Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Annual Report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer and principal accounting officer), of the effectiveness of the design and operation 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 (the “Exchange Act”)) to determine whether such disclosure controls and procedures provide reasonable assurance that information to be disclosed by us 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 rules and forms of the SEC and such information is accumulated and communicated to management, including our principal executive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding disclosure. Our disclosure controls and procedures were developed through a process in which our management applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding the control objectives. You should note that the design of any system of disclosure controls and procedures is based in part upon various assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
As previously reported, in connection with our preparation and the audit of our consolidated financial statements as of and for the year ended December 31, 2022, we and our independent registered public accounting firm identified a material weakness, as defined under the Exchange Act and by the Public Company Accounting Oversight Board (United States), in our internal control over financial reporting. The material weakness related to a lack of sufficient and adequate resources in the finance and accounting function that resulted in 1. lack of formalized risk assessment process, 2. lack of segregation of duties, and 3. ineffective process level control activities over (a) management review of journal entries, (b) account reconciliations and (c) non-routine, unusual or complex transactions. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our consolidated financial statements will not be prevented or detected on a timely basis.
Remediation Efforts to Address the Material Weakness
Based on the remediation efforts described below, material weakness 1, 2, 3(a) and (b) noted above, has been fully remediated as of December 31, 2023, and while substantial progress has been made related to material weakness 3(c), further actions and testing are necessary before we can conclude full remediation. Remediation efforts to date include the following:
• engaging a professional accounting services firm to help us commence the documentation and assessment of our internal controls for complying with the Sarbanes-Oxley Act;
• implementing a risk assessment over financial reporting controls; and
• implementing new software tools.
While significant progress has been made to enhance our internal control over financial reporting, we are still in the process of building and enhancing our processes, procedures, and controls. Additional time is required to complete the remediation over ineffective process level control activities over non-routine, unusual and complex transactions to ensure the sustainability of these remediation actions. As such, we have not concluded that the material weakness has been fully remediated as of December 31, 2023, and therefore have concluded that our disclosure controls and procedures were not effective as of December 31, 2023.
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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. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors 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. Furthermore, 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, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Management's Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with U.S. GAAP. A control system, no matter how well designed and operated, can only provide reasonable, not absolute, assurance that the objectives of the control system are met. Because of these inherent limitations, management does not expect that our internal controls over financial reporting will prevent all errors and all fraud. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with our policies and procedures may deteriorate. Our management, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that, as of December 31, 2023, our internal control over financial reporting was not effective due to the material weaknesses described above.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information regarding executive officers and executive officers and directors required by this Item 10 will be included in the 2024 Proxy Statement or in an amendment on Form 10-K/A and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by this Item 11 will be included in the 2024 Proxy Statement or in an amendment on Form 10-K/A 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 12 will be included in the 2024 Proxy Statement or in an amendment on Form 10-K/A and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item 13 will be included in the 2024 Proxy Statement or in an amendment on Form 10-K/A and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The information required by this Item 14 will be included in the 2024 Proxy Statement or in an amendment on Form 10-K/A and is incorporated herein by reference.
Our independent registered public accounting firm is KPMG LLP , San Francisco, CA, Auditor ID: 185 .
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PART IV
Item 15. Exhibits and Financial Statement Schedules
The following exhibits are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K.
Incorporated by Reference
Exhibit Number Description Schedule/Form File No. Exhibit Filing Date
2.1^ Business Combination Agreement, dated as of December 19, 2021, by and among Dynamics Special Purpose Corp., Explore Merger Sub, Inc. and Senti Biosciences, Inc. (attached as Annex A to the Registration Statement).
S-4/A 333-262707 2.1 May 10, 2022
2.2^ Amendment No. 1 to Business Combination Agreement, dated as of February 12, 2022, by and among Dynamics Special Purpose Corp., Explore Merger Sub, Inc. and Senti Biosciences, Inc. (attached as Annex AA to the Registration Statement).
S-4/A 333-262707 2.2 May 10, 2022
2.3^ Amendment No. 2 to Business Combination Agreement, dated as of May 19, 2022, by and among Dynamics Special Purpose Corp., Explore Merger Sub, Inc. and Senti Biosciences, Inc.
8-K 001-40440 2.1 May 24, 2022
3.1 Second Amended and Restated Certificate of Incorporation of Senti Biosciences, Inc.
8-K 001-40440 3.1 June 15, 2022
3.2 Amended and Restated Bylaws of Senti Biosciences, Inc.
8-K 001-40440 3.2 June 15, 2022
4.1 Specimen Common Stock Certificate .
8-K 001-40440 4.1 June 15, 2022
4.3 Description of Securities
10-K 001-40440 4.3 March 22, 2023
10.1 Note Subscription Agreement by and among Senti Biosciences, Inc., Dynamics Special Purpose Corp. and Bayer HealthCare LLC, dated as of May 19, 2022.
8-K 001-40440 10.1 May 24, 2022
10.2+ Senti Biosciences, Inc. 2016 Stock Incentive Plan, as amended, and forms of award agreements thereunder.
S-4 333-262707 10.2 February 14, 2022
10.3+ Senti Biosciences, Inc. 2022 Equity Incentive Plan and forms of award agreements thereunder.
10-Q 001-40440 10.3 August 15, 2022
10.4+ Senti Biosciences, Inc. 2022 Employee Stock Purchase Plan.
10-Q 001-40440 10.4 August 15, 2022
10.5+ Form of Indemnification Agreement by and between the Registrant and each of its directors and executive officers. Combination.
S-4/A 333-262707 10.5 May 10, 2022
10.6+ Employee Offer Letter, by and between Timothy Lu and Senti Biosciences, Inc., dated December 27, 2018.
S-4 333-262707 10.6 February 14, 2022
10.7+ Employee Offer Letter, by and between Philip Lee and Senti Biosciences, Inc., dated December 27, 2018.
S-4 333-262707 10.7 February 14, 2022
10.8+
Employee Offer Letter, by and between Deborah Knobelman and Senti Biosciences, Inc., dated May 13, 2021.
S-4 333-262707 10.9 February 14, 2022
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Incorporated by Reference
Exhibit Number Description Schedule/Form File No. Exhibit Filing Date
10.9 Lease, by and between Britannia Biotech Gateway Limited Partnership and Senti Biosciences, Inc., dated July 17, 2018.
S-4 333-262707 10.10 February 14, 2022
10.10 First Amendment to Lease, by and between Britannia Biotech Gateway Limited Partnership and Senti Biosciences, Inc., dated May 8, 2019 .
S-4 333-262707 10.11 February 14, 2022
10.11 Second Amendment to Lease, by and between Britannia Biotech Gateway Limited Partnership and Senti Biosciences, Inc., dated June 17, 2020.
S-4 333-262707 10.12 February 14, 2022
10.12†
Research and Development and Laboratory Lease Agreement, by and between 1430 Harbor Bay Pkwy LLC and Senti Biosciences, Inc., dated June 3, 2021.
10-K 001-40440 10.13 March 22, 2023
10.13†
Patent License Agreement by and between the U.S. Department of Health and Human Services, as represented by the National Cancer Institute, and Senti Biosciences, Inc., dated July 20, 2020.
S-4 333-262707 10.14 February 14, 2022
10.14†
Patent License Agreement by and between the U.S. Department of Health and Human Services, as represented by the National Cancer Institute, and Senti Biosciences, Inc., dated February 5, 2021.
S-4 333-262707 10.15 February 14, 2022
10.15†
Research Collaboration and License Agreement by and between Spark Therapeutics, Inc. and Senti Biosciences, Inc., dated April 9, 2021 .
S-4 333-262707 10.16 February 14, 2022
10.16†
Patent License Agreement by and between the U.S. Department of Health and Human Services, as represented by the National Cancer Institute, and Senti Biosciences, Inc., dated May 17, 2021.
S-4 333-262707 10.17 February 14, 2022
10.17†
Collaboration and Option Agreement by and between BlueRock Therapeutics, LP and Senti Biosciences, Inc., dated May 21, 2021.
S-4 333-262707 10.18 February 14, 2022
10.18 Investor Rights and Lock-up Agreement.
8-K 001-40440 10.4 June 15, 2022
10.19 Form of Subscription Agreement.
S-4/A 333-262707 10.20 May 10, 2022
10.20 Form Sponsor Support Agreement (included in Exhibit 2.1).
S-4 333-262707 10.21 February 14, 2022
10.21 Form of Company Stockholder Support Agreement (included in Exhibit 2.1).
S-4 333-262707 10.22 February 14, 2022
10.22 Form of Amendment to Company Stockholder Support Agreement entered into on February 12, 2022 by certain stockholders of Senti Biosciences, Inc. (incorporated by reference to and Exhibit 10.1 of Dynamics Special Purpose Corp.’s Current Report on Form 8-K as filed with the SEC on February 15, 2021).
S-4 333-262707 10.24 February 14, 2022
10.23+
Senti Biosciences, Inc. 2022 Inducement Plan and forms of award agreements thereunder .
S-1 333-267390
10.24 September 12, 2022
10.24 ChEF Purchase Agreement, dated as of August 31, 2022, by and between Senti Biosciences, Inc. and Chardan Capital Markets LLC.
8-K 001-40440
10.1 September 1, 2022
10.25 Registration Rights Agreement dated as of August 31, 2022, by and between Senti Biosciences, Inc. and Chardan Capital Markets LLC.
8-K 001-40440
10.2 September 1, 2022
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Incorporated by Reference
Exhibit Number Description Schedule/Form File No. Exhibit Filing Date
10.26+
Non-Employee Director Compensation Policy.
10-Q 001-40440
10.1 November 10, 2022
10.27+
Consulting Agreement between Senti Biosciences, Inc. and David Epstein.
10-Q 001-40440
10.2 November 10, 2022
10.28+
Severance and Change in Control Agreement between the Company and Deborah Knobelman.
10-Q 001-40440
10.3 November 10, 2022
10.29+
Severance and Change in Control Agreement between the Company and Philip Lee.
10-Q 001-40440
10.4 November 10, 2022
10.30+
Severance and Change in Control Agreement between the Company and Tim Lu.
10-Q 001-40440
10.5 November 10, 2022
10.31†
Amendment No. 1 to the Research and License Agreement between Spark Therapeutics, Inc. and Senti Biosciences, Inc., dated December 8, 2022.
10-K 001-40440 10.32 March 22, 2023
10.32†
Side Letter between BlueRock Therapeutics, LP and Senti Biosciences, Inc., dated February 3, 2023.
10-K 001-40440 10.33 March 22, 2023
10.33 Scientific Advisory Board Agreement between Senti Biosciences, Inc. and James Collins.
10-K 001-40440 10.34 March 22, 2023
10.34+
E mployee Offer Letter by and betw e en Ka nya Ra jangam and Senti Biosciences, Inc., dated May 10, 2022.
10-Q 001-40440 10.1 May 9, 2023
10.35†
A mendment No. 2 to the Research and L i cense Agreement between Spark The rapeut ics, Inc. and Senti Biosciences, Inc., dated May 12, 2023.
10-Q 001-40440 10.1 August 11, 2023
10.36†
Framework Agreement by and among Senti Biosciences, Inc., Ge neFab, LLC and Valere Bio, Inc., dated August 7, 2023.
10-Q 001-40440 10.1 November 14, 2023
10.37†
Se ller E conomic Share Agreement by and among Senti Biosciences, Inc., Gene Fab, Inc and Valere Bio, Inc., dated August 7, 2023.
10-Q 001-40440 1 10.2 November 14, 2023
10.38†
Development and Manufacturing Services Agreement by and between Senti Biosciences, Inc. and Ge neFab, LLC dated A ugust 7, 2023.
10-Q 001-40440 10.3 November 14, 2023
10.39†
Sublease Agreement by and between Senti Bi osciences, Inc. and GeneFab, LLC dated August 7, 2023.
10-Q 001-40440 10.4 November 14, 2023
10.40†
Option Agreement by and between Senti Biosciences, Inc. and GeneFab, LLC, dated August 7, 2023 .
POS-AM (on S-1) 333-265873
10.8 November 1, 2023
10.41*†
C ollaboration and Option Agreement by and between Senti Biosc iences, Inc., and Celest Therapeutics (Shanghai) Co. Ltd., dated November 6, 2023.
16.1 Letter from Marcum LLC to the SEC
8-K 001-40440 16.1 June 15, 2022
21.1 List of Subsidiaries
8-K 001-40440 21.1 June 15, 2022
23.1* Consent of KPMG LLP
24.1* Power of Attorney (included on the signature page to the Annual Report on Form 10-K which forms part of this Annual Report on Form 10-K).
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Incorporated by Reference
Exhibit Number Description Schedule/Form File No. Exhibit Filing Date
31.1* Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2* Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), 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
97* Senti Biosciences, Inc. Compensation Recovery Policy
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.
101.SCH* Inline XBRL Taxonomy Extension Schema Document
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document
104* The cover page for the Company’s Annual Report on Form 10-K has been formatted in Inline XBRL and contained in Exhibit 101.
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__________________
* Filed herewith.
** Furnished herewith. This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing.
^ Certain exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Company agrees to furnish supplementally a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request.
† Portions of this exhibit (indicated by asterisks) have been omitted because the registrant has determined that the information is both not material and is the type that the registration treats as private or confidential.
+ Indicates management contract or compensatory plan.
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Item 16. Form 10-K Summary
Not applicable.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, as amended, the registrant has duly caused this Annual Report on From 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
SENTI BIOSCIENCES, INC.
By: /s/ Timothy Lu, M.D., Ph.D.
Name: Timothy Lu, M.D., Ph.D.
Title: Chief Executive Officer and President
Date: March 21, 2024
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Timothy Lu and Deborah Knobelman as his or her true and lawful attorney-in-fact and agent, 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 United States Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitutes or substitute, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney as of the date indicated opposite his/her name.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
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Signature Title Date
/s/ Timothy Lu Chief Executive Officer, President and Director
March 21, 2024
Timothy Lu, M.D., Ph.D. (Principal Executive Officer)
/s/ Deborah Knobelman Chief Financial Officer and Head of Corporate Development
March 21, 2024
Deborah Knobelman, Ph.D. (Principal Financial Officer and Principal Accounting Officer)
/s/ Susan Berland Director March 21, 2024
Susan Berland
/s/ Brenda Cooperstone Director March 21, 2024
Brenda Cooperstone
/s/ Edward Mathers Director March 21, 2024
Edward Mathers
/s/ James J. Collins Director March 21, 2024
James J. (Jim) Collins
/s/ Omid Farokhzad Director March 21, 2024
Omid Farokhzad
193