FUNI 8-K
Hypha Labs, Inc. (FUNI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b)) | |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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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. ☐
Item 1.01. Entry into a Material Definitive Agreement.
On January 21, 2025, Hypha Labs, Inc. (the “Company”) entered into an Amended and Restated Consulting, Confidentiality and Proprietary Rights Agreement (the “A&R Consulting Agreement”) with Duck’s Nest Investments, Inc. (the “Consultant”), an entity wholly-owned by A. Stone Douglass, a director of the Company and the Company’s Chairman, President, Chief Executive Officer, Chief Financial Officer and Secretary. The A&R Consulting Agreement is effective as of January 1, 2025 (the “Effective Date”), and amends and restates that certain Consulting, Confidentiality and Proprietary Rights Agreement, dated September 1, 2021, by and between the Company and the Consultant. Pursuant to the A&R Consulting Agreement, Mr. Douglass will, among other things: (i) have the titles of Chairman, President, Chief Executive Officer, Chief Financial Officer and Secretary; (ii) work with the Company’s financial and other staff; (iii) interface with the Company’s outside accounting firm and law firm(s); (iv) interface with the Company’s auditors; (v) supervise all public filings with the Securities and Exchange Commission and Nasdaq Stock Market; and (vi) report to the Company’s Board of Directors. The A&R Consulting Agreement has a term of one year from the Effective Date, and is subject to renewal and extension for successive one-year periods. In consideration for the services rendered pursuant to the A&R Consulting Agreement, the Consultant will be paid $10,000 per month. The A&R Consulting Agreement also includes confidentiality, non-solicitation and other customary provisions.
The foregoing description of the A&R Consulting Agreement is qualified in its entirety by reference to the text of the A&R Consulting Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference to this Item 1.01.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The information included in Item 1.01 of this Current Report on Form 8-K is incorporated by reference to this Item 5.02.
Item 5.05. Amendments to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics.
Effective January 24, 2025, the Company adopted a new Code of Conduct and Business Ethics (the “Code”), which applies to all directors, officers and employees of the Company and its subsidiaries.
The foregoing description of the Code is qualified in its entirety by reference to the text of the Code, which is filed as Exhibit 14.1 to this Current Report on Form 8-K and incorporated by reference to this Item 5.05. The Code will be made available on the Company’s website at www.hyphalabs.com.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits. | |
| 10.1 | Amended and Restated Consulting, Confidentiality and Proprietary Rights Agreement, effective January 1, 2025, by and between Hypha Labs, Inc. and Duck’s Nest Investments, Inc. | |
| 14.1 | Code of Conduct and Business Ethics | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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 hereunto duly authorized.
| Hypha Labs, Inc. | ||
| Date: | January 24, 2025 | |
| By: | /s/ A. Stone Douglass | |
| A. Stone Douglass | ||
| Chairman, President, Chief Executive Officer, Chief Financial Officer and Secretary | ||
Exhibit 10.1
Hypha Labs, Inc.
AMENDED AND RESTATED
CONSULTING, CONFIDENTIALITY AND PROPRIETARY RIGHTS AGREEMENT
This Amended and Restated Consulting, Confidentiality and Proprietary Rights Agreement (“Agreement”) is entered into effective as of the 1st day of January, 2025 (the “Effective Date”) by and between Hypha Labs, Inc. formerly known as DigiPath Labs, Inc., a Nevada corporation (the “Company”), and Duck’s Nest Investments, Inc., (“Consultant”), a Florida corporation wholly-owned by A. Stone Douglass (the “Principal”).
WHEREAS, the Company previously entered into a Consulting, Confidentiality and Proprietary Rights Agreement with Consultant effective as of the 1st day of September, 2021 (the “2021 Agreement”) which was extended from year to year thereafter by the parties; and
WHEREAS, the Company desires to continue to engage Consultant to provide certain services as set forth on Schedule A attached hereto and as specified from time to time by the Company and to amend and restate the 2021 Agreement to so provide.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and conditions contained herein, the parties hereto agree that their amended and restated agreement shall read as follows:
1. Engagement. The Company hereby engages Consultant to perform, using the Principal, those duties set forth in the Schedule A attached hereto and such other duties as may be requested from time to time by the Company. Consultant hereby accepts such engagement upon the terms and subject to conditions set forth in this Agreement.
2. Compensation. For the services rendered by Consultant under this Agreement, the Company shall pay to Consultant the compensation specified in the Schedule A, subject to the terms and conditions set forth in this Agreement.
3. Term and Survivability. The term of this Agreement shall be for a period of one year from the Effective Date, subject to renewal and extension for additional one year periods annually unless either party notifies the other at least 30 days prior to the next extension date of its intent not to renew and extend this Agreement. Notwithstanding the foregoing, Company may terminate this Agreement on or after one month from the Effective Date by providing written advance notice to Consultant and Consultant may terminate this Agreement on or after one month from the Effective Date by one-month’s written advance notice to Company. In addition, this Agreement may be terminated if either party materially fails to perform or comply with this Agreement or any material provision hereof. Termination shall be effective five (5) days after notice of such material failure to perform or comply with this Agreement or any material provision hereof to the defaulting party if the defaults have not been cured within such five (5) day period. Upon termination of this Agreement the following sections of this Agreement shall survive such termination: Sections 3, 5, 6, 7, 8, 10, 12 and 13.
4. Costs and Expenses of Consultant’s Performance. Except as set forth on the Schedule A, all costs and expenses of Consultant’s performance hereunder shall be borne by the Consultant.
5. Taxes. As an independent contractor, Consultant acknowledges and agrees that it is solely responsible for the payment of any taxes and/or assessments imposed on account of the payment of compensation to, or the performance of services by Consultant pursuant this Agreement, including, without limitation, any unemployment insurance tax, federal and state income taxes, federal Social Security (FICA) payments, and state disability insurance taxes. The Company shall not make any withholdings or payments of said taxes or assessments with respect to amounts paid to Consultant hereunder; provided, however, that if required by law or any governmental agency, the Company shall withhold such taxes or assessments from amounts due Consultant, and any such withholding shall be for Consultant’s account and shall not be reimbursed by the Company to Consultant. Consultant expressly agrees to make all payments of such taxes, as and when the same may become due and payable with respect to the compensation earned under this Agreement.
6. Confidentiality. Consultant agrees that Consultant will not, except when required by applicable law or order of a court, during the term of this Agreement or thereafter, disclose directly or indirectly to any person or entity, or copy, reproduce or use, any Trade Secrets (as defined below) or Confidential Information (as defined below) or other information treated as confidential by the Company known, learned or acquired by the Consultant during the period of the Consultant’s engagement by the Company. For purposes of this Agreement, “Confidential Information” shall mean any and all Trade Secrets, knowledge, data or know-how of the Company, any of its affiliates or of third parties in the possession of the Company or any of its affiliates, and any nonpublic technical, training, financial and/or business information treated as confidential by the Company or any of its affiliates, whether or not such information, knowledge, Trade Secret or data was conceived, originated, discovered or developed by Consultant hereunder. For purposes of this Agreement, “Trade Secrets” shall include, without limitation, any formula, concept, pattern, processes, designs, device, software, systems, list of customers, training manuals, marketing or sales or service plans, business plans, marketing plans, financial information, or compilation of information which is used in the Company’s business or in the business of any of its affiliates. Any information of the Company or any of its affiliates which is not readily available to the public shall be considered to be a Trade Secret unless the Company advises Consultant in writing otherwise. Consultant acknowledges that all of the Confidential Information is proprietary to the Company and is a special, valuable and unique asset of the business of the Company, and that Consultant’s past, present and future engagement by the Company has created, creates and will continue to create a relationship of confidence and trust between the Consultant and the Company with respect to the Confidential Information. Furthermore, Consultant shall immediately notify the Company of any information which comes to its attention which might indicate that there has been a loss of confidentiality with respect to the Confidential Information. In such event, Consultant shall take all reasonable steps within its power to limit the scope of such loss. Notwithstanding the foregoing, Confidential Information does not include information that Consultant can demonstrate with competent evidence is: (a) already lawfully known by Consultant at the time of first receipt from Company and is not subject to any other nondisclosure agreement between the parties or between Consultant and a third party; (b) was in the public domain at the time it was disclosed to Consultant; (c) entered the public domain after it was disclosed to the Consultant through no fault of Consultant or its employees, agents or subcontractors (d) is independently developed by consultant through no use of the Company’s Confidential Information. Consultant may also disclose Confidential Information of Company to the extent disclosure is required to be disclosed by a court or governmental authority having jurisdiction over Consultant, provided that Consultant gives Company prompt written notice of the request prior to any disclosure and cooperates with Company, at Company’s reasonable request and expense, in any lawful action to contest or limit the scope of such required disclosure, including filing motions and otherwise making appearances before a court.
7. Return of the Company’s Proprietary Materials. Consultant agrees to deliver promptly to the Company on termination of this Agreement for whatever reason, or at any time the Company may so request, all documents, records, artwork, designs, data, drawings, flowcharts, listings, models, sketches, apparatus, notebooks, disks, notes, copies and similar repositories of Confidential Information and any other documents of a confidential nature belonging to the Company, including all copies, summaries, records, descriptions, modifications, drawings or adaptations of such materials which Consultant may then possess or have under its control. Concurrently with the return of such proprietary materials to the Company, Consultant agrees to deliver to the Company such further agreements and assurances to ensure the confidentiality of proprietary materials. Consultant further agrees that upon termination of this Agreement, Consultant’s, employees, consultants, agents or independent contractors shall not retain any document, data or other material of any description containing any Confidential Information or proprietary materials of the Company.
8. Trade Secrets of Others. Consultant represents to the Company that its performance of all the terms of this Agreement does not and will not breach any agreement to keep in confidence proprietary information or trade secrets acquired by Consultant in confidence or in trust prior to its engagement by the Company, and Consultant will not disclose to the Company, or induce the Company to use, any confidential or proprietary information or material belonging to others. Consultant agrees not to enter into any agreement, either written or oral, in conflict with this Agreement.
9. Independent Contractor. Consultant shall not be deemed to be an employee or agent of the Company for any purpose whatsoever. Consultant shall have the sole and exclusive control over its employees, consultants or independent contractors who provide services to the Company, and over the labor and employee relations policies and policies relating to wages, hours, working conditions or other conditions of its employees, consultants or independent contractors.
10. Non-Solicit. Consultant will not, during the term this Agreement and for one year thereafter, directly or indirectly (whether as an owner, partner, shareholder, agent, officer, director, employee, independent contractor, consultant, or otherwise) with or through any individual or entity: (i) employ, engage or solicit for employment any individual who is, or was at any time during the twelve-month period immediately prior to the termination of this Agreement for any reason, an employee of the Company, or otherwise seek to adversely influence or alter such individual’s relationship with the Company; or (ii) solicit or encourage any individual or entity that is, or was during the twelve-month period immediately prior to the termination of this Agreement for any reason, a customer or vendor of the Company to terminate or otherwise alter his, her or its relationship with the Company or any of its affiliates.
11. Equitable Remedies. In the event of a breach or threatened breach of the terms of this Agreement by Consultant, the parties hereto acknowledge and agree that it would be difficult to measure the damage to the Company from such breach, that injury to the Company from such breach would be impossible to calculate and that monetary damages would therefore be an inadequate remedy for any breach. Accordingly, the Company, in addition to any and all other rights which may be available, shall have the right of specific performance, injunctive relief and other appropriate equitable remedies to restrain any such breach or threatened breach without showing or proving any actual damage to the Company.
12. Governing Law. This Agreement shall be governed, construed and interpreted in accordance with the internal laws of the State of Nevada. In the event a judicial proceeding is necessary, the sole forum for resolving disputes arising under or relating to this Agreement are the Municipal and Superior Courts for Clark County, Nevada or the Federal District Court in Clark County, Nevada and all related appellate courts, and the parties hereby consent to the jurisdiction of such courts, and that venue shall be in Clark County, Nevada.
13. Entire Agreement: Modifications and Amendments. The terms of this Agreement are intended by the parties as a final expression of their agreement with respect to such terms as are included in this Agreement and may not be contradicted by evidence of any prior or contemporaneous agreement. The Schedule A referred to in this Agreement is incorporated into this Agreement by this reference. This Agreement may not be modified, changed or supplemented, nor may any obligations hereunder be waived or extensions of time for performance granted, except by written instrument signed by the parties or by their agents duly authorized in writing or as otherwise expressly permitted herein.
14. Attorney Fees. Should any party institute any action or proceeding to enforce this Agreement or any provision hereof, or for damages by reason of any alleged breach of this Agreement or of any provision hereof, or for a declaration of rights hereunder, the prevailing party in any such action or proceeding shall be entitled to receive from the other party all costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party in connection with such action or proceeding.
15. Prohibition of Assignment. This Agreement and the rights, duties and obligations hereunder may not be assigned or delegated by Consultant without the prior written consent of the Company. Any assignment of rights or delegation of duties or obligations hereunder made without such prior written consent shall be void and of no effect.
16. Binding Effect: Successors and Assignment. This Agreement and the provisions hereof shall be binding upon each of the parties, their successors and permitted assigns.
17. Validity. This Agreement is intended to be valid and enforceable in accordance with its terms to the fullest extent permitted by law. If any provision of this Agreement is found to be invalid or unenforceable by any court of competent jurisdiction, the invalidity or unenforceability of such provision shall not affect the validity or enforceability of all the remaining provisions hereof.
18. Notices. All notices and other communications hereunder shall be in writing and, unless otherwise provided herein, shall be deemed duly given if delivered personally or by telecopy or mailed by registered or certified mail (return receipt requested) or by Federal Express or other similar courier service to the parties at the following addresses or (at such other address for the party as shall be specified by like notice). Additionally, an email shall be sent with a copy of all written notices.
(i) If to the Company:
| Hypha Labs, Inc. | |
| 5940 S. Rainbow Boulevard | |
| Las Vegas, NV 89118 | |
| Phone: (702) 744-0640 | |
| Fax: | |
| Attn: Dennis Hartmann | |
| Email: |
(ii) If to the Consultant:
| Duck’s Nest Investments, Inc. | |
| A.Stone Douglass | |
| 1313 Torrey Pines Road | |
| La Jolla, CA 92037 | |
| Phone: (858-583-1017 | |
| Email: [email protected] |
Any such notice, demand or other communication shall be deemed to have been given on the date personally delivered or as of the date mailed, as the case may be.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Consulting, Confidentiality and Proprietary Rights Agreement as of the Effective Date written above.
| CONSULTANT | ||
|
Duck’s Nest Investments, Inc. | ||
| By: | ||
Name: |
A. Stone Douglass | |
| Title: | Owner | |
| Hypha Labs, Inc. formerly known as DigiPath Labs, Inc. | ||
|
By: |
||
| Name: | Dennis Hartmann | |
| Title: | Director | |
Schedule A
| 1. | TITLE, DUTIES AND OPERATIONAL RESPONSIBILITIES: |
Title, Duties and Operational Responsibilities
| ■ | Consultant will have the titles of Chairman, President, Chief Executive Officer, Chief Financial Officer and Secretary. | |
| ■ | Work with the financial and other staff. | |
| ■ | Interface with the outside accounting firm and law firm(s) | |
| ■ | Interface with the auditors Supervise all public filings with the SEC and Nasdaq | |
| ■ | Consultant shall report to the Board. | |
| ■ | Consultant shall perform the duties as set forth above as well as other duties which shall be communicated separately from time to time. |
| 2. | SCHEDULE AND COMITTMENT OF TIME: |
| Consultant is expected to devote a minimum of 15 hours per week. | |
| 3. | REPORTING SCHEDULE: |
| Consultant shall report regularly to the Board his actions on behalf of the Company. | |
| 4. | COMPENSATION AND PAYMENT TERMS: |
| Consultant shall be paid $120,000 per year, which shall be paid at the end of every month, the first payment being due on January 31st for the month ending January 2025. | |
| 5 | EXPENSES: |
| The Company agrees to reimburse Consultant for other reasonably necessary travel expenses. However, should such expenses exceed $500 in any given calendar month; such expenses shall be pre-approved in advance by the Company in order to qualify to reimbursement. An email authorization by an officer or director of the Company shall be deemed a valid approval. |
Exhibit 14.1
HYPHA LABS, INC. (the “Company”)
CODE OF CONDUCT AND BUSINESS ETHICS
Introduction
This Code of Conduct and Business Ethics (this “Code”) covers a wide range of business practices and procedures. It does not cover every issue that may arise, but it sets out basic principles to guide the directors, officers, and employees of the Company. All Company directors, officers, and employees should conduct themselves accordingly and seek to avoid even the appearance of improper behavior in any way relating to the Company. In appropriate circumstances, this Code should also be provided to and followed by the Company’s agents and representatives, including consultants.
Any director or officer who has any questions about this Code should consult with the Chief Executive Officer. If an employee has any questions about this Code, the employee should ask his or her supervisor how to handle the situation.
| 1. | Scope of Code |
This Code is intended to deter wrongdoing and to promote the following:
| ● | honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; | |
| ● | full, fair, accurate, timely, and understandable disclosure in reports and documents the Company files with, or submits to, the Securities and Exchange Commission (the “SEC”) and in other communications made by the Company; | |
| ● | compliance with applicable governmental laws, rules, and regulations; | |
| ● | the prompt internal reporting of violations of this Code to the appropriate person or persons identified in this Code; | |
| ● | accountability for adherence to this Code; and | |
| ● | adherence to a high standard of business ethics. |
| 1 |
| 2. | Compliance with Laws, Rules, and Regulations |
Obeying the law, both in letter and in spirit, is the foundation on which the Company’s ethical standards are built. All directors, officers, and employees should respect and obey all laws, rules, and regulations applicable to the business and operations of the Company. Although directors, officers, and employees are not expected to know all of the details of these laws, rules, and regulations, it is important to know enough to determine when to seek advice from supervisors, managers, officers, legal counsel or other appropriate Company personnel.
| 3. | Conflicts of Interest |
A “conflict of interest” exists when an individual’s private interest interferes in any way – or even appears to conflict – with the interests of the Company. A conflict of interest situation can arise when a director, officer, or employee takes actions or has interests that may make it difficult to perform his or her work on behalf of the Company in an objective and effective manner. Conflicts of interest may also arise when a director, officer, or employee, or a member of his or her family, receives improper personal benefits as a result of his or her position with the Company. Loans to, or guarantees of obligations of, employees and their family members may create conflicts of interest.
Service to the Company should never be subordinated to personal gain or advantage. Conflicts of interest, whenever possible, should be avoided. In particular, clear conflict of interest situations involving directors, officers, and employees who occupy supervisory positions or who have discretionary authority in dealing with any third party may include the following:
| ● | any significant ownership interest in any supplier or customer; | |
| ● | any consulting or employment relationship with any customer, supplier, or competitor; | |
| ● | any outside business activity that detracts from an individual’s ability to devote appropriate time and attention to his or her responsibilities to the Company; | |
| ● | the receipt of non-nominal gifts or excessive entertainment from any organization with which the Company has current or prospective business dealings; | |
| ● | being in the position of supervising, reviewing, or having any influence on the job evaluation, pay, or benefit of any family member; and | |
| ● | selling anything to the Company or buying anything from the Company, except on the same terms and conditions as comparable directors, officers, or employees are permitted to so purchase or sell. |
It is almost always a conflict of interest for a Company officer or employee to work simultaneously for a competitor, customer, or supplier. No officer or employee may work for a competitor as a consultant or board member. The best policy is to avoid any direct or indirect business connection with the Company’s customers, suppliers, and competitors, except on the Company’s behalf.
| 2 |
Conflicts of interest are prohibited as a matter of Company policy, except under guidelines approved by the Board of Directors. Conflicts of interest may not always be clear-cut and further review and discussions may be appropriate. Any director or officer who becomes aware of a conflict or potential conflict should bring it to the attention of the Chief Executive Officer. Any employee who becomes aware of a conflict or potential conflict should bring it to the attention of a supervisor, manager, or other appropriate personnel.
| 4. | Insider Trading |
Directors, officers, and employees who have access to confidential information relating to the Company are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of the Company’s business. All non-public information about the Company should be considered confidential information. To use non-public information for personal financial benefit or to “tip” others who might make an investment decision on the basis of this information is not only unethical and against Company policy but is also illegal. Directors, officers, and employees also should comply with insider trading standards and procedures adopted by the Company. If a question arises, the director, officer, or employee should consult with the Company’s Chief Executive Officer.
| 5. | Corporate Opportunities |
Directors, officers, and employees are prohibited from taking for themselves personally or directing to a third party any opportunity that is discovered through the use of corporate property, information, or position without the consent of the Board of Directors. No director, officer, or employee may use corporate property, information, or position for improper personal gain, and no director, officer, or employee may compete with the Company directly or indirectly. Directors, officers, and employees owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.
| 6. | Competition and Fair Dealing |
The Company seeks to compete in a fair and honest manner. The Company seeks competitive advantages through superior performance rather than through unethical or illegal business practices. Stealing proprietary information, possessing trade secret information that was obtained without the owner’s consent, or inducing such disclosures by past or present employees of other companies is prohibited. Each director, officer, and employee should endeavor to respect the rights of and deal fairly with the Company’s customers, suppliers, service providers, competitors, and employees. No director, officer, or employee should take unfair advantage of anyone relating to the Company’s business or operations through manipulation, concealment, or abuse of privileged information, misrepresentation of material facts, or any unfair dealing practice.
To maintain the Company’s valuable reputation, compliance with the Company’s quality processes and safety requirements is essential. In the context of ethics, quality requires that the Company’s products and services meet reasonable customer expectations. All inspection and testing documents must be handled in accordance with all applicable regulations.
| 3 |
No gift or entertainment should ever be accepted by a director, officer, or employee, family member of a director, officer, or employee, or agent relating to the individual’s position with the Company unless it (1) is not a cash gift, (2) is consistent with customary business practices, (3) is not excessive in value, (4) cannot be construed as a bribe or payoff, and (5) does not violate any laws or regulations. A director or officer should discuss with the Chief Executive Officer, and employees should discuss with their supervisors, any gifts or proposed gifts that may not be appropriate.
| 7. | Discrimination and Harassment |
The diversity of the Company’s employees is a tremendous asset. The Company is firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment or any kind. Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances.
| 8. | Health and Safety |
The Company strives to provide each employee with a safe and healthful work environment. Each officer and employee has responsibility for maintaining a safe and healthy workplace for all employees by following safety and health rules and practices and reporting accidents, injuries, and unsafe equipment, practices, or conditions.
Violence and threatening behavior are not permitted. Officers and employees should report to work in a condition to perform their duties, free from the influence of illegal drugs or alcohol. The use of illegal drugs in the workplace will not be tolerated.
| 9. | Record-Keeping |
The Company requires honest and accurate recording and reporting of information in order to make responsible business decisions.
Many officers and employees regularly use business expense accounts, which must be documented and recorded accurately. If an officer or employee is not sure whether a certain expense is legitimate, the employee should ask his or her supervisor.
All of the Company’s books, records, accounts, and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions, and must conform both to applicable legal requirements and to the Company’s system of internal controls. Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable law or regulation.
Business records and communications often become public, and the Company and its officers and employees in their capacity with the Company should avoid exaggeration, derogatory remarks, guesswork, or inappropriate characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos, and formal reports.
| 4 |
The Company’s records should always be retained or destroyed according to the Company’s record retention policies. In accordance with those policies, in the event of litigation or governmental investigation, directors, officers, and employees should consult with the Company’s legal counsel before taking any action because it is critical that any impropriety or possible appearance of impropriety be avoided.
| 10. | Confidentiality |
Directors, officers, and employees must maintain the confidentiality of confidential information entrusted to them by the Company or its customers, suppliers, joint venture partners, or others with whom the Company is considering a business or other transaction except when disclosure is authorized by an executive officer or required or mandated by laws or regulations. Confidential information includes all non-public information that might be useful or helpful to competitors or harmful to the Company or its customers and suppliers, if disclosed. It also includes information that suppliers and customers have entrusted to the Company. The obligation to preserve confidential information continues even after employment ends.
| 11. | Protection and Proper Use of Company Assets |
All directors, officers, and employees should endeavor to protect the Company’s assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on the Company’s profitability. Any suspected incident of fraud or theft should be immediately reported for investigation. Company assets should be used for legitimate business purposes and should not be used for non-Company business.
The obligation to protect the Company’s assets includes its proprietary information. Proprietary information includes intellectual property, such as trade secrets, patents, trademarks, and copyrights, as well as business, marketing and service plans, engineering and manufacturing ideas, designs, databases, records, salary information, and any unpublished financial data and reports. Unauthorized use or distribution of this information would violate Company policy. It could also be illegal and result in civil or even criminal penalties.
| 12. | Payments to Government Personnel |
The U.S. Foreign Corrupt Practices Act prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business. It is strictly prohibited to make illegal payments to government officials of any country.
In addition, the U.S. government has a number of laws and regulations regarding business gratuities that may be accepted by U.S. government personnel. The promise, offer, or delivery to an official or employee of the U.S. government of a gift, favor, or other gratuity in violation of these rules would not only violate Company policy but could also be a criminal offense. State and local governments, as well as foreign governments, may have similar rules.
| 5 |
| 13. | Corporate Disclosures |
All directors, officers, and employees should support the Company’s goal to have full, fair, accurate, timely, and understandable disclosure in the periodic reports required to be filed by the Company with the SEC. Although most employees hold positions that are far removed from the Company’s required filings with the SEC, each director, officer, and employee should promptly bring to the attention of the Chief Executive Officer any of the following:
| ● | Any material information to which such individual may become aware that affects the disclosures made by the Company in its public filings or would otherwise assist the Chief Executive Officer in fulfilling their responsibilities with respect to such public filings. | |
| ● | Any information the individual may have concerning (a) significant deficiencies in the design or operation of internal controls that could adversely affect the Company’s ability to record, process, summarize, and report financial data or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s financial reporting, disclosures, or internal controls. | |
| ● | Any information the individual may have concerning any violation of this Code, including any actual or apparent conflicts of interest between personal and professional relationships, involving any management or other employees who have a significant role in the Company’s financial reporting, disclosures, or internal controls. | |
| ● | Any information the individual may have concerning evidence of a material violation of the securities or other laws, rules, or regulations applicable to the Company and the operation of its business, by the Company or any agent thereof, or of violation of this Code. |
| 14. | Waivers of the Code of Conduct |
Any waiver of this Code for directors or executive officers may be made only by the Board of Directors or a committee of the Board and will be promptly disclosed to stockholders as required by applicable laws, rules, and regulations, including the rules of the SEC and the NASDAQ Stock Market.
| 15. | Publicly Available |
This Code shall be posted on the Company’s website.
| 16. | Reporting any Illegal or Unethical Behavior |
Directors and officers are encouraged to talk to the Chief Executive Officer, and employees are encouraged to talk to supervisors, managers, or other appropriate personnel when in doubt about the best course of action in a particular situation. Directors, officers, and employees should report any observed illegal or unethical behavior and any perceived violations of laws, rules, regulations, or this Code to appropriate personnel. It is the policy of the Company not to allow retaliation for reports of misconduct by others made in good faith. Directors, officers, and employees are expected to cooperate in internal investigations of misconduct.
| 17. | Enforcement |
The Board of Directors shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of this Code. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to this Code and to these additional procedures, and may include written notices to the individual involved that the Board has determined that there has been a violation, censure by the Board, demotion or re-assignment of the individual involved, suspension with or without pay or benefits (as determined by the Board), and termination of the individual’s employment or position. In determining the appropriate action in a particular case, the Board of Directors or such designee shall take into account all relevant information, including the nature and severity of the violation, whether the violation was a single occurrence or repeated occurrences, whether the violation appears to have been intentional or inadvertent, whether the individual in question had been advised prior to the violation as to the proper course of action, and whether or not the individual in question had committed other violations in the past.
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