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Common Stock Warrants

3 Months Ended

Mar. 31, 2023

Common Stock Warrants [Abstract]

COMMON STOCK WARRANTS

Note 9 – Common Stock Warrants

During February 2023, the Board approved the amendment of 293,042 Preferred A Placement Warrants to extend the maturity date by six months for each warrant and to remove the cashless exercise provision in the warrant agreements. The amended maturity dates for 234,197 and 58,845 Preferred A Placement Warrants will be in September 2023 and October 2023, respectively. The Company assessed the accounting treatment of the warrant amendments and determined that the amendments are modifications for accounting purposes. The Company determined the modifications had an insignificant impact on the condensed consolidated financial statements.

During March 2023, the Preferred A Lead Investor Warrants for 52,500 shares of common stock expired.

January and February 2023 Warrants

In connection with the sale of common stock during January and February 2023, the Company issued warrants to purchase shares of common stock to 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.

The following is a summary of the Company’s warrant activity for the three months ended March 31, 2022:

Warrant Issuance		Issuance		Exercise Price				Outstanding, December 31, 2021				Granted				Exercised				Canceled/ Expired				Variable Settlement Provision Adjustment				Outstanding, March 31, 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

The following is a summary of the Company’s warrant activity for the three months ended March 31, 2023:

Warrant Issuance		Issuance		Exercise Price				Outstanding, December 31, 2022				Granted				Exercised				Canceled/ Expired				Variable Settlement Provision Adjustment				Outstanding, March 31, 2023				Expiration
Preferred A Placement Warrants		March and April 2018 and August 2019		$	1.40				293,042				—				—				—				—				293,042			September and October 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
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
									1,938,143				2,670,000				—				(52,500	)			—				4,555,643

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.

The major inputs were:

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

The fair value of the January and February 2023 warrants at the issuance date is approximately $1.5 million.