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Item 9A. Controls and Procedures

2023-03-16 compared with 2022-02-28 · 54 added, 36 removed, 132 unchanged (41% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Interim Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of the end of the period covered by this Annual Report on Form 10-K.

Based on this evaluation, our management concluded that, as of December 31, 2021, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act), as of December 31, 2022.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2022 due to a material weakness in our internal control over financial reporting, which is described below in “Management’s Report on Internal Control over Financial Reporting”.

Notwithstanding the material weakness in our internal control over financial reporting, our Chief Executive Officer and Chief Financial Officer have concluded that the Consolidated Financial Statements present fairly, in all material respects, our financial position, results of operations and cash flows in accordance with generally accepted accounting principles in the United States of America (U.S.

Management’s Report on Internal Control over Financial Reporting

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

Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Our internal control over financial reporting includes policies and procedures that provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S.

generally accepted accounting principles.

Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2021.

Management reviewed the results of its assessment with our Audit Committee.

The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in its report which is included below.

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

Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S.

Management has assessed the effectiveness of our internal control over financial reporting 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.

Based on this assessment and considering the material weakness described below, management concluded that, as of December 31, 2022, our internal control over financial reporting was not effective.

A material weakness is a deficiency, or 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.

During our fiscal 2022 financial statement close process, management identified a deficiency in the design of internal control over financial reporting related to a complex manual accounting calculation.

An incorrect calculation caused the accrued merchant payable balance to be understated by an immaterial amount, and there is a reasonable possibility our existing controls would not have detected the error in a timely manner if it were to be material.

The error did not affect payments to merchants.

A material weakness exists due to inadequate preventative and detective controls over complex manual calculations used to record certain month-end balances such that there is a reasonable possibility that a material misstatement would not be identified timely.

Our independent registered public accounting firm, Deloitte & Touche LLP, who audited the Consolidated Financial Statements as of and for the year ended December 31, 2022 included in this Annual Report on Form 10-K issued an adverse opinion on the effectiveness of our internal control over financial reporting.

Deloitte & Touche LLP’s report is included herein.

Remediation Plan

With the oversight of senior management and our audit committee, management is in process of designing and implementing the following control activities related to complex manual calculations:

• Formalize a process to identify and address accounting implications for new initiatives.

• Design new controls and enhance existing controls for complex manual processes.

• Automate complex accounting calculations to minimize human error.

We are committed to maintaining a strong internal control environment and are implementing measures designed to help ensure that the material weakness is remediated.

However, there cannot be any assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts.

The material weakness will be fully remediated when these controls have operated effectively for a sufficient period of time and we have validated the operating effectiveness of these controls through testing.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

As a result of the COVID-19 pandemic, a majority of our employees have been working remotely.

We have not identified any material changes to our internal controls over financial reporting as a result of COVID-19 or related changes to our working environment.

We are continually monitoring and assessing the impact the COVID-19 pandemic and related restrictions have on our own internal controls to minimize the effect on their design and operating effectiveness.

Except for the identification of the material weakness described above, there were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

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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, the Company maintained, in all material respects, 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 February 28, 2022, 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, 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 16, 2023, expressed an unqualified opinion on those financial statements.

Basis for Opinion

14 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 is included in management's assessment:

During the Company’s fiscal 2022 financial statement close process, management identified a deficiency in the design of internal control over financial reporting related to a complex manual accounting calculation.

An incorrect calculation caused the accrued merchant payable balance to be understated by an immaterial amount, and there is a reasonable possibility the existing controls would not have detected the error in a timely manner if it were to be material.

The error did not affect payments to merchants.

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, 2022, of the Company, and this report does not affect our report on such financial statements.

/s/ Deloitte & Touche LLP

Chicago, Illinois

February 28, 2022

March 16, 2023

OTHER INFORMATION

On March 14, 2023, in connection with her retirement from General Motors, Deborah Wahl notified us of her intention to resign as a director, effective March 17, 2023.

The departure of Ms.

Wahl was not the result of any disagreement with us on any matter relating to its operations, policies or practices, and we thank her for her dedicated service to Groupon.

DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENT INSPECTIONS

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4.4 Description of the Company's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

10.1* 2008 Stock Option Plan.**

10.2* Form of Notice of Grant of Stock Option under 2008 Stock Option Plan.**

10.3* 2010 Stock Plan.**

10.4* Form of Notice of Grant of Stock Option under 2010 Stock Plan.**

10.5* Form of Notice of Restricted Stock Unit Award under 2010 Stock Plan.**

10.1* Form of Indemnification Agreement.**

1 unchanged sentence

10.3 Severance Benefit Agreement, dated November 30, 2021 (incorporated by reference to the Company's Current Report on Form 8-K filed on December 1, 2021).**

10.9 2011 Incentive Plan, as amended and restated effective as of June 13, 2019 (incorporated by reference to the Company's Definitive Proxy Statement on Schedule 14A filed on April 26, 2019 ).**

10.10 Non-Employee Directors’ Compensation Plan (incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018).

10.11 Form of Notice of Restricted Stock Award under 2011 Incentive Plan (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2012).**

10.12 Form of Notice of Performance Share Unit Award and Form of performance Share Unit Award Agreement under 2011 Incentive Plan (incorporate by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2018).**

10.13 Form of Notice and Performance Share Unit Award Agreement under the Groupon, Inc.

2011 Incentive Plan, as Amended (incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019).**

10.4 Groupon, Inc.

2011 Incentive Plan, as amended (incorporated by reference to Appendix B to the Company's Definitive Proxy Statement on Schedule DEF14A, filed with the SEC on April 27, 2022)**

10.5 Non-Employee Directors’ Compensation Plan (incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022).**

10.6 Form of Notice of Restricted Stock Unit Award under 2011 Incentive Plan .**

10.7 Form of Notice of Performance Share Unit Award and Form of performance Share Unit Award Agreement under 2011 Incentive Plan (incorporate d by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2018).**

10.8 Form of Capped Call Confirmation (incorporated by reference to the Company’s Current Report on Form 8-K filed on March 25, 2021).

2 unchanged sentences

10.11 Second Amendment, dated as of March 22, 2021, among the Company, the subsidiaries of the Company party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto, to the Second Amended and Restated Credit Agreement, dated as of May 14, 2019, among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto (incorporated by reference to the Company's Current Report on Form 8-K filed on March 22, 2021).

10.18 Offer letter, dated October 12, 2021 (incorporated by reference to the Company's Current Report on Form 8-K filed on October 13, 2021).**

10.12 Third Amendment, dated as of September 28, 2022, among the Company, the subsidiaries of the Company party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto, to the Second Amended and Restated Credit Agreement, dated as of May 14, 2019 (and as amended by the First Amendment, dated as of July 17, 2020 and the Second Amendment, dated as of March 22, 2021), among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto (incorporated by reference to the Company's Current Report on Form 8-K filed on September 29, 2022).

10.13 Fourth Amendment, dated as of March 13, 2023, among the Company, the subsidiaries of the Company party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto, to the Second Amended and Restated Credit Agreement, dated as of May 14, 2019 (and as amended by the First Amendment, dated as of July 17, 2020, the Second Amendment, dated as of March 22, 2021 and the Third Amendment, dated as of September 28, 2022), among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto (incorporated by reference to the Company's Current Report on Form 8-K filed on March 15, 2023).

10.14 Offer letter, dated November 4, 2022 .**

10.15 CEO Offer Letter, dated November 30, 2021 (incorporated by reference to the Company's Current Report on Form 8-K filed on December 1, 2021).**

17 unchanged sentences

Form 10-K Summary

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 on this 28th day of February 2022.

GROUPON, INC.

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KNOWN BY ALL PERSONS BY THESE PRESENTS, that the individuals whose signatures appear below hereby constitute and appoint Kedar Deshpande and Damien Schmitz, and each of them severally, as his or her true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution for him or her and in his or her name, place and stead in any and all capacities to sign any and all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do or perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or of his substitute or substitutes, may lawfully do to cause to be done by virtue hereof.

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 as of February 28, 2022.

Signature Title

1 unchanged sentence

Kedar Deshpande

/s/ Damien Schmitz Interim Chief Financial Officer (Principal Financial Officer)

/s/ Damien Schmitz Chief Financial Officer (Principal Financial Officer)

Damien Schmitz

/s/ Kerrie Dvorak Interim Chief Accounting Officer (Principal Accounting Officer)

/s/ Kerrie Dvorak Chief Accounting Officer (Principal Accounting Officer)

Kerrie Dvorak

1 unchanged sentence

Leonsis Director

Barris Director

/s/ Jan Barta Director

/s/ Robert J.

2 unchanged sentences

Eric Lefkofsky

/s/ Valerie Mosley Director

Valerie Mosley

/s/ Dusan Senkypl Director

Dusan Senkypl

/s/ Deborah Wahl Director

/s/ Helen Vaid Director

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