What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-31 compared with 2022-03-28 · 33 added, 13 removed, 128 unchanged (26% of the section changed)

6 unchanged sentences

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Form 10-K were not effective, due to the material weakness in our internal controls over financial reporting described below.

Management’s Report on 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.

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 based on the criteria described in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this assessment, management has concluded that while we have remediated three material weaknesses, our internal control over financial reporting as of December 31, 2022 was not effective, as we still have not remediated two material weaknesses in our internal control over financial reporting described below.

This annual report does not include an attestation report of our registered public accounting firm due to an exemption for “emerging growth companies.”

Changes in Internal Control over Financial Reporting

12 unchanged sentences

(2) user access review of systems that support financial reporting and a preliminary review of segregation of duties;

(3) implementing a new enterprise resource planning (“ERP”) system and other systems and processes related to revenue recognition and equity administration to increase capabilities over our financial statement recording and reporting processes;

(4) hiring additional full-time accounting personnel with appropriate levels of experience to increase our accounting and technical expertise, including a new Chief Financial Officer, a Corporate Controller, an Internal Controls Manager, and a Director of IT who was hired shortly after December 31, 2021;

and (5) reallocating responsibilities across our accounting organization so that the appropriate level of knowledge and experience is applied based on complexity of transactions.

The actions we took were subject to ongoing executive management review and also to audit committee oversight.

As of December 31, 2021, the material weaknesses have not been remediated.

(3) implementing financial modules to support reconciliations, and other systems and processes related to fixed assets, leases, revenue recognition, and equity administration to increase capabilities over our financial statement recording and reporting processes;

(4) hiring additional full-time accounting personnel with appropriate levels of experience to increase our accounting and technical expertise, including a new Tax Manager, a Director of IT, and additional accounting staff, all with public company experience and or a Certified Public Accountant certification;

and (5) reallocating responsibilities across our accounting organization so that the appropriate level of knowledge and experience is applied based on complexity of transactions, in addition to implementation of sufficient and timely review of significant accounting transactions and reconciliations.

The actions we took were subject to ongoing executive management review and also to audit committee oversight, and resulted in the full remediation of the following material weaknesses as of December 31, 2022:

our controls were not adequately designed to consider certain revenue recognition criteria, specifically related to the timing of revenue recognition, appropriate presentation and satisfaction of criteria for revenue recognition, which could have resulted in a material misstatement;

our controls were not adequately designed to consider the accurate recording of value added taxes and sales and use taxes, resulting in misstatements;

ineffective information technology general controls in the areas of user access and segregation of duties related to certain information technology systems that support our financial reporting process specifically related to expenditures.

As of December 31, 2022, two material weaknesses remained as follows:

our controls were not operating effectively to allow sufficient and timely review of significant accounting transactions and reconciliations.

These deficiencies resulted in errors in cash and cash equivalents, prepaid expenses and other current assets, property and equipment, capitalized internal-use software, capital lease liability and sale leaseback transactions, accrued compensation and income tax;

our controls over certain equity transactions were not operating effectively to allow management to timely identify errors related to the recording of those transactions;

specifically, we did not have sufficient technical resources to appropriately identify errors in the accounting for equity awards and preferred stock transactions, resulting in misstatements relating to completeness and accuracy of stock-based compensation and classification of equity instrument.

We have dedicated significant effort and resources towards measures to remediate the identified material weaknesses.

We are in the process of designing and implementing internal controls intended to address our remaining material weaknesses, and are also testing the operating effectiveness of these controls.

The remaining material weaknesses cannot be considered fully remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Except as otherwise described herein, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the year ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4 unchanged sentences

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected.

The design of any system of controls also 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 the 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.

Exemption from Management’s Report on Internal Control over Financial Reporting

The Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by the rules of the SEC for newly public companies.

Other Information

13 unchanged sentences

(1) Financial Statements.

We have filed the consolidated financial statements listed in the Index to Consolidated Financial Statements, Schedules, and Exhibits included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

(2) Financial Statement Schedules.

12 unchanged sentences

4.1 Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Exchange Act of 1934

10-K 001-41026 4.1 03/28/2022

10.1 Form of Indemnification Agreement by and between the Registrant and each of its directors and executive officers.

20 unchanged sentences

10.8 First Amendment to the Loan and Security Agreement, dated October 21, 2021, by and between the Company and City National Bank.

10-K 001-41026 10.8 03/28/2022

10.9 Second Amendment to the Loan and Security Agreement, dated as of October 21, 2021, by and between the Registrant and City National Bank

8-K 001-41026 10.1 04/27/2022

10.10 Third Amendment to the Loan and Security Agreement, dated as of January 2 0 , 202 3 , by and between the Registrant and City National Bank

23.1 Consent of BDO USA, LLP, Independent Registered Public Accounting Firm.

6 unchanged sentences

Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH Inline XBRL Taxonomy Extension Schema Document.

8 unchanged sentences

(b) Exhibits.

See Ite m 15(a)(3) above.

† Pursuant to Item 601(a)(5) of Regulation S-K, certain exhibits and schedules to this agreement have been omitted.

The Company hereby agrees to furnish supplementally to the Securities and Exchange Commission, upon its request, any or all of such omitted exhibits and/or schedules.

See Item 15(a)(3) above.

2 unchanged sentences

Not Applicable.

Pursuant to the requirements of Section 13 or 15(d) 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, in the City of San Mateo, State of California, on this 28th day of March, 2022.

Backblaze, Inc.

14 unchanged sentences

Frank Patchel

/s/ Brian Wilson

Chief Technology Officer and Director March 28, 2022

/s/ Timothy Nufire

Chief Cloud Officer and Director March 28, 2022

Director March 31, 2023

Timothy Nufire

8 unchanged sentences

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