Verus International Inc (VRUS)

[kingpindg]

sello, after review of the documents, here are some points for your consideration…

Garnock can only begin converting the Note after the A/S is raised to 7.5B (Note, page 6), but he can exercise the Warrant at any time after February 8, 2019, the issuance date of the Warrant (Warrant, page 2).

If he exercises the Warrant before the shares are registered, he does not necessarily or entirely lose the 30 trading day lookback. He may do a standard exercise at a price based on the lookback, or he may elect to do a cashless exercise based on a formula that incorporates both the closing price from the previous trading day and the lowest sale price from the previous 30 trading days (Warrant, page 5).

Garnock does not need to wait for the shares to be registered before he can convert the Note or exercise the Warrant. The shares only need to be registered so that he can more easily sell them should he choose to do so (see “Mandatory Registration”, RRA, page 3). If the shares are not registered then Garnock would only be able to sell based on Rule 144 requirements.

I agree that Garnock can purchase, via the Warrant, the entire 925M shares (I am rounding), so long as he does so before he makes any conversions under the Note and waives the 9.99% ownership limitation. Once he begins converting the Note, then he can only purchase, via the Warrant, the same number of shares that he received from the conversions (Warrant, page 3).

Purchasing the entire 925M shares available under the Warrant would not preclude him for acquiring shares via conversion of the Note. In other words, he has the right under the Warrant to purchase up to 925M shares and the right to convert the Note into some number of shares such that he could end up with more than 925M shares, in total.

If he were to convert the note fully on April 15th, the exercise price would be 90% of the lowest sale price (not closing price) in the previous 30 trading days, or $0.00495 (0.9x$0.0055), giving him 256.2M shares. If he did not exercise the Warrant fully, prior to the conversion, then he could only buy 256.2M shares giving the company an additional $1.27M.

Hopefully, as you say, he wants to invest in himself and exercises the Warrant in a manner that provides more than the minimum of additional capital to the company.

All of the above is based on my reading of the documents which, at times, are not easy to follow. I welcome your thoughts.


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