Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our periodic and current reports that we file with the SEC 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 timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2021. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), were effective as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and (ii) accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2021 based on the criteria set forth in “Internal Control-Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2021 based on those criteria.
This Annual Report on Form 10-K does not include an attestation report of the Company’s registered public accounting firm due to the Company's EGC status and is exempted from the auditor attestation requirement of Section 404(b) of the Sarbanes-Oxley Act.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially effect, our internal control over financial reporting. We have not experienced any significant impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 pandemic. The design of our processes and
120
Table of Contents
controls allow for remote execution with accessibility to secure data. We are continually monitoring and assessing the COVID-19 situation to minimize the impact, if any, on the design and operating effectiveness on our internal controls.
Inherent Limitations on Effectiveness of Disclosure Controls and Procedures
It should be noted that any system of controls, however well designed and operated, can provide only reasonable assurance, and not absolute assurance, that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals in all future circumstances.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
121
Table of Contents
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item and not set forth below will be set forth in our definitive proxy statement for our 2022 Annual Meeting of Stockholders (the “Proxy Statement”) to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2021, and is incorporated herein by reference.
We have adopted a Code of Ethics that applies to our Chief Executive Officer and senior financial officers, including our Chief Financial Officer, as required by the SEC. The current version of our Code of Ethics can be found on our Internet site at http://www.arlo.com. Additional information required by this Item regarding our Code of Ethics is incorporated by reference to the information contained in the section captioned “Corporate Governance Policies and Practices” in our Proxy Statement.
We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of our Code of Ethics by posting such information on our website at http://www.arlo.com within four business days following the date of such amendment or waiver.
Item 11. Executive Compensation
The information required by this item will be set forth in the Proxy Statement and is incorporated herein.
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 the Proxy Statement and is incorporated herein.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be set forth in the Proxy Statement and is incorporated herein.
Item 14. Principal Accountant Fees and Services
The information required by this item will be set forth in the Proxy Statement and is incorporated herein.
122
Table of Contents
PART IV
Item 15. Exhibit and Financial Statement Schedules
(a) The following documents are filed as part of this report:
(1) Financial Statements.
The following consolidated financial statements of Arlo Technologies, Inc. are filed as part of this Annual Report on Form 10-K in Item 8, Financial Statements and Supplementary Data .
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 238 )
71
Consolidated Balance Sheets as of December 31, 2021 and 2020
72
Consolidated Statements of Operations for the three years ended December 31, 2021, 2020 and 2019
73
Consolidated Statements of Comprehensive Income for the three years ended December 31, 2021, 2020 and 2019
74
Consolidated Statements of Stockholders’ Equity for the three years ended December 31, 2021, 2020 and 2019
75
Consolidated Statements of Cash Flows for the three years ended December 31, 2021, 2020 and 2019
76
Notes to Consolidated Financial Statements 77
(2) Financial Statement Schedules.
All financial statement schedules have been omitted as the information is not required under the related instructions or is not applicable or because the information required is already included in the consolidated financial statements or the notes to those consolidated financial statements.
123
Table of Contents
(3) Exhibits.
INDEX TO EXHIBITS
Incorporated by Reference
Exhibit Number
Exhibit Description Form Date Number Filed Herewith
3.1
Amended and Restated Certificate of Incorporation of Arlo Technologies, Inc.
8-K 8/7/2018 3.1
3.2
Amended and Restated Bylaws of Arlo Technologies, Inc.
8-K 8/7/2018 3.2
4.1
Common Stock Certificate of Arlo Technologies, Inc.
S-1/A 7/23/2018 4.1
4.2
Description of Common Stock of Arlo Technologies, Inc.
10-K 2/26/2021 4.2
10.1
Master Separation Agreement, by and between NETGEAR, Inc. and Arlo Technologies, Inc. dated as of August 2, 2018
8-K 8/7/2018 10.1
10.2
Transition Services Agreement, by and between NETGEAR, Inc. and Arlo Technologies, Inc. dated as of August 2, 2018
8-K 8/7/2018 10.2
10.3
Tax Matters Agreement, by and between NETGEAR, Inc. and Arlo Technologies, Inc. dated as of August 2, 2018
8-K 8/7/2018 10.3
10.4
Employee Matters Agreement, by and between NETGEAR, Inc. and Arlo Technologies, Inc. dated as of August 2, 2018
8-K 8/7/2018 10.4
10.5
Intellectual Property Rights Cross-License Agreement, by and between NETGEAR, Inc. and Arlo Technologies, Inc. dated as of August 2, 2018
8-K 8/7/2018 10.5
10.6
Registration Rights Agreement, by and between NETGEAR, Inc. and Arlo Technologies, Inc. dated as of August 2, 2018
8-K 8/7/2018 10.6
10.7
Office Lease, by and between LT Orchard Parkway, LLC and Arlo Technologies, Inc. dated as of June 28, 2018
S-1 7/6/2018 10.7
10.8 *
Confirmatory Employment Letter with Matthew McRae
8-K 8/7/2018 10.7
10.9 *
Confirmatory Employment Letter with Christine Gorjanc
8-K 8/7/2018 10.8
10.10 *
Confirmatory Employment Letter with Patrick Collins
8-K 8/7/2018 10.9
10.11 *
Confirmatory Employment Letter with Brian Busse
8-K 8/7/2018 10.10
10.12 *
Change in Control and Severance Agreement
8-K 8/7/2018 10.11
10.13 *
2018 Equity Incentive Plan, as amended
8-K 8/3/2021 10.1
10.14 *
2018 Employee Stock Purchase Plan
10-K 2/22/2019 10.14
10.15 *
Performance-Based Option Grant Agreement
8-K 8/7/2018 10.14
10.16 *
Indemnification Agreement for directors and executive officers
S-1/A 7/23/2018 10.16
10.17 *
Non-Employee Director Restricted Stock Unit Grant Agreement
10-Q 8/27/2018 10.17
10.18
Cooperation Agreement, dated April 30, 2019, by and among Arlo Technologies, Inc. and the VIEX Parties listed therein
8-K 5/1/2019 10.1
10.19 *
Form of Service and Stock Market Performance-Based Restricted Stock Unit Agreement for Executive Officers
10-Q 11/8/2019 10.1
10.20 *
Form of Service and Revenue Performance-Based Restricted Stock Unit Agreement for Executive Officers
10-Q 11/8/2019 10.2
10.21 *
Form of Service-Based Restricted Stock Unit Agreement for Executive Officers
10-Q 11/8/2019 10.3
10.22 †
Asset Purchase Agreement, by and between Arlo Technologies, Inc. and Verisure S.à.r.l. dated as of November 4, 2019
10-K 2/28/2020 10.23
10.23 †
Supply Agreement, by and between Arlo Technologies, Inc. and Verisure S.à.r.l. dated as of November 4, 2019, as amended on June 23, 2020, November 1, 2021, and December 1, 2021
X
10.24 *
Confirmatory Employment Letter with Gordon Mattingly
10-Q 8/6/2020 10.2
10.25 *
Form of Change in Control and Severance Agreement for non-CEO Executive Officers
10-Q 8/6/2020 10.3
10.26 *
Form of Service and Cash Balance Performance-Based Restricted Stock Unit Agreement for Executive Officers
10-Q 8/6/2020 10.4
10.27 *
Non-Employee Director Compensation Policy
10-K 2/26/2021 10.30
10.28 *
Form of Service and Cash Balance Performance-Based Restricted Stock Unit Agreement for Executive Officers Granted in 2021
10-Q 5/6/2021 10.1
10.29
Sublease, by and between Arlo Technologies, Inc. and Vocera Communications, Inc., dated as of May 25, 2021
10-Q 8/5/2021 10.1
124
Table of Contents
10.30 *
Performance Stock Unit Award under 2018 Equity Incentive Plan to Matthew McRae, dated September 9, 2021
10-Q 11/10/2021 10.2
10.31
Loan and Security Agreement, by and between Arlo Technologies, Inc. and Bank of America, N.A. dated as of October 27, 2021
X
21.1
List of subsidiaries and affiliates
X
23.1
Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm
X
24.1
Power of Attorney (included on the Signatures page)
X
31.1
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
X
31.2
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
X
32.1
Section 1350 Certification of Principal Executive Officer
X
32.2
Section 1350 Certification of Principal Financial Officer
X
101.INS 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 X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X
104 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) X
* Indicates management contract or compensatory plan or arrangement.
† Pursuant to Item 601(b)(10) of Regulation S-K, certain portions of this exhibit have been omitted by means of marking such portions with asterisks because the Registrant has determined that the information is both not material and is the type that the Registrant treats as private or confidential.
Item 16. Form 10-K Summary
None.
125
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ARLO TECHNOLOGIES, INC.
Registrant
/s/ MATTHEW MCRAE
Matthew McRae
Chief Executive Officer
(Principal Executive Officer)
/s/ GORDON MATTINGLY
Gordon Mattingly
Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: March 2, 2022
126
Table of Contents
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Matthew McRae and Gordon Mattingly, and each of them, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K 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 each of said attorneys-in-fact, or his 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/ MATTHEW MCRAE Chief Executive Officer March 2, 2022
Matthew McRae (Principal Executive Officer)
/s/ GORDON MATTINGLY Chief Financial Officer March 2, 2022
Gordon Mattingly (Principal Financial and Accounting Officer)
/s/ PRASHANT AGGARWAL Director March 2, 2022
Prashant Aggarwal
/s/ JOCELYN E. CARTER-MILLER Director March 2, 2022
Jocelyn E. Carter-Miller
/s/ RALPH E. FAISON Director March 2, 2022
Ralph E. Faison
/s/ CATRIONA FALLON Director March 2, 2022
Catriona Fallon
/s/ AMY ROTHSTEIN Director March 2, 2022
Amy Rothstein
/s/ GRADY K. SUMMERS Director March 2, 2022
Grady K. Summers
127