Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e). In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures and carries out a variety of ongoing procedures, under the supervision and with the participation of the Company’s management, including the Company’s CEO and CFO, to evaluate the effectiveness of the design and operation of the Company’s disclosure controls and procedures .
Based on that evaluation, our Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2022 due to the material weaknesses in the Company’s internal control over financial reporting, described below.
Nevertheless, based on the performance of additional procedures by management designed to ensure reliability of financial reporting, the Company’s management has concluded that, notwithstanding the material weaknesses described below, the consolidated financial statements, included in this Form 10-K, fairly present, in all material respects, the Company’s financial position, results of operations, and cash flows as of the dates, and for the periods presented, in conformity with U.S. GAAP.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).
As of December 31, 2022, our management, under the oversight of our board of directors, conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established by the Committee of Sponsoring Organization of the Treadway Commission in Internal Control - Integrated Framework (2013) . Based on this assessment, our management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2022 due to the material weaknesses described below.
A material weakness is a deficiency, or combination of deficiencies, in our internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements would not be prevented or detected on a timely basis.
Based on this assessment, management concluded that the Company’s risk assessment process was not effective in implementing controls on a timely basis in response to changes to the business operations, personnel, and other factors affecting certain financial reporting processes and related information technology (“IT”) systems. As a result, the Company had ineffective Information Technology General Controls (“ITGCs”) related to certain systems, applications, and tools used for financial reporting; and the Company did not establish effective user access and segregation of duties controls across financially relevant functions. Therefore, the automated and manual process level controls over financial reporting which were dependent upon these ITGCs could not be relied upon.
The control deficiencies identified did not result in misstatements to our consolidated financial statements; however, the control deficiencies described above created a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis. Therefore, our management concluded that the deficiencies represent material weaknesses.
KPMG LLP, the Company’s independent registered public accounting firm, who audited the consolidated financial statements included in this Form 10-K, has issued an attestation report on the Company’s internal control over financial reporting. KPMG LLP’s attestation report contains an adverse opinion on the effectiveness of the Company’s internal control over financial reporting. KPMG LLP’s report is included in Item 8 in this Form 10-K.
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Remediation Efforts to Address the Material Weaknesses
The aforementioned material weaknesses were identified in 2021. While the Company has improved its organizational capabilities, the material weaknesses remain un-remediated as of December 31, 2022, and the Company’s remediation efforts will continue to take place in 2023.
During the year ended December 31, 2022, management completed the following remedial actions:
• performed a risk assessment over the IT systems used as part of financial reporting and business processes, including the various layers of technology;
• implemented processes to identify sensitive access and segregation of duties risks across relevant business and IT functions, implemented tools and systems to support the ongoing maintenance and evaluation of the risks and controls, and implemented controls to address risks within certain privileged IT access;
• designed, developed, and deployed an enhanced ITGC framework, including the implementation of a number of systems and tools to enable the effectiveness and consistent execution of these controls; and
• hired critical leadership roles with public company and internal control experience responsible for designing, implementing, and monitoring our ITGCs, including the Chief Information Officer, Chief Operating Officer, Vice President Corporate Controller, and Head of SOX Compliance.
In addition to the remedial actions taken to date, the Company is still considering the full extent of the procedures to implement in order to remediate the material weaknesses described above. However, the current remediation plan includes:
• continuing to implement processes and controls to better manage and monitor our segregation of duties risks, including enhancing the usage of technology and tools for segregation of duties within the Company’s systems, applications, and tools;
• continuing to implement ITGCs to manage access and program changes within our IT environment and to support the evaluation, monitoring, and ongoing effectiveness of key application controls and key reports; including:
◦ enhancing controls and the usage of technology and tools over consistent provisioning, deprovisioning, and periodic reviews of user access;
◦ enhancing monitoring processes to drive improved execution of ITGCs, including assessing the impact of business and technology changes for the continued alignment with financial reporting needs; and
• continuing to expand our resources with the expertise, technical knowledge, and structure to implement, monitor, and maintain ITGCs, with a focus on user assess and segregation of duties controls.
The actions that we are taking are subject to ongoing management review and audit committee oversight. We will not be able to conclude whether the steps we are taking will fully remediate the material weaknesses in our internal control over financial reporting until we have completed our remediation efforts and subsequently evaluated their effectiveness. We may also conclude that additional measures are required to remediate the material weaknesses in our internal control over financial reporting.
Changes in Internal Control Over Financial Reporting
Except for the remediation measures in connection with the material weaknesses described above, there were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the quarter ended December 31, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item will be included in our Proxy Statement for our 2023 Annual Meeting of Shareholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2022 and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by this Item will be included in our Proxy Statement for our 2023 Annual Meeting of Shareholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2022 and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters
The information required by this Item will be included in our Proxy Statement for our 2023 Annual Meeting of Shareholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2022 and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item will be included in our Proxy Statement for our 2023 Annual Meeting of Shareholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2022 and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
The information required by this Item will be included in our Proxy Statement for our 2023 Annual Meeting of Shareholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2022 and is incorporated herein by reference.
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PART IV
Item 15. Exhibits, Financial Statement Schedules
Exhibit Index
Incorporated by Reference
Exhibit Number Exhibit Title Form File No. Exhibit Filing Date
3.1 Amended and Restated Certificate of Incorporation of Rivian Automotive, Inc.
8-K 001-41042 3.1 11/16/2021
3.2 Amended and Restated Bylaws of Rivian Automotive, Inc.
8-K 001-41042 3.2 11/16/2021
4.1 Specimen Stock Certificate evidencing the shares of Class A common stock
S-1/A 333-259992 4.1 11/01/2021
4.2 Fifth Amended and Restated Investors’ Rights Agreement, dated as of January 19, 2021, by and among the Registrant and certain holders of its capital stock, as amended
S-1/A 333-259992 4.2 10/22/2021
4.3* Description of Capital Stock
10.1# 2015 Long-Term Incentive Plan, as amended, and forms of option and restricted stock unit agreements thereunder
S-1/A 333-259992 10.1 11/01/2021
10.2# 2021 Incentive Award Plan and forms of option and restricted stock unit agreements thereunder
S-1/A 333-259992 10.2 11/01/2021
10.3# Non-Employee Director Compensation Program
S-1/A 333-259992 10.3 11/01/2021
10.4# 2021 Employee Stock Purchase Plan
S-1/A 333-259992 10.4 11/01/2021
10.5# Form of Indemnification Agreement for Directors and Officers
S-1/A 333-259992 10.5 11/01/2021
10.6 Credit Agreement, dated as of May 20, 2021, by and among Rivian Holdings, LLC, as Borrower Representative, the borrowers party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.
S-1/A 333-259992 10.6 10/22/2021
10.7# Employment Agreement by and between Rivian Automotive, LLC and Robert Joseph Scaringe
S-1/A 333-259992 10.7 11/01/2021
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10.8# Employment Agreement by and between Rivian Automotive, LLC and Jiten Behl
S-1/A 333-259992 10.8 11/01/2021
10.9# Employment Agreement by and between Rivian Automotive, LLC and Claire McDonough
S-1/A 333-259992 10.9 11/01/2021
10.10# Transition and Release Agreement, dated as of March 2, 2021, by and between Rivian Automotive, LLC and Ryan Green
S-1/A 333-259992 10.11 11/01/2021
10.11† Framework Agreement, dated as of September 16, 2019, by and between Rivian Automotive, LLC and Amazon Logistics, Inc.
S-1 333-259992 10.12 10/01/2021
10.12† Work Order No. #1 to the Framework Agreement, dated as of September 16, 2019, by and between Rivian Automotive, LLC and Amazon Logistics, Inc.htm
S-1 333-259992 10.13 10/01/2021
10.13† Commercial Letter Agreement, dated as of February 15, 2019, by and between Rivian Automotive, Inc. and Amazon.com, Inc.
S-1 333-259992 10.14 10/01/2021
10.14† Amendment to Commercial Letter Agreement, dated as of September 6, 2019, by and between Rivian Automotive, Inc. and Amazon.com, Inc.
S-1 333-259992 10.15 10/01/2021
10.15† Master Services Agreement, dated as of May 7, 2021, by and between Rivian, LLC and Cox Automotive Corporate Services, LLC
S-1 333-259992 10.16 10/01/2021
10.16† Statement of Work for Consignment Services, dated as of June 21, 2021, by and between Rivian, LLC and Manheim Remarketing, Inc.
S-1 333-259992 10.17 10/01/2021
10.17† Development, Production and Supply Agreement, dated as of April 16, 2021, by and between Rivian Automotive, LLC and Troy Design and Manufacturing Co.
S-1 333-259992 10.18 10/01/2021
10.18 Indenture, dated as of October 8, 2021, by and among Rivian Holdings, LLC, Rivian, LLC, Rivian Automotive, LLC, the guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent.
S-1/A 333-259992 10.19 10/22/2021
10.19 Note Purchase Agreement, dated as of October 8, 2021, by and among Rivian Holdings, LLC, Rivian, LLC, Rivian Automotive, LLC and the purchasers party thereto.
S-1/A 333-259992 10.20 10/22/2021
10.20†* Amendment No. 1 to the Framework Agreement, dated as of October 26, 2021, by and between Rivian Automotive, LLC and Amazon Logistics, Inc.
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10.21 Amendment to the Warrant to Purchase Series C Preferred Stock, dated as of October 31, 2021, by and between Rivian Automotive, Inc. and Amazon.com NV Investment Holdings LLC.
S-1/A 333-259992 10.21 11/01/2021
10.22ˆ Economic Development Agreement, dated as of May 2, 2022, by and among Rivian Horizon, LLC, the State of Georgia and the Georgia Department of Economic Development, and Joint Development Authority of Jasper County, Morgan County, Newton County and Walton County
8-K 001-41042 10.1 05/06/2022
10.23 Amendment no. 1 to Credit Agreement, dated as of May 20, 2021, by and among Rivian Holdings, LLC, as Borrower Representative, the borrowers party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.
10-Q 001-41042 10.1 05/11/2022
10.24 Amendment no. 2 to Credit Agreement, dated as of May 20, 2021, by and among Rivian Holdings, LLC, as Borrower Representative, the borrowers party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.
10-Q 001-41042 10.2 05/11/2022
10.25# Rivian Executive Bonus Plan
10-Q 001-41042 10.1 11/09/2022
10.26†* Amendment No. 2 to the Framework Agreement, dated as of January 1, 2023, by and between Rivian Automotive, LLC and Amazon Logistics, Inc.
21.1* List of Subsidiaries of Rivian Automotive, Inc.
23.1* Consent of KPMG, LLP, Independent Registered Public Accounting Firm
31.1* Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)
31.2* Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)
32.1** Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
32.2** Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
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101.INS* Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH* Inline XBRL Taxonomy Extension Schema Document
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document
104* Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
* Filed herewith.
** Furnished herewith.
# Indicates management contract or compensatory plan.
† Portions of this exhibit (indicated by asterisks) have been redacted in compliance with Regulation S-K Item 601(b)(10)(iv).
ˆ Certain exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant undertakes to provide copies of any of the omitted exhibits upon request by the Securities and Exchange Commission.
Item 16. Form 10-K Summary
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RIVIAN AUTOMOTIVE, INC.
By: /s/ Robert J. Scaringe
Robert J. Scaringe
Chief Executive Officer, Chairman of the Board of Directors
Date: February 28, 2023 (Principal Executive 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:
Signature Title Date
/s/ Robert J. Scaringe
Chief Executive Officer, Chairman of the Board of Directors February 28, 2023
Robert J. Scaringe (Principal Executive Officer)
/s/ Claire McDonough
Chief Financial Officer February 28, 2023
Claire McDonough (Principal Financial Officer)
/s/ Jeffrey R. Baker
Chief Accounting Officer February 28, 2023
Jeffrey R. Baker (Principal Accounting Officer)
/s/ Karen Boone Director February 28, 2023
Karen Boone
/s/ Sanford Schwartz Director February 28, 2023
Sanford Schwartz
/s/ Rose Marcario Director February 28, 2023
Rose Marcario
/s/ Peter Krawiec Director February 28, 2023
Peter Krawiec
/s/ Jay Flatley Director February 28, 2023
Jay Flatley
/s/ Pamela Thomas-Graham Director February 28, 2023
Pamela Thomas-Graham
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