What changed in this filing

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Item 9A. Controls and Procedures

2024-03-05 compared with 2023-03-07 · 58 added, 34 removed, 141 unchanged (39% of the section changed)

19 unchanged sentences

• 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

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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 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.

This material weakness resulted in adjustments to the income tax benefit, deferred taxes, goodwill, and liabilities in our fiscal 2018 consolidated financial statements, which were recorded prior to issuance.

This material weakness also resulted in immaterial adjustments to the income tax benefit and deferred taxes and related disclosures in the fiscal 2017 and 2019 consolidated financial statements, which were corrected in the fiscal 2019 and 2020 consolidated financial statements, respectively.

This material weakness also resulted in adjustments to the income tax expense and deferred taxes in our fiscal 2021 consolidated financial statements, which were recorded prior to issuance.

This material weakness also resulted in immaterial adjustments to the income tax benefit and deferred taxes and related disclosures in the fiscal 2017 and 2019

consolidated financial statements, which were corrected in the fiscal 2019 and 2020 consolidated financial statements, respectively.

This material weakness also resulted in adjustments to the income tax expense and deferred taxes in our fiscal 2021 consolidated financial statements, which were recorded prior to issuance and immaterial adjustments which were recorded in our fiscal 2023 consolidated financial statements.

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 continue to implement measures designed to improve the Company’s internal control over financial reporting to address and remediate the previously identified material weaknesses.

To date, such measures include 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 knowledge and experience 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 reviewed 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, including controls around classification of cash flows and disclosure of noncash items, as 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.

• Enhanced access restrictions for certain users over general ledger journal entries and designed new processes to further segregate journal entry creation from journal entry approval authority.

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

While the material weaknesses disclosed have not yet been remediated as of December 31, 2023, management is devoting substantial resources to the ongoing remediation efforts.

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 designed and operating effectively.

Remediation of Prior Material Weakness in Internal Control Over Financial Reporting

As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 25, 2022, the following control deficiencies constituted a material weakness in our internal control over financial reporting:

• We did not design and maintain effective controls over information technology general controls for information systems and applications that are relevant to the preparation of the consolidated financial statements.

4 unchanged sentences

and testing and approval controls for program development to ensure that new software development is aligned with business and information technology requirements.

The deficiencies, when aggregated, could impact our ability to maintain effective segregation of duties, as well as the effectiveness of information technology-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the information technology controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

The deficiencies, when aggregated, could impact our ability to maintain effective segregation of duties, as well as the effectiveness of information technology-dependent controls (such as

automated controls that address the risk of material misstatement to one or more assertions, along with the information technology controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Therefore, we concluded the information technology deficiencies resulted in a material weakness.

However, these information technology deficiencies did not result in any misstatements to the consolidated financial statements.

Remediation Efforts

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

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

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

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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.

The Company has designed and implemented the following measures to remediate the previously identified material weakness related to information technology general controls:

• Hired a seasoned information technology leader with public company experience to enhance information technology services and solutions.

• Designed and implemented 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 testing and approval controls for program development to ensure that new software is aligned with business and information technology requirements.

• 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 of December 31, 2023, the remediation measures described above have been completed, and the newly designed and enhanced controls have been implemented and operated for a sufficient time to demonstrate the material weakness has been remediated.

Based on the testing performed by management, the controls have been determined to be appropriately designed and operating effectively as of December 31, 2023 and as such, the material weakness related to information technology general controls for information systems and applications that are relevant to the preparation of the consolidated financial statements has been remediated.

Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Other Information

9 unchanged sentences

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

23 unchanged sentences

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

10.1(a) 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

10.1(b) Amendment No.

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

March 7, 2023, Form 10-K, Exhibit 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

2 to Credit Agreement dated as of January 5, 2024, by and among FWR Holding Corporation as Borrower, the lenders party thereto, the other parties thereto and Bank of America N.A., as administrative agent

January 8, 2024, Form 8-K, Exhibit 10.1

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

27 unchanged sentences

10.11* Form of 2023 Restricted Stock Unit Award Agreement

March 7, 2023, Form 10-K, Exhibit 10.11

10.12* Form of 2024 Restricted Stock Unit Award Agreement

Filed herewith

10.13* Form of 2024 Restricted Stock Unit Award Agreement (Special Recognition Grant)

Filed herewith

10.14* 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

10.15 Form of Restricted Unit Award Agreement for Directors

March 7, 2023, Form 10-K, Exhibit 10.13

10.16*** Asset Purchase Agreement dated as of January 5, 2024, by and among VIM Holdings, LLC, its owners and affiliates, and First Watch Restaurants, Inc.

January 8, 2024, Form 8-K, Exhibit 2.1

21.1 List of subsidiaries

9 unchanged sentences

Furnished herewith

97.1 Incentive-Based Compensation Recovery Policy

Filed herewith

101 The financial information from First Watch Restaurant Group, Inc.

5 unchanged sentences

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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***Disclosure schedules omitted pursuant to Item 601(b)(2) of Regulation S-K.

The Company will furnish supplementally a copy of any omitted schedule to the SEC upon request.

The Company may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules so furnished.

Form 10-K Summary

13 unchanged sentences

Bradley Director March 5, 2024

/s/ Irene Chang Britt Director March 5, 2024

Irene Chang Britt

/s/ Tricia Glynn Director March 5, 2024

/s/ Stephanie Lilak Director March 7, 2023

Stephanie Lilak

/s/ William Kussell Director March 5, 2024

William Kussell

/s/ Lisa Price Director March 7, 2023

/s/ Michael White Director March 7, 2023

Michael White

/s/ Stephanie Lilak Director March 5, 2024

Stephanie Lilak

/s/ David Paresky Director March 5, 2024

David Paresky

/s/ Jostein Solheim Director March 5, 2024

Jostein Solheim

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