Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Limitations on Effectiveness of Disclosure Controls and Procedures
In designing and evaluating our 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. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures.
Consistent with SEC guidance that an assessment of a recently acquired business may be omitted from management’s evaluation of disclosure controls and procedures in the year of the acquisition, our management excluded from such evaluation an assessment of the effectiveness of our internal control over financial reporting related to Wavedash and Vegas.com. Wavedash, which we acquired in September 2023, represented approximately 7% of our consolidated total assets as of December 31, 2023 and approximately 1% of our consolidated total revenues for the year ended December 31, 2023. Vegas.com, which we acquired in November 2023, represented approximately 22% of our consolidated total assets as of December 31, 2023 and approximately 2% of our consolidated total revenues for the year ended December 31, 2023.
Our management, with the participation of our principal executive and principal financial officers, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Report. Based on such evaluation, our principal executive and principal financial officers concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2023 due to the material weakness in our internal control over financial reporting described below.
Material Weakness
In connection with the audit of our consolidated financial statements as of December 31, 2023, 2022 and 2021, we identified a material weakness in our internal control over financial reporting related to the implementation of segregation of duties as part of our control activities, the establishment of clearly defined roles within our finance and accounting functions and the number of personnel in those functions with an appropriate level of technical accounting and SEC reporting experience which, in the aggregate, constitute a material weakness.
Remediation Activities
We continue to strengthen our internal control over financial reporting and are committed to ensuring that such controls are designed and operating effectively. During the year ended December 31, 2023, we continued to review our internal control procedures, to implement new controls and processes, to hire additional qualified personnel and to establish more robust processes to support our internal control over financial reporting, including by creating clearly defined roles and responsibilities and the appropriate segregation of duties. These actions have begun to be validated through testing and, when fully implemented, we believe they will be effective in remediating the material weakness. However, additional time is required to complete implementing the enhanced procedures and to test and ensure the effectiveness and sustainability of the improved controls. The material weakness will not be considered remediated until the applicable controls have been in place and operating for a sufficient period of time and management has concluded, through testing, that these controls are effective. We continue to devote significant time and attention to these efforts.
107
Management's Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
Consistent with SEC guidance that an assessment of a recently acquired business may be omitted from management’s report on internal control over financial reporting in the year of the acquisition, our management excluded from such report an assessment of the effectiveness of our internal control over financial reporting related to Wavedash and Vegas.com. Wavedash, which we acquired in September 2023, represented approximately 7% of our consolidated total assets as of December 31, 2023 and approximately 1% of our consolidated total revenues for the year ended December 31, 2023. Vegas.com, which we acquired in November 2023, represented approximately 22% of our consolidated total assets as of December 31, 2023 and approximately 2% of our consolidated total revenues for the year ended December 31, 2023.
Our management, under the supervision of our principal executive and principal financial officers, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023 based on the framework in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, management, including our principal executive and principal financial officers, concluded that our internal control over financial reporting was not effective as of December 31, 2023 due to the material weakness in our internal control over financial reporting described above.
Changes in Internal Control over Financial Reporting
Except with respect to the continuing remediation activities 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, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We are in the process of reviewing the internal control structures of Wavedash and Vegas.com and, if necessary, will make appropriate changes as we continue to integrate such businesses into our overall internal control over financial reporting.
Item 9B. Other Information
Insider Trading Arrangements
On November 13, 2023 , Craig Dixon , a member of our Board , adopted a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. The plan provides for the sale of up to 12,000 shares of our Class A common stock and ends on December 31, 2024 .
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
108
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Information about our directors and executive officers is included in Part I, Item 1 of this Report.
Our Code of Business Conduct and Ethics (the “Code”), which applies to all directors, officers and employees, is available on our Investor Relations website, investors.vividseats.com . We intend to satisfy the disclosure requirements regarding any applicable amendment to or waiver from the Code by posting such information on our Investor Relations website rather than by filing a Current Report on Form 8-K.
All other information required by this item will be included in the definitive proxy statement relating to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by this item will be included in the definitive proxy statement relating to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners And Management And Related Stockholder Matters
The information required by this item will be included in the definitive proxy statement relating to our 2024 Annual Meeting of Stockholders 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 the definitive proxy statement relating to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The information required by this item will be included in the definitive proxy statement relating to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.
109
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a)(1) Financial Statements.
The financial statements required by this item are included in Part II, Item 8 of this Report.
(a)(2) Financial Statement Schedules.
All financial statement schedules have been omitted because they are not applicable, not required or the information required is shown in the financial statements and accompanying notes thereto included in Part II, Item 8 of this Report.
(a)(3) Exhibits.
The following is a list of exhibits filed as part of this Report.
Exhibits
Incorporated by Reference
Exhibit
Number
Description
Form
Exhibit
Filing Date
Filed / Furnished Herewith
2.1
Transaction Agreement, dated April 21, 2021, among Horizon Acquisition Corporation, Horizon Sponsor, LLC, Hoya Topco, LLC, Hoya Intermediate, LLC and Vivid Seats Inc.
S-4
2.1
05/28/2021
2.2
Purchase, Sale and Redemption Agreement, dated April 21, 2021, among Hoya Topco, LLC, Hoya Intermediate, LLC, Vivid Seats Inc., Crescent Mezzanine Partners VIB, L.P., Crescent Mezzanine Partners VIC, L.P., NPS/Crescent Strategic Partnership II, LP, CM7C VS Equity Holdings, LP, Crescent Mezzanine Partners VIIB, L.P., CM6B Vivid Equity, Inc., CM6C Vivid Equity, Inc., CM7C VS Equity, LLC, CM7B VS Equity, LLC, Crescent Mezzanine Partners VI, L.P., Crescent Mezzanine Partners VII, L.P., Crescent Mezzanine Partners VII (LTL), L.P., CBDC Universal Equity, Inc., Crescent Capital Group, LP and Horizon Acquisition Corporation
S-4
2.2
05/28/2021
2.3
Plan of Merger, dated October 18, 2021, among Horizon Acquisition Corporation, Horizon Sponsor, LLC, Hoya Topco, LLC, Hoya Intermediate, LLC and Vivid Seats Inc.
10-Q
2.3
11/15/2021
2.4
Agreement and Plan of Merger, dated November 3, 2023, among Vivid Seats Inc., Viva Merger Sub I, LLC, Viva Merger Sub II, LLC, VDC Holdco, LLC, the Unitholders named therein and the Unitholders’ Representative named therein
8-K
2.1
11/07/2023
110
3.1
Amended and Restated Certificate of Incorporation
8-K
3.1
10/22/2021
3.2
Amended and Restated Bylaws.
8-K
3.2
10/22/2021
3.3
First Amendment to Amended and Restated Bylaws
10-Q
3.2
05/10/2022
4.1
Amended and Restated Warrant Agreement, dated October 14, 2021, between Horizon Acquisition Corporation and Continental Stock Transfer & Trust Company
8-K
10.7
10/22/2021
4.2
Specimen Class A Common Stock Certificate
10-K
4.2
3/15/2022
4.3
Specimen Warrant Certificate
10-K
4.3
3/15/2022
4.4
Description of Capital Stock
10-K
4.4
3/15/2022
10.1
Stockholders’ Agreement, dated October 18, 2021, among Vivid Seats Inc., Hoya Topco, LLC and Horizon Sponsor, LLC
8-K
10.1
10/22/2021
10.2
Amended and Restated Registration Rights Agreement, dated October 18, 2021, among Vivid Seats Inc., Hoya Topco, LLC and Horizon Sponsor, LLC
8-K
10.2
10/22/2021
10.3
Tax Receivable Agreement, dated October 18, 2021, among Vivid Seats Inc., Hoya Intermediate, LLC, GTCR Management XI, LLC, Hoya Topco, LLC and several Blocker TRA Holders
8-K
10.3
10/22/2021
10.4
Private Warrant Agreement, dated October 18, 2021, between Vivid Seats Inc. and Hoya Topco, LLC
8-K
10.6
10/22/2021
10.5
Amended and Restated Warrant Agreement, dated October 14, 2021, between Hoya Acquisition Corporation and Continental Stock Transfer & Trust Company
8-K
10.7
10/22/2021
10.6
Private Warrant Agreement, dated October 15, 2021, between Hoya Acquisition Corporation and Continental Stock Transfer & Trust Company
8-K
10.8
10/22/2021
10.7
Private Warrant Agreement, dated October 15, 2021, between Horizon Acquisition Corporation and Continental Stock Transfer & Trust Company
8-K
10.9
10/22/2021
10.8
Private Warrant Agreement ($10.00 exercise price) dated, October 18, 2021, between Hoya Intermediate, LLC and Hoya Topco, LLC
8-K
10.10
10/22/2021
10.9
Private Warrant Agreement ($15.00 exercise price), dated October 18, 2021, between Hoya Intermediate, LLC and Hoya Topco, LLC
8-K
10.11
10/22/2021
10.10
Form of Subscription Agreement
S-4/A
10.4
10/22/2021
10.11#
Form of Indemnification Agreement
8-K
10.5
10/22/2021
10.12#
2021 Incentive Award Plan
S-8
99.1
10/18/2021
10.13#
2021 Employee Stock Purchase Plan
S-8
99.2
10/18/2021
10.14#
Form of Restricted Stock Unit Grant Notice and Agreement
S-8
99.3
10/18/2021
111
10.15#
Form of Non-Employee Director Restricted Stock Unit Grant Notice and Agreement
S-8
99.4
10/18/2021
10.16#
Form of Stock Option Grant Notice and Agreement
S-8
99.5
10/18/2021
10.17#
Non-Employee Director Compensation Policy, as amended
10-Q
10.1
08/09/2022
10.18#
Employment Agreement, dated August 9, 2021, among Stanley Chia, Vivid Seats Inc. and Vivid Seats, LLC
S-4/A
10.14
08/16/2021
10.19#
Employment and Restrictive Covenants Agreement, dated April 1, 2020, between Lawrence Fey and Vivid Seats LLC
S-4/A
10.19
08/16/2021
10.20#
Employment Agreement, dated August 9, 2021, among Lawrence Fey, Vivid Seats Inc. and Vivid Seats, LLC
S-4/A
10.18
08/16/2021
10.21#
Employment and Restrictive Covenants Agreement, dated December 12, 2018, between Jon Wagner and Vivid Seats LLC
S-4/A
10.24
08/16/2021
10.22#
Employment Agreement, dated August 9, 2021, among Jon Wagner, Vivid Seats Inc. and Vivid Seats, LLC
S-4/A
10.23
08/16/2021
10.23#
Class E Securities Agreement, dated November 5, 2018, between Stanley Chia and Hoya Topco, LLC
S-4/A
10.15
08/16/2021
10.24#
Class B Securities Agreement, dated September 1, 2020, between Stanley Chia and Hoya Topco, LLC
S-4/A
10.16
08/16/2021
10.25#
First Amendment, dated April 21, 2021, to Class E Securities Agreement, dated November 5, 2018, between Stanley Chia and Hoya Topco, LLC, and Class B Securities Agreement, dated September 1, 2020, between Stanley Chia and Hoya Topco, LLC
S-4/A
10.17
08/16/2021
10.26#
Class D Securities Agreement, dated September 1, 2020, between Lawrence Fey and Hoya Topco, LLC
S-4/A
10.20
08/16/2021
10.27#
Class B Securities Agreement, dated September 1, 2020, between Lawrence Fey and Hoya Topco, LLC
S-4/A
10.21
08/16/2021
10.28#
First Amendment, dated April 21, 2021, to Class D Securities Agreement, dated September 1, 2020, between Lawrence Fey and Hoya Topco, LLC, and Class B Securities Agreement, dated September 1, 2020, between Lawrence Fey and Hoya Topco, LLC
S-4/A
10.22
08/16/2021
10.29#
Class D Securities Agreement, dated December 17, 2018, between Jon Wagner and Hoya Topco, LLC
S-4/A
10.25
08/16/2021
112
10.30#
Class B Securities Agreement, dated September 1, 2020, between Jon Wagner and Hoya Topco, LLC
S-4/A
10.26
08/16/2021
10.31#
Class D Securities Agreement, dated September 1, 2020, between Jon Wagner and Hoya Topco, LLC
S-4/A
10.27
08/16/2021
10.32
Office Lease, dated December 21, 2021, between Vivid Seats, LLC and BSREP II SS Chicago LLC
8-K
10.1
12/22/2021
10.33
First Lien Credit Agreement, dated June 30, 2017, among Hoya Midco, LLC, Hoya Intermediate, LLC, Barclays Bank PLC, RBC Capital Markets, SunTrust Robinson Humphrey, Inc. and Jefferies Finance LLC
S-4/A
10.7
07/07/2021
10.34
Amendment No. 1, dated March 28, 2018, to First Lien Credit Agreement, dated June 30, 2017, among Hoya Midco, LLC, Hoya Intermediate, LLC, Barclays Bank PLC, RBC Capital Markets, SunTrust Robinson Humphrey, Inc. and Jefferies Finance LLC
S-4/A
10.8
07/07/2021
10.35
Amendment No. 2, dated July 2, 2018, to First Lien Credit Agreement, dated June 30, 2017, among Hoya Midco, LLC, Hoya Intermediate, LLC, Barclays Bank PLC, RBC Capital Markets, SunTrust Robinson Humphrey, Inc. and Jefferies Finance LLC
S-4/A
10.9
07/07/2021
10.36
Amendment No. 3, dated May 22, 2020, to First Lien Credit Agreement, dated June 30, 2017, among Hoya Midco, LLC, Hoya Intermediate, LLC, Barclays Bank PLC, RBC Capital Markets, SunTrust Robinson Humphrey, Inc. and Jefferies Finance LLC
S-4/A
10.10
07/07/2021
10.37
Amendment No. 4, dated February 3, 2022, to First Lien Credit Agreement, dated June 30, 2017, among Hoya Midco, LLC, Hoya Intermediate, LLC, Barclays Bank PLC, RBC Capital Markets, SunTrust Robinson Humphrey, Inc. and Jefferies Finance LLC
8-K
10.1
02/07/2022
10.38
Hoya Intermediate, LLC Second Amended and Restated Limited Liability Company Agreement
10-K
1.38
03/07/2023
10.39
Registration Rights and Lockup Agreement, dated November 3, 2023, among Vivid Seats Inc., TZP Capital Partners III-A (Blocker), L.P. TZP Capital Partners III, L.P., Michael Reichartz and Adam White
8-K
10.1
11/07/2023
10.40#
First Amendment to 2021 Incentive Award Plan
8-K
10.1
02/09/2024
10.41
Letter Agreement Regarding Private Warrant Agreement, dated December 7, 2023, between Vivid Seats Inc. and Hoya Topco, LLC
*
113
10.42
Letter Agreement Regarding Private Warrant Agreements ($10.00 and $15.00 exercise prices), dated December 7, 2023, between Hoya Intermediate, LLC and Hoya Topco, LLC
*
10.43#
Form of Stock Option Cancellation Agreement
*
21.1
Subsidiaries
*
23.1
Consent of Deloitte & Touche LLP
*
24.1
Power of Attorney (included on the signature page of this Report)
*
31.1
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a)
*
31.2
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a)
*
32.1
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350
**
32.2
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350
**
97.1
Compensation Recovery Policy
*
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because 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 Label Linkbase Document
*
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
*
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
*
* Filed herewith.
** Furnished herewith.
# Indicates management contract or compensatory plan.
The documents filed as exhibits to this Report are not intended to provide factual information other than with respect to the terms of the documents themselves, and should not be relied on for that purpose. In particular, any representations and warranties contained in any such document were made solely within the context of such document and do not apply in any other context or at any time other than the date on which they were made.
Item 16. Form 10-K Summary
None.
114
Signatures
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.
VIVID SEATS INC.
By:
/s/ Stanley Chia
Stanley Chia
Chief Executive Officer
(principal executive officer)
Date:
March 7, 2024
Power of Attorney
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Stanley Chia and Lawrence Fey, jointly and severally, his or her attorney-in-fact, with the power of substitution, for him or her, in any and all capacities, to sign any amendments to this report and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or 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 and on the dates indicated.
Signature
Title
Date
/s/ Stanley Chia
Chief Executive and Director
March 7, 2024
Stanley Chia
(principal executive officer)
/s/ Lawrence Fey
Chief Financial Officer
March 7, 2024
Lawrence Fey
(principal financial officer)
/s/ Edward Pickus
Chief Accounting Officer
March 7, 2024
Edward Pickus
(principal accounting officer)
/s/ Mark Anderson
Director
March 7, 2024
Mark Anderson
/s/ Todd Boehly
Director
March 7, 2024
Todd Boehly
/s/ Jane DeFlorio
Director
March 7, 2024
Jane DeFlorio
/s/ Craig Dixon
Director
March 7, 2024
Craig Dixon
/s/ David Donnini
Director
March 7, 2024
David Donnini
/s/ Tom Ehrhart
Director
March 7, 2024
Tom Ehrhart
/s/ Julie Masino
Director
March 7, 2024
Julie Masino
/s/ Martin Taylor
Director
March 7, 2024
Martin Taylor
115