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Item 9A. Controls and Procedures

2025-03-11 compared with 2024-03-01 · 37 added, 29 removed, 141 unchanged (32% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Management performed, with the participation of the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO), an evaluation of the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this Annual Report.

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, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2023 due to the material weaknesses in its internal control over financial reporting described below.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports 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 Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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 disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of December 31, 2024 due to the material weaknesses in the Company’s internal control over financial reporting described below.

However, after giving full consideration to the material weaknesses described below, and the additional analyses and other procedures management performed to ensure that its consolidated financial statements included in this Annual Report were prepared in accordance with U.S.

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The Company did not maintain an effective control environment as it lacked sufficient oversight of activities related to its internal control over financial reporting due to a lack of appropriate level of experience and training commensurate with its financial reporting requirements.

Further, due to rapid business growth, changes to existing controls or the implementation of new controls have not been sufficient to respond to changes to the risks of material misstatement to financial reporting, which resulted in the Company not designing and maintaining effective controls related to substantially all accounts and disclosures.

Further, due to rapid business growth, changes to existing controls or the implementation of new controls have not been sufficient to respond to changes to the risks of material misstatement to financial reporting, which resulted in the Company, including the SYNQ3 and Amelia entities which were acquired during 2024, not designing and maintaining effective controls related to substantially all accounts and disclosures.

These material weaknesses contributed to the following additional material weaknesses as of December 31, 2024:

• The Company did not design and maintain effective controls to verify appropriate accounting for complex financing transactions.

• The Company did not design and maintain effective controls related to the identification of and accounting for certain non-routine, unusual or complex transactions, including the accounting for complex financing transactions and acquisitions.

• The Company did not design and maintain effective controls to verify appropriate segregation of duties, including assessment of incompatible duties, identification of instances where incompatible duties were assigned to an individual, and addressing conflicts on a timely basis.

4 unchanged sentences

and (iii) computer operations controls to ensure that processing and transfer of data, and data backups and recovery are monitored.

The material weaknesses related to the control environment, risk assessment and complex financing transactions resulted in the revision of the consolidated financial statements as of and for the periods ended September 30, 2022, December 31, 2022, March 31, 2023, and June 30, 2023.

The material weaknesses related to segregation of duties and IT

general controls did not result in a misstatement to our annual or interim consolidated financial statements.

The material weaknesses related to the control environment, risk assessment and the accounting for certain non-routine, unusual or complex transactions resulted in the revision of the consolidated financial statements as of and for the periods ended September 30, 2022, December 31, 2022, March 31, 2023, June 30, 2023, immaterial errors related to SYNQ3 and Amelia acquisitions during the year ended December 31, 2024 and immaterial errors in various accounts during the interim and annual periods during 2023 and 2024.

The material weaknesses related to segregation of duties and IT general controls did not result in a misstatement to our annual or interim consolidated financial statements.

Additionally, the material weaknesses could result in misstatements to substantially all of our accounts and disclosures that would result in a material misstatement of the annual or interim consolidated financial statements that would not be prevented or detected.

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The effectiveness of our internal control over financial reporting as of December 31, 2024 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears under Item 8.

Remediation Efforts for the Material Weaknesses

We are in the process of designing and implementing controls and taking other actions to remediate the material weaknesses described above.

Specifically, during the quarter ended December 31, 2023, we implemented measures designed to improve our internal control over financial reporting to remediate the material weaknesses, including the following:

Management's Plan to Remediate the Material Weaknesses

The following remediation actions are currently being implemented and are in progress:

• Engaged a third party to perform a risk assessment that includes the identification and walkthrough of key business processes and conducting design and operational control testing to address key risks.

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• Initiated the design and implementation of a Segregation of Duties automated tool for our Enterprise Resource Planning (ERP) system.

We also began the design and implementation of similar controls for the remaining financially relevant applications.

Additionally, we have initiated the design and implementation of similar controls for the remaining financially relevant applications.

Improvements have been implemented in tool utilization to strengthen the segregation of duties.

• Initiated the design and implementation of controls related to the review of Service Organization Control reports, which cover program change management and computer operations for many of the applications that we rely on for financial reporting.

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• Completed the implementation of an automated month and quarter-end accounting close workflow tool to facilitate the review and support of key financial close process controls.

As it specifically relates to the fourth quarter of 2024, the following actions were taken:

• Hired additional personnel with expertise in risk assessment and internal controls.

• Initiated the implementation of technological enhancements including the consolidation of disparate ERP systems.

• Elevated internal compliance processes.

The material weaknesses will not be considered remediated until management completes the design and implementation of the measures described above, the controls operate for a sufficient period of time, and management has concluded, through testing, that the controls are effective.

Changes in Internal Control over Financial Reporting

As described above in the section “Remediation Efforts for the Material Weaknesses,” there were changes in our internal control over financial reporting during the quarterly period ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As noted above, there were changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarterly period ended December 31, 2024 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Other Information

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During the fiscal quarter ended December 31, 2024 , the following Section 16 officers and directors adopted, modified or terminated a “Rule 10b5-1 trading arrangement” (as defined in Item 408 of Regulation S-K of the Exchange Act):

Keyvan Mohajer , Chief Executive Officer and Director , adopted a new trading plan on December 12, 2023 (with the first trade under the new plan not to be made prior to March 12, 2024).

Keyvan Mohajer , Chief Executive Officer and Director , adopted a new trading plan on November 27, 2024 (with the first trade under the new plan not to be made prior to March 1, 2025).

The trading plan will be effective until June 15, 2025 and provides for the sale of up to 2,400,000 shares of Dr.

Mohajer’s 15,439,064 shares of Class B common stock.

up to 833,435 shares of Class A common stock issuable upon exercise of outstanding options, and up to 355,000 shares of Class A common stock issuable upon vesting and settlement of certain RSUs and PSUs, provided that certain conditions are met.

Seyed Majid Emami , Chief Science Officer and Senior Vice President of Engineering , adopted a new trading plan on December 8, 2023 ( with the first trade under the new plan not to be made prior to March 8, 2024).

The trading plan will be effective until November 30, 2024 and provides for the sale of up to 1,950,000 shares of Dr.

Emami’s 18,033,756 shares of Class B common stock and up to 666,748 shares of Class A common stock issuable upon exercise of outstanding options, provided that certain conditions are met.

Hom , Chief Product Officer and Director , adopted a new trading plan on December 8, 2023 ( with the first trade under the new plan not to be made prior to March 8, 2024).

The trading plan will be effective until May 31, 2024 and provides for the sale of up to 2,000,000 shares of Mr.

Hom’s 4,012,588 shares of Class B common stock and up to 100,000 shares of Class A common stock issuable upon vesting and settlement of certain RSUs and PSUs, provided that certain conditions are met.

Mohajer's 14,139,064 shares of Class B common stock and up to 737,500 shares of Class A common stock issuable upon vesting and settlement of certain RSUs and PSUs, provided that certain conditions are met.

• Eric Ball , Director , adopted a new trading plan on December 20, 2024 (with the first trade under the new plan not to be made prior to March 21, 2025).

The trading plan will be effective until December 31, 2025 and provides for the sale of up to 150,000 shares of Class A common stock, provided that certain conditions are met.

• Nitesh Sharan , Chief Financial Officer , adopted a new trading plan on December 13, 2024 (with the first trade under the new plan not to be made prior to March 14, 2025).

The trading plan will be effective until December 31, 2025 and provides for the sale of up to 120,000 shares of Class A common stock issuable upon exercise of outstanding options and up to 121,506 shares of Class A common stock, provided that certain conditions are met.

• Timothy Stonehocker , Chief Technology Officer , adopted a new trading plan on December 23, 2024 (with the first trade under the new plan not to be made prior to March 24, 2025).

The trading plan will be effective until February 15, 2026 and provides for the sale of up to 395,737 shares of Class A common stock issuable upon vesting and settlement of certain RSUs, provided that certain conditions are met.

Hom , Chief Product Officer and Director , adopted a new trading plan on November 27, 2024 (with the first trade under the new plan not to be made prior to April 1, 2025).

The trading plan will be effective until June 30, 2025 and provides for the sale of up to 200,000 shares of Mr.

Hom's 1,812,588 shares of Class B common stock, up to 3,815 shares of Class A common stock, and up to 29,534 shares of Class A common stock issuable upon vesting and settlement of certain RSUs, provided that certain conditions are met.

There were no “non-Rule 10b5-1 trading arrangements” (as defined in Item 408 of Regulation S-K of the Exchange Act) adopted , modified or terminated during the fiscal quarter ended December 31, 2024 by our directors and Section 16 officers.

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Form Exhibit Filing Date

2.1+ Agreement and Plan of Merger, dated December 6 , 2023, by and among SoundHound AI , Inc.

, Black Knights Merger Sub I, Inc., a Delaware corporation, Black Knight Merger Sub II, LLC, a Delaware limited liability company and Syn q3, Inc.

2.1+ Agreement and Plan of Merger, dated December 6, 2023, by and among SoundHound AI, Inc., Black Knights Merger Sub I, Inc., a Delaware corporation, Black Knight Merger Sub II, LLC, a Delaware limited liability company and Synq3, Inc.

8-K 2.1 12/07/23

Firehorse Merger Sub, LLC Stock Purchase Agreement

Amelia Holding II, LLC Credit Agreement

3.1 Second Amended and Restated Certificate of Incorporation of SoundHound AI, Inc.

37 unchanged sentences

8-K 10.4 06/08/22

10.10 Form of Preferred Stock Purchase Agreement.

8-K 10.1 01/24/23

10.11+ Senior Secured Term Loan Agreement

10-Q 10.1 05/12/23

10.10 Form of Controlled Equity Offering Sales Agreement

S-3 10.1 07/24/23

SoundHound AI, Inc.

2024 Employment Inducement Incentive Award Plan

Form of Restricted Stock Unit Agreement .

Form of Stock Option Award Agreement.

Form of Equity Distribution Agreement, dated April 9, 2024

Form of Equity Distribution Agreement, dated November 8, 2024

Form of Equity Distribution Agreement, dated January 27 , 202 5

Insider Trading Policy

Subsidiaries of the Company

8-K 21.1 05/02/22

23.1* Consent of PricewaterhouseCoopers

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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