8,742) | - The increase in R&D expenses was primarily due to a $3.8 million rise in employee compensation and a $0.7 million increase in other professional fees[218] - The increase in G&A expenses was mainly driven by a $1.6 million rise in employee and board compensation and a $0.8 million increase in professional and consulting fees[220] - As of December 31, 2021, the company had $33.6 million in cash, cash equivalents, and short-term investments, which it believes is sufficient to fund operations for at least 12 months[193][225] | | Year Ended December 31, | |---|---|---| | (in thousands) | 2021 | 2020 | | Net cash used in operating activities | ($16,183) | ($10,666) | | Net cash used in investing activities | ($16,699) | $0 | | Net cash provided by financing activities | $44,847 | $12,085 | Quantitative and Qualitative Disclosures About Market Risk. This section is not applicable to the company - Not applicable[239] Financial Statements and Supplementary Data. Audited consolidated financial statements for 2021 and 2020 are presented, highlighting the March 2021 IPO that raised $44.3 million and led to the conversion of preferred stock and convertible notes into common stock | | Dec 31, 2021 | Dec 31, 2020 | |---|---|---| | (in thousands) | | | | Assets | | | | Cash and cash equivalents | $17,675 | $5,710 | | Short-term investments | $15,921 | $0 | | Total Assets | $36,265 | $7,083 | | Liabilities & Equity | | | | Total current liabilities | $3,218 | $1,160 | | Total noncurrent liabilities | $317 | $13,985 | | Total Liabilities | $3,535 | $15,145 | | Total stockholders' equity (deficit) | $32,730 | ($40,880) | - In its March 2021 IPO, the company sold 9,775,000 shares of common stock at $5.00 per share, raising net proceeds of $44.3 million after underwriting discounts and offering expenses[267] - Upon the IPO, all outstanding redeemable convertible preferred stock converted into 11,436,956 shares of common stock[290][336] - Upon the IPO, $12.9 million in principal and interest from convertible notes converted into 5,015,494 shares of common stock[329][341] - The company maintains a full valuation allowance against its net deferred tax assets of approximately $9.0 million due to uncertainty surrounding their realization[390] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. There were no changes in or disagreements with accountants on accounting and financial disclosure - None[402] Controls and Procedures. As of December 31, 2021, management concluded that disclosure controls and procedures were ineffective due to a material weakness in financial close and reporting controls - Management concluded that as of December 31, 2021, the company's disclosure controls and procedures were ineffective[403] - A material weakness was identified related to the ineffective design and operation of financial close and reporting controls, though it did not result in any identified misstatements to the financial statements[404][405] Other Information. This section is not applicable - Not applicable[408] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This section is not applicable - Not applicable[409] Part III Directors, Executive Officers and Corporate Governance. The information required for this item is incorporated by reference from the company's Proxy Statement for its 2022 annual meeting of stockholders - Information is incorporated by reference to the Proxy Statement on Schedule 14A for the 2022 annual meeting of stockholders[412] Executive Compensation The information required for this item is incorporated by reference from the company's Proxy Statement for its 2022 annual meeting of stockholders - Information is incorporated by reference to the Proxy Statement on Schedule 14A for the 2022 annual meeting of stockholders[413] Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters. The information required for this item is incorporated by reference from the company's Proxy Statement for its 2022 annual meeting of stockholders - Information is incorporated by reference to the Proxy Statement on Schedule 14A for the 2022 annual meeting of stockholders[414] Certain Relationships and Related Transactions, and Director Independence The information required for this item is incorporated by reference from the company's Proxy Statement for its 2022 annual meeting of stockholders - Information is incorporated by reference to the Proxy Statement on Schedule 14A for the 2022 annual meeting of stockholders[415] Principal Accountant Fees and Services The information required for this item is incorporated by reference from the company's Proxy Statement for its 2022 annual meeting of stockholders - Information is incorporated by reference to the Proxy Statement on Schedule 14A for the 2022 annual meeting of stockholders[416] Part IV Exhibits, Financial Statements and Schedules This section lists financial statements, schedules, and an index of exhibits filed with the Form 10-K report, including corporate governance documents and material contracts - This item lists the financial statements and exhibits filed with the report, including corporate governance documents, incentive plans, and material contracts[419][420]