What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-02-26 compared with 2024-02-28 · 57 added, 68 removed, 181 unchanged (41% of the section changed)

3 unchanged sentences

In designing and evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As required by Rule 13a-15(b) of the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, have 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 period covered by this annual report.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are not effective as of December 31, 2023 due to the material weaknesses in internal control over financial reporting described below.

Our disclosure contr ols and procedures are designed to provide reasonable assurance of achieving their objectives as specified above.

However, our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will preve nt or detect all errors and fraud.

As required by Rule 13a-15(b) of the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchan ge Act) as of the end of the period covered by this annual report.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of December 31, 2024.

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above.

However, our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent or detect all errors and fraud.

Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met.

2 unchanged sentences

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act.

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

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.

Under the supervision of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024 based on the guidelines established in Internal Control—Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, our management concluded that our internal control over financial reporting was not effective as of December 31, 2023 due to the material weaknesses in internal control over financial reporting identified and further described below.

A material weakness (as defined in Rule 12b-2 under the Exchange Act) 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.

Management's assessment identified the following material weakness in the Company's internal control over financial reporting:

• The Company did not have adequate user access controls specific to segregation of duties in the Company’s change management process in certain information technology systems of the Chubb fire and security business that was acquired in 2022, which resulted from ineffective risk assessment.

As a result, process level automated and manual controls that are dependent on the completeness and accuracy of information derived from the affected systems across all financial reporting processes were also considered ineffective because they could have been adversely impacted.

• The Company did not have adequate controls to ensure the completeness and accuracy of time keeping and service order information used in the financial reporting processes of certain businesses that is processed and hosted by a third-party service organization.

The Company did not have an effective risk assessment process to identify and assess the risks of misstatement associated with the third-party service organization processing and hosting of related data on behalf of the Company.

As a result, process level automated and manual controls that are dependent on the completeness and accuracy of information related to revenue and cost of revenues and

derived from the affected systems were also considered ineffective because they could have been adversely impacted.

The control deficiencies did not result in material misstatements identified in the preparation of consolidated financial statements as of and for the year ended December 31, 2023.

However, these control deficiencies created a reasonable possibility that a material misstatement to the consolidated financial statements would not have been prevented or detected on a timely basis.

KPMG LLP, the Company’s independent registered public accounting firm, has audited our consolidated financial statements included in this report, and has also issued an adverse opinion on the effectiveness of the Company’s internal control over financial reporting, which is included elsewhere in this Form 10-K.

On June 3, 2024, we completed our acquisition of Elevated Facility Services Group (Elevated);

see Note 4 to the Consolidated Financial Statements for more information.

We are currently integrating Elevated into our internal control framework and processes and, pursuant to the SEC's guidance that an assessment of a recently acquired business may be omitted from the scope of an assessment in the year of acquisition, the scope of our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2024 does not include Elevated.

The operations of Elevated are 7.5% of our consolidated assets and 1.7% of our consolidated revenue as of and for the year ended December 31, 2024, respectively.

Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2024.

KPMG LLP, our independent registered public accounting firm, has issued its report on the effectiveness of our internal control over financial reporting, which is included in Part II, Item 8 of this annual report on Form 10-K.

2024 Remediation Activities

In its 2022 Item 9A filed on Form 10-K, management identified material weaknesses over user access controls related to an information technology system resulting from insufficient risk assessment and ineffective operation of process level controls over revenue recognition resulting from insufficient training.

In its 2023 Item 9A filed on Form 10-K, management identified material weaknesses over user access controls related to an information technology system resulting from insufficient risk assessment and the identification and risk assessment of processes and internal controls in place at certain third-party service organizations.

Management, through the below remediation activities, were able to successfully remediate the previously communicated material weaknesses in existence as of December 31, 2023.

The Company performed the following remediation activities in 2023 in relation to the legacy businesses:

We conducted additional training with control owners and reviewers within operations and finance with a specific focus on sufficient documentation and evidence in the execution of the controls;

We conducted an evaluation of ITGCs and related policies, with a focus on risk assessment procedures and controls related to access to IT systems and implemented an IT management review and testing plan to monitor ITGCs with a specific focus on systems supporting our financial reporting processes.

As a result of the remediation activities during 2023, we remediated the prior year material weaknesses within our legacy business.

Remediation Plan of Newly Identified Material Weakness

While management was successful in completing its multi-year remediation of prior year material weaknesses within the legacy business, the establishment of internal controls over financial reporting at certain subsidiaries of the recently acquired Chubb Fire & Security business and the inability of a third-party service organization to provide a service auditors’ report led to the identification of new material weaknesses.

We will continue to strengthen our internal control over financial reporting and are committed to ensuring that such controls are operating effectively.

We are implementing process and control improvements to address the above material weaknesses identified in 2023 as follows:

• We will implement third-party software designed to identify segregation of duties conflicts based on established roles and responsibilities;

• We will conduct an analysis of conflict reports derived by the third party software and document mitigation where established controls exist and operate effectively or create newly designed controls to mitigate those conflicts where such controls do not exist;

• We generally require our third-party service organizations to provide a SOC 1, Type 2 report to us.

However, if a SOC1, Type 2 report is not available, we will evaluate the third-party’s relevant systems and compare other available options.

If no other options exist, Management will design and implement process level controls to ensure information used in our financial reporting process is complete and accurate.

The material weaknesses in our internal control over financial reporting will not be considered remediated until the remediated controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

No system of controls, no matter how well designed and operated, can provide absolute assurance that the objectives of the system of controls will be met, and no evaluation of controls can provide absolute assurance that all control deficiencies or material weaknesses have been or will be detected.

There is no assurance that the remediation will be fully effective.

As described above, the material weakness has not been remediated as of the filing date of this Annual Report.

If these remediation efforts do not prove effective and control deficiencies and material weaknesses persist or occur in the future, the accuracy and timing of our financial reporting may be adversely affected.

The Company performed the following remediation activities in 2024:

• We implemented third-party software designed to identify segregation of duties conflicts based on established roles and responsibilities;

• We conducted an analysis of conflict reports derived by the third-party software and documented mitigation where established controls exist and operate effectively and designed and implemented new controls to mitigate those conflicts where such controls did not previously exist.

• The Company implemented a process to assess and monitor the population of third-party service organizations, and the related attestation reports related to internal controls at those service organizations, that are important to the Company’s internal control over financial reporting.

As a result of the remediation activities completed during 2024, we remediated the prior year material weaknesses.

Changes in Internal Control over Financial Reporting

3 unchanged sentences

Rule 10b5-1 Trading Plans

During the quarter ended December 31, 2023, Ian G.H.

Ashken and James E.

Lillie, each a director of the Company, adopted a “Rule 10b5-1 trading arrangement” as defined in Regulation S-K Item 408, as follows:

On November 29, 2023 , Mr.

Ashken adopted a Rule 10b5-1 trading arrangement providing for the sale of the Company's common stock (a "Rule 10b5-1 Trading Plan") that is intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c).

Ashken’s Rule 10b5-1 Trading Plan provides for the sale of up to 450,000 shares of our common stock pursuant to one or more limit orders until September 13, 2024, or earlier if all transactions under the trading arrangement are completed.

On November 29, 2023 , Mr.

Lillie adopted a Rule 10b5-1 Trading Plan for the sale of the Company's common stock that is intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c).

Lillie’s Rule 10b5-1 Trading Plan provides for the sale of up to 375,000 shares of our common stock pursuant to one or more limit orders until September 13, 2024, or earlier if all transactions under the trading arrangement are completed.

No other officers or directors, as defined in Rule 16a-1(f), adopted and/or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as defined in Regulation S-K Item 408, during the quarter ended December 31, 2023.

No officers or directors, as defined in Rule 16a-1(f), adopted and/or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as defined in Regulation S-K Item 408, during the quarter ended December 31, 2024.

Exchange Act Section 13(r) Disclosure

During the year ended December 31, 2024, specifically, during the third fiscal quarter of 2024, as previously reported on our Form 10-Q filed with the Securities and Exchange Commission on October 31, 2024, Chubb Fire & Security Limited, a United Kingdom subsidiary of the Company (“Chubb U.K.”), engaged in activities that we are required to disclose under Section 13(r) of the Securities Exchange Act of 1934, as amended, as part of the Iran Threat Reduction and Syria Human Rights Act (“ITRA”).

installs security systems and fire detection equipment and offers inspection services.

An internal review has identified that Chubb U.K.

provided services at a U.K.

office of Bimeh Iran Insurance Co (U.K.) Ltd.

(“Bimeh”), a United Kingdom subsidiary of the Iran Insurance Company, which is owned by the Government of Iran.

We expect gross revenue and net profit associated with this transaction to be nominal, if any.

We do not plan to provide any future equipment or services to Bimeh.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

2 unchanged sentences

Information required by this Item is incorporated by reference from the Company's definitive proxy statement to be filed no later than 120 days after December 31, 2024 (the "Definitive Proxy Statement").

The Company's Board of Directors has adopted an insider trading policy which governs the purchase, sale, and/or other dispositions of our securities by directors, officers, and employees and other covered persons and is designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to the Company.

A copy of our Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K.

In addition, with regard to the Company’s trading in its own securities, it is the Company’s policy to comply with the federal securities laws and the applicable exchange listing requirements.

EXECUTIVE COMPENSATION

1 unchanged sentence

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information required by this Item, other that the information regarding our equity plans set forth below required by Item 201(d) of Regulation S-K, will be contained in the Definitive Proxy Statement and is incorporated herein by reference.

Information required by this Item, other than the information regarding our equity plans set forth below required by Item 201(d) of Regulation S-K, will be contained in the Definitive Proxy Statement and is incorporated herein by reference.

Equity Compensation Plan Information

3 unchanged sentences

Outstanding Options, Warrants and Rights

(a) Weighted Average Exercise Price of Outstanding Options,

Warrants and Rights

(b) Number of Securities Remaining Available for Future Issuance

(a) Number of Securities Remaining Available for Future Issuance

Under Equity Compensation Plans (Excluding Securities

3 unchanged sentences

2,421,212 11,998,287

Equity compensation plans not approved by security holders

Director Stock Options (2)

125,000 11.50 —

Total 2,421,212 11,998,287

(1) Included in the total number of securities in column (a) is 2,421,212 time-based restricted stock units, EBITDA performance-based restricted stock units, and market-based performance restricted stock units, which have no exercise price.

(2) Represents stock options previously issued in connection with its initial public offering to the Company's then non-founder directors.

(3) The weighted average exercise price of outstanding options, warrants, and rights (excluding time-based restricted stock units, EBITDA performance-based restricted stock units, and market-based performance restricted stock units) is $11.50.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

9 unchanged sentences

Incorporated by Reference

Number Description

Exhibit Number

1 unchanged sentence

Plans of Acquisition

Stock Purchase Agreement by and between Carrier Global Corporation, Carrier Investments UK Limited, Chubb Limited and APi Group Corporation dated as of July 26, 2021

July 30, 2021

Amendment to Stock Purchase Agreement by and between Carrier Global Corporation, Carrier Investments UK Limited, Chubb Limited and APi Group Corporation dated as of January 3, 2022

4 unchanged sentences

January 3, 2022

3.3 Ce rtificate of El imination of 5.5% S eries B Perpetual Converti ble Preferred Stock

3.1 March 5, 2024

3.4 Bylaws of APi Group Corporation Certificate of Incorporation of APi Group Corporation

1 unchanged sentence

Description of Capital Stock.

Year ended December 31, 2021

4.2 Indenture, dated as of June 22, 2021, by and among APi Group Corporation, the guarantors party thereto and Computershare Trust Company, N.A.

20 unchanged sentences

APi Group Corporation 2020 Employee Stock Purchase Plan

10.1 June 3, 2020

APi Group, Inc.

18 unchanged sentences

Amendment No.

2, dated December 16, 2021, among APi Group DE, Inc., APi Group Corporation, the subsidiary guarantors from time to time party thereto, the lenders and letter of credit issuers from time to time party thereto, and Citibank, N.A.

2 to Credit Agreement , dated December 16, 2021, among APi Group DE, Inc., APi Group Corporation, the subsidiary guarantors from time to time party thereto, the lenders and letter of credit issuers from time to time party thereto, and Citibank, N.A.

as administrative agent and collateral agent

4 unchanged sentences

Amendment No.

4, dated October 11, 2023, among APi DE, Inc., APi Group Corporation, the subsidiary guarantors from time to time party thereto, the lenders and letter of credit issuers from time to time party thereto, and Citibank, N.A.

4 to Credit Agreement , dated as of October 11, 2023, among APi Group DE, Inc., as borrower, APi Group Corporation, the subsidiary guarantors from time to time party thereto, the lenders from time to time party thereto , and Citibank, N.A.

as administrative agent and collateral agent

1 unchanged sentence

10.8(f) Amendment No.

5, dated February 28, 2024, APi DE, Inc., APi Group Corporation, the subsidiary guarantors from time to time party thereto, Citibank, N.A.

as administrative agent and collateral agent, Juno Lower Holdings L.P., FD Juno Holdings L.P., Viking Global Equities Master Ltd.

and Viking Global Equities II LP.

5 to Credit Agreement , dated as of February 28, 2024, by and amo ng APi Group DE, Inc., as borrow er, APi Group Corporation, the subsidiary guarantors from time to time party thereto, the lenders from time to time party thereto, and Citibank, N.A.

as administrative agent and collateral agent

Form 8-K 10.2 February 28, 2024

Amendment No.

6 to C redi t Agree ment , dated as of May 10, 2024 , by and among APi Group DE, Inc., as borrower, APi Group Corporation, the subsidiary guarantors from time to time party thereto, the lenders from time to time party thereto, and Citibank, N.A.

as administrative agent and collateral agent

10.1 May 13, 2024

Amendment No.

7 to Credit Agreement, dated February 14 , 202 5 , by and among APi Group DE, Inc., as borrower, APi Group Corporation, the subsidiary guarantors from time to time party thereto, the lenders from time to time party thereto, and Citibank, N.A.

as administrative agent and collateral agent

10.1 February 19, 2025

10.9 Pledge and Security Agreement, dated as of October 1, 2019, by and among APi Group DE, Inc., as borrower, J2 Acquisition Limited, the grantors from time to time party thereto, and Citibank, N.A., as administrative agent and as collateral agent

19 unchanged sentences

Other Exhibits

19.1* Insider Trading Policy, adopted and approved as of December 11, 2024

21.1* List of subsidiaries of the registrant.

1 unchanged sentence

Certification by Russell Becker, Chief Executive Officer, pursuant to Exchange Act Rules 13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification by Kevin Krumm, Chief Financial Officer, pursuant to Exchange Act Rules 13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification by G lenn David Jackola , I nterim Chief Financial Officer, pursuant to Exchange Act Rules 13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification by Russell Becker, Chief Executive Officer, pursuant to 18 U.S.C.

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

Certification by Kevin Krumm, Chief Financial Officer, pursuant to 18 U.S.C.

Certification by Glenn David Jackola , Interim Chief Financial Officer, pursuant to 18 U.S.C.

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

Mine Safety Disclosures

APi Group Corporation Executi ve Officer Clawback Policy

97.1 APi Group Corporation Executive Officer Clawback Policy

97.1 Year ended December 31, 2023

Inline XBRL Instance Document

24 unchanged sentences

/s/ Russell A.

President and Chief Executive Officer (principal executive officer)

President and Chief Executive Officer

(principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

2 unchanged sentences

Becker President and Chief Executive Officer (principal executive officer) February 26, 2025

Krumm Chief Financial Officer (principal financial officer) February 28, 2024

/s/ Glenn David Jackola Interim Chief Financial Officer (principal financial officer) February 26, 2025

Glenn David Jackola

/s/ Sir Martin E.

12 unchanged sentences

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