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): April 29, 2020
VERUS
INTERNATIONAL, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-34106
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11-3820796
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(State
or other jurisdiction
of
incorporation)
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(Commission
File
Number)
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(I.R.S.
Employer
Identification
No.)
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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:
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[ ]
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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[ ]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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[ ]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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[ ]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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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 [ ]
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
7.01 Regulation FD.
On
April 29, 2020, the Company held a scheduled earnings call for its shareholders, wherein, among other business matters discussed,
an update was provided regarding the Company’s acquisition of ZC Top Apparel Manufacturing, Inc. (“ZC TAM”).
Previously, on April 3, 2020, the Company announced its binding agreement with ZC TAM to acquire a 51% controlling interest in
that entity, and its one year exclusive option with ZC TAM to complete the acquisition, secure purchase orders and make further
capital investments. Local counsel in the Philippines has been engaged and the anticipated closing date is by May 8, 2020.
Item
9.01 Financial Statements and Exhibits.
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No.
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Description
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99.1
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Press Release, dated April 3, 2020
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99.2
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Verus International, ZC Top Apparel Manufacturing, Inc. Term Sheet, April 3, 2020
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99.3
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Verus International, ZC Top Apparel Manufacturing, Inc Option Notification Letter, April 2, 2020
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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.
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Verus
International, Inc.
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Dated:
May 4, 2020
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/s/
Anshu Bhatnagar
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Anshu
Bhatnagar
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Chief
Executive Officer
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Exhibit 99.1
VERUS
INTERNATIONAL ACQUIRES CONTROLLING INTEREST IN N95 MASK AND BIOHAZARD SUIT MANUFACTURER
Gaithersburg,
MD – April 3, 2020 – Verus International, Inc. (“Verus” or the “Company”) (OTCQB: VRUS)
is pleased to announce that it has acquired a controlling 51% interest in ZC Top Apparel Manufacturing, Inc. (“ZC Top”),
a Philippines-based maker of reusable N95 fabric masks and biohazard suits.
ZC
Top produces a highly sought-after, premium mask that is N95 compliant and constructed of a washable shell and a multi-layer filter
than can provide protection for three days before replacement. The multi-layer filter consists of BFE99, PFE99 melt-blown and
spun-bond polypropylene, which are the same materials used in medical surgical and N95 disposable masks. The masks also feature
an activated carbon filter that functions like a high-efficiency particulate air (HEPA) filter, giving an additional layer of
protection compared to a regular N95 mask.
The
ZC Top masks also incorporate exhalation valve technology to facilitate smoother breathing, along with cotton construction to
create a high-quality reusable mask that is more comfortable and cost effective than many other anti-viral mask designs.
“Investors
may be surprised to see us enter this business, but we have international trade experience that is highly sought after in this
current environment. We were approached early in the COVID-19 crisis by the management team at ZC Top, who were experiencing an
overwhelming number of requests for protective gear from governments and other entities around the world,” explained Verus
International CEO Anshu Bhatnagar. “We are providing the funding and other resources to begin filling these pending orders
as quickly as possible. We are not yet prepared to provide revenue estimates, but based on initial demand, we believe protective
gear could eclipse all of our existing revenue sources.”
The
new ZC Top subsidiary currently has request for quotes (RFQs) from the U.S. Government and other governments, agencies and sellers
on multiple continents. The Philippines-based facility has a peak production capacity of ten million masks per month. Based on
pending orders, the Company believes that it can operate at near capacity for the foreseeable future.
“This
is a transformative moment for our company, giving us a new subsidiary that more than doubles our backlog overnight,” said
Bhatnagar. “We worked hard to get the resources in place to unlock this unused capacity at a time when the world needs it
most. This is an operating facility with an existing product line, so our investment will go directly to produce masks and biohazard
suits. We expect this to be a very profitable enterprise within the first month of operation, with a positive impact on our future
projections.”
Verus
will provide additional details on this new subsidiary during the upcoming Fiscal 2019 financial results conference call on Monday,
April 13, 2020 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time).
About
Verus International
Verus
is a global, emerging multi-line consumer packaged goods (CPG) company developing branded product lines in the U.S., South America,
and the Middle East. 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’s website, www.verusfoods.com,
and via the official Twitter feed @Verus_Foods
and the Big League Foods subsidiary Twitter feed @BigLeagueFoods.
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 could 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
Exhibit
99.2
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ZC TOP APPAREL MANUFACTURING INC.
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Standard Manufacturing Building (SMB) 4, Zamboanga Economic Zone, Talisayan, Z.C.
Telephone No.: (062) 955-3165
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TERM
SHEET
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COMPANY:
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ZC
TOP APPAREL MANUFACTURING INC. is the biggest apparel manufacturer in Mindanao. The company is engaged in international export
and local manufacturing distribution. Its factory is located within the Zamboanga City Special Economic Zone Authority –
a tax- free zone where other local and international companies are also based. The Company has been in operation for five (5)
years through its subsidiary Zamtees Garments and Advertising. It caters both local and international clients and is engaged in
E-commerce through Lazada, Shoppee and other online marketplaces.
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INVESTOR
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ANSHU
BHATNAGAR
Chief
Executive Officer
Verus International, Inc.
9841
Washington Blvd., Suite 390 Gaithersburg MD 20878
Telephone
No. (301) 329-2700
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AMOUNT
OF INVESTMENT
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100,000.00
USD at closing. Up to additional $300,000 as required.
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EQUITY
PERCENTAGE OFFERED
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Fifty
one percent (51%)
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TYPE
OF SECURITIES OFFERED
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Ordinary
shares – SEED
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EXISTING
CAPITAL STRUCTURE
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Ordinary
shares - Founders
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100%
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Ordinary
shares – SEED
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0%
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Preferred
shares
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0%
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Total
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100%
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DIVIDENDS
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51%
% noncumulative, payable if and when declared by the Board of Directors
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CONVERSION
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N/A
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ANTIDILUTION
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The
terms of the “Ordinary Shares – SEED” will contain standard “weighted average” anti-dilution
protection with respect to the issuance by the Company of additional securities, subject to
standard
and customary exceptions.
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VOTING
RIGHTS
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On
all matters submitted for stockholder approval, each share of “Ordinary Shares – SEED” shall be entitled to
such number of votes in relation to the total number of outstanding ordinary shares.
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LIQUIDATION
PREFERENCE
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The
holders of “Ordinary Shares – SEED” shall have equal preference with other shareholders when it comes to liquidation.
For purposes of this section, a merger, consolidation, sale of all or substantially all of the Company’s assets, or other
corporate reorganization shall constitute a liquidation, unless the holders of at least a majority of the holders of the ordinary
shares vote otherwise.
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BOARD
OF DIRECTORS
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Investor
assigns two (2) director. Investee assigns one (1) director.
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AFFIRMATIVE
COVENANTS
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While
any “Ordinary Shares – SEED” is outstanding, the company will:
a)
maintain adequate property and business insurance.
b)
comply with all laws, rules, and regulations.
c)
preserve, protect, and maintain its corporate existence; its rights, franchises, and privileges; and all properties necessary
or useful to the proper conduct of its business.
d)
submit all reports required under the Internal Revenue Code and the regulations promulgated thereunder.
e)
cause all key employees to execute and deliver noncompetition, non-solicitation, non-hire, nondisclosure, and assignment
of inventions agreements for a term of their employment with the Company plus one year in a form reasonably acceptable
to the Board of Directors.
f)
not enter into related party transactions without the consent of a majority of disinterested directors.
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FINANCIAL
STATEMENTS AND REPORTING
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The
Company will provide all information and materials, including, without limitation, all internal management documents, reports
of operations, reports of adverse developments, copies of any management letters, communications with shareholders or
directors, and press releases and registration statements, as well as access
to all senior managers as requested by holders of “Ordinary Shares – SEED”. In addition, the Company will
provide such holders with unaudited monthly and quarterly and audited yearly financial statements, as well as an annual
budget.
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REDEMPTION
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Commencing
with the date that is five years from the date of closing and on each one-year anniversary of such date thereafter, holders
of at least a majority of the then issued and outstanding shares of “Ordinary Shares – SEED” may request
the Company to redeem their shares at a price equal to the original purchase price for such shares plus any declared but
unpaid dividends, with 1/2 of the shares to be redeemed on such redemption date, and the remaining 1/2 on the date that is
one year from such date.
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RIGHT
OF FIRST REFUSAL
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Holders
of “Ordinary Shares – SEED” shall have a pro-rata right to participate in subsequent stock
issuances.
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RIGHT
OF FIRST REFUSAL AND COSALE
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In
the event that any of the Founders and existing executive management propose to sell their stock to third parties, the
Company shall have the first right to purchase the securities on substantially the same terms as the proposed sale; the
“Ordinary Shares – SEED” holders shall next have said right according to respective percentage ownership of
such shares or to sell proportionate percentage pursuant to cosale rights. Such rights shall terminate upon a Qualified
Public Offering.
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OTHER
PROVISIONS
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The
purchase agreement shall include standard and customary representations and warranties of the Company, and the other agreements
prepared to implement this financing shall contain other standard and customary provisions. Definitive agreements will be
drafted by Investors counsel. This term sheet is intended by the parties to be nonbinding. Company shall indemnify Investor
of liabilities prior to closing.
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EXPENSES
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The
Company will reimburse the holders of “Ordinary Shares – SEED” for reasonable legal fees in connection with
the transaction, payable at closing and only in the event that the transactions contemplated by this term sheet are consummated,
up to a limit of $500.
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CONDITIONS
TO CLOSING
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Closing
shall be subject to the standard and customary conditions, including the completion of due diligence and the delivery
to the investors of a legal opinion of counsel to the Company, regarding standard and customary matters and satisfactory
to the Investors
and
their legal counsel.
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NO
SHOP
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For
30 days, the Company will not solicit, encourage or accept any offers for the acquisition of Company capital stock (other than
equity compensation for service providers), or of all or any substantial portion of Company assets.
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The
terms in this term sheet are legally binding between the parties.
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ZC
TOP APPAREL MANUFACTURING, INC.
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By:
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/s/
Ronald Ian Bilang
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Name:
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Ronald
Ian Bilang
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Title:
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Chief
Executive Officer
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Date:
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April
3, 2020
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VERUS
INTERNATIONAL, INC.
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By:
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/s/
Anshu Bhatnagar
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Name:
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Anshu
Bhatnagar
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Title:
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Chief
Executive Officer
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Date:
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April
3, 2020
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Exhibit
99.3
9841
Washingtonian Blvd., Suite 390
Gaithersburg,
MD 20878
April
2, 2020
Mr.
Ronald Ian Bilang
ZC Top Apparel Manufacturing, Inc.
Standard Manufacturing Building (SMB)
Zamboanga
Economic Zone Authority (ZCSEZA)
Talisayan
Zamboanga City Del Sur, Philippines
Re:
Verus-TAM Term Sheet
Dear
Mr. Bilang:
This
letter is in reference to the signed Term Sheet by and between Verus International, Inc. (“Verus”) and ZC Top Apparel
Manufacturing, Inc. (“TAM”), pursuant to which Verus has agreed to purchase, and TAM has accepted, a direct investment
interest for Fifty-One Percent (51%) control of TAM (the “Control Interest”) in exchange for the sum certain of One
Hundred Thousand Dollars U.S. ($100,000.00 U.S.) (the “Purchase Price”) (a copy of which is attached). Each of Verus
and TAM shall be referred to individually as a “Party” and, collectively, as the “Parties.” Any use of
lower-case “party” shall mean a third-party.
Contemporaneous
with the funding of the first Purchase Order by Verus, Verus seeks binding assurance from TAM, for an exclusivity period of 365
days to purchase the Control Interest in TAM (the “Exclusivity Period”). This shall be an option and not an obligation.
Accordingly, Verus seeks the following binding agreement from TAM:
AGREEMENT
NOW
THEREFORE, for valuable consideration exchanged, the receipt and sufficiency of which is hereby acknowledged, the Parties,
intending to be legally bound, hereby agree as follows:
1.
Option and Exclusivity Period. For a period of 365 days from and after the date that this letter is signed by both Parties
(the “Exclusivity Period”), TAM shall grant to Verus, and no other party, the exclusive right to close the Control
Interest transaction (the “Exclusive Option”). The Exclusive Option may be in the form of an asset purchase, stock
purchase or any other transaction as advised by both US and Philippian counsel.
2.
Working Capital Terms. At any time after the exercise of the Exclusive Option, if TAM requires, Verus shall fund an additional
amount of One Hundred Thousand Dollars U.S. ($100,000.0 U.S.) towards the manufacturing of HAZMAT suits or respirators. If required,
Verus may fund an additional Two Hundred Thousand Dollars U.S. ($200,00.00 U.S.) for working capital. Working capital may be in
the form of P.O. financing, Letters of Credit, Bank Guarantee, LC discounting or any other structure that may be required to facilitate
the business.
3.
Binding Agreement. Paragraph (1.) above shall be binding upon the Parties.
4.
Governing Law and Venue. This Agreement shall be enforced under the laws of the State of New York (United States), without
regard to the conflicts of laws, and any action or controversy shall be resolved in the federal courts of the United States in
the State of New York.
5.
Confidentiality. This letter and its binding terms shall be and be deemed confidential and neither party shall disclose
to any third party its contents or the nature of the transactions.
6.
Counterparts. This letter agreement may be executed in one or more counterpart signatures via facsimile or other electronic
transfer.
The
undersigned, intending to be legally bound, have dually executed this Letter Agreement, as of the Effective Date.
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VERUS
International Inc.
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Signed:
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/s/
Anshu Bhatnagar
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By:
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Anshu
Bhatnagar, CEO
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Date:
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April
3, 2020
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ZC
Top Apparel Manufacturing, Inc.
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Signed:
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/s/
Ronald Ian Bilang
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By:
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Ronald
Ian Bilang
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Date:
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April
3, 2020
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