Personalis, Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Our management, with the participation of our chief executive officer, or CEO, and chief financial officer, or CFO, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or Exchange Act), as of the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, our CEO and CFO have concluded that as of December 31, 2021, our disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosures. Management Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the 1934 Act. Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2021 based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of December 31, 2021, our internal control over financial reporting was effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report that is included in Part II, Item 8, of this Annual Report on Form 10-K. Changes in Internal Control None. Limitations on Controls Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, 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, within the Company have been detected. Item 9B. Other Information. Compensatory Arrangements of Certain Officers On February 16, 2022 and February 21, 2022, the compensation committee of the board of directors of the Company approved the amendment and restatement of the terms of executive severance agreements for Messrs. West and Tachibana and Dr. Chen, each dated February 23, 2022 (collectively, the “A&R Executive Severance Agreements”). Provisions that were amended in the A&R Executive Severance Agreement with Mr. West (the “West Severance Agreement”), include, among other things: • In the event that there is a “separation from service” (as defined in the West Severance Agreement), the period to receive payment of COBRA health insurance premiums will be shortened to the earlier of (i) 12 months or (ii) the date upon which Mr. West obtains coverage under a subsequent employer’s medical plan. • In the event of a separation from service within 12 months after the effective date of “change in control” (as defined in the West Separation Agreement), the vesting of each of Mr. West’s then-outstanding unvested equity compensation awards shall accelerate as to all of then-unvested shares subject to each such award, or, in the case of any other separation from service, the vesting of each of Mr. West’s then-outstanding unvested equity compensation awards shall accelerate as to the number of the then-unvested shares subject to each such award that would have become vested within the first 24 months following such separation from service, subject to certain conditions. 99 Provisions that were amended in the A&R Executive Severance Agreements with each of Mr. Tachibana and Dr. Chen (together, the “Officer Severance Agreements”), include, among other things: • In the event that there is a “separation from service” (as defined in the Officer Severance Agreements), the period to receive payment of COBRA health insurance premiums will be shortened to the earlier of (i) 12 months for Mr. Tachibana and 9 months for Dr. Chen or (ii) the date upon which the executive obtains coverage under a subsequent employer’s medical plan. • In the event that there is a separation from service that is not within 12 months after a “change in control” (as defined in the Officer Severance Agreements), the executive will be entitled to 6 months of his then current base salary, subject to certain conditions. Appointment of Director On February 17, 2022, upon recommendation of the nominating and corporate governance committee of the board of directors, the board of directors increased the size of the board of directors from 7 to 8 members, and appointed Olivia K. Bloom, to the board of directors as a Class I director, which appointment will become effective on March 1, 2022. Ms. Bloom’s term will expire, along with the terms of the other Class I directors, at the Company’s annual meeting of stockholders in 2023. The board of directors also appointed Ms. Bloom to serve as a member of the audit committee of the board of directors, with such appointment effective upon her appointment to the board of directors. There are no arrangements or understandings between Ms. Bloom and any other persons pursuant to which she was selected as a director. The board of directors has determined that Ms. Bloom qualifies as an independent director under the independence requirements set forth under Rule 5605(a)(2) of the Nasdaq Rules and listing standards. Additionally, there are no transactions involving the company and Ms. Bloom that we would be required to report pursuant to Item 404(a) of Regulation S-K. In connection with her appointment to the board of directors and the audit committee, and pursuant to the Company’s amended and restated non-employee director compensation policy (the “Amended Personalis, Inc. Non-Employee Director Compensation Policy”), Ms. Bloom will receive annual cash retainers for her service on the board of directors and any committee of the board of directors, an initial equity grant and annual equity grants, each in the amounts set forth in the Company’s Amended Non-Employee Director Compensation Policy. The company will also enter into its standard form of indemnification agreement with Ms. Bloom. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 100 PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by this Item is set forth under the headings “Executive Officers,” “Security Ownership of Certain Beneficial Owners and Management,” “Delinquent Section 16(a) Reports,” “Corporate Governance and Board of Directors Matters,” and “Proposal No. 1 Election of Directors—Information About Our Continuing Directors” in the Company’s 2022 Proxy Statement to be filed with the SEC within 120 days after December 31, 2021 in connection with the solicitation of proxies for the Company’s 2022 annual meeting of stockholders, and is incorporated herein by reference. Our board of directors has adopted a Code of Business Conduct and Ethics applicable to all officers, directors and employees, which is available on our website (investors.personalis.com) under "Corporate Governance." We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of Business Conduct and Ethics by posting such information on the website address and location specified above. Item 11. Executive Compensation. The information required by this Item is set forth under the headings “Director Compensation,” “Executive Compensation,” and “Compensation Committee Interlocks and Insider Participation” in the Company’s 2022 Proxy Statement to be filed with the SEC within 120 days after December 31, 2021, and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item is set forth under the headings “Equity Compensation Plans at December 31, 2021” and “Security Ownership of Certain Beneficial Owners and Management” in the Company’s 2022 Proxy Statement to be filed with the SEC within 120 days after December 31, 2021, and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this Item is set forth under the headings “Corporate Governance and Board of Directors Matters” and “Transactions with Related Persons and Indemnification” in the Company’s 2022 Proxy Statement to be filed with the SEC within 120 days after December 31, 2021, and is incorporated herein by reference. Item 14. Principal Accounting Fees and Services. The information required by this Item is set forth under the headings “Principal Accountant Fees and Services” and “Pre-Approval Procedures” under the proposal “Ratification of Selection of Independent Registered Public Accounting Firm” in the Company’s 2022 Proxy Statement to be filed with the SEC within 120 days after December 31, 2021, and is incorporated herein by reference. 101 PART IV Item 15. Exhibits, Financial Statement Schedules. (a) Financial Statements and Schedules The financial statements are set forth under Item 8 of this Form 10-K, as indexed below. Financial statement schedules have been omitted since they either are not required, not applicable, or the information is otherwise included. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Consolidated Balance Sheets 73 Consolidated Statements of Operations 74 Consolidated Statements of Comprehensive Loss 75 Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) 76 Consolidated Statements of Cash Flows 77 Notes to Consolidated Financial Statements 78 Reports of Independent Registered Public Accounting Firm 97 102 (b) Exhibits Incorporated by Reference Exhibit Number Description Form File No. Exhibit Filing Date 3.1 Amended and Restated Certificate of Incorporation of the Registrant. 8-K 001-38943 3.1 6/24/2019 3.2 Amended and Restated Bylaws of the Registrant. 8-K 001-38943 3.2 6/24/2019 4.1 Description of Securities of Personalis, Inc. 10-K 001-38943 4.1 2/25/2021 4.2 Form of Common Stock Certificate of the Registrant. S-1/A 333-231703 4.1 6/7/2019 4.3 Amended and Restated Investor Rights Agreement by and among the Registrant and certain of its stockholders, dated December 16, 2014 . S-1 333-231703 4.2 5/23/2019 10.1# Personalis, Inc. 2011 Equity Incentive Plan, as amended, and forms of agreements thereunder. S-1 333-231703 10.1 5/23/2019 10.2# Personalis, Inc. 2019 Equity Incentive Plan and forms of agreements thereunder. S-1/A 333-231703 10.2 6/7/2019 10.3# Personalis, Inc. 2019 Employee Stock Purchase Plan. S-1/A 333-231703 10.3 6/7/2019 10.4# Form of Indemnification Agreement entered into by and between the Registrant and each director and executive officer. S-1/A 333-231703 10.4 6/7/2019 10.5# Employment Terms Letter, by and between John West and the Registrant, dated June 2, 2019. S-1/A 333-231703 10.5 6/7/2019 10.6# Employment Terms Letter, by and between Dr. Richard Chen and the Registrant, dated June 2, 2019. S-1/A 333-231703 10.7 6/7/2019 10.7# Employment Terms Letter, by and between Aaron Tachibana and the Registrant, dated June 2, 2019. S-1/A 333-231703 10.8 6/7/2019 10.8 Lease, by and between MENLO PREHC I, LLC, MENLO PREPI I, LLC, TPI INVESTORS 9, LLC and the Registrant, dated February 2, 2015. S-1 333-231703 10.9 5/23/2019 10.9¥ Contract No. VA240-17-D-0103, by and between the U.S. Department of Veterans Affairs and the Registrant, dated September 28, 2017. S-1 333-231703 10.10 5/23/2019 10.10¥ Master Services Subcontract Agreement, by and between Illumina, Inc. and the Registrant, dated November 1, 2017 . S-1 333-231703 10.13 5/23/2019 10.11¥ Pricing Agreement, by and between Illumina, Inc. and the Registrant, dated March 26, 2019. S-1 333-231703 10.19 5/23/2019 10.12 First Amendment to Lease, by and between MENLO PREPI I, LLC and TPI INVESTORS 9, LLC and the Registrant, dated April 8, 2020. 10-Q 001-38943 10.1 8/6/2020 10.13# Amendment to Employment Terms Letter, by and between John West and the Registrant, dated May 6, 2020. 10-Q 001-38943 10.1 5/7/2020 10.14# Personalis, Inc. 2020 Inducement Plan and forms of agreements thereunder. S-8 333-238080 99.1 5/7/2020 10.15 Lease, by and between Ardenwood Ventures I, LLC and the Registrant, dated August 25, 2021. 10-Q 001-38943 10.1 11/4/2021 10.16 Amendment No. 1 to Lease, by and between Ardenwood Ventures I, LLC and the Registrant, dated December 8, 2021. 10.17¥ At-the-Market Sales Agreement, dated December 30, 2021, by and between the Registrant and BTIG, LLC. 8-K 001-38943 1.1 12/30/2021 10.18# Amended Personalis, Inc. Non-Employee Director Compensation Policy, dated February 17, 2022. 10.19# Amended and Restated Executive Severance Agreement, by and between John West and the Registrant, dated February 23, 2022. 10.20# Amended and Restated Executive Severance Agreement, by and between Dr. Richard Chen and the Registrant, dated February 23, 2022. 10.21# Amended and Restated Executive Severance Agreement, by and between Aaron Tachibana and the Registrant, dated February 23, 2022. 21.1 Subsidiaries of the Registrant as of December 31, 2021. 23.1 Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm. 24.1 Power of Attorney (included on the Signatures page of this Annual Report on Form 10-K). 103 31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1† Certification of Principal 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 Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.1 Consent to be Named as a Director Nominee of Oliva Bloom. 101 Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. 104 Inline XBRL for the cover page of this Annual Report on Form 10-K, included in the Exhibit 101 Inline XBRL Document Set. # Indicates management contract or compensatory plan or arrangement. † The certifications attached as Exhibit 32.1 and Exhibit 32.2 that accompany this Annual Report on Form 10-K are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, 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. ¥ Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K because such schedules and exhibits do not contain information which is material to an investment or voting decision or which is not otherwise disclosed in the filed agreements. The Company will furnish the omitted schedules and exhibits to the SEC upon request by the SEC. Item 16. Form 10-K Summary None. 104 SIGNAT URES 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 . Date: February 24, 2022 Personalis, Inc. By: /s/ Aaron Tachibana Aaron Tachibana Chief Financial Officer (Principal Financial and Accounting Officer) POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints John West and Aaron Tachibana, jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Name and Signature Title Date /s/ John West President, Chief Executive Officer and Director February 24, 2022 John West (Principal Executive Officer) /s/ Aaron Tachibana Chief Financial Officer February 24, 2022 Aaron Tachibana (Principal Financial and Accounting Officer) /s/ A. Blaine Bowman Director February 24, 2022 A. Blaine Bowman /s/ Alan Colowick Director February 24, 2022 Alan Colowick, M.D. /s/ Karin Eastham Director February 24, 2022 Karin Eastham /s/ Kenneth Ludlum Director February 24, 2022 Kenneth Ludlum /s/ Jonathan MacQuitty Director February 24, 2022 Jonathan MacQuitty, Ph.D. /s/ Woodrow A. Myers, Jr. Director February 24, 2022 Woodrow A. Myers, Jr., M.D. 105