What changed in this filing

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Item 1. Financial Statements

2022-11-10 compared with 2022-08-15 · 198 added, 139 removed, 572 unchanged (37% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

June 30, December 31,

September 30, December 31,

Cash and cash equivalents $ 114,940 $ 56,034

Trade and other receivables 573 483

Accounts receivable 846 483

Prepaid expenses and other current assets 3,975 3,676

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Redeemable convertible preferred stock (A and B), $ 0.0001 par value;

zero and 19,517,990 shares authorized at June 30, 2022 and December 31, 2021;

zero and 19,517,988 shares issued and outstanding at June 30, 2022 and December 31, 2021;

aggregate liquidation preference of zero and $ 163.8 million at June 30, 2022 and December 31, 2021, respectively

zero and 19,517,990 shares authorized at September 30, 2022 and December 31, 2021;

zero and 19,517,988 shares issued and outstanding at September 30, 2022 and December 31, 2021;

aggregate liquidation preference of zero and $ 163.8 million at September 30, 2022 and December 31, 2021, respectively

Stockholders’ equity (deficit):

Preferred stock, $ 0.0001 par value;

10,000,000 and zero shares authorized at June 30, 2022 and December 31, 2021;

zero and zero shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

10,000,000 and zero shares authorized at September 30, 2022 and December 31, 2021;

zero and zero shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Common stock, $ 0.0001 par value;

500,000,000 and 27,006,600 shares authorized at June 30, 2022 and December 31, 2021;

43,368,270 and 2,972,409 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

500,000,000 and 27,006,600 shares authorized at September 30, 2022 and December 31, 2021;

43,638,917 and 2,972,409 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 295,415 3,619

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(in thousands, except share and per share data)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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Change in preferred stock tranche liability — — — ( 14,742 )

Loss on impairment of fixed assets — ( 9 ) — ( 9 )

Other income (expense) 2 21 ( 28 ) ( 110 )

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277,977 2,294 — — — — —

Issuance of common stock — — 563,460 — 1,432 — 1,432

Exercise of options of common stock — — 563,460 — 1,432 — 1,432

Early exercise of common stock options — — ( 512,670 ) — ( 1,329 ) — ( 1,329 )

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7,703,875 79,877 — — — — —

Issuance of common stock — — 12,891 — 21 — 21

Exercise of options of common stock — — 12,891 — 21 — 21

Vesting of early exercise of common stock options — — 13,099 — 28 — 28

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19,517,988 171,833 2,915,156 — 2,130 ( 92,766 ) ( 90,636 )

Exercise of options of common stock — — 7,572 — 19 — 19

Vesting of early exercise of common stock options — — 13,099 — 28 — 28

Stock-based compensation — — — — 626 — 626

Net loss — — — — — ( 11,406 ) ( 11,406 )

Balance as of September 30, 2021

19,517,988 $ 171,833 2,935,827 $ — $ 2,803 $ ( 104,172 ) $ ( 101,369 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

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19,517,988 $ 171,833 2,972,409 $ — $ 3,619 $ ( 115,076 ) $ ( 111,457 )

Issuance of common stock — — 172,606 — 422 — 422

Exercise of options of common stock — — 172,606 — 422 — 422

Vesting of early exercise of common stock options — — 143,524 — 375 — 375

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Gain recognized on fair value of embedded derivative after cancellation and exchange of convertible note — — — — ( 1,289 ) — ( 1,289 )

Vesting of early exercised options — — 41,047 — 102 — 102

Stock-based compensation — — — — 9,225 — 9,225

Exercise of options of common stock — — 27,233 — 74 — 74

Vesting of early exercised common stock options — — 41,047 — 102 — 102

Stock-based compensation — — — — 9,225 — 9,225

Net loss — — — — — ( 11,552 ) ( 11,552 )

1 unchanged sentence

— — 43,368,270 4 292,698 ( 138,436 ) 154,266

Common Stock Purchase Agreement fee settled in common stock — — 100,000 — 196 — 196

Additional Reverse Recapitalization transaction costs — — — — ( 223 ) — ( 223 )

Vesting of early exercise of common stock options — — 170,647 — 454 — 454

Stock-based compensation — — — — 2,290 — 2,290

Net loss — — — — — ( 16,640 ) ( 16,640 )

Balance as of September 30, 2022

— $ — 43,638,917 $ 4 $ 295,415 $ ( 155,076 ) $ 140,343

The accompanying notes are an integral part of these condensed consolidated financial statements.

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(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

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Loss on write-off of fixed assets 13 9

Issuance of common stock for Common Stock Purchase Agreement fee 196 —

Other non-cash charges 8 —

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Proceeds from issuance of Series B redeemable convertible preferred stock, net of issuance costs — 66,952

Payment of deferred offering costs — ( 480 )

Net cash from financing activities 117,675 68,412

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Recognition of Series B preferred stock tranche liability $ — $ 33

Nine Months Ended September 30,

Extinguishment of Series B preferred stock tranche liability $ — $ 15,210

Six Months Ended June 30,

Merger and related PIPE financing costs included in accounts payable and accrued expenses 263 —

Deferred transaction costs related to pending business combination in accounts payable and accrued expenses $ — $ 140

Receivables in transit from issuance of common stock upon exercise of stock options $ — $ 12

The accompanying notes are an integral part of these condensed consolidated financial statements.

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and its subsidiaries, (the “Company” or “Senti”), is a biotechnology company that was founded to create a new generation of smarter medicines that outmaneuver complex diseases using novel and unprecedented approaches.

Senti Bio has built a synthetic biology platform that enables it to program next-generation cell and gene therapies with what we refer to as “gene circuits.” These gene circuits, which are created from novel and proprietary combinations of DNA sequences, reprogram cells with biological logic to sense inputs, compute decisions and respond to their cellular environments.

Senti has built a synthetic biology platform that enables it to program next-generation cell and gene therapies with what the Company refers to as “gene circuits.” These gene circuits, which are created from novel and proprietary combinations of DNA sequences, reprogram cells with biological logic to sense inputs, compute decisions and respond to their cellular environments.

The Company is headquartered in South San Francisco, California.

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(“Dynamics” or “DYNS”) consummated a merger pursuant to which Explore Merger Sub, Inc.

(“Merger Sub”), a Delaware corporation and wholly owned subsidiary of Dynamics, merged with and into Senti Sub I, Inc.

(formerly named Senti Biosciences, Inc.

(“Merger Sub”), a Delaware corporation and wholly owned subsidiary of Dynamics, merged with and into Senti Sub I, Inc., formerly named Senti Biosciences, Inc.

(“Legacy Senti”), with Legacy Senti surviving as a wholly-owned subsidiary of Dynamics (such transactions, the “Merger,” and, collectively with the other transactions described in the merger agreement (as defined below, the “Reverse Recapitalization”)).

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To date, the Company has financed its operations primarily through a Reverse Recapitalization, the sale of equity securities and convertible debt and, to a lesser extent, through collaboration agreements and governmental grants.

At June 30, 2022 and December 31, 2021, the Company had an accumulated deficit of 138.4 million and 115.1 million, respectively.

The Company’s net losses were $ 23.4 million and $ 33.0 million for the six months ended June 30, 2022 and 2021, respectively.

At September 30, 2022 and December 31, 2021, the Company had an accumulated deficit of $ 155.1 million and $ 115.1 million, respectively.

The Company’s net losses were $ 40.0 million and $ 44.4 million for the nine months ended September 30, 2022 and 2021, respectively.

Substantially all of the Company’s net losses resulted from costs incurred in connection with the Company’s research and development programs and from general and administrative costs associated with the Company’s operations.

The Company expects to incur substantial operating losses and negative cash flows from operations for the foreseeable future as the Company advances its preclinical activities and clinical trials for its product candidates in development .

As of June 30, 2022, the Company had cash, cash equivalents and restricted cash of $ 143.1 million.

As of September 30, 2022, the Company had cash, cash equivalents and restricted cash of $ 118.2 million.

Based on the cash and cash equivalents on hand, the Company believes its combined cash and cash equivalents will be sufficient to fund operations, including clinical trial expenses and capital expenditure requirements, for at least 12 months from the issuance date of these interim financial statements.

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The accompanying interim condensed consolidated financial statements and the related footnote disclosures are unaudited.

These unaudited interim financial statements have been prepared on the same basis as the audited financial statements, and in management’s opinion, include all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2022 and its results of operations for the three and six months ended June 30, 2022 and 2021, and cash flows for the six months ended June 30, 2022 and 2021.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ended December 31, 2022 or any other period.

These unaudited interim financial statements have been prepared on the same basis as the audited financial statements, and in management’s opinion, include all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2022 and its results of operations for the three and nine months ended September 30, 2022 and 2021, and cash flows for the nine months ended September 30, 2022 and 2021.

The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ended December 31, 2022 or any other period.

The December 31, 2021 year-end condensed consolidated balance sheet was derived from audited annual financial statements but does not include all disclosures from the annual financial statements.

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GAAP have been condensed or omitted pursuant to such rules and regulations.

Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021 and the related notes included in the Company’s Registration Statement on Form S-1, filed with the SEC on June 28, 2022, and amended on July 29, 2022, which provides a more complete discussion of the Company’s accounting policies and certain other information.

There have been no material changes to the Company’s significant accounting policies as of and for the three and six months ended June 30, 2022, as compared to the significant accounting policies described in the Company’s audited annual consolidated financial statements as of and for the year ended December 31, 2021, except as discussed below.

Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021 and the related notes included in the Company’s Registration Statement on Form S-1, filed with the SEC on September 12, 2022, which provides a more complete discussion of the Company’s accounting policies and certain other information.

There have been no material changes to the Company’s significant accounting policies as of and for the three and nine months ended September 30, 2022, as compared to the significant accounting policies described in the Company’s audited annual consolidated financial statements as of and for the year ended December 31, 2021, except as discussed below.

Contingent Earnout Equity

In connection with the Reverse Recapitalization and pursuant to the Merger dated as of June 8, 2022 by and among the Merger Sub and Legacy Senti, former holder of the Legacy Senti common stock and Legacy Senti preferred stock are entitled to receive as additional consideration of up to 2,000,000 shares of the Company’s Common Stock (the “Contingent Earnout Shares”), comprised of two separate tranches of 1,000,000 shares per tranche, for no consideration upon the achievement of certain share price milestones within a period of two and three years .

The Contingent Earnout Shares are a form of dividend for holders of Legacy Senti common stock and Legacy Senti preferred stock.

If there is a change of control within the three-year period following the closing of the Merger that results in a per share price equal to or in excess of certain share price milestones not previously met, then the Company shall issue the earnout shares to the holders of Legacy Senti common stock and preferred stock.

In accordance with ASC 815-40, Derivatives and Hedging , as certain terms of the contingent earnout shares were not indexed to the common stock, equity treatment is precluded and liability classification is required at the Reverse Recapitalization date and subsequently remeasured at each reporting date with changes in fair value recorded as a component of other (expense) income, net in the condensed consolidated statements of operations and comprehensive loss.

In accordance with ASC 815-40, Derivatives and Hedging , as certain terms of the contingent earnout shares were not indexed to the common stock, equity treatment is precluded and liability classification is required at the Reverse Recapitalization date and subsequently remeasured at each reporting date with changes in fair value recorded as a component of other income (expense), net in the condensed consolidated statements of operations and

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

the earnout shares were granted to holders of Legacy Senti common stock that are subject to repurchase so was accounted for as stock-based compensation and as of the date of the Merger and expensed as there was no remaining service period.

comprehensive loss.

A portion of the earnout shares were granted to holders of Legacy Senti common stock that are subject to repurchase, and as of the date of the Merger were accounted for as stock-based compensation and expensed as there was no remaining service period.

The estimated fair value of the Contingent Earnout Shares was determined using a Monte Carlo simulation using a distribution of potential outcomes on a monthly basis over a three-year period prioritizing the most reliable information available.

The assumptions utilized in the calculation were based on the achievement of certain stock price milestones, including the current Company common stock price, expected volatility, risk-free rate, expected term and expected dividend yield.

Recent Accounting Standards

The Company believes that the impact of recently issued accounting standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

Reverse Recapitalization

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• all shares of Dynamics Class A common stock were redesignated as common stock, par value $ 0.0001 per share, of the Company.

Former holders of the Legacy Senti common stock and preferred stock are eligible to receive up to an aggregate of 2.0 million additional shares of the Company’s common stock in the aggregate in two equal tranches of 1.0 million shares if the volume-weighted average closing sale price of the common stock is greater than or equal to $ 15.00 and $ 20.00 , respectively, for any 20 trading days within any 30 consecutive trading day period.

Former holders of the Legacy Senti common stock and preferred stock are eligible to receive up to an aggregate of 2,000,000 additional shares of the Company’s common stock in the aggregate in two equal tranches of 1,000,000 shares if the volume-weighted average closing sale price of the common stock is greater than or equal to $ 15.00 and $ 20.00 , respectively, for any 20 trading days within any 30 consecutive trading day period.

The first and second tranche term is two and three years , respectively, from the closing of the Merger.

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Concurrently with the closing of the Merger, the unsecured convertible promissory note (the “May 2022 Note”) in the principal amount of $ 5.2 million that was previously issued by Legacy Senti to Bayer Healthcare LLC (“Bayer”) on May 19, 2022 was automatically cancelled and exchanged for 517,500 shares of Class A Common Stock (the “Note Exchange”) at a price of $ 10.00 per share.

The shares of Class A Common Stock issued in the Note Exchange are entitled to the same registration rights granted to the PIPE Investors with respect to the PIPE Shares.

Refer to Note 7, Convertible Note , for further details of the convertible note.

The shares of Class A Common Stock issued in the Note

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Exchange are entitled to the same registration rights granted to the PIPE Investors with respect to the PIPE Shares.

Refer to Note 7, Convertible Note , for further details of the convertible note.

The number of shares of the Company’s common stock outstanding immediately following the consummation of the Merger was:

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(1) Includes 19,517,988 shares of common stock issued upon conversion of Legacy Senti’s redeemable convertible preferred stock.

The Merger is accounted for as a reverse recapitalization in accordance with U.S.

Under this method of accounting, Dynamics is treated as the acquired company for financial reporting purposes and Legacy Senti is treated as the acquiror.

This determination is primarily based on the fact that subsequent to the Merger, the Legacy Senti stockholders hold a majority of the voting rights of the combined company, Legacy Senti comprises all of the ongoing operations of the combined company, Legacy Senti comprises a majority of the carryover governing body of the combined company, and Legacy Senti’s senior management comprises all of the senior management of the combined company.

The Merger was accounted for as a reverse recapitalization in accordance with U.S.

Under this method of accounting, Dynamics was treated as the acquired company for financial reporting purposes and Legacy Senti was treated as the acquiror.

This determination was primarily based on the fact that subsequent to the Merger, the Legacy Senti stockholders hold a majority of the voting rights of the combined company, Legacy Senti comprises all of the ongoing operations of the combined company, Legacy Senti comprises a majority of the carryover governing body of the combined company, and Legacy Senti’s senior management comprises all of the senior management of the combined company.

Accordingly, for accounting purposes, the Merger was treated as the equivalent of Legacy Senti issuing shares for the net assets of Dynamics, accompanied by a recapitalization.

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Operations prior to the Merger are those of Legacy Senti.

In connection with the Merger, the Company received $ 140.7 million in proceeds from the Merger and related PIPE Financing, including the Bayer convertible note cancellation and exchange.

The Company incurred $ 23.3 million of transaction costs, consisting of banking, legal, and other professional fees, which was recorded as a reduction of proceeds to additional paid-in capital.

In addition, there were $ 0.3 million of unpaid transaction costs included in accounts payable and accrued expenses as of June 30, 2022.

In connection with the Merger, the Company raised $ 140.7 million in proceeds from the Merger and related PIPE Financing, including the Bayer convertible note cancellation and exchange.

Transaction costs totaling $ 23.5 million consisting of banking, legal, and other professional fees were deducted from the funds raised, of which $ 4.8 million was incurred by the Company and the remainder by Dynamics.

In addition, there were no unpaid transaction costs included in accounts payable and accrued expenses as of September 30, 2022.

Fair Value Measurements

The following tables summarize the estimated value of cash equivalents and restricted cash (in thousands):

June 30, 2022

September 30, 2022

Amortized Cost Unrealized Gain Unrealized Loss Estimated Fair Value

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Financial assets and liabilities measured and recognized at fair value are as follows (in thousands):

June 30, 2022

September 30, 2022

Level 1 Level 2 Level 3 Total

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Change in fair value included in other income (expense) 8,779

Fair value as of June 30, 2022

Fair value as of September 30, 2022

The fair value of the Contingent Earnout Liability is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy.

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Notes to Condensed Consolidated Financial Statements

In determining the fair value of the Contingent Earnout Liability, the Company used the Monte Carlo simulation value model using a distribution of potential outcomes.

In determining the fair value of the Contingent Earnout Liability, the Company used a Monte Carlo simulation value model using a distribution of potential outcomes.

Refer to Note 8, Stockholders’ Equity (Deficit) , for further details of the Contingent Earnout.

Preferred Stock Tranche Liability

The subsequent fair values of the preferred stock tranche liability recognized in connection with the issuance of Series B redeemable convertible preferred stock financing were determined with the assistance of a third-party valuation specialist using significant inputs not observable in the market which constitute Level 3 measurements within the fair value hierarchy.

The subsequent fair values of the preferred stock tranche liability recognized in connection with the issuance of Series B redeemable convertible preferred stock were determined with the assistance of a third-party valuation specialist using significant inputs not observable in the market which constitute Level 3 measurements within the fair value hierarchy.

The following reflects the significant quantitative inputs used in the valuation of the preferred stock tranche liability as of December 31, 2020 using a Monte Carlo valuation model and/or Black-Scholes option pricing model:

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The second and third closings occurred on May 14, 2021 and all shares of the Series B redeemable convertible preferred stock were acquired thereby extinguishing the preferred stock tranche liability.

The value of the tranche rights acquired on May 14, 2021 was determined using the current value method as both tranches were called by the Company on the valuation date.

The $ 15.2 million value of the tranche rights acquired on May 14, 2021 was determined using the current value method as both tranches were called by the Company on the valuation date.

The following reflects the significant quantitative inputs used in the valuation of the preferred stock tranche liability as of May 14, 2021 using a weighted comparable guideline IPO (high and low) and special purpose acquisition company (“SPAC”) transactions for the public scenario and the Black-Scholes pricing model for the staying-private scenario:

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Weighted-average value of Series B redeemable convertible preferred stock $ 2.032

The difference between the weighted-average value of Series B redeemable convertible preferred stock of $ 2.032 and the strike price of $ 1.6427 is the $ 0.3893 weighted-average fair value of the tranche feature on a per share basis as of May 14, 2021 for a total fair value of $ 15.2 million resulting in a change in fair value of the preferred stock tranche liability of $ 2.9 million for the three months ended June 30, 2021.

The following table provides a roll-forward of the change in the preferred stock tranche liability (in thousands):

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Prepaid expenses and other current assets consisted of the following (in thousands):

June 30, December 31,

September 30, December 31,

Prepaid expenses (including prepaid rent) $ 2,277 $ 798

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Property and equipment, net consisted of the following (in thousands):

June 30, December 31,

September 30, December 31,

Lab equipment $ 7,762 $ 4,988

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Property and equipment, net $ 47,259 $ 12,368

Depreciation totaled $ 0.5 million and $ 0.3 million for the six months ended June 30, 2022 and 2021, respectively and $ 0.3 million and $ 0.2 million for the three months ended June 30, 2022 and 2021, respectively.

Depreciation totaled $ 0.9 million and $ 0.5 million for the nine months ended September 30, 2022 and 2021, respectively and $ 0.4 million and $ 0.2 million for the three months ended September 30, 2022 and 2021, respectively.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following (in thousands):

June 30, December 31,

Accrued professional and service fees $ 7,234 $ 2,555

September 30, December 31,

Accrued professional and service fees related to facility construction $ 6,828 $ 605

Accrued professional and service fees other 2,465 1,950

Accrued employee-related expenses 2,566 2,665

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Operating Leases

The Company’s operating leases are primarily for its corporate headquarters located in South San Francisco, California and for additional office and laboratory space located in Alameda, California (“Alameda lease”) that commenced on July 30, 2021.

The Company’s operating leases are primarily for its corporate headquarters located in South San Francisco, California (“HQ lease”) and for additional office and laboratory space located in Alameda, California (“Alameda lease”) that commenced on July 30, 2021.

The corporate headquarters lease has an initial term of eight years expiring in 2027, with an option to renew for an additional eight years unless canceled by either party thereafter.

The Alameda lease has an initial term of eleven years expiring in 2032, with an option to renew the lease for up to two additional terms of five years .

The exercise of these renewal options is not recognized as part of the ROU assets and lease liabilities, as the Company did not conclude, at the commencement date of the leases, that the exercise of renewal options or

The Alameda lease has an initial term of eleven years expiring in 2032, with an option to renew the lease for up to two

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

termination options was reasonably certain.

additional terms of five years .

The Alameda lease provides for a tenant improvement allowance of up to $ 17.5 million for the costs relating to the design, permitting and construction of the improvements, to be disbursed by the landlord no later than December 31, 2023.

The Company was deemed to be the accounting owner of the tenant improvements primarily because the Company is the principal in the construction and design of the assets, is responsible for costs overruns and retains substantially all economic benefits from the leasehold improvements over their economic lives .

The Company is deemed to be the accounting owner of the tenant improvements primarily because the Company is the principal in the construction and design of the assets, is responsible for costs overruns and retains substantially all economic benefits from the leasehold improvements over their economic lives .

Accordingly, the tenant improvement allowance is considered an incentive and was deducted from the initial measurement of the ROU asset and lease liability.

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A summary of total lease costs and other information for the period relating to the Company’s operating leases is as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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Total lease cost $ 1,530 $ 1,270 $ 4,563 $ 3,033

Six Months Ended June 30,

Nine Months Ended September 30,

Other information:

Operating cash flows net inflows and (outflows) from operating lease $ 9,225 $ ( 1,995 )

Remeasurement of ROU and lease liabilities due to changes in the timing of receipt of lease incentives 199 —

ROU assets obtained in exchange for operating lease obligations (including remeasurement of ROU and lease liabilities due to changes in the timing of receipt of lease incentives) $ 202 $ 9,825

Weighted-average remaining lease term 8.2 years 7.9 years

Weighted-average discount rate 9.1 % 9.1 %

As of June 30, 2022, the Company had received $ 8.1 million of the $ 17.5 million tenant improvements allowance.

As of June 30, 2022 and 2021, amounts disclosed for ROU assets obtained in exchange for lease obligations include amounts added to the carrying amount of ROU assets resulting from lease modifications and reassessments.

Maturities of the Company’s lease liabilities as of June 30, 2022, were as follows (in thousands):

For the nine months ended September 30, 2022, the Company received $ 11.3 million and has received $ 11.3 million inception-to-date of the $ 17.5 million tenant improvement allowance.

As of September 30, 2022 and 2021, amounts disclosed for ROU assets obtained in exchange for lease obligations include amounts added to the carrying amount of ROU assets resulting from lease modifications and reassessments.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Maturities of the Company’s lease liabilities as of September 30, 2022, were as follows (in thousands):

2022, for the remainder of the year $ 697

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Less imputed interest ( 19,402 )

Tenant improvement reimbursements ( 9,361 )

Tenant improvement allowance remaining ( 6,178 )

Total lease liabilities $ 34,095

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Convertible Note

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In accordance with the accounting guidance for an extinguishment of convertible debt instruments with a conversion feature that is separately accounted for as a derivative, the Company determined that the cancellation and exchange should be accounted for as an extinguishment of the May 2022 Note and a gain on extinguishment of $ 1.3 million was recorded at the closing of the Merger and all accrued interest at the time of the Merger was reversed and recorded to additional paid in capital.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Stockholders’ Equity (Deficit)

Redeemable Convertible Preferred Stock

The Company’s redeemable convertible preferred stock consisted of the following as of December 31, 2021 (in thousands, except per share amounts):

The Company’s redeemable convertible preferred stock consisted of the following as of December 31, 2021 (in thousands, except share and per share amounts):

December 31, 2021

Issue Price Shares Authorized Shares Issued and Outstanding

Per Share Shares Authorized Shares Issued and Outstanding

Net Carrying Value

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Total 19,517,990 19,517,988 $ 171,833 $ 163,834

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

In connection with the Merger, all previously issued and outstanding redeemable convertible preferred stock was converted into an equivalent number of shares of common stock of the Company on a one -to-one basis, then multiplied by the Exchange Ratio pursuant to the Merger Agreement.

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Common stock is subordinate to the redeemable convertible preferred stock with respect to dividend rights and rights upon liquidation, winding up, and dissolution of the Company.

Through June 30, 2022, no cash dividends have been declared or paid.

At June 30, 2022 and December 31, 2021, the Company was authorized to issue 500,000,000 and 27,006,600 shares of common stock, respectively all at a par value of $ 0.0001 per share, and had reserved the following shares for future issuance:

June 30, December 31,

Through September 30, 2022, no cash dividends have been declared or paid.

At September 30, 2022 and December 31, 2021, the Company was authorized to issue 500,000,000 and 27,006,600 shares of common stock, respectively all at a par value of $ 0.0001 per share, and had reserved the following shares for future issuance:

September 30, December 31,

Series A and B redeemable convertible preferred stock — 19,517,988

Common Stock Purchase Agreement 8,627,049 —

Common stock options issued and outstanding 8,757,118 2,291,838

Common stock shares available for future issuance under equity plans 4,514,977 717,617

Common stock shares available for future issuance under the 2022 Employee Stock Purchase Plan (the “ESPP”) 592,584 —

Unvested early exercised common stock 118,160 473,373

Stock options to purchase common stock 8,779,368 2,291,838

Common stock options available for future grant under stock option plan 2,492,735 717,617

Total 22,609,888 23,000,816

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Preferred Stock

In connection with the close of the Merger, the Company’s Amended and Restated Certificate of Incorporation provides the Company’s board of directors with the authority to issue $ 0.0001 par value preferred stock in one more series and to establish from time to time the number of shares to be included in each such series, by adopting a resolution and filing a certification of designations.

Voting powers, designations, powers, preferences and relative, participating, optional, special and other rights shall be stated and expressed in such resolutions.

There were 10,000,000 shares designated as preferred stock and none were outstanding as of June 30, 2022.

In connection with the close of the Merger, the Company’s Amended and Restated Certificate of Incorporation provides the Company’s board of directors with the authority to issue $ 0.0001 par value preferred stock in one or more series and to establish from time to time the number of shares to be included in each such series, by adopting a resolution and filing a certification of designations.

Voting powers, designations, powers, preferences and relative,

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

participating, optional, special and other rights shall be stated and expressed in such resolutions.

There were 10,000,000 shares designated as preferred stock and none were outstanding as of September 30, 2022.

Common Stock Purchase Agreement

On August 31, 2022, the Company entered into a Common Stock Purchase Agreement and a Registration Rights Agreement (collectively referred to as the “Purchase Agreement”) with Chardan Capital Markets LLC (“Chardan”).

Pursuant to the Purchase Agreement, the Company has the right, in its sole discretion, to sell to Chardan up to the lesser of (i) $ 50.0 million of newly issued shares of the Company’s common stock, and (ii) the Exchange Cap (as defined below) (subject to certain conditions and limitations), from time to time during the 36 -month term of the Purchase Agreement.

Under the applicable NASDAQ rules, the Company may not issue to Chardan under the Purchase Agreement more than 8,727,049 shares of common stock, which number of shares is equal to 19.99 % of the common shares outstanding immediately prior to the execution of the Purchase Agreement unless certain exceptions are met (the “Exchange Cap”).

The purchase price of the shares of common stock will be determined by reference to the Volume Weighted Average Price (“VWAP”) of the common stock during the applicable purchase date, less a fixed 3 % discount to such VWAP.

However, the total shares to be purchased on any day may not exceed 20 % of the trading volume, and the total purchase price on any day may not exceed $ 3.0 million.

As consideration for Chardan’s commitment to purchase shares of common stock at the Company’s direction upon the terms and subject to the conditions set forth in the Purchase Agreement, upon execution of the Purchase Agreement, the Company issued 100,000 shares of its common stock to Chardan and paid a $ 0.4 million document preparation fee.

The Company recognized an expense of $ 0.7 million within general and administrative expenses in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss for the Chardan related costs and legal fees incurred in connection with the agreement.

Other than the issuance of the commitment shares of the Company’s common stock to Chardan, the Company had not issued any shares of its common stock to raise capital under the Purchase Agreement as of September 30, 2022.

Subsequent to September 30, 2022, and through the date of this filing, the Company sold 100,000 shares of common stock, for aggregate net proceeds of $ 0.4 million, under the Purchase Agreement.

Contingent Earnout Equity

Following the Closing, former holders of Legacy Senti common stock and preferred stock may receive up to 2,000,000 additional shares of the Company’s common stock in the aggregate, in two equal tranches of 1,000,000 shares of common stock per tranche.

Following the closing of the Merger, former holders of Legacy Senti common stock and preferred stock may receive up to 2,000,000 additional shares of the Company’s common stock in the aggregate, in two equal tranches of 1,000,000 shares of common stock per tranche.

The first and second tranches are issuable if the closing volume weighted average price (“VWAP”) per share of common stock quoted on the Nasdaq (or the exchange on which the shares of common stock are then listed) is greater or equal to $ 15.00 and $ 20.00 , respectively over any twenty trading days within any thirty-day trading period.

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The estimated fair value of the total Contingent Earnout Shares at the Closing on June 8, 2022, was $ 9.8 million based on a Monte Carlo simulation valuation model.

Of this amount, $ 9.7 million was accounted for as a Contingent Earnout Liability because the triggering events that determine the number of Contingent Earnout Shares required to

Of this amount, $ 9.7 million was accounted for as a Contingent Earnout Liability because the triggering events that determine the number of Contingent Earnout Shares required to be issued include events that are not solely indexed to the common stock of the Company.

The remaining balance of $ 0.1 million relates to holders of Legacy Senti common stock that are subject to repurchase were accounted for as stock-based compensation and recorded as an expense, as there was no remaining service period.

The Contingent Earnout Liability was remeasured to fair value as of September 30, 2022, resulting in the recording of a non-cash loss of $ 0.1 million and gain of $ 8.8 million for the three and nine months ended September 30, 2022, classified

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

be issued include events that are not solely indexed to the common stock of the Company.

The Contingent Earnout Liability was remeasured to fair value as of June 30, 2022, resulting in the recording of a non-cash gain of $ 8.9 million for the three and six months ended June 30, 2022, classified within change in fair value of contingent earnout liability in the condensed consolidated statements of operations and comprehensive loss.

within change in fair value of contingent earnout liability in the condensed consolidated statements of operations and comprehensive loss.

Assumptions used in the valuation are described below:

June 08, 2022 June 30, 2022

June 08, 2022 September 30, 2022

Current stock price $ 7.51 $ 2.17

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Spark may generally terminate the agreement upon 90 days prior written notice or 180 days prior written notice if the licensed promoter is in clinical trials or is being commercialized at the time of termination.

The Company evaluated Spark’s optional rights to license, develop, manufacture and commercialize each of the promoter profiles to determine whether they provide Spark with any material rights to purchase the promoter licenses at an incremental discount.

The Company’s proprietary technology used to develop the promoters is in the

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

The Company’s proprietary technology used to develop the promoters is in the early stages of development, so technological feasibility and probability of developing a product is highly uncertain.

early stages of development, so technological feasibility and probability of developing a product is highly uncertain.

As a result, determining the SSP for the optional rights is subject to significant judgment.

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The Company believes that the cost-based input method is the best measure of progress because other measurements would not reflect how the Company transfers the control related to the performance obligation to our customers.

For the three months ended June 30, 2022 and 2021, the Company recorded revenue, which was previously included in deferred revenue at the beginning of each period, of $ 0.5 million and $ 0.3 million, respectively, and for the six months ended June 30, 2022 and 2021, the Company recorded revenue, which was previously included in the deferred revenue at the beginning of each period, of $ 1.0 million and $ 0.3 million, respectively.

Contract asset balances related to unbilled revenue for our collaboration agreements were zero as of June 30, 2022 and 2021, and are presented within prepaid expenses and other current assets on the condensed consolidated balance sheets.

For the three months ended September 30, 2022 and 2021, the Company recorded revenue, which was previously included in deferred revenue at the beginning of each period, of $ 0.7 million and $ 0.5 million, respectively, and for the nine months ended September 30, 2022 and 2021, the Company recorded revenue, which was previously included in the deferred revenue at the beginning of each period, of $ 1.7 million and $ 0.8 million, respectively.

Contract asset balances related to unbilled revenue for our collaboration agreements were zero as of September 30, 2022 and 2021, and are presented within prepaid expenses and other current assets on the condensed consolidated balance sheets.

In 2021, the Small Business Innovation Research (“SBIR”) awarded the Company a grant in the amount of $ 2.0 million over two years subject to meeting certain terms and conditions.

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Entity-wide information

During the three months ended June 30, 2022, Customers A and B accounted for 82 % and 18 %, respectively, of revenue.

During the three months ended June 30, 2021, Customers A, B and C accounted for 86 %, 2 % and 12 %, respectively, of revenue.

During the six months ended June 30, 2022, Customers A and B accounted for 80 % and 20 %, respectively, of revenue.

During the six months ended June 30, 2021, Customer A, B and C accounted for 79 %, 5 % and 16 %, respectively, of revenue.

All revenues were generated in the United States for the three and six months ended June 30, 2022 and 2021.

During the three months ended September 30, 2022, Customers A and B accounted for 86 % and 14 %, respectively, of revenue.

During the three months ended September 30, 2021, Customers A and B accounted for 83 % and 16 %, respectively, of revenue.

During the nine months ended September 30, 2022, Customers A and B accounted for 82 % and 18 %, respectively, of revenue.

During the nine months ended September 30, 2021, Customer A and B accounted for 85 % and 11 %, respectively, of revenue.

All revenues were generated in the United States for the three and nine months ended September 30, 2022 and 2021.

Stock-Based Compensation

On June 8, 2022, upon the Merger, the Company adopted a 2022 Stock Incentive Plan (the “2022 Plan”) authorizing the grant of incentive stock options (“ISOs”), to employees, including employees of any parent or subsidiary, and for the grant of nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to employees, directors and consultants, including employees and consultants of the Company’s affiliates.

As of June 30, 2022, the Company is authorized to issue up to 2,492,735 , of shares of common stock under the 2022 Plan in which the exercise price of an

On June 8, 2022, upon the Merger, the Company adopted a 2022 Stock Incentive Plan (the “2022 Plan”) authorizing the grant of incentive stock options (“ISOs”), to employees, including employees of any parent or subsidiary, and for the grant of non-statutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to employees, directors and consultants, including employees and consultants of the Company’s affiliates.

As of September 30, 2022, the Company is authorized to issue up to 2,492,735 shares of common stock under the 2022 Plan in which the exercise price of an ISO and NSO shall not be less than 100 % of the fair market value of a common stock share on the date

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

ISO and NSO shall not be less than 100 % of the fair market value of a common stock share on the date of grant.

The exercise price of an ISO granted to a 10 % stockholder shall not be less than 110 % of the fair value of the common stock share on the date of grant.

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The 2022 Plan replaced the Legacy Senti 2016 Stock Incentive Plan (the “2016 Plan”).

As of June 30, 2022 and December 31, 2021, Legacy Senti was authorized to issue up to 12,828,363 of shares of common stock under the 2016 Plan.

As of June 8, 2022 and December 31, 2021, Legacy Senti was authorized to issue up to 12,828,363 shares of common stock under the 2016 Plan.

Following the Merger, no additional stock awards will be granted under the 2016 Plan.

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The shares underlying any award granted under the 2016 Plan that are forfeited back to or repurchased or reacquired by the Company, will revert to and again become available for issuance under the 2022 Plan.

On August 5, 2022, the Company adopted a 2022 Inducement Equity Plan (the “2022 Inducement Plan”) authorizing the grant of non-statutory stock options (“NSOs”), stock appreciation rights (“SARs”), restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to persons not previously an employee of the Company and its affiliates.

As of September 30, 2022, the Company is authorized to issue up to 2,000,000 shares of common stock under the 2022 Inducement Plan in which the exercise price of a stock option or SAR shall not be less than 100 % of the fair market value of a common stock share on the date of grant.

Stock options and SARs awarded under the Plan expire ten years after the grant date.

The following table summarizes the Company’s stock option activity, excluding performance and market awards:

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2,291,838 $ 4.39 9.1 $ 11,304

Granted 1,510,059 $ 1.83 — $ —

Exercised ( 199,807 ) $ 2.49 — $ —

Forfeited ( 529,221 ) $ 3.16 — $ —

Outstanding at June 30, 2022

Outstanding at September 30, 2022

3,072,869 $ 3.46 9.1 $ 527

Vested and exercisable at June 30, 2022

Vested and exercisable at September 30, 2022

583,348 $ 4.01 8.1 $ 29

Early Exercise of Stock Options into Restricted Stock

For the six months ended June 30, 2022 and 2021, the Company issued zero and 512,670 shares of common stock upon exercise of unvested stock options, respectively.

As of June 30, 2022 and December 31, 2021, 288,807 and 473,373 shares were held by employees subject to repurchase at an aggregate price of $ 0.8 million and $ 1.2 million, respectively.

For the nine months ended September 30, 2022 and 2021, the Company issued zero and 512,670 shares of common stock upon exercise of unvested stock options, respectively.

As of September 30, 2022 and December 31, 2021, 118,160 and 473,373 shares were held by employees subject to repurchase at an aggregate price of $ 0.3 million and $ 1.2 million, respectively.

Performance Awards

In connection with the Merger, on December 19, 2021, the Legacy Senti approved 8,400,892 performance awards to existing employees that vest contingent upon the satisfaction of both a four -year service condition and a performance condition tied to the consummation of the Merger.

In connection with the Merger, on December 19, 2021, Legacy Senti approved 8,400,892 performance awards to existing employees that vest contingent upon the satisfaction of both a four -year service condition and a performance condition tied to the consummation of the Merger.

The awards and the associated recognition of stock-based compensation were contingent on the Merger being consummated.

As of the approval date of the performance awards, Legacy Senti did not have sufficient common stock available for issuance.

Upon the Merger, the Company increased number of shares authorized and 6,796,074 awards were granted on June 8, 2022.

Upon the Merger, the Company increased the number of shares authorized and 6,796,074 awards were granted on June 8, 2022.

Refer to Note 8, Stockholders’ Equity (Deficit), for further details of the shares of common stock authorized.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Number of Options Weighted-Average Exercise Price Weighted-Average

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Granted 6,796,074 $ 9.92 — $ —

Outstanding at June 30, 2022

Forfeited ( 1,427,573 ) $ 9.92 — $ —

Outstanding at September 30, 2022

5,368,501 $ 9.92 9.2 $ —

Vested and exercisable at June 30, 2022

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Vested and exercisable at September 30, 2022

Market Awards

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The award and the associated recognition of stock-based compensation are contingent on the Merger being consummated.

As of the approval date, the Legacy Senti did not have sufficient common stock available for issuance to allow for exercise of the stock options.

Upon the Merger, the Company increased number of shares authorized and 315,748 awards were granted on June 8, 2022.

As of the approval date, Legacy Senti did not have sufficient common stock available for issuance to allow for exercise of the stock options.

Upon the Merger, the Company increased the number of shares authorized and 315,748 awards were granted on June 8, 2022.

Refer to Note 8, Stockholders’ Equity (Deficit), for further details of the shares of common stock authorized.

Employee Stock Purchase Plan

On June 8, 2022, upon the Merger, the Company adopted a 2022 Employee Stock Purchase Plan (the “ESPP”).

The ESPP allows eligible employees to purchase shares of the Company's common stock at a price equal to 85 % of the lower of the fair market values of the stock on the first day of an offering or on the date of purchase.

The Company recognizes stock-based compensation expenses related to purchase rights issued pursuant to its ESPP on a straight-line basis over the offering period, which is generally 24 months.

The fair value of purchase rights under the ESPP are estimated on the date of grant using the Black-Scholes option valuation model.

On January 1 of each year commencing January 1, 2023, the ESPP will automatically increase by 1 % of the outstanding number of shares of common stock of the Company on December 31 or such lesser number of shares as approved by the Company’s board of directors.

The grant date of the initial offering was September 16, 2022, and that offering period shall end on November 15, 2024.

The Company’s ESPP operates with rolling offering periods, so a new offering period will begin on November 16, 2022.

As of September 30, 2022, the Company recorded a liability of $ 38 thousand related to the accumulated payroll deductions, which are refundable to employees who withdraw from the ESPP.

This amount is included within accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets.

Stock-Based Compensation Expense

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As of the closing of the Merger and going forward, the fair value of common stock will be based on the publicly traded market value.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Expected Term — The expected term represents the period that the Company’s stock options are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term).

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The assumptions used to determine the grant date fair value of non-market based, stock options granted were as follows, presented on a weighted-average basis:

Six Months Ended June 30,

Nine Months Ended September 30,

Expected term (in years) 6.5 6.1

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Dividend yield — —

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

The assumptions used to determine the per-share fair value of shares to be granted under the ESPP were as follows:

Nine Months Ended September 30,

Fair value per share $ 0.84

Fair value per share of Common Stock $ 1.60

Expected term (in years) 1.3

Expected volatility 88 %

Risk-free interest rate 3.8 %

Dividend yield —

Total stock-based compensation expense was as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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Total stock-based compensation expense $ 2,290 $ 626 $ 12,176 $ 1,560

As of June 30, 2022, the total unrecognized stock-based compensation was approximately $ 32.1 million, expected to be recognized over a weighted-average period of 2.26 years.

As of September 30, 2022, the total unrecognized stock-based compensation related to service, performance, and market-based options was approximately $ 23.9 million, expected to be recognized over a weighted-average period of 2.18 years and the total unrecognized stock-based compensation related to the ESPP was approximately $ 1.1 million, expected to be recognized over a weighted-average period of 1.3 years.

As of December 31, 2021, the total unrecognized stock-based compensation was approximately $ 9.2 million, expected to be recognized over a weighted-average period of 3.1 years.

No provision for income taxes was recorded for the three and six months ended June 30, 2022 and 2021, respectively.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

No provision for income taxes was recorded for the three and nine months ended September 30, 2022 and 2021, respectively.

Deferred tax assets generated from the Company’s net operating losses have been fully reserved, as the Company believes it is not more likely than not that the benefit will be realized due to the Company’s net operating losses generated to date.

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A reconciliation of net loss available to common stockholders and the number of shares in the calculation of basic and diluted loss per share is as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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The following potential common stock securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (on an as-converted basis):

Three and Six Months Ended June 30,

Three and Nine Months Ended September 30,

Series A and B redeemable convertible preferred stock — 19,517,988

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Total 10,875,278 21,832,990

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Commitments and Contingencies

In the ordinary course of business, we enter into contractual agreements with third parties that include non-cancelable payment obligations, for which we are liable in future periods.

On June 3, 2021, the Company entered into a lease agreement for a new cGMP facility in Alameda, California to support planned initial clinical trials for our product candidates (Note 6).

On June 3, 2021, the Company entered into a lease agreement for a new cGMP facility in Alameda, California to support planned initial clinical trials for our product candidates.

Refer to Note 6, Operating Leases , for further details of the leases.

The lease will expire in 2032 with future undiscounted operating lease payments of $ 46.0 million over an initial lease period of eleven years .

In 2021, the Company began construction of the cGMP facility.

As of June 30, 2022 the Company paid $ 17.9 million in construction costs of the $ 35.5 million purchase commitment.

As of September 30, 2022 the Company paid $ 29.3 million in construction costs of the $ 35.5 million purchase commitment.

The agreements with the construction company provide for termination following a certain period after notice.

Upon termination, the Company will be responsible for payment for work performed to date.

In 2021, the Company entered into a three-year collaboration and option agreement with BlueRock Therapeutics LP (“BlueRock”) under which the Company granted BlueRock an option to acquire an exclusive or non-exclusive license to develop, manufacture and commercialize cell therapy products (Note 14).

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

non-exclusive license to develop, manufacture and commercialize cell therapy products.

Refer to Note 14, Related Parties , for further details of the related parties.

In consideration for the option, the Company is responsible for up to $ 10.0 million in costs and expenses incurred over the three-year term.

As of June 30, 2022, purchase commitments related to sponsored research agreements amounted to approximately $ 1.7 million.

As of September 30, 2022, purchase commitments related to sponsored research agreements amounted to approximately $ 1.3 million.

The Company has entered into license agreements under which they are obligated to make annual maintenance payments of $ 0.1 million and specified milestone and royalty payments.

Future milestone and royalty payments under these agreements are not considered contractual obligations since the payments under these agreements are contingent upon future events, such as the Company’s achievement of specified development, regulatory, and sales milestones, or generating product sales.

As of June 30, 2022, the Company is unable to estimate the timing or likelihood of achieving these milestones or generating future product sales.

As of September 30, 2022, the Company is unable to estimate the timing or likelihood of achieving these milestones or generating future product sales.

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The Company is subject to claims and assessments from time to time in the ordinary course of business but does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

Indemnifications

Indemnification

In the ordinary course of business, the Company enters into agreements that may include indemnification provisions.

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The Company currently has directors’ and officers’ insurance.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

Related Parties

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On June 8, 2022, in conjunction with the Merger, each outstanding share of preferred stock of Legacy Senti was cancelled and converted into the aggregate number of shares of the Company’s common stock that would be issued upon conversion of the shares of Legacy Senti preferred stock based on the applicable conversion ratio immediately prior to the effective time, multiplied by the Exchange Ratio, rounded down to the nearest whole share.

As of June 30, 2022, no shares of preferred stock remain outstanding.

NEA held 4,429,725 and zero shares of common stock as of June 30, 2022 and December 31, 2021, respectively.

NEA held zero and 2,642,934 shares of outstanding Series A redeemable convertible preferred stock as of June 30, 2022 and December 31, 2021, respectively, as well as zero and 536,791 shares of outstanding Series B redeemable convertible preferred stock, respectively.

NEA held one of the seven seats on the Company’s Board of Directors as of June 30, 2022 and December 31, 2021.

As of September 30, 2022, no shares of preferred stock remain outstanding.

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

NEA held 4,429,725 and zero shares of common stock as of September 30, 2022 and December 31, 2021, respectively.

NEA held zero and 2,642,934 shares of outstanding Series A redeemable convertible preferred stock as of September 30, 2022 and December 31, 2021, respectively, as well as zero and 536,791 shares of outstanding Series B redeemable convertible preferred stock, respectively.

NEA held one of the seven seats on the Company’s Board of Directors as of September 30, 2022 and December 31, 2021.

Bayer Healthcare LLC

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Under the BlueRock Agreement, the specific financial terms for milestone payments and royalties will be negotiated and agreed to only after the option is exercised.

As of June 30, 2022, Bayer held 5,878,488 shares of the Company’s common stock.

As of December 31, 2021, Bayer held 5,360,988 shares of Series B redeemable convertible preferred stock and held one of the seven seats on

SENTI BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

the Board of Directors of Legacy Senti.

As of September 30, 2022, Bayer held 5,878,488 shares of the Company’s common stock.

As of December 31, 2021, Bayer held 5,360,988 shares of Series B redeemable convertible preferred stock and held one of the seven seats on the Board of Directors of Legacy Senti.

Bayer’s parent company is Bayer AG, which served as the lead investor in our Series B financing through its Leaps by Bayer unit.

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Subsequent Events

The Company evaluated subsequent events and transactions that occurred up to the date the unaudited condensed financial statements were issued.

Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.

On October 13, 2022, the Company sold 100,000 shares of common stock to Chardan pursuant to the Common Stock Purchase Agreement, aggregating to a net proceeds of $ 0.4 million.

Refer to Note 8, Stockholder’s Equity (Deficit), for further details of the Common Stock Purchase Agreement.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements