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Item 9A. Controls and Procedures

2023-03-30 compared with 2022-03-22 · 28 added, 41 removed, 100 unchanged (41% of the section changed)

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, are designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures are designed to ensure that information required to be disclosed is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based upon our evaluation of the Company’s disclosure controls and procedures, as of December 31, 2021, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls were not effective, due to the material weakness in internal control over financial reporting disclosed in our final prospectus filed with the SEC on July 23, 2021 for the fiscal year ended December 31, 2020.

In light of this fact, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weakness in our internal control over financial reporting, the consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with US GAAP.

Evaluation of Disclosure Controls and Procedure s

Our “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), are designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act).

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2022 based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on the results of its evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2022.

Changes in Internal Control over Financial Reporting

We are taking actions to remediate the material weakness relating to our internal control over financial reporting, as described below.

Except as otherwise described herein, there was no change in our internal control over financial reporting that occurred during the period covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Ongoing Remediation of Material Weakness in Internal Control over Financial Reporting

We are working to remediate the material weakness and are taking steps to strengthen our internal control over financial reporting through the continued hiring of additional finance and accounting personnel with the requisite technical knowledge and skills.

With the additional personnel, we are taking appropriate and reasonable steps to remediate this material weakness through the implementation of appropriate segregation of duties, formalization of accounting policies and controls and retention of appropriate expertise for complex accounting transactions.

We will not be able to fully remediate these control deficiencies until these steps have been completed and have been operating effectively for a sufficient period of time.

While management believes that progress has been made in enhancing internal controls as of December 31, 2021, and in the period since, the material weakness described in our final prospectus filed with the SEC on July 23, 2021 with respect to the fiscal year ended December 31, 2020, has not been fully remediated due to insufficient time to assess the design, fully implement remediation and assess operating effectiveness of the related controls.

Management will continue to evaluate and improve our disclosure controls and procedures and internal control over financial reporting throughout 2022, and will make any further changes management deems appropriate.

We remediated the material weakness relating to our internal control over financial reporting, as described below.

Except as otherwise described herein, there was no change in our internal control over financial reporting that occurred during the fourth quarter of 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Remediation of Material Weakness in Internal Control over Financial Reporting

We strengthened our internal control over financial reporting through hiring of additional finance and accounting personnel with the requisite technical knowledge and skills, implementation of appropriate segregation of duties, and formalization of accounting policies and controls.

Management believes that significant progress has been made in enhancing internal controls as of December 31, 2022 and has concluded that the enhanced controls are operating effectively.

The material weakness described in Part II, Item 9A, “Controls and Procedures” in our Annual Report on Form 10-K for the year ended December 31, 2021 has been fully remediated.

Other Information

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We intend to disclose future amendments to such code, or any waivers of a provision of the code, applicable to any principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, or our directors on our website or in a Current Report on Form 8-K.

Information contained on the website is not incorporated by reference into this Annual Report.

Information contained on the website is not incorporated by reference into this Annual Report on Form 10-K.

The remaining information required under this item is incorporated herein by reference to our definitive proxy statement with respect to our 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

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Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2022 and 2021

Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Units and Other Stockholders’ and Members' Deficit for the years ended December 31, 2021 and 2020

Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) for the years ended December 31, 2022 and 2021

Consolidated Statement of Cash Flows for the years ended December 31, 2022 and 2021

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3.2 Amended and Restated Bylaws of the Absci Corporation (filed as Exhibit 3.1 to the Form 8-K, File No.

001-40646, filed by Absci Corporation on July 26, 2021 and incorporated herein by reference).

001-40646, filed by Absci Corporation on December 15, 2022 and incorporated herein by reference).

4.1 Specimen Common Stock Certificate ( filed as Exhibit 4.1 to the Form S-1, File No.

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333-257553, filed by Absci Corporation on June 30, 2021 and incorporated herein by reference).

4.3 Description of the Registrant’s Securities.

4.3 Description of the Registrant’s Securities (filed as Exhibit 4.3 to the Annual Report on Form 10-K for the year ended December 31, 2021 filed by Absci Corporation on March 22, 2022).

10.1# 2020 Stock Option and Grant Plan and forms of award agreements thereunder (filed as Exhibit 10.1 to the Form S-1, File No.

333-257553, filed by Absci Corporation on June 30, 2021 and incorporated herein by reference).

10.2# 2021 Stock Option and Incentive Plan and forms of award agreements thereunder (filed as Exhibit 10.2 to the Form S-1, File No.

333-257553, filed by Absci Corporation on July 15, 2021 and incorporated herein by reference).

10.2# 2021 Stock Option and Incentive Plan and forms of award agreements thereunder ( filed as Exhibit 10.

1 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed by Absci Corporation on November 9, 2022 and incorporated herein by reference ).

10.3# 2021 Employee Stock Purchase Plan (filed as Exhibit 10.3 to the Form S-1, File No.

2 unchanged sentences

333-257553, filed by Absci Corporation on July 15, 2021 and incorporated herein by reference).

10.5# Non-Employee Director Compensation Policy (filed as Exhibit 10.5 to the Form S-1, File No.

333-257553, filed by Absci Corporation on July 15, 2021 and incorporated herein by reference).

10.5# Amended and Restated Non-Employee Director Compensation Policy (filed as Exhibit 4.2 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, filed by Absci Corporation on August 11, 2022 and incorporated herein by reference).

10.6# Form of Indemnification Agreement by and between the Registrant and each of its directors and officers (filed as Exhibit 10.8 to the Form S-1, File No.

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10.8# Employment Agreement, by and between the Registrant and Gregory Schiffman, dated as of July 26, 2021 (filed as Exhibit 10.7 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, filed by Absci Corporation on September 7, 2021 and incorporated herein by reference).

10.9# Employment Agreement, by and between the Registrant and Matthew Weinstock, dated as of July 26, 2021.

10.9# Employment Agreement, by and between the Registrant and Sarah Korman, dated as of July 26, 2021.

10.11# Employment Agreement, by and between the Registrant and Nikhil Goel, dated as of July 26, 2021.

10.12 Office Lease, by and between AbSci, LLC and Broadway Investors II, LLC, dated as of August 11, 2016, as amended by Amendment No.

1 dated as of January 27, 2017, Amendment No.

2 dated as of November 27, 2017, Amendment No.

3 dated as of July 31, 2018, Amendment No.

4 dated as of February 1, 2019 and Amendment No.

5 dated as of July 1, 2019 (filed as Exhibit 10.9 to the Form S-1, File No.

333-257553, filed by Absci Corporation on June 30, 2021 and incorporated herein by reference).

10.13 Sublease Agreement, by and between AbSci, LLC and Killian Pacific LLC, dated as of February 1, 2019, as amended by Amendment No.

1 of Sublease dated as of July 1, 2019 (filed as Exhibit 10.10 to the Form S-1, File No.

333-257553, filed by Absci Corporation on June 30, 2021 and incorporated herein by reference).

(filed as Exhibit 10.10 to the Annual Report on Form 10-K for the year ended December 31, 2021, filed by Absci Corporation on March, 2022 and incorporated herein by reference) .

10.10# Separation Agreement by and between the Company and Matthew Weinstock dated September 30, 2022 (filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed by Absci Corporation on November 9, 2022 and incorporated herein by reference).

10.11# Consulting Agreement by and between the Company and Matthew Weinstock dated October 4, 2022 (filed as Exhibit 10.3 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed by Absci Corporation on November 9, 2022 and incorporated herein by reference) .

10.12 Lease, by and between the Registrant and Columbia Tech Center, L.L.C., dated as of December 2, 2020, as amended by First Lease Modification Agreement, dated as of March 8, 2021 (filed as Exhibit 10.11 to the Form S-1, File No.

333-257553, filed by Absci Corporation on June 30, 2021 and incorporated herein by reference).

23.1 Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm

23.1 Consent of Independent Registered Accounting Firm .

24.1 Power of Attorney (reference is made to the signature page hereto).

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† The certifications attached as Exhibit 32.1 and Exhibit 32.2 that accompany this Annual Report on Form 10-K are not deemed filed with the SEC and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-K, irrespective of any general incorporation language contained in such filing.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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 thereunto duly authorized.

ABSCI CORPORATION

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/s/ Todd Bedrick

Vice President, Corporate Controller (Principal Accounting Officer)

March 22, 2022

/s/ Eli Casdin

Chief Accounting Officer (Principal Accounting Officer)

March 30, 2023

10 unchanged sentences

March 30, 2023

/s/ Daniel Rabinovitsj

Daniel Rabinovitsj

March 30, 2023

/s/ Joseph Sirosh

Joseph Sirosh, PhD

Andreas Busch, Ph.D.

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

What changed 10-K

Item 9A. Controls and Procedures