UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 31, 2019
VERUS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-34106 | 11-3820796 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
9841 Washingtonian Boulevard, #390
Gaithersburg, MD 20878
(Address of principal executive offices) (zip code)
(301) 329-2700
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [X]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 1.01. Entry into a Material Definitive Agreement.
On July 31, 2019 (the “Closing Date”), Verus International, Inc., a Delaware corporation (the “Company”), Verus Foods, Inc., a corporation organized under the laws of Nevada and a wholly owned subsidiary of the Company (“Verus Foods” and, together with the Company, the “Borrowers”), entered into a secured, $500,000 revolving credit agreement (the “New Credit Facility”) with The Columbia Bank (the “Lender”).
Borrowings under the New Credit Facility accrue interest at a one-month LIBOR-based rate plus 300 basis-points (5.28% as of the Closing Date).
The outstanding balance under the New Credit Facility may be prepaid at any time without premium or penalty. The New Credit Facility contains customary affirmative and negative covenants, including a borrowing base requirement upon each request for an advance from the New Credit Facility.
Additionally, the New Credit Facility contains customary events of default and remedies upon an event of default, including the acceleration of repayment of outstanding amounts under the New Credit Facility.
The Borrower’s performance and payment obligations under the New Credit Facility are guaranteed by substantially all of the Borrower’s assets.
The Lender of the New Credit Facility has performed, and may in the future perform, various commercial banking services for the Company and its subsidiaries, for which it has received, and may in the future receive, customary fees and expenses.
The foregoing description of the New Credit Facility is only a summary and is qualified in its entirety by reference to the complete text of the New Credit Facility, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Company.
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference in this Item 2.03.
Item 8.01. Entry into a Material Definitive Agreement.
On July 31, 2019, the Company issued a press release announcing the New Credit Facility. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits. |
| - 2 - |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Verus International, Inc. | |
| Dated: August 1, 2019 | /s/ Anshu Bhatnagar |
| Anshu Bhatnagar | |
| Chief Executive Officer |
| - 3 - |
VERUS INTERNATIONAL ANNOUNCES $500,000 LINE OF CREDIT WITH THE COLUMBIA BANK, N.A.
Gaithersburg, MD – August 1, 2019 – Verus International, Inc. (“Verus” or the “Company”) (OTCQB:VRUS) is pleased to announce that it has signed a revolving line of credit (“LOC”) with The Columbia Bank, N.A. (a Fulton Financial Corporation affiliate). The revolving credit line is immediately available for eligible foreign trade financing.
The new revolving credit line carries a favorable variable rate of 30-day LIBOR plus 3.00%. The LOC will be monitored by the Fulton International Group and is considered an initial credit line, with the potential for increases to the LOC loan total in the future.
“This is a great resource for our international financing needs, because it is the kind of commercial credit that can expand over time as our relationship grows with The Columbia Bank,” explained CEO Anshu Bhatnagar. “At our current size, getting a line of credit for international trade from a U.S. bank is gratifying, because international credit is not easy to attain. We are particularly excited about the terms. For example, the 30-day LIBOR rate is currently 2.28%, so under our new loan facility we can borrow right now at just 5.28%, which is a tremendous improvement over any of our prior funding.”
Verus can immediately begin to deploy this source of funds for new business. Based on current average inventory turns, the Company believes that the LOC can generate from $7M to $10M in annual revenue (depending upon the product mix). In addition to this agreement, Verus is also exploring other vendor and trade relationships that can increase its growth trajectory via favorable terms that help minimize the financing for each shipment.
“This credit facility is part of our long-term strategy to qualify for significant sums of commercial and trade credit,” explained CEO Bhatnagar. “We have considerable unfunded business waiting for financing, so this funding will have one purpose – to grow our revenue. Because we are using this for working capital, the effect on sales will be immediate, with the added bonus that the favorable terms will also help our margins. We are very excited to receive this vote of confidence from a major U.S. financial institution. It important to remember that this is a just an initial credit line, so we expect the size of the credit line to increase over time.”
Operational Update
Three of the first four ice cream flavors have shipped and the fourth just completed production. To clarify the process for those who are unfamiliar with a distributor model, the initial shipments go directly to the distributor, not to the retail stores. So, the major store roll out for ice cream will occur in August as the distributors add the Verus products to their routes and stocking schedules. By the end of August, we expect the ice cream will be well represented in the initial target team markets. The candy is several weeks ahead in terms of placement and recently passed the 500-store mark. Verus will provide periodic updates on the store count of the Major League Baseball (MLB) products as distribution accelerates during the next few months.
MKR Group, Inc. | 12198 Ventura Blvd., Suite 200, Los Angeles, CA 91604 | Main: 323.468.2300 Fax: 323.205.4332
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In addition to selected corporate commentary, interested investors are encouraged to monitor upcoming product announcements via the official Twitter feed @Verus_Foods .
About Verus International, Inc.
Verus International operates an international food subsidiary (Verus Foods) that sells branded consumer products to customers worldwide. The Company trades on the OTC market (OTCQB: VRUS). Investors can find real-time quotes and market information for the Company on www.otcmarkets.com . Additional information is also available at the Company website: www.verusfoods.com .
Safe Harbor Statement
This press release contains certain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are identified by the use of the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project” and similar expressions that are intended to identify forward-looking statements. All forward-looking statements speak only as of the date of this press release. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, objectives, expectations and intentions reflected in or suggested by the forward-looking statements are reasonable, we can give no assurance that these plans, objectives, expectations or intentions will be achieved. Forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from historical experience and present expectations or projections. Actual results to differ materially from those in the forward-looking statements and the trading price for our common stock may fluctuate significantly. Forward-looking statements also are affected by the risk factors described in the Company’s filings with the U.S. Securities and Exchange Commission. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
Contacts
Investor Contact:
MKR Group Inc.
Todd Kehrli or Mark Forney
vrus@mkr-group.com
MKR Group, Inc. | 12198 Ventura Blvd., Suite 200, Los Angeles, CA 91604 | Main: 323.468.2300 Fax: 323.205.4332
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