What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-27 compared with 2023-03-16 · 66 added, 38 removed, 162 unchanged (39% of the section changed)

14 unchanged sentences

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 or compliance with the policies or procedures may deteriorate.

Management with participation of the CEO and CFO under the oversight of our Board of Directors evaluated the effectiveness of our internal control over financial reporting as of December 31, 2022 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013).

Based on that evaluation, management determined that our internal control over financial reporting was not effective as of December 31, 2022, because of the material weaknesses described below.

Management with participation of the CEO and CFO under the oversight of the Audit Committee of our Board of Directors evaluated the effectiveness of our internal control over financial reporting as of December 31, 2023 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013).

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

Certain components of the Company’s control environment were ineffective as the Company did not have a sufficient complement of resources with assigned responsibility and accountability for the design, operation and documentation of internal control over financial reporting.

This created deficiencies in the Company’s risk assessment process that led to ineffective information and communication activities as the controls necessary to ensure the reliability of information used in financial reporting and communicate relevant information about roles and responsibilities for internal control over financial reporting were ineffective.

As a result, process-level control activities were not designed, implemented or operated effectively in the substantial majority of our processes.

Because there is a reasonable possibility that material misstatement of our consolidated financial statements will not be prevented or detected on a timely basis, we concluded the deficiencies represent material weaknesses in our internal control over financial reporting and our internal control over financial reporting was not effective as of December 31, 2022.

The material weaknesses did not result in any material misstatements to our consolidated financial statements as of and for the year ended December 31, 2022.

Our independent registered public accounting firm, KPMG LLP, who audited the consolidated financial statements included in this annual report, has expressed an adverse opinion on the operating effectiveness of our internal control over financial reporting.

KPMG LLP's report appears in Item 8 of this Annual Report.

Based on the evaluation described above, management determined that our internal control over financial reporting was not effective as of December 31, 2023, because of material weaknesses.

Specifically, the Company did not design and maintain sufficient user access and monitoring controls to ensure appropriate segregation of duties and adequately restrict access to a financial application.

As a result, automated and manual business process controls that are dependent on the affected IT general controls were also deemed ineffective, as they could have been adversely affected due to their reliance on information and configurations from the affected IT system.

In addition, a management review control associated with the valuation of the sponsor earn-out liabilities did not operate effectively as it did not evaluate a key assumption used in the valuation at an appropriate level of precision.

If not remediated, or if we identify further material weaknesses in our internal control, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our consolidated financial statements or a failure to meet our reporting and financial obligations.

The material weaknesses did not result in any material misstatements to our consolidated financial statements or disclosures in any of the years ended December 31, 2023, 2022 or 2021.

Our independent registered public accounting firm, Grant Thornton LLP, who audited the consolidated financial statements included in this annual report, has expressed an adverse opinion on the effectiveness of our internal control over financial reporting as of December 31, 2023, which appears in Item 8 Financial Statements and Supplementary Data of this 2023 Form 10-K.

Remediation Plan

We have identified the following plans to remediate the material weaknesses described in this Item 9A and to enhance our overall control environment, risk assessment, control activities, and information and communication.

We are taking the following actions to remediate the material weaknesses described in this Item 9A and to enhance our overall control environment.

We are committed to ensuring that our internal control over financial reporting is effective.

● We are developing a detailed remediation plan, with appropriate executive sponsorship and with the assistance of third-party specialists, to specifically address the material weaknesses.

● We have hired, and will continue to hire, additional certified public accountants (including those with public company experience) who have the appropriate level of expertise in the areas of accounting, financial reporting, and internal controls commensurate with the volume and complexity of our reporting requirements.

● We plan to design and implement a comprehensive and continuous risk assessment process to identify and assess risks of material misstatement and ensure that the impacted financial reporting processes and related internal controls are properly designed and in place to respond to those risks in our financial reporting.

● We plan to enhance the design of existing control activities and implement additional process-level control activities and ensure they are operating effectively.

● We plan to design and implement additional information and communications controls to ensure use of and obtaining relevant and quality information to allow operation of effective control activities, including internal and external communication.

Although we intend to complete the remediation process as promptly as possible, we cannot at this time estimate how long it will take to remediate these material weaknesses.

In addition, we may discover additional material weaknesses that require additional time and resources to remediate, and we may decide to take additional measures to address the material weaknesses or modify the remediation steps described above.

● We are developing a detailed remediation plan, with appropriate executive sponsorship, to specifically address the material weaknesses.

● We have hired, and will continue to hire, additional professionally qualified accountants who have the appropriate level of expertise in the areas of accounting, financial reporting, and IT general controls.

● We are taking steps to enhance the design of existing control activities related to IT environment and implement additional process-level control activities and ensure they are operating effectively.

● We have and will continue to restrict access to the financial application to ensure appropriate segregation of duties.

● We will design updated processes and controls around change management monitoring to ensure that all changes have sufficient documentation and are reviewed by an authorized person.

● We will maintain sufficient and appropriate review documentation for the assessment of all key assumptions related to the valuation of sponsor earn out liabilities.

We intend to complete the remediation process as promptly as possible.

We may discover additional material weaknesses that require additional time and resources to remediate, and we may decide to take additional measures to address the material weaknesses or modify the remediation steps described above.

Until these weaknesses are remediated, we plan to continue to perform additional analyses and other procedures to ensure that our consolidated financial statements are prepared in accordance with GAAP.

Remediation of Previously Reported Material Weaknesses

As previously reported in Part II, Item 9A, ‘Controls and Procedures’ of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission on March 16, 2023, in connection with our assessment of the effectiveness of internal control over financial reporting as of December 31, 2022, we identified material weaknesses related to insufficient complement of resources, ineffective risk assessment process and ineffective information and communication activities which resulted in ineffective process-level controls in a majority of financial reporting processes.

In response to the material weaknesses, the Company developed and implemented a remediation plan.

We hired additional qualified resources, trained those resources and engaged a nationally recognized accounting firm to review the design of high-risk processes.

We enhanced our risk assessment process and designed controls to mitigate the risk of material misstatements at an increased level of precision.

We implemented new tools and applications to ensure timely compliance with the internal control requirements.

Based on those

remediation actions, management has concluded that the material weaknesses previously reported have been remediated as of December 31, 2023.

As noted above, we have reported material weaknesses in 2023.

Changes in Internal Control over Financial Reporting

Other than the material weaknesses discussed above and changes outlined in remediation activities, there have been no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As described above, we have taken and continue to take steps to remediate material weaknesses in our internal control over financial reporting described in “Remediation Plan” and “Remediation of Previously Reported Material Weaknesses.” Other than in connection with the remediation process described above, no change in our internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Other Information

Rule 10b5-1 Trading Arrangements

During the quarter ended December 31, 2023, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements as defined in Item 408 of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

14 unchanged sentences

Exhibits – the exhibits listed below are filed as part of this Annual Report or incorporated herein by reference to the location indicated.

Business Combination Agreement, dated as of July 12, 2021, among Ivanhoe Capital Acquisition Corp., Wormhole Merger Sub Pte.

and SES Holdings Pte.

Ltd., as amended by Amendment No.

1 thereto, dated September 20, 2021 (incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-4/A (File No.

333-258691), filed with the Securities and Exchange Commission on January 5, 2022).

Amendment No.

1 to Business Combination Agreement, dated as of September 20, 2021, among Ivanhoe Capital Acquisition Corp., Wormhole Merger Sub Pte.

and SES Holdings Pte.

(incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No.

001-39845), filed with the Securities and Exchange Commission on September 21, 2021).

Certificate of Incorporation of SES AI Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No.

22 unchanged sentences

001-39845), filed with the Securities and Exchange Commission on February 8, 2022).

Employment Agreement, dated as of February 15, 2021, by and between Rohit Makharia and SES Holdings Pte.

(incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K (File No.

001-39845), filed with the Securities and Exchange Commission on February 8, 2022).

Employment Agreement, dated as of May 24, 2016, by and between Yongkyu Son and SolidEnergy Systems Corporation (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K (File No.

001-39845), filed with the Securities and Exchange Commission on February 8, 2022).

Employment Agreement, dated as of July 1, 2018, by and between Dr.

1 unchanged sentence

001-39845), filed with the Securities and Exchange Commission on February 8, 2022).

Employment Agreement, dated as of March 3, 2023, by and between Daniel (Gang) Li and SolidEnergy Systems LLC (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No.

001-39845), filed with the Securities and Exchange Commission on May 9, 2023).

Employment Agreement, dated as of March 2, 2022, by and between Kyle Pilkington and SolidEnergy Systems, LLC

Advisory Agreement, dated as of June 26, 2022, by and between Joanne Ban and SES AI Corporation (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No.

001-39845), filed with the Securities and Exchange Commission on May 9, 2023).

Separation Letter, dated as of January 24, 2024, by and between Rohit Makharia and SES Holdings Pte Ltd .

Director Nomination Agreement dated as of July 12, 2021, by and among Ivanhoe Capital Acquisition Corp., SES Holdings Pte.

31 unchanged sentences

Amendment No.

5 to Commercial Lease Agreement, dated as of October 21, 2022.

5 to Commercial Lease Agreement, dated as of October 21, 2022 (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K (file No.

001-39845) filed with the Securities and Exchange Commission on March 16, 2023).

Form of Restricted Share Award Grant (incorporated by reference to Exhibit 10.22 to the Company’s Current Report on Form 8-K (File No.

4 unchanged sentences

001-39845), filed with the Securities and Exchange Commission on February 8, 2022).

Form of Restricted Stock Unit Award Grant Notice pursuant to the SES AI Corporation 2021 Incentive Award Plan for restricted stock unit awards to employees, consultants and advisors (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q (File No.

Company’s Quarterly Report on Form 10-Q (File No.

001-39845), filed with the Securities and Exchange Commission on May 13, 2022).

15 unchanged sentences

001-39845), filed with the Securities and Exchange Commission on April 18, 2022).

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Old SES for the fiscal year ended December 31, 2021 (incorporated by reference to Exhibit 99.2 to the Company’s Amendment No.

1 to Current Report on Form 8-K/A (File No.

001-39845), filed with the Securities and Exchange Commission on March 31, 2022).

Letter from KPMG LLP (incorporated by reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K (File No.

001-39845), filed with the Securities and Exchange Commission on June 16, 2023).

List of Subsidiaries .

Consent of Independent Registered Public Accounting Firm (Grant Thornton LLP) .

Consent of Independent Registered Public Accounting Firm (KPMG LLP).

6 unchanged sentences

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

Policy for the Recovery of Erroneously Awarded Compensation.

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

11 unchanged sentences

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

March 16, 2023

February 27, 2024

SES AI CORPORATION

10 unchanged sentences

Chief Executive Officer and Chairman

March 16, 2023

February 27, 2024

(Principal Executive Officer)

1 unchanged sentence

Chief Financial Officer

March 16, 2023

February 27, 2024

(Principal Financial Officer and Principal Accounting Officer)

/s/ Jang Wook Choi

March 16, 2023

February 27, 2024

Jang Wook Choi

/s/ Kent Helfrich

March 16, 2023

Kent Helfrich

March 16, 2023

/s/ Anirvan Coomer

February 27, 2024

Anirvan Coomer

/s/ Brian Krzanich

February 27, 2024

Brian Krzanich

February 27, 2024

/s/ Michael Noonen

March 16, 2023

February 27, 2024

Michael Noonen

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