Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our internal control over financial reporting is 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. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of December 31, 2022.
Management identified material weaknesses in internal control over financial reporting for the period ended December 31, 2020 related to: (a) accounting for non-routine transactions; (b) the lack of consistent review of journal entries prior to their posting to the general ledger; and (c) the need to provide formal segregation controls over our information technology. These material weaknesses were due to us being a private company with limited resources and not having the necessary business processes, controls, and technical expertise to oversee our business processes and controls.
Based on the remediation efforts described below, weakness (a) as noted above, was fully remediated as of December 31, 2021, and weaknesses (b) and (c) have been fully remediated as of December 31, 2022. Remediation efforts include the following:
• Adding experienced technical accounting personnel, and continuing to engage with external technical accounting consultants, to facilitate timely and accurate accounting for non-routine transactions;
• Expanded the team of experienced accounting personnel to allow for appropriate review of journal entries and general segregation of duties;
• Implemented new software tools to facilitate systematic processing and effective review of journal entries prior to entering in the general ledger; and,
• Partnered with external consultants specializing in public company control compliance, to assess and implement controls over financial and information technology processes.
Notwithstanding the assessment that our internal controls over financial reporting were not effective in prior periods, we believe we have employed supplementary procedures to ensure the financial statements contained in this Report fairly present in all material respects, our financial position as of December 31, 2022 and 2021, and results of operations and cash flows for the periods ending December 31, 2022, 2021 and 2020.
Management’s Report on Internal Controls Over Financial Reporting
This Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the company's registered public accounting firm due to a transition period established by rules of the SEC for newly public companies or emerging growth companies.
Changes in Internal Control over Financial Reporting
Other than the remediation efforts described above, there were no changes 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 year ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived 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. Our disclosure controls and procedures and our internal controls over financial reporting have been designed to provide reasonable assurance of achieving their objectives. 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.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
P ART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated by reference to our definitive Proxy Statement for the 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our year ended December 31, 2022.
Item 11. Executive Compensation
The information required by this item is incorporated by reference to our definitive Proxy Statement for the 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our year ended December 31, 2022.
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 our definitive Proxy Statement for the 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our year ended December 31, 2022.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference to our definitive Proxy Statement for the 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our year ended December 31, 2022.
Item 14. Principal Accounting Fees and Services
The information required by this item is incorporated by reference to our definitive Proxy Statement for the 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our year ended December 31, 2022.
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a)(1) Financial Statements
See Index to Financial Statements in Item 8 of this Report.
(a)(2) Financial Statement Schedule
All financial statement schedules have been omitted as the information is not required under the related instructions or is not applicable or because the information required is already included in the financial statements or the notes to those financial statements.
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(a)(3) Exhibits
The documents set forth below are filed herewith or incorporated herein by reference to the location indicated.
Incorporated by Reference
Exhibit
Exhibit Description
Form
Exhibit
Filing Date
2.1**
Merger Agreement, dated as of April 21, 2021, by and among the Company, Merger Sub and Legacy SmartRent.
8-K
2.1
April 22, 2021
2.2
Amendment No. 1 to Merger Agreement, dated as of July 23, 2021, by and among the Company, Merger Sub and Legacy SmartRent.
8-K
2.1
July 26, 2021
3.1
Third Amended and Restated Certificate of Incorporation.
8-K
3.1
August 30, 2021
3.2
Amended and Restated Bylaws.
8-K
3.2
August 30, 2021
4.1
Specimen Common Stock Certificate.
8-K
4.1
August 30, 2021
4.2
Description of the Registrant’s Securities.
10-K
4.2
March 25, 2022
10.1
Amended and Restated Registration Rights Agreement, dated as of August 24, 2021, by and among the Company, the Sponsor and certain equity holders of Legacy SmartRent named therein.
8-K
10.1
August 30, 2021
10.2
SmartRent, Inc. 2021 Equity Incentive Plan.
S-4/A
10.13
July 26, 2021
10.3
SmartRent, Inc. 2021 Employee Stock Purchase Plan.
S-4/A
10.14
July 26, 2021
10.4
Restricted Stock Units Agreement under the SmartRent, Inc. 2021 Equity Incentive Plan.
8-K
10.11
August 30, 2021
10.5
Stock Option Agreement under the SmartRent, Inc. 2021 Equity Incentive Plan.
8-K
10.12
August 30, 2021
10.6**
Credit Agreement, dated as of December 10, 2021, by and among (i) SmartRent, Inc., (ii) the several banks and other financial institutions or entities party thereto, and (iii) Silicon Valley Bank, as the issuing lender, swingline lender, administrative agent, collateral agent for the lenders, and the lead arranger.
8-K
10.1
December 13, 2021
10.7
Sponsor Agreement, dated April 21, 2021, by and among the Company, its former officers and directors, Legacy SmartRent and the Sponsor.
8-K
10.2
April 22, 2021
10.8
Form of Indemnification Agreement between the Company and each of the officers and directors of the Company.
S-4/A
10.24
July 26, 2021
10.9
SmartRent.com, Inc. Amended and Restated 2018 Stock Plan.
S-4/A
10.12
July 26, 2021
10.10
Stock Option Agreement under the SmartRent.com, Inc. Amended and Restated 2018 Stock Plan.
8-K
10.13
August 30, 2021
10.11
Restricted Stock Units Award Agreement under the SmartRent.com, Inc. Amended and Restated 2018 Stock Plan.
8-K
10.14
August 30, 2021
10.12
Employment Agreement, dated as of March 16, 2021, by and between Legacy SmartRent and Lucas Haldeman.
S-4/A
10.16
July 26, 2021
10.13
Employment Agreement, dated as of March 16, 2021, by and between Legacy SmartRent and Isaiah DeRose-Wilson.
S-4/A
10.21
July 26, 2021
10.14
Employment Agreement, dated as of January 3, 2022, by and between SmartRent and Brian Roberts (filed herewith).
10.15
Employment Agreement, dated as of April 28, 2022, by and between SmartRent and Hiroshi Okamoto (filed herewith).
10.16
Employment Agreement, dated as of April 27, 2022, by and between SmartRent and Robyn Young (filed herewith).
10.17
Warrant to Purchase Common Stock, dated as of April 24, 2020 by and between Legacy SmartRent and RET Ventures SPV I, L.P.
10-K
10.21
March 25, 2022
10.18
Warrant to Purchase Common Stock, dated as of February 4, 2021, by and between Legacy SmartRent and LEN FW Investor, LLC.
10-K
10.22
March 25, 2022
21.1
Subsidiaries of the Company (filed herewith).
23.1
Consent of Deloitte & Touche LLP (filed herewith).
24.1
Power of Attorney (included on the signature pages herein).
31.1
Certification of Principal Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2
Certification of Principal Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
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32.1
Certification of Principal Executive Officer as adopted pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.2
Certification of Principal Financial Officer as adopted pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
99.1
Insider Trading Policy of SmartRent, Inc., as amended and restated effective January 24, 2023 (filed herewith).
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 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)
** Certain exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the SEC a copy of any omitted exhibits or schedules upon request.
Indicates a management contract or any compensatory plan, contract or arrangement.
Item 16. Form 10-K Summary
None.
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Signa tures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on this 8th day of March 2023.
SmartRent, Inc.
By:
/s/ Lucas Haldeman
Lucas Haldeman
Chief Executive Officer
(Principal Executive Officer)
By:
/s/ Hiroshi Okamoto
Hiroshi Okamoto
Chief Financial Officer
(Principal Financial Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Lucas Haldeman and Hiroshi Okamoto, and each of them, his or her true and lawful attorney-in-fact and agent, 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 SEC, 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 in and about the premises, 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 his or her or their substitute or substitutes, may lawfully do or cause to be done or 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 date indicated:
Signature
Capacity in Which Signed
Date
/s/ Lucas Haldeman
Chief Executive Officer and Director
March 8, 2023
Lucas Haldeman
(Principal Executive Officer)
/s/ Hiroshi Okamoto
Chief Financial Officer
March 8, 2023
Hiroshi Okamoto
(Principal Financial Officer)
/s/ Alana Beard
Director
March 8, 2023
Alana Beard
/s/ Robert Best
Director
March 8, 2023
Robert Best
/s/ John Dorman
Director
March 8, 2023
John Dorman
/s/ Ann Sperling
Director
March 8, 2023
Ann Sperling
/s/ Bruce Strohm
Director
March 8, 2023
Bruce Strohm
/s/ Frederick Tuomi
Director
March 8, 2023
Frederick Tuomi
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