The collapse of NewAge has suddenly become significantly more intriguing.
John R. Wadsworth’s first item of business after acquiring NewAge through a Purchase Asset Agreement in August is to file a lawsuit against the company’s former management.
Wadsworth signed a purchase agreement with NewAge in August, but the arrangement wasn’t authorized until October 17th.
The case against the previous executives was brought by NewAge’s Chief Restructuring Officer, Lawrence Perkins. /end update
Contract violation, sabotage for personal advantage, and extortion. A glimpse at the decline of a once-$500 million-a-year MLM company’s revenues.
Defendants included in NewAge’s 7 October complaint are:
Frederick “Fred” Cooper — former NewAge director, co-majority Ariix shareholder prior to Ariix’s merger with NewAge, and Kwikclick board of directors member and CEO.
Prior to NewAge’s merger, Mark Wilson was a co-majority shareholder and the company’s president.
Brent Willis – NewAge CEO
Kwikclick is a Delaware company.
In 2020, NewAge bought Ariix as a point of reference.
NewAge’s complaint describes the Defendants’ failure to preserve Ariix’s assets after the acquisition as a “brazen conspiracy.” Ariix also has undisclosed significant liabilities.
This allegedly violated the conditions of NewAge’s purchase agreement.
In the Complaint, Fred Cooper (right) often comes out as a bit of a dictator.
Cooper has no leadership position inside the NewAge corporation, but heritage Ariix employees continue to regard him as having the capacity to influence business choices within the organization.
Cooper’s frequent attendance in the corporate office and his fraudulently representing himself as the Chairman of the Board during his many speaking engagements with Brand Partners beyond his regular function as a corporate director strengthened this notion. Cooper, according to information and belief, billed NewAge for his appearance expenditures.
Cooper lacked managerial power, but NewAge employees viewed him as a “co-CEO” of the company with Brent Willis.
The Defendant’s inability to protect Ariix’s assets stems from the fact that it gave Ariix inadequate protection.
Wenhan Zhang was given a complete copy of Ariix’s ICONN software for usage at Kwikclick.
ICONN was Ariix’s proprietary software, built by Ariix employees at their own expense.
In or around June 2020, Zhang’s position as Chief Information Officer of Ariix was terminated. Zhang began working as the Chief Information Officer at Kwikclick following his dismissal from Ariix.
Zhang continued to receive compensation from Ariix, however, even after his ostensible separation from the company.
Cooper authorized Ariix to continue paying Zhang’s salary for the benefit of his new firm, Kwikclick, based on facts and belief.
Cooper asked Ariix’s China-based software development team to dedicate a substantial amount of time and effort to the creation of Kwikclick software.
Cooper did this entirely for his new firm, Kwikclick.
Cooper, according to information and belief, authorized Tyler Jones, previously of Ariix and following the merger NewAge’s Vice President, Legal, to prepare and backdate a fake agreement between Ariix and Kwikclick involving the ICONN source code.
The fraudulent arrangement was not revealed to NewAge prior to NewAge’s acquisition of Ariix.
NewAge was reportedly spending $200,000 per month to code for Kwikclick at one time.
Cooper openly harassed and intimidated the NewAge employees who spoke out against his proposal when they questioned if a licensing deal with Kwikclick was necessary.
A NewAge executive considered Kwikclick.
was a fraud meant to collect information on NewAge’s Brand Partners in order to develop a competing MLM.
Late in 2021, NewAge nonetheless engaged into a software license arrangement with Kwikclick without Board permission.
Willis signed the License Agreement on behalf of NewAge, while Cooper signed on behalf of Kwikclick.
Willis and Cooper were aware that Willis lacked the jurisdiction to compel NewAge to engage into the License Agreement, since the NewAge board of directors had expressly reserved the authority to approve the arrangement itself and had not given its permission.
Furthermore, KwikClick’s software reportedly differed from NewAge’s current program by only 5%.
The License Agreement’s terms are not typical. They are extremely beneficial to Kwikclick and harmful to NewAge.
The License Agreement stipulated that for the term of the License Agreement, NewAge would pay Kwikclick a monthly license price of $50,000.
The License Agreement also requires NewAge to pay hefty commissions on product sales made through the Kwikclick platform by NewAge Brand Partners.
Before the transaction, the defendants informed NewAge Ariix that they had $11 million in operating capital.
Ariix truly had a debt liability of $18 million.
The investigation of Cooper, who benefitted off the company’s demise by purchasing NewAge to avoid bankruptcy, is an intriguing detail.
Cooper’s refusal to sign an adequate non-disclosure agreement and his inability to show evidence of finances or agree to conditions acceptable to the Special Committee of the Board of Directors monitoring the sale process led to the breakdown of negotiations.
Instead, Cooper started establishing Kwikclick as the unofficial successor to NewAge.
In 2022, Kwikclick shares began trading publicly. Cooper and Wilson began giving Kwikclick stock to NewAge executives, top Brand Partners, and international sales leaders.
The NewAge board of directors was not informed of these contributions.
Cooper, according to information and belief, arranged for the distribution of Kwikclick shares to NewAge executives and Brand Partners as a means of buying loyalty and soliciting the business of those executives and Brand Partners, as well as an incentive for the executives and Brand Partners to promote the use of Kwikclick within the NewAge organization.
During a special emergency meeting of the Founder’s Club on August 30, 2022, in Orlando, Florida, Defendant Wilson informed the group of senior Brand Partners that his and Cooper’s noncompete agreements would expire in November 2022.
Wilson informed the group that he and Cooper would become “free agents” in November 2022, and that the remaining members of the group were also “free agents.”
These comments were intended to persuade NewAge’s top Brand Partners (members of the Founders Club) to engage with a new enterprise founded by Cooper and Wilson to compete with NewAge in violation of the restrictive covenants applicable to Cooper and Wilson.
Cooper’s demand that he and NewAge stock investors be “made whole” or else grew over the month of August 2022.
Phil Lewis (the former Ariix operations executive who is now working by NewAge) reported to John Wadsworth on or around August 31, 2022, that he had spent 10 hours with Cooper on August 30, 2022.
Lewis wrote to Wadsworth that “the Ariix team is mobilizing” and that the “team” intended to “leave as a group” unless everyone who lost money on NewAge stock was compensated in full.
Lewis allegedly warned Wadsworth that he would lose the whole Ariix team if Wadsworth did not “make Fred [Cooper] an owner.”
Lewis advised Wadsworth to offer Cooper 30% of the NewAge business; otherwise, Wadsworth would lose 50% of the business when Cooper quit the organization.
Tim Sales , who was said to be a “major Brand Partner for NewAge,” supported Cooper’s scheme and personally threatened Wadsworth.
Tim Sales, a prominent Brand Partner for NewAge, warned Wadsworth on or around September 2, 2022, “If you don’t make Fred an owner or give Fred the Ariix business, everyone will quit and you’ll lose half of your investment.”
Sales was one of Ariix’s first Brand Partners. Sales and his Brand Partners are responsible for a substantial amount of NewAge product sales.
Ishim Benallal (a.k.a. Icham Benallal, right), the European General Manager for NewAge, escalated the situation by resorting to extortion.
Benallal informed Wadsworth on September 16, 2022, that all European Brand Partners would depart NewAge if Cooper and Wilson were not declared majority owners and controlling shareholders of the firm that acquired NewAge’s assets through bankruptcy.
Benallal assured Wadsworth that, if he so desired, he could ruin NewAge’s European company in three days.
Benallal pushed NewAge’s European Brand Partners in a presentation to “pull out your phone and join up for Kwikclick; do it now!
Benallal reportedly disclosed to Wadsworth that Cooper had given him 6 million shares in Kwikclick so that he would no longer be required to work if he so desired.
According to NewAge’s Complaint, the aforementioned accusations were “fabricated at the instruction or prompting of Cooper and Wilson and for their own gain.”
This, of however, came at the price of NewAge, which was virtually left without a compass and subsequently filed for bankruptcy.
In their case, NewAge accuses the Defendants of:
interference with contractual relationships (Cooper, Wilson, Willis and Kwikclick)
Breach of duty of loyalty (Cooper, Wilson and Willis across three separate counts)
Contract violation – merger agreement (Cooper and Wilson)
fraud – merger agreement (Cooper and Wilson)
fraud – licensing agreement (Cooper and Kwikclick)
Infraction of the licensing agreement (Kwikclick)
Complicity in a breach of fiduciary duty (Kwikclick)
infraction to the Protecting Trade Secrets Act (Cooper, Wilson, Willis and Kwikclick)
infringement of trade secrets (Cooper, Wilson, Willis and Kwikclick)
breach of contract – non-compete and non-solicitation clauses (Cooper)
breach of contract – non-compete clause (Cooper and Wilson)
interference with contractual relationships (Cooper, Wilson, Willis and Kwikclick)
conspiracy (Cooper, Wilson, Willis and Kwikclick) (Cooper, Wilson, Willis and Kwikclick)
unfair enrichment (Cooper, Wilson, Willis and Kwikclick)
imposition of false confidence – fraud (Wilson, Willis and Kwikclick)
NewAge also seeks a declaratory ruling on the ownership of Kwikclick’s software on the grounds that it owns the source code.
Kwikclick shares have fallen from their all-time high of $7 to their current trading price of $2.
According to NewAge’s Complaint;
Cooper still holds about 53.4% of Kwikclick’s outstanding shares.
Cooper served as the CEO of Kwikclick until about September 2022.
Cooper resigned as CEO of Kwikclick on or about September 2022.
The previous website domain of Kwikclick now refers to “kwik.com,” indicating that the firm has relaunched.
The private domain registration for “kwik.com” was last updated on June 30, 2022. In October 2021, Kwik’s official Facebook page was established.
According to data compiled by SimilarWeb, Kwik’s website received 6,700 visits in July, 30,000 in August, and 18,200 in September.
This traffic is divided between France, Italy, and Israel. This looks to be the work of Icham Benallal:
Assuming Cooper, Wilson, and Willis do not reach a settlement, this case has the potential to be quite entertaining to see.