KWIK 8-K
KwikClick, Inc. (KWIK)
FORM
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Section 5 - Corporate Governance and Management
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officer.
(a) Resignation of Dan Shaw from Board of Directors
On May 31, 2023, Dan Shaw, a member of the Board of Directors of KwikClick, Inc. (the “Company”), notified the Company of his intention to resign from the Company’s Board of Directors (the “Board”) and all committees, effective May 31, 2023. Mr. Shaw has indicated that his departure from the Board was not the result of any disagreement with management or the Board but was in order to more fully pursue other commitments.
(b) Resignation of Matthew Williams as President
On May 31, 2023, Matthew Williams, President of the Company, notified the Board of Directors of his intention to resign from the Company effective May 31, 2023. Mr. Williams has indicated that his departure from the Company was not the result of any disagreement with management or the Board but was in order to more fully pursue other commitments.
(c) Appointment of Fred Cooper as Chief Executive Officer and President and Chairman of the Board of Directors
On May 31, 2023 during a meeting of the Board of Directors, Fred Cooper, a major shareholder of KwikClick, Inc., was nominated, unanimously approved, and appointed to serve as the Chairman of the Board of Directors of the Company. Mr. Cooper was also appointed as Chief Executive Officer and President of the Company, filling the vacancy created by Mr. Williams’ resignation.
Fred W. Cooper, Ph.D., age 60, President and Chief Executive Officer. Dr. Cooper has served as a director and CEO of the Company since June 2020. Since November 16, 2020, Dr. Cooper has also serviced on the Board of Directors of NewAge, Inc. (Nasdaq: NBEV), a Colorado-based social selling and distribution company with a network of independent business owners across 75 countries worldwide. Mr. Cooper became a director in connection with the closing of NewAge’s merger with Ariix, LLC (“Ariix”). Dr. Cooper brings more than 25 years of e-commerce and direct selling experience and was a Founder and the Chief Executive Officer of ARIIX prior to merging ARIIX with NewAge. Under Dr. Cooper’s leadership, ARIIX was one of the fastest-growing direct selling companies over its nine years of business, and in 2020, was recognized as number 35 on the DSN’s list of Top 100 global companies. Prior to founding ARIIX in July 2011, he was the President and Chief Operating Officer of NYSE listed USANA Health Sciences. He started his career in direct sales at USANA in 1998 where he played many critical roles, serving in different executive capacities in Special Projects, Information Technology, and Global Operations. Dr. Cooper also spent over ten years teaching entrepreneurship and statistics courses as a part-time professor at the University of Utah.
Dr. Cooper earned a B.S. in Finance and a B.S. in Psychology from the University of Utah. He also earned a Ph.D. in Business Administration, with an emphasis on statistics and operations processes and management, from the University of Utah. Mr. Cooper is qualified to serve on our board of directors due to his vast business experience and the fact that he is the mastermind behind the Company’s product.
(d) Appointment of Jeffrey Yates to the Board of Directors
On May 31, 2023 during a meeting of the Board of Directors, Jeffrey Yates, the Company’s Chief Financial Officer, was nominated, unanimously approved, and appointed to serve as a Director of the Company.
Jeffrey Yates, age 61, has a strong track record for achievement, leadership experience in financial management, strategic planning, and business development. Mr. Yates has extensive experience in accounting, forecasting, cash flow management, treasury, budgeting, financial and operational analysis, reporting and compliance. Proven leadership capabilities in executive management, operations, information systems and project management. Mr. Yates served as Chief Financial Officer for ARIIX from May 2011 – July 2021 and previously served as Chief Financial Officer for Usana Health Sciences from June 2008 – May 2011, also having been a chief financial officer and executive officer in other organizations. Mr. Yates began his career in finance management in 1990 while serving as a certified public accountant with Price Waterhouse. He is a member of the American Institute of Certified Public Accountants and Utah Association of Certified Public Accountants. Jeffrey attended Brigham Young University where he studied and received his Master of Accountancy and Bachelor of Science with an emphasis in Management Accounting in December of 1989.
(e) Appointments to Board of Director Committees
On May 31, 2023, during a meeting of the Board of Directors, the following Committees were reorganized with new members nominated, unanimously approved and appointed as follows:
Audit Committee – Jeff Roberts, Chair; Jeffrey Yates, Committee Member
Compensation Committee – Brady Cooper, Chair; Robert Green, Committee Member
Governance Committee – Jeffrey Yates, Chair; Fred Cooper, Committee Member
Section 8 - Other Events
Item 8.01 Other Events.
(a)Lawsuit
On June 1, 2023, a lawsuit previously filed by NewAge, Inc. against KwikClick on October 7, 2022, was dismissed (“Dismissed Lawsuit”). The Dismissed Lawsuit claimed that NewAge, which was in bankruptcy at the time, bought the source code upon which the KwikClick platform is allegedly built when NewAge purchased Ariix, LLC in November 2020. The summons and complaint in the lawsuit were never served on KwikClick.
On May 31, 2023, NAI Liquidation Trust, which is the successor to the defunct NewAge, Inc.’s assets, by and through its Liquidation Trustee, Steven Balasiano, filed Adversary case 23-50393 against KwikClick and several of its affiliates, including several of our large stockholders, directors, and executive officers, in the U.S. Bankruptcy Court (Delaware) (the “Trustee Lawsuit”). The Trustee Lawsuit also names persons unrelated to KwikClick for actions with which KwikClick is not alleged to have any involvement.
Similar to the Dismissed Lawsuit, the specific causes of action against KwikClick in the Trustee Lawsuit include aiding and abetting breach of fiduciary duty, fraudulent inducement – license agreement, declaratory judgment, civil conspiracy, tortious interference with contractual relations, tortious interference with prospective economic advantage, conversion, violation of the Defend Trade Secrets Act, misappropriation of trade secrets (Utah Uniform Trade Secrets Act), unjust enrichment, turn-over of property of the estate under 11 U.S.C. § 542(A), avoidance and recovery of actual fraudulent transfer under 11 U.S.C. §§ 548 And 550.
KwikClick vehemently disputes NewAge’s allegations, disputes that NewAge owns the source code upon which KwikClick is built and seeks to vigorously defend itself and may file third party claims and counterclaims in connection with the litigation. As of the date of this report, NAI Liquidation Trust has yet to serve KwikClick with the Complaint.
If KwikClick is unable to defend itself in the adversary proceeding, it is unlikely that the Company will be able to continue as a going concern. Other than the reference above, to the knowledge of management, no director or executive officer is party to any other action in which any party has an interest adverse to us.
(b)Secured Note Approval
On May 31, 2023, the Company authorized the issuance of promissory notes (“Notes”) and a security agreement (“Security Agreement”). The Notes shall be in the principal amount of up to Five Hundred Thousand Dollars ($500,000). The Company has agreed to pay interest on the unpaid principal balance of the Notes at the annual rate of ten percent (10%) simple interest (the “Note Rate”). The Maturity Date for purposes of the Notes shall be the sooner of August 31, 2023 or the receipt of equity financing more than $2,000,000 or other cash proceeds received by KwikClick.
The Notes shall be secured by important personal property of the Company, including all intellectual property, patents, and applied patents, IT coding and programming for the Kwik platform and integrated modules, Kwik URL, trademark and brand, customer list.
Copies of the Promissory Note and Security Agreement are attached to this report.
Section 9 - Financial Statements and Exhibits
Item 9.01 Exhibits
Exhibit 10.8 | |
Exhibit 10.9 |
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.
| KWIKCLICK, INC. |
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| /s/ Jeffrey Yates |
| Jeffrey Yates |
| Chief Financial Officer |
Dated: June 7, 2023
PROMISSORY NOTE
$[ ][ ] __, 2023
Bountiful, Utah
FOR VALUE RECEIVED, the undersigned, KwikClick, Inc., a Delaware corporation (“Maker”), promises to pay to the order of [ ](“Holder”), at such place within the United States as Holder may designate to Maker in writing from time to time, the principal sum of [ ] dollars [$ ], together with interest thereon from the date of disbursement until paid and other amounts as provided herein.
1.Interest and Payments.
1.1.Interest Rate. Maker promises to pay interest through and including the Maturity Date, as defined below, on the unpaid principal balance of this Note at the annual rate of ten percent (10%) simple interest (the “Note Rate”). The Maturity Date for purposes of this Note shall be the sooner of August 31, 2023 or the receipt of equity financing in excess of $2,000,000 by Maker or other cash proceeds received by KwikClick. The time period beginning on the date first set forth above and ending on the Maturity Date is referred to herein as the term hereof.
1.2.Interest Payments. Interest accruing hereon shall be paid on or before the Maturity Date. Any unpaid interest shall be added to the principal balance on the date such interest is due and shall be subject to the interest rate set out in Paragraph 1.1.
1.3.Principal Repayment. The principal amount of this Note shall be due and payable in full in a lump sum payment on or before the Maturity Date.
1.4.The estimated use of proceeds for this Note shall be used at the Maker’s discretion for general corporate uses.
1.5.Place and Time of Payment. All payments specified herein shall be deemed made when actually received by Holder. All payments shall be made to Holder at [ ], and shall be made without offset and without prior notice or demand.
1.6.Form and Application of Payments. Payments shall be in lawful money of the United States of America and when received by Holder shall be applied first to cost or fees incurred in the collection of this note, second to origination fee, third to accrued interest, fourth upon the portion of the principal balance then due, if any, and fifth as a principal payment.
1.7.Prepayment. This Note may be prepaid in whole or in part at any time or from time to time without premium or penalty.
1.8.Security. This Note shall be secured by the following personal property of the Company: All IP: Patents, and applied patents, IT coding and programming for the Kwik platform and integrated modules, Kwik URL, trademark and brand, customer list. The patents are further described on Exhibit A to the Security Agreement of even date.
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2.Default. Time is of the essence of this Note. A default shall occur if Maker fails to make any payment under this Note on the date due.
3.Attorney Fees and Collection Costs. The prevailing party in any dispute in connection with this promissory note shall be entitled to attorney’s fees and court costs.
4.Governing Law and Venue. This Note has been executed under and shall be construed and enforced in accordance with the laws of the State of Utah. Litigation in connection with this note shall be conducted exclusively in the state of Utah Third District Court in and for Salt Lake County.
5.Amendment. This Note may not be amended, modified, or changed, nor shall any provision hereof be deemed waived, except only by an instrument in writing signed by the party against whom enforcement of any such waiver, amendment, change or modification is sought.
6.Binding Agreement. This Note shall be binding upon the successors and assigns of Maker.
7.Warranties. Maker warrants and represents to Holder that the proceeds of the loan evidenced hereby will be used for commercial purposes and will not be used for personal, consumer, residential or household purposes.
8.Construction. This Note and the other documents related hereto have been reviewed and negotiated by Maker and any other parties thereto with the benefit of or the opportunity to seek the assistance of legal counsel and shall not be construed against any party by presumption. The titles and captions contained in this Note are inserted for convenience and shall not be deemed to define, limit, extend or modify any provision of this Note.
9. Scrivener. This document was prepared by corporate counsel for the Maker. The Maker’s corporate counsel may currently represent the Holder in matters unrelated to this Note. The Holder acknowledges that the Maker’s corporate counsel does not represent the Holder in connection with this Note. The Parties by entering this Note acknowledge that they have been advised to seek the advice of independent counsel of their own choosing and have been further advised to not rely on the Maker’s corporate counsel for business or legal decisions in relation to entering this Note.
THIS NOTE has been executed as of ___________, 2023.
MAKER
KWIKCLICK, INC.
________________________
By: Jeff Yates, CFO
HOLDER
__________________________
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT is entered into as of [ ] ___, 2023, by KWIKCLICK, INC., a Delaware corporation (hereinafter called “Debtor”) and the holders of the Company’s Promissory Notes as defined below (each, a “Secured Party” and together, the “Secured Parties”).
WITNESSETH:
1.SECURITY INTEREST. A security interest is hereby granted to and provided for Secured Parties in and attached to the personal property (“Collateral”) described at Paragraph 2 below to secure payment and performance of Debtor’s obligations including the indebtedness described at Paragraph 3 below.
2.COLLATERAL. The Collateral shall include the following personal property of the Company: All IP: Patents, and applied patents, IT coding and programming for the Kwik platform and integrated modules, Kwik URL, trademark and brand, customer list. The patents are further described on Exhibit A to this Security Agreement.
3.INDEBTEDNESS. The rights and security interest granted Secured Parties herein are security for all debts, obligations and liabilities of every kind and nature, absolute or contingent, that now are or hereafter become existing of Debtor or any of them in Secured Parties which stem from the obligation of Debtor created in the Promissory Notes between Debtor and Secured Parties, issued in May 2023. The amount owed Secured Parties pursuant to the Promissory Notes shall not exceed a total of $2,000,000.
4.ADDITIONAL TERMS AND PROVISIONS.
A.Debtor’s Warranties and Obligations.
(1)Filing. Except for the security interest granted hereby, Debtor is the sole owner of the Collateral. No financing statements or other Security Agreement covering any of the Debtor’s other property of the type, kind or class of Collateral is or will be given to any other person or on file in any public office except in favor of Secured Parties without Secured Parties’ written consent. Debtor agrees to sign and deliver one or more financing statements or other instruments as Secured Parties may require complying with applicable law to preserve, protect and enforce the security interest of Secured Parties.
(2)Care of Property. Debtor shall keep the Collateral free from all liens, encumbrances and security interests; pay when due all taxes and other charges upon it; not sell, misuse, conceal or in any way dispose of it except as specifically authorized in writing by Secured Parties. Loss or damage to the Collateral shall not release Debtor from any obligations hereunder.
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(3)Right to Protect. To preserve the Collateral or the priority or perfection of the Secured Parties’ interest, Secured Parties may act in Debtor’s name or otherwise or advance funds for the same and such advances shall be one of the obligations secured hereby and shall be immediately payable. Such funds shall include necessary costs and attorneys’ fees involved in initiating or defending any action necessary to protect the security interest of the Secured Parties
(4)Proceeds. If Collateral is sold, exchanged or otherwise disposed of with or without Secured Parties’ consent, Secured Parties shall have a first prior lien on all proceeds. Nothing contained herein shall constitute Secured Parties’ consent to any sale, exchange or other disposition unless expressly granted in writing.
(5)Assignment. The Secured Parties shall be entitled to assign its rights under this Security Agreement. If Secured Parties assigns this Agreement, the assignee shall be entitled to performance of all of Debtor’s obligations and agreements, and Debtor will assert no claims or defenses he may have against Secured Parties against the assignee.
(6)Representative. The Secured Parties hereby: (i) designate Fred Cooper as the representative of the Secured Parties (the “Representative”) to act on behalf of the Secured Parties as their representative in accordance with the terms of the Security Agreement with respect to the filing of any initial financing statements and amendments thereto, and any termination statements thereof; (ii) agree and consent that the Representative be named as the sole secured party on any and all financing statements and security agreements filed pursuant to this Security Agreement for the ratable benefit of all the Secured Parties; and (iii) agree that the Representative is authorized to file any and all terminations of such financing statements at such time or times as it determines is appropriate pursuant to the Security Agreement. As soon as practicable following the execution and delivery of this Amendment and upon the authorization of the Representative on behalf of the Secured Parties, the Company shall file with the State of Delaware and any other offices that the Representative may reasonably request in writing an initial financing statement that contains any information required by Article 9 of the UCC of the state or such jurisdiction for the sufficiency or filing office acceptance of any financing statement or amendment.
(7)Priority of Liens. As between all Secured Parties, the security interests granted to the Secured Parties hereunder are in all respects pari passu security interests in the Collateral and cash proceeds received by KwikClick shall be allocated pro rata based on the outstanding balances of the Promissory Notes. For instance, if one Secured Party loaned half of the proceeds under the Promissory notes and another five persons are owed the balance, then the Secured Party who loaned half of the money shall be entitled to 50% of the recovery from the cash proceeds received by KwikClick and the other five persons shall divide up the remaining 50% based on their respective loan balances under their respective Promissory Note balances.
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B.Default. Debtor shall be in default hereunder if any of the following events occur:
(1)Debtor fails to pay any amount due under the Promissory Note on or by a Maturity Date defined in the Promissory Note.
(2)Debtor becomes insolvent or unable to pay debts as they mature, or makes an assignment for the benefit of creditors or any proceeding is instituted by or against Debtor alleging that Debtor is insolvent or unable to pay debts as they mature.
(3)Entry of judgment against Debtor, other than a judgment of the Secured Parties or its assigns.
(4)Transfer of a substantial part of the property of Debtor, contrary to the terms of the Promissory Note, or to a party other than the Secured Parties.
(5)An attachment, garnishment, execution or other process is issued or a lien filed against any property of the Debtor or the assessment of a tax deficiency against Debtor.
(6)Transfer of any interest in any of the Collateral, contrary to the terms of the Promissory Note, without the written consent of Secured Parties.
C.General.
(1)In the event of default, Debtor agrees to pay all costs of collection and all disbursements allowed by law, and such additional sums as attorneys’ fees as the judge of the court may adjudge reasonable.
(2)Debtor shall remain fully liable for any deficiency if Secured Parties undertakes to realize upon the Collateral and nothing shall limit Secured Parties’ right to collect the obligations directly from the Debtor without first realizing upon the Collateral.
(3)In the event of default, Secured Parties may realize upon the Collateral by sale in a private transaction and apply the proceeds from the sale toward Debtor’s obligations.
(4)Time is of the essence of this Agreement; failure to insist upon timely performance on one or more occasions shall not be a waiver of the right to insist upon timely performance on any other occasions.
(5)The full value and the whole of the Collateral is subject to Secured Parties’ security interest and to the terms of this Agreement even though the specific obligation against the Collateral is in an amount less than the said full value or based on less than all of said Collateral.
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(6)Secured Parties has no duty to protect, insure, collect or realize upon the Collateral or to preserve rights in it against other persons, and nothing herein or otherwise shall limit Secured Parties’ right to collect the debts, liabilities and obligations directly from Debtor without first realizing upon the Collateral.
(7)Debtor authorizes Secured Parties, without notice or demand and without affecting Debtor’s debts, liabilities, or obligations to Secured Parties, from time to time to change, waive, and release any Collateral.
(8)Debtor will give Secured Parties prior written notice by registered mail of any change of residence or place of business and new address thereof. All words used herein shall be construed to be of such gender and number as the circumstances require and all references to Debtor shall include all other persons primarily or secondarily liable hereunder.
(9)This Agreement shall be governed by and construed in accordance with the internal laws of the State of Utah, which internal laws exclude any provision or interpretation of such laws that would call for, or permit, the application of the laws of any other state or jurisdiction, and any dispute arising therefrom and the remedies available shall be determined solely in accordance with such internal laws. Venue for any dispute arising from this Agreement or the parties’ relative rights and obligations hereunder shall be in the State Courts of the State of Utah, and each party hereto consents to the personal jurisdiction of said Court.
(10)Any provision hereof found to be invalid shall not invalidate the remainder.
(11)This Agreement binds the Debtor, its representatives, successors and assigns and inures to the benefit of the Secured Parties, its successors and assigns.
(12)This document was prepared by corporate counsel for the Debtor. The Debtor’s corporate counsel may currently represent the Secured Parties, of any of them, in matters unrelated to this Agreement. The Secured Parties acknowledge that the Debtor’s corporate counsel does not represent the Secured Parties in connection with this Agreement. The Parties by entering this Agreement acknowledge that they have been advised to seek the advice of independent counsel of their own choosing and have been further advised to not rely on the Debtor’s corporate counsel for business or legal decisions in relation to entering into this Agreement.
(13)This Agreement constitutes the entire agreement as to the subject matter hereof between parties and may not be altered or amended except by written agreement of the parties.
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(14)This Agreement has been executed in a number of identical counterparts, each of which shall be deemed an original for all purposes and all of which constitute, collectively, one agreement; but, in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart.
[Signature page follows]
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IN WITNESS WHEREOF, we have executed this Security Agreement the day and year first above written.
DEBTOR
By:______________________________
Jeff Yates
Its:CFO
SECURED PARTY
[ ]
By:
Name:
Title:
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