What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-07 compared with 2022-03-23 · 45 added, 26 removed, 130 unchanged (35% of the section changed)

6 unchanged sentences

In light of this fact, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting, the consolidated financial statements for the periods covered by and included in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

Material Weaknesses in Internal Control Over Financial Reporting

Management’s Report on Internal Control Over Financial Reporting

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

Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting.

Management has adopted the framework in “Internal Control-Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 25, 2022 based on the COSO framework, management has determined that the Company’s internal control over financial reporting as of December 25, 2022 was not effective.

We identified material weaknesses in our internal control over financial reporting.

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• We did not design and maintain effective controls over the period-end financial reporting process, including controls over the preparation and review of account reconciliations and journal entries, and the appropriate classification and presentation of accounts and disclosures in the consolidated financial statements.

This material weakness resulted in adjustments to accruals and within the statement of cash flows in our fiscal 2018 consolidated financial statements, which were recorded prior to the issuance of our fiscal 2018 consolidated financial statements.

This material weakness resulted in adjustments to accruals and within the statement of cash flows in our fiscal 2018

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consolidated financial statements, which were recorded prior to the issuance of our fiscal 2018 consolidated financial statements.

• We did not design and maintain effective controls over the accounting for income taxes over the recording of deferred income taxes and the assessment of the realization of deferred tax assets.

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Specifically, we did not design and maintain:

sufficient user access controls to ensure appropriate segregation of duties and

adequately restrict user and privileged access to financial applications, programs and data to appropriate Company personnel;

sufficient user access controls to ensure appropriate segregation of duties and adequately restrict user and privileged access to financial applications, programs and data to appropriate Company personnel;

program change management controls to ensure that information technology program and data changes affecting financial information technology applications and underlying accounting records are identified, tested, authorized and implemented appropriately;

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Additionally, each of the aforementioned material weaknesses could result in a misstatement of the consolidated financial statements that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Our independent registered public accounting firm will not be required to opine on the effectiveness of our internal control over financial reporting until we are no longer an “emerging growth company” as defined in the JOBS Act.

Remediation Efforts

We have taken certain measures to remediate the material weaknesses described above, including hiring additional personnel, designing and implementing formal procedures and controls supporting the Company’s period-end financial reporting process, such as controls over the preparation and review of account reconciliations and disclosures in the consolidated financial statements and designing certain information technology general controls.

We are in the process of implementing additional measures designed to enable us to meet the requirements of being a public company, improve our internal control over financial reporting and remediate the control deficiencies that led to the material weaknesses, including hiring additional information technology, finance and accounting personnel, evaluating our financial and information technology control environment and augmenting our internal controls with new accounting policies and procedures, and designing and implementing financial reporting controls, income tax controls, and information technology general controls.

While we believe that the efforts taken to date and those planned for remediation will improve the effectiveness of our internal control over financial reporting, these remediation efforts are ongoing and will require a sufficient period of time to operate for management to be able to conclude that the design is effective to address the risks of material misstatement and that such controls are operating effectively through testing of such controls.

We may conclude that additional measures are necessary to remediate the material weaknesses in our internal control over financial reporting, which may necessitate additional evaluation and implementation time.

Management’s Report on Internal Control Over Financial Reporting and Attestation Report

This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.

Additionally, our independent registered public accounting firm will not be required to opine on the effectiveness of our internal control over financial reporting until we are no longer an “emerging growth company” as defined in the JOBS Act.

We have taken certain measures to remediate the material weaknesses described above, including the following:

• Hired new and reassigned existing financial reporting, accounting, and information technology leadership with public company experience to enhance public company financial reporting, technical accounting, and information technology services and solutions.

• Augmented financial reporting capabilities by staffing professionals with special skills in income tax, internal audit, information technology, and legal.

• Established various policies, including a formal delegation of authority policy defining the protocols for reviewing and authorizing commitments, contracts, invoices, and transactions as well as a comprehensive set of information technology policies to govern the Company’s information technology practices.

• Formalized certain roles and review responsibilities, including ensuring appropriate segregation of duties.

• Designed and implemented period-end financial reporting controls, such as controls over the preparation and review of account reconciliations, financial statement disclosures, and the consolidated financial statements as

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well as establishing a formal management Disclosure Committee to review the draft financial statements and disclosures prior to release, including a sub-certification process from various functional groups.

• Designed and implemented controls over the accounting for income taxes to ensure the appropriate recording of deferred income taxes, income taxes and related disclosures.

• Designed sufficient user access controls to ensure appropriate segregation of duties and adequately restrict user and privileged access to financial applications, programs and data to appropriate Company personnel.

• Designed and implemented change management controls to ensure that information technology program and data changes affecting financial information technology applications and underlying accounting records are identified, tested, authorized, and implemented appropriately.

• Designed and implemented computer operation controls to ensure critical jobs are monitored and privileges are appropriately granted.

• Implemented a new backup and recovery platform to monitor data backups for all relevant systems in accordance with the applicable policy as well as manage a test recovery process.

As we continue to evaluate and work to improve our internal control over financial reporting, we may take additional measures to address control deficiencies, or we may modify certain of the remediation measures described above.

The material weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Other Information

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The remaining information required by this item is incorporated herein by reference to the sections entitled “Proposal 1:

Director Election Proposal,” “Information Regarding the board of directors and Corporate Governance,” and “Executive Officers” in our definitive Proxy Statement for the Annual Meeting of Shareholders expected to be held on May 24, 2022 (the “Proxy Statement”).

Director Election Proposal,” “Information Regarding the board of directors and Corporate Governance,” and “Executive Officers” in our definitive Proxy Statement for the Annual Meeting of Stockholders expected to be held on May 23, 2023 (the “Proxy Statement”).

We will provide disclosure of delinquent Section 16(a) reports, if any, in our Proxy Statement, and such disclosure, if any, is incorporated herein by reference.

1 unchanged sentence

The information required by this item is incorporated by reference to the sections entitled “Executive Compensation,” “Outstanding Equity Awards at Fiscal Year-End,” and “Director Compensation” in the Proxy Statement.

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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and the other parties thereto, dated as of October 1, 2021

Filed herewith

March 23, 2022, Form 10-K, Exhibit 4.2

4.3 Description of First Watch Restaurant Group, Inc.

Filed herewith

March 23, 2022, Form 10-K, Exhibit 4.3

10.1 Credit Agreement, dated as of October 6, 2021, by and among FWR Holding Corporation, AI Fresh Parent, Inc., the lenders party thereto, the other parties therein and Bank of America, N.A., as administrative agent

October 6, 2021, Form 8-K, Exhibit 10.1

10.2 Amendment No.

1 to Credit Agreement dated as of February 24, 2023, between FWR Holding Corporation as Borrower, the lenders party therto, the other parties therein and Bank of America N.A., as administrative agent

Filed herewith

10.2(a) Credit Agreement, dated as of August 21, 2017, between FWR Holding Corporation as Borrower, the lenders party thereto, and Golub Capital Markets LLC, as administrative agent

September 7, 2021, Form S-1, Exhibit 10.1(a)

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First Amendment to Credit Agreement, dated as of February 28, 2019, between FWR Holding Corporation as Borrower, the lenders party thereto, and Golub Capital Markets LLC, as administrative agent

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10.7* Letter Agreement, dated July 12, 2018, by and between First Watch Restaurants, Inc.

Filed herewith

March 23, 2022, Form 10-K, Exhibit 10.7

10.8* First Watch Restaurant Group, Inc.

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2021 Equity Incentive Plan

Filed herewith

March 23, 2022, Form 10-K, Exhibit 10.9

10.10* Form of 2022 Stock Option Agreement

March 23, 2022, Form 10-K, Exhibit 10.10

10.11* Form of 2023 Restricted Stock Unit Award Agreement

Filed herewith

10.11* Form of Director Indemnification Agreement for First Watch Restaurant Group, Inc.

10.12* Form of Director and Officer Indemnification Agreement

September 7, 2021, Form S-1, Exhibit 10.7

10.13 F orm of Restricted Unit Award Agreeme nt for Directors

Filed herewith

21.1 List of subsidiaries

2 unchanged sentences

Filed herewith

24.1 Power of Attorney (included on signature page of this Annual Report on Form 10-K)

Filed herewith

31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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This certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates them by reference.

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Form 10-K Summary

1 unchanged sentence

FIRST WATCH RESTAURANT GROUP, INC.

Mel Hope, Chief Financial Officer

March 23, 2022

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Christopher A.

Tomasso and Mel Hope, and each of them, his or her true and lawful attorneys-in-fact, each with full power of substitution, for him or her in any and all capacities, to sign any 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, granting unto said attorneys-in-fact and their substitutes, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully as he or she might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact or their substitute or substitutes may do or cause to be done by virtue hereof.

Name Mel Hope

Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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.

4 unchanged sentences

/s/ Mel Hope Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) March 7, 2023

/s/ Kenneth L.

Director and Chairman Emeritus March 23, 2022

/s/ Ralph Alvarez Director and Chairman of the Board March 7, 2023

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/s/ Tricia Glynn Director March 7, 2023

/s/ Stephanie Lilak Director March 7, 2023

Stephanie Lilak

/s/ William Kussell Director March 7, 2023

4 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