UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X]Annual
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December
31, 2013

[_]Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 0-51365

IRONCLAD
PERFORMANCE WEAR CORPORATION(Exact Name of Registrant as Specified in its Charter)

|Nevada                            |  | 98-0434104         
|--------------------------------- |  | -------------------
|(State or Other Jurisdiction      |  | (I.R.S. Employer   
|of Incorporation or Organization) |  | Identification No.)



2201
Park Place, Suite 101El Segundo, California 90245
(Address of Principal Executive Offices and Zip Code)

(310) 643-7800
(Registrant’s Telephone Number, Including Area Code)

Securities registered under Section 12(b)
of the Exchange Act:

None

Securities registered under Section 12(g)
of the Exchange Act:

Common Stock, par value $0.001 per
share

(Title of Class)

Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.		Yes[_]No[X]

Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.		Yes[_]No[X]

Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.		Yes[X]No[_]

Indicate by check mark whether
the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such files). 			Yes[X]No[_]

Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.[_]

Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

|Large Accelerated Filer[_]                                          |                              | Accelerated Filer[_]
|------------------------------------------------------------------- | ---------------------------- | --------------------
|Non-accelerated Filer[_](Do not check if smaller reporting company) | Smaller Reporting Company[X]

Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Act).		Yes[_]No[X]

The aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the common equity was last sold, as of the last business
day of the registrant’s most recently completed second fiscal quarter, was approximately $14,384,000.

At March 14, 2014, the issuer
had 76,704,275 shares of common stock, par value $0.001 per share, issued and outstanding..



Table of Contents





IRONCLAD PERFORMANCE WEAR CORPORATION

INDEX TO FORM 10-K







|PART I   |                                                                                                              |  | 3 
|-------- | ------------------------------------------------------------------------------------------------------------ |  | --
|Item 1.  | Business                                                                                                     |  | 3 
|Item 1A. | Risk Factors                                                                                                 |  | 7 
|Item 1B. | Unresolved Staff Comments                                                                                    |  | 16
|Item 2.  | Properties                                                                                                   |  | 16
|Item 3.  | Legal Proceedings                                                                                            |  | 16
|Item 4.  | Mine Safety Disclosures                                                                                      |  | 16
|PART II  |                                                                                                              |  | 17
|Item 5.  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 17
|Item 6.  | Selected Financial Data                                                                                      |  | 17
|Item 7.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations.                       |  | 17
|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 24
|Item 8.  | Financial Statements and Supplementary Data                                                                  |  | 25
|Item 9.  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |  | 48
|Item 9A. | Controls and Procedures                                                                                      |  | 48
|Item 9B. | Other Information                                                                                            |  | 49
|PART III |                                                                                                              |  | 50
|Item 10. | Directors, Executive Officers and Corporate Governance                                                       |  | 50
|Item 11. | Executive Compensation                                                                                       |  | 54
|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 60
|Item 13. | Certain Relationships and Related Transactions, and Director Independence                                    |  | 62
|Item 14. | Principal Accounting Fees and Services                                                                       |  | 63
|PART IV  |                                                                                                              |  | 64
|Item 15. | Exhibits, Financial Statement Schedules                                                                      |  | 64





Table of Contents2





PART I

CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS

This report, including the sections entitled
“Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and “Business,” contains “forward-looking statements” that include information relating to future events,
future financial performance, strategies, expectations, competitive environment, regulation and availability of resources. These
forward-looking statements include, without limitation, statements regarding: proposed new services; our expectations concerning
litigation, regulatory developments or other matters; statements concerning projections, predictions, expectations, estimates or
forecasts for our business, financial and operating results and future economic performance; statements of management’s goals
and objectives; and other similar expressions concerning matters that are not historical facts. Words such as “may,”
“will,” “should,” “could,” “would,” “predicts,” “potential,”
“continue,” “expects,” “anticipates,” “future,” “intends,” “plans,”
“believes” and “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking
statements.

Forward-looking statements should not
be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by
which, that performance or those results will be achieved. Forward-looking statements are based on information available at the
time they are made and/or management’s good faith belief as of that time with respect to future events, and are subject to
risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested
by the forward-looking statements. Important factors that could cause these differences include, but are not limited to other factors
discussed under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and “Business.”

Forward-looking statements speak only
as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update
forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking
information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements,
no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

Item 1.	Business.

With respect to this discussion, the
terms “we,” “us,” “our,” “Ironclad” and the “Company” refer to Ironclad
Performance Wear Corporation, a Nevada corporation and its wholly-owned subsidiary Ironclad Performance Wear Corporation, a California
corporation, or “Ironclad California.”

General

Founded in 1998, we design and manufacture
branded performance work wear for a variety of construction, do-it-yourself, industrial, sporting goods and general services markets.
Since inception, we have leveraged our proprietary technologies to design task-specific technical gloves and performance apparel
designed to improve the wearer’s ability to safely, efficiently and comfortably perform specific job functions. Our goal
is to establish and maintain a reputation in the construction, do-it-yourself, industrial, sporting goods and general services
markets as a leader in performance gloves and apparel.

We manufacture our performance gloves
and apparel using functional materials, including DuPontTM Kevlar®, Nomex® and Teflon®, Clarino® Synthetic
Leather, CT-5® Cut Resistant Fabric and Duraclad®. We incorporate these materials in the manufacturing process to create
products that meet the functional and protective requirements of our consumers. Since inception, we have employed an in-house research
and development department responsible for identifying and creating new products and applications, and improving and enhancing
existing products.

We currently sell our products in all
50 states and internationally through an estimated 16,000 retail outlets. Our gloves are priced at retail between $8 and $65 per
unit, with apparel unit prices ranging from $4 to $80.



Table of Contents3





Glove Products

Currently, our primary products are our
task-specific technical gloves. Glove products are specially designed for individual user groups. Currently, we produce and sell
over 85 distinct glove types in a variety of sizes and colors which cater to the specific demands and requirements of industrial,
construction, do-it-yourself, and sporting goods consumers, including carpenters, machinists, package handlers, plumbers, welders,
roofers, oil and gas workers, mechanics, hunters, gardeners and do-it-yourself users. Gloves are available in multiple levels of
protection and abrasion that allow the wearer to choose a product based on the task demands, weather and ease of motion. Glove
products are currently manufactured by multiple suppliers operating in China, Hong Kong, Cambodia, and Indonesia. The manufacturing
capabilities necessary for the manufacturing of our gloves is not particularly specialized and we believe that we would be able
to replace our current manufacturers without significant disruption in supply, if necessary. Raw material suppliers and substitute
materials are readily available and we believe that our manufacturers would be able to replace their current raw material suppliers
without significant disruption in supply.

Apparel

We launched a line of performance apparel
products during the fourth quarter of 2005. This apparel line initially consisted of long and short sleeved shirts designed to
increase the comfort and functionality of the wearer by taking into account environmental temperatures and workers’ corresponding
perspiration levels. The apparel is engineered to keep the wearer dry and cool under extreme work conditions. Ironclad’s
apparel products are comparable to Under ArmourTM Products, but we have incorporated worker-centric features such as anti-microbials,
SPF 30 sunscreen protection and self wicking, and have made our apparel products slightly heavier for durability. Our existing
sales force sells the performance apparel line to our existing customer base. In 2007, we expanded the apparel line to include
performance jackets, pants, shorts, reflective and polo shirts, underwear and tights. The apparel line is manufactured by four
suppliers located in Taiwan, Mexico, Vietnam and the Dominican Republic. Manufacturing capacity for apparel is readily available
and we believe that we would be able to replace our current manufacturers and add new manufacturers without significant disruption
in supply.

In mid-2008, after completing an internal
and competitive analysis, we determined that Ironclad should reduce its focus and attention on performance apparel because of the
cost involved in launching a new line of business and promoting this new line into the marketplace. As a result, we have decreased
the number of performance apparel items produced and sold by the Company. The reduction in performance apparel was guided by our
sell-through analysis and a survey of our retail customers’ preferences. Those apparel items remaining in Ironclad’s
offerings will continue to be sold through our existing sales channels.

Competition

Ironclad competes in the following principal
markets: industrial, construction and sport.

Technical Gloves

Ironclad faces competition from other
specialty gloves and apparel companies, such as Custom Leathercraft Manufacturing Company, Ergodyne, Hex Armour, Mechanix Wear
and Ringer’s. Compared generally, we believe our material selection and construction provides for superior protection, durability,
quality and repeat customers affording a substantial, sustainable advantage in the category.

Performance Work Apparel

We are one of a limited number of manufacturers
of performance work apparel and, in the opinion of management, currently face relatively little competition from other manufacturers
in this sector. However, as mentioned above, we intend to de-emphasize our work apparel line in favor of focusing on the task-specific
technical glove business. As such, our position in the performance work apparel market will decline significantly.



Table of Contents4





Mainstream Product Channels

To date, we have established our reputation,
customer loyalty and brand by selling our products through hardware stores, lumber yards, big box home centers, industrial distributors,
automotive and sporting goods retailers. We intend to continue to expand into additional large retailers and distributors in 2014.

International Expansion

We began distributing products internationally
in 2005 in Australia and Japan. In 2006, we entered the Canadian market through a distributor. We expanded into the United Kingdom
in 2007 and into Spain and the Netherlands in 2008. In 2010 we expanded into Sweden through a direct customer. Several of our domestic
distributors market our gloves into other international markets through their own networks. In 2013 we established a third party
Free Trade Zone (“FTZ”) warehouse in Singapore in order to better service our international customers. We plan to expand
further into Europe and additional international markets in the future.

Ironclad Branding

We place an emphasis on the establishment
and maintenance of our brand equity. Since the inception of our business, our products have carried the “Ironclad”
brand. We believe that our success in building a dedicated following of users with substantial product penetration across a large
number of retailers and storefronts was instrumental in recently allowing us to gain entry into larger retailers, and providing
the foundation to expand internationally and into broader industrial distributors.

We have been expanding our efforts on
Web sales and marketing through a redesigned Ironclad Website and a dedicated KONGTM website and will continue to focus on
e-commerce (i.e. offering our complete line of gloves and apparel, in all sizes, directly to the end consumer).

Sales and Customer Analysis

We are currently distributing our products
through an estimated 16,000 outlets that cater to the professional tradesman, do-it-yourself consumer, industrial user and sporting
goods consumer, including “Big Box” home centers, hardware co-ops, lumber yards, industrial distributors, national
auto retailers and sporting goods retailers. Currently, we estimate that our products are sold in only 25% of the retail and distribution
outlets identified by our management as viable Ironclad outlets. We intend to continue to emphasize and expand our relationships
with these retailers and distributors.

Sales through industrial distributors
accounted for approximately 38% and 53% of our sales revenue in 2013 and 2012, respectively. One distributor, Orr Safety Corporation,
accounted for approximately 24% of our sales in 2013 and approximately 41% of our sales in 2012.

Selected Analysis of “Big Box” and
International Retailers

We plan to continue our expansion by
increasing selling efforts through “Big Box” home centers, large industrial distributors and international channels,
which we believe creates significant opportunities for strengthening our brand and expanding our product penetration in the various
markets.

Geographic Information

Domestic sales accounted for 82% of our
revenue in 2013 and 82% in 2012. International sales in Australia, the United Kingdom, Canada, the Netherlands, Sweden and other
countries accounted for our remaining revenue in each year. All of our fixed assets are located in the United States, principally
in California at our headquarters. Our products are currently manufactured in China, Hong Kong, Indonesia, and Cambodia. Most of
our inventory is held in our main, third party warehouse in California, however we do maintain a small, varying amount in our FTZ
warehouse in Singapore.

Private-Label and Co-Branded Products and Relationships



Table of Contents5





We have selectively teamed up with several
existing brands in our marketplace to produce private-label gloves (co-branded with a “Built Tough by Ironclad” tag).
In addition, we have also developed co-branded gloves with qualified partners to penetrate alternate marketplaces, such as the
oil & gas industry (i.e. the KONGTM glove). We have also licensed several brand names (Snap-on, RealTree, Tuff Chix, and
Coleman) whereby we have the right to use their logo or patterns on gloves we produce for sale to our customers.

Intellectual Property and Proprietary Rights

We currently have six U.S. patents, one
international patent and three U.S. patents pending, which are intended to protect the design and technical innovations found in
our performance work gloves. Following are descriptions of the patents or patents pending.

| | · | Advanced Touch® Technology is a seamless fingertip design that places a smooth layer of material
on the touch receptors of the fingers. The result is an increase in comfort and a high degree of touch sensitivity. It is used
in Ironclad’s Tuff Chix® and Ranchworx® gloves as well as most gloves built for 5.11 Tactical. This patent was issued
on October 30, 2007.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Ironclad’s Engineered Grip System consists of a uniquely patterned, molded thermoplastic
elastomer, or TPE, that is welded to a synthetic leather palm. It provides extreme grip and abrasion protection without sacrificing
hand dexterity. It is found in Ironclad’s Extreme Duty® glove, which is designed to handle brick, cement block, rebar,
and demolition rubble. The Extreme Duty glove is primarily used by search and rescue professionals, including units of the New
York and Los Angeles Fire Departments. This patent was issued on September 5, 2006.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Silicone rubber is fused to the synthetic leather palm of the Box Handler® and Gripworx®
gloves in a specific pattern. The patent for this pattern, designed for optimum grip on smooth surfaces, was issued April 28, 2008.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Ironclad’s signature palm pattern is found on nine popular glove styles, including the
General UtilityTM, Wrenchworx® and Ranchworx® gloves. Management believes this pattern differentiates Ironclad from
other non-branded gloves. This patent was issued on February 14, 2006.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Ironclad has developed two glove styles that absorb tool impacts with a unique design of multiple
gel-filled palm pads. This design is found on the Vibration Impact and Mach 5® Impact and Snap-on Impact gloves. This patent
was issued on February 13, 2007.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Ironclad has designed a new silicone impregnated palm pattern specifically for use in automotive
market glove products. This patent was issued on July 6, 2010.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Ironclad has developed a heat resistant, shrink resistant, oil repellant, high durability synthetic
fabric used for the palm of high temperature, high dexterity gloves. Exclusive Ironclad Hotshield ® palm technology is found
in the Heatworx® line. This patent is pending.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Utilized in the complete line of KONGTM gloves, specific geometry and construction for a
glove used in the oil and gas extraction industries provides protection to the entire hand for impacts, glancing blows and pinched
fingers. This patent is pending.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Ironclad has created a new glove palm material and design that provides oil resistance, heat
resistance and improved grip in the presence of heavy oil saturation. This patent is registered in Singapore and pending elsewhere.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Ironclad owns the following trademark
intellectual property: 57 registered U.S. trademarks, 10 in-use U.S. trademarks, 1 U.S. trademark pending registration, 21 registered
international trademarks and 1 pending international trademark. These trademarks significantly strengthen consumer awareness of
the Ironclad brand, and enable Ironclad to maintain distinction between it and other companies trying to copy the Ironclad brand
image. We also have 7 copyright marks.



Table of Contents6





We seek to protect our intellectual property
through existing laws and regulations, and by contractual restrictions. We rely upon trademark, patent and copyright law, trade
secret protection and confidentiality or license agreements with our employees, customers, partners and others to help us protect
our intellectual property.

The status of any patent involves complex
legal and factual questions. The scope of allowable claims is often uncertain. As a result, we cannot be sure that any patent application
filed by us will result in a patent being issued, nor that any patents issued in the future will afford adequate protection against
competitors with similar technology; nor can we provide assurance that patents issued to us will not be infringed upon or be designed
around by others.

Employees

As of March 14, 2014, Ironclad had
29  full-time employees. Since inception, we have never had a work stoppage, and our employees are not represented by a labor
union. Ironclad considers its relationships with its employees to be positive.

Item 1A.	Risk Factors.

Investing in our common stock involves
a high degree of risk. You should carefully consider the following risk factors and all other information contained in this report
before purchasing our common stock. The risks and uncertainties described below are not the only ones facing us. Additional risks
and uncertainties that we are unaware of, or that we currently deem immaterial, also may become important factors that affect us.
If any of the following risks occur, our business, financial condition or results of operations could be materially and adversely
affected. In that case, the trading price of our common stock could decline, and you may lose some or all of the money you paid
to purchase our common stock.

RISKS RELATING TO OUR BUSINESS

We may need additional funding to
support our operations and capital expenditures. Our inability to obtain such funding could adversely affect our business.

We have funded our operations and
capital expenditures with cash flow from operations, our cash on hand, the net proceeds of the private placements and credit agreements.
As part of our planned growth, we will be required to make expenditures necessary to expand and improve our operating and management
infrastructure.

While capital resources have historically
been insufficient to support the continued growth of our operations, we believe that the proceeds from our financing transactions,
our cash flows from operations and borrowings available to us under our senior secured credit facility, the availability of purchase
order financing and our continuing cost containment measures will be adequate to meet our liquidity needs and capital expenditure
requirements for at least the next 12 months. In the event that our working capital needs exceed our cash sources we will need
to raise additional funds. There can be no assurance that any financing arrangements will be available in amounts or on terms acceptable
to us, if at all. Furthermore, if we are able to raise additional capital through the sale of equity or convertible debt securities
it may result in additional dilution to our existing stockholders. If adequate additional funds are not available, we may be required
to delay, reduce the scope of, or eliminate material parts of the implementation of our business strategy. This limitation could
substantially harm our business, results of operations and financial condition.

Our operating results may fluctuate
significantly and our stock price could decline or fluctuate if our results do not meet the expectation of analysts or investors.

Management expects that we will experience
substantial variations in our net sales and operating results from quarter to quarter. We believe that the factors which influence
this variability of quarterly results include:

| | · | the timing of our introduction of new product lines;
| | - | ----------------------------------------------------

| | · | the level of consumer acceptance of each new product line;
| | - | ----------------------------------------------------------

Table of Contents7





| | · | general economic and industry conditions that affect consumer spending and retailer purchasing;
| | - | -----------------------------------------------------------------------------------------------

| | · | the availability of manufacturing capacity;
| | - | -------------------------------------------

| | · | the seasonality of the markets in which we participate;
| | - | -------------------------------------------------------

| | · | the timing of trade shows;
| | - | --------------------------

| | · | the product mix of customer orders;
| | - | -----------------------------------

| | · | the timing of the placement or cancellation of customer orders;
| | - | ---------------------------------------------------------------

| | · | the weather;
| | - | ------------

| | · | transportation delays;
| | - | ----------------------

| | · | quotas and other regulatory matters; and
| | - | ----------------------------------------

| | · | the timing of expenditures in anticipation of increased sales and actions of competitors.
| | - | -----------------------------------------------------------------------------------------

As a result of fluctuations in our revenue
and operating expenses that may occur, management believes that period-to-period comparisons of our results of operations are not
a good indication of our future performance. It is possible that in some future quarter or quarters, our operating results will
be below the expectations of securities analysts or investors. In that case, our common stock price could fluctuate significantly
or decline.

We have a history of operating losses
and there can be no assurance that we can maintain profitability.

We have a history of operating losses
and may not sustain profitability. We cannot guarantee that we will remain profitable. Even if we remain profitable, given the
competitive and evolving nature of the industry in which we operate, we may be unable to sustain or increase profitability and
our failure to do so would adversely affect our business, potentially requiring us to raise additional funds to continue operations.

We may be unable to effectively manage
our growth.

Our strategy envisions growing our business.
Any growth in or expansion of our business is likely to continue to place a strain on our financial, managerial and other administrative
resources, infrastructure and systems. We have historically been undercapitalized to effectively manage and sustain our growth.
As with other growing businesses, we expect that we will need to continually restructure and expand our business development capabilities,
our systems and processes and our access to financing sources. We also will need to hire, train, supervise and manage new employees.
These processes are time consuming and expensive, will increase management responsibilities and will divert management attention.
We cannot assure you that we will be able to:

| | · | expand our systems effectively or efficiently or in a timely manner;
| | - | --------------------------------------------------------------------

| | · | allocate our human resources optimally;
| | - | ---------------------------------------

| | · | meet our capital needs;
| | - | -----------------------

| | · | identify and hire qualified employees or retain valued employees; or
| | - | --------------------------------------------------------------------

| | · | incorporate effectively the components of any business or product line that we may acquire in
our effort to achieve growth.
| | - | ---------------------------------------------------------------------------------------------------------------------------

Our inability or failure to manage our
growth and expansion effectively could harm our business and materially and adversely affect our operating results and financial
condition.



Table of Contents8





Substantially
all of our revenues have been derived from a relatively limited product line consisting of task-specific gloves and performance
apparel, and our future success depends on our ability to expand our product line and achievebroadermarket acceptance of our company and our products.

To date, our products have consisted
mainly of task-specific gloves and performance apparel, targeted primarily to the construction, do-it-yourself, industrial and
sporting goods markets. Our success and the planned growth and expansion of our business depend on us achieving greater and broader
acceptance in our existing market segments as well as in new segments. We may be required to enter into new arrangements and relationships
with vendors, suppliers and others to achieve broader acceptance of our products, but cannot guarantee that we will be able to
enter into such relationships. We also may be required to undertake new types of risks or obligations that we may be unable to
manage. There can be no assurance that consumers will purchase our products or that retail outlets will stock our products. Though
we plan to continue to expend resources on promoting, marketing and advertising to increase product awareness, we cannot guarantee
that any expenses we incur in such efforts will generate the desired product awareness or commensurate increase in sales of our
products. If we are unable to expand into new market segments, we may be unable to grow and expand our business or implement our
business strategy as described in this report. This could materially impair our ability to increase sales and revenue and materially
and adversely affect our margins, which could harm our business and cause our stock price to decline.

We may be unable to compete successfully
against existing and future competitors, which could decrease our revenue and margins, and harm our business.

The performance task specific glove and
apparel industries are highly competitive. There are several other companies that provide similar products, many of which are larger
and have greater financial resources than us. Our future growth and financial success depend on our ability to further penetrate
and expand our existing distribution channels and to increase the size of our average annual net sales per account in these channels,
as well as our ability to penetrate and expand other distribution channels. For example, we encounter competition in our existing
glove and workwear distribution channels from a number of competitors. Unknown or unforeseen new entrants into our distribution
channels, particularly low-cost overseas producers, will further increase the level of competition in these channels. There can
be no assurance that we will be able to maintain our growth rate or increase our market share in our distribution channels at the
expense of existing competitors and other apparel manufacturers choosing to enter the market segments in which we compete. In addition,
there can be no assurance that we will be able to enter and achieve significant growth in other distribution channels.

Failure to expand into new distribution
channels and new international markets could materially and adversely impact our growth plan and profitability.

Our sales growth depends in part on our
ability to expand from our existing hardware and lumber retail channels and industrial distributors into new distribution channels,
particularly “Big Box” home centers and work wear and sporting goods retailers. Failure to expand into these mass-market
channels could severely limit our growth.

Our business plan also depends in part
on our ability to expand into international markets. We have begun the distribution of our products in Japan, Australia, Canada
and Europe and we are in the process of establishing additional distribution in Europe and other international markets. Failure
to expand international sales through these and other markets could limit our growth capability and leave us vulnerable solely
to United States market conditions.

Our dependence on independent manufacturers
reduces our ability to control the manufacturing process, which could harm our sales, reputation and overall profitability.

We depend on independent contract manufacturers
to maintain sufficient manufacturing and shipping capacity in an environment characterized by declining prices, labor shortages,
continuing cost pressure and increased demands for product innovation and speed-to-market. This dependence could subject us to
difficulty in obtaining timely delivery of products of acceptable quality. In addition, a contractor’s failure to ship products
to us in a timely manner or to meet the required quality standards could cause us to miss the delivery date requirements of our
customers. The failure to make timely deliveries may cause our customers to cancel orders, refuse to accept

Table of Contents9





deliveries, impose
non-compliance charges through invoice deductions or other charge-backs, demand reduced prices or reduce future orders, any of
which could harm our sales, reputation and overall profitability.

We do not have long-term contracts with
any of our independent contractors and any of these contractors may unilaterally terminate their relationship with us at any time.
While management believes that there exists an adequate supply of contractors to provide products and services to us, to the extent
we are not able to secure or maintain relationships with independent contractors that are able to fulfill our requirements, our
business would be harmed.

We have initiated standards for our suppliers,
and monitor our independent contractors’ compliance with applicable labor laws, but we do not control our contractors or
their labor practices. The violation of federal, state or foreign labor laws by one of our contractors could result in us being
subject to fines and our goods that are manufactured in violation of such laws being seized or their sale in interstate commerce
being prohibited. To date, we have not been subject to any sanctions that, individually or in the aggregate, have had a material
adverse effect on our business, and we are not aware of any facts on which any such sanctions could be based. There can be no assurance,
however, that in the future we will not be subject to sanctions as a result of violations of applicable labor laws by our contractors,
or that such sanctions will not have a material adverse effect on our business and results of operations.

Our dependence on a single provider
for all warehouse and fulfillment functions reduces our ability to control the warehousing and fulfillment processes, which could
harm our sales, reputation, and overall business.

We have entered into an agreement to
outsource most of our warehouse and fulfillment functions to a single provider where we will consolidate most of our inventory
at one site, which is managed by an independent contractor who will then perform most of our warehousing, assembly, packaging and
fulfillment services. We depend on our independent contractor fulfiller to properly fulfill customer orders in a timely manner
and to properly protect our inventories. The contractor’s failure to ship products to customers in a timely manner, to meet
the required quality standards, to correctly fulfill orders, to maintain appropriate levels of inventory, or to provide
adequate security measures and protections against excess shrinkage could cause us to miss delivery date requirements of our
customers or incur increased expense to replace or replenish lost or damaged inventory or inventory shortfall. The failure to make
timely and proper deliveries may cause our customers to cancel orders, refuse to accept deliveries, impose non-compliance
charges through invoice deductions or other charge-backs, demand reduced prices or reduce future orders, any of which could harm
our sales, reputation and overall profitability.

Trade matters may disrupt our supply
chain, which could result in increased expenses and decreased sales.

We cannot predict whether any of the
countries in which our merchandise currently is manufactured or may be manufactured in the future will be subject to additional
trade restrictions imposed by the U.S. and other foreign governments, including the likelihood, type or effect of any such restrictions.
Trade restrictions, including increased tariffs or quotas, embargoes, safeguards and customs restrictions, against apparel items,
as well as U.S. or foreign labor strikes, work stoppages or boycotts, could increase the cost or reduce the supply of apparel available
to us and adversely affect our business, financial condition and results of operations. Although the quota system established by
the Agreement on Textiles and Clothing was completely phased out for World Trade Organization countries effective January 1, 2005,
there can be no assurances that restrictions will not be reestablished for certain categories in specific countries. We are unable
to determine the impact of the changes to the quota system on our sourcing operations, particularly in China. Our sourcing operations
may be adversely affected by trade limits or political and financial instability resulting in the disruption of trade from exporting
countries, significant fluctuation in the value of the U.S. dollar against foreign currencies, restrictions on the transfer of
funds and/or other trade disruptions.

Our international operations, and
the operations of our foreign manufacturers and suppliers, are subject to additional risks that are beyond our control and that
could harm our business.

Table of Contents10







Our glove products are manufactured by
6 manufacturers operating in China, Hong Kong, Indonesia and Cambodia. Our performance apparel products were manufactured in Taiwan,
Vietnam, Mexico and the Dominican Republic. We may in the future use offshore manufacturers for all or some of these products.
In addition, approximately 18% of our fiscal 2013 net revenues were generated through international sales and we plan to increase
our sales to international markets in the future. As a result of our international manufacturing and sales, we are subject to additional
risks associated with doing business abroad, including:

| | · | political unrest, terrorism and economic instability resulting in the disruption of trade from
foreign countries in which our products are manufactured;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | difficulties in managing foreign operations, including difficulties associated with inventory
management and collection on foreign accounts receivable;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | dependence on foreign distributors and distribution networks;
| | - | -------------------------------------------------------------

| | · | currency exchange fluctuations and the ability of our Chinese manufacturers to change the prices
they charge us based on fluctuations in the value of the U.S. dollar relative to that of the Chinese Yuan;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the imposition of new laws and regulations, including those relating to labor conditions, quality
and safety standards as well as restrictions on the transfer of funds;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | disruptions or delays in shipments;
| | - | -----------------------------------

| | · | changes in local economic and non-economic conditions and standards in which our manufacturers,
suppliers or customers are located; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------

| | · | reduced protection for intellectual property rights in jurisdictions outside the United States.
| | - | -----------------------------------------------------------------------------------------------

These and other factors beyond our control
could interrupt our manufacturers’ production in offshore facilities, influence the ability of our manufacturers to export
our products cost-effectively or at all, inhibit our and our unaffiliated manufacturer’s ability to produce certain materials
and influence our ability to sell our products in international markets, any of which could have an adverse effect on our business,
financial conditions and operations.

We may be unable to adequately protect
our intellectual property rights.

We rely in part on patent, trade secret,
trade dress and trademark law to protect our rights to certain aspects of our products, including product designs, proprietary
manufacturing processes and technologies, product research and concepts and recognized trademarks, all of which we believe are
important to the success of our products and our competitive position. There can be no assurance that any of our pending patent
or trademark applications will result in the issuance of a registered patent or trademark, or that any patent or trademark granted
will be effective in thwarting competition or be held valid if subsequently challenged. In addition, there can be no assurance
that the actions taken by us to protect our proprietary rights will be adequate to prevent imitation of our products, that our
proprietary information will not become known to competitors, that we can meaningfully protect our rights to unpatented proprietary
information or that others will not independently develop substantially equivalent or better products that do not infringe on our
intellectual property rights. We could be required to devote substantial resources to enforce our patents and protect our intellectual
property, which could divert our resources and result in increased expenses. In addition, an adverse determination in litigation
could subject us to the loss of our rights to a particular patent or other intellectual property, could require us to grant licenses
to third parties, could prevent us from manufacturing, selling or using certain aspects of our products or could subject us to
substantial liability, any of which could harm our business.

We
may become subject to litigation for infringing the intellectual property rights of others.

Table of Contents11







Others may initiate claims against us
for infringing on their intellectual property rights. We may be subject to costly litigation relating to such infringement claims
and we may be required to pay compensatory and punitive damages or license fees if we settle or are found culpable in such litigation,
we may be required to pay damages, including punitive damages. In addition, we may be precluded from offering products that rely
on intellectual property that is found to have been infringed by us. We also may be required to cease offering the affected products
while a determination as to infringement is considered. These developments could cause a decrease in our operating income and reduce
our available cash flow, which could harm our business and cause our stock price to decline.

We may be unable to attract and retain
qualified, experienced, highly skilled personnel, which could adversely affect the implementation of our business plan.

Our success depends to a significant
degree upon our ability to attract, retain and motivate skilled and qualified personnel. If we fail to attract, train and retain
sufficient numbers of these qualified people, our prospects, business, financial condition and results of operations will be materially
and adversely affected. In particular, we are heavily dependent on the continued services of our senior management team. We do
not have long-term employment agreements with any of the members of our senior management team, each of whom may voluntarily terminate
their employment with us at any time. Following any termination of employment, these employees would not be subject to any non-competition
covenants. The loss of any key employee, including members of our senior management team, and our inability to attract highly skilled
personnel with sufficient experience in our industries could harm our business.

Adverse conditions in the economy
and disruption of financial markets could negatively impact us and our customers and therefore our results of operations.

A further economic downturn in the businesses
or geographic areas in which we sell our products could reduce demand for these products and result in a decrease in sales volume
that could have a negative impact on our results of operations. Volatility and disruption of financial markets could limit our
ability, as well as our customers’ ability, to obtain adequate financing or credit to purchase and pay for our products in
a timely manner, or to maintain operations, and result in a decrease in sales volume that could have a negative impact on our results
of operations.

If we are unable to adequately fund
our operations, we may be forced to voluntarily file for deregistration of our common stock with the U.S. Securities and Exchange
Commission.

Compliance with the periodic reporting
requirements required by the U.S. Securities and Exchange Commission (or SEC) consumes a considerable amount of both internal,
as well external, resources and represents a significant cost for us. If we are unable to continue to devote adequate funding and
the resources needed to maintain such compliance, while continuing our operations, we may be forced to deregister with the SEC.
If we file for deregistration, our common stock will no longer be listed on NASDAQ’s OTC Bulletin Board (or OTCBB), and it
may suffer a decrease in or absence of liquidity as after the deregistration process is complete, our common stock will only be
tradable on the “Pink Sheets.” As a result of such deregistration, non-affiliates will no longer have access to information
regarding our results of operations. Without the availability of such information, our lenders may be forced to increase their
monitoring of our operations which may result in higher costs to us when borrowing money which could have a negative impact and
harm our business.

RISKS RELATING TO OUR INDUSTRY

If we are unable to respond to the
adoption of technological innovation in our industry and changes in consumer demand, our products will cease to be competitive,
which could result in a decrease in revenue and harm our business.

Our future success will depend, in part,
on our ability to keep up with changes in consumer tastes and our continued ability to differentiate our products through implementation
of new technologies, such as new materials and fabrics. We may not, however, be able to successfully do so, and our competitors
may be able to produce designs that are more appealing, implement new technologies or innovations in their designs, or manufacture
their products at a much lower cost. These types of developments could render our products less competitive and possibly eliminate
any differentiating advantage in designs and materials that we might hold at the present time.



Table of Contents12





We are susceptible to general economic
conditions, and a downturn in our industries or a reduction in spending by consumers could adversely affect our operating results.

The apparel industry in general has historically
been characterized by a high degree of volatility and subject to substantial cyclical variations. Our operating results will be
subject to fluctuations based on general economic conditions, in particular conditions that impact consumer spending and construction
and industrial activity. A downturn in the construction, industrial or housing sectors could be expected to directly and negatively
impact sales of protective gear to workers in these sectors, which could cause a decrease in revenue and harm our sales.

Difficult economic conditions could also
increase the risk of extending credit to our retailers. Since we have entered into a factoring relationship, a customer’s
financial problems would limit the amount of customer receivables that we could assign to such factor on the receivables, and could
cause us to assume more credit risk relating to those assigned receivables or to curtail business with that customer.

Changes in international treaties
or governmental regulatory schemes could adversely impact our business.

Any negative changes to international
treaties and regulations such as the North American Free Trade Agreement (or NAFTA), and to the effects of international trade
agreements and embargoes imposed by entities such as the World Trade Organization, could result in a rise in trade quotas, duties,
taxes and similar impositions, limit the countries from whom we can purchase our fabric or other component materials, or limit
the countries where we might market and sell our products, any of which could correspondingly have an adverse effect on our business.

Any changes in regulation by the Federal
Trade Commission (or FTC) with respect to labeling and advertising of our products could have an adverse effect on our business.
The FTC requires apparel companies to provide a label clearly stating the country of origin of manufacture and the company’s
apparel registration number and a second label stating washing instructions for the product. A change in these requirements could
add additional cost to the production of our products, though we do not believe that this additional cost would be material, especially
in relation to the cost of producing our products.

RISKS RELATING TO OUR COMMON STOCK

There is a limited trading market
for our common stock and a market for our stock may not be sustained, which will adversely affect the liquidity of our common stock
and could cause our market price to decline.

Although prices for our shares of common
stock are quoted on the OTCBB (under the symbol ICPW), there is a limited public trading market for our common stock, and no assurance
can be given that a public trading market will be sustained.

Active trading markets generally result
in lower price volatility and more efficient execution of buy and sell orders. The absence of an active trading market reduces
the liquidity of our common stock. As a result of the lack of trading activity, the quoted price for our common stock on the OTC
Bulletin Board is not necessarily a reliable indicator of its fair market value. Further, if we cease to be quoted, holders of
our common stock would find it more difficult to dispose of, or to obtain accurate quotations as to the market value of, our common
stock, and the market value of our common stock would likely decline.

The market price of our common stock
is likely to be highly volatile and subject to wide fluctuations, and you may be unable to resell your shares at or above the offering
price.

The market price of our common stock
is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factors that are beyond our
control, including announcements of new products or services by our competitors. In addition, the market price of our common stock
could be subject to wide fluctuations in response to a variety of factors, including:

Table of Contents13







| | · | quarterly variations in our revenues and operating expenses;
| | - | ------------------------------------------------------------

| | · | developments in the financial markets, apparel industry and the worldwide or regional economies;
| | - | ------------------------------------------------------------------------------------------------

| | · | announcements of innovations or new products or services by us or our competitors;
| | - | ----------------------------------------------------------------------------------

| | · | announcements by the government that affect international trade treaties;
| | - | -------------------------------------------------------------------------

| | · | fluctuations in interest rates and/or the asset backed securities market;
| | - | -------------------------------------------------------------------------

| | · | significant sales of our common stock or other securities in the open market; and
| | - | ---------------------------------------------------------------------------------

| | · | changes in accounting principles.
| | - | ---------------------------------

In the past, stockholders have often
instituted securities class action litigation after periods of volatility in the market price of a company’s securities.
If a stockholder were to file any such class action suit against us, we would incur substantial legal fees and our management’s
attention and resources would be diverted from operating our business to respond to the litigation, which could harm our business.

Substantial future sales of our common
stock in the public market could cause our stock price to fall.

Sales of a significant number of shares
of our common stock in the open market could depress the market price of our common stock. Further reduction in the market price
for our shares could make it more difficult to raise funds through future equity offerings.

Moreover, as additional shares of our
common stock become available for resale in the open market (including shares issued upon the exercise of our outstanding options
and warrants), the supply of our publicly traded shares will increase, which could decrease its price.

Some of our shares may also be offered
from time-to-time in the open market pursuant to Rule 144, and these sales may have a depressive effect on the market for our shares.
In general, a non-affiliate who has held restricted shares for a period of six months may sell an unrestricted number of shares
of our common stock into the market. The resale of these shares under Rule 144 may cause our stock price to decline.

The sale of securities by us in any
equity or debt financing could result in dilution to our existing stockholders and have a material adverse effect on our earnings.

Any sale of common stock by us in a future
private placement offering could result in dilution to the existing stockholders as a direct result of our issuance of additional
shares of our capital stock. In addition, our business strategy may include expansion through internal growth, by acquiring complementary
businesses, by acquiring or licensing additional brands, or by establishing strategic relationships with targeted customers and
suppliers. In order to do so, or to finance the cost of our other activities, we may issue additional equity securities that could
dilute our stockholders’ stock ownership. We may also assume additional debt and incur impairment losses related to goodwill
and other tangible assets if we acquire another company and this could negatively impact our earnings and results of operations.

The trading of our common stock on
the OTCBB and the designation of our common stock as a “penny stock” could impact the trading market for our common
stock.

Our securities, as traded on the OTCBB,
are subject to SEC rules that impose special sales practice requirements on broker-dealers who sell these securities to persons
other than established customers or accredited investors. For the purposes of the rule, the phrase “accredited investors”
means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000
or having an annual income that exceeds $200,000 (or that, when combined with a spouse’s income, exceeds $300,000). For transactions
covered by the rule, the broker-dealer must make a special suitability determination for the purchaser

Table of Contents14







and receive the purchaser’s written agreement to the
transaction before the sale. Consequently, the rule affects the ability of broker-dealers to sell our securities and also affects
the ability of purchasers to sell their securities in any market that might develop therefor.

In addition, the SEC has adopted a number
of rules to regulate “penny stock” that restrict transactions involving these securities. Such rules include Rules
3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange Act of 1934, as amended. These
rules may have the effect of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities
with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or quoted
on the NASDAQ Stock Market if current price and volume information with respect to transactions in such securities is provided
by the exchange or system). Because our securities constitute “penny stocks” within the meaning of the rules, the rules
would apply to us and to our securities.

Stockholders should be aware that, according
to the SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i)
control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation
of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room”
practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities
by promoters and broker-dealers after prices have been manipulated to a desired level, resulting in investor losses. Our management
is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position
to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines
of practical limitations to prevent the described patterns from being established with respect to our securities.

We have not paid dividends in the
past and do not expect to pay dividends for the foreseeable future, and any return on investment may be limited to potential future
appreciation on the value of our common stock.

We currently intend to retain any future
earnings to support the development and expansion of our business and do not anticipate paying cash dividends in the foreseeable
future. Our payment of any future dividends will be at the discretion of our board of directors after taking into account various
factors, including without limitation, our financial condition, operating results, cash needs, growth plans and the terms of any
credit agreements that we may be a party to at the time. To the extent we do not pay dividends, our stock may be less valuable
because a return on investment will only occur if and to the extent our stock price appreciates, which may never occur. In addition,
investors must rely on sales of their common stock after price appreciation as the only way to realize their investment, and if
the price of our stock does not appreciate, then there will be no return on investment. Investors seeking cash dividends should
not purchase our common stock.

Our officers, directors and principal
stockholders can exert significant influence over us and may make decisions that are not in the best interests of all stockholders.

Our officers, directors and principal
stockholders (greater than 5% stockholders) collectively control approximately 36% of our outstanding common stock. As a result,
these stockholders will be able to affect the outcome of, or exert significant influence over, all matters requiring stockholder
approval, including the election and removal of directors and any change in control. In particular, this concentration of ownership
of our common stock could have the effect of delaying or preventing a change of control of us or otherwise discouraging or preventing
a potential acquirer from attempting to obtain control of us. This, in turn, could have a negative effect on the market price of
our common stock. It could also prevent our stockholders from realizing a premium over the market prices for their shares of common
stock. Moreover, the interests of this concentration of ownership may not always coincide with our interests or the interests of
other stockholders, and accordingly, they could cause us to enter into transactions or agreements that we would not otherwise consider.

Table of Contents15







Anti-takeover provisions
may limit the ability of another party to acquire us, which could cause our stock price to decline.

Our Articles of Incorporation, as amended,
our bylaws, as amended, and Nevada law contain provisions that could discourage, delay or prevent a third party from acquiring
us, even if doing so may be beneficial to our stockholders. In addition, these provisions could limit the price investors would
be willing to pay in the future for shares of our common stock.

Item 1B.	Unresolved Staff Comments.

Not applicable.

Item 2.	Properties.

We lease all of our facilities. Our headquarters
are located at 2201 Park Place, Suite 101, El Segundo, California 90245. The table below sets forth certain information regarding
our leaseholds as of March 14, 2014.

|Address                                   |  | Approximate Floor Space (Sq. Ft.) |       | Monthly Rent |  | Use
|----------------------------------------- |  | --------------------------------- | ----- | ------------ |  | ---
|2201 Park Place, Suite 101 El Segundo, CA |  |                                   | 8,900 |              |  | $  

* In 2012 we received a rent abatement
of 50% for six months.

In July 2011 we exercised our option
to extend our current lease for an additional five years. As part of this renewal process we reduced our square footage by approximately
1,700 square feet of unneeded warehouse space in exchange for six months of rent concessions and approximately $40,000 of tenant
improvements. We believe our facilities are adequate to meet our current and near-term needs.

Item 3.	Legal Proceedings.

We are not party to, nor is our property
the subject of, any material pending legal proceedings. We have, from time to time, been involved in disputes and proceedings arising
in the ordinary course of our business. In addition, as a public company, we are also potentially susceptible to litigation, such
as claims asserting violations of securities laws. Any such claims, with or without merit, if not resolved, could be time-consuming
and result in costly litigation. There can be no assurance that an adverse result in any future proceeding would not have a potentially
material adverse effect on our business, results of operations or financial condition.

Item 4.	Mine Safety Disclosures.

Not applicable.



Table of Contents16







PART II

Item 5.	Market for Registrant’s
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Common Stock

Our common stock is quoted on the OTC
Bulletin Board under the symbol “ICPW.” The following table sets forth, for the periods indicated, the high and low
bid information for our common stock, as determined from sporadic quotations on the OTC Bulletin Board. The following quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

|                             |  | High |      | Low
|---------------------------- |  | ---- | ---- | ---
|Year Ended December 31, 2012 |  |      |      |    
|First Quarter                |  | $    | 0.33 |    
|Second Quarter               |  | $    | 0.30 |    
|Third Quarter                |  | $    | 0.26 |    
|Fourth Quarter               |  | $    | 0.30 |    
|Year Ended December 31, 2013 |  |      |      |    
|First Quarter                |  | $    | 0.30 |    
|Second Quarter               |  | $    | 0.28 |    
|Third Quarter                |  | $    | 0.25 |    
|Fourth Quarter               |  | $    | 0.18 |    



On March 14, 2014, the closing sales price
of our common stock as reported on the OTC Bulletin Board was $0.18 per share. As of March 14, 2014, there were approximately 134
stockholders of record of our common stock.

Dividends

We have never paid dividends on our common
stock. We intend to retain any future earnings for use in our business.

Item 6.	Selected Financial Data.

Not applicable.

Item 7.	Management’s Discussion and Analysis
of Financial Condition and Results of Operations.

The following discussion and analysis
should be read together with the Consolidated Financial Statements of Ironclad Performance Wear Corporation and the “Notes
to Consolidated Financial Statements” included elsewhere in this report. This discussion summarizes the significant factors
affecting the consolidated operating results, financial condition and liquidity and cash flows of Ironclad Performance Wear Corporation
for the fiscal years ended December 31, 2013 and 2012. Except for historical information, the matters discussed in this Management’s
Discussion and Analysis of Financial Condition and Results of Operations are forward-looking statements that involve risks and
uncertainties and are based upon judgments concerning various factors that are beyond our control.



Table of Contents17





Overview

We are a leading designer and
manufacturer of branded performance work wear. Founded in 1998, we have grown and leveraged our proprietary technologies to
produce task-specific gloves and performance apparel that are designed to significantly improve the wearer’s ability to
safely, efficiently and comfortably perform general to highly specific job functions. We have built and continue to augment
our reputation among professionals in the construction and industrial service markets, and do-it-yourself and sporting goods
consumers with products specifically designed for individual tasks or task types. We believe that our dedication to quality
and durability and focus on our clients’ needs has created a high level of brand loyalty and has solidified substantial
brand equity.

We plan to increase our domestic revenues
by leveraging our relationships with existing retailers and industrial distributors, including “Big Box” and sporting
goods retailers, increasing our product offerings in new and existing locations, and introducing new products, developed and targeted
for specific customers and/or industries.

We believe that our products have international
appeal. In 2005, we began selling products in Australia and Japan through independent distributors, which accounted for approximately
4% of total sales. From 2006 through 2012 we entered the Canadian and European markets through distributors. International sales
have grown from approximately 7% - 18% of total sales in 2013. We plan to continue to increase sales internationally by expanding
our distribution into Europe and other international markets during the fiscal year ending December 31, 2014.

Critical Accounting Policies, Judgments and Estimates

Our Management’s Discussion and
Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United States. To prepare these financial statements, we must
make estimates and assumptions that affect the reported amounts of assets and liabilities. These estimates also affect our reported
revenues and expenses. On an ongoing basis, management evaluates its estimates and judgment, including those related to revenue
recognition, accrued expenses, financing operations and contingencies and litigation. Management bases its estimates and judgment
on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different assumptions or conditions. The following represents
a summary of our critical accounting policies, defined as those policies that we believe are the most important to the portrayal
of our financial condition and results of operations and that require management’s most difficult, subjective or complex
judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

Revenue Recognition

Under our sales model, a customer is
obligated to pay us for products sold to it within a specified number of days from the date that title to the products is transferred
to the customer. Our standard terms are typically net 30 days from the transfer of title to the products to a customer, however,
we have negotiated special terms with certain customers and industries. We typically collect payment from a customer within 30
to 60 days from the transfer of title to the products to a customer. Transfer of title occurs and risk of ownership passes to a
customer at the time of shipment or delivery, depending on the terms of our agreement with a particular customer. The sale price
of our products is substantially fixed or determinable at the date of sale based on purchase orders generated by a customer and
accepted by us. A customer’s obligation to pay us for products sold to it is not contingent upon the resale of those products.
We recognize revenue at the time product is shipped or delivered to a customer, based on terms of agreement with a customer.

Cost of Goods Sold

Our cost of goods sold includes the FOB
cost of the product plus landed costs. Landed costs include freight-in, insurance, duties and administrative costs to deliver the
finished goods to our distribution warehouse. Cost of goods sold does not include purchasing costs, warehousing or distribution
costs. These costs are captured as incurred on a separate line in operating expenses. Our gross margins may not be comparable to
other entities that may include some or all of these costs in the calculation of gross margin.

Table of Contents18







Inventory Obsolescence Allowance

We review the inventory level of all
products quarterly. For most glove products that have been in the market for one year or greater, we consider inventory levels
of greater than one year’s sales to be excess. Due to limited market penetration for our apparel products we have decided
to provide a 40%-50% allowance against this line of products. Products that are no longer part of the current product offering
are considered obsolete. The potential for re-sale of slow-moving and obsolete inventories is based upon our assumptions about
future demand and market conditions. The recorded cost of obsolete inventories is then reduced to zero and a reserve is established
for slow moving products. Both the write down and reserve adjustments are recorded as charges to cost of goods sold. For the years
ended December 31, 2013 and December 31, 2012 we adjusted our inventory reserve by $2,000 and $159,000, respectively, to a current
balance of $621,000 and recorded a corresponding adjustment in cost of goods sold. All adjustments for obsolete inventory establish
a new cost basis for that inventory as we believe such reductions are permanent declines in the market price of our products. Generally,
obsolete inventory is sold to companies that specialize in the liquidation of these items or contributed to charities, while we
continue to market slow-moving inventories until they are sold or become obsolete. As obsolete or slow-moving inventory is sold
or disposed of, we reduce the reserve.

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts
for estimated losses resulting from the inability of our customers to make required payments. Our current customers consist of
large national, regional and smaller independent customers with good payment histories with us. In 2010 we began factoring certain
accounts receivable without recourse with our factor. In December 2012 we terminated this factoring arrangement. We perform periodic
credit evaluations of our customers and maintain allowances for potential credit losses based on management’s evaluation
of historical experience and current industry trends. If the financial condition of our customers were to deteriorate, resulting
in the impairment of their ability to make payments, additional allowances may be required. New customers are evaluated by us for
credit worthiness before terms are established. Although we expect to collect all amounts due, actual collections may differ.

Product Returns, Allowances and Adjustments

Product returns, allowances and adjustments
is a broad term that encompasses a number of offsets to gross sales. Included herein are warranty returns of defective products,
returns of saleable products and accounting adjustments.

Warranty Returns - We have a warranty
policy that covers defects in workmanship. It allows customers to return damaged or defective products to us following a customary
return merchandise authorization process.

Saleable Product Returns - We
may allow from time-to-time, depending on the customer and existing circumstances, stock adjustment returns, whereby the customer
is given the opportunity to ‘trade out’ of a style of product that does not sell well in their territory, usually in
exchange for another product, again following the customary return merchandise authorization process. In addition we may allow
from time to time other saleable product returns from customers for other business reasons, for example, in settlement of an outstanding
accounts receivable, from a discontinued distributor customer or other customer service purpose.

Accounting Adjustments - These
adjustments include pricing and shipping corrections and periodic adjustments to the product returns reserve.

For both warranty and saleable product
returns we utilize actual historical return rates to determine our allowance for returns in each period, adjusted for unique, one-time
events. Gross sales are reduced by estimated returns. We record a corresponding accrual for the estimated liability associated
with the estimated returns which is based on the historical gross sales of the products corresponding to the estimated returns.
This accrual is offset each period by actual product returns.

Table of Contents19







Our current estimated future sales return
rate is approximately 1.5% and our current estimated future warranty product return rate is approximately 0.5%. As noted above,
our return rate is based upon our past history of actual returns and we estimate amounts for product returns for a given period
by applying this historical return rate and reducing actual gross sales for that period by a corresponding amount. We believe that
using a trailing 12-month return rate provides us with a sufficient period of time to establish recent historical trends in product
returns for two primary reasons: (i) our products’ useful life is approximately 3-4 months and (ii) we are able to quickly
correct any significant quality issues as we learn about them. If an unusual circumstance exists, such as a product that has begun
to show materially different actual return rates as compared to our average 12-month return rates, we will make appropriate adjustments
to our estimated return rates. Factors that could cause materially different actual return rates as compared to the 12-month return
rates include a new product line, a change in materials or product being supplied by a new factory. Although we have no specific
statistical data on this matter, we believe that our practices are reasonable and consistent with those of our industry. Our warranty
terms under our arrangements with our suppliers do not provide for individual products returned by retailers or retail customers
to be returned to the vendor.

|Reserve for Warranty Returns                            |  |  
|------------------------------------------------------- |  | -
|Reserve Balance 12/31/11                                |  | $
|Payments Recorded During the Period                     |  |  
|                                                        |  |  
|Accrual for New Liabilities During the Reporting Period |  |  
|                                                        |  |  
|Reserve Balance 12/31/12                                |  |  
|Payments Recorded During the Period                     |  |  
|                                                        |  |  
|Accrual for New Liabilities During the Reporting Period |  |  
|                                                        |  |  
|Reserve Balance 12/31/13                                |  | $



Stock Based Compensation

The Company accounts for stock based
compensation under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) 718, Share-Based Payment. This statement establishes standards surrounding the accounting for transactions
in which an entity exchanges its equity instruments for goods and services. The statement focuses primarily on accounting for transactions
in which an entity obtains employee services in share-based payment transactions, such as the options issued under our stock option
plans. We follow a fair value approach using an option-pricing model, Black-Scholes option valuation model, at the date of a stock
option grant. The deferred compensation calculated under the fair value method would then be amortized over the respective vesting
period of the stock option.

Income Taxes

Deferred income taxes are provided using
the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will
not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates as of the
date of enactment.

When tax returns are filed, it is highly
certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty
about the merits of the position taken or the amount of the position that would be effectively sustained. The benefit of a tax
position is recognized in the

Table of Contents20







financial statements in the period during which, based on
all available evidence, management believes it is more-likely-than-not that the position will be sustained upon examination, including
the resolution of appeals or litigation, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions
that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50%
likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax
positions taken that exceeds the amount measured as described above would be reflected as a liability for unrecognized tax benefits
in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities
upon examination. We have reported losses for 2003, 2004, 2005, 2006, 2007, 2008 and 2009, and uncertainty exists as to whether
benefits from deferred tax assets will be utilized. In the past we have fully reserved our deferred tax assets, however, at December
31, 2012 we had several years in a row of sustained profits and believed it would be appropriate to start reducing this valuation
allowance. Accordingly, we reduced our valuation allowance to approximately 70%. At December 31, 2013 we once again reviewed our
current profitability in relation to our valuation allowance and have determined to further reduce our valuation allowance to 63%.
There remains sufficient future uncertainty that we have determined not to record any long-term deferred tax assets at this time.

Interest and penalties associated with
unrecognized tax benefits would be classified as additional income taxes in the statement of operations.

Recent Accounting Pronouncements

In July 2012, The Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2012-02, “Intangibles
– Goodwill and Others: Testing Indefinite-Lived Intangible Assets for Impairment”, to allow entities to use a qualitative
approach to test indefinite-lived assets for impairment. ASU 2012-02 permits an entity to first perform a qualitative assessment
to determine whether it is more likely than not that the fair value of an indefinite-live intangible asset is less than its carrying
value. If it is concluded that this is the case, it is necessary to perform the currently prescribed quantitative impairment test
by comparing the fair value of the indefinite-lived intangible asset with its carrying value. Otherwise, the quantitative impairment
test is not required. ASU 2012-02 is effective for impairment tests for annual and interim impairment tests performed for fiscal
years beginning after September 15, 2012. Early adoption is permitted. We adopted the provisions of this standard and noted no
material impact on our financial condition or results of operations.

Results of Operations

Comparison of Years Ended December 31, 2013 and December
31, 2012

Net Salesdecreased $1,649,261,
or 6.3%,to$24,530,853 in the year ended December 31, 2013 from $26,180,114 for the corresponding period in
2012. This decrease was primarily due to decreased sales with our industrial customers, notably the oil and gas industry, of approximately
$4,625,000 and $160,000 across other customers, offset by increased sales of approximately $2,131,000 with retail automotive customers,
and $1,138,000 with private label customers. Three customers accounted for approximately 50% of net sales during the year ended
December 31, 2013 and two customers accounted for approximately 55% of net sales for the year ended December 31, 2012. Customer
demand for our products in certain retail sectors continued to stabilize this year, however those sectors tied to housing and construction
are still lagging. We continue to focus our sales efforts on those areas where we see continued growth, the industrial and safety
channels, international markets and job specific glove styles.

Gross Profitdecreased $1,935,274
to $8,115,366 for the year ended December 31, 2013 from $10,050,640 for the year ended December 31, 2012. Gross profit, as a percentage
of net sales, or gross margin, decreased to 33.1% in 2013 from 38.4% in 2012. This decrease in gross profit is primarily due to
a decrease in higher margin sales, price competition in maturing product lines plus several large special-price orders that shipped
in the period. Product mix and customer sales mix shifts can affect gross profit in any period as well. Sales to international
distributors are generally at lower gross margin, as the international distributor pays the cost of selling and distributing the
product and servicing their customers.

Table of Contents21







Operating Expensesincreased by
$282,776, or 3.7%, to $7,871,895 in 2013 from $7,589,119 in 2012. As a percentage of net sales, operating expenses increased to
32.1% in 2013 from 29.0% in the same period of 2012. The increased spending in 2013 was primarily due to increased labor and benefits
of approximately $284,000; increased sales slotting fees of approximately $328,000; increased advertising costs of approximately
$176,000; increased professional services fees of $133,000; increased contracted service fees, primarily third-party fulfillment
services, of approximately $118,000; increased commission expenses of approximately $68,000; increased stock option expense of
$47,000; increased consulting expenses of approximately $47,000; increased rent expense of approximately $32,000; and increased
general office expenses of approximately $25,000; offset by decreased bonus expense of approximately $701,000, decreased legal
fees of approximately $175,000 and decreased bank fees of approximately $99,000. Our number of employees decreased to 27 at December
31, 2013 from 28 at December 31, 2012.

Income from Operationsdecreased
$2,218,050 or 90.1%, to $243,471 in 2013 from $2,461,521 in 2012. Income from operations as a percentage of net sales decreased
to 1.0% in 2013 from 9.4% in 2012. The decrease in income for 2013 was primarily the result of decreased sales in our industrial
channel and lower gross profit from new retail channel customers as well as competitive pricing pressures with existing products
and customers.

Interest Expenseincreased $23,950
to $74,095 in 2013 from $50,145 in 2012. The increase was primarily due to lower customer deposits which necessitated higher bank
borrowing in the current year.

Interest Income decreased $21,357
to $106 in 2013 from $21,463 in 2012. Interest income in 2012 was almost entirely from refunds received from our protests of duty
rates with the U.S. Customs Office.

Other Income, net was $1 in 2013
as compared with $55,419 in 2012. Other income in 2012 was primarily the result of refunds of prior period duties of $107,417,
offset by prior period duty chargebacks of $64,600, plus a trademark settlement payment of $12,500.

Gain on Disposition of Equipment
in 2013 and 2012 was $550 and $50, respectively.

Deferred Income Tax Benefit. In
prior years, based on our history of losses, we provided a 100% valuation allowance against our deferred tax assets, as it was
not more likely than not that any future benefit from deductible temporary differences and net operating loss carryforwards would
be realized. For the year ended December 31, 2012 we reassessed the need for a valuation allowance against our deferred tax assets
and, based on the positive evidence of the prior three years pre-tax income and forecasted future results, concluded that it is
more likely than not that we would be able to realize some of our deferred tax assets. Accordingly, we reversed approximately 30%
of our valuation allowance for our current deferred tax assets and recorded a deferred tax benefit of $857,500. At December 31,
2013 we once again reviewed our current profitability and forecasted future results and concluded that it is more likely than not
that we would be able to realize some more of our deferred tax assets. For the current year we reversed approximately 7% of our
valuation allowance for our current deferred tax assets and recorded a deferred tax benefit of $214,500. We will continue to evaluate
if it is more likely than not that we will realize the benefits from future deferred tax assets and have accordingly provided a
63% valuation allowance against our remaining deferred tax assets.

Net Incomedecreased $2,518,079
to $560,729 in 2013 from $3,078,808 in 2012. This decrease in income is a result of two factors, the combination of each of the
sales, profit and expense factors discussed above, and the net effect of the year over year recognition of previously reserved
valuation allowances against deferred tax assets.

Seasonality and Annual Results

Our glove business generally shows an
increase in sales during the third and fourth quarters due primarily to an increase in the sale of our winter glove line during
this period. We typically generate 55% - 65% of our glove net sales during these months. As the overall economy continues to experience
pockets of recovery, our results have been positively impacted by the successful introduction of new products designed specifically
for the oil and gas, safety, automotive and sporting goods industries.

Table of Contents22







Our working capital, at any particular
time, reflects the seasonality of our glove business and plans to expand product lines and enter new markets. We expect inventory,
accounts payable and accrued expenses to be higher in the third and fourth quarters for these reasons.

Liquidity and Capital Resources

Our cash requirements are principally
for working capital. Our need for working capital is seasonal, with the greatest requirements from July through the end of October
each year as a result of our inventory build-up during this period for the fall and winter selling seasons. Historically, our main
sources of liquidity have been borrowings under our existing revolving credit facility, the issuance of subordinated debt and the
sale of equity. In the short term we are monitoring our credit issuances and cash collections to maximize cash flows and investigating
opportunities to quickly reduce our current inventories to convert these assets into cash. Over the past year, and continuing in
the near and longer term we are focused on controlling our operating costs, increasing margins and improving operating procedures
to generate sustained profitability.

Operating
Activities. In 2013, cash used in operating activities was $1,008,067 and consisted primarily of net income of $560,729, increased
by non-cash items of $433,627, a decrease in inventory of $709,043 and a decrease in total
accounts receivable of $556,971; offset by an increase in accounts payable and accrued expenses of $2,802,743, the reversal of
our deferred tax valuation allowance of $214,500; increases in deposits on inventory of $152,389 and increases in prepaid expenses
and other expenses of $98,805.

In 2012,
cash used in operating activities was $232,437 and consisted primarily of net income of $3,078,808, increased by non-cash items
of $545,649 and decreases in accounts payable and accrued expenses of $2,372,144; offset by
the reversal of our deferred tax valuation allowance of $857,500; increases in total accounts receivable of $4,089,185; increases
in inventory of $991,130; increases in deposits on inventory of $249,211; and increases in prepaid expenses and other expenses
of $42,012.

Investing Activities. In 2013
and 2012, investing activities were primarily the result of capital expenditures, mainly for computer equipment, furniture, leasehold
improvements and trademark applications. Cash used in investing activities increased $13,124 to $108,402 for 2013 from $95,278
in 2012. Expenditures for property and equipment in 2013 and 2012 were $94,114 and $86,170, and investment in trademarks and patents
were $14,838 and $9,158, respectively.

Financing Activities.Financing
activities in 2013 consisted of net borrowing under our bank credit facility of $685,528 and cash proceeds from the issuance of
common stock due to stock option exercises of $23,102. Financing activities during 2012 consisted of net payments under our factoring
facility of $177,336 and cash proceeds from the issuance of common stock due to stock option exercises of $166,515.

We believe that our cash flows from operations
and borrowings available to us under our senior secured credit facility, the availability of purchase order financing and our continuing
cost containment measures will be adequate to meet our liquidity needs and capital expenditure requirements for at least the next
12 months.

Our ability to access these sources of
liquidity may be negatively impacted by a decrease in demand for our products and the requirement that we meet certain borrowing
conditions under our senior secured credit facility, as well as the other factors described in Risk Factors.

Credit Facilities

On December 7, 2009 we entered into a
factoring agreement with FCC, LLC, dba First Capital Western Region, LLC (“FCC”), whereby we assigned certain of our
accounts receivable without recourse and other accounts receivable with recourse. FCC, based on its internal credit policies, determined
which accounts receivable it would accept on a non-recourse basis. This facility allowed us to borrow the lesser of (a) $3,000,000
or (b) the sum of (i) the threshold for the net amount of eligible accounts receivable set forth in the agreement and (ii) the
threshold for the value of eligible inventory set forth in the agreement, which amount shall not exceed the lesser of $1,500,000
or the net amount of eligible accounts receivable. All of our assets secured amounts borrowed under the terms of this

Table of Contents23







agreement. The interest rate was based on the level of our
rolling twelve month EBITDA/ASC718 balance. In 2012 we achieved a 2% rate savings throughout the year. The 2% rate savings was
the best rate available under our agreement. Interest on outstanding balances based on accounts receivable accrued at LIBOR plus
5.5% and interest on outstanding balances based on inventory accrued at LIBOR plus 6.5%. This agreement had an initial term of
thirty-six (36) months. On December 1, 2011, this agreement was amended to increase our limit on permissible capital equipment
expenditures from $100,000 to $250,000 per year, effective for 2011 and 2012. This agreement was terminated on December 7, 2012.

On November 30,
2012 we entered into a Business Loan Agreement with Union Bank, N.A. which provides a revolving loan of up to $6,000,000. The first
$3,500,000 of advances under this facility are under an open line-of-credit. Advances in excess of $3,500,000, up to the line limit
of $6,000,000, are subject to a Borrowing Base report. The term Borrowing Base means an amount equal to (a) 80% of the net amount
of all eligible accounts receivable plus, (b) the lesser of (i) 50% of the value of eligible landed inventory and (ii) $2,750,000,
plus (c) 35% of eligible in-transit inventory. In addition, during the months of April to October each calendar year, the outstanding
principal amount of all advances against eligible inventory shall not exceed 150% of the aggregate outstanding principal amount
of advances against eligible accounts receivable. All of our assets secure amounts borrowed under the terms of this agreement.
Interest on borrowed funds will accrue at Prime minus 0.25% unless we choose to “fix” a portion of the indebtedness
(minimum $150,000) at LIBOR plus 2% for fixed periods of time ranging from 30 days to 360 days.

At December 31, 2013, we had unused credit
available under our current facility of approximately $3,831,000. At December 31, 2012, we had unused credit available under our
current facility of approximately $4,516,000.

Off Balance Sheet Arrangements

At December 31, 2013, we did not have
any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance,
variable interest or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet
arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market
or credit risk that could arise if we had engaged in such relationships.

Item 7A.	Quantitative and Qualitative Disclosures
About Market Risk.

Not applicable.

Table of Contents24







Item 8.	Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                       |  | Page
|---------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                       |  |     
|Audited Financial Statements:                                                                                          |  |     
|                                                                                                                       |  |     
|Report of Independent Registered Public Accounting Firm                                                                |  | 24  
|                                                                                                                       |  |     
|Consolidated Balance Sheets at December 31, 2013 and December 31, 2012                                                 |  | 25  
|                                                                                                                       |  |     
|Consolidated Statements of Operations for each of the Years Ended December 31, 2013, and December 31, 2012             |  | 26  
|                                                                                                                       |  |     
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2013, and December 31, 2012                     |  | 27  
|                                                                                                                       |  |     
|Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2012 and December 31, 2013 |  | 28  
|                                                                                                                       |  |     
|Notes to the Consolidated Financial Statements                                                                         |  | 29  





























Table of Contents25







REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Ironclad Performance Wear Corporation



We have audited the accompanying consolidated balance sheets
of Ironclad Performance Wear Corporation as of December 31, 2013 and 2012, and the related consolidated statements of operations,
cash flows, and changes in stockholders’ equity for each of the years in the two-year period ended December 31, 2013. Ironclad
Performance Wear Corporation’s management is responsible for these consolidated financial statements. Our responsibility
is to express an opinion on these consolidated financial statements based on our audits.



We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.



In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of Ironclad Performance Wear Corporation as of December
31, 2013 and 2012, and the results of its operations and its cash flows for each of the years in the two-year period ended December
31, 2013 in conformity with accounting principles generally accepted in the United States of America.







/s/ EFP Rotenberg, LLP

EFP Rotenberg, LLP

Rochester, New York

March 17, 2014































Table of Contents26







IRONCLAD PERFORMANCE WEAR CORPORATION

CONSOLIDATED BALANCE SHEETS

AT DECEMBER 31, 2013 AND 2012



|ASSETS                                                                                                                                                               |  |              |            |             
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | ------------
|                                                                                                                                                                     |  | December 31, |            | December 31,
|                                                                                                                                                                     |  | 2013         |            | 2012        
|CURRENT ASSETS                                                                                                                                                       |  |              |            |             
|Cash and cash equivalents                                                                                                                                            |  | $            | 313,750    |             
|Accounts receivable net of allowance for doubtful accounts of $48,000                                                                                                |  |              | 6,782,191  |             
|Due from factor without recourse                                                                                                                                     |  |              | —          |             
|Inventory net of reserve of $621,000 and $619,000                                                                                                                    |  |              | 4,570,402  |             
|Deposits on inventory                                                                                                                                                |  |              | 868,662    |             
|Prepaid and other                                                                                                                                                    |  |              | 407,619    |             
|Deferred tax assets - current                                                                                                                                        |  |              | 274,000    |             
|                                                                                                                                                                     |  |              |            |             
|Total Current Assets                                                                                                                                                 |  |              | 13,216,624 |             
|                                                                                                                                                                     |  |              |            |             
|PROPERTY AND EQUIPMENT                                                                                                                                               |  |              |            |             
|Computer equipment and software                                                                                                                                      |  |              | 442,262    |             
|Vehicle                                                                                                                                                              |  |              | 39,630     |             
|Furniture and equipment                                                                                                                                              |  |              | 196,744    |             
|Leasehold improvements                                                                                                                                               |  |              | 90,441     |             
|Less: accumulated depreciation                                                                                                                                       |  |              | (577,759   | )           
|                                                                                                                                                                     |  |              |            |             
|Total Property and Equipment, Net                                                                                                                                    |  |              | 191,318    |             
|                                                                                                                                                                     |  |              |            |             
|OTHER ASSETS                                                                                                                                                         |  |              |            |             
|Trademarks and patents, net of accumulated amortization of $49,064 and $40,318                                                                                       |  |              | 138,260    |             
|Deposits                                                                                                                                                             |  |              | 10,204     |             
|Deferred tax assets – long term                                                                                                                                      |  |              | 798,000    |             
|                                                                                                                                                                     |  |              |            |             
|Total Other Assets                                                                                                                                                   |  |              | 946,464    |             
|                                                                                                                                                                     |  |              |            |             
|TOTAL ASSETS                                                                                                                                                         |  | $            | 14,354,406 |             
|                                                                                                                                                                     |  |              |            |             
|LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                 |  |              |            |             
|CURRENT LIABILITIES                                                                                                                                                  |  |              |            |             
|Accounts payable and accrued expenses                                                                                                                                |  | $            | 2,129,905  |             
|Line of credit                                                                                                                                                       |  |              | 2,169,411  |             
|                                                                                                                                                                     |  |              |            |             
|Total Current Liabilities                                                                                                                                            |  |              | 4,299,316  |             
|                                                                                                                                                                     |  |              |            |             
|                                                                                                                                                                     |  |              |            |             
|Total Liabilities                                                                                                                                                    |  |              | 4,299,316  |             
|                                                                                                                                                                     |  |              |            |             
|STOCKHOLDERS’ EQUITY                                                                                                                                                 |  |              |            |             
|Common stock, $0.001 par value,172,744,750 shares authorized, 76,704,275 and  76,447,587 shares   issued and outstanding at December 31, 2013 and 2012, respectively |  |              | 76,704     |             
|Capital in excess of par value                                                                                                                                       |  |              | 19,208,255 |             
|Accumulated deficit                                                                                                                                                  |  |              | (9,229,869 | )           
|                                                                                                                                                                     |  |              |            |             
|Total Stockholders’ Equity                                                                                                                                           |  |              | 10,055,090 |             
|                                                                                                                                                                     |  |              |            |             
|TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                           |  | $            | 14,354,406 |             
|                                                                                                                                                                     |  |              |            |             



Table of Contents27







See Notes to Consolidated Financial Statements.IRONCLAD PERFORMANCE WEAR CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2013
and 2012



|                                                              |  |     
|------------------------------------------------------------- |  | ----
|                                                              |  | 2013
|                                                              |  |     
|                                                              |  |     
|REVENUES                                                      |  |     
|Net sales                                                     |  | $   
|                                                              |  |     
|COST OF SALES                                                 |  |     
|Cost of sales                                                 |  |     
|                                                              |  |     
|GROSS PROFIT                                                  |  |     
|                                                              |  |     
|EXPENSES                                                      |  |     
|General and administrative                                    |  |     
|Sales and marketing                                           |  |     
|Research and development                                      |  |     
|Purchasing, warehousing and distribution                      |  |     
|Depreciation and amortization                                 |  |     
|                                                              |  |     
|Total Operating Expenses                                      |  |     
|                                                              |  |     
|INCOME FROM OPERATIONS                                        |  |     
|                                                              |  |     
|OTHER INCOME (EXPENSE)                                        |  |     
|Interest expense                                              |  |     
|Interest income                                               |  |     
|Other income, net                                             |  |     
|Gain on disposition of equipment                              |  |     
|                                                              |  |     
|Total Other Income (Expense), Net                             |  |     
|                                                              |  |     
|NET INCOME BEFORE PROVISION FOR INCOME TAXES                  |  |     
|Benefit from (Provision for) income taxes - current           |  |     
|Deferred income tax benefit – reversal of valuation allowance |  |     
|                                                              |  |     
|NET INCOME                                                    |  | $   
|                                                              |  |     
|NET INCOME PER COMMON SHARE                                   |  |     
|Basic                                                         |  | $   
|Diluted                                                       |  | $   
|                                                              |  |     
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                    |  |     
|Basic                                                         |  |     
|Diluted                                                       |  |     
|                                                              |  |     



See Notes to Consolidated Financial Statements.

Table of Contents28





IRONCLAD PERFORMANCE WEAR CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2013
and 2012

|                                                                           |  | 2013 |             | 2012
|-------------------------------------------------------------------------- |  | ---- | ----------- | ----
|CASH FLOWS FROM OPERATING ACTIVITIES                                       |  |      |             |     
|Net income attributable to common stockholders                             |  | $    | 560,729     |     
|Adjustments to reconcile net loss to net cash used in operating activities |  |      |             |     
|Allowance for bad debts                                                    |  |      | —           |     
|Inventory reserve                                                          |  |      | 2,000       |     
|Depreciation                                                               |  |      | 158,122     |     
|Amortization                                                               |  |      | 8,746       |     
|(Gain) loss on disposition of equipment                                    |  |      | 161         |     
|Reversal of deferred income tax valuation allowance                        |  |      | (214,500    | )   
|Non-cash compensation:                                                     |  |      |             |     
|Stock option expense                                                       |  |      | 264,598     |     
|Changes in operating assets and liabilities:                               |  |      |             |     
|Accounts receivable                                                        |  |      | (358,522    | )   
|Due from factor without recourse                                           |  |      | 915,492     |     
|Inventory                                                                  |  |      | 709,043     |     
|Deposits on inventory                                                      |  |      | (152,389    | )   
|Prepaid and other                                                          |  |      | (98,804     | )   
|Accounts payable and accrued expenses                                      |  |      | (2,802,743  | )   
|Net cash flows used in operating activities                                |  |      | (1,008,067  | )   
|                                                                           |  |      |             |     
|CASH FLOWS FROM INVESTING ACTIVITIES                                       |  |      |             |     
|Property and equipment purchased                                           |  |      | (94,114     | )   
|Proceeds from sale of assets                                               |  |      | 550         |     
|Investment in trademarks and patents                                       |  |      | (14,838     | )   
|Net cash flows used in investing activities                                |  |      | (108,402    | )   
|                                                                           |  |      |             |     
|CASH FLOWS FROM FINANCING ACTIVITIES                                       |  |      |             |     
|Proceeds from bank lines of credit                                         |  |      | 13,997,688  |     
|Payments to bank lines of credit                                           |  |      | (13,312,160 | )   
|Proceeds from issuance of common stock and warrants                        |  |      | 23,102      |     
|Net cash flows provided by (used by) financing activities                  |  |      | 708,630     |     
|                                                                           |  |      |             |     
|NET DECREASE IN CASH                                                       |  |      | (407,839    | )   
|CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD                              |  |      | 721,589     |     
|CASH AND CASH EQUIVALENTS END OF PERIOD                                    |  | $    | 313,750     |     
|                                                                           |  |      |             |     
|SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:                            |  |      |             |     
|Cash paid  during the year for:                                            |  |      |             |     
|Interest paid in cash                                                      |  |      | (74,095     | )   
|Income taxes paid                                                          |  |      | (146,000    | )   



See Notes to Consolidated Financial Statements.



Table of Contents29







IRONCLAD PERFORMANCE WEAR CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES
IN

STOCKHOLDERS’
EQUITY

For the Years Ended December 31, 2013
and 2012





|                                                   |  | Common Stock                  |            |           |  |                                |        |                    
|-------------------------------------------------- |  | ----------------------------- | ---------- | --------- |  | ------------------------------ | ------ | -------------------
|                                                   |  | Shares Issued and Outstanding |            | Par Value |  | Capital in Excess of Par Value |        | Accumulated Deficit
|                                                   |  |                               |            |           |  |                                |        |                    
|Balance at December 31, 2011                       |  |                               | 74,550,752 |           |  | $                              | 74,551 |                    
|Common stock issued upon exercise of stock options |  |                               | 1,836,833  |           |  |                                | 1,837  |                    
|Common stock issued upon exercise of warrant       |  |                               | 60,000     |           |  |                                | 60     |                    
|Stock option expense                               |  |                               | —          |           |  |                                | —      |                    
|Net income                                         |  |                               | —          |           |  |                                | —      |                    
|Balance at December 31, 2012                       |  |                               | 76,447,585 |           |  |                                | 76,448 |                    
|Common stock issued upon exercise of stock options |  |                               | 256,690    |           |  |                                | 256    |                    
|Stock option expense                               |  |                               | —          |           |  |                                | —      |                    
|Net income                                         |  |                               | —          |           |  |                                | —      |                    
|Balance at December 31, 2013                       |  |                               | 76,704,275 |           |  | $                              | 76,704 |                    
|                                                   |  |                               |            |           |  |                                |        |                    
|                                                   |  |                               |            |           |  |                                |        |                    







See Notes to Consolidated Financial Statements





























Table of Contents30







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.Description
of Business.

The Company was incorporated in Nevada
on May 26, 2004 and engages in the business of design and manufacture of branded performance work wear including task-specific
gloves and performance apparel designed to significantly improve the wearer’s ability to safely, efficiently and comfortably
perform general to highly specific job functions. Its customers are primarily hardware, lumber retailers, “Big Box”
home centers, industrial distributors and automotive and sporting goods retailers. The Company has received six U.S. patents and
one international patent and has three patents pending for design and technological innovations incorporated in its performance
work gloves. The Company has 57 registered U.S. trademarks, 10 in-use U.S. trademarks, 1 U.S. trademark pending registration, 21
registered international trademarks and 1 pending international trademark. We also have 7 copyright marks.

2.Accounting
Policies.

Basis of Consolidation

The consolidated financial statements
include the accounts of Ironclad Performance Corporation, an inactive parent company, and its wholly owned subsidiary Ironclad
California. All significant inter-company transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid
investments with original maturities of three months or less when purchased to be cash equivalents. The Company places its cash
with high credit quality institutions. The Federal Deposit Insurance Company (FDIC) insures cash amounts at each institution for
up to $250,000. From time to time, the Company maintains cash in excess of the FDIC limit.

Accounts Receivable

The Company factored
designated trade receivables pursuant to a factoring agreement with an unrelated Factor. On December 7, 2009 the Company entered
into a new factoring agreement whereby it assigns certain of its trade receivables with recourse and other trade receivables without
recourse. The Company incurs a one-time servicing fee (discount) of 0.75% as a percentage of the face value of each invoice assigned
to the Factor. This servicing fee is recorded on the condensed consolidated statement of operations in the period of sale. Servicing
fees incurred for the years ended December 31, 2013 and 2012 were $-0- and $102,397, respectively. The financing of accounts receivable
without recourse is accounted for as a sale of receivables in accordance with the guidance under ASC 860-20, “Sales of Financial
Assets.” The Factor, based on its internal credit policies, determines which customer trade receivables it will accept without
recourse and assigns a credit limit for that customer. The Company then assigns (sells) the face value of certain trade receivable
invoices to the Factor, excludes them from accounts receivable, and records a current asset entitled “Due from factor without
recourse” on the condensed consolidated balance sheet and they are reflected as cash provided by operating activities on
the condensed consolidated statement of cash flows. Thereafter, the Company is entitled to borrow up to 70% of the value of such
invoices through its line of credit with the Factor. The Factor retains the remaining 30% of the outstanding factored accounts
receivable as a reserve. The Factor handles all collection activities and receives payment from the customer into its own bank
lockbox account. The Factor has no recourse to the Company for failure of debtors of these designated accounts receivable. The
Factor reimburses the Company for its purchased invoices by applying the funds collected from the customer as payments against
the Company’s line of credit.

Trade receivables
with recourse were also assigned to the Factor as an additional source of financing, and are carried at the original invoice amount
less an estimate made for doubtful accounts. Under the terms of the recourse provision, the Company is required to reimburse the
Factor, upon demand, for factored receivables that are not paid on time. Accordingly, these receivables are accounted for as a
secured borrowing arrangement and not as a sale of financial assets. The allowance for doubtful accounts is based on management’s
regular evaluation of individual customer’s receivables and consideration of a customer’s financial condition and credit
history. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are
recorded when received. Interest is not charged on past due accounts.



Table of Contents31







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



On December 7, 2012
the Company terminated this factoring agreement. The amounts showing as “Due from factor without recourse” on the balance
sheet reflect open balances that were subsequently collected through the Factor.

On November 30,
2012 the Company entered into a Business Loan Agreement with a bank providing a revolving loan of up to $6,000,000. The first $3,500,000
of advances under this facility are under an open line-of-credit. Advances in excess of $3,500,000, up to the line limit of $6,000,000,
are subject to a Borrowing Base report. The term Borrowing Base means an amount equal to (a) 80% of the net amount of all eligible
accounts receivable plus, (b) the lesser of (i) 50% of the value of eligible landed inventory and (ii) $2,750,000, plus (c) 35%
of eligible in-transit inventory. In addition, during the months of April to October each calendar year, the outstanding principal
amount of all advances against eligible inventory shall not exceed 150% of the aggregate outstanding principal amount of advances
against eligible accounts receivable. Interest on borrowed funds will accrue at Prime minus 0.25% unless the Company chooses to
“fix” a portion of the indebtedness (minimum $150,000) at LIBOR plus 2% for fixed periods of time ranging from 30 days
to 360 days.

The allowance for doubtful accounts for all
probable uncollectible receivables is based on a combination of historical data, cash payment trends, specific customer issues,
write-off trends, general economic conditions and other factors. These factors are continuously monitored by management to arrive
at the estimate for the amount of accounts receivable that may be ultimately uncollectible. In circumstances where we are aware
of a specific customer’s inability to meet its financial obligations, we record a specific allowance for doubtful accounts
against amounts due to reduce the net recognized receivable to the amount we reasonably believe will be collected. Management believes
the balances for allowance for doubtful accounts at December 31, 2013 and 2012 are reasonably stated.



|Accounts Receivable and Due From Factor |  | December 31, 2013 |           | December 31, 2012
|--------------------------------------- |  | ----------------- | --------- | -----------------
|                                        |  |                   |           |                  
|Accounts receivable                     |  | $                 | 6,830,191 |                  
|Less-Allowance for doubtful accounts    |  |                   | (48,000   | )                
|                                        |  |                   |           |                  
|Net accounts receivable                 |  | $                 | 6,782,191 |                  
|                                        |  |                   |           |                  
|Due from factor without recourse        |  | $                 | —         |                  



Inventory

Inventory is stated at the lower of average
cost (which approximates first in, first out) or market and consists primarily of finished goods. The Company regularly reviews
its inventory quantities on hand and records a provision for excess and obsolete inventory based primarily on management’s
estimated forecast of product demand and production requirements.

Property and Equipment

Property and equipment are recorded at
cost less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of
the related assets, which range from three to seven years. Leasehold improvements are depreciated over fifteen years or the lease
term, whichever is shorter. Maintenance and repairs are charged to expense as incurred.

Trademarks

Table of Contents32







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The costs incurred to acquire trademarks, which are active and
relate to products with a definite life cycle, are amortized over the estimated useful life of fifteen years. Trademarks, which
are active and relate to corporate identification, such as logos, are not amortized. Pending trademarks are capitalized and reviewed
monthly for active status.

Long-Lived Asset Impairment

The Company periodically evaluates whether
events and circumstances have occurred that indicate the remaining estimated useful life of long-lived assets may warrant revision
or that the remaining balance may not be recoverable. When factors indicate that the asset should be evaluated for possible impairment,
the Company uses an estimate of the undiscounted net cash flows over the remaining life of the asset in measuring whether the asset
is recoverable. Based upon the anticipated future income and cash flow from operations and other factors, relevant in the opinion
of the Company’s management, there has been no impairment.

Operating Segment Reporting

As previously discussed, the Company
has two product lines, “gloves” and “apparel,” both of which have similar characteristics. They each provide
functional protection and comfort to workers in the form of workwear for various parts of the body; their production processes
are similar; they are both sold to the same type of class of customers, typically on the same purchase order; and they are warehoused
and distributed from the same warehouse facility. In addition, the “apparel” segment currently comprises less than
1% of the Company’s revenues. The Company believes that the aggregation criteria of FASB ASC 280-10 applies and will accordingly
aggregate these two segments.

Revenue Recognition

A customer is obligated to pay for products
sold to it within a specified number of days from the date that title to the products is transferred to the customer. The Company’s
standard terms are typically net 30 days from the transfer of title to the products to the customer, however, we have negotiated
special terms with certain customers and industries. The Company typically collects payment from a customer within 30 to 60 days
from the transfer of title to the products to a customer. Transfer of title occurs and risk of ownership passes to a customer at
the time of shipment or delivery, depending on the terms of the agreement with a particular customer. The sale price of the Company’s
products is substantially fixed or determinable at the date of sale based on purchase orders generated by a customer and accepted
by the Company. A customer’s obligation to pay the Company for products sold to it is not contingent upon the resale of those
products. The Company recognizes revenues when products are shipped or delivered to customers, based on terms of agreement with
the customer.

Revenue Disclosures

The Company’s revenues are derived
from the sale of our core line of task specific work gloves plus our line of workwear apparel products, available to all of our
customers, both domestically and internationally. Below is a table outlining this breakdown for the comparative periods:

|              |  | Year Ended December 31, 2013 |            | Year Ended December 31, 2012
|------------- |  | ---------------------------- | ---------- | ----------------------------
|Net Sales     |  |                              | Gloves     |                             
|Domestic      |  | $                            | 19,855,382 |                             
|International |  |                              | 4,554,424  |                             
|Total         |  | $                            | 24,409,806 |                             





Table of Contents33





IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Cost
of Goods Sold

Cost of goods sold includes all of the
costs associated with producing the product by independent, third party factories (FOB costs), plus the costs of transporting,
inspecting and delivering the product to our distribution warehouse in California (landed costs). Landed costs consist primarily
of ocean/air freight, transport insurance, import duties, administrative charges and local trucking charges from the port to our
warehouse. Cost of goods sold for the years ended December 31, 2013 and 2012 were $16,415,487 and $16,129,474 respectively.

Purchasing, warehousing and distribution
costs are reported in operating expenses on the line item entitled “Purchasing, warehousing and distribution” and,
for the years ending December 31, 2013 and 2012 were $1,173,564 and $1,112,492, respectively. These costs were comprised of salaries
and benefits of approximately $457,000 and $502,000; office expenses of approximately $66,000 and $65,000; travel and lodging of
approximately $8,000 and $43,000; and warehouse operations of approximately $643,000 and $502,000, respectively.

Product Returns, Allowances and Adjustments

Product returns, allowances and adjustments
is a broad term that encompasses a number of offsets to gross sales. Included herein are warranty returns of defective products,
returns of saleable products and accounting adjustments.

Warranty Returns - the Company has a
warranty policy that covers defects in workmanship. It allows customers to return damaged or defective products to us following
a customary return merchandise authorization process. Warranty returns for the years ending December 31, 2013 and 2012 were approximately
$88,000 or 0.3% and $78,000 or 0.3%, respectively.

Saleable Product Returns - the Company
may allow from time to time, depending on the customer and existing circumstances, stock adjustment returns, whereby the customer
is given the opportunity to ‘trade out’ of a style of product that does not sell well in their territory, usually
in exchange for another product, again following the customary return merchandise authorization process. In addition we may allow
from time to time other saleable product returns from customers for other business reasons, for example, in settlement of an outstanding
accounts receivable, from a discontinued distributor customer or other customer service purpose. Saleable product returns for
the years ending December 31, 2013 and 2012 were approximately $309,000 or 1.2% and $271,000 or 1.0%, respectively.

Accounting
Adjustments - these adjustments include pricing and shipping corrections and periodic adjustments to the product returns reserve.
Pricing and shipping corrections for the years ending December 31, 2013 and 2012 were approximately $54,000 or 0.2% and $49,000
or 0.2%, respectively. Adjustments to the product returns reserve for the years ending December 31, 2013 and 2012 were approximately
$10,000 or 0.0% and $3,000 or 0.0%, respectively.

For warranty returns the Company utilizes
actual historical return rates to determine the allowance for returns in each period. For saleable product returns the Company
also utilizes actual historical return rates, adjusted for large, non-recurring occurrences. The Company does not accrue for pricing
and shipping corrections as they are unpredictable and generally de minimis. Gross sales are reduced by estimated returns. We record
a corresponding accrual for the estimated liability associated with the estimated returns which is based on the historical gross
sales of the products corresponding to the estimated returns. This accrual is offset each period by actual product returns.

Table of Contents34







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|Reserve for Warranty Returns                            |  |  
|------------------------------------------------------- |  | -
|Reserve Balance 12/31/11                                |  | $
|                                                        |  |  
|Payments Recorded During the Period                     |  |  
|                                                        |  |  
|Accrual for New Liabilities During the Reporting Period |  |  
|                                                        |  |  
|Reserve Balance 12/31/12                                |  |  
|                                                        |  |  
|Payments Recorded During the Period                     |  |  
|                                                        |  |  
|Accrual for New Liabilities During the Reporting Period |  |  
|                                                        |  |  
|Reserve Balance 12/31/13                                |  | $



Advertising and Marketing

Advertising and marketing costs are expensed
as incurred. Advertising expenses for the years ended December 31, 2013 and 2012 were $559,921 and $384,080, respectively.

Shipping and Handling Costs

Freight billed to customers is recorded
as sales revenue and the related freight costs as cost of sales.

Customer Concentrations

Three customers accounted for approximately
$12,661,000 or 52% of net sales for year ended December 31, 2013 and two customers accounted for approximately $14,524,000 or 55%
of net sales for year ended December 31, 2012. No other customer accounted for more than 10% of net sales. All transactions were
in United States dollars. There were no transaction gains or losses associated with sales transactions.

Supplier Concentrations

Three suppliers, which are located overseas,
accounted for approximately 79% of total purchases during the year ended December 31, 2013 and two suppliers accounted for approximately
76% of total purchases during the year ended December 31, 2012. All transactions were in United States dollars. There were no transaction
gains or losses associated with vendor purchase transactions.

Earnings Per Share

The Company utilizes FASB ASC 260, “Earnings
per Share.” Basic earnings per share is computed by dividing earnings available to common stockholders by the weighted-average
number of common shares outstanding. Diluted earnings per share is computed similar to basic earnings per share except that the
denominator is increased to include the number of additional common shares that would have been outstanding if the potential common
shares had been issued and if the additional common shares were dilutive. Common equivalent shares are excluded from the computation
if their effect is anti-dilutive.

The following table sets forth the calculation
of the numerators and denominators of the basic and diluted per share computations for the years ended December 31:

Table of Contents35







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                            |  | 2013 |            | 2012
|----------------------------------------------------------- |  | ---- | ---------- | ----
|Numerator: Net Income                                       |  | $    | 346,229    |     
|Denominator: Basic EPS                                      |  |      |            |     
|Common shares outstanding, beginning of period              |  |      | 76,447,587 |     
|Weighted average common shares issued during the period     |  |      | 233,911    |     
|Denominator for basic earnings per common share             |  |      | 76,681,498 |     
|Denominator: Diluted EPS                                    |  |      |            |     
|Common shares outstanding, beginning of period              |  |      | 76,447,587 |     
|Weighted average common shares issued during the period     |  |      | 233,911    |     
|Dilutive warrants outstanding at end of the period          |  |      | —          |     
|Dilutive stock options outstanding at the end of the period |  |      | 7,066,140  |     
|Denominator for diluted earnings per common share           |  |      | 83,747,638 |     



The following potential common shares
have been excluded from the computation of diluted net earnings per share for the periods presented because their effect would
have been anti-dilutive:

|                      |  | Year Ended December 31,
|--------------------- |  | -----------------------
|                      |  | 2013                   
|                      |  |                        
|Common Stock Warrants |  |                        
|Common Shares         |  |                        



Income Taxes

The Company adopted the provisions of
FASB ASC 740-10 effective January 1, 2007. The implementation of FASB ASC 740-10 has not caused the Company to recognize any changes
in its identified tax positions. Management considers the Company’s tax positions to be routine transactions for which the
law is clear and unambiguous and that there are no uncertain tax positions. Interest and penalties associated with unrecognized
tax benefits would be classified as additional income taxes in the statement of operations.

Income taxes are provided for the tax
effects of the transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related
primarily to the difference between the basis of the allowance for doubtful accounts, accumulated depreciation and amortization,
accrued payroll and net operating loss carryforwards for financial and income tax reporting. The deferred tax assets and liabilities
represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled.

Deferred tax assets and liabilities are
reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized
or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision
for income taxes. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation
allowance is recognized.

Table of Contents36







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The significant components of the provision
for income taxes for the years ended December 31, 2013 and 2012 were ($184,196) and $219,000, respectively, for the current
state (refund)/provisions and $8,000 and $48,000 for the federal tax provision, respectively. There was no state or federal deferred
tax provision. Based on its history of losses, the Company provided a 100% valuation allowance against its deferred tax assets,
as it was not more likely than not that any future benefit from deductible temporary differences and net operating loss carryforwards
would be realized. For the year ended December 31, 2012 the Company has reassessed the need for a valuation allowance against its
deferred tax assets and, based on the positive evidence of the last three year’s pre-tax income and forecasted future results,
concluded that it is more likely than not that it would be able to realize some of its deferred tax assets. Accordingly, the Company
has reversed approximately 30% of its valuation allowance for its current deferred tax assets and recorded a deferred tax benefit
of $857,500. At December 31, 2013 we once again reviewed our current profitability and forecasted future results and concluded
that it is more likely than not that we would be able to realize some more of our deferred tax assets. For the current year we
reversed approximately 7% of our valuation allowance for our current deferred tax assets and recorded a deferred tax benefit of
$214,500. We will continue to evaluate if it is more likely than not that we will realize the benefits from future deferred tax
assets and have accordingly provided a 63% valuation allowance against our remaining deferred tax assets.

By statute, tax years ending in December
31, 2012 through 2009 remain open to examination by the major taxing jurisdictions to which the Company is subject.

Use of Estimates

The preparation of financial statements
requires management to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure
of contingent assets and liabilities. Actual results could differ from those estimates. Significant estimates and assumptions made
by management are used for, but not limited to, the allowance for doubtful accounts, inventory obsolescence, allowance for returns
and the estimated useful lives of long-lived assets.

Recently Issued Accounting Pronouncements

In July 2012, The Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2012-02, “Intangibles
– Goodwill and Others: Testing Indefinite-Lived Intangible Assets for Impairment”, to allow entities to use a qualitative
approach to test indefinite-lived assets for impairment. ASU 2012-02 permits an entity to first perform a qualitative assessment
to determine whether it is more likely than not that the fair value of an indefinite-live intangible asset is less than its carrying
value. If it is concluded that this is the case, it is necessary to perform the currently prescribed quantitative impairment test
by comparing the fair value of the indefinite-lived intangible asset with its carrying value. Otherwise, the quantitative impairment
test is not required. ASU 2012-02 is effective for impairment tests for annual and interim impairment tests performed for fiscal
years beginning after September 15, 2012. Early adoption is permitted. The Company has adopted the provisions of this standard
and noted no material impact on the financial condition or results of operations of the Company.

3.Inventory

At December 31, 2013 and 2012 the Company
had one class of inventory - finished goods.

|               |  | December 31, 2013 |           | December 31, 2012
|-------------- |  | ----------------- | --------- | -----------------
|               |  |                   |           |                  
|Finished Goods |  | $                 | 4,570,402 |                  



4.Property
and equipment

Property and equipment consisted of the
following:

Table of Contents37







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|                               |  | December 31, 2013 |          | December 31, 2012
|------------------------------ |  | ----------------- | -------- | -----------------
|Computer hardware and software |  | $                 | 442,262  |                  
|Vehicle                        |  |                   | 39,630   |                  
|Furniture and equipment        |  |                   | 196,744  |                  
|Leasehold improvements         |  |                   | 90,441   |                  
|                               |  |                   | 769,077  |                  
|Less accumulated depreciation  |  |                   | (577,759 | )                
|                               |  |                   |          |                  
|Property and equipment, net    |  | $                 | 191,318  |                  



Depreciation expense for the years ended
December 31, 2013 and 2012 was $158,122 and $149,666, respectively.

5.Trademarks
and patents

Trademarks and patents consisted of the
following:

|                               |  | December 31, 2013 |         | December 31, 2012
|------------------------------ |  | ----------------- | ------- | -----------------
|                               |  |                   |         |                  
|Trademarks and patents         |  | $                 | 187,324 |                  
|Less: Accumulated amortization |  |                   | (49,064 | )                
|                               |  |                   |         |                  
|Trademarks, net                |  | $                 | 138,260 |                  



Trademarks consist of definite-lived
trademarks of $120,225 and $111,043 and indefinite-lived trademarks of $67,099 and $61,443 at December 31, 2013 and 2012, respectively.
All trademark costs have been generated by the Company, and consist of initial legal and filing fees.

Amortization expense was $8,746 and $8,403
for the years ended December 31, 2013 and 2012, respectively. The Company expects to amortize approximately $8,800 in each of the
next five years.

Table of Contents38







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



6.Accounts
payable and accrued expenses

Accounts
payable and accrued expenses consisted of the following:

|                                            |  | December 31, 2013 |           | December 31, 2012
|------------------------------------------- |  | ----------------- | --------- | -----------------
|                                            |  |                   |           |                  
|Accounts payable                            |  | $                 | 538,001   |                  
|Accrued inventory                           |  |                   | 623,984   |                  
|Accrued rebates and co-op                   |  |                   | 224,213   |                  
|Accrued bonus                               |  |                   | 40,533    |                  
|Accrued warranty reserve                    |  |                   | 75,000    |                  
|Customer deposits                           |  |                   | 260,717   |                  
|Accrued expenses – other                    |  |                   | 367,457   |                  
|                                            |  |                   |           |                  
|Total accounts payable and accrued expenses |  | $                 | 2,129,905 |                  



7.Bank
Lines of Credit

Factoring Agreement

On December 7, 2009
the Company entered into a factoring agreement with FCC, LLC, dba First Capital Western Region, LLC (“FCC”), whereby
it assigned certain of its accounts receivable without recourse and other accounts receivable with recourse. FCC, based on its
internal credit policies, determined which accounts receivable it would accept without recourse. This facility allowed the Company
to borrow the lesser of (a) $3,000,000 or (b) the sum of (i) the threshold for the net amount of total eligible accounts receivable
set forth in the agreement, with and without recourse, and (ii) the threshold for the value of eligible inventory set forth in
the agreement, which amount shall not exceed the lesser of $1,500,000 or the net amount of eligible accounts receivable. All of
the Company’s assets secured amounts borrowed under the terms of this agreement. Interest on outstanding balances based on
accounts receivable accrued at LIBOR plus 5.5% and interest on outstanding balances based on inventory accrued at LIBOR plus 6.5%.
This agreement had an initial term of thirty-six (36) months. On December 1, 2011, this agreement was amended to increase the Company’s
limit on permissible capital equipment expenditures from $100,000 to $250,000 per year, effective for 2011 and 2012. On December
7, 2012 the Company terminated this factoring agreement. As of December 31, 2013 there were no remaining balances due from factor.
As of December 31, 2012, the total amount due from factor was $915,492 which represented open factored balances that were being
collected through the Factor.

Bank Revolving Loan

On November 30,
2012 the Company entered into a Business Loan Agreement with Union Bank, N.A. which provides a revolving loan of up to $6,000,000.
The first $3,500,000 of advances under this facility are under an open line-of-credit. Advances in excess of $3,500,000, up to
the line limit of $6,000,000, are subject to a Borrowing Base report. The term Borrowing Base means an amount equal to (a) 80%
of the net amount of all eligible accounts receivable plus, (b) the lesser of (i) 50% of the value of eligible landed inventory
and (ii) $2,750,000, plus (c) 35% of eligible in-transit inventory. In addition, during the months of April to October each calendar
year, the outstanding principal amount of all advances against eligible inventory shall not exceed 150% of the aggregate outstanding
principal amount of advances against eligible accounts receivable. All of the Company’s assets secure amounts borrowed under
the terms of this agreement. Interest on borrowed funds will accrue at Prime minus 0.25% unless the Company chooses to “fix”
a portion of the indebtedness (minimum $150,000) at LIBOR plus 2% for fixed periods of time ranging from 30 days to 360 days.



Table of Contents39







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



As of December 31,
2013 and 2012, the total amounts due to Union Bank were $2,169,411 and $1,483,883, respectively.

8.Equity
transactions

Common Stock

On
February7,2012the Companyissued60,000sharesofcommonstockuponthe exerciseofawarrantatanexercisepriceof$0.05.

On
February27,
2012the Companyissued268,792sharesofcommonstockuponthe exerciseofastockoptionatanexercisepriceof$0.09.

On
February29,
2012the Companyissued561,291sharesofcommonstockuponthe exerciseofvariousstockoptionsatexercisepricesbetween$0.09and $0.095.

On
March15,
2012the Companyissued43,146sharesofcommonstockuponthe exerciseofastockoptionatanexercisepriceof$0.09.

OnMarch20,2012theCompanyissued833,333sharesof commonstockupontheexerciseof variousstockoptionsat an exercisepriceof
$0.09.

OnMarch22,2012theCompanyissued36,687sharesof commonstockuponthecashlessexerciseof
a stockoptionat an exercisepriceof
$0.11.

On
September15,
2012the Companyissued43,146sharesofcommonstockuponthe exerciseofastockoptionatanexercisepriceof$0.09.

On
December20,
2012the Companyissued50,438sharesofcommonstockuponthe exerciseofastockoptionatanexercisepriceof$0.095.

On
January14,
2013the Companyissued172,582sharesofcommonstockuponthe exerciseofastockoptionatanexercisepriceof$0.09.

On
February 5, 2013the Companyissued35,513sharesofcommonstockuponthe exerciseofastockoptionatanexercisepriceof$0.09.

On
February 25, 2013the Companyissued48,595sharesofcommonstockuponthe exerciseofastockoptionatanexercisepriceof$0.09.

Therewere76,704,275sharesofcommonstockofthe CompanyoutstandingatDecember31, 2013.

Warrant Activity

A summary of warrant activity is as follows:

|                                          |  | Number of Shares |         | Weighted Average Exercise Price
|----------------------------------------- |  | ---------------- | ------- | -------------------------------
|Warrants outstanding at December 31, 2011 |  |                  | 103,146 |                                
|Warrants exercised                        |  |                  | (60,000 | )                              
|Warrants outstanding at December 31, 2012 |  |                  | 43,146  |                                
|Warrants outstanding at December 31, 2013 |  |                  | 43,146  |                                

Table of Contents40







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Stock Based Compensation

The Company accounts for stock based
compensation under the provisions of FASB ASC 718 “Share-Based Payments” using the modified prospective application
transition method.

Ironclad California reserved 7,000,000
shares of its common stock for issuance to employees, directors and consultants under the 2000 Stock Incentive Plan, which the
Company assumed in the Merger (“the 2000 Plan”). Under the 2000 Plan, options may be granted at prices not less than
the fair market value of the Company’s common stock at the grant date. Options generally have a ten-year term and shall be
exercisable as determined by the Company’s board of directors.

Effective May 18, 2006, the Company reserved
4,250,000 shares of its common stock for issuance to employees, directors and consultants under its 2006 Stock Incentive Plan (the
“2006 Plan”). Under the 2006 Plan, options may be granted at prices not less than the fair market value of the Company’s
common stock at the grant date. Options generally have a ten-year term and shall be exercisable as determined by the Company’s
board of directors.

Effective May 9, 2009, the Company reserved
an additional 6,750,000 shares of its common stock for issuance to employees, directors and consultants under its 2006 Stock Incentive
Plan (the “2006 Plan”). Under the 2006 Plan, options may be granted at prices not less than the fair market value of
the Company’s common stock at the grant date. Options generally have a ten-year term and shall be exercisable as determined
by the Company’s board of directors.

Effective April 11, 2011, the Company
reserved an additional 2,000,000 shares of its common stock for issuance to employees, directors and consultants under its 2006
Stock Incentive Plan (the “2006 Plan”). Under the 2006 Plan, options may be granted at prices not less than the fair
market value of the Company’s common stock at the grant date. Options generally have a ten-year term and shall be exercisable
as determined by the Company’s board of directors.

Effective May 21, 2013, the Company reserved
an additional 3,000,000 shares of its common stock for issuance to employees, directors and consultants under its 2006 Stock Incentive
Plan (the “2006 Plan”). Under the 2006 Plan, options may be granted at prices not less than the fair market value of
the Company’s common stock at the grant date. Options generally have a ten-year term and shall be exercisable as determined
by the Company’s board of directors.

The fair value of each stock option granted
under either the 2000 or 2006 Plan is estimated on the date of the grant using the Black-Scholes Model. The Black-Scholes Model
has assumptions for risk free interest rates, dividends, stock volatility and expected life of an option grant. The risk free interest
rate is based on the U.S. Treasury Bill rate with a maturity based on the expected life of the options and on the closest day to
an individual stock option grant. Dividend rates are based on the Company’s dividend history. The stock volatility factor
is based on historical market prices of the Company’s common stock. The expected life of an option grant is based on management’s
estimate. The fair value of each option grant is recognized as compensation expense over the vesting period of the option on a
straight line basis.

For stock options issued during the years
ended December 31, 2013 and 2012, the fair value of these options was estimated at the date of the grant using a Black-Scholes
Model with the following range of assumptions:

|                        |  | December 31, 2013 |                  | December 31, 2012
|----------------------- |  | ----------------- | ---------------- | -----------------
|Risk free interest rate |  |                   | 0.12% - 1.33%    |                  
|Dividends               |  |                   | —                |                  
|Volatility factor       |  |                   | 64.8% - 88.3%    |                  
|Expected life           |  |                   | 5.5 - 6.25 years |                  

Table of Contents41







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



A summary of stock option activity is
as follows:

| |                                  | Number of Shares |  | Weighted Average Exercise Price
| | -------------------------------- | ---------------- |  | -------------------------------
| | Outstanding at December 31, 2011 |                  |  |                                
| | Granted                          |                  |  |                                
| | Exercised                        |                  |  |                                
| | Cancelled/Expired                |                  |  |                                
| | Outstanding at December 31, 2012 |                  |  |                                
| | Granted                          |                  |  |                                
| | Exercised                        |                  |  |                                
| | Cancelled/Expired                |                  |  |                                
| | Outstanding at December 31, 2013 |                  |  |                                
| | Exercisable at December 31, 2013 |                  |  |                                



The following tables summarize information
about stock options outstanding at December 31, 2013:

|Range of Exercise Price |               | Number Outstanding |  | Weighted Average Remaining Contractual Life (Years) |            | Weighted Average Exercise Price |  | Intrinsic Value Outstanding Shares
|----------------------- | ------------- | ------------------ |  | --------------------------------------------------- | ---------- | ------------------------------- |  | ----------------------------------
|                        | $0.09 - $0.27 |                    |  |                                                     | 10,143,765 |                                 |  |                                   



The following tables summarize information
about stock options exercisable at December 31, 2013:

|Range of Exercise Price |               | Number Exercisable |  | Weighted Average Remaining Contractual Life (Years) |           | Weighted Average Exercise Price |  | Intrinsic Value Exercisable Shares
|----------------------- | ------------- | ------------------ |  | --------------------------------------------------- | --------- | ------------------------------- |  | ----------------------------------
|                        | $0.09 - $0.27 |                    |  |                                                     | 7,809,833 |                                 |  |                                   



























Table of Contents42







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The following tables summarize information
about non-vested stock options:

| |                                 | Number of Shares |  | Weighted Average Grant Date Fair Value
| | ------------------------------- | ---------------- |  | --------------------------------------
| | Non-Vested at December 31, 2011 |                  |  |                                       
| | Granted                         |                  |  |                                       
| | Vested                          |                  |  |                                       
| | Forfeited                       |                  |  |                                       
| | Non-Vested at December 31, 2012 |                  |  |                                       
| | Granted                         |                  |  |                                       
| | Vested                          |                  |  |                                       
| | Forfeited                       |                  |  |                                       
| | Non-Vested at December 31, 2013 |                  |  |                                       



The Company recorded $264,598 of compensation
expense for employee stock options during the year ended December 31, 2013. These compensation expense charges were recorded in
the following operating expense categories, general and administrative - $171,021; sales and marketing - $47,845; research and
development - $29,862; and purchasing, warehousing and distribution - $15,870. There was a total of $267,428 of unrecognized compensation
costs related to non-vested share-based compensation arrangements under the Plan outstanding at December 31, 2013. This cost is
expected to be recognized over a weighted average period of 2.2 years. The total fair value of shares vested during the year ended
December 31, 2013 was $243,455.

9.Income
Taxes

The provision (benefit) for income taxes
for the years ended December 31, 2013 and 2012 consisted of the following:

| |          | 2013 |  | 2012
| | -------- | ---- |  | ----
| |          |      |  |     
| | Current  |      |  |     
| | Deferred |      |  |     
| |          |      |  |     
| |          |      |  |     
| |          |      |  |     













Table of Contents43







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The provision for income taxes differs
from the amount that would result from applying the federal statutory rate for the years ended December 31, 2013 and 2012 as follows:

|                                              |  | 2013 |       | 2012
|--------------------------------------------- |  | ---- | ----- | ----
|Statutory regular federal income benefit rate |  |      | (34.0 | )%  
|State income taxes, net of federal benefit    |  |      | (52.4 | )   
|Change in valuation allowance                 |  |      | 149.1 |     
|Other                                         |  |      | (2.4  | )   
|Total                                         |  |      | (60.3 | %)  



In assessing the realizability of deferred
tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not
be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities,
projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable
income and projections for future taxable income over the periods which the deferred tax assets are deductible, management believes
it is more likely than not the Company will realize some portion or all of the benefits of these deductible differences, and has
chosen to reduce its valuation allowance against its deferred tax assets to 63%.

Significant components of the Company’s
deferred tax assets and liabilities for federal incomes taxes at December 31, 2013 and 2012 consisted of the following:

|                                       |  | 2013 |            | 2012
|-------------------------------------- |  | ---- | ---------- | ----
|Deferred tax assets                    |  |      |            |     
|Net operating loss carryforward        |  | $    | 2,228,062  |     
|Stock option expense                   |  |      | 1,382,598  |     
|Allowance for doubtful accounts        |  |      | 20,563     |     
|Allowance for product returns          |  |      | 32,130     |     
|Accrued compensation                   |  |      | 58,940     |     
|Inventory reserve                      |  |      | 266,036    |     
|Other                                  |  |      | 73,419     |     
|Valuation allowance                    |  |      | (2,691,622 | )   
|                                       |  |      |            |     
|Total deferred tax assets              |  |      | 1,370,126  |     
|                                       |  |      |            |     
|Deferred tax liabilities – state taxes |  |      | (298,126   | )   
|                                       |  |      |            |     
|Net deferred tax assets                |  | $    | 1,072,000  |     



As of December 31, 2013, the Company had unused
federal and state net operating loss carryforwards available to offset future taxable income of $4,853,000 and $5,917,000, respectively,
that expire between 2015 and 2025. As of December 31, 2012, the Company had unused federal and state net operating loss carryforwards
available to offset future taxable income of $5,778,000 and $9,344,000, respectively, that expire between 2015 and 2028.

Table of Contents44







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



10.Commitments
and Contingencies

The Company entered into a five-year
lease with one option to renew for an additional five years for a corporate office and warehouse lease commencing in July 2006.
The Company exercised its five year option to renew this lease commencing in July 2011. The facility is located in El Segundo,
California. As part of this renewal process we reduced our square footage by approximately 1,700 square feet of unneeded warehouse
space in exchange for six months of rent concessions and approximately $40,000 for tenant improvements. Rent expense for this facility
for the years ended December 31, 2013 and 2012 for this facility were $157,013 and $125,038, respectively.

The Company has various non-cancelable
operating leases for office equipment expiring through July 15, 2016. Equipment lease expense charged to operations under these
leases was $10,126 and $12,205 for the years ended December 31, 2013 and 2012, respectively.

Future minimum rental commitments under
these non-cancelable operating leases for years ending December 31 are as follows:

|Year |            | Facility |  | Equipment |         | Total
|---- | ---------- | -------- |  | --------- | ------- | -----
|     | 2014       |          |  | $         | 161,628 |      
|     | 2015       |          |  |           | 165,912 |      
|     | 2016       |          |  |           | 84,558  |      
|     | Thereafter |          |  |           | —       |      
|     |            |          |  |           |         |      
|     |            |          |  | $         | 412,098 |      



Ironclad California executed a Separation
Agreement with Eduard Albert Jaeger effective in April 2004. Pursuant to the terms of the Separation Agreement, if Ironclad terminates
Mr. Jaeger’s employment with Ironclad California at any time other than for Cause, then Ironclad California must pay Mr.
Jaeger (a) all accrued and unpaid salary and other compensation payable by the Company for services rendered through the termination
date, payable in a lump sum payment on the termination date; and (b) a cash amount equal to Two Hundred Thousand Dollars ($200,000),
payable in installments throughout the one (1)-year period following the termination date in the same manner as Ironclad California
pays salaries to its other executive officers. The Separation Agreement requires Mr. Jaeger to comply with certain obligations,
including execution of a general release, in order to receive the lump sum payment. For the purposes of the Separation Agreement,
termination for “Cause” means termination by reason of: (i) any act or omission knowingly undertaken or omitted by
Mr. Jaeger with the intent of causing damage to Ironclad California, its properties, assets or business or its stockholders, officers,
directors or employees; (ii) any improper act of Mr. Jaeger involving a material personal profit to him, including, without limitation,
any fraud, misappropriation or embezzlement, involving properties, assets or funds of Ironclad or any of its subsidiaries; (iii)
any consistent failure by Mr. Jaeger to perform his normal duties as directed by the Chairman of the Company’s board of directors,
in the sole discretion of the Company’s board of directors; (iv) any conviction of, or pleading nolo contendere to, (A) any
crime or offense involving monies or other property of Ironclad; (B) any felony offense; or (C) any crime of moral turpitude; or
(v) the chronic or habitual use or consumption of drugs or alcoholic beverages. This Separation Agreement has been cancelled, effective
February 18, 2014, in conjunction with a Consulting Agreement of same date, as described in Note 14.

11.	Legal Proceedings

On or around April 26, 2012, one of the
Company’s stockholders (the “Plaintiff”) filed a lawsuit in the California Superior Court, together with an ex
parte application for a temporary restraining order, attempting to immediately restrain the Company from conducting the election
of directors on May 23, 2012 unless it included

Table of Contents45







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



certain nominees proposed by the Plaintiff on the ballot
for election. In connection with the application the Plaintiff requested that the Court set a hearing for a preliminary injunction
on the same issue prior to the election that was held on May 23, 2012. The Company was successful in opposing the ex parte application
and the Court denied the relief requested to set a hearing for the preliminary injunction. On or around May 10, 2012, the Plaintiff
filed another ex parte application in connection with the same action, seeking substantially similar relief. The Company was again
successful in opposing the application.

The Company held its annual meeting as
planned on May 23, 2012. The slate nominated by the Company’s board of directors was successfully nominated and elected.
The Company did not nominate or present as a matter of business the director slate proposed by the Plaintiff.

On May 29, 2012, the Company filed an
action in the US District Court for the Central District of California against the Plaintiff and certain other stockholders alleging,
among other matters, violations of the U.S. securities laws and seeking declaratory relief relating to the interpretation of its
bylaws. The Company sought monetary damages and injunctive relief asking the court to order the defendant to cease violating the
securities laws.

In August 2012, two of the defendant
stockholders purported to substitute themselves as plaintiffs in the original state action (in place of the Plaintiff) (the “New
Plaintiffs”) and concurrently filed another ex parte application with the California Superior Court seeking a hearing under
California Corporations Code Section 709 to determine whether the Plaintiff and the New Plaintiffs were denied the right to vote
at the Company’s 2012 annual meeting, and to set aside the results of our 2012 annual meeting. Without deciding on the merits
of the parties’ arguments, the Court scheduled the hearing for January 2013.

In late September 2012, the Company conducted
a mediation proceeding with the New Plaintiffs and ultimately agreed to a non-binding resolution of all disputes under the state
and federal actions. All parties thereafter dismissed the pending state and federal proceedings without prejudice.

On December 17, 2012, the Company entered
into a Settlement Agreement and Mutual General Release (the “Settlement Agreement”), dated December 14, 2012, by and
among the Company, Scott Jarus, Scott Alderton, Eduard A. Jaeger, R.D. Pete Bloomer, Vane Clayton and David Jacobs, on the one
hand, and Kenneth J. Frank, Richard B. Kronman, Michael A. DiGregorio, Charles H. Giffen, Charles W. Hunter and Marcel Sassola,
on the other hand, pursuant to which the Company and the then-current members of its board of directors (the “Board”)
agreed to a final settlement and release of claims with respect to the actions described above filed by Richard Kronman, Marcel
Sassola and Kenneth Frank on behalf of certain of the Company’s stockholders (collectively, the “Claimants”),
against the Company in the California Superior Court, and the actions described above filed by the Company against the Claimants
in the United States District Court for the Central District of California.

Under the Settlement Agreement, Scott
Alderton agreed to resign from the Board and the Company agreed to appoint Charles H. Giffen and Michael A. DiGregorio to fill
the vacant seats on the Board (accounting for an increase in the size of the Board to seven). The Settlement Agreement also provides
for the replacement of certain members of the Board prior to the Company’s 2013 annual meeting of stockholders should such
members resign. In addition, the parties to the Settlement Agreement agreed that the persons to be nominated to be members of the
Board at the Company’s 2013 annual meeting of stockholders shall be the persons who are members of the Board pursuant to
the Settlement Agreement. The parties also agreed that each of the Claimants and each of Eduard A. Jaeger and Scott Jarus (who
individually are parties to the Voting Agreement referenced below), will vote all of their shares of the Company’s voting
stock in favor of those nominees at or in connection with the Company’s 2013 annual meeting of stockholders. The provisions
of the Settlement Agreement related to the composition of the Company’s board of directors expire automatically upon the
conclusion of the Company’s 2013 annual meeting of stockholders unless terminated earlier in accordance with the terms of
the Settlement Agreement.

To effectuate the parties agreement with
respect to voting shares of the Company’s voting stock, on December 17, 2012, the Company also entered into a Voting Agreement,
dated December 14, 2012, with Kenneth J. Frank, Michael A. DiGregorio, Charles H. Giffen, Charles W. Hunter, Marcel Sassola, Eduard
A. Jaeger, Richard B. Kronman and Scott Jarus.

Table of Contents46







IRONCLAD PERFORMANCE WEAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



12.	Related Party Transactions

Mr. Jarus, an Ironclad board member since
May 2006, was appointed in September 2008, in a consulting capacity, as Executive Chairman of the Corporation with a compensation
of $10,000 per month. In May 2009, Mr. Jarus also took on the role of Interim Chief Executive Officer. He performed in this capacity
through December 31, 2009. On January 1, 2010, Mr. Jarus was employed by the Company in the role of Chief Executive Officer at
an annual salary of $130,000. Mr. Jarus also received an additional annual amount equal to $5,220 to cover any employee portion
of health benefits offered by the Company. On January 1, 2011 Mr. Jarus received an increase in his annual salary to $145,000.
On January 1, 2012 Mr. Jarus received an increase in his annual salary to $250,000. On September 27, 2013 Mr. Jarus resigned his
position as Chief Executive Officer of the Company and remained a board member. Mr. Jarus subsequently resigned from the board
on February 18, 2014.

Mr. Alderton, an Ironclad board member
since August 2002, is a partner of the law firm, Stubbs, Alderton and Markiles, LLP, or SAM, which is Ironclad’s attorney
of record. SAM rendered services to Ironclad California as its primary legal firm since 2002, and became our primary legal counsel
upon closing of the merger with Ironclad California on May 9, 2006. On December 31, 2012 Mr. Alderton resigned from our Board of
Directors. The Company has incurred legal fees from SAM of $154,543 and $160,283 in 2013 and 2012, respectively.

13.	Customs and Duties Protests

Early in 2008 the Company became aware
that competitors had been importing gloves similar to many of its products under a temporary tariff provision at a lower duty rate
under Chapter 99. This lower duty rate of 2.8% was significantly less than the 10.4% rate the Company had been paying. The Company
filed retroactive, formal protests with U.S. Customs and Border Protection (CBP) for refund of duties for previous entries totaling
approximately $165,000.

In July, 2008, the Company received a
written denial on its formal protest from CBP. The Company continued to contest this denial through the courts.

In summary, the outcome of the Company’s
challenge to the classification of some of its products for the purpose of determining the appropriate duty rate has been resolved.
We have received successful rulings lowering duties on specific styles of gloves, and we have modified the wrist closure on some
of our gloves to conform with the current classification, where feasible. The Company continued to challenge the higher classification
for certain styles of gloves under protest and the protest denials have been summonsed to the Court of International Trade (“CIT”).
These entries at the CIT have been approved for stipulation to the Justice Department and the Company has received reimbursement
from the U.S. Customs Office in 2012 of previously paid duties of $107,417 plus accrued interest of $19,001.

14.	Subsequent Events

On February 18, 2014 the board of directors
of the Company appointed Mr. Jeffrey Cordes as Chief Executive Officer with a compensation of $300,000 per year, along with an
incentive bonus of $125,000 for over-achievement of corporate objectives. Mr. Cordes was also appointed to the board of directors.
In addition, Mr. Cordes was awarded 2,700,000 options to purchase Ironclad Performance Wear Corporation stock at $0.17, the stock
closing price on the date of the award.

Concurrent with the above appointment,
Mr. Eduard Jaeger tendered his resignation as Head of Business Development and as a member of the board of directors. Mr. Jaeger
will remain affiliated with the Company for two years as a Brand Ambassador and Evangelist for the Company’s products pursuant
to a consulting contract.

Also concurrent with the above appointment,
Mr. Scott Jarus resigned from the board of directors.



Table of Contents47





Item 9.	Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.

None.

Item 9A.	Controls and Procedures.

Evaluation of Controls and Procedures

We maintain disclosure controls and procedures
that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934,
as amended, or the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s
rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under
the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers,
or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure as defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act.

As of December 31, 2013, management conducted
an evaluation, with the participation of our Chief Executive Officer and our Principal Financial Officer, of the effectiveness
of the design and operation of our disclosure controls and procedures. Based on that evaluation, management has concluded that
as of December 31, 2013, our disclosure controls and procedures were effective.

Changes in Internal Controls

During the last fiscal quarter, there
have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.

Management’s Report on Internal
Control over Financial Reporting

Our management is responsible for establishing
and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities
Exchange Act of 1934. Our internal control over financial reporting is designed, under the supervision of our principal executive
and principal financial officers, and effected by our board of directors, management and other personnel to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of America (GAAP). Our internal control over financial
reporting includes those policies and procedures that:

| | · | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the our assets;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------

| | · | provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with
authorizations of our management and directors; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of our assets that could have a material effect on the financial statements.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We carried out an evaluation under the
supervision, and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer,
of the effectiveness of our internal control over financial reporting as of December 31, 2013. This evaluation was based on the
framework in “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the
Treadway Commission, or COSO. All internal control systems, no matter how well designed, have inherent limitations. Therefore,
even those systems determined to be effective can provide only reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with GAAP.

Table of Contents48







Based on their evaluation, our management
concluded that internal control over financial reporting was effective as of December 31, 2013.

Item 9B.	Other Information.

None.





















































Table of Contents49





PART III

Item 10.	Directors, Executive Officers and Corporate
Governance.

The following table sets forth the
name, age and position of each of our executive officers and directors as of March 14, 2014. All directors serve until the next
annual meeting of stockholders or until their successors are elected and qualified. Officers are appointed by our board of directors
and their terms of office are, except to the extent governed by an employment contract, at the discretion of our board of directors.

|Name                  | Age | Position                                                                   
|--------------------- | --- | ---------------------------------------------------------------------------
|Jeffrey Cordes        | 56  | Chief Executive Officer, Director                                          
|Rhonda Hoffarth       | 53  | Executive Vice President and Chief Operating Officer                       
|K. Bryan Griggs       | 37  | Executive Vice President of Sales and Marketing                            
|Thomas Kreig          | 66  | Senior Vice President of Finance, Principal Financial Officer and Secretary
|R.D. Pete Bloomer     | 78  | Director                                                                   
|Vane Clayton          | 55  | Director                                                                   
|David Jacobs          | 80  | Director                                                                   
|Michael A. DiGregorio | 59  | Director                                                                   
|Charles H. Giffen     | 55  | Director                                                                   
|Patrick O’Brien       | 67  | Director                                                                   



Jeffrey Cordes, Chief Executive Officer, Director

Mr. Cordes has served as our Chief
Executive Officer and a member of our board of directors since February 2014. He brings more than 30 years of extensive
executive experience in global textiles and apparel. Mr. Cordes served as President and Chief Operating Officer of Walls
Industries, Inc., a leading global company in safety and work apparel, from 2010 through 2013, and as Chief Operating Officer
from 2004 to 2010. Prior to Walls, Mr. Cordes served as the Chief Executive officer of Hometown Wholesale Furniture Clubs,
Inc. from 2002 to 2004 and as the Chief Operating Officer and Chief Financial Officer of e2 Communications Inc. from 2000 to
2001. Prior to e2 Communications, Mr. Cordes served as President and Chief Operating Officer and as a Director of Pillowtex
Corporation (NYSE PTX), a marketer, manufacturer and importer of home textiles, from 1997 to 1999. Mr. Cordes served as Chief
Financial Officer and a  Director of Pillowtex from 1993 to 1997. Mr. Cordes held additional Vice President positions with
Pillowtex from 1984 to 1993.  Mr. Cordes holds an MBA from the Cox School of Business at Southern Methodist University and
an undergraduate degree in Business Administration from Hope College. Mr. Cordes’ extensive executive and
industry experience led to the conclusion that he should serve as a director in light of our business and structure.

Rhonda Hoffarth, Executive Vice President
& Chief Operating Officer

Ms. Hoffarth has served as our Executive
Vice President & Chief Operating Officer since January 2003. From August 2005 through May 2006, Ms. Hoffarth also served as
Ironclad’s interim Chief Financial Officer. Ms. Hoffarth has over 20 years of experience in operations and finance with growing
consumer product companies. Prior to joining us, Ms. Hoffarth spent 9 years with Bell Sports, Inc. in various roles, including
Vice President of Operations, North American, helping the company grow from $45,000,000 in revenue to over $200,000,000. Subsequently,
Ms. Hoffarth spent 2 years as the Senior Vice President of Operations for Targus, Inc., a $500,000,000 developer of mobile accessories.
Both Bell Sports and Targus source their finished products from Asia and have multiple sales channels (independent shops, regional
and national accounts, big box accounts). Ms. Hoffarth received her Masters of Business Administration from the University of Southern
California in 1992.

K. Bryan Griggs, Executive Vice President
of Sales and Marketing

Mr. Griggs has served as our Executive
Vice President of Sales and Marketing since February 2014. Mr. Griggs brings more than 15 years of sales and operational management
experience in the apparel, footwear and outdoor industries. Prior to joining us, Mr. Griggs served as President at Propper International,
a leading company in tactical and military apparel for three years. Previous to that, Mr. Griggs served for two years as Vice President
of



Table of Contents50







Sales at 511 Tactical, one of our long time business partners. For four years prior to that he served as EVP of Outdoor
Products for Otto International, a $23 billion global sourcing and branded company. Earlier Mr. Griggs built his own company, Mud
River Dog Products, out of his garage, initially as a hobby, and built the brand to be the recognized leader in the hunting dog
product market. He later sold this company. Mr. Griggs attended Colorado Mountain College and the University of Colorado.

Thomas Kreig, Senior Vice President
of Finance, Principal Financial Officer and Secretary

Mr. Kreig currently serves as Senior
Vice President of Finance, Principal Financial Officer and Secretary. From September 2002 through May 2009, Mr. Kreig served as
our Vice President of Finance and Secretary. From April 2007 through December 2007 and from February 2008 through May 2009 Mr.
Kreig served as our Interim Chief Financial Officer. Before joining Ironclad, Mr. Kreig spent 18 years serving as Controller, Vice
President of Finance and Chief Financial Officer at companies in several different industries. Most recently he served as Controller
for In-Flight Network, LLC, a developer of satellite-based broadband communications for airline passengers. Prior to In-Flight
Network, Mr. Kreig served as Vice President of Finance for Network Courier Services, Inc. From 1983 to 1996, Mr. Kreig served as
Controller and Chief Financial Officer for Triple L Distributing Co., Inc. and Controller and Treasurer for a medical diagnostic
equipment company where he was instrumental in helping to successfully execute an initial public offering. He is a certified public
accountant and received his Masters of Business Administration from the University of Detroit in 1975.

R. D. Pete Bloomer, Director

Mr. Bloomer served as Chairman of our
board of directors from April 2003 through September 2008. He is the Chairman and Chief Executive Officer of CVM Management, Inc.
and Managing Partner of CVM Equity Fund V, Ltd., LLP, or CVM, which was one of our larger stockholders. He is also the Managing
Partner of the Northern Rockies Venture Fund which is one of the original investors of Ironclad. The specific experience, qualifications,
attributes and skills that led to the conclusion that Mr. Bloomer should serve on our board of directors, in light of our business
and structure, include his service as the managing partner of 7 venture funds dating back to 1983. Those funds have invested in
over 90 early stage venture investments. Mr. Bloomer has served as a member of the board of directors of many of the entities in
which he has invested. Mr. Bloomer has significant experience in marketing and sales having been Vice President of Sales/Marketing
for Head Ski & Tennis, and having spent 11 years with IBM in sales and marketing. Mr. Bloomer is also an experienced operations
executive having served as Vice President of Operations for Hanson Industries. Mr. Bloomer has served on the board of directors
of several private companies not associated with his venture capital activity.

Vane Clayton, Director

Mr. Clayton has served on our board of
directors since March 2004, where he chairs the compensation and audit committees. He currently serves as the CEO and board member
of KPA, LLC, a software and services company providing environment and safety, human resource management and internet marketing
services to 5,100 auto, truck and equipment dealers in the U.S. and Canada. Prior to KPA, Mr. Clayton was President of ZOLL Data
Systems, an Enterprise Software subsidiary of ZOLL Medical Corporation (purchased by Asahi Kasei for $2.2B in 2012). Earlier in
his career, Mr. Clayton managed a sales team for Raychem ($1.7B in Sales), a division of Tyco Electronics. Mr. Clayton has experience
in directing public and private companies in high growth sales and marketing strategies; new product and channel development; fund
raising; Sarbanes-Oxley Section 404 compliance; strategic positioning; and building successful teams. Mr. Clayton holds a B.S.
in Agricultural/Mechanical Engineering from Purdue University and an MBA from Harvard Business School.

David Jacobs,
Director

Mr. Jacobs has served
on our board of directors since May 2012. He is the Founder (in 1978), of Spyder Active Sports, Inc., the largest specialty ski
wear brand in the world with sales in 54 countries. It was purchased by Apax Partners, in 2004. Prior to Spyder, Mr. Jacobs introduced
the Pearl Izumi brand of bicycling wear to the U.S. through a joint venture with the Japanese owners from 1982 to 1989. In 1972,
Mr. Jacobs founded the Hot Gear children’s ski wear brand. From 1966 to 1969, he was a joint venture partner with Bob Lange,
the founder of the first plastic ski boot, and then served as Vice President in charge of International operations for Lange USA
from 1969 to



Table of Contents51







1972. Mr. Jacobs is the winner of the Ernst & Young Entrepreneur of the Year award for the Rocky Mountain Region
in 2004, and was inducted into the Boulder Business Hall of Fame in 2004. As an athlete, Mr. Jacobs was the Canadian National Downhill
Champion, Head Coach of Canada’s National Ski Team, and has been named to the Canadian Ski Hall of Fame, the Colorado Ski
Hall of fame, and the Laurentian Ski Hall of fame. From 2001 to 2002, before the Company went public, Mr. Jacobs served on the
board of directors of Ironclad Performance Wear Corporation, a California corporation and our wholly-owned subsidiary. Mr. Jacobs’
extensive experience managing and growing apparel businesses make him a valuable addition to our Board of Directors in light of
our business and structure.

Michael A. DiGregorio, Director

Mr.
DiGregorio was appointed to our board of directors in January 2013 pursuant to the terms of the previously disclosed Settlement
Agreement signed in December 2012. He has spent many years in senior financial and operating capacities in domestic and international
markets. A CPA by background, he has been CFO of public and private companies, and also president of two large organizations. Thirteen
of those years were spent working with private equity groups, in which he helped transform underperforming companies and helped
add significant market value to those enterprises. Since early 2012, he has been developing his board and advisory practice.
From mid-2009 to February 2012, he was EVP & CFO for Korn Ferry International, Inc. Previously he had been the CFO at St. John
Knits and also at Jafra Cosmetics International, Inc. Mr. DiGregorio also serves as a member of the board of directors of Calavo
Growers, Inc. (NASDAQ: CVGW), Vicro Manufacturing Corp. (NASDAQ: VIRC) Matilda Jane Clothing Co. and CAbi LLC. Mr. DiGregorio’s
experience in senior financial and operating capacities led to the conclusion that Mr. DiGregorio should serve on our board of
directors in light of our business and structure.

Charles H. Giffen, Director

Mr.
Giffen was appointed to our board of directors in January 2013 pursuant to the terms of the Settlement Agreement disclosed above.He is a veteran management consultant and executive coach, specializing in optimizing all aspects of operational and financial
performance for small to mid-size businesses. Mr. Giffen holds over 30 years of broad business experience, both managing and advising
a wide variety of companies in different industries and sectors (manufacturing, wholesale, service, professional), and he has
worked as a management consultant for the last 15 years. His company, Small Biz Wrangler, maximizes execution, efficiency, communication,
leadership and profitability for its client companies. Previously, Mr. Giffen served as President and Chief Operating Officer
of GTCO Calcomp, Inc., a leading manufacturer of computer input peripherals and pioneer in electromagnetic digitizing technology.
He has also developed entertainment ventures in cable television (New Culture Network, Inc.) and motion simulation (RideTime USA,
Inc.), and managed operations for publishing and technical education companies. Mr. Giffen holds a Bachelor of Arts in Economics
from the University of Maryland at College Park. Mr. Giffen’s experience in optimizing operational and financial performance
led to the conclusion that Mr. Giffen should serve on our board of directors in light of our business and structure.

Patrick O’Brien,
Director

Mr. O’Brien
was appointed to our board of directors in March 2014. He brings to our board of directors his seasoned executive and business
expertise with diverse international experience in private and public companies with an emphasis on financial analysis and business
development. He currently serves as the Managing Director and Principal of Granville Wolcott Advisors, a company he formed 2009
which provides business consulting, due diligence and asset management services for public and private clients. From 2005 to 2009,
Mr. O’Brien was a Vice President – Asset Management for Bental-Kennedy Associated Real Estate Counsel where he represented
pension fund ownership interests in hotel real estate investments nationwide. Mr. O’Brien also serves on the board of directors
of Livevol, Inc., a private company that is a leader in equity and index options technology, and Merriman Holdings, Inc. (OTCOX:
MERR), and institutional broker-dealer with an investment banking, corporate servicing practice and a Digital Capital Platform.
Mr. O’Brien previously served as a member of the board of directors of Factory Card & Party Outlet (ECPO, NASDAQ) until
its sale to AAH Holdings. Mr. O’Brien is a graduate of the Eli Broad College of Business at Michigan State University with
a BA in Hotel Management.





Table of Contents52





Audit Committee of the Board of Directors

The Audit Committee of our board of
directors currently consists of Messrs. Clayton (Chair), Bloomer and DiGregorio. Our board of directors has determined that Mr.
DiGregorio is an audit committee financial expert, as defined in Item 407(d)(5) of Regulation S-K, and that Mr. DiGregorio is
“independent” as that term is defined in the applicable rules for companies traded on the NASDAQ Stock Market. Our
board of directors has also determined that each other member of our Audit Committee is able to read and understand fundamental
financial statements and has substantial business experience that results in such member’s financial sophistication. Accordingly,
our board of directors believes that each member of our Audit Committee has sufficient knowledge and experience necessary to fulfill
such member’s duties and obligations on our Audit Committee. The primary purposes of the Audit Committee are (i) to review
the scope of the audit and all non-audit services to be performed by our independent auditors and the fees incurred by us in connection
therewith, (ii) to review the results of such audit, including the independent accountants’ opinion and letter of comment
to management and management’s response thereto, (iii) to review with our independent accountants our internal accounting
principles, policies and practices and financial reporting, (iv) to engage our independent auditors and (v) to review our quarterly
and annual financial statements prior to public issuance. The role and responsibilities of the Audit Committee are more fully
set forth in a written Charter adopted by our board of directors. The Audit Committee was created by our board of directors effective
May 18, 2006.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities
Exchange Act of 1934 requires that our executive officers and directors, and persons who own more than ten percent of a registered
class of our equity securities, file reports of ownership and changes in ownership with the SEC. Executive officers, directors
and greater-than-ten percent stockholders are required by SEC regulations to furnish us with all Section 16(a) forms they file. 
Based solely on our review of the copies of the forms received by us and written representations from certain reporting persons
that they have complied with the relevant filing requirements, we believe that, during the year ended December 31, 2013, all of
our executive officers, directors and greater-than-ten percent stockholders complied with all Section 16(a) filing requirements
other than Ms. Hoffarth who did not timely file one Form 4 reporting one transaction, Mr. Jaeger who did not timely file one Form
4 reporting two transactions, and Mr. Turlington who did not file a Form 3 reporting his appointment as our Interim President.

Code of Ethics

We have adopted a Code of Ethics applicable
to all of our board members and to all of our employees, including our Chief Executive Officer and Principal Financial Officer.
The Code of Ethics constitutes a “code of ethics” as defined by applicable SEC rules and a “code of conduct”
as defined by applicable NASDAQ rules. We will provide a copy of the Code of Ethics to any person without charge, upon request
by writing or calling us at:

Ironclad Performance Wear Corporation

Attn: Investor Relations

2201 Park Place, Suite 101

El Segundo, CA 90245

(310) 643-7800

Any waiver of the Code of Ethics pertaining
to a member of our board of directors or one of our executive officers will be disclosed in a report on Form 8-K filed with the
SEC.













Table of Contents53







Item 11.	Executive Compensation.

Summary Compensation Table

The following table sets forth, as to
the Chief Executive Officer and as to each of the other two most highly compensated executive officers whose compensation exceeded
$100,000 during the last fiscal year, information concerning all compensation paid for services to us in all capacities for our
last two fiscal years.

|Name and Principal Position                                              | Year | Salary ($) | Bonus
                                                           ($)
                                                           ** | Option Awards ($) | All Other Compensation ($) | Total
                                                           ($)
|------------------------------------------------------------------------ | ---- | ---------- | ---------------------------------------------------------------------------------------------------------------------------------- | ----------------- | -------------------------- | --------------------------------------------------------------------
|Scott Jarus (1)                                                          |      | 2013       |                                                                                                                                    |                   | 193,166                    |                                                                     
|Chief Executive Officer, Executive Chairman of the Corporation, Director |      | 2012       |                                                                                                                                    |                   | 231,660                    |                                                                     
|Lee Turlington (2)                                                       |      | 2013       |                                                                                                                                    |                   | —                          |                                                                     
|Interim President                                                        |      | 2012       |                                                                                                                                    |                   | —                          |                                                                     
|Rhonda Hoffarth (3)                                                      |      | 2013       |                                                                                                                                    |                   | 181,762                    |                                                                     
|Chief Operating Officer, Executive Vice President of Operations          |      | 2012       |                                                                                                                                    |                   | 172,425                    |                                                                     
|Federico Castro (4)                                                      |      | 2013       |                                                                                                                                    |                   | 169,671                    |                                                                     
|Vice President of Sales                                                  |      | 2012       |                                                                                                                                    |                   | 193,689                    |                                                                     
|Eduard Albert Jaeger (5)                                                 |      | 2013       |                                                                                                                                    |                   | 214,304                    |                                                                     
|Head of New Business Development and Director                            |      | 2012       |                                                                                                                                    |                   | 209,000                    |                                                                     



** Bonus’ are reported in the
year earned and accrued. Payments were made in the first quarter of the subsequent year.

| | (1) | Mr. Jarus served as our Interim Chief Executive Officer from May 4 to December 31, 2009, and
was appointed our Chief Executive Officer effective as of January 1, 2010. The other compensation disclosed for Mr. Jarus represents
an automobile allowance, 401(k) employer matching funds and amounts paid to cover any employee portion of health benefits offered
by the Company. Mr. Jarus’ annual base salary was $250,000 and he may also receive a discretionary bonus as determined by
the Compensation Committee of our board of directors. Mr. Jarus does not have an employment agreement with us and he resigned as
Chief Executive Officer in September, 2013. On July 26, 2012, we granted to Mr. Jarus options to purchase 153,000 shares of our
common stock, with 1/12th vesting on the twenty-third day of each month commencing June 23, 2012 until fully vested.
The fair value of those options was estimated on the date of grant using the Black-Scholes Model with the following weighted-average
assumptions:
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Year |      | Risk Free Interest Rate |  | Volatility |      | Term |  | Dividends
|---- | ---- | ----------------------- |  | ---------- | ---- | ---- |  | ---------
|     | 2012 |                         |  |            | 0.58 | %    |  |          

| | (2) | Mr. Turlington was appointed as our Interim President on October 18, 2013 and received his compensation
pursuant to a Consulting Agreement providing for a consulting fee of $14,000 for services rendered in October 2013 and thereafter,
a consulting fee of $30,000 per month for services rendered during the remaining term provided that Mr. Turlington provided consulting
services for at least 11 days during such month. In the event that Mr. Turlington provided consulting services for 10 or fewer
days in any given month other than October 2013, we were obligated to pay Mr. Turlington a consulting fee of $2,000 per day for
such month. Mr. Turlington’s services as our Interim President ceased on February 18, 2014.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Table of Contents54





| | (3) | Ms. Hoffarth’s current annual base salary is $179,322 and she may also receive a discretionary
bonus as determined by the Compensation Committee of our board of directors. The other compensation disclosed for Ms. Hoffarth
represents an automobile allowance and 401(k) employer matching funds. Ms. Hoffarth does not have an employment agreement with
us.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | On September 25, 2013, Mr. Castro resigned from his position as Vice President of Sales. The
other compensation disclosed for Mr. Castro represents an automobile allowance and 401(k) employer matching funds. Mr. Castro did
not have an employment agreement with us.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Mr. Jaeger served as our President and Chief Executive Officer from our formation through May 4, 2009. Mr. Jaeger’s current
annual base salary is $217,619 and he may also receive a discretionary bonus as determined by the Compensation Committee of our
board of directors. The terms of Mr. Jaeger’s Separation Agreement with us are discussed below. The other compensation disclosed
for Mr. Jaeger represents an automobile allowance, 401(k) employer matching funds and amounts paid to cover any employee portion
of health benefits offered by the Company. On July 26, 2012, we granted to Mr. Jaeger options to purchase 81,625 shares of our
common stock, with 1/12th vesting on the twenty-third day of each month commencing June 23, 2012 until fully vested.
The fair value of those options was estimated on the date of grant using the Black-Scholes Model with the following weighted-average
assumptions:
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Year |      | Risk Free Interest Rate |  | Volatility |      | Term |  | Dividends
|---- | ---- | ----------------------- |  | ---------- | ---- | ---- |  | ---------
|     | 2012 |                         |  |            | 0.58 | %    |  |          



Outstanding Equity Awards at Fiscal Year End

The following table presents information
regarding outstanding options held by our named executive officers as of the end of our fiscal year ended December 31, 2013.

|Name                     |  | Number of Securities Underlying Unexercised Options (#) Exercisable |         |  |  | Number of Securities Underlying Unexercised Options (#) Unexercisable |     |   |  | Option Exercise Price ($) (1) |         | Option Expiration Date
|------------------------ |  | ------------------------------------------------------------------- | ------- |  |  | --------------------------------------------------------------------- | --- | - |  | ----------------------------- | ------- | ----------------------
|Eduard Albert Jaeger (2) |  |                                                                     | 122,034 |  |  |                                                                       | (3  | ) |  |                               | —       |                       
|                         |  |                                                                     | 500,000 |  |  |                                                                       | (4  | ) |  |                               | —       |                       
|                         |  |                                                                     | 103,900 |  |  |                                                                       | (5  | ) |  |                               | —       |                       
|                         |  |                                                                     | 167,000 |  |  |                                                                       | (6  | ) |  |                               | —       |                       
|                         |  |                                                                     | 191,216 |  |  |                                                                       | (7  | ) |  |                               | 133,784 |                       
|                         |  |                                                                     | 81,625  |  |  |                                                                       | (8  | ) |  |                               | —       |                       
|                         |  |                                                                     |         |  |  |                                                                       |     |   |  |                               |         |                       
|Scott Jarus              |  |                                                                     | 153,000 |  |  |                                                                       | (9  | ) |  |                               | —       |                       
|                         |  |                                                                     |         |  |  |                                                                       |     |   |  |                               |         |                       
|Rhonda Hoffarth          |  |                                                                     | 21,573  |  |  |                                                                       | (10 | ) |  |                               | —       |                       
|                         |  |                                                                     | 125,000 |  |  |                                                                       | (11 | ) |  |                               | —       |                       
|                         |  |                                                                     | 71,500  |  |  |                                                                       | (12 | ) |  |                               | —       |                       
|                         |  |                                                                     | 200,000 |  |  |                                                                       | (13 | ) |  |                               | —       |                       
|                         |  |                                                                     | 161,798 |  |  |                                                                       | (14 | ) |  |                               | 113,202 |                       
|Federico Castro          |  |                                                                     | —       |  |  |                                                                       |     |   |  |                               | —       |                       
|                         |  |                                                                     |         |  |  |                                                                       |     |   |  |                               |         |                       
|Lee Turlington           |  |                                                                     | —       |  |  |                                                                       |     |   |  |                               | —       |                       

Table of Contents55







| | (1) | On May 4, 2009, the board of directors approved changing the exercise price for all outstanding
stock options which were fixed and re-priced at $0.09 per share, which price represents an amount equal to $0.02 above the average
closing stock price of the Company over the prior 30 days.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Ironclad California executed a Separation Agreement with Eduard
Albert Jaeger effective in April 2004, the terms of which are described in Employment Contracts herein. The Separation Agreement
was cancelled on February 18, 2014, concurrent with Mr. Jaeger’s entry into a Consulting Agreement with the Company.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Mr. Jaeger was granted options to purchase 276,131 shares on 9/2/05,
146,695 shares vested immediately and 50% of the remainder vests on each of the first and second anniversary of the effective date
of grant. On March 20, 2012 Mr. Jaeger exercised 154,097 shares of this option.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Mr. Jaeger was granted options to purchase 500,000 shares on 5/18/06,
25% vested on the first anniversary of the effective date of grant and 1/36thof the remaining amount of shares vest at the end of each month thereafter.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Mr. Jaeger was granted options to purchase 103,900 shares on 11/17/07, 25% vested on the first
anniversary of the effective date of grant and 1/36th of the remaining amount of shares vest at the end of each month
thereafter.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | Mr. Jaeger was granted options to purchase 167,000 shares on 7/16/09,
25% vested on the first anniversary of the effective date of grant and 1/36thof the remaining amount of shares vest at the end of each month thereafter.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (7) | Mr. Jaeger was granted options to purchase 325,000 shares on 8/24/11,
25% vested on the first anniversary of the effective date of grant and 1/36thof the remaining amount of shares vest at the end of each month thereafter.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (8) | Mr. Jaeger was granted options to purchase 81,625 shares on 7/26/12,
1/12th vests on the twenty-third day of each month commencing June 23, 2012.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------

| | (9) | Mr. Jarus was granted options to purchase 153,000 shares on 7/26/12,
1/12th vests on the twenty-third day of each month commencing June 23, 2012.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------

| | (10) | Ms. Hoffarth was granted options to purchase 21,573 shares on 6/22/04,
25% vested on the first anniversary of the effective date of grant and 1/36thof the remaining amount of shares vest at the end of each month thereafter.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (11) | Ms. Hoffarth was granted options to purchase 125,000 shares on
5/18/06, 25% vested on the first anniversary of the effective date of grant and 1/36thof the remaining amount of shares vest at the end of each month thereafter.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (12) | Ms. Hoffarth was granted options to purchase 71,500 shares on 11/20/07,
25% vested on the first anniversary of the effective date of grant and 1/36thof the remaining amount of shares vest at the end of each month thereafter.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (13) | Ms. Hoffarth was granted options to purchase 200,000 shares on
7/16/09, 25% vested on the first anniversary of the effective date of grant and 1/36thof the remaining amount of shares vest at the end of each month thereafter.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (14) | Ms. Hoffarth was granted options to purchase 275,000 shares on
8/24/11, 25% vested on the first anniversary of the effective date of grant and 1/36thof the remaining amount of shares vest at the end of each month thereafter.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Table of Contents56







The following executive officers listed
in the above table exercised options during the fiscal year ended December 31, 2012:

|Name          |  | # Options Exercised |  | Exercise Price |      | Total
|------------- |  | ------------------- |  | -------------- | ---- | -----
|Eduard Jaeger |  | 215,728 shares      |  | $              | 0.09 |      
|Eduard Jaeger |  | 32,053 shares       |  | $              | 0.09 |      
|Eduard Jaeger |  | 431,455 shares      |  | $              | 0.09 |      
|Eduard Jaeger |  | 154,097 shares      |  | $              | 0.09 |      



The following executive officers listed
in the above table exercised options during the fiscal year ended December 31, 2013:

|Name            |  | # Options Exercised |  | Exercise Price |      | Total
|--------------- |  | ------------------- |  | -------------- | ---- | -----
|Rhonda Hoffarth |  | 172,582 shares      |  | $              | 0.09 |      



Director Compensation

The following table presents information
regarding compensation paid to our non-employee directors for our fiscal year ended December 31, 2013.

|Name               |  | Fees Earned or Paid in Cash ($) |        | Option Awards ($) |  | Total ($)
|------------------ |  | ------------------------------- | ------ | ----------------- |  | ---------
|R. D. Pete Bloomer |  |                                 | 30,000 |                   |  |          
|Vane Clayton       |  |                                 | 30,000 |                   |  |          
|Michael DiGregorio |  |                                 | 30,000 |                   |  |          
|Charles Giffen     |  |                                 | 30,000 |                   |  |          
|David Jacobs       |  |                                 | 30,000 |                   |  |          
|Scott Jarus        |  |                                 | 7,500  |                   |  |          



None of the directors listed in the above
table exercised options during the fiscal year ended December 31, 2012. The following former director exercised options during
the fiscal year ended December 31, 2012:

|Name           |  | # Options Exercised |  | Exercise Price |       | Total
|-------------- |  | ------------------- |  | -------------- | ----- | -----
|Scott Alderton |  | 129,437 shares      |  | $              | 0.09  |      
|Scott Alderton |  | 31,854 shares       |  | $              | 0.09  |      
|Scott Alderton |  | 75,000 shares       |  | $              | 0.09  |      
|Scott Alderton |  | 75,000 shares       |  | $              | 0.09  |      
|Scott Alderton |  | 250,000 shares      |  | $              | 0.095 |      



In 2012, non-employee directors of Ironclad
received $28,750 for attending meetings and serving on Ironclad’s board of directors. In 2013, non-employee directors of
Ironclad received $30,000 for attending meetings and serving on Ironclad’s board of directors. Since April 2000, non-employee
directors of Ironclad California and, after 2006, our company have each received options to purchase shares of Ironclad common
stock upon their appointment to our board of directors and periodically thereafter. We expect to continue the practice of compensating
our directors with options to purchase our common stock going forward. Compensation payable to non-employee directors may be adjusted
from time to time, as approved by our board of directors.

Table of Contents57







Employment Contracts

We are not party to any employment agreements
with any or our executive officers. Except as described in this section, Ironclad California is not party to any employment agreements
with any of its executive officers.

Ironclad California executed a Separation
Agreement with Eduard Albert Jaeger effective in April 2004. Pursuant to the terms of the Separation Agreement, if Ironclad terminates
Mr. Jaeger’s employment with Ironclad California at any time other than for Cause, then Ironclad California must pay Mr.
Jaeger (a) all accrued and unpaid salary and other compensation payable by the Company for services rendered through the termination
date, payable in a lump sum payment on the termination date; and (b) a cash amount equal to Two Hundred Thousand Dollars ($200,000),
payable in installments throughout the one (1)-year period following the termination date in the same manner as Ironclad California
pays salaries to its other executive officers. The Separation Agreement requires Mr. Jaeger to comply with certain obligations,
including execution of a general release, in order to receive the lump sum payment. For the purposes of the Separation Agreement,
termination for “Cause” means termination by reason of: (i) any act or omission knowingly undertaken or omitted by
Mr. Jaeger with the intent of causing damage to Ironclad California, its properties, assets or business or its stockholders, officers,
directors or employees; (ii) any improper act of Mr. Jaeger involving a material personal profit to him, including, without limitation,
any fraud, misappropriation or embezzlement, involving properties, assets or funds of Ironclad or any of its subsidiaries; (iii)
any consistent failure by Mr. Jaeger to perform his normal duties as directed by the Chairman of the Board, in the sole discretion
of our board of directors; (iv) any conviction of, or pleading nolo contendere to, (A) any crime or offense involving monies or
other property of Ironclad; (B) any felony offense; or (C) any crime of moral turpitude; or (v) the chronic or habitual use or
consumption of drugs or alcoholic beverages. This Separation Agreement has been cancelled, effective February 18, 2014, in conjunction
with a Consulting Agreement of same date, as described in Note 14.

On February 18, 2014, we entered into
an offer letter with Jeffrey Cordes pursuant to which Mr. Cordes will serve as our Chief Executive Officer and a member of our
board of directors. Mr. Cordes will receive an annual salary of $300,000 and is eligible to receive an incentive bonus for fiscal
2014 of $125,000 based upon our company achieving revenue and operating income (defined as earnings before interest, taxes, depreciation,
amortization and stock compensation expense) targets, and based upon Mr. Cordes and/or our company achieving certain corporate
objectives, as determined by our board of directors with input from Mr. Cordes within 30 days following the commencement of Mr.
Cordes employment. To the extent earned, 50% of the incentive bonus for fiscal 2014 will be paid in cash and 50% will be paid through
the issuance of shares of our common stock with an equivalent value as of the date of issuance, with 50% of such shares (the unvested
portion) remaining subject to forfeiture until such time as our board of directors determines that our revenue and operating income
for fiscal 2015 will exceed our revenue and operating income for fiscal 2014. In the event that our board of directors does not
determine by December 31, 2015 that our revenue and operating income for fiscal 2015 will exceed our revenue and operating income
for fiscal 2014, the unvested portion of such shares will be forfeited. In the event that Mr. Cordes’ employment is terminated
by the us (other than for cause) (i) within six months of a sale of our company to an unaffiliated third party or any going private
transaction or private equity investment or purchase of equity interests in our company that results in a change in the beneficial
ownership of our securities of more than 50% of the total combined voting power of all of our outstanding securities, we will continue
to pay Mr. Cordes’ then-current base salary for a period of 12 months following the effective date of such termination, and
(ii) at any other time, we will continue to pay Mr. Cordes’ then-current base salary for six months following the effective
date of such termination.

2006 Stock Incentive Plan

Our 2006 Stock Incentive Plan, or the
Plan, was adopted on September 18, 2006 and became effective on January 12, 2007. A total of 16,000,000 shares of common stock
have been reserved for issuance upon exercise of awards granted under the Plan, as amended. Any shares of common stock subject
to an award, which for any reason expires or terminates unexercised, are again available for issuance under the Plan.

The Plan will terminate after 10 years
from the date on which our board of directors approved the plan, unless it is terminated earlier by our board of directors. The
plan authorizes the award of stock options and stock purchase grants.

Table of Contents58







The Plan will be administered by our
board of directors or the Compensation Committee of our board of directors as determined by our board of directors or otherwise
permitted under the Plan. Our board of directors has the authority to select the eligible participants to whom awards will be granted,
to determine the types of awards and the number of shares covered and to set the terms, conditions and provisions of such awards,
to cancel or suspend awards under certain conditions, and to accelerate the exercisability of awards. Our board of directors will
be authorized to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the plan, to determine
the terms of agreements entered into with recipients under the plan, and to make all other determinations that may be necessary
or advisable for the administration of the Plan. Our board of directors may at its discretion delegate the responsibility for administering
the plan to any committee or subcommittee of our board of directors.

The exercise price per share of common
stock purchasable under any stock option will be determined by our board of directors, but cannot in any event be less than 100%
of the fair market value of the common stock on the date the option is granted. Our board of directors will determine the term
of each stock option (subject to a maximum of 10 years) and each option will be exercisable pursuant to a vesting schedule determined
by our board of directors. The grants and the terms of ISOs will be restricted to the extent required for qualification as ISOs
by the U.S. Internal Revenue Code of 1986, as amended, or the Code. Subject to approval of our board of directors, options may
be exercised by payment of the exercise price in cash, shares of common stock, which have been held for at least six months, or
pursuant to a “cashless exercise” through a broker-dealer under an arrangement approved by us. Our board of directors
may require the grantee to pay to us any applicable withholding taxes that the company is required to withhold with respect to
the grant or exercise of any award. The withholding tax may be paid in cash or, subject to applicable law, our board of directors
may permit the grantee to satisfy these obligations by the withholding or delivery of shares of common stock. We may withhold from
any shares of common stock that may be issued pursuant to an option or from any cash amounts otherwise due from the company to
the recipient of the award an amount equal to such taxes.

Stock purchase rights are generally treated
similar to stock options with respect to exercise/purchase price, exercisability and vesting.

In the event of any change affecting
the shares of common stock by reason of any stock dividend or split, recapitalization, merger, consolidation, spin-off, combination
or exchange of shares or other similar corporate change, or any distribution to stockholders other than cash dividends, our board
of directors will make such substitution or adjustment in the aggregate number of shares that may be distributed under the Plan
and in the number and option price (or exercise or purchase price, if applicable) as it deems to be appropriate in order to maintain
the purpose of the original grant.

No option will be assignable or otherwise
transferable by the grantee other than by will or the laws of descent and distribution and, during the grantee’s lifetime,
an option may be exercised only by the grantee.

If a grantee’s service to the company
terminates on account of death, disability or retirement, then the grantee’s unexercised options, if exercisable immediately
before the grantee’s death, disability or retirement, may be exercised in whole or in part, not later than one year after
this event. If a grantee’s service to the company terminates for cause, then the grantee’s unexercised option terminates
effective immediately upon such termination. If a grantee’s service to us terminates for any other reason, then the grantee’s
unexercised options, to the extent exercisable immediately before such termination, will remain exercisable, and may be exercised
in whole or in part, for a period of three months after such termination of employment.

Under the Plan, the occurrence of a “Change
in Control” can affect options and other awards granted under the plan. Generally, the Plan defines a “Change in Control”
to include the consummation of a merger or consolidation with or into another entity or any other corporate reorganization, if
more than 80% of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after
the merger, consolidation or other reorganization is owned, directly or indirectly, by persons who were not our stockholders immediately
before the merger, consolidation or other reorganization, except that in making the determination of ownership by our stockholders,
immediately after the reorganization, equity securities that persons own immediately before the reorganization as stockholders
of another party to the transaction will be disregarded. For these purposes voting power will be calculated by assuming the conversion
of all equity securities convertible (immediately or at some future time)

Table of Contents59







into shares entitled to vote, but not assuming the exercise
of any warrants or rights to subscribe to or purchase those shares. “Change in Control” also includes the sale, transfer
or other disposition of all or substantially all of our assets. A transaction will not constitute a Change in Control if its sole
purpose is to change the state of our incorporation or to create a holding company that will be owned in substantially the same
proportions by the persons who held the our securities immediately before such transaction.

If a “Change in Control”
were to occur, our board of directors would determine, in its sole discretion, whether to accelerate any unvested portion of any
option grant. Additionally, if a Change in Control were to occur, any agreement between us and any other party to the Change in
Control could provide for (i) the continuation of any outstanding awards, (ii) the assumption of the Plan or any awards by the
surviving corporation or any of its affiliates, (iii) cancellation of awards and substitution of other awards with substantially
the same terms or economic value as the cancelled awards, or (iv) cancellation of any vested or unvested portion of awards, subject
to providing notice to the option holder.

Item 12.	Security Ownership
of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table presents information
regarding the beneficial ownership of our common stock as of March 14, 2014 by:

| | · | each of our executive officers;
| | - | -------------------------------

| | · | each of our directors;
| | - | ----------------------

| | · | all of our directors and executive officers as a group; and
| | - | -----------------------------------------------------------

| | · | each stockholder known by us to be the beneficial owner of more than 5% of our common stock.
| | - | --------------------------------------------------------------------------------------------

Beneficial ownership is determined in
accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Unless otherwise
indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property laws where applicable. Shares of our common stock subject
to options or warrants that are currently exercisable or exercisable within 60 days of March 14, 2014 are deemed to be outstanding
and to be beneficially owned by the person holding the options or warrants for the purpose of computing the percentage ownership
of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

The information presented in this table
is based on 76,704,275 shares of our common stock outstanding on March 14, 2014. Unless otherwise indicated, the address of each
of the executive officers and directors and 5% or more stockholders named below is c/o Ironclad Performance Wear Corporation, 2201
Park Place, Suite 101, El Segundo, California 90245.

|Name of Beneficial Owner                          |  | Number of Shares Beneficially Owned |         | Percentage of Shares Outstanding
|------------------------------------------------- |  | ----------------------------------- | ------- | --------------------------------
|                                                  |  |                                     |         |                                 
|Executive Officers and Directors:                 |  |                                     |         |                                 
|Jeffrey Cordes                                    |  |                                     | —       |                                 
|Chief Executive Officer, Director                 |  |                                     |         |                                 
|Rhonda Hoffarth (1)                               |  |                                     | 809,091 |                                 
|Chief Operating Officer, Executive Vice President |  |                                     |         |                                 
|K. Bryan Griggs                                   |  |                                     | —       |                                 
|Executive Vice President of Sales and Marketing   |  |                                     |         |                                 
|Thomas Kreig (2)                                  |  |                                     | 617,089 |                                 
|Senior Vice President of Finance, Secretary       |  |                                     |         |                                 
|                                                 

Table of Contents60





|Name of Beneficial Owner                          |  |  | Beneficially
                                                                                Owned |  |  |  | Percentage of Shares Outstanding |  
|------------------------------------------------- |  |  | -------------------------------------------------------------------------------------------------- |  |  |  | -------------------------------- | -
|                                                  |  |  |                                                                                                    |  |  |  |                                  |  
|R.D. Pete Bloomer (3)                             |  |  | 1,050,849                                                                                          |  |  |  | 1.4                              | %
|Director                                          |  |  |                                                                                                    |  |  |  |                                  |  
|Vane Clayton (4)                                  |  |  | 913,739                                                                                            |  |  |  | 1.2                              | %
|Director                                          |  |  |                                                                                                    |  |  |  |                                  |  
|David Jacobs (5)                                  |  |  | 301,808                                                                                            |  |  |  | *                                |  
|Director                                          |  |  |                                                                                                    |  |  |  |                                  |  
|Michael DiGregorio (6)                            |  |  | 348,308                                                                                            |  |  |  | *                                |  
|Director                                          |  |  |                                                                                                    |  |  |  |                                  |  
|Charles Giffen (7)                                |  |  | 228,308                                                                                            |  |  |  | *                                |  
|Director                                          |  |  |                                                                                                    |  |  |  |                                  |  
|Patrick
    O’Brian (8)                           |  |  | 25,500                                                                                             |  |  |  | *                                |  
|Director                                          |  |  |                                                                                                    |  |  |  |                                  |  
|Directors and officers as a group (9 persons) (9) |  |  | 4,294,642                                                                                          |  |  |  | 5.3                              | %
|                                                  |  |  |                                                                                                    |  |  |  |                                  |  
|5% Shareholders:                                  |  |  |                                                                                                    |  |  |  |                                  |  
|Ronald Chez                                       |  |  | 7,664,955                                                                                          |  |  |  | 10.0                             | %
|Scott Jarus                                       |  |  | 7,299,700                                                                                          |  |  |  | 9.5                              | %
|Kenneth J. Frank                                  |  |  | 5,842,951                                                                                          |  |  |  | 7.6                              | %
|Eduard  Jaeger                                    |  |  | 4,135,426                                                                                          |  |  |  | 5.3                              | %

*Less
than 1%

| | (1) | Includes 604,922 shares of common stock reserved for issuance upon exercise of stock options
which currently are exercisable or will become exercisable within 60 days of March 14, 2014.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Includes 485,863 shares of common stock reserved for issuance upon exercise of stock options
which currently are exercisable or will become exercisable within 60 days of March 14, 2014.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Consists of (i) 11,591 shares of common stock held directly, (ii) 46,722 shares of common stock
held by CVM Management, Inc., of which Mr. Bloomer is the President and as such has voting and investment power, and (iii) 992,536
shares of common stock reserved for issuance upon exercise of stock options which currently are exercisable or will become exercisable
within 60 days of March 14, 2014.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Includes 863,099 shares of common stock reserved for issuance upon exercise of stock options
which currently are exercisable or will become exercisable within 60 days of March 14, 2014.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Consists of 301,808 shares of common stock reserved for issuance upon exercise of stock options which currently are exercisable
or will become exercisable within 60 days of March 14, 2014.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | Includes 228,308 shares of common stock reserved for issuance upon exercise of stock options which currently are exercisable
or will become exercisable within 60 days of March 14, 2014.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (7) | Consists of 228,308 shares of common stock reserved for issuance upon exercise of stock options which currently are exercisable
or will become exercisable within 60 days of March 14, 2014.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (8) | Consists of 25,500 shares of common stock reserved for issuance upon exercise of stock options which currently are
                                                                 exercisable or will become exercisable within 60 days of March 14, 2014
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (9) | Consists of (i) 564,348 shares
of common stock, and (ii) 3,704,844 shares of common stock reserved for issuance upon exercise of stock options which currently
are exercisable or will become exercisable within 60 days of March 14, 2014.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Table of Contents61







Equity Compensation Plan Information

The following table sets forth information
concerning our equity compensation plans as of December 31, 2013.

|Plan Category                                                                      |  | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) |            |  |  | Weighted-average exercise price of outstanding options, warrants and rights (b) |    | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
|---------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------- | ---------- |  |  | ------------------------------------------------------------------------------- | -- | -----------------------------------------------------------------------------------------------------------------------------------------------
|Equity compensation plans approved by security holders (2000 Stock Incentive Plan) |  |                                                                                                 | 406,795    |  |  |                                                                                 | (1 | )                                                                                                                                              
|                                                                                   |  |                                                                                                 |            |  |  |                                                                                 |    |                                                                                                                                                
|Equity compensation plans approved by security holders (2006 Stock Incentive Plan) |  |                                                                                                 | 9,836,970  |  |  |                                                                                 | (2 | )                                                                                                                                              
|                                                                                   |  |                                                                                                 |            |  |  |                                                                                 |    |                                                                                                                                                
|Equity compensation plans not approved by security holders (Warrants)              |  |                                                                                                 | 43,146     |  |  |                                                                                 | (3 | )                                                                                                                                              
|                                                                                   |  |                                                                                                 |            |  |  |                                                                                 |    |                                                                                                                                                
|Total                                                                              |  |                                                                                                 | 10,286,911 |  |  |                                                                                 |    |                                                                                                                                                
|                                                                                   |  |                                                                                                 |            |  |  |                                                                                 |    |                                                                                                                                                

(1) This
number represents options assumed in connection with the merger with Ironclad California.

(2)This number represents stock options to purchase 9,836,970 shares of our common stock under
the 2006 Stock Incentive Plan, or the Plan.

(3) This number represents warrants issued
to purchase 43,146 shares of our common stock in exchange for services. This warrant has no expiration.

Item 13.	Certain Relationships and Related Transactions,
and Director Independence.

Transactions with Officers and Directors

Other than the transactions described
below, since January 1, 2012, there has not been, nor is there currently proposed, any transaction or series of similar transactions
to which we were or will be a party:

| | · | in which the amount involved exceeds the lesser of $120,000 or one percent of the average of
our total assets at year end for the last two completed fiscal years; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | in which any director, executive officer, stockholder who beneficially owns 5% or more of our
common stock or any member of their immediate family had or will have a direct or indirect material interest.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Table of Contents62







Mr. Alderton, one of our board members
from August 2002 through December 2012, is a partner of the law firm Stubbs, Alderton and Markiles, LLP, or SAM, which serves as
our attorney of record. SAM rendered services to Ironclad California as its primary legal firm since 2002, and became our primary
legal counsel upon closing of the merger with Ironclad California on May 9, 2006. The Company incurred legal fees for services
rendered by SAM of $154,543 and $160,283 in 2013 and 2012, respectively.

Mr. Jaeger, our Head of Business Development
and a board member, resigned as an officer and director of our company and its subsidiaries on February 18, 2014 and agreed to
cancel his existing separation agreement. Concurrent with such resignation we engaged Mr. Jaeger as a consultant for a term of
two years to act as a brand ambassador and evangelist for our products, attend trade shows and leverage his industry relationships
on our behalf.

Director Independence

Our board of directors currently consists
of six members: Messrs. Bloomer, Clayton, Cordes, DiGregorio, Giffen and Jacobs. We are not a “listed issuer” under
SEC rules. We believe that Messrs. Bloomer, Clayton, DiGregorio, Giffen and Jacobs are “independent” as that term is
defined in the applicable rules for companies traded on the NASDAQ Stock Market.

Item 14.	Principal Accounting Fees and Services.

EFP Rotenberg, LLP is our principal independent
public accounting firm. All audit work was performed by the full time employees of EFP Rotenberg, LLP. Our Audit Committee approves
in advance, all services performed by EFP Rotenberg, LLP. Our board of directors has considered whether the provision of non-audit
services is compatible with maintaining the principal accountant’s independence, and has approved such services.

Audit Fees

Fees for audit services totaled approximately
$101,250 and $98,750 for the years ended December 31, 2013 and 2012, respectively, including fees associated with the annual audit,
and reviews of our quarterly reports on Form 10-Q.

Audit-Related Fees

There were no fees for audit-related
services for the years ended December 31, 2013 and 2012. Audit-related services principally include accounting consultations.

Tax Fees

Fees were incurred totaling approximately
$10,850 and $10,850 during the years ended December 31, 2013 and 2012, respectively for tax services, including for tax compliance,
tax advice and tax planning.

All Other Fees

No other fees were incurred during the
years ended December 31, 2013 and 2012 for services provided by EFP Rotenberg, LLP, except as described above.

Table of Contents63





PART IV

Item 15.	Exhibits, Financial Statement Schedules.

The financial statements filed as part
of this Annual Report on Form 10-K are listed on page 24.

The following exhibits are filed with
this Annual Report on Form 10-K:



|Exhibit
        Number | Exhibit Title                                                                                                                                                                                                                                                                   
|---------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                       |                                                                                                                                                                                                                                                                                 
|3.1.1                  | Articles of Domestication of the Registrant.  Incorporated by reference to Exhibit 3.1 to our Registration Statement on Form SB-2 (File No. 333-118808), filed September 3, 2004.                                                                                               
|3.1.2                  | Certificate of Change effecting a forward stock split and increasing the number of authorized shares, filed May 9, 2006.  Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K (File No. 000-51365), filed May 12, 2006.                                  
|3.1.3                  | Articles of Merger effecting a name change to the Registrant.  Incorporated by reference to Exhibit 3.3 to our Current Report on Form 8-K (File No. 000-51365), filed May 12, 2006.                                                                                             
|3.2                    | Amended and Restated Bylaws.  Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K (File No. 000-51365), filed March 7, 2014.                                                                                                                             
|4.1.1                  | Articles of Domestication of the Registrant.  Incorporated by reference to Exhibit 3.1 to our Registration Statement on Form SB-2 (File No. 333-118808), filed September 3, 2004.                                                                                               
|4.1.2                  | Certificate of Change effecting a forward stock split and increasing the number of authorized shares, filed May 9, 2006.  Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K (File No. 000-51365), filed May 12, 2006.                                  
|4.1.3                  | Articles of Merger effecting a name change to the Registrant.  Incorporated by reference to Exhibit 3.3 to our Current Report on Form 8-K (File No. 000-51365), filed May 12, 2006.                                                                                             
|4.2                    | Amended and Restated Bylaws.  Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K (File No. 000-51365), filed March 15, 2012.                                                                                                                            
|4.3                    | Ironclad Performance Wear Corporation 2000 Stock Incentive Plan.  Incorporated by reference to Exhibit 4.1 to our Registration Statement on Form S-8 (File No. 333-139210), filed December 8, 2006.                                                                             
|4.4                    | First Amendment to Ironclad Performance Wear Corporation 2000 Stock Incentive Plan.  Incorporated by reference to Exhibit 4.2 to our Registration Statement on Form S-8 (File No. 333-139210), filed December 8, 2006.                                                          
|4.5                    | 2006 Stock Incentive Plan.  Incorporated by reference to Exhibit 99.1 to our Registration Statement on Form S-8 (File No. 333-145855), filed September 4, 2007.                                                                                                                 
|4.6                    | Amendment No. 1 to Ironclad Performance Wear Corporation’s 2006 Stock Incentive Plan.  Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (File No. 000-51365), filed May 11, 2009.                                                                    
|4.7                    | Amendment No. 2 to Ironclad Performance Wear Corporation’s 2006 Stock Incentive Plan.  Incorporated by reference to Appendix A to our Definitive Proxy Statement on Schedule 14A (File No. 000-51365), filed April 18, 2011.                                                    
|4.8                    | Amendment No. 3 to Ironclad Performance Wear Corporation’s 2006 Stock Incentive Plan.  Incorporated by reference to Appendix A to our Definitive Proxy Statement on Schedule 14A (File No. 000-51365), filed April 5, 2013.                                                     
|10.1†                  | Form of Indemnification Agreement.  Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (File No. 000-51365), filed December 21, 2012.                                                                                                                  
|10.2†                  | Separation Agreement between Eduard Albert Jaeger and the Registrant.  Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (File No. 000-51365), filed May 12, 2006.                                                                                    
|10.3                   | Standard Industrial/Commercial Multi-Tenant Lease by and between Park/El Segundo Partners, LLC, and the Registrant, dated September 12, 2005, as amended.  Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K (File No. 000-51365), filed May 12, 2006.



Table of Contents64







|Exhibit
                                                                                Number | Exhibit Title                                                                                                                                                                                                                                                                                                                                   
|---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                               |                                                                                                                                                                                                                                                                                                                                                 
|10.4                                                                                           | Letter Agreement with Advantage Media Systems, Inc., dated June 29, 2007.  Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (File No. 000-51365), filed July 6, 2007.                                                                                                                                                
|10.5*                                                                                          | Exclusive License and Distributorship Agreement dated January 6, 2009, between the Registrant and Orr Safety Corporation.  Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No. 000-51365), filed May 15, 2009.                                                                                             
|10.6*                                                                                          | Factoring and Inventory Advances and Security Agreement dated December 7, 2009, between the Registrant and FCC, LLC d/b/a First Capital Western Region, LLC.  Incorporated by reference to Exhibit 10.13 to our Annual Report on Form 10-K (File No. 000-51365), filed March 11, 2010.                                                          
|10.7                                                                                           | Patent and Trademark Security Agreement dated December 7, 2009, between the Registrant and FCC, LLC d/b/a First Capital Western Region, LLC.  Incorporated by reference to Exhibit 10.14 to our Annual Report on Form 10-K (File No. 000-51365), filed March 11, 2010.                                                                          
|10.8†*                                                                                         | Ironclad Performance Wear Annual Incentive Plan – 2012.  Incorporated by reference to Exhibit 10.1 to our .Current Report on Form 8-K (File No. 000-51365), filed March 2, 2012.                                                                                                                                                                
|10.9                                                                                           | Business Loan Agreement dated November 30, 2012, between Ironclad Performance Wear Corporation and Union Bank, N.A.  Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (File No. 000-51365), filed December 11, 2012.                                                                                                 
|10.10                                                                                          | Security Agreement dated November 30, 2012, between Ironclad Performance Wear Corporation and Union Bank, N.A.  Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K (File No. 000-51365), filed December 11, 2012.                                                                                                      
|10.11                                                                                          | Commercial Promissory Note issued on November 30, 2012 by Ironclad Performance Wear Corporation in favor of Union Bank, N.A.  Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K (File No. 000-51365), filed December 11, 2012.                                                                                        
|10.12*                                                                                         | Settlement Agreement and Mutual General Release dated December 14, 2012, by and among Ironclad Performance Wear Corporation, Scott Jarus, Scott Alderton, Eduard A. Jaeger, R.D. Pete Bloomer, Vane Clayton, David Jacobs, Kenneth J. Frank, Richard B. Kronman, Michael A. DiGregorio, Charles H. Giffen, Charles W. Hunter and Marcel Sassola.
|10.13                                                                                          | Voting Agreement dated December 14, 2012, by and among Ironclad Performance Wear Corporation, Kenneth J. Frank, Michael A. DiGregorio, Charles H. Giffen, Charles W. Hunter, Marcel Sassola, Eduard A. Jaeger, Richard B. Kronman and Scott Jarus.                                                                                              
|21.1                                                                                           | Subsidiaries of the Registrant.  Incorporated by reference to Exhibit 21.1 to our Current Report on Form 8-K (File No. 000-51365), filed May 12, 2006.                                                                                                                                                                                          
|23.1                                                                                           | Consent of EFP Rotenberg, LLP.                                                                                                                                                                                                                                                                                                                  
|24.1                                                                                           | Power of Attorney (included on signature page).                                                                                                                                                                                                                                                                                                 
|31.1                                                                                           | Certification of Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                            
|31.2                                                                                           | Certification of Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                            
|32.1                                                                                           | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                          
|32.2                                                                                           | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                          
|101.INS**                                                                                      | XBRL Instance.                                                                                                                                                                                                                                                                                                                                  
|101.SCH**                                                                                      | XBRL Taxonomy Extension Schema.                                                                                                                                                                                                                                                                                                                 
|101.CAL**                                                                                      | XBRL Taxonomy Extension Calculation.                                                                                                                                                                                                                                                                                                            
|101.DEF**                                                                                      | XBRL Taxonomy Extension Definition.                                                                                                                                                                                                                                                                                                             



Table of Contents65







|Exhibit
                                                                                Number | Exhibit Title                        
|---------------------------------------------------------------------------------------------- | -------------------------------------
|                                                                                               |                                      
|101.LAB**                                                                                      | XBRL Taxonomy Extension Labels.      
|101.PRE**                                                                                      | XBRL Taxonomy Extension Presentation.



† Each a management contract or compensatory plan or
arrangement required to be filed as an exhibit to this report on Form 10-K.

* Confidential treatment has been requested with respect to
certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

** XBRL information is furnished and not filed or a part
of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed
not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability
under these sections.

























Table of Contents66





SIGNATURES

Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                     | IRONCLAD PERFORMANCE WEAR CORPORATION
|-------------------- | -------------------------------------
|                     |                                      
|Date: March 17, 2014 |                                      
|                     | By:                                  
|                     | Its:                                 
|                     |                                      



POWER OF ATTORNEY

The undersigned directors and officers
of Ironclad Performance Wear Corporation do hereby constitute and appoint Jeffrey Cordes and Thomas Kreig, and each of them, with
full power of substitution and resubstitution, as their true and lawful attorneys and agents, to do any and all acts and things
in our name and behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names
in the capacities indicated below, which said attorney and agent, may deem necessary or advisable to enable said corporation to
comply with the Securities Exchange Act of 1934, as amended and any rules, regulations and requirements of the Securities and Exchange
Commission, in connection with this Annual Report on Form 10-K, including specifically but without limitation, power and authority
to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments)
hereto, and we do hereby ratify and confirm all that said attorneys and agents, or either of them, shall do or cause to be done
by virtue hereof.

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.

|Name                   |  | Title                                                                            |  | Date          
|---------------------- |  | -------------------------------------------------------------------------------- |  | --------------
|                       |  |                                                                                  |  |               
|/s/ Jeffrey Cordes     |  | Chief Executive Officer and Director                                             |  | March 17, 2014
|Jeffrey Cordes         |  | (Principal Executive Officer)                                                    |  |               
|                       |  |                                                                                  |  |               
|/s/ Thomas Kreig       |  | Senior Vice President of Finance and                                             |  | March 17, 2014
|Thomas Kreig           |  | Principal Financial Officer
        (Principal Financial and Accounting Officer) |  |               
|                       |  |                                                                                  |  |               
|/s/ David Jacobs       |  | Director                                                                         |  | March 17, 2014
|David Jacobs           |  |                                                                                  |  |               
|                       |  |                                                                                  |  |               
|/s/ R. D. Pete Bloomer |  | Director                                                                         |  | March 17, 2014
|R. D. Pete Bloomer     |  |                                                                                  |  |               
|                       |  |                                                                                  |  |               
|/s/ Vane Clayton       |  | Director                                                                         |  | March 17, 2014
|Vane Clayton           |  |                                                                                  |  |               
|                       |  |                                                                                  |  |               
|/s/ Michael DiGregorio |  | Director                                                                         |  | March 17, 2014
|Michael DiGregorio     |  |                                                                                  |  |               
|                       |  |                                                                                  |  |               
|/s/ Charles Giffen     |  | Director                                                                         |  | March 17, 2014
|Charles Giffen         |  |                                                                                  |  |               
|                       |  |                                                                                  |  |               
|                       |  | Director                                                                         |  | March 17, 2014
|Patrick O’Brian        |  |                                                                                  |  |               



Table of Contents67