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Item 9A. Controls and Procedures

2020-09-28 compared with 2019-09-12 · 49 added, 32 removed, 196 unchanged (29% of the section changed)

1 unchanged sentence

Disclosure Controls and Procedures

An evaluation of the effectiveness of our “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act as of June 30, 2019, was carried out by our management under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”).

Based upon that evaluation, our CEO and CFO concluded that, as of June 30, 2019, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding disclosure.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) , as appropriate, to allow timely decisions regarding required disclosure.

An evaluation of the effectiveness of our “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act as of June 30, 2020, was carried out by our management under the supervision and with the participation of our CEO and CFO.

Based upon that evaluation, our CEO and CFO concluded that, as of June 30, 2020, our disclosure controls and procedures were not effective because of the material weakness in our internal control over financial reporting described below.

Management’s Report on Internal Control over Financial Reporting

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In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control — Integrated Framework (2013).

Based on management’s assessment based on the criteria of COSO, we concluded that, as of June 30, 2019, our internal control over financial reporting is effective, at the reasonable assurance level.

Our internal control system was 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 in the U.S.

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provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.

Peterson Sullivan LLP, an independent registered public accounting firm has issued an attestation report on our internal control over financial reporting, which is set forth on page 35 of this Annual Report on Form 10-K.

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.

Based on management’s assessment based on the criteria of COSO, we concluded that, as of June 30, 2020, our internal control over financial reporting was not effective due to the following material weakness that existed as of June 30, 2020.

We did not design and maintain effective internal controls over the goodwill and intangibles impairment review process.

The Company identified an error in its evaluation of the annual goodwill impairment test performed as of April 1, 2020 and the interim goodwill and intangibles impairment evaluation test performed as of June 30, 2020.

Specifically, we did not design and maintain effective controls to review in sufficient detail the carrying values of the Company’s reporting units for both the annual and interim goodwill impairment tests.

In addition, we did not design and maintain effective controls at the proper precision level to determine whether an impairment evaluation triggering event occurred as of June 30, 2020.

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 consolidated financial statements will not be prevented or detected on a timely basis.

This material weakness did not result in a misstatement to the consolidated financial statements.

However, this material weakness could result in misstatements that would result in a material misstatement of the consolidated financial statements that would not be prevented or detected.

BDO USA, LLP, an independent registered public accounting firm has issued an attestation report on our internal control over financial reporting, which is set forth on page 36 of this Annual Report on Form 10-K.

Remediation of Material Weakness

We have evaluated the material weakness and begun developing and implementing a plan of remediation to strengthen our internal controls related to the control procedures applied to the goodwill and intangible asset impairment testing process.

Management is working to remediate this material weakness and we have begun conducting an in depth review of our controls over the goodwill and intangibles cycle to enhance our procedures and resources related to the identification and evaluation of triggering events that can impact our impairment assessments, particularly during the periods the Company is impacted by the COVID-19 environment.

We intend to enhance the level of precision at which our internal controls over financial reporting relating to goodwill and intangible asset impairment assessments are performed, specifically in consideration of the factors analyzed in evaluating triggering events and performing management’s qualitative impairment assessment.

We also intend to improve our documentation to strengthen the support for the judgments applied to the impairment analyses.

If deemed necessary, we will provide additional training to staff involved in the control procedures over the goodwill and intangibles cycle and/or obtain assistance from third parties.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Except for the material weakness described above, there have not been any other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

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Senior Vice President & Chief Financial Officer

Senior Vice President & Chief Operating Officer of Freight Forwarding Operations

Senior Vice President & Chief Operating Officer of Rail and Truck Brokerage Operations

Senior Vice President & General Counsel

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Palmieri was appointed as a director in March 2014.

He has b een the Managing Partner of ANR Partners, LLC, a Philadelphia-based management and financial consulting firm, since 2012.

He has been the Managing Partner of ANR Partners, LLC, a Philadelphia-based management and financial consulting firm, since 2012.

Prior to this, from 2007 to 2012, Mr.

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From 2003 to 2006, he was the President and CEO of Schneider Financial Services, a financial services subsidiary of a large, privately held transportation and logistics company.

From 1998 to 2003, he served as a Managing Director a nd co-head of the Transportation and Logistics investment banking group at Credit Suisse Group.

From 1998 to 2003, he served as a Managing Director and co-head of the Transportation and Logistics investment banking group at Credit Suisse Group.

From 1993 to 1998, he served as a Managing Director and co-head of the Transportation and Logistics investment banking group at Deutsche Securities.

Before this, he served in various finance and management positions at several large companies, including Whirlpool Financial Corporation, PacificCorp Credit, Commercial Credit Company and GE Capital.

Palmieri received a Bachelor of Science in Accounting from Wagn er College.

Palmieri received a Bachelor of Science in Accounting from Wagner College.

As a result of these and other professional experiences, Mr.

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Macomber earned a Bachelor of Arts, emphasis in Accounting from Seattle University.

Joseph Bento.

Bento joined the Company in January 2016 and served as Senior Vice President of Operations until his appointment to Senior Vice President and Chief Operating Officer of Freight Forwarding Operations in mid-2016.

Prior to joining the Company, Mr.

Bento served in a variety of significant roles within the transportation industry, including, (i) from June 2015 to November 2015, as Executive Vice President of Neovia Logistics, (ii) from September 2012 to April 2015, as the Chief Sales Officer of SEKO Logistics;

and (iii) from 1998 to 2012, in various leadership roles at Eagle Global Logistics and its successor, CEVA Logistics.

Bento earned a Bachelor of Science in Finance from California State University – Long Beach.

Boyce has served as our Senior Vice President and Chief Operating Officer of Rail and Truck Brokerage Operations since our acquisition of Wheels in April 2015.

He came to Wheels on February 1, 2012 to serve as the Executive Vice President - Marketing and Sales and was promoted to Chief Marketing Officer shortly thereafter.

From October 2013 until April 2015, he served as President of Wheels’ U.S.

Prior to joining Wheels, Mr.

Boyce was employed by Canadian Pacific Railway where he served in various senior roles including General Manager - Sales and Marketing Domestic Intermodal.

Prior to this, he was the Vice President - Sales and Marketing with Canpar Transport Ltd, a leading Canadian courier company, and TST (formerly TNT) Overland Express, a leading Canadian based LTL company serving customers across North America.

Sobba has served as our Senior Vice President and General Counsel since May 2018.

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The information in the Proxy Statement set forth under the captions “Principal Stockholders” and “Executive Compensation — Securities authorized for Issuance under Equity Compensation Plans” is incorporated herein by reference.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

CERTAIN RELATIONSHIPS AND RELATE D TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information in the Proxy Statement set forth under the captions “Corporate Governance” is incorporated herein by reference.

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dated October 18, 2005)

Amended and Restated Bylaws

Amended and Restated Bylaw of Radiant Logistics, Inc.

(October 1, 2019)

Certificate of Amendment of Certificate of Incorporation

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2012 Stock Option and Performance Award Plan+

Form of Restricted Stock Unit Award Agreement under the Radiant Logistics, Inc.

2012 Stock Option and Performance Award Plan+

Incorporated by Reference

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Exhibit Number

Form of Restricted Stock Unit Award Agreement under the Radiant Logistics, Inc.

2012 Stock Option and Performance Award Plan+

Form of Non-qualified Stock Option Award Agreement (Director) under the Radiant Logistics, Inc.

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2012 Stock Option and Performance Award Plan+

Separation and Release Agreement, dated effective as of December 31, 2019, by and between Radiant Global Logistics, Inc.

and Tim Boyce

Independent Contractor Agreement, dated effective as of January 1, 2020, by and between Radiant Global Logistics, Inc.

and Tim Boyce

Credit Agreement, dated March 13, 2020, by and among Radiant Logistics, Inc., the Subsidiaries of the Borrower Party Hereto, and Bank of America, N.A., Bank of Montreal Chicago Branch, MUFG Union Bank, N.A., the Lenders Party Hereto, BofA Securities, Inc.

$29,000,000 Credit Facilities Amended and Restated Loan Agreement, dated March 13, 2020, by and among Radiant Global Logistics (Canada) Inc., 2062698 Ontario Inc., Clipper Exxpress Company, Radiant Logistics, Inc., Radiant Global Logistics, Inc., Radiant Transportation Services, Inc., Radiant Logistics Partners LLC, Adcom Express, Inc., DBA Distribution Services, Inc., International Freight Systems (of Oregon), Inc., Radiant Off-Shore Holdings LLC, Green Acquisition Company, Inc., On Time Express, Inc., Radiant Global Logistics (CA), Inc., Radiant Trade Services, Inc., Service By Air, Inc., Radiant Customs Services, Inc., and Fiera Private Debt Fund IV LP

Incorporated by Reference

Filed/Furnished

Exhibit Number

$10,000,000 Credit Facility Amended and Restated Loan Agreement, dated March 13, 2020, by and among Radiant Global Logistics (Canada) Inc.

and 2062698 Ontario Inc., Clipper Exxpress Company, Radiant Logistics, Inc., Radiant Global Logistics, Inc., Radiant Transportation Services, Inc., Radiant Logistics Partners LLC, Adcom Express, Inc., DBA Distribution Services, Inc., International Freight Systems (of Oregon), Inc., Radiant Off-Shore Holdings LLC, Green Acquisition Company, Inc., On Time Express, Inc., Radiant Global Logistics (CA), Inc., Radiant Trade Services, Inc., Service By Air, Inc., Radiant Customs Services, Inc., Highways & Skyways, Inc., and Fiera Private Debt Fund V LP

First Lien Pari Passu Intercreditor Agreement, dated as of March 13, 2020, by and among Bank of America, M.A., Fiera Private Debt Fund IV LP and Fiera Private Debt Fund V LP, and acknowledged and agreed to by Radiant Logistics, Inc.

Code of Business Conduct and Ethics+

Subsidiaries of the Registrant

Consent of BDO USA, LLP

Consent of Peterson Sullivan, LLP

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Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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+Compensatory plans or arrangements

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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