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): March 6,
2020
YOUNGEVITY INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
|
Delaware
|
|
001-38116
|
|
90-0890517
|
|
(State
or other jurisdiction of incorporation)
|
|
(Commission
File No.)
|
|
(IRS
Employer Identification No.)
|
2400 Boswell Road, Chula Vista, CA 91914
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area
code: (619)
934-3980
N/A
(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:
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
Common
Stock
|
YGYI
|
The
Nasdaq Capital Market
|
|
Series
D Preferred Stock
|
YGYIP
|
The
Nasdaq Capital Market
|
Indicate by check mark whether the registrant is an emerging growth
company as defined in 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 checkmark 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 March 6, 2020, CLR Roasters, Inc.(“CLR”), a wholly
owned subsidiary of Youngevity International, Inc. (the
“Company”) entered into a Finance, Security and ARAP
Monetization Agreement (the “Agreement”) with
H&H
Export Y CIA. LTDA, and H&H Coffee Group Export Corp
(collectively, “H&H”). H&H is the agent for the
independent green coffee growers from which CLR purchases its
unprocessed coffee beans and H&H also purchases processed
coffee beans from CLR that it sells to third parties. The owners of
H&H are also employees of CLR and manage the La Pita plantation
in Nicaragua for which they receive a percentage of profit derived
from green coffee sales processed in Nicaragua. Pursuant to the
Agreement, H&H has agreed to allow a Nicaraguan agency (the
“Agency”), to advance on behalf of H&H,
approximately $22 million of the $30.1 million of accounts
receivable owed by H&H to CLR for its purchase of processed
green coffee during the 2019 season. The Agency has also entered
into a $46.5 credit facility with H&H to provide funding for
H&H’s future coffee purchases of unprocessed green coffee
from independent producers. Of the 2020 sales amounts to be billed
by CLR for future coffee purchases of processed coffee, CLR will be
paid an additional amount, at a rate of $.225 per pound of
processed green coffee shipped to customers, to be applied to the
remaining outstanding 2019 accounts receivable balance owed by
H&H to CLR. Until such time as the entire accounts receivable
balance is paid in full, H&H has agreed not take any profit
interest. CLR expects this arrangement to ensure that it has an
adequate supply of unprocessed coffee beans for the 2020
season.
A copy
of the Finance, Security and AR AP Monetization Agreement, dated
March 6, 2020, by and between H&H Coffee Group Export Corp,
H&H Export Y CIA. LTDA. and CLR Roasters, Inc. is attached as
an exhibit to this Current report on Form 8-K and is incorporated
herein reference.
Item 9.01 Financial Statements and
Exhibits.
|
(d)
|
Exhibits.
|
|
|
|
Finance,
Security and AR AP Monetization Agreement, dated March 6, 2020 by
and between H&H Coffee Group Export Corp, H&H Export Y CIA.
LTDA. and CLR Roasters, Inc.
|
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.
|
|
YOUNGEVITY
INTERNATIONAL, INC.
|
|
|
|
|
Date:
March 10, 2020
|
By: /s/
David Briskie
|
|
|
Name:
David Briskie
|
|
|
Title:
President and Chief Financial Officer
|
Exhibit 10.1
Finance, Security, and AR AP Monetization Agreement
This Finance, Security and AR AP Monetization
Agreement (hereinafter referred to as the “FSM”)
is entered into this March 6,of 2020 by and between
H&H COFFEE GROUP EXPORT CORP.,
of 980 West 23 Street, Hialeah,
Florida, 33010 and H&H EXPORT Y CIA. LTDA., located at
Beneficio La Pita km 117 ½ Carretera Matagalpa Matagalpa,
Nicaragua (hereinafter
collectively referred
to as “H&H”) and CLR ROASTERS, INC (Hereinafter referred to as
“CLR”). of 2131-41 NW 72 Avenue, Miami, Florida,
(hereinafter referred to as "CLR"). Either may be referred
to in the singular as Party or collectively as
Parties.
WHEREAS, the Parties have previously
entered into that certain Sourcing and Supply Agreement dated March
31, 2019, a copy of which is attached hereto as Exhibit 1;
and
WHEREAS, the Parties, as provided for
within the Sourcing and Supply Agreement delivered various amounts
of green coffee as outlined and within the terms of said agreement;
and
WHEREAS, H&H, acting as the agent
for various growers of green coffee (the “ Independent
Producers”) had green coffee delivered to CLR from the
Independent Producers for the 2019 green coffee program. CLR
acquired ownership of the raw green coffee beans and delivered the
processed coffee beans to various buyers. CLR accumulated an
Accounts Payable Balance due to the Independent Growers/H&H
Representative for approximately $22.0 million which was
outstanding as of 12/31/2019; and
WHEREAS, CLR milled and sold to H&H
green coffee, with H&H selling the green coffee to various
customers, with a significant amount of these sales being sold to
various government agencies accumulating an Account Receivables
Balance owed to CLR in the amount of approximately $30.1 Million;
and
WHEREAS, CLR advanced to H&H and
Siles operating capital, and amounts are owed to CLR for interest,
loans, advances, and other fees for approximately $3.0 million
during 2019 which are secured by of the Additional Collateral ( as
defined below); and
WHEREAS, H&H has been advised that
the Independent Producers that the Independent Producers are not
able to finance green coffee for the 2020 green coffee program as
was the case for the 2019 green coffee program, with the
independent producers requiring payment upon delivery of the green
coffee for the 2020 growing season. Further, alternate financing
for the program has been arranged to continue the green coffee
program into 2020 and beyond.
TERMS AND CONDITIONS
NOW THEREFORE, in consideration of the
mutual covenants and promises contained herein and for other good
and valuable consideration the Parties agree as
follows:
1.
H&H has entered into a $46,500,000 credit
facility with Multiagro & CIS LTD, a division of Flores Zeldon
Importer and Exporter, LTD, a Nicaraguan Agency
(“Agency”) to finance the 2020 green coffee business
and to insure payment of 2019 Accounts Receivables held by
CLR.
2.
Under the terms of the lending agreement and
arrangements that H&H and CLR Subsidiary, Siles,entered with
the Agency, the Agency has agreed to advance, on behalf of H&H,
approximately $22.0 million ,which advance shall reduce the
Accounts Receivables due to CLR from H&H and shall be used by
CLR to payoff its payables owed to the Independent Producers. The
payment of these funds is for partial repayment of the Account
Receivable owed by H&H to CLR. The remaining Accounts
Receivable owed to CLR after payment of the advance shall be
referred to as the “Accounts Receivable
Balance”
3.
CLR and H&H has
agreed to allow the Agency to directly pay off and extinguish
CLR’s Accounts Payables, and the Agency has directly paid off
and extinguished, CLR’s Accounts Payables obligation S
owed to the Independent Producers, for the 2019 growing season,
insuring that the Accounts Payable obligation is fully paid down
and that the Independent Producers will for the 2020 growing season
continue to deliver green coffee beans to the CLR mill for
processing and resale with payment due from H&H upon delivery
of the processed beans.
4.
The credit facility provides for the purchase by
the Agency (the “Agency Coffee Beans”) of 495,000
Quintals (49,500,000 Pounds) of green coffee for the 2020 growing
season. H&H and CLR agree to allow the Agency, to directly
disburse funds owed as payment for the Agency Coffee Beans to the
Independent Producers upon presentation by the Independent
Producers that green coffee has been delivered and quantities
verified and confirmed that the coffee is in the care, custody and
control of CLR. The credit facility interest and fees will be paid
at a rate of 4 cents a pound.
5.
The Accounts Receivables that was owed by H&H
to CLR in the amount of $30.1 Million is an integral part of this
Finance, Security and AR/AP Monetization
Agreement funding provided by the Agency in cooperation with
Parties. Given the Agency has paid and extinguished CLR’s
Accounts Payables obligation owed to the Independent Producers, the
Agency has requested the Account Receivables Balance owed by
H&H to CLR be paid down during the 2020 season as CLR
processes and sells green coffee beans to its customers during the
2020 growing season. It is agreed that via a reduction on
the loan amount from the agency and the invoice amount from H&H
and or the Producers to CLR, at a rate of .225 per pound of green
coffee shipped, of the 2020 sales amounts billed by CLR to
CLR’s customers , that this amount will be paid to CLR and
applied to the outstanding 2019 Accounts Receivable balance owed by
H&H to CLR. All payments will occur upon receipt delivery of
processed green coffee to CLR’s customers with H&H
providing verification of the quantities invoiced.
6.
H&H represents that the Agency and related
parties to the Agency is obligated to pay CLR the approximately
$30.1 million Accounts Receivable balance described above and that
the $22.0 million dollar payment by the Agency to the
Independent Producers is
representation of this obligation and the payment to the
Independent Producers resembles a show of good faith by the Agency
and its related parties. The Agency, in consideration of the
payment to the Independent Producers and the establishment of the
$46,500,000 line of credit to H&H, of which $22.0 million has
been paid to the Independent Producers on behalf of CLR, has
required that CLR leave the respective Accounts Receivable balance
as collateral to secure the credit line as green coffee inventory
is accumulated at Siles and assigned to CLR. This balance will be
referenced as\ “Additional
Collateral”.
7.
The Additional Collateral, as described above,
will be released to CLR as CLR ships the processed green coffee to
its customers. CLR’s share of the Additional Collateral (the
A/R) will be paid via a reduction on invoice amount to CLR at a
rate of .225 per pound of green coffee shipped. Providing the
49,500,000 pounds acquired for the 2020 season is all shipped by
CLR in 2020 the entire $30.1 million Account Receivable, including
the Additional Collateral, would be recouped by CLR by the end of
the year 2020. The Parties agree that CLR will continue to receive
the .225 per invoice reduction until the entire additional
collateral amount is recouped by CLR.
8.
CLR and H&H
agree that for the 2020 growing season, an outstanding Accounts
Receivable due from H&H for approximately 27% of its 2020 gross
billing amount will be outstanding as of the end of the 2020
growing season. (this is in effect CLR’s required
contribution to the financing agreement).
9.
H&H understands and acknowledges that there
will be no payments made under the profit-sharing agreement until
CLR’s Additional Collateral is recouped and released to CLR,
including the $5 million note for hedging and all interest and fees
related to 2019 green coffee program. Further, the parties
acknowledge that the Sourcing, Supply, and Service agreement
executed in March 31, 2019 and any amendments thereto will remain
in full force and effect where applicable.
Representations and Warranties:
1.
H&H represents and warranties, as the agent
for the Producers, that all obligations outlined on Exhibit
“A“ has been satisfied and paid in
full.
2
H&H represents and warranties that its
obligation to pay CLR the Additional Collateral balance of $30.1
million will continue going until this amount is paid in
full.
3.
H&H represents
and warranties that is will continue to provide logistics and
support to Producer(s) in delivering their harvested green coffee
to the Parties Mills. H&H will arrange for
Independent Producer(s) to assign and release title of their coffee
to CLR upon delivery of said coffee to the Parties
Mills
4.
H&H herby represents and warranties and
guarantees to CLR that it shall be the sole obligation of H&H
to keep accurate records of receipts of all coffee, advances to
Producers against their specific coffee if any, loan advances and
tracking from the credit facility, any service costs provided on
Independent Producers coffee including freight, shipping, import
and export fees, taxes, interest charges and any other applicable
fees or charges along with any fees that are paid directly to the
Producers or the Agency. (Hereinafter referred to as the
“Settlement Charges”). An accounting of these
Settlement Charges will be promptly submitted to CLR by H&H at
the time the Independent Producers final settlement is negotiated, and their coffee
commodity is paid for by CLR.
GENERAL
1
ASSIGNMENT: BINDING
EFFECT. This Agreement and the rights of CLR hereunder may be
assigned by CLR.
2
EXECUTION. This
Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
Execution and delivery of this Agreement by delivery of a facsimile
copy bearing the facsimile signature of a party shall constitute a
valid and binding execution and delivery of this Agreement by such
party. Such facsimile copies shall constitute enforceable original
documents.
3
NOTICES. Any notice
or communication required or permitted hereunder shall be
sufficiently given if sent by first class mail, postage
prepaid:
(a)
If to CLR, addressed to it at:
2141 NW
72nd
Avenue
Miami,
Florida 33122
(b)
If to: H&H addressed to it
at:
980
West 23 Street
Hialeah,
Florida, 33010
4
APPLICABLE LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO SUCH STATE'S
CONFLICTS OF LAWS OR CHOICE OF LAW RULES. H&H HEREBY WAIVES
WITH FULL KNOWLEDGE THAT IT IS DOING SO, THE RIGHT TO HAVE ANY
MATTER LITIGATED IN OR HAVE THE LAW OF NICARAGUA APPLIED IN ANY WAY
TO THE ENFORCEMENT OF THE AGREEMENT OR ANY PROVISION THEREOF. THE
PARTIES FURTHER AGREE THAT SHOULD THE NEED ARISE TO EXECUTE FURTHER
DOCUMENTS EITHER IN THE SATE OF FLORIDA OR IN NICARAGUA TO GIVE
FULL FORCE AND EFFECT TO THIS PARAGRAPH OR ANY OTHER PROVISION(S)
OF THIS AGREEMENT UNDER THE LAWS OF THE STATE OF FLORIDA THAT THEY
WILL DO SO IMMEDIATELY AND WITHOUT DELAY. VENUE SHALL BE PROPER IN
MIAMI-DADE COUNTY, FLORIDA.
5
Neither
Party hereto, shall be responsible for any losses or damages to the
other occasioned by delays in the performance or non-performance of
any of said Parties obligations when caused by acts of God, strike,
acts of war, or other such acts which are beyond the reasonable
control of said Party.
6
ATTORNEY’S
FEES. In any action between the
Parties to enforce any of the terms of this Agreement or any other
matter arising from this Agreement, the prevailing Party shall be
entitled to recover its costs and expenses, including reasonable
attorneys' fees up to and including all negotiations, trials and
appeals, whether or not litigation is
initiated.
7
CONSTRUCTION. The
terms of this Agreement shall not be more strictly construed
against one Party by virtue of having drafted the Agreement as both
Parties have reviewed same and have had an opportunity to make
changes thereto.
8
SEVERABILITY. If
any provision of this Agreement shall be held to be invalid or
unenforceable its entirety in part or in its entirety for any
reason, then the remaining provisions shall continue to be valid
and enforceable. If a court finds that any provision of this
Agreement is partially invalid or unenforceable, but that by
limiting or performing such provision it would become valid and
enforceable, then such provision shall be deemed to be rewritten,
construed and enforced as so limited or reformed.
9
CAPTIONS. The
captions in this Agreement are for convenience only and shall not
be considered a part hereof or affect the construction or
interpretation of any provisions of this Agreement.
10
NUMBER
AND GENDER. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural, as
the identity of the Party or Parties, or their personal
representatives, successors and assigns may require.
11
ENTIRE
AGREEMENT. This Agreement (including the schedules and annexes
hereto) and the documents delivered pursuant hereto or in
connection herewith constitute the entire agreement and
understanding between the Parties and supersedes any prior
agreement and understanding, written or oral, relating to the
subject matter of this Agreement. H&H, , Hernandez and Orozco
each acknowledge that they have (a) had the opportunity to seek the
advice of independent counsel, including independent tax counsel,
regarding the consequences of this Agreement; and (b) received no
representations from CLR or its counsel regarding the legal
consequences of this Agreement. This Agreement may be modified or
amended only by a written instrument executed by the
Parties.
IN WITNESS WHEREOF, the parties have
entered into this Agreement as of the day and year first above
written.
H &
H COFFEE GROUP EXPORT, CORP.
/s/ Alain
Hernadez
Signature
ALAIN
HERNANDEZ
H&H EXPORT Y CIA. LTDA
/s/ Alain Hernadez
Signature
ALAIN
HERNANDEZ
CLR
ROASTERS, LLC
/s/ David
Briskie
Company
Representative’s Signature
DAVID BRISKIE
Company
Representative’s Printed Name