Item 9A. Controls and Procedures
ITEM 9A.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our chief executive officer and our principal financial officer and other senior management personnel, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act) as of April 27, 2024. Based on that evaluation, our chief executive officer and our principal financial officer concluded that these disclosure controls and procedures were not effective due to the material weakness described below. Notwithstanding the identified material weakness, the Company’s management, including our chief executive officer and principal financial officer, has concluded the Company’s consolidated financial statements included in this Form 10-K present fairly, in all material respects, the Company’s financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. generally accepted accounting principles.
Management ’ s Annual Report on Internal Control Over Financial Reporting
The Company’s Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our 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 GAAP.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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.
Management assessed the effectiveness of our internal control over financial reporting as of April 29, 2023 and April 30, 2022, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013). Based on this assessment, management concluded at the time the respective 10-Qs and 10-Ks were filed that our internal control over financial reporting was effective based on those criteria. Subsequent to that assessment, management identified a material weakness in internal controls as described below.
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 our annual or interim financial statements will not be prevented or detected on a timely basis. Management identified a material weakness in our internal financial reporting controls over the review of the Consolidated Statements of Cash Flows, including operating lease disclosures and presentation at January 27, 2024, October 28, 2023 and July 29, 2023, and for Fiscal 2023, Fiscal 2022. The controls did not operate at a level precise enough to detect errors in certain calculations within the Consolidated Statements of Cash Flows and the presentation of right-of-use assets obtained in exchange for lease liabilities as supplemental non-cash items.
Remediation
The Company’s management has implemented additional review procedures to enhance our internal control over financial reporting with respect to reporting cash flows. These procedures include the hiring of additional financial professions to review the calculations underlying the cash flow presentation, enhanced procedures for assuring that right-of-use assets are reported on a timely basis by subsidiary personnel and additional quarter-end reviews of operating lease liabilities. Management believes that implementation of these procedures will remediate the internal control weakness over financial reporting but will continue to monitor the applicable controls for a sufficient period of time to determine that these controls are operating effectively.
Changes in Internal Control Over Financial Reporting
Except as described above, there has been 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 has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Notwithstanding the identified material weakness described above, management believes that the consolidated financial statements included present fairly in all material respects our consolidated financial position, results of operations and cash flows for the period presented.
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of National Beverage Corp.
Opinion on the Internal Control Over Financial Reporting
We have audited National Beverage Corp. 's (the Company) internal control over financial reporting as of April 27,2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of April 27, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of April 27, 2024 and April 29, 2023, and the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended April 27, 2024, and the related notes (collectively, the financial statements) of the Company and our report dated June 26, 2024, expressed an unqualified opinion.
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 has ineffective financial reporting controls over the review of the statement of cash flows, including operating lease disclosures and presentation. The controls also did not operate at a level precise enough to detect other errors in calculations and formulas and as a result did not detect differences between classifications within the statement of cash flows and the presentation of right-of-use assets obtained in exchange for lease liabilities as supplemental non-cash items.. This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2024 financial statements, and this report does not affect our report dated June 26, 2024, on those financial statements.
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 in the accompanying Report 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 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, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included 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 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. 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.
/s/ RSM US LLP
Fort Lauderdale, Florida
June 26, 2024
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ITEM 9B.
OTHER INFORMATION
Not applicable.
ITEM 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
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PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 will be included under the captions “Election of Directors”, “Information as to Nominees and Other Directors”, “Information Regarding Meetings and Committees of the Board” and “Reporting Compliance” in the Company’s 2024 Proxy Statement and is incorporated herein by reference.
The following table sets forth certain information with respect to the officers of the Registrant at April 27, 2024:
Name
Age
Position with Company
Nick A. Caporella (1)
88
Chairman of the Board and Chief Executive Officer
Joseph G. Caporella (2)
63
President
George R. Bracken (3)
78
Executive Vice President – Finance
_______________________________
(1)
Mr. Nick A. Caporella has served as Chairman of the Board, Chief Executive Officer and Director since the Company’s inception in 1985. Also, he serves as Chairman of the Nominating Committee. Since 1992, Mr. Caporella’s services have been provided to the Company by Corporate Management Advisors, Inc., a company he owns.
(2)
Mr. Joseph G. Caporella has served as President since September 2002 and, prior to that, as Executive Vice President and Secretary since January 1991. Also, he has served as a Director since January 1987. Joseph G. Caporella is the son of Nick A. Caporella.
(3)
Mr. George R. Bracken has served as Executive Vice President - Finance since July 2012. Previously, he served as Senior Vice President – Finance from October 2000 to July 2012 and Vice President and Treasurer from October 1996 to October 2000. Since 1992, Mr. Bracken’s services have been provided to the Company by Corporate Management Advisors, Inc.
Officers are normally appointed each year at the first meeting of the Board of Directors after the annual meeting of shareholders and may be removed at any time by the Board of Directors.
ITEM 11.
EXECUTIVE COMPENSATION
The information required by Item 11 will be included under the captions “Executive Compensation and Other Information” and “Compensation Committee Interlocks and Insider Participation” in the Company’s 2024 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 Item 12 will be included under the captions “Security Ownership” and “Equity Compensation Plan Information” in the Company’s 2024 Proxy Statement and is incorporated herein by reference.
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ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTION, AND DIRECTOR INDEPENDENCE
The information required by Item 13 will be included under the captions “Certain Relationships and Related Party Transactions” and “Information Regarding Meetings and Committees of the Board” in the Company’s 2024 Proxy Statement and is incorporated herein by reference.
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by Item 14 will be included under the caption “Independent Auditors” in the Company’s 2024 Proxy Statement and is incorporated herein by reference.
PART IV
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)
The following documents are filed as part of this report:
Page
1.
Financial Statements
Consolidated Balance Sheets
18
Consolidated Statements of Income
19
Consolidated Statements of Comprehensive Income
20
Consolidated Statements of Shareholders’ Equity
21
Consolidated Statements of Cash Flows
22
Notes to Consolidated Financial Statements
23
Report of Independent Registered Public Accounting Firm (PCAOB ID: 49 )
35
2.
Financial Statement Schedules
NA
3.
Exhibits
See Exhibit Index which follows.
ITEM 16. Form 10-K Summary
None.
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EXHIBIT INDEX
Exhibit
No.
Description
3.1
Restated Certificate of Incorporation (1)
3.2
Amended and Restated By-Laws (2)
3.3
Certificate of Designation of the Special Series D Preferred Stock of the Company (3)
4
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (14)
10.1
Management Agreement between the Company and Corporate Management Advisors, Inc. (4) *
10.2
National Beverage Corp. Investment and Profit Sharing Plan (5) *
10.3
National Beverage Corp. 1991 Omnibus Incentive Plan (4) *
10.4
National Beverage Corp. 1991 Stock Purchase Plan (4) *
10.5
Amendment No. 1 to the National Beverage Corp. Omnibus Incentive Plan (6) *
10.6
National Beverage Corp. Special Stock Option Plan (7) *
10.7
Amendment No. 2 to the National Beverage Corp. Omnibus Incentive Plan (8) *
10.8
National Beverage Corp. Key Employee Equity Partnership Program (8) *
10.9
Second Amended and Restated Credit Agreement, dated June 30, 2008, between NewBevCo, Inc. and lender therein (9)
10.10
Amendment to National Beverage Corp. Special Stock Option Plan (10) *
10.11
Amendment to National Beverage Corp. Key Employee Equity Partnership Program (10) *
10.12
Amended and Restated Credit Agreement dated January 5, 2022 between NewBevCo and lender therein (11)
10.13
Loan Agreement dated December 21, 2021 between NewBevCo, Inc. and lender therein (11)
10.14
Second Amended and Restated Credit Agreement between NewBevCo, Inc. and lender therein (12)
10.15
Amendment to Loan Agreement dated November 15, 2023 between NewBevCo, Inc. and lender therein (14)
19
National Beverage Corp. Insider Trading Policy (15)
21
Subsidiaries of Registrant (15)
23
Consent of Independent Registered Public Accounting Firm (15)
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (15)
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31.2
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (15)
32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (15)
32.2
Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (15)
97
National Beverage Corp. Compensation Clawback Policy (15) *
101
The following financial information from National Beverage Corp.’s Annual Report on Form 10-K for the fiscal year ended April 27, 2024 is formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements of Shareholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) the Notes to Consolidated Financial Statements.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*
Indicates management contract or compensatory plan or arrangement.
(1)
Previously filed with the Securities and Exchange Commission as an exhibit to Schedule 14C Information Statement dated June 26, 2018 and is incorporated herein by reference.
(2)
Previously filed with the Securities and Exchange Commission as an exhibit to Form 8-K Current Report dated July 23, 2018 and is incorporated herein by reference.
(3)
Previously filed with the Securities and Exchange Commission as an exhibit to Form 8-K Current Report dated January 31, 2013 and is incorporated herein by reference.
(4)
Previously filed with the Securities and Exchange Commission as an exhibit to Amendment No. 1 to Form S-1 Registration Statement (File No. 33-38986) on July 26, 1991 and is incorporated herein by reference.
(5)
Previously filed with the Securities and Exchange Commission as an exhibit to the Form S-1 Registration Statement (File No. 33-38986) on February 19, 1991 and is incorporated herein by reference
(6)
Previously filed with the Securities and Exchange Commission as an exhibit to Annual Report on Form 10-K for the fiscal year ended April 27, 1996 and is incorporated herein by reference.
(7)
Previously filed with the Securities and Exchange Commission as an exhibit to Registration Statement on Form S-8 (File No. 33-95308) on August 1, 1995 and is incorporated herein by reference.
(8)
Previously filed with the Securities and Exchange Commission as an exhibit to Annual Report on Form 10-K for the fiscal year ended May 3, 1997 and is incorporated herein by reference.
(9)
Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended January 29, 2011 and is incorporated herein by reference.
(10)
Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended January 31, 2009 and is incorporated herein by reference.
(11)
Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended January 29, 2022 and is incorporated herein by reference.
(12)
Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended October 29, 2022 and is incorporated herein by reference.
(13)
Previously filed with the Securities and Exchange Commission as an exhibit to Annual Report on Form 10-K for the fiscal year ended May 2, 2020 and is incorporated herein by reference.
(14)
Previously filed with the Securities and Exchange Commission as an exhibit to Quarterly Report on Form 10-Q for the fiscal period ended October 28, 2023 and is incorporated herein by reference.
(15)
Filed herewith.
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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.
NATIONAL BEVERAGE CORP.
By:
/s/ George R. Bracken
George R. Bracken
Executive Vice President – Finance
(Principal Financial Officer and Principal Accounting Officer)
Date: June 26, 2024
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 indicated on June 26, 2024.
/s/ Nick A. Caporella
/s/ Cecil D. Conlee
Nick A. Caporella
Cecil D. Conlee
Chairman of the Board and
Director
Chief Executive Officer
/s/ Joseph G. Caporella
/s/ Samuel C. Hathorn, Jr.
Joseph G. Caporella
Samuel C. Hathorn, Jr.
President and Director
Director
/s/ George R. Bracken
/s/ Stanley M. Sheridan
George R. Bracken
Stanley M. Sheridan
Executive Vice President – Finance
Director
(Principal Financial Officer and Principal Accounting Officer)
43