SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d)
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 20, 2018
KUSHCO HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
|(Commission File Number)||(IRS Employer Identification No.)|
|11958 Monarch Street, Garden Grove, CA||92841|
|(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 5.02.||Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.|
On November 8, 2018, KushCo Holdings, Inc. (the “Company”) entered into an Offer Letter (the “Offer Letter”) with Christopher Tedford, pursuant to which Mr. Tedford will be appointed as the Company’s Chief Financial Officer and its principal financial and accounting officer effective as of November 26, 2018 (the “Effective Date”). Following the Effective Date, Jim McCormick, the Company’s Chief Financial Officer and Chief Operating Officer, will no longer serve as Chief Financial Officer and principal financial and accounting officer and will continue in his role as Chief Operating Officer of the Company.
From 2016 through 2018, Mr. Tedford served as Senior Vice President and Chief Accounting Officer of Confie, a leading national personal lines and commercial insurance broker . From 2011 to 2016, Mr. Tedford served as Senior Director and Corporate Controller and, from 2015, as Vice President and Interim Chief Financial Officer of Pacific Sunwear of California, Inc., a Nasdaq-listed specialty retailer rooted in the action sports industry , where he managed the daily functions of the accounting and finance groups. Prior to that, he served in positions of increasing responsibility at KPMG LLP, Deloitte & Touche LLP, Multi-Finance Electronix, Inc. and Clean Energy Fuels Corp. Mr. Tedford, age 46, is a Certified Public Accounting and received his Bachelor of Science from the University of California, Irvine and Master of Accounting from the University of Southern California.
Pursuant to the Offer Letter, Mr. Tedford will receive an initial annual base salary of $250,000. In addition, Mr. Tedford will have the opportunity to earn an annual bonus of up to $100,000, based on achievement of certain performance goals. In addition, subject to approval of the compensation committee of the Company’s board of directors, Mr. Tedford will be granted options to purchase 600,000 shares of the Company’s common stock on the Effective Date, which will vest over three years, with one-third vesting on the one-year anniversary of the Effective Date and the remaining two-thirds vesting ratably in equal monthly installments over the remaining two years. The options will be governed by the terms and conditions of a stock option agreement which Mr. Tedford will be required to sign.
The foregoing description of the Offer Letter is a summary and does not purport to be complete. Such description is qualified in its entirety by reference to the text of the Offer Letter, which is filed as Exhibit 10.1 to this Current Report on Form 8-K, and is incorporated herein by reference.
There are no related party transactions between the Company and Mr. Tedford, and Mr. Tedford is neither related to, nor does he have any relationship with, any existing member of the Board or any executive officer of the Company.
|Item 8.01.||Other Events.|
On November 20, 2018 , the Company issued a press release announcing the appointment of Mr. Tedford. A copy of the press release is attached hereto as Exhibit 99.1.
|Item 9.01.||Financial Statements and Exhibits.|
|10.1||Offer Letter between Christopher Tedford and KushCo Holdings, Inc., dated November 8, 2018.|
|99.1||Press Release of KushCo Holdings, Inc. dated November 20, 2018.|
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.
|KUSHCO HOLDINGS, INC.|
|November 20, 2018||/s/ Nicholas Kovacevich|
Chairman and Chief Executive Officer
INDEX TO EXHIBITS
|Description of Exhibit|
|10.1||Offer Letter between Christopher Tedford and KushCo Holdings, Inc., dated November 8, 2018.|
|99.1||Press Release of KushCo Holdings, Inc. dated November 20, 2018.|
November 8 th , 2018
19381 St. Mary’s Dr.
North Tustin, CA 92705
Dear Mr. Tedford:
Congratulations! We are very pleased to offer you a position with KUSHCO HOLDINGS, INC., a Nevada corporation (the “Company”) as a Chief Financial Officer (CFO). Your employment is subject to the terms and conditions set forth in this letter.
This letter is to confirm our understanding with respect to your future employment by KushCo Holdings or any present or future parent, subsidiary, affiliate or successor thereof (collectively, the “Company”). The terms and conditions agreed to in this letter are hereinafter referred to as the “Offer”. In consideration of the mutual promises and covenants contained in this Offer, and for other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, we have agreed as follows:
Subject to the terms and conditions of this Offer, you will be employed by the Company as a full-time Chief Financial Officer (CFO), reporting to Nick Kovacevich, CEO. You will have the responsibilities, duties and authority commensurate with the position of Chief Financial Officer (CFO), as determined by the Officers and/or Board from time to time. You agree to devote your full business time attention and best efforts to the performance of your duties and to the furtherance of the Company’s interests during your employment.
Subject to the terms hereof, your employment hereunder will commence on November 26 th , 2018 (the “Commencement Date”). Your employment with the Company is deemed to be “At Will” and can be terminated by the Company or you at any time without prior notice or without reason.
The principal location at which you will perform such services will be Garden Grove, CA.
While you are employed hereunder, you will be paid as an exempt status employee with a base salary at the annual rate of $250,000.00 (the “Base Salary”). The Base Salary will be payable bi-weekly installments in accordance with the Company’s payroll practices as in effect. The Company will deduct from each such installment any amounts required to be deducted or withheld under applicable law or under any employee benefit plan in which you participate.
You will be eligible to earn up to a total of $100,000.00 in bonus compensation annually and any other discretionary incentives as approved by the Board and the KushCo Holdings’ Leadership Team. Following six (6) months from the Commencement Date of this agreement, you will be eligible to receive $50,000.00 in guaranteed bonus compensation based on KIPs to be outlined following the Commencement Date. The remaining $50,000.00 will be paid based on the standard fiscal year bonus cycle. Following fiscal year 2019, all bonuses will be paid in accordance with the standard annual schedule.
On November 26 th , 2018 subject to Board and any other necessary approvals, you will be granted 600,000 options to purchase shares of the Company’s common stock at a strike price equivalent to the closing stock price on the date of grant.
The options granted to you shall vest or accrue, as applicable, over a three-year period as follows: (i) 33% shall be deemed vested or accrued, as applicable, on November 26 th , 2019 and none before this date; and (ii) the balance of the Option Shares will be vested in a series of twenty-four (24) successive equal monthly installments. Should your employment terminate before the passage of the next 12 months, the options granted to you shall not be deemed vested, accrued, or exercisable. All terms and conditions of the stock option shall be governed by the terms and conditions of the applicable option agreement, which you will be required to sign. These terms include a “change in control” clause that would accelerate the option vesting period.
You will be entitled to fifteen (15) paid vacation days per year along with paid holidays and personal days in accordance with the Company’s policies as in effect from time to time.
If this offer is accepted and you begin employment with the Company, you will be eligible to participate in any benefit plans and programs in effect from time to time, including group medical and life insurance and disability benefits, and other fringe benefits as are made available to other similarly situated employees of the Company, in accordance with and subject to the eligibility and other provisions of such plans and programs.
Reimbursement of Expenses
The Company shall reimburse you for all reasonable out-of-pocket expenses incurred by you in connection with the performance of your duties in accordance with its regular reimbursement policies as in effect from time to time and upon receipt of itemized vouchers and such other supporting information as dictated by the Board-approved policies of the Company.
You shall be required to execute a Confidentiality and Non-Competition Agreement and remain subject to the Confidentiality and Non-Competition Agreement between you and the Company dated as of on or about the date hereof. The Confidentiality and Non-Competition Agreement will survive termination of your employment with the Company (regardless of the reason, if any, of such termination).
This offer of employment is contingent upon the satisfactory completion of the following:
|(a)||Verification of your right to work in the United States, as demonstrated by your completion of the I-9 form upon hire and your submission of acceptable documentation (as noted on the I-9 form) verifying your identity and work authorization within three days of starting employment.|
|(b)||Your execution of the Company’s form of Employee Proprietary Information and Inventions Agreement.|
|(c)||Satisfactory completion of a background investigation & reference checks.|
This offer will be withdrawn if any of the above conditions are not satisfied:
By accepting this offer, you confirm that you are able to accept this job and carry out the work that it would involve without breaching any legal restrictions on your activities, such as restrictions imposed by a current or former employer. You also confirm that you will inform the Company about any such restrictions and provide the Company with as much information about them as possible, including any agreements between you and your current or former employer describing such restrictions on your activities. You further confirm that you will not remove or take any documents or proprietary data or materials of any kind, electronic or otherwise, with you from your current or former employer to the Company without written authorization from your current or former employer. If you have any questions about the ownership of particular documents or other information, discuss such questions with your former employer before removing or copying the documents or information.
You will be subject to all applicable employment and other policies of the Company, as outlined in the Company’s employee handbook and elsewhere. Your employment will be at-will, meaning that you or the Company may terminate the employment relationship at any time, with or without cause, and with or without notice.
All of us at the Company are excited at the prospect of you joining our team. If you have any questions about the above details, please call me immediately. If you wish to accept this position, please sign below and return this letter agreement to me within three business days. This offer is open for you to accept until November 8 th , 2018 at which time it will be deemed to be withdrawn.
I look forward to hearing from you.
/s/ Nick Kovacevich
Chief Executive Officer
Accepted and Approved
|By:||/s/ Christopher Tedford|
KushCo Holdings Appoints Christopher Tedford as Chief Financial Officer
GARDEN GROVE, Calif., November 20, 2018 – KushCo Holdings, Inc. (OTCQB: KSHB) (“KushCo” or the “Company”), the parent company of innovative industry leaders such as Kush Supply Co., Kush Energy, The Hybrid Creative, and Koleto Packaging Solutions, which provide a range of services and products for a variety of industries including the regulated cannabis and CBD industries, today announced it has appointed Christopher Tedford as the Company’s new Chief Financial Officer (“CFO”), effective November 26, 2018. Jim McCormick, the Company’s current CFO and Chief Operating Officer (“COO”) will transition exclusively into the COO position where he will focus on scaling the Company’s operational capacity to support its growth objectives.
In his role as CFO, Mr. Tedford’s day-to-day responsibilities will include accounting, financial reporting, treasury management, strategic financial planning, risk management, deal analysis and negotiations. He will also lead the team’s efforts to establish Sarbanes-Oxley Act (“SOX”) compliance.
Mr. Tedford brings considerable cross-sector experience in the development of sound financial and operational policies, in addition, Mr. Tedford has a wide breath of merger and acquisition experience which will be a key asset as The Company continues to explore M&A viabilities. From 2016 – 2018, Mr. Tedford served as Senior Vice President and Chief Accounting Officer at Confie, a leading national personal lines and commercial insurance broker. From 2011 – 2016, he worked at Pacific Sunwear of California, a specialty retailer rooted in the action sports industry, first as Senior Director and Corporate Controller before working his way up to Vice President and Chief Financial Officer. He also served as Director and Corporate Controller at Clean Energy Fuels Corp. Earlier in his career, he also held senior level positions within KPMG LLP and Deloitte & Touche LLP. Mr. Tedford is a Certified Public Accountant and has a Bachelor of Science from the University of California, Irvine, CA, a Master of Accounting from the University of Southern California, Los Angeles, CA, and is a member of the American Institute of Certified Public Accountants.
“KushCo has seen tremendous growth as the cannabis industry continues to experience an historic expansion,” Chris Tedford commented. “The Company’s leadership has demonstrated a strong understanding of the industry, a unique business model that has the potential to generate significant growth in both the near and long term, and innovative products backed by IP and patents. I look forward to collaborating with the team to further support the Company’s growth.”
Nick Kovacevich, CEO of KushCo Holdings, commented, “Chris’s dynamic experience in financial and risk management, along with his proven leadership skills, will provide stability to the Company as we scale our operations to meet the demands of the rapidly expanding cannabis market. Moreover, his experience at public companies will prove invaluable to us as we work to establish SOX compliance, and his cross-sector experience, which encompasses both consumer product businesses and the energy sector, is aligned with our business model which touches several industry verticals. Hiring a dedicated CFO will also enable Mr. McCormick to focus exclusively on his COO role to ensure smoother operations of our business as we expand our organic cross-selling, enter new markets and evaluate strategic M&A opportunities.”
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About KushCo Holdings, Inc.
KushCo Holdings, Inc. (OTCQB: KSHB) is the parent company to a diverse group of business units that are transformative leaders across several industries. KushCo Holdings’ subsidiaries and brands provide exceptional customer service, product quality, compliancy knowledge and a local presence in serving its diverse customer base.
KushCo Holdings’ brands include Kush Supply Co., a dynamic sales platform that is the nation’s largest and most respected distributor of packaging, supplies, and accessories to the cannabis and CBD industry, Kush Energy, which provides ultra-pure hydrocarbon gases and solvents, Hybrid Creative, a premier creative design agency for clients across several industries, and Koleto Packaging Solutions, the research and development arm driving intellectual property development and acquisitions.
Founded in 2010, KushCo Holdings has now sold more than 1 billion units and regularly sells to more than 5,000 legally operated medical and adult-use dispensaries, growers, and producers across North America, South America, and Europe. KushCo Holdings subsidiaries maintain facilities in the five largest U.S. cannabis markets as well as having a local sales presence in every major U.S. cannabis market.
KushCo Holdings strives to be the industry leader for responsible and compliant products and services in the legal cannabis and CBD industry. The Company has been featured in media nationwide, including CNBC, Los Angeles Times, TheStreet.com, Entrepreneur, and business magazine Inc. While KushCo Holdings provides products and solutions to customers in the cannabis and CBD industries, it has no direct involvement with the cannabis plant or any products that contain THC or CBD.
For more information, visit www.kushco.com or call (888)-920-5874.
This press release may include predictions, estimates or other information that might be considered forward-looking within the meaning of applicable securities laws. While these forward-looking statements represent the Company’s current judgments, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect the opinions of the Company’s management only as of the date of this release. Please keep in mind that the Company is not obligating itself to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. When used herein, words such as: “potential,” “look forward,” “expect,” “believe,” “dedicated,” “building,” or variations of such words and similar expressions are intended to identify forward-looking statements. Factors that could cause actual results to differ materially from those contemplated in any forward-looking statements made by the Company herein are often discussed in filings the Company makes with the United States Securities and Exchange Commission (SEC), available at: www.sec.gov, and on the Company’s website, at: www.kushco.com.
KushCo Holdings Contacts
Anne Donohoe / Nick Opich
KCSA Strategic Communications
212-896-1265 / 212-896-1206
email@example.com / firstname.lastname@example.org
Phil Carlson / Elizabeth Barker
KCSA Strategic Communications
212-896-1233 / 212-896-1203