# EDGAR Filing Document

**Accession Number:** 0000088000
**File Stem:** 0000950170-23-010594
**Filing Date:** 2023-3
**Character Count:** 475778
**Document Hash:** 5cd8b2d39167e53ff65d4fa61235a954
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-23-010594.hdr.sgml**: 20230329

**ACCESSION NUMBER**: 0000950170-23-010594

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 95

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230329

**DATE AS OF CHANGE**: 20230329

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Scott's Liquid Gold - Inc.
- **CENTRAL INDEX KEY:** 0000088000
- **STANDARD INDUSTRIAL CLASSIFICATION:** PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS [2844]
- **IRS NUMBER:** 840920811
- **STATE OF INCORPORATION:** CO
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-13458
- **FILM NUMBER:** 23775263

**BUSINESS ADDRESS:**
- **STREET 1:** 8400 E. CRESCENT PARKWAY  #450
- **STREET 2:** SUITE 450
- **CITY:** GREENWOOD VILLAGE
- **STATE:** CO
- **ZIP:** 80111
- **BUSINESS PHONE:** 3033734860

**MAIL ADDRESS:**
- **STREET 1:** 8400 E. CRESCENT PARKWAY  #450
- **STREET 2:** SUITE 450
- **CITY:** GREENWOOD VILLAGE
- **STATE:** CO
- **ZIP:** 80111

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SCOTTS LIQUID GOLD INC
- **DATE OF NAME CHANGE:** 19920703

?xml version="1.0" encoding="ASCII"? 10-K

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

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**FORM** 10-K

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**(Mark One)** 

☒ **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** 

**For the fiscal year ended** **December 31,** 2022

**OR** 

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO** 

**Commission File Number** 001-13458

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SCOTT'S LIQUID GOLD-INC.

**(Exact name of Registrant as specified in its Charter)** 

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| | |
|:---|:---|
| Colorado | 84-0920811 |
| **(State or other jurisdiction of**<br>**incorporation or organization)** | **(I.R.S. Employer<br>Identification No.)** |
| 8400 E. Crescent Parkway**,** Suite 450**,** Greenwood Village**,** CO | 80111 |
| **(Address of principal executive offices)** | **(Zip Code)** |

---

**Registrant's telephone number, including area code:** (303) 373-4860

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Securities registered pursuant to Section 12(b) of the Act.

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;**Title of each class** | &nbsp;&nbsp;&nbsp;**Trading Symbol** | &nbsp;&nbsp;&nbsp;**Name of exchange on which registered** |

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Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.10 Par Value

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

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 ☒

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 ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive oﬃcers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

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| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒  | Smaller reporting company | ☒ |
| Emerging growth company | ☐ |  |  |

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the common stock held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on June 30, 2022, was $5,903,122.

The number of shares of Registrant's Common Stock outstanding as of March 28, 2023 was 12,797,423.

Certain information required by Part III is incorporated by reference to the Registrant's definitive Proxy Statement for the Annual Meeting of Shareholders for fiscal year ended December 31, 2022 to be filed within 120 days after December 31, 2022.

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**CAUTIONARY NOTE ON FORWARD-LOOKING INFORMATION** 

This Annual Report on Form 10-K (this "Report") contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, in addition to historical information. All statements, other than statements of historical facts, included in this Report that address activities, events, or developments with respect to our financial condition, results of operations, or economic performance that we expect, believe, or anticipate will or may occur in the future, or that address plans and objectives of management for future operations, are forward-looking statements. You can typically identify forward-looking statements by the use of words, such as "may," "could," "should," "assume," "project," "believe," "anticipate," "expect," "estimate," "potential," "plan," and other similar words. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

The forward-looking statements contained in this Report are based on management's current expectations and are subject to uncertainty and changes in circumstances. We cannot assure you that future developments affecting us will be those that we have anticipated. Forward-looking statements and our performance inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the impact of the COVID-19 pandemic on our business, suppliers, consumers, customers, and employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•disruptions or inefficiencies in the supply chain, including any impact of availability or costs of materials and components;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•dependence on third-party vendors and on sales to major customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•regulations, economic conditions, and tariffs in the People's Republic of China ("PRC"), as well as resumption of sales after exiting our agreement with our exclusive distributor in the PRC;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a continued shift in the retail market from food and drug stores to mass merchandisers, club stores, dollar stores, e-commerce retailers, and subscription services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•competition from large consumer products companies in the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•competitive factors, including any decrease in distribution of (i.e., retail stores carrying) our significant products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•new competitive products and/or technological changes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the need for effective advertising of our products and limited resources available for such advertising;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•unfavorable economic conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changing consumer preferences and the continued acceptance of each of our significant products in the marketplace;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the degree of success of any new product or product line introduction by us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the degree of success of the integration of product lines or businesses we may acquire;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in the regulation of our products, including applicable environmental, U.S. and international Food and Drug Administration regulations and process-audit compliance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the loss of any executive officer or other personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•future losses which could affect our liquidity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•and other matters discussed in this Report, including the risks described in the Risk Factors section of this Report.

We caution you that forward-looking statements are not guarantees of future performance and that actual results or performance may be materially different from those expressed or implied in the forward-looking statements. The forward-looking statements in this Report speak as of the filing date of this Report. Although we may from time to time voluntarily update our prior forward-looking statements, we undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may arise after the date of this Report.

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**TABLE OF CONTENTS**

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| | | |
|:---|:---|:---|
|  |  | **Page** |
| **PART I** |  |  |
| Item 1. | [<u>Business</u>](#item_1) | 1 |
| Item 1A. | [<u>Risk Factors</u>](#item_1a_risk_factors) | 5 |
| Item 1B. | [<u>Unresolved Staff Comments</u>](#item_1b) | 9 |
| Item 2. | [<u>Properties</u>](#item_2) | 9 |
| Item 3. | [<u>Legal Proceedings</u>](#item_3) | 9 |
| Item 4. | [<u>Mine Safety Disclosures</u>](#item_4) | 9 |
| <br>**PART II** |  |  |
| Item 5. | [<u>Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities</u>](#item_5) | 10 |
| Item 6. | [<u>RESERVED</u>](#item_6_reserved) | 10 |
| Item 7. | [<u>Management's Discussion and Analysis of Financial Condition and Results of Operations</u>](#item_7) | 11 |
| Item 7A. | [<u>Quantitative and Qualitative Disclosures About Market Risk</u>](#item_7a) | 17 |
| Item 8. | [<u>Financial Statements and Supplementary Data</u>](#item_8) | 18 |
| Item 9. | [<u>Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</u>](#item_9_changes_in_disagreements_with_acc) | 39 |
| Item 9A. | [<u>Controls and Procedures</u>](#item_9a) | 39 |
| Item 9B. | [<u>Other Information</u>](#item_9b) | 40 |
| Item 9C. | [<u>Disclosure Regarding Foreign Jurisdictions that Prevent Inspections</u>](#item_9c____disclosure_regarding_foreign_) | 40 |
| <br>**PART III** |  |  |
| Item 10. | [<u>Directors, Executive Officers and Corporate Governance</u>](#item_10) | 41 |
| Item 11. | [<u>Executive Compensation</u>](#item_11) | 41 |
| Item 12. | [<u>Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</u>](#item_12) | 41 |
| Item 13. | [<u>Certain Relationships and Related Transactions, and Director Independence</u>](#item_13) | 41 |
| Item 14. | [<u>Principal Accounting Fees and Services</u>](#item_14_principal_accounting_fees_servic) | 41 |
| <br>**PART IV** |  |  |
| Item 15. | [<u>Exhibits and Financial Statement Schedules</u>](#item_15) | 41 |
| Item 16. | [<u>Form 10-K Summary</u>](#item_16) | 43 |

---

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**PART I**

(in thousands, except per share data)

**ITEM 1. BUSINESS** 

**Overview** 

Scott's Liquid Gold-Inc., a Colorado corporation, was incorporated on February 15, 1954. In this Report the terms "we," "us," or "our" refer to Scott's Liquid Gold-Inc. and our subsidiaries, collectively. We develop, market, and sell high-quality, high-value household and health and beauty care products. Our business is divided into two operating segments; household products and health and beauty care products. During 2022, our family of brands included:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Scott's Liquid Gold<sup>®</sup>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Alpha<sup>®</sup> Skin Care;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Prell<sup>®</sup>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Neoteric Diabetic Skin Care<sup>®</sup>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Denorex<sup>®</sup>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Zincon<sup>®</sup>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Kids N Pets<sup>®</sup>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Messy Pet<sup>®</sup>; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•BIZ<sup>®</sup>.

In 2021, we sold the Dryel<sup>®</sup> brand and concluded our distribution agreement of Batiste Dry Shampoo. In December 2022, we sold the Prell<sup>®</sup> brand, and in January 2023 we sold the Scott's Liquid Gold<sup>®</sup> brand.

**Financial Information About Segments and Principal Products**

The table set forth below shows the percentage of our net sales from continuing operations contributed by each operating segment during 2022 and 2021:

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| | | |
|:---|:---|:---|
|  | **% of Net Sales** | **% of Net Sales** |
|  | **2022** | **2021** |
| Household | 71.0% | 42.8% |
| Health and beauty care |  |  |
| &nbsp;&nbsp;Distributed | - | 21.5% |
| &nbsp;&nbsp;Manufactured | 29.0% | 35.7% |
| &nbsp;&nbsp;&nbsp;Total health and beauty care | 29.0% | 57.2% |

---

For more financial information on our operating segments, refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 12 to our Consolidated Financial Statements in Item 8.

Household Products

During 2022, products in our household segment included:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Scott's Liquid Gold<sup>®</sup> Wood Care;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Scott's Liquid Gold<sup>®</sup> Floor Restore;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Kids N Pets<sup>®</sup> and Messy Pet<sup>®</sup>; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•BIZ<sup>®</sup>.

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Scott's Liquid Gold<sup>®</sup> Wood Care has been sold in the United States for over 70 years. Our Scott's Liquid Gold<sup>®</sup> Floor Restore product is a quick and easy way to renew and protect hardwood floors. On January 23, 2023, we sold the Scott's Liquid Gold<sup>®</sup> brand, including the Wood Care and Floor Restore products, to a company that markets and distributes wood care products.

On October 1, 2019, we acquired the Kids N Pets<sup>®</sup> and Messy Pet<sup>®</sup>brands. Founded in 1989, Kids N Pets<sup>®</sup> brands are award-winning, safe, stain and odor removing products targeted toward households with children and pets. These high-quality, high-value products excel at controlling odor and cleaning up kid and pet accidents, and food and drink stains while being products that parents can feel safe using around their children and pets. The primary sales channels for Kids N Pets<sup>®</sup> and Messy Pet<sup>®</sup>are through retail stores such as Walmart and Home Depot, and online through e-commerce retailers such as Amazon.

On July 1, 2020, we acquired BIZ<sup>®</sup> and Dryel<sup>®</sup>brands. BIZ<sup>®</sup> is a top performing detergent in the market, utilizing a proprietary enzyme-based formula to fight stains and eliminate odors. It was established by Procter & Gamble in 1968 and is sold in Powder, Liquid, and Liquid Booster Packs.

On December 23, 2021, we sold the Dryel<sup>®</sup>brand. We have reflected the operations of Dryel<sup>®</sup> as discontinued operations for all periods presented. See Note 3 - "Discontinued Operations" in the Notes to Consolidated Financial Statements for further information.

Health and Beauty Care Products

During 2022, products in our health and beauty care segment included:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Alpha<sup>®</sup> Skin Care;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Neoteric Diabetic Skin Care<sup>®</sup>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Prell<sup>®</sup> and;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Denorex<sup>®</sup> and Zincon<sup>®</sup>.

Our Alpha<sup>®</sup> Skin Care brand was one of the first to use alpha hydroxy acids ("AHAs") in lines of facial care products, body lotion, and body wash. Products containing AHAs gently slough off dead skin cells to promote a healthier, more youthful appearance and help to diminish fine lines and wrinkles.

In 2016, we acquired the Prell<sup>®</sup>, Denorex<sup>®</sup> and Zincon<sup>®</sup> brands of hair and scalp care products. Our Denorex<sup>®</sup> products are dermatologist-recommended medicated hair care products to control the symptoms of dandruff and other scalp conditions. Our Zincon<sup>®</sup> product is a medicated anti-dandruff shampoo.

We were a distributor in the United States for Batiste Dry Shampoo from 2009 through 2021. Under our distribution agreement with the manufacturer of Batiste Dry Shampoo, Church & Dwight Co. Inc. ("Church & Dwight"), we were the exclusive specialty retail distributor in the United States of Batiste Dry Shampoo until our agreement expired on December 31, 2021.

On December 15, 2022, we sold the Prell<sup>®</sup>brand to a company that markets and distributes natural hair and skin care products. We have reflected the operations of Prell<sup>®</sup> as discontinued operations for all periods presented. See Note 3 - "Discontinued Operations" in the Notes to Consolidated Financial Statements for further information.

**Marketing and Distribution** 

We primarily market our products through: (1) trade promotions to support price features, displays, slotting fees and other merchandising of our products by our retail customers; (2) consumer marketing in print, social and digital media; and (3) to a lesser extent, consumer incentives such as coupons and rebates.

Our products are sold nationally through our sales force to mass merchandisers, drugstores, supermarkets, hardware stores, e-commerce retailers, and other retail outlets and to wholesale distributors. Our products were previously sold internationally through independent distributors in Canada and China.

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The table set forth below shows net sales to our significant customers as a percentage of consolidated net sales during 2022 and 2021:

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| | | |
|:---|:---|:---|
|  | **% of Net Sales** | **% of Net Sales** |
|  | **2022** | **2021** |
| Walmart | 42.7% | 30.9% |
| Ulta | 0.7% | 18.8% |

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As is typical in our industry, we do not have long-term contracts with Walmart, Ulta, or any other retail customer.

Historically, we have used our websites for sales of our products directly to consumers. Beginning in January 2022, our websites redirect consumers to our e-commerce retail partners to fulfill sales of our products directly to our consumers.

International sales were historically made to distributors who were responsible for the selling and marketing of the products, and we were paid for these products in United States dollars. In February 2022, we discontinued sales of our Denorex<sup>®</sup>products to Canada due to uneconomic results. With the sale of the Scott's Liquid Gold<sup>®</sup> brand in January 2023, we no longer have any products distributed in Canada.

We terminated our exclusive distribution agreement for sales in China with HK NFS Limited ("HK NFS") on July 12, 2022 due to breaches of the distribution agreement by HK NFS, and began establishing a direct model to resume sales of our products to consumers in China.

Under our distribution agreement with Church & Dwight, we were the exclusive distributor of Batiste Dry Shampoo products in the specialty retailer channel in the United States through December 31, 2021.

From time to time, our customers return products to us. For our household products, we permit returns only for a limited time. For our health and beauty care products, returns are accepted for a greater period of time in order to maintain or enhance our relationship with the customer. Typically, customers are granted a credit equal to the original sale price plus a handling charge.

**Manufacturing and Suppliers** 

As of March 2020, we identified third-party logistics and contract manufacturing partners for our product lines, and we no longer manufacture or ship any of our products directly to our retail partners.

Almost all of the raw and packaging materials used by the Company are purchased from third parties, some of whom are single-source suppliers. The prices we pay for materials and other commodities are subject to fluctuation. Due primarily to COVID-19 related supply chain disruptions that have continued as the economy re-opens, we experienced limited supply constraints and commodity costs increases for certain raw materials and finished goods. When prices for these items change, we may or may not be able to pass the change to our customers. The Company expects continued volatility and increased cost pressures in both commodities and transportation to continue in fiscal year 2023.

**Competition**

Both the household and health and beauty care product categories are highly competitive and innovative. We compete in both categories against a range of competitors, most of which are significantly larger and have greater financial resources, name recognition, innovation capabilities, and product and market diversification than us. We compete in both categories primarily on the basis of quality, brand recognition, and the distinguishing characteristics of our products. The wood care and laundry care product categories are dominated by a small number of companies that are significantly larger than us and each of these competitors produces several competing products. In the health and beauty care category, several of our competitors are also significantly larger than us and each of these competitors produces several competing products.

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**Regulation**

We are subject to various federal, state and local laws and regulations that pertain to the types of consumer products that we manufacture and sell. Many chemicals used in consumer products, some of which are used in several of our product formulations, have come under scrutiny by various state governments and the federal government. Some of these chemicals are called volatile organic compounds ("VOCs"). All of our products currently meet the most stringent VOC regulations and may be sold throughout the United States. Many of our skin care products, several of which contain AHAs, are considered cosmetics within the definition of the Federal Food Drug and Cosmetic Act (the "FFDCA"). Our cosmetic products are subject to the regulations under the FFDCA and the Fair Packaging and Labeling Act. The relevant laws and regulations are enforced by the FDA. We believe that we are producing and marketing all of our products in compliance with all applicable laws and regulations in the markets in which we participate.

Our advertising is subject to regulation under the Federal Trade Commission Act and related regulations, which prohibit false and misleading claims in advertising. Private and derivative labeling claims are common in this industry and can result in costly settlements and distraction of management. Changes in these regulations, or interpretations or enforcement of these regulations, could adversely affect our profitability, result in regulatory actions, or private or derivative claims.

Our international sales are primarily conducted in China. As such, we may be impacted by regulations, economic conditions, and tariffs imposed by the PRC.

**Employees**

As of December 31, 2022, we employed 22 people, who work in administrative, sales, advertising, marketing and operational functions. Through our history, we appreciate the importance of retention, growth and development of our employees. We believe we offer competitive compensation (including salary, incentive bonus, and equity) and benefits packages to our employees. We are also focused on understanding our diversity and inclusion strengths and opportunities and executing on a strategy to support further progress. We continue to focus on building a pipeline for talent to create more opportunities for workplace diversity and to support greater representation within the Company.

No contracts exist between us and any union. The compensation of our executive officers is subject to annual review by the Compensation Committee of our Board of Directors.

**Patents and Trademarks** 

At present, we own one patent for our Neoteric Diabetic<sup>®</sup> Healing Cream. Additionally, we actively use our registered trademarks for Alpha<sup>®</sup> Skin Care, Denorex<sup>®</sup>, Zincon<sup>®</sup>, Neoteric Diabetic Skin Care<sup>®</sup>, Neoteric<sup>®</sup>, Kids N Pets<sup>®</sup>, Messy Pet<sup>®</sup>, and BIZ<sup>®</sup> in the United States and have registered trademarks in a number of additional countries. Our registered trademarks protect names and logos relating to our products as well as the design of boxes for certain of our products. We transferred all registered trademarks of our Scott's Liquid Gold<sup>®</sup>brand as part of the sale of that brand in January 2023.

**Public Information** 

Our website address is <u>www.slginc.com</u>. The information contained on our website is not included as a part of, or incorporated by reference into, this Annual Report on Form 10-K. We make available, free of charge, on our website our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, shareholder proxy statements on Schedule 14A, interactive data files posted pursuant to Rule 405 of Regulation S-T, our Current Reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") as soon as reasonably practicable after we have electronically filed such material with, or furnished it to, the United States Securities and Exchange Commission (the "SEC"). You may also access and read our filings without charge through the SEC's website at <u>www.sec.gov</u>.

Our Code of Business Conduct and Ethics Policy, Audit Committee Charter, Governance and Nominating Committee Charter, and Compensation Committee Charter, are all available, free of charge, on our website. The documents referenced above are available in print at no cost to any stockholder who requests them from our Corporate Secretary at 8400 East Crescent Parkway, Suite 450, Greenwood Village, Colorado 80111.

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**ITEM 1A. RISK FACTORS.** 

The following is a discussion of certain material risks that may affect our business. These risks may negatively impact our existing business, future business opportunities, our financial condition or our financial results. In such case, the trading price of our common stock could also decline. Additional risks and uncertainties not presently known to us, or that we currently see as immaterial, may also negatively impact our business.

**Business and Industry Risks**

**A loss of one or more of our major customers could have a material adverse effect on our product sales.** 

For a majority of our sales, we are dependent upon a small number of major retail customers. The easy access of consumers to our products is dependent upon these major retail stores and other retail stores carrying our products. The willingness of retail customers to carry any of our products depends on various factors, including the level of sales of the product at their stores. In addition, private label products sold by retail trade chains, which are typically sold at lower prices than branded products, are a source of competition for certain of our product lines.

Any declines in sales of our products to consumers could result in the loss of retail customers and a corresponding decrease in the distribution of the products, as well as increased costs related to any markdown or return of our products. It is uncertain whether the consumer base served by these stores would purchase our products at other retail stores. **Our sales of Alpha**<sup>®</sup> **Skin Care products to China have been interrupted by the termination of our exclusive distribution agreement.**

We terminated our arrangement with our exclusive distributor due to breaches of the distribution agreement by HK NFS and are establishing a direct model to resume sales of our products to consumers in China. The reestablishment of an effective business model in China is dependent on deploying significant resources to marketing and advertising efforts and regulatory compliance, as well as the successful shutdown of our former distributor's storefronts on various e-commerce platforms. We possess limited resources to fund marketing and regulatory efforts, and as a result our success in these efforts is not guaranteed, which could adversely affect our operating results.

**Our international operations in China expose us to a number of risks.**

There is both cost and risk associated with establishing, developing, and maintaining international sales operations, and promoting our brand internationally. The PRC's economic, political, and social conditions, and its government policies, could adversely affect our business. We may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination that we violated the Foreign Corrupt Practices Act could have a material adverse effect on our operating results.

Our international operations also subject us to changes in trade policies and agreements and other foreign or domestic legal and regulatory requirements, including those resulting in potentially adverse tax consequences or the imposition of onerous trade restrictions such as tariffs, sanctions, and price controls. Any changes in these international trade policies could adversely affect our profitability and stock price.

**A continued change in the consumer product retail market may cause our sales to decline.**

Our performance depends upon the general health of the economy and of the retail environment in particular. Consumer products, such as those marketed by us, are increasingly being sold by club stores, dollar stores, mass merchandisers, e-commerce retailers and subscription services. The retail environment is changing with the growth of third-party resellers and alternative retail channels that could significantly change the way traditional retailers do business. If we are not effective in limiting these third-party resellers in selling our products, or if the alternative retail channels were to take significant market share away from traditional retailers or we are not successful in these alternative retail channels, our margins and results of operations may be negatively impacted.

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**In both health and beauty care and household products, our competitors include some of the largest consumer products companies in the United States.** 

The markets in which our products compete are intensely competitive, and many of the other competitors in these markets are larger multi-national consumer products companies. These competitors have much greater financial, technical, and other resources than us, and as a result, are able to regularly introduce new products and spend considerably more on advertising. The distribution and sales of our products can be adversely impacted by the actions of our competitors, and we may have little or no ability to take action to prevent or mitigate these adverse impacts.

**We have limited resources to promote our products with advertising and marketing effectiveness.** 

We believe the growth of our net sales is dependent upon our ability to introduce our products to current and new consumers through advertising and marketing. At present, we have limited resources compared to many of our competitors to spend on advertising and marketing our products. Advertising and marketing can be important in reaching consumers, although the effectiveness of any particular advertisement and marketing cannot be predicted. Additionally, we may not be able to obtain optimal effectiveness at our current advertising and marketing budget. Our limited resources to promote our products through advertising and marketing may adversely affect our net sales and operating results.

**Sales of our existing products are affected by changing consumer preferences.** 

Our primary market is retail stores in the United States which sell to consumers or end users in the mass market. Consumer preferences can change rapidly and are affected by new competitive products. This situation is true for both health and beauty care and household products. Any changes in consumer preferences can materially affect the sales of our products and the results of our operations.

**Our future performance and growth is dependent, in part, on the introduction of new or acquired products that are successful in the marketplace.** 

Our future performance and growth is partially dependent on our ability to successfully identify, develop and introduce new products and product line extensions. The successful development and introduction of new products involves substantial research, development, marketing and promotional expenditures, which we may be unable to recover if the new products do not gain widespread market acceptance.

We have pursued and may continue to pursue acquisitions of brands or businesses. Acquisitions involve numerous potential risks, including, among other things, the successful integration of the acquired products or brands and realization of the full extent of expected benefits or synergies. Acquisitions could also result in additional debt, exposure to liabilities, the potential impairment of goodwill or other intangible assets, or transaction costs. Any of these risks, should they materialize, could adversely impact our operating results.

**Any loss of our key executives or other personnel could harm our business.**

Our success has depended on the experience and continued service of our executive officers and key employees. If we fail to retain these officers or key employees, our ability to continue our business and effectively compete may be substantially diminished.

**Our stock price can be volatile and can decline substantially.** 

Our stock is traded on the OTC Pink Market tier of the OTC Markets. The volume of trades in our stock varies from day to day but is relatively limited. As a result, any events can result in volatile movements in the price of our stock and can result in significant declines in the market price of our stock.

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**We rely on trademark, copyright, and trade secret laws, which may not be sufficient to protect our intellectual property.**

We rely on a combination of laws, such as copyright, trademark and trade secret laws, as well as confidentiality provisions and limited licenses, to establish and protect our intellectual property. We have registered U.S. and foreign country trademarks, and HK NFS has contractually agreed to undertake steps to prevent counterfeiting of our products and to otherwise protect our trademarks in the PRC. These forms of intellectual property protection are critically important to our ability to establish and maintain our competitive position. However, it is possible that laws, contractual restrictions, and other efforts may not be sufficient to prevent misappropriation of our property or to deter others from developing similar intellectual property.

**Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.**

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our customers, suppliers, and business partners on our networks. The secure processing, maintenance and transmission of this information is critical to our operations. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen, resulting in legal claims or proceedings, which could disrupt our operations and damage our reputation, adversely affect our operating results and stock price.

**We may from time to time expand our business through acquisitions, which could disrupt our business.**

We have completed, and may pursue in the future, acquisitions of businesses or assets that are complementary to our business. Such acquisitions involve a number of risks, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•failure of the acquired businesses to achieve the results we expect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•substantial cash expenditures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•diversion of capital and management attention from operational matters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our inability to retain key personnel of the acquired businesses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•possible impairment of substantial intangible assets if performance doesn't meet expectations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•incurrence of debt and contingent liabilities and risks associated with unanticipated events or liabilities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the potential disruption and strain on our existing business and resources that could result from our planned growth and continuing integration of our acquisitions.

If we fail to properly evaluate acquisitions, we may not achieve the anticipated benefits of such acquisitions, we may incur costs in excess of what is anticipated, and management resources and attention may be diverted from other necessary or valuable activities. Any acquisition may not result in short-term or long-term benefits to us. If we are unable to integrate or successfully manage any business that we acquire, we may not realize anticipated cost savings, improved efficiencies or revenue growth, which may result in reduced profitability or operating losses.

**There is substantial doubt about our ability to continue as a going concern, and if we are unable to continue our business, our shares may have little or no value.**

Primarily due to a decline in net sales, disruption of our international sales to China, and increases in costs associated with the manufacture and distribution of our products, the Company has incurred net losses and uses of operating cash flows that likely will require additional liquidity to continue its operations over the next 12 months. Management has implemented actions to reduce the Company's operating expenses and has restructured debt facilities, and is considering various strategic actions including asset sales, obtaining additional debt or equity financing (potentially in conjunction with acquisitions), and further reduction of operating costs. However, given the impact of the economic downturn in the U.S., the Company may be unable to execute these plans under acceptable terms, which may make it difficult to raise sufficient capital for the Company to continue to finance our operations.

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**Operational Risks**

**Disruptions in our supply chain and other factors affecting the distribution of our finished goods inventory could adversely impact our business.**

A disruption within our logistics or supply chain network could adversely affect our ability to maintain appropriate inventory or deliver products in a timely manner, which could impair our ability to meet customer demand for products and result in lost sales, increased supply chain costs, or damage to our reputation. As a result of COVID-19, we have encountered shortages of raw materials for certain of our products and delays in receiving finished goods product from contract manufacturers, which has prevented us from meeting certain customer demands for our products. Along with many other industry participants, our contract manufacturing partners have experienced difficulty procuring certain raw materials and components.

Continued increases in costs as well as any impacts to our partners' abilities to fulfill sales to our customers could continue to affect our ability to meet debt requirements and lead to increased debt costs.

**We face the risk that raw materials for our products may not be available or that costs for these materials will increase.** 

Raw materials required for our products are sourced and obtained from third party suppliers, some of which are sole source suppliers. We have no long-term contracts with such suppliers and are subject to cost increases. Manufacturers of our products may not have sufficient raw materials for production if there is a shortage in raw materials or other disruption in the supply chain or if suppliers terminate their relationships or are otherwise unable to supply raw materials. In addition, if our contract manufacturers change suppliers it could involve delays that restrict our ability to have our products manufactured or to buy products in a timely manner to meet delivery requirements of our customers. Suppliers of raw materials for our products can also be subject to the same risk with their vendors.

**Financial and Economic Risks**

**Unfavorable and uncertain economic conditions could adversely affect our profitability.** 

Unfavorable and uncertain economic conditions in the past have adversely affected, and in the future may adversely affect, consumer demand for some of our products, resulting in reduced sales volume and a decrease in our overall profitability. Factors that can affect consumer demand for our products include inflation, slower growth or recession, rates of unemployment, consumer confidence, tighter credit, higher interest rates, health care costs, fuel and other energy costs and other economic factors affecting consumer spending behavior.

Our products are subject to transportation costs, both in delivery to us at our production facility as well as shipments to our customers. As a result, we are exposed to volatility in the freight industry that could affect our costs, including changes in regulations and labor costs. Any increases in transportation costs could adversely affect our profitability if we are not able to pass those costs on to our customers.

**Changes in the economic environment have resulted, and could further result, in significant impairments of certain of our goodwill and long-lived assets.** 

Under U.S. generally accepted accounting principles ("GAAP"), we review the carrying value of our goodwill on an annual basis. We also review the carrying value of our long-lived assets when events or changes in circumstances indicate that the carrying value of these assets may not be recoverable, based on their expected future cash flows. The impact of reduced expected future cash flow could require the write-down of all or a portion of the carrying value for these assets, which would result in additional impairments, resulting in decreased earnings. During 2022 and 2021, we determined that the fair values of goodwill and certain intangible assets in our Detergent, All-Purpose, and Shampoo reporting units were less than their carrying values which resulted in impairment charges.

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**Legal and Regulatory Risks**

**Changes in the regulation of our products, including environmental regulations, could have an adverse effect on the distribution, cost or function of our products.** 

Regulations affecting our products include requirements of the FDA and NMPA for cosmetic products and environmental regulations. In the past, the FDA has mentioned the treatment of products with AHAs as drugs, which could make our production and sale of certain Alpha<sup>®</sup> Skin Care products more expensive or prohibitive. Also, in the past, we have been required to change the formulation of our products to comply with environmental regulations and may be required to do so again in the future if the applicable regulations are further amended.

Labeling practices in our industry have recently experienced an increase of warning letters admonishing cosmetics manufacturers for promotional claims on their websites and product labels deemed by the FDA to blur the line between "cosmetics" and "drugs." The increase of warning letters by the FDA has also triggered a wave of follow-on class action lawsuits against cosmetic manufacturers in general, including manufacturers not singled out via FDA warning letters. We have in the past and may in the future receive claims that our labeling is inaccurate or non-compliant. Any claims levied against us could result in costly settlements, distract management and have an adverse effect on our operating results.

**Any adverse developments in litigation could have a material impact on us.** 

We are subject to lawsuits from time to time in the ordinary course of business. While we expect those lawsuits not to have a material effect on us, an adverse development in any such lawsuit or the insurance coverage for a lawsuit could materially and adversely affect our operating results.

**ITEM 1B. UNRESOLVED STAFF COMMENTS.** 

Not applicable.

**ITEM 2. PROPERTIES.** 

We lease our corporate headquarter facilities in Greenwood Village, Colorado. Please see Note 8 to our Consolidated Financial Statements for more information on our facilities.

**ITEM 3. LEGAL PROCEEDINGS.** 

We are subject to lawsuits from time to time in the ordinary course of business. While we expect those lawsuits not to have a material effect on us, an adverse development in any such lawsuit or the lack of insurance coverage for a lawsuit could materially and adversely affect our financial condition and cash flow.

**ITEM 4. MINE SAFETY DISCLOSURES.** 

Not applicable.

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**PART II** 

(in thousands, except per share data)

**ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.** 

**Market Information** 

Our $0.10 par value common stock is traded on the OTC Pink Market tier of the OTC Markets (an electronic inter-dealer quotation system) under the ticker symbol "SLGD." Over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. The high and low prices of our common stock as traded on the OTC Pink Market tier of the OTC Markets were as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| **<u>Three Months Ended</u>** | **2022** | **2022** | **2021** | **2021** |
|  | **High** | **Low** | **High** | **Low** |
| March 31 | $1.60 | $1.02 | $3.03 | $1.78 |
| June 30 | 1.07 | 0.70 | 3.00 | 2.28 |
| September 30 | 0.81 | 0.33 | 3.00 | 2.00 |
| December 31 | 0.37 | 0.19 | 2.08 | 1.00 |

---

**Shareholders of Record**

As of March 28, 2023, based on inquiry, we had approximately 633 shareholders of record.

**Dividends** 

We did not pay any cash dividends during the two most recent fiscal years. We do not anticipate paying dividends in the foreseeable future.

**ITEM 6. RESERVED.** 

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**ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.** 

Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company's consolidated financial statements. This Item 7 contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risk, uncertainties, and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. Please refer to "Item 1A. Risk Factors" for a discussion of the uncertainties, risks and assumptions associated with these statements.

**COVID-19 Pandemic**

The COVID-19 pandemic and government steps to reduce the spread and address the impact of COVID-19 have had and continue to have an impact on the way people live, work, interact and shop. While the impact of COVID-19 on our business has largely abated at this time, uncertainties continue. We have also experienced certain disruptions to our supply chain due to COVID-19, which have impacted and may continue to impact sales of and consumer access to our products. In addition, we have experienced changes in the purchasing patterns of our customers, including a shift in many markets to purchasing our products online. COVID-19 may continue to impact consumers' behavior, shopping patterns and consumption preferences.

While we currently expect to be able to continue operating our business as described above, uncertainty resulting from COVID-19 could result in unforeseen additional disruptions to our business, including our global supply chain and retailer network, and/or require us to incur additional operational costs.

**Sale of Brands**

On December 15, 2022, we sold the Prell<sup>®</sup>brand to a company that markets and distributes natural hair and skincare products. We have reflected the operations of Prell<sup>®</sup> as discontinued operations for all periods presented. On December 23, 2021, we sold the Dryel<sup>®</sup>brand to a company that markets and distributes household cleaning products. We have reflected the operations of Dryel<sup>®</sup> as discontinued operations for all periods presented.

See Note 3 - "Discontinued Operations" in the Notes to Consolidated Financial Statements for further information on the sale of both brands.

On January 23, 2023, we sold the Scott's Liquid Gold<sup>®</sup> brand, including the Wood Care and Floor Restore products, to a company that markets and distributes wood care products.

**Distribution to China**

We terminated our exclusive distribution agreement of Alpha<sup>®</sup>Skin Care products with HK NFS on July 12, 2022 due to breaches of the distribution agreement by HK NFS, and are establishing a direct model to resume sales of our products to consumers in China. The reestablishment of an effective business model in China is dependent on deploying significant resources to marketing and advertising efforts and regulatory compliance, as well as the successful shutdown of our former distributor's storefronts on various e-commerce platforms.

Throughout 2020 and early 2021, we obtained components and produced finished goods specifically designed and formulated for distribution in the PRC. Our exclusive distributor ultimately did not purchase these products in accordance with their minimum order requirements. Due to the difficulties we have encountered in establishing our own e-commerce storefronts, this has resulted in our accumulation of high amounts of finished goods inventories and raw materials specifically designed for China. Due to uncertainties of future production requirements, raw materials that we have acquired is included in our impairment of inventories for the years ended December 31, 2022 and 2021, respectively.

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**Distribution Agreement with Church & Dwight**

Our distribution agreement with Church & Dwight Co., Inc. and our subsidiary, Neoteric Cosmetics, Inc., was not extended beyond December 31, 2021. As a result, the distribution agreement expired on its own terms as of December 31, 2021 and the Company ceased to distribute Batiste Dry Shampoo products. Unless offset by increased sales of our other products, the conclusion of this distribution agreement is expected to have a material impact on our net sales and result of operations. Net sales of Batiste were $7,155 for the year ended December 31, 2021.

**Executive Overview** 

Our Business

Scott's Liquid Gold-Inc. exists to positively impact consumers' lives in the markets we serve and create shareholder value. We develop, market, and sell high-quality, high-value household and health and beauty care products nationally and internationally to mass merchandisers, drugstores, supermarkets, hardware stores, e-commerce retailers, other retail outlets, and to wholesale distributors. Our long history has generated strong consumer and customer loyalty for our brands.

On an ongoing basis, management focuses on a variety of key indicators to monitor our business health and performance. These key indicators include (but are not limited to) the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Net sales (collectively and by operating segment);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Profitability, focusing on gross margins and net income; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Cash flow.

To achieve our business and financial objectives, we focus on initiatives to drive the growth of the key indicators above. Our ability to drive and generate growth depends on consumer demand for our products and retail customers' willingness to carry our products in a competitive marketplace. In this environment, we intend to continue to focus on our key indicators to remain competitive, sustain our current level of operations, and drive further growth in future periods.

During 2022, the Company achieved objectives focused on optimization, cost reduction, and modernization of our business. These included (but were not limited to) the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Implementation of new, scalable enterprise resource planning software, replacing our prior software which had been in place for over 30 years;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Sales of assets with low margins or limited future growth potential to optimize our product portfolio;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Restructure and consolidation of business departments to facilitate greater cross-functional teamwork and workplace efficiency;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Elimination of unprofitable sales arrangements with customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Implementation of minimum order quantity thresholds on customer orders to reduce fulfillment costs; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Consolidation of third-party logistics and warehousing partners to achieve reduced costs and compliance fines.

Outlook

Looking forward, we are focused on both short- and long-term strategies that we believe will enhance our financial health and deliver shareholder value. While the marketplace in which we operate has always been highly competitive, we expect that the category challenges and the level of competition will continue to rise. We believe that some of the trends in our business and industry could adversely affect our profitability, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Changes in national and international regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Changes in policies or practices of some of our key retail customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Rapid growth of e-commerce and alternative retail channels; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Inflationary impacts to the costs of products, transportation, and labor associated with our logistics and warehousing partners.

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We believe our history of providing high-quality, high-value products to consumers positions us to meet the challenges in our marketplace by continuing to focus on the following key priorities in 2023:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Paydown of debt and improving cash flows from operations through growth of sales and optimization of cost structure;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Pursuing growth opportunities, including distributing Alpha<sup>®</sup> Skin Care, Kids N Pets<sup>®</sup>, Messy Pet<sup>®</sup>, and other products to broader markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Improving our processes and systems;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Optimizing our inventories, supply chain, and operations, as well as further consolidation of third-party logistics partners; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Exploration of one or more of the following: the sale of additional brands; a sale, merger, or other strategic transaction involving the entire company; acquisitions of other brands or companies; issuance of additional debt or equity; and continuing to operate as a public, independent company.

**Results of Operations** 

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| | | | |
|:---|:---|:---|:---|
|  | **For the Year Ended December 31, (in thousands)** | **For the Year Ended December 31, (in thousands)** | **For the Year Ended December 31, (in thousands)** |
|  |  |  | **Increase / (Decrease)** |
|  | **2022** | **2021** | **%** |
| Net sales | $16570 | $29742) | (44.3%) |
| Cost of sales | 9024 | 16805) | (46.3%) |
| Impairment of inventories | 461 | 404 | 14.1% |
| &nbsp;&nbsp;Total cost of sales | 9485 | 17209) | (44.9%) |
| &nbsp;&nbsp;&nbsp;Gross profit | 7085 | 12533) | (43.5%) |
| &nbsp;&nbsp;&nbsp;Gross margin | 42.8% | 42.1% |  |
| Operating expenses: |  |  |  |
| &nbsp;&nbsp;Advertising | 641 | 639 | 0.3% |
| &nbsp;&nbsp;Selling | 6477 | 8956) | (27.7%) |
| &nbsp;&nbsp;General and administrative | 2786 | 4611) | (39.6%) |
| &nbsp;&nbsp;Intangible asset amortization | 325 | 802) | (59.5%) |
| &nbsp;&nbsp;Impairment of goodwill and intangible assets | 5172 | 4050 | 27.7% |
| &nbsp;&nbsp;&nbsp;Total operating expenses | 15401 | 19058) | (19.2%) |
| Loss from operations | (8316) | (6525) | (27.4%) |
| Interest expense | (534) | (341) | (56.6%) |
| Loss before income taxes and discontinued operations | (8850) | (6866) | (28.9%) |
| Income tax expense | (63) | (1079) | 94.2% |
| Loss from continuing operations | (8913) | (7945) | (12.2%) |
| Income (loss) from discontinued operations, net of taxes | 62 | (3146) | 102.0% |
| Net loss | $(8851) | $(11091) | 20.2% |

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Net loss changed primarily due to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower sales and gross profits from the conclusion of our distribution agreement with Church and Dwight for Batiste products, as well as reduced sales and gross profits from various product lines due to changes in our customers' purchasing strategies related to inventory and inflationary pressures. In addition, supply chain affected in-stock levels of certain products and impacted our sales to customers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Decrease in selling expenses caused by lower logistics and warehousing costs from lower sales, a transition to a different third-party logistics provider during the fourth quarter of 2022, and a reduction in personnel costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Decrease in general and administrative costs due to changes in personnel and related costs as well as reductions in restructuring costs associated with separation of employees during 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Increase in interest expense associated with additional debt in 2022 and increases in variable interest rates.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Decrease in intangible asset amortization from impairments of intangible assets in the fourth quarter of 2021 and second quarter of 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Impairment of goodwill and intangible assets.

**Segment Results**

The following tables show comparative net sales, gross margin, gross profit, loss from operations, volume and percentage changes for our household and health and beauty care products between periods:

**Household products**

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| | | | |
|:---|:---|:---|:---|
|  | **For the Year Ended December 31, (in thousands)** | **For the Year Ended December 31, (in thousands)** | **For the Year Ended December 31, (in thousands)** |
|  |  |  | **Increase / (Decrease)** |
|  | **2022** | **2021** | **%** |
| Net sales | $11763 | $14152) | (16.9%) |
| Gross profit | $4810 | $5583) | (13.8%) |
| &nbsp;&nbsp;Gross margin | 40.9% | 39.5% |  |
| Loss from operations | $(6574) | $(3963) | (65.9%) |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Net sales and gross profit decreased due to changes in our customers' purchasing strategies related to inventory and inflationary pressures as well as supply chain disruptions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Loss from operations was reduced primarily related to less goodwill and intangible asset impairments and was partially offset by reductions in selling and general and administrative costs.

**Health and beauty care products**

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| | | | |
|:---|:---|:---|:---|
|  | **For the Year Ended December 31, (in thousands)** | **For the Year Ended December 31, (in thousands)** | **For the Year Ended December 31, (in thousands)** |
|  |  |  | **Increase / (Decrease)** |
|  | **2022** | **2021** | **%** |
| Health and beauty care net sales |  |  |  |
| &nbsp;&nbsp;Net sales- distributed products | $- | $7123) | (100.0%) |
| &nbsp;&nbsp;Net sales- manufactured products | 4807 | 8467) | (43.2%) |
| &nbsp;&nbsp;&nbsp;Total health and beauty care net sales | $4807 | $15590) | (69.2%) |
| Gross profit | $2275 | $6950) | (67.3%) |
| &nbsp;&nbsp;Gross margin | 47.3% | 44.6% |  |
| Loss from operations | $(1742) | $(2562) | 32.0% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Net sales of distributed health and beauty care products decreased due to the termination of our Batiste distribution agreement with Church & Dwight in December 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Net sales and gross profits from manufactured products decreased due to the elimination of sales to our exclusive China distributor of Alpha<sup>®</sup> Skin Care products as well as reduced sales of Alpha<sup>®</sup> from certain customers' changes in inventory management practices. During the first quarter of 2022 we also eliminated sales of our Denorex<sup>®</sup> brands to certain customers with minimal profitability.

**Liquidity and Capital Resources** 

Financing Agreements

Please see Note 7 to our Consolidated Financial Statements for information on our debt facilities with UMB Bank, N.A. ("UMB") and La Plata Capital, LLC ("La Plata").

Liquidity and Changes in Cash Flows

At December 31, 2022, we had approximately $49 in cash on hand, a decrease of $1,221 from December 31, 2021.

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The following is a summary of cash provided by or used in each of the indicated types of activities:

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| | | | |
|:---|:---|:---|:---|
|  | **For the Year Ended December 31, (in thousands)** | **For the Year Ended December 31, (in thousands)** | **For the Year Ended December 31, (in thousands)** |
|  |  |  | **Increase / (Decrease)** |
|  | **2022** | **2021** | **%** |
| Operating activities | $(1849) | $(322) | (474.2%) |
| Investing activities | 338 | 4381) | (92.3%) |
| Financing activities | 290 | (2794) | 110.4% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Net cash used in operating activities was primarily related to our net loss and partially offset by conversion of working capital from accounts receivable and reduction in finished goods inventories.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Net cash provided by investing activities was due to purchases relating to our internal use software offset by the sale of our Prell<sup>®</sup> brand.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Net cash provided by financing activities was from proceeds of our various debt facilities which is used for working capital.

The accompanying Consolidated Financial Statements have been prepared assuming that the Company will continue as a going concern, which contemplates the continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. However, substantial doubt about the Company's ability to continue as a going concern exists.

Primarily due to a decline in net sales, disruption of our international sales to China, and increases in costs associated with the manufacture and distribution of our products, the Company used net cash in operating activities of $1,849 during the year ended December 31, 2022. All proceeds from the sale of our Scott's Liquid Gold<sup>®</sup> brand in January 2023 were used to reduce outstanding debt. In February 2023, the Company terminated its Loan and Security Agreement with UMB Bank, N.A. and repaid its revolving credit facility in full. The Company's debt agreement with La Plata Capital, LLC matures on November 9, 2023, which will require repayments of all principal amounts outstanding during 2023. Management's assessment of cash flow forecasts indicate that, absent any other action, the Company likely will require additional liquidity to continue its operations over the next 12 months.

Management has implemented actions to reduce the Company's operating expenses and has restructured debt facilities through the adjustments to the timing of required principal payments and covenant compliance periods. Management is considering additional various strategic actions including asset sales, obtaining additional debt or equity financing (potentially in conjunction with acquisitions), workforce reduction, deferring or eliminating certain capital expenditures, and further reduction of other operating expenses to ensure alignment with customer demand in order to address liquidity needs and pursue its business plan. The Company expects that these strategic actions will reduce expenses and outstanding debt balances and provide required liquidity for ongoing operations. However, given the impact of the economic downturn on the U.S., the Company may be unable to sell assets or access further equity or debt financing when needed. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all.

The Consolidated Financial Statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties.

**Critical Accounting Policies and Estimates**

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to use judgment and make estimates. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. Actual results could ultimately differ from those estimates. The accounting policies that are most critical in the preparation of the Company's Consolidated Financial Statements are those that are both important to the presentation of the Consolidated Financial Statements and require significant or complex judgments and estimates on the part of management.

Revenue Recognition

Our revenue recognition policy is significant because the amount and timing of revenue is a key component of our results of operations. See Note 1(l), "Revenue Recognition" in our Consolidated Financial Statements in Item 8 for additional discussion.

------

Intangible Assets and Goodwill

Goodwill is tested for impairment at the reporting unit level, which is the level at which discrete financial information is available and reviewed by management. For fiscal year 2022, the Company's reporting units for goodwill impairment testing purposes were its individual components, which are differentiated by their product categories.

Determining the fair value of the Company's reporting units for goodwill and the fair value of its intangible assets requires significant estimates and judgments by management. When a quantitative analysis is performed, the Company generally uses the income approach, which requires several estimates, including future cash flows consistent with management's strategic plans, sales growth rates, and the selection of royalty rates and a discount rate. Estimating sales growth rates requires significant judgment by management in areas such as future economic conditions, category growth rates, product pricing, consumer tastes and preferences and future expansion expectations. In selecting an appropriate royalty rate, the Company considers recent market transactions for similar brands and products. In determining an appropriate discount rate, the Company considers the current interest rate environment and its estimated cost of capital. Other qualitative factors the Company considers, in addition to those quantitative measures discussed above, include assessments of general macroeconomic conditions, industry-specific considerations and historical financial performance. The Company generally engages a third-party valuation firm to assist it in determining the fair value of intangible assets acquired in business combinations.

In determining the fair value of the Company's reporting units, fair value is also determined using the market approach, which is generally derived from metrics of comparable publicly traded companies. As multiple valuation methodologies are used, the Company also performs a qualitative analysis comparing the fair value of a reporting unit under each method to assess its reasonableness and ensure consistency of results.

Determining the expected life of a brand requires management judgment and is based on an evaluation of several factors including market share, brand history, future expansion expectations, the level of in-market support anticipated by management, legal or regulatory restrictions and the economic environment where the products are sold.

We made revisions to the internal forecasts relating to all reporting units during the second quarter of 2022 due to changes in the economic outlook of our All-Purpose reporting unit, and during the fourth quarter of 2022 related to our annual assessment of all reporting units. Through our assessments, we concluded that the changes in circumstances in these reporting units triggered the need for a quantitative review of the carrying values of goodwill and certain intangible assets and resulted in impairment charges to each of our reporting units during the year ended December 31, 2022, and resulted in the following impairment charges:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | **Intangible Assets** | **Goodwill** | **Total** | **Intangible Assets** | **Goodwill** | **Total** |
| All-Purpose | $2717 | $1710 | $4427 | $1084 | $593 | $1677 |
| Shampoo | 194 | - | 194 | 1483 | 760 | 2243 |
| Detergent | 551 | - | 551 | 130 | - | 130 |
|  | $3462 | $1710 | $5172 | $2697 | $1353 | $4050 |

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Inventories Valuation

Our inventory valuation policy is significant because the costs and valuation of slow-moving or obsolete inventories are key components of our results of operations. See Note 1(f), "Inventories Valuation" in our Consolidated Financial Statements in Item 8 for additional discussion.

During the years ended December 31, 2022 and 2021, we specifically identified slow moving and obsolete inventories, resulting in an impairment of $461 and $404, respectively.

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Income Taxes

Our income taxes policy is significant because our estimate for taxes is a key component of our results of operations. See Note 1(k), "Income Taxes" in our Consolidated Financial Statements in Item 8 for additional discussion.

Recently Issued Accounting Standards

For information on recently issued accounting standards, see Note 1(p), "Recently Issued Accounting Standards," to our Consolidated Financial Statements.

**ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.** 

Not applicable.

------

**ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.** 

 **Report of Independent Registered Public Accounting Firm** 

To the Stockholders and Board of Directors of Scott's Liquid Gold - Inc.

**Opinion on the Financial Statements**

We have audited the accompanying balance sheets of Scott's Liquid Gold - Inc. (the "Company") as of December 31, 2022 and December 31, 2021, the related statements of operations, stockholders' equity, and cash flows for each of the years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and December 31, 2021, and the results of its operations and its cash flows for each of the years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

**Substantial Doubt Regarding Going Concern**

The accompanying consolidated financial statements have been prepared assuming that the entity will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the entity has suffered recurring losses from operations, has experienced cash used from operations in excess of its current cash position, and has an accumulated deficit, that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter

**Basis for Opinion**

The Company's management is responsible for these financial statements. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting 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.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matter**

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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**Impairment of Intangible Assets and Goodwill**

Description of the Matter

At December 31, 2022, the Company had intangible assets and goodwill of $1,136,000 and $-0-, respectively. As discussed in Notes 1(i) and 6 to the consolidated financial statements, intangible assets are assessed for recoverability whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company evaluates assets for potential impairment by comparing estimated future undiscounted net cash flows to the carrying amount of the asset. If the carrying amount of the assets exceeds the estimated future undiscounted cash flows, impairment is measured based on the difference between the carrying amount of the assets and fair value. Goodwill is tested by the Company's management for impairment at least annually, during the fourth quarter, unless events or circumstances indicate the carrying amount may not be recoverable. Goodwill is tested for impairment at the reporting unit level.

Auditing the Company's impairment tests for intangible assets with finite lives was complex and highly judgmental due to the significant estimation in management's assumptions related to net sales growth rates, gross profit and operating margin, discount rates, and long-term growth rates to calculate the undiscounted cash flows and the fair value estimate. These assumptions can significantly affect the undiscounted cash flows and fair value of the intangible assets with finite lives. Auditing the Company's impairment tests for goodwill was complex and highly judgmental due to the significant estimation required in determining the fair value of the reporting units. Specifically, the fair value estimates of the reporting units are sensitive to assumptions such as net sales growth rates, discount rate, long-term growth rates and gross profit and operating margin. The fair value estimates of intangible assets and reporting units are affected by such factors as industry, market performance, and financial forecasts.

How We Addressed the Matter in Our Audit

Our audit procedures related to testing the valuation of intangible assets and goodwill, among others:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We obtained an understanding of the process and evaluated the design and implementation of key controls used by management to develop its fair value estimates and perform the impairment tests. We tested the completeness and accuracy of the underlying data used by the Company for the cash flow projections in its analyses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We compared the significant assumptions used by management in its cash flow projections to current industry and economic trends, historical financial results, and other relevant factors and evaluated the reasonableness of those assumptions. We also assessed the historical accuracy of management's cash flow projections to actual results.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•With the assistance of our fair value specialists, we evaluated the reasonableness of the revenue growth projections, discount rates, royalty rates and valuation methodologies by:

oTesting the source information underlying the determination of revenue growth projections, specifically the long-term growth rate, royalty rates, and discount rates, and testing the mathematical accuracy of the calculations.

oReviewing the reconciliation of the internal rate of return, the weighted average return on assets and the weighted average cost of capital noting that the reconciliation fell within an acceptable range.

oReviewing the royalty rates selected for the trade names, to confirm that the rate was a reasonable market participant rate.

oWe evaluated the completeness and accuracy of the footnote disclosures in Note 6 in the financial statements.

/s/ Plante & Moran, PLLC

We have served as the Company's auditor since 2003.

Broomfield, Colorado

March 29, 2023

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**SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES**

**Consolidated Statements of Operations** 

(in thousands, except per share data)

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| Net sales | $16570 | $29742 |
| Cost of sales | 9024 | 16805 |
| Impairment of inventories | 461 | 404 |
| Total cost of sales | 9485 | 17209 |
| &nbsp;&nbsp;Gross profit | 7085 | 12533 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;Advertising | 641 | 639 |
| &nbsp;&nbsp;Selling | 6477 | 8956 |
| &nbsp;&nbsp;General and administrative | 2786 | 4611 |
| &nbsp;&nbsp;Intangible asset amortization | 325 | 802 |
| &nbsp;&nbsp;Impairment of goodwill and intangible assets | 5172 | 4050 |
| &nbsp;&nbsp;&nbsp;Total operating expenses | 15401 | 19058 |
| Loss from operations | (8316) | (6525) |
| Interest expense | (534) | (341) |
| Loss before income taxes and discontinued operations | (8850) | (6866) |
| Income tax expense | (63) | (1079) |
| Loss from continuing operations | (8913) | (7945) |
| Income (loss) from discontinued operations, net of taxes | 62 | (3146) |
| Net loss | $(8851) | $(11091) |
| Basic and diluted net loss per common shares: |  |  |
| &nbsp;&nbsp;Loss from continuing operations | $(0.70) | $(0.63) |
| &nbsp;&nbsp;Income (loss) from discontinued operations | $0.00 | $(0.25) |
| &nbsp;&nbsp;Net loss | $(0.70) | $(0.88) |
| Weighted average shares outstanding: |  |  |
| &nbsp;&nbsp;Basic and diluted | 12758 | 12678 |

---

See accompanying notes to these Consolidated Financial Statements.

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**SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES**

**Consolidated Balance Sheets** 

(in thousands, except par value amounts)

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| <u>Assets</u> |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $49 | $770 |
| &nbsp;&nbsp;&nbsp;Restricted cash | - | 500 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 1833 | 3516 |
| &nbsp;&nbsp;&nbsp;Inventories | 4692 | 4937 |
| &nbsp;&nbsp;&nbsp;Income taxes receivable | 239 | 320 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses | 243 | 436 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 7056 | 10479 |
| Property and equipment, net | 1 | 7 |
| Goodwill | - | 1710 |
| Intangible assets, net | 1137 | 4809 |
| Operating lease right-of-use assets | 2491 | 2735 |
| Other assets | 46 | 38 |
| Assets of discontinued operations | - | 1091 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $10731 | $20869 |
| <u>Liabilities and Shareholders' Equity</u> |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $1407 | $2647 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 311 | 747 |
| &nbsp;&nbsp;&nbsp;Current portion of long-term debt, net of debt issuance costs | 3384 | 1000 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities, current portion | 270 | 251 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 5372 | 4645 |
| Long-term debt, net of current portion and debt issuance costs | - | 1876 |
| Operating lease liabilities, net of current | 2512 | 2780 |
| Other liabilities | 27 | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 7911 | 9328 |
| Shareholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;Preferred Stock, no par value, authorized 20,000 shares; no shares issued and outstanding | - | - |
| &nbsp;&nbsp;&nbsp;Common Stock; $0.10 par value, authorized 50,000 shares; issued and outstanding 12,797 shares (2022) and 12,727 shares (2021) | 1280 | 1273 |
| &nbsp;&nbsp;&nbsp;Capital in excess of par | 7912 | 7789 |
| &nbsp;&nbsp;&nbsp;(Accumulated deficit) retained earnings | (6372) | 2479 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity | 2820 | 11541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and shareholders' equity | $10731 | $20869 |

---

See accompanying notes to these Consolidated Financial Statements.

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**SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES**

**Consolidated Statements of Shareholders' Equity** 

(in thousands)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** |  |  |  |
|  | **Shares** | **Amount** | **Capital in Excess of Par** | **(Accumulated Deficit) Retained Earnings** | **Total** |
| Balance, January 1, 2021 | 12618 | $1262 | $7633 | $13570 | $22465 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation | - | - | (9) | - | (9) |
| &nbsp;&nbsp;&nbsp;Stock options exercised | 45 | 4 | 53 | - | 57 |
| &nbsp;&nbsp;&nbsp;Restricted stock unit vesting | 64 | 7 | 112 | - | 119 |
| &nbsp;&nbsp;&nbsp;Net loss | - | - | - | (11091) | (11091) |
| Balance, December 31, 2021 | 12727 | 1273 | 7789 | 2479 | 11541 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation | - | - | 89 | - | 89 |
| &nbsp;&nbsp;&nbsp;Restricted stock unit vesting | 70 | 7 | 34 | - | 41 |
| &nbsp;&nbsp;&nbsp;Net loss | - | - | - | (8851) | (8851) |
| Balance, December 31, 2022 | 12797 | 1280 | 7912 | (6372) | 2820 |

---

See accompanying notes to these Consolidated Financial Statements.

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**SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES**

**Consolidated Statements of Cash Flows** 

(in thousands)

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| Cash flows from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(8851) | $(11091) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 622 | 1820 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 130 | 110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | - | 784 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on disposal of discontinued operations | 155 | 834 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of inventories | 461 | 404 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of goodwill and intangible assets | 5172 | 6294 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 1683 | 996 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | 194 | (2093) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | 185 | 272 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes receivable | 81 | 215 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable, accrued expenses, and other liabilities | (1681) | 1133 |
| &nbsp;&nbsp;&nbsp;Total adjustments to net loss | 7002 | 10769 |
| Net cash used in operating activities | (1849) | (322) |
| Cash flows from investing activities: |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of software | (142) | (469) |
| &nbsp;&nbsp;&nbsp;Proceeds from sale of discontinued operations | 480 | 4850 |
| Net cash provided by investing activities | 338 | 4381 |
| Cash flows from financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from term loans | - | 2000 |
| &nbsp;&nbsp;&nbsp;Repayments on term loans | (2000) | (1583) |
| &nbsp;&nbsp;&nbsp;Proceeds from revolving credit facility | 25816 | 40677 |
| &nbsp;&nbsp;&nbsp;Repayments of revolving credit facility | (23526) | (43885) |
| &nbsp;&nbsp;&nbsp;Payments for debt issuance costs | - | (60) |
| &nbsp;&nbsp;&nbsp;Proceeds from exercise of stock options | - | 57 |
| Net cash provided by (used in) financing activities | 290 | (2794) |
| Net (decrease) increase in cash and restricted cash | (1221) | 1265 |
| Cash and restricted cash, beginning of period | 1270 | 5 |
| Cash and restricted cash, end of period | $49 | $1270 |
| Supplemental disclosures: |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid during the period for interest | $316 | $561 |

---

See accompanying notes to these Consolidated Financial Statements.

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**SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES**

**Notes to Consolidated Financial Statements**

(in thousands, except per share data)

**Note 1. Organization and Summary of Significant Accounting Policies**

(a) Company Background

Scott's Liquid Gold-Inc., a Colorado corporation, was incorporated on February 15, 1954. Scott's Liquid Gold-Inc. and its wholly-owned subsidiaries (collectively, the "Company," "we," "our," or "us") develop, market, and sell quality household and health and beauty care products. Our business is comprised of two segments; household products and health and beauty care products.

(b) Principles of Consolidation

Our Consolidated Financial Statements include our accounts and those of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

On December 15, 2022, we entered into an asset purchase agreement with a buyer, pursuant to which we agreed to sell to all of our right, title and interest in and to certain assets of the Prell<sup>®</sup> product line. We have reflected the operations the Prell<sup>®</sup> product line as discontinued operations for all periods presented, which was previously classified under our household products segment. See Note 3 for further information.

On December 23, 2021, we entered into an asset purchase agreement with a buyer, pursuant to which we agreed to sell to all of our right, title and interest in and to certain assets of the Dryel<sup>®</sup> product line. We have reflected the operations the Dryel<sup>®</sup> product line as discontinued operations for all periods presented, which was previously classified under our household products segment. See Note 3 for further information.

(c) Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain previously reported financial information has been reclassified to conform to the current year's presentation.

(d) Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts in our financial statements of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, the realization of deferred tax assets, reserves for slow moving and obsolete inventory, customer returns and allowances, intangible asset useful lives and amortization method, fair value of assets acquired in business combinations, future cash flows associated with impairment testing of goodwill and other long-lived assets, and stock-based compensation. Actual results could differ from our estimates.

(e) Cash and Restricted Cash

Cash and restricted cash consist of the following:

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| | | |
|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2021** |
| Cash | $49 | $770 |
| Restricted Cash | - | 500 |
|  | $49 | $1270 |

---

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(f) Inventories Valuation

Inventories consist of raw materials and finished goods and are stated at the lower of cost (first-in, first-out method) or net realizable value, which is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We specifically identify impairment write downs for slow moving and obsolete products and raw materials based upon, among other things, an assessment of historical and anticipated sales of our products. In the event that actual results differ from our estimates, the results of future periods may be impacted.

During the years ended December 31, 2022 and 2021 respectively, we specifically identified slow moving and obsolete raw material and finished goods inventories, resulting in impairment charges that are reflected on the Consolidated Statements of Operations.

(g) Property and Equipment

Property and equipment are recorded at historical cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets ranging from three to 20 years. Office furniture and office machines are estimated to have useful lives of 10 to 20 and three to five years, respectively. Maintenance and repairs are expensed as incurred. Improvements that extend the useful lives of the asset or provide improved efficiency are capitalized.

(h) Leases

Lease assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our incremental borrowing rate generally applicable to the location of the lease asset, unless the implicit rate is readily determinable. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised.

Certain nonlease components, such as maintenance and other services provided by the lessor, are included in the valuation of the lease. Leases with an initial term of 12 months or less, which are not material to our financial statements, are not recorded on the balance sheet, and the expense for these short-term leases and for operating leases is recognized on a straight-line basis over the lease term. Lease agreements with lease and nonlease components are combined as a single lease component.

(i) Intangible Assets and Goodwill

Goodwill is subject to impairment tests at least annually or when events or changes in circumstances indicate that an asset may be impaired. Other intangible assets with finite lives, such as customer relationships, trade names, and formulas, are amortized over their estimated useful lives, generally ranging from 5 to 20 years. Amortization expense related to intangible assets is included in operating expenses on the Consolidated Statement of Operations.

Internal-use software costs recognized as an intangible asset relates to capitalizable costs of computer software obtained for internal-use as defined by the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 350-40-30-1. All other internal-use software costs are expensed as incurred by the Company. In the second quarter of 2022, our internal-use software was implemented for its intended use with an estimated useful life of five years. Amortization expense is recorded on a straight-line basis and is included in general and administrative expenses on the Consolidated Statements of Operations.

(j) Financial Instruments

Financial instruments which potentially subject us to concentrations of credit risk include cash and cash equivalents and accounts receivable. We maintain our cash balances in the form of bank demand deposits with financial institutions that we believe are creditworthy. We establish an allowance for doubtful accounts, which is generally not material to our financial statements, based upon factors surrounding the credit risk of specific customers, historical trends and other information. We have no significant financial instruments with off-balance sheet risk of accounting loss, such as foreign exchange contracts, option contracts or other foreign currency hedging arrangements.

The recorded amounts for cash and cash equivalents, receivables, other current assets, accounts payable, and accrued expenses approximate fair value due to the short-term nature of these financial instruments.

------

(k) Income Taxes

Income taxes reflect the tax effects of transactions reported in the Consolidated Financial Statements and consist of taxes currently payable plus deferred income taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. A valuation allowance is established when it is more-likely-than-not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which related temporary differences become deductible. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Taxes are reported based on tax positions that meet a more-likely-than-not standard and that are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits or expense. We classify penalty and interest expense related to income tax liabilities as an income tax expense. There are no significant interest and penalties recognized in the Consolidated Statements of Operations or accrued on the Consolidated Balance Sheets.

On March 27, 2020, President Trump signed into U.S. federal law the CARES Act, which among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In particular, under the CARES Act, NOLs arising in 2018, 2019, and 2020 taxable years may be carried back to each of the preceding five years to generate a refund. The tax impact of the carryback of 2020 and 2019 losses were recorded in the first quarter 2021 and 2020 income tax provisions, respectively. We elected to defer our portion of social security tax payments, and we paid this liability in the third quarter of 2021.

(l) Revenue Recognition

Our revenue recognition policy is significant because the amount and timing of revenue is a key component of our results of operations. Certain criteria are required to be met in order to recognize revenue. If these criteria are not met, then the associated revenue is deferred until it is met. When consideration is received in advance of the delivery of goods or services, a contract liability is recorded. Our revenue contracts are identified when purchase orders are received and accepted from customers and represent a single performance obligation to sell our products to a customer.

Net sales reflect the transaction prices for contracts, which include products shipped at selling list prices reduced by variable consideration. Variable consideration includes estimates for expected customer allowances, promotional programs for consumers, and sales returns. Based on our customer-by-customer history, our variable consideration estimates are generally accurate and subsequent adjustments are generally immaterial.

Variable consideration is primarily comprised of customer allowances. Customer allowances primarily include reserves for trade promotions to support price features, displays, slotting fees, and other merchandising of our products to our customers. Promotional programs for consumers primarily include coupons, rebates, and certain other promotional programs, and do not represent a significant portion of variable consideration. The costs of customer allowances and promotional programs for consumers are estimated using either the expected value or most likely amount approach, depending on the nature of the allowance, using all reasonably available information, including our historical experience and current expectations. Customer allowances and promotional programs for consumers are reflected in the transaction price when sales are recorded. We may adjust our estimates based on actual results and consideration of other factors that cause allowances. In the event that actual results differ from our estimates, the results of future periods may be impacted.

Sales returns are generally not material to our financial statements, and do not comprise a significant portion of variable consideration. Estimates for sales returns are based on, among other things, an assessment of historical trends, information from customers, and anticipated returns related to current sales activity. These estimates are established in the period of sale and reduce our revenue in that period.

Sales are recorded at the time that control of the products is transferred to customers. In evaluating the timing of the transfer of control of products to customers, we consider several indicators, including significant risks and rewards of products, our right to payment, and the legal title of the products. Based on the assessment of control indicators, sales are generally recognized when products are delivered to customers.

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We have also established an allowance for doubtful accounts. We estimate this allowance based upon, among other things, an assessment of the credit risk of specific customers and historical trends. We believe our allowance for doubtful accounts is adequate to absorb any losses which may arise. In the event that actual losses differ from our estimates, the results of future periods may be impacted.

Customer allowances for trade promotions and allowance for doubtful accounts at December 31 were as follows:

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| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Trade promotions | $361 | $1242 |
| Allowance for doubtful accounts | 59 | 14 |
|  | $420 | $1256 |

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(m) Advertising Costs

We expense advertising costs as incurred.

(n) Stock-Based Compensation

We account for share based payments by recognizing compensation expense based upon the estimated fair value of the awards on the date of grant. We determine the estimated grant-date fair value of stock options with only service conditions using the Black-Scholes option pricing model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including the estimated fair value of underlying common stock, risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to the valuation. We recognize compensation costs ratably over the vesting period using the straight-line method, which approximates the service period.

The Company issues restricted stock unit ("RSUs") awards with restrictions that lapse upon the passage of time (service vesting) and satisfaction of market conditions targeted to our Company's stock price. For those restricted stock unit awards with only service vesting, the Company recognizes compensation cost on a straight-line basis over the service period. For awards with both market and service conditions, the Company starts recognizing compensation cost over the requisite service period, with the effect of the market conditions reflected in the calculation of the award's fair value at grant date. The Company values awards with only service vesting requirements based on the grant date share price. The Company values awards with market and service conditions using a Monte Carlo simulation. The Company determines the requisite service period for awards with both market and service conditions based on the longer of the explicit service period and the derived service period. Stock awards that contain market vesting conditions are included in the computations of diluted EPS reflecting the average number of shares that would be issued based on the highest 30-day average market price at the end during the reporting periods, if their effect is dilutive. If the condition is based on an average of market prices over some period of time, the corresponding average for the period is used.

(o) Operating Costs and Expenses Classification

Cost of sales includes costs associated with purchasing finished goods from contract manufacturers, labor, freight-in, quality control, repairs, maintenance, and other indirect costs. We classify freight-out as selling expenses. Other selling expenses consist primarily of costs for sales and sales support personnel, brokerage commissions and promotional costs. Freight-out costs included in selling expenses totaled $1,771 and $2,879, for the years ended December 31, 2022 and 2021, respectively.

General and administrative expenses consist primarily of wages and benefits associated with management and administrative support departments, business insurance costs, professional fees, office facility related expenses and other general support costs.

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On April 29, 2021, the Company announced that Mark E. Goldstein, the President and Chief Executive Officer of the Company and a member of the Board of Directors, retired effective as of April 26, 2021. In connection with Mr. Goldstein's retirement, the Company and Mr. Goldstein entered into a Separation Agreement, Waiver and Release (the "Separation Agreement"), pursuant to which the Company will pay Mr. Goldstein $720 in severance payments (equal to 18 months base salary) over a period of 30 months and reimbursement for the costs of continuing health benefits for a period of 18 months. Severance costs of $805 were recognized in the second quarter of 2021 and are included in general and administrative expenses. Accrued severance costs are included in accrued expenses on the Consolidated Balance Sheets.

(p) Recently Issued Accounting Standards

In September 2022, the FASB issued Accounting Standards Update ("ASU") No. 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations". This guidance requires annual and interim disclosures for entities that use supplier finance programs in connection with the purchase of goods and services. These amendments are effective for fiscal years beginning after December 15, 2022, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. We are currently assessing the impact of this guidance on our financial statements.

(q) Recently Adopted Accounting Standards

In December 2022, the FASB issues ASU No. 2022-06, "Reference Rate Reform (Topic 848): Deferred of the Sunset Date of Topic 848". This guidance defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The Company adopted ASU 2022-06 effective December 31, 2022. The adoption did not have a material impact on our financial statements.

**Note 2. Going Concern**

The accompanying Consolidated Financial Statements have been prepared assuming that the Company will continue as a going concern, which contemplates the continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. However, substantial doubt about the Company's ability to continue as a going concern exists.

Primarily due to a decline in net sales, disruption of our international sales to China, and increases in costs associated with the manufacture and distribution of our products, the Company used net cash in operating activities of $1,849 during the year ended December 31, 2022. In February 2023, the Company terminated its Loan and Security Agreement with UMB Bank, N.A. and repaid its revolving credit facility in full. The Company's debt agreement with La Plata Capital, LLC matures on November 9, 2023. See Note 7 - "Long-Term Debt and Line of Credit" in the Notes to Consolidated Financial Statements for further information. Management's assessment of cash flow forecasts indicate that, absent any other action, the Company likely will require additional liquidity to continue its operations over the next 12 months.

Management has implemented actions to reduce the Company's operating expenses and has restructured debt facilities through the adjustments to the timing of required principal payments and covenant compliance periods. Management is considering additional various strategic actions including asset sales, obtaining additional debt or equity financing (potentially in conjunction with acquisitions), workforce reduction, deferring or eliminating certain capital expenditures, and further reduction of other operating expenses to ensure alignment with customer demand in order to address liquidity needs and pursue its business plan. The Company expects that these strategic actions will reduce expenses and outstanding debt balances and provide required liquidity for ongoing operations. However, given the impact of the economic downturn on the U.S., the Company may be unable to sell assets or access further equity or debt financing when needed. As such, there can be no assurance that the Company will be able to obtain additional liquidity when needed or under acceptable terms, if at all.

The Consolidated Financial Statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties.

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**Note 3. Discontinued Operations** 

On December 15, 2022, we entered into an asset purchase agreement with a buyer, pursuant to which we agreed to sell to all of our right, title and interest in and to certain assets of the Prell<sup>®</sup> product line. The total consideration paid to us was $150, plus an amount equal to the value of the Prell<sup>®</sup> inventory of $330, subject to post-close adjustment. Additionally, the buyer will pay a royalty equal to 3% of collections on net sales for four years after the closing date (the "Prell<sup>®</sup> Royalty"). The Prell<sup>®</sup> Royalty required recognition of a gain upon derecognition of the sale of assets under FASB ASC 610-20. Because the Prell<sup>®</sup> Royalty is variable consideration and is contingent on the outcome of future events that are largely outside of the Company's control, the variable consideration from the Prell<sup>®</sup> Royalty has been fully constrained and no amount is included in the loss on the sale of discontinued operations. Consideration for the Prell<sup>®</sup> Royalty will be recognized as received from the buyer. The constraint on the variable consideration will be reassessed at each subsequent reporting period.

On December 23, 2021, we entered into an asset purchase agreement with a buyer, pursuant to which we agreed to sell to all of our right, title and interest in and to certain assets of the Dryel<sup>®</sup> product line. The total consideration paid to us was $4,850, plus an amount equal to the value of the Dryel<sup>®</sup> inventory of $440, subject to post-close adjustment. At closing, $500 of the total consideration is held in escrow for a twelve-month period following the closing date, and was released ratably in four installments in 2022. This consideration is reflected as Restricted Cash on the Consolidated Balance Sheets.

A long-lived asset group should be classified as held for sale if all of the established criteria are met. The sales of Prell<sup>®</sup> and Dryel<sup>®</sup> did not meet these criteria during the years ended December 31, 2022, and 2021, respectively, because we had not established active programs to locate a buyer and because the brands were not being marketed for sale. All efforts between the buyers and the Company occurred during the fourth quarter of 2022 and 2021, respectively. As a result, there were no adjustments to fair value related to held for sale assets, and the difference between the consideration paid to us and the carrying amount of all assets is reflected in the loss on sale of discontinued operations.

We have reflected the operations of the Prell<sup>®</sup> and Dryel<sup>®</sup> and product lines as discontinued operations. Our Consolidated Balance Sheets and Consolidated Statements of Operations report discontinued operations separate from continuing operations. Our Consolidated Statements of Equity and Statements of Cash Flows combine the results of continuing and discontinued operations. A summary of financial information related to our discontinued operations is as follows:

Reconciliation of the Line Items Constituting Pretax Loss from Discontinued Operations to the After-Tax Loss from Discontinued Operations in the Consolidated Statements of Operations for the years ended December 31:

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| | | | |
|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** |
|  | **Prell®** | **Dryel®** | **Total** |
| Net sales | $3140 | $- | $3140 |
| Cost of sales | 2006 | - | 2006 |
| &nbsp;&nbsp;Gross profit | 1134 | - | 1134 |
| Operating expenses: |  |  |  |
| &nbsp;&nbsp;Selling | 831 | - | 831 |
| &nbsp;&nbsp;General and administrative | 14 | - | 14 |
| &nbsp;&nbsp;Intangible asset amortization | 18 | - | 18 |
| Income from discontinued operations, before tax | 271 | - | 271 |
| Interest expense | (54) | - | (54) |
| Loss on sale of discontinued operations | (155) | - | (155) |
| Income from discontinued operations, net of tax | $62 | $- | $62 |

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| | | | |
|:---|:---|:---|:---|
|  | **2021** | **2021** | **2021** |
|  | **Prell®** | **Dryel®** | **Total** |
| Net sales | $3339 | $2827 | $6166 |
| Cost of sales | 2277 | 1482 | 3759 |
| &nbsp;&nbsp;Gross profit | 1062 | 1345 | 2407 |
| Operating expenses: |  |  |  |
| &nbsp;&nbsp;Selling | 841 | 625 | 1466 |
| &nbsp;&nbsp;General and administrative | - | 34 | 34 |
| &nbsp;&nbsp;Intangible asset amortization | 309 | 492 | 801 |
| &nbsp;&nbsp;Impairment of goodwill and intangible assets | 2244 | - | 2244 |
| Loss from discontinued operations, before tax | (2332) | 194 | (2138) |
| Interest expense | (32) | (398) | (430) |
| Income tax benefit | 71 | 185 | 256 |
| Loss on sale of discontinued operations | - | (834) | (834) |
| Loss from discontinued operations, net of tax | $(2293) | $(853) | $(3146) |

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There were no capital expenditures or significant operating and investing noncash items related to discontinued operations during the years ended December 31, 2022 and 2021, respectively.

Reconciliation of Major Classes of Assets and Liabilities of the Discontinued Operations to Amounts Presented Separately in the Consolidated Balance Sheets as of December 31:

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| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| <u>Assets</u> |  |  |
| Current assets: |  |  |
| Inventories | $- | $740 |
| Intangible assets, net | - | 351 |
| Total assets | $- | $1091 |

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All assets and liabilities in the above table are related to the discontinued operations of Prell<sup>®</sup>. There were no assets or liabilities related to Dryel<sup>®</sup> as of December 31, 2022 or 2021, respectively.

The following summarizes the carrying values of intangible assets, and the resulting loss on sale of discontinued operations associated with Prell<sup>®</sup> at the date of disposition:

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| | |
|:---|:---|
| Trade names | $152 |
| Formulas and batching processes | 153 |
|  | $305 |
| Proceeds from sale of Prell® | 150 |
| &nbsp;&nbsp;Loss on sale of discontinued operations | $(155) |

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The following summarizes the carrying values of goodwill, intangible assets, and the resulting loss on sale of discontinued operations associated with Dryel<sup>®</sup> at the date of disposition:

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| | |
|:---|:---|
| Customer relationships | $2663 |
| Trade names | 1064 |
| Formulas and batching processes | 488 |
| Non-compete | 12 |
| Goodwill | 1457 |
|  | $5684 |
| Proceeds from sale of Dryel® | 4850 |
| &nbsp;&nbsp;Loss on sale of discontinued operations | $(834) |

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**Note 4. Inventories** 

Inventories, consisting of materials, labor and overhead at December 31 were comprised of the following:

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| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Finished goods | $4568 | $4759 |
| Raw materials | 124 | 178 |
|  | $4692 | $4937 |

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**Note 5. Property and Equipment** 

Property and equipment at December 31 were comprised of the following:

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| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Office furniture and equipment | $151 | $151 |
| Less accumulated depreciation | (150) | (144) |
|  | $1 | $7 |

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Depreciation expense for the years ended December 31, 2022 and 2021 was $6 and $11, respectively.

**Note 6. Goodwill and Intangible Assets** 

The changes in the carrying amount of goodwill by reporting unit for the fiscal years ended December 31, 2022 and 2021 were as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Detergent** | **Shampoo** | **All-Purpose** | **Total** |
| Balance, January 1, 2022 | $- | $- | $1710 | $1710 |
| &nbsp;&nbsp;Additions | - | - | - | - |
| &nbsp;&nbsp;Impairment | - | - | (1710) | (1710) |
| Balance, December 31, 2022 | $- | $- | $- | $- |
| Balance, January 1, 2021 | $593 | $760 | $1710 | $3063 |
| &nbsp;&nbsp;Additions | - | - | - | - |
| &nbsp;&nbsp;Impairment | (593) | (760) | - | (1353) |
| Balance, December 31, 2021 | $- | $- | $1710 | $1710 |

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Intangible assets consisted of the following:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **As of December 31, 2022** | **As of December 31, 2022** | **As of December 31, 2022** | **As of December 31, 2021** | **As of December 31, 2021** | **As of December 31, 2021** |
|  | **Gross Carrying Amount** | **Accumulated Amortization** | **Net Carrying Value** | **Gross Carrying Amount** | **Accumulated Amortization** | **Net Carrying Value** |
| <u>Intangible assets:</u> |  |  |  |  |  |  |
| Customer relationships | $- | $- | $- | $2103 | $329 | $1774 |
| Trade names | 309 | 97 | 212 | 1680 | 151 | 1529 |
| Formulas and batching processes | 412 | 283 | 129 | 1036 | 299 | 737 |
| Internal-use software | 898 | 105 | 793 | 756 | - | 756 |
| Non-compete agreement | 33 | 30 | 3 | 48 | 35 | 13 |
|  | $1652 | $515 | $1137 | $5623 | $814 | $4809 |

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The change in the net carrying amounts of intangible assets during 2022 was primarily due to cash paid for our internal-use software, the impact of impairment charges related to intangible assets in our reporting units more fully described below, and amortization expense. Amortization expense for the years ended December 31, 2022 and 2021 was $325 and $802, respectively.

Estimated amortization expense for 2023 and subsequent years is as follows:

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| | |
|:---|:---|
| 2023 | $219 |
| 2024 | 219 |
| 2025 | 218 |
| 2026 | 217 |
| 2027 | 112 |
| Thereafter | 152 |
| Total | $1137 |

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During the second quarter of 2022, we experienced a significant decline in our stock price and market capitalization and revised internal forecasts relating to all reporting units due to inflationary related pressures at our customers which have caused sales decreases, which resulted in impairment charges to goodwill and certain intangible assets in our All-Purpose reporting unit. We made revisions to the internal forecasts relating to all reporting units during the fourth quarter of 2022 and 2021 due primarily to the sale of our Prell<sup>®</sup> and Dryel<sup>®</sup> brands as well as the impact of rising costs associated with the manufacture and distribution of our products. Through our annual assessments conducted on December 31, 2022 and 2021, respectively, we concluded that the changes in circumstances in these reporting units triggered the need for a quantitative review of the carrying values of goodwill and certain intangible assets and resulted in impairment charges to each of our Detergent, All-Purpose, and Shampoo reporting units. During the year ended December 31, 2022 and 2021, respectively, we incurred the impairment charges to the following reporting units:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | Intangible Assets | **Goodwill** | **Total** | Intangible Assets | **Goodwill** | **Total** |
| All-Purpose | $2717 | $1710 | $4427 | $1084 | $593 | $1677 |
| Shampoo | 194 | - | 194 | 1483 | 760 | 2243 |
| Detergent | 551 | - | 551 | 130 | - | 130 |
|  | $3462 | $1710 | $5172 | $2697 | $1353 | $4050 |

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The Company used the income approach and market approach to determine the fair value of the reporting units that required significant judgments and estimates by management regarding several key inputs, including future cash flows consistent with management's strategic plans, sales growth rates and the selection of royalty rate and a discount rate, among others. Estimating sales growth rates requires significant judgment by management in areas such as future economic conditions, category and industry growth rates, product pricing, consumer tastes and preferences and future expansion expectations.

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**Note 7. Long-Term Debt and Line-of-Credit** UMB Loan Agreement

On July 1, 2020, we entered into a Loan and Security Agreement (as amended, the "UMB Loan Agreement") with UMB Bank, N.A. ("UMB"). Under the UMB Loan Agreement we obtained a $3,000 term loan, with equal monthly payments fully amortized over three years, which was repaid in full in the second quarter of 2022, and a revolving credit facility, with a maximum commitment of $4,000 bearing interest at the one-month term SOFR rate + 6.83% with a floor of 7.75%.

On January 23, 2023, we entered into the Consent and Seventh Amendment to Loan and Security Agreement, which consents to the sale of Scott's Liquid Gold<sup>®</sup> Wood Care and Scott's Liquid Gold<sup>®</sup> Floor Restore assets, updates defined terms and financial covenants under the UMB Agreement, and reduces the maximum commitment on the revolving credit facility to $500, contingent on a further reduction to $250 if a tax refund is received from the Internal Revenue Service.

The UMB Loan Agreement required compliance with affirmative, negative, and financial covenants, as determined on a monthly basis. The Company was in compliance with the UMB Loan Agreement covenants as of December 31, 2022.

As of December 31, 2022, our UMB term loan and UMB revolving credit facility had an outstanding balance of $0 and $2,504, respectively, with an all-in interest rate of 10.67% and 11.19%, respectively. UMB unamortized loan costs were $100 and $297 as of December 31, 2022 and 2021, respectively.

The UMB Loan Agreement was terminated on February 27, 2023 and the revolving credit facility was paid in full on February 28, 2023. The loans were secured by all of the assets of the Company and all of its subsidiaries.

La Plata Loan Agreement

On November 9, 2021, we entered into a loan and security agreement (the "La Plata Loan Agreement") with La Plata Capital, LLC ("La Plata"). Under the La Plata Loan Agreement, we obtained a $2,000 term loan that bears interest at 14% and a maturity date of November 9, 2023. Interest-only payments are required on a monthly basis beginning in January 2022 and ending on December 31, 2022. Beginning on January 1, 2023, monthly principal payments of $30 are required in addition to accrued and unpaid interest. All remaining unpaid principal and interest are fully due on November 9, 2023. We repaid $1,000 of principal against the La Plata Loan Agreement during the first quarter of 2022.

The La Plata Loan Agreement requires compliance with affirmative, negative, and financial covenants, as determined on a monthly basis. The La Plata Loan Agreement is secured by all of the assets of the Company and all of its subsidiaries, subordinate to the security of the UMB Loan Agreement. In conjunction with this agreement, we also entered into an intercreditor and subordination agreement with UMB and La Plata, effective November 9, 2021.

On January 25, 2023, we entered into the First Amendment to La Plata Loan Agreement (the "First Amendment"). The First Amendment states interest-only payments are required on a monthly basis through March 31, 2023. The First Amendment revises the timing of principal and interest payments and provides updated financial covenants.

On February 28, 2023, we entered into the Second Amendment to La Plata Loan Agreement (the "Second Amendment"). The Second Amendment provides an additional $250 through a promissory note with an interest rate of 15% per annum. Interest-only payments are required on a monthly basis through June 30, 2023, with monthly principal payments of $30 beginning on July 1, 2023. The Second Amendment also revised the date as of which certain financial covenants would be required to June 30, 2023.

The Company was in compliance with the La Plata Loan Agreement covenants as of December 31, 2022.

As of December 31, 2022, our La Plata term loan had an outstanding balance of $1,000. La Plata unamortized loan costs were $20 and $41 as of December 31, 2022 and 2021, respectively.

As of December 31, 2022, the total principal payments due on our outstanding debt were as follows:

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| | | | |
|:---|:---|:---|:---|
|  | **Revolving Credit Facility** | **Term Loan** | **Total** |
| 2023 | $2504 | $1000 | $3504 |

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**Note 8. Leases**

We have entered into a lease for our corporate headquarters with a remaining lease term of 8 years. This lease includes both lease and non-lease components, which are accounted for as a single lease component as we have elected the practical expedient to combine these components for all leases. As the lease does not provide an implicit rate, we calculated the right-of-use assets and lease liabilities using our secured incremental borrowing rate at the lease commencement date. We currently do not have any finance leases outstanding.

Information related to leases was as follows:

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| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| **Operating lease information:** |  |  |
| &nbsp;&nbsp;Operating lease cost | $400 | $411 |
| &nbsp;&nbsp;Operating cash flows from operating leases | 400 | 411 |
| &nbsp;&nbsp;Net assets obtained in exchange for new operating lease liabilities | - | - |
| &nbsp;&nbsp;Weighted average remaining lease term in years | 7.92 | 8.91 |
| &nbsp;&nbsp;Weighted average discount rate | 5.1% | 5.1% |

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Future minimum annual lease payments are as follows:

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| | |
|:---|:---|
| 2023 | $406 |
| 2024 | 413 |
| 2025 | 420 |
| 2026 | 427 |
| 2027 | 434 |
| Thereafter | 1305 |
| Total minimum lease payments | $3405 |
| Less imputed interest | (623) |
| Total operating lease liability | $2782 |

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**Note 9. Income Taxes** 

The provision for income tax attributable to continuing operations for the years ended December 31 is as follows:

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| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Current provision: |  |  |
| &nbsp;&nbsp;&nbsp;Federal | $63 | $39 |
| &nbsp;&nbsp;&nbsp;State | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current provision | 63 | 39 |
| Deferred provision: |  |  |
| &nbsp;&nbsp;&nbsp;Federal | - | 1040 |
| &nbsp;&nbsp;&nbsp;State | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deferred provision | - | 1040 |
| Provision: |  |  |
| &nbsp;&nbsp;&nbsp;Federal | 63 | 1079 |
| &nbsp;&nbsp;&nbsp;State | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total provision | $63 | $1079 |

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The current tax provision related to discontinued operations for the years ended December 31, 2022 and 2021 was $58 and $0, respectively. The deferred tax benefit related to discontinued operations for the years ended December 31, 2022 and 2021 was $(45) and $(256), respectively. These amounts are combined with amounts related to continuing operations on the consolidated statements of cash flows.

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Income tax expense at the statutory tax rate is reconciled to the overall income tax expense for the years ended December 31 as follows:

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| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Federal income tax at statutory rates | $(1845) | $(1442) |
| State income taxes, net of federal tax effect | (74) | (132) |
| Permanent differences | - | (6) |
| Rate difference in NOL Carryback | 57 | 11 |
| Other | 22 | (55) |
| Change in state tax rate | 149 | 57 |
| Change in valuation allowance | 1754 | 2646 |
| &nbsp;&nbsp;&nbsp;Provision for income taxes | $63 | $1079 |

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The effective tax rate for the years ended December 31, 2022 and 2021 was (0.7%) and (10.9%) respectively, which can differ from the statutory income tax rate due to various factors, including the establishment and change in a valuation allowance. During the year ended 2021, the Company established a valuation allowance on our deferred tax asset, which is reflected in income tax expense on the Consolidated Statements of Operations. The valuation allowance represents our determination that, more likely than not, we will be unable to realize the value of such assets at this time due to the uncertainty of future profitability.

ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is "more likely than not." Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. The net deferred tax assets and liabilities as of December 31, 2022 and 2021 are comprised of the following:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Deferred tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;Net operating loss carryforwards | $1659 | $531 |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 20 | 30 |
| &nbsp;&nbsp;&nbsp;Inventories | 231 | 410 |
| &nbsp;&nbsp;&nbsp;Accrued vacation and bonus | 67 | 161 |
| &nbsp;&nbsp;&nbsp;Intangibles and Goodwill | 2622 | 1771 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | 610 | 697 |
| &nbsp;&nbsp;&nbsp;Other | 231 | 168 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deferred tax assets | 5440 | 3768 |
| Deferred tax liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | (546) | (629) |
| &nbsp;&nbsp;&nbsp;Prepaid expenses | (22) | (21) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deferred tax liabilities | (568) | (650) |
| Net deferred tax asset, before allowance | 4872 | 3118 |
| Valuation allowance | (4872) | (3118) |
| Net deferred tax asset | $- | $- |

---

Net operating losses and tax credit carryforwards as of December 31, 2022 are as follows:

---

| | | |
|:---|:---|:---|
|  |  | **Expiration Years** |
| Net operating losses, state (After December 31, 2017) | $2452 | Do not expire |
| Tax credits, federal | $8 | 2042 |

---

Accounting for uncertainty in income taxes is based on a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We recognize in our Consolidated Financial Statements only those tax positions that are more-likely-than-not to be sustained as of the adoption date, based on the technical merits of the position. Each year we perform a comprehensive review of our material tax positions.

A valuation allowance has been provided as there is uncertainty that the deferred tax assets will be realized. The valuation allowance as of December 31, 2022, primarily relates to net operating loss carryforwards, goodwill, and intangible assets.

Our policy is to recognize interest and penalties related to uncertain tax benefits in income tax expense. As we had no uncertain tax benefits during 2022 and 2021, we had no accrued interest or penalties related to uncertain tax positions in either year.

------

We and our subsidiaries are subject to the following material taxing jurisdictions: United States and Colorado. The tax years that remain open to examination by the Internal Revenue Service are 2019 and years thereafter. The tax years that remain open to examination by the State of Colorado are 2018 and years thereafter.

**Note 10. Shareholders' Equity** 

In 2015, we adopted, and shareholders approved, an equity incentive plan for our employees, officers and directors (the "2015 Plan").

On January 18, 2022, we granted 25 RSUs to an employee (the "2022 Individual Employee Grant") with a grant date fair value of $10. The 2022 Individual Employee Grant vested one-third on the initial grant date, and the remaining two-thirds will vest on each anniversary of the grant date. On March 2, 2022, we granted 15 shares of restricted stock to one executive all of which vested on the grant date with a fair value of $18.

On November 9, 2021, we awarded 107 RSUs to executives and employees (the "2021 Employee Grant"). The 2021 Employee Grant vests in thirds on each anniversary of the grant date.

During 2022 and 2021, we did not grant any options to acquire shares of our common stock.

Compensation cost related to stock options recognized in operating results (included in general and administrative expenses) totaled $10 and $54 for the years ended December 31, 2022 and 2021, respectively. Approximately $0 of total unrecognized compensation costs related to non-vested stock options is expected to be recognized over the next two years, depending on the vesting provisions of the options. There was no tax benefit from recording the non-cash expense as it relates to the options granted to employees, as these were qualified stock options which are not normally tax deductible.

Compensation cost related to RSUs totaled $79 and $56 for the year ended December 31, 2022 and 2021, respectively. Approximately $145 of total unrecognized compensation costs related to non-vested RSUs is expected to be recognized over the next three years.

Stock option activity under the 2015 Plan is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of Options** | **Weighted Average Exercise Price** | **Weighted Average Remaining Contractual Life** | **Aggregate Intrinsic Value** |
| **2015 Plan** |  |  |  |  |
| Maximum number of shares under the plan | 2000 |  |  |  |
| Outstanding, December 31, 2020 | 470 | $1.80 | 3.3 years | 125 |
| &nbsp;&nbsp;Granted | - | $- |  |  |
| &nbsp;&nbsp;Exercised | (45) | $1.26 |  |  |
| &nbsp;&nbsp;Cancelled/Expired | (118) | $2.17 |  |  |
| Outstanding, December 31, 2021 | 307 | $1.80 | 2.6 years | 45 |
| Exercisable, December 31, 2021 | 289 | $1.76 | 2.7 years | 45 |
| Available for issuance, December 31, 2021 | 1530 |  |  |  |
| &nbsp;&nbsp;Granted | - | $- |  |  |
| &nbsp;&nbsp;Exercised | - | $- |  |  |
| &nbsp;&nbsp;Cancelled/Expired | 158 | $2.08 |  |  |
| Outstanding, December 31, 2022 | 149 | $1.42 | 2.7 years | - |
| Exercisable, December 31, 2022 | 149 | $1.32 | 2.7 years | - |
| Available for issuance, December 31, 2022 | 1851 |  |  |  |

---

------

A summary of additional information related to the options outstanding as of December 31, 2022 under the 2015 Plan is as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Range of Exercise Prices** | **Number of Options<br>(in thousands)** | **Weighted Average Remaining Contractual Life** | **Weighted Average Exercise Price** |
| **2015 Plan** |  |  |  |
| $1.20-$1.25 | 76 | 2.7 years | $1.25 |
| $1.26-$1.38 | 40 | 3.9 years | $1.26 |
| $1.80-$2.25 | 33 | 1.4 years | $2.02 |
| &nbsp;&nbsp;&nbsp;Total | 149 | 2.7 years | $1.42 |

---

Under our 2015 Plan, we have 1,706 shares available for future equity grants, which comprises our maximum shares available under the plan less all options and RSUs granted.

We have an Employee Stock Ownership Plan to provide retirement benefits for our employees which was terminated on December 1, 2021. At December 31, 2022 and 2021, a total of 0 and 14 shares of our common stock, respectively, have been allocated and earned by our employees.

**Note 11. Earnings per Share** 

Per share data is determined by using the weighted average number of common shares outstanding. Common equivalent shares are considered only for diluted earnings per share, unless considered anti-dilutive. Common equivalent shares, determined using the treasury stock method, result from stock options with exercise prices that are below the average market price of the common stock.

Basic earnings per share include no dilution and are computed by dividing income available to common shareholders by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflect the potential of securities that could share in our earnings.

A reconciliation of the weighted average number of common shares outstanding (in thousands) for the years ended December 31 is as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Common shares outstanding, beginning of the period | 12727 | 12618 |
| Weighted average common shares issued | 31 | 60 |
| Weighted average number of common shares outstanding | 12758 | 12678 |
| Dilutive effect of common share equivalents | - | - |
| Diluted weighted average number of common shares outstanding | 12758 | 12678 |

---

Common stock equivalents (in thousands) that have been excluded from the calculation of earnings per share as of December 31 because they would have been anti-dilutive are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2021** | **2021** |
| Stock options |  | 148 |  | 188 |

---

**Note 12. Segment Information** 

Segments

We operate in two different segments: household products and health and beauty care products. We have chosen to organize our business around these segments based on differences in the products sold. Accounting policies for our segments are the same as those described in Note 1. We evaluate segment performance based on segment income or loss before income taxes.

------

The following provides information on our segments as of and for the years ended December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** |
|  | **Household Products** | **Health and Beauty Care Products** | **Corporate** | **Total** |
| Net sales | $11763 | $4807 | $- | $16570 |
| Loss from operations | (6574) | (1742) | - | (8316) |
| Identifiable assets | 5968 | 3730 | 1033 | 10731 |
| Capital and intangible asset expenditures | - | - | 142 | 142 |
| Depreciation and amortization | 487 | 135 | - | 622 |
|  | **2021** | **2021** | **2021** | **2021** |
|  | **Household Products** | **Health and Beauty Care Products** | **Corporate** | **Total** |
| Net sales | $14152 | $15590 | $- | $29742 |
| Loss from operations | (3963) | (2562) | - | (6525) |
| Identifiable assets | 13207 | 6398 | 1264 | 20869 |
| Capital and intangible asset expenditures | - | - | 469 | 469 |
| Depreciation and amortization | 1202 | 618 | - | 1820 |

---

Corporate assets noted above are comprised of our income tax receivable and internal-use software.

Customers

Net sales to significant customers were the following for the years ended December 31, 2022 and 2021, respectively:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Walmart | $7111 | $11102 |
| Ulta | $146 | $6764 |

---

Outstanding accounts receivable from significant customers represented the following percentages of our total accounts receivable as of December 31, 2022 and 2021, respectively:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Walmart | 32.7% | 51.7% |
| Ulta | 0.0% | 2.9% |

---

A loss of any of our significant customers could have a material adverse effect on us because it is uncertain whether our consumer base served by these customers would purchase our products at other retail outlets. No long-term contracts exist between us and our other significant customers.

Geographic Area Information

Information about continuing operations in different geographic areas is as follows for the years ended December 31, 2022 and 2021, respectively:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Net sales |  |  |
| &nbsp;&nbsp;United States | $15776 | $26730 |
| &nbsp;&nbsp;PRC | 673 | 2448 |
| &nbsp;&nbsp;Canada | 121 | 564 |
| &nbsp;&nbsp;&nbsp;Total | $16570 | $29742 |

---

------

All net sales to the PRC were to HK NFS, our former exclusive distributor. There were no long-lived assets held outside the United States as of December 31, 2022 and 2021, respectively.

**Note 13. Commitments and Contingencies**

As of December 31, 2022, the Company had no material commitments or contingencies.

**Note 14. Subsequent Events**

Sale of Scott's Liquid Gold<sup>®</sup> brand

On January 23, 2023, we entered into an asset purchase agreement with a buyer, pursuant to which we agreed to sell all of our right, title and interest in and to certain assets of the Scott's Liquid Gold<sup>®</sup> Wood Care and Scott's Liquid Gold<sup>®</sup> Floor Restore product lines. The total consideration paid to us was $800, plus an amount equal to the value of the Scott's Liquid Gold<sup>®</sup> Wood Care and Scott's Liquid Gold<sup>®</sup> Floor Restore inventory of $1,100, subject to post-close adjustment. Additionally, the buyer will pay a royalty equal to 2% of net sales for four years after the closing date. The assets sold did not meet all criteria to be classified as assets held for sale as of the balance sheet date, and as such are not presented and disclosed as assets held for sale in the Consolidated Financial Statements. Net sales of Scott's Liquid Gold<sup>®</sup> Wood Care and Floor Restore were $4,075 and $5,028 for the years ended December 31, 2022 and 2021, respectively.

In conjunction with the sale of the Scott's Liquid Gold<sup>®</sup>brand, the Company may continue to use names "Scott's Liquid Gold" and "SLG" for up to one year following the closing date of the agreement on January 23, 2023. Following this transitional name period, the Company will only be able to use the aforementioned names in connection with retaining records and other historical or archived documents and any use required by or permitted as a fair use or otherwise under applicable law.

Entry into employment agreements

Effective as of March 31, 2023, Tisha Pedrazzini, President and Principal Executive Officer, and David Arndt, Chief Financial Officer, Principal Accounting Officer, Treasurer, and Corporate Secretary, entered into employment agreements with the Company.

The employment agreements for Ms. Pedrazzini and Mr. Arndt provide for annual salaries of $240 and $205, respectively and have the potential to earn bonuses for each individual based on individual and/or Company's performance. The initial term of the agreements are one year and will renew automatically for 120 day periods thereafter unless either party provides 90 days' notice on non-renewal.

**ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.** 

None.

**ITEM 9A. CONTROLS AND PROCEDURES.** 

**Disclosure Controls and Procedures** 

As of December 31, 2022, we conducted an evaluation, under the supervision and with the participation of our President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our President and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of December 31, 2022.

------

**Management's Report on Internal Control over Financial Reporting** 

Management is responsible for establishing and maintaining adequate internal control over financial reporting. A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management, including our President and Chief Financial Officer, has conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of December 31, 2022, based on the criteria for effective internal control described in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its assessment, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2022.

This Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permits us to provide only management's report in this Report.

Management's report shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

**Remediation of Material Weakness**

A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant's financial statements will not be prevented or detected on a timely basis. The material weakness that we previously reported was identified as of June 30, 2022 related to the review of the impairment assessment of goodwill prepared by a third-party firm. The deficiencies in internal control over financial reporting were detailed in Item 4 of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.

During the fourth quarter of 2022, management of the Company implemented measures that it believes are sufficient to fully remediate each of the deficiencies resulting in the material weakness, which measures are described in Item 4 of the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022. During the fourth quarter of fiscal 2022, we successfully completed the testing necessary to conclude that the material weakness has been remediated. We will continue to monitor the effectiveness of these and other processes, procedures, and controls and will make any further changes that management determines to be appropriate.

**Changes in Internal Control over Financial Reporting** 

Other than the remediation of the material weakness referenced above, there was no change in our internal control over financial reporting during the quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

**ITEM 9B. OTHER INFORMATION.** 

None.

**ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.**

None.

------

**PART III**

(in thousands)

For Part III, except as set forth below, the information set forth in our definitive Proxy Statement for our Annual Meeting of Shareholders to be filed within 120 days after December 31, 2022, hereby is incorporated by reference into this Report.

**ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.** 

**ITEM 11. EXECUTIVE COMPENSATION.** 

**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.** 

**ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.** 

Mark Goldstein

On April 29, 2021, the Company announced that Mark E. Goldstein, the President and Chief Executive Officer of the Company and a member of the Board of Directors, retired effective as of April 26, 2021. In connection with Mr. Goldstein's retirement, the Company and Mr. Goldstein entered into a Separation Agreement, Waiver and Release (the "Separation Agreement"), pursuant to which the Company will pay Mr. Goldstein $720 in severance payments (equal to 18 months base salary) over a period of 30 months and reimbursement for the costs of continuing health benefits for a period of 18 months.

**ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.** 

**PART IV** 

**ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.** 

**Consolidated Financial Statements:** 

Report of Independent Registered Public Accounting Firm (Plante & Moran, PLLC; Denver, Colorado; PCAOB ID #166)

Consolidated Statements of Operations for the years ended December 31, 2022 and 2021

Consolidated Balance Sheets as of December 31, 2022 and 2021

Consolidated Statements of Shareholders' Equity for the years ended December 31, 2022 and 2021

Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021

Notes to Consolidated Financial Statements

**Exhibits**

---

| | |
|:---|:---|
| **Exhibit Number** | **Document** |
| <br>3.1 | <br>[<u>Restated Articles of Incorporation, as amended and restated through May 1, 1996, incorporated by reference to Exhibit 3.1 of our Annual Report on Form 10-KSB for the year ended December 31, 2007.</u>](https://www.sec.gov/Archives/edgar/data/88000/000103570408000120/d53455exv3w1.htm) |
| <br>3.2 | <br>[<u>Bylaws, as amended through July 13, 2011, incorporated by reference to Exhibit 99.1 of our Current Report on Form 8-K filed on July 19, 2011.</u>](https://www.sec.gov/Archives/edgar/data/88000/000119312511191401/dex991.htm) |
| <br>4.1 | <br>[<u>Description of Registrant's Securities, incorporated by reference to Exhibit 4.1 of our Annual Report on Form 10-K for the year ended December 31, 2020.</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459021016166/slgd-ex41_8.htm) |
| <br>10.1\* | <br>[<u>Form of Indemnification Agreement for executive officers and directors incorporated by reference to Exhibit 10.3 of the Company's Annual Report on Form 10-K for the year ended December 31, 2012.</u>](https://www.sec.gov/Archives/edgar/data/88000/000119312513133774/d445632dex103.htm) |
| <br>10.2\* | <br>[<u>Employment Agreement, dated as of March 26, 2014, between Scott's Liquid Gold-Inc. and Mark Goldstein incorporated by reference to Exhibit 10.5 of the Company's Annual Report on Form 10-K, filed on March 28, 2014.</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459014001031/slgd-ex10_20131231291.htm) |

---

------

---

| | |
|:---|:---|
| **Exhibit Number** | **Document** |
| <br>10.3\* | <br>[<u>Scott's Liquid Gold-Inc. 2015 Equity and Incentive Plan incorporated by reference to Appendix A to the Company's Definitive Proxy Statement for its annual meeting of shareholders held on June 4, 2015 filed on April 27, 2015.</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459015002869/slgd-def14a_20150604.htm#APPENDIX_A) |
| <br>10.4\* | <br>[<u>Form of 2015 Equity and Incentive Plan Incentive Stock Option Agreement incorporated by reference to Exhibit 10.24 of the Company's Annual Report on Form 10-K, filed on March 30, 2016.</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459016015579/slgd-ex1024_239.htm) |
| <br>10.5\* | <br>[<u>Form of 2015 Equity and Incentive Plan Non-Qualified Stock Option Agreement incorporated by reference to Exhibit 10.25 of the Company's Annual Report on Form 10-K, filed on March 30, 2016.</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459016015579/slgd-ex1025_240.htm) |
| <br>10.6\* | <br>[<u>Form of Executive Officer RSU Award Agreement, dated October 2, 2020 incorporated by reference to Exhibit 10.11 of the Company's Annual Report on Form 10-K, filed on March 31, 2022.</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459022012994/slgd-ex1011_446.htm) |
| <br>10.7\* | <br>[<u>Employee Agreement, effective March 31, 2023, by and between Scott's Liquid Gold-Inc. and Tisha Pedrazzini</u>](slgd-ex10_7.htm) |
| <br>10.8\* | <br>[<u>Employment Agreement, effective March 31, 2023, by and between Scott's Liquid Gold-Inc. and David Arndt</u>](slgd-ex10_8.htm) |
| <br>10.9 | <br>[<u>Distribution Agreement, effective January 1, 2018, between Neoteric Cosmetics, Inc. and HK NFS Limited, incorporated by reference to Exhibit 10.25 of the Company's Annual Report on Form 10-K, filed on April 2, 2018.</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459018007324/slgd-ex1025_112.htm) |
| <br>10.10 | <br>[<u>Asset Purchase Agreement, by and among SLG Chemicals, Inc., a wholly owned subsidiary of Scott's Liquid Gold-Inc., Scott's Liquid Gold-Inc. and Paramount Chemical Specialties, Inc., dated October 1, 2019, incorporated by reference to Exhibit 2.1 of the Company's Current Report on Form 8-K filed on October 2, 2019.</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459019036271/slgd-ex21_7.htm) |
| 10.11 | [<u>Asset Purchase Agreement, by and between Scott's Liquid Gold-Inc. and AFAM Concept, Inc. dated December 15, 2022</u>](slgd-ex10_11.htm) |
| 10.12 | [<u>Asset Purchase Agreement, by and between Scott's Liquid Gold-Inc. and Nakoma Brands dated January 23, 2023</u>](slgd-ex10_12.htm) |
| <br>10.13 | <br>[<u>Loan and Security Agreement, dated July 1, 2020, UMB Bank, N.A., Scott's Liquid Gold-Inc., SLG Chemicals, Inc., and Neoteric Cosmetics, Inc., incorporated by reference to Exhibit 2.2 of the Company's Current Report on Form 8-K filed on July 1, 2020</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459020031518/slgd-ex22_34.htm). |
| <br>10.14 | <br>[<u>First Amendment to Loan and Security Agreement, dated March 26, 2021, UMB Bank, N.A., Scott's Liquid Gold-Inc., SLG Chemicals, Inc., and Neoteric Cosmetics, Inc., incorporated by reference to Exhibit 10.22 of the Company's Annual Report on Form 10-K, filed on March 29, 2021.</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459021016166/slgd-ex1022_584.htm) |
| <br>10.15 | <br>[<u>Second Amendment to Loan and Security Agreement, dated June 25, 2021, UMB Bank, N.A., Scott's Liquid Gold-Inc., SLG Chemicals, Inc., and Neoteric Cosmetics, Inc., incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed on June 25, 2021.</u>](https://www.sec.gov/Archives/edgar/data/0000088000/000156459021034572/slgd-ex101_6.htm) |
| <br>10.16 | <br>[<u>Third Amendment to Loan and Security Agreement, dated August 13, 2021, UMB Bank, N.A., Scott's Liquid Gold-Inc., SLG Chemicals, Inc., and Neoteric Cosmetics, Inc., incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q filed on August 13, 2021</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459021044133/slgd-ex101_148.htm).  |
| <br>10.17 | <br>[<u>Consent and Fourth Amendment to Loan and Security Agreement, dated November 15, 2021, UMB Bank, N.A., Scott's Liquid Gold-Inc., SLG Chemicals, Inc., and Neoteric Cosmetics, Inc., incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q filed on November 15, 2021.</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459021056784/slgd-ex101_255.htm) |
| 10.18 | [<u>Fifth Amendment to Loan and Security Agreement, dated August 10, 2022, UMB Bank, N.A., Scott's Liquid Gold-Inc., SLG Chemicals, Inc., and Neoteric Cosmetics, Inc., incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q filed on August 12, 2022.</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459022029313/slgd-ex101_283.htm) |
| 10.19 | [<u>Consent and Sixth Amendment to Loan and Security Agreement, dated December 15, 2022, UMB Bank, N.A., Scott's Liquid Gold-Inc., SLG Chemicals, Inc., and Neoteric Cosmetics, Inc., incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed on December 21, 2022.</u>](https://www.sec.gov/Archives/edgar/data/88000/000095017022026865/slgd-ex10_1.htm) |
| 10.20 | [<u>Consent and Seventh Amendment to Loan and Security Agreement, dated January 23, 2023, UMB Bank, N.A., Scott's Liquid Gold-Inc., SLG Chemicals, Inc., and Neoteric Cosmetics, Inc., incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed on January 27, 2023.</u>](https://www.sec.gov/Archives/edgar/data/88000/000095017023001280/slgd-ex10_1.htm) |
| <br>10.21 | <br>[<u>Loan Agreement, dated November 9, 2021, by and between La Plata Capital, LLC, and Scott's Liquid Gold-Inc., incorporated by reference to Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q filed on November 15, 2021.</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459021056784/slgd-ex102_254.htm) |
| <br>10.22 | [<u>Security Agreement, dated November 9, 2021, by and between La Plata Capital, LLC, and Scott's Liquid Gold-Inc., incorporated by reference to Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q filed on November 15, 2021.</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459021056784/slgd-ex103_253.htm) |

---

------

---

| | |
|:---|:---|
| **Exhibit Number** | **Document** |
| 10.23 | [<u>First Amendment to La Plata Loan Agreement, dated January 25, 2023, incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed January 27, 2023.</u>](https://www.sec.gov/Archives/edgar/data/88000/000095017023001280/slgd-ex10_2.htm) |
| 10.24 | [<u>Second Amendment to La Plata Loan Agreement, dated February 28, 2023, incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed February 28, 2023.</u>](https://www.sec.gov/Archives/edgar/data/88000/000095017023005887/slgd-ex10_1.htm) |
| <br>21 | <br>[<u>List of Subsidiaries incorporated by reference to Exhibit 21 of the Company's Annual Report on Form 10-K for the year ended December 31, 2014.</u>](https://www.sec.gov/Archives/edgar/data/88000/000156459015002120/slgd-ex21_20141231207.htm) |
| <br>23.1 | <br>[<u>Consent of Plante & Moran, PLLC.</u>](slgd-ex23_1.htm) |
| <br>24 | <br>[<u>Powers of Attorney.</u>](slgd-ex24.htm) |
| <br>31.1 | <br>[<u>Rule 13a-14(a) Certification of the President.</u>](slgd-ex31_1.htm) |
| <br>31.2 | <br>[<u>Rule 13a-14(a) Certification of the Chief Financial Officer.</u>](slgd-ex31_2.htm) |
| <br>32.1\*\* | <br>[<u>Section 1350 Certification.</u>](slgd-ex32_1.htm) |
| <br>101.INS | <br>Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
| <br>101.SCH | <br>Inline XBRL Taxonomy Extension Schema Document. |
| <br>101.CAL | <br>Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| <br>101.LAB | <br>Inline XBRL Taxonomy Extension Label Linkbase Document. |
| <br>101.PRE | <br>Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| <br>101.DEF | <br>Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| <br>104 | <br>Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

\* Management contract or compensatory plan or arrangement.

\*\* Furnished, not filed.

**ITEM 16. FORM 10-K SUMMARY.**

None.

------

**SIGNATURES** 

Pursuant to the requirements 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.

---

| | |
|:---|:---|
| SCOTT'S LIQUID GOLD-INC.,<br>a Colorado corporation | SCOTT'S LIQUID GOLD-INC.,<br>a Colorado corporation |
| By: | /s/ Tisha Pedrazzini |
|  | Tisha Pedrazzini, President<br>(Principal Executive Officer) |
| By: | /s/ David M. Arndt |
|  | David M. Arndt, Chief Financial Officer |
|  | (Principal Financial and Chief Accounting Officer) |
| Date: | March 29, 2023 |

---

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.

---

| | | |
|:---|:---|:---|
| Date | Name and Title | Signature |
| March 29, 2023 | Tisha Pedrazzini, |  |
|  | Director and President | /s/ Tisha Pedrazzini |
| March 29, 2023 | Rimmy R. Malhotra, Director | Tisha Pedrazzini for herself and as |
| March 29, 2023 | Daniel J. Roller, Director | Attorney-in-Fact for the named directors  |
|  |  | who constitute all of the members of the  |
|  |  | the Board of Directors and for the named officers |

---

------

## Ex-10

**EXHIBIT 10.7**

**EMPLOYMENT AGREEMENT**

This Employment Agreement (this "**Agreement**"), effective as of March 31, 2023 (the "**Effective Date**"), is by and between **Scott's Liquid Gold – Inc.**, a Colorado corporation (the "**Company**"), and **Tisha Pedrazzini** an individual ("**Executive**").

**PART ONE – DEFINITIONS**

**Definitions**. For purposes of this Agreement, the following definitions will be in effect:

"**Affiliates**" means all persons and entities directly or indirectly controlling, controlled by or under common control with the entity specified, where control may be by management authority, contract or equity interest.

"**Board**" means the Board of Directors of the Company or the Compensation Committee thereof (or any other committee subsequently granted authority with respect to compensatory matters by the Board), subject to Section 14 below.

"**Change of Control**" means a change in the ownership or control of the Company effected through any of the following transactions: (i) a merger, consolidation or reorganization approved by the Company's stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Company's outstanding voting securities immediately prior to such transaction, (ii) any stockholder-approved sale, transfer or other disposition of all or substantially all of the Company's assets, (iii) the acquisition, directly or indirectly, by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the "**Exchange Act**")) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's stockholders; or (iv) a change in the composition of the Board over a period of twelve (12) consecutive months or less such that a majority of the Board members cease, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination. Notwithstanding the foregoing, however, in any circumstance or transaction in which compensation payable pursuant to this Agreement would be subject to the tax under Section 409A of the Code if the foregoing definition of "Change of Control" were to apply, but would not be so subject if the term "Change of Control" were defined herein to mean a "change in control event" within the meaning of Treasury Regulation § 1.409A-3(i)(5), then "Change of Control" means, but only to the extent necessary to prevent such compensation from becoming subject to the tax under Section 409A of the Code, a transaction or circumstance that satisfies the requirements of both (1) a Change of Control under the applicable clauses (i) through (iv) above, and (2) a "change in control event" within the meaning of Treasury Regulation Section § 1.409A-3(i)(5).

"**Code**" means the Internal Revenue Code of 1986, as amended from time to time, and the Treasury regulations and administrative guidance promulgated thereunder.

"**Company**" means, unless the context otherwise requires, Scott's Liquid Gold - Inc., a Colorado corporation, and all of its subsidiaries.

------

"**Compensation Committee**" means the Compensation Committee of the Board.

"**Employment Period**" means the period beginning on March 31, 2023 and ending on March 31, 2024.

"**Good Reason**" shall mean the occurrence of any of the following without Executive's consent: (i) a material reduction of Executive's duties or responsibilities, relative to Executive's duties or responsibilities as in effect immediately prior to such reduction; (ii) a reduction of more than ten percent (10%) in Executive's Base Salary as in effect immediately prior to such reduction; (iv) the relocation of Executive to a facility or a location more than twenty-five (25) miles from the Company's present location in Greenwood Village, Colorado; provided, however, that a relocation that is generally applicable to all executives of the Company shall not constitute "Good Reason." A termination of employment by Executive shall not be deemed to be for Good Reason unless (A) Executive gives the Company written notice describing the event or events which are the basis for such termination within 30 days after the event or events occur, (B) such grounds for termination (if susceptible to correction) are not corrected by the Company within 30 days of the Company's receipt of such notice (the "**Correction Period**"), and (C) Executive terminates Executive's employment no later than 30 days following the Correction Period.

"**Termination for Cause**" shall mean the Company's termination of Executive's employment for any of the following reasons: (i) Executive's commission of any act of fraud, embezzlement or dishonesty, (ii) the arrest or conviction of Executive, or the entry of a plea of nolo contendere by Executive, for a felony; (iii) Executive's unauthorized use or disclosure of any confidential information or trade secrets of the Company, (iv) the disclosing or using of any material confidential information of Company at any time by Executive, except as required in connection with her duties to the Company, (v) Executive's violation of a published Company policy which stipulates the Executive may be terminated by the Company for cause; or (vi) Executive's continued failure, in the reasonable good faith determination of the Board (excluding Executive therefrom), to perform the major duties, functions and responsibilities of Executive's position after written notice from the Company identifying the deficiencies in Executive's performance and a reasonable cure period of not less than thirty (30) days.

**PART TWO – TERMS AND CONDITIONS OF EMPLOYMENT**

The following terms and conditions will govern Executive's employment with the Company throughout the Employment Period and will also, to the extent expressly indicated below, remain in effect following Executive's cessation of employment with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Employment and Duties.** During the Employment Period, Executive will serve as the President and will report to the Board. Executive will have such duties and responsibilities as are commensurate with such position and such other duties and responsibilities commensurate with such position (including with respect to the Company's subsidiaries) as are from time to time assigned to Executive by the Board (or a committee thereof). During the Employment Period, Executive will devote her full business time, energy and skill to the performance of her duties and responsibilities hereunder, provided the foregoing will not prevent Executive from (a) serving as a non-executive director on the board of directors of not more than three non-profit organizations or other companies, (b) participating in charitable, civic, educational, professional, community or industry affairs, (c) managing her and her family's personal investments, including in an advisory capacity related to current or potential investments or (d) such other activities approved by the Board from time to time; provided, that such activities individually or in the aggregate do not interfere or conflict with Executive's duties and responsibilities hereunder, violate applicable law, or create a potential business or fiduciary conflict.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **OMITTED**

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.** **Term.** The term of this Agreement shall run for a period of 1-year from the Effective Date through March 31, 2024 (such period, the "**Term**"), and may be terminated earlier as contemplated by Section 8.A. Termination of this Agreement due to its non-renewal shall not constitute a Termination for Cause or a resignation by Executive for Good Reason. This agreement will automatically renew, after the initial Term, in increments of 120 days, if notice is not delivered by either party 90 days prior to its expiration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.** **Compensation; Additional Incentives.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.<u>Base Salary</u>. Executive's base salary (the "**Base Salary**") will be paid at the rate of $20,000 monthly ($240,000 annualized) during the Term. Executive's Base Salary may be increased by the Compensation Committee or Board in their sole discretion, but shall not be decreased more than 10% without Executive's consent. Executive's Base Salary will be paid at periodic intervals in accordance with the Company's normal payroll practices for salaried employees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.<u>Bonus Opportunities</u>. Subject to approval by the Compensation Committee and the Company having adequate available cash as determined by the Board in its sole discretion, Executive will be eligible for a bonus payment with a target range of 25% to 75% of her base salary during the initial Term (a "**Performance Bonus**"). The Performance Bonus, if any, will be paid at the same time as annual performance bonuses are paid to all Company employees, provided that Executive must be employed as of the date of payment of any Performance Bonus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.<u>Withholding</u>. The Company may deduct and withhold, from the compensation payable and benefits provided to Executive hereunder, any and all applicable federal, state, local and other taxes and any other amounts required to be deducted or withheld by the Company under applicable statute or regulation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.<u>Clawback Policy</u>. To the extent that any compensation paid or payable pursuant to this Agreement is considered "incentive-based compensation," including within the meaning and subject to the requirements of Section 10D of the Exchange Act, such compensation shall be subject to potential forfeiture or recovery by the Company in accordance with any compensation recovery policy adopted by the Board or any committee thereof, including in response to the requirements of Section 10D of the Exchange Act and any implementing rules and regulations thereunder adopted by the Securities and Exchange Commission or any national securities exchange on which the Company's common stock is then listed. This Agreement may be unilaterally amended by the Company to comply with any such compensation recovery policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.** **Equity Compensation.** Executive will be eligible for additional equity grants as determined by the Board or the Compensation Committee in their sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.** **Expense Reimbursement; Fringe Benefits; Paid Time Off (PTO).**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.Executive will be entitled to reimbursement from the Company for customary, ordinary and necessary business expenses incurred by Executive in the performance of Executive's duties hereunder, provided that Executive's entitlement to such reimbursements shall be conditioned upon Executive's provision to the Company of vouchers, receipts and other substantiation of such expenses in accordance with Company policies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.During the Employment Period, Executive will be eligible to participate in any group life insurance plan, group medical and dental insurance plan, accidental death and dismemberment plan, short-term disability program and other employee benefit plans, including profit sharing plans, cafeteria benefit programs and stock purchase and option plans, which are made available to executives of the Company and for which Executive qualifies under the terms of such plan or plans.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.Executive shall be entitled to vacation and paid time off (PTO) in accordance with the Company's policies as in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.** **Executive Covenants.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.<u>Transition and Other Assistance</u>. During the 90 days following the termination of the Employment Period, Executive will take all actions the Company may reasonably request to maintain the Company's business, goodwill and business relationships and to assist with transition matters, all at Company expense. In addition, upon the receipt of notice from the Company (including outside counsel), during the Employment Period and thereafter, Executive will respond and provide information with regard to matters of which she has knowledge as a result of her employment with the Company, and will provide assistance to the Company and its representatives in the defense or prosecution of any claims that may be made by or against the Company, to the extent that such claims may relate to the period of Executive's employment with the Company, all at Company expense. During the Employment Period and thereafter, Executive shall promptly inform the Company if she becomes aware of any lawsuits involving such claims that may be filed or threatened against the Company. During the Employment Period and thereafter, Executive shall also promptly inform the Company (to the extent she is legally permitted to do so) if she is asked to assist in any investigation of the Company (or its actions), regardless of whether a lawsuit or other proceeding has then been filed against the Company with respect to such investigation, and will not do so unless legally required. The Company will pay Executive at a rate of $200 per hour, plus reasonable expenses, in connection with any actions requested by the Company under this paragraph following any termination of Executive's employment, with such amounts being paid to Executive at periodic intervals in accordance with the Company's normal payroll practices for salaried employees. Executive's obligations under this paragraph shall be subject to the Company's reasonable cooperation in scheduling in light of Executive's other obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.<u>Non-Solicitation</u>. During the Employment Period and for a period of 12 months after Executive's last day of employment with the Company, Executive will not (i) directly or indirectly solicit or induce any employee of the Company to terminate or negatively alter her or her relationship with the Company or (ii) directly or indirectly solicit the business of any client or customer of the Company (other than on behalf of the Company) or (iii) directly or indirectly induce any client, customer, supplier, vendor, consultant or independent contractor of the Company to terminate or negatively alter his, her or its relationship with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.<u>Survival of Provisions</u>. The obligations contained in this Section 7 will survive the termination of Executive's employment with the Company and will be fully enforceable thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.** **Termination of Employment.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.<u>General</u>. Subject to Section 8.D, Executive's employment with the Company is "at-will" and may be terminated at any time for any reason (or no reason) by either Executive or the Company providing 60-days written notice of such termination to the other party, which will also result in the Term ending.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.<u>Death and Permanent Disability</u>. Upon termination of Executive's employment with the Company due to death or permanent disability during the Term, the employment relationship created pursuant to this Agreement will immediately terminate, the Term will end and amounts will only be payable under this Agreement as specified in this Section 8.B. Should Executive's employment with the Company terminate by reason of Executive's death or permanent disability during the Employment Period, Executive, or Executive's estate, shall be entitled to receive:

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)the unpaid Base Salary earned by Executive pursuant to Section 4.A for services rendered through the date of Executive's death or permanent disability, as applicable, payable in accordance with the Company's normal payroll practices for terminated salaried employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)reimbursement of all expenses for which Executive is entitled to be reimbursed pursuant to Section 6, payable in accordance with the Company's normal reimbursement practices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)the right to continue health care benefits under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, ("**COBRA**") at Executive's cost, to the extent required and available by law and subject to the Company continuing to maintain a group health plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)any accrued but unpaid Performance Bonus pursuant to Section 4.B, payable at such time as provided in Section 4.B;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)the limited death, disability, and income continuation benefits provided under Section 6.B, if any, will be payable in accordance with the terms of the plans pursuant to which such limited death or disability benefits are provided.

Compensation and benefits provided pursuant to Section 8.B.(i) through (v) are collectively referred to as the "**Termination Benefits**."

If Executive's death occurs before payment of any earned Performance Bonus, the applicable payments will be made to the Executive's estate. For purposes of this Agreement, Executive will be deemed "permanently disabled" if Executive is so characterized pursuant to the terms of the Company's disability policies or programs applicable to Executive from time to time, or if no such policy is applicable, if the Compensation Committee determines, in its sole discretion, that Executive is unable to perform the essential functions of Executive's duties for physical or mental reasons for ninety (90) days in any twelve-month period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.<u>Termination for Cause; Resignation without Good Reason</u>. The Company may at any time during the Employment Period, upon written notice summarizing with reasonable specificity the basis for the Termination for Cause, terminate Executive's employment hereunder for any act qualifying as a Termination for Cause. Such termination will be effective immediately upon such notice. Upon any Termination for Cause (or employee's resignation other than for Good Reason), Executive shall be solely entitled to receive:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)the unpaid Base Salary and Bonuses earned by Executive pursuant to Section 4 for services rendered through the date of termination, payable in accordance with the Company's normal payroll practices for terminated salaried employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)reimbursement of all expenses for which Executive is entitled to be reimbursed pursuant to Section 6, payable in accordance with the Company's normal reimbursement practices; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)the right to continue health care benefits under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, at Executive's cost, to the extent required and available by law and subject to the Company continuing to maintain a group health plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.<u>Involuntary Termination Without Cause by the Company; Resignation by Executive for Good Reason</u>. The Company shall be entitled to terminate Executive with 60-days' written notice, other than a Termination for Cause, and Executive shall be entitled to resign with or without Good Reason, in each

------

case at any time; provided, however, that if Executive (1) is terminated by the Company other than in circumstances constituting a Termination for Cause, or (2) resigns for Good Reason, then Executive shall be solely entitled to receive:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)The Termination Benefits through the date of termination, payable in a lump sum within 15 days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)Severance equal to six (6) months of base salary, subject to usual and customary withholdings and paid in accordance with the Company's standard payroll procedures over the course of the six (6) months following termination;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)Solely in the event that, following the expiration of the initial Term, Executive is terminated by the Company (other than in circumstances constituting a Termination for Cause) or resigns for Good Reason within twelve (12) months following a Change of Control (a) in lieu of the severance provided in Section 8.D.(ii), Executive will be entitled to severance equal to twelve (12) months of base salary, subject to usual and customary withholdings and paid in accordance with the Company's standard payroll procedures over the course of the twelve (12) months following termination, and (b) twelve (12) months of reimbursement for Executive's portion of COBRA benefits provided in Section 8.B.(iii) above upon proof of payment of Executive's COBRA coverage and subject to usual and customary withholdings ("**Change of Control Payment**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)For purposes of clarity, a termination of Executive's employment due to Executive's death or to Executive's permanent disability shall not be considered either a termination by the Company without cause or a resignation by Executive for Good Reason, and such termination shall not entitle Executive (or her heirs or representatives) to any compensation or benefits pursuant to this Section 8.D.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)Upon providing notice of termination, the Company may materially reduce Executive's duties and responsibilities without such actions constituting "Good Reason," so long as the Company continues to pay Executive's salary through the termination date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.<u>Termination by Non-Renewal</u>. In the event the company fails to renew Executive's employment (pursuant to this Agreement or otherwise) before the expiration of this Agreement ("**Non-Renewal**"), Executive shall be entitled to receive the Termination Benefits through the date of the termination of Executive's employment, payable in a lump sum within 15 days.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F.<u>Resignations from Other Positions</u>. Upon any termination of Executive's employment, and as a condition to Executive receiving any benefits or payments in connection with such termination (including the Termination Benefits and Change of Control Payment) (the "**Severance Benefits**") under this Agreement, if so requested by a majority of the Board, Executive will immediately resign (1) as a director of the Company and any of its subsidiaries, (2) from all officer or other positions of the Company, and (3) from all fiduciary positions (including as trustee) Executive then holds with respect to any employee benefit plans or trusts established, maintained or sponsored by the Company or by any of its Affiliates. Failure by Executive to resign immediately from all positions described in the immediately preceding sentence shall result in automatic forfeiture of any and all rights to the Severance Benefits (other than payments or benefits required to be provided by law).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G.<u>Equity Awards Upon Termination</u>. Except as otherwise provided in Section 8, upon termination of Executive's employment for any reason and subject to the terms of the Company's equity incentive plans and the Executive's award agreements (which will govern in the event of any conflicts between this Agreement and such award agreements), as they may be amended from time to time, including by reason of Executive's death or permanent disability, any portion of any equity awards held by the

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Executive that are not then vested will immediately be forfeited and expire for no consideration and the remainder of such equity awards will remain exercisable for three months thereafter (with the understanding that any equity awards that are intended to be "incentive stock options" under the Code shall thereupon be disqualified from such treatment); provided, that any portion of the equity awards held by Executive immediately prior to Executive's death, to the extent then exercisable, will remain exercisable for twelve months following Executive's death, unless otherwise provided under the applicable equity incentive plan or award agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H.<u>Release</u>. Executive shall execute within twenty-one (21) days (or, to the extent required by applicable law, forty-five (45) days) following the termination date (and non-revocation within seven (7) days thereafter) a general release of claims in a form provided by the Company. Notwithstanding anything contained herein, Executive's right to receive (or retain) the Severance Benefits (other than payments or benefits required to be provided by law), is conditioned on and subject to the execution of such release.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.** **Section 409A of the Code.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.<u>General</u>. This Agreement shall be interpreted and applied in all circumstances in a manner that is consistent with the intent of the parties that, to the extent applicable, amounts earned and payable pursuant to this Agreement shall constitute short-term deferrals exempt from the application of Section 409A of the Code and, if not exempt, that amounts earned and payable pursuant to this Agreement shall not be subject to the premature income recognition or adverse tax provisions of Section 409A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.<u>Separation from Service</u>. References in this Agreement to "termination" of Executive's employment, "resignation" by Executive from employment and similar terms shall, with respect to such events that will result in payments of compensation or benefits, mean for such purposes a "separation from service" as defined under Section 409A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.<u>Specified Executive</u>. In the event any one or more amounts payable under this Agreement constitute a "deferral of compensation" and become payable on account of the "separation from service" (as determined pursuant to Section 409A of the Code) of Executive and if as such date Executive is a "specified employee" (as determined pursuant to Section 409A of the Code), such amounts shall not be paid to Executive before the earlier of (i) the first day of the seventh calendar month beginning after the date of Executive's "separation from service" or (ii) the date of Executive's death following such "separation from service." Where there is more than one such amount, each shall be considered a separate payment and all such amounts that would otherwise be payable prior to the date specified in the preceding sentence shall be accumulated (without interest) and paid together on the date specified in the preceding sentence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.<u>Separate Payments</u>. For purposes of Section 409A of the Code, each payment or amount due under this Agreement shall be considered a separate payment, and Executive's entitlement to a series of payments under this Agreement is to be treated as an entitlement to a series of separate payments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.<u>Reimbursements</u>. Any reimbursement to which Executive is entitled pursuant to this Agreement that would constitute nonqualified deferred compensation subject to Section 409A of the Code shall be subject to the following additional rules: (i) no reimbursement of any such expense shall affect Executive's right to reimbursement of any other such expense in any other taxable year; (ii) reimbursement of the expense shall be made, if at all, not later than the end of the calendar year following the calendar year in which the expense was incurred; (iii) the right to reimbursement shall not be subject to liquidation or exchange for any other benefit; and (iv) the right to reimbursement of expenses incurred kind shall terminate one year after the end of the Employment Period.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.** **Section 280G of the Code**. Notwithstanding anything to the contrary contained herein (or any other agreement entered into by and between Executive and the Company or any incentive arrangement or plan offered by the Company), in the event that any amount or benefit paid or distributed to Executive pursuant to this Agreement, taken together with any amounts or benefits otherwise paid to Executive by the Company (collectively, the "**Covered Payments**"), would constitute an "excess parachute payment" as defined in Section 280G of the Code, and would thereby subject Executive to an excise tax under Section 4999 of the Code (an "**Excise Tax**"), the provisions of this Section 10 shall apply. If the aggregate present value (as determined for purposes of Section 280G of the Code) of the Covered Payments exceeds the amount which can be paid to Executive without Executive incurring an Excise Tax, then the amounts payable to Executive under this Agreement (or any other agreement by and between Executive and the Company or pursuant to any incentive arrangement or plan offered by the Company) shall be reduced (but not below zero) to the maximum amount which may be paid hereunder without Executive becoming subject to the Excise Tax (such reduced payments to be referred to as the "**Payment Cap**"). In the event Executive receives reduced payments and benefits as a result of application of this Section 10, Executive shall have the right to designate which of the payments and benefits otherwise set forth herein (or any other agreement between the Company and Executive or any incentive arrangement or plan offered by the Company) shall be received in connection with the application of the Payment Cap, subject to the following sentence. Reduction shall first be made from payments and benefits which are determined not to be nonqualified deferred compensation for purposes of Section 409A of the Code, and then shall be made (to the extent necessary) out of payments and benefits that are subject to Section 409A of the Code and that are due at the latest future date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.** **No Guarantee of Tax Consequences**. The Board, the Compensation Committee, the Company and its Affiliates, officers and employees make no commitment or guarantee to Executive that any federal, state, local or other tax treatment will apply or be available to Executive or any other person eligible for compensation or benefits under this Agreement and assume no liability whatsoever for the tax consequences to Executive or to any other person eligible for compensation or benefits under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.** **Controlling Law, Jurisdiction and Venue.** This Agreement and all questions relating to its validity, interpretation, performance, and enforcement will be governed by and construed in accordance with the laws of the State of Colorado, notwithstanding any Colorado or other conflict-of-interest provisions to the contrary. Executive agrees that any and all claims arising between the parties out of this agreement shall be controlled by the laws of the State of Colorado, as follows: any dispute, controversy arising out of, connected to, or relating to any matters herein of the transactions between Company and Executive, or this Agreement, which cannot be resolved by negotiation (including, without limitation, any dispute over the arbitrability of an issue), will be settled by binding arbitration in accordance with the J.A.M.S/ENDISPUTE Arbitration Rules and Procedures, as amended by this Agreement. Arbitration proceedings will be held in Denver, Colorado. Company and Executive agree the prevailing party on any action to enforce rights hereunder shall bear their own costs. The parties agree that this provision and the Arbitrator's authority to grant relief are subject to the United States Arbitration Act, 9 U.S.C. 1- 16 et seq. ("USAA") and the provisions of this Agreement. The parties agree that the arbitrator has no power or authority to make awards or issue orders of any kind except as expressly permitted by this Agreement, and in no event does the arbitrator have the authority to make any award that provides for punitive or exemplary damages. The award may be confirmed and enforced in any court of competent jurisdiction. All post-award proceedings will be governed by the USAA. Company and Executive irrevocably consent to the jurisdiction and venue of such arbitration and such courts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.** **Entire Agreement; Severability**. This Agreement and the agreements referenced herein contain the entire agreement of the parties relating to the subject matter hereof, and supersede in their entirety any and all prior agreements, understandings or representations relating to the subject matter hereof. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof

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have been made by either party which are not expressly set forth in this Agreement. The provisions of this Agreement shall be deemed severable and, if any provision is found to be illegal, invalid or unenforceable for any reason, (a) the provision will be amended automatically to the minimum extent necessary to cure the illegality or invalidity and permit enforcement and (b) the illegality, invalidity or unenforceability will not affect the legality, validity or enforceability of the other provisions hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**14.** **Amendment; Committee Authority**. This Agreement may be amended, supplemented, or modified only by a written instrument duly executed by or on behalf of each party hereto. All determinations and other actions required or permitted hereunder to be made by or on behalf of the Company or the Board may be made by either the Board (excluding Executive therefrom) or the Compensation Committee (or any other committee subsequently granted authority by the Board); provided that the actions of the Compensation Committee (or any other committee subsequently granted authority by the Board) shall be subject to the authority then vested in such committee by the Board, it being understood and agreed that as of the date of this Agreement the Compensation Committee has full authority, concurrent with the Board, to administer this Agreement; and provided, further, that a decision or action by the Compensation Committee (or any other committee subsequently granted authority by the Board) hereunder shall be subject to review or modification by the Board if the Board so chooses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**15.** **Waiver**. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by either party in exercising any right, power, or privilege under this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**16.** **No Violation.** Executive represents and warrants that the execution and delivery of this Agreement and the performance of Executive's services contemplated hereby will not violate or result in a breach by Executive of, or constitute a default under, or conflict with: (i) any provision or restriction of any employment, consulting, or other similar agreement; (ii) any agreement by Executive with any third party not to compete with, solicit from, or otherwise disparage such third party; (iii) any provision or restriction of any agreement, contract, or instrument to which Executive is a party or by which Executive is bound; or (iv) any order, judgment, award, decree, law, rule, ordinance, or regulation or any other restriction of any kind or character to which Executive is subject or by which Executive is bound.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**17.** **Assignment**. Notwithstanding anything else herein, this Agreement is personal to Executive and neither this Agreement nor any rights hereunder may be assigned by Executive. The Company may assign this Agreement to an affiliate or to any acquirer of all or substantially all of the business or assets of the Company, in which case the term "Company" will mean such affiliate or acquirer. This Agreement will inure to the benefit of and be binding upon the personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, legatees and permitted assignees of the parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**18.** **Counterparts, Facsimile**. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. To the maximum extent permitted by applicable law, this Agreement may be executed via facsimile.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**19.** **Notices**. Any notice required to be given under this Agreement shall be deemed sufficient, if in writing, and sent by certified mail, return receipt requested, via overnight courier, or hand delivered to the Company at 8400 E. Crescent Parkway, Suite 450, Greenwood Village, CO 80111, and to Executive at the most recent address reflected in the Company's employment records.

Signature page follows.

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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the Effective Date.

**Scott's Liquid Gold – Inc.**, a Colorado corporation

By: <u>_/s/ David Arndt</u>________________________________

Name: David Arndt

Title: Chief Financial Officer

Date: 3/28/2023

**EXECUTIVE**

By: __<u>/s/ Tisha Pedrazzini</u>____________________________

Tisha Pedrazzini, an individual

Date: 3/28/2023

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## Ex-10

**EXHIBIT 10.8**

**EMPLOYMENT AGREEMENT**

This Employment Agreement (this "**Agreement**"), effective as of March 31, 2023 (the "**Effective Date**"), is by and between **Scott's Liquid Gold – Inc.**, a Colorado corporation (the "**Company**"), and **David Arndt** an individual ("**Executive**").

**PART ONE – DEFINITIONS**

**Definitions**. For purposes of this Agreement, the following definitions will be in effect:

"**Affiliates**" means all persons and entities directly or indirectly controlling, controlled by or under common control with the entity specified, where control may be by management authority, contract or equity interest.

"**Board**" means the Board of Directors of the Company or the Compensation Committee thereof (or any other committee subsequently granted authority with respect to compensatory matters by the Board), subject to Section 14 below.

"**Change of Control**" means a change in the ownership or control of the Company effected through any of the following transactions: (i) a merger, consolidation or reorganization approved by the Company's stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Company's outstanding voting securities immediately prior to such transaction, (ii) any stockholder-approved sale, transfer or other disposition of all or substantially all of the Company's assets, (iii) the acquisition, directly or indirectly, by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the "**Exchange Act**")) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's stockholders; or (iv) a change in the composition of the Board over a period of twelve (12) consecutive months or less such that a majority of the Board members cease, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination. Notwithstanding the foregoing, however, in any circumstance or transaction in which compensation payable pursuant to this Agreement would be subject to the tax under Section 409A of the Code if the foregoing definition of "Change of Control" were to apply, but would not be so subject if the term "Change of Control" were defined herein to mean a "change in control event" within the meaning of Treasury Regulation § 1.409A-3(i)(5), then "Change of Control" means, but only to the extent necessary to prevent such compensation from becoming subject to the tax under Section 409A of the Code, a transaction or circumstance that satisfies the requirements of both (1) a Change of Control under the applicable clauses (i) through (iv) above, and (2) a "change in control event" within the meaning of Treasury Regulation Section § 1.409A-3(i)(5).

"**Code**" means the Internal Revenue Code of 1986, as amended from time to time, and the Treasury regulations and administrative guidance promulgated thereunder.

"**Company**" means, unless the context otherwise requires, Scott's Liquid Gold - Inc., a Colorado corporation, and all of its subsidiaries.

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"**Compensation Committee**" means the Compensation Committee of the Board.

"**Employment Period**" means the period beginning on March 31, 2023 and ending on March 31, 2024.

"**Good Reason**" shall mean the occurrence of any of the following without Executive's consent: (i) a material reduction of Executive's duties or responsibilities, relative to Executive's duties or responsibilities as in effect immediately prior to such reduction; (ii) a reduction of more than ten percent (10%) in Executive's Base Salary as in effect immediately prior to such reduction; (iv) the relocation of Executive to a facility or a location more than twenty-five (25) miles from the Company's present location in Greenwood Village, Colorado; provided, however, that a relocation that is generally applicable to all executives of the Company shall not constitute "Good Reason." A termination of employment by Executive shall not be deemed to be for Good Reason unless (A) Executive gives the Company written notice describing the event or events which are the basis for such termination within 30 days after the event or events occur, (B) such grounds for termination (if susceptible to correction) are not corrected by the Company within 30 days of the Company's receipt of such notice (the "**Correction Period**"), and (C) Executive terminates Executive's employment no later than 30 days following the Correction Period.

"**Termination for Cause**" shall mean the Company's termination of Executive's employment for any of the following reasons: (i) Executive's commission of any act of fraud, embezzlement or dishonesty, (ii) the arrest or conviction of Executive, or the entry of a plea of nolo contendere by Executive, for a felony; (iii) Executive's unauthorized use or disclosure of any confidential information or trade secrets of the Company, (iv) the disclosing or using of any material confidential information of Company at any time by Executive, except as required in connection with his duties to the Company, (v) Executive's violation of a published Company policy which stipulates the Executive may be terminated by the Company for cause; or (vi) Executive's continued failure, in the reasonable good faith determination of the Board (excluding Executive therefrom), to perform the major duties, functions and responsibilities of Executive's position after written notice from the Company identifying the deficiencies in Executive's performance and a reasonable cure period of not less than thirty (30) days.

**PART TWO – TERMS AND CONDITIONS OF EMPLOYMENT**

The following terms and conditions will govern Executive's employment with the Company throughout the Employment Period and will also, to the extent expressly indicated below, remain in effect following Executive's cessation of employment with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Employment and Duties.** During the Employment Period, Executive will serve as the Chief Financial Officer and Treasurer and will report to the Board and Chief Executive Officer or equivalent. Executive will have such duties and responsibilities as are commensurate with such position and such other duties and responsibilities commensurate with such position (including with respect to the Company's subsidiaries) as are from time to time assigned to Executive by the Board (or a committee thereof). During the Employment Period, Executive will devote his full business time, energy and skill to the performance of his duties and responsibilities hereunder, provided the foregoing will not prevent Executive from (a) serving as a non-executive director on the board of directors of not more than three non-profit organizations or other companies, (b) participating in charitable, civic, educational, professional, community or industry affairs, (c) managing his and his family's personal investments, including in an advisory capacity related to current or potential investments or (d) such other activities approved by the Board from time to time; provided, that such activities individually or in the aggregate do not interfere or conflict with Executive's duties and responsibilities hereunder, violate applicable law, or create a potential business or fiduciary conflict.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **OMITTED**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.** **Term.** The term of this Agreement shall run for a period of 1-year from the Effective Date through March 31, 2024 (such period, the "**Term**"), and may be terminated earlier as contemplated by Section 8.A. Termination of this Agreement due to its non-renewal shall not constitute a Termination for Cause or a resignation by Executive for Good Reason. This agreement will automatically renew, after the initial Term, in increments of 120 days, if notice is not delivered by either party 90 days prior to its expiration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.** **Compensation; Additional Incentives.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.<u>Base Salary</u>. Executive's base salary (the "**Base Salary**") will be paid at the rate of $17,083 monthly ($205,000 annualized) during the Term. Executive's Base Salary may be increased by the Compensation Committee or Board in their sole discretion, but shall not be decreased more than 10% without Executive's consent. Executive's Base Salary will be paid at periodic intervals in accordance with the Company's normal payroll practices for salaried employees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.<u>Bonus Opportunities</u>. Subject to approval by the Compensation Committee and the Company having adequate available cash as determined by the Board in its sole discretion, Executive will be eligible for a bonus payment with a target range of 25% to 75% of his base salary during the initial Term (a "**Performance Bonus**"). The Performance Bonus, if any, will be paid at the same time as annual performance bonuses are paid to all Company employees, provided that Executive must be employed as of the date of payment of any Performance Bonus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.<u>Withholding</u>. The Company may deduct and withhold, from the compensation payable and benefits provided to Executive hereunder, any and all applicable federal, state, local and other taxes and any other amounts required to be deducted or withheld by the Company under applicable statute or regulation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.<u>Clawback Policy</u>. To the extent that any compensation paid or payable pursuant to this Agreement is considered "incentive-based compensation," including within the meaning and subject to the requirements of Section 10D of the Exchange Act, such compensation shall be subject to potential forfeiture or recovery by the Company in accordance with any compensation recovery policy adopted by the Board or any committee thereof, including in response to the requirements of Section 10D of the Exchange Act and any implementing rules and regulations thereunder adopted by the Securities and Exchange Commission or any national securities exchange on which the Company's common stock is then listed. This Agreement may be unilaterally amended by the Company to comply with any such compensation recovery policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.** **Equity Compensation.** Executive will be eligible for additional equity grants as determined by the Board or the Compensation Committee in their sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.** **Expense Reimbursement; Fringe Benefits; Paid Time Off (PTO).**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.Executive will be entitled to reimbursement from the Company for customary, ordinary and necessary business expenses incurred by Executive in the performance of Executive's duties hereunder, provided that Executive's entitlement to such reimbursements shall be conditioned upon Executive's provision to the Company of vouchers, receipts and other substantiation of such expenses in accordance with Company policies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.During the Employment Period, Executive will be eligible to participate in any group life insurance plan, group medical and dental insurance plan, accidental death and dismemberment plan, short-term disability program and other employee benefit plans, including profit sharing plans, cafeteria benefit programs and stock purchase and option plans, which are made available to executives of the Company and for which Executive qualifies under the terms of such plan or plans.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.Executive shall be entitled to vacation and paid time off (PTO) in accordance with the Company's policies as in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.** **Executive Covenants.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.<u>Transition and Other Assistance</u>. During the 90 days following the termination of the Employment Period, Executive will take all actions the Company may reasonably request to maintain the Company's business, goodwill and business relationships and to assist with transition matters, all at Company expense. In addition, upon the receipt of notice from the Company (including outside counsel), during the Employment Period and thereafter, Executive will respond and provide information with regard to matters of which he has knowledge as a result of his employment with the Company, and will provide assistance to the Company and its representatives in the defense or prosecution of any claims that may be made by or against the Company, to the extent that such claims may relate to the period of Executive's employment with the Company, all at Company expense. During the Employment Period and thereafter, Executive shall promptly inform the Company if he becomes aware of any lawsuits involving such claims that may be filed or threatened against the Company. During the Employment Period and thereafter, Executive shall also promptly inform the Company (to the extent he is legally permitted to do so) if he is asked to assist in any investigation of the Company (or its actions), regardless of whether a lawsuit or other proceeding has then been filed against the Company with respect to such investigation, and will not do so unless legally required. The Company will pay Executive at a rate of $200 per hour, plus reasonable expenses, in connection with any actions requested by the Company under this paragraph following any termination of Executive's employment, with such amounts being paid to Executive at periodic intervals in accordance with the Company's normal payroll practices for salaried employees. Executive's obligations under this paragraph shall be subject to the Company's reasonable cooperation in scheduling in light of Executive's other obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.<u>Non-Solicitation</u>. During the Employment Period and for a period of 12 months after Executive's last day of employment with the Company, Executive will not (i) directly or indirectly solicit or induce any employee of the Company to terminate or negatively alter his or his relationship with the Company or (ii) directly or indirectly solicit the business of any client or customer of the Company (other than on behalf of the Company) or (iii) directly or indirectly induce any client, customer, supplier, vendor, consultant or independent contractor of the Company to terminate or negatively alter his, his or its relationship with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.<u>Survival of Provisions</u>. The obligations contained in this Section 7 will survive the termination of Executive's employment with the Company and will be fully enforceable thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.** **Termination of Employment.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.<u>General</u>. Subject to Section 8.D, Executive's employment with the Company is "at-will" and may be terminated at any time for any reason (or no reason) by either Executive or the Company providing 60-days written notice of such termination to the other party, which will also result in the Term ending.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.<u>Death and Permanent Disability</u>. Upon termination of Executive's employment with the Company due to death or permanent disability during the Term, the employment relationship created pursuant to this Agreement will immediately terminate, the Term will end and amounts will only be payable under this Agreement as specified in this Section 8.B. Should Executive's employment with the Company terminate by reason of Executive's death or permanent disability during the Employment Period, Executive, or Executive's estate, shall be entitled to receive:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)the unpaid Base Salary earned by Executive pursuant to Section 4.A for services rendered through the date of Executive's death or permanent disability, as applicable, payable in accordance with the Company's normal payroll practices for terminated salaried employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)reimbursement of all expenses for which Executive is entitled to be reimbursed pursuant to Section 6, payable in accordance with the Company's normal reimbursement practices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)the right to continue health care benefits under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, ("**COBRA**") at Executive's cost, to the extent required and available by law and subject to the Company continuing to maintain a group health plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)any accrued but unpaid Performance Bonus pursuant to Section 4.B, payable at such time as provided in Section 4.B;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)the limited death, disability, and income continuation benefits provided under Section 6.B, if any, will be payable in accordance with the terms of the plans pursuant to which such limited death or disability benefits are provided.

Compensation and benefits provided pursuant to Section 8.B.(i) through (v) are collectively referred to as the "**Termination Benefits**."

If Executive's death occurs before payment of any earned Performance Bonus, the applicable payments will be made to the Executive's estate. For purposes of this Agreement, Executive will be deemed "permanently disabled" if Executive is so characterized pursuant to the terms of the Company's disability policies or programs applicable to Executive from time to time, or if no such policy is applicable, if the Compensation Committee determines, in its sole discretion, that Executive is unable to perform the essential functions of Executive's duties for physical or mental reasons for ninety (90) days in any twelve-month period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.<u>Termination for Cause; Resignation without Good Reason</u>. The Company may at any time during the Employment Period, upon written notice summarizing with reasonable specificity the basis for the Termination for Cause, terminate Executive's employment hereunder for any act qualifying as a Termination for Cause. Such termination will be effective immediately upon such notice. Upon any Termination for Cause (or employee's resignation other than for Good Reason), Executive shall be solely entitled to receive:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)the unpaid Base Salary and Bonuses earned by Executive pursuant to Section 4 for services rendered through the date of termination, payable in accordance with the Company's normal payroll practices for terminated salaried employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)reimbursement of all expenses for which Executive is entitled to be reimbursed pursuant to Section 6, payable in accordance with the Company's normal reimbursement practices; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)the right to continue health care benefits under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, at Executive's cost, to the extent required and available by law and subject to the Company continuing to maintain a group health plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.<u>Involuntary Termination Without Cause by the Company; Resignation by Executive for Good Reason</u>. The Company shall be entitled to terminate Executive with 60-days' written notice, other than a Termination for Cause, and Executive shall be entitled to resign with or without Good Reason, in each

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case at any time; provided, however, that if Executive (1) is terminated by the Company other than in circumstances constituting a Termination for Cause, or (2) resigns for Good Reason, then Executive shall be solely entitled to receive:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)The Termination Benefits through the date of termination, payable in a lump sum within 15 days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)Severance equal to six (6) months of base salary, subject to usual and customary withholdings and paid in accordance with the Company's standard payroll procedures over the course of the six (6) months following termination;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)Solely in the event that, following the expiration of the initial Term, Executive is terminated by the Company (other than in circumstances constituting a Termination for Cause) or resigns for Good Reason within twelve (12) months following a Change of Control (a) in lieu of the severance provided in Section 8.D.(ii), Executive will be entitled to severance equal to twelve (12) months of base salary, subject to usual and customary withholdings and paid in accordance with the Company's standard payroll procedures over the course of the twelve (12) months following termination, and (b) twelve (12) months of reimbursement for Executive's portion of COBRA benefits provided in Section 8.B.(iii) above upon proof of payment of Executive's COBRA coverage and subject to usual and customary withholdings ("**Change of Control Payment**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)For purposes of clarity, a termination of Executive's employment due to Executive's death or to Executive's permanent disability shall not be considered either a termination by the Company without cause or a resignation by Executive for Good Reason, and such termination shall not entitle Executive (or his heirs or representatives) to any compensation or benefits pursuant to this Section 8.D.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)Upon providing notice of termination, the Company may materially reduce Executive's duties and responsibilities without such actions constituting "Good Reason," so long as the Company continues to pay Executive's salary through the termination date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.<u>Termination by Non-Renewal</u>. In the event the company fails to renew Executive's employment (pursuant to this Agreement or otherwise) before the expiration of this Agreement ("**Non-Renewal**"), Executive shall be entitled to receive the Termination Benefits through the date of the termination of Executive's employment, payable in a lump sum within 15 days.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F.<u>Resignations from Other Positions</u>. Upon any termination of Executive's employment, and as a condition to Executive receiving any benefits or payments in connection with such termination (including the Termination Benefits and Change of Control Payment) (the "**Severance Benefits**") under this Agreement, if so requested by a majority of the Board, Executive will immediately resign (1) as a director of the Company and any of its subsidiaries, (2) from all officer or other positions of the Company, and (3) from all fiduciary positions (including as trustee) Executive then holds with respect to any employee benefit plans or trusts established, maintained or sponsored by the Company or by any of its Affiliates. Failure by Executive to resign immediately from all positions described in the immediately preceding sentence shall result in automatic forfeiture of any and all rights to the Severance Benefits (other than payments or benefits required to be provided by law).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G.<u>Equity Awards Upon Termination</u>. Except as otherwise provided in Section 8, upon termination of Executive's employment for any reason and subject to the terms of the Company's equity incentive plans and the Executive's award agreements (which will govern in the event of any conflicts between this Agreement and such award agreements), as they may be amended from time to time, including by reason of Executive's death or permanent disability, any portion of any equity awards held by the

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Executive that are not then vested will immediately be forfeited and expire for no consideration and the remainder of such equity awards will remain exercisable for three months thereafter (with the understanding that any equity awards that are intended to be "incentive stock options" under the Code shall thereupon be disqualified from such treatment); provided, that any portion of the equity awards held by Executive immediately prior to Executive's death, to the extent then exercisable, will remain exercisable for twelve months following Executive's death, unless otherwise provided under the applicable equity incentive plan or award agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;H.<u>Release</u>. Executive shall execute within twenty-one (21) days (or, to the extent required by applicable law, forty-five (45) days) following the termination date (and non-revocation within seven (7) days thereafter) a general release of claims in a form provided by the Company. Notwithstanding anything contained herein, Executive's right to receive (or retain) the Severance Benefits (other than payments or benefits required to be provided by law), is conditioned on and subject to the execution of such release.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.** **Section 409A of the Code.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.<u>General</u>. This Agreement shall be interpreted and applied in all circumstances in a manner that is consistent with the intent of the parties that, to the extent applicable, amounts earned and payable pursuant to this Agreement shall constitute short-term deferrals exempt from the application of Section 409A of the Code and, if not exempt, that amounts earned and payable pursuant to this Agreement shall not be subject to the premature income recognition or adverse tax provisions of Section 409A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.<u>Separation from Service</u>. References in this Agreement to "termination" of Executive's employment, "resignation" by Executive from employment and similar terms shall, with respect to such events that will result in payments of compensation or benefits, mean for such purposes a "separation from service" as defined under Section 409A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.<u>Specified Executive</u>. In the event any one or more amounts payable under this Agreement constitute a "deferral of compensation" and become payable on account of the "separation from service" (as determined pursuant to Section 409A of the Code) of Executive and if as such date Executive is a "specified employee" (as determined pursuant to Section 409A of the Code), such amounts shall not be paid to Executive before the earlier of (i) the first day of the seventh calendar month beginning after the date of Executive's "separation from service" or (ii) the date of Executive's death following such "separation from service." Where there is more than one such amount, each shall be considered a separate payment and all such amounts that would otherwise be payable prior to the date specified in the preceding sentence shall be accumulated (without interest) and paid together on the date specified in the preceding sentence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.<u>Separate Payments</u>. For purposes of Section 409A of the Code, each payment or amount due under this Agreement shall be considered a separate payment, and Executive's entitlement to a series of payments under this Agreement is to be treated as an entitlement to a series of separate payments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.<u>Reimbursements</u>. Any reimbursement to which Executive is entitled pursuant to this Agreement that would constitute nonqualified deferred compensation subject to Section 409A of the Code shall be subject to the following additional rules: (i) no reimbursement of any such expense shall affect Executive's right to reimbursement of any other such expense in any other taxable year; (ii) reimbursement of the expense shall be made, if at all, not later than the end of the calendar year following the calendar year in which the expense was incurred; (iii) the right to reimbursement shall not be subject to liquidation or exchange for any other benefit; and (iv) the right to reimbursement of expenses incurred kind shall terminate one year after the end of the Employment Period.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.** **Section 280G of the Code**. Notwithstanding anything to the contrary contained herein (or any other agreement entered into by and between Executive and the Company or any incentive arrangement or plan offered by the Company), in the event that any amount or benefit paid or distributed to Executive pursuant to this Agreement, taken together with any amounts or benefits otherwise paid to Executive by the Company (collectively, the "**Covered Payments**"), would constitute an "excess parachute payment" as defined in Section 280G of the Code, and would thereby subject Executive to an excise tax under Section 4999 of the Code (an "**Excise Tax**"), the provisions of this Section 10 shall apply. If the aggregate present value (as determined for purposes of Section 280G of the Code) of the Covered Payments exceeds the amount which can be paid to Executive without Executive incurring an Excise Tax, then the amounts payable to Executive under this Agreement (or any other agreement by and between Executive and the Company or pursuant to any incentive arrangement or plan offered by the Company) shall be reduced (but not below zero) to the maximum amount which may be paid hereunder without Executive becoming subject to the Excise Tax (such reduced payments to be referred to as the "**Payment Cap**"). In the event Executive receives reduced payments and benefits as a result of application of this Section 10, Executive shall have the right to designate which of the payments and benefits otherwise set forth herein (or any other agreement between the Company and Executive or any incentive arrangement or plan offered by the Company) shall be received in connection with the application of the Payment Cap, subject to the following sentence. Reduction shall first be made from payments and benefits which are determined not to be nonqualified deferred compensation for purposes of Section 409A of the Code, and then shall be made (to the extent necessary) out of payments and benefits that are subject to Section 409A of the Code and that are due at the latest future date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.** **No Guarantee of Tax Consequences**. The Board, the Compensation Committee, the Company and its Affiliates, officers and employees make no commitment or guarantee to Executive that any federal, state, local or other tax treatment will apply or be available to Executive or any other person eligible for compensation or benefits under this Agreement and assume no liability whatsoever for the tax consequences to Executive or to any other person eligible for compensation or benefits under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.** **Controlling Law, Jurisdiction and Venue.** This Agreement and all questions relating to its validity, interpretation, performance, and enforcement will be governed by and construed in accordance with the laws of the State of Colorado, notwithstanding any Colorado or other conflict-of-interest provisions to the contrary. Executive agrees that any and all claims arising between the parties out of this agreement shall be controlled by the laws of the State of Colorado, as follows: any dispute, controversy arising out of, connected to, or relating to any matters herein of the transactions between Company and Executive, or this Agreement, which cannot be resolved by negotiation (including, without limitation, any dispute over the arbitrability of an issue), will be settled by binding arbitration in accordance with the J.A.M.S/ENDISPUTE Arbitration Rules and Procedures, as amended by this Agreement. Arbitration proceedings will be held in Denver, Colorado. Company and Executive agree the prevailing party on any action to enforce rights hereunder shall bear their own costs. The parties agree that this provision and the Arbitrator's authority to grant relief are subject to the United States Arbitration Act, 9 U.S.C. 1- 16 et seq. ("USAA") and the provisions of this Agreement. The parties agree that the arbitrator has no power or authority to make awards or issue orders of any kind except as expressly permitted by this Agreement, and in no event does the arbitrator have the authority to make any award that provides for punitive or exemplary damages. The award may be confirmed and enforced in any court of competent jurisdiction. All post-award proceedings will be governed by the USAA. Company and Executive irrevocably consent to the jurisdiction and venue of such arbitration and such courts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.** **Entire Agreement; Severability**. This Agreement and the agreements referenced herein contain the entire agreement of the parties relating to the subject matter hereof, and supersede in their entirety any and all prior agreements, understandings or representations relating to the subject matter hereof. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof

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have been made by either party which are not expressly set forth in this Agreement. The provisions of this Agreement shall be deemed severable and, if any provision is found to be illegal, invalid or unenforceable for any reason, (a) the provision will be amended automatically to the minimum extent necessary to cure the illegality or invalidity and permit enforcement and (b) the illegality, invalidity or unenforceability will not affect the legality, validity or enforceability of the other provisions hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**14.** **Amendment; Committee Authority**. This Agreement may be amended, supplemented, or modified only by a written instrument duly executed by or on behalf of each party hereto. All determinations and other actions required or permitted hereunder to be made by or on behalf of the Company or the Board may be made by either the Board (excluding Executive therefrom) or the Compensation Committee (or any other committee subsequently granted authority by the Board); provided that the actions of the Compensation Committee (or any other committee subsequently granted authority by the Board) shall be subject to the authority then vested in such committee by the Board, it being understood and agreed that as of the date of this Agreement the Compensation Committee has full authority, concurrent with the Board, to administer this Agreement; and provided, further, that a decision or action by the Compensation Committee (or any other committee subsequently granted authority by the Board) hereunder shall be subject to review or modification by the Board if the Board so chooses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**15.** **Waiver**. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by either party in exercising any right, power, or privilege under this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**16.** **No Violation.** Executive represents and warrants that the execution and delivery of this Agreement and the performance of Executive's services contemplated hereby will not violate or result in a breach by Executive of, or constitute a default under, or conflict with: (i) any provision or restriction of any employment, consulting, or other similar agreement; (ii) any agreement by Executive with any third party not to compete with, solicit from, or otherwise disparage such third party; (iii) any provision or restriction of any agreement, contract, or instrument to which Executive is a party or by which Executive is bound; or (iv) any order, judgment, award, decree, law, rule, ordinance, or regulation or any other restriction of any kind or character to which Executive is subject or by which Executive is bound.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**17.** **Assignment**. Notwithstanding anything else herein, this Agreement is personal to Executive and neither this Agreement nor any rights hereunder may be assigned by Executive. The Company may assign this Agreement to an affiliate or to any acquirer of all or substantially all of the business or assets of the Company, in which case the term "Company" will mean such affiliate or acquirer. This Agreement will inure to the benefit of and be binding upon the personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, legatees and permitted assignees of the parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**18.** **Counterparts, Facsimile**. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. To the maximum extent permitted by applicable law, this Agreement may be executed via facsimile.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**19.** **Notices**. Any notice required to be given under this Agreement shall be deemed sufficient, if in writing, and sent by certified mail, return receipt requested, via overnight courier, or hand delivered to the Company at 8400 E. Crescent Parkway, Suite 450, Greenwood Village, CO 80111, and to Executive at the most recent address reflected in the Company's employment records.

Signature page follows.

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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the Effective Date.

**Scott's Liquid Gold – Inc.**, a Colorado corporation

By: __<u>/s/ Tisha Pedrazzini</u>____________________________

Name: Tisha Pedrazzini

Title: President

Date: 3/28/2023

**EXECUTIVE**

By: <u>_/s/ David Arndt</u>________________________________

David Arndt, an individual

Date: 3/28/2023

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## Ex-10

**EXHIBIT 10.11**

**ASSET PURCHASE AGREEMENT**

This Asset Purchase Agreement (this "**Agreement**"), dated as of December 15, 2022, is by and among AFAM Concept, Inc. ("**Buyer**"), Neoteric Cosmetics, Inc., a corporation organized and existing under the laws of the State of Colorado ("**Seller**"), and for the limited purposes stated herein, Scott's Liquid Gold-Inc., a Colorado corporation ("**SLG**"). Buyer and Seller shall be collectively referred to herein as the "**Parties**" and, each, individually, a "**Party**."

**RECITALS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.Seller owns and operates the "Prell" product lines, which includes shampoo products marketed under the Prell brand (the "**Business**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.Seller desires to sell, convey, transfer, assign and deliver to Buyer (or its designated Affiliates), and Buyer desires to (or to cause its designated Affiliates to) purchase and acquire from Seller, all of Seller's right, title and interest in and to certain assets of Seller related to the Business, together with certain obligations and liabilities relating thereto, as more particularly set forth herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.Concurrently with the execution and delivery of this Agreement and as a condition to the willingness of Buyer to enter into this Agreement, Seller will enter into a Transition Services Agreement with Buyer, as more particularly described herein.

**NOW, THEREFORE**, in consideration of the promises and for other good and valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the Parties, intending to be legally bound hereby, agree as follows.

**AGREEMENT**

1.**PURCHASED ASSETS.** At Closing and subject to the terms and conditions of this Agreement, Seller shall sell, convey, assign, transfer and deliver to Buyer, free and clear of Encumbrances other than Permitted Encumbrances, all of such Seller's right, title and interest in, under, and to all of the following assets, rights, claims, properties, contractual rights, goodwill, going concern value, and interests related to the Business, wherever situated, excluding the Excluded Assets (collectively, the "**Purchased Assets**"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1.**Names.** All rights to the names "Prell" together with any derivatives thereof and all logos, designs, phrases and other identifications of or relating to such names and the goodwill associated therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2.**Intellectual Property.** All Intellectual Property Rights owned by Seller and solely used in the Business, including without limitation, the Intellectual Property Rights as set forth on <u>Schedule 1.2</u> (collectively, the "**Intellectual Property Assets**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3.**Prepaid Expenses.** All prepaid and security deposits related to the Business listed on <u>Schedule 1.3</u>, including with respect to the Purchased Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.**Records.** Originals, or where not available, copies, of all books and records, including books of account, ledgers and general, financial and accounting records, customer lists, customer purchasing histories, price lists, distribution lists, supplier lists, production data, quality control

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records and procedures, research and development files, correspondence with any Governmental Authority, sales materials relating to the period following December 31, 2021 (including pricing history, total sales, terms and conditions of sale, sales and pricing policies and practices), strategic plans, internal financial statements, marketing and promotional surveys, material and research and files relating to the Intellectual Property Assets (collectively, the "**Records**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.5.**Inventory.** All inventory and rights therein (including all inventory, finished goods, components, raw materials, work in progress, packaging, supplies, parts and other inventories) (the "**Inventory**"), wherever located, related to the Business, other than Excluded Inventory (the "**Purchased Inventory**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.6.**Goodwill.** All rights in goodwill and the going concern value of the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.7.**Other Assets.** All other rights in intangible assets (including all claims, contract rights and warranty and product liability claims against third parties) solely related to the Purchased Assets identified above. Additionally, Buyer shall be entitled to all warranty protection now possessed by Seller covering any product or inventory item purchased from Seller under this Agreement, to the extent such protection is transferable or assignable by Seller. Any inventory buyer is unable to sell due to USA regulation changes will be returned to seller.

2.**EXCLUDED ASSETS.** Notwithstanding anything to the contrary contained herein, the following assets of Seller shall not be part of the sale and purchase contemplated by this Agreement (collectively, the "**Excluded Assets**"). The Excluded Assets are excluded from the Purchased Assets, and shall remain the property of Seller after the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.**Organizational Documents.** The corporate seals, organizational documents, minute books, stock books, Tax Returns, books of account or other records of Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2.**Excluded Inventory**. Inventory that is (i) damaged, (ii) obsolete, discontinued, outdated, dead or excess, including Inventory that is more than twelve (12) months old as of the Closing Date and/or (iii) not of useable or saleable quality or quantity in the ordinary course of business (collectively, the "**Excluded Inventory**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3.**Accounts Receivable**. Accounts Receivable relating to the period prior to Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4.**Cash and Cash Equivalents.** All of Seller's cash and cash equivalents on hand or in bank accounts and short-term investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5.**Miscellaneous Assets.** All other assets of Seller which are not used in or otherwise related primarily to the Business.

3.**LIABILITIES.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1.**Assumed Liabilities.** Subject to the terms and conditions set forth herein, Buyer shall assume and agree to pay, perform and discharge only the Liabilities required to be performed after the Closing in connection with the Purchased Assets or as set forth in <u>Schedule 3.1</u> (collectively, the "**Assumed Liabilities**"), and no other Liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.**Excluded Liabilities.** Notwithstanding the provisions of <u>Section 3.1</u> or any other provision in this Agreement to the contrary, Buyer shall not assume and shall not be responsible to pay,

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perform or discharge any Liabilities of Seller or any of its Affiliates of any kind or nature whatsoever other than the Assumed Liabilities (the "**Excluded Liabilities**"). Seller shall, and shall cause each of its Affiliates to, pay and satisfy in due course all Excluded Liabilities which they are obligated to pay and satisfy. Without limiting the generality of the foregoing, the Excluded Liabilities shall include, but not be limited to, the following, except to the extent specified as an Assumed Liability:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.1.any Liability for (a) Taxes of Seller (or any stockholder or Affiliate of Seller) or relating to the Business, the Purchased Assets or the Assumed Liabilities for any Pre-Closing Tax Period; (b) Taxes that arise out of the consummation of the transactions contemplated hereby that are the responsibility of Seller pursuant to <u>Section 7.3</u> (Taxes) of this Agreement; or (c) other Taxes of Seller (or any stockholder or Affiliate of Seller) that becomes a Liability of Buyer under any common law doctrine of de facto merger or transferee or successor liability or otherwise by operation of contract or Law relating to the period prior to the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.2.any Liabilities relating to or arising out of the Excluded Assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.3.any Liabilities in respect of any pending or threatened Action arising out of, relating to or otherwise in respect of the operation of the Business or the Purchased Assets to the extent such Action relates to such operation on or prior to the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.4.any pending or threatened Environmental Claims, or Liabilities under Environmental Laws, to the extent arising out of, or relating to or otherwise in respect of the operation of the Business or the Purchased Assets to the extent such claim relates to such operation on or prior to the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.5.any accounts payable of Seller relating to the period prior to the Closing Date; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.6.any Liabilities associated with indebtedness of Seller and/or the Business.

4.**PURCHASE PRICE.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.**Purchase Price.** The "**Purchase Price**" shall be (a) $150,000.00 (the "**Cash Purchase Price**"), plus (b) the inventory purchase price as finally determined pursuant to <u>Section 4.2,</u> which includes inventory as of the Closing Date and Subsequent Inventory (the "**Inventory Purchase Price**") plus (c) a royalty equal to 3% of net sales (determined on a GAAP basis) collected for all products sold in the United States under the Prell brand name, paid not later than the 15th day of the month following the month in which such sales amounts are collected by Buyer, for all sales consummated within 48 months following the Closing Date (the "**Royalty Payment**"). At the Closing, the Buyer shall deliver the sum of the Cash Purchase Price and the Estimated Inventory Purchase Price (collectively, the "**Closing Payment**") to Seller by wire transfer of immediately available funds to an account designated by Seller in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.**Inventory Purchase Price.** The Inventory Purchase Price shall be determined in accordance the terms of this section.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.1.As of five (5) business days prior to the Closing Date (the "**Inventory Date**"), Buyer and Seller shall (a) take an inventory of all items of Purchased Inventory and (b) jointly prepare a schedule in substantially the form of **Exhibit A** (the "**Inventory Statement**") setting forth all items of Purchased Inventory as of the Inventory Date and for each

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such item of Purchased Inventory, (i) its description (including item number assigned thereto), (ii) quantities, (iii) value at the lower of cost or market price for each Purchased Inventory item as of the Inventory Date, and (iv) the estimated total value of the Purchased Inventory (as calculated pursuant to subsection (iii)) listed in the Inventory Statement (the "**Estimated Inventory Purchase Price**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.2.Within thirty (30) days following the Closing, Buyer shall prepare and deliver to Seller a calculation of the Purchased Inventory together with its total value, in accordance with the methodology used in preparing the Inventory Statement (the "**Closing Inventory Statement**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.3.If the value of the Purchased Inventory set forth in the Closing Inventory Statement exceeds the Estimated Inventory Purchase Price, Buyer shall pay to Seller the amount of such excess by wire transfer of immediately available funds within five (5) Business Days of delivery of the Closing Inventory Statement. If the value of the Purchased Inventory set forth in the Closing Inventory Statement is less than the Estimated Inventory Purchase Price, Seller shall pay to Buyer the amount of deficiency by wire transfer of immediately available funds within five (5) Business Days of delivery of the Closing Inventory Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.4.In addition to the inventory purchased as of Closing, Buyer shall purchase, for an amount equal to the cost to Seller or SLG (as applicable), inventory of Products that Seller has ordered to be manufactured in or before March 2023, including, for the avoidance of doubt, inventory produced under Purchase Order Number 2005-00-00055 and Purchase Order Number 2022-00-01099 ("**Subsequent Inventory**"), within five (5) Business Days of delivery by Chemrite CoPac, Inc. Buyer shall also purchase any raw materials and components, for an amount equal to the cost of Chemrite CoPac, Inc. has purchased on behalf of Seller, within five (5) Business Days of Delivery by Chemrite CoPac, Inc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3.**Purchase Price Allocation.** Seller and Buyer shall agree within thirty (30) days after the Closing Date on the allocation of the Purchase Price among the Purchased Assets and Assumed Liabilities and any other amounts required to be included in the determination of the Purchase Price for U.S. federal income tax purposes, and such allocation shall be prepared in accordance with Section 1060 of the Code and the requirements of IRS Form 8594. The Parties shall file all Tax Returns, reports and other documents, including an asset acquisition statement on Form 8594, required by any competent taxing authority in a timely manner consistent with the agreed allocation. The Parties acknowledge that the Purchase Price subject to allocation may be different for each of the Parties (e.g., due to inclusion of differing amounts of transaction cost).

5.**CLOSING.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.**Closing.** Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the "**Closing**") shall take place on the Closing Date by means of an electronic closing in which the closing documentation will be delivered by electronic mail exchange of signature pages in PDF or functionally equivalent electronic format, which delivery will be effective without any further physical exchange of the original copies. The Closing will be deemed effective as of 12:01 a.m. U.S. Eastern time on the date after all of the conditions to Closing set forth in <u>Sections 5.2</u> and <u>5.3</u> have been satisfied or waived (other than conditions which by their nature are to be satisfied at the Closing) (the "**Closing Date**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.**Seller's Closing Deliveries.** At Closing, Seller shall deliver, or cause to be delivered, to Buyer each of the following, as applicable:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.1.the Purchased Assets, free and clear of all Encumbrances other than Permitted Encumbrances;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.2.a bill of sale and assignment and assumption agreement ("**Bill of Sale**"), and other instruments of conveyance as may be necessary or appropriate to transfer to Buyer as of the Closing Date good and marketable title to all of the Purchased Assets and effecting the assignment to and assumption by Buyer of the Purchased Assets and the Assumed Liabilities, duly executed by Seller, all in form and substance reasonably satisfactory to Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.3.notices of assignment(s) of all right, title and interest of Seller in and to the Registered Intellectual Property Assets to Buyer, duly executed by Seller, all in form and substance reasonably satisfactory to Buyer (the "**Intellectual Property Assignments**");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.4.a transition services agreement by and between Buyer and Seller, wherein Seller agrees to provide certain services that will allow Buyer to successfully and efficiently transfer the Business, duly executed by Seller, all in form and substance reasonably satisfactory to Buyer (the "**Transition Services Agreement**");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.5.a copy of a certificate of good standing of the Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.6.a copy of all resolutions adopted by the board of directors (or other similar governing body) of the Seller, authorizing the execution delivery and performance of this Agreement and the consummation of the transactions contemplated hereby;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.7.a certificate pursuant to Treasury Regulations Section 1-1445-2(b) that the Seller is not a foreign person within the meaning of Section 1445 of the Code, duly executed by the Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.8.evidence in form and substance reasonably satisfactory to Buyer that all third-party consents have been received and that no such consents have been revoked; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.9.such other instruments as shall be reasonably requested by Buyer to carry out the transactions described herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3.**Buyer's Closing Deliveries.** At Closing, Buyer shall deliver, or cause to be delivered, to Seller:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3.1.the Closing Payment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3.2.the Bill of Sale, duly executed by Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3.3.the Intellectual Property Assignments, duly executed by Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3.4.the Transition Services Agreement, duly executed by Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3.5.a copy of a certificate of good standing of the Buyer;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3.6.a copy of all resolutions adopted by the board of directors (or other similar governing body) of the Buyer, authorizing the execution delivery and performance of this Agreement and the consummation of the transactions contemplated hereby; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3.7.such other instruments as shall be reasonably requested by Seller to carry out the transactions described herein.

6.**Representations and Warranties.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.**Seller's Representations and Warranties.** Seller and SLG, jointly and severally, represent and warrant to the Buyer that, except as otherwise set forth in the disclosure schedules (the "**Disclosure Schedules**"), the following representations and warranties are, as of the date hereof, and will be, as of the Closing Date, true and correct:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.1.**Execution and Effect of Agreement**. Seller has the power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller of this Agreement and the other Transaction Documents to which it is a party and the consummation by the Seller of the transactions contemplated hereby and thereby have been duly authorized by Seller. This Agreement has been, and the other Transaction Documents to which Seller is a party will be, duly executed and delivered by Seller and constitutes or, when executed by Seller, will constitute the legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with their respective terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.2.**Organization and Good Standing; Authority and Power**. Seller is a corporation duly organized, validly existing, and in good standing under the laws of the State of Colorado. Seller has all requisite power, and the general power to own, lease, and operate the Purchased Assets and to carry on operations relating to the Business as now conducted, and to enter into this Agreement and the other Transaction Documents to which it is a party and perform all of its obligations hereunder and thereunder. All action necessary to authorize the execution and delivery by Seller of this Agreement and the other Transaction Documents to which it is a party and other documents required to be executed, and delivered, by Seller hereunder and thereunder, and the performance of each of its obligations hereunder and thereunder, have been duly authorized and taken.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.3.**Financial Data**. <u>Schedule 6.1.3(a)</u> contains true and complete copies of the unaudited sales, gross margin, and contribution margin of the Business the ten (10) month period ended October 31, 2022 (collectively, the "**Financial Data**"). The Financial Data is based on the books and records of the Business, and fairly present the financial condition of the Business as of the respective dates they were prepared and the results of the operations of the Business for the periods indicated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.4.**Title to Purchased Assets**. Seller has good and valid title to all of the Purchased Assets, free and clear of all Encumbrances other than Permitted Encumbrances. Except as set forth on <u>Schedule 6.1.4</u>: the Purchased Assets constitute all of the material assets used in or held for use in operation of the Business and are sufficient for Buyer to conduct the Business from and after the Closing Date; none of the Excluded Assets are material to the Business; the Purchased Assets will allow Buyer to operate without

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interruption and in the ordinary course of business consistent with past practice, as it has been conducted by Seller and its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.5.**Intellectual Property.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.5.1.<u>Schedule 6.1.5.1</u> contains a complete and correct list of (a) each Intellectual Property Asset that is registered, issued or subject to a pending application for registration or issuance with a Governmental Authority ("**Registered Intellectual Property Asset**"), and (b) all material unregistered Intellectual Property Assets. Failure to list an item in <u>Schedule 6.1.5.1</u> shall not mean that the omitted item is not a Registered Intellectual Property Asset or a material unregistered Intellectual Property Asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.5.2.The conduct of the Business, as now conducted or as conducted since December 31, 2021, including the use, sale, offering for sale, making, distribution, importation, exportation, licensing or sublicensing of the Products by Seller, does not and did not during such time period infringe upon or misappropriate any Intellectual Property Right of any other Person and since December 31, 2021 Seller has not received any written charge, complaint, claim, demand or notice alleging any such infringement or misappropriation arising out of Seller's operation of the Business (including any claim that the Seller must license or refrain from using all or any portion of the Intellectual Property Assets).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.5.3.Since December 31, 2021, there has been no unauthorized use, infringement or misappropriation of any Intellectual Property Asset by any Person, including any employees and former employees, consultants, customers or suppliers of Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.5.4.The Intellectual Property Assets consist solely of items and rights which are owned solely by Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.5.5.<u>Schedule 6.1.5.5</u> describes, with respect to each applicable Intellectual Property Asset, the current status of any pending applications, registrations and filings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.5.6.All Registered Intellectual Property Assets that are registered or issued are valid, enforceable and subsisting, in good standing, with all fees, payments and filings due as of the Closing Date duly made. Except as set forth on <u>Schedule 6.1.5.6</u>, (a) Seller has made all filings required to vest ownership of all Registered Intellectual Property Assets in Seller, and (b) Seller has not granted any third party any right in or to, or license under, or any covenant or other agreement not to sue or enforce, with respect to any of the Intellectual Property Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.5.7.With respect to each Intellectual Property Asset, (a) Seller possesses all right, title and interest in and to such Intellectual Property Asset, free and clear of all Encumbrances other than Permitted Encumbrances; (b) such Intellectual Property Asset is not subject to any outstanding injunction, judgment, order, decree, ruling or charge affecting Seller's use or ownership of or the validity or enforceability of such Intellectual Property

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Asset; and (c) no Action is pending or, to the Knowledge of Seller, is threatened that challenges the use, validity, enforceability or Seller's ownership of such Intellectual Property Asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.5.8.Seller has used commercially reasonable efforts to prevent unauthorized disclosure of each Intellectual Property Asset that Seller currently uses in the operation of the Business and that derives its value from being kept in confidence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.5.9.Each Intellectual Property Asset will be owned and available for use by Buyer on identical terms and conditions immediately after the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.5.10.All Products and primary packaging materials used by Seller in the Business, and packaging of the Products, comply in all material respects with applicable Laws relating to the marking and identification of Intellectual Property Rights. Other than de minis failure to mark, (a) all Products covered by one or more patents included within the Registered Intellectual Property Assets have been marked with the appropriate patent number or numbers in accordance with 35 U.S.C. § 287, and (b) all Products and primary packaging materials used by Seller in the Business and packaging of the Products that utilize any registered trademark included within the Registered Intellectual Property Assets have been marked with the® designation in accordance with 15 U.S.C. § 1111.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.6.**Inventory**. All Purchased Inventory of the Business, including finished products, components, and raw materials, regardless of location, consist of a quality and quantity usable and, with respect to finished goods, saleable, in the ordinary course of business. All Purchased Inventory has been valued by the Parties at the lesser of cost value or market value as of the Inventory Date. All Purchased Inventory is owned by Seller free and clear of all Encumbrances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.7.**No Conflicts; Consent**. The execution, delivery and consummation of this Agreement and the other Transaction Documents to which Seller is a party, and the consummation of the transactions contemplated hereby and thereby, by Seller: (a) will not violate in any material respect any Law or Governmental Order to which Seller is a party or to which Seller, the Business or the Purchased Assets are bound or subject, conflict in any material respect with or result in a material breach of, or give rise to a right of termination of, require consent under, or accelerate the performance required by, the terms of any material contract to which the Business or any Purchased Asset is bound or subject; and (b) will not constitute a default in any material respect thereunder, or result in the creation of any Encumbrance upon any Purchased Asset. No consent, approval, permit, authorization of, declaration to or filing with any Governmental Authority or any other Person on the part of Seller is required in connection with the execution and delivery of this Agreement or the other Transaction Documents or the consummation of the transactions contemplated hereby or thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.8.**Litigation**. There is no Action pending or to Seller's Knowledge threatened against or involving the Business or any of the Purchased Assets. There are no Actions pending or to Seller's Knowledge threatened against Seller or to which Seller is otherwise a party relating to this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.9.**Customer and Suppliers**. <u>Schedule 6.1.9</u> contains a complete and accurate list of all of Seller's suppliers and customers comprising 90% of the revenue of the Business. Seller has not received notice that any such supplier or customer plans to discontinue doing business with Seller or, after the Closing, Buyer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.10.**Brokers**. Neither Seller nor any Person acting on behalf of Seller has agreed to pay a commission, finder's fee, investment banking fee or similar payment in connection with this Agreement or any other Transaction Document, other than payments for which Buyer will not be liable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.**Buyer's Representations and Warranties.** Buyer hereby represents and warrants to the Seller that the following representations and warranties are, as of the date hereof, and will be, as of the Closing Date, true and correct:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.1.**Execution and Effect of Agreement**. Buyer has the power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer of this Agreement and the other Transaction Documents to which it is a party and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by Buyer. This Agreement has been, and the other Transaction Documents to which Buyer is a party will be, duly executed and delivered by Buyer and constitutes or, when executed by Buyer, will constitute the legal, valid and binding obligation of Buyer, enforceable against the Buyer in accordance with their respective terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.2.**Organization and Good Standing**. Buyer is duly organized, validly existing, and in good standing under the laws of the state of its organization. All corporate action necessary to authorize the execution and delivery of this Agreement by Buyer and the other Transaction Documents to Buyer is a party, and the performance of its obligations hereunder and thereunder, have been duly authorized and taken.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.3.**No Conflicts; Consent**. The execution, delivery and consummation of this Agreement and the other Transaction Documents to which Buyer is a party, and the consummation of the transactions contemplated hereby and thereby, by Buyer: (a) will not violate in any material respect any Law or Governmental Order to which Buyer is a party or to which Buyer is bound or subject, conflict in any material respect with or result in a material breach of, or give rise to a right of termination of, require consent under, or accelerate the performance required by, the terms of any material contract to which Buyer is a party or to which the Buyer's business is bound or subject; and (b) will not constitute a default in any material respect thereunder. No consent, approval, permit, authorization of, declaration to or filing with any Governmental Authority or any other Person on the part of Buyer is required in connection with the execution and delivery of this Agreement or the other Transaction Documents or the consummation of the transactions contemplated hereby or thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.4.**Litigation**. There are no Actions pending or to Buyer's Knowledge threatened against Buyer or to which Buyer is otherwise a party relating to this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.5.**Brokers**. Neither Buyer nor any Person acting on behalf of Buyer has agreed to pay a commission, finder's fee, investment banking fee or similar payment in connection with this Agreement or any other Transaction Document.

7.**COVENANTS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.**Expenses.** Except as otherwise specifically provided in this Agreement, the Parties shall bear their respective expenses incurred in connection with the preparation, execution and performance of this Agreement and the consummation of the transactions contemplated hereby, including all fees and expenses of their respective Representatives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2.**Use of Intellectual Property.** Following the Closing, Seller and its Affiliates shall not challenge the validity or enforceability of the Intellectual Property Assets or the exclusive ownership of any of the Intellectual Property Assets by Buyer or its Affiliates or successors or assigns, provided, however, that Seller may (a) use the Intellection Property Assets on a transitional basis solely to the extent necessary to transition the Business; and (b) assert and defend its right to make such use of the Intellectual Property Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3.**Taxes.** Seller and Buyer shall cooperate fully with each other and make available or cause to be made available to each other in a timely fashion such data regarding the Business which relates to Taxes, prior Tax Returns or filings and other information as may be reasonably required for the preparation by Buyer or Seller of any Tax Returns, elections, consents or certificates required to be prepared and filed by Buyer or Seller and any audit or other examination by any taxing authority or administrative Action relating to liability for Taxes. Buyer and Seller shall retain copies of all Tax Returns, supporting work schedules and other records relating to the Business and which relate to Tax periods or portions thereof ending prior to or on the Closing Date for the amount of time required by applicable Law. All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the other Transaction Documents (including any real property transfer Tax and any other similar Tax) shall be borne equally by the parties and paid or reimbursed, as applicable by each party when due. Seller shall, at its own expense, timely file any Tax Return or other document with respect to such Taxes or fees (and Buyer shall cooperate with respect thereto as necessary).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.4.**Bulk Sales.** Buyer and Seller hereby agree to waive compliance with the provisions of any bulk sales, bulk transfer or similar legislation in the jurisdictions in which any of the Purchased Assets are located. Seller shall, after Closing, pay its creditors as its debts to them become due and take all action necessary to prevent any such creditor from asserting any claim against Buyer or the Purchased Assets or under any such legislation for relief provided therein as a result of such non-compliance. If, for any reason, the Seller fails to make payment to any creditor that would otherwise have been covered by compliance with the Bulk Sales Act, and Buyer is required to make the payment that Seller would owe under this provision, Buyer shall be entitled to deduct from any Royalty or other payment due Seller from Buyer the amount so paid on Seller's behalf.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.5.**Confidential Information**. From and after the Closing, Seller shall, and shall cause each of its respective Affiliates and Representatives to (a) treat all Confidential Information of or relating to the Business, the Purchased Assets, the Buyer, and/or its Affiliates (whenever and however acquired) strictly confidential; (b) not disclose such Confidential Information or permit it to be disclosed, in whole or part, to any Person without the prior written consent of

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Buyer; and (c) not use any such Confidential Information for any purpose except as permitted by this Agreement. Confidential Information subject to this Section shall not include information that is or becomes generally available to the public other than through the Seller's breach of this Agreement; or is communicated to Seller by a Person that had no confidentiality obligations with respect to such information. Nothing herein shall be construed to prevent disclosure of Confidential Information of or relating to the Business as may be required by applicable Law, or pursuant to the valid order of a court of competent jurisdiction or an authorized governmental agency, provided that the disclosure does not exceed the extent of disclosure required by such Law or order.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.6.**Refunds and Remittances**. After the Closing, if either Party or any of its Affiliates receives any refund, payment, or other amount or asset which is properly due and owing to the other Party in accordance with this Agreement or any other Transaction Document, or related to claims or other matters for which the other Party is responsible under any Transaction Document, such Party shall promptly notify the other Party thereof and shall promptly remit (or shall cause to be promptly remitted) such refund, payment or other amount or asset to such Party in accordance with its instructions. In furtherance of the foregoing, from and after the Closing, each Party shall furnish the other Party with such financial and other data and information related to such Party's assets and receivables as the other Party may reasonably request from time to time to the extent necessary to verify compliance with this section.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.7.**Public Announcements; Communications.** Unless otherwise required by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel), no Party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other Party (which consent shall not be unreasonably withheld or delayed), and the Parties shall cooperate as to the timing and contents of any such announcement. Prior to Closing, Buyer shall not contact or communicate with customers, suppliers, vendors, service providers or other business partners of Seller regarding this Agreement or the transactions contemplated hereby without the prior written consent of Seller (not to be unreasonably withheld, conditioned or delayed) and the parties shall cooperate in good faith regarding communicating the consummation of this Agreement to such persons on or after the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.8.**Further Assurances.** Seller and Buyer shall each deliver or cause to be delivered to the other on the Closing Date such instruments as the other may reasonably request for the purpose of carrying out the transactions contemplated by this Agreement and shall take or cause to be taken all actions necessary or appropriate to consummate the transactions contemplated hereby. At any time and from time to time after the Closing, Seller shall, at the reasonable request of Buyer and at Seller's expense and without further consideration, execute and deliver any further deeds, bills of sale, endorsements, assignments and other instruments of conveyance and transfer, and take such other actions as Buyer may reasonably request in order to (a) transfer, convey, assign and deliver to Buyer, and to place Buyer in actual possession and operating control of, and to vest, perfect or confirm, of record or otherwise, in Buyer all right, title and interest in, to and under the Purchased Assets, (b) to assist in the collection or reduction to possession of any and all of the Purchased Assets or to enable Buyer to exercise and enjoy all rights and benefits with respect thereto, or (c) to otherwise carry out the intent and purposes of this Agreement.

8.**INDEMNIFICATION**

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1.**Indemnification by Seller and SLG.** Subject to the survival periods set forth in <u>Section 8.4</u> (Survival), Seller and SLG, jointly and severally, agree to defend, indemnify and hold Buyer and its Affiliates and their respective officers, directors, shareholders, owners, Representatives and lenders (collectively, the "**Buyer Indemnified Parties**") harmless from and against any and all losses, liabilities, damages, obligations, Actions, demands, penalties, interest, costs and expenses (including any and all attorneys' fees and expenses relating thereto, including costs of investigation and litigation incurred by the indemnified party to the extent such party is the prevailing party in making or defending such claim for indemnity) (collectively, the "**Losses**") arising out of (a) any breach of a representation or warranty made by Seller or SLG in this Agreement, including the Transaction Documents; (b) any breach of a covenant, agreement or undertaking of Seller or SLG in this Agreement or in any other document or instrument attached hereto or delivered by Seller in connection with this Agreement; and (c) any Excluded Assets or Excluded Liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.**Indemnification by Buyer.** Subject to the survival periods set forth in <u>Section 8.4</u> (Survival), Buyer hereby agrees to defend, indemnify and hold Seller harmless from and against any and all Losses, arising out of or in connection with (a) any breach of a representation or warranty made by Buyer in this Agreement, including the Transaction Documents; (b) any breach of a covenant, agreement or undertaking of Buyer in this Agreement or in any other document or instrument attached hereto or delivered by Buyer in connection with this Agreement; and (c) any Purchased Assets or Assumed Liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3.**Notices; Defense or Prosecution of Claims.** Upon becoming aware of any claim and upon having reason to believe in the possible existence of any claim entitling a Party to indemnification hereunder, the Party claiming indemnification (the "**Indemnified Party**") shall give the other Party (the "**Indemnifying Party**") prompt written notice of such claim setting forth in such notice all essential facts then known to the Indemnified Party in connection therewith; provided, however, that failure to give such prompt notice or specify all known facts shall not absolve the Indemnifying Party from its liabilities under this Section. If the facts giving rise to a claim for indemnification hereunder arise out of the claim of any third party, or if there is any claim against a third party, the Indemnifying Party may, at its option, assume the defense or the prosecution thereof, with counsel satisfactory to the Indemnified Party, at the sole cost and expense of the Indemnifying Party, unless (i) such claim seeks an order, injunction or other equitable relief against the Indemnified Party or (ii) the Indemnified Party shall have reasonably concluded that there is a conflict of interest between the Indemnifying Party, on the one hand, and the Indemnified Party, on the other hand, in the defense or prosecution of such claim. After any assumption of the defense or prosecution of any claim by the Indemnifying Party, it shall not be liable to the Indemnified Party for any legal expenses thereafter incurred by the Indemnified Party in connection with the defense or prosecution thereof other than reasonable costs of investigation and any costs incurred in the course of such defense or prosecution. In any such event, whether or not the Indemnifying Party does so assume the defense or prosecution thereof, the Indemnifying Party and the Indemnified Party shall cooperate in the defense or prosecution thereof and shall furnish such records and information and attend at such proceedings as may be reasonably requested in connection herewith. The Indemnifying Party shall have no indemnification obligations with respect to any claim or demand that is settled by the Indemnified Party without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld), other than any claim or demand as to which the Indemnifying Party shall not have assumed the defense or prosecution thereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4.**Survival.** (a) The representations and warranties made by the Parties in this Agreement shall survive the Closing and shall continue in full force and effect without limitation after the Closing for a period of 18 months following the Closing Date, except that (i) claims related to fraud and claims arising from or pertaining to the Excluded Liabilities shall survive indefinitely; and (ii) claims arising from the breach of representations and warranties contained in <u>Sections 6.1.1</u>, <u>6.1.2</u>, <u>6.1.4</u>, <u>6.1.10</u> and <u>6.2.1</u>, <u>6.2.2</u>, <u>6.2.3</u> and <u>6.2.5</u> shall survive for the applicable statute of limitations plus sixty (60) days and (b) covenants and agreements made by the Parties in this Agreement shall survive for the period provided in such covenants and agreements, if any, or until fully performed; provided, however, that any obligations under <u>Section 8.1</u> and <u>Section 8.2</u> shall not terminate with respect to any Losses, as to which the Indemnified Party shall have given notice to the Indemnifying Party in accordance with <u>Section 8.3</u> before the termination of the applicable survival period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.**Limitations**. Notwithstanding anything herein to the contrary, the maximum amount subject to indemnification under hereunder shall not exceed $75,000, other than with respect to any breach of any representation or warranty in Sections <u>6.1.1</u>, <u>6.1.2, 6.1.4</u>, and <u>6.1.10</u>, which amount subject to indemnification shall not exceed the Purchase Price, and other than with respect to claims related to fraud, which amount subject to indemnification will be uncapped. Further, Buyer shall not make a claim under <u>Section 8.1</u> until such claim or claims in the aggregate exceed $20,000 ("**Basket**"), in which event Seller or SLG shall be liable for all such losses from the first dollar; provided, however, the Basket shall not apply with respect claims related to fraud. No Party shall have liability under this Agreement to the extent that such liability resulted from the willful misconduct or gross negligence of the other Party hereto. Each Party hereto shall take and shall cause to be taken steps reasonably necessary to mitigate any liability.

9.**MISCELLANEOUS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1.**Amendment and Modification; Waiver.** This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.**Successors and Assigns.** This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns. None of the Parties may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No transfer or assignment shall relieve the transferring or assigning Party of any of its obligations hereunder. Without limiting the forgoing, Buyer shall not sell, assign, transfer, license or otherwise convey the Business, or any part of the Business, unless the purchaser is reasonably satisfactory to Seller and agrees in writing to perform all obligations of Buyer under this Agreement and the Transition Services Agreement, including with respect to the Royalty Payment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3.**No Third-Party Beneficiaries.** Except as provided in <u>Section 8</u> (Indemnification), this Agreement is for the sole benefit of the Parties and their respective successors and permitted

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assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4.**Choice of Law; Submission to Jurisdiction; Waiver of Jury Trial.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4.1.This Agreement shall be governed by and construed under and the rights of the Parties determined in accordance with the Laws of the State of Delaware (without reference to the choice of law provisions of the State of Delaware).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4.2.Each of the Parties irrevocably consents to the service of any process, pleading, notices or other papers by the mailing of copies thereof by registered, certified or first-class mail, postage prepaid, to such Party at such Party's address set forth herein, or by any other method provided or permitted under the Laws of the State of Delaware.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4.3.To the extent that a Party has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, such Party hereby irrevocably waives such immunity in respect of its obligations pursuant to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4.4.Except as otherwise provided in this Agreement, any proceeding or litigation arising out of relating to this Agreement or any contemplated transaction hereunder shall be brought in the courts of the State of Delaware, and each of the Parties irrevocably submits to the exclusive jurisdiction of each such court in any such proceeding or litigation, waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims in respect of such proceeding or litigation shall be heard and determined only in any such court, and agrees not to bring any proceeding or litigation arising out of or relating to this Agreement or any contemplated transaction hereunder in any other court. Each Party acknowledges and agrees that this section constitutes a voluntary and bargained-for agreement between the Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4.5.EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5.**Notices.** All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third (3<sup>rd</sup>) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this <u>Section 9.5</u>):

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| | |
|:---|:---|
| &nbsp;&nbsp;If to Seller or SLG: | &nbsp;&nbsp;Scott's Liquid Gold-Inc.<br>8400 E. Crescent Parkway, Suite 450<br>Greenwood Village, CO 80111<br>Attention: Chief Financial Officer<br>|
| &nbsp;&nbsp;with a copy to: | &nbsp;&nbsp;Holland & Hart LLP<br>555 17th Street<br>Denver, CO 80202<br>Attention: Amy L. Bowler<br>|
| &nbsp;&nbsp;If to Buyer: | &nbsp;&nbsp;AFAM Concept, Inc.<br>7401 S. Pulaski Road<br>Chicago, Illinois 60629<br>Attention: Zain Ali<br>|
| &nbsp;&nbsp;with a copy to:  | &nbsp;&nbsp;211 West Wacker Drive<br>Suite 710<br>Chicago,IL 60606<br>Attention: Richard Grossman<br>|

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.6.**Entire Agreement.** This Agreement, together with the exhibits and schedules hereto, the other Transaction Documents, and the Confidentiality Agreement, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior understandings and agreements, whether written or oral, and no Party shall be liable or bound to any other Party in any manner by any warranties, representations or covenants except as specifically set forth herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.7.**Interpretation.** For purposes of this Agreement, (a) the words "include," "includes" and "including" shall be deemed to be followed by the words "without limitation"; (b) the word "or" is not exclusive; and (c) the words "herein," "hereof," "hereby," "hereto" and "hereunder" refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (i) to Articles, Sections, Schedules and Exhibits mean the Articles and Sections of, and Schedules and Exhibits attached to, this Agreement; (ii) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof; and (iii) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.8.**Headings.** The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.9.**Severability.** If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in

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any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.10.**Specific Performance.** The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.11.**Non-disclosure.** This Agreement is confidential to the Parties and their Representatives, and is subject to that certain Mutual Confidentiality and Non-Solicitation Agreement dated June 20, 2022 (the "**Confidentiality Agreement**"), which continues in full force and effect and shall continue in full force and effect after Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.12.**Attorneys' Fees.** In the event of any action to enforce, interpret or construe this Agreement, in addition to any other relief to which it may be entitled at law or in equity, the prevailing party shall be entitled to its reasonable costs incurred, including attorneys' fees and the costs of appeal, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.13.**Counterparts; Electronic Signatures.** This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

10.**DEFINITIONS.** For purposes of this Agreement, terms capitalized herein shall be defined in accordance with the following definitions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1."**Accounts Receivable**" shall mean all of Seller's accounts, accounts receivable, notes and notes receivable related to the Business, including all rights of the Seller to payment for services rendered that are payable to the Seller, including any security held for the payment thereof, less any allowance for doubtful accounts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2."**Action**" shall mean any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3."**Affiliate**" shall mean, as to a specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by or is under common control with, the Person specified. The term "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4."**Assumed Liabilities**" shall have the meaning set forth in <u>Section 3.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.5."**Bill of Sale**" shall have the meaning set forth in <u>Section 5.2.2</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.6."**Business**" shall have the meaning set forth in the Recitals.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.7."**Business Day**" shall mean any day other than a Saturday, Sunday or holiday on which national banking associations in the State of Colorado are authorized or required to be closed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.8."**Buyer**" shall have the meaning set forth in the Preamble.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.9."**Buyer Indemnified Parties**" shall have the meaning set forth in <u>Section 8.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.10."**Cash Purchase Price**" shall have the meaning set forth in <u>Section 4.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.11."**Closing**" shall have the meaning set forth in <u>Section 5.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.12."**Closing Date**" shall have the meaning set forth in <u>Section 5.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.13."**Closing Inventory Statement**" shall mean the Inventory Purchase Price pursuant to <u>Section 4.2.2.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.14."**Closing Payment**" shall have the meaning set forth in <u>Section 4.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.15."**Confidential Information**" shall mean all non-public, confidential or proprietary information, whether in written, electronic or other form or media, and whether or not marked, designated or otherwise identified as "confidential," including: (a) information concerning the past, present and future business affairs relating to the Business and/or the Purchased Assets, including finances, customer information, supplier information, products, services, organizational structure and internal practices, forecasts, sales and other financial results, records and budgets, and business, marketing, development, sales and other commercial strategies of Seller, Buyer, and/or or their respective Affiliates, and/or or their respective customers, suppliers, and other third parties having a relationship with the Business; (b) unpatented inventions, ideas, methods and discoveries, trade secrets, know-how, unpublished patent applications and other confidential Intellectual Property Rights; (c) designs, specifications, documentation, components, source code, object code, images, icons, audiovisual components and objects, schematics, drawings, protocols, processes, and other visual depictions, in whole or in part, of any of the foregoing; (d) Confidential Information of any third party included with, or incorporated in, any information used by Seller, Buyer, and/or or their respective Affiliates in the Business or in connection with the Purchased Assets; (e) other information that would reasonably be considered non-public, confidential or proprietary given the nature of the information and the Business; and (f) notes, analyses, compilations, reports, forecasts, studies, samples, data, statistics, summaries, interpretations and other materials prepared by or for Seller, Buyer and/or their respective Affiliates that contain, are based on, or otherwise reflect or are derived, in whole or in part, from any of the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.16."**Confidentiality Agreement**" shall have the meaning set forth in <u>Section 9.11</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.17."**Disclosure Schedules**" shall have the meaning set forth in <u>Section 6.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.18."**Encumbrance**" shall mean any lien (including mechanics, warehousemen, laborers and landlords liens), charge, claim, hypothecation, pledge, security interest, mortgage, preemptive right, right of first refusal, option, judgment, title defect right of first refusal, easement or conditional sale or other title retention agreement or other restriction or encumbrance of any kind.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.19."**Environmental Claim**" shall mean any Action, Governmental Order, Encumbrance, fine, penalty, or, as to each, any settlement or judgment arising therefrom, (including costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, release of, or exposure to, any hazardous materials; or (b) non-compliance with any Environmental Law or term or condition of any environmental Permit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.20."**Environmental Law**" shall mean any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any hazardous materials.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.21."**Estimated Inventory Purchase Price**" shall mean the Inventory Purchase Price pursuant to <u>Section 5.3.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.22."**Excluded Assets**" shall have the meaning set forth in <u>Section</u> 2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.23."**Excluded Inventory**" shall have the meaning set forth in <u>Section 2.2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.24."**Excluded Liabilities**" shall have the meaning set forth in <u>Section 3.2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.25."**Financial Data**" shall have the meaning set forth in <u>Section 6.1.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.26."**GAAP**" shall mean United States generally accepted accounting principles in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.27."**Governmental Authority**" shall mean any governmental, regulatory or administrative body, agency, subdivision or authority, any court or judicial authority, arbitrator (public or private) or any public, private or industry regulatory authority, whether national, federal, state, local, foreign or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.28."**Governmental Order**" shall mean any order, writ, judgment, injunction, decree, stipulation, ruling, determination or award entered by or with any Governmental Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.29."**Indemnified Party**" shall have the meaning set forth in <u>Section 8.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.30."**Indemnifying Party**" shall have the meaning set forth in <u>Section 8.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.31."**Intellectual Property Assets**" shall have the meaning set forth in <u>Section 1.2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.32."**Intellectual Property Assignments**" shall have the meaning set forth in <u>Section 5.2.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.33."**Intellectual Property Rights**" shall mean intellectual property rights, including (a) inventions, designs, algorithms and other industrial property, and all enhancements and

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improvements thereto, whether patentable or unpatentable, and whether or not reduced to practice, and all patents therefor or in connection therewith (including all U.S. and foreign patents, patent applications, patent disclosures, mask works, and all divisions, continuations, continuations-in-part, reissues, re-examinations and extensions thereof); (b) trademarks, trade names and service marks, trade dress, logos, internet domain names, social media handles and accounts, marketing material (commercial advertisements, sell sheets, brochures, digital marketing material etc.) and other commercial product or service designations, and all goodwill and similar value associated with any of the foregoing, and all applications, registrations, and renewals in connection therewith; (c) copyrights (whether or not registered), moral rights in relation to all works of authorship, and all registrations and applications for registration thereof, as well as rights to renew copyrights; (d) trade secrets (as such are determined under applicable Law), know-how and other confidential business information, including technical information; (e) any and all other rights to existing and future registrations and applications for any of the foregoing and all other proprietary rights in, or relating to, any of the foregoing, including remedies against and rights to sue for past infringements, and rights to damages and profits due or accrued in or relating to any of the foregoing; (f) any and all other intangible proprietary property, information and materials; and (g) any contracts granting any right relating to or under the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.34."**Inventory**" shall have the meaning set forth in <u>Section 1.5</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.35."**Inventory Date**" shall have the meaning set forth in <u>Section 4.2.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.36."**Inventory Statement**" shall have the meaning set forth in <u>Section 4.2.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.37."**Knowledge**", shall mean, with respect to Seller and SLG, the actual or constructive knowledge of each of the directors and officers of the Seller and SLG, after due inquiry.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.38."**Law**" shall mean any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.39."**Liability**" shall mean any direct or indirect indebtedness, liability, assessment, claim, loss, damage, deficiency, obligation or responsibility, expense (including reasonable attorneys' fees, court costs, accountants' fees, environmental consultants' fees, laboratory costs and other professionals' fees), order, settlement payments, Taxes, fines and penalties, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise (including any liability under any guaranties, letters of credit, performance credits or with respect to insurance loss accruals).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.40."**Names**" shall have the meaning set forth in <u>Section 1.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.41."**Party**" and "**Parties**" shall have the meaning set forth in the Preamble.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.42."**Permitted Encumbrances**" shall mean: written outbound licenses of the Intellectual Property Assets entered into in the ordinary course of business with manufacturers and service providers; liens arising under the Seller's credit facilities, which will be released with respect to the Purchased Assets upon the Closing; liens for Taxes, assessments and other charges of Governmental Authorities not yet due and payable or being contested in good faith by appropriate proceedings; and mechanics', workmens', repairmens', warehousemens', carriers' or other like liens arising or incurred in the ordinary course of business or by operation of Law

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and which are not material to the Purchased Assets, are not delinquent, and none of such liens will individually or in the aggregate impair the continued use and operation of the property to which they relate in the Business as presently conducted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.43."**Person**" shall mean, any natural person, corporation, partnership, proprietorship, other business organization, trust, union, association or Governmental Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.44."**Pre-Closing Tax Period**" shall mean any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.45."**Products**" shall mean shampoo products marketed under the name "Prell."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.46."**Purchase Price**" shall have the meaning set forth in <u>Section 4.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.47."**Purchased Assets**" shall have the same meaning set forth in <u>Section</u> 1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.48."**Purchased Inventory**" shall have the meaning set forth in <u>Section 1.5</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.49."**Records**" shall have the meaning set forth in <u>Section 1.4</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.50."**Registered Intellectual Property Asset**" shall have the meaning set forth in <u>Section 6.1.5.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.51."**Representative**" shall mean, as to a specified Person, any officer, director, agent, employee, attorney, accountant, consultant or other representative of the Person specified.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.52."**Seller**" shall have the meaning set forth in the Preamble.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.53."**SLG**" shall have the meaning set forth in the Preamble.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.54."**Taxes**" shall mean all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, documentary, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other Taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.55."**Tax Return**" shall mean any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.56."**Transaction Documents**" shall mean this Agreement, the Bill of Sale, the Assignment and Assumption Agreement, the Intellectual Property Assignments, the Transition Services Agreement and all other agreements, instruments and documents required to be delivered at Closing or in connection with the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.57."**Transition Services Agreement**" shall have the meaning set forth in <u>Section 5.2.4</u>.

**[Remainder of page intentionally left blank; Signatures on following page]**

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IN WITNESS WHEREOF, the Parties hereto have caused this Asset Purchase Agreement to be executed as of the Effective Date by their respective officers thereunto duly authorized.

**"SELLER"**

Neoteric Cosmetics, Inc.

<u>/s/ Tisha Pedrazzini</u>

Printed Name: Tisha Pedrazzini

Title: President

**"SLG"**

Scott's Liquid Gold-Inc.

<u>/s/ Tisha Pedrazzini</u><br> Printed Name: Tisha Pedrazzini<br>Title: President

**"BUYER"**

AFAM Concept, Inc.

<u>/s/ Zain Ali</u><br> Printed Name: Zain Ali<br>Title: President

Signature Page to Asset Purchase Agreement

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## Ex-10

**EXHIBIT 10.12**

**ASSET PURCHASE AGREEMENT**

This Asset Purchase Agreement (this "**Agreement**"), dated as of January 23, 2023, is by and among Nakoma Products LLC, a limited liability company organized and existing under the laws of the State of Illinois ("**Buyer**"), SLG Chemicals, Inc., a corporation organized and existing under the laws of the State of Colorado, and Scott's Liquid Gold-Inc., a corporation organized and existing under the laws of the State of Colorado (collectively with SLG Chemicals, Inc., "**Seller**"). Buyer and Seller shall be collectively referred to herein as the "**Parties**" and, each, individually, a "**Party**."

**RECITALS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.Seller (or its Affiliates) owns and operates the "Scott's Liquid Gold®" brand, which includes the Scott's Liquid Gold® Wood Care (aerosol and pourable) and Scott's Liquid Gold® Floor Restore sub-brands (the "**Business**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.Seller desires to sell, convey, transfer, assign and deliver to Buyer (or its designated Affiliates), and Buyer desires to (or to cause its designated Affiliates to) purchase and acquire from Seller, all right, title and interest in and to certain assets related to the Business, together with certain obligations and liabilities relating thereto, as more particularly set forth herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.Concurrently with the execution and delivery of this Agreement and as a condition to the willingness of Buyer to enter into this Agreement, Seller will enter into a Transition Services Agreement with Buyer, as more particularly described herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.In furtherance of the consummation of the transactions contemplated by this Agreement, the Parties desire to enter into this Agreement.

**NOW, THEREFORE**, in consideration of the foregoing recitals, which are hereby incorporated in this Agreement, the mutual promises made herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the Parties, intending to be legally bound hereby, agree as follows.

**AGREEMENT**

&nbsp;&nbsp;&nbsp;&nbsp;1.**PURCHASED ASSETS.** At Closing and subject to the terms and conditions of this Agreement, Seller shall (and shall cause its Affiliates, as applicable, to) sell, convey, assign, transfer and deliver to Buyer, free and clear of Encumbrances other than Permitted Encumbrances, all of Seller's or such Affiliates' right, title and interest in, under, and to all of the assets, rights, claims, properties, contractual rights, goodwill, going concern value, and interests related to the Business, wherever situated, excluding the Excluded Assets (collectively, the "**Purchased Assets**"), including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1.**Names.** All rights to the names "Scott's Liquid Gold®," "Scott's Liquid Gold® Wood Care," and "Scott's Liquid Gold® Floor Restore," and "Liquid Gold®," together with

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any derivatives thereof and all logos, designs, phrases and other identifications of or relating to such names and the goodwill associated therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2.**Intellectual Property.** All Intellectual Property Rights used in the Business, as set forth on Schedule 1.2 (collectively, the "**Intellectual Property Assets**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3.**Assumed Contracts.** All rights and interests to and under the Contracts, commitments, bids and other contract rights of Seller or any Affiliate of Seller, as applicable, existing on the Closing Date, in each case related to or arising from the Business and set forth on <u>Schedule 1.3</u> (collectively, the "**Assumed Contracts**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4.**Records.** Originals, or where not available, copies, of all books and records, including books of account, ledgers and general, financial and accounting records, customer lists, customer purchasing histories, price lists, distribution lists, supplier lists, production data, quality control records and procedures, customer complaints and inquiry files, research and development files, records and data (including all correspondence with any Governmental Authority), sales material and records (including pricing history, total sales, terms and conditions of sale, sales and pricing policies and practices), strategic plans, internal financial statements, marketing and promotional surveys, material and research and files relating to the Intellectual Property Assets (collectively, the "**Records**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.5.**Permits.** All Permits held relating to and required for the operation of the Business, including the Permits set forth in <u>Schedule 1.5</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.6.**Inventory.** All inventory and rights therein (including all inventory, finished goods, raw materials, work in progress, packaging, supplies, parts and other inventories) (the "**Inventory**"), wherever located, related to the Business, other than Excluded Inventory (the "**Purchased Inventory**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.7.**Goodwill.** All rights in the goodwill associated with the Business and the going concern value of the Business.

&nbsp;&nbsp;&nbsp;&nbsp;2.**EXCLUDED ASSETS.** Notwithstanding anything to the contrary contained herein, the following assets of Seller shall not be part of the sale and purchase contemplated by this Agreement (collectively, the "**Excluded Assets**"). The Excluded Assets are excluded from the Purchased Assets, and shall remain the property of Seller after the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.**Accounts Receivable.** Accounts Receivable of Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2.**Organizational Documents.** The corporate seals, organizational documents, minute books, stock books, Tax Returns, books of account or other records having to do with the corporate organization of Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3.**Excluded Contracts.** Contracts that are not included as Assumed Contracts (the "**Excluded Contracts**").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4.**Excluded Inventory**. Inventory that is (i) damaged, (ii) obsolete, discontinued, outdated, dead or excess, including Inventory that is more than twelve (12) months old as of the Closing Date and/or (iii) not of useable or saleable quality or quantity in the ordinary course of business (collectively, the "**Excluded Inventory**"). Excluded Inventory shall include, without limitation, such items of inventory set forth on <u>Schedule 2.4</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5.**Cash and Cash Equivalents.** All of Seller's cash and cash equivalents on hand or in bank accounts and short term investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6.**Prepaid Expenses.** All prepaid expenses and security deposits related to the Business, including with respect to the Purchased Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7.**800 Telephone Number.** The 800 telephone number of Seller used in connection with the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.8.**Miscellaneous Assets.** All other assets of Seller which are not used in or otherwise related primarily or exclusively to the Business.

&nbsp;&nbsp;&nbsp;&nbsp;3.**LIABILITIES.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1.**Assumed Liabilities.** Subject to the terms and conditions set forth herein, Buyer shall assume and agree to pay, perform and discharge only the following Liabilities of Seller arising after the Closing under the Purchased Assets (collectively, the "**Assumed Liabilities**"), and no other Liabilities: (a) all Liabilities in respect of the Purchased Assets to the extent that such Liabilities thereunder are required to be performed after the Closing Date, were incurred in the ordinary course of business, and do not relate to any breach, default or violation by Seller on or prior to the Closing; and (b) those Liabilities of Seller set forth in <u>Schedule 3.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.**Excluded Liabilities.** Notwithstanding the provisions of <u>Section 3.1</u> or any other provision in this Agreement to the contrary, Buyer shall not assume and shall not be responsible to pay, perform or discharge any Liabilities of Seller or any of its Affiliates of any kind or nature whatsoever other than the Assumed Liabilities (the "**Excluded Liabilities**"). Seller shall, and shall cause each of its Affiliates to, pay and satisfy in due course all Excluded Liabilities which they are obligated to pay and satisfy. Without limiting the generality of the foregoing, the Excluded Liabilities shall include, but not be limited to, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.1.any Liabilities of Seller arising or incurred in connection with the negotiation, preparation, investigation and performance of this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, including fees and expenses of counsel, accountants, consultants, advisors and others;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.2.any Liability for (a) Taxes of Seller (or any stockholder or Affiliate of Seller) or relating to the Business, the Purchased Assets or the Assumed Liabilities for any Pre-Closing Tax Period; (b) Taxes that arise out of the consummation of the transactions contemplated hereby or that are the responsibility of Seller pursuant to <u>Section 8.3</u> (Taxes) of this Agreement; or (c) other Taxes of Seller (or any stockholder or Affiliate of Seller) that becomes a Liability of Buyer under any common law doctrine of de facto merger or transferee or successor liability or otherwise by operation of contract or Law relating to the period prior to the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.3.any Liabilities relating to or arising out of the Excluded Assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.4.any Liabilities, including in respect of any pending or threatened Action, arising out of, relating to or otherwise in respect of the operation of the Business or the Purchased Assets on or prior to the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.5.any product Liability or similar claim for injury to a Person or property which arises out of or is based upon any express or implied representation, warranty, agreement or guaranty made by Seller, or by reason of the improper performance or malfunctioning of a product, improper design or manufacture, failure to adequately package, label or warn of hazards or other related product defects of any products at any time manufactured or sold or any service performed by Seller to the extent such Liability or claims relates to the Business on or prior to the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.6.any recall, design defect or similar claims of any products manufactured or sold or any service performed by Seller to the extent related to the Business on or prior to the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.7.any Environmental Claims, or Liabilities under Environmental Laws, to the extent arising out of or relating to facts, circumstances or conditions existing on or prior to the Closing or otherwise to the extent arising out of any actions or omissions of Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.8.any accounts payable of Seller, other than the Assumed Liabilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.9.any Liabilities under the Excluded Contracts or any other Contracts, (a) which are not validly and effectively assigned to Buyer pursuant to this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) which do not conform to the representations and warranties with respect thereto contained in this Agreement; or (c) to the extent such Liabilities arise out of or relate to a breach by Seller of such Contracts prior to Closing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.10.any Liabilities associated with indebtedness of Seller and/or the Business; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.11.any Liabilities arising out of, in respect of or in connection with the failure by Seller or any of its Affiliates to comply with any Law or Governmental Order.

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&nbsp;&nbsp;&nbsp;&nbsp;4.**THIRD PARTY CONSENTS.** To the extent that Seller's rights under any Assumed Contract or Permit constituting a Purchased Asset, or any other Purchased Asset, may not be assigned to Buyer without the consent of another Person which has not been obtained as of Closing, this Agreement shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful, and Seller, at its expense, shall use commercially reasonable efforts to obtain any such required consent(s) as promptly as possible. If any such consent shall not be obtained, or if any attempted assignment would be ineffective or would impair Buyer's rights under the Purchased Asset in question so that Buyer would not in effect acquire the benefit of all such rights, Seller, to the maximum extent permitted by Law and the Purchased Asset, shall act after the Closing in order to obtain for it the benefits thereunder and shall cooperate, to the maximum extent permitted by Law and the Purchased Asset, with Buyer in any other reasonable arrangement agreed to by the parties designed to provide such benefits to Buyer.

&nbsp;&nbsp;&nbsp;&nbsp;5.**PURCHASE PRICE.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.**Purchase Price.** The Purchase Price shall be One Million Nine Hundred Thousand and 00/100 Dollars ($1,900,000.00), plus the Royalty Payments (collectively, as adjusted pursuant to <u>Section 5.3</u> below, the "**Purchase Price**"). In consideration for the Purchased Assets and other rights of Seller hereunder and the assumption of the Assumed Liabilities, at the Closing Buyer shall pay to (or to the direction of) Seller an amount equal to One Million Nine Hundred Thousand and 00/100 Dollars ($1,900,000.00) (the "**Closing Amount**"). Buyer shall deliver the Closing Amount to Seller by wire transfer of immediately available funds to an account designated by Seller in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.**Royalty Payments.** As further consideration for Purchased Assets and other rights of Seller hereunder and the assumption of the Assumed Liabilities, Buyer shall pay Seller the Royalty Payments, which shall be determined in accordance the terms of this <u>Section 5.2</u>, subject to <u>Section 2(b)(ii)</u> of the Transition Services Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.1.During the Royalty Term, Buyer shall pay to Seller quarterly royalty payments equal to two percent (2.0%) of the Gross Sales of the Business (each such payment, a "**Royalty Payment**," and collectively, the "**Royalty Payments**"); provided, however, that no Royalty Payments shall be paid until such time as the covenants set forth in <u>Section 8.8</u> have been performed with respect to the

U.S. Patent and Trademark Office and the appropriate Governmental Authorities in Canada, whereupon accrued but unpaid Royalty Payments shall be paid within ten (10) Business Days of Seller providing to Buyer confirmation of the name correction, and thereafter Royalty Payments shall be paid quarterly during the remainder of the Royalty Term; and provided further that in the event that the covenants set forth in <u>Section 8.8</u> have not been performed with respect to the U.S. Patent and Trademark Office and the appropriate Governmental Authorities in Canada before the end of the Royalty Term, no Royalty Payments shall be paid.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.2.Within ten (10) Business Days after the end of each calendar quarter during the Royalty Term, Buyer shall furnish to Seller written report (each, a "**Quarterly Royalty Report**") showing in reasonably specific detail: (i) the calculation of Gross Sales during such calendar quarter; and (ii) the calculation of the amount of the Royalty Payment that shall have accrued based upon such Gross Sales. Royalty Payments shown to have accrued by each Quarterly Royalty Report provided for under this Section shall be due on the date such Quarterly Royalty Report is due. Royalty Payments, in whole or in part, may be made in advance of such due date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.3.As promptly as practicable following the end of each calendar year during the Royalty Term (but not later than thirty (30) days thereafter), Buyer shall prepare and deliver to Seller a report (the "**Annual Royalty Report**") setting forth, in reasonable detail, audited financial data used to calculate Gross sales during such calendar year and Buyer's calculation of the applicable Royalty Payments during such calendar year. Seller shall have thirty (30) days after receipt of Buyer's Annual Royalty Report to notify Buyer of any disputes regarding the Annual Royalty Report or calculation of the applicable Royalty Payments made during such calendar year. During the 30-day review period, Seller shall have full access to Buyer's work papers and to the persons who prepared the Annual Royalty Report. Within fourteen (14) days of the earlier to occur of (i) the expiration of the 30-day review period, and (ii) notice to Buyer from Seller that there is no dispute regarding the Annual Royalty Report, Buyer shall pay to Seller, or Seller shall pay to Buyer, as applicable, the difference between Royalty Payments made during such calendar year, and the amount of Royalty Payments accrued as set forth in the Annual Royalty Report. If within the 30- day review period Seller notifies Buyer of any good faith disputes in accordance with this <u>Section 5.2.3</u>, then the Parties will negotiate in good faith in an effort to resolve those disputes. If the Parties are unable to resolve any dispute within thirty (30) days after Buyer receives notice, then either party may submit that dispute for resolution to an accountant with an independent accounting firm of recognized national or regional standing mutually acceptable to Buyer and Seller and, unless the parties otherwise agree, which accountant is not then providing, and has not provided at any time during the period commencing two years prior to the Closing Date through the date of its determination pursuant to this <u>Section 5.2.3</u>, services to any of Buyer, Seller, or any of their respective Affiliates. The resolution of any dispute by that accounting firm shall be rendered within thirty (30) days after submission of the dispute to the accounting firm and shall be conclusive and binding upon the Parties. The substantially non-prevailing Party shall be responsible for the fees and costs of the accounting firm. Within fourteen (14) days of the resolution of any dispute in accordance with this <u>Section 5.2.3</u>, Buyer shall pay to Seller, or Seller shall pay to Buyer, as applicable, the difference between Royalty Payments made during such calendar year, and the amount of Royalty Payments accrued as resolved pursuant to this <u>Section 5.2.3</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3.**Purchase Price Adjustment.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3.1.Within thirty (30) days after the Closing Date, Buyer shall prepare and deliver to Seller a statement setting forth Buyer's calculation, as of the Closing Date, of that portion of the Inventory which consists of finished goods (the "**Closing Inventory**") prepared in accordance with generally accepted (i.e., GAAP) inventory valuation principles and methodologies. Seller shall have ten (10) days after receipt of Buyer's Closing Inventory calculation to notify Buyer of any disputes regarding the Closing Inventory calculation. During the 10-day review period, Seller shall have full access to Buyer's work papers and to the persons who prepared the Closing Inventory calculation. If Seller notifies Buyer of any good faith disputes in accordance with this <u>Section 5.3.1</u>, then the Parties will negotiate in good faith in an effort to resolve those disputes. If the Parties are unable to resolve any dispute within thirty (30) days after Buyer receives notice, then either party may submit that dispute for resolution to an accountant with an independent accounting firm of recognized national or regional standing mutually acceptable to Buyer and Seller and, unless the parties otherwise agree, which accountant is not then providing, and has not provided at any time during the period commencing two years prior to the Closing Date through the date of its determination pursuant to this <u>Section 5.3.1</u>, services to any of Buyer, Seller, or any of their respective Affiliates. The resolution of any dispute by that accounting firm shall be rendered within thirty (30) days after submission of the dispute to the accounting firm and shall be conclusive and binding upon the Parties. The substantially non-prevailing Party shall be responsible for the fees and costs of the accounting firm.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3.2.If the Closing Inventory, as determined in accordance with <u>Section 5.3.1</u> above, is less than the Estimated Closing Inventory, then Seller shall pay to Buyer the amount of the deficiency. If the Closing Inventory, as determined in accordance with <u>Section 5.3.1</u>, exceeds the Estimated Closing Inventory, then Buyer shall pay to Seller the excess amount. All payments under this subsection shall be made within ten (10) days (1) after conclusion of the 10-day review period described in <u>Section 5.3.1</u> or, (2) if Seller notifies Buyer of a dispute under <u>Section 5.3.1</u>, after final resolution of any disputes under <u>Section 5.3.1</u>. For purposes of this <u>Section 5.3.2</u>, "**Estimated Closing Inventory**" shall mean One Million One Hundred Thousand Dollars ($1,100,000).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4.**Purchase Price Allocation.** Seller and Buyer shall agree within thirty (30) days after the Closing Date on the allocation of the Purchase Price among the Purchased Assets and Assumed Liabilities and any other amounts required to be included in the determination of the Purchase Price for U.S. federal income tax purposes, and such allocation shall be prepared in accordance with Section 1060 of the Code and the requirements of IRS Form 8594. The Parties shall file all Tax Returns, reports and other documents, including an asset acquisition statement on Form 8594, required by any competent taxing authority in a timely manner consistent with the agreed

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allocation. The Parties acknowledge that the Purchase Price subject to allocation may be different for each of the Parties (e.g., due to inclusion of differing amounts of transaction cost).

&nbsp;&nbsp;&nbsp;&nbsp;6.**CLOSING.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.**Closing.** Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the "**Closing**") shall take place simultaneous with the execution and delivery of this Agreement (such date, the "**Closing Date**") by means of an electronic closing in which the closing documentation will be delivered by electronic mail exchange of signature pages in PDF or functionally equivalent electronic format, which delivery will be effective without any further physical exchange of the original copies. The Closing will be deemed effective as of 12:01 a.m. U.S. Eastern time on the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.**Seller's Closing Deliveries.** At Closing, Seller shall deliver, or cause to be delivered, to Buyer each of the following, as applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.1.the Purchased Assets, free and clear of all Encumbrances other than Permitted Encumbrances;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.2.a bill of sale and assignment and assumption agreement ("**Bill of Sale**"), and other instruments of conveyance as may be necessary or appropriate to transfer to Buyer as of the Closing Date good and marketable title to all of the Purchased Assets and effecting the assignment to and assumption by Buyer of the Assigned Contracts and the Assumed Liabilities, duly executed by Seller, all in form and substance reasonably satisfactory to Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.3.notices of assignment(s) of all right, title and interest of Seller in and to the Registered Intellectual Property Assets to Buyer, duly executed by Seller, all in form and substance reasonably satisfactory to Buyer (the "**Intellectual Property Assignments**");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.4.a transition services agreement by and between Buyer and Seller, wherein Seller agrees to provide certain services that will allow Buyer to successfully and efficiently transfer the Business, duly executed by Seller, all in form and substance reasonably satisfactory to Buyer (the "**Transition Services Agreement**");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.5.a copy of a certificate of good standing of Seller;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.6.a copy of all resolutions adopted by the board of directors (or other similar governing body) of Seller, authorizing the execution delivery and performance of this Agreement and the consummation of the transactions contemplated hereby;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.7.evidence in form and substance reasonably satisfactory to Buyer that all third- party consents have been received and that no such consents have been revoked; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.8.such other instruments as shall be reasonably requested by Buyer to carry out the transactions described herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.**Buyer's Closing Deliveries.** At Closing, Buyer shall deliver, or cause to be delivered, to Seller:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.1.the Closing Amount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.2.the Bill of Sale, duly executed by Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.3.the Intellectual Property Assignments, duly executed by Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.4.the Transition Services Agreement, duly executed by Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.5.a copy of a certificate of good standing of Buyer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.6.a copy of all resolutions adopted by the board of directors (or other similar governing body) of Buyer, authorizing the execution delivery and performance of this Agreement and the consummation of the transactions contemplated hereby; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.7.such other instruments as shall be reasonably requested by Seller to carry out the transactions described herein.

&nbsp;&nbsp;&nbsp;&nbsp;7.**Representations and Warranties.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.**Seller's Representations and Warranties.** Seller (i.e., both SLG Chemicals, Inc. and Scott's Liquid Gold-Inc., jointly and severally) represents and warrants to Buyer that, except as otherwise set forth in the disclosure schedules referred to in this <u>Section 7.1</u> (the "**Disclosure Schedules**"), the following representations and warranties are, as of the date hereof, and will be, as of the Closing Date, true and correct:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.1.** **Execution and Effect of Agreement**. Seller has the power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller of this Agreement and the other Transaction Documents to which it is a party and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by Seller. This Agreement has been, and the other Transaction Documents to which Seller is a party will be, duly executed and delivered by Seller and constitutes or, when

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executed by Seller, will constitute the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with their respective terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.2.** **Organization and Good Standing; Binding Obligation**. Seller is a corporation duly organized, validly existing, and in good standing under the laws of the State of Colorado. Seller has all requisite power, and the general power to own, lease, and operate the Purchased Assets and to carry on operations relating to the Business as now conducted, and to enter into this Agreement and the other Transaction Documents to which it is a party and perform all of its obligations hereunder and thereunder. All action necessary to authorize the execution and delivery by Seller of this Agreement and the other Transaction Documents to which it is a party and other documents required to be executed, and delivered, by Seller hereunder and thereunder, and the performance of each of its obligations hereunder and thereunder, have been duly authorized and taken.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.3.** **Financial Data**. <u>Schedule 7.1.3(a)</u> contains true and complete copies of the unaudited sales, gross margin, and contribution margin (including all direct costs required to calculate the contribution margin) of the Business for the eleven (11) month period ended November 30, 2022 (collectively, the "**Financial Data**"). The Financial Data has been prepared in accordance with GAAP applied on a consistent basis throughout the period involved. The Financial Data is based on the books and records of the Business, and fairly present the financial condition of the Business in all material respects as of the respective dates they were prepared and the results of the operations of the Business for the periods indicated. Seller maintains a standard system of accounting for the Business established and administered in accordance with GAAP. The Business does not have any Liabilities (absolute, accrued, contingent or otherwise) except as set forth on <u>Schedule 7.1.3(b)</u>. Since December 31, 2021, the Business has not incurred any Liabilities material to the Business taken as a whole, except (a) Liabilities incurred in the ordinary course of business and consistent with past practices and (b) Liabilities expressly disclosed on <u>Schedule 7.1.3(b)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.4.** **Material Adverse Effect**. Since December 31, 2021, (i) the operations and affairs of Seller and the Business have been conducted only in the ordinary course of business consistent with past practice, (ii) no Restricted Event has occurred, and (iii) there has been no change in the Business or the financial condition, properties or results of operations of the Business, which has had or could reasonably be expected to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.5.** **Product Warranties**. Seller represents and warrants to Buyer that (a) each Product shipped or delivered by Seller has been in conformity with all Product specifications, warranties (express and implied), and all applicable Laws, (b) Seller has no existing or pending Liability for replacement or repair of any such Products or other damages in connection therewith or any Product recalls, (c)

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neither Seller nor any of its Affiliates has sold any Products or delivered any services that included a warranty for a period of longer than one (1) year, (d) neither Seller nor any of its Affiliates has material Liability arising out of any injury to individuals or property as a result of the ownership, possession, or use of any Product in connection with the Business, (e) neither Seller nor any of its Affiliates has committed any act or failed to commit any act which would result in, and, to the Knowledge of Seller, there has been no occurrence which would give rise to or form the basis of, any Product liability or liability for breach of warranty (whether covered by insurance or not) on the part of Seller or any of its Affiliates with respect to Products designed, manufactured, assembled, repaired, maintained, delivered, sold or installed or services rendered by or on behalf of Seller in connection with the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.6.** **Taxes**. Except as has not had or could not reasonably be expected to have a Material Adverse Effect, all Tax Returns with respect to the Business required to be filed by Seller for any Pre-Closing Tax Period have been, or will be, timely filed. Such Tax Returns are, or will be, true, complete and correct in all material respects. There are no Liabilities or Encumbrances for Taxes upon any of the Purchased Assets nor is any taxing authority in the process of imposing any Encumbrances for Taxes on any of the Purchased Assets (other than for current Taxes not yet due and payable).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.7.** **Compliance with Law**. Except as has not had or could not reasonably be expected to have a Material Adverse Effect, Seller is in compliance with all Laws applicable to the Business and/or the Purchased Assets. Neither Seller nor any of its Affiliates has received any written or other notice of or been charged with the violation of any Laws relating to the Business. Neither Seller nor any of its Affiliates is under investigation with respect to the violation of any Laws applicable to the Business and, to the Knowledge of Seller, there are no facts or circumstances which could form the basis for any such violation of such Laws applicable to the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.8.** **Title to Purchased Assets**. Other than as set forth in <u>Schedule 7.1.8(a)</u>, Seller has good and valid title to all of the Purchased Assets, free and clear of all Encumbrances other than Permitted Encumbrances. Except as set forth on <u>Schedule 7.1.8(b)</u>: the Purchased Assets constitute all of the material assets used in or held for use in operation of the Business and are sufficient for Buyer to conduct the Business from and after the Closing Date; none of the Excluded Assets are material to the Business; the Purchased Assets will allow Buyer to operate without interruption and in the ordinary course of business consistent with past practice, as it has been conducted by Seller and its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.9.** **Contracts**. None of Seller or, to Seller's Knowledge any other party thereto, is in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any notice of any intention to terminate, any Contract. No event or circumstance has occurred that, with notice or lapse of

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time or both, would constitute an event of default under any Contract relating to the Business or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. There are no material disputes pending or threatened under any such Contract. No Contracts other than Assumed Contracts are necessary for the conduct of the Business or are used solely in the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.10.** **Intellectual Property.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>7.1.10.1.</u><u>Schedule 7.1.10.1</u> contains a complete and correct list of (a) each Intellectual Property Asset that is registered, issued or subject to a pending application for registration or issuance with a Governmental Authority ("**Registered Intellectual Property Asset**"), and (b) all material unregistered Intellectual Property Assets. Failure to list an item in <u>Schedule 7.1.10.1</u> shall not mean that the omitted item is not a Registered Intellectual Property Asset or a material unregistered Intellectual Property Asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.10.2.The conduct of the Business, as now conducted or as conducted since December 31, 2015, including the use, sale, offering for sale, making, distribution, importation, exportation, licensing or sublicensing of the Products by Seller, does not and did not during such time period infringe upon or misappropriate any Intellectual Property Right of any other Person and since December 31, 2015, Seller has not received any written charge, complaint, claim, demand or notice alleging any such infringement or misappropriation arising out of Seller's operation of the Business (including any claim that Seller must license or refrain from using all or any portion of the Intellectual Property Assets), except as otherwise set forth in <u>Schedule 7.1.10.2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.10.3.Except as otherwise set forth in <u>Schedule 7.1.10.3</u>, there has been no unauthorized use, infringement or misappropriation of any Intellectual Property Asset by any Person, including any employees and former employees, consultants, customers or suppliers of Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.10.4.The Intellectual Property Assets consist solely of items and rights which are owned solely by Seller, and no Intellectual Property Rights other than the Intellectual Property Assets are necessary for the conduct of the Business or are used solely in the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>7.1.10.5.</u><u>Schedule 7.1.10.5</u> describes, with respect to each applicable Intellectual Property Asset, the current status of any pending applications, registrations and filings.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.10.6.All Registered Intellectual Property Assets that are registered or issued are valid, enforceable and subsisting, in good standing, with all fees, payments and filings due as of the Closing Date duly made. Except as set forth on Schedule 7.1.10.6, (a) Seller has made all filings required to vest ownership of all Registered Intellectual Property Assets in Seller, and (b) Seller has not granted any third party any right in or to, or license under, or any covenant or other agreement not to sue or enforce, with respect to any of the Intellectual Property Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.10.7.With respect to each Intellectual Property Asset, (a) Seller possesses all right, title and interest in and to such Intellectual Property Asset, free and clear of all Encumbrances other than Permitted Encumbrances; (b) such Intellectual Property Asset is not subject to any outstanding injunction, judgment, order, decree, ruling or charge affecting Seller's use or ownership of or the validity or enforceability of such Intellectual Property Asset; and (c) no Action is pending or, to the Knowledge of Seller, is threatened that challenges the use, validity, enforceability or Seller's ownership of such Intellectual Property Asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.10.8.Seller has used commercially reasonable efforts to prevent unauthorized disclosure of each Intellectual Property Asset that Seller currently uses in the operation of the Business and that derives its value from being kept in confidence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.10.9.Each Intellectual Property Asset will be owned and available for use by Buyer immediately after the Closing on identical terms and conditions as owned and used by Seller immediately prior to the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.10.10.All Products and primary packaging materials used by Seller in the Business, and packaging of the Products, comply in all material respects with applicable Laws, including those relating to the marking and identification of Intellectual Property Rights. Other than de minis failure to mark, (a) all Products covered by one or more patents included within the Registered Intellectual Property Assets have been marked with the appropriate patent number or numbers in accordance with 35 U.S.C. § 287, and (b) all Products and primary packaging materials used by Seller in the Business and packaging of the Products that utilize any registered trademark included within the Registered Intellectual Property Assets have been marked with the® designation in accordance with 15 U.S.C. § 1111.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.11.** **Inventory**. All Purchased Inventory of the Business, including finished products, regardless of location, consist of a quality and quantity usable and,

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with respect to finished goods, saleable, in the ordinary course of business. Seller does not own raw materials or work-in-process inventory. All Purchased Inventory has been, or shall be at Closing, valued by the Parties at the lesser of cost value or market value. Purchased Inventory now on hand was purchased in the ordinary course of business of Seller at cost value at the time of purchase. Seller has managed Purchased Inventory levels in the ordinary course of business and in a manner consistent with past practices. The quantities of each item of Purchased Inventory are not excessive, but are reasonable in the present circumstances of Seller. All Purchased Inventory is owned by Seller free and clear of all Encumbrances, and no item of Purchased Inventory is held on a consignment basis, except as set forth on <u>Schedule 7.1.11(a)</u>. The location(s) of all Purchased Inventory are listed in <u>Schedule 7.1.11(a)</u>. <u>Schedule 7.1.11(b)</u> sets forth, as of the Closing Date, an inventory of all items of Purchased Inventory, including (i) a description (including item number assigned thereto),

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) quantities, (iii) value at the lower of cost or market price for each Purchased Inventory item as of the Closing Date, and (iv) the total value of the Purchased Inventory (as calculated pursuant to subsection (iii)).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.12.** **No Conflicts; Consent**. The execution, delivery and consummation of this Agreement and the other Transaction Documents to which Seller is a party, and the consummation of the transactions contemplated hereby and thereby, by Seller: (a) will not violate in any material respect any Law or Governmental Order to which Seller is a party or to which Seller, the Business or the Purchased Assets are bound or subject, conflict in any material respect with or result in a material breach of, or give rise to a right of termination of, require consent under, or accelerate the performance required by, the terms of any Assumed Contract to which Seller is a party or to which the Business or any Purchased Asset is bound or subject; and (b) will not constitute a default in any material respect thereunder, or result in the creation of any Encumbrance upon any Purchased Asset. Except as set forth in <u>Schedule 7.1.12</u>, no consent, approval, permit, authorization of, declaration to or filing with any Governmental Authority or any other Person on the part of Seller is required in connection with the execution and delivery of this Agreement or the other Transaction Documents or the consummation of the transactions contemplated hereby or thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.13.** **Litigation**. There is no Action pending or to Seller's Knowledge threatened against or involving the Business or any of the Purchased Assets. Seller is not in violation of any Governmental Order with respect to the Business. With respect to the Business and the Purchased Assets, neither Seller nor any Affiliate thereof is engaged in any Action to recover monies due it or for damages sustained by it. There are no Actions pending or to Seller's Knowledge threatened against Seller or to which Seller is otherwise a party relating to this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.14.** **Certain Payments**. Neither Seller nor, to the Knowledge of Seller, any director, officer, employee, or other Person associated with or acting on behalf of any of them, has directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback or other payment to any Person, private or public, regardless of form, whether in money, property, or services

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) to obtain favorable treatment in securing business for the Business; (ii) to pay for favorable treatment for business secured by Seller or any Affiliate thereof; (iii) to obtain special concessions or for special concessions already obtained, for or in respect of Seller or any Affiliate thereof; or (iv) in violation of any Law; or (b) established or maintained any fund or asset with respect to the Business that has not been recorded in the books and records of Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.15.** **Customer and Suppliers**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>7.1.15.1.</u><u>Schedule 7.1.15.1</u> sets forth with respect to the Business (i) each customer who has paid an aggregate consideration to Seller for goods or services rendered in an amount greater than or equal to $50,000 for the most recent fiscal year (collectively, the "**Material Customers**"); and (ii) the amount of consideration paid by each Material Customer during such periods. Seller has not received any notice, and has no reason to believe, that any of the Material Customers has ceased, or intends to cease after Closing, to use the goods or services of the Business or to otherwise terminate or materially reduce its relationship with the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>7.1.15.2.</u><u>Schedule 7.1.15.2</u> sets forth with respect to the Business (i) each supplier to whom Seller has paid consideration for goods or services rendered in an amount greater than or equal to $50,000 for the most recent fiscal year (collectively, the "**Material Suppliers**"); and (ii) the amount of purchases from each Material Suppliers during such period. Seller has not received any notice, and has no reason to believe, that any of the Material Suppliers has ceased, or intends to cease, to supply goods or services to the Business or to otherwise terminate or materially reduce its relationship with the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1.15.3.Seller has not received notice that any Material Customer or Material Supplier (i) plans to discontinue doing business with Seller or, after the Closing, Buyer, (ii) plans to reduce the level of business done with Seller or, after the Closing, Buyer, or (iii) will not do business with Buyer on substantially the same terms, conditions and amounts subsequent to the Closing Date as supplier or customer (as the case may be) did with Seller since December 31, 2021. All of Seller's relationships with its Material Customers and Material Suppliers (a) are described in written Contracts, copies of which have been made available to Buyer; (b) have not been orally modified; and (c) require no performance by Seller beyond the written terms thereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.16.** **Insurance**. There are no claims related to the Business, the Purchased Assets or the Assumed Liabilities pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. Neither Seller nor any of its Affiliates has received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if not yet due, accrued. All such Insurance Policies are (a) in full force and effect and enforceable in accordance with their terms; (b) are provided by carriers who are financially solvent; and (c) have not been subject to any lapse in coverage. None of Seller or any of its Affiliates is in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy. True and complete copies of the Insurance Policies have been made available to Buyer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1.17.** **Brokers**. Neither Seller nor any Person acting on behalf of Seller has agreed to pay a commission, finder's fee, investment banking fee or similar payment in connection with this Agreement or any other Transaction Document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2.**Buyer's Representations and Warranties.** Buyer hereby represents and warrants to Seller that the following representations and warranties are, as of the date hereof, and will be, as of the Closing Date, true and correct:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.2.1.** **Organization and Good Standing; Binding Obligation**. Buyer is an Indiana corporation duly organized, validly existing, and in good standing under the laws of the State of Indiana of the United States of America. All corporate action necessary to authorize the execution and delivery of this Agreement by Buyer and the other Transaction Documents to which Buyer is a party, and the performance of its obligations hereunder and thereunder, have been duly authorized and taken.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.2.2.** **No Conflicts; Consent**. The execution, delivery and consummation of this Agreement and the other Transaction Documents to which Buyer is a party, and the consummation of the transactions contemplated hereby and thereby, by Buyer: (a) will not violate in any material respect any Law or Governmental Order to which Buyer is a party or to which Buyer is bound or subject, conflict in any material respect with or result in a material breach of, or give rise to a right of termination of, require consent under, or accelerate the performance required by, the terms of any material contract to which Buyer is a party or to which Buyer's business is bound or subject; and (b) will not constitute a default in any material respect thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.2.3.** **Brokers**. Neither Buyer nor any Person acting on behalf of Buyer has agreed to pay a commission, finder's fee, investment banking fee or similar payment in connection with this Agreement or any other Transaction Document.

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&nbsp;&nbsp;&nbsp;&nbsp;8.**COVENANTS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1.**Expenses.** Except as otherwise specifically provided in this Agreement, the Parties shall bear their respective expenses incurred in connection with the preparation, execution and performance of this Agreement and the consummation of the transactions contemplated hereby, including all fees and expenses of their respective Representatives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.**Use of Intellectual Property.** Following the Closing, Seller and its Affiliates shall not challenge the validity or enforceability of the Intellectual Property Assets or the exclusive ownership of any of the Intellectual Property Assets by Buyer or its Affiliates or successors or assigns, and Seller and its affiliates shall immediately cease all use of the Intellectual Property Assets, except as provided in the Transition Services Agreement or as otherwise expressly set forth in this Section. Seller and its Affiliates shall not acquire or use any Intellectual Property Rights that incorporate any of the Intellectual Property Assets or that are otherwise confusingly similar thereto. Notwithstanding the foregoing, following the Closing and until the conclusion of the Transitional Name Period (as defined below), Seller may continue to use the names "SCOTT'S LIQUID GOLD" and "SLG" in connection with Seller's corporate name, operations, and related administrative purposes, including routine and customary financial or corporate communications, and including in the domain name

(but excluding, for the avoidance of doubt, any marketing or other business or commercial purposes). At the conclusion of the Transitional Name Period, Seller agrees to turn off all public-facing portions of the website at the domain name

and to not take any action to renew the domain name. After the Transitional Name Period, Seller may continue to use the names "SCOTT'S LIQUID GOLD" and "SLG" only in connection with retaining records and other historical or archived documents and any use required by or permitted as a fair use or otherwise under applicable Law. "**Transitional Name Period**" means the period of time beginning on the Closing and ending on the earlier of one (1) year following the Closing Date and the date that Seller has completed all requirements and taken all actions required under the Laws of the State of Colorado for Seller to change its corporate name, including all required shareholder approvals.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3.**Taxes.** Seller and Buyer shall cooperate fully with each other and make available or cause to be made available to each other in a timely fashion such data regarding the Business which relates to Taxes, prior Tax Returns or filings and other information as may be reasonably required for the preparation by Buyer or Seller of any Tax Returns, elections, consents or certificates required to be prepared and filed by Buyer or Seller and any audit or other examination by any taxing authority or administrative Action relating to liability for Taxes. Buyer and Seller shall retain copies of all Tax Returns, supporting work schedules and other records relating to the Business and which relate to Tax periods or portions thereof ending prior to or on the Closing Date for the amount of time required by applicable Law. All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the other Transaction

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Documents (including any real property transfer Tax and any other similar Tax) shall be borne equally by the parties and paid or reimbursed, as applicable by each party when due. Seller shall, at its own expense, timely file any Tax Return or other document with respect to such Taxes or fees (and Buyer shall cooperate with respect thereto as necessary).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4.**Bulk Sales.** Buyer and Seller hereby agree to waive compliance with the provisions of any bulk sales, bulk transfer or similar legislation in the jurisdictions in which any of the Purchased Assets are located. Seller shall, after Closing, pay its creditors as its debts to them become due and take all action necessary to prevent any such creditor from asserting any claim against Buyer or the Purchased Assets or under any such legislation for relief provided therein as a result of such non-compliance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.**Covenants against Unfair Competition.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.1.Seller recognizes that it has been instrumental in the success of the Business and in establishing and maintaining its respective customer and supplier relationships for the Business as well as having had access to, acquiring and assisting in developing Confidential Information of and relating to the Business, all of which are critical to the Business. Seller further acknowledges and agrees that such information is and will continue to be of significant value to Buyer and that any use other than by Buyer after the Closing could cause substantial loss to Buyer and thereby to the investment Buyer is making in the Purchased Assets and the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.2.Seller accordingly agrees that, without the express prior written consent of Buyer, for a period of five (5) years after the Closing Date in the case of <u>Section</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>8.5.2.1</u> and for a period of two (2) years after the Closing Date in the case of <u>Sections 8.5.2.2</u> and <u>8.5.2.3</u> (the "**Restrictive Period**"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.2.1.Seller will not and will cause its respective directors, officers, employees and Affiliates not to directly or indirectly (including through their respective Affiliates or Representatives) engage in or conduct any business which directly or indirectly competes or interferes with the Business as the Business is conducted as of and after the Closing Date during the Restrictive Period throughout the territory of North America; provided that the employees and directors of Seller may become employees, consultants, or directors of other companies in the same or similar industry.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.2.2.Seller will not and will cause its respective directors, officers, employees and Affiliates not to directly or indirectly (including through their respective Affiliates or Representatives) (a) interfere with, solicit, or accept for itself or for any Person, other than Buyer or its Affiliates, any of the Former Customers and Existing Customers of the Business as the Business is conducted as of and

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after the Closing Date, other than with respect to Seller's business in the ordinary course that does not include the Business and does not conflict with or compete with the Business, and (b) induce, solicit or otherwise encourage any such past or present customer of the Business to purchase products that are the same or substantially similar to the products of the Business as the Business is conducted as of and after the Closing Date, including the Products, from Persons operating businesses, or preparing to operate businesses, competitive with the Business as the Business is conducted as of and after the Closing Date; provided that such restrictions shall not apply with respect to employees of Seller who become employees or consultants of other companies in the same or similar industry.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.2.3.Seller will not and will cause its respective directors, officers, employees and Affiliates not to directly or indirectly (including through their respective Affiliates or Representatives) interfere with, attempt to interfere with or disparage Buyer's or its Affiliates' relationship with any customer, vendor, contractor, supplier, employee, owner-operator or consultant (or the terms relating to such relationships) of the Business as the Business is conducted as of and after the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.3.For a period of one year after the Closing, Seller will not and will cause its respective directors, officers, employees and Affiliates not to solicit to employ any employees of the Business (as of and after the Closing Date) or otherwise engage any such individual; provided that all current employees of Seller may continue to be employees of Seller. The term "solicit to employ" does not include (i) using general solicitations of employment, such as general advertisements, not specifically directed toward employees of Buyer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.4.From and after the Closing, Seller shall, and shall cause each of its respective Affiliates and Representatives to (a) treat all Confidential Information of or relating to Business, the Purchased Assets, Buyer, and/or its Affiliates (whenever and however acquired) strictly confidential; (b) not disclose such Confidential Information or permit it to be disclosed, in whole or part, to any Person without the prior written consent of Buyer; and (c) not use any such Confidential Information for any purpose except as permitted by this Agreement. Seller shall notify Buyer immediately in the event Seller becomes aware of any loss or disclosure of any Confidential Information of or relating to Business, the Purchased Assets, Buyer or its Affiliates (whenever and however acquired). Confidential Information subject to this <u>Section 8.5.4</u> shall not include information that is or becomes generally available to the public other than through Seller's breach of this Agreement; or is communicated to Seller by a Person that had no confidentiality obligations with respect to such information. Nothing herein shall be construed to prevent disclosure of Confidential Information of or relating to Business as may be required by

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applicable Law, or pursuant to the valid order of a court of competent jurisdiction or an authorized governmental agency, provided that the disclosure does not exceed the extent of disclosure required by such Law or order. Seller agrees to provide written notice of any such order to an authorized officer of Buyer within five (5) days of receiving such order, but in any event sufficiently in advance of making any disclosure to permit Buyer to contest the order or seek confidentiality protections, as determined in Buyer's sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.5.Seller acknowledges that (a) the Business is international in scope; (b) the Business is marketed in North America and that Buyer contemplates potential distribution throughout North America; (c) the Business competes with other businesses that are or could be located in any part of North America; (d) Buyer has required that Seller make the covenants set forth in this <u>Section 8.5</u> as a condition to Buyer's purchase of the Purchased Assets and assumption of Assumed Liabilities; (e) the provisions of this <u>Section 8.5</u> are reasonable and necessary to protect and preserve Buyer's interests in and right to the ownership and operation of the Business after the Closing; and (f) Buyer would be irreparably damaged if Seller were to breach the covenants set forth in this <u>Section 8.5</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.6.Seller further acknowledges and agrees that damages cannot adequately compensate Buyer in the event of any of Seller's breach of any of the covenants contained in this <u>Section 8.5</u>. Accordingly, Seller agrees that in the event of a breach of any such covenants, Buyer shall be entitled to seek injunctive relief against the breaching Seller, without bond (unless required by Law) in addition to such other relief as may be available at law or in equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.7.The restrictive covenants contained in this <u>Section 8.5</u> shall be construed as agreements which are independent of the other provisions of this Agreement, and the existence of any claim or cause of action of Seller against Buyer, of whatever nature, shall not constitute a defense to Buyer's enforcement of such restrictive covenants. To the extent any of such restrictive covenants are deemed unenforceable by virtue of their scope in terms of geographical area or length of time, but may be enforceable by limiting the scope thereof, Seller agrees that the same shall be enforceable to the fullest extent permissible under the Laws and public policies of the jurisdiction(s) in which enforcement is sought, and the Parties hereby authorize any court or forum of competent jurisdiction to modify or reduce the scope of the restrictive covenants to the minimum extent necessary to make such restrictive covenants enforceable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.6.**Consents.** Seller shall use its commercially reasonable efforts to obtain at the earliest practicable date all consents, waivers, approvals and notices required to consummate, or in connection with, the transactions contemplated by this Agreement. All such consents, waivers, approvals and notices shall be in writing and in form and substance reasonably satisfactory to Buyer, and executed counterparts of such consents, waivers and approvals shall be delivered to Buyer promptly after receipt thereof, and copies of

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such notices shall be delivered to Buyer promptly after the making thereof. Notwithstanding anything to the contrary in this Agreement, neither Buyer nor any of its Affiliates shall be required to pay any amounts in connection with obtaining any consent, waiver or approval.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.7.**Refunds and Remittances**. After the Closing, if either Party or any of its Affiliates receives any refund, payment, or other amount or asset which is properly due and owing to the other Party in accordance with this Agreement or any other Transaction Document, or related to claims or other matters for which the other Party is responsible under any Transaction Document, such Party shall promptly notify the other Party thereof and shall promptly remit (or shall cause to be promptly remitted) such refund, payment or other amount or asset to such Party in accordance with its instructions. In furtherance of the foregoing, from and after the Closing, each Party shall furnish the other Party with such financial and other data and information related to such Party's assets and receivables as the other Party may reasonably request from time to time to the extent necessary to verify compliance with this <u>Section 8.7</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.8.**Correction of Seller's Name on Trademark Registrations.** As promptly as possible following the Closing Date and at Seller's expense, Seller shall cause Seller's name to be corrected from "Scott's Liquid Gold, Inc." to "Scott's Liquid Gold-Inc." on all registrations of trademarks that are Registered Intellectual Property Assets (and thus also Intellectual Property Assets and Purchased Assets) and that are registered under the aforesaid misspelled version of Seller's name, in each case with the U.S. Patent and Trademark Office, the World Intellectual Property Organization and the appropriate Governmental Authorities in Canada, the European Union, and the United Kingdom. To the extent that Seller requests Buyer's cooperation in order to correct Seller's name, Seller shall be responsible for prompt payment or reimbursement of reasonable expenses, including legal fees and costs, incurred by Buyer in connection therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.9.**Public Announcements.** Unless otherwise required by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel), no Party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other Party (which consent shall not be unreasonably withheld or delayed), and the Parties shall cooperate as to the timing and contents of any such announcement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.10.**Further Assurances.** Seller and Buyer shall each deliver or cause to be delivered to the other on the Closing Date such instruments as the other may reasonably request for the purpose of carrying out the transactions contemplated by this Agreement and shall take or cause to be taken all actions necessary or appropriate to consummate the transactions contemplated hereby. At any time and from time to time after the Closing, Seller shall, at the reasonable request of Buyer and at Seller's expense and without further consideration, execute and deliver any further deeds, bills of sale, endorsements, assignments and other instruments of conveyance and transfer, and take such other actions as Buyer may reasonably request in order (a) more effectively to transfer,

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convey, assign and deliver to Buyer, and to place Buyer in actual possession and operating control of, and to vest, perfect or confirm, of record or otherwise, in Buyer all right, title and interest in, to and under the Purchased Assets, (b) to assist in the collection or reduction to possession of any and all of the Purchased Assets or to enable Buyer to exercise and enjoy all rights and benefits with respect thereto, or (c) to otherwise carry out the intents and purposes of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;9.**INDEMNIFICATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1.**Indemnification by Seller.** Subject to the survival periods set forth in <u>Section 9.4</u> (Survival), Seller (i.e., both SLG Chemicals, Inc. and Scott's Liquid Gold-Inc., jointly and severally) agrees to defend, indemnify and hold Buyer and its Affiliates and their respective officers, directors, shareholders, owners, Representatives and lenders (collectively, the "**Buyer Indemnified Parties**") harmless from and against any and all losses, liabilities, damages, obligations, Actions, demands, penalties, interest, costs and expenses (including any and all reasonable attorneys' fees and expenses relating thereto, including costs of investigation and litigation incurred by the indemnified party to the extent such party is the prevailing party in making or defending such claim for indemnity) (collectively, the "**Losses**") arising out of or in connection with (a) any breach of a representation or warranty made by Seller in this Agreement, or in any Schedule, Exhibit or other document or instrument attached hereto or delivered by Seller in connection with this Agreement, including the Transaction Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any breach of a covenant, agreement or undertaking of Seller in this Agreement or in any Schedule, Exhibit or other document or instrument attached hereto or delivered by Seller in connection with this Agreement; (c) any Excluded Assets or Excluded Liability, including any claims arising for injuries or death to persons or damage to property arising or claimed to arise from products shipped or delivered by Seller prior to and on the Closing Date and any claims made against Buyer relating to matters occurring on or before the Closing Date and relating to, or involving, the conduct by Seller of the Business herein sold; (d) without limiting the generality of the foregoing, any claims made by any third party claiming to be the holder of an Encumbrance (excepting only the Permitted Encumbrances) against any of the Purchased Assets; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) any third party claim based upon, resulting from or arising out of the business, operations, properties, assets or obligations of Seller or any of its Affiliates conducted, existing or arising on or prior to the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.**Indemnification by Buyer.** Subject to the survival periods set forth in <u>Section 9.4</u> (Survival), Buyer hereby agrees to defend, indemnify and hold Seller harmless from and against any and all Losses, arising out of or in connection with (a) any breach of a representation or warranty made by Buyer in this Agreement, or in any Schedule, Exhibit or other document or instrument attached hereto or delivered by Buyer in connection with this Agreement; (b) any breach of a covenant, agreement or undertaking of Buyer in this Agreement or in any Schedule, Exhibit or other document or instrument attached hereto or delivered by Buyer in connection with this Agreement, including the Transaction Documents, (c) any claims arising for injuries or death to persons or damage to property arising or claimed to arise from products shipped or

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delivered by Buyer after the Closing Date, subject to <u>Section 3.2</u> (Excluded Liabilities); and (d) any claims made against Seller relating to matters occurring after the Closing Date and relating to, or involving, the conduct by Buyer of the Business herein sold, except for such claims for which Seller is required to indemnify any Buyer Indemnified Party pursuant hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3.**Notices; Defense or Prosecution of Claims.** Upon becoming aware of any claim and upon having reason to believe in the possible existence of any claim entitling a Party to indemnification hereunder, the Party claiming indemnification (the "**Indemnified Party**") shall give the other Party (the "**Indemnifying Party**") prompt written notice of such claim setting forth in such notice all essential facts then known to the Indemnified Party in connection therewith; provided, however, that failure to give such prompt notice or specify all known facts shall not absolve the Indemnifying Party from its liabilities under this Section. If the facts giving rise to a claim for indemnification hereunder arise out of the claim of any third party, or if there is any claim against a third party, the Indemnifying Party may, at its option, assume the defense or the prosecution thereof, with counsel satisfactory to the Indemnified Party, at the sole cost and expense of the Indemnifying Party, unless (i) such claim seeks an order, injunction or other equitable relief against the Indemnified Party or (ii) the Indemnified Party shall have reasonably concluded that there is a conflict of interest between the Indemnifying Party, on the one hand, and the Indemnified Party, on the other hand, in the defense or prosecution of such claim. After any assumption of the defense or prosecution of any claim by the Indemnifying Party, it shall not be liable to the Indemnified Party for any legal expenses thereafter incurred by the Indemnified Party in connection with the defense or prosecution thereof other than reasonable costs of investigation and any costs incurred in the course of such defense or prosecution. In any such event, whether or not the Indemnifying Party does so assume the defense or prosecution thereof, the Indemnifying Party and the Indemnified Party shall cooperate in the defense or prosecution thereof and shall furnish such records and information and attend at such proceedings as may be reasonably requested in connection herewith. The Indemnifying Party shall have no indemnification obligations with respect to any claim or demand that is settled by the Indemnified Party without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld), other than any claim or demand as to which the Indemnifying Party shall not have assumed the defense or prosecution thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4.**Survival.** (a) The representations and warranties made by the Parties in this Agreement shall survive the Closing and shall continue in full force and effect without limitation after the Closing for a period of 18 months following the Closing Date, except that (i) claims related to fraud or willful misconduct and claims arising from or pertaining to the Excluded Liabilities shall survive indefinitely; (ii) claims arising from the breach of representations and warranties contained in <u>Sections 7.1.1</u>, <u>7.1.2</u>, <u>7.1.8</u>, <u>7.1.17</u> and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>7.2</u> shall survive for the applicable statute of limitations; (iii) claims arising from the breach of representations and warranties contained in <u>Section 7.1.10</u> shall survive for a period of three (3) years; and (iv) claims arising from the breach of representations and warranties contained in <u>Section 7.1.6</u> shall survive for the full period of all

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applicable statutes of limitations plus 60 days; and (b) covenants and agreements made by the Parties in this Agreement shall survive for the period provided in such covenants and agreements, if any, or until fully performed; provided, however, that any obligations under <u>Section 9.1</u> and <u>Section 9.2</u> shall not terminate with respect to any losses, liabilities, damages, obligations, Actions, demands, penalties, interest, cost and expenses, including reasonable legal fees and expenses relating thereto, as to which the Indemnified Party shall have given notice to the Indemnifying Party in accordance with <u>Section 9.3</u> before the termination of the applicable survival period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5.**Limitations**. Notwithstanding anything herein to the contrary, the maximum amount subject to indemnification under this Section shall not exceed $500,000, other than with respect to any breach of any representation or warranty in Sections <u>7.1.1</u>, <u>7.1.2, 7.1.6</u>, <u>7.1.8</u>, and <u>7.1.17</u>, which amount subject to indemnification shall not exceed the Purchase Price. Further, Buyer shall not make a claim hereunder until such claim or claims in the aggregate exceed $50,000 ("**Basket**"), in which event Seller shall be liable for all such losses from the first dollar; provided, however, the Basket shall not apply with respect to losses based upon, arising out of, with respect to or by reason of any breach of any representation or warranty in Sections <u>7.1.1</u>, <u>7.1.2, 7.1.6</u>, <u>7.1.8</u>, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>7.1.17</u> or the covenant in <u>Section 8.8</u>. No Party shall have liability under this Agreement to the extent that such liability resulted from the willful misconduct or gross negligence of the other Party hereto. Each Party hereto shall take and shall cause to be taken steps reasonably necessary to mitigate any liability promptly after becoming aware of any event that could reasonably be expected to give rise to such liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.6. &nbsp;&nbsp;&nbsp;&nbsp;10.**MISCELLANEOUS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1.**Amendment and Modification; Waiver.** This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2.**Successors and Assigns.** This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns. None of the Parties may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning Party of any of its obligations hereunder.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3.**No Third Party Beneficiaries.** Except as provided in <u>Section 9</u> (Indemnification), this Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.**Choice of Law; Submission to Jurisdiction; Waiver of Jury Trial.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.1.This Agreement shall be governed by and construed under and the rights of the Parties determined in accordance with the Laws of the State of Delaware (without reference to the choice of law provisions of the State of Delaware).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.2.Each of the Parties irrevocably consents to the service of any process, pleading, notices or other papers by the mailing of copies thereof by registered, certified or first class mail, postage prepaid, to such Party at such Party's address set forth herein, or by any other method provided or permitted under the Laws of the State of Delaware.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.3.To the extent that a Party has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, such Party hereby irrevocably waives such immunity in respect of its obligations pursuant to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.4.Except as otherwise provided in this Agreement, any proceeding or litigation arising out of relating to this Agreement or any contemplated transaction hereunder shall be brought in the courts of the State of Delaware, and each of the Parties irrevocably submits to the exclusive jurisdiction of each such court in any such proceeding or litigation, waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims in respect of such proceeding or litigation shall be heard and determined only in any such court, and agrees not to bring any proceeding or litigation arising out of or relating to this Agreement or any contemplated transaction hereunder in any other court. Each Party acknowledges and agrees that this <u>Section 10.4.4</u> constitutes a voluntary and bargained-for agreement between the Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.5.EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.5.**Notices.** All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third (3<sup>rd</sup>) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this <u>Section 10.5</u>):

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| | |
|:---|:---|
| If to Seller: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Scott's Liquid Gold-Inc. or SLG Chemicals, Inc. 8400 E. Crescent Parkway, Suite 450 Greenwood Village, CO 80111<br>Attention: Chief Financial Officer |
| with a copy to: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holland & Hart LLP 555 17th Street<br>Denver, CO 80202<br>Attention: Amy L. Bowler |
| If to Buyer: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nakoma Products LLC 8455 S. 77th Ave.<br>Bridgeview, IL 60455<br>Attention: Walter Bransen, President |
| <br>with a copy to: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <br>Amundsen Davis, LLC<br>150 N. Michigan Ave., Suite 3300<br>Chicago, IL 60601<br>Attention: Vic Peterson |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.6.**Entire Agreement.** This Agreement, together with the exhibits and schedules hereto, the other Transaction Documents, and the Confidentiality Agreement, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior understandings and agreements, whether written or oral, and no Party shall be liable or bound to any other Party in any manner by any warranties, representations or covenants except as specifically set forth herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.7.**Interpretation.** For purposes of this Agreement, (a) the words "include," "includes" and "including" shall be deemed to be followed by the words "without limitation"; (b) the word "or" is not exclusive; and (c) the words "herein," "hereof," "hereby," "hereto" and "hereunder" refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (i) to Articles, Sections, Schedules and Exhibits mean the

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Articles and Sections of, and Schedules and Exhibits attached to, this Agreement; (ii) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof; and (iii) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.8.**Headings.** The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.9.**Severability.** If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.10.**Specific Performance.** The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.11.**Non-disclosure.** This Agreement is confidential to the Parties and their Representatives, and is subject to that certain Mutual Confidentiality and Non- Solicitation Agreement dated November 4, 2022, entered into by and between Buyer and Seller (the "**Confidentiality Agreement**"), which continues in full force and effect and shall continue in full force and effect after Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.12.**Attorneys' Fees.** In the event of any action to enforce, interpret or construe this Agreement, in addition to any other relief to which it may be entitled at law or in equity, the prevailing party shall be entitled to its reasonable costs incurred, including attorneys' fees and the costs of appeal, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.13.**Counterparts; Electronic Signatures.** This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;11.**DEFINITIONS.** For purposes of this Agreement, terms capitalized herein shall be defined in accordance with the following definitions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1."**Accounts Receivable**" shall mean all of Seller's accounts, accounts receivable, notes and notes receivable related to the Business, including all rights of Seller to payment for services rendered that are payable to Seller, including any security held for the payment thereof, less any allowance for doubtful accounts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2."**Action**" shall mean any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3."**Affiliate**" shall mean, as to a specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by or is under common control with, the Person specified. The term "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4."**Annual Royalty Report**" shall have the meaning set forth in <u>Section 5.2.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.5."**Assumed Contracts**" shall have the meaning set forth in <u>Section 1.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.6."**Assumed Liabilities**" shall have the meaning set forth in <u>Section 3.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.7."**Bill of Sale**" shall have the meaning set forth in <u>Section 6.2.2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.8."**Business**" shall have the meaning set forth in the Recitals.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.9."**Business Day**" shall mean any day other than a Saturday, Sunday or holiday on which national banking associations in the State of Indiana are authorized or required to be closed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.10."**Buyer**" shall have the meaning set forth in the Preamble.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.11."**Buyer Indemnified Parties**" shall have the meaning set forth in <u>Section 9.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.12."**Closing**" shall have the meaning set forth in <u>Section 6.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.13."**Closing Date**" shall have the meaning set forth in <u>Section 6.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.14."**Closing Inventory**" shall have the meaning set forth in <u>Section 5.3.1</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.15."**Confidential Information**" shall mean all non-public, confidential or proprietary information, whether in written, electronic or other form or media, and whether or not marked, designated or otherwise identified as "confidential," including: (a) information concerning the past, present and future business affairs relating to the Business and/or the Purchased Assets, including finances, customer information, supplier information, products, services, organizational structure and internal practices, forecasts, sales and other financial results, records and budgets, and business, marketing, development, sales and other commercial strategies of Seller, Buyer, and/or or their respective Affiliates, and/or or their respective customers, suppliers, and other third parties having relationship with the Business; (b) unpatented inventions, ideas, methods and discoveries, trade secrets, know-how, unpublished patent applications and other confidential Intellectual Property Rights; (c) designs, specifications, documentation, components, source code, object code, images, icons, audiovisual components and objects, schematics, drawings, protocols, processes, and other visual depictions, in whole or in part, of any of the foregoing; (d) Confidential Information of any third party included with, or incorporated in, any information used by Seller, Buyer, and/or or their respective Affiliates in the Business or in connection with the Purchased Assets; (e) other information that would reasonably be considered non-public, confidential or proprietary given the nature of the information and the Business; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) notes, analyses, compilations, reports, forecasts, studies, samples, data, statistics, summaries, interpretations and other materials prepared by or for Seller, Buyer and/or their respective Affiliates that contain, are based on, or otherwise reflect or are derived, in whole or in part, from any of the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.16."**Confidentiality Agreement**" shall have the meaning set forth in <u>Section 10.11</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.17."**Contracts**" shall mean all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral relating to the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.18."**Disclosure Schedules**" shall have the meaning set forth in <u>Section 7.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.19."**Encumbrance**" shall mean any lien (including mechanics, warehousemen, laborers and landlords liens), charge, claim, hypothecation, pledge, security interest, mortgage, preemptive right, right of first refusal, option, judgment, title defect right of first refusal, easement or conditional sale or other title retention agreement or other restriction or encumbrance of any kind.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.20."**Environmental Claim**" shall mean any Action, Governmental Order, Encumbrance, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the

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presence, release of, or exposure to, any hazardous materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any environmental Permit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.21."**Environmental Law**" shall mean any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any hazardous materials.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.22."**Estimated Closing Inventory**" shall have the meaning set forth in <u>Section 5.3.2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.23."**Excluded Assets**" shall have the meaning set forth in <u>Section 2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.24."**Excluded Contracts**" shall have the meaning set forth in <u>Section 2.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.25."**Excluded Inventory**" shall have the meaning set forth in <u>Section 2.4</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.26."**Excluded Liabilities**" shall have the meaning set forth in <u>Section 3.2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.27."**Existing Customer**" shall mean any Person who is, as of the Closing Date, purchasing Products from Seller or any Person who purchases, from and after the Closing Date and during the Restrictive Period, from Buyer products relating to the Business, including the Products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.28."**Financial Data**" shall have the meaning set forth in <u>Section 7.1.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.29."**Former Custome**r" shall mean any Person who is not an Existing Customer, but who had, within the 18-month period immediately preceding the Closing Date, purchased Products from Seller.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.30."**GAAP**" shall mean United States generally accepted accounting principles in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.31."**Governmental Authority**" shall mean any governmental, regulatory or administrative body, agency, subdivision or authority, any court or judicial authority, arbitrator (public or private) or any public, private or industry regulatory authority, whether national, federal, state, local, foreign or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.32."**Governmental Order**" shall mean any order, writ, judgment, injunction, decree, stipulation, ruling, determination or award entered by or with any Governmental Authority.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.33."**Gross Sales**" shall mean and include the total actual gross charges for all Products sold to customers, for cash or credit, but excluding sales, use, service or excise taxes collected from customers and paid to the appropriate taxing authority; and customer refunds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.34."**Indemnified Party**" shall have the meaning set forth in <u>Section 9.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.35."**Indemnifying Party**" shall have the meaning set forth in <u>Section 9.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.36."**Insurance Policies**" means those insurance policies of Seller in effect as of the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.37."**Intellectual Property Assets**" shall have the meaning set forth in Section 1.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.38."**Intellectual Property Assignments**" shall have the meaning set forth in Section <u>6.2.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.39."**Intellectual Property Rights**" shall mean intellectual property rights, including

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)inventions, designs, algorithms, formulations, manufacturing processes, and other industrial property, and all enhancements and improvements thereto, whether patentable or unpatentable, and whether or not reduced to practice, and all patents therefor or in connection therewith (including all U.S. and foreign patents, patent applications, patent disclosures, mask works, and all divisions, continuations, continuations-in-part, reissues, re-examinations and extensions thereof);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)trademarks, trade names and service marks, trade dress, logos, internet domain names, social media handles and accounts, and other commercial product or service designations, and all goodwill and similar value associated with any of the foregoing, and all applications, registrations, and renewals in connection therewith; (c) copyrights (whether or not registered), moral rights in relation to all works of authorship, and all registrations and applications for registration thereof, as well as rights to renew copyrights; (d) trade secrets (as such are determined under applicable Law), know-how and other confidential business information, including technical information; (e) domain names and website content; (f) any and all other rights to existing and future registrations and applications for any of the foregoing and all other proprietary rights in, or relating to, any of the foregoing, including remedies against and rights to sue for past infringements, and rights to damages and profits due or accrued in or relating to any of the foregoing; (g) any and all other intangible proprietary property, information and materials; and (h) any Contracts granting any right relating to or under the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.40."**Inventory**" shall have the meaning set forth in <u>Section 1.6</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.41."**Knowledge**" shall mean, with respect to Seller, the actual or constructive knowledge of any directors and officers of Seller, after due inquiry.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.42."**Law**" shall mean any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.43."**Liability**" shall mean any direct or indirect indebtedness, liability, assessment, claim, loss, damage, deficiency, obligation or responsibility, expense (including reasonable attorneys' fees, court costs, accountants' fees, environmental consultants' fees, laboratory costs and other professionals' fees), order, settlement payments, Taxes, fines and penalties, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, actual or potential, contingent or otherwise (including any liability under any guaranties, letters of credit, performance credits or with respect to insurance loss accruals).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.44."**Material Adverse Effect**" shall mean any event, occurrence, fact, condition or change that is, or is reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, financial condition, or assets of the Business; (b) the use or value of the Purchased Assets or a material increase in the amount of Assumed Liabilities; or (c) the ability of Seller to consummate the transactions contemplated hereby on a timely basis or perform its obligations under any of the Transaction Documents; provided that none of the following events, occurrences, facts, conditions or changes shall be deemed, either alone or in combination, to constitute a Material Adverse Effect, or be taken into account in determining whether there has been a Material Adverse Effect: (a) changes in general economic conditions, the securities markets generally or debt or financing markets generally, including changes in interest rates, exchange rates, lack of liquidity or trading volumes, (b) changes in general legal, tax, regulatory or political conditions,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)changes in GAAP, (d) changes or effects that generally affect the industries in which Seller operates, (e) changes in applicable law or the interpretation or enforcement thereof, (f) changes or effects resulting or arising from the commencement, occurrence, continuation or intensification of any war (whether or not declared), sabotage, armed hostilities or acts of violence or terrorism, (g) earthquakes, hurricanes, tsunamis, pandemics, epidemics, or other natural disasters, (h) changes or effects that arise out of or are attributable to the acts or omissions of, or circumstances affecting, Buyer or its Affiliates, (i) changes or effects that relate to any failure by Seller to meet projections or forecasts for any period or (j) changes or effects resulting or arising from the negotiation, execution, public announcement or performance of this Agreement; provided, however, that the exceptions set forth in clauses (a) through (g) above shall apply only to such changes or effects that do not have a materially disproportionate impact on Seller relative to other companies in the industry in which Seller operates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.45."**Material Customers**" shall have the meaning set forth in <u>Section 7.1.15.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.46."**Material Suppliers**" shall have the meaning set forth in <u>Section 7.1.15.2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.47."**Party**" and "**Parties**" shall have the meaning set forth in the Preamble.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.48."**Permits**" shall mean all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.49."**Permitted Encumbrances**" shall mean: written outbound licenses of the Intellectual Property Assets entered into in the ordinary course of business with manufacturers and service providers, as disclosed on <u>Schedule 11.49</u>; liens arising under Seller's credit facilities, which will be released with respect to the Purchased Assets upon the Closing; liens for Taxes, assessments and other charges of Governmental Authorities not yet due and payable or being contested in good faith by appropriate proceedings, which proceedings are disclosed on <u>Schedule 11.49</u>; and mechanics', workmens', repairmens', warehousemens', carriers' or other like liens arising or incurred in the ordinary course of business or by operation of Law and which are not material to the Purchased Assets, are not delinquent, and none of such liens will individually or in the aggregate impair the continued use and operation of the property to which they relate in the Business as presently conducted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.50."**Person**" shall mean, any natural person, corporation, partnership, proprietorship, other business organization, trust, union, association or Governmental Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.51."**Pre-Closing Tax Period**" shall mean any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.52."**Products**" shall mean products sold as of the Closing Date under the "Scott's Liquid Gold®" brand and included on <u>Schedule 11.52</u>, which includes the Scott's Liquid Gold® Wood Care (aerosol and pourable) and Scott's Liquid Gold® Floor Restore sub- brands.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.53."**Purchase Price**" shall have the meaning set forth in <u>Section 5.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.54."**Purchased Assets**" shall have the same meaning set forth in <u>Section 1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.55."**Purchased Inventory**" shall have the meaning set forth in <u>Section 1.6</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.56."**Quarterly Royalty Report**" shall have the meaning set forth in <u>Section 5.2.2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.57."**Records**" shall have the meaning set forth in <u>Section 1.4</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.58."**Registered Intellectual Property Asset**" shall have the meaning set forth in <u>Section</u> <u>7.1.10.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.59."**Representative**" shall mean, as to a specified Person, any officer, director, agent, employee, attorney, accountant, consultant or other representative of the Person specified.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.60."**Restrictive Period**" shall have the meaning set forth in <u>Section 8.5</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.61."**Restricted Event**" means, with respect to Seller's operation of the Business: (a) entering into, terminating or receiving notice of termination of any Permit, license, royalty, noncompetition, joint venture, credit or other Contract or transaction that involves a total remaining commitment of more than $25,000; (b) selling, leasing, licensing or otherwise disposing of any material asset, or incurring or suffering any Encumbrance on any material property or asset; (c) canceling or waiving any claim or right, or writing down or writing off any accounts or notes receivable, in each case with a value in excess of $25,000; (d) changing any accounting method or principle; (e) failing to cause any uncontested liability or obligation in excess of $25,000 individually or in the aggregate to be paid or satisfied when the same becomes due; (f) incurring or suffering material damage to or destruction or loss of any of any material asset, whether or not covered by insurance; (g) failing to pay any supplier or other creditor in the ordinary course of business consistent with past practice for longer than 60 days; (i) licensing, selling or transferring any Intellectual Property Assets, other than Permitted Encumbrances; (j) entering into a Contract or making a binding commitment to do any of the foregoing; (k) terminating, or permitting the termination or expiration of any Permit; or (l) agreeing to or executing any settlement or compromise with any with any Governmental Authority or third Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.62."**Royalty Payment**" and "**Royalty Payments**" shall have the meaning set forth in <u>Section 5.2.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.63."**Royalty Term**" shall mean the period beginning on the day following the Closing Date and ending on the date that is the two-year anniversary of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.64."**Seller**" shall have the meaning set forth in the Preamble.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.65."**Taxes**" shall mean all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, bulk sales or bulk transfer, documentary, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other Taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.66."**Tax Return**" shall mean any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.67."**Transaction Documents**" shall mean this Agreement, the Escrow Agreement, the Bill of Sale, the Assignment and Assumption Agreement, the Intellectual Property Assignments, the Transition Services Agreement and all other agreements, instruments

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and documents required to be delivered at Closing or in connection with the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.68."**Transition Services Agreement**" shall have the meaning set forth in <u>Section 6.2.4</u>.

**[Remainder of page intentionally left blank; Signatures on following page]**

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IN WITNESS WHEREOF, the Parties hereto have caused this Asset Purchase Agreement to be executed as of the Effective Date by their respective officers thereunto duly authorized.

**"SELLER"**

Scott's Liquid Gold-Inc.

<u>/s/ Tisha Pedrazzini</u><br>Printed Name: Tisha Pedrazzini<br>Title: President

SLG Chemicals, Inc.

<u>/s/ Tisha Pedrazzini</u><br>Printed Name: Tisha Pedrazzini<br>Title: President

**"BUYER"**

Nakoma Products LLC

<u>/s/ Walter Bransen</u><br>Printed Name: Walter Bransen<br>Title: President

[Signature Page to Asset Purchase Agreement]

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## Ex-23

**EXHIBIT 23.1**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-48213, 333-67141, 333-51710, 333-126028, 333-156191, 333-176400, and 333-205354) of Scott's Liquid Gold - Inc. and subsidiaries of our report dated March 29, 2023, with respect to the consolidated financial statements of Scott's Liquid Gold-Inc. and subsidiaries, which appears in the December 31, 2022 annual report on Form 10-K of Scott's Liquid Gold - Inc. and subsidiaries.

/s/ Plante & Moran, PLLC

March 29, 2023

Denver, Colorado

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## Ex-24

**EXHIBIT 24**

Powers of Attorney

Each of the undersigned Directors and/or Executive Officers of Scott's Liquid Gold-Inc. (the "Company") hereby authorize Tisha Pedrazzini as their true and lawful attorney-in-fact and agent (1) to sign in the name of the undersigned, and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and any amendments to such Annual Report; and (2) to take any and all actions necessary or required in connection with such Annual Report to comply with the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated there under.

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| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| /s/ Tisha Pedrazzini |  |  |
| Tisha Pedrazzini | President | March 29, 2023 |
| <br>/s/ Rimmy R. Malhotra |  |  |
| Rimmy R. Malhotra | Director | March 29, 2023 |
| <br>/s/ Daniel J. Roller |  |  |
| Daniel J. Roller | Director | March 29, 2023 |

---

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## Ex-31

**EXHIBIT 31.1** 

**<u>CERTIFICATION</u>** 

I, Tisha Pedrazzini, certify that:

1. I have reviewed this Annual Report on Form 10-K of Scott's Liquid Gold-Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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| | |
|:---|:---|
| Dated: March 29, 2023 | /s/ Tisha Pedrazzini |
|  | Tisha Pedrazzini |
|  | President |

---

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## Ex-31

**EXHIBIT 31.2** 

**<u>CERTIFICATION</u>** 

I, David M. Arndt, certify that:

1. I have reviewed this Annual Report on Form 10-K of Scott's Liquid Gold-Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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| | |
|:---|:---|
| Dated: March 29, 2023 | /s/ David M. Arndt |
|  | David M. Arndt |
|  | Chief Financial Officer and Corporate Secretary |

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## Ex-32

**EXHIBIT 32.1** 

CERTIFICATION OF ANNUAL REPORT ON FORM 10-K OF

SCOTT'S LIQUID GOLD-INC.

FOR THE YEAR ENDED DECEMBER 31, 2022

Each of the undersigned hereby certifies, for the purposes of Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Scott's Liquid Gold-Inc. ("Scott's Liquid Gold"), that to his knowledge:

1. This Annual Report on Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Scott's Liquid Gold.

This written statement is being furnished to the Securities and Exchange Commission as an exhibit to the Annual Report on Form 10-K. A signed original of this statement has been provided to Scott's Liquid Gold and will be retained by Scott's Liquid Gold and furnished to the Securities and Exchange Commission or its staff upon request.

This Certification is executed as of March 29, 2023.

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| |
|:---|
| /s/ Tisha Pedrazzini |
| Tisha Pedrazzini |
| President |
| <br>/s/ David M. Arndt |
| David M. Arndt |
| Chief Financial Officer and Corporate Secretary |

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