Item 9A. Controls and Procedures
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in the reports we file with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
As of December 31, 2023, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2023.
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Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by or under the supervision of our management, including our principal executive officer and principle financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
As of December 31, 2023, our management assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework) (the COSO criteria). Based on this assessment, our management concluded that, as of December 31, 2023, our internal control over financial reporting was effective.
Ernst & Young LLP, an independent registered public accounting firm, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2023 as stated in its report, which is included herein.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended December 31, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitation on Effectiveness of Controls
In designing and evaluating our controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. In addition, the design of any system of controls is 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.
As discussed above, Mr. Sheridan, our principal executive officer, and Ms. Vosseller, our principal financial and accounting officer, are involved in a personal relationship and share a primary residence. While our board of directors is informed of the relationship and appropriate actions have been taken to ensure compliance with our policies and procedures, the existence of this relationship may create additional risk, or the perception of additional risk, that our controls and procedures may not be effective.
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Tandem Diabetes Care, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Tandem Diabetes Care, Inc.’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, Tandem Diabetes Care, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income (loss), stockholders‘ equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 21, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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 the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
San Diego, California
February 21, 2024
107
Item 9B. Other Information.
None.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
We have adopted a code of business conduct and ethics that applies to our Chief Executive Officer and other senior financial officers (our Chief Financial Officer, Vice President of Finance, Controller and other senior financial officers performing similar functions), which we refer to as the Code of Ethics (Senior Financial Officers). Our Code of Ethics (Senior Financial Officers) is designed to meet the requirements of paragraph (b) of Item 406 of Regulation S-K. We will promptly disclose on our website (i) any amendment to or any waiver (including an implicit waiver) of, our Code of Ethics (Senior Financial Officers) that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of Item 406 of Regulation S-K, and (ii) the nature of any such amendment or waiver.
We have also adopted a code of business conduct and ethics that applies to all of our directors and employees, which we refer to as the Code of Ethics (Directors and Employees). The Code of Ethics (Senior Financial Officers) and the Code of Ethics (Directors and Employees) are available on our website at www.tandemdiabetes.com under the Investor Center section of the website. However, the information contained on or accessed through our website does not constitute part of this Annual Report, and references to our website address in this Annual Report are inactive textual references only.
The information required by this item that is not set forth above will be set forth in our definitive proxy statement for our 2024 annual meeting of stockholders (the “Proxy Statement”), to be filed with the SEC not later than 120 days after the end of the fiscal year ended December 31, 2023, under the headings “Election of Directors,” “Executive Officers,” “Certain Relationships and Related-Party Transactions,” “Corporate Governance-Director Independence, Agreements and Relationships,” “Legal Proceedings with Directors,” “Corporate Governance,” “Compensation Governance,” “Delinquent Section 16(a) Reports” and is incorporated herein by reference.
Item 11. Executive Compensation.
The information required by this item will be set forth in the Proxy Statement under the headings “Compensation Discussion and Analysis,” “Executive Compensation Tables,” “Director Compensation,” “Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report,” 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 will be set forth in the Proxy Statement under the headings “Compensation Governance—Stock Incentive Plans” and “Stock Ownership,” and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item will be set forth in the Proxy Statement under the heading “Corporate Governance—Director Independence, Agreements and Relationships,” and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services.
The information required by this item will be set forth in the Proxy Statement under the heading “Appointment of Independent Registered Public Accounting Firm,” and is incorporated herein by reference.
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PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) The following documents are filed as part of this Annual Report:
1. Financial Statements. The following documents are included in Part II, Item 8 of this Annual Report and are incorporated by reference herein:
Page
Report of Independent Registered Public Accounting Firm
75
Consolidated Balance Sheets
77
Consolidated Statements of Operations and Comprehensive Income (Loss)
78
Consolidated Statements of Stockholders’ Equity
79
Consolidated Statements of Cash Flows
80
Notes to Consolidated Financial Statements
81
2. Financial Statement Schedules. Financial statement schedules have been omitted because they are not required or are not applicable, or the required information is shown in the consolidated financial statements or notes thereto.
3. Exhibits.
Incorporated by Reference
Exhibit Number Exhibit Description Form File No. Date of First Filing Exhibit Number Provided
Herewith
3.1 Amended and Restated Certificate of Incorporation (as amended through August 1, 2023 and currently in effect) .
10-Q 001-36189 3-Aug-23
3.1
3.2 Amended and Restated Bylaws (as amended through August 1, 2023 and currently in effect).
10-K 001-36189 3-Aug-23
3.2
4.1 Reference is made to Exhibits 3 .1 and 3.2 .
4.2 Description of Capital Stock .
X
4.3 Form of Common Stock Certificate.
S-1/A 333-191601 1-Nov-13 4.1
4.4 Form of Warrant to Purchase Stock .
S-1 333-216531 8-Mar-17 4.3
4.5 Indenture dated May 15, 2020 by and between Tandem Diabetes Care, Inc. and U.S. Bank National Association.
8-K 001-36189 15-May-20 4.1
4.6 Form of Global Note, representing Tandem Diabetes Care, Inc.’s 1.50% Convertible Senior Notes due 2025 (included as Exhibit A to the Indenture filed as Exhibit 4.1).
8-K 001-36189 15-May-20 4.1
10.1*
Tandem Diabetes Care, Inc. Amended and Restated 2013 Stock Incentive Plan.
DEF 14A 001-36189 26-Apr-18 Appendix B
10.2*
Tandem Diabetes Care, Inc. Amended and Restated 2013 Stock Incentive Plan.
10-Q 001-36189 30-Jul-2020 10.2
10.3*
Form of Restricted Stock Unit Agreement under the Amended and Restated 2013 Stock Incentive Plan.
10-Q 001-36189 30-Jul-2020 10.1
110
10.4*
Form of Stock Option Agreement under the Amended and Restated 2013 Stock Incentive Plan.
S-1/A 333-191601 1-Nov-13 10.7
10.5*
Form of Stock Option Agreement under the Amended and Restated 2013 Stock Incentive Plan (Non-Employee Directors).
S-1/A 333-191601 1-Nov-13 10.8
10.6*
Tandem Diabetes Care, Inc. Amended and Restated 2013 Employee Stock Purchase Plan.
DEF 14A 001-36189 26-Apr-18 Appendix C
10.7*
Tandem Diabetes Care, Inc. 202 3 Sr. Management Cash Bonus Plan.
10-Q 001-36189 3-May-2023 10.1
10.8
Tandem Diabetes Care, Inc. 2023 Long-Term Incentive Plan.
10-Q 001-36189 3-Aug-2023
10.1
10.9
Form of Restricted Stock Units Agreement under the 2023 Long-Term Incentive Plan.
10-Q 001-36189 3-Aug-2023 10.2
10.10*
Employee Offer Letter, dated January 29, 2013, by and between Tandem Diabetes Care, Inc. and John F. Sheridan.
S-1 333-191601 7-Oct-13 10.13
10.11*
Amended and Restated Employment Severance Agreement, dated November 4, 2013, by and between Tandem Diabetes Care, Inc. and John F. Sheridan.
S-1/A 333-191601 8-Nov-13 10.17
10.12*
Amended and Restated Employment Severance Agreement, dated November 4, 2013, by and between Tandem Diabetes Care, Inc. and Susan M. Morrison.
S-1/A 333-191601 8-Nov-13 10.19
10.13*
Amended and Restated Employment Severance Agreement dated August 2, 2017, by and between Tandem Diabetes Care, Inc. and Leigh Vosseller.
S-1 333-222553 16-Jan-18 10.25
10.14*
Separation Agreement, dated August 18, 2023, by and between Tandem Diabetes Care, Inc. and Brian Hansen.
8-K
001-36189 18-Aug-23 10.1
10.15*
Transition and Consulting Agreement, dated December 1, 2023, by and between the Company and David B. Berger.
8-K
001-36189 11-Dec-23 10.1
10.16*
Form of Indemnification Agreement for Directors and Officer s
S-1 333-191601 7-Oct-13 10.11
10.17
Confidential Intellectual Property Agreement, dated July 10, 2012, by and between Tandem Diabetes Care, Inc. and Smiths Medical ASD, Inc.
S-1/A 333-191601 8-Nov-13 10.20
10.18**
Development Agreement, dated June 4, 2015 by and between Tandem Diabetes Care, Inc. and DexCom, Inc.
10-Q/A 001-36189 9-Nov-18 10.5
111
10.19†
Development Agreement, dated November 20, 2020, by and between Tandem Diabetes Care, Inc. and DexCom, Inc.
10-K 001-36189 24-Feb-21 10.24
10.20†
Commercialization Agreement, dated November 20, 2020, by and between Tandem Diabetes Care, Inc. and DexCom, Inc.
10-K 001-36189 24-Feb-21 10.25
10.21†
License Agreement, dated July 14, 2016, by and between Tandem Diabetes Care, Inc. and TypeZero Technologies, LLC (acquired by DexCom, Inc.).
10-Q 001-36189 30-Apr-2020 10.1
10.22†
Commercialization Agreement, dated January 14, 2022, by and between Tandem Diabetes Care, Inc. and Unomedical A/S.
10-K 001-36189 2-Feb-2022 10.35
10.23
Office Lease dated September 15, 2021 by and between Tandem Diabetes Care, Inc. and Kilroy Realty L.P.
10-Q 001-36189 3-Nov-2021 10.1
10.24†
Share Purchase Agreement by and Between Tandem Diabetes Care, Inc., and AMF Medical .
10-K
001-36189 22-Feb-2023 10.33
10.25
Employee Offer Letter, dated October 31, 2023, by and between Tandem Diabetes Care, Inc. and Mark Novara .
X
21.1 Subsidiaries of the Registrant
X
23.1 Consent of Independent Registered Public Accounting Firm.
X
24.1 Power of Attorney (included on the signature page).
X
31.1 Certification of John F. Sheridan, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
31.2 Certification of Leigh A. Vosseller, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1*** 18 U.S.C. Section 1350 Certification by Chief Executive Officer of Tandem Diabetes Care, Inc.
X
32.2*** 18 U.S.C. Section 1350 Certification by Chief Financial Officer of Tandem Diabetes Care, Inc.
X
97
Tandem Diabetes Care, Inc. C lawback P olicy .
X
101.INS Inline XBRL Instance Document. X
101.SCH Inline XBRL Taxonomy Extension Schema Document. X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. X
112
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. X
104 Cover Page Interactive Data File (embedded within the Inline XBRL document). X
† Certain confidential portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The Company has determined that such omitted information is (i) not material, and (ii) is of the type of information that the Company customarily and actually treats as private or confidential.
* Indicates management contract or compensatory plan.
** Confidential treatment has been granted with respect to certain portions of this exhibit pursuant to an application for confidential treatment sent to the Securities and Exchange Commission. Such portions are omitted from this filing and have been filed separately with the Securities and Exchange Commission.
*** Certification pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended; furnished herewith.
Item 16. Form 10-K Summary.
None.
113
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Tandem Diabetes Care, Inc.
By: /s/ John F. Sheridan
John F. Sheridan
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: February 21, 2024
114
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints John F. Sheridan and Leigh A. Vosseller, and each of them individually, his and her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and her and in his and her name, place, and stead, in any and all capacities, to sign any and all amendments to this Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, 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 his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ JOHN F. SHERIDAN President, Chief Executive Officer and Director (Principal Executive Officer) February 21, 2024
John F. Sheridan
/s/ LEIGH A. VOSSELLER Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) February 21, 2024
Leigh A. Vosseller
/s/ DICK P. ALLEN Director
February 21, 2024
Dick P. Allen
/s/ KIM D. BLICKENSTAFF Director
February 21, 2024
Kim D. Blickenstaff
/s/ MYOUNGIL CHA Director February 21, 2024
Myoungil Cha
/s/ PEYTON R. HOWELL Director February 21, 2024
Peyton R. Howell
/s/ JOAO PAULO FALCAO MALAGUEIRA Director February 21, 2024
Joao Paulo Falcao Malagueira
/s/ KATHLEEN MCGRODDY-GOETZ Director February 21, 2024
Kathleen McGroddy-Goetz
/s/ REBECCA B. ROBERTSON Chair of the Board February 21, 2024
Rebecca B. Robertson
/s/ RAJWANT S. SODHI Director February 21, 2024
Rajwant S. Sodhi
/s/ CHRISTOPHER J. TWOMEY Director February 21, 2024
Christopher J. Twomey
115