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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ~~July~~January 31, ~~2021~~2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from _______________________ to ___________________

Commission File Number 001-34106

VERUS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware

11-3820796

(State of

incorporation)

(I.R.S. Employer

Identification No.)

9841 Washingtonian Blvd #200 Gaithersburg, MD		20878
4300 Greenbriar Drive Stafford, TX		77477
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (301) 329-2700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		None		None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

☐ Yes ☒ No

As of ~~September~~April 1711, ~~2021~~2022, there were 1756,~~029~~026,~~400~~ 564 shares of the issuer’s common stock, $0.000001 par value per share, issued, as adjusted for a 1-for-500 reverse stock split which was completed and became effective on January 13, 2021.

VERUS INTERNATIONAL, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		Page No.
PART I – FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Unaudited Financial Statements	4
	Condensed Consolidated Balance Sheets – July 31, 2021 (Unaudited) and October 31, 2020	4
	Condensed Consolidated Balance Sheets – January 31, 2022 (Unaudited) and October 31, 2021	4
	Condensed Consolidated Unaudited Statements of Operations – Three and Nine Months Ended July 31, 2021 and 2020	5
	Condensed Consolidated Unaudited Statements of Operations – Three Months Ended January 31, 2022 and 2021	5
	Condensed Consolidated Unaudited Statements of Stockholders’ Equity – Nine Months Ended July 31, 2021 and 2020	6
	Condensed Consolidated Unaudited Statements of Stockholders’ (Deficit) Equity – Three Months Ended January 31, 2022 and 2021	6
	Condensed Consolidated Unaudited Statements of Cash Flows – Nine Months Ended July 31, 2021 and 2020	8
	Condensed Consolidated Unaudited Statements of Cash Flows – Three Months Ended January 31, 2022 and 2021	7
	Notes to Condensed Consolidated Unaudited Financial Statements	109
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3531
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3934
Item 4.	Controls and Procedures	3935
PART II – OTHER INFORMATION		40
Item 1.	Legal Proceedings	4036
Item 1A.	Risk Factors	4037
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4037
Item 3.	Defaults Upon Senior Securities	4037
Item 5.	Other Information	4037
Item 6.	Exhibits	4138
SIGNATURES		4241

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact could be deemed forward-looking statements. Statements that include words such as “may,” “will,” “might,” “projects,” “expects,” “plans,” “believes,” “anticipates,” “targets,” “intends,” “hopes,” “aims,” “can,” “should,” “could,” “would,” “goal,” “potential,” “approximately,” “estimate,” “pro forma,” “continue” or “pursue” or the negative of these words or other words or expressions of similar meaning may identify forward-looking statements. For example, forward-looking statements include any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; statements of belief and any statement of assumptions underlying any of the foregoing.

These forward-looking statements are found at various places throughout this Quarterly Report on Form 10-Q and the other documents referred to and relate to a variety of matters, including, but not limited to, other statements that are not purely statements of historical fact. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of management, are not guarantees of performance and are subject to significant risks and uncertainty. These forward-looking statements should not be relied upon as predictions of future events and Verus International, Inc. (the “Company”) cannot assure you that the events or circumstances discussed or reflected in these statements will be achieved or will occur. Furthermore, if such forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by the Company or any other person that the Company will achieve its objectives and plans in any specified timeframe, or at all.

These forward-looking statements should, therefore, be considered in light of various important factors, including those set forth in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended October 31, ~~2020~~2021, filed with the SEC on ~~March~~April 1915, ~~2021~~2022 and elsewhere in this Quarterly Report on Form 10-Q. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. The Company disclaims any obligation to publicly update or release any revisions to these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events, except as required by law.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Verus International, Inc.

Condensed Consolidated Balance Sheets

	July 31, 2021			October 31, 2020
	January 31, 2022			October 31, 2021
	~~(Unaudited)~~	(Unaudited)
Assets
Current Assets
Cash	$	6924,~~480~~279		$	2166,~~483~~022
Accounts receivable, net		5,524,873			4,933,322
Accounts receivable		273,118			303,218
Inventory		85145,~~667~~129			60145,~~378~~129
Prepaid expenses		84,518			170,874
Other assets		16,144			16,144
Other assets		9,434			8,629
Assets of discontinues operations		326			105,974
Assets of discontinued operations		41			453,809
Total Current Assets		458,996			636,487
Total Current Assets		5,774,013			5,648,495
Property and equipment, net		74,859			85,067
Property and equipment, net		106,024			139,444
Operating lease right-of-use asset		175,876			198,637
Operating lease right-of-use asset, net		221,115			383,225
Total Assets	$	709,731		$	920,191
Intangible asset, net		395,505			453,858
Liabilities and Stockholders’ Deficit
Total Assets	$	6,496,657		$	6,625,022
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and accrued expenses	$	2630,~~157,457~~838		$	2638,~~138,666~~315
Operating lease liability		9193,~~621~~936			~~178~~92,~~327~~771
Interest payable		~~296~~442,~~962~~959			~~161~~368,~~427~~709
Due to officer		1,801			1,801
Due to former officer		221,586			221,586
Notes payable		1,~~517~~571,~~497~~272			1,~~337~~533,~~925~~294
Convertible notes payable, net		~~538~~489,~~610~~220			~~387~~530,~~193~~358
Derivative liability		~~699~~453,~~797~~968			~~180~~471,~~404~~219
Liabilities of discontinued operations		~~160~~162,~~448~~752			~~592~~227,~~072~~338
Total Current Liabilities		54,~~464~~066,~~193~~531			4,~~977~~083,~~815~~590
Long-Term Liabilities
Operating lease liability, net of current portion		81,940			105,866
Notes payable, net of current portion		-			34,826
Total Liabilities		4,148,471			4,189,456
Operating lease liability, net of current portion		129,494			214,284
Commitments and Contingencies (Note 9)
Total Liabilities		5,593,687			5,226,925
Stockholders’ Deficit
Commitments and Contingencies (Note 11)		-			-
Series A convertible preferred stock, $0.000001 par value; 120,000,000 shares authorized and 28,944,601 shares issued and outstanding at January 31, 2022 and October 31, 2021		29			29
Stockholders’ Equity
Series B convertible preferred stock, $0.000001 par value; 1,000,000 shares authorized and no shares issued and outstanding at January 31, 2022 and October 31, 2021		-			-
Series A convertible preferred stock, $0.000001 par value; 120,000,000 shares authorized and 28,944,601 shares issued and outstanding at July 31, 2021 and October 31, 2020		29			29
Series C convertible preferred stock, $0.000001 par value; 1,000,000 shares authorized and 680,801 shares issued and outstanding at January 31, 2022 and October 31, 2021		1			1
Series B convertible preferred stock, $0.000001 par value; 1,000,000 shares authorized and no shares issued and outstanding at July 31, 2021 and October 31, 2020		-			-
Preferred stock value
Series C convertible preferred stock, $0.000001 par value; 1,000,000 shares authorized and 680,801 shares issued and outstanding at July 31, 2021 and October 31, 2020		1			1
Common stock, $0.000001 par value; 7,500,000,000 shares authorized and 56,026,564 and 23,844,566 shares issued at January 31, 2022 and October 31, 2021, respectively (as adjusted for a 1-for-500 reverse stock split as discussed in Note 1)		56			24
Common stock, $0.000001 par value; 7,500,000,000 shares authorized and 14,847,812 and 10,278,867 shares issued at July 31, 2021 and October 31, 2020, respectively (as adjusted for a 1-for-500 reverse stock split as discussed in Note 1)		15			10
Additional paid-in-capital		47,317,542			46,889,360
Additional paid-in-capital		46,481,743			45,562,840
Shares to be issued		10,000			5,000
Shares to be issued		43,100			-
Accumulated deficit		(50,766,368	)		(50,163,679	)
Accumulated deficit		(45,621,918	)		(44,164,783	)
Total Stockholders’ Deficit		(3,438,740	)		(3,269,265	)
Total Stockholders’ Equity		902,970			1,398,097
Total Liabilities and Stockholders’ Deficit	$	709,731		$	920,191
Total Liabilities and Stockholders’ Equity	$	6,496,657		$	6,625,022

The accompanying condensed notes are an integral part of these unaudited condensed consolidated financial statements.

Verus International, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	2021			2020			2021			2020
	2022			2021
	For the Three Months Ended						~~For the Nine Months Ended~~
	July 31,						July 31,
	January 31,
	2021			2020			2021			2020
	2022			2021
Revenue	$	~~1,848,389~~-		$	~~5,915,587~~-		$	~~8,612,422~~		$	~~16,712,149~~
Cost of revenue		~~1,384,211~~-			~~4,776,122~~75			~~6,809,203~~			~~13,378,280~~
Gross Profit		~~464,178~~-			~~1,139,465~~(75	)		~~1,803,219~~			~~3,333,869~~
Operating Expenses:
Salaries and benefits		~~129~~70,~~974~~456			~~272~~(19,~~934~~780	)		~~395,925~~			~~8,873,090~~
Selling and promotions expense		85,775			157,579			224,276			286,544
Legal and professional fees		50,000			-
Legal and professional fees		23,840			157,133			38,816			550,527
General and administrative		101,541			155,337
General and administrative		469,862			521,718			1,628,664			1,667,710
Total Operating Expenses		221,997			135,557
Total Operating Expenses		709,451			1,109,364			2,287,681			11,377,871
Operating loss		(221,997	)		(135,632	)
Operating (loss) income		(245,273	)		30,101			(484,462	)		(8,044,002	)
Other (Expense) Income:
Other (Expense) Income:
Interest expense		(83,420	)		(66,157	)
Interest expense		(52,473	)		(837,816	)		(199,414	)		(1,031,495	)
Initial derivative liability expense		(143,657	)		(279,512	)
Amortization of debt discounts and issuance costs		(49,152	)		(136,124	)		(113,916	)		(454,773	)
Amortization of original issue discounts and deferred financing costs		(59,041	)		(27,512	)
Loss on extinguishment and settlement of convertible notes payable		(41,325	)		-			(76,266	)		(723,773	)
Loss on extinguishment and settlement of debt		(110,592	)		(118	)
(Loss) gain on change in fair value of derivative liability		(19,743	)		-			8,229			-
Gain on change in fair value of derivative liability		57,052			39,207
Gain on forgiveness of Paycheck Protection Program loan		104,479			-			104,479			-
Total Other (Expense) Income		(339,658	)		(334,092	)
Initial derivative liability expense		-			(86,000	)		(800,213	)		(86,000	)
Loss from continuing operations before income taxes		(561,655	)		(469,724	)
Gain on settlement of liabilities		-			-			104,774			-
Income taxes		-			-
Total Other (Expense) Income		(58,214	)		(1,059,940	)		(972,327	)		(2,296,041	)
Loss from continuing operations		(561,655	)		(469,724	)
Loss from continuing operations before income taxes		(303,487	)		(1,029,839	)		(1,456,789	)		(10,340,043	)
Discontinued operations (Note 11)
Income taxes		-			-			-			-
(Loss) gain from discontinued operations		(41,034	)		23,589
Loss from continuing operations		(303,487	)		(1,029,839	)		(1,456,789	)		(10,340,043	)
Net loss	$	(602,689	)	$	(446,135	)
Discontinued operations (Note 13)
Loss per common share:
Loss from discontinued operations		-			(300,074	)		(346	)		(806,279	)
Loss from continuing operations per common share – basic and diluted	$	(0.02	)	$	(0.04	)
Net loss	$	(303,487	)	$	(1,329,913	)	$	(1,457,135	)	$	(11,146,322	)
Loss (gain) from discontinued operations per common share – basic and diluted	$	(0.00	)	$	0.00
Loss per common share:
Loss per common share – basic and diluted	$	(0.02	)	$	(0.04	)
Loss from continuing operations per common share – basic and diluted	$	(0.02	)	$	(0.20	)	$	(0.12	)	$	(2.13	)
Weighted average shares outstanding – basic and diluted		37,761,233			11,599,945
Loss from discontinued operations per common share – basic and diluted	$	-		$	(0.05	)	$	(0.00	)	$	(0.17	)
Loss per common share – basic and diluted	$	(0.02	)	$	(0.25	)	$	(0.12	)	$	(2.30	)
Weighted average shares outstanding – basic and diluted		13,423,712			5,267,016			12,507,231			4,845,878

The accompanying condensed notes are an integral part of these unaudited condensed consolidated financial statements.

Verus International, Inc.

Condensed Consolidated Statement of Changes in Stockholders’ ~~Equity (~~Deficit)

For the Three ~~and Nine~~ Months Ended ~~July~~January 31, ~~2021~~2022 and ~~2020~~2021

(Unaudited)

	Shares		Par		Shares		Par		Shares		Par		Shares		Par		Capital		Issued		Deficit			(Deficit)
	Preferred Stock A				Preferred Stock B				Preferred Stock C				Common Stock				Additional Paid-In		Common Stock to be		Accumulated			Total Stockholders’ Equity
	Shares		Par		Shares		Par		Shares		Par		Shares		Par		Capital		Issued		Deficit			(Deficit)
Balance, October 31, 2020		28,944,601	$	29		-	$	-		680,801	$	1		10,278,867	$	10	$	45,562,840	$	-	$	(44,164,783	)	$	1,398,097
Balance, October 31, 2021		28,944,601	$	29		-	$	-		680,801	$	1		23,844,566	$	24	$	46,889,360	$	5,000	$	(50,163,679	)	$	(3,269,265	)
Conversion of convertible promissory notes to common stock														132,~~685~~181,~~917~~998		232		~~464~~405,~~652~~787							~~464~~405,~~654~~819
Conversion of Preferred Stock A to common stock		-				-				-
Stock-based compensation for restricted shares under employment contract																		22,395							22,395
Conversion of Preferred Stock A to common stock, shares
Shares of common stock to be issued for board member services rendered																				5,000					5,000
Shares issued from sale of common stock
Issuance of common stock for vendor services
Beneficial conversion feature for conversion of convertible promissory notes to common stock
Issuance of common stock for vendor services, shares
Shares to be issued for conversion of convertible promissory note to common stock
Shares of common stock to be issued for vendor services
Shares issued for sale of Common Stock, shares
Net loss		-		-		-		-		-		-										(602,689	)		(602,689	)
Shares issued under stock-based compensation
Balance, January 31, 2022		28,944,601	$	29		-	$	-		680,801	$	1		56,026,564	$	56	$	47,317,542	$	10,000	$	(50,766,368	)	$	(3,438,740	)
Shares issued under stock- based compensation, shares
Issuance of common stock for note payable issuance
Stock-based compensation for restricted shares under employment contract
Issuance of common stock for vendor services		-				-				-				67,728		-		18,964							18,964
Shares of common stock to be issued for vendor services		-		-		-		-		-		-								13,100					13,100
Net loss																						(446,135	)		(446,135	)
Balance, January 31, 2021		28,944,601	$	29		-	$	-		680,801	$	1		12,032,512	$	12	$	46,046,456	$	13,100	$	(44,610,918	)	$	1,448,680
Conversion of convertible promissory notes to common stock		-		-		-		-		-		-		312,256		-		118,658							118,658
Issuance of common stock for note payable issuance														400,000		1		87,999							88,000
Stock-based compensation for restricted shares under employment contract		-				-				-								18,663							18,663
Shares of common stock to be issued for vendor services		-				-				-										15,000					15,000
Net loss								-														(707,513	)		(707,513	)
Balance, April 30, 2021		28,944,601	$	29		-	$	-		680,801	$	1		12,744,768	$	13	$	46,271,776	$	28,100	$	(45,318,431	)	$	981,488
Conversion of convertible promissory notes to common stock		-		-		-		-		-		-		2,103,044		2		209,967							209,969
Shares of common stock to be issued for vendor services		-				-				-										15,000					15,000
Net loss								-														(303,487	)		(303,487	)
Balance, July 31, 2021		28,944,601	$	29		-	$	-		680,801	$	1		14,847,812	$	15	$	46,481,743	$	43,100	$	(45,621,918	)	$	902,970

	Preferred Stock A				Preferred Stock B				Preferred Stock C				Common Stock				Additional Paid-In		Common Stock to be		Accumulated			Total Stockholders’ Equity
	Shares		Par		Shares		Par		Shares		Par		Shares		Par		Capital		Issued		Deficit			(Deficit)
Balance, October 31, 2020		28,944,601	$	29		-	$	-		680,801	$	1		10,278,867	$	10	$	45,562,841	$	-	$	(44,164,783	)	$	1,398,097
Conversion of convertible promissory notes to common stock														1,685,918		2		464,651							464,653
Issuance of common stock for vendor services														67,728		-		18,964							18,964
Shares of common stock to be issued for vendor services																				13,100					13,100
Net loss		-		-		-		-		-		-										(446,135	)		(446,135	)
Balance, January 31, 2021		28,944,601	$	29		-	$	-		680,801	$	1		12,032,512	$	12	$	46,046,456	$	13,100	$	(44,610,918	)	$	1,448,680

The accompanying condensed notes are an integral part of these unaudited condensed consolidated financial statements.

Verus International, Inc.

Condensed Consolidated ~~Statement~~Statements of ~~Changes~~Cash ~~in Stockholders’ Equity (Deficit)~~Flows

For the Three and Nine Months Ended July 31, 2021 and 2020

(Unaudited)

	Preferred Stock A						Preferred Stock B				Preferred Stock C				Common Stock				Additional Paid-In		Common Stock to be			Accumulated			Total Stockholders’ Equity
	2022			2021
	Shares			Par			Shares		Par		Shares		Par		Shares		Par		Capital		Issued			Deficit			(Deficit)
	For the Three Months Ended
Balance, October 31, 2019		44,570,101		$	45			-	$	-		430,801	$	-		4,611,557	$	5	$	27,568,220	$	-		$	(28,494,590	)	$	(926,320	)
	January 31,
Conversion of Preferred Stock A to common stock		(3,125,500	)		(3	)																3						-
	2022			2021
Shares to be issued under stock-based compensation								-				-								2,253,238		90,000						2,343,238
Cash flows from operating activities:
Conversion of convertible promissory notes to common stock																30,196				877,039								877,039
Net loss	$	(602,689	)	$	(446,135	)
Shares issued from sale of common stock		-						-				-
Adjustments to reconcile net loss to net cash used in operating activities:
Beneficial conversion feature for conversion of convertible promissory notes to common stock		-						-				-
Initial derivative liability expense		143,657			279,512
Shares to be issued for conversion of convertible promissory note to common stock		-			-			-		-		-		-								465,675						465,675
Loss on extinguishment and settlement of debt		110,592			118
Net loss																									(2,503,288	)		(2,503,288	)
Amortization of original issue discounts and deferred financing costs		59,041			27,512
Balance, January 31, 2020		41,444,601		$	42			-	$	-		430,801	$	-		4,641,753	$	5	$	30,698,497	$	555,678		$	(30,997,878	)	$	256,344
Stock-based compensation		27,395			(74,186	)
Conversion of Preferred Stock A to common stock		-						-				-				6,251				3		(3	)					-
Allowance for accounts receivable		30,100			-
Shares to be issued under stock-based compensation																				6,606,312								6,606,312
Depreciation and amortization		10,208			10,468
Conversion of convertible promissory notes to common stock		-						-				-				196,776				656,011		(465,675	)					190,336
Gain on change in fair value of derivative liability		(57,052	)		(39,207	)
Beneficial conversion feature for conversion of convertible promissory notes to common stock		-			-			-		-		-		-						830,162								830,162
Changes in operating assets and liabilities:
Net loss																									(7,313,120	)		(7,313,120	)
Decrease in inventory		-			75
Balance, April 30, 2020		41,444,601		$	42			-	$	-		430,801	$	-		4,844,780	$	5	$	38,790,985	$	90,000		$	(38,310,998	)	$	570,034
Increase in prepaid expenses		-			(27,238	)
Conversion of Preferred Stock A to common stock		(12,500,000	)		(13	)										25,000				13								-
Increase in other assets		-			(805	)
Conversion of convertible promissory notes to common stock																968,404		1		1,068,311								1,068,312
Increase in accounts payable and accrued expenses		75,943			187,538
Shares issued from sale of common stock																24,483				91,917								91,917
Decrease in right to use and lease obligation, net		-			(9,385	)
Shares issued under stock-based compensation																30,000				180,000		(90,000	)					90,000
Net cash used in operating activities of continuing operations		(202,805	)		(91,733	)
Shares of common stock issued for vendor services		-			-			-		-		-		-		52,000				78,000								78,000
Net cash provided by (used in) operating activities of discontinued operations		41,062			(1,636	)
Net loss																									(1,329,913	)		(1,329,913	)
Net cash used in operating activities		(161,743	)		(93,369	)
Balance, July 31, 2020		28,944,601		$	29			-	$	-		430,801	$	-		5,944,667	$	6	$	40,209,226	$	-		$	(39,640,911	)	$	568,350
Cash flows from financing activities:
Proceeds from issuance of convertible notes payable, net of commissions		120,000			168,300
Payments applied to convertible promissory notes		-			(63,000	)
Net cash provided by financing activities of continuing operations		120,000			105,300
Net (decrease) increase in cash		(41,743	)		11,931
Cash at beginning of period		66,022			6,150
Cash at end of period	$	24,279		$	18,081
Supplemental disclosure:
Cash paid for interest	$	-		$	18,765

The accompanying condensed notes are an integral part of these unaudited condensed consolidated financial statements.

Verus International, Inc.

	For the Three Months Ended
	January 31,
	2022		2021
Supplemental disclosure of non-cash investing and financing activities:

Common Stock issued in exchange for conversion of convertible promissory note and accrued interest:
Value	$	405,819	$	464,653
Shares		32,181,998		1,685,918

Common Stock issued for vendor services:
Value	$	-	$	18,964
Shares		-		67,728

Common Stock to be issued for vendor services:
Value	$	-	$	13,100
Shares		-		48,182

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	2021			2020
	For the Nine Months Ended
	July 31,
	2021			2020
Cash flows from operating activities:
Net loss	$	(1,457,135	)	$	(11,146,322	)
Adjustments to reconcile net loss to net cash used in operating activities:
Initial derivative liability expense		800,213			86,000
Amortization of original issue discounts and deferred financing costs		113,916			454,773
Depreciation and amortization		91,773			178,605
Loss on extinguishment and settlement of debt		76,266			723,773
Amortization of beneficial conversion feature		-			830,162
Gain on change in fair value of derivative liability		(8,229	)		-
Stock-based compensation		(25,523	)		8,276,632
Gain on forgiveness of Paycheck Protection Program loan		(104,479	)		-
Gain on settlement of liabilities		(104,774	)		-
Changes in operating assets and liabilities:
Increase in accounts receivable		(591,551	)		(1,866,824	)
(Increase) decrease in inventory		(25,289	)		416,836
Decrease (increase) in prepaid expenses		130,356			(261,363	)
Increase in other assets		(805	)		-
Increase in accounts payable and accrued expenses		384,775			287,821
(Decrease) increase in right to use and lease obligation, net		(9,386	)		10,956
Net cash used in operating activities of continuing operations		(729,872	)		(2,008,951	)
Net cash provided by operating activities of discontinued operations		22,144			168,072
Net cash used in operating activities		(707,728	)		(1,840,879	)
Cash flows from investing activities:
Capital expenditures		-			(3,115	)
Investment in unconsolidated entity		-			(100,000	)
Net cash used in investing activities of continuing operations		-			(103,115	)
Net cash used in investing activities of discontinued operations		-			(3,000	)
Net cash used in investing activities		-			(106,115	)
Cash flows from financing activities:
Proceeds from issuance of convertible notes payable, net of commissions		578,400			1,221,500
Proceeds from issuance of notes payable		240,325			354,480
Proceeds from sale of common stock		-			91,917
Payments applied to convertible promissory notes		(63,000	)		-
Net cash provided by financing activities of continuing operations		755,725			1,667,897
Net increase in cash		47,997			(279,097	)
Cash at beginning of period		21,483			330,151
Cash at end of period	$	69,480		$	51,054
Supplemental disclosure:
Cash paid for interest	$	18,765		$	14,885

The accompanying condensed notes are an integral part of these unaudited condensed consolidated financial statements.

	2021		2020
	For the Nine Months Ended
	July 31,
	2021		2020
Supplemental disclosure of non-cash operating activities:
Stock-based compensation for common stock and common stock warrant issuances recognized in prior periods	$	-	$	777,176
Stock-based compensation for common stock issuance for services rendered to be recognized in future periods	$	-	$	63,742
Supplemental disclosure of non-cash investing and financing activities:
Common Stock issued in exchange for conversion of Series A Preferred Stock:
Value	$	-	$	16
Shares		-		31,251
Common Stock issued in exchange for conversion of convertible promissory note and accrued interest:
Value (includes beneficial conversion feature)	$	793,279	$	3,431,524
Shares		4,101,218		1,195,376
Common Stock issued for note payable issuance:
Value	$	88,000	$	-
Shares		400,000		-
Common Stock issued for vendor services:
Value	$	18,964	$	-
Shares		67,728		-
Common Stock to be issued for vendor services:
Value	$	43,100	$	-
Shares		227,824		-

The accompanying condensed notes are an integral part of these unaudited condensed consolidated financial statements.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 1: NATURE OF BUSINESS AND BASIS OF PRESENTATION

Explanatory Note

All references to shares of our common stock contained herein have been adjusted to reflect a 1-for-500 reverse stock split which was completed and became effective on January 13, 2021.

Organization and Nature of Business

Verus International, Inc., including its wholly-owned subsidiaries, are collectively referred to herein as “Verus,” “VRUS”, “Company,” “us,” or “we.”

We were incorporated in the state of Delaware under the name Spectrum Gaming Ventures, Inc. on May 25, 1994. On October 10, 1995, we changed our name to Select Video, Inc. On October 24, 2007, we filed a Certificate of Ownership with the Delaware Secretary of State whereby Webdigs, Inc., our wholly-owned subsidiary, was merged with and into us and we changed our name to Webdigs, Inc.

On October 9, 2012, we consummated a share exchange (the “Exchange Transaction”) with Monaker Group, Inc. (formerly known as Next 1 Interactive, Inc.), a Nevada corporation (“Monaker”) pursuant to which we received all of the outstanding equity in Attaché Travel International, Inc., a Florida corporation and wholly owned subsidiary of Monaker (“Attaché”) in consideration for the issuance of 93 million shares of our newly designated Series A Convertible Preferred Stock to Monaker. Attaché owned approximately 80% of a corporation named RealBiz Holdings Inc. which is the parent corporation of RealBiz 360, Inc. (“RealBiz”). As a condition to the closing of the Exchange Transaction, on October 3, 2012, we filed a Certificate of Ownership with the Delaware Secretary of State whereby RealBiz Media Group, Inc., our wholly-owned subsidiary, was merged with and into us and we changed our name to RealBiz Media Group, Inc.

On May 1, 2018, Verus Foods MENA Limited (“Verus MENA”) entered into a Share Purchase and Sale Agreement with a purchaser (the “Purchaser”) pursuant to which Verus MENA sold 75 shares (the “Gulf Agro Shares”) of Gulf Agro Trading, LLC (“Gulf Agro”), representing 25% of the common stock of Gulf Agro, to the Purchaser. In consideration for the Gulf Agro Shares, the Purchaser was assigned certain contracts executed during a specified period of time. Upon the consummation of the transaction contemplated by the Share Purchase and Sale Agreement, the Purchaser obtained a broader license for product distribution. All liabilities of Gulf Agro remained with Gulf Agro.

~~Since~~For the period August 1, 2018 through October 31, 2021, we, through our wholly-owned subsidiary, Verus Foods, Inc., an international supplier of consumer food products, ~~have been~~were focused on international consumer packaged goods, foodstuff distribution and wholesale trade. Our fine food products ~~are~~were sourced in the United States and exported internationally. We ~~market~~marketed consumer food products under our own brands primarily to supermarkets, hotels, and other members of the wholesale trade. Initially, we focused on frozen foods, particularly meat, poultry, seafood, vegetables, and french fries with beverages as a second vertical, and during 2018, we added cold-storage facilities and began seeking international sources for fresh fruit, produce and similar perishables, as well as other consumer packaged foodstuff with the goal to create vertical farm-to-market operations. ~~Verus has also begun to explore new consumer packaged goods (“CPG”) non-food categories, such as cosmetic and fragrances, for future product offerings.~~

109

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 1: NATURE OF BUSINESS AND BASIS OF PRESENTATION (continued)

WeThrough ~~currently~~October ~~have~~31, 2021, we had a significant regional presence in the Middle East and North Africa (“MENA”) and sub-Saharan Africa (excluding The Office of Foreign Assets Control restricted nations), with deep roots in the Gulf Cooperation Council (“GCC”) countries, which includes the United Arab Emirates, Oman, Bahrain, Qatar, Kingdom of Saudi Arabia and Kuwait. ~~The~~During ~~Company’s~~the ~~long-term~~three ~~goal~~months isended October 31, 2021, we made a decision to ~~source~~cease ~~goods~~operating ~~and~~as ~~generate~~an international ~~wholesale~~supplier ~~and~~of ~~retail~~consumer ~~CPG~~food ~~sales~~products, inwhereby ~~North~~we cancelled and ~~South~~settled ~~America,~~all ~~Europe~~supplier and customer contracts to avoid any future significant liabilities. Accordingly, ~~Africa~~we have classified the operating results and associated assets and liabilities from Verus MENA as discontinued operations in the consolidated financial statements for the years ended October 31, ~~Asia~~2021 and ~~Australia~~2020 (see Note 11).

In addition to the foregoing, since our acquisition of Big League Foods, Inc. (“BLF”) during April 2019, pursuant to which we acquired a license with Major League Baseball Properties, Inc. (“MLB”) to sell MLB-branded frozen dessert products and confections, we sold pint size ice cream in grocery store-type packaging. In addition, under our confections product line, we sold gummi and chocolate candies. The MLB license ~~covered~~covers all 30 MLB teams, and all of our products pursuant to such license featured “home team” ~~packaging~~ packaging that matched the fan base in each region. On December 18, 2020, we and our wholly owned subsidiary, BLF, entered into a letter ~~agreement~~ agreement with ACG Global Solutions, Inc. and Game on Foods, Inc. (“GOF”), whereby for certain consideration, BLF sold, transferred, and assigned all of BLF’s rights, title, and interest in and to all of BLF’s assets to GOF. The assignments of our interests in the MLB and NHL licenses were completed on March 15, 2021 and March 25, 2021, respectively. Accordingly, we have classified the operating results and associated assets and liabilities from BLF as discontinued operations in the ~~unaudited condensed~~ consolidated financial statements for the ~~nine months~~ years ended ~~July~~October 31, 2021 and 2020 (see Note 1311).

Furthermore, during August 2019, we purchased all of the assets of a french fry business in the Middle East.

Basis of Presentation

The unaudited condensed consolidated financial information furnished herein reflects all adjustments, consisting only of normal recurring items, which in the opinion of management, are necessary to fairly state the Company’s financial position, results of operations and cash flows for the dates and periods presented and to make such information not misleading. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted pursuant to rules and regulations of the Securities and Exchange Commission (the “SEC”); nevertheless, management of the Company believes that the disclosures herein are adequate to make the information presented not misleading.

The unaudited condensed consolidated financial statements for the ~~nine~~three months ended ~~July~~January 31, ~~2021~~2022 and ~~2020~~2021 include the operations of ~~BLF~~ BLF effective April 25, 2019, Verus MENA effective May 1, 2018, and Verus Foods, Inc. effective January 2017. The operating results and ~~associated~~ associated assets and liabilities from BLF and Verus MENA have been classified as discontinued operations in the unaudited ~~condensed~~ consolidated financial statements for the ~~nine~~three months ended ~~July~~January 31, ~~2021~~2022 and ~~2020~~2021 (see Note 1311). All significant intercompany balances and transactions have been eliminated in the consolidation.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended October 31, ~~2020~~2021, contained in the Company’s Annual Report on Form 10-K filed with the SEC on ~~March~~April 1915, ~~2021~~2022. The results of operations for the ~~nine~~three months ended ~~July~~January 31, ~~2021~~2022, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending October 31, ~~2021~~2022.

1110

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 1: NATURE OF BUSINESS AND BASIS OF PRESENTATION (continued)

Impact of COVID-19 Pandemic

A novel strain of coronavirus, COVID-19, surfaced during December 2019 and has spread around the world, including to the United States. During March 2020, COVID-19 was declared a pandemic by the World Health Organization. During certain periods of the pandemic thus far, a number of U.S. states and various countries throughout the world had been under governmental orders requiring that all workers remain at home unless their work was critical, essential, or life-sustaining. As a result of these governmental orders, the Company temporarily closed its domestic and international offices and required all of its employees to work remotely. As economic activity has begun and continues recovering, the impact of the COVID-19 pandemic on our business has been more reflective of greater economic and marketplace dynamics. Furthermore, in light of variant strains of the virus that have emerged, the COVID-19 pandemic could once again impact our operations and the operations of our customers and vendors as a result of quarantines, illnesses, and travel restrictions.

The full impact of the COVID-19 pandemic on the Company’s financial condition and results of operations will depend on future developments, such as the ultimate duration and scope of the pandemic, its impact on the Company’s employees, customers, and vendors, in addition to how quickly normal economic conditions and operations resume and whether the pandemic impacts other risks disclosed in Item 1A “Risk Factors” within ~~the~~this ~~Company’s~~ Annual Report on Form 10-K. Even after the pandemic has subsided, the Company may continue to experience adverse impacts to its business as a result of any economic recession or depression that has occurred as a result of the pandemic. Therefore, the Company cannot reasonably estimate the impact at this time. The Company continues to actively monitor the pandemic and may determine to take further actions that alter its business operations as may be required by federal, state, or local authorities or that it determines are in the best interests of its employees, customers, vendors, and shareholders.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and reported amounts of revenues and expenses for the reporting period. Actual results could differ from those estimates. If actual results significantly differ from the Company’s estimates, the Company’s financial condition and results of operations could be materially impacted. Significant estimates include the collectability of accounts receivable, valuations of inventory, estimated useful lives of finite-lived intangible assets, accrued expenses, valuation of derivative liabilities, stock-based compensation and the valuation reserve for income taxes.

Reclassifications

Certain reclassifications of prior period amounts have been made to enhance comparability with the current period unaudited condensed consolidated financial statements, including, but not limited to, presentation of certain items within the unaudited consolidated balance sheets, unaudited statements of operations, unaudited consolidated statements of cash flows, and certain notes to the unaudited condensed consolidated financial statements. These reclassifications had no effect on the previously reported net loss.

~~Concentrations of Credit Risk~~11

Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company maintains cash and cash equivalents with high-quality financial institutions. Deposits held with the financial institutions may exceed the amount of insurance provided by the Federal Deposit Insurance Corporation on such deposits, but may be redeemed upon demand. The Company performs periodic evaluations of the relative credit standing of the financial institutions. With respect to accounts receivable, the Company monitors the credit quality of its customers as well as maintains an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make required payments.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Concentrations of Credit Risk

Credit Risk

Revenue Risk

The Company’s ~~food~~ products accounts receivable, net and revenues are geographically concentrated with customers located indomestically in the ~~GCC countries~~United States. In addition, significant concentrations exist with a limited number of customers. Approximately 6936% of accounts receivable, net at ~~July~~January 31, ~~2021~~2022 were concentrated with ~~nine~~two customers. ~~and~~There ~~approximately~~was ~~69%~~no of revenue ~~for~~generated during the ~~nine~~three months ended ~~July~~January 31, 2022, ~~2021~~therefore, ~~were concentrated~~no ~~with~~concentration ~~eight~~of ~~customers~~revenue risk existed for the three months ended January 31, 2022. Although the loss of one or more of our top customers, or a substantial decrease in demand by any of those customers for our products, could have a material adverse effect on our business, results of operations and financial condition, such risks may be mitigated by our access to credit insurance programs.

Supplier Risk

The Company purchases substantially all of its ~~food~~ products from a limited number ~~of regions around the world or from a limited number of~~ suppliers. Increases in the prices of the ~~food~~ products which we purchase could adversely affect our operating results if we are unable to offset the effect of these increased costs through price increases, and we can provide no assurance that we will be able to pass along such increased costs to our customers. Furthermore, if we cannot obtain sufficient ~~food~~ products or our suppliers cease to be available to us, we could experience shortages in our ~~food~~ products or be unable to meet our commitments to customers. Alternative sources of ~~food~~ products, if available, may be more expensive. For periods in which the prices are declining, the Company may be required to write down its inventory carrying cost which, depending on the extent of the differences between market price and carrying cost, could have a material adverse effect on the Company’s consolidated results of operations and financial position. Approximately 87% of accounts payable at July 31, 2021 were concentrated with seven suppliers and approximately 68% of cost of revenue for the nine months ended July 31, 2021 were concentrated with eight suppliers.

Cash and Cash Equivalents

For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. There were no cash equivalents at ~~July~~January 31, ~~2021~~2022 or October 31, ~~2020~~2021. The Company places its cash and cash equivalents with high-quality financial institutions. At times, balances in the Company’s cash accounts may exceed the Federal Deposit Insurance Corporation (“FDIC”) limit. At ~~July~~January 31, ~~2021~~2022 and October 31, ~~2020~~2021, the Company’s cash balances did not exceed the FDIC limit.

~~Accounts Receivable~~12

The Company regularly reviews outstanding receivables and provides for estimated losses through an allowance for doubtful accounts. In evaluating the level of established loss reserves, the Company makes judgments regarding its customers’ ability to make required payments, economic events and other factors. As the financial condition of these parties change, circumstances develop or additional information becomes available, adjustments to the allowance for doubtful accounts may be required. The Company maintains reserves for potential credit losses and such losses traditionally have been within its expectations. At July 31, 2021 and October 31, 2020, the Company determined there was no requirement for an allowance for doubtful accounts.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounts Receivable

The Company regularly reviews outstanding receivables and provides for estimated losses through an allowance for doubtful accounts. In evaluating the level of established loss reserves, the Company makes judgments regarding its customers’ ability to make required payments, economic events and other factors. As the financial condition of these parties change, circumstances develop or additional information becomes available, adjustments to the allowance for doubtful accounts may be required. The Company maintains reserves for potential credit losses and such losses traditionally have been within its expectations. At January 31, 2022 and October 31, 2021, we determined $228,100 and $198,000, respectively, was required for an allowance for doubtful accounts due to the past due status of certain accounts receivable invoices.

Inventory

Inventory is stated at the lower of net realizable value or cost, determined on the first-in, first-out basis. Net realizable value is based on estimated selling prices in the ordinary course of business less reasonably predictable costs of completion and transportation. Inventories consist of finished products.

Intangible Assets

The Company amortizes its one intangible asset, certain acquired customer contracts, on a straight-line basis over the estimated useful life of the asset.

Property and Equipment

All expenditures on the acquisition for property and equipment are recorded at cost and capitalized as incurred, provided the asset benefits the Company for a period of more than one year. Expenditures on routine repairs and maintenance of property and equipment are charged directly to operating expense. The property and equipment is depreciated based upon its estimated useful life after being placed in service. Leasehold improvements are depreciated based upon the remaining term of the related lease. The estimated useful lives range from 3 to 7 years based upon asset class. When an asset is retired, sold or impaired, the resulting gain or loss is reflected in earnings.

Impairment of Long-Lived Assets

In accordance with Accounting Standards Codification (“ASC”) 360-10, “Property, Plant, and Equipment”, the Company periodically reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value.

Fair Value of Financial Instruments

The Company ~~accounts~~measures ~~for~~its ~~the fair value of~~ financial instruments in accordance with ASC topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), formerly SFAS No. 157 “Fair Value Measurements”. ASC 820 defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JANUARY 31, 2022 AND 2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

ASC 820 also describes three levels of inputs that may be used to measure fair value:

Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

Financial instruments consist principally of cash, accounts receivable, prepaid expenses, accounts payable, accrued liabilities and other current liabilities. The carrying amounts of such financial instruments in the accompanying balance sheets approximate their fair values due to their relatively short-term nature. The fair value of short and long-term debt is based on current rates at which the Company could borrow funds with similar remaining maturities. The carrying amounts approximate fair value. It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments. At January 31, 2022, the Company had a Level 3 financial instrument related to its derivative liability.

Revenue Recognition

The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s (“FASB”), Accounting Standards Codification (“ASC”) ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.

Revenue is derived from the sale of consumable and non-consumable products. The Company recognizes revenue when obligations under the terms of a contract with the customer are satisfied. Product sales occur once control is transferred upon delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products. The amount of consideration the Company receives and revenue the Company recognizes varies with changes in customer incentives the Company offers to its customers and their customers. In the event any discounts, sales incentives, or similar arrangements are agreed to with a customer, such amounts are estimated at time of sale and deducted from revenue. Sales taxes and other similar taxes are excluded from revenue (see Note 5).

A contract asset is recognized for incremental costs to obtain a customer contract that are recoverable, otherwise such incremental costs are expensed as incurred.

Cost of Revenues

Cost of revenues represents the cost of the products sold during the periods presented.

Shipping and Handling Costs

Shipping and handling costs for freight expense on goods shipped are included in cost of sales. For the three months ended January 31, 2022 and 2021 there was no freight expense on goods shipped as the operating results and associated assets and liabilities from BLF and Verus MENA have been classified as discontinued operations in the consolidated financial statements for the three months ended October 31, 2022 and 2021 (see Note 11).

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments consist principally of cash, accounts receivable, prepaid expenses, accounts payable, accrued liabilities and current and long-term debt. The carrying amounts of such financial instruments in the accompanying balance sheets approximate their fair values due to their relatively short-term nature. The fair value of short and long-term debt is based on current rates at which the Company could borrow funds with similar remaining maturities. The carrying amounts approximate fair value. It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments. At July 31, 2021, the Company had a Level 3 financial instrument related to its derivative liability.

Revenue Recognition

The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s (“FASB”), Accounting Standards Codification (“ASC”) ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenue is recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.

A contract asset is recognized for incremental costs to obtain a customer contract that are recoverable, otherwise such incremental costs are expensed as incurred.

Shipping and Handling Costs

Shipping and handling costs for freight expense on goods shipped are included in cost of sales. Freight expense on goods shipped for the nine months ended July 31, 2021 and 2020 was $639,757 and $732,691, respectively.

Customer Deposits

From time to time the Company requires prepayments for deposits in advance of delivery of products. Such amounts are initially recorded as customer deposits. The Company recognizes such revenue as it is earned in accordance with revenue recognition policies.

Share-Based Compensation

The Company computes share based payments in accordance with the provisions of ASC Topic 718, Compensation – Stock Compensation and related interpretations. As such, compensation cost is measured on the date of grant at the fair value of the share-based payments. Such compensation amounts, if any, are amortized over the respective vesting periods of the grants. The Company estimates the fair value of stock options and warrants by using the Black-Scholes option valuation model.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED JULY 31, 2021 AND 2020

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Derivative Instruments

The Company ~~enters~~accounts ~~into~~for financing arrangements that consist of freestanding derivative instruments or are hybrid instruments that contain embedded derivative features. The Company accounts for these arrangements in accordance with ASC Topic 815, Accounting for Derivative Instruments and Hedging Activities as well as related interpretations of this standard. In accordance with this standard, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, considering all of the rights and obligations of each instrument.

The Company estimates fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered consistent with the objective measuring fair values. In selecting the appropriate technique, the Company considers, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as Black-Scholes model) are highly volatile and sensitive to changes in the trading market price of the Company’s common stock. Since derivative financial instruments are initially and subsequently carried at fair values, our income (expense) going forward will reflect the volatility in these estimates and assumption changes.

Convertible Debt Instruments

The Company records debt net of debt discount for beneficial conversion features and warrants, on a relative fair value basis. Beneficial conversion features are recorded pursuant to the Beneficial Conversion and Debt Topics of the Financial Accounting Standards Board (“FASB”) ASC. The amounts allocated to warrants and beneficial conversion rights are recorded as debt discount and as additional paid-in-capital. Debt discount is amortized to interest expense over the life of the debt using the effective interest method.

~~Foreign Currency Translation~~15

The Company has one non-U.S. subsidiary, where the functional currency is the United Arab Emirates dirham (“AED”). The Company’s foreign subsidiary maintains its records using local currency. The related assets and liabilities of this non-U.S. subsidiary have been translated using end of period exchange rates and stockholders’ equity is translated at the historical exchange rates to the U.S. dollar. Income and expense items were translated using average exchange rates for the period. The resulting translation adjustments, net of income taxes, are reported as other comprehensive income and accumulated other comprehensive income in the stockholder’s equity in accordance with ASC 220 – Comprehensive Income.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign Currency Translation

Through October 31, 2021, the Company had one non-U.S. subsidiary, where the functional currency was the United Arab Emirates dirham (“AED”). The Company’s foreign subsidiary maintained its records using local currency. The related assets and liabilities of this non-U.S. subsidiary have been translated using end of period exchange rates and stockholders’ equity is translated at the historical exchange rates to the U.S. dollar. Income and expense items were translated using average exchange rates for the period. The resulting translation adjustments, net of income taxes, are reported as other comprehensive income and accumulated other comprehensive income in the stockholder’s equity in accordance with ASC 220 – Comprehensive Income.

The exchange rate used to translate amounts in AED into USD for the purposes of preparing the unaudited condensed consolidated financial statements were as follows:

Balance sheet:

	July 31, 2021		October 31, 2020
	January 31, 2022		October 31, 2021
Period-end AED: USD exchange rate	$	0.~~27230~~27229	$	0.~~27229~~27230

Income statement:

	For the Three Months Ended				~~For the Nine Months Ended~~
	July 31,				July 31,
	January 31,
	2021		2020		2021		2020
	2022		2021
Average Period AED: USD exchange rate	$	0.27229	$	0.~~27229~~27228	$	~~0.27229~~	$	~~0.27230~~

Translation gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are translated, as the case may be, at the rate on the date of the transaction and included in the results of operations as incurred.

Income Taxes

The Company accounts for income taxes in accordance with Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes (“ASC 740”). Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities and net operating loss and tax credit carryforwards given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year-to-year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria of ASC 740.

ASC 740 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company’s tax returns for its October 31, ~~2020~~2021, 2020, 2019, and 2018 tax years may be selected for examination by the taxing authorities as the statute of limitations remains open.

The Company recognizes expenses for tax penalties and interest assessed by the Internal Revenue Service and other taxing authorities upon receiving valid notice of assessments. The Company has received no such notices for the tax years ended October 31, ~~2020~~2021 and ~~2019~~2020.

~~Earnings Per Share~~16

In accordance with the provisions of FASB ASC Topic 260, Earnings per Share, basic earnings per share (“EPS”) is computed by dividing earnings available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating EPS on a diluted basis.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

InEarnings ~~computing~~Per diluted EPS, only potential common shares that are dilutive, those that reduce EPS or increase loss per share, are included. The effect of contingently issuable shares are not included if the result would be anti-dilutive, such as when a net loss is reported. Therefore, basic and diluted EPS are computed using the same number of weighted average shares for the three and nine months ended July 31, 2021 and 2020, as we incurred a net loss for those periods. At July 31, 2021, there were outstanding warrants to purchase approximately 2,620,000 shares of the Company’s common stock, approximately 194,000 shares of the Company’s common stock issuable upon the conversion of Series A and Series C convertible preferred stock, approximately 228,000 shares of the Company’s common stock to be issued, and approximately 16,900,000 shares of the Company’s common stock issuable upon the conversion of convertible notes payable which may dilute future EPS. At July 31, 2020, there were outstanding warrants to purchase approximately 2,620,000 shares of the Company’s common stock, approximately 144,000 shares of the Company’s common stock issuable upon the conversion of Series A and Series C convertible preferred stock, and approximately 3,800,000 shares of the Company’s common stock issuable upon the conversion of convertible notes payable which may dilute future EPS.Share

In accordance with the provisions of FASB ASC Topic 260, Earnings per Share, basic earnings per share (“EPS”) is computed by dividing earnings available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating EPS on a diluted basis.

In computing diluted EPS, only potential common shares that are dilutive, those that reduce EPS or increase loss per share, are included. The effect of contingently issuable shares are not included if the result would be anti-dilutive, such as when a net loss is reported. Therefore, basic and diluted EPS are computed using the same number of weighted average shares for the three months ended January 31, 2022 and 2021, as we incurred a net loss for those periods. At January 31, 2022, there were outstanding warrants to purchase approximately 2,620,000 shares of the Company’s common stock, approximately 194,000 shares of the Company’s common stock issuable upon the conversion of Series A and Series C convertible preferred stock, approximately 1,200,000 shares of the Company’s common stock to be issued, and approximately 177,000,000 shares of the Company’s common stock issuable upon the conversion of convertible notes payable which may dilute future EPS. At January 31, 2021, there were outstanding warrants to purchase approximately 2,810,000 shares of the Company’s common stock, approximately 194,000 shares of the Company’s common stock issuable upon the conversion of Series A and Series C convertible preferred stock, and approximately 2,200,000 shares of the Company’s common stock issuable upon the conversion of convertible notes payable which may dilute future EPS.

Modification/Extinguishment of Debt

In accordance with ASC 470, a modification or an exchange of debt instruments that adds or eliminates a conversion option that was substantive at the date of the modification or exchange is considered a substantive change and is measured and accounted for as extinguishment of the original instrument along with the recognition of a gain or loss. Additionally, under ASC 470, a substantive modification of a debt instrument is deemed to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. A substantive modification is accounted for as an extinguishment of the original instrument along with the recognition of a gain or loss.

Concentrations, Risks and Uncertainties

A significant portion of the Company’s ongoing operations are related to the ~~international~~nutraceutical ~~food~~products ~~industries~~industry, and its prospects for success are tied indirectly to interest rates and the worldwide demand for the Company’s ~~food~~nutraceutical ~~and beverage~~ products.

Segment Reporting

Although the Company has a number of operating divisions, separate segment data has not been presented, as they meet the criteria for aggregation as permitted by ASC Topic 280, Segment Reporting.

Recently Adopted Accounting Standards

Effective November 1, ~~2020~~2021, the Company adopted ASU ~~2018~~2019-1312, ~~Fair~~Income ~~Value~~Taxes ~~Measurement~~ (Topic ~~820~~740), which ~~modified~~amended and simplified the ~~disclosure~~accounting ~~requirements~~for income ontaxes ~~fair~~by ~~value~~removing ~~measurements~~certain inexceptions ~~Topic~~to ~~820,~~the ~~Fair~~general ~~Value~~principles ~~Measurement~~of Topic 740, ~~based~~and onalso ~~the~~improved ~~concepts~~consistent inapplication ~~the~~of ~~Concept~~and ~~Statement,~~simplified U.S. ~~including~~GAAP ~~the~~for ~~consideration~~ other areas of ~~costs~~Topic 740 by clarifying and ~~benefits~~amending existing guidance. The Company determined the adoption of ASU ~~2018~~2019-13 12 did not have ana material impact on its unaudited condensed consolidated financial statements.

1817

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recently Issued Accounting Standards Not Yet Adopted

During May 2021, the FASB issued ASU 2021-04, to clarify and reduce diversity in accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The standard is effective for the Company as of November 1, 2022, with early adoption permitted. The Company is reviewing the impact of this guidance but does not currently expect the adoption of this guidance to have a material impact on its consolidated financial statements.

During August 2020, the FASB issued ASU 2020-06, to modify and simplify the application of U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. The standard is effective for the Company as of November 1, 2024, with early adoption permitted. The Company is reviewing the impact of this guidance but does not currently expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on the accompanying unaudited condensed consolidated financial statements.

NOTE 3: GOING CONCERN

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company has incurred a net loss from continuing operations of $1561,~~456,789~~655 and ~~negative~~has used cash ~~flows~~in ~~from~~operating activities of continuing operations of $~~729~~202,~~872~~ 805 for the ~~nine~~three months ended ~~July~~January 31, ~~2021~~2022. At ~~July~~January 31, ~~2021~~2022, the Company had a working capital ~~surplus~~deficit of $~~309~~3,~~820~~607, 535, and an accumulated deficit of $4550,~~621~~766,~~918~~368. It is management’s opinion that these facts raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date of this report, without additional debt or equity financing. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and ~~classification~~ classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

In order to meet its working capital needs through the next twelve months from the date of this report and to fund the growth of ~~our~~its business, the Company may consider plans to raise additional funds through the issuance of equity or debt. Although the Company intends to obtain additional financing to meet its cash needs, the Company may be unable to secure any additional financing on terms that are favorable or acceptable to it, if at all. The Company’s ability to raise additional capital will also be impacted by the ~~recent~~continued COVID-19 pandemic, which such ability is highly uncertain, cannot be predicted, and could have an adverse effect on the Company’s business and financial condition.

NOTE 4: ~~PREPAID EXPENSES~~LEASES

~~Prepaid~~At ~~expenses~~January ~~total~~31, ~~$84~~2022,~~518~~ the Company was party to one operating lease for its corporate office and ~~$170~~domestic warehouse operations in Stafford,~~874~~ Texas. atEffective ~~July~~February 318, 2021, ~~and~~the ~~October~~Company ~~31,~~terminated ~~2020,~~the ~~respectively~~operating lease for its corporate office at Gaithersburg, Maryland and entered ~~consist~~into ~~mainly~~a ofnew, ~~prepaid~~short-term ~~rent~~lease, ~~prepaid~~which the Company subsequently terminated. The Company also terminated its short-term lease for ~~consulting,~~office ~~and~~space ~~deposits~~in onDubai, ~~purchases~~UAE.

NOTE 5: LEASES

At July 31, 2021, the Company was party to one operating leases for its domestic warehouse operations in Stafford, Texas. Effective February 8, 2021, the Company terminated the operating lease for its corporate office and Gaithersburg, Maryland and entered into a new, short-term lease. The Company also has a short-term lease for office space in Dubai, UAE.

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the term, and (3) whether the Company has the right to direct the use of the asset. The Company allocates the consideration in the contract to each lease and non-lease component based on the component’s relative stand-alone price to determine the lease payments. Lease and non-lease components are accounted for separately. Leases are classified as either finance leases or operating leases based on criteria in ASC 842.

At lease commencement, the Company records a lease liability equal to the present value of the remaining lease payments, discounted using the rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. A corresponding ROU asset is recorded, measured based on the initial measurement of the lease liability. ROU assets also include any lease payments made and exclude lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.18

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 54: LEASES (continued)

~~Lease~~At ~~expense for operating leases, consisting of~~ lease ~~payments~~commencement, isthe ~~recognized~~Company onrecords a ~~straight-line~~lease ~~basis~~liability ~~over~~equal to the ~~lease~~present ~~term.~~value ~~Included~~of inthe ~~lease expense~~remaining ~~are any variable~~ lease payments, ~~incurred~~discounted in using the ~~period~~rate ~~that~~implicit ~~were not included~~ in the ~~initial~~ lease ~~liability.~~or, ~~Lease~~if ~~expense~~that ~~for finance~~rate ~~leases~~cannot ~~consists~~be ofreadily determined, the ~~amortization~~Company’s ofincremental ~~the~~borrowing rate. A corresponding ROU asset, ~~which~~ is ~~calculated~~recorded, onmeasured abased ~~straight-line~~on ~~basis over~~ the ~~shorter~~initial measurement of the ~~useful life~~lease ofliability. ~~the~~ROU ~~asset~~assets oralso ~~the~~include any lease ~~term,~~payments made and ~~interest~~exclude ~~expense~~lease onincentives. ~~the~~Lease ~~lease~~terms ~~liability,~~may ~~which~~include isoptions ~~calculated~~to ~~using~~extend ~~the~~or ~~effective~~terminate ~~interest~~the ~~rate method.~~lease ~~The~~when ~~Company~~it ~~had~~is noreasonably ~~finance~~certain ~~leases~~that atthe Company ~~July~~will ~~31,~~exercise ~~2021~~that option.

~~For~~Lease ~~the~~expense ~~nine~~for ~~months~~operating ~~ended~~leases, ~~July~~consisting ~~31,~~of ~~2021~~lease payments, ~~the~~is ~~Company~~recognized ~~had~~on ~~operating~~a straight-line basis over the lease ~~costs~~term. ofIncluded ~~$115,624,~~in ~~which~~lease expense are ~~included~~any invariable ~~general~~lease ~~and~~payments ~~administrative expenses~~incurred in the ~~unaudited~~period ~~consolidated~~that ~~statements~~were ofnot ~~operations.~~included ~~For~~in the ~~nine~~initial ~~months~~lease ~~ended~~liability. ~~July~~Lease ~~31,~~expense ~~2021,~~for finance ~~the~~leases ~~Company~~consists ~~made~~of ~~operating lease~~the ~~cash~~amortization ~~payments~~ of ~~$91~~the ROU asset,~~355,~~ which ~~are~~is ~~included~~calculated inon ~~cash~~a ~~flows~~straight-line ~~from~~basis ~~operating~~over ~~activities~~the shorter of ~~continuing operations in~~ the ~~unaudited~~useful ~~consolidated~~life ~~statements~~ of ~~cash~~the ~~flows.~~asset Ator ~~July~~the ~~31,~~lease ~~2021~~term, ~~the~~and ~~Company~~interest ~~had~~expense ~~operating~~on the lease ~~costs of $8~~liability,~~280~~ ~~accrued~~which ~~for~~is ~~future~~calculated ~~payment, which~~using ~~are~~the ~~included~~effective ininterest ~~accounts~~rate method. ~~payable~~The ~~and~~Company ~~accrued~~had ~~expenses~~no infinance ~~the~~leases ~~unaudited~~at ~~consolidated~~January ~~balance~~31, ~~sheets~~2022.

AtFor ~~July~~the three months ended January 31, ~~2021~~2022, the ~~remaining~~Company ~~lease~~had ~~term~~operating ~~for~~lease ~~our~~costs ~~domestic~~of ~~warehouse~~$25,149, ~~operations~~which isare 28included ~~months,~~in general and administrative expenses in the ~~discount~~unaudited ~~rate~~consolidated isstatements 5%of operations. ~~Future~~For ~~annual~~the three months ended January 31, 2022, the Company made operating ~~minimum~~lease cash payments ~~required~~of ~~under~~$12,900, ~~this~~which are included in cash flows from operating ~~type~~activities ~~lease~~of atcontinuing ~~July~~operations in the unaudited consolidated statements of cash flows. At January 31, ~~2021~~2022, the Company had operating lease costs of $21,178 accrued for future payment, which are asincluded ~~follows:~~in accounts payable and accrued expenses in the unaudited consolidated balance sheets.

At January 31, 2022, the remaining lease term for our domestic warehouse operations is 25 months, and the discount rate is 5%. Future annual minimum cash payments required under this operating type lease at January 31, 2022 are as follows:

Future Minimum Lease Payments:
Remainder of fiscal year 2021	$	25,149
Remainder of fiscal year 2022	$	75,447
2022		100,596
2023		100,596
2024		8,383
Total Minimum Lease Payments	$	~~234~~184,~~724~~426
Less: amount representing interest		(138,~~609~~550	)
Present Value of Lease Liabilities	$	~~221~~175,~~115~~876
Less: current portion		(9193,~~621~~936	)
Long-Term Portion	$	~~129~~81,~~494~~940

~~NOTE 6: INTANGIBLE ASSET, NET~~19

At July 31, 2021, intangible asset, net, consists of a single intangible asset of certain acquired customer contracts.

Through December 18, 2020, the Company held an acquired MLB license intangible and an NHL license intangible, which were assigned to GOF through a letter agreement with ACG Global Solutions, Inc. and GOF, effective December 18, 2020. The assignments of the Company’s interests in the MLB and NHL licenses were completed on March 15, 2021 and March 25, 2021, respectively. Accordingly, we have classified the impairment of these intangibles and the reversal of accrued license royalty fees within discontinued operations in the unaudited condensed consolidated financial statements for the nine months ended July 31, 2021 and 2020 (see Note 13).

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 65: ~~INTANGIBLE~~REVENUE ~~ASSET, NET (continued)~~DISAGGREGATION

~~Acquired~~The ~~Customer~~Company ~~Contracts~~did not generate any revenue from continuing operations for the three months ended January 31, 2022 and 2021, and therefore did not have any revenue disaggregation.

~~The~~NOTE ~~acquired~~6: customer contracts were purchased for $544,630 (2,000,000 United Arab Emirates Dirham) from a third-party frozen foods vendor during September 2019, giving the Company the right to earn revenue under the terms of the acquired customer contracts.DEBT

The net carrying amount of the intangible asset is as follows:

SCHEDULE OF INTANGIBLE ASSETS

	Estimated
	Useful Lives	July 31, 2021			October 31, 2020
Intangible asset:
Customer contracts	7 years		544,630			544,630
Accumulated amortization			(149,125	)		(90,772	)
Intangible assets, net		$	395,505		$	453,858

As a result of the COVID-19 pandemic, we have considered its potential impact on our global supply chain, operations and routes to market or those of our suppliers, customers, distributors and retailers. Based on our analysis, we have determined there is currently no indication that the carrying amount of our acquired customer contracts is impaired and not fully recoverable, and therefore no impairment exists at July 31, 2021.

Amortization expense for the three and nine months ended July 31, 2021 was $19,451 and $58,353, respectively. Amortization expense for the three and nine months ended July 31, 2020 was $19,451 and $71,321, respectively.

Annual amortization expense related to the existing net carrying amount of the intangible asset for the next five years is expected to be as follows:

SCHEDULE OF FUTURE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS

Remainder of fiscal year 2021	$	19,451
Fiscal year 2022	$	77,804
Fiscal year 2023	$	77,804
Fiscal year 2024	$	77,804
Fiscal year 2025	$	77,804
Fiscal year 2026	$	64,838

NOTE 7: REVENUE DISAGGREGATION

The following table presents the Company’s revenue by country and major product lines:

SCHEDULE OF NET REVENUE BY COUNTRY

	For the Three Months Ended						For the Nine Months Ended
	July 31,						July 31,
	2021			2020			2021			2020
United Arab Emirates	$	1,621,601		$	3,730,680		$	6,632,975		$	12,229,734
Oman		95,452			794,593			835,521			1,831,220
Kingdom of Saudi Arabia		95,880			335,579			537,557			1,028,892
Bahrain		-			234,735			223,069			802,303
United States		35,456			820,000			383,300			820,000
Revenue	$	1,848,389		$	5,915,587		$	8,612,422		$	16,712,149
Food products		100	%		100	%		100	%		100	%
		100	%		100	%		100	%		100	%

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED JULY 31, 2021 AND 2020

(UNAUDITED)

NOTE 7: REVENUE DISAGGREGATION (continued)

For the nine months ended July 31, 2021, the Company was subject to revenue concentration risk as eight customers accounted for approximately 69% of our total revenue. For the nine months ended July 31, 2020, the Company was subject to revenue concentration risk as six customers accounted for approximately 55% of our total revenue.

NOTE 8: DEBT

Convertible Notes Payable

On April 297, ~~2020~~2021, the Company ~~issued~~entered ~~and~~into ~~sold~~ a ~~convertible~~securities ~~promissory~~purchase ~~note~~agreement towith an accredited investor inpursuant ~~the~~to ~~principal~~which ~~amount~~the ofCompany ~~$165,000~~issued ~~(including~~and sold a ~~$15,000~~convertible ~~original~~promissory ~~issuance~~note ~~discount)~~in the principal amount of $88,500. The note matures on April 297, ~~2021~~2022, bears interest at a rate of 89% per annum, (increasing to 1822% per annum upon the occurrence of an Event of Default (as defined in the note)) and is convertible into shares of the Company’s common stock at a conversion price ofequal ~~$10.00 per share, subject~~ to ~~adjustment.~~the ~~The~~greater ~~note~~of ~~may~~(i) ~~be prepaid by~~ the ~~Company~~Fixed atConversion ~~any~~Price ~~time~~(as ~~prior~~defined toin the ~~maturity~~note) ~~date~~or of(ii) the ~~Note~~Variable ~~with~~Conversion ~~certain~~Price ~~prepayment penalties~~ (as defined in the note.), ~~Due~~subject to ~~the~~adjustment. ~~variable~~The ~~conversion provision contained in the convertible promissory~~ note ~~that~~may ~~became~~be ~~effective~~prepaid ~~upon~~by the ~~VWAP of the~~ Company’s at ~~common~~any ~~stock~~time ~~falling~~prior ~~below~~to ~~$5.50~~the at180th ~~any time~~day after the ~~prepayment~~issuance date, of the ~~Company~~note ~~accounted~~with ~~for~~certain ~~this~~prepayment ~~conversion~~penalties ~~feature~~ as adefined ~~derivative~~in ~~liability,~~the ~~and recorded a derivative liability of $250,329~~note. On various dates through ~~December~~November 81, ~~2020~~2021, the aggregate outstanding principal and accrued interest of $~~172~~92,~~246~~ 483 was converted into an aggregate of ~~985~~ 4,~~384~~607,401 shares of the Company’s common stock~~, fully satisfying this obligation~~. The Company recorded an aggregate ~~gain~~loss on extinguishment of debt of $3164,~~304~~602 as a result of the Company issuing shares of its common stock to fully satisfy this obligation.

On ~~May~~April 128, ~~2020~~2021, the Company ~~entered~~issued ~~into~~and sold a ~~securities~~convertible ~~purchase~~promissory ~~agreement~~note ~~with~~to an accredited investor ~~and issued and sold a convertible promissory note~~ in the principal amount of $~~153~~150,000 (including a $20,000 original issuance discount). The note matures on ~~May~~April 128, ~~2021~~2022, bears interest at a rate of 98% per annum, (increasing to 2224% per annum upon the occurrence of an Event of Default (as defined in the note)). ~~and~~This is convertible ~~into~~debenture ~~shares~~converts at 60% of the lowest closing price during the ~~Company’s common~~15 ~~stock~~days atprior ato conversion ~~price~~and ~~equal~~may tobe prepaid by the ~~greater~~Company ofat ~~(i)~~any time prior to the ~~Fixed~~180th day ~~Conversion~~after ~~Price~~the ~~(as~~issuance ~~defined~~date inof the note) orwith ~~(ii)~~certain ~~the~~prepayment ~~Variable Conversion~~amounts ~~Price (~~as ~~defined~~set forth therein. Due to the variable conversion provisions contained in the convertible promissory note), ~~subject~~the toCompany ~~adjustment.~~accounted ~~The~~for ~~note~~this ~~may~~conversion befeature ~~prepaid~~as bya derivative liability. In connection herewith, the Company atrecorded ~~any~~a ~~time~~derivative ~~prior~~liability toof ~~the~~$282,500 ~~180th day~~and ~~after~~deferred ~~the~~financing ~~issuance~~costs of ~~the~~$5,200. ~~note~~The ~~with~~original ~~certain~~issue ~~prepayment~~discount and ~~penalties~~deferred asfinancing ~~defined~~costs inare being amortized over the term of the note. On various dates through ~~November 23~~January 20, ~~2020~~2022, the aggregate outstanding principal and accrued interest of $~~159~~58,~~885~~682 was converted into an aggregate of ~~900~~9,~~597~~372,896 shares of the Company’s common stock~~, fully satisfying this obligation~~. The Company recorded an aggregate loss on extinguishment of debt of $7829,~~422~~ 711 as a result of the Company issuing shares of its common stock. toAt ~~satisfy~~January ~~this~~31, ~~obligation~~2022, the aggregate balance of the convertible promissory note and accrued interest was $100,604. At January 31, 2022, the aggregate balance of the convertible promissory note, net of original issue discount and deferred financing costs was $89,843.

On ~~July~~April 1415, ~~2020~~2021, the Company ~~entered~~issued ~~into~~and sold a ~~securities~~convertible ~~purchase~~promissory ~~agreement~~note ~~with~~to an accredited investor ~~and issued and sold a convertible promissory note~~ in the principal amount of $63143,000 (including a $13,000 original issuance discount). The note matures on ~~July~~April 1415, ~~2021~~2022, bears interest at a rate of 96% per annum, (increasing to 2224% per annum upon the occurrence of an Event of Default (as defined in the note)). ~~and~~This is convertible ~~into~~debenture ~~shares~~converts at 60% of the lowest closing price during the ~~Company’s common~~15 ~~stock~~days atprior ato conversion ~~price~~and ~~equal~~may be prepaid by the Company at any time prior to the ~~greater~~180th day ofafter ~~(i)~~the issuance date of the ~~Fixed~~note ~~Conversion~~with ~~Price~~certain (prepayment amounts as ~~defined~~set forth therein. Due to the variable conversion provisions contained in the ~~note)~~convertible orpromissory ~~(ii)~~note, the ~~Variable Conversion~~Company ~~Price~~accounted (for this conversion feature as ~~defined~~a inderivative liability. In connection herewith, the ~~note)~~Company recorded a derivative liability of $238,200 ~~subject~~and todeferred ~~adjustment~~financing costs of $11,700. The ~~note~~original ~~may~~issue bediscount and ~~prepaid~~deferred byfinancing costs are being amortized over the ~~Company~~term atof ~~any~~the ~~time~~note. ~~prior~~On tovarious dates through January 4, 2022, the ~~180th~~aggregate outstanding ~~day~~principal ~~after~~and ~~the~~accrued ~~issuance~~interest of ~~the~~$53,107 ~~note~~was ~~with~~converted ~~certain~~into ~~prepayment~~an ~~penalties~~aggregate asof ~~defined~~8,655,854 inshares of the ~~note~~Company’s common stock. ~~During~~The Company ~~January~~recorded ~~2021~~an aggregate loss on extinguishment of debt of $36,103 as a result of the Company ~~paid-off~~issuing shares of its common stock. At January 31, 2022, the aggregate balance of the convertible promissory note, ~~including~~and accrued interest ~~and~~was ~~prepayment~~$96,416. ~~amount~~At January 31, ~~fully~~2022, the ~~satisfying~~aggregate ~~this~~balance ~~obligation~~of the convertible promissory note, net of original issue discount and deferred financing costs was $87,060.

2220

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 86: DEBT (continued)

On ~~July~~June 2229, ~~2020~~2021, the Company entered into a securities purchase agreement with an accredited investor ~~and~~pursuant ~~issued~~to which the Company issued and sold a convertible promissory note in the principal amount of $9085,~~000 (including a $15,000 original issuance discount)~~750. The note matures on ~~July~~June 2229, ~~2021~~2022, bears interest at a rate of 49% per annum, (increasing to 2422% per annum upon the occurrence of an Event of Default (as defined in the note)) and is convertible into shares of the Company’s common stock at a conversion price ofequal ~~$50.00~~to ~~per share during~~ the ~~first six~~greater ~~months~~of a(i) ~~principal~~the ~~amount~~Fixed isConversion ~~outstanding,~~Price ~~and~~(as ~~then~~defined in ~~adjusts~~the tonote) aor ~~conversion~~(ii) ~~price~~the ofVariable ~~63%~~Conversion ofPrice ~~the~~(as ~~lowest~~defined ~~closing~~in ~~price during~~ the ~~20 days prior to conversion~~note), subject to adjustment. The note may be prepaid by the Company at any time prior to the 180th day after the issuance date of the note with certain prepayment penalties as defined in the note. On various dates through ~~June~~January 2926, ~~2021~~2022, the aggregate outstanding principal ~~and accrued interest~~ of $9565,~~292~~300 was converted into an aggregate of 113,~~084~~271,~~391~~612 shares of the Company’s common stock~~, fully satisfying this obligation~~. The Company recorded an aggregate loss on extinguishment of debt of $3238,~~871~~783 as a result of the Company issuing shares of its common stock. toAt ~~satisfy~~January ~~this~~31, ~~obligation~~2022, the aggregate balance of the convertible promissory note and accrued interest was $24,682. The aggregate balance of the convertible promissory note, net of deferred financing costs at January 31, 2022 was $18,909.

On ~~January~~August 45, 2021, the Company entered into a securities purchase agreement with an accredited investor pursuant to which the Company issued and sold a convertible promissory note in the principal amount of $9573,~~000~~750. The note matures on ~~January~~August 45, 2022, bears interest at a rate of 9% per annum (increasing to 22% per annum upon the occurrence of an Event of Default (as defined in the note)) and is convertible into shares of the Company’s common stock at a conversion price equal to the greater of (i) the Fixed Conversion Price (as defined in the note) or (ii) the Variable Conversion Price (as defined in the note), subject to adjustment. The note may be prepaid by the Company at any time prior to the 180th day after the issuance date of the note with certain prepayment penalties as defined in the note. OnAt January 7, 2021, the proceeds received from this Note were used to prepay the convertible promissory note dated July 14, 2020. On various dates through July 21, 2021, the aggregate outstanding principal of $65,000 was converted into an aggregate of 1,330,909 shares of the Company’s common stock. The Company recorded an aggregate loss on extinguishment of debt of $43,276 as a result of the Company issuing shares of its common stock. At July 31, ~~2021~~2022, the aggregate balance of the convertible promissory note and accrued interest was $3477,~~548~~023. The aggregate balance of the convertible promissory note, net of deferred financing costs at ~~July~~January 31, ~~2021~~2022 was $2871,~~895~~849.

On ~~January~~August 1312, 2021, the Company issued and sold a convertible promissory note to an accredited investor in the principal amount of $88110,000 (including a $410,000 original issuance discount). The note matures on ~~January~~August 1312, 2022, bears interest at a rate of 86% per annum (increasing to 24% per annum upon the occurrence of an Event of Default (as defined in the note)). This convertible debenture converts at 60% of the lowest closing price during the 15 days prior to conversion and may be prepaid by the Company at any time prior to the 180th day after the issuance date of the note with certain prepayment amounts as set forth therein. Due to the variable conversion provisions contained in the convertible promissory note, the Company accounted for this conversion feature as a derivative liability. In connection herewith, the Company recorded a derivative liability of $~~120~~226,~~219~~620 and deferred financing costs of $78,~~200~~800. The original issue discount and deferred financing costs are being amortized over the term of the note. At ~~July~~January 31, ~~2021~~2022, the aggregate balance of the convertible promissory note and accrued interest was $91113,~~858~~128. At ~~July~~January 31, ~~2021~~2022, the aggregate balance of the convertible promissory note, net of of original issue discount and deferred financing costs was $82100,~~937~~111.

On ~~April~~November 75, 2021, the Company entered into a securities purchase agreement with an accredited investor pursuant to which the Company ~~issued~~ issued and sold a convertible promissory note in the principal amount of $8878,~~500~~750. The note matures on ~~April~~November 75, 2022, bears interest at a rate of 9% per annum (increasing to 22% per annum upon the occurrence of an Event of Default (as defined in the note)) and is convertible into shares of the Company’s common stock at a conversion price equal to the ~~greater of (i) the Fixed Conversion Price (as defined in the note) or (ii) the~~ Variable Conversion Price (as defined in the note), subject to adjustment. The note may be prepaid by the Company at any time prior to the 180th day after the issuance date of the note with certain prepayment penalties as defined in the note. AtDue ~~July~~to the variable conversion provisions contained in the convertible promissory note, the Company accounted for this conversion feature as a derivative liability. In connection herewith, the Company recorded a derivative liability of $143,657 and deferred financing costs of $3,750. At January 31, ~~2021~~2022, the aggregate balance of the convertible promissory note and accrued interest was $9180,~~031~~459. The aggregate balance of the convertible promissory note, net of deferred financing costs at ~~July~~ January 31, ~~2021~~2022 was $8675,~~112~~904.

2321

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 86: DEBT (continued)

On ~~April~~December 810, 2021, the Company ~~issued~~entered ~~and~~into ~~sold~~ a ~~convertible~~securities ~~promissory~~purchase ~~note~~agreement towith an accredited investor pursuant to which the Company issued and sold a convertible promissory note in the principal amount of $~~150~~48,~~000 (including a $20,000 original issuance discount)~~750. The note matures on ~~April~~December 810, 2022, bears interest at a rate of 89% per annum (increasing to 2422% per annum upon the occurrence of an Event of Default (as defined in the note)). ~~This~~and is convertible into ~~debenture~~shares ~~converts at 60%~~ of the ~~lowest~~Company’s ~~closing~~common ~~price~~stock ~~during~~at ~~the~~a 15conversion ~~days~~price ~~prior~~equal to ~~conversion~~the ~~and~~greater ~~may~~of be(i) ~~prepaid by~~ the ~~Company~~Fixed atConversion ~~any~~Price ~~time~~(as ~~prior to the 180th~~defined ~~day~~in ~~after~~ the ~~issuance~~note) ~~date~~or of(ii) the ~~note~~Variable ~~with~~Conversion ~~certain~~Price ~~prepayment amounts~~ (as ~~set~~defined ~~forth therein. Due to the variable conversion provisions contained~~ in the ~~convertible promissory~~ note), ~~the~~subject ~~Company~~to ~~accounted~~adjustment. ~~for~~The ~~this~~note ~~conversion~~may ~~feature~~be asprepaid aby ~~derivative liability. In connection herewith,~~ the Company at ~~recorded~~any atime ~~derivative~~prior ~~liability~~to ofthe ~~$282,500~~180th ~~and~~day ~~deferred~~after ~~financing~~the ~~costs~~issuance date of ~~$5,200.~~the ~~The~~note ~~original~~with ~~issue~~certain ~~discount and~~prepayment ~~deferred~~penalties ~~financing~~as ~~costs~~defined ~~are~~in ~~being amortized over~~ the ~~term of the~~ note. At ~~July~~ January 31, ~~2021~~2022, the aggregate balance of the convertible promissory note and accrued interest was $~~153~~49,~~781~~387. AtThe ~~July 31, 2021, the~~ aggregate balance of the convertible promissory note, net of ~~original~~ ~~issue discount and~~ deferred financing costs at January 31, 2022 was $~~132~~45,~~740~~545.

OnAt ~~April~~January 1531, 2021, the Company issued and sold a convertible promissory note to an accredited investor in the principal amount of $143,000 (including a $13,000 original issuance discount). The note matures on April 15, 2022, bears interest at a rate of 6% per annum (increasing to 24% per annum upon the occurrence of an Event of Default (as defined in the note)). This convertible debenture converts at 60% of the lowest closing price during the 15 days prior to conversion and ~~may~~October be prepaid by the Company at any time prior to the 180th day after the issuance date of the note with certain prepayment amounts as set forth therein. Due to the variable conversion provisions contained in the convertible promissory note31, ~~the Company accounted for this conversion feature as a derivative liability. In connection herewith~~2021, ~~the~~there ~~Company~~was ~~recorded a derivative liability of~~ $~~238~~489,~~200~~221 and ~~deferred financing costs of~~ $11530,~~700.~~358 ~~The original issue discount and deferred financing costs are being amortized over the term~~ of ~~the~~convertible ~~note.~~notes Atpayable ~~July 31~~outstanding, ~~2021,~~net ~~the aggregate balance~~ of ~~the~~discounts ~~convertible~~of ~~promissory note and accrued interest was~~ $~~145~~28,~~539.~~879 ~~At July 31, 2021, the aggregate balance of the convertible promissory note, net of original issue discount~~ and ~~deferred financing costs was~~ $~~125~~42,~~608~~442, respectively.

OnDuring ~~June 29, 2021,~~ the ~~Company~~three ~~entered~~months ~~into~~ended aJanuary ~~securities purchase agreement with an accredited investor pursuant to which the Company issued and sold a convertible promissory note in the principal amount of $85~~31,~~750.~~ ~~The note matures on June 29,~~ 2022, ~~bears interest at a rate of 9% per annum (increasing to 22% per annum upon the occurrence of an Event of Default (as defined in the note))~~ and is convertible into shares of the Company’s common stock at a conversion price equal to the greater of (i) the Fixed Conversion Price (as defined in the note) or (ii) the Variable Conversion Price (as defined in the note), subject to adjustment. The note may be prepaid by the Company at any time prior to the 180th day after the issuance date of the note with certain prepayment penalties as defined in the note. At July 31, 2021, ~~the~~amortization ~~aggregate balance~~ of ~~the~~original ~~convertible~~issue ~~promissory~~discount ~~note~~ and ~~accrued~~issuance ~~interest~~costs ~~was~~amounted to $8621,~~405.~~063 ~~The aggregate balance of the convertible~~and ~~promissory note~~$27, ~~net of deferred financing costs at July 31~~512, ~~2021 was $82,318~~respectively.

AtDuring ~~July~~the ~~31,~~three ~~2021~~months ~~and~~ended ~~October~~January 31, ~~2020~~2022, ~~there~~an ~~was~~aggregate ~~$538,610 and~~of $~~387~~191,~~193~~ 371 of convertible notes, ~~payable~~including ~~outstanding~~accrued interest, ~~net~~were converted into shares of ~~discounts~~the Company’s common stock and there were no payments toward the outstanding balances of convertible notes. During the three months ended January 31, 2021, an aggregate of $46284,~~639~~131 of convertible notes, including accrued interest, were converted into shares of the Company’s common stock and there were payments of an aggregate of $3591,~~806,~~457 toward the outstanding balances of convertible ~~respectively~~notes.

During the nine months ended July 31, 2021, amortization of original issue discount and issuance costs amounted to $61,017. During the nine months ended July 31, 2020, amortization of original issue discount, issuance costs, beneficial conversion features amounted to $1,222,435.

During the nine months ended July 31, 2021, an aggregate of $444,423 of convertible notes, including accrued interest, were converted into shares of the Company’s common stock and there were payments of an aggregate of $91,457 toward the outstanding balances of convertible notes. During the nine months ended July 31, 2020, an aggregate of $1,875,929 of convertible notes, including accrued interest, were converted into shares of the Company’s common stock and there were no payments toward the outstanding balances of convertible notes.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED JULY 31, 2021 AND 2020

(UNAUDITED)

NOTE 8: DEBT (continued)

Notes Payable

On January 26, 2019, the Company entered into Amendment No. 1 to the promissory note (the “Monaco Note”) issued in favor of the Donald P. Monaco Insurance Trust on January 26, 2018 in the principal amount of $530,000, with an annual interest rate of 12%, whereby (i) the maturity date of the Monaco Note was extended to January 26, 2020 and (ii) the Company agreed to use its best efforts to prepay the unpaid principal amount of the Monaco Note together with all accrued but unpaid interest thereon on or prior to March 31, 2019.

On February 8, 2019, the Company entered into Amendment No. 2 to the Monaco Note whereby the maturity date of the Monaco Note was extended to November 8, 2019.

Upon maturity on November 8, 2019, the Company was not able to pay the balance due and the interest rate immediately increased to 18% ~~per~~ per annum. The note holder agreed to only impose the default interest rate and not proceed with any other default remedies currently available. On August 14, 2020, the Company entered into Amendment No. 3 (the “Third Note Amendment”) to the Monaco Note whereby (i) the timing of payments of principal and interest was amended and (ii) it was acknowledged and agreed that so long as the principal ~~and~~ and interest payment schedule, as amended by the Third Note Amendment, is satisfied by the Company, the Company will not be in default ~~pursuant~~ pursuant to the payment of principal and interest of the Note. Furthermore, on October 26, 2020, the Company entered into Amendment No. 4 (the “Fourth Note Amendment”) to the Monaco Note whereby amendments were made to (i) the timing of payments of principal and interest, (ii) the determination of status of default, and (iii) the manner and application of payments. ~~The~~On ~~Company~~December ~~received a~~15, ~~notice~~2021, ofDonald ~~event~~P. ofMonaco as ~~default~~trustee ~~and~~of ~~demand~~the ~~letter~~Donald ~~(“Demand~~P. ~~Letter”)~~Monaco ~~from~~Insurance ~~the~~Trust, ~~promissory~~commenced ~~note~~a ~~holder~~lawsuit ~~(“Note~~against ~~Holder”). The~~the Company ~~expects~~in tothe ~~work~~United ~~with~~States ~~the~~District ~~Note~~Court ~~Holder~~for tothe District ~~negotiate~~of aMaryland ~~repayment~~as ~~structure~~a ~~whereby~~result of the Company ~~can~~not ~~repay~~making required payments under the Monaco Note. ~~Holder~~The ~~the balance~~Company ~~due~~intends asto ~~quickly~~defend asthis matter ~~possible~~and ~~based~~although ~~upon~~the ~~its~~ultimate ~~available~~outcome ~~capital.~~cannot ~~Through~~be ~~July~~predicted ~~31,~~with ~~2021~~certainty, an adverse ruling against the Company ~~paid~~could anhave ~~aggregate~~a ~~of $116,152~~material ofadverse ~~accrued~~effect ~~interest~~on inits ~~accordance~~financial ~~with~~condition ~~the~~and ~~provisions~~ results of ~~the~~operations ~~Fourth~~(see Note ~~Amendment~~10).

On March 31, 2020, the Company issued and sold a promissory note to an accredited investor in the principal amount of $312,500 (including a $62,500 original issuance discount). The note matures on July 1, 2020, bears interest at a rate of 4% per annum, (increasing to 18% per annum upon the occurrence of an Event of Default (as defined in the note)) and provides a security interest in all of the Company’s equity ownership interest in its wholly owned subsidiary, Big League Foods, Inc (“BLF”). The note may be prepaid by the Company at any time prior to the maturity date with no prepayment penalties. On July 20, 2020, the Company and its wholly owned subsidiary, BLF, entered into a letter agreement (“Agreement”) with the accredited investor to extend the maturity date ninety (90) days to September 29, 2020. The Agreement also provides that BLF will sell certain of its inventory (“Purchased Inventory”) to the accredited investor as an approved Distributor and that the accredited investor will make certain invoice payments to BLF vendors. Upon the sale of Purchased Inventory by the accredited investor, the accredited investor will retain the first $60,000 of proceeds and then apply future proceeds on a per case amount, as specified within the Agreement, as a reduction of the outstanding promissory note balance. Any remaining note balance will be due and payable by the Company upon maturity of the promissory note. Furthermore, on December 18, 2020, the Company and its wholly owned subsidiary, BLF, entered into a special agreement with the accredited investor to extend the maturity date to December 31, 2021, add a prepayment clause to whereby in the event the accredited investor has received a total of $150,000 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, and add an event of default to whereby until January 1, 2022, the only event of default on the note shall be the Company’s failure to make the Prepayment. Through July 31, 2021, the Company has not paid any amount toward the outstanding balance of this promissory note.22

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 86: DEBT (continued)

OnThrough ~~April~~January 2331, ~~2020~~2022, the Company ~~entered~~paid ~~into a promissory note with~~ an ~~approved~~aggregate ~~lender in the principal amount~~ of $~~104~~116,~~479.~~152 ~~The note was approved under the provisions~~ of ~~the~~accrued Coronavirus, Aid, Relief and Economic Security Act (the “CARES Act”) and the terms of the Paycheck Protection Program of the U.S. Small Business Administration’s 7(a) Loan Program. The note accrues interest ~~for the first six months following the issuance date at a rate of 1% per annum, (increasing to 6% per annum upon the occurrence of an Event of Default (as defined~~ in ~~the~~accordance ~~note)),~~with ~~and beginning November 23, 2020, requires 18 monthly payments of $5,880 each, consisting of principal and interest until paid in full on April 23, 2022. The note may be prepaid by~~ the ~~Company~~provisions ~~at any time prior to the maturity date with no prepayment penalties. Additionally, any portion~~ of the ~~note~~Fourth ~~up to the entire principal and accrued interest balance may be forgiven~~Note ~~in the event the Company satisfies certain requirements as determined by the CARES Act~~Amendment. ~~On June 21, 2021, the entire principal and accrued interest balance of $105,710 was forgiven by the U.S. Small Business Administration, which satisfied this obligation.~~

On ~~February~~March 131, ~~2021~~2020, the Company ~~entered~~issued ~~into~~and sold a ~~securities~~promissory ~~purchase~~note ~~agreement~~to ~~with~~ an accredited investor ~~and issued an 12% promissory note~~ in the principal amount of $~~303~~312,~~000~~500 (including a $3962,500 original ~~issue~~issuance discount). toThe ~~the~~note ~~accredited~~matures ~~investor~~on ~~with~~July a1, ~~maturity~~2020, ~~date~~bears ~~of February~~interest 1,at ~~2022.~~a ~~Twelve~~rate ~~months~~ of ~~interest~~4% isper ~~immediately~~annum, ~~earned~~(increasing byto ~~the~~18% per ~~accredited~~annum ~~investor~~ upon the ~~Company~~occurrence ~~receiving~~of ~~proceeds~~an ~~and is~~Event ~~included~~of Default (as defined in the ~~required~~note)) ~~monthly~~and ~~repayments.~~provides Ona ~~February~~security 8,interest ~~2021,~~in all of the Company’s equity ~~received~~ownership ~~net~~interest ~~proceeds~~ in ~~the~~its ~~amount~~wholly ofowned ~~$240~~subsidiary,~~325~~ asBig ~~a result~~League ~~of $23~~Foods,~~175~~ ~~being~~Inc ~~paid~~(“BLF”). ~~for~~The ~~legal~~note ~~and~~may ~~due~~be ~~diligence~~prepaid ~~fees~~by ~~incurred~~the ~~with~~Company at ~~respect~~any time prior to ~~this~~the ~~securities~~maturity ~~purchase~~date ~~agreement~~with ~~and~~no ~~convertible promissory~~prepayment ~~note~~penalties. InOn ~~accordance~~July ~~with~~20, ~~the securities purchase agreement~~2020, the Company ~~issued~~and 1)its ~~200~~wholly owned subsidiary,~~000~~ ~~restricted~~BLF, entered ~~shares~~into ofa ~~its~~letter ~~common stock~~agreement (“~~Commitment Shares~~Agreement”) towith the accredited investor asto ~~additional~~extend ~~consideration for~~ the ~~purchase~~maturity ofdate ~~the~~ninety ~~promissory~~(90) ~~note~~days to ~~and~~September ~~2) 200~~29,~~000~~ ~~restricted~~2020. ~~shares~~The Agreement also provides that BLF will sell certain of its ~~common~~inventory ~~stock~~ (“~~Returnable~~Purchased ~~Shares~~Inventory”) to the accredited investor ~~which~~as ~~will~~an beapproved ~~returned to~~Distributor and that the ~~Company~~accredited ~~upon~~investor ~~timely~~will ~~completion~~make ofcertain ~~the~~invoice ~~required~~payments ~~repayment~~to ~~schedule~~BLF vendors. ~~Repayments~~Upon the sale of ~~the~~Purchased ~~promissory~~Inventory ~~note~~by ~~shall~~the beaccredited ~~made~~investor, inthe ~~eight~~accredited ~~(8) installments~~investor ~~each~~will inretain the ~~amount~~first of $4260,~~420~~000 ~~commencing~~of onproceeds ~~July~~and 1,then apply ~~2021~~future ~~and~~proceeds ~~continuing~~on ~~thereafter~~a ~~each~~per ~~thirty~~case ~~(30)~~amount, ~~days~~as ~~until~~specified ~~February 1~~within the Agreement, ~~2022.~~as ~~This~~a reduction of the outstanding promissory note isbalance. Any ~~only~~remaining ~~convertible~~note ~~upon~~balance anwill ~~event~~be ofdue ~~default~~and aspayable ~~defined~~by inthe Company upon maturity of the promissory note. ~~The~~Furthermore, ~~original~~on ~~issue~~December ~~discount~~18, ~~deferred~~2020, ~~financing~~the ~~costs~~Company and ~~issuance~~its ~~date~~wholly ~~fair~~owned ~~value~~subsidiary, ofBLF, ~~the~~entered ~~Commitment~~into ~~Shares~~a ~~are~~special ~~being~~agreement ~~amortized~~with ~~over~~ the ~~term~~accredited ofinvestor to extend the ~~note.~~maturity date Asto ofDecember ~~July~~ 31, 2021, ~~the~~add ~~Company~~a ~~has~~prepayment ~~not~~clause ~~made~~to whereby in the ~~required~~event ~~monthly~~the ~~payment~~accredited investor has received a total of $42150,~~420~~000 ~~commencing~~or more pursuant to the note on ~~July~~or 1before December 31, 2021 (the “Prepayment”), ~~has~~then ~~not~~the ~~received~~note ashall ~~notice~~be forgiven and considered paid in full, and add an event of default ~~from~~ ~~the~~to ~~accredited~~whereby ~~investor~~until January 1, ~~and~~2022, isthe ~~working~~only ~~with~~event of default on the ~~accredited~~note ~~investor~~shall be the Company’s failure to ~~resolve~~make the Prepayment. Through January 31, 2022, the Company has not paid any amount toward the outstanding balance of this promissory ~~matter~~note. At ~~July~~January 31, ~~2021~~2022, the aggregate balance of the promissory note and accrued interest was $339,~~360~~229. ~~The~~On ~~aggregate~~March ~~balance~~10, of2022, ~~the~~AGC ~~promissory~~Global ~~note~~Solutions, ~~net~~Inc., ofcommenced ~~original~~a ~~issue~~lawsuit ~~discount,~~against the Company in the United States ~~deferred~~Circuit ~~financing~~Court ~~costs~~for ~~and~~Montgomery ~~issuance~~County, ~~date~~Maryland ~~fair~~as ~~value~~a result of the ~~Commitment~~Company ~~Shares~~not atmaking ~~July~~required payments under the promissory note by December 31, 2021. ~~was~~The ~~$249~~Company intends to defend this matter and although the ultimate outcome cannot be predicted with certainty,~~224~~ an adverse ruling against the Company could have a material adverse effect on its financial condition and results of operations (see Note 10).

~~Revolving~~On ~~Credit~~February ~~Agreement~~1, 2021, the Company entered into a securities purchase agreement with an accredited investor and issued an 12% promissory note in the principal amount of $303,000 (including a $39,500 original issue discount) to the accredited investor with a maturity date of February 1, 2022. Twelve months of interest is immediately earned by the accredited investor upon the Company receiving proceeds and is included in the required monthly repayments. On February 8, 2021, the Company received net proceeds in the amount of $240,325 as a result of $23,175 being paid for legal and due diligence fees incurred with respect to this securities purchase agreement and convertible promissory note. In accordance with the securities purchase agreement, the Company issued 1) 200,000 restricted shares of its common stock (“Commitment Shares”) to the accredited investor as additional consideration for the purchase of the promissory note and 2) 200,000 restricted shares of its common stock (“Returnable Shares”) to the accredited investor which will be returned to the Company upon timely completion of the required repayment schedule. Repayments of the promissory note shall be made in eight (8) installments each in the amount of $42,420 commencing on July 1, 2021 and continuing thereafter each thirty (30) days until February 1, 2022. This promissory note is only convertible upon an event of default as defined in the promissory note. The original issue discount, deferred financing costs and issuance date fair value of the Commitment Shares are being amortized over the term of the note. As of January 31, 2022, the Company has not made the required monthly payment of $42,420 commencing on July 1, 2021, has not received a notice of default from the accredited investor, and is working with the accredited investor to resolve this matter. At January 31, 2022, the aggregate balance of the promissory note and accrued interest was $387,335.

On July 31, 2019, the Company entered into a secured, $500,000 revolving credit agreement (“Credit Facility”). Borrowings under the Credit Facility may be used to fund working capital needs and bear interest at a one-month LIBOR-based rate plus 300 basis-points (3.101% at July 31, 2021). The Company’s performance and payment obligations under the Credit Facility are guaranteed by substantially all of its assets. The structure of this Credit Facility is a note payable with a revolving credit line feature with a mutual termination provision instead of a stated maturity date. The outstanding balance under the Credit Facility may be prepaid at any time without premium or penalty. Additionally, the Credit Facility contains customary events of default and remedies upon an event of default, including the acceleration of repayment of outstanding amounts under the Credit Facility.23

At July 31, 2021, $425,772 was outstanding under the Credit Facility. The Credit Facility contains customary affirmative and negative covenants, including a borrowing base requirement upon each request for an advance from the Credit Facility. The Company was in compliance with all covenants at July 31, 2021.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 96: ~~DERIVATIVE~~DEBT ~~LIABILITY~~(continued)

Revolving Credit Agreement

On July 31, 2019, the Company entered into a secured, $500,000 revolving credit agreement (“Credit Facility”). Borrowings under the Credit Facility may be used to fund working capital needs and bear interest at a one-month LIBOR-based rate plus 300 basis-points, including a default rate of 500 basis-points (9.013% at January 31, 2022). The Company’s performance and payment obligations under the Credit Facility are guaranteed by substantially all of its assets. The structure of this Credit Facility is a note payable with a revolving credit line feature with a mutual termination provision instead of a stated maturity date. The outstanding balance under the Credit Facility may be prepaid at any time without premium or penalty. Additionally, the Credit Facility contains customary events of default and remedies upon an event of default, including the acceleration of repayment of outstanding amounts under the Credit Facility.

At January 31, 2022, $425,772 was outstanding under the Credit Facility. The Credit Facility contains customary affirmative and negative covenants, including a borrowing base requirement upon each request for an advance from the Credit Facility. On November 16, 2021, Fulton Bank, N.A. (“Fulton”) commenced a lawsuit against the Company in the United States District Court for the District of Maryland as a result of the Company not making required payments under the Credit Facility. The Company intends to defend this matter and although the ultimate outcome cannot be predicted with certainty, an adverse ruling against the Company could have a material adverse effect on its financial condition and results of operations (see Note 10).

NOTE 7: DERIVATIVE LIABILITY

The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, Derivatives and Hedging. The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operation as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.

The derivative liability is measured at fair value on a recurring basis using significant unobservable inputs (Level 3) from October 31, ~~2020~~2021 to ~~July~~January 31, ~~2021~~2022.

	Conversion feature derivative liability
October 31, 2019	$	-
October 31, 2021	$	471,219
Initial fair value of derivative liability charged to other expense		~~336~~143,~~329~~657
Gain on change in fair value included in earnings		(6957,~~925~~052	)
Derivative liability relieved by conversions of convertible promissory notes		(86103,~~000~~856	)
October 31, 2020	$	180,404
January 31, 2022	$	453,968
Initial fair value of derivative liability charged to other expense		279,512
Gain on change in fair value included in earnings		(39,207	)
Derivative liability relieved by conversions of convertible promissory notes		(180,404	)
January 31, 2021	$	240,305
Initial fair value of derivative liability charged to other expense		520,701
Loss on change in fair value included in earnings		11,235
Derivative liability relieved by conversions of convertible promissory notes		(47,834	)
April 30, 2021	$	724,407
Initial fair value of derivative liability charged to other expense		-
Loss on change in fair value included in earnings		19,743
Derivative liability relieved by conversions of convertible promissory notes		(44,353	)
July 31, 2021	$	699,797

Total derivative liability at July 31, 2021 and October 31, 2020 amounted to $699,797 and $180,404, respectively. The change in fair value included in earnings of $8,229 is due in part to the quoted market price of the Company’s common stock decreasing from $0.48 at October 31, 2020 to $0.07 at July 31, 2021, coupled with substantially reduced conversion prices due to the effect of “ratchet” provisions incorporated within the convertible notes payable.24

The Company used the following assumptions for determining the fair value of the convertible instrument granted under the binomial pricing model with a binomial simulation at July 31, 2021:

SCHEDULE OF FAIR VALUE ASSUMPTIONS OF DERIVATIVE LIABILITY

Expected volatility	126.1% - 781.3		%
Expected term	5.5 – 8.5 months
Risk-free interest rate		0.05% - 0.06	%
Stock price	$	0.07

The Company recognizes its derivative liabilities as Level 3 and values its derivatives using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed are that of volatility and market price of the underlying common stock of the Company.

At July 31, 2021, the Company did not have any derivative instruments that were designated as hedges.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 107: ~~STOCKHOLDERS’~~DERIVATIVE ~~EQUITY~~LIABILITY (continued)

~~The~~Total ~~total~~derivative ~~number~~liability ofat ~~shares~~January of31, ~~all~~2022 ~~classes~~and ofOctober ~~stock~~31, ~~that~~2021 ~~the~~amounted ~~Company shall have the authority~~ to ~~issue is 7~~$453,~~625,000,000~~968 ~~shares~~and ~~consisting of 7~~$471,~~500~~219,~~000,000~~ ~~shares~~respectively. ofThe ~~common~~change ~~stock~~in ~~with~~fair ~~a $0.000001 par~~ value included ~~per~~in ~~share~~earnings offor ~~which~~the ~~14,847,812~~three ~~are~~months ~~issued~~ended atJanuary ~~July~~ 31, ~~2021~~2022 ~~and 125,000,000 shares~~ of ~~preferred stock~~$57,052 ~~par~~is ~~value~~due ~~$0.000001~~in ~~per~~part ~~share~~to ofthe ~~which~~quoted ~~(A)~~market ~~120,000,000~~price ~~shares~~of ~~have~~the ~~been designated as Series A Convertible~~Company’s ~~Preferred~~common ofstock ~~which~~decreasing ~~28,944,601~~from ~~are~~$0.02 ~~outstanding~~ at ~~July~~October 31, 2021, ~~(B)~~to ~~1,000,000~~$0.005 ~~shares have been designated as Series B Convertible Preferred Stock, of which no shares are outstanding~~ at ~~July~~January 31, ~~2021 and (C) 1~~2022,~~000,000~~ ~~have~~coupled ~~been~~with ~~designated~~substantially asreduced ~~Series~~conversion Cprices due ~~Convertible~~to ~~Preferred~~the ~~Stock,~~ effect of ~~which~~“ratchet” ~~680,801~~provisions ~~shares~~incorporated ~~are~~within ~~outstanding~~the atconvertible ~~July~~notes ~~31, 2021~~payable.

OnThe ~~October 6, 2020, stockholders holding a majority of the voting power of the~~ Company’s ~~issued~~used ~~and outstanding shares of voting stock, executed a written consent approving 1) an amendment to~~ the ~~Company’s~~following ~~Certificate~~assumptions of Incorporation, (the “Certificate of Incorporation”) to effect a consolidation of the issued and outstanding shares of Common Stock, pursuant to which the shares of Common Stock would be combined and reclassified into one share of Common Stock at a ratio of 1-for~~-500~~ ~~(the~~determining ~~“Reverse Stock Split”), 2) approval of~~ the ~~Company’s~~fair ~~2020~~value ~~Equity Incentive Plan (the “2020 Plan”) and the reservation~~ of ~~750,000,000 (1,500,000 post-split) shares of Common Stock for issuance thereunder; and, 3) approval of Amendments to and Restatement of~~ the ~~Company’s Certificate~~convertible ofinstrument ~~Incorporation~~granted pursuant to the Delaware General Corporation Law Section 242(a)(3) to (a) with the exception of actions to enforce a duty or liability arising from the Exchange Act, which may be brought only in federal court pursuant to Section 27 of the Exchange Act, or claims made under the ~~Securities~~binomial ~~Act, that may be brought in either state or federal court pursuant to Section 22 of~~pricing ~~the~~model ~~Exchange~~with Act, adopt Delaware General Corporation Law Section 115 to require that any or all other internal corporate claims, including claims made in the right of the Company, shall be brought solely and exclusively in any or all of the courts of the State of Delaware; and, (b) revise the Certificate of Incorporation to correct and consolidate legacy disclosures, including a ~~description~~binomial ofsimulation ~~its~~at ~~common stock~~January ~~and the adoption of Section 155 of the General Delaware Corporation Law~~31, ~~so as to comprise one document with the Delaware Secretary of State in the future.~~2022:

~~On November~~ SCHEDULE ~~18,~~OF ~~2020,~~FAIR ~~the~~VALUE ~~Company~~ASSUMPTIONS ~~filed~~OF aDERIVATIVE Certificate of Amendment (the “Amendment”) to its Certificate of Incorporation, to 1) effect a consolidation of the issued and outstanding shares of Common Stock, pursuant to which the shares of Common Stock would be combined and reclassified into one share of Common Stock at a ratio of 1-for-500 (the “Reverse Stock Split”), 2) adopt Delaware General Corporation Law Section 115 to require that any or all other internal corporate claims, including claims made in the right of the Company, shall be brought solely and exclusively in any or all of the courts of the State of Delaware; and, 3) revise the Certificate of Incorporation to correct and consolidate legacy disclosures, including a description of its common stock and the adoption of Section 155 of the General Delaware Corporation Law, so as to comprise one document with the Delaware Secretary of State in the future. On January 13, 2021, the Company’s Reverse Stock Split was completed and became effective.LIABILITY

Expected volatility	225.1% - 363.8		%
Expected term	2.2 – 9.1 months
Risk-free interest rate	0.130% - 0.635		%
Stock price	$	0.005

The Company recognizes its derivative liabilities as Level 3 and values its derivatives using the methods discussed above. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed are that of volatility and market price of the underlying common stock of the Company.

At January 31, 2022, the Company did not have any derivative instruments that were designated as hedges.

NOTE 8: STOCKHOLDERS’ DEFICIT

The total number of shares of all classes of stock that the Company shall have the authority to issue is 7,625,000,000 shares consisting of 7,500,000,000 shares of common stock with a $0.000001 par value per share of which 56,026,564 are issued at January 31, 2022 and 125,000,000 shares of preferred stock, par value $0.000001 per share of which (A) 120,000,000 shares have been designated as Series A Convertible Preferred of which 28,944,601 are outstanding at January 31, 2022, (B) 1,000,000 shares have been designated as Series B Convertible Preferred Stock, of which no shares are outstanding at January 31, 2022 and (C) 1,000,000 have been designated as Series C Convertible Preferred Stock, of which 680,801 shares are outstanding at January 31, 2022.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 108: STOCKHOLDERS’ ~~EQUITY~~DEFICIT (continued)

On October 6, 2020, stockholders holding a majority of the voting power of the Company’s issued and outstanding shares of voting stock, executed a written consent approving 1) an amendment to the Company’s Certificate of Incorporation, (the “Certificate of Incorporation”) to effect a consolidation of the issued and outstanding shares of Common Stock, pursuant to which the shares of Common Stock would be combined and reclassified into one share of Common Stock at a ratio of 1-for-500 (the “Reverse Stock Split”), 2) approval of the Company’s 2020 Equity Incentive Plan (the “2020 Plan”) and the reservation of 750,000,000 (1,500,000 post-split) shares of Common Stock for issuance thereunder; and, 3) approval of Amendments to and Restatement of the Company’s Certificate of Incorporation pursuant to the Delaware General Corporation Law Section 242(a)(3) to (a) with the exception of actions to enforce a duty or liability arising from the Exchange Act, which may be brought only in federal court pursuant to Section 27 of the Exchange Act, or claims made under the Securities Act, that may be brought in either state or federal court pursuant to Section 22 of the Exchange Act, adopt Delaware General Corporation Law Section 115 to require that any or all other internal corporate claims, including claims made in the right of the Company, shall be brought solely and exclusively in any or all of the courts of the State of Delaware; and, (b) revise the Certificate of Incorporation to correct and consolidate legacy disclosures, including a description of its common stock and the adoption of Section 155 of the General Delaware Corporation Law, so as to comprise one document with the Delaware Secretary of State in the future.

On November 18, 2020, the Company filed a Certificate of Amendment (the “Amendment”) to its Certificate of Incorporation, to 1) effect a consolidation of the issued and outstanding shares of Common Stock, pursuant to which the shares of Common Stock would be combined and reclassified into one share of Common Stock at a ratio of 1-for-500 (the “Reverse Stock Split”), 2) adopt Delaware General Corporation Law Section 115 to require that any or all other internal corporate claims, including claims made in the right of the Company, shall be brought solely and exclusively in any or all of the courts of the State of Delaware; and, 3) revise the Certificate of Incorporation to correct and consolidate legacy disclosures, including a description of its common stock and the adoption of Section 155 of the General Delaware Corporation Law, so as to comprise one document with the Delaware Secretary of State in the future. On January 13, 2021, the Company’s Reverse Stock Split was completed and became effective.

Common Stock

During the ~~nine~~three months ended ~~July~~January 31, ~~2021~~2022, the Company:

● issued 4,101,218 shares of its common stock valued at $793,279, as repayment for outstanding principal and interest on convertible promissory notes as requested by the note holders in accordance with contractual terms. ● issued 400,000 restricted shares of its common stock consisting of 1) 200,000 restricted shares of its common stock (“Commitment Shares”) to an accredited investor as additional consideration for the purchase of a promissory note and 2) 200,000 restricted shares of its common stock (“Returnable Shares”) to an accredited investor which will be returned to the Company upon timely completion of the required repayment schedule. ● issued 67,728 shares of its common stock to a vendor for services rendered. ● recorded 227,824 shares of its common stock as shares to be issued to a vendor for services rendered.

	●	issued 32,181,998 shares of its common stock valued at $405,819, as repayment for outstanding principal and interest on convertible promissory notes as requested by the note holders in accordance with contractual terms.

	●	recorded 1,000,000 shares of its common stock valued at $5,000, as shares to be issued to a board member for services rendered.

During the ~~nine~~three months ended ~~July~~January 31, ~~2020~~2021, the Company:

● issued 1,~~195~~685,~~376~~918 shares of its common stock valued at $3464,~~431~~653,~~524,~~ ~~which includes aggregate beneficial conversion features of $830,162,~~ as repayment for outstanding principal and interest on a convertible promissory ~~note~~notes as requested by the note holder in accordance with contractual terms. ● issued 3167,~~251~~728 shares of its common stock ~~for~~to ~~the~~a ~~conversion~~vendor offor ~~15,625,500~~services ~~shares of its Series A Convertible Preferred stock~~rendered. ● ~~issued~~recorded 3048,~~000~~182 shares of its common stock ~~for~~as the vesting of the first 50% of a 60,000 common stock grant to Christopher Cutchens, the Company’s Chief Financial Officer. The Company recorded $123,750 of stock-based compensation expense during the nine months ended July 31, 2020, related to this common stock grant. ● issued 24,483 shares ~~of its common stock~~ to anbe ~~accredited investor for proceeds of $91,917. ●~~ issued ~~52,000 shares of its common stock~~ to a vendor for services rendered.

Common Stock Warrants

At ~~July~~January 31, ~~2021~~2022, there were warrants to purchase up to 2,619,114 shares of the Company’s common stock outstanding which may dilute future EPS. There were no warrants earned or granted during the ~~nine~~three months ended ~~July~~January 31, ~~2021~~2022.

2926

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 108: STOCKHOLDERS’ ~~EQUITY~~DEFICIT (continued)

The following table sets forth common share purchase warrants outstanding at ~~July~~January 31, ~~2021~~2022:

			Weighted
			Average
			Exercise		Intrinsic
	Warrants		Price		Value
Outstanding, October 31, 2020		2,619,114	$	2.24	$	-
Outstanding, October 31, 2021		2,619,114	$	2.24	$	-
Warrants granted and issued		-	$	-	$	-
Warrants exercised		-	$	-	$	-
Warrants forfeited		-	$	-	$	-
Outstanding, July 31, 2021		2,619,114	$	2.24	$	-
Outstanding, January 31, 2022		2,619,114	$	2.24	$	-
Common stock issuable upon exercise of warrants		2,619,114	$	2.24	$	-

								Common Stock Issuable
		Common Stock Issuable Upon Exercise of						Upon Warrants
		Warrants Outstanding						Exercisable
				Weighted
		Number		Average		Weighted		Number		Weighted
Range of		Outstanding		Remaining		Average		Exercisable		Average
Exercise		at ~~July~~January 31,		Contractual		Exercise		At ~~July~~January 31,		Exercise
Prices		~~2021~~2022		Life (Years)		Price		~~2021~~2022		Price
$	1,25		1,160,000		0.6009	$	1.25		1,160,000	$	1.25
$	3.00		1,457,114		10.5158	$	3.00		1,457,114	$	3.00
$	25.00		2,000		10.4292	$	25.00		2,000	$	25.00
			2,619,114		10.1149	$	2.24		2,619,114	$	2.24

NOTE 119: COMMITMENTS AND CONTINGENCIES

Contracts and Commitments Executed Pursuant Employment Agreements

On February 17, 2021, Anshu Bhatnagar resigned as Chief Executive Officer of the Company, and on May 18, 2021 resigned as a member of the Board of Directors and the role of Chairman of the Board of Directors of the Company. Upon such resignation, Mr. Bhatnagar’s employment agreement was terminated.

On February 17, 2021, Apurva Dhruv was appointed as Chief Executive Officer of the Company pursuant to the terms of an employment agreement (the “2021 Employment Agreement”) as approved by the Board of Directors of the Company. On May 18, 2021, Mr. Dhruv was appointed as a member of the Board of Directors and will serve in the role of Chairman of the Board of Directors of the Company.

Lease Agreement

At ~~July~~January 31, ~~2021~~2022, the Company was party to one operating ~~leases~~lease for its corporate office and domestic warehouse operations in Stafford, Texas. ~~Effective~~The ~~February 8,~~Company ~~2021,~~incurs ~~the~~rent ~~Company~~expense ~~terminated~~of ~~the~~$8,383 ~~operating~~per ~~lease~~month for its corporate office and ~~Gaithersburg,~~domestic ~~Maryland~~warehouse ~~and~~operations ~~entered~~in ~~into a new~~Stafford, ~~short-term lease~~Texas. The ~~Company~~term ~~also~~of ~~has~~this aoperating ~~short-term~~ lease ~~for~~is ~~office~~through ~~space~~November ~~in Dubai~~30, ~~UAE~~2023.

~~The Company incurs rent expense of $8,383 per month for its domestic warehouse operations in Stafford, Texas. The term of this operating lease is through November 30, 2023.~~27

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 1210: LITIGATION

On April 4, 2019, Auctus Fund, LLC (“Auctus”) commenced a lawsuit against the Company in the United States District Court for the District of Massachusetts. On August 27, 2019 the Company filed a motion to dismiss this lawsuit. On September 30, 2019, Auctus responded by filing a First Amended Complaint. The Company then filed a second motion to dismiss on October 24, 2019. On February 25, 2020, the court issued a decision dismissing the securities laws and unjust enrichment and breach of fiduciary duty claims and retaining the breach of contract, breach of covenant of good faith, fraud and deceit, and negligent misrepresentation-, and the Massachusetts Consumer Protection Act claims. The Company filed its Answer to the complaint on March 10, 2020. The case remains pending in the District of Massachusetts. This case stems from a securities purchase agreement and convertible note issued in May 2017, a securities purchase agreement and convertible note issued in July 2018, the spin-off of the Company’s real estate division into NestBuilder including the issuance of shares of NestBuilder in the spin-off to the Company’s stockholders and an inducement agreement, release and payoff agreement executed by the parties in February 2019 whereby the Company settled the balance of outstanding amounts owed to Auctus in consideration for cash and shares of NestBuilder. Auctus has requested that the court grant it injunctive and equitable relief and specific performance with respect to the Company’s obligations; determine that the Company is liable for all damages, losses and costs and award Auctus actual losses sustained; award Auctus costs including, but not limited to, costs required to prosecute the action including attorneys’ fees; and punitive damages. The Company intends to continue to defend this matter and although the ultimate outcome cannot be predicted with certainty, based on the current information available, the Company does not believe the ultimate liability, if any, will have a material adverse effect on its financial condition or results of operations.

On April 23, 2021, a class action lawsuit was commenced against the Company in the United States District Court for the District of Maryland and alleges various violations of the federal securities laws under the Securities Exchange Act of 1934. ~~The~~On ~~Company~~November ~~intends to defend this matter and although the ultimate outcome cannot be predicted with certainty~~9, ~~based on the current information available~~2021, ~~the~~a ~~Company~~Confidential ~~does~~Settlement ~~not~~Agreement ~~believe~~and ~~the~~General ~~ultimate~~Release ~~liability,~~(“Settlement ifAgreement”) ~~any,~~was ~~will~~entered ~~have~~into aby ~~material~~and ~~adverse~~between ~~effect~~all ~~on its financial condition or results of operations~~parties.

31On November 16, 2021, Fulton Bank, N.A. (“Fulton”) commenced a lawsuit against the Company in the United States Circuit Court for Montgomery County, Maryland as a result of the Company not making required payments under the Credit Facility. The Company intends to defend this matter and although the ultimate outcome cannot be predicted with certainty, an adverse ruling against the Company could have a material adverse effect on its financial condition and results of operations.

On December 15, 2021, Donald P. Monaco as trustee of the Donald P. Monaco Insurance Trust, commenced a lawsuit against the Company in the United States Circuit Court for Montgomery County, Maryland as a result of the Company not making required payments under the Monaco Note. The Company intends to defend this matter and although the ultimate outcome cannot be predicted with certainty, an adverse ruling against the Company could have a material adverse effect on its financial condition and results of operations.

On February 7, 2022, Indeglia & Carney, LLP, commenced a lawsuit against the Company in the United States Circuit Court for Washington County, Maryland as a result of allegations of the Company not making payment of an outstanding balance due for services rendered. The Company intends to defend this matter and although the ultimate outcome cannot be predicted with certainty, an adverse ruling against the Company could have a material adverse effect on its financial condition and results of operations.

On March 10, 2022, AGC Global Solutions, Inc., commenced a lawsuit against the Company in the United States Circuit Court for Montgomery County, Maryland as a result of the Company not making required payments under a promissory note. The Company intends to defend this matter and although the ultimate outcome cannot be predicted with certainty, an adverse ruling against the Company could have a material adverse effect on its financial condition and results of operations.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 1311: DISCONTINUED OPERATIONS

The Company has classified the operating results and associated assets and liabilities from its BLF subsidiary, of which BLF assets were sold, transferred, and assigned to GOF on December 18, 2020, and from its Verus MENA subsidiary, of which operations as an international supplier of consumer food products ceased during the three months ended October 31, 2021, as discontinued operations in the ~~unaudited condensed~~ consolidated ~~financial~~ financial statements for the ~~nine~~three months ended ~~July~~January 31, ~~2021~~2022 and ~~2020~~2021.

The assets and liabilities associated with discontinued operations included in our consolidated balance sheets were as follows:

SCHEDULE OF DISCONTINUED OPERATIONS INCLUDED IN CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS

	July 31, 2021						October 31, 2020
	January 31, 2022						October 31, 2021
	Discontinued		Continuing		Total		Discontinued		Continuing		Total
Assets
Current Assets
Cash	$	41326	$	6924,~~480~~280	$	6924,~~521~~606	$	262,221	$	2166,~~483~~022	$	2168,~~509~~243
Accounts receivable, net		-		5273,~~524,873~~118		5273,~~524,873~~118		~~225,368~~-		4303,~~933,322~~218		5303,~~158,690~~218
Inventory		-		85145,~~667~~129		85145,~~667~~129		-		60145,~~378~~129		60145,~~378~~129
Prepaid expenses		-		~~84,518~~-		~~84,518~~-		464,~~047~~084		~~170,874~~-		~~216~~4,~~921~~084
Other assets		-		916,~~434~~144		916,~~434~~144		-99,669		816,~~629~~144		8115,~~629~~813
Total Current Assets		41326		5458,~~773,972~~671		5458,~~774,013~~997		~~271~~105,~~441~~974		5530,~~194,686~~513		5636,~~466,127~~487
Property and equipment, net		-		~~106~~74,~~024~~859		~~106~~74,~~024~~859		~~8,054~~-		~~139~~85,~~444~~067		~~147~~85,~~498~~067
Operating lease right-of-use asset, net		-		~~221~~175,~~115~~876		~~221~~175,~~115~~876		-		~~383~~198,~~225~~637		~~383~~198,~~225~~637
Intangible asset, net		-		395,505		395,505		174,314		453,858		628,172
Total Assets	$	326	$	709,406	$	709,732	$	105,974	$	814,217	$	920,191
Total Assets	$	41	$	6,496,616	$	6,496,657	$	453,809	$	6,171,213	$	6,625,022
Liabilities
Current Liabilities
Accounts payable and accrued expenses	$	~~160~~162,~~448~~752	$	2630,~~157,457~~839	$	2793,~~317,905~~591	$	~~592~~227,~~072~~338	$	2638,~~138,666~~315	$	2865,~~730,738~~653
Operating lease liability		-		9193,~~621~~936		9193,~~621~~936		-		~~178~~92,~~327~~771		~~178~~92,~~327~~771
Interest payable		-		~~296~~442,~~962~~959		~~296~~442,~~962~~959		-		~~161~~368,~~427~~709		~~161~~368,~~427~~709
Due to officer		-		1,801		1,801		-		1,801		1,801
Due to former officer		-		221,586		221,586		-		221,586		221,586
Notes payable		-		1,~~517~~571,~~497~~272		1,~~517~~571,~~497~~272		-		1,~~337~~533,~~925~~294		1,~~337~~533,~~925~~294
Convertible notes payable, net		-		~~538~~489,~~610~~220		~~538~~489,~~610~~220		-		~~387~~530,~~193~~358		~~387~~530,~~193~~358
Derivative liability		-		~~699~~453,~~797~~968		~~699~~453,~~797~~968		-		~~180~~471,~~404~~219		~~180~~471,~~404~~219
Total Current Liabilities		~~160~~162,~~448~~752		53,~~303~~903,~~745~~780		54,~~464~~066,~~193~~532		~~592~~227,~~072~~338		43,~~385~~856,~~743~~252		4,~~977~~083,~~815~~590
Notes payable, net of current portion		-		-		-		-		34,826		34,826
Operating lease liability, net of current portion		-		81,940		81,940		-		105,866		105,866
Operating lease liability, net of current portion		-		129,494		129,494		-		214,284		214,284
Total Liabilities	$	162,752	$	3,985,720	$	4,148,472	$	227,338	$	3,962,118	$	4,189,456
Total Liabilities	$	160,448	$	5,433,239	$	5,593,687	$	592,072	$	4,634,853	$	5,226,925

3229

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~JULY~~JANUARY 31, ~~2021~~2022 AND ~~2020~~2021

(UNAUDITED)

NOTE 1311: DISCONTINUED OPERATIONS (continued)

The revenues and expenses associated with discontinued operations included in our consolidated statements of operations were as follows:

	Three Months Ended July 31,
	Three Months Ended January 31,
	2021									2020
	2022									2021
	Discontinued			Continuing			Total			Discontinued			Continuing			Total
Revenue	$	-		$	~~1,848,389~~-		$	~~1,848,389~~-		$	~~257~~3,~~491~~454,644		$	~~5,915,587~~-		$	63,~~173~~454,~~078~~644
Cost of revenue		-			~~1,384,211~~-			~~1,384,211~~-			~~484~~2,~~029~~861,273			~~4,776,122~~75			52,~~260~~861,~~151~~348
Gross Profit		-			~~464,178~~-			~~464,178~~-			~~(226~~593,~~538~~371	)		~~1,139,465~~(75	)		~~912~~593,~~927~~296
Salaries and benefits		-11,450			~~129~~70,~~974~~456			~~129~~81,~~974~~906			6245,~~158~~394			~~272~~(19,~~934~~780	)		~~335~~25,~~092~~614
Selling and promotions expense		-			~~85,775~~-			~~85,775~~-			~~210~~82,030			~~157,579~~-			~~157~~82,~~789~~030
Legal and professional fees		-			2350,~~840~~000			2350,~~840~~000			(223,~~151~~668	)		~~157,133~~-			~~154~~23,~~982~~668
General and administrative		-29,585			~~469~~101,~~862~~540			~~469~~131,~~862~~125			13418,~~318~~691			~~521~~155,~~718~~336			~~535~~574,~~036~~027
Total Operating Expenses		-41,034			~~709~~221,~~451~~997			~~709~~263,~~451~~031			73569,~~536~~783			1135,~~109,364~~556			1705,~~182,900~~339
Operating loss		-			(245,273	)		(245,273	)		(300,074	)		30,101			(269,973	)
Operating (loss) income		(41,034	)		(221,997	)		(263,031	)		23,588			(135,631	)		(112,043	)
Other Income (Expense):
Interest expense		-			(5283,~~473~~420	)		(5283,~~473~~420	)		-			(~~837~~66,~~816~~157	)		(~~837~~66,~~816~~157	)
Initial derivative liability expense		-			-(143,657	)		-(143,657	)		-			(86279,~~000~~512	)		(86279,~~000~~512	)
Amortization of original issue discounts and deferred financing costs		-			(4959,~~152~~041	)		(4959,~~152~~041	)		-			(~~136~~27,~~124~~512	)		(~~136~~27,~~124~~512	)
Loss on extinguishment and settlement of debt		-			(41110,~~325~~592	)		(41110,~~325~~592	)		-			-(118	)		-(118	)
(Loss) Gain on change in fair value of derivative liability		-			(19,743	)		(19,743	)		-			-			-
Gain on change in fair value of derivative liability		-			57,052			57,052			-			39,207			39,207
Gain on forgiveness of Paycheck Protection Program loan		-			104,479			104,479			-			-			-
Total Other (Expense) Income		-			(339,658	)		(339,658	)		-			(334,092	)		(334,092	)
Total Other (Expense) Income		-			(58,214	)		(58,214	)		-			(1,059,940	)		(1,059,940	)
Loss (income) before income taxes		(41,034	)		(561,655	)		(602,689	)		23,588			(469,723	)		(446,135	)
Loss before income taxes		-			(303,487	)		(303,487	)		(300,074	)		(1,029,839	)		(1,329,913	)
Income taxes		-			-			-			-			-			-
Net loss	$	-		$	(303,487	)	$	(303,487	)	$	(300,074	)	$	(1,029,839	)	$	(1,329,913	)
Net loss (income)	$	(41,034	)	$	(561,655	)	$	(602,689	)	$	23,588		$	(469,723	)	$	(446,135	)

33NOTE 12: SUBSEQUENT EVENTS

~~VERUS~~On ~~INTERNATIONAL~~March 22, ~~INC~~2022, as a result of the Company’s failure to timely file its Form 10-Q, the Company remained in default with respect to certain of its convertible notes. The Company has not received any notification of default from any of its outstanding convertible notes.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~30

FOR THE NINE MONTHS ENDED JULY 31, 2021 AND 2020

(UNAUDITED)

NOTE 13: DISCONTINUED OPERATIONS (continued)

	Nine Months Ended July 31,
	2021									2020
	Discontinued			Continuing			Total			Discontinued			Continuing			Total
Revenue	$	1,291		$	8,612,422		$	8,613,713		$	282,476		$	16,712,149		$	16,994,625
Cost of revenue		-			6,809,203			6,809,203			833,934			13,378,280			14,212,214
Gross Profit		1,291			1,803,219			1,804,510			(551,458	)		3,333,869			2,782,411
Salaries and benefits		(10,599	)		395,925			385,326			185,441			8,873,090			9,058,531
Selling and promotions expense		-			224,276			224,276			2,727			286,544			289,271
Legal and professional fees		-			38,816			38,816			1,986			550,527			552,513
General and administrative		12,236			1,628,664			1,640,900			64,560			1,667,710			1,732,270
Total Operating Expenses		1,637			2,287,681			2,289,318			254,714			11,377,871			11,632,585
Operating loss		(346	)		(484,462	)		(484,808	)		(806,171	)		(8,044,002	)		(8,850,173	)
Other Income (Expense):
Interest expense		-			(199,414	)		(199,414	)		(107	)		(1,031,495	)		(1,031,602	)
Initial derivative liability expense		-			(800,213	)		(800,213	)		-			(86,000	)		(86,000	)
Amortization of original issue discounts and deferred financing costs		-			(113,916	)		(113,916	)		-			(454,773	)		(454,773	)
Loss on extinguishment and settlement of debt		-			(76,266	)		(76,266	)		-			(723,773	)		(723,773	)
Gain on change in fair value of derivative liability		-			8,229			8,229			-			-			-
Gain on forgiveness of Paycheck Protection Program loan		-			104,479			104,479			-			-			-
Gain on settlement of liabilities		-			104,774			104,774			-			-			-
Total Other (Expense) Income		-			(972,327	)		(972,327	)		(107	)		(2,296,041	)		(2,296,148	)
Loss before income taxes		(346	)		(1,456,789	)		(1,457,135	)		(806,279	)		(10,340,043	)		(11,146,322	)
Income taxes		-			-			-			-			-			-
Net loss	$	(346	)	$	(1,456,789	)	$	(1,457,135	)	$	(806,279	)	$	(10,340,043	)	$	(11,146,322	)

NOTE 14: SUBSEQUENT EVENTS

On August 5, 2021, the Company entered into a securities purchase agreement with an accredited investor pursuant to which the Company issued and sold a convertible promissory note in the principal amount of $73,750. The note matures on August 5, 2022, bears interest at a rate of 9% per annum (increasing to 22% per annum upon the occurrence of an Event of Default (as defined in the note)) and is convertible into shares of the Company’s common stock at a conversion price equal to the greater of (i) the Fixed Conversion Price (as defined in the note) or (ii) the Variable Conversion Price (as defined in the note), subject to adjustment. The note may be prepaid by the Company at any time prior to the 180th day after the issuance date of the note with certain prepayment penalties as defined in the note.

On August 12, 2021, the Company entered into a securities purchase agreement with an accredited investor pursuant to which the Company issued and sold a convertible promissory note in the principal amount of $110,000 (including a $10,000 original issuance discount). The note matures on August 12, 2022, bears interest at a rate of 6% per annum (increasing to 24% per annum upon the occurrence of an Event of Default (as defined in the note)). This convertible debenture converts at 60% of the lowest closing price during the 15 trading days prior to conversion and may be prepaid by the Company at any time prior to the 180th day after the issuance date of the note with certain prepayment amounts as set forth therein.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the attached unaudited condensed consolidated financial statements and notes thereto, and our audited consolidated financial statements and related notes for our fiscal year ended October 31, ~~2020~~2021 found in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on ~~March~~April 1915, ~~2021~~2022.

Explanatory Note

All references to shares of our common stock contained herein have been adjusted to reflect a 1-for-500 reverse stock split which was completed and became effective on January 13, 2021.

Overview

~~Since~~For the period August 1, 2018 through October 31, 2021, we, through our wholly-owned subsidiary, Verus Foods, Inc. (“Verus Foods”), an international supplier of consumer food products, ~~have~~were ~~been~~ focused on international consumer packaged goods, foodstuff distribution and wholesale trade. Our fine food products ~~are~~were sourced in the United States and exported internationally. We ~~market~~marketed consumer food products under our own brand primarily to supermarkets, hotels and other members of the wholesale trade. Initially, we focused on frozen foods, particularly meat, poultry, seafood, vegetables, and french fries with beverages as a second vertical, and in 2018, we added cold-storage facilities and began seeking international sources for fresh fruit, produce and similar perishables, as well as other consumer packaged foodstuff with the goal to create vertical farm-to-market operations. ~~We have also begun to explore new consumer packaged goods (“CPG”) non-food categories, such as cosmetic and fragrances, for future product offerings.~~

WeThrough ~~currently~~October ~~have~~31, 2021, we had a significant regional presence in the Middle East and North Africa (“MENA”) and sub-Saharan Africa (excluding The Office of Foreign Assets Control restricted nations), with deep roots in the Gulf Cooperation Council (“GCC”) countries, which ~~includes~~included the United Arab Emirates (“UAE”), Oman, Bahrain, Qatar, Kingdom of Saudi Arabia and Kuwait. ~~Our long-term~~During ~~goal~~the isthree months ended October 31, 2021, we made a decision to ~~source~~cease ~~goods~~operating ~~and~~as ~~generate~~an international ~~wholesale~~supplier ~~and~~of ~~retail~~consumer ~~CPG~~food ~~sales~~products, whereby inwe ~~North~~cancelled and ~~South~~settled ~~America,~~all ~~Europe,~~supplier ~~Africa,~~and ~~Asia~~customer contracts to avoid any future significant liabilities. Accordingly, we have classified the operating results and associated assets and liabilities from Verus MENA as discontinued operations in the consolidated ~~Australia~~financial statements for the years ended October 31, 2021 and 2020.

In addition to the foregoing, since our acquisition of Big League Foods, Inc. (“BLF”) during April 2019, pursuant to which we acquired a license with Major League Baseball Properties, Inc. (“MLB”) to sell MLB-branded frozen dessert products and confections, we sold pint size ice cream in grocery store-type packaging. In addition, under our confections product line, we sold gummi and chocolate candies. The MLB license covers all 30 MLB teams, and all of our products pursuant to such license featured “home team” packaging that matched the fan base in each region. On December 18, 2020, we and our wholly owned subsidiary, BLF, entered into a letter ~~agreement~~ agreement with ACG Global Solutions, Inc. and Game on Foods, Inc. (“GOF”), whereby for certain consideration, BLF sold, transferred, and assigned all of BLF’s rights, title, and interest in and to all of BLF’s assets to GOF. The assignments of our interests in the MLB and NHL licenses were completed on March 15, 2021 and March 25, 2021, respectively. Accordingly, we have classified the operating results and associated assets and liabilities from BLF as discontinued operations in the consolidated financial statements for the years ended October 31, 2021 and 2020.

Furthermore, during August 2019, we purchased all of the assets of a french fry business in the Middle East.

Recent Developments

~~Eliot’s Adult Nut Butter~~Litigation

On ~~February~~November 116, 2021, ~~the~~Fulton ~~Company~~Bank, ~~entered~~N.A. ~~into a Mutual Rescission and Release Agreement~~ (~~the~~ “~~Rescission Agreement~~Fulton”) ~~with~~commenced ~~Eliot’s Adult~~a ~~Nut~~lawsuit ~~Butter,~~against ~~LLC~~the ~~(“Eliot’s”)~~Company ~~and~~in the ~~member~~United ~~owners~~States ofCircuit ~~Eliot’s~~Court for ~~(the~~Montgomery ~~“Members”)~~County, Maryland as a result of the ~~parties’~~Company ~~inability~~not tomaking ~~agree~~required ~~upon~~payments ~~advancement~~under ofthe ~~Eliot’s~~Credit ~~business operations~~Facility. ~~Pursuant~~The toCompany ~~the terms of the Rescission~~intends ~~Agreement,~~to ~~among~~defend ~~other~~this ~~things,~~matter ~~all~~and ~~agreements~~although ~~between~~ the ~~parties~~ultimate ~~including~~outcome ~~(i)~~cannot ~~Asset~~be ~~Purchase~~predicted ~~Agreement~~with ~~dated September 1~~certainty, ~~2020,~~an ~~(ii) the~~adverse ~~Assignment~~ruling ~~and~~against ~~Assumption Agreement dated September 1, 2020, (iii)~~ the ~~Bill~~Company ~~of Sale dated September 1, 2020, (iv) the Employment~~could ~~Agreement~~have bya ~~and~~material ~~between~~adverse ~~Eliot’s~~effect ~~and~~on ~~Michael~~its ~~Kanter~~financial ~~dated~~condition ~~September 1, 2020,~~ and ~~(v)~~results ~~all~~of ~~related ancillary agreements (collectively, “Original Contracts”) were terminated and the parties released each other from all obligations arising from the Original Contracts~~operations.

~~Accordingly,~~On ~~the~~December ~~Company~~15, ~~concluded~~2021, ~~that~~Donald noP. ~~business~~Monaco ~~combination~~as ~~occurred~~trustee onof ~~September~~the 1,Donald ~~2020~~P. Monaco Insurance Trust, ~~and~~commenced ~~therefore~~a nolawsuit ~~financial~~against ~~information~~the ~~related~~Company toin ~~this~~the ~~transaction~~United ~~has~~States ~~been~~Circuit ~~included~~Court infor Montgomery County, Maryland as a result of the Company’s ~~consolidated~~not ~~financial~~making ~~statements~~required aspayments ofunder the Monaco Note. The Company intends to defend this matter and ~~for~~although the ~~three~~ultimate ~~and~~outcome ~~nine~~cannot ~~months~~be ~~ended July~~predicted 31with certainty, ~~2021~~an adverse ruling against the Company could have a material adverse effect on its financial condition and results of operations.

35On February 7, 2022, Indeglia & Carney, LLP, commenced a lawsuit against the Company in the United States Circuit Court for Washington County, Maryland as a result of allegations of the Company not making payment of an outstanding balance due for services rendered. The Company intends to defend this matter and although the ultimate outcome cannot be predicted with certainty, an adverse ruling against the Company could have a material adverse effect on its financial condition and results of operations.

Critical Accounting Policies and Estimates

The discussion and analysis of the Company’s financial condition and results of operations are based upon its unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these unaudited condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an on-going basis, management evaluates past judgments and estimates, including those related to bad debts, potential impairment of intangible assets, accrued liabilities and contingencies. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting policies and related risks described in Note 2 above and the Company’s Annual Report on Form 10-K as filed with the SEC on ~~March~~April 1915, ~~2021~~2022 are those that depend most heavily on these ~~judgments~~ judgments and estimates. As of ~~July~~January 31, ~~2021~~2022, there had been no material changes to any of the critical accounting policies contained therein.

Results of Operations

Three months ended ~~July~~January 31, ~~2021~~2022 compared to three months ended ~~July~~January 31, ~~2020~~2021

Continuing Operations

Revenue

~~Our~~For ~~revenue decreased to $1,848,389 for~~ the three months ended ~~July~~January 31, ~~2021,~~2022 ~~compared to $5,915,587 for the three months ended July 31, 2020, a decrease of $4,067,198 or 69%. The decrease is the result of decreased international revenue with existing~~ and ~~new customers~~2021, ~~partially~~ ~~offset~~there bywas ~~Pachyderm~~no ~~Labs~~ revenue offrom ~~approximately~~continuing ~~$35,456~~operations. ~~We remain focused on increasing sales to existing and new customers through all sales channels.~~

Cost of Revenue

~~Cost~~There ofwas ~~revenue~~no ~~totaled~~cost ~~$1,384,211~~of revenue for the three months ended ~~July~~January 31, ~~2021~~2022, compared to $~~4,776,122~~75 for the three months ended ~~July~~January 31, ~~2020, a decrease of $3,391,911 or 71%~~2021. ~~The decrease is the result of lower revenue and related product costs.~~

Operating Expenses

Our operating expenses, which include salaries and benefits, stock-based compensation, selling and promotions expense, legal and professional fees, and general and administrative expenses ~~decreased~~increased to $~~709~~221,~~451~~997 for the three months ended ~~July~~January 31, ~~2021~~2022, compared to $1135,~~109,364~~557 for the three months ended ~~July~~January 31, ~~2020~~2021, aan ~~decrease~~increase of $~~399~~86,~~913~~440, or 3664%. The ~~decrease~~increase is primarily due to ~~decreases~~an ~~across~~increase ~~all~~of 101,582 in stock-based compensation expense related to a prior year reversal of $118,750 related to the forfeiture of a restricted common stock ~~categories~~grant to our former Chief Financial Officer, partially offset by stock-based compensation expense related to a restricted common stock grant to our Chief Executive Officer. Additionally, legal and professional fees increased $50,000 due to active litigation against the Company. These increases were partially offset by decreases in salaries and benefits of $11,346 and general and administrative expenses of $53,796.

Other (Expense) Income

Our other income (expense) ~~income~~, net ~~decreased~~increased slightly by $15,~~001~~566,~~726~~ or 2%, for the three months ended ~~July~~January 31, ~~2021~~2022. The increase ~~decrease~~ is primarily the result of ~~decreases~~ increases in interest expense, amortization of original issue discounts and deferred financing costs, ~~and initial derivative liability,~~ ~~coupled~~loss ~~with a gain~~ on ~~forgiveness~~convertible ofnote ~~Paycheck~~payable ~~Protection~~extinguishment ~~Program~~/ ~~loan.~~settlement, ~~This decrease was~~ partially offset by ~~increases~~lower ininitial ~~loss~~derivative onliability ~~convertible note~~expense ~~payable extinguishment / settlement,~~ and ~~loss~~higher gain on change in fair value of derivative liability.

Net Loss from Continuing Operations

We generated a net loss from continuing operations of $~~303~~561,~~487~~655 for the three months ended ~~July~~January 31, ~~2021~~2022, compared to a net loss of $1469,~~029,839~~724 for the three months ended ~~July~~January 31, ~~2020~~2021, aan ~~decrease~~increase of $~~726~~91,~~352~~931. The ~~decrease~~increase in net loss is primarily driven by the ~~decrease~~increase in ~~operating~~ operating expenses and other expenses, ~~partially offset by the decrease in gross profit~~ as disclosed above.

Discontinued Operations

For the three months ended ~~July~~January 31, ~~2021~~2022, there are no revenue, cost of revenue, ~~operating~~or ~~expenses,~~ other income (expense) from discontinued operations. For the three months ended January 31, or2022, operating expenses were $41,034, generating a net ~~income~~ loss of $41,034 from discontinued operations. For the three months ended ~~July~~January 31, ~~2020~~2021, we generated $~~257~~3,~~491~~454,644 of revenue, incurred $~~484~~2,~~029~~861,273 of cost of revenue, incurred $73569,~~536~~ 783 of operating expenses, and generated a net ~~loss~~income of $~~300~~23,~~074~~588 from discontinued operations.

Nine months ended July 31, 2021 compared to nine months ended July 31, 2020

Continuing Operations

Revenue

Our revenue decreased to $8,612,422 for the nine months ended July 31, 2021, compared to $16,712,149 for the nine months ended July 31, 2020, a decrease of $8,099,727 or 49%. The decrease is the result of decreased international revenue with existing and new customers, partially offset by Pachyderm Labs revenue of approximately $383,300. We remain focused on increasing sales to existing and new customers through all sales channels.

Cost of Revenue

Cost of revenue totaled $6,809,203 for the nine months ended July 31, 2021, compared to $13,378,280 for the nine months ended July 31, 2020, a decrease of $6,569,077 or 49%. The decrease is the result of lower revenue and related product costs.

Operating Expenses

Our operating expenses, which include salaries and benefits, stock-based compensation, selling and promotions expense, legal and professional fees, and general and administrative expenses decreased to $2,287,681 for the nine months ended July 31, 2021, compared to $11,377,871 for the nine months ended July 31, 2020, a decrease of $9,090,190, or 80%. The decrease is primarily due to a decrease of $8,287,897 in stock-based compensation expense related to performance warrants earned by our former Chief Executive Officer during the prior year period, coupled with lower expenses across all other expense categories.

Other (Expense) Income

Our other (expense) income, net decreased by $1,323,714 for the nine months ended July 31, 2021. The decrease is primarily the result of decreases in interest expense, amortization of original issue discounts and deferred financing costs, and loss on convertible note payable extinguishment / settlement, coupled with gain on change in fair value of derivative liability, gain on forgiveness of Paycheck Protection Program loan, and gain on settlement of liabilities. This decrease was partially offset by an increase in initial derivative liability expense.

Net Loss from Continuing Operations

We generated a net loss from continuing operations of $1,456,789 for the nine months ended July 31, 2021, compared to a net loss of $10,340,043 for the nine months ended July 31, 2020, a decrease of $8,883,254. The decrease in net loss is primarily driven by the decrease in operating expenses and other expenses, partially offset by the decrease in gross profit as disclosed above.

Discontinued Operations

As our discontinued operations were sold, transferred, and assigned effective December 18, 2020 (see Note 13), we generated $1,291 of revenue, incurred $1,637 of operating expenses, and generated a net loss of $346 from discontinued operations for the nine months ended July 31, 2021. During the nine months ended July 31, 2020, we generated $282,476 of revenue, incurred $833,934 of cost of revenue, incurred $254,714 of operating expenses, and generated a net loss of $806,279 from discontinued operations.

Liquidity and Capital Resources

At ~~July~~January 31, ~~2021~~2022, we had $6924,~~480~~279 of cash and a working capital ~~surplus~~deficit of $~~309~~3,~~820~~607,535 as compared to cash of $2166,~~483~~022 and a working capital ~~surplus~~deficit of $~~670~~3,~~680~~447,103 at October 31, ~~2020~~2021.

Net cash used in operating activities of continuing operations was $~~729~~202,~~872~~805 for the ~~nine~~three months ended ~~July~~January 31, ~~2021~~2022, asan ~~compared~~increase toof ~~net cash~~$111,072 ~~used~~from ~~in operating activities continuing operations of~~ $291,~~008,951~~733 ~~for~~used during the ~~nine~~three months ended ~~July~~January 31, ~~2020~~2021. The ~~decrease~~increase in net cash used in operating activities of continuing operations was primarily due to ~~decreases~~a decrease in accounts ~~receivable and prepaid expenses~~payable, coupled with an increase in ~~accounts~~net ~~payable and accrued expenses~~loss, ~~and~~ partially offset by ~~increases~~a net increase in ~~inventory~~non-cash charges.

There was no net cash used in investing activities of continuing operations for the ~~nine~~three months ended ~~July~~January 31, ~~2021.~~2022 ~~Net cash used in investing activities of continuing operations for the nine month ended July 31, 2020 totaled $103,115 consisting of a $100,000 investment in an unconsolidated entity~~ and ~~$3,115 for capital expenditures~~2021.

We have financed our operations since inception primarily through proceeds from equity and debt financings and revenue derived from operations. During the ~~nine~~three months ended ~~July~~January 31, ~~2021~~2022, net cash provided by financing activities of continuing operations was $~~755~~120,~~725~~000 as compared to $1105,~~667,897~~300 during the ~~nine~~three months ended ~~July~~January 31, ~~2020~~2021. The ~~decrease~~increase in net cash provided by financing activities of continuing operations was primarily due to lower ~~net~~payments ~~proceeds~~applied ~~from~~to ~~the issuance of~~ convertible ~~notes~~promissory ~~payable and~~ notes ~~payable~~, ~~and~~coupled with lower net proceeds from the ~~sale~~ issuance of ~~common stock, coupled with higher payments applied to~~ convertible ~~promissory~~ notes payable. Our continued operations primarily depend upon our ability to raise additional capital from various sources including equity and debt financings, as well as our revenue derived from operations. We can give no assurances that any additional capital that we are able to obtain will be sufficient to meet our needs or will be on favorable terms. Based on our current plans, we believe that our cash provided from the above sources may not be sufficient to enable us to meet our planned operating needs for the next twelve months.

Impact of COVID-19 Pandemic

A novel strain of coronavirus, COVID-19, surfaced during December 2019 and has spread around the world, including to the United States. During March 2020, COVID-19 was declared a pandemic by the World Health Organization. During certain periods of the pandemic thus far, a number of U.S. states and various countries throughout the world had been under governmental orders requiring that all workers remain at home unless their work was critical, essential, or life-sustaining. As a result of these governmental orders, ~~the~~we ~~Company~~ temporarily closed our ~~its~~ domestic and international offices and required all of ~~its~~our employees to work remotely. As economic activity has begun and continues recovering, the impact of the COVID-19 pandemic on our business has been more reflective of greater economic and marketplace dynamics. Furthermore, in light of variant strains of the virus that have emerged, the COVID-19 pandemic could once again impact our operations and the operations of our customers and vendors as a result of quarantines, illnesses, and travel restrictions.

The full impact of the COVID-19 pandemic on ~~the~~our ~~Company’s~~ financial condition and results of operations will depend on future developments, such as the ultimate duration and scope of the pandemic, its impact on ~~the~~our ~~Company’s~~ employees, customers, and vendors, in addition to how quickly normal economic conditions and operations resume and whether the pandemic impacts other risks disclosed in Item 1A “Risk Factors” within ~~the~~this ~~Company’s~~ Annual Report on Form 10-K. Even after the pandemic has subsided, ~~the~~we ~~Company~~ may continue to experience adverse impacts to ~~its~~our business as a result of any economic recession or depression that has occurred as a result of the pandemic. Therefore, ~~the~~we ~~Company~~ cannot reasonably estimate the impact at this time. ~~The~~We ~~Company~~continue ~~continues~~ to actively monitor the pandemic and may determine to take further actions that alter ~~its~~our business operations as may be required by federal, state, or local authorities or that itwe ~~determines~~determine are in the best interests of ~~its~~our employees, customers, vendors, and shareholders.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company we are not required to provide information required by this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of ~~July~~January 31, ~~2021~~2022 to determine whether our disclosure controls and procedures are effective to provide reasonable assurance that the information required to be disclosed in our reports under the Exchange Act, and the rules and regulations thereunder, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Based on this evaluation, because of our limited resources and limited number of employees, management concluded that our disclosure controls and procedures were ~~effective~~ineffective as of ~~July~~January 31, ~~2021~~2022. Management has identified control deficiencies regarding the lack of segregation of duties. Management of the Company believes that these material weaknesses are due to the small size of the Company’s accounting staff. The small size of the Company’s accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of such remediation.

To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of external legal and accounting professionals. As we grow, we expect to increase our number of employees, which should enable us to implement adequate segregation of duties within the internal control framework.

These control deficiencies could result in a misstatement of account balances that would result in a reasonable possibility that a material misstatement to our consolidated financial statements may not be prevented or detected on a timely basis. In light of this material weakness, we performed additional analyses and procedures in order to conclude that our unaudited condensed consolidated financial statements for the three months ended January 31, 2022, included in this Quarterly Report on Form 10-Q were fairly stated in accordance with GAAP. Accordingly, management believes that despite our material weaknesses, our unaudited condensed consolidated financial statements for the three months ended January 31, 2022 are fairly stated, in all material respects, in accordance with GAAP.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3935

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in matters may arise from time to time that may harm our business. As of the date of this Quarterly Report on Form 10-Q, except as set forth herein, management believes that there are no claims against us, which it believes will result in a material adverse effect on our business or financial condition.

On April 4, 2019, Auctus Fund, LLC (“Auctus”) commenced a lawsuit against the Company in the United States District Court for the District of Massachusetts. On August 27, 2019 the Company filed a motion to dismiss this lawsuit. On September 30, 2019, Auctus responded by filing a First Amended Complaint. The Company then filed a second motion to dismiss on October 24, 2019. On February 25, 2020, the court issued a decision dismissing the securities laws and unjust enrichment and breach of fiduciary duty claims and retaining the breach of contract, breach of covenant of good faith, fraud and deceit, and negligent misrepresentation-and the Massachusetts Consumer Protection Act claims. The Company filed its Answer to the complaint on March 10, 2020. The case remains pending in the District of Massachusetts. This case stems from a securities purchase agreement and convertible note issued in May 2017, a securities purchase agreement and convertible note issued in July 2018, the spin-off of the Company’s real estate division into NestBuilder including the issuance of shares of NestBuilder in the spin-off to the Company’s stockholders and an inducement agreement, release and payoff agreement executed by the parties in February 2019 whereby the Company settled the balance of outstanding amounts owed to Auctus in consideration for cash and shares of NestBuilder. Auctus has requested that the court grant it injunctive and equitable relief and specific performance with respect to the Company’s obligations; determine that the Company is liable for all damages, losses and costs and award Auctus actual losses sustained; award Auctus costs including, but not limited to, costs required to prosecute the action including attorneys’ fees; and punitive damages. The Company intends to continue to defend this matter and although the ultimate outcome cannot be predicted with certainty, based on the current information available, the Company does not believe the ultimate liability, if any, will have a material adverse effect on its financial condition or results of operations.

On November 16, 2021, Fulton Bank, N.A. (“Fulton”) commenced a lawsuit against the Company in the United States Circuit Court for Montgomery County, Maryland as a result of the Company not making required payments under the Credit Facility. The Company intends to defend this matter and although the ultimate outcome cannot be predicted with certainty, an adverse ruling against the Company could have a material adverse effect on its financial condition and results of operations.

Item 1A. Risk Factors.

As a smaller reporting company we are not required to provide information required by this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 5. Other Information

None.

4037

Item 6. Exhibits.

Exhibit Number		Description
3.1		Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 of Form 10-12b filed on June 20, 2008)
3.2		Amendment to Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.2 of Form 10-12b filed on June 20, 2008)
3.3		Certificate of Ownership Merging Webdigs, Inc. with and into Select Video, Inc. (Incorporated by reference to Exhibit 3.3 of Form 10-Q filed on June 17, 2019)
3.4		Certificate of Amendment to Certificate of Incorporation (Incorporated by reference to Exhibit 3.12 of Form 10-K filed on March 26, 2018)
3.5		Certificate of Ownership (Incorporated by reference to Exhibit 3.1 of Form 8-K filed on October 15, 2012)
3.6		Amendment to the Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.6 of Form 10-K filed on February 13, 2015)
3.7		Certificate of Designations for Series B Convertible Preferred Stock (Incorporated by reference to Exhibit 3.8 of Form 10-K filed on February 13, 2015)
3.8		Certificate of Designations of Series C Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 of Form 8-K filed on May 8, 2015)
3.9		Amendment to Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 of Form 8-K filed on April 10, 2017)
3.10		Amendment to Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 of Form 8-K filed on February 27, 2018)
3.11		Certificate of Amendment to Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 of Form 8-K filed on October 16, 2018)
3.12		Second Amended and Restated Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of Verus International, Inc. (Incorporated by reference to Exhibit 3.1 of Form 8-K filed on February 12, 2019)
3.13		Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.3 of Form 10-12b filed on June 20, 2008)
3.14		Amendment No. 1 to Second Amended and Restated Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of Verus International, Inc. (Incorporated by reference to Exhibit 3.1 of Form 8-K filed on April 11, 2019)
3.15		Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Verus International, Inc. (Incorporated by reference to Exhibit 3.1 of Form 8-K filed on April 18, 2019)
3.16		Certificate of Amendment of the Certificate of Incorporation of Verus International, Inc. (Incorporated by reference to Exhibit 3.1 of Form 8-K filed on January 12, 2021)
10.1		Employment Agreement by and between Verus International, Inc. and Anshu Bhatnagar (Incorporated by reference to Form 8-K filed on April 29, 2020)
4.1+		2015 Stock Incentive Plan (Incorporated by reference to Exhibit 4.1 of Form S-8 filed on August 7, 2015)
10.2		Form of Securities Purchase Agreement dated July 22, 2020 (Incorporated by reference to Form 10-Q filed on September 21, 2020)
4.2+		2018 Equity Incentive Plan (Incorporated by reference to Exhibit 4.2 of Form 10-K filed on March 19, 2019)
10.3		Form of Note dated July 22, 2020 (Incorporated by reference to Form 10-Q filed on September 21, 2020)
4.3		Description of the Registrant’s Securities (Incorporated by reference to Exhibit 4.3 of Form 10-K filed on April 13, 2020)
10.4		Amendment No. 3 to Donald P. Monaco Insurance Trust Note (Incorporated by reference to Form 8-K filed on August 20, 2020)
4.4+		2020 Equity Incentive Plan (Incorporated by reference to Appendix B of Definitive Information Statement filed on November 6, 2020)
10.5		Amendment No. 4 to Donald P. Monaco Insurance Trust Note (Incorporated by reference to Form 8-K filed on October 30, 2020)
10.6		Special Amendment to note dated March 31, 2020 (Incorporated by reference to Form 8-K filed on December 28, 2020)
10.7		Form of Agreement (Incorporated by reference to Form 8-K filed on December 28, 2020)
10.8		Form of Securities Purchase Agreement dated January 13, 2021 (Incorporated by reference to Form 8-K filed on January 25, 2021)
10.9		Form of Note dated January 13, 2021 (Incorporated by reference to Form 8-K filed on January 25, 2021)
10.10		Employment Agreement by and between Verus International, Inc. and Apurva Dhruv (Incorporated by reference to Form 8-K filed on February 23, 2021)
10.11		Form of Securities Purchase Agreement dated January 4, 2021 (Incorporated by reference to Form 10-K filed on March 9, 2021)
10.12		Form of Note dated January 4, 2021 (Incorporated by reference to Form 10-K filed on March 9, 2021)
10.13		Form of Securities Purchase Agreement dated February 1, 2021 (Incorporated by reference to Form 10-K filed on March 9, 2021)
10.14		Form of Note dated February 1, 2021 (Incorporated by reference to Form 10-K filed on March 9, 2021)
10.15		Form of Securities Purchase Agreement dated April 7, 2021 (Incorporated by reference to Form 10-Q filed on June 21, 2021)
10.16		Form of Note dated April 7, 2021 (Incorporated by reference to Form 10-Q filed on June 21, 2021)
10.17		Form of Securities Purchase Agreement dated April 8, 2021 (Incorporated by reference to Form 10-Q filed on June 21, 2021)
10.18		Form of Note dated April 8, 2021 (Incorporated by reference to Form 10-Q filed on June 21, 2021)
10.19		Form of Securities Purchase Agreement dated April 15, 2021 (Incorporated by reference to Form 10-Q filed on June 21, 2021)
10.20		Form of Note dated April 15, 2021 (Incorporated by reference to Form 10-Q filed on June 21, 2021)
10.21*		Form of Securities Purchase Agreement dated June 29, 2021
10.22*		Form of Note dated June 29, 2021
10.23*		Form of Securities Purchase Agreement dated August 5, 2021
10.24*		Form of Note dated August 5, 2021
10.25*		Form of Securities Purchase Agreement dated August 12, 2021
10.26*		Form of Note dated August 12, 2021
31.1*		Certification of Chief Executive and Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Chief Executive and Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
104*		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*Filed herewith.38

10.1		Contribution and Spin-off Agreement (Incorporated by reference to Exhibit 10.1 of Form 8-K filed on November 3, 2017)
10.2		First Amendment to Contribution and Spin-Off Agreement dated January 29, 2018 (Incorporated by reference to Exhibit 10.27 of Form 10-K filed on March 26, 2018)
10.3		Form of Note issued to Donald P. Monaco Insurance Trust on January 26, 2018 (Incorporated by reference to Exhibit 10.1 of Form 8-K filed on February 12, 2018)
10.4		Amendment No. 1 to Note issued to Donald P. Monaco Insurance Trust (Incorporated by reference to Exhibit 10.1 of Form 8-K filed on February 12, 2019)
10.5		Amendment No. 2 to Note issued to Donald P. Monaco Insurance Trust (Incorporated by reference to Exhibit 10.2 of Form 8-K filed on February 12, 2019)
10.6#		Sales Contract by and between Verus Foods, Inc. and Gulf ARGO Trading, LLC dated December 26, 2016 (Incorporated by reference to Exhibit 10.16 on Form 10-K filed on March 19, 2019)
10.7#		Exclusive Distribution Agreement by and between Verus Foods Inc. and Padrone General Trading LLC dated August 18, 2017 (Incorporated by reference to Exhibit 10.17 on Form 10-K filed on March 19, 2019)
10.8		Credit Agreement, dated as of July 31, 2019, by and among Verus International, Inc. and Verus Foods Inc., as Borrowers, and The Columbia Bank, as lender (Incorporated by reference to Form 8-K filed on August 1, 2019)
10.9##		Asset Purchase Agreement, dated as of August 30, 2019, by and among Verus International, Inc. and the Sellers thereto (Incorporated by reference to Form 8-K filed on September 3, 2019)
10.10		Form of Note (Incorporated by reference to Form 8-K filed on April 7, 2020)
10.11		Form of Common Stock Purchase Agreement (Incorporated by reference to Form 8-K filed on July 2, 2020)
10.12		Form of Registration Rights Agreement (Incorporated by reference to Form 8-K filed on July 2, 2020)
10.13		Form of Letter Agreement (Incorporated by reference to Form 8-K filed on July 24, 2020)
10.14		Amendment No. 3 to Donald P. Monaco Insurance Trust Note (Incorporated by reference to Form 8-K filed on August 20, 2020)
10.15		Amendment No. 4 to Donald P. Monaco Insurance Trust Note (Incorporated by reference to Form 8-K filed on October 30, 2020)
10.16		Special Amendment to note dated March 31, 2020 (Incorporated by reference to Form 8-K filed on December 28, 2020)
10.17		Form of Agreement (Incorporated by reference to Form 8-K filed on December 28, 2020)
10.18+		Employment Agreement by and between Verus International, Inc. and Apurva Dhruv (Incorporated by reference to Form 8-K filed on February 23, 2021)
10.19		Form of Securities Purchase Agreement dated February 1, 2021 (Incorporated by reference to Form 10-K filed on March 9, 2021)
10.20		Form of Note dated February 1, 2021 (Incorporated by reference to Form 10-K filed on March 9, 2021)
10.21		Form of Securities Purchase Agreement dated April 8, 2021 (Incorporated by reference to Form 10-Q filed on June 21, 2021)
10.22		Form of Note dated April 8, 2021 (Incorporated by reference to Form 10-Q filed on June 21, 2021)
10.23		Form of Securities Purchase Agreement dated April 15, 2021 (Incorporated by reference to Form 10-Q filed on June 21, 2021)
10.24		Form of Note dated April 15, 2021 (Incorporated by reference to Form 10-Q filed on June 21, 2021)
10.25		Form of Securities Purchase Agreement dated June 29, 2021 (Incorporated by reference to Form 10-Q filed on September 20, 2021)
10.26		Form of Note dated June 29, 2021 (Incorporated by reference to Form 10-Q filed on September 20, 2021)
10.27		Form of Securities Purchase Agreement dated August 5, 2021 (Incorporated by reference to Form 10-Q filed on September 20, 2021)
10.28		Form of Note dated August 5, 2021 (Incorporated by reference to Form 10-Q filed on September 20, 2021)
10.29		Form of Securities Purchase Agreement dated August 12, 2021 (Incorporated by reference to Form 10-Q filed on September 20, 2021)
10.30		Form of Note dated August 12, 2021 (Incorporated by reference to Form 10-Q filed on September 20, 2021)
10.31		Form of Securities Purchase Agreement dated November 5, 2021 (Incorporated by reference to Form 10-K filed on April 15, 2022)
10.32		Form of Note dated November 5, 2021 (Incorporated by reference to Form 10-K filed on April 15, 2022)
10.33		Form of Securities Purchase Agreement dated December 10, 2021 (Incorporated by reference to Form 10-K filed on April 15, 2022)
10.34		Form of Note dated December 10, 2021 (Incorporated by reference to Form 10-K filed on April 15, 2022)

31.1*		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
104*		Cover Page Interactive Data File (embedded with the Inline XBRL document

+ Each of these Exhibits constitutes a management contract, compensatory plan, or arrangement.

* Filed herewith.

# The SEC has granted confidential treatment with respect to certain portions of this exhibit. Omitted portions have been filed separately with the SEC.

## Pursuant to Item 601(b)(10) of Regulation S-K, certain confidential portions of this exhibit were omitted by means of making such portions with an asterisk because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Verus International, Inc. /s/ Apurva Dhruv Apurva Dhruv Chief Executive Officer (Principal Executive, Financial, and Accounting Officer) ~~September~~April 2015, ~~2021~~2022

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Filing Compare · VERUS INTERNATIONAL, INC.