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Item 9A. Controls and Procedures

2023-03-29 compared with 2022-03-14 · 62 added, 451 removed, 104 unchanged (83% of the section changed)

1 unchanged sentence

Disclosure Control and Procedures

We maintain disclosure controls and procedures (as such terms are defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that the information required to be disclosed in the reports that we file or submit under the Exchange Act 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 and 

Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management, under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer evaluated the effectiveness and design of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of December 31, 2021.

Based on that evaluation, the Chief Executive Officer and Principal Financial Officer concluded that these disclosure controls and procedures were effective as of December 31, 2021.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Interim Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act").

Based on this evaluation, our Chief Executive Officer and Interim Chief Financial Officer concluded that because of the material weakness in our internal control over financial reporting described below, our disclosure controls and procedures were not effective as of December 31, 2022 to provide reasonable assurance that information required to be disclosed in our reports that we file or submit 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 our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management necessarily applies its judgment in assessing the costs and benefits of such disclosure controls and procedures that, by their nature, can only provide reasonable assurance regarding management's control objectives. 

Management has concluded that, notwithstanding the material weakness described below, the company’s consolidated financial statements in this Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with U.S.

Management ’

10 unchanged sentences

Because of these and other inherent limitations of control systems, there is only the reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions.

Management, under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer, conducted an evaluation of our internal control over financial reporting as of December 31, 2021, based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on our evaluation under the COSO framework, management concluded that our internal control over financial reporting was effective as of December 31, 2021.

There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management, under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer, conducted an evaluation of our internal control over financial reporting as of December 31, 2022, based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 

As a result of this assessment, management concluded that we did not design and maintain effective controls over the completeness and accuracy of the accounting for, and disclosure of, short-term financings.

Specifically, we did not design appropriate controls to identify and reconcile prepaid assets and associated short-term liabilities.

This material weakness resulted in material error in connection with our IPFS Corporation Financing Agreement that was corrected through the restatement of the consolidated financial statements as of and for the year ended December 31, 2021, and the correction of the unaudited quarterly financial information for period endings March 31, 2022 and June 30, 2022.

Additionally, this material weakness could result in misstatements to the aforementioned account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Management's Plan for Remediation of the Material Weakness

In response to the material weakness described above, with the oversight of the Audit Committee of our Board of Directors, management is currently evaluating our policies and procedures related to the accounting for short term financings and is working to implement adequate internal controls to ensure that (i) the liability associated with short-term financings are identified and recorded properly, and (ii) the associated asset with said financings are identified and recorded.

The remediation efforts are intended both to address the identified material weakness and to enhance our overall financial control environment. Management is committed to continuous improvement of the Company’s internal control over financial reporting and will continue to diligently review the Company’s internal control over financial reporting. 

Other than the changes described above in “Management's Plan for Remediation of the Material Weakness”, there were no changes in our internal control over financial reporting (as such term is defined in the Exchange Act) during the year ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

This Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.

6 unchanged sentences

Information regarding our Code of Ethics is included in Item 1 of Part I, and that information is incorporated by reference herein.

Board of Directors

Set forth below is biographical information for each of the six directors on our Board of Directors, each of whom will serve on our Board of Directors until the next annual meeting of our stockholders.

Position / Background

Director Since

Jamie Colbourne

Colbourne has served as our Interim Chief Financial Officer and Principal Financial Officer since November 23, 2021 and as the Chairman of Jones Soda’s Board of Directors since January 1, 2021. 

Colbourne served as Jones Soda’s Interim Chief Executive Officer from April 6, 2020 until December 1, 2020.

Prior to that, he was the Chief Executive Officer of Harry’s Fresh Foods, a position he held from July 2012 until it was sold in March 2019, and also served on its Board of Directors.

Colbourne currently serves on the Board of Directors of Harbor Wholesale and Bargreen Ellingson.

He was the Chief Operating Officer of Charlie’s Produce from 2008 to 2012.

From 2002 to 2008, Mr.

Colbourne served as Chief Executive Officer and President of Litehouse Inc., and prior to that, he held positions at Tully’s Coffee, Specialty Frozen Foods, Haagen-Dazs, Pepsico/Seven-up Canada.

Colbourne received a Bachelor of Commerce, Marketing and Finance from St.

Mary’s University in Canada and received a Canadian Chartered Accounting designation in 1982.  We believe Mr.

Colbourne is qualified to serve on our Board of Directors because of his management expertise and experience in the food industry.

September 2020

Norman has been a director of Jones Soda since August 2019.

Norman is a seasoned global operating executive that currently serves on the Board of Directors of Hearthside Food Solutions.

Previously, from June 2019 through April 2020, Mr.

Norman was chairman and CEO of Heavenly Rx Ltd., where he is focused on developing a long-term strategic direction and growing the company’s brand portfolio.

Preceding his role at Heavenly Rx Ltd., Mr.

Norman spent over 30 years at the Kellogg Company, a multinational food manufacturing company, and most recently served as President of the company’s North American operations from April 2015 to April 2018.

During his multi-decade career at Kellogg, Norman led various transformation efforts through strategic portfolio innovation and management that resulted in long-term, profitable growth.

Norman earned a bachelor’s degree in French studies from the University of Portsmouth in June 1987, and previously was a Board member for the Grocery Manufacturers Association, where he served on the executive committee. 

We believe Mr.

Norman is qualified to serve on our Board of Directors because of his branding, business strategy and marketing expertise and experience in the food industry.

Norman is an “Investor Designee” of Heavenly Rx, as defined in the Investor Rights Agreement dated July 11, 2019 (the “IRA”) entered into by us, Heavenly Rx Ltd.

(“Heavenly Rx”) and certain of our shareholders, and was appointed to the Board of Directors in accordance with the terms and conditions of such agreement.

Sirkin has been a director of Jones Soda since August 2019.

Sirkin is a seasoned marketing executive who has held various executive roles in large multinational consumer packaged goods (CPG) companies.

He was most recently the Chief Growth Officer for the Kellogg Company from January 2016 through February 2019.

In this capacity he was a member of the company's Executive Committee and was responsible for R&D, innovation, sales, marketing, research and analytics and setting the category strategy for the company.

Prior to Kellogg, Clive served as the Chief Marketing Officer of Kimberly-Clark from March 2012 to November 2015, overseeing all marketing across their B2B and B2C divisions.

This followed a 16+ year career in advertising at Leo Burnett, where he served in various leadership capacities across multiple geographies culminating in being named Group Managing Director with responsibility for setting the global business strategy for the group.

He served on the Global Executive Committee and the Board of the company.

Sirkin currently serves on the Boards of Screendragon ltd., Fyllo tech, UCAN and 70 Faces Media.

He earned a B.

degree from the University of Witwatersrand in South Africa in 1985.  We believe Mr.

Sirkin is qualified to serve on our Board of Directors because of his marketing expertise and experience in the food industry.

Sirkin is an “Investor Designee” of Heavenly Rx, as defined in the IRA, and was appointed to the Board of Directors in accordance with the terms and conditions of such agreement.

Murray was appointed as our President effective September 1, 2020 and as our Chief Executive Officer as of December 1, 2020, and has been a director of Jones Soda since May 19, 2021. 

Prior to that, he was the President of JGC Food Company (“JGC”), a position he held from 2017 to May 2019, and was previously the Vice President of Sales and Marketing of JGC from 2013 to 2017.

He was the Vice President of Sales of Harry’s Fresh Foods from 2011 and 2013 and Vice President of National Accounts of Solo Cup Company from 2008 to 2011. 

Previous to 2008, Mr.

Murray held numerous other roles in sales and marketing, including a 22-year career with Kraft Foods.

Murray received a Bachelor of Arts degree in Marketing, from Michigan State University. 

We believe Mr.

Murray is qualified to serve on our Board of Directors because he brings first-hand knowledge of the Company's day-to-day operations as well as an understanding of the operational, financial and strategic issues facing our Company.

Spiro has been a director of Jones Soda since February 15, 2022.

Spiro is a former prosecutor and a well-known litigator who has represented an array of disrupting companies across 

Spiro has been a partner at Quinn Emanuel Urquhart & Sullivan LLP since October 2017, where he currently serves as Co-Chair of the Investigations, Government Enforcement & White-Collar Defense practice.

Prior to that, Mr.

Spiro had been an attorney at Brafman and Associates in New York City since July 2013.

In that position, Mr.

Spiro has handled an array of complex litigation and investigations.

Prior to his joining Brafman and Associates, from September 2008 to July 2013, Mr.

Spiro worked as a Manhattan prosecutor.

Spiro formerly was the director of an autism children’s program at McLean Hospital, Harvard’s psychiatric hospital.

Spiro graduated with a B.A.

in Psychology from Tufts University in 2005 and a J.D.

from Harvard Law School in 2008, and he is currently a member of the adjunct faculty at Harvard.

Spiro became admitted to the State Bar of New York in 2008. 

He has lectured and written on a variety of subjects related to psychology and the law.

strategic 

advisor and board member to both public and private companies and helps growth-stage ventures with a variety of legal and operational matters.

Spiro has served on the board of directors Glassbridge Enterprises, Inc since 2015, and on the board of directors of iMedia Brands from 2018 to 2019.

We believe Mr.

Spiro is qualified to serve on our Board of directors because of his significant analytical and overall business leadership skills.

February 2022

Chad Bronstein

Bronstein has been a director of Jones Soda since February 15, 2022.

Currently, Mr.

Bronstein serves as Chief Executive Officer and Founder of Fyllo, a company providing compliance-first SaaS solutions for highly regulated industries.

He also serves as Co-Founder and Chairman of the Board for Tyson 2.0, boxer Mike Tyson’s cannabis company, and Wesana Health, a life science company on a journey to treat traumatic brain injury and mental illness through psychedelics.

In addition, he is an investor and partner in Kenan Thompson’s new talent management and production company, Artists for Artists.

Previously, 

Bronstein 

Chief Revenue Officer of Amobee Inc.

after it was acquired by  Adconian Media Group, where he served as Senior 

President 

American 

Partnerships. 

Bronstein 

strategic advisor at OpenWeb.

He graduated from Miami University in 2009. 

We believe Mr.

Bronstein brings to our Board of Directors executive leadership experience and a knowledge of the cannabis industry. 

February 2022

There are no family relationships among any of our current directors, nominees or executive officers. 

Compliance with Section 16(a)

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, and persons who own more than 10% of our common stock (collectively, “Reporting Persons”) to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock.

Reporting Persons are also required by SEC regulations to furnish us with copies of all such ownership reports they file.

SEC regulations also require the Company to identify in this Proxy Statement any Reporting Person who failed to file any such report on a timely basis.

Based solely on our review of the copies of such reports received or written communications from certain Reporting Persons we believe that all Reporting Persons filed all required Section 16(a) reports on a timely basis for fiscal year 2021 and for fiscal year 2022 through March 14, 2022, except as follows: 

Eric Chastain had one late Form 4 filing;

Fleming had three late Form 4 filings;

Anderson had two late Form 4 filings;

Clive Sirkin had two late Form 4 filings;

Paul Norman had two late Form 4 filings;

Jamie Colbourne had one late Form 4 filing;

Mark Murray had one late Form 4 filing;

Robert Wesley Blair had one late Form 3 filing and one late Form 4 filing;

Alex Spiro had one late Form 3 filing and one late Form 4 filing;

Chad Bronstein had one late Form 3 filing and one late Form 4 filing.

Code of Ethics and Code of Conduct

We have a Code of Ethics that applies to our CEO and other senior financial officers, as well as a Code of Conduct applicable to all directors, officers and employees.

A copy of each is posted on our website at www.jonessoda.com under the Investor Relations tab, under “Corporate Governance”

and under the headings “Code of Ethics”

and “Code of Conduct,”

respectively.

If we waive any material provision of our Code of Conduct or Code of Ethics for our CEO or senior financial officers or substantively change the codes, we will disclose that fact on our website within four business days.

Director Nomination Process

There were no material changes in 2021 to the process by which our securityholders may recommend nominees to our Board of Directors.

Audit Committee

The Company has an Audit Committee. 

The Audit Committee represents the Board of Directors in discharging its responsibilities relating to our accounting, reporting, financial and internal control practices, and any related party transactions.

Among its responsibilities, the Audit Committee:

is responsible for selecting, retaining or replacing our independent auditors;

reviews the scope, fees and result of their audit;

reviews the independence of the auditors;

reviews and approves any non-audit services and related fees;

is informed of their significant audit findings and management's responses;

reviews the adequacy of the Company’s accounting and financial personnel;

reviews the Company’s financial reporting processes and internal controls over financial reporting and disclosure controls and procedures;

and oversees legal and regulatory compliance matters, including reviewing and approving all significant related party transactions and potential conflict of interest situations.

The Audit Committee reviews the quarterly and annual financial statements and recommends their acceptance to the Board of Directors.

The Audit Committee also periodically reviews, in consultation with the Compensation Committee, the Company’s Code of Conduct and Code of Ethics, and establishes and reviews (a) procedures for receipt, retention and treatment of complaints regarding the Company's accounting, internal controls and auditing matters;

and (b) procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

The Audit Committee operates under a written charter setting forth the functions and responsibilities of the committee, which is reviewed by the committee on a periodic basis, and by the Board of Directors as appropriate.

A current copy of the charter is available on our website at www.jonessoda.com under the Investor Relations tab under the heading “Corporate Governance.”

As of February 15, 2022, the Audit Committee is comprised of Messrs.

Sirkin (Chair), Norman and Bronstein (and, prior to February 15, 2022, was comprised of Messrs.

Anderson, Michael M.

Fleming and Sirkin for fiscal year 2021).

The Board of Directors has determined that, after consideration of all relevant factors, each of these directors qualifies as an “independent”

director under applicable Securities and Exchange Commission (“SEC”) and NASDAQ rules.

Each member of the Audit Committee is able to read and understand fundamental financial statements, including our consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows.

Further, no member of the Audit Committee has participated in the preparation of our consolidated financial statements, or those of any of our current subsidiaries, at any time during the past three years.

The Board of Directors has determined that none of the current members of the Audit Committee qualify as an “audit committee financial expert”

as defined under applicable SEC rules.

The Board of Directors plans to appoint a new person to serve on the Audit Committee who possess the requisite “financial sophistication”

under applicable NASDAQ rules to qualify as an “audit committee financial expert”. 

 The Audit Committee held four meetings in 2021.

EXECUTIVE OFFICERS

Our executive officers as of March 14, 2022 were as follows:

Mark Murray         

President and Chief Executive Officer 

Eric Chastain         

Chief Operating Officer, President of the Jones Beverage Division, and Corporate Secretary

Jamie Colbourne

Principal Financial Officer and Interim Chief Financial Officer

Joe Culp         

Controller and Principal Accounting Officer

Chastain was appointed as our Chief Operating Officer effective June 2014 and as the President of the Jones Beverage Division since November 8, 2021.

He has been with the Company for nearly 20 years, and previously served as Vice President of Operations of the Company from May 2002 to June 2014.

As Chief Operating Officer, Mr.

Chastain is responsible for directing the operational aspects of our contract manufacturing, as well as purchasing, logistics, and product development.

Additionally, Mr.

Chastain leads the international business development for the Company.

Prior to joining us, Mr.

Chastain had several years of beverage manufacturing experience as Director of Operations.

Chastain attended Washington State University and Central Washington University where he earned a Bachelor of Arts degree in Business Administration.

Culp has served as our Controller and Principal Accounting Officer since March 8, 2021.

He has served in various financial roles since joining us in January 2019, including as Principal Financial Officer from March 8, 2021 to November 23, 2021.

Previously, Mr.

Culp served as a senior accountant in the audit department of Moss Adams LLP from 2014 to November 2018, performing audits for both public and private companies across various industries including manufacturing, public utilities, financial institutions, health care, and contractors.

Culp received a Bachelor of Arts degree in Accounting and Master's in Accounting, both from Washington State University, and is a Certified Public Accountant.

The biographical information for Jamie Colbourne and Mark Murray is included above under “Board of Directors.”

The other information called for by Part III, Item 10, will be included in our proxy statement relating to our 2023 Annual Meeting of Shareholders (our “2023 Proxy Statement”), and is incorporated herein by reference to the sections captioned “Nominees,”

“Compliance with Section 16(a),”

“Board Meetings and Committees,”

“Audit Committee,”

“Director Nomination Process,”

and “Executive Officers.”

Our 2022 Proxy Statement will be filed within 120 days of December 31, 2022, our fiscal year end.

EXECUTIVE COMPENSATION.

Summary Compensation Table

The following table shows for the fiscal years ended December 31, 2021 and 2020, all compensation awarded or paid by us to, or earned by, the following persons (the “Named Executive Officers”):

Name and Principal Position

Option Awards ($)(1)

All Other Compensation ($)

 284,375

 100,000

 385,575

President and Chief Executive Officer

 243,317

Eric Chastain

 170,183

 229,483

Chief Operating Officer, President of the Jones Beverage Division, and  

Corporate Secretary

 114,922

 144,222

 148,750

Controller and Principal Accounting Officer

Represents the aggregate grant date fair value for awards granted, as applicable, in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”).

See Note 7 regarding the assumptions underlying the valuation of equity awards.

Consisted of a car allowance and cell phone allowance for Mr.

Chastain in 2020 and 2021 and Mark Murray in 2021.

Murray was appointed as our President effective September 1, 2020 and as our Chief Executive Officer as of December 1, 2020.  “All Other Consideration” consisted of a car allowance and cell phone allowance for Mr.

Murray in 2020, as well as consulting payments made to Mr.

Murray during 2020 prior to his employment as our President in September 2020.

Narrative Disclosure to Summary Compensation Table

The following describes the material factors necessary to understand the compensation disclosed in the Summary Compensation Table.

Murray was appointed as our President effective September 1, 2020, and we and Mr.

Murray entered into our standard employment letter agreement pursuant to which Mr.

Murray served as President at an annual salary of $250,000.

Effective December 1, 2020, we and Mr.

Murray entered into an amended and restated employment letter agreement pursuant to which Mr.

Murray serves as our Chief Executive Officer and President at an annual salary of $275,000.

Effective May 16, 2021, Mr.

Murray’s annual base salary will be increased from $275,000 to $290,000.

In addition, Mr.

Murray will be eligible to earn a cash bonus in an amount equal $75,000 payable in the event that the Company achieves both its revenue and EBITDA targets for 2021 (with upward scaling of the bonus amount available to be earned at the rate of $1,250 in additional bonus amounts for every 1% above these targets achieved by the Company (i.e., if the Company exceeds both its revenue and EBITDA targets for 2021 by 20%, the bonus amount for 2021 shall be equal to $100,000)).

The Company also approved the grant to Mr.

Murray of a stock option to purchase up to 100,000 shares of the Company’s Common Stock;

provided that (a) such option shall become immediately vested as to 50,000 shares if the Company achieves both its revenue and EBITDA targets for 2021 (as determined by the Compensation Committee in its reasonable discretion based on its review of the Company’s audited consolidated financial statements for 2021);

(b) such option shall become immediately vested as to 100,000 shares if the Company exceeds by at least 20% both its revenue and EBITDA targets for 2021 (as determined by the Compensation Committee in its reasonable discretion based on its review of the Company’s audited consolidated financial statements for 2021) and (c) such option shall be terminated in its entirety and shall not be exercisable for any shares if the Company does not achieve both its revenue and EBITDA targets for 2021 (as determined by the Compensation Committee in its reasonable discretion based on its review of the Company’s audited consolidated financial statements for 2021).

Murray’s stock option shall be subject to the Company’s 2011 Equity Incentive Plan, as readopted, and the Company’s standard non-qualified stock option agreement, which have been filed by the Company with the Securities and Exchange Commission, and shall have an exercise price equal to the Company’s closing stock price (as quoted on the OTCQB marketplace) on the date of grant. Effective as of February 15, 2022, the Board of Directors approved a cash bonus for Mr.

Murray in the amount of $100,000 based on the company’s 2021 performance. 

In addition, Mr.

Murray was granted non-qualified stock options subject to the terms and conditions of our 2011 Plan for the purchase of (i) 100,000 shares of the our common stock at an exercise price equal to $0.165 per share, which were immediately vested as of the date of grant, and (ii) 400,000 shares of our common stock at an exercise price equal to $0.165 per share, which vests as follows: 

1/4th of the shares subject to the option shall vest on the one-year anniversary of the date of grant and an additional 1/48th of the shares subject to the option shall vest on a monthly basis thereafter for a period of 48 months (subject to Mr.

Murray’s continuous service with us). 

Eric Chastain.

Chastain has served as our Chief Operating Officer since June 2014, as Corporate Secretary since December 2015 and as the President of the Jones Beverage Division since November 8, 2021.

Chastain previously served as Vice President of Operations from 2002 until June 2014 when he was promoted to Chief Operating Officer.

Effective as of November 8, 2021, Mr.

Chastain’s annual base salary was increased from $165,000 to $200,000.

In addition, Mr.

Chastain may be eligible to receive an annual performance-based cash bonus based on us achieving certain net income targets, all subject to approval by the Compensation Committee.

Effective as of February 15, 2022, the Board of Directors approved a cash bonus for Mr.

Chastain in the amount of $33,000 based on the company’s 2021 performance.

In connection with his performance, in March 2020, we awarded to Mr.

Chastain a stock option to purchase 50,000 shares of common stock, which option is subject to the terms and conditions of our 2011 Plan (as defined below), has an exercise price equal to $0.22 per share and vests as follows: 

(i) 25% of such shares upon the first anniversary of the vesting commencement date and (ii) an additional 1/48th of such shares at the conclusion of each additional one-month period thereafter, in each case subject to Mr.

Chastain’s continued employment with us.

In addition, in connection with his performance, in March 2021, we awarded to Mr.

Chastain a stock option to purchase 50,000 shares of common stock, which option is subject to the terms and conditions of our 2011 Plan, has an exercise price equal to $0.49 per share and vests as follows: 

Chastain’s continued employment with us.

During 2021 and 2020, Mr.

Chastain was paid a $150 per month cell phone allowance.

Culp has served as our Controller and Principal Accounting Officer since March 8, 2021.

He has served in various financial roles since joining us in January 2019, including as Principal Financial Officer from March 8, 2021 to November 23, 2021.

Effective as of January 1, 2022, Mr.

Culp’s annual base salary was increased from $95,000 to $110,000. In addition, on November 2, 2021, the Board approved a cash bonus in the amount of $15,000 for Mr.

Additionally, Mr.

Culp was paid a cash bonus of $14,250 effective February 15, 2022 in connection with his 2021 performance. In addition, in March 2021, we awarded to Mr.

Culp a stock option to purchase 50,000 shares of common stock, which option is subject to the terms and conditions of our 2011 Plan, has an exercise price equal to $0.49 per share and vests as follows: 

Culp’s continued employment with us. 

Outstanding Equity Awards at Fiscal Year-End 2021 Table

The following table presents information about outstanding equity awards held by each of the Named Executive Officers as of December 31, 2021.

Option Awards

Number of Securities Underlying Unexercised Options (#)

Unexercisable

Option Exercise Price ($)

Option Expiration Date

Mark Murray (1)

 100,000

Eric Chastain (2)

 100,000

Jamie Colbourne (3)

__________________

Murray's stock options vest as follows (in each case, subject to Mr.

Murray’s continued service with the Company):

•400,000 stock option granted in November 2020 vests over a period of 48 months, with 25% vesting after one year and an additional 1/48th vesting each one-month period of continuous service completed thereafter;

•100,000 stock options granted in November 2020 was fully vested upon grant.

Chastain's stock options vest as follows (in each case, subject to Mr.

Chastain’s continued service with the Company):

•2021 stock option granted in March 2021 vests over a period of 48 months, with 25% vesting after one year and an additional 1/48th vesting each one-month period of continuous service completed thereafter;

•2020 stock option granted in March 2020 vests over a period of 48 months, with 25% vesting after one year and an additional 1/48th vesting each one-month period of continuous service completed thereafter;

•2018 stock option granted in March 2018, 50% vests over a period of 48 months, with 25% vesting after one year and an additional 1/48th vesting each one-month period of continuous service completed thereafter;

and 50% cliff vested in March 2019 after certain performance metrics were met;

•2016 stock option granted in December 2016 cliff vested in 2017 as certain quantitative performance metrics were met;

•2016 stock option granted in December 2016 vested over a period of 48 months, with 25% vesting after one year and an additional 1/48th vesting each one-month period of continuous service completed thereafter;

•2015 stock option granted in November 2015 vested over a period of 48 months, with 25% vesting after one year and an additional 1/48th vesting each one-month period of continuous service completed thereafter;

•2013 stock option granted in December 2013 vested over a period of 48 months, with 25% vesting after one year and an additional 1/48th vesting each one-month period of continuous service completed thereafter;

•2013 stock option granted in January 2013 vested and became exercisable at a rate of 1/24 each month and became fully exercisable on the two-year anniversary of the date of grant subject his continuous service;

•2012 stock option vested in full on the one-year anniversary of the date of grant.

Colbourne's stock options vest as follows (in each case, subject to Mr.

Colbourne’s continued service with the Company):

•2021 stock option granted in January 2021 vests in full in January 2022. 

•2020 stock option granted in December 2020 vests in full in December 2021. 

Culp's stock options vest as follows (in each case, subject to Mr.

Culp’s continued service with the Company):

•2019 stock option granted in November 2019 vests over a period of 48 months, with 25% vesting after one year and an additional 1/48th vesting each one-month period of continuous service completed thereafter;

•2019 stock option granted in January 2019 vests over a period of 48 months, with 25% vesting after one year and an additional 1/48th vesting each one-month period of continuous service completed thereafter;

Additional Narrative Disclosure

In March 2021, the Board of Directors approved the readoption of the Company’s 2011 Equity Incentive Plan (the “2011 Plan”) to extend the expiration date thereof from April 1, 2021 to April 1, 2023 and obtained shareholder approval of such readoption at the annual meeting of shareholders held on May 13, 2021.

On September 30, 2021, the Board of Directors upon the recommendation of the Compensation Committee, approved an amendment to the 2011 Plan to decrease the number of shares of common stock available for issuance pursuant to future awards under the 2011 Plan from 4,785,597 shares of common stock to 2,500,000 shares of common stock.

In addition, the Board of Directors approved an amendment to the outstanding awards previously granted under the 2011 Plan to provide that upon the closing of the Plan of Arrangement, the vesting of all awards outstanding as of September 30, 2021 shall be accelerated, and such awards shall thereafter become immediately vested in full and the restrictions thereon shall lapse.

Moreover, our 2011 Plan, as amended, provides for accelerated vesting of all unvested awards upon a corporate transaction, irrespective of the scheduled vesting date for these awards, unless the awards are assumed or substituted for by the successor company.

For purposes the 2011 Plan, a “corporate transaction”

means any of the following events:

Acquisition by a third party of beneficial ownership of 50% or more of the outstanding common stock or voting power of the Company, subject to certain exceptions;

A change in the composition of the Board of Directors during any 24-month period such that the individuals who, as of the beginning of such 24-month period, constitute the Board of Directors, cease for any reason to constitute at least a majority of the Board of Directors, subject to certain exceptions;

Consummation of a merger or consolidation of the Company with or into any other company;

Consummation of a statutory share exchange pursuant to which our outstanding shares are acquired or a sale in one transaction or a series of transactions undertaken with a common purpose of at least 50% of our outstanding voting securities;

Consummation of a sale, lease, exchange or other transfer in one transaction or a series of related transactions undertaken with a common purpose of all or substantially all of our assets.

Compensation Practices

We have evaluated the risks arising from our compensation policies and practices for our employees and concluded that such risks are not reasonably likely to have a material adverse effect on the Company.

In this regard, the following factors, among others, were considered:

Compensation is in line with the Company’s business plan and discourages inappropriate risk-taking for short-term gains;

Long-term incentive compensation is primarily in the form of stock options that generally vest over multiple year periods, thereby aligning the interests of management and other key employees with the long-term interests of our shareholders;

Annual cash bonuses are discretionary and are not governed by a fixed formula;

Sales commissions are not an element of our compensation practices for our Named Executive Officers or other senior management.

Director Compensation

We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board of Directors.

In setting director compensation, the Compensation Committee and the Board of Directors consider the significant amount of time that directors expend in fulfilling their duties as well as the skill level required of members of the Board of Directors.

In addition to cash and stock-based compensation, non-employee directors are reimbursed for their out-of-pocket expenses, in accordance with our reimbursement policies, incurred in attending meetings of the Board of Directors and committee meetings and conferences with our management.

We also maintain liability insurance for all of our directors and executive officers.

2021 Cash Compensation

We pay cash compensation to our non-employee directors for their service on the Board of Directors and Board committees.

Under our standard director compensation structure for 2021, each non-employee director received the following cash compensation for his or her service in 2021:

Non-employee (NE) Director Annual Retainer (payable in quarterly payments)

20,000  

NE Director Board Meeting Attendance Fee (telephonic)

Chair of Board of Directors Annual Retainer

5,000  

Chair of Audit Committee Annual Retainer

2,500  

Chair of Compensation and Governance Committee Annual Retainer

1,000  

Chair of Nominating Committee Annual Retainer

1,000  

Audit Committee Member Annual Retainer

1,000  

Compensation, Nominating, and Governance Committee Member Annual Retainer

500  

Non-employee directors can elect to receive payment of all or any portion of their cash compensation in the form of shares of our fully vested common stock in lieu of cash.

Our Compensation Committee has approved this practice since June 2010.

No directors elected to receive shares in lieu of payment of all or any portion of their cash compensation during 2021.

2021 Equity Compensation

Commencing as of January 1, 2020, equity compensation for non-employee director service consists of the grant of an annual non-qualified stock option award that vests on the first anniversary of the date of grant (subject to the director’s continuing service as of such anniversary date), with the number of shares underlying such award determined by dividing $25,000 by the closing stock price (as quoted on the OTCQB marketplace) on the date of grant (which shall be the first trading day in January in each calendar year), and such stock option award shall have an exercise price equal to our closing stock price (as quoted on the OTCQB marketplace) on the date of grant.

When joining our Board of Directors, each new non-employee director shall be granted a non-qualified stock option award that vests on the first anniversary of the date of grant (subject to the director’s continuing service as of such anniversary date), with the number of shares underlying such award determined by dividing $25,000 by our closing stock price on the first trading day following the date on which such director is appointed), prorated based on the date on which such director is appointed, and which stock option shall be granted as of the first trading day following the date on which such director was appointed, and shall have an exercise price equal to our closing stock price (as quoted on the OTCQB marketplace) on the date of grant.

2021 Director Compensation Table

The following table presents information about compensation earned by non-employee directors during 2021:

Fees Earned ($)

Stock Option Awards ($)(1)

Jeff Anderson

Michael Fleming

Jamie Colbourne

Information called for by Part III, Item 11, will be included in our 2023 Proxy Statement, and is incorporated herein by reference to the sections captioned “Executive Compensation”

and “Director Compensation.”

Our 2023 Proxy Statement will be filed within 120 days of December 31, 2022, our fiscal year end.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS.

The following table sets forth as of March 14, 2022 certain information regarding the beneficial ownership of our outstanding common stock by the following persons or groups:

each person who is known by us to own beneficially more than five percent (5%) of the outstanding shares of common stock;

the Named Executive Officers identified in the Summary Compensation Table below;

each of our directors and director nominees;

all of our directors and executive officers as a group.

As of March 14, 2022 there were 91,866,024 

shares of common stock issued and outstanding.

Unless otherwise indicated, each person's address is c/o Jones Soda Co., 66 S.

Hanford St., Suite 150, Seattle, WA 98134.

Beneficial ownership is determined in accordance with SEC rules and includes shares over which the indicated beneficial owner exercises voting and/or investment power.

Shares of common stock subject to options or warrants currently exercisable or exercisable within 60 days of March 14, 2022 are deemed outstanding for computing the percentage ownership of the person holding the options or warrants, but are not deemed outstanding for computing the percentage ownership of any other person.

Except as otherwise indicated and subject to community property laws where applicable, we believe the beneficial owners of the common stock listed below, based on information furnished by them, have sole voting and investment power with respect to the shares listed opposite their names.

Beneficial Ownership of Common Stock (1)

Name and Address of Beneficial Owner

Securities Currently Exercisable or Within 60 Days

Total Beneficial Ownership

Percent of Total

Heavenly Rx Ltd.

SOL Verano Blocker 1 LLC

Executive Officers and Directors

Mark Murray, President and Chief Executive Officer

Eric Chastain, Chief Operating Officer and Corporate Secretary (2)

Joe Culp, Controller and Principal Accounting Officer

Jamie Colbourne, Director

Alex Spiro, Director

Clive Sirkin, Director

Chad Bronstein, Director

Paul Norman, Director

All current directors and executive officers as a group (8 persons) (3)  

* Less than one percent

(1) The table is based upon information supplied by such principal shareholders, executive officers and directors.

(2) On April 18, 2018, Mr.

Chastain purchased a $10,000 convertible subordinated promissory note of the Company, which accrues interest at a rate of 6.0% per annum with a four-year team and a conversion rate of $0.32 per share.

The conversion price is subject to anti-dilution adjustment on a broad-based, weighted average basis if we issue shares or equity-linked instruments at a conversion price below $0.32 per share.  Mr.

Chastain may convert all or part of such convertible note into shares of common stock of the Company at any time on or prior to the maturity date of the convertible note.

As of March 14, 2022, Mr.

Chastain has the ability to convert the note into 38,559 shares, which have been included in the amounts described above. 

(3) Consists of Messrs.

Colbourne, Bronstein, Spiro, Norman, Sirkin, Chastain, Murray, and Culp.  

Certain information called for by Part III, Item 12, will be included in our 2022 Proxy Statement, and is incorporated herein by reference to the section captioned “Security Ownership Of Certain Beneficial Owners And Management.”

Our 2022 Proxy Statement will be filed within 120 days of December 31, 2022, our fiscal year end.

Equity Compensation Plan Information

The following table gives information as of December 31, 2021, the end of the most recently completed fiscal year, about shares of common stock that may be issued under our Jones Soda Co.

2011 Incentive Plan.

The following table gives information as of December 31, 2022, the end of the most recently completed fiscal year, about shares of common stock that may be issued pursuant to currently outstanding stock options granted under Jones Soda Co.

2011 Incentive Plan, as well as shares of common stock issuable pursuant to awards granted under the Jones Soda Co.

2022 Omnibus Equity Incentive Plan.

Plan Category

of Shares to be

Issued Upon Exercise

or Vesting of

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Equity Compensation Plans Not Approved by Shareholders

The 2011 Plan, as readopted, includes a formula for an annual increase in the number of shares authorized under the 2011 Plan, as of January 1 of each year, by an amount equal to the lesser of (a) 1,300,000 shares, (b) 4.0% of our outstanding common stock as of the end of our immediately preceding fiscal year, and (c) a lesser amount determined by the Board of Directors, provided that the number of shares that may be granted pursuant to awards in a single year may not exceed 10% of our outstanding shares of common stock on a fully diluted basis as of the end of the immediately preceding fiscal year.

On September 30, 2021, our Board of Directors upon the recommendation of our Compensation Committee, approved an amendment to the 2011 Plan to decrease the number of shares of common stock available for issuance pursuant to future awards under the 2011 Plan from 4,785,597 shares of common stock to 2,500,000 shares of common stock.

On May 16, 2022, our shareholders approved the adoption of the Jones Soda Co. 2022 Omnibus Equity Incentive Plan (the "2022 Plan"), which replaced the Jones Soda Co.

2011 Incentive Plan (the “2011 Plan”) and provides for the granting incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to participants to acquire shares of Company common stock under the 2022 Plan.

Under the terms of the 2022 Plan, the sum of (i) 10,000,000 shares of the Company’s common stock, plus (ii) the number of shares of common stock reserved, but unissued under the 2011 Plan, plus (iii) the number of shares of common stock underlying forfeited awards under the 2011 Plan are initially available for issuance as awards under the 2022 Plan.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

TRANSACTIONS WITH RELATED PERSONS

On February 9, 2022, current directors Chad Bronstein and Alex Spiro purchased, prior to becoming directors on our Board of Directors, an aggregate principal amount of   $100,000 and $400,000, respectively, of Contingent Convertible Debentures of the Company, which are convertible into units of Jones at a conversion price of $0.50 per Jones unit, with each Jones unit consisting of one Jones Shares and one Jones Special.

Each Jones Special Warrant will be exercisable into one Jones Share at a price of $0.625 per Jones Share for a period of 24 months from the date of issuance, conditional upon Jones increasing its authorized capital to an amount to cover the Jones Shares issuable pursuant to all of the outstanding Jones Special Warrants as well as the other Jones Shares issuable pursuant to the then outstanding convertible/exercisable securities of Jones.

The Contingent Convertible Debentures are automatically convertible into Jones units upon Jones Soda increasing its authorized capital to an amount to cover the Jones Shares issuable pursuant to all of the outstanding Contingent Convertible Debentures as well as all of the other then outstanding convertible/exercisable securities of Jones.

The Contingent Convertible Debentures are only convertible into Jones units upon the occurrence of a Conversion Event.

Jamie Colbourne, the Chair of our Board of Directors and Interim Chief Financial Officer, Mark Murray, our President and Chief Executive Officer and a member our Board of Directors, former director Jeffrey Anderson and current directors 

Clive Sirkin and Paul Norman, each acquired $200,000 in Subscription Receipts in Pinestar, and consequently each of these related persons acquired 400,000 Jones Shares and 400,000 Jones Special Warrants (exercisable into Jones Shares at an exercise price of $0.625 per Jones Share) in connection with the closing of the Plan of Arrangement on February 15, 2022.

The issuance of Jones Shares and Jones Special Warrants to these related parties was 

approval 

by the Company’s Audit Committee following the process described below.

Independence of the Board of Directors

The Board of Directors has determined that four of our directors, Messrs.

Spiro, Bronstein, Norman and Sirkin, are “independent directors”

within the meaning of the listing standards of The Nasdaq Stock Market (“NASDAQ”). In making its independence determinations, the Board of Directors considered all relationships between any of the directors and the Company.

Pursuant to Section 2 of the IRA, we are required to nominate for election to the Board of Directors two directors designated by Heavenly Rx.

Each of Paul Norman and Clive Sirkin are “Investor Designees”

of Heavenly Rx, as defined in the IRA.   

Information called for by Part III, Item 13, will be included in our 2023 Proxy Statement, and is incorporated herein by reference to the sections captioned “Transactions with Related Persons”

and “Independence of Board of Directors.”

Our 2023 Proxy Statement will be filed within 120 days of December 31, 2022, our fiscal year end.

PRINCIPAL ACCOUNTING FEES AND SERVICES.

Policy for Approval of Audit and Permitted Non-Audit Services

All audit, audit-related and tax services were pre-approved by the Audit Committee, which concluded that the provision of such services by our independent accountants for 2021 was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions.

The Audit Committee’s charter requires that the Audit Committee review the scope and extent of audit services to be provided, including the engagement letter, prior to the annual audit, and review and pre-approve all audit fees to be charged by the independent accountants.

In addition, the charter requires the Audit Committee to pre-approve all additional non-audit matters, if any, to be provided by the independent accountants.

Audit and Audit-Related Fees

The following table sets forth the aggregate fees billed by our current independent accountants, Armanino LLP (Bellevue, Washington, Auditor Firm ID:

32), for professional services rendered in the fiscal years ended December 31, 2021 and 2020.

Audit Fees (1)

 —

Audit-Related Fees (2)

All Other Fees (4)

The following table sets forth the aggregate fees billed by our former independent accountants, BDO LLP, for professional services rendered in the fiscal years ended December 31, 2021 and 2020.

Audit Fees (1)

122,778 

Audit-Related Fees (2)

All Other Fees (4)

“Audit Fees” represent fees for professional services provided in connection with the audit of our annual financial statements and review of our quarterly financial statements included in our reports on Form 10-Q, and audit services provided in connection with other statutory or regulatory filings, including without limitation, our Registration Statement on Form S-1 (previously on Form S-3).

“Audit-Related Fees” generally represent fees for assurance and related services reasonably related to the performance of the audit or review of our financial statements.

“Tax Fees” generally represent fees for tax compliance, tax advice and tax planning.

“All Other Fees” generally represents fees for products and services provided to the Company that are not otherwise reported in the table.

Information called for by Part III, Item 14, will be included in our 2023 Proxy Statement, and is incorporated herein by reference to the sections captioned “Policy for Approval of Audit and Permitted Non-Audit Services”

and “Audit and Audit-Related Fees.”

Our 2023 Proxy Statement will be filed within 120 days of December 31, 2022, our fiscal year end.

EXHIBITS  

14 unchanged sentences

(Previously filed with, and incorporated herein by reference to, Exhibit 3.1 to our quarterly report on Form 10-Q, filed on November 8, 2013;

Articles of Amendment to Articles of Incorporation of Jones Soda Co.

dated May 16, 2022.

(Previously filed with, and incorporated herein by reference to, Exhibit 3.3 to our registration statement on Form S-1, filed on June 14, 2022;

Description of Registrant's Securities (Filed herewith).

Form of Convertible Subordinated Promissory Note (Previously filed with, and incorporated herein by reference to, Exhibit 10.1 to our current report on Form 8-K, filed on March 27, 2018;

Form of Note Purchase Agreement (Previously filed with, and incorporated herein by reference to, Exhibit 10.2 to our current report on Form 8-K, filed on March 27, 2018;

Form of Registration Rights Agreement ((Previously filed with, and incorporated herein by reference to, Exhibit 10.3 to our current report on Form 8-K, filed on March 27, 2018;

1 unchanged sentence

and SOL Verano Blocker 1 LLC (Previously filed with, and incorporated herein by reference to, Exhibit 10.2 to our Current Report on Form 8-K, filed on July 20, 2021;

Form of 3.00% Unsecured Contingent Convertible Debenture due February 9, 2023 (Previously filed with, and incorporated herein by reference to, Exhibit 10.1 to our Current Report on Form 8-K, filed on February 15, 2022;

Registration Rights Agreement dated February 9, 2022 between Jones Soda Co.

and the holders of the Contingent Convertible Debentures (Previously filed with, and incorporated herein by reference to, Exhibit 10.2 to our Current Report on Form 8-K, filed on February 15, 2022;

Lease Agreement dated December 31, 2014, by and between 66 South Hanford Street Limited Partnership and Jones Soda Co.

(Previously filed with, and incorporated herein by reference to, Exhibit 10.1 to our current report on Form 8-K, filed on January 7, 2015;

First Amendment to Lease dated February 4, 2020 (Previously filed with, and incorporated herein by reference to, Exhibit 10.1 to our current report on Form 8-K, filed on February 20, 2020;

Jones Soda Co.

2 unchanged sentences

Form of Stock Option Grant Notice and Agreement under the 2011 Equity Incentive Plan, as readopted (Previously filed with, and incorporated herein by reference to, Exhibit 10.3 to our quarterly report on Form 10-Q, filed August 12, 2011;

Form of Restricted Stock Award Notice and Agreement under the 2011 Equity Incentive Plan, as readopted (Previously filed with, and incorporated herein by reference to, Exhibit 10.4 to our quarterly report on Form 10-Q, filed August 12, 2011;

Form of Restricted Stock Unit Award Notice and Agreement under the 2011 Equity Incentive Plan, as readopted (Previously filed with, and incorporated herein by reference to, Exhibit 10.1 to our quarterly report on Form 10-Q, filed November 13, 2018;

2022 Omnibus Equity Incentive Plan (Previously filed with, and incorporated herein by reference to, Appendix B to our definitive proxy statement on Schedule 14A, filed April 1, 2022)

Form of Restricted Stock Unit Award Notice and Agreement under the 2022 Omnibus Equity Incentive Plan (Filed herewith).

Form of Stock Option Grant Notice and Agreement under the 2022 Omnibus Equity Incentive Plan (Filed herewith).

Form of Indemnification Agreement (Previously filed with, and incorporated herein by reference to, Exhibit 10.6 to our current report on Form 8-K, filed on July 12, 2019;

Amended Compensation for Non-Employee Directors of Jones Soda Co.

(Previously filed with, and incorporated herein by reference to, our current report on Form 8-K, filed September 30, 2019;

Amended and Restated Employment Letter Agreement between Jones Soda Co.

and Mark Murray dated effective December 1, 2020 (Previously filed with, and incorporated herein by reference to, our current report on Form 8-K, filed December 2, 2020;

Subsidiaries of the Registrant (Filed herewith).

Employment Agreement between Jones Soda Co.

and Mark Murray dated effective May 27, 2022 (Previously filed with, and incorporated herein by reference to, our Current Report on Form 8-K, filed June 2, 2022;

Rescission Agreement between Jones Soda Co.

and Mark Murray dated December 30, 2022 Previously filed with, and incorporated herein by reference to, our Current Report on Form 8-K, filed January 6, 2023;

Subsidiaries of the Registrant  

(Filed herewith).

Consent of Armanino LLP (Filed herewith).

Certification by Mark Murray, Chief Executive Officer, pursuant to Rule 13a-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith).

Certification by Jamie Colbourne, Principal Financial Officer, pursuant to Rule 13a-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith).

Certification by Joe Culp, Interim Chief Financial Officer, pursuant to Rule 13a-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith).

Certification by Mark Murray, Chief Executive Officer, pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith).

Certification by Jamie Colbourne, Principal Financial Officer, pursuant to 18 U.S.C.

Certification by Joe Culp, Interim Chief Financial Officer, pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith).

11 unchanged sentences

JONES SODA CO.

/s/ Jamie Colbourne

Principal Financial Officer and Interim Chief Financial Officer

/s/ Joe Culp

Director of Finance, Principal

Financial Officer, and Interim Chief

Financial Officer

POWER OF ATTORNEY

4 unchanged sentences

March 29, 2023

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

March 29, 2023

/s/JAMIE COLBOURNE

Director, Chairman of the Board, Interim Chief Financial Officer ( Principal Financial Officer )

March 29, 2023

Jamie Colbourne

/s/ ALEX SPIRO

March 14, 2022

/s/ CHAD BRONSTEIN

2 unchanged sentences

/s/ PAUL NORMAN

Chairman of the Board, Director

March 29, 2023

1 unchanged sentence

March 29, 2023

/s/ GREGG REICHMAN

March 29, 2023

Gregg Reichman

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