Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the fiscal year covered by this Annual Report on Form 10-K. This evaluation is performed to determine whether our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Due to the material weaknesses described below, our chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2021. In light of this fact, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting, the consolidated financial statements for the periods covered by and included in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.
Material Weaknesses
As disclosed in our final prospectus filed with the SEC on September 23, 2021 pursuant to Rule 424(b) under the Securities Act, we identified three material weaknesses in the design and operation of our internal control over financial reporting in connection with the preparation of our financial statements for the fiscal years ended December 31, 2020 and 2019. A material weakness is a deficiency, or a 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. The Company’s management, including our chief executive officer and chief financial officer concluded that:
• We have not sufficiently designed, implemented and documented internal controls at the entity level and across the key business and financial processes to allow us to achieve complete, accurate and timely financial reporting.
• We have not designed and implemented controls to maintain appropriate segregation of duties in our manual and IT-based business processes.
• We have insufficient resources with the appropriate knowledge and experience in our accounting function related to GAAP and the SEC reporting requirements of a U.S. domestic registrant to enable us to design and maintain an effective financial reporting process.
Remediation Status of Material Weaknesses
Material weakness related to the design, implementation and documentation of internal controls at the entity level and across key business and financial process.
We have taken numerous steps to address the underlying causes of this material weakness. We have hired additional experienced financial reporting personnel and put new processes in place to achieve complete, accurate and timely financial reporting. We have also hired a third-party consulting firm with expertise to help us design, implement and document our internal controls across the organization.
Material weakness related to appropriate segregation of duties in our manual and IT-based business processes.
We have commenced a process to (i) identify key systems and processes that require improved documentation, (ii) implement enhanced standards designed to meet the requirements of the Sarbanes-Oxley Act for segregation of duties, (iii) review the design of applicable internal controls and assess any required amendments and (iv) increase the training of accounting and finance staff in relevant areas.
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While progress has been made to remediate both of the material weaknesses above, as of December 31, 2021, we are still in the process of developing and implementing the enhanced processes and procedures and testing the operating effectiveness of these improved controls. We believe our actions will be effective in remediating the material weaknesses, and we continue to devote significant time and attention to these efforts. In addition, the material weaknesses will not be considered remediated until the applicable remedial processes and procedures have been in place for a sufficient period of time and management has concluded, through testing, that these controls are effective. Accordingly, the material weaknesses above are not remediated as of December 31, 2021.
Material weakness related to insufficient resources with the appropriate knowledge and experience in our accounting function.
To address and remediate this material weakness the Company hired additional accounting and financial reporting personnel with extensive knowledge and experience related to U.S. GAAP and the SEC reporting requirements of U.S. domestic registrants. Accordingly, we believe we have remediated the material weakness that the Company has insufficient resources with the appropriate knowledge and experience to enable us to design and maintain an effective financial reporting process.
Changes in Internal Control over Financial Reporting
Except for the remediation efforts described above, 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 period covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Management’s Report on Internal Control over Financial Reporting
This Annual Report on Form 10-K does not include a report of management's assessment regarding internal control over financial reporting or an attestation of our independent registered public accounting firm as permitted in this transition period under the rules of the SEC for newly public companies.
ITEM 9B. OTHER INFORMATION
None.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item will be set forth in our Proxy Statement for the 2022 Annual Meeting of Stockholders (the “2022 Proxy Statement”) to be filed with the SEC within 120 days of our fiscal year ended December 31, 2021 and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item will be set forth in our 2022 Proxy Statement and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item will be set forth in our 2022 Proxy Statement and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item will be set forth in our 2022 Proxy Statement and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item will be set forth in our 2022 Proxy Statement and is incorporated herein by reference.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this Annual Report on Form 10-K:
1. Consolidated Financial Statements
See Index to Consolidated Financial Statements at “Item 8. Financial Statements and Supplementary Data.”
2. Financial Statement Schedules
Schedules have been omitted because they are either not required, not applicable, not present in amounts sufficient to require submission of the schedule or the required information is included elsewhere in this Annual Report on Form 10-K.
3. Exhibits
The following exhibits are filed herewith or incorporated by reference herein:
Incorporated by Reference
Exhibit No. Description Form File No. Filing Date Exhibit No.
3.1 Amended and Restated Certificate of Incorporation of a.k.a. Brands Holding Corp., filed with the Delaware Secretary of State on September 21, 2021
8-K 001-40828 September 27, 2021 3.1
3.2 Amended and Restated Bylaws of a.k.a. Brands Holding Corp., effective September 21, 2021
8-K 001-40828 September 27, 2021 3.2
4.1 Registration Rights Agreement, dated September 24, 2021, by and among a.k.a. Brands Holding Corp. and the other signatories party thereto
8-K 001-40828 September 27, 2021 4.1
4.2* Description of a.k.a. Brands Holding Corp.’s securities
10.1 Stockholders Agreement, dated June 23, 2021, by and among a.k.a. Brands Holding Corp., New Excelerate, L.P., and certain other equityholders of the Registrant party thereto
S-1 333-259028 August 24, 2021 10.2
10.2 Form of Indemnification Agreement between a.k.a. Brands Holding Corp. and its directors and officers
S-1 333-259028 August 24, 2021 10.3
10.3 Director Nomination Agreement, dated as of September 24, 2021, by and among a.k.a. Brands Holding Corp. and the other signatories party thereto
8-K 001-40828 September 27, 2021 10.1
10.4 Syndicated Facility Agreement, dated as of September 24, 2021, by and among a.k.a. Brands Holding Corp., KeyBank National Association and the other signatories party thereto
8-K 001-40828 September 27, 2021 10.2
10.5 †
a.k.a. Brands Holding Corp. 2021 Omnibus Incentive Plan
S-8 333-259753 September 24, 2021 10.1
10.6 †
Form of Incentive Stock Option Agreement
S-8 333-259753 September 24, 2021 10.2
10.7 †
Form of Restricted Stock Unit Agreement
S-8 333-259753 September 24, 2021 10.3
10.8 †
Form of Restricted Stock Agreement
S-8 333-259753 September 24, 2021 10.4
10.9 †
a.k.a. Brands Holding Corp. 2021 Employee Stock Purchase Plan
S-8 333-259753 September 24, 2021 10.5
10.10 †
Employment Agreement, dated April 21, 2020, by and between Excelerate US, Inc. and Jill Ramsey
S-1 333-259028 August 24, 2021 10.10
10.11 †
Employment Agreement, dated June 1, 2019, by and between Excelerate US, Inc. and Jonathan Harvey
S-1 333-259028 August 24, 2021 10.11
10.12 †
Employment Agreement, dated October 15, 2020, by and between Excelerate US, Inc. and Michael Trembley
S-1 333-259028 August 24, 2021 10.12
10.13 †
Employment Agreement, dated June 10, 2019, by and between Excelerate US, Inc. and Don Allen
S-1 333-259028 August 24, 2021 10.13
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10.14 †
Letter Agreement, dated September 25, 2020, by and between Excelerate US, Inc. and Don Allen
S-1 333-259028 August 24, 2021 10.14
10.15 †
Employment Agreement, dated September 20, 2018, by and between Excelerate US, Inc. and Shih-Fong Wang
S-1 333-259028 August 24, 2021 10.15
10.16 †
Letter Agreement, dated October 14, 2020, by and between Excelerate US, Inc. and Shih-Fong Wang
S-1 333-259028 August 24, 2021 10.16
10.17 †
Letter Agreement, dated December 23, 2020, by and between Excelerate US, Inc. and Shih-Fong Wang
S-1 333-259028 August 24, 2021 10.17
10.18 †
Letter Agreement, dated November 18, 2019, by and between Excelerate, L.P. and Kelly Thompson
S-1 333-259028 August 24, 2021 10.18
21.1* Subsidiaries of a.k.a. Brands Holding Corp.
23.1* Consent of Independent Registered Public Accounting Firm
31.1* Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2* Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1** Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2** Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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 Labels Linkbase Document.
101.PRE* Inline XBRL Taxonomy Extension Calculation Linkbase Document.
104* Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
__________
† Management contract or compensatory plan or arrangement.
* Filed herewith.
** Furnished herewith. The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K are deemed furnished and not filed with the SEC and are not to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, 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.
ITEM 16. FORM 10-K SUMMARY
Not Applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Francisco, State of California, on March 1, 2022.
a.k.a. Brands Holding Corp.
By: /s/ Jill Ramsey
Name: Jill Ramsey
Title: Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jill Ramsey or Ciaran Long, or any of them, his or her attorneys-in-fact, for such person in any and all capacities, to sign any amendments to this report and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that either of said attorneys-in-fact, or substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Jill Ramsey Chief Executive Officer and Director March 1, 2022
Jill Ramsey (Principal Executive Officer)
/s/ Ciaran Long Chief Financial Officer March 1, 2022
Ciaran Long (Principal Financial Officer and
Principal Accounting Officer)
/s/ Myles McCormick Director March 1, 2022
Myles McCormick
/s/ Kelly Thompson Director March 1, 2022
Kelly Thompson
/s/ Christopher Dean Chairman of the Board of Directors March 1, 2022
Christopher Dean
/s/ Matthew Hamilton Director March 1, 2022
Matthew Hamilton
/s/ Wesley Bryett Director March 1, 2022
Wesley Bryett
/s/ Simon Beard Director March 1, 2022
Simon Beard
/s/ Ilene Eskenazi Director March 1, 2022
Ilene Eskenazi
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