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Item 9A. Controls and Procedures

2022-03-01 compared with 2021-03-29 · 69 added, 27 removed, 122 unchanged (44% of the section changed)

4 unchanged sentences

Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on that evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were not effective at a reasonable assurance level as of December 31, 2020 because of the material weakness in internal controls further discussed below.

Notwithstanding the material weakness, our management, including our CEO and CFO, has concluded that our consolidated financial statements, included in the 2020 Annual Report on Form 10-K, fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with generally accepted accounting principles.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.

Specifically, our management determined that, as of December 31, 2020, we have material weaknesses in each of the following components of the “Internal Control—Integrated Framework” (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission:

Based on that evaluation, our CEO and CFO have concluded, as of December 31, 2021, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.

Management’s Annual 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).

Our internal control system is designed to provide reasonable assurance regarding the preparation and fair presentation of externally-reported consolidated financial statements in accordance with generally accepted accounting principles in the United States (U.S.

As discussed above, internal control systems, no matter how well designed, have inherent limitations and can provide only reasonable assurance that their objectives have been met.

As disclosed in Part II Item 9A Controls and Procedures in our Annual Report on Form 10-K for the year ended December 31, 2020, we identified material weaknesses in each of the following components of the Internal Control -Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO):

• insufficient accounting personnel to enable segregation of duties relating to the general ledger, disbursement, and certain accounting functions;

• no formalized processes or controls for account reconciliations, including independent review of such reconciliations, or related financial statement analysis prepared in conformity with generally accepted accounting principles in the United States (U.S.

• no formalized processes or controls for account reconciliations, including independent review of such reconciliations, or related financial statement analysis prepared in conformity with U.S.

• an insufficient complement of accounting personnel with the necessary U.S.

GAAP technical expertise to timely identify and account for complex or non-routine transactions or to formalize accounting policies, memoranda, or controls for such transactions.

These material weaknesses could result in a misstatement of account balances or disclosures that would result in a material misstatement of our annual or interim consolidated financial statements that may not be prevented or detected, and accordingly, it was determined that these control deficiencies constitute material weaknesses.

Remediation Plan

We have begun to take certain actions to address the control deficiencies in our financial reporting, including hiring three finance department employees with appropriate expertise, including our Chief Financial Officer and our Controller, and retaining an accounting consulting firm to provide additional depth and breadth to our technical accounting and financial reporting capabilities.

We have also begun to review and document our accounting and financial processes and internal controls, build out our financial

management and reporting systems infrastructure, and further develop and formalize our accounting policies and financial reporting procedures, which includes ongoing senior management review and establishing our audit committee oversight.

In addition, our current plan includes engaging a consulting firm to assist in the design effectiveness and testing of our internal controls and the hiring of an additional four finance and accounting personnel during 2021 to assist in executing on these specific functions, of which we have hired two personnel as of January 31, 2021.

Management’s Annual 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 our independent registered public accounting firm due to a transition period established by the rules of the SEC for newly public companies.

During 2021, management implemented our previously disclosed remediation plan that included:

(i) hiring six finance department employees with appropriate expertise, including our CFO and Controller;

(ii) retaining an accounting consulting firm to provide additional depth and breath to our technical and financial reporting capabilities;

and (iii) implementing formal financial reporting processes and internal controls and building out our financial management and reporting systems infrastructure, which includes ongoing senior management review, and establishing our audit committee oversight.

During the fourth quarter of 2021, we completed our testing of the operating effectiveness of the implemented controls and found them to be effective.

As of December 31, 2021, our management conducted

an evaluation, under the supervision and with the participation of our CEO and CFO, of the effectiveness of our internal control over financial reporting based upon the framework in the Internal Control -Integrated Framework (2013), issued by COSO.

Based upon that evaluation, our CEO and CFO concluded that our internal control over financial reporting was effective as of December 31, 2021 and that the material weaknesses have been remediated as of December 31, 2021.

Deloitte & Touche LLP, an independent registered public accounting firm that audited the consolidated financial statements included in this Annual Report on Form 10-K, has also audited the effectiveness of our internal control over financial reporting as of December 31, 2021, as stated in their report which appears herein under Part II, Item 9A of this Annual Report on Form 10-K.

Inherent Limitations on Effectiveness of Controls

9 unchanged sentences

Changes in Internal Control over Financial Reporting

Except for the identification of the material weaknesses and the remediation plan described above, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the quarter ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Except for the changes in connection with our implementation of the remediation plan discussed above, there have been no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the period that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Seer, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Seer, Inc.

and subsidiary (the “Company”) as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated March 1, 2022, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s change in its method of accounting for leases in fiscal year 2021 due to the adoption of ASC Topic 842, Leases.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk

that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte and Touche LLP

San Francisco, California

March 1, 2022

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance.

29 unchanged sentences

S-1 333-252395 4.2 1/25/2021

4.3 Description of the Registrant ’ s securities registered p ursuant to S ection 12 of the Securities Exchange Act of 1934.

4.3 Description of the Registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.

10-K 001-39747 4.3 3/29/2021

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

7 unchanged sentences

10.5+ 2020 Employee Stock Purchase Plan.

S-1/A 333-250035 10.5 11/30/2020

10-Q 001-39747 10.2 8/12/2021

10.6+ Key Executive Change in Control and Severance Plan, and form of Participation Agreement thereunder.

13 unchanged sentences

10.12+ Outside Director Compensation Policy

S-1/A 333-250035 10.12 11/30/2020

10-Q 001-39747 10.1 8/12/2021

10.13# Umbrella Development & Supply Agreement between the Registrant and Hamilton Company, dated March 9, 2020.

6 unchanged sentences

S-1 333-250035 10.15 11/12/2020

10.16 Leave of Absence Agreement between Omead Ostadan and the Company effective October 7, 2021.

8-K 001-39747 10.1 10/13/2021

10.17 Amended Confirmatory Employment Letter between the Company and Omead Ostadan, dated February 18, 2022.

8-K 001-39747 10.1 2/18/2022

21.1 List of Subsidiaries of the Registrant.

5 unchanged sentences

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

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

101.INS Inline XBRL Instance Document

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 Cover Page Interactive Data File - the Cover Page Interactive Data File does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

+ Indicates management contract or compensatory plan.

† The certifications attached as Exhibit 31.1, 31.2 and 32.1 that accompany this Annual Report on Form 10-K, are deemed furnished and not filed with the Securities and Exchange Commission 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 Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.

† The certifications attached as Exhibit 32.1 that accompany this Annual Report on Form 10-K, are deemed furnished and not filed with the Securities and Exchange Commission 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 Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.

# Confidential treatment has been requested for portions of this exhibit.

These portions have been omitted and have been filed separately with the Securities and Exchange Commission.

* Filed herewith

Form 10-K Summary

15 unchanged sentences

March 1, 2022

/s/ David Hallal Lead Independent Director March 29, 2021

/s/ David Halla Lead Independent Director March 1, 2022

/s/ Catherine Friedman Director March 1, 2022

Catherine Friedman

/s/ Meeta Gulyani Director March 1, 2022

Meeta Gulyani

/s/ Rachel Haruwitzm Ph.D.

Director March 1, 2022

Rachel Haurwitz, Ph.D.

/s/ Robert Langer, Sc.D.

6 unchanged sentences

Omead Ostadan

/s/ Mostafa Ronaghi, Ph.D.

/s/ Mostafa Ronahi.

Director March 1, 2022

Mostafa Ronaghi, Ph.D.

/s/ David Singer Director March 29, 2021

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