Senti Biosciences may run short of funds in Q4 2026
SNTI retained the Rett Syndrome and TIL programs, while management said additional funds are needed for continued operations and development.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
8-K
Senti Biosciences Holdings, Inc. (SNTI) completed its merger on October 21, 2026, divesting its ownership of Senti Holdings, Inc. and Senti Biosciences, Inc. to ST NewCo Limited. SNTI received exclusive worldwide rights to certain patents, agreements and know-how supporting its Rett Syndrome and TIL programs, and assumed future obligations under assigned agreements.
Midco is to distribute one CVR per common share as of a post-closing record date; holders of options, RSUs and warrants also qualify under their terms. CVR payments may total up to $60.0 million if SENTI-202 milestones are achieved within seven years: $10.0 million for BLA filing acceptance, $20.0 million for FDA approval, and $30.0 million if cumulative worldwide net sales exceed $200.0 million. CVRs have no voting or dividend rights and are not equity interests.
SNTI issued 7,309,941 shares to CPIF II-7 Limited at $0.342 per share for approximately $2.5 million. The Company required exchange of $16.0 million of outstanding notes into common stock on October 28, 2026, at $0.342 per share; the pro forma estimate was 46,783,626 exchange shares. Management said resources may not support operations starting as early as the fourth quarter of 2026, and additional funding is needed.
0 points · 0 major1 major · 1 point
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- None.
Negative
- Major point. Forward-looking: it has not happened yet and may not happen.Liquidity: SNTI may not maintain operations as early as the fourth quarter of 2026.
Filing Explained
Outstanding warrants covering up to 31,735,500 shares carry a right to require cash repurchase within 30 days after closing.
The merger closed on
The company also agreed to pay for transitional and research and development support under an initial 12-month consulting agreement, with an option to extend for another 12 months. It may terminate individual services, which reduces the fees.
The unaudited pro forma balance sheet, modeled as if the merger and related transactions occurred on June 30, reports cash of
Stockholders approved a reverse split within a 1-for-20 to 1-for-50 range, but implementation remains subject to a Board decision. If implemented, it would consolidate shares and proportionally raise the per-share price; the split itself does not change company value.
8-K Event Classification
5 items: 1.01, 1.02, 2.01, 3.02, 9.01
5 items
Item 1.01
Entry into a Material Definitive Agreement
Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 1.02
Termination of a Material Definitive Agreement
Business
A significant contract was terminated, which may affect business operations or revenue.
Item 2.01
Completion of Acquisition or Disposition of Assets
Financial
The company completed a significant acquisition or sale of business assets.
Item 3.02
Unregistered Sales of Equity Securities
Securities
The company sold equity securities in a private placement or other unregistered transaction.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
Key Figures
Shares issued to CPIF II-7 Limited: 7,309,941 shares
Issue price: $0.342 per share
Aggregate proceeds: Approximately $2.5 million
+5 more
8 metrics
Shares issued to CPIF II-7 Limited
7,309,941 shares
Issued and sold on October 21, 2026
Issue price
$0.342 per share
Equity commitment share issuance
Aggregate proceeds
Approximately $2.5 million
Gross proceeds from the equity commitment share issuance
Outstanding note principal
$16.0 million
Aggregate principal outstanding as of the Closing Date; exchange required on October 28, 2026
Maximum aggregate CVR payments
Up to $60.0 million
Payable by Midco if the specified milestones are achieved within seven years of closing
BLA filing acceptance milestone
$10.0 million
SENTI-202 milestone payment
FDA approval milestone
$20.0 million
SENTI-202 BLA approval milestone payment
Worldwide sales milestone
$30.0 million payment; cumulative worldwide net sales exceeding $200.0 million
SENTI-202 milestone
Key Terms
contingent value rights, Biologics License Application, exchange cap, pro forma condensed consolidated financial information, +1 more
5 terms
contingent value rights financial
"contractual contingent value rights (“CVRs”)"
Contingent value rights are special financial instruments that give their holder the potential to receive additional payments if certain future events or conditions happen, such as the achievement of specific business milestones. They are like a promise of extra rewards that depend on how well a project or company performs later on. Investors care about them because they offer a chance for extra gains but also carry uncertainty, as the extra payments are not guaranteed.
Biologics License Application regulatory
"acceptance of a Biologics License Application (“BLA”) filing"
A biologics license application is a formal request submitted to regulatory authorities seeking approval to market a new biological medicine, such as vaccines or treatments made from living organisms. It is a comprehensive review process that evaluates the safety, effectiveness, and manufacturing quality of the product. For investors, receiving approval signals that a biological therapy can be sold to the public, potentially leading to revenue growth and market success.
exchange cap regulatory
"could exceed the applicable exchange cap"
pro forma condensed consolidated financial information financial
"unaudited pro forma condensed consolidated financial information"
Pro forma condensed consolidated financial information presents a company's combined, summarized financial results adjusted to show how a recent or proposed transaction—such as a merger, acquisition, divestiture, or restructuring—would have affected revenue, expenses and assets if it had occurred earlier. Investors use this 'what if' snapshot to judge the potential impact of that event and to compare performance across periods, but it relies on assumptions and is not always the same as audited statements.
Black-Scholes–Merton model technical
"fair value based on the Black-Scholes–Merton model"
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
Which milestones can trigger SNTI CVR payments?
The CVRs may pay up to $60.0 million in aggregate if SENTI-202 meets milestones within seven years of closing: $10.0 million upon BLA filing acceptance (or passage of the 60-day review period without rejection), $20.0 million upon FDA approval, and $30.0 million when cumulative worldwide net sales exceed $200.0 million. Midco pays CVR holders directly.
How many shares did SNTI issue to CPIF II-7 Limited?
SNTI issued 7,309,941 shares at $0.342 per share for aggregate proceeds of approximately $2.5 million.
What happens to SNTI's outstanding convertible notes?
SNTI notified the noteholders that all $16.0 million of outstanding notes are required to be exchanged for Company common stock on October 28, 2026, at $0.342 per share. Upon completion, the related guarantees and security interests are to terminate.
How long does SNTI's consulting agreement with Senti Biosciences, Inc. last?
The agreement has an initial term of 12 months, with an option for SNTI to extend it for an additional 12 months. SNTI may terminate individual services before the term ends with prior notice, subject to the agreement's terms.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 21, 2026
(Exact name of Registrant as specified in its charter)
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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(Address of principal executive offices including zip code)
Registrant’s telephone number, including area code: (650 ) 239-2030
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading
Symbol
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Name of each exchange
on which registered
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The Nasdaq Capital Market
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Introductory Note
On October 21, 2026, Senti Biosciences Holdings, Inc., a Delaware corporation (the “Company”), completed the transactions contemplated by the Agreement
and Plan of Merger, dated as of July 14, 2026 (the “Merger Agreement”), by and among the Company, Senti Holdings, Inc., a wholly owned subsidiary of the Company (“Midco”), Senti Biosciences, Inc., a Delaware corporation and wholly owned subsidiary
of Midco (“Opco”), ST NewCo Limited (f/k/a Celadon Partners SPV 35 Limited), (“Parent”), and Senti Merger Sub, Inc. (“Merger Sub”). On the terms and subject to the conditions of the Merger Agreement, Merger Sub merged with and into Midco, with
Midco surviving as a wholly owned subsidiary of Parent (the “Merger”), and each outstanding share of Midco common stock (other than shares owned by Midco or a subsidiary of Midco, which shares were canceled) was automatically canceled and converted
into the right to receive the Milestone Payment Amounts (as defined and described below) (the “Merger Consideration”). The right to receive the Merger Consideration shall be distributed by Midco to the Company’s equityholders in the form of
contractual contingent value rights (“CVRs”).
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Entry into a Material Definitive Agreement.
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CVR Agreement
On October 21, 2026 (the “Closing Date”), in connection with the closing (the “Closing”) of the transactions contemplated by the Merger Agreement,
Midco entered into a Contingent Value Rights Agreement, dated as of October 21, 2026 (the “CVR Agreement”), by and between Midco and Continental Stock Transfer & Trust Company, as rights agent (the “Rights Agent”).
The CVR Agreement governs the terms of the CVRs issued in connection with the Merger. Each CVR represents a contractual right to receive the following
contingent cash payments (the “Milestone Payment Amounts”) if the following milestones are achieved on or before the seventh anniversary of the Closing Date:
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A pro rata share of $10.0 million upon the filing by or on behalf of Midco, or any of its affiliates or licensees, of a biologics license application (the “BLA”) with the U.S. Food and Drug Administration
(the “FDA”) and its acceptance by the FDA, or the passing of the 60-day review period without rejection, by the FDA, for the Logic Gated off-the-shelf CAR-NK cell therapy known as SENTI-202 (the “Product”);
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A pro rata share of $20.0 million upon receipt by or on behalf of Midco or any of its affiliates or licensees of FDA approval of the BLA for the Product; and
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A pro rata share of $30.0 million upon the achievement of cumulative worldwide net sales (as defined in the CVR Agreement) of the Product exceeding $200.0 million during the period commencing on the first
commercial sale of the Product until the seventh anniversary of the Closing Date.
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The aggregate amount payable under the CVR Agreement shall not exceed $60.0 million.
In connection with the Merger, the Company’s Board of Directors (the “Board”) intends to fix the record date for distribution of CVRs after closing of
the Merger in accordance with the terms of the Merger Agreement (the “CVR Record Date”). Each holder of common stock of the Company, par value $0.0001 per share (the “Company Common Stock”), as of the CVR Record Date will receive one CVR per share
of Company Common Stock held as of such date. In addition, holders of Company Stock Options, Company RSUs and Company Warrants (each as defined below) are also entitled to receive CVRs, as described below.
The CVRs and the possibility of receiving any payment pursuant to the CVRs are highly speculative and subject to numerous factors outside the control
of Parent or its affiliates. There can be no assurance that any transaction that may give rise to any payment pursuant to the CVRs will be executed or that any payment pursuant to the CVRs will ever be paid.
The CVRs are not certificated, will not have any voting or dividend rights, will not represent any equity or ownership interests in Parent or Midco
and will not be transferable except in limited circumstances.
The foregoing description of the CVR Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the
CVR Agreement, a copy of which is filed as Exhibit 2.2 hereto and is incorporated herein by reference.
Pursuant to the terms and conditions of the Merger Agreement, among other things:
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Company Stock Options. Immediately prior to the effective time of the Merger (the “Closing Effective Time”), each outstanding option to purchase shares of Company
Common Stock (each, a “Company Stock Option”), whether or not then vested or exercisable, became fully vested and exercisable. Each Company Stock Option that remained outstanding immediately prior to the Closing Effective Time was
extended so that such Company Stock Option will remain exercisable until the original expiration date of such Company Stock Option, notwithstanding any earlier termination of the holder’s employment or service with the Company or any of
its subsidiaries; provided that each such Company Stock Option will remain subject to earlier termination in accordance with the terms of the applicable equity incentive plan. Each Company Stock Option that is outstanding and
unexercised as of immediately prior to the CVR Record Date shall entitle such holder to receive, upon exercise of such Company Stock Option pursuant to the terms thereof, a number of CVRs equal to
the number of shares of the Company Common Stock that would have been issuable upon exercise in full of such stock option immediately prior to the CVR Record Date, reduced by an amount equal to the amount of any applicable withholding
taxes, subject to and in accordance with the terms and conditions of such stock option and the CVR Agreement.
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Company RSUs. Immediately prior to the Closing Effective Time, each outstanding restricted stock unit award with respect to shares of Company Common Stock (each, a
“Company RSU”), whether or not then vested, became fully vested, automatically and without any action on the part of the holder thereof, and shall thereafter remain subject to settlement in accordance with the terms and conditions of
the applicable equity incentive plan and the award agreement evidencing such Company RSU. Each Company RSU that is outstanding and unsettled as of immediately prior to the CVR Record Date shall entitle such holder to receive, upon
settlement of such Company RSU pursuant to the terms thereof, a number of CVRs equal to the number of shares of the Company’s common stock subject to such Company RSU immediately prior to the CVR Record Date, reduced by an amount equal
to the amount of any applicable withholding taxes, subject to and in accordance with the terms and conditions of such Company RSU and the CVR Agreement.
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Company Warrants. Each warrant to purchase shares of Company Common Stock (each, a “Company Warrant”) that is outstanding and unexercised as of immediately
prior to the CVR Record Date shall entitle such holder to receive, upon exercise of such Company Warrant pursuant to the terms thereof, a number of CVRs equal to the number of shares of Company Common Stock that would have been issuable
upon exercise in full of such Company Warrant immediately prior to the CVR Record Date, reduced by an amount equal to the amount of any applicable withholding taxes, subject to and in accordance with the terms and conditions of such
Company Warrant and the CVR Agreement.Asset Assignment and Assumption Agreement and License Agreement
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On the Closing Date, the Company entered into an Asset Assignment and Assumption Agreement and License Agreement (the “Assignment Agreement”) with
Opco and Midco. Pursuant to the Assignment Agreement, Opco assigned to the Company, exclusively throughout the world and free and clear of encumbrances, all right, title and interest in and to certain patents and related patent rights, all
agreements between Opco and an external research organization (the “Assigned Agreements”) and all know-how owned or controlled by Opco that relates to or is useful in connection with the Company’s Rett Syndrome and TIL programs. The Company
assumed all obligations and liabilities of Opco arising under the Assigned Agreements on and after the effective date, including future payment, reporting and other contractual obligations, while Opco will remain responsible for obligations
accrued before that date unless otherwise agreed in writing. The Company will not incur any payment obligations to Opco under the Assignment Agreement.
The foregoing description of the Assignment Agreement does not purport to be complete and is qualified in its entirety by reference to the full text
of the Assignment Agreement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
Master Consulting Agreement
On the Closing Date, in connection with the Closing, the Company entered into a master consulting agreement (the “Master Consulting Agreement”) with
Opco. Under the Master Consulting Agreement, Opco has agreed to provide the Company with certain transitional corporate, administrative, financial, information technology and operational support services as well as related research and
development services.
The Master Consulting Agreement has an initial term of 12 months, and the Company has the option to extend the term for an additional 12 months. The
services are subject to specified minimum service levels. With prior notice to Opco, the Company has the right to terminate individual services before the expiration of the term as it develops standalone capabilities, without terminating the
Master Consulting Agreement in its entirety. The Company has agreed to pay Opco certain fees, subject to reduction if the Company terminates individual services before the expiration of the Master Consulting Agreement.
The Master Consulting Agreement contains customary representations, warranties and covenants.
The foregoing description of the Master Consulting Agreement does not purport to be complete and is qualified in its entirety by reference to the
full text of the Master Consulting Agreement, a copy of which is filed as Exhibit 10.2 hereto and is incorporated herein by reference.
Equity Commitment
On October 21, 2026, the Company issued and sold 7,309,941 shares of Company Common Stock to CPIF II-7 Limited, an entity affiliated with Celadon
Partners SPV 24 Limited (the “Investor”), at a price of $0.342 per share for aggregate proceeds of approximately $2.5 million pursuant to that certain Equity Commitment Letter, dated September 3, 2026 (the “Equity Commitment Letter”), by and
between the Company and CPIF II-9 Limited. The shares of Company Common Stock were offered and sold to the Investor without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemptions provided
by Section 4(a)(2) of the Securities Act as a transaction not involving a public offering and Rule 506 promulgated under the Securities Act as a sale to one accredited investor, and in reliance on similar exemptions under applicable state laws.
Pursuant to the terms of the Equity Commitment Letter, on the Closing Date, the Company also entered into a registration rights agreement with the
Investor (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, as reasonably practicable following the Closing Date, but, in any event, not later than thirty days thereafter (the “Filing Date”), the Company agreed
to file one or more resale registration statements on Form S-3 (or another appropriate form if Form S-3 is not available) providing for the resale by the Investor of the shares of Company Common Stock purchased pursuant to the Equity Commitment
Letter (the “Registrable Shares”), and to use commercially reasonable efforts to cause any such resale registration statement to be declared effective as soon as practicable but in any event no later than the earlier of (a) the seventy-fifth
calendar day following the Filing Date of such registration statement if the U.S. Securities and Exchange Commission (the “SEC”) notifies the Company that it will “review” the registration statement and (b) the fifth business day after the date
the Company is notified (orally or in writing, whichever is earlier) by the SEC that such registration statement will not be “reviewed” or will not be subject to further review. The Company further agreed to use reasonable best efforts to keep
any such registration statement effective at all times until all Registrable Shares have been resold, the Registrable Shares may be sold without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144
under the Securities Act, or no Registrable Shares remain.
The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the
form of Registration Rights Agreement, a copy of which is filed as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated by reference into this Item 1.01.
| Item 1.02 |
Termination of a Material Definitive Agreement
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On the Closing Date, the Company notified all holders of Midco’s Senior Secured Convertible Notes (the “Notes”) that it requiring the exchange (the
“Exchange”) of all outstanding Notes for shares of Company Common Stock pursuant to the terms of the Notes. In connection with the Equity Commitment Letter, the exchange price per share was adjusted to $0.342. Pursuant to the terms of the Notes,
such exchange is required to take place on October 28, 2026. The holders of the Notes consist of CPIF II-7 Limited and NSG BioInnovation Fund, L.P., and as of the Closing Date, there were $16.0 million in aggregate principal amount of outstanding
Notes. Information regarding relationships between CPIF II-7 and the Company is set forth under Item 2.01 of this Current Report on Form 8-K and is incorporated herein by reference.
The Notes were guaranteed by the Company and all its direct and indirect subsidiaries (other than Midco) and were secured by a first priority lien,
subject to certain permitted liens in all of the current and future assets of Midco, the Company and all direct and indirect subsidiaries of Midco, subject to certain customary exclusions. Upon consummation of the Exchange, the guarantees by the
Company and its applicable subsidiaries in favor of the holders of the Notes and the security interests granted by the Company, Midco and its indirect subsidiaries in favor of the holders of the Notes shall be terminated.
| Item 2.01 |
Completion of Acquisition or Disposition of Assets.
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The information provided in the Introductory Note and Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Celadon Partners, LLC (“Celadon”) controls Parent, Celadon Partners SPV 24 Limited, the Company’s largest stockholder, CPIF II-7 Limited, which
purchased $14.0 million in aggregate principal amount of Midco’s Senior Secured Convertible Notes, and the Investor.
Prior to the Closing Effective Time, the Company and Celadon had certain relationships other than in respect of the Merger, which are described under
the heading “Certain Relationships and Related Party Transactions” in the Company’s definitive proxy statement related to the Merger, which the Company filed on September 24, 2026.
The Company formed a special committee (the “Special Committee”) of independent and disinterested directors of the Board. The Special Committee
reviewed and considered the terms and conditions of the Merger Agreement, including the Merger Consideration. The Special Committee unanimously determined that the Merger Agreement and the transactions contemplated thereby were advisable, fair
to, and in the best interests of the Company and its stockholders, and the Board (other than a member designated by Celadon, who was absent from such vote) approved the Merger Agreement and the transactions contemplated thereby.
The foregoing description of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and
qualified in its entirety by, the full text of the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1, and the terms of which are incorporated herein by reference.
| Item 3.02 |
Unregistered Sales of Equity Securities.
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The information contained above in Item 1.01 of this Current Report on Form 8-K under the caption “Equity Commitment” is hereby incorporated by
reference into this Item 3.02.
| Item 9.01 |
Financial Statements and Exhibits.
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(b) Pro Forma Financial Information.
The unaudited pro forma condensed consolidated financial information of the Company giving effect to the Merger and the other material related
transactions is filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
(d) Exhibits.
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Exhibit
No.
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Description
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2.1*
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Agreement and Plan of Merger, dated as of July 14, 2026, by and among Senti Biosciences Holdings, Inc., Senti Holdings, Inc., Senti Biosciences, Inc., Celadon Partners SPV 35 Limited and
Senti Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on July 15, 2026)
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2.2
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Contingent Value Rights Agreement, dated as of October 21, 2026, by and between Senti Holdings, Inc. and Continental Stock Transfer & Trust Company, as Rights Agent
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10.1†
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Assignment and Assumption Agreement, dated as of October 21, 2026, by and between the Company and Senti Biosciences, Inc.
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10.2†
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Master Consulting Agreement, dated as of October 21, 2026, by and between the Company and Senti Biosciences, Inc.
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10.3
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Registration Rights Agreement, dated as of October 21, 2026, by and between the Company and CPIF II-9 Limited
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99.1
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Unaudited Pro Forma Condensed Consolidated Financial Information
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document)
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* Schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. Senti Biosciences Holdings, Inc. agrees to furnish supplementally a copy of any
omitted schedule to the Securities and Exchange Commission upon 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 registrant treats as private or confidential.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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SENTI BIOSCIENCES HOLDINGS, INC.
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Date:
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October 26, 2026
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By:
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/s/ Timothy Lu
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Name:
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Timothy Lu, M.D., Ph.D.
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Title:
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Chief Executive Officer
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Exhibit 99.1
SENTI BIOSCIENCES HOLDINGS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial information presents the historical financial information of Senti Biosciences Holdings, Inc. (the
“Company,” “we,” “us” or “our”) adjusted to give effect to the Merger and other material transactions, as further described below. The unaudited pro forma condensed consolidated financial information has been prepared in accordance with Article 11 of
Regulation S-X. Defined terms included below have the same meanings as terms defined and included elsewhere in this Current Report on Form 8-K to which this exhibit is attached (the
“Current Report”).
The historical financial information of Senti Biosciences Holdings, Inc. is derived from the unaudited condensed consolidated financial statements of the Company and its
subsidiaries as of and for the six months ended June 30, 2026 and the audited consolidated financial statements of Senti Biosciences, Inc., the Company’s predecessor issuer, and its subsidiaries for the year ended December 31, 2025. Senti Biosciences
Holdings, Inc. was formed in connection with the holding company reorganization implemented in April 2026, pursuant to which the Company became the successor issuer to Senti Biosciences, Inc. The unaudited pro forma condensed consolidated financial
information should be read together with the Company’s and its predecessor’s historical financial statements and the related notes thereto.
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2026 presents the historical consolidated balance sheet of the Company on a pro forma basis
as if the Merger and other material transactions have been consummated on June 30, 2026. The unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2026 and for the year ended December 31, 2025 give pro
forma effect to the Merger and other material transactions as if they had occurred on January 1, 2025, the beginning of the earliest period presented.
The unaudited pro forma condensed consolidated financial information is provided for informational purposes only. It does not purport to indicate the results that would
have been obtained had the Merger and other material transactions actually been completed on the assumed dates or for the periods presented, or the results of operations or financial position that may be realized in the future. The pro forma
adjustments are based on the information currently available, and the assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions reflected in the
accompanying unaudited pro forma condensed consolidated financial information.
Description of the Merger
On July 14, 2026, the Company entered into an
Agreement and Plan of Merger (the “Merger Agreement”) by and among ST NewCo Limited (f/k/a Celadon Partners SPV 35 Limited) (“Parent”), Senti Merger Sub, Inc., a direct, wholly-owned subsidiary of Parent (“Merger Sub”), the Company, Senti Holdings,
Inc., a wholly-owned subsidiary of the Company (“Midco”), and Senti Biosciences, Inc., a wholly-owned subsidiary of Midco through which the Company’s business historically operated (“Opco”). Pursuant to the terms of the Merger Agreement, among
other things, at the time the Merger became effective upon the filing of the certificate of merger with the State of Delaware (“Closing Effective Time”), Merger Sub was
merged with and into Midco (the “Merger”), with Midco surviving as a wholly-owned subsidiary of Parent, and Midco continued to own 100% of Opco. As a result of the Merger, the Company divested its entire ownership interest in Midco and Opco. Prior
to the closing of the Merger, the Company entered into an Asset Assignment and Assumption Agreement and License Agreement (the “Assignment Agreement”) with Opco and Midco, pursuant to which Opco licensed or assigned to the Company all intellectual
property and contracts needed for the Company to advance its Rett Syndrome and TIL programs following the Merger. Additionally, in connection with the closing of the Merger, the Company entered into a master consulting agreement (the “Master
Consulting Agreement”) with Opco. Under the Master Consulting Agreement, Opco agreed to provide the Company with certain transitional corporate, administrative, financial, information technology and operational support services as well as related
research and development services. The Merger, the Merger Agreement, Assignment Agreement, Master Consulting Agreement and other material transactions are described in more detail in Note 1 to this unaudited pro forma condensed consolidated
financial information.
SENTI BIOSCIENCES HOLDINGS, INC.
Unaudited Pro Forma Condensed Consolidated Balance Sheets
As of June 30, 2026
(In thousands)
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Senti
Biosciences
Holdings
Inc.
Historical
|
Pro Forma
Adjustments
for divestiture
of Midco and
Opco
|
Additional
Pro Forma
Adjustments
|
Note
|
Senti
Biosciences
Holdings Inc.
Pro Forma As
Adjusted
|
||||||||||||||||
|
(Note 2A)
|
||||||||||||||||||||
|
ASSETS
|
||||||||||||||||||||
|
CURRENT ASSETS
|
||||||||||||||||||||
|
Cash and cash equivalents
|
$
|
6,463
|
$
|
(5,863
|
)
|
$
|
2,500
|
2B
|
|
$
|
3,100
|
|||||||||
|
Accounts receivable
|
—
|
—
|
—
|
—
|
||||||||||||||||
|
GeneFab receivable - related party
|
557
|
(557
|
)
|
—
|
—
|
|||||||||||||||
|
GeneFab prepaid expenses - related party
|
4,932
|
(4,932
|
)
|
—
|
—
|
|||||||||||||||
|
Prepaid expenses and other current assets
|
1,055
|
(1,055
|
)
|
101
|
2C
|
|
101
|
|||||||||||||
|
Total current assets
|
13,007
|
(12,407
|
)
|
2,601
|
3,201
|
|||||||||||||||
|
Restricted cash
|
1,426
|
(1,426
|
)
|
—
|
—
|
|||||||||||||||
|
Property and equipment, net
|
11,433
|
(11,433
|
)
|
—
|
—
|
|||||||||||||||
|
Operating lease right-of-use assets
|
7,239
|
(7,239
|
)
|
—
|
—
|
|||||||||||||||
|
TOTAL ASSETS
|
$
|
33,105
|
$
|
(32,505
|
)
|
$
|
2,601
|
$
|
3,201
|
|||||||||||
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
||||||||||||||||||||
|
CURRENT LIABILITIES
|
||||||||||||||||||||
|
Accounts payable
|
$
|
2,248
|
$
|
(2,248
|
)
|
$
|
372
|
2C
|
|
$
|
372
|
|||||||||
|
Accrued expenses and other current liabilities
|
4,082
|
(4,082
|
)
|
301
|
2C
|
|
301
|
|||||||||||||
|
Convertible notes - related party (Initial Notes)
|
3,993
|
(3,993
|
)
|
—
|
—
|
|||||||||||||||
|
Operating lease liabilities, current
|
3,492
|
(3,492
|
)
|
—
|
—
|
|||||||||||||||
|
GeneFab sublease deferred income - related party
|
1,939
|
(1,939
|
)
|
—
|
—
|
|||||||||||||||
|
Deferred revenue - related party
|
11
|
(11
|
)
|
—
|
—
|
|||||||||||||||
|
Total current liabilities
|
15,765
|
(15,765
|
)
|
673
|
673
|
|||||||||||||||
|
Operating lease liabilities, non-current
|
12,741
|
(12,741
|
)
|
—
|
—
|
|||||||||||||||
|
Other non-current liabilities
|
8,000
|
(8,000
|
)
|
—
|
—
|
|||||||||||||||
|
TOTAL LIABILITIES
|
36,506
|
(36,506
|
)
|
673
|
673
|
|||||||||||||||
|
STOCKHOLDERS’ (DEFICIT) EQUITY
|
||||||||||||||||||||
|
Common stock
|
3
|
—
|
5
|
2D
|
|
8
|
||||||||||||||
|
Additional paid-in capital
|
372,139
|
—
|
20,003
|
2E
|
|
392,142
|
||||||||||||||
|
Accumulated deficit
|
(375,543
|
)
|
4,001
|
(18,080
|
)
|
2F
|
|
(389,622
|
)
|
|||||||||||
|
TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY
|
(3,401
|
)
|
4,001
|
1,928
|
2,528
|
|||||||||||||||
|
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
$
|
33,105
|
$
|
(32,505
|
)
|
$
|
2,601
|
$
|
3,201
|
|||||||||||
SENTI BIOSCIENCES HOLDINGS, INC.
Unaudited Pro Forma Condensed Consolidated Statements of Operations and Comprehensive Loss
For the Six Months Ended June 30, 2026
(in thousands, except share and per share data)
|
Senti
Biosciences
Holdings
Inc.
Historical
|
Pro Forma
Adjustments
for divestiture
of Midco and
Opco
|
Additional
Pro Forma
Adjustments
|
Note
|
Senti
Biosciences
Holdings Inc.
Pro Forma As
Adjusted
|
||||||||||||||||
|
(Note 2A)
|
||||||||||||||||||||
|
Collaboration revenue - related party
|
$
|
33
|
$
|
(33
|
)
|
$
|
—
|
$
|
—
|
|||||||||||
|
Operating expenses:
|
||||||||||||||||||||
|
Research and development (including related party costs of $3,798 for the six months ended June 30, 2026 )
|
13,048
|
(13,041
|
)
|
—
|
2G
|
|
7
|
|||||||||||||
|
General and administrative
|
12,972
|
(9,039
|
)
|
—
|
2G
|
|
3,933
|
|||||||||||||
|
Gain on lease modification
|
(6,882
|
)
|
6,882
|
—
|
—
|
|||||||||||||||
|
Total operating expenses
|
19,138
|
(15,198
|
)
|
—
|
3,940
|
|||||||||||||||
|
Loss from operations
|
(19,105
|
)
|
15,165
|
—
|
(3,940
|
)
|
||||||||||||||
|
Other income:
|
||||||||||||||||||||
|
Interest income
|
156
|
(156
|
)
|
—
|
—
|
|||||||||||||||
|
GeneFab sublease income - related party
|
1,076
|
(1,076
|
)
|
—
|
—
|
|||||||||||||||
|
Change in fair value of convertible notes - related party
|
271
|
(271
|
)
|
—
|
—
|
|||||||||||||||
|
Other income, net
|
631
|
(631
|
)
|
—
|
—
|
|||||||||||||||
|
Total other income
|
2,134
|
(2,134
|
)
|
—
|
—
|
|||||||||||||||
|
Net loss
|
$
|
(16,971
|
)
|
$
|
13,031
|
$
|
—
|
$
|
(3,940
|
)
|
||||||||||
|
Comprehensive loss
|
$
|
(16,971
|
)
|
$
|
13,031
|
$
|
—
|
$
|
(3,940
|
)
|
||||||||||
|
Basic and diluted net loss
|
$
|
(16,971
|
)
|
$
|
13,031
|
$
|
—
|
$
|
(3,940
|
)
|
||||||||||
|
Basic and diluted net loss per share
|
$
|
(0.55
|
)
|
$
|
(0.05
|
)
|
||||||||||||||
|
Basic and diluted weighted-average number of shares used in computing net loss per share
|
31,058,642
|
54,093,567
|
2H
|
|
85,152,209
|
|||||||||||||||
SENTI BIOSCIENCES HOLDINGS, INC.
Unaudited Pro Forma Condensed Consolidated Statements of Operations and Comprehensive Loss
For the Year Ended December 31, 2025
(in thousands, except share and per share data)
|
Senti
Biosciences
Holdings
Inc.
Historical
|
Pro Forma
Adjustments
for divestiture
of Midco and
Opco
|
Additional
Pro Forma
Adjustments
|
Note
|
Senti
Biosciences
Holdings Inc.
Pro Forma As
Adjusted
|
||||||||||||||||
|
(Note 2A)
|
||||||||||||||||||||
|
Collaboration revenue - related party
|
$
|
22
|
$
|
(22
|
)
|
$
|
—
|
$
|
—
|
|||||||||||
|
Operating expenses:
|
||||||||||||||||||||
|
Research and development (including related party costs of $12,909 for the year ended December 31, 2025)
|
37,586
|
(37,583
|
)
|
—
|
2G
|
|
3
|
|||||||||||||
|
General and administrative
|
26,163
|
(17,498
|
)
|
6,855
|
2I, 2G
|
|
15,520
|
|||||||||||||
|
Impairment of long-lived assets
|
5,052
|
(5,052
|
)
|
—
|
—
|
|||||||||||||||
|
Total operating expenses
|
68,801
|
(60,133
|
)
|
6,855
|
15,523
|
|||||||||||||||
|
Loss from operations
|
(68,779
|
)
|
60,111
|
(6,855
|
)
|
(15,523
|
)
|
|||||||||||||
|
Other income (expense):
|
||||||||||||||||||||
|
Interest income
|
927
|
(927
|
)
|
—
|
—
|
|||||||||||||||
|
GeneFab sublease income - related party
|
5,423
|
(5,423
|
)
|
—
|
—
|
|||||||||||||||
|
Other income, net - related party
|
160
|
(160
|
)
|
—
|
—
|
|||||||||||||||
|
Other income, net
|
831
|
(831
|
)
|
—
|
—
|
|||||||||||||||
|
Total other income, net
|
7,341
|
(7,341
|
)
|
—
|
—
|
|||||||||||||||
|
Net loss
|
$
|
(61,438
|
)
|
$
|
52,770
|
$
|
(6,855
|
)
|
$
|
(15,523
|
)
|
|||||||||
|
Comprehensive loss
|
$
|
(61,438
|
)
|
$
|
52,770
|
$
|
(6,855
|
)
|
$
|
(15,523
|
)
|
|||||||||
|
Basic and diluted net loss per share
|
$
|
(2.73
|
)
|
$
|
(0.20
|
)
|
||||||||||||||
|
Basic and diluted weighted-average number of shares used in computing net loss per share
|
22,483,391
|
54,093,567
|
2H
|
76,576,958
|
||||||||||||||||
SENTI BIOSCIENCES HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION
Note 1. Basis of Presentation
The unaudited pro forma condensed consolidated financial information is not necessarily indicative of what the actual results of operations and financial position would
have been had the Merger and the other contemplated transactions taken place on the dates indicated, nor is it indicative of the future consolidated results of operations or financial position of the Company following the Merger. It should be read in
conjunction with the historical financial statements and notes thereto of the Company and the Company’s predecessor issuer, Senti Biosciences, Inc.
Merger Agreement
Pursuant to the terms of the Merger Agreement, Merger Sub was merged with and into Midco, with Midco surviving as a wholly-owned subsidiary of Parent and continuing to
own 100% of Opco. As a result, the Company divested its entire ownership interest in Midco and Opco and Parent acquired substantially all of the Company’s existing business and pipeline held through Midco and Opco.
After the completion of the Merger, the Company is expected to remain a publicly traded company and continue to develop the Rett Syndrome program and the TIL program.
Asset Assignment and Assumption Agreement and License Agreement
Prior to the Closing of the Merger, the Company entered into the Assignment Agreement with Opco and Midco. Pursuant to the Assignment Agreement, Opco assigned to the
Company, exclusively throughout the world and free and clear of encumbrances, all right, title and interest in and to certain patents and related patent rights, all agreements between Opco and an external research organization, or the Assigned
Agreements, and all know-how owned or controlled by Opco that relates to or is useful in connection with the Rett Syndrome program utilizing Regulator Dial technology and the platform of Regulator Dial-enabled armored TILs. The Company assumed all
obligations and liabilities of Opco arising under the Assigned Agreements on and after the effective date, including future payment, reporting and other contractual obligations, while Opco will remain responsible for obligations accrued before that
date unless otherwise agreed in writing.
Master Consulting Agreement
In connection with the closing of the Merger, the Company entered into a Master Consulting Agreement with Opco. Under the Master Consulting Agreement, Opco agreed to
provide the Company with certain transitional corporate, administrative, financial, information technology and operational support services, as well as related research and development services.
The Master Consulting Agreement has an initial term of 12 months, and the Company has the option to extend the term for an additional 12 months. The services are subject to
specified minimum service levels. The Company has the right to terminate individual services before the expiration of the term as it develops standalone capabilities, without terminating the Master Consulting Agreement in its entirety. The Company
agreed to pay Opco a fee for the services, subject to reduction if the Company terminates individual services before the expiration of the Master Consulting Agreement. The Master Consulting Agreement contains customary representations, warranties and
covenants.
Contingent Value Rights
No cash was paid to the Company or the holders of its common stock at the Closing Effective Time as consideration for the Merger. The Merger consideration consisted
solely of the right to receive the contingent cash Milestone Payment Amounts, as defined below. The right to receive the Merger consideration shall be distributed by Midco to the Company’s equityholders and certain holders of the Company’s equity
awards and warrants in the form of contingent value rights (“CVRs”) upon exercise of such instruments. The CVRs may pay, in the aggregate, up to $60.0 million (“Milestone Payment Amounts”) if specified milestones for SENTI-202 are achieved within
seven years of closing of the Merger (“Milestone Expiration Date”): (i) $10.0 million upon acceptance of a Biologics License Application (“BLA”) filing (or the passing of the 60-day review period without rejection) by the U.S. Food and Drug
Administration (“FDA”), (ii) $20.0 million upon FDA approval of the BLA, and (iii) $30.0 million upon cumulative worldwide net sales of SENTI-202 exceeding $200.0 million. The Merger
consideration is payable by Midco directly to the CVR holders rather than to the Company; accordingly, no Merger consideration has been reflected in the unaudited pro forma condensed consolidated financial information. Pursuant to the Merger
Agreement, Midco shall effect the issuance and distribution of one CVR with respect to each share of the Company’s common stock that is issued and outstanding as of the CVR record date, which will be a date no less than five days and no more than ten
days following the date that the Merger closed. Each outstanding and unsettled RSU, outstanding and unexercised warrant and outstanding and unexercised stock option as of immediately prior to the CVR record date entitled the holder thereof to
receive, upon settlement or exercise pursuant to its terms, a number of CVRs equal to the number of shares of the Company’s common stock subject to or issuable upon exercise of such instrument immediately prior to the CVR record date, reduced by an
amount equal to the amount of any applicable withholding taxes, in each case subject to and in accordance with the terms and conditions of such instrument and the CVR Agreement. As the obligation to deliver CVRs to option holders is the
responsibility of Midco, no liability classification is required as a pro forma adjustment on the Company’s pro forma financial statements with respect to the outstanding stock options.
Upon achievement of each milestone, Midco will pay each CVR holder their pro rata share of the applicable Milestone Payment Amounts.
In accordance with the terms of the outstanding common stock warrants, which were not amended in connection with the Merger, the holders of the warrants can elect to
require the Company to repurchase the remaining unexercised portion of such holder's warrants in cash upon or within 30 days after the closing of the Merger, at their fair
value based on the Black-Scholes–Merton model, measured as of the consummation date of the Merger. The warrants to purchase up to 31,735,500 shares of the Company’s common stock, par value $0.0001 per share are classified within stockholders' deficit
in the historical condensed consolidated balance sheets. As the Company may be required to settle the warrants in cash at the holder's election, the warrants will no longer meet the criteria for equity classification under ASC 815-40, Derivatives and Hedging — Contracts in Entity's Own Equity. The estimated warrant liability was not material as of June 30, 2026, therefore no reclassification adjustment was made.
The fair value of the warrants was estimated as of June 30, 2026, the date as of which the Merger transaction is assumed to have closed for purposes of the unaudited pro
forma condensed consolidated balance sheet. The fair value measurement of the warrants incorporated key inputs and assumptions, including underlying share price, exercise price, expected term, historical volatility, risk-free interest rate, and
expected dividend rate.
As of June 30, 2026, management’s preliminary assessment was that the assets and liabilities of Midco and its subsidiaries did not meet the criteria
for classification as held for sale under ASC 360-10, Property, Plant, and Equipment and ASC 205-20, Presentation
of Financial Statements—Discontinued Operations because completion of the Merger remained subject to stockholder approval and other closing conditions and was not yet probable. Accordingly, the Company’s historical financial statements do
not present the business to be divested as held for sale or as a discontinued operation, and the unaudited pro forma condensed consolidated financial information presents the Merger as a transaction accounting adjustment rather than as a
retrospective recast under ASC 205-20. If and when the held-for-sale criteria are met, the Company expects the divestiture to represent a strategic shift that will have a major effect on its operations and financial results and, accordingly, to be
reported as a discontinued operation in its consolidated financial statements, with prior periods recast.
Securities Purchase Agreement
In connection with the transactions, Midco entered into a Securities Purchase Agreement with CPIF II-7 Limited (the “Noteholder”), an affiliate of Parent for the issuance
of the Notes in an aggregate amount of up to $40.0 million. The Notes are exchangeable for shares of the Company’s common stock at an initial exchange price of $0.6261 per share, as adjusted, and are also convertible into shares of common stock of
Midco at an initial conversion price of $0.6261 per share, as adjusted, upon the occurrence of events specified in the terms of the Notes. In connection with the commitment from parent explained in Note 2B, the conversion price and exchange price was
adjusted to $0.342 per share. The Notes are guaranteed by the Company and all of its direct and indirect subsidiaries (other than Midco) and are secured by a first priority lien on the assets of
Midco, the Company and certain subsidiaries. The Notes do not bear interest unless an event of default has occurred and have a maturity date of November 23, 2026 (the “Maturity Date”). On the Maturity Date, if the Notes have not previously been
converted or exchanged, Midco is required to pay the holder cash equal to 200% of all outstanding principal and accrued and unpaid interest (the “Maturity Amount”). Upon a change of control which excludes the Merger, the Noteholder may require Midco to redeem all or any portion of the Notes for cash at the applicable change of control redemption price
(defined below), and until such redemption price is paid in full, the Noteholder may continue to exchange the Notes for shares of the Company’s common stock or convert the Notes into shares of Midco’s common stock. The change of control redemption
price is the greater of (i) the Maturity Amount and (ii) the then outstanding principal and accrued and unpaid interest, multiplied by a quotient determined by dividing the redemption closing price by the lowest exchange or conversion price, then in
effect. The redemption closing price is the greatest closing sale price of the Company’s common stock during the period between the date immediately preceding the earlier of the consummation or public announcement of the change of control and the
date the Noteholder delivers the redemption notice.
In May 2026, Midco issued $10.0 million of Notes (the “Initial Notes”), and, pursuant to the Merger Agreement, Parent or an affiliate of Parent was to purchase an
additional $6.0 million of Notes (the “Additional Notes”), reduced dollar-for-dollar by any net proceeds actually received from sales of Company common stock under its at-the-market (“ATM”) facility. No such ATM sales have taken place. The issuance
of the Company’s shares of common stock in exchange of the Notes could exceed the applicable exchange cap and therefore requires stockholder approval under Nasdaq Listing Rule 5635. The
Company obtained this approval prior to the closing of the Merger. The Initial Notes and the Additional Notes are obligations of Midco and were divested with Midco in the Merger, unless previously converted or exchanged. In August 2026, an
affiliate of Parent purchased $4.0 million of Additional Notes. In September 2026, NSG BioInnovation, L.P. (“NSG”) purchased $2.0 million of Additional Notes. NSG’s purchase satisfied the remaining obligation of Parent to purchase Additional Notes
pursuant to the Merger Agreement.
The historical consolidated balance sheet of the Company as of June 30, 2026 and the historical consolidated statement of operations of the Company for the six months
ended June 30, 2026 were derived from the Company’s unaudited condensed consolidated financial statements included in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2026. The historical consolidated statement of operations for the
year ended December 31, 2025 was derived from the audited consolidated financial statements of Senti Biosciences, Inc., the Company’s predecessor issuer. The pro forma adjustments give effect to the Merger and other contemplated transactions, pursuant to which the Company divested its entire ownership interest in Midco and, indirectly, Opco, and
to other material adjustments. No income tax effects have been reflected based on the Company’s full valuation allowance against its net deferred tax assets.
Reverse Stock Split
The Company’s stockholders approved a reverse stock split of the Company’s common stock at a ratio within the range of 1-for-20 to 1-for-50, as determined by the board
of directors. The reverse stock split remains subject to the Company’s board determining to implement the reverse stock split and is not reflected in the pro forma adjustments included in Note 2 below.
Liquidity and Going Concern
Based on the Company’s current operating plan and existing cash and cash equivalents and the impact of the divestiture of Midco and Opco, with the contemplated Merger, the
Company has determined that it may not be able to maintain operations starting as early as the fourth quarter of 2026. Parent signed a binding commitment to purchase, and did purchase, upon the closing of the Merger the Company’s common stock for
aggregate gross proceeds of $2.5 million. The proceeds from this capital contribution will be used to fund the Company’s continued operations. Additional funds will be necessary to continue operating as a public company and to continue to develop our
remaining research and development programs and platforms. The Company’s continued existence is dependent upon management’s ability to raise capital and ultimately develop profitable operations. While management is devoting substantially all of its
efforts to raising capital, there can be no assurance that the Company’s efforts will be successful. Moreover, no assurance can be given that management’s actions will result in raising additional financing or profitable operations.
Note 2. Adjustments to Unaudited Pro Forma Condensed Consolidated Financial Information
The following is a summary of the pro forma adjustments reflected in the unaudited pro forma condensed consolidated financial information based on preliminary estimates,
which may change as additional information is obtained:
Merger Consideration and Estimated Loss (Gain) on Disposal
The Merger consideration consists solely of the right to receive the contingent cash Milestone Payment Amounts. The aggregate undiscounted amounts of cash consideration that could become payable through the CVRs range from $0 (if no milestone is achieved on or before
the Milestone Expiration Date) to $60.0 million, if all milestones are achieved on or before the Milestone Expiration Date). The unaudited pro forma condensed consolidated financial
information does not reflect any consideration payable related to the CVRs, as such amounts are contingent and payable by Midco directly to the CVR holders rather than to the Company. Accordingly, no Merger consideration has been recognized
by the Company.
The Initial Notes are obligations of Midco and are reflected as part of the divestiture of Midco and Opco in the Company’s unaudited, pro forma condensed consolidated
balance sheets as of June 30, 2026. The $4.0 million of Additional Notes issued on August 14, 2026 and the $2.0 million of Additional Notes that NSG agreed to purchase in September 2026 were not included in the June 30, 2026 historical balance sheet.
The $4.0 million issuance produced $3.9 million of net proceeds received by Midco; no ATM sales are assumed, and neither the Midco proceeds nor the $2.0 million NSG obligation is included in the Company’s pro forma cash. At closing, the Company
expects to force exchange of the full $16.0 million of Notes into Company common stock at $0.342 per share, subject to contractual rounding and the other closing conditions.
The full $16.0 million comprises the $10.0 million of Initial Notes, the $4.0 million of issued Additional Notes and the $2.0 million remaining Additional Notes that NSG purchased. The exchange shares are included as a component of the estimated loss
on disposal.
The following table summarizes the total consideration and the preliminary estimate of the expected loss on disposal:
|
Description
|
(in thousands)
|
|||
|
Merger consideration recognized
|
$
|
—
|
||
|
Carrying amount of net liabilities to be divested as of June 30, 2026
|
4,001
|
|||
|
Estimated fair value of 46,783,626 shares of Company’s common stock expected to be issued upon exchange of the Notes1
|
(10,653
|
)
|
||
|
Estimated loss on disposal
|
$
|
(6,652
|
)
|
|
|
1
|
The estimated fair value of the Company’s shares of common stock expected to be issued assumes that the Company will force the full exchange of the Notes in connection with the
Merger at the exchange price of $0.3420 for a total of 46,783,626 shares of common stock.
This adjustment includes the full exchange of the (i) Initial Note of $10.0 million outstanding as of June 30, 2026, (ii) $4.0 million of Additional Notes issued on August 14, 2026, and (iii) $2.0 million of Additional Notes that NSG purchased. The consideration expected to be issued upon settlement of the Notes is included
in the estimated loss on disposal since the Company will force the exchange of the Notes for shares of the Company’s common stock. The fair value of the Company’s common stock was estimated using the closing price of $0.23 on October 20, 2026, the latest practicable date prior to the filing of the Current
Report. A 10% change in the closing price of the Company’s common stock would change the estimated loss on disposal by $1.1 million. The market price of the Company’s common stock will continue to fluctuate from the date of the filing of the Current Report through the date the Merger became effective.
|
The estimated loss on disposal is preliminary and is measured based on the carrying amount of the net
assets of Midco and its subsidiaries as of June 30, 2026, the estimated fair value of the shares of the Company’s common stock expected to be issued upon the forced exchange of the Notes in connection with the Merger and remaining transaction
costs as of the closing date; the actual amount may differ materially and will be determined on the date of the Merger. The estimated loss on disposal is nonrecurring and will not affect the Company’s results of operations beyond 12 months after the
closing of the Merger.
The pro forma adjustments described below were made to derive the Company’s “Pro Forma As Adjusted” balances:
| A. |
Represents the derecognition of the historical assets, liabilities and results of operations of Midco and its subsidiaries, including Opco, attributable to the business to be divested pursuant to the Merger, derived from the consolidated balance sheet of Midco as of June 30, 2026 and
the consolidated statements of operations for the six months ended June 30, 2026 and the year ended December 31, 2025. This adjustment includes the derecognition of (i)
the cash remaining from the issuance of the Initial Notes less $0.6 million agreed upon by the Board to remain at PubCo as part of the funding commitment from Parent discussed in Note 2B, (ii) the convertible note liability related to the Initial Notes, which are obligations of Midco carried at a fair value of $4.0 million as of June 30, 2026, and (iii) the related gain from the change in fair value of
the Initial Notes of $0.3 million recognized during the six months ended June 30, 2026. The
balance of cash and cash equivalents and convertible note as of June 30, 2026 excludes the $4.0 million of Additional Notes issued on August 14, 2026 and the remaining
$2.0 million of Additional Notes that NSG purchased. The cash proceeds from the Notes are the assets of Midco and the Notes are obligations of Midco and are expected
to be divested or otherwise settled by Midco or the Company in connection with the Merger (Note 2J), and as such are excluded from the Pro Forma as Adjusted condensed
consolidated balance sheet.
|
| B. |
Reflects a binding commitment for Parent’s purchase upon the closing of the Merger of the Company’s common stock for aggregate gross proceeds of $2.5 million, which resulted in
the issuance of 7,309,941 shares of common stock based on the $0.3420 per share price calculated pursuant to the agreement governing such binding commitment. Such commitment is reflected as a $2.5 million of increase to cash and cash
equivalents and a corresponding increase to common stock and additional paid-in capital. The proceeds from this capital contribution will be used to fund the Company’s continued operations. Such purchase of Company common stock occurred prior
to the CVR record date, such that Parent is entitled to receive the related Merger consideration of CVRs associated with ownership of the 7,309,941 shares of common stock.
|
| C. |
Represents adjustments to reallocate to the Company only those costs incurred by Midco and its subsidiaries that are directly attributable to the Company’s continuing operations as a standalone
public company (including prepaid directors’ and officers’ insurance and accrued professional fees) after the Merger and are not already included in the Company’s historical expense, including costs that are contractually obligated by Opco as of the balance sheet date, and the related general and administrative expenses for each period presented. These adjustments reflect an increase to prepaid expenses
and other current assets of $0.1 million, increase to accounts payable of $0.4 million, and increase to accrued expenses and other current liabilities of $0.3 million, with the net impact of $0.6 million included as an increase to accumulated
deficit in the pro forma condensed consolidated balance sheet as of June 30, 2026. General and administrative expenses remaining in the “Pro Forma As Adjusted” column
represent costs attributable to the Company’s continuing operations, including personnel, professional fees, insurance, and other public company costs.
|
| D. |
Total adjustments to common stock reflect the par value related to the issuance of shares of common stock on exchange of Notes (Note 2J) and the capital contribution from the Parent (Note 2B) is $4.7 thousand.
|
| E. |
Represents the following transaction adjustments to additional paid-in capital in connection with the Merger:
|
|
(in thousands)
|
|||||
|
2I
|
Incremental stock-based compensation expense upon acceleration of awards
|
$
|
6,855
|
||
|
2J
|
Exchange of Notes for shares of Company’s common stock by Noteholder
|
10,648
|
|||
|
2B
|
Issuance of shares of Company’s common stock upon capital contribution from the Parent
|
2,500
|
|||
|
Total adjustments to additional paid-in capital
|
$
|
20,003
|
|||
| F. |
Represents the following transaction adjustments to accumulated deficit in connection with the Merger:
|
|
(in thousands)
|
|||||
|
2I
|
Incremental stock-based compensation expense upon acceleration of awards
|
$
|
6,855
|
||
|
2J
|
Exchange of Notes for shares of Company’s common stock by Noteholder
|
10,653
|
|||
|
2C
|
Retained cost allocations and other adjustments
|
572
|
|||
|
Total adjustments to accumulated deficit
|
$
|
18,080
|
|||
| G. |
Prior to the closing of the Merger, the Company entered into a Master Consulting Agreement with Opco. Under the Master Consulting Agreement, Opco agreed to provide the Company with certain
transitional corporate, administrative, financial, information technology and operational support as well as related research and development services. Estimated expenses under the Master Consulting Agreement are expected to range from $0.1
to $0.4 million annually.
|
| H. |
Pro forma basic and diluted net loss per share is computed
using the historical weighted-average shares of the Company’s common stock outstanding for each period presented, and is adjusted for the expected exchange of $16.0 million of Notes for the issuance of 46,783,626 shares of the Company’s common stock upon closing of the Merger and the issuance of 7,309,941 shares of the
Company’s common stock pursuant to the Parent’s binding commitment to purchase shares upon the closing of the Merger.
|
The CVRs do not include shares of common stock or participating securities and do not convey any equity or ownership interest in Parent, Midco, the
Company or any of their respective affiliates; accordingly, the CVRs are not included in the calculation of pro forma basic and diluted net loss per share.
| I. |
Represents a one-time stock-based compensation charge
related to the unvested stock option and restricted stock unit awards that will become automatically fully vested upon consummation of the Merger and the extension of the exercise period of the Company’s outstanding stock options. The total
charge is estimated to be $11.0 million based on unrecognized compensation cost as of December 31, 2025. Of this amount, the Pro Forma As Adjusted column for the year ended December 31, 2025 reflects a one-time stock-based compensation
charge of $6.9 million within general and administrative expenses, representing the portion expected to remain on the Company's books after the divestiture. This amount consists of $6.7 million related to the employees expected to remain
with the Company following the Merger and $0.2 million related to allocation of a portion of costs for employees who will transfer to Midco who historically performed activities that relate to the continued operations of the Company. This
charge is also reflected in the unaudited pro forma condensed consolidated balance sheet as an increase to additional paid-in capital (Note 2E) and accumulated deficit (Note 2F). This one-time charge is nonrecurring and will not affect the
Company’s results of operations beyond 12 months after the closing of the Merger. Stock-based compensation costs incurred through June 30, 2026 are reflected in the Company’s historical financial statements as of and for the six months
ended June 30, 2026 and no adjustment has been made to remove them.
|
| J. |
Represents the adjustment to additional paid-in capital and common stock par value of $10.6 million and corresponding
adjustment to accumulated deficit for the loss on disposal on the expected exchange of the $16.0 million of Notes by the Noteholder for 46,783,626 shares of the Company’s
common stock on the closing of the Merger. This assumes that the Company will force the Noteholder to exchange their Notes for shares of the Company's common stock.
|