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Item 9A. Controls and Procedures

2023-03-01 compared with 2022-03-01 · 61 added, 47 removed, 162 unchanged (40% 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.

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

Based on the evaluation of our disclosure controls and procedures as of December 31, 2022, 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.

Management’s Report on Internal Control Over Financial Reporting

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

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, 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.

Based on the assessment, management concluded that, as of December 31, 2022, 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.

Remediation of a Material Weakness

We recognize the importance of the control environment as it sets the overall tone for the Company and is the foundation for all other components of internal control.

Consequently, we designed and implemented remediation measures to address the material weakness related to our review and oversight of our third-party valuation specialists, as further described in Item 9A of our Annual Report on Form 10-K and Form 10-K/A filed with the SEC on March 1, 2022 and May 2, 2022, respectively.

In light of the material weakness, we performed the following remediation actions during the year ended December 31, 2022:

• Evaluated the design of the level of precision of the review of third-party valuation specialists

• Enhanced level of precision of the review of third-party valuation specialists

We consider our remediation efforts with respect to the material weakness to be complete as of December 31, 2022 because we believe the enhanced controls have operated for a sufficient period of time and management has concluded, through testing, that the controls are operating effectively.

Changes in 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.

Except for our remediation 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, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

3 unchanged sentences

and subsidiaries (the “Company”) as of December 31, 2022, 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, 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 .

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, 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, 2022, of the Company and our report dated March 1, 2023, 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 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.

12 unchanged sentences

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

6 unchanged sentences

The information required by this item is incorporated by reference to our Proxy Statement for the 2023 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission ("SEC") within 120 days of the fiscal year ended December 31, 2022.

We have adopted a Code of Business Conduct and Ethics (the “Code of Conduct”) applicable to all of our employees, executive officers and directors.

The Code of Conduct is available on our website at www.cardlytics.com.

The Nominating and Corporate Governance Committee of our Board of Directors is responsible for overseeing the Code of Conduct and must approve any waivers of the Code of Conduct for employees, executive officers and directors.

If we make any substantive amendments to the Code of Conduct or we grant any waiver from a provision of the Code of Conduct to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website.

Information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K.

EXECUTIVE COMPENSATION

48 unchanged sentences

S-1/A 333-222531 10.11 1/29/2018

10.8# General Services Agreement, dated as of November 5, 2010 by and between the Registrant and Bank of America, N.A., as amended to date

S-1 333-222531 10.15 1/12/2018

10.8# Software License, Customization and Maintenance Agreement, dated as of November 4, 2010 by and between the Registrant and Bank of America, N.A., as amended to date

7 unchanged sentences

10.12 Non-Employee Director Compensation Plan

10-K 001-38386 10.13 3/1/2022

10.13 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.

10-K 001-38386 10.21 3/3/2020

10.15 2018 Amendment to Schedule #1 to the Master Agreement, dated October 23, 2018, by and between the Registrant and JPMorgan Chase Bank, N.A.

21 unchanged sentences

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.

8-K 001-38386 10.1 11/18/2022

10.26 2020 Bonus Plan of the Registrant

10-K 001-38386 10.31 3/1/2022

10.27 2021 Bonus Plan of the Registrant

10-K 001-38386 10.32 3/1/2022

10.28 Assumption Agreement and Tenth Amendment to Loan and Security Agreement, dated as of April 29, 2022, by and among Cardlytics, Inc., as Borrower and Pacific Western Bank, as Lender

10-Q 001-38386 10.1 5/2/2022

10.29 Form of Transition Agreement by and between the Registrant and Kirk L.

10-Q 001-38386 10.1 8/2/2022

10.30 General Service Agreement dated as of July 7, 2022 by and between the Registrant and Bank of America, N.A.

10-Q 001-38386 10.2 8/2/2022

10.31 Statement of Work Agreement dated as of July 7, 2022 by and between the Registrant and Bank of America, N.A.

10-Q 001-38386 10.3 8/2/2022

10.32 Transition Letter Agreement between Lynne M.

Laube and Cardlytics, Inc.

10-Q 001-38386 10.1 11/1/2022

10.33 Offer Letter Agreement between Karim Temsamani and Cardlytics, Inc.

10-Q 001-38386 10.2 11/1/2022

10.34 Severance Agreement between Karim Temsamani and Cardlytics, Inc.

10-Q 001-38386 10.3 11/1/2022

10.35 Severance Agreement between Nick Lynton and Cardlytics, Inc.

10-Q 001-38386 10.4 11/1/2022

10.36 2022 Inducement Plan

10-Q 001-38386 10.7 11/1/2022

10.37 Form of option grant notice and agreement under 2022 Inducement Plan

10-Q 001-38386 10.8 11/1/2022

10.38 Form of restricted stock unit grant notice and agreement under 2022 Inducement Plan

10-Q 001-38386 10.9 11/1/2022

10.39 Resignation and Release Agreement between Lynne Laube and Cardlytics, Inc.

8-K 001-38386 10.1 11/14/2022

10.40 Resignation and Release Agreement between Scott Grimes and Cardlytics, Inc.

8-K 001-38386 10.2 11/14/2022

10.41* Assumption Agreement and Eleventh Amendment to Loan and Security Agreement, dated as of November 29, 2022, by and among Cardlytics, Inc., as Borrower and Pacific Western Bank, as Lender

10.42* Offer Letter Agreement between Amit Gupta and Cardlytics, Inc.

10.43* Severance Agreement between Amit Gupta and Cardlytics, Inc.

10..44* Assumption Agreement and Twelfth Amendment to Loan and Security Agreement, dated as of February 16, 2023, by and among Cardlytics, Inc., as Borrower and Pacific Western Bank, as Lender

10.45* Amendment to Inducement Plan

10.46* 2022 Bonus Plan of the Registrant

21.1 Subsidiaries of the Registrant

21 unchanged sentences

March 1, 2023 By:

/s/ Karim Temsamani

Karim Temsamani

Chief Executive Officer

2 unchanged sentences

Signature Title Date

Laube Chief Executive Officer and Director March 1, 2022

Laube ( Principal Executive Officer )

/s/ Karim Temsamani Chief Executive Officer and Director March 1, 2023

Karim Temsamani ( Principal Executive Officer )

/s/ Andrew Christiansen Chief Financial Officer March 1, 2023

Andrew Christiansen (Principal Financial and Accounting Officer)

Grimes Executive Chairman March 1, 2022

Adams Director March 1, 2023

Balen Lead Independent Director

Balen Board Chairman

March 1, 2023

1 unchanged sentence

Jessica Jensen

Johnson Director March 1, 2022

/s/ John Klinck Director March 1, 2023

3 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