What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-08-03 compared with 2021-03-17 · 189 added, 97 removed, 380 unchanged (43% of the section changed)

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The material weaknesses in financial reporting as of December 31, 2021 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;

inventory costing;

revenue recognition;

income taxes;

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.

● We determined that we did not have sufficient accounting systems and procedures in place, particularly in the areas of revenue recognition;

processing of accounts payable;

prepaid expenses;

and inventory costing and management .

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

GAAP and SEC .

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Remediation Efforts to Address Previously-Identified Material Weaknesses

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 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.

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 inventory costing and revenue recognition.

We are also in the process of implementing remediation measures, including designing internal controls over financial reporting, defining 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

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OTHER INFORMATION.

Restatement of Previously Issued Condensed Financial Statements (unaudited)

The Company has restated these financial statements to correct;

(i) an overstatement of costs errantly assigned to accounts payable for inventory received but not invoiced for the period ended March 31, 2021 and for the period ended June 30, 2021, (ii) an understatement of costs errantly assigned to accounts payable for inventory received but not invoiced for the period ended September 30, 2021, (iii) an overstatement of prepaid inventory and an understatement of cost of product sales and property, plant & equipment for the period ended September 30, 2021, (iv) an overstatement in finished goods inventory and an understatement of cost of product sales for the period ending September 30, 2021, (v) a reclassification between prepaid expenses and other current assets and other assets for the period ended March 31, 2021, for the period ended June 30, 2021 and for the period ended September 30, 2021, (vi) a reclassification between prepaid expenses and other current assets and lines of credit for the period ended March 31, 2021, for the period ended June 30, 2021 and for the period ended September 30, 2021, (vii) change in accrued liabilities and income tax expense for the period ended March 31, 2021, for the period ended June 30, 2021 and for the period ended September 30, 2021.

The decision to restate the Company’s financial statements previously reported on its Quarterly Report on Form 10-Q for the first quarter of 2021, its Quarterly Report on Form 10-Q for the second quarter of 2021, and its Quarterly Report on Form 10-Q for the third quarter of 2021 was approved by, and with the continuing oversight of, the Company’s Audit Committee.

The effects of the restatement on the line items within the Company’s condensed balance sheet as of March 31, 2021, as of June 30, 2021 and as of September 30, 2021 are as follows:

March 31, 2021

June 30, 2021

September 30, 2021

Current assets:

Prepaid expenses and other current assets

Total current assets:

Propert, plant and equipment, net

Total assets:

Current liabilities:

Accounts payable

Accrued liabilities

Total current liabilities:

Long-term liabilities:

Lines of credit

Total liabilities:

Stockholders' equity:

Retained earnings

Total stockholders' equity

Total liabilities and stockholders' equity

The effects of the restatement on the line items within the Company’s condensed statement of operations for the three months ended March 31, 2021, for the three months ended June 30, 2021 and for the three months ended September 30, 2021 are as follows:

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Operating expenses:

Cost of product sale

Income from operations

Income before income tax expense

Income tax expense

Net income per share:

The effects of the restatement on the line items within the Company’s condensed statement of operations for the six months ended June 30, 2021 and for the nine months ended September 30, 2021 are as follows:

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Operating expenses:

Cost of product sale

Income from operations

Income before income tax expense

Income tax expense

Net income per share:

The effects of the restatement on the line items within the condensed statement of cash flows for the three months ended March 31, 2021, for the six months ended June 30, 2021 and for the nine months ended September 30, 2021 are as follows:

Three months March 31, 2021

Six months June 30, 2021

Nine months September 30, 2021

As Originally

Operating activities:

Prepaid expenses and other current assets

Accounts payable

Accrued liabilities

Net cash provided by (used in) operating activities

Investing activities:

Purchases of property, plant and equipment

Net cash used in investing activities

Financing activities:

Payments on lines of credit

Net cash provided by (used in) financing activities

Restated Results of Operations

Comparison of Three Months ended March 31, 2021 and 2020

The cost of product sales increased $0.1 million, or 0.6%, during the three months ended March 31, 2021 as compared to the same period in 2020.

Income tax expense during the three months ended March 31, 2021 was $2.2 million compared to $2.6 million for the same period in 2020.

The effective tax rate for the three months ended March 31, 2021 was 17.1% and primarily differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction and partially offset by state income taxes.

The effective tax rate for the three months ended March 31, 2020 was 22.3% and primarily differs from the federal statutory rate of 21% primarily due to state income taxes.

Comparison of Three Months ended June 30, 2021 and 2020

The cost of product sales decreased $0.3 million, or 1.2%, during the three months ended June 30, 2021 as compared to the same period in 2020.

Income tax expense during the three months ended June 30, 2021 was $2.5 million compared to $3.0 million for the same period in 2020.

The effective tax rate for the three months ended June 30, 2021 was 16.5% and primarily differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction and partially offset by state income taxes.

The effective tax rate for the three months ended June 30, 2020 was 23.1% and primarily differs from the federal statutory rate of 21% primarily due to state income taxes.

Comparison of Six Months ended June 30, 2021 and 2020

The cost of product sales decreased $0.2 million, or 0.4%, during the six months ended June 30, 2021 as compared to the same period in 2020.

Income tax expense during the six months ended June 30, 2021 was $4.7 million compared to $5.6 million for the same period in 2020.

The effective tax rate for the six months ended June 30, 2021 was 16.7% and primarily differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction and partially offset by state income taxes.

The effective tax rate for the six months ended June 30, 2020 was 22.7% and primarily differs from the federal statutory rate of 21% primarily due to state income taxes.

Comparison of Three Months ended September 30, 2021 and 2020

The cost of product sales increased $7.8 million, or 28.2%, during the three months ended September 30, 2021 as compared to the same period in 2020.

The increase in costs is primarily related to increases in the cost of materials and labor in 2021 and was materially passed along to our end-customer.

Income tax expense during the three months ended September 30, 2021 was $2.7 million compared to $2.5 million for the same period in 2020.

The effective tax rate for the three months ended September 30, 2021 was 17.3% and primarily differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction and partially offset by state income taxes.

The effective tax rate for the three months ended September 30, 2020 was 22.7% and primarily differs from the federal statutory rate of 21% primarily due to state income taxes.

Comparison of Nine Months ended September 30, 2021 and 2020

The cost of product sales increased $7.6 million, or 9.7%, during the nine months ended September 30, 2021 as compared to the same period in 2020.

The increase in costs is primarily related to increases in the cost of materials and labor in 2021 and was materially passed along to our end-customer.

Income tax expense during the nine months ended September 30, 2021 was $7.4 million compared to $8.1 million for the same period in 2020.

The effective tax rate for the nine months ended September 30, 2021 was 17.0% and primarily differs from the federal statutory rate of 21% primarily due to a federal tax credit for energy efficient construction and partially offset by state income taxes.

The effective tax rate for the nine months ended September 30, 2020 was 22.7% and primarily differs from the federal statutory rate of 21% primarily due to state income taxes.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

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Executive Chairman of the Board

President, Chief Executive Officer and Director

Founder, Executive Vice President and Director

President and Chief Executive Officer

Chief Financial Officer

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Shipley co-founded our company in 2005 with Curtis D.

Shipley was our Co-Chief Executive Officer from January 2018 and, since February 2019, has served as our President and sole Chief Executive Officer.

Shipley was our Co-Chief Executive Officer from January 2018 and, from February 2019 to June 2022, has served as our President and sole Chief Executive Officer.

Effective in June 2022, Mr.

Shipley became the Execitive Vice President of the Company.

He has been a member of our board of directors since January 2018, when our company converted to a corporation and prior to that, Mr.

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in Lubbock, Texas, a manufactured home retailer.

Shipley is the co-founder, President and Chief Executive Officer and one of our largest stockholders and he was selected to serve on our board of directors due to his decades of experience and knowledge of our industry, his leadership and substantial sales and distribution experience with dealers and customers in the industry.

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.

Shipley is the co-founder, Executive Vice President and one of our largest stockholders and he was selected to serve on our board of directors due to his decades of experience and knowledge of our industry, his leadership and substantial sales and distribution experience with dealers and customers in the industry.

His service as a director and the Executive Vice creates a critical link between management and the board.

Duncan Bates joined our company in June 2022 and serves as President and Chief Executive Officer.

Bates most recently served as Senior Vice President, Mergers & Acquisitions of Arcosa Inc., a publicly traded infrastructure products company since August 2018.

Under his leadership, Arcosa executed 16 acquisitions and 2 divestitures in a three and ½ year period to reposition its portfolio around growth-oriented, high-margin products.

Previously, he served as a Vice President in the Industrials Investment Banking Group at Stephens Inc.

from June 2015 to August 2018.

From February 2012 to June 2015, he worked in the Energy Investment Banking Group at Seaport Global Securities, LLC.

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

in July 2010.

Bates received his B.S.

Management degree with a double major in Finance and Legal Studies from Tulane University.

Bates resigned from the Company’s Board upon his appointment as the President and Chief Executive Officer .

Ronald Arrington joined our company in May 2022 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.

Arrington, in a career spanning more than thirty years, has served as chief financial officer, as well as finance vice president and corporate controller for construction, retail and restaurant franchisee companies, including most recently serving as the Controller for XIT Paving and Construction.

He brings extensive experience in operational finance, financial management systems, operational restructuring, and process improvement.

Arrington earned his Bachelor of Business Administration from the University of Texas at Arlington 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.

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Non-Employee Directors

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.

Previously, he served as the Director of Corporate Real Estate for Temple-Inland Inc., a publicly traded corrugated packaging and building products company, from April 2002 until February 2012, at which time International Paper acquired Temple-Inland.

From 2012 until his retirement in December 2013, Mr.

Crawford served as a Senior Real Estate Manager for International Paper, focusing his efforts on the corporate transition.

From March 1994 until March 2002, Mr.

Crawford served as the Director of Corporate Real Estate and Senior Vice President for Guaranty Bank.

In that role, he had director level responsibilities over 200 branch bank locations in Texas and California, as well as oversight of Guaranty Bank's corporate headquarters in Dallas, Texas.

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 earned a B.B.A.

from Texas Tech University.

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.

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

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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.

His expertise in these areas make him well qualified as a member of the Board.

Lane was appointed to our board of directors on December 7, 2021 to fill the vacancy in the Board created by the resignation of Stephen Crawford.

Lane is currently Co-Founder, Chairman, and Chief Executive Officer at Bingie, Inc., a technology and entertainment company offering movie and television content across all streaming platforms.

Lane’s current role, he served as Co-Founder, Chairman, and Chief Executive Officer of Growth Hackers, LLC, an advertising technology company, and he served as Founder, Chairman, and Chief Executive Officer of The Service Vault, LLC, a software company.

Prior to his roles with Growth Hackers LLC and The Service Vault, LLC, Mr.

Lane founded Lane Custom Homes, LP, a full-service real estate development and homebuilding company and he served as a Principal in JP Lane Investments, structuring partnerships that purchased, owned, and sold single family developments and home sites.

Lane holds a BA in History from the University of Pennsylvania.

Lane has extensive experience and knowledge of real estate development, homebuilding industry, entertainment technology and the software industry, and this expertise is highly beneficial to our company.

Coll was appointed to our board of directors on June 7, 2022 to fill the vacancy in the Board created by the resignation of Duncan Bates.

Coll has served as the President of Universal Air Conditioner, Inc., a wholesale distributor of aftermarket auto parts since March 2015.

Previously, he was the US Head of Sales for BTG Pactual, a Brazilian investment bank and asset manager that operates throughout Latin America, from March 2011 until March 2015.

Coll began his career at UBS Investment Bank in the sales & trading and wealth management rotational program in July 2007.

Coll received his B.S.

degree in East Asian Studies with a minor in Financial Economics from Vanderbilt University.

Coll’s substantial knowledge in capital markets transactions and risk management solutions make him well qualified as a member of the Board.

Board Composition

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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 Stephen L.

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.

Duncan Bates and Joseph P.

Lane, 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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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.

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.

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 Jeffrey K.

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The audit committee is composed of Messrs.

Stouder (Chairman), Bates and Crawford.

Stouder (Chairman), Coll and Lane.

Compensation committee.

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The compensation committee is composed of Messrs.

Crawford (Chairman), Bates and Stouder.

Lane (Chairman), Coll and Stouder.

Nominating and governance committee.

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The nominating and governance committee is composed of Messrs.

Bates (Chairman) and Stouder.

Coll (Chairman), Lane and Stouder.

Code of Business Conduct and Ethics

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Our certificate of incorporation and our bylaws provide that we are required to indemnify our directors and officers, in each case to the fullest extent permitted by Texas law.

Any repeal of, or modification to, our certificate of incorporation and our bylaws may not adversely affect any right or protection of a director or officer for or with respect to any acts or omissions of such director or officer occurring prior to such amendment or repeal.

Any repeal of, or modification to, our certificate of

incorporation and our bylaws may not adversely affect any right or protection of a director or officer for or with respect to any acts or omissions of such director or officer occurring prior to such amendment or repeal.

Our bylaws also provide that we will advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in connection with their services to us, regardless of whether our bylaws permit such indemnification.

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(i) all persons serving as our principal executive officers during the years ended December 31, 2021 and 2020, and (ii) our three other most highly compensated executive officers who received compensation during the years ended December 31, 2021 and 2020 of at least $100,000 and who were executive officers on December 31, 2021 and 2020.

We refer to these persons as

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

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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Chief Accounting Officer

Chief Financial Officer (1)

Executive Vice President, General Counsel and Secretary (2)

Kerkaert joined the Company’s as Chief Financial Officer in August 2020 .

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.

Shipley’s compensation structure, in light of the fact they have historically 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 controls, owned 50% of the partnership interests of the company as of year-end 2017, which interests were converted into an initial allocation of 10,000,000 shares of our common stock of the company upon the conversion to a corporation.

Hodgson and Mr.

Shipley will continue to be compensated based on a fixed annual salary of $50,000.

In January 2022, Mr.

Hodgson entered into an amended and restated employment agreement (see Employment Agreements below).

Employment Agreements

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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.

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

On December 31, 2021, Mr.

Shipley’s employment agreement was automatically extended for one year.

In January 2022, Mr.

Hodgson entered into an amended and restated employment agreement which provides him with an annual salary of $200,000 and a signing bonus of 150,000 shares of restricted stock, which vested upon grant.

Under this new agreement, he is also eligible for an annual incentive bonus at the discretion of our compensation committee and he is eligible for equity awards if the Company’s stock price achieves certain targets.

On February 7, 2019, our board of directors separated the roles of Chief Executive Officer and Chairman of the Board, consistent with corporate governance best practices.

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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.

We have set aside an aggregate of 2,500,000 shares of common stock (including stock options) as additional compensation that we expect to award to our officers, directors and key personnel under the terms of our Plan, and this amount will not exceed 10% of the then outstanding shares of our common stock.

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Stock Options and Stock Appreciation Rights.

The committee is authorized to grant stock options, including both incentive stock options, or ISOs, which can result in potentially favorable tax treatment to the participant, and non-qualified stock options, and stock appreciation rights entitling the participant to receive the amount by which the fair market value of a share of common stock on the date of exercise exceeds the grant price of the stock appreciation right.

market value of a share of common stock on the date of exercise exceeds the grant price of the stock appreciation right.

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.

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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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We currently compensate each non-employee director through annual stock option grants and by paying annual fees for their participation on the board and on respective board committees.

Our board members will receive compensation of $10,000 per quarter, as well as an annual award of $10,000 in stock option grants that would vest as of the next annual meeting or in one year.

Our board of directors will review director compensation annually or when circumstances exist requiring reexamination and adjust it according to then current market conditions and good business practices.

Our board members will receive compensation of $10,000 per quarter, as well as an annual award of $10,000 in stock option grants that vest as of the next annual meeting or in one year.

Our board of directors review director compensation annually or when circumstances exist requiring reexamination and adjust it according to then current market conditions and good business practices.

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

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Shipley disclaims any beneficial interest.

Kerkaert’s beneficial ownership consists of 6,925 shares of common stock underlying stock options, representing 20.0% of the 34,626 stock options granted to him during the five-year period commencing August 10, 2020 under our 2018 Incentive Compensation Plan, which were exercised in September 2021.

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.

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Accounts payable balances due to Bell Mobile Homes for maintenance and related services were $49,000 and $61,000 as of December 31, 2021 and 2020, respectively.

Home sales to Bell Mobile Homes were $2,631 and $4,533 for the years ended December 31, 2020 and 2019, respectively

On February 2, 2016, the Company entered into a $1,500 note payable agreement with stated annual interest rates of 3.75% with a related party through common ownership.

The note was due on demand.

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.

sales to Bell Mobile Homes were $3,724,000 and $2,631,000 for the years ended December 31, 2021 and 2020, respectively.

Indemnification Agreements

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PRINCIPAL ACCOUNTING FEES AND SERVICES.

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.

Weaver, LLP served as our independent registered public accountants for the year ended December 31, 2021 and BKD, LLP served as our independent registered public accountants for the year ended December 31, 2020.

For our fiscal year ended December 31, 2021, we were billed approximately $77,000 for professional services rendered by Weaver, LLP and for our fiscal year ended December 31, 2020, we were billed approximately $358,000 for professional services rendered by BKD, LLP.

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.

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All Other Fees

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 years ended December 31, 2021 and 2020.

Pre-Approval Policies

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and Veritex Bank.

Amended and Restated Employment Agreement, dated as of January 5, 2022, between Legacy Housing Corporation and Curtis D.

Hodgson (incorporated by reference to Exhibit 10.1 of the registrant’s Current Report on Form 8-K filed on January 6, 2022).

Code of Ethics and Business Conduct.

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Section 1350 Certifications.

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

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

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

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LEGACY HOUSING CORPORATION

/s/ Kenneth E.

President and Chief Executive Officer

March 17, 2021

August 3, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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Executive Chairman of the Board

March 17, 2021

August 3, 2022

/s/ Kenneth E.

President and Chief Executive Officer and Director ( principal executive officer )

March 17, 2021

/s/ Thomas Kerkaert

Thomas Kerkaert

Chief Financial Officer ( principal financial officer )

March 17, 2021

Executive Vice President and Director ( principal executive officer )

August 3, 2022

/s/ Ronald C.

Chief Financial Officer ( principal

August 3, 2022

financial officer )

/s/ Jeffrey V.

Chief Accounting Officer ( principal accounting officer )

March 17, 2021

/s/ Stephen L.

March 17, 2021

August 3, 2022

/s/ Jeffrey K.

March 17, 2021

/s/ Robert D.

March 17, 2021

August 3, 2022

/s/ Joseph P.

August 3, 2022

/s/ Francisco J.

August 3, 2022

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures