SES AI Corp

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer (“CEO”) and chief financial officer (“CFO”), we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2024, as such term is defined in Rules 13a-15(e) and 15d-15(e) under Securities Exchange Act of 1934, as amended (the “Exchange Act”). Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in 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 principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and principal financial officer have concluded that as of June 30, 2024, our disclosure controls and procedures were not effective due to certain unremediated material weaknesses in our internal control over financial reporting, as discussed in more detail below.

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.

Notwithstanding the identified material weaknesses, management, with the participation of the principal executive officer and principal financial officer, believes the unaudited interim condensed consolidated financial information included in this Quarterly Report on Form 10-Q fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

Material Weaknesses

We previously identified a material weakness, as disclosed in our 2023 Annual Report. 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.

Further, as previously disclosed, in the first quarter of 2024 we identified an additional material weakness in a review control because it failed to detect an error in the accounting for forfeitures of Earn-Out Restricted Shares upon a holder’s termination of employment.

The material weaknesses did not result in any material misstatements to our unaudited condensed consolidated financial statements or disclosures in any of the three months ended June 30, 2024 or 2023 included in this Quarterly Report on Form 10-Q, and our management believes the condensed consolidated financial information included in this Quarterly Report on Form 10-Q fairly represent in all material respects our financial condition, results of operations and cash flows for such periods in accordance with U.S. GAAP.

Management’s Remediation Initiatives

We have developed detailed remediation plans, with appropriate executive sponsorship, to specifically address the material weaknesses. We have taken the following steps towards remediation of the identified material weaknesses and to enhance our internal control over financial reporting:

Remediation of Previously Reported Material Weakness

In response to the Sponsor Earn-Out liabilities material weakness, the Company executed a remediation plan in the first half of 2024. We provided training to our employees, hired new third-party valuation professionals and maintained sufficient and appropriate review documentation for the assessment of all the key assumptions and inputs used in the valuation of Sponsor Earn-Out liabilities. As a result, we have concluded that the material weakness related to valuation of Sponsor Earn-Out liabilities, previously reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission on February 27, 2024, has been remediated as of June 30, 2024.

We have expended, and will continue to expend, a substantial amount of effort and resources for the remediation and improvement of our internal control over financial reporting. We will continue to work on improvements to our internal controls during 2024 as we assess and evaluate the controls intended to remediate the material weaknesses. Until the material weaknesses included in the “Material Weaknesses” section above are remediated, we plan to continue to perform analytical procedures to ensure that our consolidated financial statements are prepared in accordance with GAAP.

Changes in Internal Control over Financial Reporting

Other than the actions taken as described in “Management’s Remediation Initiatives” and “Remediation of Previously Reported Material Weakness” above to improve the Company’s internal control over financial reporting, there have been no changes in our internal control over financial reporting during the most recent fiscal quarter that materially affected, or which are reasonably likely to materially affect, our internal control over financial reporting.