DEF 14A of Empire Petroleum Corp, Apr 29, 2024

DEF 14A of Empire Petroleum Corp

Filed Apr 29, 2024 · FY20230001072613-24-000408

Open on EDGAR

  1. To Be Held June 14, 2024

    | Proposal 1 — Election of Directors Page 4 | | | 4 | Nominees for Directors | | 7 | Corporate Governance | | 27 | Director Compensation |

  2. To Be Held June 14, 2024

    | Questions and Answers | 1 | | Principal Stockholders and Security Ownership of Management | 21 | | Equity Compensation Plan Information | 28 | | Certain Relationships and Related Transactions | 30 | | Delinquent Section 16(a) Reports | 32 | | Other Matters | 32 | | Matters Which May Come Before the Annual Meeting | 32 | | Annual Report on Form 10-K | 32 | | Notice Regarding Availability of Proxy Materials | 32 | | Annex A – Empire Petroleum Corporation 2024 Stock and Incentive Compensation Plan | A-1 |

  3. Nominees for Directors

    Nominees for Directors Set forth below is information with respect to each nominee for director, including information they have furnished as to their principal occupation or employment for the past five or more years and certain other directorships held. Each nominee’s information below also includes a summary of each individual’s experience, qualifications, attributes and skills that have led to the conclusion that such individual should serve as a director. In addition to the specific experiences, qualifications, attributes and/or skills set forth below, in the view of the Board of Directors, each nominee generally has attained a position of leadership in his or her field of endeavor; possesses corporate governance experience, business or financial expertise, integrity, objectivity and sound business judgment; has a commitment to serve the interests of all stockholders; and has the ability to develop a good working relationship with other Board members and contribute to the Board’s working relationship with senior management of Empire. See “—Corporate Governance—Consideration of Director Nominees” below for additional information regarding director nominees and the nominating process.

  4. Nominees for Directors

    | Michael R. Morrisett, age 60 President, Chief Executive Officer and Director | • Chief Executive Officer of Empire since March 2023 and President and a Director of Empire since January 2015. Principal financial officer of Empire from January 2015 to April 2023. • Over 25 years of experience in investment banking and considerable experience in the management of non-operated oil and gas properties. • Served Total Energy Partners Funds, an investment fund engaged in the ownership of non-operated oil and gas working interests, in several capacities, including as a partner, from 2012 to 2018. • Prior to 2013, served in various executive capacities at investment banking firms and private companies in the oil and gas industry. • Mr. Morrisett provides the Board more than 25 years of significant knowledge and experience in the oil and gas industry and executive level experience. As President and Chief Executive Officer, he has extensive knowledge of our day-to-day operations, which facilitates the Board’s oversight of management’s strategy, planning and performance. In addition, he is a valuable contributor of financial, accounting and risk management expertise to the Board. Mr. Morrisett has provided the strategic vision which has resulted in Empire’s significant growth. |

  5. Nominees for Directors

    | Vice Admiral Andrew L. Lewis, USN, Ret., age 61 Director since April 2022 | • Distinguished 36-year military career until his retirement in 2021 serving as Deputy Chief of Naval Operations, Plans and Strategy, vice director for Operations, and director of Fleet Training at Fleet Forces Command. • Commander of the United States Second Fleet Carrier Strike Group and NATO Joint Force Command Norfolk. • Former Senior Vice President of Policy and Projects for Business Executives for National Security, a non-profit that works with business executives and leaders in the federal government’s national security enterprise to apply best business practices in addressing the nations’ most pressing security challenges. • 1985 Graduate of the U.S. Naval Academy. • Vice-Admiral Lewis (Ret.) brings to the Board significant leadership and operational experience, as well as the military equivalent of successful start-up company experience. His executive-level experience in complex organizations and extensive experience with government relations and public policy allow him to be a valuable contributor to the Board as Empire pursues its strategic growth plans. | | J. Kevin Vann, age 52 Director since April 2023 | • Vice President, Finance/Strategic Planning of Empire from October 2022 to April 2023. • Executive Vice President and Chief Financial Officer of WPX Energy Inc. (“WPX”), a publicly traded oil and gas exploration and production company, from February 2018 until its merger with Devon Energy Corporation in 2021. • Senior Vice President and Chief Financial Officer of WPX from March 2014 to February 2018 and as Treasurer of WPX from September 2014 to November 2014 and from November 2018 until February 2020. • Vice President, Chief Accounting Officer and Controller of WPX from December 2011 to March 2014. • Controller for the exploration and production business unit of The Williams Companies, Inc. from June 2007 until December 2011. • Controller for Williams Power Company from 2006 to 2007 and Director of Enterprise Risk Management for Williams from 2002 to 2006. • A director of Apco Oil and Gas International Inc. from 2014 to 2015. • Bachelor’s Degree in Accounting from Oklahoma State University. • Member of the Cherokee Nation. • Mr. Vann provides the Board with extensive accounting and financial expertise in the oil and gas industry as well as risk management experience. His experience in finance and accounting positions qualifies him as an audit committee financial expert as defined by the SEC. |

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    Series A Directors Continuing in Office

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    | Phil E. Mulacek, age 63 Chairman of the Board and Director since October 2021 | • Proven track record of over 35 years in global oil and gas and LNG development, led the discovery of 1.6 billion barrels of oil equivalent in Papua New Guinea. • Founder of private investment company, Petroleum Independent and Exploration Corporation, established in 1981, with extensive interests in U.S. oil and gas royalty mineral acreage. • Founder and former Chairman and Chief Executive Officer of NYSE-listed InterOil Corporation; retired in 2013. Led growth of market cap of InterOil from $10 million to over $5.6 billion during 14-year tenure. • Bachelor of Science in Petroleum Engineering from Texas Tech University. • Mr. Mulacek brings to the Board extensive executive leadership experience and extensive experience in all aspects of upstream development in drilling, completion and production in North America and other regions around the world. His experience in building and growing oil and gas companies and operational expertise and vision allow him to be a valuable contributor to the Board. | | Benjamin J. Marchive II, age 44 Director since October 2021 | • Over 20 years of oil and gas industry experience, mainly in the Gulf of Mexico and along the Gulf Coast. • From 2018 to 2024, served as Senior Vice President-Land & Business Development for Cox Operating, LLC, an oil and gas company, after its merger with Energy XXI, an oil and gas company, as VP of Land and held similar positions from 2006 to 2018. Began his career as a Landman at Apache Corporation in 2003. • Board Member of the Outer Continental Shelf Advisory Board, focused on financial assurance requirements, and Executive Board Member on the Louisiana Oil and Gas Board. • Bachelor’s degree in Petroleum Land and Resource Management from University of Louisiana – Lafayette. • Mr. Marchive’s industry experience in the acquisition, exploration and development of oil and gas properties, especially in areas where Empire currently operates, allows him to be a valuable and resourceful member of the Board. | | Mason H. Matschke, age 61 Director since April 2021 | • Partner and Chief Compliance Officer of Energy Evolution Master Fund, Ltd., an energy fund focused on investing in oil and gas assets as well as companies that will benefit in a transition to a low-carbon and alternative energy environment, since 2021. • Prior to joining the Energy Evolution Fund, served as Senior Vice President of Investments at Raymond James, a financial services firm, from 2007 to 2020. Served as a Senior Vice President at Jeffries from 2006 to 2008 and at UBS from 1997 to 2006. • Mr. Matschke brings to the Board 35 years of experience focused on portfolio management and research across multiple sectors, a deep background as a derivatives strategist and experience in commodity and equity trading. He also brings compliance and regulatory expertise to the Board. |

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    | CORPORATE GOVERNANCE |

  9. Series A Directors Continuing in Office

    Empire has a Code of Business Conduct and Ethics for directors, officers (including the chief executive officer, principal financial officer and principal accounting officer) and employees. The Code of Business Conduct and Ethics is available on our website at https://empirepetroleumcorp.com under the “Investor Relations-Corporate Governance” caption, and a copy of this document may also be obtained in print by any stockholder upon request from our corporate secretary. If we amend or waive the Code of Business Conduct and Ethics with respect to the chief executive officer, principal financial officer or principal accounting officer, we will post the amendment or waiver at the same location on our website. Director Independence. Under the corporate governance standards of the NYSE American, generally, a director does not qualify as independent if the director (or in some cases, members of the director’s immediate family) has, or in the past three years has had, certain relationships or affiliations with the Company, the Company’s auditors or other companies that do business with the Company. The Board of Directors has determined that all of the Company’s directors, except Mr. Morrisett, are independent under the NYSE American standards. In determining the independence of Mr. Mulacek, the Board considered his transactions with the Company described below under the heading “Certain Relationships and Related Transactions.” Thomas W. Pritchard, who served as a director and executive officer until his resignation in March 2023, was not considered to be independent because of his employment as an executive officer of the Company. The Board determined that none of the independent directors has any material relationship with the Company that could impair such individual’s independence. Mr. Morrisett is not considered to be an independent director because of his employment as an executive officer of the Company. Board Meetings and Attendance. The Board held seven meetings during the year ended December 31, 2023. During that year, each of our directors attended at least 75 percent of the aggregate number of Board meetings and meetings held by all committees on which he then served. In addition, the Board of Directors took action 15 times during 2023 by unanimous written consent. Director Attendance at Annual Meeting of Stockholders. Each director is encouraged to participate in our annual meetings of stockholders. Each of our directors then serving attended our 2023 annual meeting of stockholders. Board Leadership Structure and Role in Risk Oversight. We currently separate the offices of chairman of the Board and chief executive officer. We believe the separation of the roles of chairman of the Board and chief executive officer provides strong leadership for our Board, while positioning our chief executive officer as the leader of the Company in the eyes of our customers, employees and other stakeholders. Our Board of Directors has five independent members and only one non-independent member. A number of our independent board members are currently serving or have served as members of senior management of other companies. Our Audit and Compensation Committees are comprised solely of independent directors, each with a different independent director serving as chair of the committee. We believe that the number of independent, experienced directors that make up our Board of Directors, along with the independent oversight of the Board by the non-executive chairman, benefits our Company and our stockholders. The Audit Committee is responsible for overseeing our risk management processes on behalf of the Board of Directors. The Audit Committee receives reports from management regarding our assessment of risks. In addition, the Audit Committee as well as the Board of Directors focuses on the most significant risks facing us and our general risk management strategy, and also ensures that risks undertaken by us are consistent with the Board of Directors’ determination of the appropriate level of risk for the Company. While the Board of Directors oversees our risk management, our management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach to address the risks facing our Company and our Board leadership structure supports this approach. Board Committees. The Board of Directors has a standing Audit Committee and Compensation Committee. Each of these committees has a written charter, which is available on our website at https://empirepetroleumcorp.com under the “Investor Relations - Corporate Governance” caption. The Board of Directors also has an Operations Committee. Each of the current members of each of the committees qualifies as an “independent” director under the corporate governance standards of the NYSE American. The table shows the current membership of the committees and identifies our independent directors serving on each committee:

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    | Name | Michael R. Morrisett | Phil E. Mulacek | Benjamin J. Marchive II | Mason H. Matschke | Andrew L. Lewis | J. Kevin Vann | | Audit | | | | X | X | X* | | Compensation | | X* | | X | | | | Operations | | X* | X | | | | | Independent Directors | | X | X | X | X | X |

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    * Denotes Committee Chairman. Audit Committee. The Board has determined that Mr. Vann qualifies as an “audit committee financial expert” as defined by the SEC and that both Messrs. Matschke and Lewis are able to read and understand fundamental financial statements and are financially sophisticated as contemplated under the rules of the NYSE American. The Audit Committee assists the Board of Directors in fulfilling its responsibilities by providing oversight relating to:

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    | • | the integrity of our financial statements; |

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    | • | our systems of internal control over financial reporting and disclosure controls and procedures; |

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    | • | the engagement, compensation, independence and performance of our independent registered public accounting firm and their conduct of the annual audit of our financial statements and any other audit, review or attestation engagement; |

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    | • | our risk profile, including financial and non-financial risks; |

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    | • | compliance with our financial and risk management policies; |

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    | • | our legal and regulatory compliance; |

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    | • | approval of any related person transactions; and |

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    | • | the application of our Code of Business Conduct and Ethics. |

  20. Series A Directors Continuing in Office

    A more detailed description of the Audit Committee’s responsibilities can be found in its charter. The Audit Committee held four meetings during 2023. Compensation Committee. The Compensation Committee reviews and takes action for and on behalf of the Board of Directors with respect to management compensation policies and practices, including:

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    | • | reviewing and approving or recommending to the independent members of the Board for approval the compensation for our chief executive officer; |

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    | • | determining and approving or recommending to the Board for approval the compensation for our other executive officers; |

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    | • | reviewing and approving management incentive compensation policies and programs; and |

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    | • | administering our equity incentive plan. |

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    In addition, the Compensation Committee recommends the form and amount of non-employee director compensation to the Board of Directors, and the Board of Directors makes the final determination. The Compensation Committee has authority under its charter to obtain advice and seek assistance from compensation consultants and from internal and outside legal, accounting and other advisors. The Committee has not retained a compensation consultant. In considering and recommending the compensation of non-employee directors, the Compensation Committee may consider such factors as it deems appropriate, including historical compensation, level of compensation necessary to attract and retain non-employee directors meeting our desired qualifications and market data. Regarding executive officer compensation, our President and Chief Executive Officer develops preliminary recommendations regarding salary adjustments and annual and long-term award amounts and provides these recommendations to the Committee. The Committee and/or the Board make the final decision and can exercise their discretion in modifying any recommendation. The Compensation Committee has discretion under its charter to form and delegate some or all of its authority to subcommittees composed entirely of independent directors. During 2023, the Compensation Committee did not form or utilize a subcommittee. The Compensation Committee held one meeting during 2023. Operations Committee. The Operations Committee assists the Board of Directors in overseeing (a) our oil and gas operations, the vision and supervision of the operational growth of production and core strategies for superior growth for Empire stockholders, and our performance and risks associated with health, safety and environmental matters, and (b) the determination of our oil, natural gas and natural gas liquids reserves and the work of our independent petroleum engineering firm. The Operations Committee held numerous meetings during 2023. Consideration of Director Nominees. The Board does not have a Nominating Committee. As such, the independent directors of the Board (the “Independent Directors”) participate in the consideration of director nominees and recommend for the Board’s selection the director nominees. The Independent Directors will consider director candidates submitted to them by other directors, employees and stockholders. The Independent Directors may engage professional search firms to assist them in identifying and evaluating potential candidates. Any stockholder recommendations of candidates proposed for consideration by the Independent Directors should include the candidate’s name and qualifications for director, reasons for the recommendation and the candidate’s written consent to being considered as a director nominee and should be addressed to: Attention: Independent Directors, c/o Secretary, 2200 S. Utica Place, Suite 150, Tulsa, Oklahoma 74114. The Independent Directors may require the stockholder submitting the recommendation or the recommended candidate to furnish such other information as the Independent Directors may reasonably request. In addition, as described below, our Amended and Restated Bylaws provide a process for stockholders to nominate directors for consideration at a meeting of stockholders. In considering prospective nominees for the Board, the Independent Directors will endeavor to find individuals of high integrity who have a solid record of accomplishment in their chosen fields and who possess the qualifications, qualities and skills to effectively represent the best interests of all stockholders. Candidates are selected for their ability to exercise good judgment and provide practical insights and diverse perspectives. The Independent Directors consider the following qualifications at a minimum to be required in recommending to the Board potential new Board members or the continued service of existing members:

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    | • | an attained position of leadership in the candidate’s field of endeavor; |

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    | • | business and/or financial expertise; |

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    | • | integrity; |

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    | • | objectivity; |

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    | • | demonstrated exercise of sound business judgment; |

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    | • | expertise relevant to our lines of business; |

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    | • | corporate governance experience; |

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    | • | ability to serve the interests of all stockholders; |

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    | • | ability to devote the time, energy and attention as may be necessary to properly discharge his or her responsibilities as a director; and |

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    | • | independence; at least 50% of the Board shall consist of independent directors, as defined in the rules of the NYSE American. |

  36. Series A Directors Continuing in Office

    Other than the foregoing, there are no stated minimum criteria for director nominees, although the Independent Directors may also consider such other factors as they may deem are in the best interests of Empire and its stockholders. When considering potential nominees for the Board, the Independent Directors will consider the criteria above and each potential nominee’s individual skills and qualifications in context of the current composition of the Board and needs of the Board at such time. In connection therewith, the Independent Directors will consider diversity in professional background, experience, expertise, perspective, age, gender and ethnicity with respect to Board composition as a whole, although the Board does not have a specific diversity policy. With respect to diversity, particular emphasis is placed on identifying candidates whose skills and characteristics complement and augment the make-up of the Board as a whole and the needs of the Board given the circumstances of Empire. If we are legally required by contract or otherwise to provide third parties with the ability to nominate and/or appoint directors (e.g., our Series A Voting Preferred Stock), the selection and nomination of such directors is not subject to the foregoing process. Our Amended and Restated Bylaws permit stockholders to nominate directors for consideration at an annual meeting of stockholders. To nominate a director, stockholders must follow the procedures specified in our Amended and Restated Bylaws that require advance notice and certain other information and requirements. Stockholders must submit the candidate’s name and qualifications in writing to our Secretary at the following address: Secretary, Empire Petroleum Corporation, 2200 S. Utica Place, Suite 150, Tulsa, Oklahoma 74114. The written notice must be received by our Secretary:

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    | • | not later than the close of business on the 90th day and not earlier than the close of business on the 120th day prior to the anniversary of the previous year’s annual meeting if such meeting is to be held on a day which is no more than 30 days in advance of the previous year’s annual meeting or not later than 60 days after the anniversary of the previous year’s annual meeting; and |

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    | • | with respect to any other annual meeting, including in the event no annual meeting was held in the previous year, not later than the close of business on the later of the 90th day prior to the annual meeting and the 10th day following the day on which public disclosure is first given of the date of the annual meeting, and not earlier than the 120th day prior to the annual meeting. |

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    The notice must contain certain information required under our Amended and Restated Bylaws, including, among other things, (i) the nominee’s name, age, business and residential addresses, written consent to being named in the proxy statement and to serving as director if elected, a completed and signed questionnaire, representation and agreement as required by our Amended and Restated Bylaws, and any other information relating to such person as would be required to be disclosed in solicitations of proxies for election of directors pursuant to Section 14(a) under the Securities Exchange Act of 1934 and (ii) with respect to the stockholder submitting the nomination, the name and business addresses of the stockholder, a representation that the stockholder is a record holder of stock entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, and a description of all agreements, arrangements or understandings between or among the stockholder and any other person or persons with respect to the nomination and the class and number of shares of stock beneficially owned by the stockholder. For further information, stockholders may contact our Secretary at our principal executive offices for a copy of the relevant provisions of our Amended and Restated Bylaws. Executive Sessions. Each regularly scheduled meeting of the Board of Directors includes an executive session of the non-management directors. These sessions are chaired by the independent, non-executive chairman of the Board. If our non-management directors include any directors who have been determined not to be independent by the Board, the Board will schedule an executive session of just the independent directors at least once each year. Communications with the Board of Directors. Stockholders who wish to communicate with our Board of Directors or any of its committees may send written communications to: Board of Directors, Empire Petroleum Corporation, 2200 S. Utica Place, Suite 150, Tulsa, Oklahoma 74114. In addition, stockholders and other interested parties may communicate with the chairman of the Board or with the non-management directors as a group by writing to: Chairman of the Board, 2200 S. Utica Place, Suite 150, Tulsa, Oklahoma 74114. Trading, Hedging and Pledging Policies. Our Insider Trading Policy prohibits our directors, officers and employees from purchasing or selling Company stock, derivative securities (such as put and call options) and debt securities while in possession of material non-public information about the Company. This policy also prohibits short sales. This policy requires written pre-clearance from the Board of Directors before holding Company securities in a margin account or pledging Company securities as collateral for a loan where the total amount borrowed against any security of the Company exceeds 10 percent of the value of the securities utilized to secure the funds borrowed. This policy does not otherwise prohibit hedging transactions. Clawback Policy. Our Policy for the Recovery of Erroneously Awarded Compensation provides that if the Company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, we must recover from any current or former executive officer incentive-based compensation that was erroneously awarded during the three years preceding the date the restatement was required. The recoverable amount is the amount of incentive-based compensation received in excess of the amount that would have been received had it been determined based on the applicable restated financial measure. Incentive-based compensation is compensation earned based on a financial reporting measure such as revenue, net income or EBITDA. Stock price and total shareholder return are also considered to be financial reporting measures under this policy.

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    | PROPOSAL 2 ADVISORY VOTE ON EXECUTIVE COMPENSATION |

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    In accordance with Section 14A of the Securities Exchange Act of 1934, we are providing our stockholders the opportunity to approve, on an advisory and non-binding basis, the compensation of our named executive officers as disclosed in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and our compensation objectives, philosophy and practices described in this proxy statement. Our compensation program is designed to, among other things:

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    | • | attract, motivate and retain highly-talented executives; |

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    | • | link executive compensation to the achievement of our business objectives as well as reinforce appropriate leadership behaviors; and |

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    | • | encourage executives to consider the impact of decisions to drive our short-term and long-term success. |

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    We believe that our compensation program, with its balance of base salary, short-term and long-term incentives and benefits, fairly accomplishes our objectives. We believe our executive compensation program has allowed our leadership team to be focused on our business objectives and helped us achieve many of our 2023 objectives, including:

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    | • | continuing to broaden awareness of Empire with the investment community, and ultimately increase liquidity; |

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    | • | making further progress on delivering stronger and more stable cash flows; |

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    | • | executing our growth strategy to increase proved developed reserves through the Starbuck Field enhanced oil recovery program and other company recompletions, workovers and drilling; |

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    | • | optimizing our operating strategy to enhance production and minimize costs while keeping debt low; and |

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    | • | continuing to attract and retain talented employees with the technical expertise necessary to successfully manage, operate and grow our business. |

  51. Series A Directors Continuing in Office

    Accordingly, our Board of Directors recommends our stockholders vote in favor of the say-on-pay proposal as set forth in the following resolution: “RESOLVED, that the compensation of the Company’s named executive officers as disclosed in its Proxy Statement for the 2024 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission for smaller reporting companies, including the executive compensation tables and the corresponding narrative discussion, is approved.” This vote is advisory, and therefore non-binding. Stockholders are strongly encouraged to read the accompanying compensation tables and the related narrative disclosure. The Board of Directors and the Compensation Committee expect to take into account the outcome of the vote in connection with their evaluation of our compensation program. At our 2023 annual meeting, the compensation of our named executive officers as disclosed in last year’s proxy statement was approved by over 97.8% (more than 99.8% if abstentions are excluded from the calculation) of the votes cast on the proposal, which demonstrated strong stockholder support for our executive compensation approach. We have provided our stockholders with the opportunity to vote on the compensation to our named executive officers at every annual meeting of stockholders since 2022. As determined by our Board of Directors, we will continue to provide our stockholders with the opportunity to vote on the compensation to our named executive officers at every annual meeting of stockholders until the next required advisory vote at the 2028 annual meeting of stockholders on the frequency of stockholder advisory votes on the compensation of our named executive officers. Our Board of Directors recommends that you vote “FOR” the approval, on an advisory basis, of the compensation of our named executive officers.

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    | PROPOSAL 3 APPROVAL OF THE EMPIRE PETROLEUM CORPORATION 2024 STOCK AND INCENTIVE COMPENSATION PLAN |

  53. Why Submit the 2024 Incentive Plan to a Vote of Our Stockholders?

    Why Submit the 2024 Incentive Plan to a Vote of Our Stockholders? We are submitting the 2024 Incentive Plan to a vote of the stockholders to comply with NYSE American rules. Stockholder approval will also allow us to grant incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), under the 2024 Incentive Plan.

  54. Reasons for the Proposed 2024 Incentive Plan

    Reasons for the Proposed 2024 Incentive Plan The stock- and cash-based awards under the Empire Petroleum Corporation 2023 Stock and Incentive Compensation Plan (the “2023 Incentive Plan”), the Empire Petroleum Corporation 2022 Stock and Incentive Compensation Plan (the “2022 Incentive Plan”), the Empire Petroleum Corporation 2021 Stock and Incentive Compensation Plan (the “2021 Incentive Plan”) and option awards under the Empire Petroleum Corporation 2019 Stock Option Plan (the “2019 Incentive Plan” and, collectively with the 2023 Incentive Plan, the 2022 Incentive Plan and the 2021 Incentive Plan, the “Predecessor Plans”) have been a key component of our compensation program since their respective adoption. Stock- and cash-based compensation awards assist us in attracting and retaining capable, talented individuals to serve in the capacity of employees, officers, directors and consultants. As of April 22, 2024, 436,935 shares remained available for us to issue as awards under the 2023 Incentive Plan and no shares remained available for us to issue as awards under the 2022 Incentive Plan, the 2021 Incentive Plan and the 2019 Incentive Plan. We intend to make our annual and other grants of awards for 2024 in the near future under the 2023 Incentive Plan for up to 350,000 shares. As of April 22, 2024, a total of 2,379,526 shares are subject to outstanding awards under the Predecessor Plans. If the 2024 Incentive Plan is approved, no more awards will be made under the 2023 Incentive Plan on and after the June 14, 2024 effective date of the 2024 Incentive Plan. The Board has determined that to ensure there are sufficient shares available to meet our needs for future grants during the coming years the adoption of the 2024 Incentive Plan reserving 700,000 shares is necessary and desirable to maintain competitiveness in today’s volatile business environment. The ability to grant stock- and cash-based compensation awards is critical to our ability to attract and retain highly qualified individuals. Our successful operation and our ability to create long-term value for our stockholders each depends on the efforts of our employees, and we believe that it is in the best interest of our stockholders for those individuals, especially at the management level to have an ownership interest in us in recognition of their present and potential contributions and to align their interests with those of our stockholders. Further details about our awards currently outstanding can be found under the captions “Equity Compensation Plan Information” and “Executive Compensation.” The 2024 Incentive Plan is a broad-based plan under which we may grant awards to all employees, including our officers and officers of our affiliates, to non-employee members of the Board and to consultants. We believe approval of the 2024 Incentive Plan will give us flexibility to continue to make stock- and cash-based grants under the 2024 Incentive Plan over the next two years in amounts determined appropriate by the Compensation Committee, which will administer the 2024 Incentive Plan (as discussed more fully below). This timeline, however, is simply an estimate used by us to determine the number of new shares to ask our stockholders to approve, and future circumstances may require us to change our expected equity grant practices. These circumstances include, but are not limited to, the future price of our Common Stock, award levels/amounts provided by our competitors and hiring activity during the next few years, including hiring activity related to mergers and acquisitions. It is our current practice to grant stock-based and cash-based compensation awards to key employees on an annual basis each fiscal year. In addition, it is our current practice to grant stock-based compensation on an annual basis to our non-employee directors. Fluctuations in our stock price may result in stock-based awards for a given year requiring a larger or smaller number of shares to capture the same grant date value as a prior year’s award, which impacts the rate at which we utilize shares for compensation purposes. The 2024 Incentive Plan will allow us to use a variety of equity compensation alternatives in structuring compensation arrangements for our personnel. While we are aware of the potential dilutive effect of compensatory equity awards, we also recognize the significant motivational and performance benefits that may be achieved from making such awards. If the 2024 Incentive Plan is approved, the potential dilution from the 700,000 shares authorized for issuance of stock-based awards will be approximately 2.35 percent based on our issued and outstanding shares as of April 22, 2024. In determining the number of shares to request pursuant to this proposal, the Compensation Committee considered the foregoing factors and decided that 700,000 shares was the appropriate number to allow us to implement an effective equity compensation program over the coming years.

  55. Summary of the 2024 Incentive Plan

    Summary of the 2024 Incentive Plan The following summary provides a general description of the material features of the 2024 Incentive Plan but is not a complete description of all provisions of the 2024 Incentive Plan and is qualified in its entirety by reference to the full text of the 2024 Incentive Plan attached as Annex A, which is incorporated by reference in this proposal. The 2024 Incentive Plan permits the grant of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards and other stock-based awards (collectively referred to as “Awards”). Key Features of the 2024 Incentive Plan. Key features of the 2024 Incentive Plan include:

  56. Summary of the 2024 Incentive Plan

    | • | The 2024 Incentive Plan has a fixed number of shares available for grant that will not automatically increase; in other words, there is no “evergreen” feature; |

  57. Summary of the 2024 Incentive Plan

    | • | The 2024 Incentive Plan is administered by the Compensation Committee of the Board of Directors (the “Committee”), which is comprised of independent directors; |

  58. Summary of the 2024 Incentive Plan

    | • | No discounted options or stock appreciation rights may be granted; |

  59. Summary of the 2024 Incentive Plan

    | • | Except as otherwise provided in an Award agreement at the time of grant or thereafter by the Committee, Awards are generally non-transferrable, except pursuant to a qualified domestic relations order, by will or the laws of descent and distribution, or to a trust of which the Award recipient is and remains the sole beneficiary for his or her lifetime; |

  60. Summary of the 2024 Incentive Plan

    | • | No automatic Award grants are made to any eligible individual; |

  61. Summary of the 2024 Incentive Plan

    | • | No repricing of stock options or stock appreciation rights may be made without stockholder approval; |

  62. Summary of the 2024 Incentive Plan

    | • | No shares withheld for tax obligations related to, or to pay the exercise price of, an option or stock appreciation right may be recycled back into to the pool of shares authorized for issuance and thus be available for future grant; |

  63. Summary of the 2024 Incentive Plan

    | • | Shares withheld for tax obligations related to, or as payment of, any Award other than an option or stock appreciation right may be recycled back into the pool of shares authorized for issuance and thus be available for future grant; |

  64. Summary of the 2024 Incentive Plan

    | • | No dividends or dividend equivalents will be paid on any Awards unless and to the extent the vesting conditions and/or performance criteria related to the underlying Award have been satisfied or achieved and any forfeiture restrictions have been satisfied and removed; and |

  65. Summary of the 2024 Incentive Plan

    | • | Awards are subject to potential reduction, cancellation, forfeiture, recoupment or other clawback under certain specified circumstances in accordance with the Company’s Policy for the Recovery of Erroneously Awarded Compensation and any other clawback policies we may adopt. |

  66. Summary of the 2024 Incentive Plan

    Administration. The Committee will administer the 2024 Incentive Plan and will have authority to make Awards under the 2024 Incentive Plan, to set the terms of the Awards, to interpret the 2024 Incentive Plan, to establish any rules or regulations relating to the 2024 Incentive Plan that it determines to be appropriate and to make any other determination that it believes necessary or advisable for the proper administration of the 2024 Incentive Plan. Eligibility. All employees and consultants of the Company and its affiliates and all non-employee directors of the Company are eligible to receive Awards under the 2024 Incentive Plan, as determined by the Committee. Eligible employees, non-employee directors and consultants who are designated by the Committee to receive an Award under the 2024 Incentive Plan are referred to as “Participants.” As of April 22, 2024, we had 55 employees, five non-employee directors and two consultants who would be eligible to be Participants in the 2024 Incentive Plan. Limits on Awards. The 2024 Incentive Plan limits the Awards granted under the plan to 700,000 shares of Common Stock, which may be granted in any one or combination of (i) stock options or stock appreciation rights, (ii) restricted stock or restricted stock units, (iii) performance shares or performance units, (iv) cash-based Awards, capped at the grant date fair market value of the cumulative number of shares remaining to be issued under the 2024 Incentive Plan, and (v) other stock-based Awards. Number of Shares Subject to the 2024 Incentive Plan. The number of shares of our Common Stock reserved for issuance under the 2024 Incentive Plan is 700,000 shares of Common Stock, subject to certain adjustments as provided in the 2024 Incentive Plan. Share Counting Rules. The following reflect the rules for counting shares against the number reserved for issuance under the 2024 Incentive Plan:

  67. Summary of the 2024 Incentive Plan

    | • | For Awards settled in cash, the shares that would have been delivered had there been no such cash or other settlement will not be counted against the shares available for issuance under the 2024 Incentive Plan. |

  68. Summary of the 2024 Incentive Plan

    | • | For shares that are delivered pursuant to the exercise of a stock appreciation right or stock option, the number of underlying shares to which the exercise related shall be counted against the applicable share limits, as opposed to the number of shares actually issued. For example, if a stock option relates to 1,000 shares and is exercised on a cashless basis at a time when the payment due to the Participant is 150 shares, then 1,000 shares shall be charged against the applicable share limits. |

  69. Summary of the 2024 Incentive Plan

    | • | Except as otherwise provided below, shares that are subject to Awards that expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under the 2024 Incentive Plan will again be available for subsequent Awards under the 2024 Incentive Plan. |

  70. Summary of the 2024 Incentive Plan

    | • | Shares that are exchanged by a Participant or withheld by us as full or partial payment in connection with any option or stock appreciation right, as well as any shares exchanged by a Participant or withheld to satisfy the tax withholding obligations related to any such option or stock appreciation right, will not be available for subsequent Awards under the 2024 Incentive Plan. |

  71. Summary of the 2024 Incentive Plan

    | • | Shares that are exchanged by a Participant or withheld by us as full or partial payment in connection with any Award other than an option or stock appreciation right, as well as any shares exchanged by a Participant or withheld to satisfy the tax withholding obligations related to any such Award other than an option or stock appreciation right, will be available for subsequent Awards under the 2024 Incentive Plan. |

  72. Summary of the 2024 Incentive Plan

    Source of Shares. Common Stock issued under the 2024 Incentive Plan may come from authorized but unissued shares of our Common Stock or from treasury shares. Stock Options. The Committee may grant nonqualified stock options or incentive stock options to purchase shares of our Common Stock. Incentive stock options may only be granted to employees. The Committee will determine the number and exercise price of the options, and the time or times that the options become exercisable, provided that the option exercise price may not be less than the fair market value of a share of Common Stock on the date of grant. The term of an option will also be determined by the Committee but may not exceed five years. No dividends or dividend equivalents will be granted alone or in conjunction with any stock option Award. The option exercise price may be paid in cash; by check; in shares of Common Stock; through a “cashless” exercise arrangement with a broker; or in any other manner authorized by the Committee. Incentive stock options will be subject to certain additional requirements necessary to qualify as incentive stock options under Section 422 of the Code. Stock Appreciation Rights. A stock appreciation right may be granted by the Committee in its discretion. The Committee may grant freestanding stock appreciation rights, tandem stock appreciation rights or any combination of these forms of stock appreciation rights. The grant price for each stock appreciation right shall be determined by the Committee and shall be specified in the Award agreement, but in no event shall the grant price be less than the fair market value of a share of our Common Stock on the date the stock appreciation right is granted. The grant price of tandem stock appreciation rights shall be equal to the option price of the related option. The term of the stock appreciation right shall be determined by the Committee and specified in the Award agreement which relates to the stock appreciation right but may not exceed ten years. Outstanding stock appreciation rights may be exercised on whatever terms and conditions the Committee imposes. Tandem stock appreciation rights may be exercised for all or part of the shares subject to the related option on the surrender of the right to exercise equivalent portions of the related option. A tandem stock appreciation right may be exercised only with respect to the shares for which the related option is then exercisable. With respect to a tandem stock appreciation right granted in connection with an incentive stock option:

  73. Summary of the 2024 Incentive Plan

    | • | the tandem stock appreciation right will expire no later than the expiration of the underlying incentive stock option; |

  74. Summary of the 2024 Incentive Plan

    | • | the value of the payout with respect to the tandem stock appreciation right will be for no more than 100 percent of the difference between the option price of the underlying incentive stock option and the fair market value of the shares subject to the underlying incentive stock option at the time the tandem stock appreciation right is exercised; and |

  75. Summary of the 2024 Incentive Plan

    | • | the tandem stock appreciation right may be exercised only when the fair market value of the shares subject to the incentive stock option exceeds the option price of the incentive stock option. |

  76. Summary of the 2024 Incentive Plan

    No dividends or dividend equivalents will be granted alone or in conjunction with an Award of stock appreciation rights. On the exercise of a stock appreciation right, a Participant will be entitled to receive payment in an amount determined by multiplying:

  77. Summary of the 2024 Incentive Plan

    | • | the difference between the fair market value of a share of Common Stock on the date of exercise and the grant price; by |

  78. Summary of the 2024 Incentive Plan

    | • | the number of shares with respect to which the stock appreciation right is exercised. |

  79. Summary of the 2024 Incentive Plan

    In the discretion of the Committee, the payment of the stock appreciation right exercised may be in cash, shares of equivalent value (based on the fair market value on the date of exercise of a stock appreciation right), in some combination thereof or in any other form approved by the Committee. Restricted Stock. Shares of Common Stock may be granted by the Committee to an eligible Participant and made subject to restrictions on sale, pledge or other transfer for a certain period. All shares of restricted stock will be subject to such restrictions as the Committee may provide in an Award agreement with the Participant, including provisions obligating the Participant to forfeit the shares to us in the event of termination of employment or service or if specified performance goals or targets are not met. A Participant’s rights with respect to such shares shall be subject to the restrictions provided in the Award agreement and the 2024 Incentive Plan. The Committee may also determine whether a Participant will be entitled to receive dividends or the value equivalent of any dividends paid during the performance period. However, all such dividends and dividend equivalents will be subject to the same vesting, forfeiture restrictions and/or performance criteria applicable to the related shares of restricted stock, and a Participant will only be entitled to receive an amount in respect of dividends or dividend equivalents paid on restricted stock in the event and to the extent that such vesting conditions and/or performance criteria have been satisfied or achieved and any forfeiture restrictions have been satisfied and removed. Restricted Stock Units. A restricted stock unit represents the right to receive from us, on the respective scheduled vesting or payment date for such restricted stock unit, one or more shares of Common Stock. An Award of restricted stock units may be subject to the attainment of specified performance goals or targets, forfeitability provisions and such other terms and conditions as the Committee may determine, subject to the provisions of the 2024 Incentive Plan. The Committee may also determine whether a Participant will be entitled to receive the value equivalent of any dividends paid during the performance period. However, a Participant will only be entitled to receive an amount in respect of dividends paid on shares underlying restricted stock units in the event and to the extent that such vesting conditions and/or performance criteria have been satisfied or achieved and any forfeiture restrictions have been satisfied and removed. Performance Shares, Performance Units and Cash-Based Awards. Performance shares, performance units and cash-based Awards may be granted in such amounts and subject to such terms and conditions as determined by the Committee at the time of grant and as set forth in the Award agreement. The Committee will set performance goals, which, depending on the extent to which they are met, will determine the number and/or value of the performance shares/units and cash-based Awards that will be paid out to the Participant. Participants will receive payment of the value of performance shares/units earned after the end of the performance period. Payment of performance shares/units and cash-based Awards will be made in shares, cash or a combination thereof that have an aggregate fair market value equal to the value of the earned performance shares/units and cash-based Awards at the close of the applicable performance period as the Committee determines. Shares may be granted subject to any restrictions deemed appropriate by the Committee. The Committee may also determine whether a Participant will be entitled to receive the value equivalent of any dividends paid during the performance period. However, a Participant will only be entitled to receive an amount in respect of dividends paid on shares underlying performance shares/units in the event and to the extent that such performance criteria have been satisfied or achieved. Other Stock-Based Awards. The 2024 Incentive Plan also authorizes the Committee to grant Participants Awards of Common Stock and other Awards that are denominated in, payable in, valued in whole or in part by reference to, or are otherwise based on the value of, or the appreciation in value of, shares of our Common Stock (other stock-based Awards). The Committee has discretion to determine the Participants to whom other stock-based Awards are to be made, the times at which such Awards are to be made, the sizes of such Awards, the form of payment, and all other conditions of such Awards, including any restrictions, deferral periods or performance requirements. The Committee may also determine whether a Participant will be entitled to receive the value equivalent of any dividends paid during the performance period. However, all such dividends and dividend equivalents will be subject to the same vesting, forfeiture restrictions and/or performance criteria applicable to the related stock-based Award, and a Participant will only be entitled to receive an amount in respect of dividends or dividend equivalents paid on a stock-based Award in the event and to the extent that such vesting conditions and/or performance criteria have been satisfied or achieved and any forfeiture restrictions have been satisfied and removed. Performance-Based Compensation. Awards may be granted to employees that are intended to be “performance-based compensation.” These performance-based Awards may be either equity or cash Awards, or a combination of both. Holders are only entitled to receive payment for a performance-based Award for any given performance period to the extent that pre-established performance goals set by the Committee are satisfied. The pre-established performance goals must be based on one or more of the performance criteria set forth in the 2024 Incentive Plan. With respect to performance-based Awards, the Board is permitted to make certain equitable and objectively determinable adjustments to the performance goals. Upon certification of achievement of the performance goals for a particular performance period set forth in an Award that is intended to qualify as “performance-based compensation,” the Committee may reduce or eliminate, but not increase, the amount specified in the original Award. Maximum Vesting Requirements. Awards under the 2024 Incentive Plan are subject to a five-year maximum vesting or forfeiture restriction period. Adjustments. Equitable adjustments to the terms of the 2024 Incentive Plan and any Awards will be made as necessary to reflect any stock splits, spin-offs, extraordinary stock dividends and similar transactions.

  80. Summary of the 2024 Incentive Plan

    Change of Control. In the event of a “change of control” (as defined in the 2024 Incentive Plan), no cancellation, acceleration of vesting, lapsing of restrictions, payment of Award, cash settlement or other payment shall occur with respect to any Award if the Committee reasonably determines in good faith before the occurrence of the change of control that the Award will be honored or assumed by any successor, or replaced by an alternative award meeting certain conditions. If the Committee reasonably determines in good faith that Awards will not be honored, assumed or replaced as described above, upon a change of control (i) Awards solely dependent on the satisfaction of a service obligation shall become fully vested and (ii) Awards dependent in any part on the satisfaction of performance objectives shall be deemed to have been fully earned based on targeted performance being attained as of the effective date of the change of control. Neither the segregation and/or separation of Green Tree New Mexico, LLC, a/k/a Empire New Mexico LLC from the Company to its stockholders, nor the actions taken in connection with adding directors to the Board and classifying the Board into common directors and Series A Directors, shall constitute a “change in control” under this provision. Discontinuance or Amendment of the 2024 Incentive Plan; No Repricing. The Committee may amend, modify, suspend or terminate the 2024 Incentive Plan in whole or in part at any time, but no amendment may materially diminish any of the rights of a Participant under any Awards previously granted without his or her consent. In addition:

  81. Summary of the 2024 Incentive Plan

    | • | without the prior approval of our stockholders, options and stock appreciation rights issued under the 2024 Incentive Plan will not be repriced, replaced or regranted through cancellation, whether in exchange for cash or another type of Award, by lowering the exercise price of a previously granted option or the grant price of a previously granted stock appreciation right or by replacing a previously granted option or stock appreciation right with a new option with a lower option price or a new stock appreciation right with a lower grant price; and |

  82. Summary of the 2024 Incentive Plan

    | • | to the extent necessary under any applicable law, regulation or exchange requirement, no amendment shall be effective unless approved by our stockholders in accordance with applicable law, regulation or exchange requirement. |

  83. Summary of the 2024 Incentive Plan

    Tax Withholding. We may withhold from any payments or stock issuances under the 2024 Incentive Plan, or collect as a condition of payment, any taxes required by law to be withheld. Subject to the Committee’s right to approve, any employee Award recipient may, but is not required to, satisfy his or her withholding tax obligation by electing to deliver currently owned shares of our Common Stock or to have us withhold, from the shares the Participant would otherwise receive, shares of our Common Stock, in each case having a value equal to the minimum amount required to be withheld (or such other amount that will not cause adverse accounting consequences for the Company and is permitted under applicable withholding rules promulgated by the Internal Revenue Service or other applicable governmental entity). Clawback Policy. The 2024 Incentive Plan will be subject to the Company’s Policy for the Recovery of Erroneously Awarded Compensation and any other written clawback policy we adopt, which policy may subject a Participant’s Awards and other rights and benefits under the 2024 Incentive Plan to reduction, cancellation, forfeiture or recoupment if certain events or wrongful conduct specified in the policy occur.

  84. Summary Compensation Table

    Summary Compensation Table The following table sets forth certain information regarding compensation of our named executive officers for the years ended December 31, 2023 and 2022. Messrs. Morrisett and Faulkner were our only executive officers as of December 31, 2023. Mr. Faulkner became an executive officer when he was promoted to Chief Financial Officer in April 2023. On March 16, 2023, Mr. Pritchard resigned as Chief Executive Officer and a director of the Company. On July 8, 2023, Mr. Sweeney resigned as Chief Operating Officer of the Company. For additional information, see “Executive Resignations” below. We have an employment agreement with Mr. Morrisett and had an employment agreement with each of Messrs. Pritchard and Sweeney until his resignation. For additional information regarding their employment agreements, see “Employment Agreement” and “Executive Resignations” below. Neither Mr. Morrisett nor Mr. Pritchard received an equity award for 2023. Mr. Sweeney did not receive any equity awards for 2023 and 2022. Since no equity awards were granted to Messrs. Morrisett and Pritchard for 2021, an additional equity award was granted to each of them during 2022. Specifically, they each received (a) restricted stock units for 10,000 shares of our Common Stock with a grant date fair value of $118,000, which amount is included in the amount shown for the Stock Awards column for 2022 below and (b) stock options for 60,000 shares of our Common Stock with a grant date fair value of $283,800, which amount represents the amount shown in the Option Awards column for 2022 below.

  85. Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | | Michael R. Morrisett | 2023 | 260,000 | 260,000 | — | — | — | 21,688 (2) | 541,688 | | President and | 2022 | 260,000 | 295,000 | 542,125 | 283,800 | — | 22,730 (3) | 1,403,655 | | Chief Executive Officer | | | | | | | | | | Stephen L. Faulkner, Jr | 2023 | 240,000 | 120,000 | 331,500 | — | — | — | 691,500 | | Chief Financial Officer(4) | | | | | | | | | | Thomas W. Pritchard | 2023 | 54,167 | — | — | — | — | 366,671 (2) | 420,838 | | Former Chief Executive Officer | 2022 | 260,000 | 295,000 | 542,125 | 283,800 | — | 20,778 (3) | 1,401,703 | | Eugene J. Sweeney | 2023 | 135,417 | — | — | — | — | 145,000 (5) | 280,417 | | Former Chief Operating Officer | 2022 | 252,500 | 130,000 | — | — | — | — | 382,500 |

  86. Summary Compensation Table

    | (1) Represents the grant date fair value computed in accordance with ASC Topic 718, “Compensation – Stock Compensation,” which excludes the effect of estimated forfeitures. The assumptions used to value these awards are included in Note 10 to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2023. The amounts shown do not represent the amounts paid to the executives. |

  87. Summary Compensation Table

    | (2) All Other Compensation in 2023 consists of (a) premiums paid for life insurance in the amount of $10,225 for Mr. Morrisett and $2,803 for Mr. Pritchard, (b) vehicle allowances and (c) $361,053 of severance paid to Mr. Pritchard. |

  88. Summary Compensation Table

    | (3) All Other Compensation in 2022 consists of (a) premiums paid for life insurance in the amount of $10,225 for Mr. Morrisett and $5,163 for Mr. Pritchard and (b) vehicle allowances. |

  89. Summary Compensation Table

    | (4) Mr. Faulkner resigned as Chief Financial Officer on March 28, 2024. |

  90. Summary Compensation Table

    | (5) Mr. Sweeney received severance of $145,000 in 2023. |

  91. Outstanding Equity Awards at Fiscal Year-End 2023

    Outstanding Equity Awards at Fiscal Year-End 2023 The following table sets forth certain information regarding outstanding equity awards of our named executive officers as of December 31, 2023.

  92. Outstanding Equity Awards at Fiscal Year-End 2023

    | | Option Awards | | | | Stock Awards | | | | | | | Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Options (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Expiration | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | | Name | Exercisable | Unexercisable | (#) | ($) | Date | (#) | ($)(1) | (#) | ($) | | Michael R. Morrisett | 589,100 500,000 10,000 | — — 20,000(3) 30,000(4) | — — — — | 1.32 1.40 11.80 11.80 | 4/2/2029 12/31/2030 8/28/2025 8/28/2026 | 6,250(2) | 68,688 | — | — | | Stephen L. Faulkner, Jr. | — | — | — | — | — | 25,000(5) | 274,750 | — | — | | Thomas W. Pritchard | 119,100 74,766 10,000 | — — — | — — — | 1.32 1.40 11.80 | 4/2/2029 12/31/2030 8/28/2025 | — | — | — | — | | Eugene J. Sweeney | 125,000 | — | — | 12.20(6) | 11/25/2024 | — | — | — | — |

  93. Outstanding Equity Awards at Fiscal Year-End 2023

    | (1) Based on the closing price of $10.99 for our Common Stock on the last trading day of 2023 as reported on the NYSE American. |

  94. Outstanding Equity Awards at Fiscal Year-End 2023

    | (2) These restricted stock units vest on January 30, 2024. |

  95. Outstanding Equity Awards at Fiscal Year-End 2023

    | (3) This option vests as follows: 10,000 shares on each of February 28, 2024 and 2025. |

  96. Outstanding Equity Awards at Fiscal Year-End 2023

    | (4) This option vests as follows: 10,000 shares on each of February 28, 2024, 2025 and 2026. |

  97. Outstanding Equity Awards at Fiscal Year-End 2023

    | (5) Mr. Faulkner forfeited 22,500 of these restricted stock units in connection with his resignation. |

  98. Outstanding Equity Awards at Fiscal Year-End 2023

    | (6) Mr. Sweeney’s Stock Option Agreements include a total of $536,000 cash component to assist with the cost of exercising the stock options to better align Mr. Sweeney with operational goals established by the Board at the time of grant of such options. |

  99. Pay Versus Performance

    Pay Versus Performance We are required by SEC rules to provide the following information about the relationship between executive compensation actually paid and our financial performance. Pay Versus Performance Table. The following table discloses information on “compensation actually paid” (“CAP”) to our principal executive officer (“PEO”), former PEO (“Former PEO”) and (on average) to our other named executive officers (“non-PEO NEOs”) during the specified years alongside total shareholder return (“TSR”) and net income metrics. The TSR calculation assumes reinvestment of all dividends, if any, and reflects changes in our common share price since the initial investment date of December 31, 2020.

  100. Pay Versus Performance

    | | Summary Compensation Table Total for PEO(1) | | Compensation Actually Paid to PEO(1)(3) | | | | | | | | | | | | Average Summary Compensation Table Total for Non-PEO Named Executive | Average Compensation Actually Paid to Non-PEO Named Executive | Value of Initial Fixed $100 Investment Based on Total Shareholder | Net Income | | Year | PEO | Former PEO | PEO | Former PEO | Officers(2) | Officers(2)(3) | Return | (Loss) | | 2023 | $541,688 | $422,587 | $513,785 | $431,236 | $485,958 | $457,583 | $704 | $(12,469,605) | | 2022 | N/A | $1,401,703 | N/A | $1,467,909 | $893,077 | $990,310 | $788 | $7,084,130 | | 2021 | N/A | $394,291 | N/A | $1,224,908 | $404,889 | $1,235,506 | $774 | $(18,614,962) |

  101. Pay Versus Performance

    | (1) The PEO for 2023 is Michael R. Morrisett who became Chief Executive Officer on March 17, 2023. The Former PEO for each of 2023, 2022 and 2021 is Thomas W. Pritchard who resigned as Chief Executive Officer on March 16, 2023. |

  102. Pay Versus Performance

    | (2) The non-PEO NEOs are Stephen L. Faulkner, Jr. and Eugene J. Sweeney for 2023, Michael R. Morrisett and Eugene J. Sweeney for 2022 and Michael R. Morrisett for 2021. |

  103. Pay Versus Performance

    | (3) To calculate CAP for the PEO and Former PEO and average CAP for the non-PEO NEOs, the following amounts were deducted from and added to Summary Compensation Table total compensation: |

  104. Pay Versus Performance

    | | PEO | Former PEO | Average non-PEO NEOs | | 2023 Total Compensation as Reported | $541,688 | $422,587 | $485,958 | | Add (Subtract): | | | | | Fair Value of Awards granted in the year (a) | — | — | (165,750) | | Fair Value of Awards granted in the year at year end (b) | — | — | 137,375 | | Change in fair value from end of prior fiscal year to end of current fiscal year for Awards made in prior fiscal years that were unvested at the end of the current fiscal year (b) | (33,841) | — | — | | Change in fair value from end of prior fiscal year to vesting date for Awards made in prior fiscal years that vested during the current fiscal year (b) | 5,938 | 8,649 | — | | Total Adjustments | (27,903) | 8,649 | (28,375) | | Compensation Actually paid | $513,785 | $431,236 | $457,583 |

  105. Pay Versus Performance

    | (a) Represents the grant date fair value of equity-based awards granted each year. |

  106. Pay Versus Performance

    | (b) The fair value or change in fair value of options was determined by reference to a Black-Scholes value as of the applicable year-end or vesting date, determined based on the same methodology as used to determine the grant date fair value but using the closing stock price on the applicable revaluation date as well as the volatility and risk free rates determined as of the revaluation dates based on expected life period. The fair value or change in fair value of other awards was determined using the closing stock price on the applicable revaluation date. |

  107. Pay Versus Performance

    Relationship Between Compensation Actually Paid Disclosed in the Pay Versus Performance Table and TSR and our Net Income (Loss).

  108. Pay Versus Performance

    | DIRECTOR COMPENSATION |

  109. Pay Versus Performance

    Annual compensation for non-employee Board members, as established in April 2023 (and modified in June 2023), is as follows (with pro-rata adjustments based on date of service as necessary):

  110. Pay Versus Performance

    | • | Non-employee Board members receive an annual cash retainer of $80,000; |

  111. Pay Versus Performance

    | • | Chairman of the Board, if a non-employee director, receives an additional quarterly cash retainer of $9,000; |

  112. Pay Versus Performance

    | • | Chairman of the Audit Committee receives restricted stock units for 5,000 shares of our Common Stock; |

  113. Pay Versus Performance

    | • | Non-employee Board members receive a quarterly cash retainer of $3,000 for each committee they serve on; |

  114. Pay Versus Performance

    | • | Non-employee Board members receive a quarterly cash retainer of $2,500 for in person Board meetings that occur during a quarter; and |

  115. Pay Versus Performance

    | • | Non-employee Board members receive restricted stock units for 10,000 shares of our Common Stock and stock options for 40,000 shares of our Common Stock. |

  116. Pay Versus Performance

    We reimburse all directors for out-of-pocket expenses in connection with attending Board and committee meetings. We do not pay our employees who serve on the Board of Directors any additional compensation for Board membership.

  117. Director Compensation Table for 2023

    Director Compensation Table for 2023 The following table sets forth a summary of the compensation earned, paid or awarded to our non-employee directors for the year ended December 31, 2023. Mr. Vann became a director on April 28, 2023. Mr. Mulacek, Chairman of the Board, waived for 2023 his additional quarterly cash retainer for serving as Chairman of the Board.

  118. Director Compensation Table for 2023

    | Name (1) | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($)(3) | Option Awards ($)(3) | All Other Compensation ($) | Total ($) | | Andrew L. Lewis | 74,000 | 118,300 | 473,200 | — | 665,500 | | Benjamin J. Marchive II | 74,000 | 118,300 | 473,200 | — | 665,500 | | Mason H. Matschke | 83,000 | 118,300 | 473,200 | — | 674,500 | | Phil E. Mulacek | 83,000 | 118,300 | 473,200 | — | 674,500 | | J. Kevin Vann | 45,500 | 152,400 | 473,200 | 95,000(4) | 766,100 |

  119. Director Compensation Table for 2023

    | (1) This table excludes Messrs. Morrisett and Pritchard who were officers and employees of the Company during 2023 and thus received no compensation for service as a director during 2023. Mr. Pritchard resigned as a director and officer on March 16, 2023. The compensation received by each of Messrs. Morrisett and Pritchard as an officer and employee is shown in the Summary Compensation Table above. |

  120. Director Compensation Table for 2023

    | (2) These amounts represent annual and quarterly retainer fees for non-employee directors. |

  121. Director Compensation Table for 2023

    | (3) These amounts represent the grant date fair value computed in accordance with ASC Topic 718, “Compensation – Stock Compensation,” which excludes the effect of estimated forfeitures. The restricted stock units are subject to forfeiture provisions, which generally lapse 13 months after the date of the grant. The stock options generally vest in four equal quarterly installments beginning with the first quarter after the date of the grant. The assumptions used to value these stock awards and stock options are included in Note 10 to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2023. The amounts shown do not represent amounts paid to the directors. As of December 31, 2023, (a) each director had outstanding restricted stock units for the following aggregate number of shares: Andrew L. Lewis: 10,000; Benjamin J. Marchive II: 10,000; Mason H. Matschke 10,000; Phil E. Mulacek: 10,000; and J. Kevin Vann: 15,000; and (b) each director had outstanding stock options with an exercise price of $11.83 per share for the following aggregate number of shares: Andrew L. Lewis: 40,000; Benjamin J. Marchive II: 40,000; Mason H. Matschke 40,000; Phil E. Mulacek: 40,000; and J. Kevin Vann: 40,000. |

  122. Director Compensation Table for 2023

    | (4) Represents consulting fees paid to Mr. Vann during 2023 prior to becoming a director. |

  123. Director Compensation Table for 2023

    | EQUITY COMPENSATION PLAN INFORMATION |

  124. Director Compensation Table for 2023

    The following table provides information as of December 31, 2023, concerning shares of our Common Stock authorized for issuance under our existing equity compensation plans. On April 3, 2019, the Board of Directors adopted the 2019 Incentive Plan. The total number of shares of our Common Stock that may be issued pursuant to stock options under the 2019 Incentive Plan is 2,500,000. Further, on April 3, 2019, the Company granted Mr. Morrisett and Mr. Pritchard each options to purchase 625,000 shares of our Common Stock at an exercise price of $1.32 per share. On December 31, 2020, the Company granted certain members of management and a member of the Board of Directors options to purchase 1,250,000 shares of our Common Stock at an exercise price of $1.40 per share. As of December 31, 2023, all of the outstanding options under the 2019 Incentive Plan were vested and expire in April 2029 or December 2030. As a result of the adoption of the 2021 Incentive Plan, no further grants will be made under the 2019 Incentive Plan. On August 27, 2021, the Board of Directors adopted the 2021 Incentive Plan, which was subsequently approved by stockholders of the Company. The total number of shares of our Common Stock that may be issued pursuant to the 2021 Incentive Plan is 750,000. As a result of the adoption of the 2022 Incentive Plan, no further grants will be made under the 2021 Incentive Plan. On June 30, 2022, the Board of Directors adopted the 2022 Incentive Plan, which was subsequently approved by the stockholders of the Company on August 26, 2022. The total number of shares of our Common Stock that may be issued pursuant to the 2022 Incentive Plan is 750,000. As a result of the adoption of the 2023 Incentive Plan, no further grants will be made under the 2022 Incentive Plan. On April 24, 2023, the Board of Directors adopted the 2023 Incentive Plan, which was subsequently approved by the stockholders of the Company on June 9, 2023. The total number of shares of our Common Stock that may be issued pursuant to the 2023 Incentive Plan is 700,000.

  125. Director Compensation Table for 2023

    | Plan Category | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights | (b) Weighted average exercise price of outstanding options, warrants and rights | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a)) | | 2019 Incentive Plan: Equity compensation plans not approved by security holders | 1,282,966 | $1.36 | — | | 2023 Incentive Plan, 2022 Incentive Plan and 2021 Incentive Plan: Equity compensation plans approved by security holders | 782,415(1) | $10.68(1) | 436,935(2) | | Total | 2,065,381 | | 436,935 |

  126. Director Compensation Table for 2023

    | (1) Includes 368,210 shares issuable upon vesting or settlement of restricted stock units, which units have no exercise price. The weighted average exercise price does not take these restricted stock units into account. Also reflects the impact of a cash component to assist with the cost of exercising certain stock options. |

  127. Director Compensation Table for 2023

    | (2) Represents shares of our Common Stock available for issuance under the 2023 Incentive Plan pursuant to stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares or units, cash-based awards and other stock-based awards. All of these shares may be awarded as restricted stock, restricted stock units, performance shares or units, cash-based awards and other stock-based awards. |

  128. Director Compensation Table for 2023

    | REPORT OF THE AUDIT COMMITTEE |

  129. Director Compensation Table for 2023

    The Audit Committee assists the Board of Directors in its responsibilities for the general oversight of the integrity of our financial statements and our financial reporting process, including our system of internal control over financial reporting. Management has the primary responsibility for the financial statements and the financial reporting process, including our system of internal controls. Our independent registered public accounting firm, Grant Thornton LLP (“Grant Thornton”), is responsible for performing an independent audit of our financial statements in accordance with the Public Company Accounting Oversight Board standards and to issue a report thereon. The Audit Committee monitors these processes. In the performance of its oversight function, the Audit Committee has reviewed and discussed our audited consolidated financial statements as of and for the fiscal year ended December 31, 2023 with management and with Grant Thornton. In this context, the Audit Committee has discussed with Grant Thornton the matters required to be discussed by Auditing Standard 1301, “Communications with Audit Committees,” issued by the Public Company Accounting Oversight Board. The Audit Committee has received from Grant Thornton the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with Grant Thornton its independence. Based on its review of the audited consolidated financial statements and the various discussions noted above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements as of and for the fiscal year ended December 31, 2023 be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, for filing with the Securities and Exchange Commission.

  130. Director Compensation Table for 2023

    | THE AUDIT COMMITTEE | | J. Kevin Vann, Chairman | | Mason H. Matschke | | Andrew L. Lewis |

  131. Director Compensation Table for 2023

    | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |