What changed in this filing

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Item 9A. Controls and Procedures

2021-03-17 compared with 2020-03-30 · 114 added, 162 removed, 363 unchanged (43% of the section changed)

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Based on the evaluation of our disclosure controls and procedures as of December 31, 2020, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of such date due to material weaknesses in internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.

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These criteria are in the areas of control environment, risk assessment, control activities, information and communication, and monitoring.

Management’s assessment included extensive documentation, evaluating and testing the design and operating effectiveness of its internal controls over financial reporting.

Based on management’s processes and assessment, as described above, management has concluded that, as of December 31, 2019, our internal control over financial reporting was not effective.

Management’s assessment included extensive documentation, evaluating and testing the design and operating effectiveness of its internal controls over financial reporting.

Based on management’s processes and assessment, as described above, management has concluded that, as of December 31, 2020, our internal control over financial reporting was not effective.

Material Weaknesses in Internal Control Over Financial Reporting

As previously disclosed in our Annual report on Form 10-K filed with the SEC on April 9, 2019, we identified material weaknesses in our internal control over financial reporting during the preparation of our financial statements for the year ended December 31, 2018.

As previously disclosed in our Annual report on Form 10-K filed with the SEC on March 30, 2020, we identified material weaknesses in our internal control over financial reporting during the preparation of our financial statements for the year ended December 31, 2019.

Under standards established by the PCAOB, a material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected and corrected on a timely basis.

The material weaknesses in internal control over financial reporting have not been remediated as of December 31, 2019.

The material weaknesses in internal control over financial reporting have not been fully remediated as of December 31, 2020.

The material weaknesses in financial reporting as of December 31, 2020 are summarized as follows:

● We determined that we did not have sufficient accounting processes and procedures in place, particularly in the areas of allowance for loan loss;

finished goods inventory costing;

inventory costing;

revenue recognition;

income taxes;

processing of payroll, accounts payable, and treasury transactions;

and accruals for period end cut-off .

We determined that we did not have sufficient experienced personnel to support preparation of financial statements for compliance with U.S.

and processing of accounts payable and treasury transactions .

● We determined that we did not have sufficient personnel to support preparation of financial statements for compliance with U.S.

GAAP and SEC .

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In connection with these material weaknesses, we are in the process of taking remediation action,

including the evaluation and implementation of appropriate processes and procedures with respect to key areas, including allowance for loan loss, finished goods inventory costing, revenue recognition, income taxes and processing of accounts payable and accruals.

including the evaluation and implementation of appropriate processes and procedures with respect to key areas, including finished goods inventory costing, revenue recognition, and processing of accounts payable.

We are also in the process of implementing remediation measures, including providing further training of accounting personnel as well as hiring additional personnel, designing internal controls over financial reporting, including user access rights and journal entry processes and approvals, and implementing more robust financial reporting databases and systems.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the fourth quarter of fiscal 2019 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the fourth quarter of fiscal 2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations in Effectiveness of Controls

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President, Chief Executive Officer and Director

Cornelius Van Den Handel

Chief Financial Officer and Treasurer

Chief Financial Officer

Chief Accounting Officer

Executive Vice President, General Counsel and Secretary

Non‑Employee Directors

Non ‑ Employee Directors

The following information provides a brief description of the business experience of each executive officer and director.

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Prior to that, Mr.

Hodgson served as a partner of the company’s predecessor, Legacy Housing, Ltd., and controlled its general partner.

Over the past 37 years, Mr.

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Shipley, together with Mr.

Hodgson, served as a general partner of the company’s predecessor, Legacy Housing, Ltd.

Shipley has more than 30 years of experience in the manufactured home industry.

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His service as a director and the President and Chief Executive Officer creates a critical link between management and the board.

Thomas Kerkaert joined our company in August 2020 and serves as Chief Financial Officer.

In this capacity, he oversees the financial actions of the Company, as well as oversight of the accounting systems, policies and financial reporting of the Company.

Kerkaert, in a career spanning more than fifteen years, has served as a finance vice president, as well as other strategic and operational financial positions, in public and private-equity backed companies,

including most recently serving as the Vice President of Finance for a business unit within Sandvik AB, a publicly owned company that provides advanced engineering equipment, tools, service and technical solutions across a range of industries.

He brings extensive experience in strategic and business planning, acquisitions and divestitures, financial management systems, operational restructuring, and process improvement.

Kerkaert earned his Masters degree in Accounting from the University of Arizona and is a Certified Public Accountant.

Burt joined our company in September 2010 and serves as Chief Accounting Officer.

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Burt oversees all accounting functions with respect to our manufacturing facilities.

Burt began his

career with our company as Controller from 2010 to 2013, then as Chief Financial Officer and Treasurer from April 2013 to July 2019.

Burt began his career with our company as Controller from 2010 to 2013, then as Chief Financial Officer and Treasurer from April 2013 to July 2019.

Prior to joining our company, from 1993 to 2009, Mr.

Burt served as Vice President and Chief Financial Officer of Kohner Properties, Inc., a company that manages multi-family housing for owners across the central part of the United States.

Burt has more than 20 years of experience in the real estate and manufactured housing industry and has expertise in the areas of accounting systems, performance reporting tools and evaluations of key performance indicators versus a company’s goals.

Burt earned a B.S.

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from the University of Notre Dame.

Cornelius Van Den Handel joined our company in July 2019 and serves as our Chief Financial Officer and Treasurer.

In this capacity, Mr.

Van Den Handel oversees all accounting and finance functions of our company.

Prior to joining our company, Mr.

Van Den Handel served as the Managing Principal of Vector Enterprises, LLC, a consulting company that provides finance, operational, compliance, and strategic consulting services for companies.

Van Den Handel has previously been CFO of three different companies, including Aviall, Inc.

(a NYSE company prior to its acquisition by The Boeing Company).

He brings extensive experience in strategic and business planning, acquisitions and divestitures, investor relations, debt and equity financing, operational restructuring, and process enhancement.

Van Den Handel earned an MBA from the University of Texas and a bachelor’s degree in aerospace engineering from the University of Southern California.

Suit joined our company in January 2018 and serves as our Executive Vice President, General Counsel and Secretary.

In this capacity, Mr.

Suit oversees the legal affairs of our company, as well as its corporate controls and governance.

Prior to joining our company, Mr.

Suit worked in the law firm of Carrington, Coleman, Sloman & Blumenthal, LLP in Dallas, Texas from December 2008 to January 2018, where he was a partner, and previously he was a lawyer at the law firms Bell Nunnally & Martin LLP from February 2006 to December 2008 and Baker Botts, LLP from September 2003 to January 2006.

Suit has practiced law for more than 15 years, primarily handling complex litigation matters and serving as outside general counsel to companies.

Suit earned a B.A.

degree from Baylor University and J.D.

from Harvard Law School.

Non-Employee Directors

Bennett became a member of our board of directors upon the closing of our IPO in December 2018.

He is a partner in the law firm of Bennett, Weston, LaJone & Turner, P.C.

in Dallas, Texas, a firm he founded in 1985 and where he currently serves as a partner focused on real estate, business law and litigation.

Bennett previously worked for the tax department of Ernst & Young from 1979‑1981, served as Vice President, Tax Counsel, and Secretary for Southmark Corporation, a real estate company that at the time was traded on the New York Stock Exchange, from 1981 to 1984, an Executive Vice President for Pacific Realty, a real estate services firm, from 1984 to 1986, and he held the position of General Counsel for Greenbriar Corporation, a real estate company, from 1995 to 2002.

Bennett earned a B.A.

degree in Business and J.D.

from the University of Kansas.

Bennett was admitted to practice law in Texas in 1980, and is also a certified public accountant.

Bennett’s substantial knowledge and over 35 years of legal and accounting and tax experience in a wide range of real estate development projects and related regulatory and dispute resolution matters makes him well‑qualified as a member of the Board.

Crawford was elected to our board of directors at the annual meeting of stockholders, held on November 8, 2019.

Crawford was reelected to our board of directors at the annual meeting of stockholders, held on December 2, 2020.

He has served as the Managing Partner of Sabine Realty Partners, LLC, a real estate company focused on Texas properties, from May 2014 until May 2019.

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In addition, Mr.

Crawford has experience from 1976-1994 in commercial real estate lending, brokering, acquisitions,

development, marketing, and asset management for companies such as Trammell Crow Company and Bonnet Resources Corporation.

Crawford has experience from 1976-1994 in commercial real estate lending, brokering, acquisitions, development, marketing, and asset management for companies such as Trammell Crow Company and Bonnet Resources Corporation.

Crawford earned a B.B.A.

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Crawford has extensive experience and knowledge of commercial real estate acquisitions, dispositions, development, and asset management, and this expertise is highly beneficial to our company.

Florea was elected to our board of directors on March 13, 2020.

He is a founder of Warren, Weston and Walker, LLC, a private advisory, consulting and investment company focusing on real estate, technology early stage startups, and medical devices.

Prior to starting Warren, Weston and Walker, LLC in 2018, Mr.

Florea was President, Chief Executive Officer and Board Member of Skyline Corporation, a publicly traded producer of manufactured housing, from 2015 to 2018.

Prior to joining Skyline Corporation in 2015, Mr.

Florea worked for Truck Accessories Group, LLC, North America’s largest manufacturer of fiberglass caps and tonneaus for light and mid-sized trucks, as President and Chief Operating Officer from 2013 to 2015.

Before that, he was the President and Chief Executive Officer for Smart-Temps, LLC (2010 to 2013) and the President and Chief Operating Officer for Dutchmen Manufacturing, Inc.

(2000 to 2009).

Florea received a Bachelor of Science degree from Ball State University.

Florea brings more than 30 years of expertise in manufacturing operations, strategic planning and corporate financial management, as well as operations and leadership experience in the manufactured housing industry, making his insights invaluable to the Board.

Isakson became a member of our board of directors upon the closing of our IPO in December 2018.

He has served as the Chief Financial Officer of Preferred Apartment Communities, Inc., a publicly traded operator of multifamily properties throughout the United States (“PAC”), since August 2018, and acted as Executive Vice President and Chief Capital Officer of PAC from 2011 until August 2018.

He served as Chief Executive Officer of Main Street Apartment Homes, LLC, an indirect subsidiary of PAC, since PAC’s commencement of operations in 2015.

Prior to his role at PAC, he was the Chief Executive Officer of Williams Asset Management, an investment and asset management firm for a private equity fund he co‑founded, from 2006 to June 2013, and he co‑founded Tarpon Development, LLC, serving as Chief Executive Officer from 1999 to 2005.

He also served as Vice President of Finance for Julian LeCraw & Company from 1995 to 1999, where he oversaw the financing and acquisition of multifamily investments.

Isakson earned a B.A.

degree in Economics from Tulane University and M.A.

in Economics from the University of Georgia.

Isakson demonstrates a broad depth of knowledge of both the private and institutional side of the housing industry in acquisitions, dispositions, corporate and property‑level finance, investor relations and asset management, which are highly relevant to our business.

Stouder was elected to our board of directors at the annual meeting of stockholders, held on December 2, 2020.

He has served as the Vice President, Global Controller at E2open, LLC, a leading provider of cloud-based supply chain software and solutions, since August 2019.

Previously, he served as the Chief Financial Officer at Global Resale, LLC, a global leader in aftermarket services and reverse logistics for IT hardware, from March 2018 to August 2019.

From July 2015 to March 2018, Mr.

Stouder served as the Corporate Controller at NBG Home, the largest provider of affordable home décor products, with manufacturing and distribution facilities across the United States and internationally.

From 2000 to 2015, he served at Dell, Inc.

in various accounting and finance positions including SEC Reporting Manager, Global Sales Controller, and Finance Director for Dell Services.

Stouder began his career at Arthur Andersen LLP in the Dallas office, where he worked in the audit practice as staff, senior, and audit manager from 1994 to 2000.

Stouder received his B.B.A.

Accounting degrees from Texas Tech University and is a certified public accountant.

Stouder brings over 25 years of experience in accounting, finance, audit, corporate governance, mergers, and investor relations.

His expertise in these areas will be highly valuable to the Board.

Bates was elected to our board of directors at the annual meeting of stockholders, held on December 2, 2020.

He has served as the Vice President, Mergers & Acquisitions at Arcosa Inc., a publicly traded infrastructure products company, since August 2018.

Previously, he served as the Vice President, Industrial Investment Banking Group at Stephens Inc., a privately owned investment bank, from June 2015 to August 2018.

From February 2012 to June 2015, he served as an associate in the energy investment banking group at Seaport Global Securities, LLC, an independent full-

service investment bank.

Bates began his career in New York at Willis RE Inc.

as a reinsurance brokerage analyst from July 2010 to February 2012.

Bates received his B.S.

Management degree with a double major in finance and legal studies in business from Tulane University.

Bates substantial knowledge in mergers & acquisitions, capital markets transactions, the insurance industry and risk management solutions make him well qualified as a member of the Board.

Board Composition

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The number of directors is determined by our board of directors, subject to the terms of our certificate of incorporation and bylaws.

Our board of directors currently consists of six members.

Our board of directors currently consists of five members.

The Board of Directors held its inaugural meeting on February 7, 2019.

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Our common stock trades on The NASDAQ Global Market.

Under Nasdaq rules, independent directors must comprise a majority of a listed company’s board of directors.

In addition, Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and governance committees must be independent.

Under Nasdaq rules, a director will only qualify as an “independent director”

if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Under Nasdaq rules, independent directors must comprise a majority of a listed company’s board of directors.

In addition, Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and governance committees must be independent.

Under Nasdaq rules, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act.

In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee:

(i) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from

the listed company or any of its subsidiaries;

(i) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries;

or (ii) be an affiliated person of the listed company or any of its subsidiaries.

Our board of directors undertook a review of its composition, the composition of its committees and the independence of each director.

Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our board of directors has determined that Mark E.

Bennett, Stephen L.

Crawford, Richard W.

Florea and John Isakson, representing a majority of our directors, do not have any relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent”

as that term is defined under Nasdaq rules.

Crawford, Jeffrey K.

Stouder and Robert D.

Bates, representing a majority of our directors, do not have any relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under Nasdaq rules.

In making these determinations, our board of directors considered the relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.

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In accordance with our audit committee charter, our audit committee oversees our corporate accounting and financial reporting processes and our internal controls over financial reporting;

evaluates the independent public accounting firm’s qualifications, independence and performance;

engages and provides for the compensation of the independent public accounting firm;

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and discusses with management and the independent registered public accounting firm the results of the annual audit and the reviews of our quarterly financial statements.

We believe that our audit committee members meet the requirements for financial literacy under the current requirements of the Sarbanes‑Oxley Act, Nasdaq and SEC rules and regulations.

In addition, the board of directors has determined that John A.

Isakson is qualified as an audit committee financial expert within the meaning of SEC regulations.

that our audit committee members meet the requirements for financial literacy under the current requirements of the Sarbanes-Oxley Act, Nasdaq and SEC rules and regulations.

In addition, the board of directors has determined that Jeffrey K.

Stouder is qualified as an audit committee financial expert within the meaning of SEC regulations.

We have made this determination based on information received by our board of directors.

The audit committee is composed of Messrs.

Crawford (Chairman), Bennett, Florea and Isakson.

Stouder (Chairman), Bates and Crawford.

Compensation committee.

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The compensation committee is composed of Messrs.

Isakson (Chairman), Bennett, Florea and Crawford.

Crawford (Chairman), Bates and Stouder.

Nominating and governance committee.

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and oversees the evaluation of the board and its committees.

We believe that the composition of our nominating and governance committee meets the requirements for independence under, and the functioning of our compensation committee complies with, any applicable requirements of the Sarbanes‑Oxley Act, Nasdaq and SEC

rules and regulations.

We intend to comply with future requirements to the extent they become applicable to us.

The nominating and governance committee is composed of Messrs.

Florea (Chairman) and Isakson.

Bates (Chairman) and Stouder.

Code of Business Conduct and Ethics

We adopted a code of business conduct and ethics that applies to all of our officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions, which is posted on our website.

Our code of business conduct and ethics is a “code of ethics,”

as defined in Item 406(b) of Regulation S‑K.

Our code of business conduct and ethics is a “code of ethics,” as defined in Item 406(b) of Regulation S-K.

The information contained on, or accessible from, our website is not part of this Form 10-K by reference or otherwise.

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We have entered into separate indemnification agreements with our directors and executive officers, in addition to the indemnification provided for in our bylaws.

These agreements, among other things, provide that we will indemnify our directors and executive officers for certain expenses (including attorneys’

fees), judgments, fines, penalties and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of such person’s services as one of our directors or executive officers, or any other company or enterprise to which the person provides services at our request.

These agreements, among other things, provide that we will indemnify our directors and executive officers for certain expenses (including attorneys’ fees), judgments, fines, penalties and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of such person’s services as one of our directors or executive officers, or any other company or enterprise to which the person provides services at our request.

We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers.

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They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders.

Further, a stockholder’s investment may be adversely

affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions.

Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions.

There is no pending litigation or proceeding involving one of our directors or executive officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.

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The following table sets forth summary compensation information for the following persons:

(i) all persons serving as our principal executive officer during the years ended December 31, 2019 and 2018, and (ii) our three other most highly compensated executive officers who received compensation during the years ended December 31, 2019 and 2018 of at least $100,000 and who were executive officers on December 31, 2019 and 2018.

We refer to these persons as our “named executive officers”

in this Form 10-K.

(i) all persons serving as our principal executive officers during the years ended December 31, 2020 and 2019, and (ii) our three other most highly compensated executive officers who received compensation during the years ended December 31, 2020 and 2019 of at least $100,000 and who were executive officers on December 31, 2020 and 2019.

We refer to these persons as

our “named executive officers” in this Form 10-K.

The following table includes all compensation earned by the named executive officers for the respective period, regardless of whether such amounts were actually paid during the period:

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Executive Chairman (former Co-Chief Executive Officer)

President and Chief Executive Officer (former Co‑Chief Executive Officer)

Chief Accounting Officer

Cornelius Van Den Handel

Chief Financial Officer and Treasurer (1)

Executive Vice President, General Counsel and Secretary (1)

Van Den Handel joined our company in July 2019.

Suit joined our company in January 2018.

The “All Other Compensation”

column represents all distributions made to Mr.

Hodgson and Mr.

Shipley in the presented time periods when our company was still a partnership.

The distributions of profits to Mr.

Hodgson and Mr.

Shipley were based upon their allocable share of partnership income.

These distributions were primarily used to cover individual tax liability of the partners.

There were no other distributions made to Mr.

Hodgson or Mr.

Shipley during these periods.

Suit left his position as the Company’s Executive Vice President and General Counsel in May 2020 .

Hodgson and Mr.

Shipley’s compensation structure, in light of the fact they have traditionally only received a relatively nominal salary of $50,000, is focused on increasing the equity value of our company as their primary compensation is in the value of their ownership interests in the company.

Hodgson, whether individually or through entities or trusts he controls, owned 50% of the partnership interests in the company as of year-end 2017, which interests were converted to an initial allocation of 10,000,000 shares of common stock of the company upon the conversion to a corporation effective January 1, 2018.

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Shipley has overseen our sales and distribution, including our company-owned retail locations.

Under the employment agreements, each executive’s annual salary is $50,000, which is subject to increase at the discretion of our compensation committee.

The employment agreements provide for customary provisions for the termination of the executive’s employment with us for cause (as defined in the applicable employment agreement) and for any reason other than for cause.

The executive will be entitled to receive his salary for the remaining portion of the employment period if he is terminated other than for cause, payable in accordance with our company’s regular payroll practices.

Additionally, in the event the executive’s employment with us is terminated within one year after a change of control (as defined in the applicable employment agreement) for reasons other than cause, we have agreed to pay the executive an amount equal to two years’

compensation at his then current rate of pay.

The employment agreements also contain covenants (a) confirming that all intellectual property developed by each executive and relating to our business constitutes our sole and exclusive property, (b) prohibiting each executive from disclosing confidential information regarding our company at any time, (c) restricting each executive from engaging in any activities competitive with our business during his employment with us and for a period of one year thereafter, and (d) preventing each executive from recruiting, soliciting or hiring away employees of our company for a period of two years after his employment with us.

Under the employment agreements, each executive’s annual salary is $50,000, which is subject to increase at the discretion of our compensation committee.

period of two years after his employment with us.

The employment agreements are governed by the laws of the State of Delaware.

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Unvested Shares

Cornelius Van Den Handel

Suit was awarded options to purchase 58,694 shares of common stock under our 2018 Incentive Compensation Plan.

The grant date of the options was February 7, 2019 and the strike price is $13.63.

Options for 7,337 shares vested on the grant date and the remaining options vest at a rate of 12.5% annually, until fully vested on February 7, 2026.

The options expire on February 7, 2029.

Kerkaert was awarded options to purchase 34,626 shares of common stock under our 2018 Incentive Compensation Plan.

The grant date of the options was August 10, 2020 and the strike price is $14.44.

The options vest at a rate of 20.0% annually, beginning August 10, 2021, until fully vested on August 10, 2025.

The options expire on August 10, 2030.

2018 Incentive Compensation Plan

Our board of directors and the holders of a majority of our outstanding shares of common stock adopted our 2018 Incentive Compensation Plan (the “Plan”) prior to the closing of our IPO.

The purpose of our Plan is to assist us in attracting, motivating, retaining and rewarding high‑quality executives and other employees, officers, directors,

consultants and other persons who provide services to us.

Our board of directors and the holders of a majority of our outstanding shares of common stock adopted our 2018 Incentive Compensation Plan (the “Plan”) prior to the closing of our IPO.

The purpose of our Plan is to assist us in attracting, motivating, retaining and rewarding high-quality executives and other employees, officers, directors, consultants and other persons who provide services to us.

No awards under the Plan have been made to date.

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The exercise price per share subject to an option and the grant price of a stock appreciation right are determined by the committee, but in the case of an ISO must not be less than the fair market value of a share of common stock on the date of grant.

For purposes of our Plan, the term “fair market value”

means the fair market value of common stock, awards or other property as determined by the committee or under procedures established by the committee.

For purposes of our Plan, the term “fair market value” means the fair market value of common stock, awards or other property as determined by the committee or under procedures established by the committee.

The maximum term of each option or stock appreciation right, the times at which each option or stock appreciation right will be exercisable, and provisions requiring forfeiture of unexercised options or stock appreciation rights at or following termination of employment generally are fixed by the committee, except that no option or stock appreciation right may have a term exceeding ten years.

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Change in Control.

of our company, as defined in our Plan (including the cash settlement of stock appreciation rights which may be exercisable in the event of a change in control).

In addition, the committee may provide in an award agreement that the performance goals relating to any performance award will be deemed to have been met upon the occurrence of any “change in control.”

The committee may, in its discretion, accelerate the exercisability, the lapsing of restrictions or the expiration of deferral or vesting periods of any award, and such accelerated exercisability, lapse, expiration and if so provided in the award agreement or otherwise determined by the committee, vesting will occur automatically in the case of a “change in control” of our company, as defined in our Plan (including the cash settlement of stock appreciation rights which may be exercisable in the event of a change in control).

Amendment and Termination.

The board of directors may amend, alter, suspend, discontinue or terminate our Plan or the committee’s authority to grant awards without further stockholder approval, except stockholder approval must be obtained for any amendment or alteration if such approval is required by law or regulation or under the rules of any stock exchange or quotation system on which shares of common stock are then listed or quoted.

The board of directors may amend, alter, suspend, discontinue or terminate our Plan or the committee’s authority to grant awards without further stockholder approval, except stockholder approval

must be obtained for any amendment or alteration if such approval is required by law or regulation or under the rules of any stock exchange or quotation system on which shares of common stock are then listed or quoted.

Thus, stockholder approval may not necessarily be required for every amendment to our Plan which might increase the cost of our Plan or alter the eligibility of persons to receive awards.

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

The following table and accompanying footnotes set forth certain information with respect to the beneficial ownership of our common stock as of March 25, 2020, referred to in the table below as the “Beneficial Ownership Date,”

TO BE UPDATED

The following table and accompanying footnotes set forth certain information with respect to the beneficial ownership of our common stock as of March 10, 2021, referred to in the table below as the “Beneficial Ownership Date,” by:

● each person who is known to be the beneficial owner of 5% or more of the outstanding shares of our common stock;

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Percentage of beneficial ownership is based on 24,192,157 shares of common stock outstanding as of the Beneficial Ownership Date.

To our knowledge, except as set forth in the footnotes to this table and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to the shares set forth opposite such person’s name.

opposite such person’s name.

Except as otherwise indicated, the address of each of the persons in this table is c/o Legacy Housing Corporation, 1600 Airport Freeway, #100, Bedford, Texas 76022.

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Directors and Executive Officers

Cornelius Van Den Handel

Mark Bennett (5)

Thomas Kerkaert

5% Stockholders

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* Less than 1% of outstanding shares of common stock

Hodgson’s beneficial ownership includes 1,000,000 shares of common stock owned by Hodgson Ventures, a Texas limited partnership, of which Mr.

Hodgson is the general partner, 3,198,480 shares of common stock owned by the Hodgson 2015 Grandchild’s Trust, of which Mr.

Hodgson’s beneficial ownership includes 1,000,000 shares of common stock owned by Hodgson Ventures, a Texas limited partnership, of which Mr.

Hodgson is the general partner, 3,074,200 shares of common stock owned by the Hodgson 2015 Grandchild’s Trust, of which Mr.

Hodgson shares voting and investment power with respect to such shares and 100,000 shares owned by Cusach, Inc., an entity controlled by Mr.

Shipley’s beneficial ownership includes 100,000 shares of common stock owned by Shipley Bros., Ltd., an entity controlled by Kenneth E.

(2) Kenneth E.

Shipley’s beneficial ownership includes 100,000 shares of common stock owned by Shipley Bros., Ltd., an entity controlled by Kenneth E.

Each of Kenneth E.

Shipley’s brothers, William Shipley and Douglas Shipley, owns 3,230,131 and 3,256,667 shares of our common stock, respectively, as to which shares Kenneth E.

Shipley disclaims any beneficial interest.

Burt’s beneficial ownership consists of 12,000 shares of common stock, representing 28.6% of the 60,000 shares of common stock granted to him during the seven-year period commencing February 7, 2019 under our 2018 Incentive Compensation Plan, which are currently vested, less 5,143 shares sold during 2019.

Suit’s beneficial ownership consists of (a) 11,143 shares of common stock, representing 28.6% of the 60,000 shares of common stock granted to him during the seven-year period commencing February 7, 2019 under our 2018 Incentive Compensation Plan, which are currently vested, less 6,000 shares sold during 2019 and (b) 14,673 shares of common stock underlying stock options, representing 25.0% of the 58,694 stock options granted to him during the eight-year period commencing February 7, 2019 under our 2018 Incentive Compensation Plan, which are currently exercisable.

Bennett’s beneficial ownership includes 31,000 shares of common stock owned by his spouse.

Burt’s beneficial ownership consists of 10,714 shares of common stock, representing 42.9% of the 60,000 shares of common stock granted to him during the seven-year period commencing February 7, 2019 under our 2018 Incentive Compensation Plan, which are currently vested, less 5,143 shares sold during 2019 and 9,857 shares sold during 2020.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Transactions and Relationships with Directors, Officers and 5% Stockholders

Bell Mobile Homes, a retailer owned by one of the Company’s significant shareholders, purchases manufactured homes from the Company.

Accounts receivable balances due from Bell Mobile Homes were $1 and $549 as of December 31, 2020 and 2019, respectively.

3 unchanged sentences

The note was due on demand.

Interest paid on the note payable to an affiliate was $47 for the year ended December 31, 2018.

Interest paid on the note

payable to an affiliate was $47 for the year ended December 31, 2018.

On October 18, 2018, this note payable was paid in full.

At December 31, 2018, the Company had a receivable of $375 from a principal shareholder for certain business expenses related to a potential business venture.

This amount is included in the Company’s accounts receivable balance as of December 31, 2018.

In September, 2019, this receivable was paid in full by the principal shareholder through a non-cash exchange of property.

13 unchanged sentences

Related person transactions include, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness, and employment by us of a related person, in each case subject to certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act.

The policy provides that in any related person transaction, our audit committee and board of directors will consider all of the available material facts and circumstances of the transaction, including the direct and indirect interests of the related persons, in the event the related person is a director (or immediate family member of a director or an entity with which a director is affiliated), the impact that the transaction will have on a director’s independence, the risks, costs and benefits of the transaction to us, and whether any alternative transactions or sources for comparable services or products are available.

After considering all such facts and circumstances, our audit committee and board of directors will determine whether approval or ratification of the related person transaction is in our best interests.

3 unchanged sentences

PRINCIPAL ACCOUNTING FEES AND SERVICES.

BKD, LLP served as our independent registered public accountants for the year ended December 31, 2019 and Grant Thornton LLP served as our independent registered public accountants for the year ended December 31, 2018.

For our fiscal year ended December 31, 2019, we were billed approximately $866,000 for professional services rendered by BKD, LLP and for our fiscal year ended December 31, 2018 we were billed approximately $1,507,000 for professional services rendered by Grant Thornton LLP.

Audit fees consist of the aggregate fees billed for (i) the audit of our annual financial statements included herein (ii) audits and reviews included in our Registration Statement on Form S-1 related to our IPO in 2018 (iii) services that are normally provided in connection with statutory and regulatory filings or engagements such as comfort letters, consents and other services, and (iv) accounting consultations.

BKD, LLP served as our independent registered public accountants for the year ended December 31, 2020 and 2019.

For our fiscal year ended December 31, 2020 and 2019, we were billed approximately $358,000 and $866,000 for professional services rendered by our independent auditors.

Audit fees consist of the aggregate fees billed for (i) the audit of our annual financial statements included herein (ii) services that are normally provided in connection with statutory and regulatory filings or engagements such as comfort letters, consents and other services, and (iii) accounting consultations.

Audit Related Fees

3 unchanged sentences

For our fiscal year ended December 31, 2019, we were billed approximately $15,000 by BKD, LLP for review of internal control documentation prepared by our management.

There were no fees that fell into the classification of “Other Fees”

for our fiscal year ended December 31, 2018.

Pre-Approval Policies

Following the appointment of all three current members to the Board’s audit committee, such committee began its activities in December 2018.

Prior to then, all of the above services and fees were reviewed and approved by the entire Board.

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XBRL Taxonomy Extension Presentation Linkbase Document

Unless otherwise indicated, each document was filed as an exhibit to the Company’s Registration Statement on Form S-1 (File No.

Compensatory plan or agreement.

14 unchanged sentences

March 17, 2021

/s/ Cornelius Van Den Handel

Cornelius Van Den Handel

/s/ Thomas Kerkaert

Thomas Kerkaert

Chief Financial Officer ( principal financial officer )

3 unchanged sentences

March 17, 2021

March 30, 2020

/s/ Stephen L.

March 17, 2021

/s/ Richard W.

/s/ Jeffrey K.

March 17, 2021

/s/ Robert D.

March 17, 2021

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