Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, has 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, as amended, or the Exchange Act), as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level.
Management’s Report on Internal Control Over Financial Reporting
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 independent registered public accounting firm as permitted in this transition period under the rules of the SEC for newly public companies.
Changes in Internal Control
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 fiscal quarter ended December 31, 2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
Our management, including our principal executive officer and principal financial officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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Item 9B. Other Information
Not applicable.
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PART III.
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item is incorporated by reference in the definitive proxy statement from our Annual Meeting of Stockholders to be held June 8, 2021. This proxy statement is referred to in this report as the “2021 Proxy Statement.”
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Item 11. Executive Compensation
The information required by this Item is incorporated by reference to the 2021 Proxy Statement.
126
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item is incorporated by reference to the 2021 Proxy Statement.
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Item 13. Certain Relationships and Related Party Transactions
The information required by this Item is incorporated by reference to the 2021 Proxy Statement.
128
Item 14. Principal Accounting Fees and Services
The information required by this Item is incorporated by reference to the 2021 Proxy Statement.
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PART IV.
Item 15. Exhibits and Financial Statement Schedules.
(a) Exhibits.
Exhibit
Number Description of Exhibit Form SEC File Number Exhibit Filing Date Filed Herewith
3.1 Amended and Restated Certificate of Incorporation of Root, Inc.
8-K 001-39568 3.1 October 30, 2020
3.2 Amended and Restated Bylaws of Root, Inc.
S-1/A 333-249332 3.4 October 20, 2020
4.1 Form of Class A common stock certificate.
S-1/A 333-249332 4.1 October 20, 2020
4.2 Description of Securities .
X
10.1 Fifth Amended and Restated Investors’ Rights Agreement by and among Root, Inc. and certain of its stockholders, dated November 25, 2019.
S-1 333-249332 4.2 October 5, 2020
10.2 Warrant to Purchase Stock by and between Root, Inc. and Silicon Valley Bank, dated July 7, 2016.
S-1 333-249332 4.3 October 5, 2020
10.3 Warrant to Purchase Stock by and between Root, Inc. and Silicon Valley Bank, dated December 20, 2017, as amended.
S-1 333-249332 4.4 October 20, 2020
10.4 Form of Floating Rate Senior Secured Note Due 2024.
S-1 333-249332 4.5 October 5, 2020
10.5# Root, Inc. Amended and Restated 2015 Equity Incentive Plan.
S-1 333-249332 10.1 October 5, 2020
10.6 Form of Notice of Stock Option Exercise and Stock Option Exercise Agreement under the Amended and Restated 2015 Equity Incentive Plan.
S-1 333-249332 10.2 October 5, 2020
10.7 Form of Notice of Stock Option Exercise and Stock Option Exercise Agreement under the Amended and Restated 2015 Equity Incentive Plan.
X
10.8 Form of RSU Agreement under the Amended and Restated 2015 Equity Incentive Plan.
S-1 333-249332 10.4 October 5, 2020
10.9 Root, Inc. 2020 Equity Incentive Plan, and forms of agreements thereunder.
10-Q 001-39658 10.1 December 2, 2020
10.10 Root, Inc. 2020 Employee Stock Purchase Plan.
S-1/A 333-249332 10.14 October 20, 2020
10.11 Loan and Security Agreement by and between Root, Inc. and Silicon Valley Bank, dated July 7, 2016, as amended., dated July 7, 2016, as amended.
S-1/A 333-249332 10.5 October 20, 2020
10.12 Office Lease Agreement by and between Root, Inc. and Two25 Commons LLC, dated May 9, 2018, as amended.
S-1 333-249332 10.6 October 5, 2020
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10.13 Amended and Restated Term Loan Agreement by and among Root, Inc., Caret Holdings, Inc., SunTrust Bank, and the lenders from time to time party thereto, dated November 25, 2019, as amended.
X
10.14 Note Purchase Agreement by and among Root, Inc., Caret Holdings, Inc., Wilmington Trust, National Association, and the noteholders from time to time party thereto, dated November 25, 2019, as amended.
S-1 333-249332 10.8 October 5, 2020
10.15 Form of Indemnity Agreement entered into by and between Root, Inc. and each director and executive officer.
S-1 333-249332 10.9 October 20, 2020
10.16# Offer Letter by and between Root, Inc. and Alexander Timm, dated January 4, 2021.
X
10.17# Amended and Restated Offer Letter by and between Root, Inc. and Daniel Rosenthal, dated February 24, 202 1 .
X
10.18# Offer Letter by and between Root, Inc. and Daniel Manges, dated February 24, 202 1 .
X
10.19 Common Stock Purchase Agreement by and between the Registrant and Dragoneer Investment Group, LLC, dated October 19, 2020.
S-1 333-249332 10.16 October 20, 2020
10.20 Common Stock Purchase Agreement by and between the Registrant and Silver Lake Partners VI, L.P., dated October 19, 2020.
S-1 333-249332 10.16 October 20, 2020
21.1 List of subsidiaries of Root, Inc.
X
23.1 Consent of Deloitte & Touche, LLP .
X
24.1 Power of Attorney (incorporated by reference to the signature pages of this Annual Report on Form 10-K). X
31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanex-Oxley Act of 2002.
X
31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1* Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema Document
131
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label 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).
_______________
# Indicates management contract or compensatory plan.
* The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Annual Report on Form 10-K and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates them by reference.
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Item 16. Form 10-K Summary
Not applicable.
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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 .
Date: March 4, 2021
ROOT, INC.
By: /s/Alexander Timm
Alexander Timm
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Alexander Timm, Daniel Rosenthal and Megan Binkley, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution for him or her, and in his or her name 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 exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done 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, and either of them, his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Signature Title Date
/s/ Alexander Timm Chief Executive Officer and Director
( Principal Executive Officer )
March 4, 2021
Alexander Timm
/s/ Daniel Rosenthal Chief Financial Officer
( Principal Financial Officer )
March 4, 2021
Daniel Rosenthal
/s/ Megan Binkley Chief Accounting Officer ( Principal Accounting Officer )
March 4, 2021
Megan Binkley
/s/ Christopher Olsen Director March 4, 2021
Christopher Olsen
/s/ Doug Ulman Director March 4, 2021
Doug Ulman
/s/ Elliot Geidt Director March 4, 2021
Elliot Geidt
/s/ Jerri DeVard Director March 4, 2021
Jerri DeVard
/s/ Larry Hilsheimer Director March 4, 2021
Larry Hilsheimer
/s/ Luis von Ahn Director March 4, 2021
Luis von Ahn
/s/ Nancy Kramer Director March 4, 2021
Nancy Kramer
/s/ Nick Shalek Director March 4, 2021
Nick Shalek
/s/ Scott Maw Director March 4, 2021
Scott Maw