What changed in this filing

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Item 9A. Controls and Procedures

2024-03-15 compared with 2023-03-15 · 375 added, 243 removed, 369 unchanged (63% of the section changed)

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Based on the evaluation of our disclosure controls and procedures as of December 31, 2023, 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.

In light of the conclusion that our disclosure controls and procedures are considered ineffective as of December 31, 2023, we have applied procedures and processes as necessary to ensure the reliability of our financial reporting in regard to this annual report.

Accordingly, the Company believes, based on its knowledge, that:

(i) this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading with respect to the period covered by this report;

and (ii) the financial statements, and other financial information included in this annual report, fairly present in all material respects our financial condition, results of operations and cash flows as of and for the periods presented in this annual report.

Management’s Report on Internal Control Over Financial Reporting

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(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.

generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with the authorization of its management and directors;

and (3) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on its financial statements.

generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with the authorization of management and directors;

Our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2023.

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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.

Management’s assessment included documenting, 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, 2023, 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 August 3, 2022, we identified material weaknesses in our internal control over financial reporting during the preparation of our financial statements for the year ended December 31, 2021.

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 fully remediated as of December 31, 2022.

The material weaknesses in financial reporting as of December 31, 2022 are summarized as follows:

● 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 policies and procedures to ensure the appropriate review and approval of user access rights to our accounting system;

and lack of approval of journal entries and segregation of duties in our financial reporting process.

● We determined that our information technology infrastructure does not provide sufficient safeguards required by the COBIT framework .

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 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.

The material weaknesses in internal control over financial reporting as of December 31, 2023 are summarized as follows:

● We determined that we have not sufficiently or adequately designed or implemented control activities and have a lack of documentation, review and approval of certain control activities.

Additionally, those activities are not sufficiently monitored and tested;

● We determined that we do not have sufficient qualified accounting personnel to support the preparation of financial statements that are in compliance with U.S.

GAAP and SEC reporting requirements;

● We determined that we have not sufficiently or adequately designed or implemented information technology general controls over in-scope business processes and financial reporting systems.

Changes in Internal Control over Financial Reporting

Except for the remediation measures described above, 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 2022 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 2023 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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Accordingly, because of the inherent limitations in our control system, misstatements in our public reports due to error or fraud may occur and not be detected.

Exemption from Auditor Attestation on Internal Controls

This Report on Form 10-K does not include an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies and emerging growth companies .

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 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 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.

During the three months ended December 31, 2023 , no director or officer of the Company adopted or terminated a “Rule 10 b 5 -1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

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Chief Financial Officer

Chief Accounting Officer

Non ‑ Employee Directors

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Hodgson earned a B.S.

in Engineering from the University of Michigan and J.D.

in Engineering from the University of Michigan and a J.D.

from The University of Texas.

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

In this capacity, he oversees the Company’s day-to-day operations and reports directly to the Board of Directors.

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.

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.

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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.

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.

In this capacity, Mr.

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.

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.

degree from the University of Southern Illinois and M.B.A.

from the University of Notre Dame.

Fiedelman joined our company in September 2023 and serves as Chief Financial Officer.

In this capacity, he oversees the Company’s finances, including all accounting systems and financial reporting.

Before joining Legacy, Mr.

Fiedelman managed his own consulting firm that provided CFO and transactional advisory services to middle market companies.

Prior to that, Mr.

Fiedelman was the CFO of Pioneer Wine & Spirits, a wholesaler of fine wines and artisanal spirits that was acquired in 2019.

Previously, Mr.

Fiedelman was the CFO of Oryon Technologies, a privately held licensor, developer, and manufacturer of a patented lighting technology, and CFO of Substrate Technologies Inc., a venture-backed developer and manufacturer of semiconductor components.

Fiedelman also held senior management positions in corporate finance, operations, and marketing at Alcatel (now Nokia).

Fiedelman began his career as a consultant with Andersen Consulting (now Accenture).

Fiedelman has a B.S.

in Electrical Engineering from Stanford University and an M.B.A.

from The Wharton School of the University of Pennsylvania.

Non-Employee Directors

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 was elected to our board of directors at the 2020 annual meeting of stockholders.

He has served as the Vice President, Global Controller at E2open, LLC, a leading provider of cloud-based supply chain software and solutions, since 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 2018 to 2019.

From 2015 to 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.

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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 was appointed to our board of directors in June, 2022 and was elected to our Board of Directors at the 2022 annual meeting of stockholders .

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

Previously, from 2011 to 2015, he was the U.S.

Head of Sales for BTG Pactual, a Brazilian investment bank and asset manager that operates throughout Latin America.

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

Coll received his B.S.

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

Ferguson was elected to our board of directors at the 2023 annual meeting of stockholders .

He has practiced law as a Texas attorney since 2005 and was a certified as public accountant in 2006.

He currently owns and manages a portfolio of oil and gas interests concentrated in West Texas and real estate holdings in the Rio Grande Valley.

In addition, Mr.

Ferguson has consulted on audit, compliance, and regulatory issues for publicly traded companies and registered investment advisors since 2005.

He is a 2002 graduate of the University of Texas

Undergraduate School of Business and Graduate School of Business.

He graduated from the University of Texas School of Law in 2005.

He was commissioned as an officer in the United States Air Force, where he continues to serve in the Reserve component.

Ferguson’s experience on audit, compliance, and regulatory issues make him well qualified as a member of the Board.

Board Composition

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Director Independence

Our common stock trades on The NASDAQ Global Market.

Our common stock trades on The NASDAQ Global Select Market.

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

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Stouder, Francisco J.

Coll 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.

Coll and Brian J.

Ferguson, 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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Under Nasdaq rules, the membership of each committee consists entirely of independent directors.

Given the date our committees were first established, our committees did not separately meet until early 2019.

The following is a brief description of our committees.

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reviews our financial statements;

reviews our critical accounting policies and estimates and internal controls over financial reporting;

reviews our critical accounting policies, estimates and internal controls over financial reporting;

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.

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), Coll and Lane.

Stouder (Chairman), Coll and Ferguson.

Compensation committee.

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The compensation committee is composed of Messrs.

Lane (Chairman), Coll and Stouder.

Ferguson (Chairman), Coll and Stouder.

Nominating and governance committee.

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The nominating and governance committee is composed of Messrs.

Lane (Chairman) and Stouder.

Coll (Chairman) and Ferguson.

Board Composition

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EXECUTIVE COMPENSATION.

Compensation Discussion and Analysis

The compensation committee, which includes our independent directors, oversees an executive compensation program that is intended to align the interests of our executive officers with those of our shareholders, link compensation paid with performance achieved, and attract, retain and motivate our key executives.

Our named executive officers (“NEOs”) are shown in the Summary Compensation Table below and include (i) all persons serving as our principal executive officers during the years ended December 31, 2023 and 2022 and (ii) our three other most highly compensated executive officers who received compensation during the years ended December 31, 2023 and 2022 of at least $100,000 and who were executive officers on December 31, 2023 and 2022.

Our annual compensation of our executive officers consists of a base salary and a discretionary bonus determined by the compensation committee.

The purpose of the base salary is to provide a fixed amount of cash compensation that is not variable and is generally competitive with market practices.

The purpose of the bonus is to provide a variable cash incentive based on performance.

In addition, our chief executive officer and chief financial officer each received stock option grants upon hire (as disclosed in the Company’s Form 8-K filings).

The annual compensation of our two co-founders, Mr.

Hodgson and Mr.

Shipley, is nominal as their significant equity positions in the Company drives their total compensation.

The Company does not have a formal compensation plan.

Employment Agreements

The Company maintains employment agreements with Messrs.

Hodgson, Shipley, Bates and Fiedelman.

Curtis Hodgson’s Employment Agreeement.

On January 5, 2022, we entered into an amended and restated employment agreement with Curtis D.

Hodgson to serve as our Executive Chairman for a term beginning January 1, 2022 and ending June 16, 2024.

Under the employment agreements, Mr.

Hodgson’s annual base salary is $200,000, and he is eligible to receive an annual incentive bonus as determined by the board of directors.

The employment agreement provides for customary provisions for the termination of the Mr.

Hodgson’s employment.

Hodgson is entitled to receive his base salary for the remaining portion of the employment period if he is terminated without cause.

Additionally, in the event Mr.

Hodgson’s employment with us is terminated within one year after a change of control (as defined in the employment agreement) for certain reasons, we have agreed to pay Mr.

Hodgson an amount equal to two years’ compensation at his then current rate of pay.

The employment agreements also contains customary confidentiality, intellectual property, non-solcitation and non-competition covenants.

Shipley’s Employment Agreement.

On November 27, 2018, we entered into an employment agreement with Kenneth E.

Shipley to serve as our Co-Chief Executive Officer.

From February 2019 to June 2022, Mr.

Shipley served as our President and sole Chief Executive Officer, and in June 2022, Mr.

Shipley became our Executive Vice President.

The term of the employment agreement commenced January 1, 2018, ended December 31, 2021 and automatically is extended for one year periods beginning with the initial termination date.

Under the employment agreement, Mr.

Shipley’s annual base salary is $50,000, and he is entitled to receive such health, death, disability, and other insurance benefits, and to participate in such retirement and other plans, as are made available to other executive officers of the Company.

The employment agreement provides for customary provisions for the termination of Mr.

Shipley’s employment.

Shipley is entitled to receive his base salary for the remaining portion of the employment period if he is terminated without cause.

Additionally, in the event Mr.

Shipley’s employment with us is terminated within one year after a change of control (as defined in the employment agreement) for certain reasons, we have agreed to pay Mr.

Shipley an amount equal to two years’ compensation at his then current rate of pay.

The employment agreements also contains customary confidentiality, intellectual property, non-solcitation and non-competition covenants.

Duncan Bates’ Employment Agreement .

On June 7, 2022, we entered into an employment agreement with Duncan Bates to serve as our President and Chief Executive Officer for an initial term beginning June 7, 2022 and ending June 7, 2027.

The employment agreement provides for Mr.

Bates to receive a base salary of $300,000 per year

and a restricted stock award of 14,700 shares of Company common stock as a signing bonus, which shall vest one-half each of the first and second anniversary of the effective date.

Bates is eligible for an annual incentive bonus that will be determined by the Board.

The employment agreement grants Mr.

Bates (i) qualified stock options valued at $1,000,000 that vest at a rate of 10% per year, (ii) an option to purchase 300,000 shares of Company common stock at an exercise price of $36 per share, which shall vest one-tenth on each anniversary of the effective date and have a term of ten years and (iii) an option to purchase 600,000 shares of Company common stock at an exercise price of $48 per share, which shall vest one-tenth on each anniversary of the effective date and have a term of ten years;

each of these grants shall be subject to the terms of the Company’s 2018 Incentive Compensation Plan.

Bates is also entitled to receive such health, death, disability, and other insurance benefits, and to participate in such retirement and other plans, as are made available to other executive officers of the Company.

The employment agreement provides for customary provisions for the termination of the Mr.

Bates’ employment.

Bates is entitled to receive an amount equal to one years’ base salary and bonus if he is terminated without cause.

Additionally, in the event Mr.

Bates’ employment with us is terminated within two years after a change of control (as defined in the employment agreement) for certain reasons, we have agreed to pay Mr.

Bates an amount equal to one years’ compensation at his then current rate of pay.

The employment agreements also contains customary confidentiality, intellectual property, non-solcitation and non-competition covenants.

Fiedelman’s Employment Agreement.

On September 10, 2023, we entered into an employment agreement with Jeffrey M.

Fiedelman to serve as our Chief Financial Officer for an initial term beginning September 10, 2023 and ending September 10, 2028.

The employment agreement provides for Mr.

Fiedelman to receive a base salary of $275,000 per year.

Fiedelman is eligible for an annual incentive bonus that will be determined by the Board.

The employment agreement grants Mr.

Fiedelman qualified stock options valued at $500,000 that vest at a rate of 20% per year and shall be subject to the terms of the Company’s 2018 Incentive Compensation Plan.

Fiedelman also is entitled to receive such health, death, disability, and other insurance benefits, and to participate in such retirement and other plans, as are made available to other executive officers of the Company.

The employment agreement provides for customary provisions for the termination of the Mr.

Fiedelman’s employment.

Fiedelman is entitled to receive an amount equal to one years’ base salary and bonus if he is terminated within two years after a change of control (as defined in the employment agreement) for certain reasons.

The employment agreements also contains customary confidentiality, intellectual property, non-solcitation and non-competition covenants.

Our NEOs participate in the same employee benefit plans that are made available to the Company’s employees generally.

We do not provide a defined benefit pension plan for our NEOs or other employees.

Our currently employed NEOs are eligible to participate in our 401(k) plan on the same terms as are generally provided to our full-time employees.

The Company provides matching contributions in respect of a portion of the participant’s elective deferrals under the 401(k) plan.

We do not provide any nonqualified deferred compensation plans for our NEOs.

The Company adopted an executive compensation clawback policy in December, 2023, that provides for the recoupment from certain executives of incentive compensation in the event of an accounting restatement or the occurrence of other clawback events described in the policy.

The policy is designed to deter and prevent detrimental conduct and to protect our investors from financial misconduct.

Summary Compensation Table

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

(i) all persons serving as our principal executive officers during the years ended December 31, 2022 and 2021, and (ii) our three other most highly compensated executive officers who received compensation during the years ended December 31, 2022 and 2021 of at least $100,000 and who were executive officers on December 31, 2022 and 2021.

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:

The table below shows the compensation paid to or earned by our NEOs for the years ending December 31, 2023 and December 31, 2022.

Name and Position

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Chief Financial Officer (2)

Chief Financial Officer (3)

Bates joined the Company as President and Chief Executive Officer in June 2022 .

Arrington joined the Company as Chief Financial Officer in May 2022 .

Hodgson and Mr.

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.

Shipley and his family members, whether individually or through an entity Mr.

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.

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

On November 27, 2018, we entered into an employment agreement with each of Curtis D.

Hodgson and Kenneth E.

Shipley to serve as our Co-Chief Executive Officer for an initial term beginning January 1, 2018 and ending December 31, 2021.

Following the initial expiration date of the employment agreements, and on each subsequent one year anniversary of such date, the term of the employment agreements will automatically be extended for one year, unless earlier terminated by either party.

Generally, since founding our company, Mr.

Hodgson has overseen our day-to-day business operations, including strategic planning and manufacturing, and Mr.

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.

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.

Hodgson transitioned from his role as our Co-Chief Executive Officer to become our executive Chairman of the Board and Mr.

Shipley became our sole Chief Executive Officer and President.

Effective in June 2022, Mr.

Shipley became the Executive Vice President and Duncan Bates was appointed President and Chief Executive Officer of the Company.

Hodgson, as an executive Chairman, will remain actively involved in our management in this role, including with respect to overall corporate strategy and manufactured home park development and financing.

Outstanding Equity Awards at December 31, 2022

The following table shows outstanding option awards held by the named executive officers as of December 31, 2022.

Vested Shares

Unvested Shares

Arrington joined the Company as Chief Financial Officer in May 2022 and left the Company in September 2023 .

Fiedelman joined the Company as Chief Financial Officer in September 2023.

Burt left the Company in December 2023.

Grants of Plan Based Awards

The following table lists grants of plan-based awards to each of our NEOs for the year ending December 31, 2023.

Stock Awards:

Option Awards:

Estimated Future Payouts Under

Non-Equity Incentive Plan Awards

Equity Incentive Plan Awards

Threshold ($)

($ per share)

Fiedelman received the award upon joining the Company as Chief Financial Officer in September 2023.

Outstanding Equity Awards

The following table lists outstanding equity awards held by our NEOs as of December 31, 2023.

Estimated Future Payouts Under

Non-Equity Incentive Plan Awards

Equity Incentive Plan Awards

Equity incentive

market or payout

Market Value of

Shares or Units

shares, units

of Stock That

or other rights

that have not

# Exercisable

# Unexercisable

Vested (#) (1)

Duncan Bates (2)

Arrington (2)

Bates was awarded options to purchase 962,460 shares of common stock under our 2018 Incentive Compensation Plan.

The grant date of the options was June 7, 2022 and the options vest at a rate of 10.0% annually, beginning June 7, 2023, until fully vested on June 7, 2032.

The options expire on June 7, 2032.

The options were granted in three tranches;

(1) 62,460 options with a strike price of $16.01, (2) 300,000 options with a strike price of $36.00 and (3) 600,000 options with a strike price of $48.00.

Arrington was awarded options to purchase 62,460 shares of common stock under our 2018 Incentive Compensation Plan.

The grant date of the options was June 7, 2022 and the strike price is $16.01.

The options vest at a rate of 10.0% annually, beginning June 7, 2023, until fully vested on June 7, 2032.

The options expire on June 7, 2032.

Fiedelman (3)

(1) Market value amounts represent the product of the closing price of our common stock on December 29, 2023 of $25.22 per share, multiplied by the number of unvested shares.

Bates received the awards upon joining the Company as Chief Executive Officer in June 2022.

Fiedelman received the award upon joining the Company as Chief Financial Officer in September 2023.

Options Exercised and Stock Vested

The following table includes certain information with respect to the options exercised and stock vested by the NEOs during the year ended December 31, 2023.

Option Awards

Number of Shares

Pension Benefits and Nonqualified Deferred Compensation

We do not provide any pension benefits, nonqualified defined contribution or other deferred compensation plans for our NEOs.

Potential Payments Upon Termination or Change of Control

We are party to employment agreements with NEOs Hodgson, Shipley, Bates and Fiedelman.

This section describes the payments and benefits that may be payable upon certain terminations of employment or a change of control and the events that trigger them.

Certain equity awards held by these NEOs are subject to accelerated vesting on a

change in control.

This section describes the payments and benefits that may be payable upon certain terminations of employment or a change of control and the events that trigger them.

Our payment obligations under each employment agreement are contingent upon the NEO executing and delivering a reasonable general release of claims in favor of the Company.

Shipley does not have this this requirement.

The employment agreements for these NEOs require the NEO to satisfy the following obligations:

1) During his employment and for 12 months following his termination of employment the NEO must comply with the provisions of a covenant not to compete, except for Mr.

Fiedelman who must comply for 6 months if he terminates employment voluntarily or for 12 months if he is terminated by the Company for cause, death or disability, or without cause.

2) During his employment and for 24 months following his termination of employment, the NEO must comply with a customary non-solicitation covenant.

3) During his employment and at all times subsequent to the last day of his employment, the NEO must comply with a customary confidentiality covenant.

There are four categories of events related to a termination of employment that can trigger payments or other benefits to our NEOs:

(i) death and disability;

(ii) involuntary termination;

(iii) voluntary termination;

and (iv) change of control (followed by an involuntary termination).

The following chart describes each category.

Death or Disability .

Upon the termination of any NEO’s employment as a result of death or disability, the Company does not have any continuing obligation after termination to the NEO or the NEO’s estate.

Involuntary Termination .

The Company may terminate an NEO for cause or without cause.

Termination for cause occurs when we decide to terminate a NEO based on our good faith determination that one of certain events have occurred.

In this case, the Company does not have any continuing obligation after termination to the NEO.

Termination without cause occurs when we decide to terminate the NEO’s employment for any reason other than for cause or disability.

Shipley and Mr.

Bates, the Company is obligated to provide benefits for 12 months following termination.

Hodgson and Mr.

Shipley, the Company is obligated to pay their base salary for the remainder of their employment period as states in their employment agreements in as if they were still employed by the Company.

Bates, the Company is obligated to pay his base salary for 12 months following termination plus a prorated bonus amount, both paid as if he was still on the employed by the Company.

Fiedelman, the Company does not have any continuing obligation.

Voluntary Termination .

The NEO may terminate his employment voluntarily, in which case the Company does not have any continuing obligation to the NEO.

Change of Control .

Hodgson and Mr.

Shipley, if their employment is terminated within 12 months after a change in control (as defined in their employment agreements), the Company is obligated to pay their base salary for 24 months following termination.

Bates and Mr.

Fiedelman, if their employment is terminated within 24 months after a change in control (as defined in their employment agreements), the Company is obligated to pay their base salary for 12 months following termination in a lump sum payment.

Bates and Mr.

Fiedelman hold equity awards that are subject to accelerated vesting upon a change of control.

The following table and footnotes present potential payments to each NEO as if the NEO’s employment had been terminated on December 31, 2023 involuntarily, without cause , and/or if a change in control had occurred on such date.

Salary continuation

Equity awards (1)

Salary continuation (3)

Equity awards

Salary continuation (4)

Equity awards

Salary continuation

Equity awards (2)

Bates’ equity awards include unvested restricted stock and stock options that would vest upon a change of control.

Restricted stock value is based on the Company’s closing stock price at December 31, 2023.

Stock option value is based on the difference between the Company’s closing stock price at December 31, 2023 and the exercise price.

Fiedelman’s equity awards include unvested stock options that would vest upon a change of control.

Stock option value is based on the difference between the Company’s closing stock price at December 31, 2023 and the exercise price.

Hodgson’s employment period terminates in June, 2024.

Shipley’s has a one year employment period that automatically renews, The current employment period terminates in November, 2024.

CEO Pay Ratio Disclosure

In accordance with Section 953(b) of the Dodd-Frank Act, and Item 402(u) of Regulation S-K,we are providing the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee.

In determining the median compensated employee, SEC rules allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions reflecting their unique employee populations.

Therefore, our reported pay ratio may not be comparable to that reported by other companies due to differences in

industry, business models and scale, as well as the different estimates, assumptions, and methodologies applied by other companies in calculating their respective pay ratios.

Excluding our CEO, we identified our median employee by preparing a list of all 572 individuals employed by the Company as of December 31, 2023, and examined the total compensation paid to each such individual as reflected in the Company’s payroll records.

We included all employees (other than our CEO), whether employed on a full-time, part-time, seasonal or temporary basis.

We annualized the compensation for any permanent employees who were not employed by us for all of 2023.

The 2023 annual total compensation of our CEO was $400,000.

The 2023 annual total compensation of our median employee was $32,240, and the ratio of these amounts is 12:1.

Pay versus Performance

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain measures of financial performance of the Company.

The following table provides information regarding Compensation Actually Paid (“CAP”) to our Principle Executive Officer (“PEO”) and non-PEO NEOs during the last two fiscal years, as well as total shareholder return and net income.

Value of Initial

Table Total for

Actually Paid to

(in thousands) ($)

1) During 2023, our PEO was Duncan Bates

2) During 2023, our Non-PEO NEOs were Curtis D.

Hodgson, Kenneth E.

Shipley, Jeffrey V.

Burt, Ronald C.

Arrington and Jeffrey M.

3) During 2022, our PEOs were Kenneth E.

Shipley and Duncan Bates

4) During 2022, our Non-PEO NEOs were Curtis D.

Hodgson, Jeffrey V.

Burt, and Ronald C.

Adjustments to the Summary Compensation Table Total to arrive at CAP for our PEO are shown below.

No adjustments were necessary for defined benefit and pension plans or dividends.

The assumptions used for determining the fair values shown in this table are consistent with those used to determine the fair values disclosed as of the grant date of such awards.

(Decrease) in

Date Fair Value

Unvested Equity

(Decrease) in

Fair Value of

of Equity Awards

at Fiscal Year End

Fair Value of

Equity Vested

at Prior Year-End

(Current Year

Equity Vested

Unvested Equity

During Fiscal Year

Actually Paid

During Fiscal Year

at Fiscal Year End

(Prior Year Awards)

Current Fiscal Year

1) Data shown for PEO Duncan Bates

2) Data shown for PEO Kenneth Shipley

Adjustments to the Summary Compensation Table Total to arrive at CAP for non-PEO NEOs (shown as an average) are presented below.

No adjustments were necessary for defined benefit and pension plans or dividends.

(Decrease) in

Date Fair Value

Unvested Equity

(Decrease) in

Fair Value of

of Equity Awards

at Fiscal Year End

Fair Value of

Equity Vested

at Prior Year-End

(Current Year

Equity Vested

Unvested Equity

During Fiscal Year

Actually Paid to

During Fiscal Year

at Fiscal Year End

(Prior Year Awards)

Current Fiscal Year

1) During 2023, our Non-PEO NEOs were Curtis D.

Hodgson, Kenneth E.

Shipley, Jeffrey V.

Burt, Ronald C.

Arrington and Jeffrey M.

2) During 2022, our Non-PEO NEOs were Curtis D.

Hodgson, Jeffrey V.

Burt, and Ronald C.

The graph below illustrates the relationship between CAP and cumulative total shareholder return.

The cumulative total shareholder return assumes $100 was invested for the period starting December 31, 2021 through the end of the listed fiscal year.

The graph shows CAP for both PEOs, Duncan Bates and Kenneth Shipley.

The graph below illustrates the relationship between CAP and net income.

The graph shows CAP for both PEOs, Duncan Bates and Kenneth Shipley.

We structure our executive compensation program to award compensation based on individual and Company performance, to be competitive in the market and to retain our executives.

2018 Incentive Compensation Plan

4 unchanged sentences

Our Plan is to be administered by our Compensation Committee, provided, however, that except as otherwise expressly provided in the Plan, the board of directors may exercise any power or authority granted to the committee under our Plan.

Subject to the terms of our Plan, the committee is authorized to select eligible persons to

receive awards, determine the type, number and other terms and conditions of, and all other matters relating to, awards, prescribe award agreements (which need not be identical for each participant), and the rules and regulations for the administration of the Plan, construe and interpret the Plan and award agreements, and correct defects, supply omissions or reconcile inconsistencies in them, and make all other decisions and determinations as the committee may deem necessary or advisable for the administration of our Plan.

Subject to the terms of our Plan, the committee is authorized to select eligible persons to receive awards, determine the type, number and other terms and conditions of, and all other matters relating to, awards, prescribe award agreements (which need not be identical for each participant), and the rules and regulations for the administration of the Plan, construe and interpret the Plan and award agreements, and correct defects, supply omissions or reconcile inconsistencies in them, and make all other decisions and determinations as the committee may deem necessary or advisable for the administration of our Plan.

The persons eligible to receive awards under our Plan are the officers, directors, employees, consultants and other persons who provide services to us.

31 unchanged sentences

Stockholder approval will not be deemed to be required under laws or regulations, such as those relating to ISOs, that condition favorable treatment of participants on such approval, although the board of directors may, in its discretion, seek stockholder approval in any circumstance in which it deems such approval advisable.

Our Plan will terminate at the earliest of (a) such time as no shares of common stock remain available for issuance under our Plan, (b) termination of our Plan by the board of directors, or (c) the tenth anniversary of the effective date of the Plan.

Awards outstanding upon expiration of our Plan will remain in effect until they have been exercised or terminated, or have expired.

1 unchanged sentence

Director Compensation

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 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.

Directors who are also officers or employees of the Company do not receive any special or additional remuneration for service on the board.

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

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

We also compensate our directors for serving as a committee member and a committee chair.

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

The following table provides information regarding compensation paid to each non-employee director during the year ended December 31, 2023:

Awards ($) (1)

(1) Amounts in this column reflect the fair value of restricted stock based on the closing price of the Company’s stock on the grant date

Lane’s term ended December 1, 2023 and he was replaced by Mr.

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

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, 2024, referred to in the table below as the “Beneficial Ownership Date,” by:

26 unchanged sentences

Shipley disclaims any beneficial interest.

Bates’ beneficial ownership consists of 1,075 shares of common stock, representing 674 shares of common stock granted to him for service as a board member during 2021 and 401 shares of common stock granted to him for service as a board member during 2022 .

Burt’s beneficial ownership consists of 27,857 shares of common stock, representing 71.4% 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.

Bates’ beneficial ownership consists of 1,075 shares of common stock granted to him for service as a board member during 2021 and 2022, 5,000 shares of common stock purchased on the open market, and 7,350 shares of common stock granted to him during the two-year period commencing on June 7, 2022 under our 2018 Incentive Compenation Plan, which are currently vested .

Delinquent Section 16(a) Reports

5 unchanged sentences

Number Of Reports Not Filed

Hodgson, Executive Chairman of the Board

Shipley, Founder, Executive Vice President and Director

Kerkaert, Chief Financial Officer (former)

Burt, Chief Accounting Officer

Crawford, Director (former)

Stouder, Director

R Duncan Bates, President and Chief Executice Officer

Arrington, Chief Financial Officer

Coll, Director

Lane, Director

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

2 unchanged sentences

Accounts receivable balances due from Bell Mobile Homes were $403 and $0 as of December 31, 2023 and 2022, respectively.

Accounts payable balances due to Bell Mobile Homes for maintenance and related services were $132,000 and $49,000 as of December 31, 2022 and 2021, respectively.

Accounts payable balances due to Bell Mobile Homes were $18 and $132 as of December 31, 2023 and 2022, respectively.

Home sales to Bell Mobile Homes were $4,543 and $4,499 for the years ended December 31, 2023 and 2022, respectively.

Shipley Bros., Ltd.

(“Shipley Bros.”), a retailer owned by one of the Company’s significant shareholders, purchases manufactured homes from the Company.

And Crazy Red’s Mobile Homes (together, “Shipley Bros.”), retailers owned by one of the Company’s significant shareholders, purchase manufactured homes from the Company.

Accounts receivable balances due from Shipley Bros.

were $143 and $0 as of December 31, 2023 and 2022, respectively.

Accounts payable balances due to Shipley Bros.

were $67 and $0 as of December 31, 2023 and 2022, respectively.

Home sales to Shipley Bros.

were $1,199 and $3,181 as of December 31, 2023 and 2022, respectively.

There were no accounts receivable balances or accounts payable balances due from/to Shipley Bros.

as of December 31, 2022 and 2021, respectively.

At December 31, 2022, the Company had a receivable of $68,000 from a principal shareholder.

This amount is included in the Company’s accounts receivable balance as of December 31, 2022.

At December 31, 2023 and December 31, 2022, the Company had an accounts receivable balance of $0 and $68, respectively, from a principal shareholder.

Indemnification Agreements

18 unchanged sentences

PRINCIPAL ACCOUNTING FEES AND SERVICES.

Daszkal Bolton, LLP served as our independent registered public accountants for the year ended December 31, 2022 and Weaver, LLP served as our independent registered public accountants for the year ended December 31, 2021.

For our fiscal year ended December 31, 2022, we were billed approximately $142,500 for professional services rendered by Daszkal Bolton, LLP and for our fiscal year ended December 31, 2021, we were billed approximately $581,000 for professional services rendered by Weaver, 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.

Frazier & Deeter, LLC served as our independent registered public accountants for the year ended December 31, 2023.

Daszkal Bolton, LLP served as our independent registered public accountants for the year ended December 31, 2022 and for the three months ended March 31, 2023.

CohnReznick LLP served as our independent registered public accountants for the three months ended June 30, 2023 and September 30, 2023.

For our fiscal year ended December 31, 2023, we were billed approximately $505,000 for professional services rendered by Frazier & Deeter, LLC.

For our fiscal year ended December 31, 2022, we were billed approximately $254,000 for professional services rendered by Daszkal Bolton, LLP.

For services rendered in 2023 rendered by Daszkal Bolton, LLP, we were billed $30,000.

For services rendered in 2023 rendered by CohnReznick LLP, we were billed $80,610.

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

Audit Related Fees

There were no fees for audit related services rendered by our independent auditors for the years ended December 31, 2023 and 2022.

For our fiscal years ended December 31, 2022 and 2021, there were no fees for professional services rendered by our independent auditors for tax compliance, tax advice, and tax planning.

There were no fees for professional services rendered by our independent auditors for tax compliance, tax advice, and tax planning for the years ended December 31, 2023 and 2022.

All Other Fees

1 unchanged sentence

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.

All of the above services and fees were reviewed and approved by the audit committee prior to the commencement of such services.

No services were performed before or without approval.

42 unchanged sentences

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).

Credit Agreement, dated as of July 28, 2023, by and among Legacy Housing Corporation, Prosperity Bank as administrative agent, and the lenders party thereto

Employment Agreement, effective June 7, 2022 by and between Legacy Housing Corporation and Duncan Bates

Employment Agreement, dated September 10, 2023 between Legacy Housing Corporation and Jeff Fiedelman

Code of Ethics and Business Conduct.

Code of Ethics for the CEO and Senior Financial Officers.

Consent of Frazier & Deeter, LLC, Independent Registered Public Accounting Firm

Consent of Daszkal Bolton, LLP, Independent Registered Public Accounting Firm

Rule 13a-14(a)/15d-14(a) Certification.

2 unchanged sentences

Section 1350 Certifications.

Executive Compensation Clawback Policy

Inline XBRL Instance Document

5 unchanged sentences

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.

Compensatory plan or agreement.

13 unchanged sentences

March 15, 2024

/s/ Ronald C.

/s/ Jeffrey M.

Chief Financial Officer ( principal

1 unchanged sentence

financial officer )

/s/ Jeffrey V.

Chief Accounting Officer ( principal accounting officer )

March 15, 2023

/s/ Jeffrey K.

March 15, 2024

/s/ Joseph P.

March 15, 2024

2 unchanged sentences

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