10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2023

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

For the transition period from to

Commission File Number: 001-13458

SCOTT’S LIQUID GOLD-INC.

(Exact name of registrant as specified in its charter)

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

Registrant’s telephone number, including area code: (303)

373-4860

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

Title of each class	Trading Symbol	Name of exchange on which registered
None	None	None

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

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

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

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

As of August 11, 2023, the registrant had 12,997,423 shares of its common stock, $0.10 par value per share, outstanding.

CAUTIONARY NOTE ON FORWARD-LOOKING INFORMATION

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

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

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

• disruptions or inefficiencies in the supply chain;

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

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

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

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

• new competitive products and/or technological changes;

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

• unfavorable economic conditions;

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

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

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

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

• the loss of any executive officer or other personnel;

• future losses which could affect our liquidity;

• the risk that we may not be able to remediate the existing material weakness related to our finance department lacking a sufficient number of trained professionals with technical accounting expertise to process and account for complex, non-routine transactions in accordance with GAAP and develop and maintain effective internal controls over financial reporting;

• other matters discussed in this Report, including the risks described in the Risk Factors section of this Report and in our Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent Quarterly Reports on Form 10-Q.

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

		Page
PART I
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 4.	Controls and Procedures	22
PART II
Item 1A.	Risk Factors	23
Item 6.	Exhibits	23

ITEM 1. FINANCIAL STATEMENTS.

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Net sales	$	1,538		$	1,120		$	3,268		$	2,928
Cost of sales		824			737			1,826			1,599
Gross profit		714			383			1,442			1,329
Operating expenses:
Advertising		120			174			275			326
Selling		574			867			1,146			1,970
General and administrative		638			776			1,255			1,561
Intangible asset amortization		51			103			101			226
Impairment of goodwill and intangible assets		-			3,589			-			3,589
Total operating expenses		1,383			5,509			2,777			7,672
Loss from operations		(669	)		(5,126	)		(1,335	)		(6,343	)
Interest expense		(6	)		(18	)		(113	)		(57	)
Loss before income taxes and discontinued operations		(675	)		(5,144	)		(1,448	)		(6,400	)
Income tax expense		(6	)		(52	)		(2	)		(52	)
Loss from continuing operations		(681	)		(5,196	)		(1,450	)		(6,452	)
Income from discontinued operations, net of taxes		228			863			1,366			1,668
Net loss	$	(453	)	$	(4,333	)	$	(84	)	$	(4,784	)
Basic and diluted net income (loss) per common shares:
Loss from continuing operations	$	(0.05	)	$	(0.41	)	$	(0.11	)	$	(0.51	)
Income from discontinued operations	$	0.02		$	0.07		$	0.11		$	0.13
Net loss	$	(0.03	)	$	(0.34	)	$	-		$	(0.38	)
Weighted average shares outstanding:
Basic and diluted		12,908			12,749			12,853			12,745

See accompanying notes to these Condensed Consolidated Financial Statements.

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except par value amounts)

			December 31,
			2022
Assets
Current assets:
Cash	608		$	49
Accounts receivable, net	1,182			1,833
Inventories	523			1,097
Income taxes receivable	-			239
Prepaid expenses	304			243
Assets held for sale	2,280			2,591
Assets of discontinued operations	-			1,235
Total current assets	4,897			7,287
Intangible assets, net	805			906
Operating lease right-of-use assets	2,364			2,491
Other assets	45			47
Total assets	8,111		$	10,731
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	1,325		$	1,407
Accrued expenses	107			311
Current portion of long-term debt, net of debt issuance costs	1,210			3,384
Operating lease liabilities, current portion	280			270
Total current liabilities	2,922			5,372
Operating lease liabilities, net of current	2,369			2,512
Other liabilities	27			27
Total liabilities	5,318			7,911
Shareholders’ equity:
Preferred Stock, no par value, authorized 20,000 shares; no shares issued and outstanding	-			-
Common Stock; 0.10 par value, authorized 50,000 shares; issued and outstanding 12,997 shares (2023) and 12,797 shares (2022)	1,300			1,280
Capital in excess of par	7,949			7,912
Accumulated deficit	(6,456	)		(6,372	)
Total shareholders’ equity	2,793			2,820
Total liabilities and shareholders’ equity	8,111		$	10,731

All values are in US Dollars.

See accompanying notes to these Condensed Consolidated Financial Statements.

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

(in thousands)

	Common Stock
	Shares		Amount		Capital in Excess of Par		(Accumulated Deficit) Retained Earnings			Total
Balance, December 31, 2022		12,797	$	1,280	$	7,912	$	(6,372	)	$	2,820
Stock-based compensation		-		-		7		-			7
Net income		-		-		-		369			369
Balance, March 31, 2023 (Unaudited)		12,797		1,280		7,919		(6,003	)		3,196
Stock-based compensation		200		20		30		-			50
Net loss		-		-		-		(453	)		(453	)
Balance, June 30, 2023 (Unaudited)		12,997	$	1,300	$	7,949	$	(6,456	)	$	2,793
Balance, December 31, 2021		12,727	$	1,273	$	7,789	$	2,479		$	11,541
Stock-based compensation		-		-		35		-			35
Net loss		-		-		-		(451	)		(451	)
Restricted stock unit vesting		22		2		26		-			28
Balance, March 31, 2022 (Unaudited)		12,749		1,275		7,850		2,028			11,153
Stock-based compensation		-		-		22		-			22
Net loss		-		-		-		(4,333	)		(4,333	)
Balance, June 30, 2022 (Unaudited)		12,749	$	1,275	$	7,872	$	(2,305	)	$	6,842

See accompanying notes to these Condensed Consolidated Financial Statements.

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Six Months Ended
	June 30,
	2023			2022
Cash flows from operating activities:
Net loss	$	(84	)	$	(4,784	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		224			339
Gain on disposal of discontinued operations		(787	)		-
Stock-based compensation		57			85
Impairment of goodwill and intangible assets		-			3,589
Change in operating assets and liabilities:
Accounts receivable		651			1,823
Inventories		958			(165	)
Prepaid expenses and other assets		(59	)		143
Income taxes receivable		239			45
Accounts payable, accrued expenses, and other liabilities		(292	)		(609	)
Total adjustments to net loss		991			5,250
Net cash provided by operating activities		907			466
Cash flows from investing activities:
Proceeds from sale of discontinued operations		1,936			-
Purchase of software		-			(142	)
Net cash provided by (used in) investing activities		1,936			(142	)
Cash flows from financing activities:
Proceeds from term loans		250			-
Repayments of term loans		(30	)		(2,000	)
Proceeds from revolving credit facility		2,795			14,737
Repayments of revolving credit facility		(5,299	)		(14,015	)
Net cash used in financing activities		(2,284	)		(1,278	)
Net increase (decrease) in cash and restricted cash		559			(954	)
Cash, beginning of period		49			1,270
Cash, end of period	$	608		$	316
Supplemental disclosures:
Cash paid during the period for interest	$	109		$	170

See accompanying notes to these Condensed Consolidated Financial Statements.

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(in thousands, except per share data)

Note 1. Organization and Summary of Significant Accounting Policies

(a) Company Background

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

(b) Principles of Consolidation

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

Closed in July 2023 and effective June 30, 2023, we entered into a purchase agreement with a buyer, pursuant to which we agreed to sell all of our right, title and interest in and to certain assets of the Alpha® Skin Care brand (the "Alpha Purchase Agreement"). The transactions contemplated by the Alpha Purchase Agreement are subject to customary conditions and closing deliveries by both Neoteric and the Alpha Buyer. The assets of Alpha® are classified as assets held for sale as of June 30, 2023 and December 31, 2022, and their operations have been classified as income from discontinued operations for all periods presented. The Alpha product line was previously classified under our health and beauty care products segment. See Note 3 for further information.

Closed in July 2023 and effective June 30, 2023, we entered into a purchase agreement with a buyer, pursuant to which we agreed to sell all of our right, title and interest in and to certain assets of the BIZ® brand. The assets of BIZ® are classified as assets held for sale as of June 30, 2023 and December 31, 2022, and their operations have been classified as income from discontinued operations for all periods presented. The BIZ® product line was previously classified under our household products segment. See Note 3 for further information.

On January 23, 2023, we entered into an asset purchase agreement with a buyer, pursuant to which we agreed to sell all of our right, title and interest in and to certain assets of the Scott's Liquid Gold® brand, including the Wood Care and Floor Restore products. We have reflected the operations of the Scott's Liquid Gold® brand as discontinued operations for all periods presented, which was previously classified under our household products segment. See Note 3 for further information.

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

The unaudited Condensed Consolidated Statements of Operations, Condensed Consolidated Balance Sheets, and Condensed Consolidated Statements of Cash Flows included in this Report have been prepared by the Company. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at June 30, 2023 and results of operations and cash flows for all periods have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These Condensed Consolidated Financial Statements should be read in conjunction with our financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the period ended June 30, 2023 are not necessarily indicative of the operating results for the full year and are unaudited. Certain prior year amounts have been reclassified to conform to the current period presentation.

(d) Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts in our financial statements of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, the realization of deferred tax assets, reserves for slow moving and obsolete inventory, customer returns and allowances, intangible asset useful lives and amortization method, operating lease right-of-use assets and operating lease liabilities, and stock-based compensation. Actual results could differ from our estimates.

(e) Inventories Valuation and Reserves

Inventories consist of raw materials and finished goods and are stated at the lower of cost (first-in, first-out method) or net realizable value, which is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We estimate an inventory reserve, which is generally not material to our financial statements, for slow moving and obsolete products and raw materials based upon, among other things, an assessment of historical and anticipated sales of our products. In the event that actual results differ from our estimates, the results of future periods may be impacted.

Our remaining raw materials balance is to be sold to contract manufacturing partners based on production demand.

(f) Assets Held for Sale and Discontinued Operations

Assets classified as held for sale are measured at the lower of their carrying amount or fair value less costs to sell and are not depreciated or amortized. Fair value is determined based on the total consideration expected to be received by the Company. The fair value of a disposal group, less any costs to sell, is assessed each reporting period it remains classified as held for sale and any remeasurement to the lower of carrying value or fair value less costs to sell is reported as an adjustment to the carrying value of the disposal group. When the net realizable value of a disposal group increases during a period, a gain can be recognized to the extent that it does not increase the value of the disposal group beyond its original carrying value when the disposal group was reclassified as held for sale. Disposal groups that meet the discontinued operations criteria by the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 205-20-45 are classified as discontinued operations and are excluded from continuing operations and segment results for all periods presented.

(g) Leases

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

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

(h) Intangible Assets

Intangible assets with finite lives, such as trade names, and formulas, are amortized over their estimated useful lives, generally ranging from 10 to 15 years. Amortization expense related to intangible assets is included in Operating Expenses on the Condensed Consolidated Statement of Operations.

Internal-use software costs recognized as an intangible asset relates to capitalizable costs of computer software obtained for internal-use as defined by ASC 350-40-30-1. All other internal-use software costs are expensed as incurred by the Company. Amortization will be recorded over the estimated useful life of the software once the software is ready for its intended use and placed into service. In the second quarter of 2022, our internal-use software was implemented for its intended use. The estimated useful life for internal-use software is five years and will be periodically reassessed based on considerations for obsolescence, technology, competition, and other economic factors.

(i) Financial Instruments

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

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

(j) Income Taxes

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

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

Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The provision for income taxes for the three and six months ended June 30, 2023 differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 21% to pre-tax income primarily due to valuation allowance. The effective tax rate for the six months ended June 30, 2023 and 2022 was 0.1% and 0.0% respectively.

The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, and permanent differences. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes.

In assessing the need for a valuation allowance, management must determine that there will be sufficient taxable income to realize deferred tax assets. Based upon the historical and anticipated future losses, management has determined that the deferred tax assets do not meet the more likely than not threshold for realizability. Accordingly, a valuation allowance has been recorded against the Company’s net deferred tax assets as of June 30, 2023, and December 31, 2022.

(k) Revenue Recognition

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

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

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

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

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

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

Customer allowances for trade promotions and allowance for doubtful accounts are included in net accounts receivable on the Condensed Consolidated Balance Sheets and were as follows:

	June 30, 2023		December 31, 2022
Trade promotions	$	141	$	361
Allowance for doubtful accounts		36		59
	$	177	$	420

(l) Advertising Costs

We expense advertising costs as incurred.

(m) Stock-Based Compensation

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

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

(n) Operating Costs and Expenses Classification

Cost of sales includes costs associated with manufacturing and distribution including labor, materials, freight-in, purchasing and receiving, quality control, repairs, maintenance, and other indirect costs, as well as warehousing and distribution costs. We classify freight-out as selling expenses. Other selling expenses consist primarily of costs for sales and sales support personnel, brokerage commissions, and promotional costs. Freight-out costs included in selling expenses totaled $112 and $158 for the three months ended June 30, 2023 and 2022, respectively, and totaled $199 and $461 for the six months ended June 30, 2023 and 2022, respectively.

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

(o) Supplier Finance Programs

During 2022, we entered into an agreement with a third-party financial institution and an agreement with an insurance agency which allows us to obtain extended payment terms for our insurance policies. The insurance policies can be canceled by the Company at any time with 10 days’ notice. The financial institution may cancel this agreement after providing 10 days’ notice if the Company does not pay any installment payment according to the terms of the agreement. We do not provide any forms of guarantees under these agreements. Payments of our obligations are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows. Outstanding confirmed amounts are $73 and $218 as of June 30, 2023 and December 31, 2022, respectively, which will be recognized on the Condensed Consolidated Financial Statements as payments are due.

Note 2. Liquidity

Primarily due to a decline in net sales, disruption of our international sales to China, and increases in costs associated with the manufacture and distribution of our products, the Company has sustained significant losses from operations in several reporting periods since 2019. Absent any other action, the Company previously believed it would require additional liquidity to continue its operations over the next 12 months.

Due to the sales of our BIZ® and Alpha® brands as disclosed in Note 3 to the Condensed Consolidated Financial Statements, which generated $3,700 of cash in July and August 2023, we have fully repaid all long-term debt as of July 2023. While, absent any other actions, our operating activities are still expected to result in negative cash flows, we now expect to have enough liquidity to finance operations for the next 12 months. Management has recently implemented actions to reduce the Company’s operating expenses through asset sales, consolidation of vendors, and personnel reductions. To further reduce operating losses, the Company is considering additional various strategic actions including asset sales, obtaining additional debt or equity financing (potentially in conjunction with acquisitions), workforce reduction, deferring or eliminating certain capital expenditures, and further reduction of other operating expenses to ensure alignment with customer demand in order to address long-term liquidity needs and pursue its business plan. The Company expects that these strategic actions will further reduce expenses and provide required liquidity for ongoing operations.

Note 3. Divestitures

Alpha® Skin Care

Closed in July 2023 and effective June 30, 2023, we entered into a purchase agreement with a buyer, pursuant to which we agreed to sell all of our right, title and interest in and to certain assets of the Alpha® Skin Care brand. The transactions contemplated by the Alpha® Purchase Agreement were subject to customary conditions and closing deliveries by both the Company and the buyer and was consummated on July 31, 2023. The Company received payments of $2,500 and $200 in July 2023 and August 2023, respectively, representing total consideration for the sale of the Alpha Skin Care brand in the amount of $2,700 and an estimated gain on the sale of assets of $1,585 that will be recognized in the third quarter of 2023. The assets of Alpha® are classified as assets held for sale as of June 30, 2023 and December 31, 2022, and their operations have been classified as income from discontinued operations for all periods presented.

BIZ®

Closed in July 2023 and effective June 30, 2023, we entered into a purchase agreement with a buyer, pursuant to which we agreed to sell all of our right, title and interest in and to certain assets of the BIZ® brand. The transactions contemplated by the BIZ® Purchase Agreement were consummated on July 7, 2023. The total consideration paid to us was $1,000, plus an amount equal to the value of the BIZ® inventory, valued at $946 as of the effective date of the agreement, subject to post-close adjustment. The estimated gain on the sale of assets is $787 and will be recognized in the third quarter of 2023. The assets of BIZ® are classified as assets held for sale as of June 30, 2023 and December 31, 2022, and their operations have been classified as income from discontinued operations for all periods presented.

Scott's Liquid Gold Wood® Care and Scott's Liquid Gold® Floor Restore

On January 23, 2023, we entered into an asset purchase agreement with a buyer, pursuant to which we agreed to sell all of our right, title and interest in and to certain assets of the Scott's Liquid Gold® Wood Care and Scott's Liquid Gold® Floor Restore product lines. The total consideration paid to us was $800, plus an amount equal to the value of the Scott's Liquid Gold® Wood Care and Scott's Liquid Gold® Floor Restore inventory of $1,136, subject to post-close adjustment. Additionally, the buyer will pay a royalty equal to 2% of gross sales for two years after the closing date (the "Scott's Liquid Gold® Royalty"). The Scott's Liquid Gold® Royalty resulted in recognition of a gain upon the sale of assets. Because the Scott's Liquid Gold® Royalty is variable consideration and is contingent on the outcome of future events that are largely outside of the Company’s control, the variable consideration from the Scott's Liquid Gold® Royalty has been fully constrained and no amount is included in the results from discontinued operations. Consideration for the Scott's Liquid Gold® Royalty is to be recognized as received from the buyer. The constraint on the variable consideration will be reassessed at each subsequent reporting period. We have reflected the operations of the Scott's Liquid Gold® product lines as discontinued operations.

Prell®

On December 15, 2022, we entered into an asset purchase agreement with a buyer, pursuant to which we agreed to sell to all of our right, title and interest in and to certain assets of the Prell® product line. The total consideration paid to us was $150, plus an amount equal to the value of the Prell® inventory of $330, subject to post-close adjustment. Additionally, the buyer will pay a royalty equal to 3% of collections on net sales for four years after the closing date (the “Prell® Royalty”). The Prell® Royalty resulted in recognition of a gain upon the sale of assets. For the six months ended June 30, 2023 there were no changes in the assessment of the Prell® Royalty, which will continue to be recognized as received from the buyer. The constraint on the variable consideration will be reassessed at each subsequent reporting period. We have reflected the operations of the Prell® product line as discontinued operations.

Our Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations report discontinued operations separate from continuing operations. Our Condensed Consolidated Statements of Equity and Statements of Cash Flows combine the results of continuing and discontinued operations. A summary of financial information related to our discontinued operations is as follows:

Reconciliation of the Line Items Constituting Pretax Loss from Discontinued Operations to the After-Tax Loss from Discontinued Operations in the Condensed Consolidated Statements of Operations for the three and six months ended June 30:

	Three Months Ended June 30, 2023
	Alpha®		BIZ®			Prell®		Scott's Liquid Gold®		Total
Net sales	$	514	$	1,011		$	-	$	-	$	1,525
Cost of sales		209		732			-		-		941
Gross profit		305		279			-		-		584
Operating expenses:
Selling		80		204			-		-		284
General and administrative		10		12			-		-		22
Intangible asset amortization		-		6			-		-		6
Operating income from discontinued operations		215		57			-		-		272
Interest expense		-		(44	)		-		-		(44	)
Income from discontinued operations	$	215	$	13		$	-	$	-	$	228

	Three Months Ended June 30, 2022
	Alpha®		BIZ®			Prell®			Scott's Liquid Gold®			Total
Net sales	$	1,057	$	1,363		$	753		$	1,090		$	4,263
Cost of sales		401		952			470			548			2,371
Gross profit		656		411			283			542			1,892
Operating expenses:
Selling		169		328			202			200			899
Intangible asset amortization		-		6			12			-			18
Operating income from discontinued operations		487		77			69			342			975
Interest expense		-		(44	)		(14	)		(54	)		(112	)
Income from discontinued operations	$	487	$	33		$	55		$	288		$	863
	Six Months Ended June 30, 2023
---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Alpha®		BIZ®			Prell®		Scott's Liquid Gold®			Total
Net sales	$	879	$	2,164		$	-	$	187		$	3,230
Cost of sales		278		1,510			-		95			1,883
Gross profit		601		654			-		92			1,347
Operating expenses:
Selling		141		437			-		28			606
General and administrative		10		12			-		22			44
Intangible asset amortization		-		12			-		-			12
Operating income from discontinued operations		450		193			-		42			685
Interest expense		-		(88	)		-		(18	)		(106	)
Gain on sale of discontinued operations		-		-			-		787			787
Income from discontinued operations	$	450	$	105		$	-	$	811		$	1,366
	Six Months Ended June 30, 2022
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Alpha®		BIZ®			Prell®			Scott's Liquid Gold®			Total
Net sales	$	1,917	$	2,423		$	1,591		$	2,313		$	8,244
Cost of sales		684		1,707			966			1,022			4,379
Gross profit		1,233		716			625			1,291			3,865
Operating expenses:
Selling		280		677			492			489			1,938
Intangible asset amortization		-		12			24			-			36
Operating income from discontinued operations		953		27			109			802			1,891
Interest expense		-		(88	)		(27	)		(108	)		(223	)
Income (loss) from discontinued operations	$	953	$	(61	)	$	82		$	694		$	1,668

There were no capital expenditures or significant operating and investing noncash items related to discontinued operations during the six months ended June 30, 2023 and 2022, respectively.

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

	June 30, 2023		December 31, 2022
Assets
Inventories	$	-	$	1,235

All assets in the above table are related to the discontinued operations of Scott's Liquid Gold®. There were no assets of discontinued operations related to Prell®, BIZ®, and Alpha® as of June 30, 2023 and December 31, 2022, respectively.

Assets Held for Sale

The following tables set forth the assets held for sale as of:

	June 30, 2023
	BIZ®		Alpha®		Total
Assets
Current assets:
Inventories	$	946	$	1,115	$	2,061
Intangible assets, net		219		-		219
Assets held for sale	$	1,165	$	1,115	$	2,280
	December 31, 2022
---	---	---	---	---	---	---
	BIZ®		Alpha®		Total
Assets
Current assets:
Inventories	$	1,092	$	1,268	$	2,360
Intangible assets, net		231		-		231
Assets held for sale	$	1,323	$	1,268	$	2,591

We measured the assets held for sale at the lower of their carrying value or fair value less costs to sell. We did not record any impairment charges in the second quarter of 2023.

Note 4. Stock-Based Compensation

On May 11, 2023, we granted 200 shares of restricted stock to two directors all of which vested on the grant date with a fair value of $40.

On March 2, 2022, we granted 15 shares of restricted stock to one executive all of which vested on the grant date with a fair value of $18.

On January 18, 2022, we granted 25 RSUs to an employee (the “2022 Individual Employee Grant”) with a grant date fair value of $10. The 2022 Individual Employee Grant vested one-third on the initial grant date, and the remaining two-thirds will vest on each anniversary of the grant date.

Compensation cost related to stock options totaled $0 and $10 in the six months ended June 30, 2023 and 2022, respectively. The stock options were fully vested in the second quarter of 2022. There was no tax benefit from recording the non-cash expense as it relates to the options granted to employees, as these were qualified stock options which are not normally tax deductible.

Compensation cost related to RSUs totaled $57 and $76 for the six months ended June 30, 2023 and 2022, respectively. Approximately $54 of total unrecognized compensation costs related to non-vested RSUs is expected to be recognized over the next three years.

Note 5. Earnings per Share

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

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

A reconciliation of the weighted average number of common shares outstanding (in thousands) is as follows. The dilutive effect of stock options and RSUs is excluded for periods in which the impact is anti-dilutive and when the Company has a net loss because the impact is also anti-dilutive.

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Common shares outstanding, beginning of the period		12,797		12,749		12,797		12,727
Weighted average common shares issued		111		-		56		18
Weighted average number of common shares outstanding		12,908		12,749		12,853		12,745
Dilutive effect of common share equivalents		-		-		-		-
Diluted weighted average number of common shares outstanding		12,908		12,749		12,853		12,745

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

	Three Months and Six Months Ended June 30,
	2023		2022
Stock options		60		213
Restricted stock units		31		104

Note 6. Segment Information

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

The following provides information on our segments for the three and six months ended June 30:

	Three Months Ended June 30, 2023
	Household Products			Health and Beauty Care Products			Total
Net sales	$	847		$	691		$	1,538
Loss from operations		(527	)		(142	)		(669	)
Capital and intangible asset expenditures		-			-			-
Depreciation and amortization		56			6			62
	Three Months Ended June 30, 2022
---	---	---	---	---	---	---	---	---	---
	Household Products			Health and Beauty Care Products			Total
Net sales	$	692		$	428		$	1,120
Loss from operations		(4,567	)		(559	)		(5,126	)
Capital and intangible asset expenditures		43			-			43
Depreciation and amortization		148			27			175

	Six Months Ended June 30, 2023
	Household Products			Health and Beauty Care Products			Total
Net sales	$	1,669		$	1,599		$	3,268
Loss from operations		(1,049	)		(286	)		(1,335	)
Capital and intangible asset expenditures		-			-			-
Depreciation and amortization		213			11			224
	Six Months Ended June 30, 2022
---	---	---	---	---	---	---	---	---	---
	Household Products			Health and Beauty Care Products			Total
Net sales	$	1,619		$	1,309		$	2,928
Loss from operations		(5,313	)		(1,030	)		(6,343	)
Capital and intangible asset expenditures		142			-			142
Depreciation and amortization		287			52			339

Note 7. Intangible Assets

Intangible assets, which are comprised of our capitalized costs of software obtained for internal-use or are related to our acquisition of our Denorex® brand, consisted of the following:

	As of June 30, 2023						As of December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Intangible assets:
Trade names	$	159	$	100	$	59	$	159	$	97	$	62
Formulas and batching processes		333		290		43		333		282		51
Internal-use software		898		195		703		898		105		793
Non-compete agreement		30		30		-		30		30		-
	$	1,420	$	615	$	805	$	1,420	$	514	$	906

Amortization expense for the three months ended June 30, 2023 and 2022 was $51 and $103, respectively. Amortization expense for the six months ended June 30, 2023 and 2022 was $101 and $226, respectively.

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

Remainder of 2023	$	100
2024		201
2025		201
2026		192
2027		81
Thereafter		30
Total	$	805

Note 8. Long-Term Debt

UMB Loan Agreement

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

The UMB Loan Agreement was terminated on February 27, 2023 and the revolving credit facility was paid in full on February 28, 2023. The loans were secured by all of the assets of the Company and its subsidiaries. Unamortized loan costs were $0 and $100 as of June 30, 2023 and December 31, 2022, respectively. Amortization of loan costs for the six months ended June 30, 2023 was $100, including $83 that were expensed as a result of the termination of the UMB Loan Agreement. Amortization of loan costs for the six months ended June 30, 2022 was $99.

La Plata Loan Agreement

On November 9, 2021, we entered into a loan and security agreement (as amended, the “La Plata Loan Agreement”) with La Plata Capital, LLC (“La Plata”). Under the La Plata Loan Agreement, we obtained a $2,000 term loan that bears interest at 14% and a $250 term loan that bears interest at 15%. We repaid $1,000 of principal against the La Plata Loan Agreement during the first quarter of 2022.

Unamortized loan costs were $9 and $20 as of June 30, 2023 and December 31, 2022, respectively. Amortization of loan costs for the six months ended June 30, 2023 and 2022 were $11, respectively.

On July 7, 2023, the La Plata term loans were paid in full and the La Plata Loan Agreement was terminated.

Note 9. Leases

We have entered into a lease for our corporate headquarters with a remaining lease term of 7 years. This lease includes both lease and nonlease components, which are accounted for as a single lease component as we have elected the practical expedient to combine these components for all leases. As this lease does not provide an implicit rate, we calculated the right-of-use assets and lease liabilities using our secured incremental borrowing rate at the lease commencement date. We currently do not have any finance leases outstanding.

Information related to leases was as follows:

	Three Months Ended June 30, 2023			Six Months Ended June 30, 2023
Operating lease information:
Operating lease cost	$	101		$	203
Operating cash flows from operating leases		101			203
Net assets obtained in exchange for new operating lease liabilities		-			-
Weighted average remaining lease term in years		7.42			7.42
Weighted average discount rate		5.1	%		5.1	%
	Three Months Ended June 30, 2022			Six Months Ended June 30, 2022
---	---	---	---	---	---	---
Operating lease information:
Operating lease cost	$	100		$	200
Operating cash flows from operating leases		100			200
Net assets obtained in exchange for new operating lease liabilities		-			-
Weighted average remaining lease term in years		8.42			8.42
Weighted average discount rate		5.1	%		5.1	%

Future minimum annual lease payments are as follows:

Remainder of 2023	$	203
2024		413
2025		420
2026		427
2027		434
Thereafter		1,305
Total minimum lease payments	$	3,202
Less imputed interest		(553	)
Total operating lease liability	$	2,649

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022. This Item 2 contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risk, uncertainties, and other factors that could cause actual results to differ materially from those made, projected, or implied in the forward-looking statements. Please refer to "Item 1A. Risk Factors" in this Report and in our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of the uncertainties, risks and assumptions associated with these statements.

Executive Overview

Our Business

Scott’s Liquid Gold-Inc. exists to positively impact consumers’ lives in the markets we serve while creating shareholder value. We develop, market, and sell high-quality, high-value household and health and beauty care products nationally and internationally to mass merchandisers, drugstores, supermarkets, hardware stores, e-commerce retailers, other retail outlets, and to wholesale distributors.

Primarily due to a decline in net sales, disruption of our international sales to China, and increases in costs associated with the manufacture and distribution of our products, the Company has experienced negative cash flows from operations for several reporting periods. In efforts to improve our financial position and liquidity, the Company has pursued asset sales of certain brands where management has determined that the brand(s) are not aligned with our long-term goals for growth and profitability. The Company will continue to consider a wide range of options, including one or more of the following: the sale of additional brands; a sale, merger, or other strategic transaction involving the entire company; acquisitions of other brands or companies; issuance of additional debt or equity; and continuing to operate as a public, independent company.

Divestitures

Closed in July 2023 and effective June 30, 2023, we sold the Alpha® Skin Care product line to a company that markets and distributes skin care products. Closed in July 2023 and effective June 30, 2023, we sold the BIZ® product line to a company that markets and distributes laundry products. The assets of Alpha® and BIZ® are classified as assets held for sale as of June 30, 2023 and December 31, 2022, and their operations have been classified as income from discontinued operations for all periods presented. On January 23, 2023, we sold the Scott's Liquid Gold® Wood Care and Scott's Liquid Gold® Floor Restore product lines to a company that markets and distributes wood care products. On December 15, 2022, we sold the Prell® brand to a company that markets and distributes natural hair and skincare products. We have reflected the operations of Scott's Liquid Gold® and Prell® as discontinued operations for all periods presented.

See Note 3 - “Discontinued Operations and Assets Held for Sale” in the Notes to Condensed Consolidated Financial Statements for further information on the sale of these brands.

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

Results of Operations

Three months ended June 30, 2023 compared to three months ended June 30, 2022

	Three Months Ended June 30, (in thousands)
							Increase / (Decrease)
	2023			2022					%
Net sales	$	1,538		$	1,120					37.3	%
Cost of sales		824			737					11.8	%
Gross profit		714			383					86.4	%
Gross margin		46.4	%		34.2	%
Operating expenses:
Advertising		120			174			)		(31.0	%)
Selling		574			867			)		(33.8	%)
General and administrative		638			776			)		(17.8	%)
Intangible asset amortization		51			103			)		(50.5	%)
Impairment of goodwill and intangible assets		-			3,589			)		(100.0	%)
Total operating expenses		1,383			5,509			)		(74.9	%)
Loss from operations		(669	)		(5,126	)				86.9	%
Interest expense		(6	)		(18	)				66.7	%
Loss before income taxes and discontinued operations		(675	)		(5,144	)				86.9	%
Income tax expense		(6	)		(52	)				88.5	%
Loss from continuing operations		(681	)		(5,196	)				86.9	%
Income from discontinued operations		228			863			)		(73.6	%)
Net loss	$	(453	)	$	(4,333	)				89.5	%

All values are in US Dollars.

Our operating results were primarily impacted by the following:

• Increases in net sales, cost of sales, and gross profit are due to increased distribution of our products sold at existing and certain new customers.

• Decrease in selling expenses is primarily due to lower logistics and warehousing costs from a consolidation of our third-party logistics partners, and a reduction in personnel costs related to asset divestitures.

• Decreased general and administrative costs primarily due to a reduction in legal and professional fees, lower bank charges from the termination of our UMB Loan Agreement, and reduced personnel costs.

• Decreased intangible asset amortization from reduced carrying amounts related to impairments recognized in 2022.

• Results from discontinued operations, which are disclosed in Note 3 to the Condensed Consolidated Financial Statements.

Segment Results

Household products

The following table shows comparative net sales, gross margin, gross profit, income or loss from operations, volume, and percentage changes for household products between periods:

	Three Months Ended June 30, (in thousands)
							Increase / (Decrease)
	2023			2022				%
Net sales	$	847		$	692				22.4	%
Gross profit	$	392		$	186				110.8	%
Gross margin		46.3	%		26.9	%
Loss from operations	$	(527	)	$	(4,567	)			88.5	%

All values are in US Dollars.

• Net sales and gross profit increased due to additional sales of Kids N Pets® and Messy Pet® products to existing customers.

• Loss from operations improved primarily due to decreased selling expenses from the consolidation of our third-party logistics partners. Our loss from operations in the second quarter of 2022 was impacted by the impairment of goodwill and intangible assets associated with our All-Purpose reporting unit.

Health and beauty care products

The following table shows comparative net sales, gross margin, gross profit, income or loss from operations, volume and percentage changes for health and beauty care products between periods:

	Three Months Ended June 30, (in thousands)
							Increase / (Decrease)
	2023			2022				%
Net sales	$	691		$	428				61.4	%
Gross profit	$	322		$	197				63.6	%
Gross margin		46.7	%		46.0	%
Loss from operations	$	(142	)	$	(559	)			74.6	%

All values are in US Dollars.

• Net sales and gross profits increased due to additional sales of Denorex® to existing customers as well as sales growth to certain new customers.

• Income from operations resulted from decreased selling expenses from the consolidation of our third-party logistics partners as well as a reduction in personnel costs.

Six months ended June 30, 2023 compared to six months ended June 30, 2022

	Six Months Ended June 30, (in thousands)
							Increase / (Decrease)
	2023			2022					%
Net sales	$	3,268		$	2,928					11.6	%
Cost of sales		1,826			1,599					14.2	%
Gross profit		1,442			1,329					8.5	%
Gross margin		44.1	%		45.4	%
Operating expenses:
Advertising		275			326			)		(15.6	%)
Selling		1,146			1,970			)		(41.8	%)
General and administrative		1,255			1,561			)		(19.6	%)
Intangible asset amortization		101			226			)		(55.3	%)
Impairment of goodwill and intangible assets		-			3,589			)		(100.0	%)
Total operating expenses		2,777			7,672			)		(63.8	%)
Loss from operations		(1,335	)		(6,343	)				79.0	%
Interest expense		(113	)		(57	)		)		(98.2	%)
Loss before income taxes and discontinued operations		(1,448	)		(6,400	)				77.4	%
Income tax expense		(2	)		(52	)				96.2	%
Loss from continuing operations		(1,450	)		(6,452	)				77.5	%
Income from discontinued operations		1,366			1,668			)		(18.1	%)
Net loss	$	(84	)	$	(4,784	)				98.2	%

All values are in US Dollars.

Our operating results were primarily impacted by the following:

• Increases in net sales, cost of sales, and gross profit are due to increased distribution of our products sold at existing and certain new customers.

• Decreased intangible asset amortization from reduced carrying amounts related to impairments recognized in 2022.

• Results from discontinued operations, which are disclosed in Note 3 to the Condensed Consolidated Financial Statements.

Segment Results

Household products

The following table shows comparative net sales, gross margin, gross profit, income or loss from operations, volume, and percentage changes for household products between periods:

	Six Months Ended June 30, (in thousands)
							Increase / (Decrease)
	2023			2022				%
Net sales	$	1,669		$	1,619				3.1	%
Gross profit	$	728		$	624				16.7	%
Gross margin		43.6	%		38.5	%
Loss from operations	$	(1,049	)	$	(5,313	)			80.3	%

All values are in US Dollars.

• Net sales and gross profit increased due to additional sales of Kids N Pets® and Messy Pet® products to existing customers. Gross margins improved due to impairments of inventories that occurred during the second quarter of 2022.

Health and beauty care products

The following table shows comparative net sales, gross margin, gross profit, income or loss from operations, volume and percentage changes for health and beauty care products between periods:

	Six Months Ended June 30, (in thousands)
							Increase / (Decrease)
	2023			2022				%
Net sales	$	1,599		$	1,309				22.1	%
Gross profit	$	714		$	705				1.2	%
Gross margin		44.6	%		53.9	%
Loss from operations	$	(286	)	$	(1,030	)			72.2	%

All values are in US Dollars.

• Net sales increased due to additional sales of Denorex® to existing customers as well as sales growth to certain new customers. Gross margin decreased due to rising costs of products, inventory impairments, and the sales mix of products sold to certain customers.

• Loss from operations resulted from decreased selling expenses from the consolidation of our third-party logistics partners as well as a reduction in personnel costs.

Liquidity and Capital Resources

Overview

Our primary sources of funds include cash expected to be generated from operations and sale of brands. Our principal uses of cash are to fund planned operating expenditures. Working capital movements are influenced by the sourcing of materials related to the production of products.

Financing Agreements

Please see Note 8 to our Condensed Consolidated Financial Statements for information on our La Plata Loan Agreement, which was terminated in July 2023, and our UMB Loan Agreement, which was terminated in February 2023.

Liquidity and Changes in Cash Flows

At June 30, 2023, we had approximately $608 in cash on hand, an increase of $559 from December 31, 2022.

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

	Six Months Ended June 30, (in thousands)
							Increase / (Decrease)
	2023			2022					%
Operating activities	$	907		$	466					94.6	%
Investing activities		1,936			(142	)				1,463.4	%
Financing activities		(2,284	)		(1,278	)		)		(78.7	%)

All values are in US Dollars.

• Net cash provided by operating activities was primarily related to conversion of working capital from accounts receivable and inventories.

• Net cash provided by investing activities was due to the sale of our Scott's Liquid Gold® brand.

• Net cash used in financing activities was from repayments and termination of our UMB Loan Agreement and offset by proceeds from our La Plata Loan Agreement.

The cash received from the sales of our BIZ® and Alpha® Skin Care brands in July and August 2023 was $3,700 and was partially used to pay off and terminate our La Plata Loan Agreement. While we believe that our current cash reserves represent sufficient cash flows to fund our operations, our liquidity has been affected by inflationary pressures at our customers which have caused sales decreases and higher costs on materials, logistics, and other purchases. We expect that our current cash reserves will be sufficient to meet operational cash needs during the next twelve months, but further economic impacts to our sales to customers or supply chain disruptions in the short-term could impact our liquidity.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of June 30, 2023, we conducted an evaluation, under the supervision and with the participation of our President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on that evaluation, our President and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2023 due to a material weakness in our internal controls resulting from our finance department not being able to process and account for complex, non-routine transactions in accordance with GAAP. Management concluded that we lack a sufficient number of trained professionals with technical accounting expertise to process and account for complex and non-routine transactions.

Remediation Plan

We are committed to maintaining a strong internal control environment and we are developing a remediation plan designed to help ensure that this material weakness is remediated as soon as possible, by establishing internal control(s) to identify complex, non-routine accounting transactions and engaging the assistance of accounting expert(s) as needed to assist in the accounting and reporting of these transactions.

The material weakness will not be considered remediated until a sustained period of time has passed to allow management to test the design and operational effectiveness of the corrective actions. Until the material weakness is remediated, we plan to continue to perform additional analyses and other procedures to ensure that our Condensed Consolidated Financial Statements are prepared in accordance with GAAP.

Notwithstanding such material weakness in internal control over financial reporting, our President and Chief Financial Officer have concluded that the Condensed Consolidated Financial Statements in Part I, Item 1 of this report, present fairly, in all material respects, our financial position, results of operations, and cash flows for the periods presented in conformity with GAAP.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during the three months ended June 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 1A. RISK FACTORS

We have identified a material weakness in our internal control over financial reporting.

We are a public reporting company subject to the rules and regulations established from time to time by the SEC. As a public company we are required to document and test our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act so that our management can certify as to the effectiveness of our internal control over financial reporting.

As disclosed in Part I, Item 4, “Disclosure Controls and Procedures,” we have identified a material weakness in our controls related to our finance department lacking a sufficient number of trained professionals with technical accounting expertise to process and account for complex, non-routine transactions in accordance with GAAP as of June 30, 2023.

This material weakness did not result in any restatements to our Condensed Consolidated Financial Statements. Our management is committed to remediating this material weakness and is in the process of developing a remediation plan to address the material weakness.

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent quarterly reports on Form 10-Q, which could materially affect our business, financial condition, or future results.

ITEM 6. EXHIBITS

Exhibit Number	Document
10.1	Restricted Stock Award Agreement, dated May 15, 2023, between Scott's Liquid Gold-Inc. and Daniel Roller
10.2	Asset Purchase Agreement, by and among the Company, SLG Chemicals, Inc. and Commercial Brands LLC, dated June 30, 2023
10.3	Asset Purchase Agreement, by and among the Company, Neoteric Cosmetics, Inc. and Alpha Skin LLC dated June 30, 2023
31.1	Rule 13a-14(a) Certification of the President.
31.2	Rule 13a-14(a) Certification of the Chief Financial Officer.
32.1*	Section 1350 Certification.
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Furnished, not filed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SCOTT’S LIQUID GOLD-INC.
By:	/s/ Tisha Pedrazzini
	Tisha Pedrazzini, President
	(Principal Executive Officer)
By:	/s/ David M. Arndt
	David M. Arndt, Chief Financial Officer
	(Principal Financial and Chief Accounting Officer)

Date: August 14, 2023

EX-10.1

EXHIBIT 10.1

SCOTT’S LIQUID GOLD-INC. 2015 EQUITY AND INCENTIVE PLAN RESTRICTED STOCK AWARD AGREEMENT (DIRECTOR)

This Restricted Stock Award Agreement (the “Agreement’) is made and entered into as of the Grant Date specified below between Scott’s Liquid Gold-Inc. (the “Company”) and the Participant named below (“Participant”), an officer of the Company or an Affiliate thereof.

Participant: Daniel Roller

Grant Date: May 11, 2023

Number of shares of Common Stock: 100,000

1. Grant of Restricted Stock.

The Company hereby grants to the Participant the number of shares of Common Stock referenced above (the “Shares”). The Shares are being granted pursuant to the terms of the Company’s 2015 Equity and Incentive Plan (the “Plan”). The Shares and this Agreement are subject to and shall be construed in accordance with the terms and conditions of the Plan, as now or hereinafter in effect. Any terms which are used in this Agreement without being defined and which are defined in the Plan shall have the meaning specified in the Plan. In the event of any conflict between this Agreement and the Plan, the terms of the Plan will govern and prevail.

2. Restricted Period.

The Shares are not subject to any requirement to perform services for a designated period, and are not conditioned on the attainment of specified performance goals. As permitted by Section 6.2 of the Plan, the Shares are immediately vested on the Grant Date.

3. Withholding.

The Participant agrees to satisfy any federal, state, and local withholding tax requirements resulting from transfer of the Shares by permitting the Company to withhold from compensation otherwise payable to Participant, and in the event such compensation is insufficient to satisfy the withholding obligation, by tendering a cash payment.

4. Issuance of Shares.

The Company will issue the shares of Common Stock registered in the name of the Participant, the Participant's authorized assignee, or the Participant's legal representative, and evidenced by stock certificates representing the shares with the appropriate legends affixed thereto, by appropriate entry on the books of the Company or of a duly authorized transfer agent, or by other appropriate means as determined by the Company.

5. No Right to Continued Service; No Rights as Shareholder.

Neither the Plan nor this Agreement confers upon the Participant any right to be retained in any position, as an Employee, Consultant or Director of the Company. The Participant has no rights as a shareholder with respect to any shares of Common Stock unless and until certificates representing the shares have been issued by the Company to the holder of such shares, or the shares have otherwise been recorded on the books of the Company or of a duly authorized transfer agent as owned by such holder.

6. Employee Benefits.

The transfer of the Shares will constitute special incentive compensation that will not be taken into account as “salary” or “compensation” or “bonus” in determining the amount of any payment under any pension, retirement, profit sharing or other remuneration plan, except to the extent required by the terms of such plan.

7. Interpretation.

The interpretations and constructions of any provision of and determinations on any question arising under the Plan or this Agreement shall be made by the Committee, and all such interpretations, constructions and determinations shall be final and conclusive as to all parties.

8. Receipt of Plan.

By entering into this Agreement, Participant acknowledges: (i) that he or she has received and read a copy of the Plan; and (ii) that this Agreement is subject to and shall be construed in accordance with the terms and conditions of the Plan, as now or hereinafter in effect.

9. Governing Law.

This Agreement shall be construed and shall take effect in accordance with the laws of the State of Colorado, without regard to the conflicts of laws rules of such State.

10. Tax Matters.

Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Participant's responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting, or transfer of the Shares; and (b) does not commit to structure the transfer of the Shares to reduce or eliminate the Participant's liability for Tax-Related Items.

11. Compliance with Law.

The issuance and transfer of the Shares are subject to compliance by the Company and the Participant with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company's shares of Common

Stock may be listed. No shares of Common Stock will be issued pursuant to this Agreement unless and until any then applicable requirements of state or federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel. The Participant understands that the Company is under no obligation to register the any shares with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.

12. Miscellaneous.

This Agreement constitutes the entire understanding and agreement of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements or understandings, inducements or conditions, express or implied, written or oral, between the parties with respect hereto. If any provision of this Agreement, or the application thereof, shall for any reason and to any extent be invalid or unenforceable, the remainder of this Agreement and the application of such provision to other circumstances shall be interpreted so as best to reasonably effect the intent of the parties hereto. All notices or other communications which are required to be given or may be given to either party pursuant to the terms of this Agreement shall be in writing and shall be delivered personally or by registered or certified mail, postage prepaid, to the address of the parties as set forth following the signature of such party. Notice shall be deemed given on the date of delivery in the case of personal delivery or on the delivery or refusal date as specified on the return receipt in the case of registered or certified mail. Either party may change its address for such communications by giving notice thereof to the other party in conformity with this paragraph.

IN WITNESS WHEREOF, the Company by a duly authorized officer of the Company and Participant have executed this Agreement effective as of the Grant Date.

SCOTT’S LIQUID GOLD-INC.<br><br><br><br><br><br><br><br>By: /s/ David Arndt<br><br>David Arndt, CFO<br><br><br><br>Date: 5/15/23	PARTICIPANT<br><br>/s/ Daniel Roller<br><br>Daniel Roller, Participant<br><br>Date: 5/15/23

EX-10.2

EXHIBIT 10.2

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”), dated as of June 30, 2023, is by and among Commercial Brands LLC, a limited liability company organized and existing under the laws of the State of Texas (“Buyer”), SLG Chemicals, Inc., a corporation organized and existing under the laws of the State of Colorado (“SLG Chemicals”), and Scott’s Liquid Gold-Inc., a corporation organized and existing under the laws of the State of Colorado (“SLG,” and collectively with SLG Chemicals, “Seller”). Buyer and Seller shall be collectively referred to herein as the “Parties” and, each, individually, a “Party.”

RECITALS

A. Seller owns and operates the “BIZ®” brand (the “Business”).

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

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

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

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

AGREEMENT

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

1.1. Names. All rights to the names “BIZ®,” together with any derivatives thereof and all logos, designs, phrases and other identifications of or relating to such names and the goodwill associated therewith.

1.2. Intellectual Property. All Intellectual Property Rights used in the Business, as set forth on Schedule 1.2 (collectively, the “Intellectual Property Assets”).

1.3. Assumed Purchase Orders. All rights and interests to and under the Contracts, commitments, bids and other contract rights of Seller related to or arising from the Business and set forth on Schedule 1.3 (collectively, the “Assumed Purchase Orders”).

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

1.5. Permits. All assignable Permits held by Seller required for the operation of the Business, including the Permits set forth in Schedule 1.5.

1.6. Inventory. All inventory and rights therein (including all inventory, finished goods, raw materials, work in progress, packaging, supplies, parts and other inventories) (the “Inventory”), wherever located, used in the Business (the “Purchased Inventory”).

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

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

2.1. Accounts Receivable. Accounts Receivable of Seller.

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

2.3. Excluded Contracts. All Contracts that are not included as Assumed Purchase Orders (the “Excluded Contracts”).

2.4. Cash and Cash Equivalents. All of Seller’s cash and cash equivalents on hand or in bank accounts and short term investments.

2.5. Prepaid Expenses. All prepaid expenses, deposits for inventory purchases, and security deposits related to the Business, including with respect to the Purchased Assets.

2.6. 800 Telephone Number. The 800 telephone number of Seller used in connection with the Business.

2.7. Miscellaneous Assets. All other assets of Seller which are not used in or otherwise related primarily or exclusively to the Business.

3. LIABILITIES.

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

3.2. Excluded Liabilities. Notwithstanding the provisions of Section 3.1 or any other provision in this Agreement to the contrary, Buyer shall not assume and shall not be responsible to pay, perform or discharge any Liabilities of Seller or any of its Affiliates of any kind or nature whatsoever other than the Assumed Liabilities, including, without limitation pre-Closing tort liabilities arising out of the ownership or operation of the Business or the Purchased Assets prior to the Closing (the “Excluded Liabilities”). Seller shall, and shall cause each of its Affiliates to, timely pay and satisfy in due course all Excluded Liabilities which they are obligated to pay and satisfy. During the term of the Transition Service Agreement, Seller shall provide evidence of such payments to Buyer upon Buyer’s written request. Without limiting the generality of the foregoing, the Excluded Liabilities shall include, but not be limited to, the following:

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

3.2.2. any Liability for (a) Taxes of Seller (or any stockholder or Affiliate of Seller) or relating to the Business, the Purchased Assets or the Assumed Liabilities for any Pre-Closing Tax Period; (b) Taxes that arise out of the consummation of the transactions contemplated hereby or that are the responsibility of Seller pursuant to Section 8.3 (Taxes) of this Agreement; or (c) other Taxes of Seller (or any stockholder or Affiliate of Seller) that becomes a Liability of Buyer under any common law doctrine of de facto merger or transferee or successor

liability or otherwise by operation of contract or Law relating to the period prior to the Closing Date.

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

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

3.2.5. any product Liability or similar claim for injury to a Person or property which arises out of or is based upon any express or implied representation, warranty, agreement or guaranty made by Seller to the extent such Liability or claims relates to Business products sold on or prior to the Closing Date;

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

3.2.7. any Environmental Claims, or Liabilities under Environmental Laws, to the extent arising out of or relating to facts, circumstances or conditions existing on or prior to the Closing or otherwise to the extent arising out of any actions or omissions of Seller;

3.2.8. any accounts payable of Seller, other than the Assumed Liabilities;

3.2.9. any Liabilities under the Excluded Contracts or any other Contracts, (a) which are not validly and effectively assigned to Buyer pursuant to this Agreement; (b) which do not conform to the representations and warranties with respect thereto contained in this Agreement; or (c) to the extent such Liabilities arise out of or relate to a breach by Seller of such Contracts prior to Closing;

3.2.10. any Liabilities associated with indebtedness of Seller and/or the Business; and

3.2.11. any Liabilities arising out of, in respect of or in connection with the failure by Seller or any of its Affiliates to comply with any Law or Governmental Order.

4. THIRD PARTY CONSENTS. To the extent that Seller’s rights under any Assumed Purchase Order or Permit constituting a Purchased Asset, or any other Purchased Asset, may not be assigned to Buyer without the consent of another Person which has not been obtained as of Closing, this Agreement shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful, and Seller, at its expense, shall use commercially reasonable efforts to obtain any such required consent(s) as promptly as possible. If any such consent shall not be obtained, or if any attempted assignment would be ineffective or would impair Buyer’s rights under the Purchased Asset in question so that Buyer would not in effect acquire the benefit of all such rights, Seller, to the maximum extent permitted by Law and the Purchased Asset, shall act after the Closing in order to obtain for it

the benefits thereunder and shall cooperate, to the maximum extent permitted by Law and the Purchased Asset, with Buyer in any other reasonable arrangement agreed to by the parties designed to provide such benefits to Buyer.

5. PURCHASE PRICE.

5.1. Purchase Price. The Purchase Price shall be (i) One Million and 00/100 Dollars ($1,000,000.00) (“Closing Cash”), plus (ii) the amount contemplated in Section 5.2 below (“Inventory Amount”), plus (iii) One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00) or such lesser sum pursuant to Section 5.2.3, which altogether is herein called the “Purchase Price.” In consideration for the Purchased Assets and other rights of Seller hereunder and the assumption of the Assumed Liabilities, Buyer shall pay to (or to the direction of) Seller an amount equal to the Purchase Price. Buyer shall deliver the Closing Cash and Five Hundred Thousand and 00/100 Dollars ($500,000.00) as a partial payment for Inventory (“Closing Inventory Payment”) to Seller by wire transfer of immediately available funds to an account designated by Seller in writing.

5.2. Inventory Amount.

5.2.1. Within thirty (30) days after the Closing Date, Buyer shall prepare and deliver to Seller a statement setting forth Buyer’s calculation, as of the Closing Date, of that portion of the Inventory which consists of raw materials and finished goods (the “Closing Inventory”) prepared in accordance with generally accepted (i.e., GAAP) inventory valuation principles and methodologies. Seller shall have ten (10) days after receipt of Buyer’s Closing Inventory calculation to notify Buyer of any disputes regarding the Closing Inventory calculation. During the 10-day review period, Seller shall have full access to Buyer’s work papers and to the persons who prepared the Closing Inventory calculation. If Seller notifies Buyer of any good faith disputes in accordance with this Section 5.2.1, then the Parties will negotiate in good faith in an effort to resolve those disputes. If the Parties are unable to resolve any dispute within thirty (30) days after Buyer receives notice, then either party may submit that dispute for resolution to an accountant with an independent accounting firm of recognized national or regional standing mutually acceptable to Buyer and Seller and, unless the parties otherwise agree, which accountant is not then providing, and has not provided at any time during the period commencing two years prior to the Closing Date through the date of its determination pursuant to this Section 5.2.1, services to any of Buyer, Seller, or any of their respective Affiliates. The resolution of any dispute by that accounting firm shall be rendered within thirty (30) days after submission of the dispute to the accounting firm and shall be conclusive and binding upon the Parties. The substantially non-prevailing Party shall be responsible for the fees and costs of the accounting firm.

5.2.2. Buyer shall pay Seller the amount reflected as the Closing Inventory as determined in accordance with Section 5.2.1 above, less the Closing Inventory Payment in accordance with Section 5.1 and less the Excess 32oz Inventory in

accordance with Section 5.2.3. All payments under this subsection shall be made within five (5) days (1) after conclusion of the 10-day review period described in Section 5.2.1 or, (2) if Seller notifies Buyer of a dispute under Section 5.2.1, after final resolution of any disputes under Section 5.2.1.

5.2.3. Buyer shall reduce the payment to Seller under Section 5.2.2 in the amount of One-Hundred Fifty Thousand and 00/100 Dollars ($150,000.00), which amount relates to Purchased Inventory consisting of BIZ Stain and Odor Eliminator in the 32fl oz size (“Excess 32oz Inventory”). As such Excess 32 oz Inventory is sold during the eighteen (18) months following the Closing Date, Buyer will make quarterly payments of the net cash proceeds from such sales, if any (up to a total of One-Hundred Fifty Thousand and 00/100 Dollars ($150,000.00)) to Seller.

5.3. Purchase Price Allocation. Seller and Buyer shall agree within ninety (90) days after the Closing Date on the allocation of the Purchase Price among the Purchased Assets and Assumed Liabilities and any other amounts required to be included in the determination of the Purchase Price for U.S. federal income tax purposes, and such allocation shall be prepared in accordance with Section 1060 of the Code and the requirements of IRS Form 8594. The Parties shall file all Tax Returns, reports and other documents, including an asset acquisition statement on Form 8594, required by any competent taxing authority in a timely manner consistent with the agreed allocation. The Parties acknowledge that the Purchase Price subject to allocation may be different for each of the Parties (e.g., due to inclusion of differing amounts of transaction cost).

6. CLOSING.

6.1. Closing. Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place simultaneous with the execution and delivery of this Agreement (such date, the “Closing Date”) by means of an electronic closing in which the closing documentation will be delivered by electronic mail exchange of signature pages in PDF or functionally equivalent electronic format, which delivery will be effective without any further physical exchange of the original copies. The Closing will be deemed effective as of 12:01 a.m. U.S. Eastern time on the Closing Date.

6.2. Seller’s Closing Deliveries. At Closing, Seller shall deliver, or cause to be delivered, to Buyer each of the following, as applicable:

6.2.1. the Purchased Assets, free and clear of all Encumbrances other than Permitted Encumbrances;

6.2.2. a bill of sale and assignment and assumption agreement (“Bill of Sale”), and other instruments of conveyance as may be necessary or appropriate to transfer to Buyer as of the Closing Date good and marketable title to all of the Purchased

Assets and effecting the assignment to and assumption by Buyer of the Assigned Contracts and the Assumed Liabilities, duly executed by Seller, all in form and substance reasonably satisfactory to Buyer;

6.2.3. assignment(s) of all right, title and interest of Seller in and to the Registered Intellectual Property Assets to Buyer, duly executed by Seller, all in form and substance reasonably satisfactory to Buyer (the “Intellectual Property Assignments”);

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

6.2.5. a copy of a certificate of good standing of Seller issued by the Colorado Secretary of State;

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

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

6.2.8. such other instruments as shall be reasonably requested by Buyer to carry out the transactions described herein.

6.3. Buyer’s Closing Deliveries. At Closing, Buyer shall deliver, or cause to be delivered, to Seller:

6.3.1. the Purchase Price;

6.3.2. the Bill of Sale, duly executed by Buyer;

6.3.3. the Intellectual Property Assignments, duly executed by Buyer;

6.3.4. the Transition Services Agreement, duly executed by Buyer;

6.3.5. a copy of a certificate of fact – status for Buyer, indicating that Buyer is in existence, issued by the Texas Secretary of State;

6.3.6. a copy of a certificate of Franchise Tax Account Status for Buyer retrieved from the Comptroller of Public Accounts website indicating that Buyer’s right to transact business in Texas is “Active”;

6.3.7. a copy of resolutions adopted by the manager(s) (or other similar governing body) of Buyer, authorizing the execution delivery and performance of this Agreement and the consummation of the transactions contemplated hereby; and

6.3.8. such other instruments as shall be reasonably requested by Seller to carry out the transactions described herein.

7. Representations and Warranties.

7.1. Seller’s Representations and Warranties. Seller (i.e., both SLG Chemicals and SLG, jointly and severally) represents and warrants to Buyer that, except as otherwise set forth in the disclosure schedules referred to in this Section 7.1 (the “Disclosure Schedules”), the following representations and warranties are, as of the date hereof, and will be, as of the Closing Date, true and correct:

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

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

7.1.3. Financial Data. Schedule 7.1.3(a) contains true and complete copies of the unaudited sales, gross margin, and contribution margin (including all direct

costs required to calculate the contribution margin) of the Business for the years 2021, 2022, and the five (5) month period ended May 31, 2023 (collectively, the “Financial Data”). The Financial Data has been prepared in accordance with GAAP applied on a consistent basis throughout the period involved. The Financial Data is based on the books and records of the Business, and fairly present the financial condition of the Business in all material respects as of the respective dates they were prepared and the results of the operations of the Business for the periods indicated. Seller maintains a standard system of accounting for the Business established and administered in accordance with GAAP. The Business does not have any Liabilities (absolute, accrued, contingent or otherwise) except as set forth on Schedule 7.1.3(b). Since December 31, 2022, the Business has not incurred any Liabilities material to the Business taken as a whole, except (a) Liabilities incurred in the ordinary course of business and consistent with past practices and (b) Liabilities expressly disclosed on Schedule 7.1.3(b).

7.1.4. Material Adverse Effect. Since December 31, 2022, (i) the operations and affairs of Seller and the Business have been conducted only in the ordinary course of business consistent with past practice, (ii) no Restricted Event has occurred, and (iii) there has been no change in the Business or the financial condition, properties or results of operations of the Business, which has had or could reasonably be expected to have a Material Adverse Effect.

7.1.5. Product Warranties. Seller represents and warrants to Buyer that (a) each Product shipped or delivered by Seller has been in conformity with all Product specifications, warranties (express and implied), and all applicable Laws, (b) Seller has no existing or pending Liability for replacement or repair of any such Products or other damages in connection therewith or any Product recalls, (c) Seller has not sold any Products or delivered any services that included a warranty for a period of longer than one (1) year, (d) Seller does not have any material Liability arising out of any injury to individuals or property as a result of the ownership, possession, or use of any Product in connection with the Business, (e) Seller has not committed any act or failed to commit any act which would result in, any material Product liability or liability for breach of warranty (whether covered by insurance or not) on the part of Seller with respect to Products designed, manufactured, assembled, repaired, maintained, delivered, sold or installed or services rendered by or on behalf of Seller in connection with the Business.

7.1.6. Taxes. Except as has not had or could not reasonably be expected to have a Material Adverse Effect, all Tax Returns with respect to the Business required to be filed by Seller for any Pre-Closing Tax Period have been, or will be, timely filed. Such Tax Returns are, or will be, true, complete and correct in all material respects. There are no Liabilities or Encumbrances for Taxes upon any of the Purchased Assets nor is any taxing authority in the process of imposing any

Encumbrances for Taxes on any of the Purchased Assets (other than for current Taxes not yet due and payable).

7.1.7. Compliance with Law; Permits. Except as has not had or could not reasonably be expected to have a Material Adverse Effect, Seller is in compliance with all Laws applicable to the Business and/or the Purchased Assets. No event has occurred or circumstance exists that (with or without notice or lapse of time) (a) may constitute or result in a violation by Seller of, or a failure on the part of Seller to comply with, any Law applicable to the Business or the Purchased Assets in any material respect, or (b) may give rise to any obligation on the part of Seller to undertake, or to bear all or any portion of the cost of, any remedial action of any nature in connection with the Business or the Purchased Assets. Seller has not received any written or other notice of or been charged with the violation of any Laws relating to the Business. Seller is not under investigation with respect to the violation of any Laws applicable to the Business.

7.1.8. Title to Purchased Assets. Other than as set forth in Schedule 7.1.8(a), Seller has good and valid title to all of the Purchased Assets, free and clear of all Encumbrances other than Permitted Encumbrances. Except as set forth on Schedule 7.1.8(b): the Purchased Assets constitute all of the material assets used in or held for use in operation of the Business and are sufficient for Buyer to conduct the Business from and after the Closing Date; none of the Excluded Assets are material to the Business; the Purchased Assets will allow Buyer to operate without interruption and in the ordinary course of business consistent with past practice, as it has been conducted by Seller.

7.1.9. Contracts. None of Seller or, to Seller’s Knowledge any other party thereto, is in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any notice of any intention to terminate, any Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Contract relating to the Business or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. There are no material disputes pending or threatened under any such Contract. No Contracts other than the Assumed Purchase Orders are necessary for the conduct of the Business or are used solely in the Business. The rights of Seller under the Assumed Purchase Orders may be assigned by Seller to Buyer giving Buyer the same rights thereunder as held by Seller prior to such assignment.

7.1.10. Intellectual Property.

7.1.10.1. Schedule 7.1.10.1 contains a complete and correct list of (a) each Intellectual Property Asset that is registered, issued or subject to a pending application for registration or issuance with a Governmental

Authority (“Registered Intellectual Property Asset”), and (b) all material unregistered Intellectual Property Assets. Failure to list an item in Schedule 7.1.10.1 shall not mean that the omitted item is not a Registered Intellectual Property Asset or a material unregistered Intellectual Property Asset.

7.1.10.2. The conduct of the Business, as now conducted or as conducted since July 1, 2020, including the use, sale, offering for sale, making, distribution, importation, exportation, licensing or sublicensing of the Products by Seller, does not and did not during such time period infringe upon or misappropriate any Intellectual Property Right of any other Person and since July 1, 2020, Seller has not received any written charge, complaint, claim, demand or notice alleging any such infringement or misappropriation arising out of Seller’s operation of the Business (including any claim that Seller must license or refrain from using all or any portion of the Intellectual Property Assets), except as otherwise set forth in Schedule 7.1.10.2.

7.1.10.3. There has been no unauthorized use, infringement or misappropriation of any Intellectual Property Asset by any Person, including any employees and former employees, consultants, customers or suppliers of Seller.

7.1.10.4. The Intellectual Property Assets consist solely of items and rights which are owned solely by Seller, and no Intellectual Property Rights other than the Intellectual Property Assets are necessary for the conduct of the Business as conducted by Seller or are used solely in the Business.

7.1.10.5. Schedule 7.1.10.5 describes, with respect to each applicable Intellectual Property Asset, the current status of any pending applications, registrations and filings.

7.1.10.6. All Registered Intellectual Property Assets that are registered or issued are valid, enforceable and subsisting, in good standing, with all fees, payments and filings due as of the Closing Date duly made. Except as set forth on Schedule 7.1.10.6, (a) Seller has made all filings required to vest ownership of all Registered Intellectual Property Assets in Seller, and (b) Seller has not granted any third party any right in or to, or license under, or any covenant or other agreement not to sue or enforce, with respect to any of the Intellectual Property Assets.

7.1.10.7. With respect to each Intellectual Property Asset, (a) Seller possesses all right, title and interest in and to such Intellectual Property Asset, free and clear of all Encumbrances other than Permitted

Encumbrances; (b) such Intellectual Property Asset is not subject to any outstanding injunction, judgment, order, decree, ruling or charge affecting Seller’s use or ownership of or the validity or enforceability of such Intellectual Property Asset; and (c) no Action is pending or, to the Knowledge of Seller, is threatened that challenges the use, validity, enforceability or Seller’s ownership of such Intellectual Property Asset.

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

7.1.10.9. Each Intellectual Property Asset will be owned and available for use by Buyer immediately after the Closing on identical terms and conditions as owned and used by Seller immediately prior to the Closing.

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

7.1.10.11. Seller does not license Intellectual Property Rights from any third party or related party that are used in the Business, other than pursuant to (a) Contracts consisting of non-exclusive inbound licenses, terms of service, terms of use and similar agreements for commercially available off-the-shelf software, services or software-as-a-service platforms; and (b) Contracts that authorize Seller to identify another Person as Seller’s customer, vendor, supplier or partner.. Seller does not license Intellectual Property Rights used in the Business to any third party or related party, other than (i) outbound licenses of the Intellectual Property Assets entered into in the ordinary course of business with manufacturers and service providers; (ii) sales, marketing, reseller, distributor or similar Contracts that provide a limited, nonexclusive license to use trademarks related to the Products; and (iii) Contracts concerning a nonexclusive license or other nonexclusive grant of rights to service

providers, contractors or vendors entered into for the provision of services to Seller by such Persons.

7.1.11. Inventory. All Purchased Inventory of the Business, including finished products, regardless of location, consist of a quality and quantity usable and, with respect to finished goods, saleable, in the ordinary course of business. All Purchased Inventory has been, or shall be at Closing, valued by the Parties at the lesser of cost value or market value. Purchased Inventory now on hand was purchased in the ordinary course of business of Seller at cost value at the time of purchase. Seller has managed Purchased Inventory levels in the ordinary course of business and in a manner consistent with past practices. The quantities of each item of Purchased Inventory are not excessive, but are reasonable in the present circumstances of Seller. All Purchased Inventory is owned by Seller free and clear of all Encumbrances, and no item of Purchased Inventory is held on a consignment basis, except as set forth on Schedule 7.1.11(a). The location(s) of all Purchased Inventory are listed in Schedule 7.1.11(a). Schedule 7.1.11(b) sets forth, as of the Closing Date, an inventory of all items of Purchased Inventory, including (i) a description (including item number assigned thereto), (ii) quantities, (iii) value at the lower of cost or market price for each Purchased Inventory item as of the Closing Date, and (iv) the total value of the Purchased Inventory (as calculated pursuant to subsection (iii)).

7.1.12. No Conflicts; Consent. The execution, delivery and consummation of this Agreement and the other Transaction Documents to which Seller is a party, and the consummation of the transactions contemplated hereby and thereby, by Seller: (a) will not violate in any material respect any Law or Governmental Order to which Seller is a party or to which Seller, the Business or the Purchased Assets are bound or subject, conflict in any material respect with or result in a material breach of, or give rise to a right of termination of, require consent under, or accelerate the performance required by, the terms of any Contract to which Seller is a party or to which the Business or any Purchased Asset is bound or subject; and (b) will not constitute a default in any material respect thereunder, or result in the creation of any Encumbrance upon any Purchased Asset. Except as set forth in Schedule 7.1.12, no consent, approval, permit, authorization of, declaration to or filing with any Governmental Authority or any other Person on the part of Seller is required in connection with the execution and delivery of this Agreement or the other Transaction Documents or the consummation of the transactions contemplated hereby or thereby.

7.1.13. Litigation. There is no Action pending or to Seller’s Knowledge threatened against or involving the Business or any of the Purchased Assets. Seller is not in violation of any Governmental Order with respect to the Business. With respect to the Business and the Purchased Assets, Seller is not engaged in any Action to recover monies due it or for damages sustained by it. There are no Actions pending or to Seller’s Knowledge threatened against Seller or to which

Seller is otherwise a party relating to this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby.

7.1.14. Certain Payments. Neither Seller nor, to the Knowledge of Seller, any director, officer, employee, or other Person associated with or acting on behalf of any of them, has directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback or other payment to any Person, private or public, regardless of form, whether in money, property, or services (i) to obtain favorable treatment in securing business for the Business; (ii) to pay for favorable treatment for business secured by Seller; (iii) to obtain special concessions or for special concessions already obtained, for or in respect of Seller; or (iv) in violation of any Law; or (b) established or maintained any fund or asset with respect to the Business that has not been recorded in the books and records of Seller.

7.1.15. Customer and Suppliers.

7.1.15.1. Schedule 7.1.15.1 sets forth with respect to the Business (i) each customer who has paid an aggregate consideration to Seller for goods or services rendered in an amount greater than or equal to $250,000 for the most recent fiscal year (collectively, the “Material Customers”); and (ii) the amount of consideration paid by each Material Customer during such periods. Seller has not received any notice, and has no reason to believe, that any of the Material Customers has ceased, or intends to cease after Closing, to use the goods or services of the Business or to otherwise terminate or materially reduce its relationship with the Business.

7.1.15.2. Schedule 7.1.15.2 sets forth with respect to the Business (i) each supplier to whom Seller has paid consideration for goods or services rendered in an amount greater than or equal to $250,000 for the most recent fiscal year (collectively, the “Material Suppliers”); and (ii) the amount of purchases from each Material Suppliers during such period. Seller has not received any notice, and has no reason to believe, that any of the Material Suppliers has ceased, or intends to cease, to supply goods or services to the Business or to otherwise terminate or materially reduce its relationship with the Business.

7.1.15.3. Seller has not received notice that any Material Customer or Material Supplier (i) plans to discontinue doing business with Seller or, after the Closing, Buyer, (ii) plans to reduce the level of business done with Seller or, after the Closing, Buyer, or (iii) will not do business with Buyer on substantially the same terms, conditions and amounts subsequent to the Closing Date as supplier or customer (as the case may be) did with Seller since December 31, 2022. All of Seller’s relationships with its Material Customers and Material Suppliers (a)

are described in written Contracts, copies of which have been made available to Buyer; (b) have not been orally modified; and (c) require no performance by Seller beyond the written terms thereof.

7.1.16. Insurance. Seller has delivered to Buyer accurate and complete copies of all policies of insurance (and correspondence relating to coverage thereunder) to which Seller is a party or under which Seller is or has been covered at any time since July 1, 2020, a list of which is included in Schedule 7.1.16. There are no claims related to the Business, the Purchased Assets or the Assumed Liabilities pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. Seller has not received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if not yet due, accrued. All such Insurance Policies are (a) in full force and effect and enforceable in accordance with their terms; (b) are provided by carriers who are financially solvent; and (c) have not been subject to any lapse in coverage. Seller is not in default under, and has not otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy.

7.1.17. Brokers. Neither Seller nor any Person acting on behalf of Seller has agreed to pay a commission, finder’s fee, investment banking fee or similar payment in connection with this Agreement or any other Transaction Document.

7.1.18. Records. The Records, all of which have been made available to Buyer, are complete and correct in all material respects and represent actual, bona fide transactions and have been maintained in accordance with sound business practices, including the maintenance of an adequate system of internal controls in all material respects.

7.1.19. Environmental Matters. The Business is, and at all times has been, in material compliance with, and has not been and is not in material violation of or liable under, any Environmental Law. No Environmental Claim Action is pending or, to the Knowledge of Seller, is threatened.

7.1.20. Relationships with Related Persons. Except as disclosed in Schedule 7.1.20, or in reports filed by SLG with the Securities and Exchange Commission (“SEC Reports”), neither Seller nor, to Seller’s Knowledge, (i) any shareholder of Seller nor (ii) any Related Person of any of them has owned, of record or as a beneficial owner, an equity interest or any other financial or profit interest in any Person that has (a) had business dealings or a material financial interest in any transaction with Seller or an Affiliate other than business dealings or transactions disclosed in Schedule 7.1.20 or the SEC Reports, each of which has been conducted in the ordinary course of business with Seller or such Affiliate at substantially prevailing market prices and on substantially

prevailing market terms or (b) engaged in competition with Seller with respect to any line of the products of Seller (a “Competing Business”) in any market presently served by Seller, except for ownership of less than one percent (1%) of the outstanding capital stock of any Competing Business that is publicly traded on any recognized exchange or in the over-the-counter market. Except as set forth in Schedule 7.1.20 or the SEC Reports, neither Seller nor, to Seller’s knowledge, (i) any shareholder of Seller, nor (ii) any Related Person of any of them, is a party to any Contract with, or has any claim or right against, Seller.

7.1.21. Solvency. Seller is not now insolvent and will not be rendered insolvent by any of the transactions contemplated by this Agreement. Immediately after giving effect to the consummation of the transactions contemplated by this Agreement: (i) Seller will be able to pay its liabilities as they become due in the usual course of its business; (ii) Seller will not have unreasonably small capital with which to conduct its present or proposed business; and (iii) Seller will have assets (calculated at fair market value) that exceed its liabilities.

7.1.22. No Other Representations and Warranties. SELLER HAS NOT MADE, NOR SHALL BE DEEMED TO HAVE MADE, AND NEITHER SELLER NOR ANY OF ITS DIRECTORS, STOCKHOLDERS, OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES IS LIABLE FOR OR BOUND IN ANY MANNER BY, ANY EXPRESS OR IMPLIED REPRESENTATIONS, WARRANTIES, GUARANTIES, PROMISES OR STATEMENTS PERTAINING TO SELLER OR THE ACQUIRED ASSETS, EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY CERTIFICATE DELIVERED AT THE CLOSING BY ANY SUCH PERSONS.

7.1.23. Disclosure. No representation or warranty made by Seller in this Agreement, as modified by the Schedules, contains any untrue statement or omits to state a material fact necessary to make any of them, in light of the circumstances in which it was made, not misleading.

7.2. Buyer’s Representations and Warranties. Buyer hereby represents and warrants to Seller that the following representations and warranties are, as of the date hereof, and will be, as of the Closing Date, true and correct:

7.2.1. Organization and Good Standing; Binding Obligation. Buyer is a Texas limited liability company, duly organized, validly existing, and in good standing under the laws of the State of Texas of the United States of America. All limited liability company action necessary to authorize the execution and delivery of this Agreement by Buyer and the other Transaction Documents to which Buyer is a party, and the performance of its obligations hereunder and thereunder, have been duly authorized and taken.

7.2.2. No Conflicts; Consent. The execution, delivery and consummation of this Agreement and the other Transaction Documents to which Buyer is a party, and the consummation of the transactions contemplated hereby and thereby, by Buyer: (a) will not violate in any material respect any Law or Governmental Order to which Buyer is a party or to which Buyer is bound or subject, conflict in any material respect with or result in a material breach of, or give rise to a right of termination of, require consent under, or accelerate the performance required by, the terms of any material contract to which Buyer is a party or to which Buyer’s business is bound or subject; and (b) will not constitute a default in any material respect thereunder.

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

8. COVENANTS.

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

8.2. Use of Intellectual Property. Following the Closing, Seller shall not challenge the validity or enforceability of the Intellectual Property Assets or the exclusive ownership of any of the Intellectual Property Assets by Buyer or its Affiliates or successors or assigns, and Seller shall immediately cease all use of the Intellectual Property Assets, except as provided in the Transition Services Agreement or as otherwise expressly set forth in this Section. Without limiting the foregoing, Seller shall not use Purchased Asset product formulations or derivations therefrom in other product, including without limitation, household or non-food product categories. Seller shall not acquire or use any Intellectual Property Rights that incorporate any of the Intellectual Property Assets or that are otherwise confusingly similar thereto.

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

be borne equally by the parties and paid or reimbursed, as applicable by each party when due. Seller shall, at its own expense, timely file any Tax Return or other document with respect to such Taxes or fees (and Buyer shall cooperate with respect thereto as necessary).

8.4. Bulk Sales. Buyer and Seller hereby agree to waive compliance with the provisions of any bulk sales, bulk transfer or similar legislation in the jurisdictions in which any of the Purchased Assets are located. Seller shall, after Closing, pay its creditors as its debts to them become due and take all action necessary to prevent any such creditor from asserting any claim against Buyer or the Purchased Assets or under any such legislation for relief provided therein as a result of such non-compliance.

8.5. Covenants against Unfair Competition.

8.5.1. Seller recognizes that it has been instrumental in the success of the Business and in establishing and maintaining its respective customer and supplier relationships for the Business as well as having had access to, acquiring and assisting in developing Confidential Information of and relating to the Business, all of which are critical to the Business. Seller further acknowledges and agrees that such information is and will continue to be of significant value to Buyer and that any use other than by Buyer after the Closing could cause substantial loss to Buyer and thereby to the investment Buyer is making in the Purchased Assets and the Business.

8.5.2. Seller accordingly agrees that, without the express prior written consent of Buyer, for a period of five (5) years after the Closing Date in the case of Section 8.5.2.1 and for a period of two (2) years after the Closing Date in the case of Sections 8.5.2.2 and 8.5.2.3 (the “Restrictive Period”):

8.5.2.1. Seller will not and will cause its respective directors, officers, employees and Affiliates not to directly or indirectly (including through their respective Affiliates or Representatives) engage in or conduct any business which directly or indirectly offers for sale products that are the same or substantially similar to the Products of the Business as the Business is conducted as of and after the Closing Date during the Restrictive Period throughout the territory of The United States of America, Canada, Mexico, and each jurisdiction where the Business presently maintains a registered trademark (“Covenant Territory”); provided that the employees and directors of Seller may become employees, consultants, or directors of other companies in the same or similar industry. To the extent Seller has Knowledge of employees becoming employees in the same or similar industry during the Restrictive Period, Seller shall give Buyer written notice thereof reasonably promptly after the occurrence.

8.5.2.2. Seller will not and will cause its respective directors, officers, employees and Affiliates not to directly or indirectly (including through their respective Affiliates or Representatives) (a) interfere with, solicit, or accept for itself or for any Person, other than Buyer or its Affiliates, any of the Former Customers and Existing Customers of the Business as the Business is conducted as of and after the Closing Date, other than with respect to Seller’s business in the ordinary course that does not include the Business and does not conflict with or compete with the Business, and (b) induce, solicit or otherwise encourage any such past or present customer of the Business to purchase products that are the same or substantially similar to the products of the Business as the Business is conducted as of and after the Closing Date, including the Products, from Persons operating businesses, or preparing to operate businesses, competitive with the Business as the Business is conducted as of and after the Closing Date; provided that such restrictions shall not apply with respect to employees of Seller who become employees or consultants of other companies in the same or similar industry. To the extent Seller has Knowledge of employees becoming employees in the same or similar industry during the Restrictive Period, Seller shall give Buyer written notice thereof reasonably promptly after the occurrence.

8.5.2.3. Seller will not and will cause its respective directors, officers, employees and Affiliates not to directly or indirectly (including through their respective Affiliates or Representatives) interfere with, attempt to interfere with or disparage Buyer’s or its Affiliates’ relationship with any customer, vendor, contractor, supplier, employee, owner-operator or consultant (or the terms relating to such relationships) of the Business as the Business is conducted as of and after the Closing Date. For a period of five years after the Closing, Seller shall, and shall cause each of its respective Affiliates and Representatives not to disparage any product of the Business or Buyer.

8.5.3. For a period of one year after the Closing, Seller will not and will cause its respective directors, officers, employees and Affiliates not to solicit to employ any employees of the Business (as of and after the Closing Date) or otherwise engage any such individual; provided that all current employees of Seller may continue to be employees of Seller. The term “solicit to employ” does not include (i) using general solicitations of employment, such as general advertisements, not specifically directed toward employees of Buyer.

8.5.4. From and after the Closing, Seller shall, and shall cause each of its respective Affiliates and Representatives to (a) treat all Confidential Information of or relating to Business, the Purchased Assets, Buyer, and/or its Affiliates

(whenever and however acquired) strictly confidential; (b) not disclose such Confidential Information or permit it to be disclosed, in whole or part, to any Person without the prior written consent of Buyer; and (c) not use any such Confidential Information for any purpose except as permitted by this Agreement. Seller shall notify Buyer immediately in the event Seller becomes aware of any loss or disclosure of any Confidential Information of or relating to Business, the Purchased Assets, Buyer or its Affiliates (whenever and however acquired). Confidential Information subject to this Section 8.5.4 shall not include information that is or becomes generally available to the public other than through Seller’s breach of this Agreement or actions by any of Seller’s Affiliates which would be a breach hereunder if committed by a Seller; or is communicated to Seller by a Person that had no confidentiality obligations with respect to such information. Nothing herein shall be construed to prevent disclosure of Confidential Information of or relating to Business as may be required by applicable Law, or pursuant to the valid order of a court of competent jurisdiction or an authorized governmental agency, provided that the disclosure does not exceed the extent of disclosure required by such Law or order. Seller agrees to provide written notice of any such order to an authorized officer of Buyer within five (5) days of receiving such order, but in any event sufficiently in advance of making any disclosure to permit Buyer to contest the order or seek confidentiality protections, as determined in Buyer’s sole discretion.

8.5.5. Seller acknowledges that (a) the Business is conducted throughout the Covenant Territory; (b) the Business is marketed in the Covenant Territory and that Buyer contemplates potential distribution throughout the Covenant Territory; (c) the Business competes with other businesses that are or could be located in any part of the Covenant Territory; (d) Buyer has required that Seller make the covenants set forth in this Section 8.5 as a condition to Buyer’s purchase of the Purchased Assets and assumption of Assumed Liabilities; (e) the provisions of this Section 8.5 are reasonable and necessary to protect and preserve Buyer’s interests in and right to the ownership and operation of the Business after the Closing; and (f) Buyer would be irreparably damaged if Seller were to breach the covenants set forth in this Section 8.5.

8.5.6. Seller further acknowledges and agrees that damages cannot adequately compensate Buyer in the event of any of Seller’s breach of any of the covenants contained in this Section 8.5. Accordingly, Seller agrees that in the event of a breach of any such covenants, Buyer shall be entitled to seek injunctive relief against the breaching Seller, without bond (or if bond or security cannot be waived, in an amount not exceeding $1,000) in addition to such other relief as may be available at law or in equity.

8.5.7. The restrictive covenants contained in this Section 8.5 shall be construed as agreements which are independent of the other provisions of this Agreement, and the existence of any claim or cause of action of Seller against Buyer, of

whatever nature, shall not constitute a defense to Buyer’s enforcement of such restrictive covenants. To the extent any of such restrictive covenants are deemed unenforceable by virtue of their scope in terms of geographical area or length of time, but may be enforceable by limiting the scope thereof, Seller agrees that the same shall be enforceable to the fullest extent permissible under the Laws and public policies of the jurisdiction(s) in which enforcement is sought, and the Parties hereby authorize any court or forum of competent jurisdiction to modify or reduce the scope of the restrictive covenants to the minimum extent necessary to make such restrictive covenants enforceable.

8.6. Consents. Seller shall use its commercially reasonable efforts to obtain at the earliest practicable date all consents, waivers, approvals and notices required to consummate, or in connection with, the transactions contemplated by this Agreement. All such consents, waivers, approvals and notices shall be in writing and in form and substance reasonably satisfactory to Buyer, and executed counterparts of such consents, waivers and approvals shall be delivered to Buyer promptly after receipt thereof, and copies of such notices shall be delivered to Buyer promptly after the making thereof. Notwithstanding anything to the contrary in this Agreement, neither Buyer nor any of its Affiliates shall be required to pay any amounts in connection with obtaining any consent, waiver or approval.

8.7. Refunds and Remittances. After the Closing, if either Party or any of its Affiliates receives any refund, payment, or other amount or asset which is properly due and owing to the other Party in accordance with this Agreement or any other Transaction Document, or related to claims or other matters for which the other Party is responsible under any Transaction Document, such Party shall promptly notify the other Party thereof and shall promptly remit (or shall cause to be promptly remitted) such refund, payment or other amount or asset to such Party in accordance with its instructions. In furtherance of the foregoing, from and after the Closing, each Party shall furnish the other Party with such financial and other data and information related to such Party’s assets and receivables as the other Party may reasonably request from time to time to the extent necessary to verify compliance with this Section 8.7.

8.8. Public Announcements. Unless otherwise required by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel), no Party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other Party (which consent shall not be unreasonably withheld or delayed), and the Parties shall cooperate as to the timing and contents of any such announcement.

8.9. Further Assurances. Seller and Buyer shall each deliver or cause to be delivered to the other on the Closing Date such instruments as the other may reasonably request for the purpose of carrying out the transactions contemplated by this Agreement and shall take or cause to be taken all actions necessary or appropriate to consummate the transactions contemplated hereby. At any time and from time to time after the Closing,

Seller shall, at the reasonable request of Buyer and at Seller’s expense and without further consideration, execute and deliver any further deeds, bills of sale, endorsements, assignments and other instruments of conveyance and transfer, and take such other actions as Buyer may reasonably request in order (a) more effectively to transfer, convey, assign and deliver to Buyer, and to place Buyer in actual possession and operating control of, and to vest, perfect or confirm, of record or otherwise, in Buyer all right, title and interest in, to and under the Purchased Assets, (b) to assist in the collection or reduction to possession of any and all of the Purchased Assets or to enable Buyer to exercise and enjoy all rights and benefits with respect thereto, or (c) to otherwise carry out the intents and purposes of this Agreement.

8.10. Forwarding Inquiries. For a period of six (6) months following the Closing Date, Seller shall, and cause its Affiliates to, forward communications or inquiries received by it regarding the Business to Buyer or as Buyer may reasonably request from time to time. Without limiting the foregoing Seller and Buyer will work cooperatively to create an automatic forwarding system for Business related calls received on the 800 telephone number of Seller used in connection with the Business.

9. INDEMNIFICATION

9.1. Indemnification by Seller. Subject to the survival periods set forth in Section 9.4 (Survival), Seller (i.e., both SLG Chemicals, Inc. and Scott’s Liquid Gold-Inc., jointly and severally) agrees to defend, indemnify and hold Buyer and its Affiliates and their respective officers, directors, shareholders, owners, Representatives and lenders (collectively, the “Buyer Indemnified Parties”) harmless from and against any and all losses, liabilities, damages, obligations, Actions, demands, penalties, interest, costs and expenses (including any and all reasonable attorneys’ fees and expenses relating thereto, including costs of investigation and litigation incurred by the indemnified party) (collectively, the “Losses”) arising out of or in connection with (a) any breach of a representation or warranty made by Seller in this Agreement, or in any Schedule, Exhibit or other document or instrument attached hereto or delivered by Seller in connection with this Agreement, including the Transaction Documents; (b) any breach of a covenant, agreement or undertaking of Seller in this Agreement or in any Schedule, Exhibit or other document or instrument attached hereto or delivered by Seller in connection with this Agreement; (c) any Excluded Assets or Excluded Liability, including any claims arising for injuries or death to persons or damage to property arising or claimed to arise from products shipped or delivered by Seller prior to and on the Closing Date and any claims made against Buyer relating to matters occurring on or before the Closing Date and relating to, or involving, the conduct by Seller of the Business herein sold; (d) without limiting the generality of the foregoing, any claims made by any third party claiming to be the holder of an Encumbrance (excepting only the Permitted Encumbrances) against any of the Purchased Assets; and (e) any third party claim based upon, resulting from or arising out of the business, operations, properties, assets or obligations of Seller conducted, existing or arising on or prior to the Closing Date.

9.2. Indemnification by Buyer. Subject to the survival periods set forth in Section 9.4 (Survival), Buyer hereby agrees to defend, indemnify and hold Seller harmless from and against any and all Losses, arising out of or in connection with (a) any breach of a representation or warranty made by Buyer in this Agreement, or in any Schedule, Exhibit or other document or instrument attached hereto or delivered by Buyer in connection with this Agreement; (b) any breach of a covenant, agreement or undertaking of Buyer in this Agreement or in any Schedule, Exhibit or other document or instrument attached hereto or delivered by Buyer in connection with this Agreement, including the Transaction Documents, (c) any claims arising for injuries or death to persons or damage to property arising or claimed to arise from products shipped or delivered by Buyer after the Closing Date, subject to Section 3.2 (Excluded Liabilities); and (d) any claims made against Seller relating to matters occurring after the Closing Date and relating to, or involving, the conduct by Buyer of the Business herein sold, except for such claims for which Seller is required to indemnify any Buyer Indemnified Party pursuant hereto.

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

9.4. Survival. (a) The representations and warranties made by the Parties in this Agreement shall survive the Closing and shall continue in full force and effect without limitation after the Closing for a period of 18 months following the Closing Date, except that (i) claims related to fraud or willful misconduct and claims arising from or pertaining to the Excluded Liabilities shall survive indefinitely; (ii) claims arising from the breach of representations and warranties contained in Sections 7.1.1, 7.1.2, 7.1.8, 7.1.17, , and 7.2 shall survive for the applicable statute of limitations; (iii) claims arising from the breach of representations and warranties contained in Section 7.1.10 shall survive for a period of three (3) years; and (iv) claims arising from the breach of representations and warranties contained in Section 7.1.6 shall survive for the full period of all applicable statutes of limitations plus 60 days; and (b) covenants and agreements made by the Parties in this Agreement shall survive for the period provided in such covenants and agreements, if any, or until fully performed; provided, however, that any obligations under Section 9.1 and Section 9.2 shall not terminate with respect to any losses, liabilities, damages, obligations, Actions, demands, penalties, interest, cost and expenses, including reasonable legal fees and expenses relating thereto, as to which the Indemnified Party shall have given notice to the Indemnifying Party in accordance with Section 9.3 before the termination of the applicable survival period.

9.5. Limitations. Notwithstanding anything herein to the contrary, the maximum amount subject to indemnification under this Section shall not exceed $500,000, other than (i) with respect to any breach of any representation or warranty in Sections 7.1.1, 7.1.2, 7.1.6, 7.1.8, 7.1.17, , which amount subject to indemnification shall not exceed the Purchase Price, or (ii) any claim to the extent of insurance coverage for such claim. Further, Buyer shall not make a claim hereunder until such claim or claims in the aggregate exceed $50,000 (“Basket”), in which event Seller shall be liable for all such losses from the first dollar; provided, however, the Basket shall not apply with respect to losses based upon, arising out of, with respect to or by reason of any breach of any representation or warranty in Sections 7.1.1, 7.1.2, 7.1.6, 7.1.8, 7.1.17,. No Party shall have liability under this Agreement to the extent that such liability resulted from the willful misconduct or gross negligence of the other Party hereto. Each Party hereto shall take and shall cause to be taken steps reasonably necessary to mitigate any liability promptly after becoming aware of any event that could reasonably be expected to give rise to such liability.

9.6. Offset. Any amounts payable under this Agreement (or any other agreement or obligation) by Buyer or by any of its Affiliates may be applied as an offset against amounts due Seller under this Agreement (or any other agreement or obligation).

9.7. Materiality. For purposes of the indemnification provisions in this Article 9, determining whether there has been a breach of any representation or warranty under this Agreement and for purposes of calculating Losses with respect thereto, the representations and warranties set forth in this Agreement will be considered without regard to any materiality qualification (including terms such as “material” and “Material Adverse Effect”) set forth therein.

10. MISCELLANEOUS.

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

10.3. No Third Party Beneficiaries. Except as provided in Section 9 (Indemnification), this Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

10.4. Choice of Law; Submission to Jurisdiction; Waiver of Jury Trial.

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

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

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

10.4.4. Except as otherwise provided in this Agreement, any proceeding or litigation arising out of relating to this Agreement or any contemplated transaction hereunder shall be brought in the courts of the State of Delaware, and each of the Parties irrevocably submits to the exclusive jurisdiction of each such court in any such proceeding or litigation, waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims in respect of such proceeding or litigation shall be heard and determined only in any such court, and agrees not to bring any proceeding or litigation arising out of or relating to this Agreement or any contemplated transaction hereunder in any other court. Each Party acknowledges and agrees that this Section 10.4.4 constitutes a voluntary and bargained-for agreement between the Parties.

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

10.5. Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.5):

If to Seller:	Scott’s Liquid Gold-Inc. or SLG Chemicals, Inc.<br><br>8400 E. Crescent Parkway, Suite 450<br><br>Greenwood Village, CO 80111<br><br>E-mail: darndt@slginc.com<br><br>Attention: Chief Financial Officer
with a copy to:	Holland & Hart LLP<br><br>555 17th Street<br><br>Denver, CO 80202<br><br>E-mail: abowler@hollandhart.com<br><br>Attention: Amy L. Bowler
If to Buyer:	Commercial Brands, LLC<br><br>1103 E. Airtex Dr.<br><br>Houston, Texas 77073<br><br>email: constantine@commercialbrands.com<br><br>Attention: Constantine Zotos
---	---
with a copy to:	J. Scott Douglass<br><br>Attorney at Law<br><br>1811 Bering Dr., Suite 420<br><br>Houston, Texas 77057

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

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

10.8. Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

10.9. Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

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

10.11. Non-disclosure. This Agreement is confidential to the Parties and their Representatives, and is subject to that certain Mutual Confidentiality and Non-Solicitation Agreement dated November 4, 2022, entered into by and between Buyer and Seller (the “Confidentiality Agreement”), which continues in full force and effect and shall continue in full force and effect after Closing.

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

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

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

11.1. “Accounts Receivable” shall mean all of Seller’s accounts, accounts receivable, notes and notes receivable related to the Business, including all rights of Seller to payment for services rendered that are payable to Seller, including any security held for the payment thereof, less any allowance for doubtful accounts.

11.2. “Action” shall mean any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

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

11.4. “Assumed Liabilities” shall have the meaning set forth in Section 3.1.

11.5. “Assumed Purchase Orders” shall have the meaning set forth in Section 1.3.

11.6. “Bill of Sale” shall have the meaning set forth in Section 6.2.2.

11.7. “Business” shall have the meaning set forth in the Recitals.

11.8. “Business Day” shall mean any day other than a Saturday, Sunday or holiday on which national banking associations in the State of Delaware are authorized or required to be closed.

11.9. “Buyer” shall have the meaning set forth in the Preamble.

11.10. “Buyer Indemnified Parties” shall have the meaning set forth in Section 9.1.

11.11. “Closing” shall have the meaning set forth in Section 6.1.

11.12. “Closing Date” shall have the meaning set forth in Section 6.1.

11.13. “Closing Inventory” shall have the meaning set forth in Section 5.2.1.

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

11.15. “Confidentiality Agreement” shall have the meaning set forth in Section 10.11.

11.16. “Contracts” shall mean all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral relating to the Business.

11.17. “Disclosure Schedules” shall have the meaning set forth in Section 7.1.

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

11.19. “Environmental Claim” shall mean any Action, Governmental Order, Encumbrance, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, release of, or exposure to, any hazardous materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any environmental Permit.

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

11.21. “Estimated Closing Inventory” shall have the meaning set forth in Section 5.2.2.

11.22. “Excluded Assets” shall have the meaning set forth in Section 2.

11.23. “Excluded Contracts” shall have the meaning set forth in Section 2.3.

11.24. “Excluded Liabilities” shall have the meaning set forth in Section 3.2.

11.25. “Existing Customer” shall mean any Person who is, as of the Closing Date, purchasing Products from Seller or any Person who purchases, from and after the Closing Date and during the Restrictive Period, from Buyer products relating to the Business, including the Products.

11.26. “Financial Data” shall have the meaning set forth in Section 7.1.3.

11.27. “Former Customer” shall mean any Person who is not an Existing Customer, but who had, within the 18-month period immediately preceding the Closing Date, purchased Products from Seller.

11.28. “GAAP” shall mean United States generally accepted accounting principles in effect from time to time, consistently applied.

11.29. “Governmental Authority” shall mean any governmental, regulatory or administrative body, agency, subdivision or authority, any court or judicial authority, arbitrator (public or private) or any public, private or industry regulatory authority, whether national, federal, state, local, foreign or otherwise.

11.30. “Governmental Order” shall mean any order, writ, judgment, injunction, decree, stipulation, ruling, determination or award entered by or with any Governmental Authority.

11.31. “Indemnified Party” shall have the meaning set forth in Section 9.3.

11.32. “Indemnifying Party” shall have the meaning set forth in Section 9.3.

11.33. “Insurance Policies” means those insurance policies of listed on Schedule 7.1.16.

11.34. “Intellectual Property Assets” shall have the meaning set forth in Section 1.2.

11.35. “Intellectual Property Assignments” shall have the meaning set forth in Section 6.2.3.

11.36. “Intellectual Property Rights” shall mean intellectual property rights, including (a) inventions, designs, algorithms, formulations, manufacturing processes, and other industrial property, and all enhancements and improvements thereto, whether patentable or unpatentable, and whether or not reduced to practice, and all patents therefor or in connection therewith (including all U.S. and foreign patents, patent applications, patent disclosures, mask works, and all divisions, continuations, continuations-in-part, reissues, re-examinations and extensions thereof); (b) trademarks, trade names and service marks, trade dress, logos, internet domain names, social media handles and accounts, and other commercial product or service designations, and all goodwill and similar value associated with any of the foregoing, and all applications, registrations, and renewals in connection therewith; (c) copyrights (whether or not registered), moral rights in relation to all works of authorship, and all registrations and applications for registration thereof, as well as rights to renew copyrights; (d) trade secrets (as such are determined under applicable Law), know-how and other confidential business information, including technical information; (e) domain names and website content; (f) any and all other rights to existing and future registrations and applications for any of the foregoing and all other proprietary rights

in, or relating to, any of the foregoing, including remedies against and rights to sue for past infringements, and rights to damages and profits due or accrued in or relating to any of the foregoing; (g) any and all other intangible proprietary property, information and materials; and (h) any Contracts granting any right relating to or under the foregoing.

11.37. “Inventory” shall have the meaning set forth in Section 1.6.

11.38. “Knowledge” shall mean, with respect to Seller, the actual or constructive knowledge of any directors and officers of Seller, after due inquiry.

11.39. “Law” shall mean any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

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

11.41. “Material Adverse Effect” shall mean any event, occurrence, fact, condition or change that is, or is reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, financial condition, or assets of the Business; (b) the use or value of the Purchased Assets or a material increase in the amount of Assumed Liabilities; or (c) the ability of Seller to consummate the transactions contemplated hereby on a timely basis or perform its obligations under any of the Transaction Documents; provided that none of the following events, occurrences, facts, conditions or changes shall be deemed, either alone or in combination, to constitute a Material Adverse Effect, or be taken into account in determining whether there has been a Material Adverse Effect: (a) changes in general economic conditions, the securities markets generally or debt or financing markets generally, including changes in interest rates, exchange rates, lack of liquidity or trading volumes, (b) changes in general legal, tax, regulatory or political conditions, (c) changes in GAAP, (d) changes or effects that generally affect the industries in which Seller operates, (e) changes in applicable law or the interpretation or enforcement thereof, (f) changes or effects resulting or arising from the commencement, occurrence, continuation or intensification of any war (whether or not declared), sabotage, armed hostilities or acts of violence or terrorism, (g) earthquakes, hurricanes, tsunamis, pandemics, epidemics, or other natural disasters, (h) changes or effects that arise out of or are attributable to the acts or omissions of, or circumstances affecting, Buyer or its Affiliates, (i) changes or effects that relate to any failure by Seller to meet projections or forecasts for any period or (j) changes or effects resulting or arising from the

negotiation, execution, public announcement or performance of this Agreement; provided, however, that the exceptions set forth in clauses (a) through (g) above shall apply only to such changes or effects that do not have a materially disproportionate impact on Seller relative to other companies in the industry in which Seller operates.

11.42. “Material Customers” shall have the meaning set forth in Section 7.1.15.1.

11.43. “Material Suppliers” shall have the meaning set forth in Section 7.1.15.2.

11.44. “Party” and “Parties” shall have the meaning set forth in the Preamble.

11.45. “Permits” shall mean all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

11.46. “Permitted Encumbrances” shall mean: written outbound licenses of the Intellectual Property Assets entered into in the ordinary course of business with manufacturers and service providers, all of which are listed on Schedule 11.46; liens arising under Seller’s credit facilities, which will be released with respect to the Purchased Assets upon the Closing; liens for Taxes, assessments and other charges of Governmental Authorities not yet due and payable or being contested in good faith by appropriate proceedings, which proceedings are disclosed on Schedule 11.46; and mechanics’, workmens’, repairmens’, warehousemens’, carriers’ or other like liens arising or incurred in the ordinary course of business or by operation of Law and which are not material to the Purchased Assets, are not delinquent, and none of such liens will individually or in the aggregate impair the continued use and operation of the property to which they relate in the Business as presently conducted.

11.47. “Person” shall mean, any natural person, corporation, partnership, proprietorship, other business organization, trust, union, association or Governmental Authority.

11.48. “Pre-Closing Tax Period” shall mean any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

11.49. “Products” shall mean products sold as of the Closing Date under the “BIZ®” brand and included on Schedule 11.49.

11.50. “Purchase Price” shall have the meaning set forth in Section 5.1.

11.51. “Purchased Assets” shall have the same meaning set forth in Section 1.

11.52. “Purchased Inventory” shall have the meaning set forth in Section 1.6.

11.53. “Records” shall have the meaning set forth in Section 1.4.

11.54. “Registered Intellectual Property Asset” shall have the meaning set forth in Section 7.1.10.1.

11.55. “Related Person” means with respect to a particular individual: (a) each other member of such individual’s Family; (b) any Person that is directly or indirectly controlled by any one or more members of such individual’s Family; (c) any Person in which members of such individual’s Family hold (individually or in the aggregate) a Material Interest; and (d) any Person with respect to which one or more members of such individual’s Family serves as a director, limited liability company manager, officer, partner, executor or trustee (or in a similar capacity). With respect to a specified Person other than an individual: (a) any Person that directly or indirectly controls, is directly or indirectly controlled by or is directly or indirectly under common control with such specified Person; (b) any Person that holds a Material Interest in such specified Person; (c) each Person that serves as a director, limited liability company manager, officer, partner, executor or trustee of such specified Person (or in a similar capacity); (d) any Person in which such specified Person holds a Material Interest; and (e) any Person with respect to which such specified Person serves as a general partner or a trustee (or in a similar capacity).

For purposes of this definition, (a) “control” (including “controlling,” “controlled by,” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and shall be construed as such term is used in the rules promulgated under the Securities Act of 1933, as amended; (b) the “Family” of an individual includes (i) the individual, (ii) the individual’s spouse, (iii) any other natural person who is related to the individual or the individual’s spouse within the second degree, and (iv) any other natural person who resides with such individual; and (c) “Material Interest” means direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Exchange Act of 1934 as amended) of voting securities or other voting interests representing at least ten percent (10%) of the outstanding voting power of a Person or equity securities or other equity interests representing at least ten percent (10%) of the outstanding equity securities or equity interests in a Person.

11.56. “Representative” shall mean, as to a specified Person, any officer, director, agent, employee, attorney, accountant, consultant or other representative of the Person specified.

11.57. “Restrictive Period” shall have the meaning set forth in Section 8.5.

11.58. “Restricted Event” means, with respect to Seller’s operation of the Business: (a) entering into, terminating or receiving notice of termination of any Permit, license, royalty, noncompetition, joint venture, credit or other Contract or transaction that involves a total remaining commitment of more than $250,000; (b) selling, leasing, licensing or otherwise disposing of any material asset, or incurring or suffering any

Encumbrance on any material property or asset; (c) canceling or waiving any claim or right, or writing down or writing off any accounts or notes receivable, in each case with a value in excess of $250,000; (d) changing any accounting method or principle; (e) failing to cause any uncontested liability or obligation in excess of $250,000 individually or in the aggregate to be paid or satisfied when the same becomes due; (f) incurring or suffering material damage to or destruction or loss of any of any material asset, whether or not covered by insurance; (g) failing to pay any supplier or other creditor in the ordinary course of business consistent with past practice for longer than 90 days; (i) licensing, selling, Encumbering, or transferring any Intellectual Property Assets, other than Permitted Encumbrances; (j) entering into a Contract or making a binding commitment to do any of the foregoing; (k) terminating, or permitting the termination or expiration of any Permit; or (l) agreeing to or executing any settlement or compromise with any with any Governmental Authority or third Person.

11.59. “Seller” shall have the meaning set forth in the Preamble.

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

11.61. “Tax Return” shall mean any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

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

11.63. “Transition Services Agreement” shall have the meaning set forth in Section 6.2.4.

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

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

“SELLER”

Scott’s Liquid Gold-Inc.

/s/ David Arndt

Printed Name: David Arndt

Title: CFO

SLG Chemicals, Inc.

/s/ David Arndt

Printed Name: David Arndt

Title: CFO

“BUYER”

Commercial Brands LLC

/s/ Constantine Zotos

Printed Name: Constantine Zotos

Title: CEO

[Signature Page to Asset Purchase Agreement]

EX-10.3

EXHIBIT 10.3

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”), dated as of June 30, 2023 (the “Effective Date”), is by and among Alpha Skin LLC, a New York limited liability company (“Buyer”), Neoteric Cosmetics, Inc., a corporation organized and existing under the laws of the State of Colorado (“Seller” or a “Seller Group Member”), and for the limited purposes stated herein, Scott’s Liquid Gold-Inc., a Colorado corporation (“SLG” or a “Seller Group Member”). Buyer and Seller (and for the limited purposes stated herein, SLG) shall be collectively referred to herein as the “Parties” and, each, individually, a “Party.”

RECITALS

A. Seller (a) is a wholly owned subsidiary of SLG and (b) owns and operates various product brands in the beauty, haircare, grooming, skin care and cosmetics (and related accessories) industry (the “Industry”). Among the Seller’s product lines is the “Alpha Skin Care” product line, which includes skin care products marketed under the Alpha brand (the “Business”). The products marketed by Seller in the Business focus primarily on the alpha hydroxy-based skin care products segment of the Industry (the “Industry Segment”).

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

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

AGREEMENT

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

1.1. Names. All rights to the names “Alpha Skin Care” or “Alpha” as used in the Industry, together with any derivatives thereof and all logos, designs, phrases and other identifications of or relating to such names and the goodwill associated therewith.

1.2. Intellectual Property. All Intellectual Property Rights owned by Seller and solely used in the Business, including without limitation, the Intellectual Property Rights as set forth on Schedule 1.2 (collectively, the “Intellectual Property Assets”).

1.3. Prepaid Expenses. All prepaid and security deposits related to the Business listed on Schedule 1.3, including with respect to the Purchased Assets.

1.4. Records. Originals, or where not available, copies, of all books and records, including books of account, ledgers and general, financial and accounting records, customer lists, customer purchasing histories, price lists, distribution lists, supplier lists, production data, quality control records and procedures, research and development files, correspondence with any Governmental Authority, sales materials relating to the period following December 31, 2022 (including pricing history, total sales, terms and conditions of sale, sales and pricing policies and practices), strategic plans, internal financial statements, marketing and promotional surveys, material and research and files relating to the Intellectual Property Assets (collectively, the “Records”).

1.5. Inventory. All inventory and rights therein (including all inventory, finished goods, components, raw materials, work in progress, packaging, supplies, parts and other inventories) (the “Inventory”), wherever located, related to the Business (the “Purchased Inventory”). The Purchased Inventory consists of Inventory described on Schedule 1.5, each having at least the values set forth on such Schedule, which includes the Effective Date Inventory.

1.6. Goodwill. All rights in goodwill and the going concern value of the Business (“Goodwill”).

1.7. Other Assets. All other rights in intangible assets (including all claims, contract rights and warranty and product liability claims against third parties) solely related to the Purchased Assets identified above. Additionally, Buyer shall be entitled to all warranty protection now possessed by Seller covering any product or Inventory item purchased from Seller under this Agreement, to the extent such protection is transferable or assignable by Seller.

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

2.2. Accounts Receivable. Accounts Receivable relating to the period prior to Closing.

2.3. Cash and Cash Equivalents. All of Seller’s cash and cash equivalents on hand or in bank accounts and short-term investments.

2.4. Excluded Prepaid Expenses. The prepaid expenses listed on Schedule 2.4.

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

3. LIABILITIES.

3.1. Assumed Liabilities. Subject to the terms and conditions set forth herein, Buyer shall assume and agree to pay, perform and discharge only the Liabilities required to be performed after the Closing in connection with the Purchased Assets or as set forth in Schedule 3.1 (collectively, the “Assumed Liabilities”), and no other Liabilities.

3.2. Excluded Liabilities. Notwithstanding the provisions of Section 3.1 or any other provision in this Agreement to the contrary, Buyer shall not assume and shall not be responsible to pay, perform or discharge any Liabilities of Seller or any of its Affiliates of any kind or nature whatsoever other than the Assumed Liabilities (the “Excluded Liabilities”). Seller shall, and shall cause each of its Affiliates to, pay and satisfy in due course all Excluded Liabilities which they are obligated to pay and satisfy. Without limiting the generality of the foregoing, the Excluded Liabilities shall include, but not be limited to, the following, except to the extent specified as an Assumed Liability:

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

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

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

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

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

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

4. PURCHASE PRICE.

4.1. Purchase Price.

4.1.1. The “Purchase Price” shall be Two Million Seven Hundred Thousand and 00/100 Dollars ($2,700,000.00) (the “Cash Purchase Price”).

4.1.2. On execution and delivery of this Agreement by the Parties on the Effective Date, Buyer shall, by wire transfer of immediately available funds to an account designated by Seller in writing, pay to Seller the sum of Five Hundred Thousand Four Hundred Thirty-four and 41/100 Dollars ($500,434.41) (the “Initial Payment”).

4.1.3. At the Closing Buyer shall deliver the Cash Purchase Price, less the Initial Payment (such net amount, the “Closing Payment”), to Seller by wire transfer of immediately available funds to an account designated by Seller in writing. Such payment of the Closing Payment shall represent the payment of the Purchase Price in full by Buyer.

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

5. CLOSING.

5.1. Effective Date Deliveries.

5.1.1. Seller’s Effective Date Deliveries. On the Effective Date, Seller shall deliver, or cause to be delivered, to Buyer each of the following:

5.1.1.1. this Agreement, duly executed by each of Seller and SLG;

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

5.1.1.3. good and marketable title to the Inventory set forth on Schedule 5.1.1.3 (the “Effective Date Inventory”), free and clear of all Encumbrances, with the full right of Buyer to market and sell the Effective Date Inventory and to retain all proceeds received from such marketing; provided that no Effective Date Inventory designated for sale in the People’s Republic of China in Schedule 5.1.1.3 shall be sold in the United States.

5.1.2. Buyer’s Effective Date Deliveries. On the Effective Date, Buyer shall deliver, or cause to be delivered, to Seller each of the following:

5.1.2.1. this Agreement, duly executed by Buyer;

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

5.1.2.3. the Initial Payment.

5.2. Closing. Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place on the Closing Date by means

of an electronic closing in which the closing documentation will be delivered by electronic mail exchange of signature pages in PDF or functionally equivalent electronic format, which delivery will be effective without any further physical exchange of the original copies. The Closing will be deemed effective as of 12:01 a.m. U.S. Eastern time on the date after all of the conditions to Closing set forth in Sections 5.3 and 5.4 have been satisfied or waived (other than conditions which by their nature are to be satisfied at the Closing) (the “Closing Date”).

5.3. Seller’s Closing Deliveries. At Closing, Seller shall deliver, or cause to be delivered, to Buyer each of the following, as applicable (the “Seller’s Closing Deliverables”):

5.3.1. the Purchased Assets, free and clear of all Encumbrances other than Permitted Encumbrances;

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

5.3.3. notices of assignment(s) of all right, title and interest of Seller in and to the Registered Intellectual Property Assets to Buyer, each duly executed by Seller, all in form and substance reasonably satisfactory to Buyer (collectively, the “Intellectual Property Assignments”);

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

5.3.5. a copy of a certificate of good standing of each of the Seller and SLG;

5.3.6. one or more certificates pursuant to Treasury Regulations Section 1-1445-2(b) that the identified Seller Group Member is not a foreign person within the meaning of Section 1445 of the Code, duly executed by the relevant Seller Group Member;

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

5.3.8. certificates, in form satisfactory to Buyer, executed by an officer of each of Seller and SLG, respectively, dated as of the Closing Date, providing, among other things, (i) confirmation to Buyer the accuracy and effectiveness as of the Closing Date of each of the representation of the relevant Seller Group Member in this Agreement and (ii) such Seller Group Member’s covenant to take such actions and provide such documents as reasonably requested by Buyer to effect or to reflect the transactions contemplated by this Agreement, including any so requested after the Closing; and

5.3.9. such other instruments as shall be reasonably requested by Buyer to carry out the transactions described herein.

5.4. Buyer’s Closing Deliveries. At Closing, Buyer shall deliver, or cause to be delivered, to Seller (the “Buyer’s Closing Deliverables”):

5.4.1. the Closing Payment;

5.4.2. the Bill of Sale, duly executed by Buyer;

5.4.3. the Intellectual Property Assignments, duly executed by Buyer;

5.4.4. the Transition Services Agreement, duly executed by Buyer;

5.4.5. a copy of a Certificate of Status evidencing the existence of the Buyer issued by the New York State Department of State, Division of Corporations;

5.4.6. a certificate, in form satisfactory to Seller, executed by the manager or other officer of Buyer, dated as of the Closing Date, providing, among other things, confirmation to Seller and SLG the accuracy and effectiveness as of the Closing Date of each of the representation of the Buyer in this Agreement; and

5.4.7. such other instruments as shall be reasonably requested by Seller to carry out the transactions described herein.

6. Representations and Warranties.

6.1. Seller’s Representations and Warranties. Seller and SLG, jointly and severally, represent and warrant to the Buyer that, except as otherwise set forth in the disclosure schedules (the “Disclosure Schedules”), the following representations and warranties are, as of the Effective Date, and will be, as of the Closing Date, true and correct:

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

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

performance of each of its obligations hereunder and thereunder, have been duly authorized and taken.

6.1.3. Financial Data. Schedule 6.1.3 contains true and complete copies of the unaudited sales, gross margin, and contribution margin of the Business for the twelve (12) month period ended March 31, 2023 (collectively, the “Financial Data”). The Financial Data is based on the books and records of the Business, and fairly present the financial condition of the Business as of the respective dates they were prepared and the results of the operations of the Business for the periods indicated.

6.1.4. Title to Purchased Assets. Except as set forth in Schedule 6.1.4, Seller has good and valid title to all of the Purchased Assets, free and clear of all Encumbrances other than Permitted Encumbrances. The Purchased Assets constitute all of the material assets used in or held for use in operation of the Business and are sufficient for Buyer to conduct the Business from and after the Closing Date; none of the Excluded Assets are material to the Business; the Purchased Assets will allow Buyer to operate without interruption and in the ordinary course of business consistent with past practice, as it has been conducted by Seller and its Affiliates.

6.1.5. Intellectual Property.

6.1.5.1. Schedule 6.1.5.1 contains a complete and correct list of (a) each Intellectual Property Asset that is registered, issued or subject to a pending application for registration or issuance with a Governmental Authority (“Registered Intellectual Property Asset”), and (b) all material unregistered Intellectual Property Assets. Failure to list an item in Schedule 6.1.5.1 shall not mean that the omitted item is not a Registered Intellectual Property Asset or a material unregistered Intellectual Property Asset. The assignments to Buyer of any or of the foregoing pursuant to or as contemplated by this Agreement are being made in connection with Buyer’s purchase of the Business and the Purchased Assets (including, but not limited to the Goodwill).

6.1.5.2. The conduct of the Business, as now conducted or as conducted since January 1, 2019 including the use, sale, offering for sale, making, distribution, importation, exportation, licensing or sublicensing of the Products by Seller, does not and did not during such time period infringe upon or misappropriate any Intellectual Property Right of any other Person and since such date Seller has not received any written charge, complaint, claim, demand or notice alleging any such infringement or misappropriation arising out of Seller’s operation of the Business (including any claim that the Seller must license or refrain from using all or any portion of the Intellectual Property Assets).

6.1.5.3. Since January 1, 2019, there has been no unauthorized use, infringement or misappropriation of any Intellectual Property Asset by any Person, including any employees and former employees, consultants, customers or suppliers of Seller.

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

6.1.5.5. Schedule 6.1.5.5 describes, with respect to each applicable Intellectual Property Asset, the current status of any pending applications, registrations and filings. With respect to each Mark listed on Schedule 6.1.5.5 which is registered with the PTO or for which a registration application is pending with the PTO, to Seller’s Knowledge, such Mark was first used in commerce in the United States by Seller (or, if relevant, any of Seller’s predecessor in interest with respect to such Mark) on or about the date noted on the PTO records for that Mark and has continued to be used in commerce by Seller (or any such predecessor in interest, if relevant) since such date through the date hereof.

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

6.1.5.7. With respect to each Intellectual Property Asset, (a) Seller possesses all right, title and interest in and to such Intellectual Property Asset, free and clear of all Encumbrances other than Permitted Encumbrances; (b) such Intellectual Property Asset is not subject to any outstanding injunction, judgment, order, decree, ruling or charge affecting Seller’s use or ownership of or the validity or enforceability of such Intellectual Property Asset; and (c) no Action is pending or, to the Knowledge of Seller, is threatened that challenges the use, validity, enforceability or Seller’s ownership of such Intellectual Property Asset.

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

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

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

6.1.6. Inventory. All Purchased Inventory is owned by Seller free and clear of all Encumbrances. All Purchased Inventory has been valued by the parties at cost value consistent with GAAP as of the Effective Date.

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

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

6.1.9. Customer and Suppliers. Schedule 6.1.9 contains a complete and accurate list of (i) all of Seller’s Business Related Third Parties and (ii) all of Seller’s customers comprising 90% of the revenue of the Business. Seller has not received notice that any such Business Related Third Party or any customer on such list plans to discontinue doing business with Seller or, after the Closing, with Buyer.

6.1.10. Brokers. Except as set forth on Schedule 6.1.10, neither Seller nor SLG, nor any Person acting on behalf of either of them, has agreed to pay a commission, finder’s fee, investment banking fee or similar payment in connection with this Agreement or any other Transaction Document.

6.2. Buyer’s Representations and Warranties. Buyer hereby represents and warrants to the Seller that the following representations and warranties are, as of the Effective Date, and will be, as of the Closing Date, true and correct:

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

obligation of Buyer, enforceable against the Buyer in accordance with their respective terms.

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

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

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

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

7. COVENANTS.

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

7.2. Use of Intellectual Property. Following the Closing, none of Seller, SLG or any of their respective Affiliates shall challenge the validity or enforceability of the Intellectual Property Assets or the exclusive ownership of any of the Intellectual Property Assets by Buyer or its Affiliates or successors or assigns (and, in furtherance thereof, and not in limitation thereof, , Seller and SLG agree that none of Seller, SLG or any of their respective Affiliates will use any of the Names in the marketing or promoting of any products at any time); provided, however, that Seller may (a) use the Intellectual Property Assets on a transitional basis solely to the extent necessary to transition the Business from Seller to Buyer (but not for any additional or new marketing or business activity; and (b) assert and defend its right to make such use of the Intellectual Property Assets as contemplated by the preceding clause (a) of this sentence.

7.3. Taxes. Seller and Buyer shall cooperate fully with each other and make available or cause to be made available to each other in a timely fashion such data regarding the Business which

relates to Taxes, prior Tax Returns or filings and other information as may be reasonably required for the preparation by Buyer or Seller of any Tax Returns, elections, consents or certificates required to be prepared and filed by Buyer or Seller and any audit or other examination by any taxing authority or administrative Action relating to liability for Taxes. Buyer and Seller shall retain copies of all Tax Returns, supporting work schedules and other records relating to the Business and which relate to Tax periods or portions thereof ending prior to or on the Closing Date for the amount of time required by applicable Law. All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the other Transaction Documents (including any real property transfer Tax and any other similar Tax) shall be borne equally by the parties and paid or reimbursed, as applicable by each party when due. Seller shall, at its own expense, timely file any Tax Return or other document with respect to such Taxes or fees (and Buyer shall reasonably cooperate, at no cost or expense to Buyer, with respect thereto as necessary). Anything in the foregoing provisions of this Section 7.3 to the contrary notwithstanding, each of Seller and SLG, on the one hand, and Buyer, on the other hand, shall be responsible such party’s own federal, state and local income tax returns and any related tax liabilities.

7.4. Bulk Sales. Buyer and Seller hereby agree to waive compliance with the provisions of any bulk sales, bulk transfer or similar legislation in the jurisdictions in which any of the Purchased Assets are located. Seller shall, after Closing, pay its creditors as its debts to them become due and take all action necessary to prevent any such creditor from asserting any claim against Buyer or the Purchased Assets or under any such legislation for relief provided therein as a result of such non-compliance. If, for any reason, the Seller fails to make payment to any creditor that would otherwise have been covered by compliance with the Bulk Sales Act, and Buyer is required to make the payment that Seller would owe under this provision, Seller or SLG shall, promptly upon receipt of notice thereof from Buyer, reimburse Buyer for such amount plus all related incurred, accrued or accruing expenses related thereto.

7.5. Refunds and Remittances. After the Closing, if either Party or any of its Affiliates receives any refund, payment, or other amount or asset which is properly due and owing to the other Party in accordance with this Agreement or any other Transaction Document, or related to claims or other matters for which the other Party is responsible under any Transaction Document, such Party shall promptly notify the other Party thereof and shall promptly remit (or shall cause to be promptly remitted) such refund, payment or other amount or asset to such Party in accordance with its instructions. In furtherance of the foregoing, from and after the Closing, each Party shall furnish the other Party a statement on the 15th calendar day of each month (or if that day is not a Business Day, the following Business Day) stating the amount (and the source) of any such proceeds which are to be refunded or remitted to the other Party received since the immediately preceding statement, which current statement might indicate “None” if no proceeds were received in that time period).

7.6. Public Announcements; Communications.

7.6.1. Unless otherwise required by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel), prior to the Closing, no Party to this Agreement shall make any public announcements in respect of the financial and other business terms this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of

the other Party (which consent shall not be unreasonably withheld or delayed), and the Parties shall cooperate as to the timing and contents of any such announcement.

7.6.2. Prior to the Closing, Buyer shall not contact or communicate with customers, Business Related Third Parties, suppliers, vendors, service providers or other business partners of Seller regarding this Agreement or the transactions contemplated hereby without the prior written consent of Seller (not to be unreasonably withheld, conditioned or delayed) and the parties shall cooperate in good faith regarding communicating the consummation of this Agreement to such persons on or after the Closing.

7.6.3. Anything in the foregoing provisions of this Section 7.6 or any other provision of this Agreement or any other Transaction Document to the contrary notwithstanding, (a) the Parties agree to cooperate at or before the Closing in the preparation and the timing of the issuance of a press release to be released after the Closing, which press release will announce the consummation of the purchase and sale transaction referred to in this Agreement, and (b) after the Closing, Buyer may provide information relating to this Agreement, including the terms thereof, to third parties in connection with additional transactions, such as financing or capital transactions and otherwise conducting the Business.

7.6.4. In all events, any Party may provide information regarding this Agreement and the terms thereof to such Party’s professional advisors, internal staff and at the request of any government agency or court of competent authority. Each Party agrees to be responsible for any breach of the provisions of this Section 7.6 by such Party’s professional advisors or internal staff.

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

7.8. Covenants against Unfair Competition.

7.8.1. Each of Seller and SLG recognize that it has been instrumental in the success of the Business and in establishing and maintaining its respective customer and supplier relationships for the Business as well as having had access to, acquiring and assisting in developing Confidential Information of and relating to the Business, all of which are critical to the Business. Each of Seller and SLG further acknowledges and agrees that such information is and will continue to be of significant value to Buyer and that any

use other than by Buyer after the Closing could cause substantial loss to Buyer and thereby to the investment Buyer is making in the Purchased Assets and the Business.

7.8.2. Each of Seller and SLG accordingly agrees that, without the express prior written consent of Buyer, for a period of five (5) years after the Closing Date in the case of Section 7.8.2.1 and for a period of two (2) years after the Closing Date in the case of Sections 7.8.2.2 and 7.8.2.3 (the “Restrictive Period”):

7.8.2.1. Neither Seller nor SLG will, and each will cause its respective directors, officers, employees and Affiliates not to, directly or indirectly (including through their respective Affiliates or Representatives) engage in or conduct any business in the Industry Segment which directly or indirectly competes or interferes with the Business as the Business is conducted as of and after the Closing Date during the Restrictive Period throughout the United States of America; provided that the employees and directors of Seller may become employees, consultants, or directors of other companies in the same or similar industry.

7.8.2.2. Neither Seller nor SLG will, and each will cause its respective directors, officers, employees and Affiliates not to, directly or indirectly (including through their respective Affiliates or Representatives): (a) interfere with, solicit, or accept for itself or for any Person, other than Buyer or its Affiliates, any of the former or existing customers of the Business as the Business is conducted as of and after the Closing Date, other than with respect to Seller’s or SLG’s business in the ordinary course that does not include the Business and does not conflict with or compete with the Business; (b) induce, solicit or otherwise encourage any such past or present customer of the Business to purchase products that are the same or substantially similar to the products of the Business as the Business is conducted as of and after the Closing Date, including the Products, from Persons operating businesses, or preparing to operate businesses, competitive with the Business as the Business is conducted as of and after the Closing Date; provided that such restrictions shall not apply with respect to employees of Seller or SLG who become employees or consultants of other companies in the same or similar industry.

7.8.2.3. Neither Seller nor SLG will, and each will cause its respective directors, officers, employees and Affiliates not to, directly or indirectly (including through their respective Affiliates or Representatives) interfere with, attempt to interfere with or disparage Buyer’s or its Affiliates’ relationship with any customer, vendor, contractor, supplier, employee, owner-operator or consultant (or the terms relating to such relationships) of the Business as the Business is conducted as of and after the Closing Date.

7.8.3. For a period of one year after the Closing, neither Seller nor SLG will, and each will cause its respective directors, officers, employees and Affiliates not to, solicit to employ any employees of the Business (as of and after the Closing Date) or otherwise engage any such individual; provided that all current employees of Seller and SLG may continue to be employees of Seller or SLG, as applicable. The term “solicit to employ” does not include using general solicitations of employment, such as general advertisements, not specifically directed toward employees of Buyer.

7.8.4. From and after the Closing, each of Seller and SLG shall, and shall cause each of its respective Affiliates and Representatives to (a) treat all Confidential Information of or relating to Business, the Purchased Assets, Buyer, and/or its Affiliates (whenever and however acquired) strictly confidential as Confidential Information of Buyer; (b) not disclose such Confidential Information or permit it to be disclosed, in whole or part, to any Person without the prior written consent of Buyer; and (c) not use any such Confidential Information for any purpose except as permitted by this Agreement. Seller or SLG, as applicable, shall notify Buyer immediately in the event Seller or SLG becomes aware of any loss or disclosure of any Confidential Information of or relating to Business, the Purchased Assets, Buyer or its Affiliates (whenever and however acquired). Confidential Information subject to this Section 7.8.4 shall not include information that is or becomes generally available to the public other than through Seller’s or SLG’s (or their respective Representatives’ or Affiliates’) breach of this Agreement; or is communicated to Seller or SLG (or their respective Representatives or Affiliates) by a Person that had no confidentiality obligations with respect to such information. Nothing herein shall be construed to prevent disclosure of Confidential Information of or relating to the Business as may be required by applicable Law, or pursuant to the valid order of a court of competent jurisdiction or an authorized governmental agency, provided that the disclosure does not exceed the extent of disclosure required by such Law or order. Each of Seller and SLG agrees to provide written notice of any such order to an authorized officer of Buyer within five (5) days of receiving such order, but in any event sufficiently in advance of making any disclosure to permit Buyer to contest the order or seek confidentiality protections, as determined in Buyer’s sole discretion.

7.8.5. Each of Seller and SLG acknowledges that (a) the Business is conducted throughout the United States of America; (b) the Business is marketed in the United States of America and that Buyer contemplates potential distribution throughout the United States of America; (c) the Business competes with other businesses that are or could be located in any part of the United States of America; (d) Buyer has required that Seller make the covenants set forth in this Section 7.8 as a condition to Buyer’s purchase of the Purchased Assets and assumption of Assumed Liabilities; (e) the provisions of this Section 7.8 are reasonable and necessary to protect and preserve Buyer’s interests in and right to the ownership and operation of the Business after the Closing; and (f) Buyer would be irreparably damaged if Seller or SLG were to breach the covenants set forth in this Section 7.8.

7.8.6. Seller further acknowledges and agrees that damages cannot adequately compensate Buyer in the event of any of Seller’s or SLG’s breach of any of the covenants contained in this Section 7.8. Accordingly, Each of Seller and SLG agrees that in the event of a breach of any such covenants, Buyer shall be entitled to seek injunctive relief against the breaching Party, without bond (unless required by Law) in addition to such other relief as may be available at law or in equity.

7.8.7. The restrictive covenants contained in this Section 7.8 shall be construed as agreements which are independent of the other provisions of this Agreement, and the existence of any claim or cause of action of Seller or SLG against Buyer, of whatever nature, shall not constitute a defense to Buyer’s enforcement of such restrictive covenants. To the extent any of such restrictive covenants are deemed unenforceable by virtue of their scope in terms of geographical area or length of time, but may be enforceable by

limiting the scope thereof, each of Seller and SLG agrees that the same shall be enforceable to the fullest extent permissible under the Laws and public policies of the jurisdiction(s) in which enforcement is sought, and the Parties hereby authorize any court or forum of competent jurisdiction to modify or reduce the scope of the restrictive covenants to the minimum extent necessary to make such restrictive covenants enforceable.

7.9. Ordinary Course of Business. From the Effective Date through and including the Closing, Seller will continue to conduct the Business (including, but not necessarily limited to marketing and sales and relationships with any existing Business Related Third Parties) in the ordinary course of business; provided, however, that (i) Seller will not enter into any new contracts or other arrangements without the prior written consent of Buyer in each instance and (ii) Seller will immediately communicate to Buyer any material change in the Business with respect to costs, revenues (except due to increased sales made in ordinary course of business) or relationships with any of current or any potential new Business Related Third Party.

7.10. Effective Date Inventory. From the Effective Date through and including the Closing, Buyer (a) shall have the right to sell, lease, abandon, or otherwise transfer or dispose of all or any part of the Effective Date Inventory (provided that no Effective Date Inventory designated for sale in the People’s Republic of China in Schedule 5.1.1.3 shall be sold in the United States), but (b) shall not have the right to (i) create or incur, or allow to be created or incurred, any Encumbrance on the Effective Date Inventory, or (ii) enter into any agreement or otherwise enter into a written commitment to do any of the foregoing referred to in clause (b)(i) of this sentence.

7.11. Communications with Others after Effective Date. In consideration of Buyer’s agreement to the provisions of Section 9, Seller and SLG agree that, from the Effective Date to the earlier of the Closing or the effective date of a termination of this Agreement effected in accordance with the provisions of Section 9, each of Seller and SLG will not, directly or indirectly (including through an Affiliate, a Representative or any other intermediary), and whether orally, in writing, electronically or through any other medium, solicit, respond to or have any preliminary or other communications or contacts with any third party (including any party associated with Seller or SLG in any capacity) which relate to any proposed or a possible transaction (whether the terms thereof are specific or hypothetical) between a Seller Group Member and such third party whereby, however such transaction might be structured, such third party would be acquiring any interest in all or part of the Business and/or all or part of Seller’s assets intended to be included in the Purchased Assets hereunder. The foregoing provisions of this Section 7.11 apply to the solicitation or initiation by any party (whether such third party or a Seller Group Member or any of their respective Affiliates, Representatives or other intermediaries), of (i) any such communications or contacts first taking place after the Effective Date and (ii) the continuation or resumption of any such communications or contacts which might have taken place prior to the Effective Date (whether or not the terms thereof are or are not changed).

8. INDEMNIFICATION

8.1. Indemnification by Seller and SLG. Subject to the survival periods set forth in Section 8.4 (Survival), Seller and SLG, jointly and severally, agree to defend, indemnify and hold Buyer and its Affiliates and their respective officers, directors, shareholders, owners, Representatives

and lenders (collectively, the “Buyer Indemnified Parties”) harmless from and against any and all losses, liabilities, damages, obligations, Actions, demands, penalties, interest, costs and expenses (including any and all attorneys’ fees and expenses relating thereto, including costs of investigation and litigation incurred by the indemnified party to the extent such party is the prevailing party in making or defending such claim for indemnity) (collectively, the “Losses”) arising out of (a) any breach of a representation or warranty made by Seller or SLG in this Agreement, including the Transaction Documents; (b) any breach of a covenant, agreement or undertaking of Seller or SLG in this Agreement or in any other document or instrument attached hereto or delivered by Seller in connection with this Agreement; and (c) any Excluded Assets or Excluded Liability.

8.2. Indemnification by Buyer. Subject to the survival periods set forth in Section 8.4 (Survival), Buyer hereby agrees to defend, indemnify and hold Seller harmless from and against any and all Losses, arising out of or in connection with (a) any breach of a representation or warranty made by Buyer in this Agreement, including the Transaction Documents; (b) any breach of a covenant, agreement or undertaking of Buyer in this Agreement or in any other document or instrument attached hereto or delivered by Buyer in connection with this Agreement; and (c) any Purchased Assets or Assumed Liability. For the avoidance of doubt, Buyer is not obligated to indemnify Seller for losses incurred that are the direct result of a breach of this Agreement by a Seller Group Member for which Seller and SLG, jointly and severally, are obligated to indemnify Buyer pursuant to Section 8.1 hereof.

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

committed, any wrongdoing and may continue conducting the Business without further claim or objection by the third party or its affiliates, (ii) has no liability to pay any amounts due in connection with such settlement or resolution, (iii) has no other outstanding or future obligations to any third party on account of such settlement or resolution, and (iv) is not required to relinquish (or have a security interest attach to) any of the Indemnified Party’s property, including, but not limited to, the Assets or other interests in the conduct of the Business or otherwise

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

8.5. Limitations. Notwithstanding anything herein to the contrary, the maximum amount subject to indemnification under hereunder from (i) Seller and SLG, on the one hand, to Buyer or (ii) from Buyer to Seller, shall not exceed $75,000, other than with respect to any breach of any representation or warranty in Sections 6.1.1, 6.1.2, 6.1.4, 6.1.10, and 6.2.1, 6.2.2 and 6.2.5, which amount subject to indemnification shall not exceed the Purchase Price, and other than with respect to claims related to fraud, which amount subject to indemnification will be uncapped. Further, Buyer shall not make a claim under Section 8.1 until such claim or claims in the aggregate exceed $20,000 (“Basket”), in which event Seller or SLG, as joint and several Indemnifying Parties, shall be liable for all such losses from the first dollar; provided, however, the Basket threshold requirement shall not apply with respect claims related to fraud by a Seller Group Member. In addition, Seller shall not make a claim under Section 8.2 until such claim or claims in the aggregate exceed the Basket, in which event Buyer, as the Indemnifying Party, shall be liable for all such losses from the first dollar; provided, however, the Basket threshold requirement shall not apply with respect claims related to fraud by Buyer. No Party shall have liability under this Agreement to the extent that such liability resulted from the willful misconduct or gross negligence of the other Party hereto. Each Party hereto shall take and shall cause to be taken steps reasonably necessary to mitigate any liability.

9. TERMINATION.

9.1. Termination of Agreement. This Agreement may be terminated at any time prior to the Closing:

9.1.1. by mutual agreement of Buyer and Seller;

9.1.2. by Seller if the Closing shall not have occurred prior to July 31, 2023 or such later date as the parties may agree (the “Outside Date”) by Seller giving written notice of Seller’s election to terminate this Agreement pursuant to this Section 9.1.2, accompanied by certification signed by an officer of Seller and from an officer of SLG that that Seller and SLG have fully complied with and have not breached the provisions

of Section 7.11; provided that Seller may not terminate this Agreement pursuant to this Section if (i) Seller or SLG is then in material breach of any representation, warranty, covenant, or agreement contained in this Agreement; (ii) Seller cannot demonstrate to Buyer’s reasonable satisfaction that Seller would be able to provide all the Seller’s Closing Deliverables to Buyer; (iii) Seller or SLG has breached or failed to perform any of its respective representations, warranties, covenants, or other agreements contained in this Agreement, which breach or failure to perform is either incapable of being cured or is not cured by the earlier of (A) the Outside Date and (B) the date that is thirty (30) days after Seller or SLG (as applicable) has received written notice of such breach or failure from Buyer; or (iv) Seller cannot provide to Buyer the certification regarding compliance with the provisions of Section 7.11 referred to in the first sentence of this paragraph.

9.1.3. by Seller if Buyer has breached or failed to perform any of its representations, warranties, covenants, or other agreements contained in this Agreement, which breach or failure to perform is either incapable of being cured or is not cured by the earlier of (A) the Outside Date and (B) the date that is thirty (30) days after Buyer has received written notice of such breach or failure from Seller, by Seller giving written notice of Seller’s election to terminate this Agreement pursuant to this Section 9.1.3, accompanied by certification signed by an officer of Seller and from an officer of SLG that that Seller and SLG have fully complied with and have not breached the provisions of Section 7.11; provided, however, that Seller may not terminate this Agreement pursuant to this Section if (i) Seller or SLG is then in material breach of any representation, warranty, covenant, or agreement contained in this Agreement; (ii) Seller cannot demonstrate to Buyer’s reasonable satisfaction that Seller would be able to provide all the Seller’s Closing Deliverables to Buyer; or (iii) Seller or SLG has breached or failed to perform any of its respective representations, warranties, covenants, or other agreements contained in this Agreement, which breach or failure to perform is either incapable of being cured or is not cured by the earlier of (A) the Outside Date and (B) the date that is thirty (30) days after Seller or SLG (as applicable) has received written notice of such breach or failure from Buyer.

9.1.4. by Buyer if any of the following conditions exists: (i) if Seller or SLG is then in material breach of any representation, warranty, covenant, or agreement contained in this Agreement, including, but not limited to, the provisions of Section 7.11; (ii) if Seller cannot demonstrate to Buyer’s reasonable satisfaction that Seller would be able to provide all the Seller’s Closing Deliverables to Buyer; or (iii) if Seller or SLG has breached or failed to perform any of its respective representations, warranties, covenants, or other agreements contained in this Agreement, which breach or failure to perform is either incapable of being cured or is not cured by the earlier of (A) the Outside Date and (B) the date that is thirty (30) days after Seller or SLG (as applicable) has received written notice of such breach or failure from Buyer, by Buyer giving written notice of Buyer’s election to terminate this Agreement pursuant to this Section 9.1.4; provided, however, that Buyer may not terminate this Agreement pursuant to this Section if (i) Buyer is then in material breach of any representation, warranty, covenant, or agreement contained in this Agreement; (ii) Buyer cannot demonstrate to Seller’s reasonable satisfaction that Buyer would be able to provide all the Buyer’s Closing Deliverables to Seller; or (iii) Buyer has breached or failed to perform any of its respective representations, warranties, covenants, or other agreements contained in this Agreement, which breach or failure to perform is either incapable of being cured

or is not cured by the earlier of (A) the Outside Date and (B) the date that is thirty (30) days after Buyer has received written notice of such breach or failure from Seller.

9.2. Effect of Termination. If this Agreement is terminated pursuant to Sections 9.1.2, or 9.1.3, (a) Seller shall be permitted to retain the Initial Payment, and (b) Buyer shall, within ten (10) Business Days of such termination, provide to Seller (i) good and marketable title to the Effective Date Inventory which has not yet been sold by Buyer (such unsold Effective Date Inventory, the “Termination Return Inventory”), which Termination Return Inventory shall be in substantially the same condition as the Effective Date Inventory was delivered to Buyer on the Effective Date, together with (ii) a payment in the amount equal to Five Hundred Thousand and 00/100 Dollars ($500,000.00) less the cost of the Termination Return Inventory to Buyer on the Effective Date (computed using the costs provided in Schedule 5.1.1.3). Seller and SLG acknowledges and agrees that this provision is the sole remedy in the event of a termination of this Agreement made in accordance with the provisions of the first sentence of this Section 9.2. Each of the parties agrees that if there is any termination of this Agreement other than pursuant to the first sentence of this Section 9.2, (i) Buyer may retain the remaining part of the Effective Day Inventory, which will be deemed to be fully paid for by the Initial Payment, and Buyer shall have the right to market all Inventory in Buyer’s possession or control, and (ii) neither party shall incur any other obligations to the other party in connection with or a result of such termination. Each of the parties acknowledges that the agreements contained in this Section are an integral part of the transactions contemplated by this Agreement and that the retention of the Initial Payment by Seller is not and shall not be construed to be a penalty, but rather is a reasonable amount that will compensate Seller, in the event of the termination of this Agreement pursuant to Sections 9.1.2, or 9.1.3, for the efforts and resources expended and opportunities foregone while negotiating this Agreement, in reliance on this Agreement and in the expectation of the consummation of the transactions contemplated by this Agreement, which amount would otherwise be impossible to calculate with precision.

10. MISCELLANEOUS.

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

10.2. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns. None of the Parties may assign its rights or obligations hereunder without the prior written consent of the other Party/Parties, which consent shall not be unreasonably withheld or delayed. No transfer or assignment shall relieve the transferring or assigning Party of any of its obligations hereunder; provided, however, that this provision shall not apply to any assignment of any or all of the Purchased Assets after the Purchase Price has been paid in full as contemplated by Section 4 or otherwise. Without limiting the forgoing, Buyer shall not sell, assign, transfer, license or

otherwise convey the Business, or any part of the Business, unless the purchaser is reasonably satisfactory to Seller and agrees in writing to perform all obligations of Buyer under this Agreement and the Transition Services Agreement.

10.3. No Third-Party Beneficiaries. Except as provided in Section 8 (Indemnification), this Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

10.4. Choice of Law; Submission to Jurisdiction; Waiver of Jury Trial.

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

10.4.4. Except as otherwise provided in this Agreement, any proceeding or litigation arising out of relating to this Agreement or any contemplated transaction hereunder shall be brought in the (i) courts of the State of Delaware, (ii) state or federal courts sitting in New York County, New York, or (iii) state or federal courts sitting in Denver, Colorado, and each of the Parties irrevocably submits to the exclusive jurisdiction of each such court in any such proceeding or litigation, waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims in respect of such proceeding or litigation shall be heard and determined only in any such court, and agrees not to bring any proceeding or litigation arising out of or relating to this Agreement or any contemplated transaction hereunder in any other court. Each Party acknowledges and agrees that this section constitutes a voluntary and bargained-for agreement between the Parties.

e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.5):

If to Seller or SLG:	Scott’s Liquid Gold-Inc.<br><br>8400 E. Crescent Parkway, Suite 450<br><br>Greenwood Village, CO 80111<br><br>Attention: Chief Financial Officer<br><br>E-mail: darndt@slginc.com
with a copy (which shall not be deemed notice) to:	Holland & Hart LLP<br><br>555 17th Street<br><br>Denver, CO 80202<br><br>Attention: Amy L. Bowler, Esq.<br><br>E-mail: abowler@hollandhart.com
If to Buyer:	Alpha Skin LLC<br><br>15 Holt Drive<br><br>Stony Point, NY 10980<br><br>Attention: Joe Indig, CEO<br><br>Email: joe@silberequity.com
with a copy (which shall not be deemed notice) to:	Krieger & Prager, LLP<br><br>39 Broadway, Suite 920<br><br>New York, NY 10006<br><br>Attention: Samuel Krieger, Esq.<br><br>Email: skrieger@kplawfirm.com

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

10.7. Interpretation. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (i) to Sections, Schedules and Exhibits mean the Sections of, and Schedules and Exhibits attached to, this Agreement; (ii) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof; (iii) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder; (iv) the meaning assigned to each term defined herein shall be equally applicable to both the singular and plural forms of such term and vice versa, and (v) words

denoting any gender or neuter form shall include each other form, as the context requires. Unless where specifically indicated otherwise, all references to dollar amounts or to amounts designated by the “$” sign in this Agreement or any other Transaction Document refer to United States Dollars. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

10.8. Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

10.11. Non-disclosure. Except as otherwise provided in this Agreement, this Agreement is confidential to the Parties and their Representatives and is governed by the non-disclosure agreement between the parties dated August 2, 2022.

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

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

11.1. “Accounts Receivable” shall mean all of Seller’s accounts, accounts receivable, notes and notes receivable related to the Business, including all rights of the Seller to payment for services rendered that are payable to the Seller, including any security held for the payment thereof, less any allowance for doubtful accounts.

of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

11.4. “Assumed Liabilities” shall have the meaning set forth in Section 3.1.

11.5. “Bill of Sale” shall have the meaning set forth in Section 5.3.2.

11.6. “Business” shall have the meaning set forth in the Recitals.

11.7. “Business Day” shall mean any day other than a Saturday, Sunday or holiday on which national banking associations in the State of Delaware are authorized or required to be closed.

11.8. “Business Related Third Party” shall mean any third party supplier or vendor of goods and/or services relating to the Business (including, but not necessarily limited to, manufacturing, packaging, shipping, marketing or warehousing services) to Seller, either directly or indirectly.

11.9. “Buyer” shall have the meaning set forth in the Preamble.

11.10. “Buyer Indemnified Parties” shall have the meaning set forth in Section 8.1.

11.11. “Buyer’s Closing Deliverables” shall have the meaning set forth in Section 5.4.

11.12. “Cash Purchase Price” shall have the meaning set forth in Section 4.1.1.

11.13. “Closing” shall have the meaning set forth in Section 5.1.

11.14. “Closing Date” shall have the meaning set forth in Section 5.1.

11.15. “Closing Payment” shall have the meaning set forth in Section 4.1.3.

11.16. “Confidential Information” shall mean all non-public, confidential or proprietary information, whether in written, electronic or other form or media, and whether or not marked, designated or otherwise identified as “confidential,” including: (a) information concerning the past, present and future business affairs relating to the Business and/or the Purchased Assets, including finances, customer information, supplier information, products, services, organizational structure and internal practices, forecasts, sales and other financial results, records and budgets, and business, marketing, development, sales and other commercial strategies of Seller, Buyer, and/or or their respective Affiliates, and/or or their respective customers, suppliers, and other third parties having a relationship with the Business; (b) unpatented inventions, ideas, methods and discoveries, trade secrets, know-how, unpublished patent applications and other confidential Intellectual Property Rights; (c) designs, specifications, documentation, components, source code, object code, images, icons, audiovisual components and objects, schematics, drawings, protocols, processes, and other

visual depictions, in whole or in part, of any of the foregoing; (d) Confidential Information of any third party included with, or incorporated in, any information used by Seller, Buyer, and/or or their respective Affiliates in the Business or in connection with the Purchased Assets; (e) other information that would reasonably be considered non-public, confidential or proprietary given the nature of the information and the Business; and (f) notes, analyses, compilations, reports, forecasts, studies, samples, data, statistics, summaries, interpretations and other materials prepared by or for Seller, Buyer and/or their respective Affiliates that contain, are based on, or otherwise reflect or are derived, in whole or in part, from any of the foregoing.

11.17. “Disclosure Schedules” shall have the meaning set forth in Section 6.1.

11.18. “Effective Date” shall have the meaning set forth in the Preamble.

11.19. “Effective Date Inventory” shall have the meaning set forth in Section 5.1.1.3.

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

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

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

11.23. “Excluded Assets” shall have the meaning set forth in Section 2.

11.24. “Excluded Liabilities” shall have the meaning set forth in Section 3.2.

11.25. “Financial Data” shall have the meaning set forth in Section 6.1.3.

11.26. “GAAP” shall mean United States generally accepted accounting principles in effect from time to time.

11.27. “Goodwill” shall have the meaning set forth in Section 1.6.

11.28. “Governmental Authority” shall mean any governmental, regulatory or administrative body, agency, subdivision or authority, any court or judicial authority, arbitrator (public or private) or any public, private or industry regulatory authority, whether national, federal, state, local, foreign or otherwise.

11.29. “Governmental Order” shall mean any order, writ, judgment, injunction, decree, stipulation, ruling, determination or award entered by or with any Governmental Authority.

11.30. “Indemnified Party” shall have the meaning set forth in Section 8.3.

11.31. “Indemnifying Party” shall have the meaning set forth in Section 8.3.

11.32. “Industry” shall have the meaning set forth in the Recitals.

11.33. “Industry Segment” shall have the meaning set forth in the Recitals.

11.34. “Initial Payment” shall have the meaning set forth in Section 4.1.2.

11.35. “Intellectual Property Assets” shall have the meaning set forth in Section 1.2.

11.36. “Intellectual Property Assignments” shall have the meaning set forth in Section 5.3.3.

11.37. “Intellectual Property Rights” shall mean intellectual property rights, including (a) inventions, designs, algorithms and other industrial property, and all enhancements and improvements thereto, whether patentable or unpatentable, and whether or not reduced to practice, and all patents therefor or in connection therewith (including all U.S. and foreign patents, patent applications, patent disclosures, mask works, and all divisions, continuations, continuations-in-part, reissues, re-examinations and extensions thereof); (b) trademarks, trade names and service marks, trade dress, logos, internet domain names, social media handles and accounts, marketing material (commercial advertisements, sell sheets, brochures, digital marketing material etc.) and other commercial product or service designations, and all goodwill and similar value associated with any of the foregoing, and all applications, registrations, and renewals in connection therewith; (c) copyrights (whether or not registered), moral rights in relation to all works of authorship, and all registrations and applications for registration thereof, as well as rights to renew copyrights; (d) trade secrets (as such are determined under applicable Law), know-how and other confidential business information, including technical information; (e) any and all other rights to existing and future registrations and applications for any of the foregoing and all other proprietary rights in, or relating to, any of the foregoing, including remedies against and rights to sue for past infringements, and rights to damages and profits due or accrued in or relating to any of the foregoing; (f) any and all formulas currently used in the manufacture of each product marketed in the Business and all formulas currently in development for potential use in the manufacture of products marketed or being considered to be marketed in the Business; (g) all current and past videos, pictures, advertising and other promotional text and content of any kind, in Seller’s possession, each for use in any medium or media, for products currently marketed in the Business or currently being considered for marketing of current or potential products marketed in the Business, (h) any and all other intangible proprietary property, information and materials; and (i) any contracts granting any right relating to or under the foregoing.

11.38. “Inventory” shall have the meaning set forth in Section 1.5.

11.39. “Knowledge”, shall mean, with respect to Seller and SLG, the actual or constructive knowledge of each of the directors and officers of the Seller and SLG, after due inquiry.

11.40. “Law” shall mean any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

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

11.42. “Names” shall have the meaning set forth in Section 1.1.

11.43. “Outside Date” shall have the meaning set forth in Section 9.1.2.

11.44. “Party” and “Parties” shall have the meaning set forth in the Preamble.

11.45. “Permitted Encumbrances” shall mean: written outbound licenses of the Intellectual Property Assets entered into in the ordinary course of business with manufacturers and service providers; liens arising under the Seller’s credit facilities, which will be released with respect to the Purchased Assets upon the Closing; liens for Taxes, assessments and other charges of Governmental Authorities not yet due and payable or being contested in good faith by appropriate proceedings; and mechanics’, workmens’, repairmens’, warehousemens’, carriers’ or other like liens arising or incurred in the ordinary course of business or by operation of Law and which are not material to the Purchased Assets, are not delinquent, and none of such liens will individually or in the aggregate impair the continued use and operation of the property to which they relate in the Business as presently conducted.

11.46. “Person” shall mean, any natural person, corporation, partnership, proprietorship, other business organization, trust, union, association or Governmental Authority.

11.47. “Pre-Closing Tax Period” shall mean any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

11.48. “Products” shall mean skin care products marketed under the name “Alpha Skin Care” or “Alpha” as used in the Industry.

11.49. “Purchase Price” shall have the meaning set forth in Section 4.1.1.

11.50. “Purchased Assets” shall have the same meaning set forth in Section 1.

11.51. “Purchased Inventory” shall have the meaning set forth in Section 1.5.

11.52. “Records” shall have the meaning set forth in Section 1.4.

11.53. “Registered Intellectual Property Asset” shall have the meaning set forth in Section 6.1.5.1.

11.54. “Representative” shall mean, as to a specified Person, any officer, director, agent, employee, attorney, accountant, consultant or other representative of the Person specified.

11.55. “Restrictive Period” shall have the meaning set forth in Section 7.8.2.

11.56. “Seller” shall have the meaning set forth in the Preamble.

11.57. “Seller Group Member” shall have the meaning set forth in the Preamble.

11.58. “Seller’s Closing Deliverables” shall have the meaning set forth in Section 5.3.

11.59. “SLG” shall have the meaning set forth in the Preamble.

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

11.62. “Termination Return Inventory” shall have the meaning set forth in Section 7.8.2.

11.63. “Transaction Documents” shall mean this Agreement, the Bill of Sale, the Assignment and Assumption Agreement, the Intellectual Property Assignments, the Transition Services Agreement and all other agreements, instruments and documents required to be delivered pursuant to this Agreement at the Effective Date, at Closing, or in connection with the transactions contemplated by this Agreement.

11.64. “Transition Services Agreement” shall have the meaning set forth in Section 5.3.4.

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

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

“SELLER”

Neoteric Cosmetics, Inc.

By: /s/ Tisha Pedrazzini

Printed Name: Tisha Pedrazzini

Title: President

“SLG”

Scott’s Liquid Gold-Inc.

By: /s/ Tisha Pedrazzini

Printed Name: Tisha Pedrazzini

Title: President

“BUYER”

ALPHA SKIN LLC

By: /s/ Joseph Indig

Printed Name: Joseph Indig

Title: CEO

Signature Page to Asset Purchase Agreement

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Tisha Pedrazzini, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Scott’s Liquid Gold-Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 14, 2023	/s/ Tisha Pedrazzini
	Tisha Pedrazzini
	President

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, David M. Arndt, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Scott’s Liquid Gold-Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 14, 2023	/s/ David M. Arndt
	David M. Arndt
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF ANNUAL REPORT ON FORM 10-Q OF

SCOTT’S LIQUID GOLD-INC.

FOR THE QUARTER ENDED JUNE 30, 2023

Each of the undersigned hereby certifies, for the purposes of Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his or her capacity as an officer of Scott’s Liquid Gold-Inc. (“Scott’s Liquid Gold”), that to his or her knowledge:

This Quarterly Report on Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Scott’s Liquid Gold.

This written statement is being furnished to the Securities and Exchange Commission as an exhibit to the Quarterly Report on Form 10-Q. A signed original of this statement has been provided to Scott’s Liquid Gold and will be retained by Scott’s Liquid Gold and furnished to the Securities and Exchange Commission or its staff upon request.

This Certification is executed as of August 14, 2023.

/s/ Tisha Pedrazzini
Tisha Pedrazzini
President
/s/ David M Arndt
David M. Arndt
Chief Financial Officer

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2023

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

For the transition period from to

Commission File Number: 001-13458

SCOTT’S LIQUID GOLD-INC.

373-4860

CAUTIONARY NOTE ON FORWARD-LOOKING INFORMATION

TABLE OF CONTENTS

ITEM 1. FINANCIAL STATEMENTS.

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

See accompanying notes to these Condensed Consolidated Financial Statements.

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

See accompanying notes to these Condensed Consolidated Financial Statements.

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

See accompanying notes to these Condensed Consolidated Financial Statements.

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

See accompanying notes to these Condensed Consolidated Financial Statements.

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1. Organization and Summary of Significant Accounting Policies

Note 2. Liquidity

Note 3. Divestitures

Alpha® Skin Care

BIZ®

Scott's Liquid Gold Wood® Care and Scott's Liquid Gold® Floor Restore

Prell®

Reconciliation of the Line Items Constituting Pretax Loss from Discontinued Operations to the After-Tax Loss from Discontinued Operations in the Condensed Consolidated Statements of Operations for the three and six months ended June 30:

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

Assets Held for Sale

Note 4. Stock-Based Compensation

Note 5. Earnings per Share

Note 6. Segment Information

Note 7. Intangible Assets

Note 8. Long-Term Debt

UMB Loan Agreement

La Plata Loan Agreement

Note 9. Leases

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

Our Business

Divestitures

Results of Operations

Three months ended June 30, 2023 compared to three months ended June 30, 2022

Segment Results

Household products

Health and beauty care products

Six months ended June 30, 2023 compared to six months ended June 30, 2022

Segment Results

Household products

Health and beauty care products

Liquidity and Capital Resources

Overview

Financing Agreements

Liquidity and Changes in Cash Flows

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Remediation Plan

Changes in Internal Control over Financial Reporting

ITEM 1A. RISK FACTORS

We have identified a material weakness in our internal control over financial reporting.

ITEM 6. EXHIBITS

SIGNATURES