UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
(Amendment
No. )
| Filed
by the Registrant |
|
☒ |
| Filed
by party other than the registrant |
|
☐ |
Check
the appropriate box:
| ☐ |
Preliminary
Proxy Statement |
| ☐ |
Confidential,
for use of the Commission only (as permitted by Rule 14a-6(e)(2)) |
| ☒ |
Definitive
Proxy Statement |
| ☐ |
Definitive
additional materials |
| ☐ |
Soliciting
material under Rule 14a-12 |
KIDPIK
CORP.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check all boxes that apply):
| ☐ |
Fee
paid previously with preliminary materials |
| ☐ |
Fee
computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
Kidpik
Corp.
200
Park Avenue South, 3rd Floor
New
York, New York 10003
(212)
399-2323
May
1, 2023
Dear
Stockholder:
You
are cordially invited to attend the 2023 Annual Meeting of Stockholders of Kidpik Corp., a Delaware corporation. On the following pages
you will find the formal Notice of Annual Meeting and Proxy Statement, including a description in detail of the actions expected to be
taken at the Annual Meeting.
We
have determined that the Annual Meeting will be held in a virtual meeting format only and will be conducted via live audio webcast. You
will be able to attend the meeting online, submit questions and vote your shares electronically by visiting www.cleartrustonline.com/kidpik
(please note this link is case sensitive), with your 12-Digit Control Number included on your notice or proxy card. We
recommend that you log in at least 15 minutes before the Annual Meeting to ensure you are logged in when the meeting starts.
We
are pleased to be using the Securities and Exchange Commission rules that allow companies to furnish proxy materials to their stockholders
primarily over the Internet. We believe that this process expedites stockholders’ receipt of the proxy materials, lowers the costs
of the annual meeting and helps to conserve natural resources.
Stockholders
attending the virtual meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting.
On or about May 1, 2023, we began mailing our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”)
containing instructions on how to access our 2023 proxy statement and 2022 annual report, and how to vote online. The Notice also includes
instructions on how to request a paper copy of the proxy materials, including the notice of annual meeting, 2023 proxy statement, 2022
annual report and proxy card.
To
be admitted to the virtual annual meeting, stockholders must enter the 12-Digit Control Number included on your notice or proxy card,
or, in the case of beneficial stockholders, requested in advance by pre-registration, at the website provided above, at the time of the
virtual annual meeting. If you are unable to attend the virtual annual meeting, it is very important that your shares be represented
and voted at the meeting.
Whether
or not you plan to attend the Annual Meeting, your vote is important to us. You may vote your shares by proxy on the Internet, by telephone
or by completing, signing and promptly returning a proxy card, or you may vote via the internet at the Annual Meeting. We encourage you
to vote by proxy on the Internet, by telephone or by proxy card even if you plan to attend the Annual Meeting. By doing so, you will
ensure that your shares are represented and voted at the Annual Meeting.
I
hope that you will attend the meeting and thank you for your continued support of Kidpik Corp.
| |
Sincerely, |
| |
|
| |
/s/
Ezra Dabah |
| |
Ezra
Dabah |
| |
Chairman
of the Board |
Kidpik
Corp.
200
Park Avenue South, 3rd Floor
New
York, New York 10003
(212)
399-2323
NOTICE
OF 2023 ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON JUNE 19, 2023
NOTICE
IS HEREBY GIVEN that the Annual Meeting of Stockholders (the “Annual Meeting”) of Kidpik Corp. (“Kidpik”
or the “Company”), will be held on Monday, June 19, 2023, at 3:00 p.m., Eastern Standard Time, in a virtual format
only at www.cleartrustonline.com/kidpik (please note this link is case sensitive). You will need to have your 12-Digit
Control Number included on your notice or the instructions that accompanied your proxy materials in order to join the Annual Meeting.
The annual meeting is being held for the following purposes:
| |
1. |
To
elect two Class II Directors to the Board of Directors; |
| |
|
|
| |
2. |
To
ratify the appointment of CohnReznick LLP as the Company’s independent registered public accounting firm for the Company’s
fiscal year 2023; |
| |
|
|
| |
3. |
To
approve an amendment to our Second Amended and Restated Certificate of Incorporation, to effect a reverse stock split of our issued
and outstanding shares of our common stock, par value $0.001 per share, by a ratio of between one-for-five to one-for-twenty, inclusive,
with the exact ratio to be set at a whole number to be determined by our Board of Directors or a duly authorized committee thereof
in its discretion, at any time after approval of the amendment and prior to April 24, 2024; and |
| |
|
|
| |
4. |
To
transact such other business as may properly come before the Annual Meeting or at any adjournment
or postponement thereof. |
As
of the date of this proxy statement, the Company has received no notice of any matters, other than those set forth above, that may properly
be presented at the Annual Meeting. If any other matters are properly presented for consideration at the Annual Meeting, the persons
named as proxies on the proxy card, or their duly constituted substitutes acting at the Annual Meeting, or any adjournment or postponement
of the Annual Meeting, will be deemed authorized to vote the shares represented by proxy or otherwise act on such matters in accordance
with their judgment.
The
close of business on April 24, 2023, has been fixed as the record date for determining those stockholders entitled to vote at the Annual
Meeting. Accordingly, only stockholders of record as of the close of business on that date are entitled to vote at the Annual Meeting
or any adjournments or postponements of the Annual Meeting.
Important
Notice Regarding the Availability of Proxy Materials for the Virtual Annual Meeting of Stockholders to Be Held on June 19, 2023. The
proxy statement and 2022 Annual Report are available on the Internet at www.cleartrustonline.com/kidpik (please note this link
is case sensitive).
| |
By
Order of the Board of Directors, |
| |
|
| |
/s/
Ezra Dabah |
| |
Ezra
Dabah |
| |
Chairman
of the Board |
| |
|
| New
York, New York |
|
| May
1, 2023 |
|
TABLE
OF CONTENTS
| Appendix
A – |
Form
of Certificate of Amendment to Second Amended and Restated Certificate of Incorporation of Kidpik Corp. |
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING
Why
am I receiving these proxy materials?
We
sent a notice of Internet Availability of Proxy Materials (the “Notice”) on or about May 1, 2023, to our stockholders
of record entitled to vote at the Annual Meeting. All stockholders have the ability to access the proxy materials online and to download
printable versions of the proxy materials or to request to receive a printed set of the proxy materials. Instructions on how to access
the proxy materials over the Internet or to request a printed copy can be found on the Notice. We have made these proxy materials available
to you in connection with the solicitation by the Board of Directors (the “Board” or “Board of Directors”)
of Kidpik Corp., a Delaware corporation (“we,” “our,” “us,” “Kidpik”
and the “Company”) of proxies to be voted at our Annual Meeting of Stockholders to be held on June 19, 2023, at 3:00
p.m. Eastern Standard Time (the “Annual Meeting”), and at any postponements or adjournments of the Annual Meeting.
This year’s Annual meeting will be a completely “virtual” meeting of stockholders. You are invited to attend
the virtual Annual Meeting online, vote your shares electronically, and submit your questions during the Annual Meeting, by visiting
at www.cleartrustonline.com/kidpik.
What
is included in the proxy materials?
The
proxy materials include:
| |
● |
Our
proxy statement for the Annual Meeting; and |
| |
|
|
| |
● |
Our
2022 Annual Report on Form 10-K, for the year ended December 31, 2022, which includes our audited financial statements for the fiscal
year ended December 31, 2022 (the “2022 Annual Report”). |
If
you request printed versions of these proxy materials by mail, these materials will also include the proxy card for the Annual Meeting.
How
can I get electronic access to the proxy materials?
Your
Notice of Internet Availability of Proxy Materials or proxy card will contain instructions on how to view our proxy materials for the
Annual Meeting on the Internet.
How
do I attend the Annual Meeting?
This
year our annual meeting will be a completely virtual meeting. There will be no physical meeting location. The meeting will only be conducted
via live audio webcast.
To
participate in the virtual meeting, visit www.cleartrustonline.com/kidpik (please note this link is case sensitive) and
enter the control number on your notice or proxy card, or on the instructions that accompanied your proxy materials. If you hold shares
in a brokerage account, you must request a special control number from ClearTrust in advance by following the instructions found on the
website at www.cleartrustonline.com/kidpik.
We
recommend you check in to the Annual Meeting 15 minutes before the meeting is scheduled to start so that any technical difficulties may
be addressed before the meeting begins.
You
may vote during the meeting by following the instructions available on the meeting website during the meeting. To the best of our knowledge,
the virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops,
laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure they
have a strong Internet connection wherever they intend to participate in the meeting. Participants should also allow plenty of time to
log in and ensure that they can hear streaming audio prior to the start of the meeting.
Questions
will be relayed to the meeting organizers and forwarded to the Chairman of the meeting for review. Questions regarding matters to be
acted upon at the meeting will be answered after each matter has been presented, as appropriate. Questions from stockholders not relating
to proposals will be grouped by topic with a representative question read aloud and answered as time permits and to the extent such questions
do not relate to material non-public information, off-topic items or other matters which the Chairman in his discretion, believes should
not be addressed at the annual meeting.
How
do I ask questions during the Annual Meeting?
We
plan to hold a question-and-answer session with management immediately following the conclusion of the business to be conducted at the
Annual Meeting.
You
may submit a question at any time during the meeting by using the Q&A feature in the meeting portal. The Chair of the meeting has
broad authority to conduct the Annual Meeting in an orderly manner, including establishing rules of conduct. A copy of the rules of conduct
will be available online at the Annual Meeting.
What
do I do if I have technical difficulties or trouble accessing the virtual meeting website?
Technicians
will be available to assist you if you experience technical difficulties accessing the virtual meeting website. If you encounter any
difficulties accessing the virtual meeting during the check-in or meeting time, please call 813-308-9980 | Access Code 675813 for assistance.
The Help Line will open at 2:00 P.M. ET on June 19, 2023, and will remain open for the duration of the meeting.
What
is the purpose of the Annual Meeting?
At
the Annual Meeting, stockholders will be asked to consider and vote upon the following matters:
| |
● |
the
election of two Class II Directors to hold office until the 2026 Annual Meeting of Stockholders; |
| |
|
|
| |
● |
the
ratification of the appointment of CohnReznick LLP as the Company’s independent registered public accounting firm for the Company’s
fiscal year 2023; and |
| |
|
|
| |
● |
the
approval of an amendment to our Second Amended and Restated Certificate of Incorporation, to effect a reverse stock split of our
issued and outstanding shares of our common stock, par value $0.001 per share, by a ratio of between one-for-five to one-for-twenty,
inclusive, with the exact ratio to be set at a whole number to be determined by our Board of Directors or a duly authorized committee
thereof in its discretion, at any time after approval of the amendment and prior to April 24, 2024. |
Stockholders
will also be asked to consider and vote at the Annual Meeting on any other matter that may properly come before the Annual Meeting or
any adjournment or postponement of the Annual Meeting. At this time, the Company’s Board of Directors is unaware of any matters,
other than those set forth above, that may properly come before the Annual Meeting.
Who
is entitled to vote at the Annual Meeting?
The
Board of Directors has fixed the close of business on April 24, 2023 as the record date (the “Record Date”) for the
determination of stockholders entitled to notice of, and to vote at, the Annual Meeting. Only stockholders of record at the close of
business on that date will be entitled to vote at the Annual Meeting or any adjournments or postponements thereof. As of the Record Date,
Kidpik had issued and outstanding 7,688,194 shares of common stock.
A
complete list of stockholders entitled to vote at the Annual Meeting will be available to view at our principal executive offices, for
any purpose germane to the Annual Meeting, during ordinary business hours, for a period of ten days before and prior to the Annual Meeting.
How
many votes do I have?
Each
share of common stock outstanding on the Record Date will be entitled to one vote on each matter submitted to a vote of the stockholders,
including the election of Directors. Cumulative voting by stockholders is not permitted.
What
are the Board of Directors’ voting recommendations?
The
Board of Directors recommends that you vote:
| |
1. |
“FOR”
the appointment of the two Class II nominees to the Board of Directors; |
| |
2. |
“FOR”
the ratification of the appointment of CohnReznick LLP as the Company’s independent registered public accounting firm for the
Company’s fiscal year 2023; and |
| |
3. |
“FOR”
the approval of an amendment to our Second Amended and Restated Certificate of Incorporation, to effect a reverse stock split of
our issued and outstanding shares of our common stock, par value $0.001 per share, by a ratio of between one-for-five to one-for-twenty,
inclusive, with the exact ratio to be set at a whole number to be determined by our Board of Directors or a duly authorized committee
thereof in its discretion, at any time after approval of the amendment and prior to April 24, 2024. |
How
can I vote my shares?
If
you are a stockholder of record, you may vote by authorizing a proxy to vote on your behalf at the Annual Meeting. Specifically, you
may authorize a proxy:
| ● |
By
Internet—If you have internet access, you may submit your proxy by going to www.cleartrustonline.com/kidpik
(please note this link is case sensitive) and by following the instructions on how to complete an electronic proxy card. You will
need the 12-Digit Control Number included on your notice or proxy card, in order to vote by internet. |
| |
|
| ● |
By
Telephone—If you have access to a touch-tone telephone, you may submit your proxy by dialing 1-813-235-4490 and by following
the recorded instructions. You will need the 12-Digit Control Number included on your notice or proxy card in order to vote by telephone. |
| |
|
| ● |
By
Mail—If you have received a printed copy of the proxy materials by mail, you may vote by mail by indicating your vote,
signing and dating the enclosed proxy card where indicated and by mailing or otherwise returning the card in the postage-paid envelope
provided to you. You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity
(for example, as a guardian, executor, trustee, custodian, attorney or officer of a corporation), indicate your name and title or
capacity. |
Will
my vote be confidential?
Independent
inspectors count the votes. Your individual vote is kept confidential from us unless special circumstances exist. For example, a copy
of your proxy card will be sent to us if you write comments on the card, as necessary to meet applicable legal requirements, or to assert
or defend claims for or against the Company.
How
may I vote my shares in person at the Annual Meeting?
Attendance
at the annual meeting is limited to holders of record of our common stock at the close of business on the record date, April 24, 2023,
and our guests. You will be asked to provide your control number in order to be admitted into the Annual Meeting. If your shares are
held in the name of a bank, broker, or other nominee and you plan to attend the Annual Meeting, you must request a control number by
pre-registering as a beneficial stockholder at www.cleartrustonline.com/kidpik and following the instructions contained
therein, no later than June 15, 2023, at 5:00 p.m. Eastern time, in order to be admitted. No recording of the meeting will be permitted.
At the Annual Meeting, stockholders of the Company will be afforded a reasonable opportunity to participate in the meeting and to vote
on matters submitted to the stockholders, including an opportunity to communicate, and to read or hear the proceedings of the meetings
in a substantially concurrent manner with such proceedings.
Who
will conduct the Annual Meeting?
The
Chairman of the Annual Meeting has broad responsibility and legal authority to conduct the Annual Meeting in an orderly and timely manner.
This authority includes establishing rules for stockholders who wish to address the meeting. Only stockholders or their valid proxy holders
may address the meeting. Copies of these rules will be available at the meeting. The Chairman may also exercise broad discretion in recognizing
stockholders who wish to speak and in determining the extent of discussion on each item of business. In light of the number of business
items on this year’s agenda and the need to conclude the meeting within a reasonable period of time, we cannot ensure that every
stockholder who wishes to speak on an item of business will be able to do so.
If
I am the beneficial owner of shares held in “street name” by my broker, will my broker automatically vote my shares
for me?
Rules
applicable to broker-dealers grant your broker discretionary authority to vote your shares without receiving your instructions on certain
“routine” matters, including the ratification of the independent registered public accounting firm and approval of
the authority of our Board of Directors to amend our Second Amended and Restated Certificate of Incorporation to affect the proposed
reverse stock split. The proposal to elect two Class II Directors is a non-routine matter. As a result, your broker does not have discretionary
authority to vote your shares on this proposal on your behalf without receiving specific voting instructions from you.
How
will my voting instructions be treated?
If
you provide specific voting instructions, your shares will be voted as instructed.
If
you hold shares as the stockholder of record and sign and return a proxy card or vote by telephone or Internet without giving specific
voting instructions, then your shares will be voted as recommended by our Board of Directors.
If
you are the beneficial owner of shares held through a broker, trustee or other nominee, and you do not give instructions to that nominee
on how you want your shares voted, then generally your nominee can vote your shares on certain “routine” matters.
At our Annual Meeting, Proposal No. 2 and Proposal No. 3 are considered routine, which means that your broker, trustee or other nominee
can vote your shares on Proposal No. 2 and Proposal No. 3 if you do not timely provide instructions to vote your shares.
If
you are the beneficial owner of shares held through a broker, trustee or other nominee, and that nominee does not have discretion to
vote your shares on a particular proposal and you do not give your broker instructions on how to vote your shares, then the votes will
be considered broker non-votes. A broker “non-vote” will be treated as unvoted for purposes of determining approval
for the proposal and will have the effect of neither a vote for nor a vote against the proposal.
Could
other matters be decided at the Annual Meeting?
At
this time, we are unaware of any matters, other than as set forth above, that may properly come before the Annual Meeting. If any other
matters properly come before the Annual Meeting, the persons named in the proxy, or their duly constituted substitutes acting at the
Annual Meeting or any adjournment or postponement of the Annual Meeting, will be deemed authorized to vote or otherwise act on such matters
in accordance with their judgment.
How
can I change my vote?
Whether
you have voted by internet, telephone or mail, if you are a stockholder of record, you may change your vote and revoke your proxy by:
| ● |
sending
a written statement to that effect to our Secretary, provided such statement is received no later than June 16, 2023; |
| |
|
| ● |
voting
by internet or telephone at a later time than your previous vote and before the closing of those voting facilities at 11:59 p.m.,
Eastern Time, on June 16, 2023; |
| |
|
| ● |
submitting
a properly signed proxy card, which has a later date than your previous vote, and that is received by ClearTrust no later than June
16, 2023; or |
| |
|
| ● |
attending
the virtual Annual Meeting and voting via the internet. |
If
you hold shares in street name, please refer to information from your bank, broker or other nominee on how to revoke or submit new voting
instructions.
What
are the quorum and voting requirements to elect Directors and approve the other proposal described in the proxy statement?
In
order to take action on the matters scheduled for a vote at the Annual Meeting, a quorum (a majority of the aggregate number of shares
of the Company’s common stock issued and outstanding and entitled to vote as of the Record Date for the Annual Meeting) must be
present in person or by proxy.
A
plurality of the votes cast at the annual meeting is required for approval of Proposal No. 1, concerning the election of two Class II
Directors. The affirmative vote of holders of the majority of the shares entitled to vote on, and who voted for, against, or expressly
abstained with respect to, the matter at the Annual Meeting, assuming a quorum is present, is required for approval of Proposal No. 2,
concerning the ratification of the appointment of CohnReznick LLP as the Company’s independent registered public accounting firm
for fiscal year 2023. Approval of Proposal No. 3, relating to approval of an amendment to the Second Amended and Restated Certificate
of Incorporation to effect a reverse stock split, requires the affirmative vote of the holders of a majority of the outstanding stock
of the Company entitled to vote on such matter at the Annual Meeting. For each of these proposals, stockholders may vote “FOR”
the proposal, “AGAINST” the proposal, or “ABSTAIN” from voting.
Because
broker “non-votes” are not entitled to vote at the Annual Meeting, broker “non-votes” will have no effect on
Proposal No. 2, but will be the same as a vote “AGAINST” Proposal No. 3.
What
are the Board of Directors’ recommendations for voting at the Annual Meeting?
Our
Board of Directors (the “Board”) recommends that you vote your shares:
| |
● |
“FOR”
the appointment of the two Class II nominees to the Board of Directors (Proposal No. 1). |
| |
● |
“FOR”
the ratification of the appointment of CohnReznick LLP, as the Company’s independent auditors for the fiscal year 2023 (Proposal
No. 2). |
| |
● |
“FOR”
approval of an amendment to our Second Amended and Restated Certificate of Incorporation, to effect a reverse stock split of our
issued and outstanding shares of our common stock, par value $0.001 per share, by a ratio of between one-for-five to one-for-twenty,
inclusive, with the exact ratio to be set at a whole number to be determined by our Board of Directors or a duly authorized committee
thereof in its discretion, at any time after approval of the amendment and prior to April 24, 2024 (Proposal No. 3). |
What
is an “abstention” and how would it affect the vote?
An
“abstention” occurs when a stockholder sends in a proxy with explicit instructions to decline to vote regarding a
particular matter (other than the election of Directors for which the choice is limited to “for” or “abstain”).
Because abstentions are treated as shares of common stock present for purposes of determining a quorum and because Proposal No. 2, concerning
the ratification of the appointment of CohnReznick LLP as the Company’s independent registered public accounting firm for fiscal
year 2023, requires the affirmative vote of holders of the majority of the shares entitled to vote on, and who voted for, against, or
expressly abstained with respect to, the matter at the Annual Meeting, assuming a quorum is present, abstaining has the same effect as
a vote “AGAINST” such proposal. Similarly, because Proposal No. 3, approval of an amendment to the Second Amended and Restated
Certificate of Incorporation to effect a reverse stock split, requires the affirmative vote of the holders of a majority of the outstanding
stock of the Company entitled to vote on such matter at the Annual Meeting, abstaining will have the same effect as a vote AGAINST”
such proposal.
What
is a broker “non-vote” and how would it affect the vote?
A
broker non-vote occurs when a broker or other nominee who holds shares for another person does not vote on a particular proposal because
that holder does not have discretionary voting power for the proposal and has not received voting instructions from the beneficial owner
of the shares. Under rules applicable to broker-dealers, Proposal No. 2, concerning the appointment of CohnReznick LLP as the Company’s
independent registered public accounting firm for the Company’s fiscal year 2023, is an item on which brokerage firms may vote
in their discretion on behalf of their clients, even if such clients have not furnished voting instructions. Thus, there may be broker
“non-votes” on Proposal No. 2 and Proposal No. 3. Brokerage firms may not vote with respect to Proposal No. 1 without
their clients having furnished voting instructions. There may be broker “non-votes” with respect to Proposal No. 1,
but they will have no effect on Proposal No. 1, which requires only a plurality of votes cast.
Who
will count the votes?
The
Company’s proxy processor and tabulator, ClearTrust LLC, will serve as proxy tabulator and count the votes. The results will be
certified by the inspector of election.
Who
will conduct the proxy solicitation and how much will it cost?
We
will pay the costs relating to this proxy statement, the proxy solicitation and the Annual Meeting. We may reimburse brokerage firms
and other persons representing beneficial owners of shares held in street name for their expenses in forwarding solicitation material
to beneficial owners. Directors, officers and employees may also solicit proxies. They will not receive any additional pay for the solicitation.
DEFINITIONS
Unless
the context requires otherwise, references in this proxy statement to the “Company,” “we,” “us,”
“our,” “Kidpik” and “Kidpik Corp.” refer specifically to Kidpik Corp.
In
addition, unless the context otherwise requires and for the purposes of this proxy statement only:
| |
● |
“Exchange
Act” refers to the Securities Exchange Act of 1934, as amended; |
| |
|
|
| |
● |
“IPO”
refers to the Company’s initial public offering, which closed on November 15, 2021, pursuant to which the Company sold 2,117,647
shares of common stock at a price to the public of $8.50 per share, pursuant to that certain Underwriting Agreement, dated November
10, 2021, between the Company and EF Hutton, division of Benchmark Investments, LLC, as representative of several underwriters named
in the Underwriting Agreement; |
| |
|
|
| |
● |
“SEC”
or the “Commission” refers to the United States Securities and Exchange Commission; and |
| |
|
|
| |
● |
“Securities
Act” refers to the Securities Act of 1933, as amended. |
FORWARD-LOOKING
STATEMENTS AND WEBSITE LINKS
This
Proxy Statement includes forward-looking statements about future events and circumstances. Generally speaking, any statement not based
upon historical fact is a forward-looking statement. Forward-looking statements can also be identified by the use of words such as “could,”
“should,” “continue,” “estimate,” “forecast,” “intend,”
“look,” “may,” “will,” “expect,” “believe,”
“anticipate,” “plan,” “remain” and “confident” or similar
expressions. In particular, statements regarding our plans, strategies, prospects and expectations regarding our business and industry
are forward-looking statements. They reflect our expectations, are not guarantees of performance and speak only as of the date of this
Proxy Statement. Except as required by law, we do not undertake to update such forward-looking statements. Our business results are subject
to a variety of risks, including those considerations or risks that are reflected as “Risk Factors” in our 2022 Annual
Report on Form 10-K, as well as elsewhere in our filings with the SEC. If any of these considerations or risks materialize, our expectations
(or underlying assumptions) may change or not be realized and our performance may be adversely affected. Therefore, you should not rely
unduly on any forward-looking statements.
We
do not assume any obligation to update information contained in this document, except as required by federal securities laws. Although
this Proxy Statement may remain available on our website or elsewhere, its continued availability does not indicate that we are reaffirming
or confirming any of the information contained herein. Neither our website nor its contents are a part of this Proxy Statement.
Website
links included in this Proxy Statement are for convenience only. The content in any website links included in this Proxy Statement is
not incorporated herein and does not constitute a part of this Proxy Statement.
INCORPORATION
BY REFERENCE
To
the extent that this proxy statement has been or will be specifically incorporated by reference into any other filing of the Company
under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
the section of this proxy statement titled “Audit Committee Report” (to the extent permitted by the rules of the U.S.
Securities and Exchange Commission (the “SEC” or the “Commission”)) shall not be deemed to be so
incorporated, unless specifically provided otherwise in such filing.
REFERENCES
TO ADDITIONAL INFORMATION
Included
with this proxy statement is a copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed
with the SEC on March 31, 2023 (the “2022 Annual Report”).
You
may also request a copy of this proxy statement and the annual report from the Company at the following address and telephone number:
Kidpik
Corp.
Attn: Corporate Secretary
200 Park Avenue South, 3rd Floor, New York, New York 10003
(212) 399-2323
PROPOSAL
NO. 1
ELECTION OF DIRECTORS
Set
forth below is certain information regarding our directors as of May 1, 2023:
| Name |
|
Position |
|
Age |
|
Director
Since |
| Ezra
Dabah |
|
Chairman,
President and Chief Executive Officer |
|
69 |
|
August
2016 |
| David
Oddi |
|
Director |
|
52 |
|
October
2021 |
| Bart
Sichel |
|
Director |
|
58 |
|
March
2022 |
| Jill
Kronenberg |
|
Director |
|
53 |
|
November
2022 |
Under
the Second Amended and Restated Certificate of Incorporation of the Company, the Board of Directors is classified into three classes
of Directors. Two Directors serving in Class II have a term expiring at the Annual Meeting. The Board of Directors has nominated the
current Class II Directors, Ezra Dabah and Jill Kronenberg, for re-election as Class II Directors, to serve for a three-year term until
the 2026 Annual Meeting of Stockholders of the Company and until their respective successor(s) is elected and qualified or until their
earlier death, resignation, retirement, disqualification or removal. Although management has no reason to believe that the nominee will
not be available as a candidate, should such a situation arise, proxies may be voted for the election of such other persons as the holders
of the proxies may, in their discretion, determine.
Directors
are elected by a plurality of the votes cast at the Annual Meeting, either in person or by proxy.
Nominee
Information
The
Board of Directors believes that the director nominees possess the qualities and experience that the Board believes that nominees should
possess, as described in detail below in the section entitled “Corporate Governance—Nominations for Directors.”
The Board of Directors seeks out, and the Board of Directors is comprised of, individuals whose background and experience complement
those of other Board members. The nominees for election to the Board of Directors, together with biographical information furnished by
each of them, are set forth below.
The
following is information regarding the nominees for election as Class II Directors:
Class
II Director Nominees
Ezra
Dabah, has served as the Chief Executive Officer and director of the Company since April 2015 and as Chairman since October 2021.
Mr. Dabah has also served since 2012 as the Chief Executive Officer and member of the Board of Directors of, is the majority owner of,
Nina Footwear Corp., a wholesaler of women’s and kids’ shoes and accessories (“Nina Footwear”). From 2013
to June 2015, Mr. Dabah served as the Chief Executive Officer of Ezrani 2 Corp. d/b/a RUUM American Kid’s Wear (“RUUM”),
a company which owned and operated childrenswear specialty retail stores. Mr. Dabah purchased this business from American Eagle Outfitters
Inc (NYSE: AEO) and rebranded the stores and business from 77 kids by American Eagle to RUUM American kids wear. Ezrani 2 Corp., voluntarily
filed for Chapter 7 bankruptcy on June 18, 2015, while Mr. Dabah was its Chief Executive Officer, which bankruptcy was closed in August
2018. Mr. Dabah has over 45 years of experience in apparel wholesale and retail operations. From 1972 to 1993, he was a director and
an executive officer of The Gitano Group, Inc. (NYSE:GIT)(“Gitano”), where he managed product design, merchandising,
and procurement. In 1984, he founded and became president of E.J. Gitano, a children’s apparel division of Gitano. In 1991, Mr.
Dabah joined The Children’s Place Retail Stores, Inc. (NASDAQ:PLCE) as its Chairman and CEO, leading the company’s
turnaround and repositioning it from a store that sold discounted brands to a single vertically integrated brand that has stores, taking
it public in 1997. In November 2004, The Children’s Place purchased The Disney Stores (300+ stores) from the Walt Disney Co (NYSE:
DIS). Under Mr. Dabah’s leadership the store count grew from approximately 150 in 1990 to almost 1,200 and sales reached $2 billion
by the end of 2006. Mr. Dabah resigned from The Children’s Place as its Chief Executive in September 2007. Between 2007 and 2012,
Mr. Dabah developed Ahhmigo, a natural and organic energy drink with patented ingredients dispensing cap technology. We believe that
Mr. Dabah’s extensive experience in apparel and retail operations and his prior service as a Chief Executive Officer of a public
company (The Children’s Place Retail Stores, Inc.), make him well qualified to serve as a member of the Board of Directors.
Jill
Kronenberg, has served as a Director of the Company since November 2022 and is a member of our Audit Committee. Ms. Kronenberg
is a seasoned executive with over 20 years of merchandising experience in the retail industry. Ms. Kronenberg has served as the President
of JSK Associates, an independent advisory and consulting firm specializing in a wide range of merchandising and strategic growth initiatives
since 2015. Ms. Kronenberg served as Chief Merchandising Officer of Marc Ecko Enterprises, a multichannel, fashion apparel brand from
2011-2012, overseeing merchandising, marketing, planning, design, and production. Prior to working at Marc Ecko Enterprises, Ms. Kronenberg
served as Senior Vice President of Merchandising and General Merchandise Manager for The Children’s Place (NASDAQ: PLCE) from 2006-2008.
Prior to joining The Children’s Place, Ms. Kronenberg spent 9 years at Aeropostale, Inc. (ARO) (from 1997-2006) where she was a
key member of the executive team responsible for Aeropostale’s rapid growth and initial public offering, while serving as Vice
President of Merchandising and General Merchandise Manager. During her tenure at Aeropostale, Ms. Kronenberg also led and developed the
JIMMY’Z brand and organization, Aeropostale’s California lifestyle concept. Prior to Aeropostale, Ms. Kronenberg served as
a buyer for Petrie Retail, Inc. and Caldor Inc. Ms. Kronenberg served on the PA Executive Board of Rodeph Sholom School and as PA President
of The Shefa School. She earned her Bachelor of Science in Marketing and Management from the School of Business at the State University
of New York at Albany. We have concluded that Ms. Kronenberg is well qualified to serve on our board based upon her extensive merchandising
and business strategy experience.
Continuing
Directors
The
following is information regarding our Directors whose terms continue after the 2023 Annual Meeting:
Class
I Director – Term Expiring at the 2025 Annual Meeting
David
Oddi, has served as a Director of the Company since October 2021 and is the Chair of our Audit Committee. Mr. Oddi is a founding
member and partner of Goode Partners, LLC, a private equity firm, that focuses primarily on investments in the consumer sector, specifically
consumer brands and services, retail, restaurants and direct marketing/selling. Prior to the founding of Goode Partners in 2005, Mr.
Oddi was a Partner of Saunders Karp & Megrue (SKM), a private equity firm, where he was primarily responsible for identifying potential
investment opportunities, structuring and executing new transactions and monitoring certain of the firm’s portfolio investments,
from 1994 to 2004. Prior to joining SKM, Mr. Oddi served in the Leveraged Finance Group of Salomon Brothers from 1992 to 1994. Mr. Oddi
currently serves as a member of the board of directors of numerous private companies and has previously served on the board of directors
of: All Saints, Capital IQ, Charlotte Russe Holding (NASDAQ: CHIC), Chuy’s (NASDAQ: CHUY), The Children’s Place (NASDAQ:
PLCE), Dave’s Killer Bread, Elephant Bar Restaurants, Incipio®, Intermix LLC, La Colombe Coffee, Lacrosse Unlimited, Luxury
Optical Holdings, Ollie’s Bargain Outlet, Rosa Mexicano, Rue 21, Skullcandy, Strike Holdings and Tommy Bahama. Mr. Oddi is a graduate
of the University of Pennsylvania, where he received a B.S. in Economics from the Wharton School. We have concluded that Mr. Oddi should
serve on our board based upon his experience as an investor and board member of other companies.
Class
III Director – Term Expiring at the 2024 Annual Meeting
Bart
Sichel, has served as a Director of the Company since March 2022 and is a member of our Audit Committee. Mr. Sichel is a proven
marketing leader and veteran c-level executive in the retail space. Since November 2022, Mr. Sichel has served as the Executive Vice
President, Chief Marketing and Customer Officer of Bed Bath & Beyond (NASDAQ: BBBY). Prior to that Mr. Sichel has served as the President
of bps Captura, an independent advisory and consulting firm to senior corporate leaders, private equity firms, and boards across multiple
consumer- facing industries, from October 2019 to November 2022. Since March 2020, he has served as a senior advisor to Banyan Holmdel,
in the Fintech industry; since October 2020 he has served as a senior advisor to Impact Analytics, in the merchandising analytics industry,
and since September 2020 he has served on the advisory board of Forman Mills, in the retail industry. Mr. Sichel has also served as an
adjunct professor at NYU since December 2019. Mr. Sichel previously worked at Burlington Stores (“Burlington”) from
2011 to August 2019, where he served as Executive Vice President and Chief Marketing Officer. He was a key member of the leadership team
that turned the business around and launched its initial public offering. At Burlington, Mr. Sichel was responsible for marketing, corporate
strategy and the company’s push into e-commerce. Prior to joining Burlington, from 1998 to 2011, Mr. Sichel served as a Principal
at McKinsey & Company. He was a leader in McKinsey’s Marketing and Retail practices in North America. Prior to 1998, Mr. Sichel
worked in various capacities across consumer facing industries including retail, e-commerce, packaged goods, financial services, and
media. Mr. Sichel serves on the national board of directors for The Leukemia & Lymphoma Society. Mr. Sichel holds an M.B.A. from
Columbia University and a B.A. from Vassar College. We have concluded that Mr. Sichel is well qualified to serve on our board based upon
his extensive marketing, ecommerce, and business strategy experience.
Recommendation
of the Board of Directors
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” PROPOSAL NO. 1, THE ELECTION OF EZRA DABAH
AND JILL KRONENBERG AS CLASS II DIRECTORS.
CORPORATE
GOVERNANCE
The
Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely and understandable
disclosure in reports and documents that the Company files with the SEC and in other public communications made by the Company; and strives
to be compliant with applicable governmental laws, rules and regulations.
Board
Leadership Structure
Our
Board of Directors has the responsibility for selecting the appropriate leadership structure for the Company. In making leadership structure
determinations, the Board of Directors considers many factors, including the specific needs of the business and what is in the best interests
of the Company’s stockholders. Our current leadership structure is comprised of a combined Chairman of the Board and Chief Executive
Officer (“CEO”), Mr. Ezra Dabah. The Board of Directors believes that this leadership structure is the most effective
and efficient for the Company at this time. Mr. Dabah possesses detailed and in-depth knowledge of the issues, opportunities, and challenges
facing the Company, and is thus best positioned to develop agendas that ensure that the Board of Directors’ time and attention
are focused on the most critical matters. Combining the Chairman of the Board and CEO roles promotes decisive leadership, fosters clear
accountability and enhances the Company’s ability to communicate its message and strategy clearly and consistently to our stockholders,
particularly during periods of turbulent economic and industry conditions.
The
Board believes that this leadership structure best serves the Company and its stockholders at this time. The Board evaluates its structure
periodically, as well as when warranted by specific circumstances in order to assess which structure is in the best interests of the
Company and its stockholders based on the evolving needs of the Company. This approach provides the Board appropriate flexibility to
determine the leadership structure best suited to support the dynamic demands of our business.
Risk
Oversight
Effective
risk oversight is an important priority of the Board of Directors. Because risks are considered in virtually every business decision,
the Board of Directors discusses risk throughout the year generally or in connection with specific proposed actions. The Board of Directors’
approach to risk oversight includes understanding the critical risks in the Company’s business and strategy, evaluating the Company’s
risk management processes, allocating responsibilities for risk oversight, and fostering an appropriate culture of integrity and compliance
with legal responsibilities. The directors exercise direct oversight of strategic risks to the Company.
The
Board of Directors exercises direct oversight of strategic risks to the Company. The Audit Committee reviews and assesses the Company’s
processes to manage business and financial risk and financial reporting risk. It also reviews the Company’s policies for risk assessment
and assesses steps management has taken to control significant risks (The Company’s committees are described in greater detail
below).
While
the Board and its committees oversee the Company’s strategy, management is charged with its day-to-day execution. To monitor performance
against the Company’s strategy, the Board receives regular updates and actively engages in dialogue with management.
Family
Relationships amongst Directors and Officers
There
are no family relationships among our directors and executive officers, except that Moshe Dabah, our Vice President, Chief Operating
Officer and Chief Technology Officer, is the son of Ezra Dabah, our Chief Executive Officer and Chairman.
Arrangements
between Officers and Directors
To
our knowledge, there is no arrangement or understanding between any of our officers or directors and any other person, including directors,
pursuant to which the officer was selected to serve as an officer or director.
Involvement
in Certain Legal Proceedings
To
our knowledge, none of our executive officers or directors has been involved in any of the following events during the past ten years,
except as described under “Business Experience”, above: (1) any bankruptcy petition filed by or against any business
of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that
time; (2) any conviction in a criminal proceeding or being a named subject to a pending criminal proceeding (excluding traffic violations
and minor offenses); (3) being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court
of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type
of business, securities or banking activities; (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the
Commodities Futures Trading Commission to have violated a federal or state securities or commodities law; (5) being the subject of, or
a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended
or vacated, relating to an alleged violation of (i) any Federal or State securities or commodities law or regulation; (ii) any law or
regulation respecting financial institutions or insurance companies, including, but not limited to, a temporary or permanent injunction,
order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition
order, or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or (6) being the
subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization
(as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section (1a)(40) of the Commodity Exchange
Act), or any equivalent exchange, association, entity, or organization that has disciplinary authority over its members or persons associated
with a member.
Other
Directorships
No
director of the Company is also a director of an issuer with a class of securities registered under Section 12 of the Exchange Act (or
which otherwise are required to file periodic reports under the Exchange Act).
Classified
board of directors
Our
Second Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws provide for a classified board of directors
consisting of three classes of directors, each serving staggered three-year terms. As a result, only one class of directors will be elected
at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms.
Our directors are divided among the three classes as follows:
| |
● |
the
Class I director is David Oddi, and his term will expire at the annual meeting of stockholders to be held in 2025; |
| |
|
|
| |
● |
the
Class II directors are Ezra Dabah and Jill Kronenberg, and each of their terms will expire at the 2023 annual meeting, subject to
the Board’s recommendation, as set forth above, for their re-appointment as a member of the Board of Directors at the 2023
Annual meeting; and |
| |
|
|
| |
● |
the
Class III director is Bart Sichel, and his term will expire at the annual meeting of stockholders to be held in 2024. |
Each
director’s term continues until the election and qualification of his or her successor, or his or her earlier death, resignation
or removal. Our Second Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws authorize only our board of
directors to fill vacancies on our board of directors. Any increase or decrease in the number of directors will be distributed among
the three classes so that, as nearly as possible, each class will consist of one-third of the directors. This classification of our board
of directors may have the effect of delaying or preventing changes in control of our company.
Committees
of the Board
Our
Board of Directors has the authority to appoint committees to perform certain management and administration functions. Our Board of Directors
currently has one committee: the audit committee.
Board
Committee Membership
| | |
Independent | | |
Audit
Committee | |
| Ezra Dabah(1) | |
| | | |
| | |
| David Oddi | |
| X | | |
| C | |
| Bart Sichel | |
| X | | |
| M | |
| Jill Kronenberg | |
| X | | |
| M | |
(1)
Chairman of Board of Directors.
C
- Chairman of Committee.
M
- Member.
Audit
Committee
NASDAQ
listing standards and applicable SEC rules require that the Audit Committee of a listed company be comprised solely of independent directors.
We have established an Audit Committee of the Board of Directors, which currently consists of Mr. Oddi, Mr. Sichel and Ms. Kronenberg.
Each member of the Audit Committee meets the independent director standard under NASDAQ’s listing standards and under Rule 10A-3(b)(1)
of the Exchange Act. Each member of the Audit Committee is financially literate (as required by Nasdaq rules) and qualified to monitor
the performance of management and the independent auditors and to monitor our disclosures so that our disclosures fairly present our
business, financial condition and results of operations.
The
Board has also determined that Mr. Oddi, is an “audit committee financial expert” (as defined in the SEC rules) because
he has the following attributes: (i) an understanding of generally accepted accounting principles in the United States of America (“GAAP”)
and financial statements; (ii) the ability to assess the general application of such principles in connection with accounting for estimates,
accruals and reserves; (iii) experience analyzing and evaluating financial statements that present a breadth and level of complexity
of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised
by our financial statements; (iv) an understanding of internal control over financial reporting; and (v) an understanding of audit committee
functions. Mr. Oddi has acquired these attributes as a result of his significant experience serving on the board of directors of various
private and public companies and as an investor and founder of a private equity firm.
The
Audit Committee has authority for (1) reviewing the disclosures made by the Chief Executive Officer and the Chief Financial Officer in
connection with their required certifications accompanying the Company’s periodic reports to be filed with the SEC, including disclosures
to the Audit Committee of (a) significant deficiencies in the design or operation of internal controls, (b) significant changes in internal
controls and (c) any fraud involving management or other employees who have a significant role in the Company’s internal controls;
(2) reviewing and discussing the Company’s quarterly financial results and related press releases, if any, with management and
the independent auditors prior to the release of such information to the public; (3) reviewing with the management the proposed scope
and plan for conducting internal audits of Company operations and obtaining reports of significant findings and recommendations, together
with management’s corrective action plans; (4) seeking to ensure the corporate audit function has sufficient authority, support
and access to Company personnel, facilities and records to carry out its work without restrictions or limitations; (5) reviewing the
corporate audit function of the Company, including its charter, plans, activities, staffing and organizational structure; (6) reviewing
progress of the internal audit program, key findings and management’s action plans to address findings; (7) periodically reviewing
the Company’s policies with respect to legal compliance, conflicts of interest and ethical conduct; (8) seeking to ensure the adequacy
of procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting control or auditing matters,
including the confidential submission of complaints by employees regarding such matters; and (9) recommending to the Board any changes
in ethics or compliance policies that the Audit Committee deems appropriate. The Committee will also review any issues relating to conflicts
of interests and all related party transactions of the Company. In addition, the Audit Committee has the authority, at its discretion
and at our expense, to retain special legal, accounting or other advisors to advise the Audit Committee.
The
Audit Committee Charter was filed as Exhibit 99.1 to the Form S-1 Registration Statement filed by the Company with the SEC on October
6, 2021.
Compensation
Committee and Nominating and Corporate Governance Committee
The
Board does not currently have a Compensation Committee or Nominating and Corporate Governance Committee as under applicable rules of
The Nasdaq Capital Market, the Company is not required to have such committees due to the Company’s status as a “controlled
company”.
Nominations
for Directors
The
Board of Directors is responsible for identifying prospective qualified candidates to fill vacancies on the Board, recommending director
nominees (including chairpersons) for each of our committees, developing and recommending appropriate corporate governance guidelines.
In
considering individual director nominees and Board committee appointments, our Board seeks to achieve a balance of knowledge, experience
and capability on the Board and Board committees and to identify individuals who can effectively assist the Company in achieving our
short-term and long-term goals, protecting our stockholders’ interests and creating and enhancing value for our stockholders. In
so doing, the Board considers a person’s diversity attributes (e.g., professional experiences, skills, background, race and gender)
as a whole and does not necessarily attribute any greater weight to one attribute. Moreover, diversity in professional experience, skills
and background, and diversity in race and gender, are just a few of the attributes that the Board takes into account. In evaluating prospective
candidates, the Board also considers whether the individual has personal and professional integrity, good business judgment and relevant
experience and skills, and whether such individual is willing and able to commit the time necessary for Board and Board committee service.
While
there are no specific minimum requirements that the Board believes must be met by a prospective director nominee, the Board does believe
that director nominees should possess personal and professional integrity, have good business judgment, have relevant experience and
skills, and be willing and able to commit the necessary time for Board and Board committee service. Furthermore, the Board evaluates
each individual in the context of the Board as a whole, with the objective of recommending individuals that can best perpetuate the success
of our business and represent stockholder interests through the exercise of sound business judgment using their diversity of experience
in various areas. We believe our current directors possess diverse professional experiences, skills and backgrounds, in addition to (among
other characteristics) high standards of personal and professional ethics, proven records of success in their respective fields and valuable
knowledge of our business and our industry.
The
Board uses a variety of methods for identifying and evaluating director nominees. The Board also regularly assesses the appropriate size
of the Board and whether any vacancies on the Board are expected due to retirement or other circumstances. In addition, the Board considers,
from time to time, various potential candidates for directorships. Candidates may come to the attention of the Board through current
Board members, professional search firms, stockholders or other persons. These candidates may be evaluated at regular or special meetings
of the Board and may be considered at any point during the year.
Director
Independence
The
Board of Directors annually (or upon appointment of a new director) determines the independence of each director and nominee for election
as a director. The Board makes these determinations in accordance with Nasdaq’s listing standards for the independence of directors
and the SEC’s rules.
In
assessing director independence, the Board considers, among other matters, the nature and extent of any business relationships, including
transactions conducted, between the Company and each director and between the Company and any organization for which one of our directors
is a director or executive officer or with which one of our directors is otherwise affiliated.
The
Board has affirmatively determined that each of Mr. David Oddi, Mr. Bart Sichel and Ms. Kronenberg is an independent director as defined
under the Nasdaq rules governing members of boards of directors and as defined under Rule 10A-3 of the Exchange Act, and has no relationship
that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Board
Diversity Matrix
Beginning
in 2022, we surveyed the Board and asked each director to self-identify their race/ethnicity, gender identity and LGBTQ+ identity. The
results are presented below in the table below, which provides certain highlights of the composition of our board members and nominees.
Each of the categories listed in the below table has the meaning as it is used in Nasdaq Proposed Rule 5605(f).
| Board
Diversity Matrix (As of April 24, 2023)* | |
| Total
Number of Directors | |
4 | |
| | |
Female | | |
Male | | |
Non- Binary | | |
Did Not
Disclose
Gender
| |
| Part
I: Gender Identity | |
| | |
| | |
| | |
| |
| Directors | |
1 | | |
3 | | |
— | | |
— | |
| Part
II: Demographic Background | |
| | |
| | |
| | |
| |
| African American
or Black | |
— | | |
— | | |
— | | |
— | |
| Alaskan Native or
Native American | |
— | | |
— | | |
— | | |
— | |
| Asian | |
— | | |
— | | |
— | | |
— | |
| Hispanic or Latinx | |
— | | |
— | | |
— | | |
— | |
| Native Hawaiian or
Pacific Islander | |
— | | |
— | | |
— | | |
— | |
| White | |
1 | | |
3 | | |
— | | |
— | |
| Two or More Races
or Ethnicities | |
— | | |
— | | |
— | | |
— | |
| LGBTQ+ | |
— | |
| Did Not Disclose
Demographic Background | |
— | |
*
The Company’s 2021 Board Diversity Matrix was publicly disclosed in the Company’s proxy statement for its 2022 Annual Meeting
of Stockholders.
Because
we have a Board of Directors of five or fewer members, we may satisfy Nasdaq’s diversity rules by having least one diverse director
who self-identifies as female, LGBTQ+, or an underrepresented minority, and as shown in the table above, we currently meet that requirement
as of April 24, 2023.
Website
Availability of Documents
The
charter of the audit committee of the Board identified above is available on our website at www.kidpik.com, under “Investors”
– “Governance” – “Governance Documents”. Copies of the committee charter are also available
for free upon written request to our Corporate Secretary.
Stockholder
Communications with the Board
A
stockholder who wishes to communicate with our Board of Directors may do so by directing a written request addressed to our Secretary,
200 Park Avenue South, 3rd Floor, New York, New York 10003, who, upon receipt of any communication other than one that is clearly marked
“Confidential,” will note the date the communication was received, open the communication, make a copy of it for our
files and promptly forward the communication to the director(s) to whom it is addressed. Upon receipt of any communication that is clearly
marked “Confidential,” our Secretary will not open the communication, but will note the date the communication was
received and promptly forward the communication to the director(s) to whom it is addressed.
Board
of Directors Meetings
During
the year ending December 31, 2022, the Board of Directors held five meetings and took various other actions via the unanimous written
consent of the board of directors and the various committees described above. All directors attended the board of directors’ meeting
and committee meetings relating to the committees on which each director served during fiscal year 2022 (during the periods which they
served as directors). Each Director attended the Company’s 2022 Annual Meeting of Stockholders (during the periods which they served
as directors). Each director of the Company is expected to be present at annual meetings of stockholders, absent exigent circumstances
that prevent their attendance. Where a director is unable to attend an annual meeting in person but is able to do so by electronic conferencing,
the Company will arrange for the director’s participation by means where the director can hear, and be heard, by those present
at the meeting.
Executive
Sessions of the Board of Directors
The
independent members of our board of directors meet in executive session (with no management directors or management present) from time
to time. The executive sessions include whatever topics the independent directors deem appropriate.
Policy
on Equity Ownership
The
Company does not have a policy on equity ownership at this time.
Policy
Against Hedging
The
Company recognizes that hedging against losses in Company shares may disturb the alignment between stockholders and executives that equity
awards are intended to build; however, while ‘short sales’ are discouraged by the Company, the Company does not currently
have a policy prohibiting such transactions. We are considering implementing a policy prohibiting such transactions in the future.
Compensation
Recovery and Clawback Policies
Under
the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), in the event of misconduct that results in a financial restatement
that would have reduced a previously paid incentive amount, we can recoup those improper payments from our Chief Executive Officer and
Chief Financial Officer (if any). The SEC also recently adopted rules which direct national stock exchanges to require listed companies
to implement policies intended to recoup bonuses paid to executives if the company is found to have misstated its financial results.
We plan to implement a clawback policy in the future, once required, although we have not yet implemented such policy.
Code
of Ethics
We
have adopted a Code of Ethical Business Conduct (“Code of Ethics”) that applies to all of our directors, officers
and employees.
The
Code of Ethics was filed as Exhibit 14.1 to the Registration Statement on Form S-1 which we filed with the SEC on October 6, 2021.
We
intend to disclose any amendments to our Code of Ethics and any waivers with respect to our Code of Ethics granted to our principal executive
officer, our principal financial officer, or any of our other employees performing similar functions on our website at kidpik.com within
four business days after the amendment or waiver. In such case, the disclosure regarding the amendment or waiver will remain available
on our website for at least 12 months after the initial disclosure. There have been no waivers granted with respect to our Code of Ethics
to any such officers or employees.
Whistleblower
Protection Policy
The
Company adopted a Whistleblower Protection Policy (“Whistleblower Policy”) that applies to all of its directors, officers,
employees, consultants, contractors and agents of the Company. The Whistleblower Policy has been reviewed and approved by the Board.
Controlled
Company Exception
Ezra
Dabah, our Chief Executive Officer and Chairman, and our principal stockholder, currently controls approximately 62.7% of the
voting power of our capital stock (based on shares of common stock outstanding as of April 24, 2023), pursuant to a Voting Agreement
(discussed below), pursuant to which Mr. Dabah and his family have formed a voting group, and are therefore a “controlled company”
as defined under Nasdaq Marketplace Rules. Although the Nasdaq Listing Rules require that a majority of the board of directors be independent,
however, because we are a “controlled company” within the meaning of the Nasdaq Listing Rules, we are permitted to,
and have elected to, not be required to comply with this requirement (provided that currently a majority of our board of directors is
independent). In addition, as a “controlled company”, we are not required to have a compensation committee or an independent
nominating function. Accordingly, our Board of Directors has determined not to have an independent compensation committee or nominating
function and to have the Board be directly responsible for compensation and the nominating members of our Board of Directors. Accordingly,
you may not have the same protections afforded to stockholders of companies that are subject to all of these corporate governance requirements.
If we cease to be a “controlled company” and our shares continue to be listed on the Nasdaq Capital Market, we will
be required to comply with these provisions within the applicable transition periods.
If
at any time we cease to be a “controlled company” under the Nasdaq rules, the Board of Directors will take all action
necessary to comply with the applicable Nasdaq rules, including, subject to permitted “phase-in” periods.
Pursuant
to a Voting Agreement entered into on September 1, 2021, with among other stockholders, Ezra Dabah’s children, Moshe Dabah, who
is also our Vice President, Chief Operating Officer and Chief Technology Officer (who holds 109,433 shares of common stock), Eva Yagoda
(who holds 67,100 shares of common stock), Joia Kazam (who holds 67,100 shares of common stock), Chana Rapaport (who holds 67,100 shares
of common stock) and Yaacov Dabah (who holds 96,624 shares of common stock); Gila Goodman (who holds sole voting rights over 305,976
shares of our common stock), who is the sister of Ezra Dabah; Isaac Dabah, who is the brother of Ezra Dabah, and uncle of Moshe Dabah
and his spouse (who hold 46,970 shares of common stock); GMM Capital LLC, an entity which Isaac Dabah controls (which holds 295,911 shares
of common stock); and Sterling Macro Fund, an entity which Isaac Dabah controls (which holds 38,247 shares of common stock), and certain
trusts in the names of Mr. Dabah’s children (which in aggregate hold 1,508,408 shares of common stock), and which are beneficially
owned by Mr. Dabah’s wife and mother-in-law, each provided complete authority to Ezra Dabah to vote the shares of common stock
held by such persons and entities at any and all meetings of stockholders of the Company and via any written consents. The Voting Agreement
has a term of three years, through August 31, 2024, but can be terminated at any time by Mr. Dabah and terminates automatically upon
the death of Mr. Dabah. In connection with their entry into the Voting Agreement, each of the other parties thereto provided Mr. Dabah
an irrevocable voting proxy to vote the shares covered by the Voting Agreement.
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own more than 10% of a registered class
of our equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and
other equity securities. These executive officers, directors, and greater than 10% beneficial owners are required by SEC regulation to
furnish us with copies of all Section 16(a) forms filed by such reporting persons.
Based
solely upon our review of the Section 16(a) filings that have been furnished to us, we believe that all filings required to be made under
Section 16(a) during the fiscal year ended December 31, 2022 were timely made.
EXECUTIVE
OFFICERS
General
Officers
will hold their positions at the pleasure of the Board of Directors, absent any employment agreement. Our officers may receive compensation
as determined by us from time to time by vote of the Board of Directors. Such compensation might be in the form of stock options, restricted
stock units or other form of equity compensation.
Our
named executive officers are:
| Name |
|
Position |
|
Age |
|
| Ezra
Dabah |
|
Chairman,
President and Chief Executive Officer |
|
69 |
|
| Moshe
Dabah |
|
Vice
President, Chief Operating Officer and Chief Technology Officer, and Secretary |
|
39 |
|
| Adir
Katzav |
|
Executive
Vice President, Chief Financial Officer, and Treasurer |
|
53 |
|
Business
Experience
The
following is a brief description of the education and business experience of our executive officers.
Ezra
Dabah – Chairman, President and Chief Executive Officer
Mr.
Dabah’s education and business experience is described above under “Proposal No. 1 Election of Directors” — “Nominees”.
Moshe
Dabah – Vice President, Chief Operating Officer, Chief Technology Officer and Secretary
Mr.
Moshe Dabah is currently the Chief Operating Officer and Chief Technology Officer of the Company (positions he has held since September
2019) and the Secretary of the Company (a position he has held since July 2021) and has served as Vice President of the Company since
July 2019. Since January 2021, Mr. Dabah has served as the Secretary of Nina Footwear Corp. From August 2012 to September 2015, Mr. Dabah
served as Director of Store Construction and Maintenance at RUUM, where he managed the rebranding of approximately 50 stores from 77
Kids by American Eagle to RUUM American Kids Wear, new store rollout and construction and store facilities, maintenance, and supplies.
From August 2011 to August 2012, Mr. Dabah served as Vice President of Commercial Sales for NextEnergy, a geothermal HVAC system design
and sales company. From August 2008 to August 2011, he served as a General Contractor with REJJ LLC, a real estate and construction management
company. Mr. Dabah is responsible for designing, implementing, integrating and optimizing all of the Company’s information technology,
infrastructure and logistic systems.
Adir
Katzav - Executive Vice President, Chief Financial Officer, and Treasurer
Mr.
Katzav has served as our Executive Vice President, Chief Financial Officer and Treasurer since June 2021. Mr. Katzav brings more than
20 years of experience in corporate finance, business advisory, risk management, and capital markets. Prior to joining the Company, Mr.
Katzav served as Executive Vice President and Chief Financial Officer of Norvic Shipping Group, from December 2017 to September 2018.
Mr. Katzav also served as Chief Financial Officer and Secretary (July 2012 to September 2016) and Director of Financial Reporting (August
2008 to June 2012) of Eagle Bulk Shipping Inc. (EGLE:NASDAQ). He previously served as a Senior Manager, in addition to other roles, for
PricewaterhouseCoopers LLP, in the US and overseas offices, where he provided business advisory and audit services to public and private
companies across multiple industries. Mr. Katzav earned a bachelor’s degree in Statistics and Operations Research and Accounting.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table sets forth information concerning the compensation of (i) all individuals serving as our principal executive officer
or acting in a similar capacity for the years ended December 31, 2022 and January 1, 2022 (“PEO”), regardless of compensation
level; (ii) our two most highly compensated executive officers other than the PEO who were serving as executive officers for the period
ended December 31, 2022 and January 1, 2022, if any (subject to the limitations below); and (iii) up to two additional individuals for
whom disclosure would have been provided pursuant to paragraph (ii) but for the fact that the individual was not serving as an executive
officer at December 31, 2022 (collectively, the “Named Executive Officers”).
Name
and Principal
Position | |
Fiscal Year
Ended | | |
Salary ($) | | |
Bonus ($) | | |
Stock awards ($)(2) | | |
Option awards ($) | | |
All
other compensation ($) | | |
Total ($) | |
| Ezra Dabah | |
| 2022 | (1) | |
$ | — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | — | |
| Chief Executive Officer | |
| 2021 | (1) | |
$ | — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | — | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Moshe Dabah | |
| 2022 | | |
$ | 215,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 215,000 | |
| Vice President, Chief Operating Officer,
Chief Technology Officer, and Secretary | |
| 2021 | | |
$ | 215,000 | | |
| — | | |
| 1,079,500 | | |
| — | | |
| — | | |
$ | 1,294,500 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Adir Katzav | |
| 2022 | | |
$ | 260,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 260,000 | |
| Executive Vice President, Chief Financial
Officer, and Treasurer | |
| 2021 | (3) | |
$ | 125,000 | | |
| — | | |
| 1,079,500 | | |
| — | | |
| — | | |
$ | 1,204,500 | |
Does
not include perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is more than $10,000.
No executive officer earned any non-equity incentive plan compensation, nonqualified deferred compensation, or other compensation, during
the periods reported above. Stock Awards represent the aggregate grant date fair value of awards computed in accordance with Financial
Accounting Standards Board Accounting Standard Codification Topic 718. For additional information on the valuation assumptions with respect
to the restricted stock grants, refer to “Note 15 – Equity-Based Compensation” to the audited financial statements
included in the 2022 Annual Report. No executive officer serving as a director received any compensation for services on the Board of
Directors separate from the compensation paid as an executive for the periods above.
(1)
On January 1, 2020 and 2021, we entered into identical management services agreements (the “Management Agreement”)
with Nina Footwear. Pursuant to the Management Agreement, the Company engaged Nina Footwear to provide administrative and executive support
services to the Company. To date those services have consisted of Mr. Dabah and his sister-in-law, Ms. Nina Miner, the Chief Creative
Officer of Nina Footwear. The Management Agreement remains in place until terminated by mutual agreement of the parties. As compensation
for providing the services under the Management Agreement, we agreed to pay Nina Footwear 0.75% of our monthly net sales for the years
ended December 31, 2022 and January 1, 2022, the total fees payable to Nina Footwear pursuant to the Management Agreement were $110,836
and $150,697 for 2022 and 2021, respectively, and are included in general and administrative expenses. Mr. Dabah is compensated directly
by Nina Footwear.
(2)
On November 10, 2021, the Company granted 127,000 of restricted stock units to Mr. Moshe Dabah and Mr. Katzav, which vest in three equal
installments (i) 1/3 vested on May 15, 2022; (ii) 1/3 vest on May 15, 2023; and (iii) 1/3 vest on May 15, 2024. All the above grants
are subject to continued employment with the Company on each applicable vesting date.
(3)
Effective June 28, 2021, Adir Katzav was appointed as the Executive Vice President, Chief Financial Officer, and Treasurer of the Company.
Outstanding
Equity Awards at Fiscal Year End
The
following table sets forth information as of December 31, 2022, concerning outstanding equity awards for the executive officers named
in the Summary Compensation Table.
| | |
Stock
awards* | |
| Name | |
Number
of shares or units of stock that have not vested (#) | | |
Market
value of shares or units of stock that have not vested (#) | | |
Equity
incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | | |
Equity
incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)(2) | |
| Moshe
Dabah | |
| — | | |
| — | | |
| 84,667 | (1) | |
| 59,098 | |
| Adir
Katzav | |
| — | | |
| — | | |
| 84,667 | (1) | |
| 59,098 | |
*There
were no outstanding options awards outstanding as of December 31, 2022, held by any executive officers of the Company, whether or not
exercisable, unexercisable or unearned.
| (1) |
Stock
award vests in three equal installments (i) 1/3 vested on May 15, 2022; (ii) 1/3 vest on May 15, 2023; and (iii) 1/3 vest on May
15, 2024. All the above grants are subject to continued employment with the Company on each applicable vesting date. |
| (2) |
Calculated
by multiplying the closing market price of the Company’s common stock at the end of the last completed fiscal year ($0.6980)
by the number of shares of stock. |
Employment
Agreements and Key Man Insurance
We
have no employment agreements in place with executive officers; however, Mr. Ezra Dabah is compensated by Nina Footwear for services
rendered to the Company through the Management Agreement, discussed above under Footnote (1) to the Summary Compensation Table.
Notwithstanding
the above, the Board of Directors has discretion to award bonuses to our executive officers from time to time, in their discretion, consisting
of cash, grants of restricted stock, restricted stock units, options or other equity securities. Additionally, the Board of Directors
may increase the salary of any executive officer from time to time in its discretion.
We
have no key man insurance on any of our executive officers.
DIRECTORS
COMPENSATION
Non-Executive
Director Compensation Table
The
following table sets forth compensation information with respect to our non-executive directors during our fiscal year ended December
31, 2022.
| Name | |
Fees Earned or Paid in
Cash ($)*
| | |
Stock
Awards ($)
| | |
All Other Compensation ($) | | |
Total ($) | |
| David Oddi | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Bart Sichel (1) | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Jill Kronenberg (2) | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
*
The table above does not include the amount of any expense reimbursements paid to the above directors. No directors received any Non-Equity
Incentive Plan Compensation, Option Awards or Nonqualified Deferred Compensation. Does not include perquisites and other personal benefits,
or property, unless the aggregate amount of such compensation is more than $10,000.
| (1) |
Appointed
as a member of the Board of Directors on March 21, 2022. |
| |
|
| (2) |
Appointed
as a member of the Board of Directors on November 10, 2022. |
| |
|
| (3) |
As
of December 31, 2022, the aggregate number of restricted stock units outstanding held by each non-executive director serving on that
date was as follows: David Oddi – 6,667. None of the non-executive directors held any unvested option awards as of December
31, 2021. |
Non-Executive
Director Compensation Policy
Because
we are still in the development stage, our directors do not receive any cash compensation other than reimbursement for expenses incurred
during the performance of their duties or their separate duties as officers of the Company; however, the Board of Directors reserves
the right to pay cash consideration to directors from time to time, and/or to grant equity awards to such board members, which may be
in the form of options, restricted stock, restricted stock units, or other equity compensation. We have no written plan or policy for
director compensation.
The
Company has also entered into an indemnification agreement with each member of the Board of Directors of the Company.
EQUITY
COMPENSATION PLAN INFORMATION
Equity
Compensation Plan Table
The
following table provides certain information as of the end of the fiscal year 2022 with respect to securities that may be issued under
the Company’s equity compensation plans, which are comprised of the Kidpik Corp. First Amended and Restated 2021 Equity Incentive
Plan:
| Plan
category | |
Number
of securities to be issued upon exercise of outstanding options (a)(1) | | |
Weighted-average
exercise price of outstanding options, warrants (b) | | |
Number
of securities remaining available for future issuance under equity compensation plan (excluding
securities reflected in column(a)) (c) | |
| Equity compensation
plans approved by security holders | |
| 435,000 | | |
$ | 8.50 | | |
| 2,299,530 | (2) |
| Equity
compensation plans not approved by security holders | |
| — | | |
| — | | |
| — | |
| | |
| 435,000 | | |
| | | |
| 2,299,530 | (2) |
| |
(1) |
Not
including 176,000 shares of common stock which may be issuable upon vesting of 176,000 outstanding restricted stock units. |
| |
(2) |
Represents
2,299,530 shares of the Company’s common stock available for future awards under the 2021 Plan (defined below). |
First
Amended and Restated 2021 Equity Compensation Plan
Our
then sole director and majority stockholders adopted a 2021 Equity Incentive Plan, on May 9, 2021, which was amended and restated by
our then sole director and majority stockholders on September 30, 2021 (as amended and restated, the “2021 Plan”).
The 2021 Plan provides for the grant of incentive stock options, or ISOs, within the meaning of Section 422 of the Internal Revenue Code,
to our employees, and for the grant of non-statutory stock options, or NSOs, stock appreciation rights, restricted stock awards, restricted
stock unit awards (RSU awards), performance awards and other forms of awards to our employees, directors and consultants and any of our
affiliates’ employees and consultants. In making a determination of whether to make an award and the amount of such awards, the
Board may take into account the nature of the services rendered by such person, his or her present and potential contribution to the
Company’s success, and such other factors as the Board of Directors in its discretion shall deem relevant.
Subject
to adjustment in connection with the payment of a stock dividend, a stock split or subdivision or combination of the shares of common
stock, or a reorganization or reclassification of the Company’s common stock, the aggregate number of shares of common stock which
may be issued pursuant to awards under the 2021 Plan is the sum of (i) 2,600,000 shares, and (ii) an automatic increase on April 1st
of each year commencing on April 1, 2022 and ending on (and including) April 1, 2031, in an amount equal to the lesser of (A) five percent
(5%) of the total shares of common stock of the Company outstanding on the last day of the immediately preceding fiscal year; and (B)
1,500,000 shares of common stock; provided, however, that the Board may act prior to April 1st of a given year to provide that the increase
for such year will be a lesser number of shares of common stock, also known as an “evergreen” provision. Notwithstanding
the above, no more than 7,800,000 incentive stock options may be granted pursuant to the terms of the 2021 Plan. The number of shares
of common stock available for awards under the 2021 Plan increased automatically on April, 1, 2022, by 380,891 shares, equal to 5% of
our outstanding shares of common stock as of January 2, 2022, and April 1, 2023, by 384,409 shares, equal to 5% of our outstanding shares
of common stock as of December 31, 2022, and as a result a total of 3,365,300 shares are currently available for awards under the 2021
Plan, not including awards previously granted, of which 2,683,939 shares remain available for future awards, when including awards previously
granted.
Shares
subject to stock awards granted under our 2021 Plan that expire or terminate without being exercised in full or that are paid out in
cash rather than in shares will not reduce the number of shares available for issuance under our 2021 Plan. Shares withheld under a stock
award to satisfy the exercise, strike or purchase price of a stock award or to satisfy a tax withholding obligation will not reduce the
number of shares available for issuance under our 2021 Plan. If any shares of our common stock issued pursuant to a stock award are forfeited
back to or repurchased or reacquired by us (i) because of a failure to meet a contingency or condition required for the vesting of such
shares; (ii) to satisfy the exercise, strike or purchase price of a stock award; or (iii) to satisfy a tax withholding obligation in
connection with a stock award, the shares that are forfeited or repurchased or reacquired will revert to and again become available for
issuance under our 2021 Plan.
REPORT
OF THE AUDIT COMMITTEE
The
Audit Committee represents and assists the Board of Directors in fulfilling its responsibilities for general oversight of the integrity
of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the independent registered
public accounting firm’s qualifications and independence, the performance of the Company’s internal audit function and independent
registered public accounting firm, and risk assessment and risk management. The Audit Committee manages the Company’s relationship
with its independent registered public accounting firm (which reports directly to the Audit Committee). The Audit Committee has the authority
to obtain advice and assistance from outside legal, accounting or other advisors as the Audit Committee deems necessary to carry out
its duties and receives appropriate funding, as determined by the Audit Committee, from the Company for such advice and assistance.
In
connection with the audited financial statements of the Company for the year ended December 31, 2022, the Audit Committee of the Board
of Directors of the Company (1) reviewed and discussed the audited financial statements with the Company’s management and the Company’s
independent auditors; (2) discussed with the Company’s independent auditors the matters required to be discussed by the applicable
requirements of the Public Company Accounting Oversight Board (PCAOB) and the Securities and Exchange Commission; (3) received and reviewed
the written disclosures and the letter from the independent auditors required by the applicable requirements of the PCAOB regarding the
independent auditors’ communications with the Audit Committee concerning independence; (4) discussed with the independent auditors
the independent auditors’ independence; and (5) considered whether the provision of non-audit services by the Company’s principal
auditors is compatible with maintaining auditor independence.
Based
on its discussions with management and CohnReznick LLP, and its review of the representations and information provided by management
and CohnReznick LLP, the Audit Committee recommended to the Board of Directors, and the Board of Directors approved, the audited financial
statements be included in the Company’s Annual Report for the year ended December 31, 2022, for filing with the SEC.
The
undersigned members of the Audit Committee have submitted this Report to the Board of Directors.
Respectfully submitted,
The
Audit Committee
/s/
David Oddi (Chairman)
/s/
Bart Sichel
/s/
Jill Kronenberg
VOTING
RIGHTS AND PRINCIPAL STOCKHOLDERS
Holders
of record of our common stock at the close of business on the Record Date will be entitled to one vote per share on all matters properly
presented at the Annual Meeting. At the close of business on the Record Date, there were 7,688,194 shares of our common stock outstanding.
Other than our common stock, we have no other voting securities currently outstanding.
Our
stockholders do not have dissenters’ rights or similar rights of appraisal with respect to the proposals described herein and,
moreover, do not have cumulative voting rights with respect to the election of directors.
Security
Ownership of Management and Certain Beneficial Owners and Management
The
following table sets forth certain information regarding the beneficial ownership of our common stock as of April 24, 2023 (the “Date
of Determination”) by (i) each Named Executive Officer, as such term is defined above under “Executive Compensation”,
(ii) each member of our Board of Directors, (iii) each person deemed to be the beneficial owner of more than five percent (5%) of our
common stock, and (iv) all of our executive officers and directors as a group. Unless otherwise indicated, each person named in the following
table is assumed to have sole voting power and investment power with respect to all shares of our common stock listed as owned by such
person. The table below is based on a total 7,688,194 shares of our outstanding common stock as of the Date of Determination.
Beneficial
ownership is determined in accordance with the rules of the SEC and includes voting and/or investing power with respect to securities.
These rules generally provide that shares of common stock subject to options, warrants or other convertible securities that are currently
exercisable or convertible, or exercisable or convertible within 60 days of the Date of Determination, are deemed to be outstanding and
to be beneficially owned by the person or group holding such options, warrants or other convertible securities for the purpose of computing
the percentage ownership of such person or group, but are not treated as outstanding for the purpose of computing the percentage ownership
of any other person or group.
To
our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, as of the Date
of Determination, (a) the persons named in the table have sole voting and investment power with respect to all shares of common stock
shown as beneficially owned by them, subject to applicable community property laws; and (b) no person owns more than 5% of our common
stock. Unless otherwise indicated, the address for each of the officers or directors listed in the table below is 200 Park Avenue South,
3rd Floor, New York, New York 10003. All of the securities reported below are common stock shares as we do not currently have any other
outstanding classes of stock other than our common stock.
| Name
of Beneficial Owner | |
Number
of Common Stock Shares Beneficially Owned | | |
Percent
of
Common
Stock | |
| Directors, Named Executive
Officers and Executive Officers | |
| | | |
| | |
| Ezra Dabah | |
| 4,821,017 | (1)(2) | |
| 62.7 | % |
| Moshe Dabah | |
| 148,844 | (2)(3) | |
| 1.9 | % |
| Adir Katzav | |
| 69,949 | (4) | |
| * | |
| David Oddi | |
| 6,666 | (5) | |
| * | |
| Bart Sichel | |
| — | | |
| — | |
| Jill Kronenberg | |
| — | | |
| — | |
| All
executive officer and directors as a group (6 persons) | |
| 4,897,632 | (1)(2) | |
| 63.7 | % |
| | |
| | | |
| | |
| 5% Stockholders | |
| | | |
| | |
| Raine Silverstein (6) | |
| 1,508,408 | (7) | |
| 19.6 | % |
| Gila Goodman (8) | |
| 453,596 | (2)(9) | |
| 5.9 | % |
(1)
Includes 252,967 shares of common stock held directly by Mr. Dabah’s wife, Renee Dabah, 167,750 shares of common stock beneficially
owned by Renee Dabah as co-trustee of the u/a/d 02/02/1997, Trust FBO Eva Dabah (now Eva Yagoda); 327,448 shares of common stock beneficially
owned by Renee Dabah as co-trustee of the u/a/d 02/02/1997, Trust FBO Joia Kazam; 334,829 beneficially owned by Renee Dabah as co-trustee
of the u/a/d 02/02/1997, Trust FBO Moshe Dabah; 324,093 beneficially owned by Renee Dabah as co-trustee of the u/a/d 02/02/1997, Trust
FBO Chana Dabah (now Chana Rapaport); and 354,288 beneficially owned by Renee Dabah as co-trustee of the u/a/d 02/02/1997, Trust FBO
Yaacov Dabah. Does not include 42,333 restricted stock units which vest within 60 days of the Determination Date and are held by Moshe
Dabah, as Mr. Ezra Dabah is not provided voting rights for such securities until actual vesting and issuance. Also includes the shares
of common stock described in Note (2) below.
(2)
Pursuant to a Voting Agreement entered into on September 1, 2021, Ezra Dabah’s children, Moshe Dabah, who is also our Vice
President, Chief Operating Officer and Chief Technology Officer (who holds 109,433 shares of common stock), Eva Dabah (who holds 67,100
shares of common stock), Joia Kazam (who holds 67,100 shares of common stock), Chana Rapaport (who holds 67,100 shares of common stock)
and Yaacov Dabah (who holds 96,624 shares of common stock); Gila Goodman (who holds 305,976 shares of our common stock), who is the sister
of Ezra Dabah; Isaac Dabah, who is the brother of Ezra Dabah, and uncle of Moshe Dabah and his spouse (who hold 46,970 shares of common
stock); GMM Capital LLC, an entity which Isaac Dabah controls (which holds 295,911 shares of common stock); and Sterling Macro Fund,
an entity which Isaac Dabah controls (which holds 38,247 shares of common stock), and certain trusts in the names of Mr. Dabah’s
children (which in aggregate hold 1,508,408 shares of common stock), and which are beneficially owned by Mr. Dabah’s wife and mother-in-law
(see note 7 below), provided complete authority to Ezra Dabah to vote the shares of common stock held by such persons and entities at
any and all meetings of stockholders of the Company and via any written consents. The Voting Agreement has a term of three years, through
August 31, 2024, but can be terminated at any time by Mr. Dabah and terminates automatically upon the death of Mr. Dabah. In connection
with their entry into the Voting Agreement, each of the other parties thereto provided Mr. Dabah an irrevocable voting proxy to vote
the shares covered by the Voting Agreement. Due to the Voting Agreement, Mr. Dabah is deemed to beneficially own the shares of common
stock beneficially owned by Moshe Dabah, Gila Goodman, Isaac Dabah, and each of the trusts described in Note 7 below, which are included
under their own ownership in the table above as well, since such parties retained dispositive control over such securities.
(3)
Beneficial ownership includes 42,333 shares of unvested restricted stock units, settleable in shares of common stock, which vest
on May 15, 2023, subject to the holder’s continued service with the Company through such date.
(4)
Beneficial ownership includes 42,333 shares of unvested restricted stock units, settleable in shares of common stock, which vest
on May 15, 2023, subject to the holder’s continued service with the Company through such date.
(5)
Beneficial ownership includes 3,333 shares of unvested restricted stock units, settleable in shares of common stock, which vest
on May 15, 2023, subject to the holder’s continued service with the Company through such date.
(6)
Address: c/o 200 Park Ave South, New York NY 10003. Mrs. Silverstein is the mother-in-law of Ezra Dabah.
(7)
Includes 167,750 shares of common stock beneficially owned by Raine Silverstein as co-trustee of the u/a/d 02/02/1997, Trust FBO Eva
Dabah (now Eva Yagoda); 327,448 shares of common stock beneficially owned by Raine Silverstein as co-trustee of the u/a/d 02/02/1997,
Trust FBO Joia Kazam; 334,829 beneficially owned by Raine Silverstein as co-trustee of the u/a/d 02/02/1997, Trust FBO Moshe Dabah; 324,093
beneficially owned by Raine Silverstein as co-trustee of the u/a/d 02/02/1997, Trust FBO Chana Dabah (now Chana Rapaport); and 354,288
beneficially owned by Raine Silverstein as co-trustee of the u/a/d 02/02/1997, Trust FBO Yaacov Dabah.
(8)
Address: c/o 200 Park Ave South, New York NY 10003. Gila Goodman is the sister of Ezra Dabah.
(9)
Includes 147,620 shares of common stock held by a trust for the benefit of Gila Dabah’s grandchildren, which Gila Dabah serves
as co-trustee of and is deemed to share voting and dispositive power over.
Change
of Control
The
Company is not aware of any arrangements which may at a subsequent date result in a change of control of the Company.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Except
as discussed below or otherwise disclosed above under “Executive Compensation” and “Director Compensation“, which
information is incorporated by reference where applicable in this “Certain Relationships and Related Transactions” section,
the following sets forth a summary of all transactions since January 2, 2021, or any currently proposed transaction, in which the Company
was to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of the Company’s
total assets at the fiscal year-end for December 31, 2022 and January 1, 2022, and in which any officer, director, or any stockholder
owning greater than five percent (5%) of our outstanding voting shares, nor any member of the above referenced individual’s immediate
family, had or will have a direct or indirect material interest (other than compensation described above under “Executive Compensation”
and “Director Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in
connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as
applicable, in arm’s-length transactions.
Related
Party Transactions
Convertible
Notes and Conversions
From
January to April 2021, the Company sold an aggregate of $2,000,000 of convertible promissory notes to the following related parties:
Ezra Dabah, our Chief Executive Officer and Chairman ($1,100,000); Renee Dabah, the wife of Mr. Dabah ($200,000); Gila Goodman, the sister
of Ezra Dabah ($500,000); The u/a/d 02/02/1997, Trust FBO Chana Dabah (now Chana Rapaport) ($50,000); the u/a/d 02/02/1997, Trust FBO
Eva Dabah (now Eva Yagoda) ($50,000); u/a/d 02/02/1997, Trust FBO Moshe Dabah ($50,000); and u/a/d 02/02/1997, Trust FBO Yaacov Dabah
($50,000). The trustees of each of the trusts are Renee Dabah (the wife of Ezra Dabah, our Chief Executive Officer and Chairman) and
Raine Silverstein, the mother-in-law of Ezra Dabah. The beneficiary of each of the trusts are children of Ezra and Renee Dabah. Each
of the convertible notes were payable on January 15, 2022, did not accrue interest, and were automatically convertible into shares of
the Company’s common stock at a conversion price equal to the per share price of the next equity funding completed by the Company
in an amount of at least $2 million and required the repayment of 110% of such convertible note amount upon a sale of the Company (including
a change of 50% or more of the voting shares).
On
April 30, 2021, $2,000,000 of outstanding loans were converted into an aggregate of 339,526 shares of common stock of the Company (valued
at $5.89 per share), pursuant to the terms of a Conversion Agreement entered into with each of the note holders described below:
| Name | |
Relation
to Company | |
Debt
Converted | | |
Shares
Issued | |
| Ezra Dabah | |
Chief Executive Officer, director
greater than 5% stockholder | |
$ | 1,100,000 | | |
| 187,880 | |
| Renee Dabah | |
Wife of Ezra Dabah | |
$ | 200,000 | | |
| 34,221 | |
| Gila Goodman | |
Sister of Ezra Dabah | |
$ | 500,000 | | |
| 85,217 | |
| A trust for the benefit of Eva Yagoda | |
Trust is for the benefit of the daughter
of Ezra Dabah, CEO and trustees (including Renee Dabah, the wife of Ezra Dabah) are greater than 5% stockholders | |
$ | 50,000 | | |
| 8,052 | |
| A trust for the benefit of Moshe Dabah | |
Trust is for the benefit of Moshe Dabah,
Chief Operating and Technology Officer of Company, and the son of Ezra Dabah, CEO, and trustees (including Renee Dabah, the wife
of Ezra Dabah) are greater than 5% stockholders | |
$ | 50,000 | | |
| 8,052 | |
| A trust for the benefit of Chana Rapaport | |
Trust is for the benefit of the daughter
of Ezra Dabah, CEO and trustees (including Renee Dabah, the wife of Ezra Dabah) are greater than 5% stockholders | |
$ | 50,000 | | |
| 8,052 | |
| A trust for the benefit
of Yaacov Dabah | |
Trust is for the
benefit of the son of Ezra Dabah, CEO and trustees (including Renee Dabah, the wife of Ezra Dabah) are greater than 5% stockholders | |
$ | 50,000 | | |
| 8,052 | |
| | |
| |
| 2,000,000 | | |
| 339,526 | |
The
Conversion Agreement also provided preemptive rights for converting note holders, for so long as they hold not less than 5% of the Company’s
outstanding common stock, to acquire additional shares of common stock to maintain their then current percentage ownership in the Company,
on the same terms offered to any other party which triggered such preemptive rights, subject to certain exceptions, and drag-along rights
(providing for rights to be dragged along in any transaction relating to the sale of a majority of the Company’s outstanding shares
or assets, or certain similar transactions, on the same terms, and subject to the same conditions, as other sellers). The agreement also
provided anti-dilution rights such that if the Company, after the date of the closing of the transactions contemplated by the Conversion
Agreement, issued shares of common stock, or common stock equivalents (options, warrants or convertible securities), with a price per
share less than the conversion price of the converted notes of $5.89, then we are required to issue additional shares of common stock
equal to the difference between the number of shares issued to each purchaser in such anti-dilutive transaction and the aggregate amount
of each converted note, divided by such lower Dilutive Price. Such anti-dilutive, preemptive rights and other rights were subsequently
agreed to be terminated in May 2021, effective as of the date that the registration statement relating to our IPO was declared effective,
which date was November 10, 2021, pursuant to the Covenant Termination and Release Agreement discussed below.
On
May 11, 2021, Isaac Dabah, the brother of Ezra Dabah, our Chief Executive Officer and largest stockholder and Ivette Dabah (his spouse),
entered into an Investment Agreement. Pursuant to the Investment Agreement, they purchased 46,970 shares of our common stock for $0.275
million. The agreement also provided preemptive rights for the investors, for so long as they hold not less than 5% of the Company’s
outstanding common stock, to acquire additional shares of common stock to maintain their then current percentage ownership in the Company,
on the same terms offered to any other party which triggered such preemptive rights, subject to certain exceptions, drag-along rights
(providing for rights to be dragged along in any transaction relating to the sale of a majority of the Company’s outstanding shares
or assets, or certain similar transactions, on the same terms, and subject to the same conditions, as other sellers) and tag-along rights
(to tag-along with any transaction proposed by Ezra Dabah or his affiliates with a third party, on the same terms and in the same proportion,
as Ezra Dabah and his affiliates). The Investment Agreement also provided anti-dilution rights such that if the Company, after the date
of the closing of the transactions contemplated by the Investment Agreement, issued shares of common stock, or common stock equivalents
(options, warrants or convertible securities), with a price per share (a “Dilutive Price”) less than $5.84 (the purchase
price of the shares), then we are required to issue additional shares of common stock equal to the difference between the number of shares
issued to the purchasers and the aggregate purchase price paid by the purchasers ($0.275 million), divided by such lower Dilutive Price.
Such anti-dilutive, preemptive rights and other rights were subsequently agreed to be terminated in May 2021, effective as of the date
that the registration statement relating to our IPO was declared effective, which date was November 10, 2021, pursuant to the Covenant
Termination and Release Agreement discussed below.
On
May 11, 2021, Sterling Macro Fund (“Sterling”), which entity is controlled by Isaac Dabah, the brother of Ezra Dabah,
our Chief Executive Officer and largest stockholder, entered into an Investment Agreement. Pursuant to the Investment Agreement, Sterling
purchased 38,247 shares of our common stock for $0.225 million. The agreement also provided preemptive rights for the investor, for so
long as it holds not less than 5% of the Company’s outstanding common stock, to acquire additional shares of common stock to maintain
its then current percentage ownership in the Company, on the same terms offered to any other party which triggered such preemptive rights,
subject to certain exceptions, drag-along rights (providing for rights to be dragged along in any transaction relating to the sale of
a majority of the Company’s outstanding shares or assets, or certain similar transactions, on the same terms, and subject to the
same conditions, as other sellers) and tag-along rights (to tag-along with any transaction proposed by Ezra Dabah or his affiliates with
a third party, on the same terms and in the same proportion, as Ezra Dabah and his affiliates). The Investment Agreement also provided
anti-dilution rights such that if the Company, after the date of the closing of the transactions contemplated by the Investment Agreement,
issued shares of common stock, or common stock equivalents (options, warrants or convertible securities), with a price per share (a “Dilutive
Price”) less than $5.84 (the purchase price of the shares), then we are required to issue additional shares of common stock
equal to the difference between the number of shares issued to the purchaser and the aggregate purchase price paid by the purchaser ($0.225
million), divided by such lower Dilutive Price. Such anti-dilutive, preemptive rights and other rights were subsequently agreed to be
terminated in May 2021, effective as of the date that the registration statement relating to our IPO was declared effective, which date
was November 10, 2021, pursuant to the Covenant Termination and Release Agreement discussed below.
On
May 12, 2021, the Company and each then stockholder of the Company (other than one minority stockholder holding 147,620 or 2.7% of the
Company’s currently outstanding common stock), entered into a Covenant Termination and Release Agreement (the “Termination
Agreement”), whereby each executing stockholder, in consideration for $10, agreed to terminate any and all preemptive rights,
anti-dilutive rights, tag-along, drag-along or other special stockholder rights (collectively, “Special Stockholder Rights”)
which they held as a result of the terms of any prior Investment Agreements or Conversion Agreements, and release the Company from any
and all liability or obligations in connection with any such Special Stockholder Rights, effective as of the date that the registration
statement relating to our IPO was declared effective, which date was November 10, 2021. However, as described above, one non-related
stockholder of the Company who then held 147,620 shares of common stock (2.7% of the Company’s current outstanding common stock),
pursuant to a January 14, 2019 Conversion Agreement, did not execute such Covenant Termination and Release Agreement. Although the shares
originally held by such stockholder were subsequently transferred, the language regarding the termination of pre-emptive anti-dilution,
drag-along and tag-along rights is not clear. As such, although the Company believes that all rights were terminated upon the transfer
of the shares originally held by such minority stockholder, it is possible that such minority stockholder argues that he continues to
hold contractual drag-along rights (providing for rights to be dragged along in any transaction relating to the sale of a majority of
the Company’s outstanding shares or assets, or the sale of 50% or more of the outstanding common stock of the Company, or any merger
or consolidation of the Company, on the same terms, and subject to the same conditions, as other sellers) and tag-along rights (to tag-along
with any transaction proposed by Ezra Dabah, our Chief Executive Officer and Chairman, or his affiliates with a third party, on the same
terms and in the same proportion, as Ezra Dabah and his affiliates), as well as stockholder adjustment rights, whereby if the Company
ever issues shares of capital stock (or any securities convertible into or exchangeable or exercisable for capital stock, or any options,
warrants or other rights to purchase, subscribe for or otherwise acquire capital stock), at a price per share less than $3.3870749 per
share, the Company is required to issue such stockholder a number of additional shares of common stock equal to the difference between
(i) 147,620 shares of common stock and (ii) $500,000 divided by the dilutive price. Such anti-dilutive rights, drag-along and tag-along
rights, to the extent they continue to apply, will have no expiration date. As discussed above, it is the Company’s belief that
such rights expired automatically upon the transfer of the shares of stock originally held by such stockholder, however, in the event
such anti-dilutive rights are deemed to apply and triggered, it could cause significant dilution to existing stockholders. Furthermore,
such anti-dilution, tag-along and drag-along rights, or the risk that such rights continue to apply, may make the Company less desirable
for an acquisition, which may otherwise be beneficial to stockholders, may complicate future offerings and/or may result in the value
of the Company’s securities having trading prices less than a similarly situated company which did not have outstanding anti-dilution,
tag-along and drag-along rights, or risks that such rights apply.
On
August 13, 2021 and June 28, 2021, the Company borrowed $100,000 and $25,000, respectively, from u/a/d 02/02/1997, Trust FBO Yaacov Dabah.
On June 28, 2021 and August 13, 2021, the Company borrowed $25,000 and $100,000, respectively, from u/a/d 02/02/1997, Trust FBO Chana
Dabah. On June 28, 2021, the Company borrowed $25,000, from u/a/d 02/02/1997, Trust FBO Eva Dabah. On June 28, 2021, the Company borrowed
$25,000, from u/a/d 02/02/1997, Trust FBO Moshe Dabah (the Company’s Chief Operating and Technology Officer). The trustees of the
trusts are Renee Dabah (the wife of Ezra Dabah, our Chief Executive Officer and Chairman) and Raine Silverstein, the mother-in-law of
Ezra Dabah. The beneficiaries of the trusts are children of Ezra and Renee Dabah. The loans were evidenced by unsecured convertible promissory
notes. Each of the convertible notes are payable on January 15, 2022, do not accrue interest, and are automatically convertible into
shares of the Company’s common stock at a conversion price equal to the per share price of the next equity funding completed by
the Company in an amount of at least $2 million and required the repayment of 110% of such convertible note amount upon a sale of the
Company (including a change of 50% or more of the voting shares). On August 25, 2021, the parties agreed to amend the previously convertible
notes, to remove the conversion rights provided for therein and clarify that no interest accrues on the convertible notes. On December
27, 2021, the Company repaid $100,000 of the outstanding loans. On March 31, 2022, and effective on January 15, 2022, the parties amended
the notes to be payable on demand.
Nina
Footwear Transactions
We
sublease our New York corporate offices and our fulfillment center from Nina Footwear, which is 86.36% owned by Ezra Dabah, our Chief
Executive Officer and Chairman and his family, and which entity Mr. Dabah serves as Chief Executive Officer and member of the Board of
Directors.
In
the normal course of business, the Company made purchases from related parties for merchandise and shared services which amounted to
$10,484 and $47,403 for the years ended December 31, 2022 and January 1, 2022, respectively.
On
January 1, 2020 and 2021, we entered into identical Management Services Agreements (with each subsequent agreement replacing the prior
year’s agreement) with Nina Footwear (together, the “Management Agreement”). Pursuant to the Management Agreement,
the Company engaged Nina Footwear to provide administrative and executive support services to the Company. To date the administrative
and executive support services have consisted of the services of Mr. Dabah and his sister-in-law, Ms. Nina Miner, the Chief Creative
Officer of Nina Footwear. The Management Agreement remains in place until terminated by mutual agreement of the parties. For these services,
the Company was to pay a monthly management fee equal to 0.75% of the Company’s net sales collections. Management fees amounted
to $110,836 and $150,697 for fiscal years 2022 and 2021, respectively, and are included in general and administrative expenses.
The
New York corporate office sublease provides us the right to use a portion of the space leased by Nina Footwear (approximately 7,500 square
feet of space), in consideration for $27,500 per month of rental charges, which we believe is the current market price for such office
space in New York City. The Company will pay a percentage of the related party’s fixed monthly rent, including contingent rental
expenses. For 2021, related party rent amounted to $330,000, and is included in general and administrative expenses. On June 27, 2022,
the Company together with Nina Footwear, entered into a new agreement to extend the lease agreement with a third party for the office
space. The Company will pay 50% of the total monthly rent, including contingent rental expenses. The lease is set to expire on April
30, 2027, with an average monthly rent of $29,259.
The
Company entered into a new sub-lease agreement for warehouse space from a related party on April 1, 2021. The Company will pay 33.3%
of the related party’s fixed monthly rent. The lease expires on September 30, 2023. The minimum lease payments amount to $221,595
for the year ending January 1, 2022, $249,237 for the year ending December 31, 2022, and $191,106 for the year ending December 30, 2023.
To
date, Mr. Ezra Dabah, has not been paid any consideration from us, and has instead been paid compensation solely by Nina Footwear, which
as described above, he serves as Chief Executive Officer of. A portion of such consideration paid by Nina Footwear (which portion has
not been specifically allocated), is for services provided by Mr. Dabah to the Company under the Management Agreement.
In
April and June 2021, the Company entered into various short-term, unsecured promissory notes with Nina Footwear, an affiliated entity
under common control in the amount of $400,000. The notes are noninterest-bearing and due on December 31, 2021. On November 16, 2021,
the Company paid in full the outstanding loan amounts of $400,000. As of January 1, 2022 and January 2, 2021, there was $913,708 and
$599,811 due to Nina Footwear, respectively.
As
of December 31, 2022 and January 1, 2022, there was $1,107,665 and $913,708 due to Nina Footwear, respectively.
Other
Related Party Relationships
Yaacov
Dabah the son of Ezra Dabah, our Chief Executive Officer, runs the Company’s Amazon Marketplace site. Yaacov Dabah received $115,231
and $146,001, respectively in fiscal years 2022 and 2021, from the Company for services rendered.
Pursuant
to a Voting Agreement entered into on September 1, 2021, Ezra Dabah’s children, Moshe Dabah, who is also our Vice President, Chief
Operating Officer and Chief Technology Officer (who holds 109,433 shares of common stock), Eva Dabah (who holds 67,100 shares of common
stock), Joia Kazam (who holds 67,100 shares of common stock), Chana Rapaport (who holds 67,100 shares of common stock) and Yaacov Dabah
(who holds 96,624 shares of common stock); the Josh A. Kazam, the son-in-law of Mr. Ezra Dabah, Irrevocable Trust (which holds 416,020
shares of our common stock), whose trustee is Greg Kiernan; Gila Goodman (who holds 305,976 shares of our common stock), who is the sister
of Ezra Dabah; Isaac Dabah, who is the brother of Ezra Dabah, and uncle of Moshe Dabah and his spouse (who hold 46,970 shares of common
stock); GMM Capital LLC, an entity which Isaac Dabah controls (which holds 295,911 shares of common stock); and Sterling Macro Fund,
an entity which Isaac Dabah controls (which holds 28,247 shares of common stock), and certain trusts in the names of Mr. Dabah’s
children (which in aggregate hold 1,508,408 shares of common stock), and which are beneficially owned by Mr. Dabah’s wife and mother-in-law,
which persons/entities provided complete authority to Ezra Dabah to vote the shares of common stock held by such persons and entities
at any and all meetings of stockholders of the Company and via any written consents. The Voting Agreement has a term of three years,
through August 31, 2024, but can be terminated at any time by Mr. Dabah and terminates automatically upon the death of Mr. Dabah. In
connection with their entry into the Voting Agreement, each of the other parties thereto provided Mr. Dabah an irrevocable voting proxy
to vote the shares covered by the Voting Agreement. Due to the Voting Agreement, Mr. Dabah is deemed to beneficially own the shares of
common stock beneficially owned by Moshe Dabah, Gila Goodman, Greg Kiernan and Isaac Dabah and each of the trusts beneficially owned
by his wife and mother-in-law.
On
September 2, 2021, our founding and majority stockholder, Ezra Dabah, our Chief Executive Officer, provided his written intent to provide
continued financial support to the Company for approximately one year and day from September 3, 2021, the terms of which funding are
expected to be in similar form as to the funding previously provided by Mr. Dabah, provided that Mr. Dabah is under no contractual or
other obligation to provide such funding and the ultimate terms of such funding are unknown.
In
September, October and November 2021, the Company borrowed an aggregate of $2,500,000 from Ezra Dabah, who is our Chief Executive Officer
and Chairman. The notes are unsecured, noninterest-bearing and the principal is fully due on January 15, 2022, at the rate of 110% of
such note amount upon a sale of the Company (including a change of 50% or more of the voting shares). On December 27, 2021, the Company
paid $500,000 of the outstanding loan amounts. On March 31, 2022, and effective on January 15, 2022, the parties amended the notes to
be payable on demand. On June 2, 2022, Company paid $150,000 of the outstanding loan amounts.
On
March 31, 2022, the Company entered into a First Amendment to Promissory Note with Ezra Dabah, the Company’s Chief Executive Officer
and director, Raine Silverstein & Renee Dabah, co-trustee, u/a/d 02/02/1997, Trust FBO Chana Dabah and Raine Silverstein & Renee
Dabah, co-trustee, u/a/d 02/02/1997, Trust FBO Yaacov Dabah, pursuant to which the Company and the note holders agreed to amend certain
outstanding promissory notes evidencing an aggregate of $2,200,000 owed by the Company to such note holders (including $2,000,000 owed
to Mr. Dabah, $100,000 owed to Trust FBO Chana Dabah and $100,000 owed to Trust FBO Yaacov Dabah) which had a stated due date of January
15, 2022, to instead be payable on demand, effective as of January 15, 2022.
Indemnification
Agreements
We
have entered into indemnification agreements with each of our directors and officers. The indemnification agreements and our Second Amended
and Restated Certificate of Incorporation and Amended and Restated Bylaws require us to indemnify our directors and officers to the fullest
extent permitted by Delaware law.
Additional
Transactions
On
November 10, 2021, prior to the pricing of the IPO, the Company granted (a) 254,000 restricted stock units, to certain executive officers
(127,000 each to Moshe Dabah and Adir Katzav); and (b) 10,000 restricted stock units to a board of director member, David Oddi. Such
options and restricted stock units (i) vested 1/3 on May 15, 2022 (six months from the closing of the Company’s IPO); (ii) vest
1/3 on May 15, 2023 (eighteen months from the closing of the IPO); and (iii) vest 1/3 on May 15, 2024 (thirty months from the closing
date of the IPO). The options each have a term of 5 years.
Review,
Approval and Ratification of Related Party Transactions
The
Audit Committee reviews related party transactions to determine whether such transactions are fair to the Company and its stockholders.
The Audit Committee of the Board of Directors of the Company is tasked with reviewing and approving any issues relating to conflicts
of interests and all related party transactions of the Company (“Related Party Transactions”). The Audit Committee,
in undertaking such review, will analyze the following factors, in addition to any other factors the Audit Committee deems appropriate,
in determining whether to approve a Related Party Transaction: (1) the fairness of the terms for the Company (including fairness from
a financial point of view); (2) the materiality of the transaction; (3) bids / terms for such transaction from unrelated parties; (4)
the structure of the transaction; (5) the policies, rules and regulations of the U.S. federal and state securities laws; (6) the policies
of the Committee; and (7) interests of each related party in the transaction.
The
Audit Committee will only approve a Related Party Transaction if the Audit Committee determines that the terms of the Related Party Transaction
are beneficial and fair (including fair from a financial point of view) to the Company and are lawful under the laws of the United States.
In the event multiple members of the Audit Committee are deemed a related party, the Related Party Transaction will be considered by
the disinterested members of the Board of Directors in place of the Committee.
In
addition, our Code of Business Conduct and Ethics (described above under “Corporate Governance—Code of Ethics”),
which is applicable to all of our employees, officers and directors, requires that all employees, officers and directors avoid any conflict,
or the appearance of a conflict, between an individual’s personal interests and our interests.
PROPOSAL
NO. 2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
Audit Committee has appointed the firm of CohnReznick LLP as the Company’s independent registered public accounting firm to audit
the financial statements of Kidpik Corp. for the fiscal year ending December 30, 2023 and recommends that stockholders vote to ratify
this appointment. The Company does not anticipate a representative from CohnReznick LLP to be present at the annual stockholders’
meeting. In the event that a representative of CohnReznick LLP is present at the Annual Meeting, the representative will have the opportunity
to make a statement if he/she desires to do so and the Company will allow such representative to be available to respond to appropriate
questions. The affirmative vote of the holders of the majority of the shares entitled to vote on, and who voted for, against, or expressly
abstained with respect to, the matter at the Annual Meeting, assuming a quorum is present, will be required to ratify the selection of
CohnReznick LLP.
The
Audit Committee is not required to take any action as a result of the outcome of the vote on this proposal. In the event stockholders
fail to ratify the appointment, the Audit Committee may reconsider this appointment. Even if the appointment is ratified, the Audit Committee,
in its discretion, may direct the appointment of a different independent accounting firm at any time during the year if the Committee
determines that such a change would be in the Company’s and the stockholders’ best interests.
Fees
to Independent Registered Public Accounting Firm
As
outlined in the table below, we incurred the following fees for the fiscal years ended December 31, 2022 and January 1, 2022 for professional
services rendered by CohnReznick LLP for the audit of the Company’s annual financial statements and for audit-related services,
and all other services, as applicable.
| Type
of Fees | |
2022 | | |
2021 | |
| Audit Fees (1) | |
$ | 196,350 | | |
$ | 172,650 | |
| Audit-Related Fees(2) | |
$ | 1,942 | | |
$ | 62,440 | |
| Total | |
$ | 198,292 | | |
$ | 235,090 | |
| |
(1) |
Audit
fees represent fees for professional services provided by our principal accountant in connection with the audit of our financial
statements, the quarterly reviews of financial statements included in our Form 10-Q filings, the reviews of other statutory or regulatory
filings and assistance with and review of documents filed with the SEC. |
| |
|
|
| |
(2) |
Audit-related
fees consist of fees for professional services rendered in connection with the submission of Registration Statements on Form S-1
in 2021 and Form S-8 in 2022. |
Pre-Approval
Policy for Services Performed by Independent Auditor
The
Audit Committee has responsibility for the appointment, compensation and oversight of the work of the Company’s independent auditor.
As part of this responsibility, the Audit Committee must pre-approve all permissible services to be performed by the independent auditor.
The
Charter of the Audit Committee includes an auditor pre-approval policy which sets forth the procedures and conditions pursuant to which
pre-approval may be given for services performed by the independent auditor. Under the policy, the Audit Committee is required to review
and pre-approve: (i) auditing services (including those performed for purposes of providing comfort letters and statutory audits) and
(ii) non-auditing services that exceed a de minimis standard established by the Audit Committee, which are rendered to the Company by
its outside auditors (including fees). The Committee is also required: (i) if required by any applicable law or rule of Nasdaq request
from the outside auditors, at least annually, a written report describing: (a) the outside auditors’ internal quality-control procedures;
and (b) any material issues raised by the most recent internal quality-control review or peer review of the outside auditors, or by any
inquiry or investigation by government or professional authorities, within the preceding five years, with respect to one or more independent
audits carried out by the outside auditors, and any steps taken to deal with any such issues; (ii) if required by applicable law or rule
of Nasdaq review and discuss with the outside auditors any relationships or services that may impact the objectivity and independence
of the outside auditors; and (iii) receive from the independent auditor annually a formal written statement delineating all relationships
between the independent auditor and the Company consistent with Independence Standards Board Standard No. 1, as may be modified or supplemented
by such other standards as may be set by law or regulation or Nasdaq rules; and discuss with the independent auditor in an active dialogue
any such disclosed relationships or services and their impact on the independent auditor’s objectivity and independence and present
to the Board its conclusion with respect to the independence of the independent auditor.
After
reviewing the foregoing reports and the outside auditors’ work throughout the year, the Audit Committee is required to evaluate
the outside auditor’s qualifications, performance and independence. This evaluation is required to include the review and evaluation
of the lead partner(s) of the outside auditors. In making its evaluation, the Audit Committee may take into account the opinions of management
and the Company’s internal auditors (or other personnel responsible for the internal audit function) and shall take appropriate
action in response to the outside auditors’ report and the opinions of those the Audit Committee consults to satisfy itself of
the outside auditors’ independence and adequate performance.
The
Audit Committee is also required to further consider whether, in order to assure the continuing independence of the outside auditors,
there should be regular rotation of the lead audit partner (in addition to what may already be required by law or regulation).
The
Audit Committee pre-approved 100% of the services, if applicable, described above under the captions “Audit Fees,”
and “Audit-Related Fees,” for the years ended December 31, 2022 and January 1, 2022.
Recommendation
of the Board of Directors
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” PROPOSAL NO. 2, THE RATIFICATION OF THE APPOINTMENT
OF COHNREZNICK LLP AS KIDPIK’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
THE FISCAL YEAR 2023.
PROPOSAL
NO. 3
APPROVAL
OF AN AMENDMENT TO THE SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO AFFECT A REVERSE STOCK SPLIT
General
At
the Annual Meeting, stockholders will be asked to approve an amendment to Article IV of the Company’s Second Amended and Restated
Certificate of Incorporation (the “Reverse Stock Split Amendment”) to effect a reverse stock split of the Company’s
issued and outstanding shares of common stock by a ratio of between one-for-five and one-for-twenty, inclusive (the “Reverse
Stock Split”), with the exact ratio to be set at a whole number to be determined by our Board of Directors or a duly authorized
committee thereof in its discretion, at any time after approval of the amendment and prior to April 24, 2024. A vote “FOR”
Proposal No. 3 will constitute approval of the Reverse Stock Split Amendment and will grant the Board the authority to determine whether
to implement the Reverse Stock Split and to select the Reverse Stock Split ratio out of the range approved by the Company’s stockholders
at the Annual Meeting. The Board expects to authorize the consummation of the Reverse Stock Split only if and to the extent necessary
to regain and maintain compliance with the Nasdaq listing requirements, as further discussed under “Purpose” below.
Upon the effectiveness of the Reverse Stock Split (the “Effective Date”), the issued and outstanding shares of the
Company’s common stock immediately prior to the Effective Date will be reclassified into a fewer number of shares based on the
Reverse Stock Split ratio selected by the Board.
The
Reverse Stock Split, as more fully described below, will not change the number of authorized shares of common stock or the par value
of the Company’s common stock.
The
description in this Proxy Statement of the proposed Reverse Stock Split Amendment is qualified in its entirety by reference to, and should
be read in conjunction with, the full text of the Form of Amendment to the Second Amended and Restated Certificate of Incorporation attached
to this Proxy Statement as Appendix A which is subject to non-material technical, administrative or similar changes and modifications
in the reasonable discretion of the officers of the Company.
Purpose
The
sole purpose for the Reverse Stock Split is based on the Board’s belief that the Reverse Stock Split will likely be necessary to
maintain the listing of our common stock on the Nasdaq Capital Market. In the event that the Board, in its sole discretion, determines
to implement the Reverse Stock Split for such purpose, the Board believes that the Reverse Stock Split could also improve the marketability
and liquidity of the common stock.
Maintain
our listing on the Nasdaq Capital Market. Our common stock is traded on the Nasdaq Capital Market. On March 22, 2023, the Company
was notified by Nasdaq (the “Nasdaq Letter”) that it no longer satisfied the minimum bid price requirement for continued
listing, of $1.00 per share, as set forth in Nasdaq Listing Rule 5550(a)(2). The Nasdaq Letter provided that the Company has 180 calendar
days from the date therein to regain compliance (i.e., until September 18, 2023)(the “Expiration Date”). If the Company
fails to regain compliance by the Expiration Date, the Company may be granted a second 180-day grace period, or until March 16, 2024
(the “Second Nasdaq Extension Period”), within which to comply with the Nasdaq minimum bid price requirement, so long
as the Company meets The Nasdaq Capital Market initial listing criteria (except for the bid price requirement) and notifies Nasdaq in
writing of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.
During the compliance period, the common stock will continue to be listed and traded on the Nasdaq Capital Market. If the Company does
not regain compliance during the allotted compliance period, our common stock will be subject to delisting by Nasdaq. As of the date
of this Proxy Statement, our stock price has not had a minimum bid price of at least $1.00 for at least ten (10) consecutive business
days since the date of the Nasdaq Letter. In the event that our stock price satisfies the minimum bid price requirement of at least $1.00
for at least ten (10) consecutive business days without requiring the Reverse Stock Split, the Board may not implement the Reverse Stock
Split.
The
Board has considered the potential harm to the Company and its stockholders should Nasdaq delist our common stock from the Nasdaq Capital
Market. Delisting our common stock could adversely affect the liquidity of our common stock because alternatives, such as the OTCQB Market
maintained by OTC Markets, Inc. and/or the pink sheets, are generally considered to be less efficient markets. An investor likely would
find it less convenient to sell, or to obtain accurate quotations in seeking to buy our common stock on an over-the-counter market. Many
investors likely would not buy or sell our common stock due to difficulty in accessing over-the-counter markets, policies preventing
them from trading in securities not listed on a national exchange or other reasons. The Board of Directors believes that the Reverse
Stock Split is a potentially effective means for us to maintain compliance with the rules of Nasdaq and to avoid, or at least mitigate,
the likely adverse consequences of our common stock being delisted from the Nasdaq Capital Market by producing the immediate effect of
increasing the bid price of our common stock.
Improve
the marketability and liquidity of the common stock. In the event the Board elects to implement the Reverse Stock Split in order
to avoid the delisting of our common stock from the Nasdaq Capital Market, we also believe that the increased market price of our common
stock expected as a result of implementing the Reverse Stock Split will improve the marketability and liquidity of our common stock and
will encourage interest and trading in our common stock. A reverse stock split could allow a broader range of institutions to invest
in our common stock (namely, funds that are prohibited from buying stocks whose price is below a certain threshold), potentially increasing
the liquidity of our common stock. A reverse stock split could help increase analyst and broker interest in our stock as their policies
can discourage them from following or recommending companies with low stock prices. Because of the trading volatility often associated
with low-priced stocks, many brokerage houses and institutional investors have internal policies and practices that either prohibit them
from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers.
Some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to
brokers. Additionally, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price
than commissions on higher-priced stocks, the current average price per share of our common stock can result in individual stockholders
paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially
higher. It should be noted, however, that the liquidity of our common stock may in fact be adversely affected by the proposed Reverse
Stock Split given the reduced number of shares of common stock that would be outstanding after the Reverse Stock Split.
For
the above reasons, we believe that providing the Board with the ability to effect the Reverse Stock Split, in the event that it determines,
in its sole discretion, that implementing the Reverse Stock Split will help us regain and maintain compliance with the Nasdaq listing
requirements and, as a result, could also improve the marketability and liquidity of our common stock, is in the best interests of the
Company and our stockholders. However, regardless as to whether or not the Board believes that implementing the Reverse Stock Split could
help us regain and maintain compliance with the Nasdaq listing requirements, the Board reserves the right not to implement the Reverse
Stock Split if it determines, in its sole discretion, that it otherwise would not be in our and our stockholders’ best interests.
Accounting
Matters
The
par value of the shares of our common stock is not changing as a result of the implementation of the Reverse Stock Split. Our stated
capital, which consists of the par value per share of our common stock multiplied by the aggregate number of shares of our common stock
issued and outstanding, will be reduced proportionately on the effective date of the Reverse Stock Split. Correspondingly, our additional
paid-in capital, which consists of the difference between our stated capital and the aggregate amount paid to us upon the issuance of
all currently outstanding shares of our common stock, will be increased by a number equal to the decrease in stated capital. Further,
net loss per share, book value per share and other per share amounts will be increased as a result of the Reverse Stock Split because
there will be fewer shares of common stock outstanding.
Risks
of the Proposed Reverse Stock Split
We
cannot assure you that the proposed Reverse Stock Split will increase our stock price and have the desired effect of maintaining compliance
with the rules of the Nasdaq. The Board expects that the Reverse Stock Split of our common stock will increase the market price of
our common stock so that we are able to regain and maintain compliance with the Nasdaq minimum bid price listing standard. However, the
effect of the Reverse Stock Split upon the market price of our common stock cannot be predicted with any certainty, and the history of
similar reverse stock splits for companies in like circumstances is varied. The price per share of our common stock after the Reverse
Stock Split may not reflect the exchange ratio implemented by the Board and the price per share following the effective time of the Reverse
Stock Split may not be maintained for any period of time following the Reverse Stock Split. For example, based on the closing price of
our common stock on April 28, 2023 of $0.5985 per share, if the Reverse Stock Split was implemented at an Exchange Ratio of 1-for-10,
there can be no assurance that the post-split trading price of the Company’s common stock would be $5.985 or even that it
would remain above the pre-split trading price. Accordingly, the total market capitalization of our common stock following a Reverse
Stock Split may be lower than before the Reverse Stock Split.
Under
applicable Nasdaq rules, to regain compliance with the $1.00 minimum closing bid price requirement and maintain our listing on the Nasdaq
Capital Market, the $1.00 closing bid price must be maintained for a minimum of ten (10) consecutive business days. Accordingly, we cannot
assure you that we will be able to maintain our Nasdaq listing after the Reverse Stock Split is effected or that the market price per
share after the Reverse Stock Split will exceed or remain in excess of the $1.00 minimum bid price for a sustained period of time.
It
is possible that the per share price of our common stock after the Reverse Stock Split will not rise in proportion to the reduction in
the number of shares of our common stock outstanding resulting from the Reverse Stock Split, and the market price per post-Reverse Stock
Split share may not exceed or remain in excess of the $1.00 minimum bid price for a sustained period of time, and the Reverse Stock Split
may not result in a per share price that would attract brokers and investors who do not trade in lower priced stocks. Even if we effect
the Reverse Stock Split, the market price of our common stock may decrease due to factors unrelated to the stock split. In any case,
the market price of our common stock may also be based on other factors which may be unrelated to the number of shares outstanding, including
our future performance. If the Reverse Stock Split is consummated and the trading price of the common stock declines, the percentage
decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence
of the Reverse Stock Split. Even if the market price per post-Reverse Stock Split share of our common stock remains in excess of $1.00
per share, we may be delisted due to a failure to meet other continued listing requirements, including Nasdaq requirements related to
the minimum stockholders’ equity, the minimum number of shares that must be in the public float, the minimum market value of the
public float and the minimum number of round lot holders.
The
proposed Reverse Stock Split may decrease the liquidity of our common stock. The liquidity of our common stock may be harmed by the
proposed Reverse Stock Split given the reduced number of shares of common stock that would be outstanding after the Reverse Stock Split,
particularly if the stock price does not increase as a result of the Reverse Stock Split. In addition, investors might consider the increased
proportion of unissued authorized shares of common stock to issued shares to have an anti-takeover effect under certain circumstances,
because the proportion allows for dilutive issuances which could prevent certain stockholders from changing the composition of the Board
or render tender offers for a combination with another entity more difficult to successfully complete. The Board does not intend for
the Reverse Stock Split to have any anti-takeover effects.
Principal
Effects of the Reverse Stock Split
Common
stock. If this proposal is approved by the stockholders at the Annual Meeting and the Board determines to effect the Reverse Stock
Split and thus amend the Second Amended and Restated Certificate of Incorporation, the Company will file a certificate of amendment to
the Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware. Except for adjustments
that may result from the treatment of fractional shares as described below, each issued share of common stock immediately prior to the
Effective Date will automatically be changed, as of the Effective Date, into a fraction of a share of common stock based on the exchange
ratio within the approved range determined by the Board. In addition, proportional adjustments will be made to the maximum number of
shares of common stock issuable under, and other terms of, our stock plans, as well as to the number of shares of common stock issuable
under, and the exercise price of, our outstanding options and warrants.
Except
for adjustments that may result from the treatment of fractional shares of common stock as described below, because the Reverse Stock
Split would apply to all issued shares of our common stock, the proposed Reverse Stock Split would not alter the relative rights and
preferences of our existing stockholders nor affect any stockholder’s proportionate equity interest in the Company. For example,
a holder of two percent (2%) of the voting power of the outstanding shares of our common stock immediately prior to the effectiveness
of the Reverse Stock Split will generally continue to hold two percent (2%) of the voting power of the outstanding shares of our common
stock immediately after the Reverse Stock Split. Moreover, the number of stockholders of record will not be affected by the Reverse Stock
Split. The amendment to the Second Amended and Restated Certificate of Incorporation itself would not change the number of authorized
shares of our common stock or the par value thereof. The Reverse Stock Split will have the effect of creating additional unreserved shares
of our authorized common stock. Although at present we have no current arrangements or understandings providing for the issuance of the
additional shares of common stock that would be made available for issuance upon effectiveness of the Reverse Stock Split, other than
those shares needed to satisfy the conversion and/or exercise of the Company’s outstanding options, these additional shares of
common stock may be used by us for various purposes in the future without further stockholder approval, including, among other things:
| |
● |
raising
capital to fund our operations and to continue as a going concern; |
| |
● |
establishing
strategic relationships with other companies; |
| |
● |
providing
equity incentives to our employees, officers or directors; and |
| |
● |
expanding
our business or product lines through the acquisition of other businesses or products. |
While
the Reverse Stock Split will make additional shares of common stock available for the Company to use in connection with the foregoing,
the primary purpose of the Reverse Stock Split is to increase our stock price in order to regain and maintain compliance with the Nasdaq
minimum bid price listing standard, which compliance will be the sole factor in determining the ratio of the Reverse Stock Split.
The
following table sets forth the approximate number of issued and outstanding shares of common stock, net income (loss) per share for the
year ended December 31, 2022, and the approximate exercise prices of our outstanding options, each in the event of a one-for-five to
one-for-twenty Reverse Stock Split:
| | |
Pre-Reverse
Stock Split | | |
After
a 1-for-5 Reverse Stock Split | | |
After
a 1-for-10 Reverse Stock Split | | |
After
a 1-for-15 Reverse Stock Split | | |
After
a 1-for-20 Reverse Stock Split | |
| Common
Stock authorized(1) | |
| 75,000,000 | | |
| 75,000,000 | | |
| 75,000,000 | | |
| 75,000,000 | | |
| 75,000,000 | |
| Common Stock outstanding | |
| 7,688,194 | | |
| 1,537,639 | | |
| 768,820 | | |
| 512,547 | | |
| 384,410 | |
| Number
of shares of Common Stock reserved for issuance upon vesting of Restricted Stock Units(2) | |
| 176,000 | | |
| 35,200 | | |
| 17,600 | | |
| 11,734 | | |
| 8,800 | |
| Number of shares of
Common Stock reserved for issuance upon exercise of outstanding options | |
| 480,000 | | |
| 96,000 | | |
| 48,000 | | |
| 32,000 | | |
| 24,000 | |
| Number
of shares of Common Stock reserved for issuance under outstanding equity incentive plans (not including outstanding or vested awards)(3) | |
| 2,566,300 | | |
| 513,260 | | |
| 256,630 | | |
| 171,087 | | |
| 128,315 | |
| Number
of shares of Common Stock authorized but unissued and unreserved | |
| 64,089,506 | | |
| 72,817,901 | | |
| 73,908,950 | | |
| 74,272,632 | | |
| 74,454,475 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income (loss) applicable
to Common Stock per share for the year ended December 31, 2022 (basic and diluted) | |
$ | (0.99 | ) | |
$ | (4.95 | ) | |
$ | (9.90 | ) | |
$ | (14.85 | ) | |
$ | (19.80 | ) |
| Weighted Average Exercise Price of Outstanding
Options | |
$ | 8.50 | | |
$ | 42.50 | | |
$ | 85.00 | | |
$ | 127.50 | | |
$ | 170.00 | |
These
estimates do not reflect the potential effects of rounding up of fractional shares that may result from the Reverse Stock Split.
| |
(1) |
There
will be no change to the 75,000,000 authorized shares of common stock of the Company as a result of the Reverse Stock Split. |
| |
|
|
| |
(2) |
The
restricted stock units vest in two equal installments (i) 1/3 on May 15, 2023; and (ii) 1/3 on May 15, 2024, subject to continued
service to the Company on each applicable vesting date. |
| |
|
|
| |
(3) |
Represents
shares of common stock available for future awards under the 2021 Plan. |
Employee
Plans, Options, Restricted Stock Units. Pursuant to the terms of the 2021 Plan, in the event of a Capitalization Adjustment (as defined
in the 2021 Plan, which includes events such as the Reverse Stock Split), the Board shall appropriately and proportionately adjust: (i)
the class(es) and maximum number of shares of common stock subject to the 2021 Plan (currently 17,600,000 shares of common stock) and
the maximum number of shares by which the share reserve may annually increase (currently 1,500,000 shares of common stock), and (ii)
the class(es) and maximum number of shares that may be issued pursuant to the exercise of incentive stock options (currently 7,800,000
shares of common stock).
Based
upon the Reverse Stock Split ratio determined by the Board, proportionate adjustments are also generally required to be made to the per
share exercise price and the number of shares of common stock issuable upon the exercise or conversion of outstanding options, and any
convertible or exchangeable securities entitling the holders to purchase, exchange for, or convert into, shares of common stock. This
would result in approximately the same aggregate price being required to be paid under such options, and convertible or exchangeable
securities upon exercise, and approximately the same value of shares of common stock being delivered upon such exercise, exchange or
conversion, immediately following the Reverse Stock Split as was the case immediately preceding the Reverse Stock Split. The number of
shares of common stock subject to restricted stock units will be similarly adjusted, subject to our treatment of fractional shares of
common stock. The number of shares of common stock reserved for issuance pursuant to these securities and our 2021 Plan will be adjusted
proportionately based upon the Reverse Stock Split ratio determined by the Board of Directors, subject to our treatment of fractional
shares of common stock. See also the table above.
Listing.
Our shares of common stock currently trade on the Nasdaq Capital Market. The Reverse Stock Split will not directly affect the listing
of our common stock on the Nasdaq Capital Market, although we believe that the Reverse Stock Split could potentially increase our stock
price, facilitating compliance with Nasdaq’s minimum bid price listing requirement. Following the Reverse Stock Split, our common
stock will continue to be listed on the Nasdaq Capital Market under the symbol “PIK,” although our common stock is
expected to have a new CUSIP number, a number used to identify our common stock, and is expected to be subject to adjustments to the
trading price thereof mirroring the Reverse Stock Split ratio which will affect our common stock.
“Public
Company” Status. Our common stock is currently registered under Section 12(b) of the Exchange Act, and we are subject to
the “public company” periodic reporting and other requirements of the Exchange Act. The proposed Reverse Stock Split
will not affect our status as a public company or this registration under the Exchange Act. The Reverse Stock Split is not intended as,
and will not have the effect of, a “going private transaction” covered by Rule 13e-3 under the Exchange Act.
Odd
Lot Transactions. It is likely that some of our stockholders will own “odd-lots” of less than 100 shares of common
stock following the Reverse Stock Split. A purchase or sale of less than 100 shares of common stock (an “odd lot”
transaction) may result in incrementally higher trading costs through certain brokers, particularly “full service”
brokers, and generally may be more difficult than a “round lot” sale. Therefore, those stockholders who own less than 100
shares of common stock following the Reverse Stock Split may be required to pay somewhat higher transaction costs and may experience
some difficulties or delays should they then determine to sell their shares of common stock.
Authorized
but Unissued Shares; Potential Anti-Takeover Effects. Our Second Amended and Restated Certificate of Incorporation presently authorizes
75,000,000 shares of common stock and 25,000,000 shares of blank check preferred stock. The Reverse Stock Split would not change the
number of authorized shares of the common stock or blank check preferred stock as designated. Therefore, because the number of issued
and outstanding shares of common stock would decrease, the number of shares of common stock remaining available for issuance by us in
the future would increase. See also the table above.
Such
additional shares would be available for issuance from time to time for corporate purposes such as issuances of common stock in connection
with capital-raising transactions and acquisitions of companies or other assets, as well as for issuance upon conversion or exercise
of securities such as convertible preferred stock, convertible debt, warrants or options convertible into or exercisable for common stock.
We believe that the availability of the additional shares of common stock will provide us with the flexibility to meet business needs
as they arise, to take advantage of favorable opportunities and to respond effectively in a changing corporate environment. For example,
we may elect to issue shares of common stock to raise equity capital, to make acquisitions through the use of stock, to establish strategic
relationships with other companies, to adopt additional employee benefit plans or reserve additional shares of common stock for issuance
under such plans, where the Board determines it advisable to do so, without the necessity of soliciting further stockholder approval,
subject to applicable stockholder vote requirements under Delaware law and Nasdaq rules. If we issue additional shares of common stock
for any of these purposes, the aggregate ownership interest of our current stockholders, and the interest of each such existing stockholder,
would be diluted, possibly substantially.
The
additional shares of our common stock that would become available for issuance upon an effective Reverse Stock Split could also be used
by us to oppose a hostile takeover attempt or delay or prevent a change of control or changes in or removal of our management, including
any transaction that may be favored by a majority of our stockholders or in which our stockholders might otherwise receive a premium
for their shares of common stock over then-current market prices or benefit in some other manner. Although the increased proportion of
authorized but unissued shares of common stock to issued shares of common stock could, under certain circumstances, have an anti-takeover
effect, the Reverse Stock Split is not being proposed in order to respond to a hostile takeover attempt or to an attempt to obtain control
of the Company.
Fractional
Shares
We
will not issue fractional certificates for post-Reverse Stock Split shares of common stock in connection with the Reverse Stock Split.
To the extent any holders of pre-Reverse Stock Split shares of common stock are entitled to fractional shares of common stock as a result
of the Reverse Stock Split, the Company will issue an additional share to all holders of fractional shares of common stock.
For
example, if a stockholder presently holds 1,000 shares of common stock, such a stockholder will hold 50 shares of common stock following
a 1-for-20 reverse split. Similarly, if a stockholder presently holds 1,015 shares of common stock, such a stockholder will hold 51 shares
of common stock following a 1-for-20 reverse split. This is because the 50.75 shares of common stock such a stockholder would otherwise
hold following a 1-for-20 reverse split will be rounded up to the nearest whole share of common stock.
Determination
of the Reverse Stock Split Ratio
The
Board believes that stockholder approval of an amendment that gives the board the discretion to implement a reverse stock split at a
ratio of between one-for-five and one-for-twenty, inclusive, for the potential Reverse Stock Split is advisable and in the best interests
of our Company and stockholders because it is not possible to predict market conditions at the time the Reverse Stock Split would be
implemented. We believe that the proposed Reverse Stock Split ratios provide us with the most flexibility to achieve the desired results
of the Reverse Stock Split. The Reverse Stock Split ratio to be selected by our Board will not be more than one-for-twenty, nor less
than one-for-five. The Company will publicly announce the chosen ratio at least five business days prior to the effectiveness of the
Reverse Stock Split and the Reverse Stock Split will be implemented by April 24, 2024, if at all.
The
selection of the specific Reverse Stock Split ratio will be based on several factors, including, among other things:
| |
● |
our
ability to maintain the listing of our common stock on The Nasdaq Capital Market; |
| |
|
|
| |
● |
the
per share price of our common stock immediately prior to the Reverse Stock Split; |
| |
|
|
| |
● |
the
expected stability of the per share price of our common stock following the Reverse Stock Split; |
| |
|
|
| |
● |
the
likelihood that the Reverse Stock Split will result in increased marketability and liquidity of our common stock; |
| |
|
|
| |
● |
prevailing
market conditions; |
| |
|
|
| |
● |
general
economic conditions in our industry; and |
| |
|
|
| |
● |
our
market capitalization before and after the Reverse Stock Split. |
We
believe that granting our Board the authority to set the ratio for the Reverse Stock Split is essential because it allows us to take
these factors into consideration and to react to changing market conditions.
Potential
Consequences if the Reverse Stock Split Proposal is Not Approved
If
the Reverse Stock Split is not approved by our stockholders, our Board will not have the authority to effect the Reverse Stock Split
to, among other things, facilitate the continued listing of our common stock on The Nasdaq Capital Market by increasing the per share
trading price of our common stock to help ensure a share price high enough to satisfy the $1.00 per share minimum bid price requirement.
Any inability of our Board to effect the Reverse Stock Split could expose us to delisting from The Nasdaq Capital Market.
Effective
Date and Time of the Reverse Stock Split
If
the Reverse Stock Split is approved by our stockholders, the Reverse Stock Split would become effective, if at all, when the amendment
to our Second Amended and Restated Certificate of Incorporation to effect the Reverse Stock Split is accepted and recorded by the office
of the Secretary of State of the State of Delaware, or such later effective date and time as set forth in the amendment (the Effective
Date). However, notwithstanding approval of the Reverse Stock Split by our stockholders, the Board will have the sole authority to elect
whether or not and when (prior to April 24, 2024) to amend our Second Amended and Restated Certificate of Incorporation to effect the
Reverse Stock Split.
No
Dissenters’ Rights
Under
Delaware law, our stockholders would not be entitled to dissenters’ rights or rights of appraisal in connection with the implementation
of the Reverse Stock Split, and we will not independently provide our stockholders with any such rights.
Potential
Anti-Takeover Implications of the Reverse Stock Split
The
Reverse Stock Split could, if implemented and under certain circumstances, have an anti-takeover effect, although this is not our intent.
As discussed above, the authorized shares are not being reduced by the Reverse Stock Split. Therefore, additional shares could be issued
(within the limits imposed by applicable law, regulation and Nasdaq rules), in one or more transactions that could make a change in control
or takeover of the Company more difficult than if the authorized shares were also reduced by the Reverse Stock Split. For example, it
may be possible for the Board of Directors to delay or impede a takeover or transfer of control of the Company by causing such additional
authorized but unissued shares to be issued to holders who might side with the Board of Directors in opposing a takeover bid that the
Board of Directors determines is not in the best interests of the Company or its stockholders. The Reverse Stock Split therefore may
have the effect of discouraging unsolicited takeover attempts. By potentially discouraging initiation of any such unsolicited takeover
attempts, the Reverse Stock Split may limit the opportunity for the Company’s stockholders to dispose of their shares at the higher
price generally available in takeover attempts or that may be available under a merger proposal. The Reverse Stock Split may have the
effect of permitting the Company’s current management, including the current Board of Directors, to retain its position, and place
it in a better position to resist changes that stockholders may wish to make if they are dissatisfied with the conduct of the Company’s
business. However, the Reverse Stock Split has been proposed with the intent to increase the per share trading price of the Company’s
common stock, and not to construct or enable any anti-takeover defense or mechanism on behalf of the Company.
The
Board of Directors is not aware of any attempt to effect a change in control of the Company and the Board of Directors has not approved
the Reverse Stock Split with the intent that it be utilized as a type of anti-takeover device.
Exchange
of Stock Certificates
As
of the Effective Date, each certificate representing shares of our common stock outstanding before the Reverse Stock Split will be deemed,
for all corporate purposes, to evidence ownership of the reduced number of shares of our common stock resulting from the Reverse Stock
Split. All shares underlying options and other securities exchangeable or exercisable for or convertible into common stock also automatically
will be adjusted on the Effective Date.
Our
transfer agent, ClearTrust, LLC, will act as the exchange agent for purposes of exchanging stock certificates subsequent to the Reverse
Stock Split. Shortly after the Effective Date, stockholders of record will receive written instructions requesting them to complete and
return a letter of transmittal and surrender their old stock certificates for new stock certificates reflecting the adjusted number of
shares as a result of the Reverse Stock Split. Certificates representing shares of common stock issued in connection with the Reverse
Stock Split will continue to bear the same restrictive legends, if any, that were borne by the surrendered certificates representing
the shares of common stock outstanding prior to the Reverse Stock Split. No new certificates will be issued until such stockholder has
surrendered any outstanding certificates, together with the properly completed and executed letter of transmittal, to the exchange agent.
Until surrendered, each certificate representing shares of common stock outstanding before the Reverse Stock Split would continue to
be valid and would represent the adjusted number of shares of common stock, based on the ratio of the Reverse Stock Split.
Any
stockholder whose stock certificates are lost, destroyed or stolen will be entitled to a new certificate or certificates representing
post-Reverse Stock Split shares of common stock upon compliance with the requirements that we and our transfer agent customarily apply
in connection with lost, destroyed or stolen certificates. Instructions as to lost, destroyed or stolen certificates will be included
in the letter of instructions from the exchange agent.
Upon
the Reverse Stock Split, we intend to treat stockholders holding our common stock in “street name,” through a bank,
broker or other nominee, in the same manner as registered stockholders whose shares of common stock are registered in their names. Banks,
brokers and other nominees will be instructed to effect the Reverse Stock Split for their beneficial holders holding our common stock
in “street name.” However, such banks, brokers and other nominees may have different procedures than registered stockholders
for processing the Reverse Stock Split. If you hold your shares in “street name” with a bank, broker or other nominee,
and if you have any questions in this regard, we encourage you to contact your bank, broker or nominee.
YOU
SHOULD NOT DESTROY YOUR STOCK CERTIFICATES AND YOU SHOULD NOT SEND THEM NOW. YOU SHOULD SEND YOUR STOCK CERTIFICATES ONLY AFTER YOU HAVE
RECEIVED INSTRUCTIONS FROM THE EXCHANGE AGENT AND IN ACCORDANCE WITH THOSE INSTRUCTIONS.
If
any certificates for shares of common stock are to be issued in a name other than that in which the certificates for shares of common
stock surrendered are registered, the stockholder requesting the reissuance will be required to pay to us any transfer taxes or establish
to our satisfaction that such taxes have been paid or are not payable and, in addition, (a) the transfer must comply with all applicable
federal and state securities laws, and (b) the surrendered certificate must be properly endorsed and otherwise be in proper form for
transfer.
Book-Entry
Shares
The
Company’s registered stockholders may hold some or all of their shares electronically in book-entry form with our transfer agent.
These stockholders do not have stock certificates evidencing their ownership of common stock. They are, however, provided with a statement
reflecting the number of shares of common stock registered in their accounts. If you hold registered shares of common stock in book-entry
form, you do not need to take any action to receive your post-Reverse Stock Split shares of common stock in registered book-entry form.
Interests
of Directors and Executive Officers
Our
directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth in this proposal except
to the extent of their ownership of shares of our common stock and equity awards granted to them under our equity incentive plans.
Material
U.S. Federal Income Tax Consequences of the Reverse Stock Split
The
following is a summary of the material U.S. federal income tax consequences of the Reverse Stock Split to U.S. Holders (as defined below)
of our shares. This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), the Treasury regulations
promulgated thereunder, and administrative rulings and court decisions in effect as of the date of this proxy statement, all of which
may be subject to change, possibly with retroactive effect. This summary only addresses holders who hold their shares as capital assets
within the meaning of the Code and does not address all aspects of U.S. federal income taxation that may be relevant to U.S. Holders
subject to special tax treatment, such as financial institutions, dealers in securities, insurance companies, regulated investment companies,
persons that own shares as part of a hedge, straddle, or conversion transaction, persons whose functional currency is not the U.S. dollar,
foreign persons and tax-exempt entities. In addition, this summary does not consider the effects of any applicable state, local, foreign
or other tax laws.
As
used herein, the term “U.S. Holder” means a beneficial owner of common stock that is: (1) an individual citizen or
resident of the United States, any state thereof or the District of Columbia; (2) a corporation (or other entity treated as a corporation
for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District
of Columbia; (3) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (4) a trust if
(a) the administration of the trust is subject to the primary supervision of a court within the United States and one or more United
States persons have the authority to control all substantial decisions of the trust, or (b) a valid election is in effect under applicable
Treasury Regulations to be treated as a United States person. A “Non-U.S. Holder” is a beneficial owner of common
stock other than a U.S. Holder, a partnership or an entity treated as a partnership for U.S. federal income tax purposes.
If
a partnership, or any entity treated as a partnership for U.S. federal income tax purposes, holds our common stock, the tax treatment
of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in
a partnership holding our common stock, you are encouraged to consult your tax advisor.
We
have not sought and will not seek any ruling from the Internal Revenue Service (the “IRS”), or an opinion from counsel
with respect to the U.S. federal income tax consequences discussed below. There can be no assurance that the tax consequences discussed
below would be accepted by the IRS or a court. The authorities on which this summary is based are subject to various interpretations,
and it is therefore possible that the federal income tax treatment may differ from the treatment described below.
We
urge holders to consult with their own tax advisors as to any U.S. federal, state, local or foreign tax consequences applicable to them
that could result from the Reverse Stock Split.
The
Reverse Stock Split is intended to constitute a reorganization within the meaning of Section 368 of the Code and is not intended to be
part of a plan to increase periodically a stockholder’s proportionate interest in our earnings and profits. The discussion below
assumes the Reverse Stock Split so qualifies.
A
U.S. Holder generally should not recognize any gain or loss with respect to the Reverse Stock Split for U.S. federal income tax purposes,
except in the case of any portion of a share of common stock treated as a distribution or as to which a United States holder recognizes
capital gain as a result of the treatment of fractional shares, discussed below, and generally should have the same adjusted tax basis
and holding period in its common stock as such holder had immediately prior to the Reverse Stock Split.
A
U.S. Holder’s aggregate tax basis in the shares of common stock exchanged in the Reverse Stock Split generally must be allocated
to each share of common stock received in the Reverse Stock Split in a manner that reflects, to the greatest extent possible, that the
shares of common stock received are received in respect of shares of common stock that were acquired on the same date and at the same
price. To the extent it is not possible to allocate basis in this manner (for example, because the number of shares of common stock held
by a U.S. Holder that were acquired on the same date and at the same price could not be exchanged for a whole number of shares in the
Reverse Stock Split), the basis of the common stock exchanged must be allocated to the common stock received in a manner that minimizes
the disparity in the holding periods of the exchanged common stock whose basis is allocated to any particular common stock received.
The
Treasury Regulations provide detailed rules for allocating the tax basis and holding period of the pre-Reverse Stock Split shares of
common stock surrendered to the post-Reverse Stock Split shares of common stock received pursuant to the Reverse Stock Split. United
States holders of shares of common stock acquired on different dates and at different prices should consult their tax advisors regarding
the allocation of the tax basis and holding period of such shares.
The
treatment of fractional shares of common stock being rounded up to the next whole share is uncertain, and a United States holder that
receives a whole share of common stock in lieu of a fractional share of common stock may recognize income, which may be characterized
as either capital gain or as a dividend, in an amount not to exceed the excess of the fair market value of such whole share over the
fair market value of the fractional share to which the United States holder was otherwise entitled. The holding period for the portion
of a share of common stock treated as a distribution or as to which a United States holder recognizes gain might not include the holding
period of pre-Reverse Stock Split shares of common stock surrendered. United States holders should consult their tax advisors regarding
the U.S. federal income tax and other tax consequences of fractional shares being rounded to the next whole share.
THE
FOREGOING IS A SUMMARY OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT UNDER CURRENT LAW AND IS FOR GENERAL
INFORMATION ONLY. THE FOREGOING DOES NOT PURPORT TO ADDRESS ALL U.S. FEDERAL INCOME TAX CONSEQUENCES OR TAX CONSEQUENCES THAT MAY ARISE
UNDER THE TAX LAWS OF OTHER JURISDICTIONS OR THAT MAY ARISE UNDER THE TAX LAWS OF OTHER JURISDICTIONS OR THAT MAY APPLY TO PARTICULAR
CATEGORIES OF STOCKHOLDERS. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT,
INCLUDING THE APPLICATION OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS, AND THE EFFECT OF POSSIBLE CHANGES IN TAX LAWS THAT MAY
AFFECT THE TAX CONSEQUENCES DESCRIBED ABOVE.
Impact
of Potential Reverse Stock Split Upon Other Data Contained in this Proxy Statement
Unless
indicated to the contrary, the data contained in this proxy statement does not reflect the impact of any reverse stock split that may
be affected pursuant to the terms of Proposal No. 3.
Vote
Required
Approval
of the Reverse Stock Split Amendment to the Second Amended and Restated Certificate of Incorporation shall be effective upon the affirmative
vote of a majority of the shares eligible to vote at the annual meeting. Abstentions and broker non-votes with respect to this proposal
will have the effect of a vote “Against” approval of the Reverse Stock Split Amendment to the Second Amended and Restated
Certificate of Incorporation. Properly executed proxies will be voted at the annual meeting in accordance with the instructions specified
on the proxy; if no such instructions are given, the persons named as agents and proxies in the enclosed form of proxy will vote such
proxy “For” the approval of the Amendment to the Second Amended and Restated Certificate of Incorporation.
Recommendation
of the Board of Directors
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” PROPOSAL NO. 3, THE APPROVAL OF AN AMENDMENT
TO OUR SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION, TO EFFECT A REVERSE STOCK SPLIT OF OUR ISSUED AND OUTSTANDING SHARES
OF OUR COMMON STOCK, PAR VALUE $0.001 PER SHARE, BY A RATIO OF BETWEEN ONE-FOR-FIVE TO ONE-FOR-TWENTY, INCLUSIVE, WITH THE EXACT RATIO
TO BE SET AT A WHOLE NUMBER TO BE DETERMINED BY OUR BOARD OF DIRECTORS OR A DULY AUTHORIZED COMMITTEE THEREOF IN ITS DISCRETION, AT ANY
TIME AFTER APPROVAL OF THE AMENDMENT AND PRIOR TO APRIL 24, 2024.
ANNUAL
REPORT
Copies
of our 2022 Annual Report on Form 10-K (including our audited financial statements) filed with the SEC may be obtained without charge
by writing to Kidpik Corp., 200 Park Avenue South, New York, New York 10003, attention: Secretary. Exhibits to the Form 10-K will be
mailed upon similar request and payment of specified fees to cover the costs of copying and mailing such materials.
Our
audited financial statements for the fiscal year ended December 31, 2022 and certain other related financial and business information
are contained in our 2022 Annual Report to stockholders, which is being made available to our stockholders along with this proxy statement,
but which is not deemed a part of the proxy soliciting material.
ADDITIONAL
FILINGS
The
Company’s Forms 10-K, 10-Q, 8-K and all amendments to those reports are available without charge through the Company’s website
on the Internet as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange
Commission. Information on our website does not constitute part of this proxy statement.
The
Company will provide, without charge, to each person to whom a proxy statement is delivered, upon written or oral request of such person
and by first class mail or other equally prompt means within one business day of receipt of such request, a copy of any of the filings
described above. Individuals may request a copy of such information by sending a request to the Company, Attn: Corporate Secretary, Kidpik
Corp., 200 Park Avenue South, New York, New York 10003.
STOCKHOLDER
PROPOSALS FOR THE
2024
ANNUAL MEETING OF STOCKHOLDERS
Proxy
Statement Proposals
Pursuant
to Rule 14a-8 under the Exchange Act, if a stockholder wants to submit a proposal for inclusion in our proxy materials for the 2024 annual
meeting of stockholders, it must be received by our Secretary by no later than January 2, 2024, unless the date of the 2024 annual meeting
of stockholders is more than 30 days before or after June 19, 2024, in which case the proposal must be received at least ten (10) days
before we begin to print and mail our proxy materials and must otherwise comply with Rule 14a-8 under the Exchange Act. In order to avoid
controversy, stockholders should submit proposals by means, including electronic means, which permit them to prove the date of delivery.
Other
Proposals and Nominations
For
any proposal or director nomination that is not submitted for inclusion in next year’s proxy statement pursuant to the process
set forth above, but is instead sought to be presented directly at the 2024 annual meeting of stockholders, stockholders are advised
to review our Amended and Restated Bylaws as they contain requirements with respect to advance notice of stockholder proposals and director
nominations. To be timely, the notice must be received at our principal executive offices not less than 90 days nor more than 120 days
prior to the first anniversary of the date of the prior year’s annual meeting of stockholders. Accordingly, any such stockholder
proposal or director nomination must be received between February 20, 2024 and the close of business on March 21, 2024 for the 2024 annual
meeting of stockholders. In the event that the 2024 annual meeting of stockholders is convened more than 30 days prior to or delayed
by more than 30 days after June 19, 2024, notice by the stockholder, to be timely, must be received not later than the close of business
on the tenth (10th) day following the date of public disclosure of the date of such meeting. All proposals should be sent to our principal
executive offices at 200 Park Avenue South, New York, New York 10003, Attention: Corporate Secretary. These advance notice provisions
are in addition to, and separate from, the requirements that a stockholder must meet in order to have a proposal included in the proxy
statement under the rules of the SEC.
A
proxy granted by a stockholder will give discretionary authority to the proxies to vote on any matters introduced pursuant to the above
advance notice bylaw provisions, subject to applicable rules of the SEC.
Copies
of our Amended and Restated Bylaws are filed as, or incorporated by reference as, an exhibit to our Annual Reports on Form 10-K, which
is available at www.sec.gov available by request to the 200 Park Avenue South, New York, New York 10003.
In
addition to satisfying the deadlines in the advance notice provisions of our Amended and Restated Bylaws, a stockholder who intends to
solicit proxies pursuant to Rule 14a-19 in support of nominees submitted under these advance notice provisions for the 2024 annual meeting
must notify our Secretary in writing not later than April 20, 2024, and comply with the other requirements of Rule 14a-19(b).
All
submissions to, or requests from, the Secretary of the Company should be made to: Moshe Dabah, Secretary of Kidpik Corp., 200 Park Avenue
South, New York, New York 10003.
The
chairman of the annual meeting of stockholders has the sole authority to determine whether any nomination or other proposal has been
properly brought before the meeting in accordance with our Amended and Restated Bylaws. If we receive a proposal other than pursuant
to Rule 14a-8 or a nomination for the 2024 annual meeting, and such nomination or other proposal is not delivered within the time frame
specified in our Amended and Restated Bylaws, then the person(s) appointed by the Board and named in the proxies for the 2024 annual
meeting may exercise discretionary voting power if a vote is taken with respect to that nomination or other proposal.
IMPORTANT
NOTICE REGARDING DELIVERY
OF
STOCKHOLDER DOCUMENTS
SEC
rules permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and notices with respect
to two or more stockholders sharing the same address by delivering a single proxy statement or a single notice addressed to those stockholders.
This process, which is commonly referred to as “householding,” provides cost savings for companies by reducing printing
and mailing costs and helps the environment by conserving natural resources. Some brokers household proxy materials, delivering a single
proxy statement or notice to multiple stockholders sharing an address unless contrary instructions have been received from the affected
stockholders. Once you have received notice from your broker that they will be householding materials to your address, householding will
generally continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate
in householding and would prefer to receive a separate proxy statement or notice, or if your household is receiving multiple copies of
these documents and you wish to request that future deliveries be limited to a single copy, please notify your broker. You can also request
prompt delivery of a copy of the proxy statement and annual report by contacting us in writing at Kidpik Corp., 200 Park Avenue South,
New York, New York 10003.
OTHER
MATTERS
As
of the date of this proxy statement, our management has no knowledge of any business to be presented for consideration at the Annual
Meeting other than that described above. If any other business should properly come before the Annual Meeting or any adjournment thereof,
it is intended that the shares represented by properly executed proxies will be voted with respect thereto in accordance with the judgment
of the persons named as agents and proxies in the enclosed form of proxy.
The
Board of Directors does not intend to bring any other matters before the Annual Meeting of stockholders and has not been informed that
any other matters are to be presented by others.
INTEREST
OF CERTAIN PERSONS IN OR OPPOSITION
TO MATTERS TO BE ACTED UPON
| (a) |
No
officer or director of the Company has any substantial interest in the matters to be acted upon, other than his role as an officer
or director of the Company. |
| |
|
| (b) |
No
director of the Company has informed the Company that he intends to oppose the action taken by the Company set forth in this proxy
statement. |
COMPANY
CONTACT INFORMATION
All
inquiries regarding our Company should be addressed to our Company’s principal executive office:
Kidpik
Corp.
200
Park Avenue South
New
York, New York 10003
| |
BY
ORDER OF THE BOARD OF DIRECTORS |
| |
|
| |
/s/
Ezra Dabah |
| |
Ezra
Dabah |
| |
Chairman
of the Board |
| |
|
| Dated:
May 1, 2023 |
|
Appendix
A
FORM
OF
CERTIFICATE
OF AMENDMENT
TO
SECOND
AMENDED AND RESTATED
CERTIFICATE
OF INCORPORATION
OF
Kidpik
Corp.
Kidpik
Corp., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST:
The name of the corporation is Kidpik Corp.
SECOND:
The date of filing the original Certificate of Incorporation of the Corporation with the Secretary of State of the State of Delaware,
under the name Kidpik Corp., was August 18, 2016. On January 14, 2019, the Corporation filed an Amended and Restated Certificate of Incorporation
and on May 10, 2021, the Corporation filed a Second Amended and Restated Certificate of Incorporation with the Secretary of State of
the State of Delaware.
THIRD:
The Board of Directors of the Company (the “Board”), acting in accordance with the provisions of Sections
141 and 242 of the General Corporation Law of the State of Delaware (the “DGCL”), adopted resolutions
approving and deeming advisable an amendment to the Company’s Second Amended and Restated Certificate of Incorporation, as amended
(the “Restated Certificate”), as follows:
RESOLVED:
That Article IV.D of the Second Amended and Restated Certificate of Incorporation of the Corporation be and it hereby is
amended to add the following paragraph as follows:
“D.
Reverse Stock Split of Outstanding Common Stock. Upon this Certificate of Amendment becoming effective pursuant to the General
Corporation Law of the State of Delaware (the “Effective Time”), each share of Common Stock, either issued
and outstanding or held by the corporation as treasury stock, in each case immediately prior to the Effective Time (the “Old
Common Stock”), shall be automatically reclassified as and converted into [5 to 20, depending on the final ratio approved
by the Board of Directors] shares of Common Stock (the “New Common Stock”). No fractional shares of the
New Common Stock shall be issued in connection with the reverse stock split. To the extent any holders of shares of the Old Common Stock
are entitled to fractional shares of the New Common Stock as a result of the Reverse Stock Split, the Company will issue an additional
share of New Common Stock to all holders of fractional shares of the Old Common Stock. Any stock certificate that, immediately prior
to the Effective Time, represented shares of the Old Common Stock, shall from and after the Effective Time, automatically and without
the necessity of presenting the same for exchange, represent that number of whole shares of New Common Stock into which such shares of
Old Common Stock shall have been reclassified pursuant to this Certificate of Amendment. The Reverse Stock Split shall have no effect
on the number of authorized shares of capital stock, previously designated series of preferred stock (if any)(except to the extent such
reverse stock split results in an adjustment to the conversion ratios thereof), or the par value thereof as set forth above in the preceding
paragraphs.”
RESOLVED:
That except as expressly amended hereby no other aspect of such Article IV shall be modified hereby.
FOURTH:
The foregoing amendment was submitted to the stockholders of the Company for their approval at an annual meeting of stockholders
which was duly called and held, upon notice in accordance with Section 222 of the DGCL, at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment. Accordingly, said amendment was duly adopted in accordance with
the provisions of Section 242 of the DGCL.
FIFTH:
This Certificate of Amendment shall become effective on [_____], 2023 at [_____] Eastern Time.
IN
WITNESS WHEREOF, Kidpik Corp. has caused this certificate to be signed this day of , 2023.
| Kidpik
Corp. |
|
| |
|
| By: |
|
|
| |
|
|
| Its: |
|
|
| |
|
|
Printed
Name: |
|
|
Kidpik (NASDAQ:PIK)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
Kidpik (NASDAQ:PIK)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024
