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): December 18, 2020
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 [ ]
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 December 18, 2020, Verus International, Inc. (the “Company”) entered into an amendment (the “Special Amendment”) to the promissory note issued to ACG Global Solutions, Inc. (the “Note”), effective March 31, 2020, whereby amendments were made to (i) extend the maturity date of the Note to December 31, 2021 (the “Maturity Date”), (ii) modify the prepayment clause to whereby payment by the Company of $150,000 or more on or before the Maturity Date will cause the Note to be forgiven and considered paid in full, (iii) modify the event of default and note collateral clauses, and (iv) add additional remedies upon the occurrence of an event of default.
The foregoing description of the Special Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of this document, which is attached as Exhibit 10.1 to this Current Report on Form 8-K, and is hereby incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On December 18, 2020, the Company and its wholly owned subsidiary, Big League Foods, Inc. (“BLF”), entered into a letter agreement (the “Agreement”) with ACG Global Solutions, Inc. (“ACG”) and Game on Foods, Inc. (“GOF”), whereby for certain consideration, BLF agreed to sell, transfer, and assign all of BLF’s rights, title, and interest in and to all of BLF’s assets to GOF.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of this document, which is attached as Exhibit 10.2 to this Current Report on Form 8-K, and is hereby incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |
| 10.1 | Form of Special Amendment | |
| 10.2 | Form of Agreement | |
| 99.1 | Press Release dated December 28, 2020 |
| -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: December 28, 2020 | /s/ Anshu Bhatnagar |
| Anshu Bhatnagar | |
| Chief Executive Officer |
| -3- |
Exhibit 10.1
PROMISSORY Note Amendment
This special amendment (the “Special Amendment”) is made as of the Effective Date indicated above the signature lines below, between ACG Global Solutions Inc. (“ACG”) and Verus International Inc. (“Verus”).
WHEREAS ACG and Verus entered into a promissory note dated on or about March 27, 2020 in which Verus agrees to repay money to ACG (the “Note”).
WHEREAS ACG is the Holder of the Note.
WHEREAS ACG and Verus desire to amend the terms of the Note.
NOW THEREFORE, in consideration of the representations, warranties, covenants, and agreements, and upon the terms and conditions hereinafter set forth, the parties hereto do hereby each agree as follows:
| a. | No Payments. ACG and Verus each agree and acknowledge that as of the Effective Date of this Special Amendment, no payments have been made pursuant to the Note. | |
| b. | Maturity Date. ACG agrees to extend the Note Maturity Date such that the Note Maturity Date shall be December 31, 2021. | |
| c. | Prepayment. The following prepayment clause shall be added to the Note: |
“In the event the Payee has received a total of $150,000.00 or more pursuant to the Note on or before December 31, 2021 (the “Prepayment”), then the Note shall be forgiven and considered paid in full”.
| d. | Event of Default. Until January 1, 2022, the only “Event of Default” on the Note shall be Company’s failure to make the Prepayment. | |
| e. | Note Collateral. ACG acknowledges Big League Foods is no longer an Asset of the Company nor collateral for the Note. | |
| f. | Additional Remedies. The following remedies shall be added to the Note, in addition to all other remedies available to the Payee: |
“If there exists an Event of Default, then the Company agrees to the entry of a Confession of Judgment. Specifically, Company hereby irrevocably appoints and constitutes Holder as Company’s duly appointed attorney-at-law to appear in any court of competent jurisdiction, and to confess judgment pursuant to the provision of the Delaware Code, against Company for all principal and interest and any other amounts due and payable under this Note, together with attorney’s fees and collection fees. This power of attorney is coupled with an interest and may not be revoked or terminated by Company. This power of attorney shall not be revoked or terminated by virtue of the death, disability, or dissolution of Company. No single exercise of the power to confess judgment shall be deemed to exhaust the power, and no judgment against Company shall bar subsequent action or judgment against such entity against whom the judgment has not been obtained in this Note.
The Company agrees to execute any document (within five (5) days of notice) that is requested by the Payee in order to enforce Payee’s rights under this Note, including but not limited to rights associated with the Confession of Judgment.”
| Page 2 |
| g. | No Other Changes. All other provisions of the Note not specifically addressed in this Special Amendment shall be unchanged and remain in full force and effect. |
The Effective Date of this Special Amendment shall be: DECEMBER 18, 2020.
| ACG Global Solutions Inc. | Verus International Inc. | |||
| Signed: | Signed: | |||
| Name: | Andrew Garnock | Name: | Anshu Bhatnagar | |
| Title: | Manager | Title: | Chief Executive Officer | |
Exhibit 10.2
[*] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
LETTER AGREEMENT
ACG Global Solutions Inc.; Verus International Inc.;
Big League Foods Inc.; Game On Foods Inc.
This letter agreement (the “Agreement”) is made as of the Effective Date indicated above the signature lines below, between ACG Global Solutions Inc. (“ACG”) and Verus International Inc. (“Verus”) and Big League Foods Inc. (“BLF”) and Game On Foods Inc. (“GOF”).
WHEREAS Verus is the sole owner of BLF.
WHEREAS BLF requires assistance with certain business matters.
WHEREAS, GOF has the experience and expertise to assist BLF in the BLF business matters.
WHEREAS Verus executed a certain promissory note in the Original Principal Amount of $312,500.00 on or about March 31, 2020 (the “Note”) and ACG is the Holder of the Note.
WHEREAS Verus and ACG desire to modify the terms of the Note.
NOW THEREFORE, in consideration of the representations, warranties, covenants, and agreements, and upon the terms and conditions hereinafter set forth, the parties hereto do hereby each agree as follows:
| 1. | Incorporation of Recitals, Attachments, Exhibits, and Schedules. Each of the recitals set forth above is hereby incorporated into and made a part of this Agreement and each attachment, exhibit, schedule that may be referenced in this Agreement shall be incorporated into this Agreement. |
| 2. | Promissory Note. ACG and Verus entered into the Note on or about March 31, 2020. ACG and Verus amended the terms of the Note by way of a letter agreement dated on or about July 20, 2020 (the “Letter Agreement”). ACG and Verus agree to further amend the Note as provided for in Schedule 2 to this Agreement. |
| 3. | BLF Employment Matters. BLF has failed to pay money that is due to the BLF workers indicated below, whether as at-will workers or based on written agreements, and BLF would like to pay the workers in exchange for a release of claims. In further consideration of the transfer, sale, and assignment of the BLF Assets (defined below), GOF agrees to promptly pay the settlement amounts indicated below to the workers. GOF’s payments are contingent upon evidence that BLF and each of the workers have signed the releases provided as Schedule 3 to this Agreement. |
| Name | Amount | ||
| ● | Miles Wheeler | $ [*] | |
| ● | Robert Holz | $ [*] | |
| ● | Jim Wheeler | $ [*] |
[*] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
| 4. | BLF Assets. |
| a. | In further consideration for the assistance with the BLF employment matters, BLF agrees to sell, transfer, and assign all of BLF’s rights, title, and interest in and to all of BLF’s assets, whether or not appearing on the BLF balance sheet (the “BLF Assets”), to GOF. | |
| b. | As requested by GOF, BLF agrees to promptly execute all documents required to assign or transfer the BLF Assets, including but not limited to a Bill of Sale. | |
| c. | BLF represents and warrants that the following are included in the Assets of BLF in “as-is and where is condition”: |
(1) All GTIN and UPC #’s and accompanying GS1 accounts
(2) 1WorldSync account and corresponding vendor connections
(3) All CAD drawings, 3D renders, product designs, product moulds
(4) Big League Foods logo and trademarks
(5) Website, social media pages/ handles
(6) Product placement images and advertisements
(7) Product promotion materials and accompanying sweepstakes and slogans
(8) SPS account and accompanying vendor EDI connections
(9) Brokerage contacts and network
(10) Trade show booths and reservations
(11) Employee computers that are currently in their possession
and accompanying files and data
(12) Employee phones that are currently in their possession
(13) Employee email addresses and accompanying files and data
(14) MLB license # ML-5046
(15) NHL license # 100430
| 5. | Verus Assets. |
| a. | In further consideration for GOF assisting its related entity with the employment matters, Verus agrees to sell, transfer, and assign to GOF all of Verus’ rights, title, and interest in the following Verus tangible property and assets located in Verus’ Gaithersburg office on an as-is and where is condition (the “Verus Property”). |
| i. | Refrigerator in possession of Jim Wheeler | ||
| ii. | HP Ink Jet Printer | ||
| iii. | Microwave | ||
| iv. | Kitchen goods |
For removal of any doubt, 8x8 phones and Lenovo desktop are NOT included and will be returned.
| b. | As requested by GOF after the Effective Date, Verus agrees to promptly execute all documents required to assign or transfer the Verus Property Assets, including but not limited to a Bill of Sale. | |
| c. | Verus represents and warrants that: (i) Verus is the sole owner of BLF and (ii) Verus owns the Verus Property. |
[*] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
| 6. | Release Contingency. This Agreement is contingent upon, and is not effective until, ACG and GOF have each received a fully executed version of the Release provided in Schedule 6 to this Agreement. |
| 7. | Consideration. All parties to this Agreement agree that sufficient consideration is or has been exchanged between the parties in return for the representations, warranties, covenants, and promises in this Agreement and the Schedules. |
| 8. | Representations and Warranties. Each party represents and warrants to the other party that: |
| a. | Each party has the requisite corporate authority to enter into this Agreement. Neither the execution and delivery of this Agreement nor the performance hereunder will conflict with or constitute a default under: (i) any governing instrument of the party; (ii) any law, regulation, statute, or ordinance applicable to the party; (iii) any agreement that involves the BLF Assets or the Verus Property, or (iv) any agreement, instrument, judgment, consent, or order to which the party or an affiliate is a party or by which the party or an affiliate, is bound. | |
| b. | This Agreement shall not change any of the provisions or obligations of the Note except as specifically referenced in this Agreement. |
| 9. | Indemnification. Verus and BLF (each an “Indemnifying Party”), jointly and severally, will indemnify and hold harmless ACG, GOF and each of their affiliated entities, and their respective officers, directors, employees, members, shareholders, owners, and agents (each and “Indemnified Party”) from and against all liabilities, losses, damages, claims, and expenditures, including reasonable legal fees (the “Expenses”), that may be incurred or suffered by an Indemnified Party arising out of third party claims related to the Indemnifying Party’s: (i) obligations under this Agreement; (ii) breach of this Agreement; or (iii) inaccurate representations or warranties in this Agreement. Upon request from ACG, the Indemnifying Party agrees to promptly pay all reasonable amounts requested by the Indemnified Party for advance payment of anticipated Expenses. |
| 10. | General Provisions. All of the General Provisions in the Letter Agreement shall be incorporated herein. |
Each person that executes this Agreement has the authority to execute it and to bind the person or entity on whose behalf he or she is signing. Each signatory shall indemnify and hold harmless the other parties from any claims, expenses, and liabilities (including attorneys’ fees) arising from any asserted or actual lack of authority to execute this Agreement.
[*] Certain information in this document has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
The Effective Date of this Agreement shall be: DECEMBER 18, 2020.
| ACG Global Solutions Inc. | Verus International Inc. | |||
| Signed: | Signed: | |||
| Name: | Andrew Garncok | Name: |
Anshu Bhatnagar |
|
| Title: | Managar | Title: | Chief Executive Officer | |
| Big League Foods Inc. | Game On Foods Inc. | |||
| Signed: | Signed: | |||
| Name: | Anshu Bhatnagar | Name: |
Jim Wheeler |
|
| Title: | Chief Executive Officer | Title: |
President |
|
Exhibit 99.1
Verus International Enters Into Agreements with Game On Foods
Gaithersburg, MD – December 28, 2020 – Verus International, Inc. (“Verus” or the “Company”) (OTC Pink: VRUS) is announcing that the Company and its wholly owned subsidiary, Big League Foods, Inc. (“BLF”), entered into a letter agreement (the “Agreement”) with ACG Global Solutions, Inc. (“ACG”) and Game on Foods, Inc. (“GOF”), whereby for certain consideration, BLF agreed to sell, transfer, and assign all of BLF’s rights, title, and interest in and to all of BLF’s assets to GOF. Under this agreement, GOF will manufacture, package and ship candy products under existing BLF licenses, while Verus will operate its own sales organization in support of this arrangement.
GOF is in the process of building a custom fulfillment operation that is capable of producing smaller and more variable lot sizes compared to traditional candy suppliers. This facility is expected to solve some of the supply chain issues inherent under licenses that have large numbers of teams and widely varying market dynamics. The Agreement is designed to significantly reduce current and future capital costs for Verus. The Agreement will also remove certain salary and other obligations, and reduce existing liabilities, as ACG has agreed to modify the terms of its promissory note to $150,000 and extend the terms until December 31, 2021.
“Licensed products require greater scale and significant capital investment, so today’s announcement solves a major problem for us,” explained Verus CEO Anshu Bhatnagar. “We consider this Agreement an amazingly positive development, because it will allow us to participate in the growth of the business, without facing the significant risks and ongoing capital requirements estimated at more than $1.0 million annually, which is required to develop this into a profitable operation. This Agreement reduces our ongoing expense by eliminating significant guaranteed annual license minimums, salaries and inventory costs, so the benefit will be immediate. These changes will enable us to follow more closely to our international model, where we primarily operate as a sales organization. We will continue to distribute and sell the BLF products, and have also freed up additional capital for our other divisions. Overall, today’s announcement puts us in a much better position to move forward with our strategic plan in 2021.”
Operational Update
The Company’s previously announced reverse stock split is proceeding as expected as final regulatory approval is in process. Upon completion of the reverse stock split, the Company expects to immediately proceed with previously discussed strategic initiatives.
About Verus International
Verus is a global, emerging multi-line consumer packaged goods (CPG) company developing branded product lines in the U.S. and on a global basis. The Company trades on the OTC market (OTC Pink: 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, the Eliot’s Nut Butters website, www.eliotsnutbutters.com; and via the official Twitter feed @Verus_Foods, and the Pachyderm Labs subsidiary Twitter feed @PachydermLabs.
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