This is actually a really good deal for VRUS. There are several provisions that keep this from being toxic debt. Note:
Item 5. Interest in Common Stock of the Issuer
(a) and (b). At present, the Issuer’s authorized common stock consists of 1,500,000,000 shares of common stock, par value of $.001 per share, and certain preferred shares. The Issuer has filed a Definitive Information Circular with the Commission, dated January 31, 2019, indicating that it has received shareholder assent to amend its certificate of incorporation to increase the number of authorized shares of Common Stock from 1,500,000,000 to 7,500,000,000 and to change its par value from $.001 to $.000001 per share. Except as otherwise specifically stated herein, all references herein to ARJ’s ownership of Issuer common stock assume the filing of such Amendment, which has not taken place yet (the “Recapitalization”). Absent such amendment, the Note is not convertible, the Warrant is not exercisable, and ARJ’s entire position in Issuer Common Stock is zero and Garnock’s entire position in Issuer Common Stock is 24,146,068 shares of Common Stock of which Garnock owns 24,000,000 of such shares and his wife, Rochelle Rabenou - Garnock, owns 146,068 shares of Issuer Common Stock. The within calculations of percentages of Issuer Common Stock owned are based on the assumption of an aggregate of 2,425,925,925 shares of Common Stock being. That number is the sum of the total current number of shares of Issuer Common Stock outstanding, (1,500,000,000) plus the 925,925,925 shares tahtw ould be owned by ARJ assumnming both conversion in full of the Note and the Recapitalization taking place. Garnock shares voting control over ARJ’s shares with ARJ. He retains sole dispositive and voting power over the 24,000,000 shares of Common Stock owned by him, and his wife retains sole voting and dispositive power over the 146,068 shares of Common Stock owned by her.
Assuming the Recapitalization becomes effective, the Reporting Persons would collectively beneficially own effective as of the date hereof 950,071,993 shares of Common Stock, consisting of 925,925,925 shares underlying the Note, 24,000,000 shares held by Garnock and 146,068 shares held by Rochelle Rabenou-Garnock. Based on 2,425,925,925 shares outstanding (see immediately preceding paragraph), such beneficial ownership would constitute 38.1% of the shares of Common Stock outstanding. The Warrant would not be exercisable since exercise of the Warrant is subject to a cap of 9.9% of the Issuer’s total outstanding Common Stock.
And don't forget this:
j) Usury. This Note shall be subject to the anti-usury limitations contained in the Securities Purchase Agreement.
At max they will get 926 mil shares, but cannot own more than 10% of the total shares outstanding. They also must convert a minimum of 25% of the outstanding balance of debt if they convert principal. So basically, they will only be able to get paid for interest at first. The company can pay down principal, but if they pay off the entire balance within the first 7 months, there is a prepayment penalty of 100%.
