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Item 9A. Controls and Procedures

2022-03-11 compared with 2021-03-31 · 84 added, 60 removed, 270 unchanged (35% of the section changed)

5 unchanged sentences

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial and Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on this evaluation, our Chief Executive Officer and Principal Financial and Accounting Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2020.

This conclusion was based on the material weakness in our internal control over financial reporting as further described below.

Based on this evaluation, our Chief Executive Officer and Principal Financial and Accounting Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2021.

Material Weaknesses

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In addition, we identified inadequate internal technical staffing levels and expertise to properly supervise and review the information of the outside consulting technical experts to properly apply ASC 815-40 for liability classification of certain warrants and ASC 470-50 and ASC 470-60 to properly reflect the accounting impact to multiple modifications of the Company’s debt instruments.

We did not have adequate policies and procedures in place to ensure the timely, effective review of assumptions used in measuring the fair value of certain financial instruments.

We did not have adequate policies and procedures in place to ensure the timely, effective review of compliance with contractual covenants in certain financial instruments.

These material weaknesses have not been remediated as of December 31, 2020.

In connection with our preparation of our annual financial statements for the year ended December 31, 2020, we identified material weaknesses in our internal control over financial reporting related to our financial statement close process and policies.

The primary factors contributing to the material weaknesses were as follows:

● We did not have adequate policies and procedures in place to ensure the timely, effective review of assumptions used in measuring the fair value of certain financial instruments.

● We did not have sufficient resources with appropriate knowledge, experience and/or training commensurate with our financial reporting requirements to assist us in our timely and efficient preparation and review over our financial reporting.

In connection with the preparation of our annual financial statements for the year ended December 31, 2020, we did not have adequate policies and procedures in place to ensure the timely, effective review of assumptions used in measuring the fair value of certain financial instruments.

In addition, we did not have adequate policies and procedures in place to ensure the timely, effective review of compliance with contractual covenants in certain financial instruments.

As discussed below in Remediation Efforts to Address Material Weaknesses , we believe these material weaknesses have been remediated as of December 31, 2021.

Remediation Efforts to Address Material Weaknesses

To remediate the material weaknesses described above, management will add controls to further enhance and revise the design of the existing controls including:

● Establishing policies and procedures to ensure timely review, by qualified personnel, of assumptions used in measuring fair value of certain financial instruments.

● Reassessing the design and operation of internal controls over financial reporting and review procedures over the preparation of our financial statements.

● Hiring permanent accounting personnel and used consultants to provide support during our quarterly and annual preparation, review, and reporting of our financial statements.

● Maintaining adequate internal qualified personnel to properly supervise and review the information provided by the outside consulting technical experts to ensure certain significant complex transactions and technical matters were properly accounted for.

We cannot assure you that the planned measures in response to these material weaknesses will be sufficient to remediate such material weaknesses or to avoid potential future material weaknesses.

To remediate the material weaknesses described above, management added controls to further enhance and revise the design of the existing controls including:

● Established policies and procedures to ensure timely review, by qualified personnel, of assumptions used in measuring fair value of certain financial instruments.

● Reassessed the design and operation of internal controls over financial reporting and review procedures over the preparation of our financial statements.

● Hired permanent accounting personnel and used consultants to provide support during our quarterly and annual preparation, review, and reporting of our financial statements.

● Maintained adequate internal qualified personnel to properly supervise and review the information provided by the outside consulting technical experts to ensure certain significant complex transactions and technical matters were properly accounted for.

Internal Control Over Financial Reporting

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Under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial and Accounting Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2021 using the criteria established in Internal Control-Integrated Framework (“2013 Framework”) issued by the Committee of Sponsoring Organization of the Treadway Commission (“COSO”).

Based on our evaluation using those criteria, our management has concluded that, as of December 31, 2020, our internal control over financial reporting was not effective 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 for the reasons discussed above.

Based on our evaluation using those criteria, our management has concluded that, as of December 31, 2021, our internal control over financial reporting was effective 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 for the reasons discussed above.

This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm on our internal control over financial reporting because we are an SRC and are not subject to auditor attestation requirements under applicable SEC rules.

Changes in Internal Control over Financial Reporting

Other than the changes disclosed above regarding the remediation efforts to address the material weaknesses, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the fourth quarter of 2020.

OTHER INFORMATION

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item is incorporated by reference from the Proxy Statement for the 2021 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended

December 31, 2020.

The information required by this item is incorporated by reference from the Proxy Statement for the 2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2021.

EXECUTIVE COMPENSATION

16 unchanged sentences

Certificate of Third Amendment of the Third Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 1, 2018).

Certificate of Designation of Series A Convertible Participating Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (filed with the Securities and Exchange Commission on March 27, 2018).

Certificate of Amendment to the Certificate of Designation of Series A Convertible Participating Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 15, 2019).

Certificate of Fifth Amendment of the Third Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 6, 2019).

1 unchanged sentence

001-36714) filed with the Securities and Exchange Commission on May 18, 2015).

Certificate of Designation of Preferences, Rights, and Limitations of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (No.

001-036714) filed with the Securities and Exchange Commission on July 23, 2019).

Certificate of Designation of Preferences, Rights, and Limitations of Series B-1 Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (No.

001-036714) filed with the Securities and Exchange Commission on October 3, 2019).

Certificate of Designation of Preferences, Rights, and Limitations of Series B-2 Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (No.

001-036714) filed with the Securities and Exchange Commission on December 26, 2019).

Certificate of Amendment to the Certificate of Designation of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (No.

001-036714) filed with the Securities and Exchange Commission on March 26, 2020).

Certificate of Designation of Series C Perpetual Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (No.

5 unchanged sentences

001-036714) filed with the Securities and Exchange Commission on September 9, 2020)

Corrected Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Form 8-K of Jaguar Health, Inc.

filed December 10, 2020, File No.

Certificate of Fifth Amendment of the Third Amended and Restated Certificate of Incorporation of Jaguar Health, Inc.

(incorporated by reference to Exhibit 3.1 to the Form 8-K of Jaguar Health, Inc.

filed September 3, 2021, File No.

Specimen Non-Voting Common Stock Certificate of Jaguar Health, Inc.

53 unchanged sentences

and Streeterville Capital, LLC (incorporated by reference to Exhibit 4.1 to the Form 8-K filed January 22, 2021, File No.

Common Stock Purchase Warrant, dated April 7, 2021, by and between Jaguar Health, Inc.

and Oasis Capital, LLC (incorporated by reference to Exhibit 4.1 to the Form 8-K of Jaguar Health, Inc.

filed April 8, 2021, File No.

Form of Indemnification Agreement by and between Jaguar Health, Inc.

1 unchanged sentence

333-198383) filed with the Securities and Exchange Commission on August 27, 2014).

Jaguar Health, Inc.

2014 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 20, 2016).

Form of Notice of Grant of Stock Option and Stock Option Agreement under the 2014 Stock Incentive Plan (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-1 (No.

18 unchanged sentences

Distribution Agreement, dated December 9, 2016, by and between Jaguar Health, Inc.

and Henry Schein, Inc (incorporated herein by reference to Exhibit 10.41 to the Annual Report on Form 10-K filed on February 15, 2017).

Investor Rights Agreement, dated March 31, 2017, by and between Jaguar Health, Inc.

and Nantucket Investments Limited (incorporated by reference herein to Exhibit 10.1 to the Current Report on Form 8-K filed on March 31, 2017).

and Henry Schein, Inc.

(incorporated herein by reference to Exhibit 10.41 to the Annual Report on Form 10-K filed on February 15, 2017).

Alliance Agreement, dated May 23, 2005, by and among AsiaPharm Investment Limited and its Affiliates, including Shandong Luye Pharmaceuticals Co.

39 unchanged sentences

filed July 5, 2019, File No.

Master Services Agreement, dated June 24, 2019, by and among Napo Pharmaceuticals, Inc., Integrium, LLC, and POC Capital, LLC.

Master Services Agreement, dated June 24, 2019, by and among Napo Pharmaceuticals, Inc., Integrium, LLC, and POC Capital, LLC (incorporated by reference to Exhibit 10.24 to the Form 10-K of Jaguar Health, Inc.

filed on March 31, 2021, File No.

Form of Exchange Agreement, between Jaguar Health, Inc.

5 unchanged sentences

filed on July 15, 2019, File No.

Warrant Exercise Agreement, dated October 2, 2019, between Jaguar Health, Inc.

and the purchaser named therein (incorporated by reference to Exhibit 10.1 to the Form 8-K of Jaguar Health, Inc.

filed October 3, 2019, File No.

License Termination and Settlement Termination Agreement, dated October 1, 2019, by and among Jaguar Health, Inc., Napo Pharmaceuticals, Inc.

7 unchanged sentences

filed December 26, 2019, File No.

Exchange Agreement, dated December 23, 2019, by and between Jaguar Health, Inc.

and Oasis Capital, LLC (incorporated by reference to Exhibit 10.2 to the Form 8-K of Jaguar Health, Inc.

filed December 26, 2019, File No.

First Amendment to the Exchange Agreement, dated January 22, 2020, by and between Jaguar Health, Inc.

and Oasis Capital, LLC (incorporated by reference to Exhibit 10.1 to the Form 8-K/A filed January 27, 2020, File No.

Form of Warrant Exercise Agreement by and between Jaguar Health, Inc.

2 unchanged sentences

and the investors named therein (incorporated by reference to Exhibit 10.1 to the Form 8-K filed March 26, 2020, File No.

Warrant Exercise and Preferred Stock Amendment Agreement, dated March 24, 2020, by and between Jaguar Health, Inc.

and the Holder named therein (incorporated by reference to Exhibit 10.2 to the Form 8-K filed March 26, 2020, File No.

Leak-Out Agreement, dated March 24, 2020, by and between Jaguar Health, Inc.

and the Holder named therein (incorporated by reference to Exhibit 10.3 to the Form 8-K filed March 26, 2020, File No.

Equity Purchase Agreement, dated March 24, 2020, by and between Jaguar Health, Inc.

13 unchanged sentences

and Oasis Capital, LLC (incorporated by reference to Exhibit 10.2 to the Form 8-K filed May 21, 2020, File No.

Form of Inducement Letter for Original Warrants (incorporated by reference to Exhibit 10.1 to the Form 8-K filed May 22, 2020, File No.

Form of Inducement Letter for Bridge Warrants (incorporated by reference to Exhibit 10.2 to the Form 8-K filed May 22, 2020, File No.

Jaguar Health, Inc.

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(incorporated by reference to Exhibit 10.2 to the Form 8-K filed September 2, 2020, File No.

At the Market Offering Agreement, dated October 5, 2020, by and between Jaguar Health, Inc.

and Ladenburg Thalmann & Co.

(incorporated by reference to Exhibit 10.1 to the Form 8-K filed October 5, 2020, File No.

Stock Plan Agreement, dated October 6, 2020, by and between Jaguar Health, Inc.

23 unchanged sentences

Master Services Agreement, dated October 5, 2020, by and between Napo Pharmaceuticals, Inc.

and Integrium, LLC.

Consent of Independent Registered Public Accounting Firm.

and Integrium, LLC (incorporated by reference to Exhibit 10.67 to the Form 10-K filed March 31, 2021, File No.

Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Form 8-K of Jaguar Health, Inc.

filed January 14, 2021, File No.

Office Lease Agreement, dated March 25, 2021, by and between Jaguar Health, Inc.

and M & E LLC (incorporated by reference to Exhibit 10.1 to the Form 8-K of Jaguar Health, Inc.

filed April 8, 2021, File No.

First Amendment to the Equity Purchase Agreement, dated April 7, 2021, by and between Jaguar Health, Inc.

and Oasis Capital, LLC (incorporated by reference to Exhibit 10.2 to the Form 8-K of Jaguar Health, Inc.

filed April 8, 2021, File No.

Registration Rights Agreement, dated April 7, 2021, by and between Jaguar Health, Inc.

and Oasis Capital, LLC (incorporated by reference to Exhibit 10.3 to the Form 8-K of Jaguar Health, Inc.

filed April 8, 2021, File No.

Form of Securities Purchase Agreement, dated April 29, 2021 (incorporated by reference to Exhibit 10.1 to the Form 8-K of Jaguar Health, Inc.

filed April 30, 2021, File No.

Subscription Agreement, dated June 1, 2021, by and among Dragon SPAC S.p.A., Napo Pharmaceuticals, Inc.

and Joshua Mailman (incorporated by reference to Exhibit 10.1 to the Form 8-K of Jaguar Health, Inc.

filed June 4, 2021, File No.

License Agreement, dated August 18, 2021, by and between Napo Pharmaceuticals, Inc.

and Napo EU S.p.A.

(incorporated by reference to Exhibit 10.1 to the Form 8-K of Jaguar Health, Inc.

filed August 24, 2021, File No.

Securities Purchase Agreement, dated September 13, 2021, by and between Jaguar Health, Inc.

and the investors named therein (incorporated by reference to Exhibit 10.1 to the Form 8-K of Jaguar Health, Inc.

filed September 17, 2021, File No.

At The Market Offering Agreement, dated December 10, 2021, by and between Jaguar Health, Inc.

and Ladenburg Thalmann & Co.

(incorporated by reference to Exhibit 10.1 to the Form 8-K of Jaguar Health, Inc.

filed December 10, 2021, File No.

First Amendment to the At the Market Offering Agreement, dated February 2, 2022, by and between Jaguar Health, Inc.

and Ladenburg Thalmann & Co.

(incorporated by reference to Exhibit 10.1 to the Form 8-K of Jaguar Health, Inc.

filed February 2, 2022, File No.

Letter from Mayer Hoffman McCann P.C., dated November 23, 2021 (incorporated by reference to Exhibit 16.1 to the Form 8-K of Jaguar Health, Inc.

filed November 23, 2021, File No.

Subsidiaries of the Registrant.

Consent of RBSM LLP, Independent Registered Public Accounting Firm.

Consent of Mayer Hoffman McCann P.C., Independent Registered Public Accounting Firm.

Principal Executive Officer’s Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

4 unchanged sentences

§ 1350 (Section 906 of Sarbanes-Oxley Act of 2002).

XBRL Instance Document

XBRL Taxonomy Extension Schema

XBRL Taxonomy Extension Calculation Linkbase

XBRL Taxonomy Extension Definition Linkbase

XBRL Taxonomy Extension Label Linkbase

XBRL Taxonomy Extension Presentation Linkbase

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension Schema

Inline XBRL Taxonomy Extension Calculation Linkbase

Inline XBRL Taxonomy Extension Definition Linkbase

Inline XBRL Taxonomy Extension Label Linkbase

Inline XBRL Taxonomy Extension Presentation Linkbase

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Filed herewith.

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Chief Executive Officer and President

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Lisa A.

Conte and Carol Lizak, jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any 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 Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.

Chief Executive Officer, President and Director (Principal Executive Officer)

March 11, 202 2

/s/ CAROL LIZAK

Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

March 11, 2022

Chairman of the Board

March 11, 2022

/s/ JOHN MICEK III

John Micek III

March 11, 2022

/s/ JONATHAN B.

March 11, 2022

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