Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of our Disclosure Controls and Procedures
Disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act, are controls and procedures that are designed to ensure that information required to be disclosed 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 and accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based upon that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our disclosure controls and procedures were effective as of December 31, 2022.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. Further, our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with generally accepted accounting principles in the United States (“GAAP”). Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of our consolidated financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our control system will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, 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. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Under the supervision of our management, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2022 based on the criteria set forth in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
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Commission. Based on that assessment, our management has concluded that our internal control over financial reporting was effective as of December 31, 2022.
Remediation of Previously Reported Material Weakness
As previously reported in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, in connection with the preparation of our consolidated financial statements, a material weakness in our internal control over financial reporting was identified in the fiscal year ended December 31, 2021. We determined a material weakness existed relating to ineffective information technology general controls in the areas of user access and segregation of duties related to certain information technology systems that support our financial reporting process specifically related to expenditures. During the year ended December 31, 2022, our management, under the oversight of our Audit Committee and in consultation with outside advisors, implemented measures designed to ensure that the control deficiencies contributing to the material weakness were remediated. These remediation measures included, but were not limited to: (i) implementing enhanced process controls around user access management and (ii) expanding the management and governance over user access and system controls. Management has concluded, through testing of the design and operating effectiveness of the newly designed controls that the previously identified material weakness was remediated as of December 31, 2022.
Our management has concluded that the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K present fairly, in all material respects, our financial position, results of operations and cash flows in conformity with GAAP.
Changes in Internal Control over Financial Reporting
Other than as described above, there has been no change in our internal control over financial reporting during the quarter ended December 31, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information regarding our directors and executive officers set forth under the headings “Proposal No.1—Election of Directors,” “Information Regarding the Board of Directors and Corporate Governance,” and “Information Regarding Executive Officers” of the 2023 Proxy Statement is incorporated herein by reference.
Information regarding our Audit Committee, including the members of our Audit Committee, set forth under the heading “Information Regarding the Board of Directors and Corporate Governance—Audit Committee” of the 2023 Proxy Statement is incorporated herein by reference.
Information regarding the procedures by which our shareholders may recommend nominees to our Board of Directors set forth under the heading “Information Regarding the Board of Directors and Corporate Governance—Nominating and Corporate Governance Committee” of the 2023 Proxy Statement is incorporated herein by reference.
Information regarding compliance with Section 16(a) of the Exchange Act, if any, set forth under the heading “Delinquent Section 16(a) Reports” of the 2023 Proxy Statement is incorporated herein by reference.
Information regarding our Code of Business Conduct and Ethics set forth under the heading “Information Regarding the Board of Directors and Corporate Governance—Code of Business Conduct and Ethics” of the 2023 Proxy Statement is incorporated herein by reference.
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ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation and director compensation set forth under the headings “Executive Compensation” and “Director Compensation,” respectively, of the 2023 Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information contained in the sections captioned “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” of the 2023 Proxy Statement is incorporated herein by reference.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information contained in the section captioned “Transactions with Related Persons and Indemnification” of the 2023 Proxy Statement is incorporated herein by reference.
Information regarding director independence set forth under the heading “Information Regarding the Board of Directors and Corporate Governance” of the 2023 Proxy Statement is incorporated herein by reference.
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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Information regarding our independent auditor fees and serves in the section captioned “Proposal No. 2—Ratification of Selection of Independent Registered Public Accounting Firm—Principal Accounting Fees and Services” of the 2023 Proxy Statement is incorporated herein by reference.
Our Audit Committee’s policy on pre-approval of audit and permissible non-audit services of our independent auditor in the section captioned “Proposal No. 2—Ratification of Selection of Independent Registered Public Accounting Firm—Pre-Approval Policies and Procedures” of the 2023 Proxy Statement is incorporated herein by reference.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this Annual Report on Form 10-K:
(1) FINANCIAL STATEMENTS
Our consolidated financial statements are listed in the “Index to the Financial Statements” under Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
(2) FINANCIAL STATEMENT SCHEDULES
All schedules to the financial statements are omitted because they are not applicable, not material or the required information is shown in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
(3) EXHIBITS
The documents listed in the Exhibit Index of this Annual Report on Form 10-K are incorporated by reference or are filed with this Annual Report on Form 10-K, in each case as indicated therein.
EXHIBIT INDEX
Exhibit Number Description of Document Form
File No.
Exhibit
Filing Date
Filed Herewith
3.1 Amended and Restated Certificate of Incorporation of Pulmonx Corporation.
8-K
001-39562
3.1
October 5, 2020
3.2 Amended and Restated Bylaws of Pulmonx Corporation.
S-1/A
333-248635
3.4
September 24, 2020
4.1 Form of common stock certificate of Pulmonx Corporation.
S-1/A
333-248635
4.1
September 24, 2020
4.2 Amended and Restated Investors’ Rights Agreement by and among Pulmonx Corporation and certain of its stockholders, dated April 16, 2019.
S-1/A
333-248635
4.2
September 24, 2020
4.3 Description of common stock of Pulmonx Corporation.
10-K 001-39562 4.3 March 15, 2021
10.1+ Amended and Restated 2010 Stock Plan.
S-8
333-249187
99.1
October 1, 2020
10.2+ Forms of Notice of Stock Option Grant, Option Agreement, and Exercise Notice under Amended and Restated 2010 Stock Plan.
S-8
333-249187
99.2
October 1, 2020
10.3+ Amended and Restated 2020 Stock Plan.
S-8
333-249187
99.3
October 1, 2020
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10.4+ Forms of Notice of Stock Option Grant, Option Agreement, and Exercise Notice under Amended and Restated 2020 Stock Plan.
S-8
333-249187
99.4
October 1, 2020
10.5+ 2020 Equity Incentive Plan.
S-8
333-249187
99.5
October 1, 2020
10.6+ Forms of Option Agreement and Notice of Stock Option Grant under 2020 Equity Incentive Plan.
S-8
333-249187
99.6
October 1, 2020
10.7+ Form of Restricted Stock Unit Award Agreement under 2020 Equity Incentive Plan.
S-8
333-249187
99.7
October 1, 2020
10.8+ 2020 Employee Stock Purchase Plan.
S-8
333-249187
99.8
October 1, 2020
10.9 Form of Indemnification Agreement by and between Pulmonx Corporation and each of its directors and executive officers.
S-1/A
333-248635
10.9
September 24, 2020
10.10+ Executive Employment Agreement, by and between Pulmonx Corporation and Glendon E. French, dated December 10, 2014.
S-1/A
333-248635
10.10
September 24, 2020
10.11+ Offer Letter Agreement, by and between Pulmonx Corporation and Geoffrey Beran Rose, dated December 11, 2014.
S-1/A
333-248635
10.11
September 24, 2020
10.12+ Offer Letter Agreement, by and between Pulmonx Corporation and Derrick Sung, Ph.D., dated March 12, 2019.
S-1/A
333-248635
10.12
September 24, 2020
10.13+ Offer Letter Agreement, by and between Pulmonx Corporation and David Lehman, dated September 15, 2020
10-K 001-39562 10.13 March 15, 2021
10.14 Office Lease, by and between Pulmonx Corporation and HCP LS Redwood City, LLC, dated September 4, 2009.
S-1/A
333-248635
10.18
September 24, 2020
10.15 First Amendment to Office Lease, by and between Pulmonx Corporation and HCP LS Redwood City, LLC, dated October 3, 2014.
S-1/A
333-248635
10.19
September 24, 2020
10.16 Second Amendment to Office Lease, by and between Pulmonx Corporation and HCP LS Redwood City, LLC, dated November 7, 2019.
S-1/A
333-248635
10.20
September 24, 2020
10.17 Sublease, by and between Pulmonx Corporation and Genomic Health, Inc., dated April 8, 2020.
S-1/A
333-248635
10.21
September 24, 2020
10.18 First Amendment to Sublease Agreement, by and between Pulmonx Corporation and Genomic Health, Inc., dated September 10, 2020.
S-1/A
333-248635
10.22
September 24, 2020
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10.19 Intellectual Property Security Agreement, by and between Pulmonx Corporation and Canadian Imperial Bank of Commerce, dated February 20, 2020.
S-1/A
333-248635
10.25
September 24, 2020
10.20 Note Purchase Agreement and Form of 2020 Note, by and between Pulmonx Corporation and the purchasers of the 2020 Notes, dated April 17, 2020.
S-1/A
333-248635
10.26
September 24, 2020
10.21+ Pulmonx Corporation Severance and Change in Control Plan and related participation agreement.
S-1/A
333-248635
10.27
September 28, 2020
10.22 Second Amendment and Waiver to Loan and Security Agreement, by and between Pulmonx Corporation and Canadian Imperial Bank of Commerce, dated December 28, 2020.
10-Q 001-39562 10.1 May 12, 2021
10.23 Amended and Restated Loan and Security Agreement, by and between Pulmonx Corporation and Canadian Imperial Bank Commerce, dated March 29, 2021.
10-Q 001-39562 10.2 May 12, 2021
10.24+ Amended and Restated Non-Employee Director Compensation Policy.
10-Q 001-39562 10.3 May 12, 2021
10.25 First Amendment to Amended and Restated Loan and Security Agreement, by and between Pulmonx Corporation and Canadian Imperial Bank of Commerce, dated June 17, 2021.
10-Q 001-39562 10.1 August 10, 2021
10.26 Second Amendment to Amended and Restated Loan and Security Agreement, by and between Pulmonx Corporation and Canadian Imperial Bank of Commerce, dated October 21, 2021.
10-Q 001-39562 10.1 November 9, 2021
10.27 Third Amendment to Amended and Restated Loan and Security Agreement, by and between Pulmonx Corporation and Canadian Imperial Bank of Commerce, dated October 31, 2022.
X
21.1 List of Subsidiaries of Registrant.
X
23.1 Consent of BDO USA, LLP, independent registered public accounting firm.
X
24.1 Power of Attorney (included on signature page hereto).
X
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
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31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1* Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2* Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) X
___________________
+ Indicates management contract or compensatory plan
* The certifications attached as Exhibits 32.1 and 32.2 accompanying this Annual Report on Form 10-K are not deemed filed with the SEC and are not to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.
ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Redwood City, State of California, on the 1st day of March, 2023.
PULMONX CORPORATION
By: /s/Glendon E. French
Glendon E. French
President, Chief Executive Officer and Director
By: /s/Derrick Sung
Derrick Sung, Ph.D.
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Glendon E. French and Derrick Sung, jointly and severally, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/Glendon E. French President, Chief Executive Officer and Director March 1, 2023
Glendon E. French (Principal Executive Officer)
/s/Derrick Sung, Ph.D. Chief Financial Officer March 1, 2023
Derrick Sung, Ph.D. (Principal Financial Officer and Principal Accounting Officer)
/s/Thomas W. Burns Director March 1, 2023
Thomas W. Burns
/s/Richard Ferrari Director March 1, 2023
Richard Ferrari
/s/Daniel P. Florin Director March 1, 2023
Daniel P. Florin
/s/Georgia Garinois-Melenikiotou Director March 1, 2023
Georgia Garinois-Melenikiotou
/s/Alissa Hsu Lynch Director March 1, 2023
Alissa Hsu Lynch
/s/Dana G. Mead, Jr. Director March 1, 2023
Dana G. Mead, Jr.
/s/Tiffany Sullivan Director March 1, 2023
Tiffany Sullivan
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