Movano(MOVE) - 2023 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements Movano Inc. reported no revenue, consistent with its development-stage status, with net loss increasing to $7.3 million for Q2 2023 and $14.4 million for the first six months, while cash stood at $14.5 million as of June 30, 2023, bolstered by public offerings, highlighting a significant accumulated deficit and a 'going concern' warning Condensed Consolidated Balance Sheets As of June 30, 2023, Movano's total assets increased to $17.6 million from $13.2 million at year-end 2022, primarily due to a rise in cash and cash equivalents to $14.5 million, with total liabilities decreasing slightly to $4.7 million and stockholders' equity improving to $12.8 million, though the accumulated deficit grew to $109.5 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $14,472 | $10,759 | | Total current assets | $16,086 | $11,646 | | Total assets | $17,573 | $13,243 | | Liabilities & Equity | | | | Total current liabilities | $4,553 | $4,978 | | Total liabilities | $4,745 | $5,328 | | Accumulated deficit | ($109,460) | ($95,097) | | Total stockholders' equity | $12,828 | $7,915 | Condensed Consolidated Statements of Operations and Comprehensive Loss For the three months ended June 30, 2023, the company reported a net loss of $7.3 million, or ($0.17) per share, compared to a net loss of $6.9 million, or ($0.21) per share, for the same period in 2022, with the six-month net loss at $14.4 million in 2023 versus $13.8 million in 2022, driven by higher sales, general, and administrative expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $4,171 | $4,112 | $8,065 | $8,703 | | Sales, general and administrative | $3,213 | $2,734 | $6,522 | $5,081 | | Loss from operations | ($7,384) | ($6,846) | ($14,587) | ($13,784) | | Net loss | ($7,267) | ($6,868) | ($14,363) | ($13,800) | | Net loss per share, basic and diluted | ($0.17) | ($0.21) | ($0.36) | ($0.42) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2023, net cash used in operating activities was $14.0 million, while net cash provided by financing activities was $17.7 million, primarily from public offerings of common stock, resulting in a net increase in cash and cash equivalents of $3.7 million, bringing the period-end balance to $14.5 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($13,964) | ($12,153) | | Net cash provided by (used in) investing activities | ($39) | $11,548 | | Net cash provided by financing activities | $17,716 | $19 | | Net increase / (decrease) in cash | $3,713 | ($586) | | Cash and cash equivalents at end of period | $14,472 | $17,089 | Notes to Condensed Consolidated Financial Statements Key notes detail the company's development-stage nature, reliance on equity financing, and substantial doubt about its ability to continue as a going concern, with two public offerings in February and June 2023 raising net proceeds of approximately $6.7 million and $8.1 million respectively, also covering stock-based compensation, warrants, and lease commitments - The company is a development-stage entity that has not yet recorded any revenues and has incurred losses since inception, with its ability to continue as a going concern in substantial doubt[23][27] - In February 2023, the company raised net proceeds of approximately $6.7 million from a public offering of common stock and warrants[24][68] - In June 2023, the company raised net proceeds of approximately $8.1 million from a public offering of common stock[25][69] - As of June 30, 2023, the company had non-cancelable contractual commitments of $0.4 million, primarily with vendors, due within one to twelve months[116] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's development-stage status focused on its Evie Ring product and proprietary SoC, with operating losses increasing to $7.4 million in Q2 2023 from $6.8 million in Q2 2022 due to higher SG&A expenses, and despite raising $17.7 million from financing activities, existing cash is not sufficient to fund operations for the next twelve months, raising substantial doubt about its ability to continue as a going concern - The company's initial product is the Evie Ring, a wearable designed for women, for which it filed a 510(k) submission with the FDA in July 2023 for its pulse oximeter[125][126] - Movano is also developing a proprietary System-on-a-Chip (SoC) for non-invasive continuous glucose monitoring (CGM) and cuffless blood pressure monitoring[127] Comparison of Operating Results (in thousands) | Metric | Q2 2023 | Q2 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $4,171 | $4,112 | $59 | 1% | | Sales, general and administrative | $3,213 | $2,734 | $479 | 18% | | Loss from operations | ($7,384) | ($6,846) | ($538) | -8% | | Net loss | ($7,267) | ($6,868) | ($399) | -6% | - The company's cash of $14.5 million is not expected to be sufficient to fund operations for the next twelve months, raising substantial doubt about its ability to continue as a going concern[140][145] - During the first six months of 2023, the company sold 2,200,746 shares through its At-the-Market (ATM) program for net proceeds of $2.9 million, with approximately $44.7 million remaining available under the program[141][73] Quantitative and Qualitative Disclosure About Market Risk As a smaller reporting company, Movano Inc. is not required to provide the information for this item - The company is not required to provide information on market risk as it qualifies as a smaller reporting company[155] Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2023, due to a previously disclosed material weakness in internal control over financial reporting related to the ineffective design and operation of financial close and reporting controls, with no material changes to internal controls made during the quarter - Management concluded that disclosure controls and procedures were not effective as of June 30, 2023[157] - The ineffectiveness is due to a material weakness identified at December 31, 2022, related to the financial close and reporting controls, which has not yet been fully remediated[159] PART II – OTHER INFORMATION Legal Proceedings The company is not currently a party to any pending legal proceedings that are expected to have a material adverse effect on its business or financial condition - Movano is not currently a party to any material pending legal proceedings[164] Risk Factors This section refers to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022, and subsequent quarterly reports - For a discussion of risks and uncertainties, readers are referred to Part I, 'Item 1A. Risk Factors' in the 2022 Form 10-K[165] Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities This item is not applicable for the reporting period - Not applicable[166] Defaults Upon Senior Securities This item is not applicable for the reporting period - Not applicable[167] Mine Safety Disclosures This item is not applicable for the reporting period - Not applicable[168] Other Information During the second quarter of 2023, none of the company's directors or executive officers adopted or terminated a Rule 10b5-1 trading plan or any non-Rule 10b5-1 trading arrangement - No directors or executive officers adopted or terminated any Rule 10b5-1(c) trading plans during the three months ended June 30, 2023[169] Exhibits This section lists the exhibits filed with the Form 10-Q, including the CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1) and Inline XBRL documents - The report includes CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, along with Inline XBRL data files[170]