What changed in this filing

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Item 9A. Controls and Procedures

2022-03-01 compared with 2021-03-01 · 66 added, 53 removed, 143 unchanged (45% of the section changed)

4 unchanged sentences

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.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2020.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2020, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2021, our Chief Executive Officer and Chief Financial Officer concluded that, solely as a result of the material weakness in the Company's internal control over financial reporting, as of such date, our disclosure controls and procedures were not effective.

However, giving full consideration to the deficiency, we have concluded that the Consolidated Financial Statements included in this annual report present fairly, in all material respects, our financial position, results of operations and cash flows for the periods disclosed in conformity with U.S.

generally accepted accounting principles.

Management’s Report on Internal Controls Over Financial Reporting

1 unchanged sentence

Management conducted an assessment of our internal control over financial reporting based on the framework established in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.

Based on the assessment, management concluded that, as of December 31, 2020, our internal control over financial reporting was effective.

Our independent registered public accounting firm has issued at attestation report on the effectiveness of our internal control over financial reporting, which appears in this Annual Report.

Based on the assessment, management concluded that, as of December 31, 2021, our internal control over financial reporting was not effective.

On March 5, 2021, we acquired Dosh and on May 5, 2021, we acquired Bridg.

As permitted by the SEC rules and regulations, management's assessment did not include the internal control of the acquired operations of Dosh or Bridg, which are included in our consolidated financial statements as of December 31, 2021 and for the period from the acquisition date through December 31, 2021.

In accordance with our integration efforts, we plan to incorporate the acquired operations of Dosh and Bridg into our internal control over financial reporting program within the time period provided by applicable SEC rules and regulations.

The assets, excluding goodwill and acquired intangibles, of the acquired operations of Dosh and Bridg constituted approximately 4.9% of our total consolidated assets as of December 31, 2021.

Revenues of the acquired operations of Dosh and Bridg comprised approximately 7.7% of our total consolidated revenues for the year ended December 31, 2021.

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 the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

As a result of its review, management identified a material weakness.

Specifically, management concluded that it did not design and implement effective internal controls related to significant acquisitions, including the oversight of third-party valuation specialists and sufficiently precise reviews of the related valuation reports for our goodwill and acquired intangible assets, contingent consideration and liabilities assumed.

Our independent registered public accounting firm has issued at attestation report on the effectiveness of our internal control over financial reporting, which appears in this Annual Report and which notes the identification of this material weakness.

Remediation Plans for Material Weakness in Internal Control over Financial Reporting

We are committed to maintaining a strong internal control environment.

In response to the identified material weakness above, we, with the oversight of the Audit Committee of the Board of Directors, will take comprehensive actions to remediate the material weakness in internal control over financial reporting.

We will re-evaluate the scope and level of precision for conducting the reviews over significant acquisitions including the review of valuation reports produced by third-party specialists supporting the accounting for business combinations.

The remediation efforts are intended both to address the identified material weakness and to enhance our overall financial control environment.

We continue to evaluate and work to improve our disclosure controls and procedures and internal control over financial reporting, we may take additional measures to address this material weakness or modify certain remediation measures described above.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Except for our identification and assessment of the material weakness described above, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Cardlytics, Inc.

Opinion on the Financial Statements

To the shareholders and the Board of Directors of Cardlytics, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Cardlytics, Inc.

and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)

(PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our

report dated March 1, 2021, expressed an unqualified opinion on those financial statements.

In our opinion, because of the effect of the material weakness identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO .

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated March 1, 2022, expressed an unqualified opinion on those financial statements.

As described in Management's Report on Internal Controls over Financial Reporting, the Company consummated its acquisitions of Dosh on March 5, 2021 and Bridg on May 4, 2021.

Management excluded from its assessment of internal controls over financial reporting for the acquired operations of Dosh and Bridg.

The assets, excluding goodwill and acquired intangibles, of the acquired operations of Dosh and Bridg constituted approximately 4.9% of the Company’s total consolidated assets as of December 31, 2021.

Revenues of the acquired operations of Dosh and Bridg comprised approximately 7.7% of the Company’s total consolidated revenues for the year ended December 31, 2021.

Accordingly, our audit did not include the internal control over financial reporting of the acquired operations of Dosh and Bridg which are excluded from management’s assessment.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its

assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of

Management on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s

internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are

required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Controls over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the

audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all

material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk

that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the

assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit

provides a reasonable basis for our opinion.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally

accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures

that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and

dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and

expenditures of the company are being made only in accordance with authorizations of management and directors of the

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or

disposition of the company’s assets that could have a material effect on the financial statements.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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.

Also, 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.

Material Weakness

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 the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment:

The Company did not design and implement effective internal controls over significant acquisitions, including the oversight of third party valuation specialists and a sufficiently precise review of the related valuation reports for the Company’s goodwill and other intangible assets, contingent consideration and liabilities assumed.

This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 31, 2021, of the Company, and this report does not affect our report of such financial statements.

/s/ DELOITTE & TOUCHE LLP

2 unchanged sentences

OTHER INFORMATION.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

41 unchanged sentences

S-1/A 333-222531 10.3 1/29/2018

10.5† 2017 Bonus Plan of the Registrant

S-1 333-222531 10.6 1/12/2018

10.6† 2018 Bonus Plan of the Registrant

S-1/A 333-222531 10.7 1/29/2018

10.5† Form of restricted securities unit award of the Registrant

2 unchanged sentences

S-1 333-222531 10.9 1/12/2018

10.9† Offer Letter Agreement, dated as of June 11, 2014, by and between the Registrant and David T.

S-1 333-222531 10.1 1/12/2018

10.7† Form of Amended and Restated Separation Pay Agreement by and between the Registrant and each of Scott D.

11 unchanged sentences

10-Q 001-38386 10.2 8/14/2018

10.16 2019 Bonus Plan of the Registrant

10-Q 001-38386 10.1 5/9/2019

10.12 First Amendment to Loan and Security Agreement, dated March 27, 2019, among Cardlytics, Inc., as Borrower and Pacific Western Bank, as Lender

1 unchanged sentence

10.13* Non-Employee Director Compensation Plan

10-Q 001-38386 10.1 8/8/2019

10.14 Second Amendment to Loan and Security Agreement, dated May 14, 2019, among Cardlytics, Inc., as Borrower and Pacific Western Bank, as Lender

2 unchanged sentences

10-Q 001-38386 10.1 11/12/2019

10.16 2019 Bonus Plan of the Registrant

10-Q 001-38386 10.1 5/9/2019

10.17 2019 Amendment to General Services Agreement, dated December 20, 2019, by and between the Registrant and Bank of America, N.A.

9 unchanged sentences

10-Q 001-38386 10.1 11/2/2020

10.26 Separation and Release Agreement between David T.

Evans and Cardlytics, Inc.

10-Q 001-38386 10.2 11/2/2020

10.22^ 2020 Amendment to General Services Agreement, dated December 2, 2020, by and between the Registrant and Bank of America, N.A.

10-K 001-38386 10.27 3/3/2021

10.23 Sixth Amendment to Loan and Security Agreement, dated December 30, 2020, amount Cardlytics, Inc., as Borrower and Pacific Western Bank, as Lender

10-K 001-38386 10.28 3/3/2021

10.24 Form of Confirmation for Capped Call Transactions

8-K 001-38386 10.1 9/22/2020

10.25 Assumption Agreement and Seventh Amendment to Loan and Security Agreement, dated as of March 5, 2021, by and among Cardlytics, Inc., as Borrower, BSpears Merger Sub II, LLC, as additional borrower, and Pacific Western Bank, as Lender

10-Q 001-38386 10.1 5/4/2021

10.26 Assumption Agreement and Seventh Amendment to Loan and Security Agreement, dated as of April 7, 2021, by and among Cardlytics, Inc., as Borrower, BSpears Merger Sub II, LLC, as additional borrower, and Pacific Western Bank, as Lender

10-Q 001-38386 10.1 8/3/2021

10.27 Assumption Agreement and Eighth Amendment to Loan and Security Agreement, dated as of May 5, 2021, by and among Cardlytics, Inc., as Borrower, BSpears Merger Sub II, LLC, as additional borrower, and Pacific Western Bank, as Lender

10-Q 001-38386 10.2 8/3/2021

10.28 Agreement and Plan of Merger, dated April 12, 2021, by and among Cardlytics, Inc., Bridg, Inc., Mr.

T Merger Sub, Inc., and Shareholder Representative Services LLC

10-Q 001-38386 10.3 8/3/2021

10.29* 2021 Amendment to General Services Agreement, dated November 30, 2021, by and between the Registrant and Bank of America, N.A.

10.30* 2021 Amendment to General Services Agreement, dated February 15, 2022, by and between the Registrant and Bank of America, N.A.

10.31* 2020 Bonus Plan of the Registrant

10.32* 2021 Bonus Plan of the Registrant

21.1 Subsidiaries of the Registrant

38 unchanged sentences

/s/ Aimée Lapic Director March 1, 2022

/s/ Chris Suh Director March 1, 2022

/s/ Tony Weisman Director March 1, 2022

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