UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 8-K

   

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): March 9, 2018

   

KUSH BOTTLES, INC.

(Exact name of registrant as specified in its charter)

 

Nevada 000-55418 46-5268202
(State or other jurisdiction
of incorporation) 
(Commission File Number)  (IRS Employer Identification No.) 

 

1800 Newport Circle, Santa Ana, CA 92705
(Address of principal executive offices) (Zip Code)

 

Registrant's telephone number, including area code:   (714) 243-4311

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company x

 

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. x

 

 

 

 

 

Item 5.05 Amendments to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics.

 

On March 9, 2018, the Board of Directors (the “Board”) of Kush Bottles, Inc. (the “Company”) adopted a Code of Business Conduct and Ethics (the “Code”) that applies to all directors, officers and employees of the Company. The code addresses various topics, including compliance with applicable laws, rules and regulations, conflicts of interest, public disclosure of information, insider trading, corporate opportunities, competition and fair dealing, record-keeping, confidentiality and protection and proper use of company assets.

 

The foregoing description of the Code does not purport to be complete and is qualified in its entirety by reference to the full text of the Code, a copy of which is filed herewith as Exhibit 14.1 and incorporated herein by reference.

 

The Code will also be posted on the Company's website at www.kushbottles.com . The Company also anticipates filing any future amendment or waiver of the Code on the Company’s website within four business days of the date thereof. The contents of the Company’s website are not incorporated by reference in this report or made a part hereof for any purpose.

 

Item 8.01. Other Events.

 

Also on March 9, 2018, the Board formed an audit committee (the “Audit Committee”), a compensation committee (the “Compensation Committee”) and a nominating and corporate governance committee (the “Nominating and Corporate Governance Committee” and, together with the Audit Committee and Compensation Committee, collectively, the “Committees”).

 

The Audit Committee consists of Eric Baum, Barbara Goodstein and Donald Hunter, with Mr. Hunter acting as its Chair. The Compensation Committee consists of Messrs. Baum, Goodstein and Hunter, with Mr. Baum acting as its Chair. The Nominating and Corporate Governance Committee consists of Messrs. Goodstein and Hunter, with Ms. Goodstein acting as its Chair.

 

In connection with the formation of the Committees, the Board adopted charters (the “Committee Charters”) to govern their membership and function. The Committee Charters are filed herewith as exhibits 99.1, 99.2 and 99.3, respectively. The Committee Charters will also be posted on the Company's website at www.kushbottles.com .

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit
Number
  Title
14.1   Kush Bottles, Inc. Code of Business Conduct and Ethics.
99.1   Audit Committee Charter.
99.2   Compensation Committee Charter.
99.3   Nominating and Corporate Governance Committee Charter.

 

 

 

 

SIGNATURE

 

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

 

    KUSH BOTTLES, INC.
    (Registrant)
     
March 13, 2018   /s/   Nicholas Kovacevich
(Date)   Nicholas Kovacevich
Chairman and Chief Executive Officer

 

 

 

INDEX TO EXHIBITS

 

Exhibit

Number

  Description of Exhibit
14.1   Kush Bottles, Inc. Code of Business Conduct and Ethics.
99.1   Audit Committee Charter.
99.2   Compensation Committee Charter.
99.3   Nominating and Corporate Governance Committee Charter.

 

 

 

Exhibit 14.1

 

Kush Bottles, Inc. Code of Business Conduct and Ethics

 

Adopted by the Board of Directors on March 9, 2018

 

1.         Introduction

 

1.1        The Board of Directors of Kush Bottles, Inc. (together with its subsidiaries, the " Company ") has adopted this Code of Ethics and Business Conduct (the " Code ") in order to:

 

(a)       promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest;

 

(b)       promote full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission (the " SEC ") and in other public communications made by the Company;

 

(c)       promote compliance with applicable governmental laws, rules and regulations;

 

(d)       promote the protection of Company assets, including corporate opportunities and confidential information;

 

(e)       promote fair dealing practices;

 

(f)       deter wrongdoing; and

 

(g)       ensure accountability for adherence to the Code.

 

1.2       All directors, officers and employees are required to be familiar with the Code, comply with its provisions and report any suspected violations as described below in Section 15, Reporting and Enforcement.

 

2.        Honest and Ethical Conduct .

 

2.1       The Company's policy is to promote high standards of integrity by conducting its affairs honestly and ethically.

 

2.2       Each director, officer and employee must act with integrity and observe the highest ethical standards of business conduct in his or her dealings with the Company's customers, suppliers, partners, service providers, competitors, employees and anyone else with whom he or she has contact in the course of performing his or her job.

 

 

 

 

3.        Foreign Corrupt Practices Act (FCPA) . The Company conducts its business with the highest legal and ethical standards and will not tolerate corruption. Each employee, contractor, consultant and agent must perform his/her job in full compliance with the Foreign Corrupt Practices Act (FCPA) and must never conduct business through unlawful payments, bribes, kickbacks, gifts, or other questionable inducements. The FCPA specifically prohibits the Company’s employees, contractors, consultants and agents from offering, promising, making, authorizing, or providing, directly or indirectly, any payments, gifts, or anything of value to a non-U.S. government official, political party or candidate, or an official of an international organization, with the intent to:

 

· improperly influence or reward the official’s actions;

 

· improperly influence decision-making in order to obtain or retain business; or

 

· secure an improper advantage.

 

Each Kush Bottles Inc. employee, contractor, consultant and agent has the responsibility to ensure that his/her dealings with non-U.S. government officials, including state-employed healthcare professionals, comply with the FCPA. Likewise, each employee, contractor, consultant and agent is prohibited from making payments to any third party whom the employee, contractor, consultant or agent knows will, or believes is likely to, make an unlawful payment related to, or on behalf of, the Company’s business.

 

4.        Conflicts of Interest .

 

4.1       A conflict of interest occurs when an individual's private interest (or the interest of a member of his or her family) interferes, or even appears to interfere, with the interests of the Company as a whole. A conflict of interest can arise when an employee, officer or director (or a member of his or her family) takes actions or has interests that may make it difficult to perform his or her work for the Company objectively and effectively. Conflicts of interest also arise when an employee, officer or director (or a member of his or her family) receives improper personal benefits as a result of his or her position in the Company.

 

4.2       Loans by the Company to, or guarantees by the Company of obligations of, employees or their family members are of special concern and could constitute improper personal benefits to the recipients of such loans or guarantees, depending on the facts and circumstances. Loans by the Company to, or guarantees by the Company of obligations of, any director or executive officer are expressly prohibited.

 

4.3       Whether or not a conflict of interest exists or will exist can be unclear. Conflicts of interest should be avoided unless specifically authorized as described herein. Persons other than directors and executive officers who have questions about a potential conflict of interest or who become aware of an actual or potential conflict should discuss the matter with, and seek a determination and prior authorization or approval from, their supervisor or the Chief Financial Officer. A supervisor may not authorize or approve conflict of interest matters or make determinations as to whether a problematic conflict of interest exists without first providing the Chief Financial Officer with a written description of the activity and seeking the Chief Financial Officer's written approval. If the supervisor is himself or herself involved in the potential or actual conflict, the matter should instead be discussed directly with the Chief Financial Officer.

 

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Directors and executive officers must seek determinations and prior authorizations or approvals of potential conflicts of interest exclusively from the independent members of the Board of Directors or, if constituted, the Audit Committee of the Board of Directors.

 

5.        Meals, Gifts and Entertainment

 

5.1        Employees must not solicit, accept or give gifts that may influence business decisions and must be cautious when giving gifts or entertainment to, or accepting gifts or entertainment from, anyone who does or seeks to do business with our Company.

 

5.2        Employees may never accept or offer gifts that are: cash or monetary equivalents, such as gift cards or vouchers; objects that have significant value, or may appear significant to others; or indicative of preferential treatment. Employees may never accept or offer entertainment that is: excessive in value; not business-related; or in an inappropriate setting.

 

5.3        Employees may accept business-related meals, entertainment, token gifts or favors that do not have significant value and do not create a real or apparent sense of obligation. This rule also applies to any gifts and entertainment given to your family members or a charity you support.

 

5.4       No gifts or business entertainment, of any kind, may be given to any government employee or consultant without the prior approval. In this connection, practices that are acceptable in commercial business environments may be against the law or may violate the policies governing applicable federal, state or local government employees or consultants (including the employees of universities and medical centers).

 

6.        Compliance .

 

6.1       Employees, officers and directors should comply, both in letter and spirit, with all applicable laws, rules and regulations in the cities, states and countries in which the Company operates.

 

6.2       Although not all employees, officers and directors are expected to know the details of all applicable laws, rules and regulations, it is important to know enough to determine when to seek advice from appropriate personnel. Questions about compliance should be addressed to the Company’s Chief Financial Officer.

 

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6.3       No director, officer or employee may purchase or sell any Company securities while in possession of material non-public information regarding the Company, nor may any director, officer or employee purchase or sell another company's securities while in possession of material non-public information regarding that company. It is against Company policies and illegal for any director, officer or employee to use material non-public information regarding the Company or any other company to:

 

(a)       obtain profit for himself or herself; or

 

(b)       directly or indirectly "tip" others who might make an investment decision on the basis of that information.

 

In order to assist with compliance with laws against insider trading, the Company has adopted an Insider Trading Policy governing securities trades by insiders (collectively, the “ Insider Trading Policy ”). A copy of that policy has been distributed to every employee. This Code does not supersede or replace the Insider Trading Policy, and is meant only to supplement and reinforce the restrictions and guidance of the Insider Trading Policy with respect to securities transactions. If you have any questions, please consult the Company’s Chief Financial Officer.

 

7.        Disclosure .

 

7.1       The Company's periodic reports and other documents filed with the SEC, including all financial statements and other financial information, must comply with applicable federal securities laws and SEC rules.

 

7.2       Each director, officer and employee who contributes in any way to the preparation or verification of the Company's financial statements and other financial information must ensure that the Company's books, records and accounts are accurately maintained. Each director, officer and employee must cooperate fully with the Company's accounting and internal audit departments, as well as the Company's independent public accountants and counsel.

 

7.3       Each director, officer and employee who is involved in the Company's disclosure process must:

 

(a)       be familiar with and comply with the Company's disclosure controls and procedures and its internal control over financial reporting; and

 

(b)       take all necessary steps to ensure that all filings with the SEC and all other public communications about the financial and business condition of the Company provide full, fair, accurate, timely and understandable disclosure.

 

7.4       To the extent any director, officer or employee reasonably believes that questionable accounting or auditing conduct or practices have occurred or are occurring, report those concerns to the Chief Financial Officer or the Board of Directors or, alternatively, through the Company’s anonymous complaint process described in Section 15.1(e) below.

 

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8.        Record Retention

 

8.1       All records that relate to your work are the property of the Company. No employee has a personal or property right to Company records, including records that an employee authored or helped develop or compile. 

 

8.2       Employees, officers, directors, and consultants are required to retain, protect, store, and dispose of Company records according to the Company’s Records Retention Policy. Do not dispose of records that are subject to any ongoing or threatened subpoena, litigation, government or other investigation, or tax audit.

 

9.        Protection and Proper Use of Company Assets .

 

9.1       All directors, officers and employees should protect the Company's assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company's profitability and are prohibited.

 

9.2       All Company assets should be used only for legitimate business purposes, though incidental personal use may be permitted. Any suspected incident of fraud or theft should be reported for investigation immediately.

 

9.3       The obligation to protect Company assets includes the Company's proprietary information. Proprietary information includes intellectual property such as trade secrets, patents, trademarks, and copyrights, as well as business and marketing plans, engineering and manufacturing ideas, designs, databases, records and any non-public financial data or reports. Unauthorized use or distribution of this information is prohibited and could also be illegal and result in civil or criminal penalties.

 

10.        Corporate Opportunities . All directors, officers and employees owe a duty to the Company to advance its interests when the opportunity arises. Directors, officers and employees are prohibited from taking for themselves personally (or for the benefit of friends or family members) opportunities that are discovered through the use of Company assets, property, information or position. Directors, officers and employees may not use Company assets, property, information or position for personal gain (including gain of friends or family members). In addition, no director, officer or employee may compete with the Company.

 

11.        Confidentiality . Directors, officers and employees should maintain the confidentiality of information entrusted to them by the Company or by its customers, suppliers or partners, except when disclosure is expressly authorized or is required or permitted by law. Confidential information includes all non-public information (regardless of its source) that might be of use to the Company's competitors or harmful to the Company or its customers, suppliers or partners if disclosed.

 

12.        Fair Dealing . Each director, officer and employee must deal fairly with the Company's customers, suppliers, partners, service providers, competitors, employees and anyone else with whom he or she has contact in the course of performing his or her job. No director, officer or employee may take unfair advantage of anyone through manipulation, concealment, abuse or privileged information, misrepresentation of facts or any other unfair dealing practice.

 

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13.        Discrimination, Harassment and Retaliation. The diversity of the Company’s employees is a tremendous asset. The Company is firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination, harassment or retaliation of any kind. Examples of such behavior include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances. Please consult the Company’s employee handbook for more information on the Company’s policy against such conduct.

 

14.        Environment, Health and Safety .

 

14.1        The Company is committed to conducting its business in compliance with all applicable environmental and workplace health and safety laws and regulations. The Company strives to provide a safe and healthy work environment for our employees and to avoid adverse impact and injury to the environment and communities in which we conduct our business. Achieving this goal is the responsibility of all employees, officers, and directors.

 

15.         Reporting and Enforcement .

 

15.1       Reporting and Investigation of Violations.

 

(a)       Actions prohibited by this Code involving directors or executive officers must be reported to the independent members of the Board of Directors or, if constituted, the Audit Committee of the Board of Directors.

 

(b)       Actions prohibited by this Code involving anyone other than a director or executive officer must be reported to the reporting person's supervisor or the Chief Financial Officer.

 

(c)       After receiving a report of an alleged prohibited action, the independent members of the Board of Directors (or, if constituted, the Audit Committee of the Board of Directors), the relevant supervisor or the Chief Financial Officer must promptly take all appropriate actions necessary to investigate.

 

(d)       All directors, officers and employees are expected to cooperate in any internal investigation of misconduct.

 

(e)       For those persons who desire to make anonymous reporting complaints, the Company has retained an independent company, Lighthouse Services, to establish a secure, confidential and anonymous reporting mechanism. Lighthouse Services’ role is to facilitate secure reporting and record-keeping through its website and telephone hotline. Lighthouse Services will not investigate or evaluate reports of Code violations.

 

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Any officer, director, employee or consultant of the Company or any subsidiary may submit a Reporting Complaint on a confidential or anonymous basis to Lighthouse Services. If the reporting person desires anonymity, they should not access the Lighthouse Services website from the Company’s computer network, but rather should use a personal computer or outside internet portal, or telephone the Lighthouse Services telephone hotline from outside the Company:

 

Lighthouse Services website:   www.lighthouse-services.com/kushbottles  
       
Toll-free telephone hotline:   (833) 480-0010  

 

Lighthouse Services will provide copies or transcripts of reports of Code violations to the Chief Financial Officer. Reports of Code violations which are submitted anonymously will remain anonymous. Anonymous reports of Code violations will be treated in the same manner as those bearing a signature. If requested by the reporting person, Lighthouse Services will provide a process for handling follow-up questions directly with the reporting person to ensure confidentiality.

 

15.2       Enforcement.

 

(a)       The Company must ensure prompt and consistent action against violations of this Code.

 

(b)       If, after investigating a report of an alleged prohibited action by a director or executive officer, the independent members of the Board of Directors (or, if constituted, the Audit Committee of the Board of Directors) determine that a violation of this Code has occurred, the independent members of the Board of Directors (or, if constituted, the Audit Committee of the Board of Directors) will report such determination to the Board of Directors.

 

(c)       If, after investigating a report of an alleged prohibited action by any other person, the relevant supervisor determines that a violation of this Code has occurred, the supervisor will report such determination to the Chief Financial Officer.

 

(d)       Upon receipt of a determination that there has been a violation of this Code, the Board of Directors or the Chief Financial Officer will take such preventative or disciplinary action as it deems appropriate, including, but not limited to, reassignment, demotion, dismissal and, in the event of criminal conduct or other serious violations of the law, notification of appropriate governmental authorities.

 

15.3       Waivers.

 

(a)       Each of the Board of Directors (in the case of a violation by a director or executive officer) and the Chief Financial Officer (in the case of a violation by any other person) may, in its discretion, waive any violation of this Code.

 

(b)       Any waiver for a director or an executive officer shall be disclosed as required by SEC and any applicable securities exchange rules.

 

15.4       Prohibition on Retaliation.

 

The Company does not tolerate acts of retaliation against any director, officer or employee who makes a good faith report of known or suspected acts of misconduct or other violations of this Code.

  

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Exhibit 99.1

 

Kush Bottles, Inc.

A Nevada corporation

(the “ Company ”)

 

Audit Committee Charter

 

The Audit Committee (the “Committee”) is created by the Board of Directors of the Company (the “Board”) to:

 

· assist the Board in its oversight of:

 

· the integrity of the Company’s financial statements and the Company’s financial reporting processes and systems of internal control;

 

· the qualifications, independence and performance of the Company’s independent auditors and the performance of the Company’s internal auditors and internal audit function;

 

· the Company’s compliance with legal and regulatory requirements;

 

· enterprise risk management and data security; and

 

· the implementation and effectiveness of the Company’s ethics and compliance program; and

 

· prepare the Audit Committee Report that Securities and Exchange Commission (“SEC”) rules require to be included in the Company’s annual proxy statement.

 

Membership

 

The Committee shall consist of at least three directors, each of whom shall meet the independence requirements for audit committee membership established by the Board and applicable laws, regulations, and listing requirements. Each member of the Committee must be able to read and understand fundamental financial statements, including the Company's balance sheet, income statement and cash flow statement. In addition, as determined by the Board in its business judgment, all members of the Committee shall be financially literate, at least one member shall be an “audit committee financial expert” in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), and at least one member (who may also serve as the audit committee financial expert) shall have accounting or related financial management expertise in accordance with listing standards. Based on the recommendation of the Nominating and Corporate Governance Committee, the Board shall elect the members and the Chair of the Committee at its organizational meeting following the Annual Meeting of Shareholders. The members of the Committee may be removed by the Board.

 

 

 

 

No Committee member shall serve simultaneously on the audit committees of more than two other public companies unless the Board determines that such simultaneous service would not impair the ability of the Committee member to serve on the Committee effectively.

 

Procedures

 

The Committee shall meet at least four times annually or more frequently as it deems appropriate to carry out its duties. A majority of the members of the Committee shall constitute a quorum. The Chair of the Committee, in consultation with the other Committee members, shall set meeting agendas.

 

The Committee shall periodically meet separately in executive session with the independent auditors, the internal audit staff and management to discuss any matters that the Committee or persons with whom they meet believe should be discussed. The Committee shall also meet regularly without such individuals present.

 

In fulfilling its responsibilities, the Committee shall have full access to all books, records, facilities and personnel of the Company. The Committee shall have the sole authority to retain and terminate any independent legal, accounting or other advisors to the Committee as the Committee may deem appropriate, including sole authority to approve fees and retention terms of any legal, accounting or other advisors that it retains. The Committee shall oversee the work of any outside counsel and other advisors.

 

The Committee shall receive appropriate funding from the Company, as determined by the Committee in its capacity as a committee of the Board, for the payment of compensation to the Company's independent auditors, any other accounting firm engaged to perform services for the Company, any outside counsel and any other advisors to the Committee.

 

The Committee may delegate its authority to subcommittees or the Chair of the Committee when it deems appropriate.

 

Responsibilities

 

In addition to any other responsibilities that may be assigned from time to time by the Board, the Committee shall:

 

Independent Auditors

 

1. Retain sole authority for appointing, compensating, retaining (subject to shareholder ratification) and overseeing the work of the independent auditors of the Company. The independent auditors shall report directly to the Committee.

  

2. Retain the sole authority to pre-approve all engagement fees and terms and all permissible non-audit services to be provided by the independent auditors.

 

 

 

 

3. Review and discuss with the independent auditors their audit procedures, including the audit plan and its scope with respect to the Company’s consolidated financial statements.

 

4. Evaluate the independent auditors’ qualifications, performance and independence, and shall present its conclusions and recommendations with respect to the independent auditors to the Board on at least an annual basis. As part of such evaluation, the Committee shall:

 

· obtain and review a report or reports from the Company’s independent auditors describing:

 

o the independent auditors’ internal quality-control procedures;

 

o any material issues raised by (i) the most recent internal quality-control review or peer review of the auditing firm, or (ii) any inquiry or investigation by governmental or professional authorities, within the preceding five years, regarding one or more independent audits carried out by the independent auditors, and any steps taken to deal with any such issues; and

 

o all relationships between the independent auditors and the Company;

 

· review and evaluate the lead partner and senior members of the independent auditors;

 

· assure the regular rotation of the audit partners as required by law as well as consider whether the independent auditors should be rotated, so as to assure continuing auditor independence; and

  

· recommend ratification of the independent auditors’ appointment by the shareholders.

 

5. Establish clear hiring policies for employees or former employees of the independent auditor.

 

Internal Auditors

 

6. Evaluate the performance of the Company’s internal audit function, whether staffed by employees or an outside firm, and review and discuss with the internal auditors the responsibilities, budget and staffing of the internal audit organization.

 

7. Meet separately with the internal auditors periodically to discuss audit plans, findings and action plans.

 

 

 

 

Financial Reporting and Disclosure

 

8. Review and discuss with the independent auditors and management the results of the annual audit of the Company’s consolidated financial statements prior to filing with the SEC on Form 10-K or distribution thereof, including (i) the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (ii) any appropriate matters regarding accounting principles, practices and judgments and the independent auditors’ opinion as to the quality thereof and any items required to be communicated to the Committee by the independent auditors in accordance with standards established and amended from time to time by the Public Company Accounting Oversight Board (“PCAOB”) and the American Institute of Certified Public Accountants (“AICPA”).

 

9. Review and discuss with management and the independent auditors the Company’s interim financial results to be included in the Company’s quarterly reports prior to filing with the SEC on Form 10-Q, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and any items required to be communicated to the Committee by the independent auditors in accordance with existing PCAOB and AICPA guidance.

 

10. Review and discuss with management, the independent auditors, and the internal auditors the quality and adequacy of the Company’s financial reporting processes, internal controls and disclosure controls and procedures, including whether there are any significant deficiencies in the design or operation of such processes, controls and procedures, material weaknesses in such processes, controls and procedures, any corrective actions taken with regard to such deficiencies and weaknesses and any fraud involving management or other employees with a significant role in such processes, controls and procedures.

 

11. Review and discuss with the independent auditors any audit problems or difficulties and management’s response thereto, including those matters required to be discussed with the Committee by the independent auditors pursuant to existing PCAOB and AICPA guidance and resolve any disagreements between management and the independent auditors regarding financial reporting.

 

12. Review with management and the independent auditors:

 

· any analyses or other written communications prepared by management, the internal auditors and/or the independent auditors setting forth significant financial reporting issues and judgments made in connection with the preparation of the consolidated financial statements, including analyses of the effects of alternative United States GAAP methods on the financial statements;

· the critical accounting policies and practices of the Company;

· off-balance sheet transactions and structures;

 

 

 

 

· any major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles;

· regulatory and accounting initiatives or actions applicable to the Company (including any SEC investigations or proceedings), and

· other material written communications between the independent registered public accounting firm and management, such as any management letter or schedule of unadjusted differences.

 

13. Recommend to the Board whether the Company’s consolidated financial statements should be accepted for inclusion in the Company’s annual report on Form 10-K.

 

14. Review and discuss generally with management the types of information to be disclosed and the types of presentations to be made in the Company’s earnings press release, paying particular attention to any use of “pro forma” or “adjusted” non-GAAP information , as well as financial information and earnings guidance provided to analysts and rating agencies. It is not expected that the Committee will pre-approve each such release or guidance.

 

15. Keep the Company's independent auditors informed of the Committee’s understanding of the Company’s relationships and transactions with related parties that are significant to the company; and to review and discuss with the Company s independent auditors the auditors evaluation of the Company's identification of, accounting for, and disclosure of its relationships and transactions with related parties.

 

Risk Management and Compliance Matters

 

16. Review the Company’s policies and practices with respect to risk assessment and risk management, including discussing with management the Company’s major financial and fraud risk exposures and the steps that management has taken to monitor and control such exposures.

 

17. Periodically review risk assessments from management with respect to cyber security, including assessments of the overall threat landscape and related strategies and investments.

 

18. Periodically review global tax matters and risks with management and appropriate internal and external tax specialists.

 

19. Approve the Company’s Code of Conduct and review the implementation and effectiveness of the Company’s compliance program, including violations of the Code of Conduct and responses thereto and the adequacy of resources for compliance.

 

20. Meet periodically with management and Outside Counsel to discuss and review legal, compliance or regulatory matters that may have a material impact on the Company’s business, financial statements or compliance policy and any material reports or inquiries from regulators or government agencies.

 

 

 

 

21. Establish procedures for:

 

· the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and

· the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

 

22. Review, approve and oversee any transaction between the Company and any related person (as defined in Item 404 of Regulation S-K) on an ongoing basis, in accordance with Company policies and procedures.

 

Reporting to the Board; Evaluation of Performance; Other Activities

 

23. Report to the Board on a regular basis, and this report shall include a review of any issues that arise with respect to the quality or integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the qualifications, independence and performance of the Company’s independent auditors and the performance of the internal audit and compliance functions.

 

24. At least annually, (i) evaluate its own performance and report to the Board on such evaluation and (ii) review and assess the adequacy of this Charter and recommend any proposed changes to the Board for approval.

 

25. Prepare a report to stockholders to be included in the Company’s annual proxy statement as required by the SEC and file with the relevant stock exchange any reports that may be required with respect to the Committee.

 

26. The Committee shall perform any other activities consistent with the Company’s Articles of Incorporation, as amended, By-Laws and governing law as the Committee or the Board deems necessary or appropriate.

 

 

 

Exhibit 99.2

 

Kush Bottles, Inc.

A Nevada corporation

(the “ Company ”)

 

Compensation Committee Charter

 

The Compensation Committee (the “Committee”) was created by the Board of Directors of the Company (the “Board”) to:

 

· oversee the Company’s compensation and benefits policies generally;

  

· evaluate the performance of designated senior executives, including the Company’s Chief Executive Officer (the “CEO”);

 

· in consultation with the other independent directors of the Company, oversee and set compensation for the Company’s CEO;

 

· oversee and set compensation for the Company’s designated senior executives;

 

· review and recommend to the Board compensation (including equity-based compensation) for the Company’s non-employee directors; and

 

· prepare the compensation committee report to be included in the Company’s annual proxy statement.

 

Membership

 

The Committee shall consist of at least two members, comprised solely of independent directors meeting the independence requirements of the relevant stock exchange and the Securities and Exchange Commission (the “SEC”) as promulgated from time to time for membership on a company’s compensation committee. Furthermore, at least two members of the Committee shall qualify as “non-employee” directors under Rule 16b-3 promulgated under the Securities and Exchange Act of 1934. The Nominating and Corporate Governance Committee shall recommend nominees for appointment to the Committee annually and as vacancies or newly created positions occur. Committee members shall be appointed by the Board and may be removed by the Board at any time. The Nominating and Corporate Governance Committee shall recommend to the Board, and the Board shall designate, the Chair of the Committee.

 

 

 

 

Procedures

 

The Committee shall meet as often as it determines is appropriate to carry out its responsibilities under this charter, but not less frequently than three times a year. The Chair of the Committee, in consultation with the other Committee members, shall determine the frequency and length of the committee meetings and shall set meeting agendas consistent with this charter. The Committee shall maintain minutes of its meetings and make available copies of such minutes to the Board. The Secretary of the Company shall maintain copies of all minutes as permanent records of the Company. No senior executive should attend that portion of any meeting where such executive’s performance or compensation is discussed, unless specifically invited by the Committee.

 

Authority

 

General

 

The Committee has the sole authority to retain and terminate any advisor, including any legal counsel, accountant or compensation consultant, that the Committee may consider necessary, without conferring with or obtaining the approval of management or the full Board. The Committee has the sole authority to approve all of such advisors’ fees and other retention terms, and shall have available appropriate funding from the Company. The Committee shall take into account the independence of advisors in a manner consistent with any applicable stock exchange listing requirements, as well as any other criteria it deems appropriate. The Committee is directly responsible for the appointment, compensation and oversight of any such advisor’s work. However, the Committee shall not be required to implement or act consistently with the advice or recommendations of its compensation consultant, legal counsel or other advisor to the Committee, and the authority granted in this Charter shall not affect the ability or obligation of the Committee to exercise its own judgment in fulfillment of its duties under this Charter. The Committee shall evaluate whether any compensation consultant retained or to be retained by it has any conflict of interest in accordance with Item 407(e)(3)(iv) of Regulation S-K.

 

Delegation

 

The Committee may delegate its authority to subcommittees or the Chair of the Committee when it deems appropriate and in the best interests of the Company.

 

The Committee may delegate to the Chair of the Committee or, in his or her absence, to one or more of its other members, the authority to make grants and awards of stock rights or options to any non-Section 16 officer of the Company under such of the Company’s incentive- compensation or other equity-based plans as the Committee deems appropriate and in accordance with the terms of such plans.

 

 

 

 

The Committee may delegate its authority hereunder relating to compensation practices for employees other than executive officers and directors, to the extent it deems appropriate and consistent with law and customary practice, and may otherwise fully delegate authority relating to matters it deems to be ministerial.

 

Responsibilities

 

In addition to any other responsibilities that may be assigned from time to time by the Board, the Committee is responsible for the following matters:

 

Compensation Policies

 

· The Committee shall review and approve the Company’s compensation and benefits policies generally (subject, if applicable, to shareholder ratification), including reviewing and approving any incentive-compensation plans and equity-based plans of the Company. In reviewing such compensation and benefits policies, the Committee may consider the recruitment, development, promotion, retention and compensation of senior executives and other employees of the Company and any other factors that it deems appropriate, including compensation of senior executives at peer companies. The Committee shall report the results of such review and any action it takes with respect to the Company’s compensation and benefits policies to the Board. The Committee shall also have the authority to administer the Company’s incentive-compensation plans and equity-based plans, including designation of the employees to whom the awards are to be granted, the amount of the award or equity to be granted and the terms and conditions to each award or grant, subject to the provisions of each plan.

 

Executive Compensation

 

· The Committee shall review and approve for each of the designated senior executives of the Company, and in coordination with the other independent directors of the Company, shall review and approve for the CEO, his or her (i) annual base salary level, (ii) annual incentive compensation, (iii) long-term incentive compensation, (iv) employment, severance and change-in-control agreements, if any, and (v) any other compensation, ongoing perquisites or special benefit items. In so reviewing and approving executive compensation, the Committee shall, among other things:

 

o identify, review and approve corporate goals and objectives relevant to executive compensation, including those relevant to the compensation of the CEO;

 

o in coordination with the other independent directors of the Company, evaluate the CEO’s performance in light of such goals and objectives and set the CEO’s compensation based on such evaluation and such other factors as the Committee deems appropriate and in the best interests of the Company (including the cost to the Company of such compensation), provided that the CEO cannot be present during any voting or deliberations by the Committees regarding his or her compensation;

 

o evaluate each designated senior executive’s performance in light of such goals and objectives and set each designated senior executive’s compensation based on such evaluation and such other factors as the Committee deems appropriate and in the best interests of the Company (including the cost to the Company of such compensation);

 

 

 

 

o in coordination with the independent directors of the Company, determine any long-term incentive component of the CEO’s compensation taking into account awards given to the CEO in past years, the Company’s performance, shareholder returns, the value of similar incentive awards at comparable companies and such other factors as the Committee deems appropriate and in the best interests of the Company (including the cost to the Company of such compensation);

 

o determine any long-term incentive component of each designated senior executive’s compensation based on awards given to such executive in past years, the Company’s performance, shareholder return and the value of similar incentive awards relative to such targets at comparable companies and such other factors as the Committee deems appropriate and in the best interests of the Company (including the cost to the Company of such compensation); and

 

o review external surveys and compensation studies to assess the competitiveness of compensation for designated senior executives, including the identification of peer companies that should be used for purposes of determining competitive compensation packages for designated senior executives.

 

Director Compensation

 

The Committee shall review the compensation arrangements (including equity-based compensation) for the Company’s directors. Changes in Board compensation, if any, should come at the recommendation of the Committee, but with full discussion and approval by the Board.

 

Disclosure

 

The Committee shall prepare the Compensation Committee Report required by SEC rules to be included in the Company’s annual proxy statement. The Committee shall review and discuss the Company’s Compensation Disclosure and Analysis as required by SEC rules (“CD&A”) with management and provide a recommendation to the Board regarding the inclusion of the CD&A within the Company’s proxy statement.

 

Risk Assessment

 

The Committee shall review and assess risks arising from the Company’s compensation policies and practices for its employees and whether any such risks are reasonably likely to have a material adverse effect on the Company.

 

 

 

 

Reporting to the Board

 

· The Committee shall report to the Board periodically and at least annually. These reports shall include a review of any recommendations or issues that arise with respect to Company compensation and benefits policies, executive compensation and any other matters that the Committee deems appropriate or is requested to be included by the Board. In addition, the Committee shall, in consultation with the other independent directors of the Company, evaluate and then present its evaluation of the performance of the senior management of the Company to the full Board.

 

· At least annually, the Committee shall evaluate its own performance, which shall be reviewed by the Nominating and Corporate Governance Committee and reported to the Board.

 

· The Committee shall annually review and assess the adequacy of this charter and recommend any proposed changes to the Board for approval.

 

 

 

Exhibit 99.3

 

Kush Bottles, Inc.

A Nevada corporation

(the “ Company ”)

 

Nominating and Corporate Governance Committee Charter

 

The Nominating and Corporate Governance Committee (the “Committee”) was created by the Board of Directors of the Company (the “Board”) to:

 

· identify individuals qualified to become Board members consistent with the criteria approved by the Board, and recommend to the Board director nominees for election at the next annual or special meeting of shareholders at which directors are to be elected or to fill any vacancies or newly created directorships that may occur between such meetings;

 

· recommend directors for appointment to Board committees;

 

· make recommendations to the Board as to determinations of director independence;

 

· oversee the evaluation of the performance of the Board and its committees;

 

· consider matters of corporate governance and to review, at least annually, the Corporate Governance Guidelines of the Company and oversee compliance with such Guidelines; and

 

· review and consider the Company’s policies and practices on issues relating to corporate social responsibility, charitable contributions, political spending practices and other significant public policy issues.

 

Membership

 

The Committee shall consist of at least two members, comprised solely of independent directors meeting the independence requirements of the relevant stock exchange and the Securities and Exchange Commission (the “SEC”) as promulgated from time to time for membership on a company’s nominating and governance committee. In consultation with the Chair of the Board, the Board shall recommend nominees for appointment to the Committee annually and as vacancies or newly created positions occur. Committee members shall be appointed by the independent members of the Board and may be removed by the Board at any time. The Committee shall recommend to the Board, and the Board shall designate, the Chair of the Committee.

 

 

 

 

Procedures

 

The Committee shall meet as often as it determines is appropriate to carry out its responsibilities under this charter, but not less frequently than two times a year. The Chair of the Committee, in consultation with the other Committee members, shall determine the frequency and length of the committee meetings and shall set meeting agendas consistent with this charter. The Committee shall maintain minutes of its meetings and make available copies of such minutes to the Board. The Secretary of the Company shall maintain copies of all minutes as permanent records of the Company.

 

Authority

 

General

 

The Committee has the sole authority to retain and terminate legal, financial or other advisors that the Committee may consider necessary, without conferring with or obtaining the approval of management or the full Board, including without limitation any search firm assisting the Committee in identifying director candidates. The Committee has the sole authority to approve all of such advisors’ fees and other retention terms and shall have available appropriate funding from the Company. The Committee is directly responsible for the appointment, compensation and oversight of any such advisor’s work.

 

Delegation

 

The Committee may delegate its authority to subcommittees or the Chair of the Committee when it deems appropriate and in the best interests of the Company.

 

Responsibilities

 

In addition to any other responsibilities that may be assigned from time to time by the Board, the Committee is responsible for the following matters:

 

Board/Committee Nominees

 

· The Committee shall oversee searches for and identify qualified individuals for membership on the Company’s Board.

 

· The Committee shall recommend to the Board criteria for Board and Board committee membership, including as to director independence, and shall recommend or screen individuals for membership on the Company’s Board and its committees. The Committee shall recommend to the Board regarding the selection and approval of the nominees for director to be submitted to a stockholder vote at the annual meeting of stockholders, subject to Board approval. The Committee shall consider any director candidates recommended by the Company’s stockholders pursuant to the procedures set forth in the Company’s Corporate Governance Guidelines and as described in the Company’s proxy statement. In making its recommendations for Board and committee membership, the Committee shall:

 

 

 

 

o review candidates’ qualifications for membership on the Board or a committee of the Board (including making a specific recommendation as to the independence of each candidate) based on the criteria approved by the Board and taking into account any independence, financial literacy and financial expertise standards that may be required under applicable law, rules and regulations, including relevant stock exchange listing and SEC rules; and

 

o periodically review the composition of the Board and its committees, including the Chairs of each committee in light of all of the factors the Committee deems relevant.

 

Evaluating the Board and Its Committees

 

· At least annually, the Committee shall lead the Board in a self-evaluation to determine whether it and its committees are functioning effectively. The Committee shall oversee the evaluation process and report on such process and the results of the evaluations, including any recommendations for proposed changes, to the Board.

 

· At least annually, the Committee shall review the evaluations prepared by each Board committee of such committee’s performance and consider any recommendations for proposed changes to the Board.

 

· The Committee shall periodically review the size and responsibilities of the Board and its committees and recommend any proposed changes to the Board.

 

Corporate Governance Matters

 

· The Committee shall develop and recommend to the Board the Corporate Governance Guidelines for the Company. At least annually, the Committee shall review and reassess the adequacy of such Corporate Governance Guidelines and recommend any proposed changes to the Board.

 

· The Committee shall be responsible for any tasks assigned to it in the Company’s Corporate Governance Guidelines.

 

· The Committee shall oversee compliance with the Company’s Corporate Governance Guidelines and report on such compliance to the Board. The Committee shall also review and consider any requests for waivers of the Company’s Corporate Governance Guidelines, and shall make a recommendation to the Board with respect to such request for a waiver.

 

· At least annually, the Committee shall review the responsibilities of the Board and developments in the corporate governance of public companies.

 

· The Committee shall review potential conflicts of interest involving directors that the Audit Committee believes may affect a director’s independence.

 

 

 

 

· The Committee shall review stockholder proposals received by the Company, including those relating to public policy issues, and make recommendations to the Board regarding the Company’s response to such proposals.

 

· The Committee shall assure that the Company has in place appropriate planning to address succession, both in the event of an emergency and in the ordinary course of business, of the Company’s Chief Executive Officer and, if appropriate, other members of senior management.

 

Public Policy Matters

 

The Committee shall review and consider the Company’s policies and practices on significant issues of corporate social responsibility, including the review of any corporate social responsibility report issued by the Company.

 

· At least annually, the Committee shall review material developments regarding the laws, rules and regulations that apply to the Company’s business.

 

· The Committee shall review and consider the Company’s policies and practices (including expenditures) regarding charitable contributions.

 

· The Committee shall review and consider the Company’s policies and practices (including its expenditures) regarding political activities, including political contributions and direct and indirect lobbying.

 

· The Committee shall review and consider the Company’s policies and practices regarding other significant public policy issues as the Board may determine from time to time.

 

Director Orientation and Continuing Education

 

The Committee shall oversee the Company’s orientation and continuing education program for directors.

 

Reporting to the Board

 

· The Committee shall report to the Board periodically and at least annually. These reports shall include a review of any recommendations or issues that arise with respect to Board or committee nominees or membership, Board performance, corporate governance or any other matters that the Committee deems appropriate or is requested to be included by the Board.

 

· At least annually, the Committee shall evaluate its own performance and report to the Board on such evaluation.

 

· The Committee shall annually review and assess the adequacy of this charter and recommend any proposed changes to the Board for approval.