10-Q

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 April 30, 2022

Or

☐	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.)

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 June 14, 2022, there were 490,265,882 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 – April 30, 2022 (Unaudited) and October 31, 2021	4
	Condensed Consolidated Unaudited Statements of Operations – Three and Six Months Ended April 30, 2022 and 2021	5
	Condensed Consolidated Unaudited Statements of Stockholders’ (Deficit) Equity – Six Months Ended April 30, 2022 and 2021	6
	Condensed Consolidated Unaudited Statements of Cash Flows – Six Months Ended April 30, 2022 and 2021	7
	Notes to Condensed Consolidated Unaudited Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	37
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	39
Item 5.	Other Information	39
Item 6.	Exhibits	40
SIGNATURES		43

2

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, 2021, filed with the SEC on April 15, 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.

3

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Verus International, Inc.

Condensed Consolidated Balance Sheets

	April 30, 2022			October 31, 2021
	(Unaudited)
Assets
Current Assets
Cash	$	6,789		$	66,022
Accounts receivable, net		250,618			303,218
Inventory		145,129			145,129
Other assets		16,144			16,144
Assets of discontinued operations		326			105,974
Total Current Assets		419,006			636,487
Property and equipment, net		64,651			85,067
Operating lease right-of-use asset		152,830			198,637
Total Assets	$	636,487		$	920,191
Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable and accrued expenses	$	783,844		$	638,315
Operating lease liability		95,115			92,771
Interest payable		541,602			368,709
Due to former officer		221,586			221,586
Notes payable		1,562,985			1,533,294
Convertible notes payable, net		489,909			530,358
Derivative liability		522,921			471,219
Liabilities of discontinued operations		162,752			227,338
Total Current Liabilities		4,380,714			4,083,590
Operating lease liability, net of current portion		57,715			105,866
Total Liabilities		4,438,429			4,189,456
Commitments and Contingencies (Note 9)
Stockholders’ Deficit
Series A convertible preferred stock, $0.000001 par value; 120,000,000 shares authorized and 28,944,601 shares issued and outstanding at April 30, 2022 and October 31, 2021		29			29
Series B convertible preferred stock, $0.000001 par value; 1,000,000 shares authorized and no shares issued and outstanding at April 30, 2022 and October 31, 2021		-			-
Series C convertible preferred stock, $0.000001 par value; 1,000,000 shares authorized and 680,801 shares issued and outstanding at April 30, 2022 and October 31, 2021		1			1
Common stock, $0.000001 par value; 7,500,000,000 shares authorized and 87,521,179 and 23,844,566 shares issued at April 30, 2022 and October 31, 2021, respectively (as adjusted for a 1-for-500 reverse stock split as discussed in Note 1)		88			24
Additional paid-in-capital		47,455,109			46,889,360
Shares to be issued		15,000			5,000
Accumulated deficit		(51,272,169	)		(50,163,679	)
Total Stockholders’ Deficit		(3,801,942	)		(3,269,265	)
Total Liabilities and Stockholders’ Deficit	$	636,487		$	920,191

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

4

Verus International, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	April 30,						April 30,
	2022			2021			2022			2021
Revenue	$	-		$	347,844		$	-		$	347,844
Cost of revenue		-			168,792			-			168,867
Gross Profit		-			179,052			-			178,977
Operating Expenses:
Salaries and benefits		61,497			173,740			131,953			153,960
Legal and professional fees		25,000			-			75,000			-
General and administrative		135,143			203,145			236,684			358,482
Total Operating Expenses		221,640			376,885			443,637			512,442
Operating loss		(221,640	)		(197,833	)		(443,637	)		(333,465	)
Other (Expense) Income:
Interest expense		(102,373	)		(80,784	)		(185,793	)		(146,941	)
Amortization of original issue discounts and deferred financing costs		(17,738	)		(37,252	)		(76,779	)		(64,764	)
Loss on extinguishment and settlement of convertible notes payable		(4,494	)		(34,823	)		(115,086	)		(34,941	)
(Loss) gain on change in fair value of derivative liability		(112,451	)		(11,235	)		(55,399	)		27,972
Default principal increase on convertible notes payable		(47,100	)		-			(47,100	)		-
Initial derivative liability expense		-			(520,701	)		(143,657	)		(800,213	)
Gain on settlement of liabilities		-			104,774			-			104,774
Total Other (Expense) Income		(284,156	)		(580,021	)		(623,814	)		(914,113	)
Loss from continuing operations before income taxes		(505,796	)		(777,854	)		(1,067,451	)		(1,247,578	)
Income taxes		-			-			-			-
Loss from continuing operations		(505,796	)		(777,854	)		(1,067,451	)		(1,247,578	)
Discontinued operations (Note 11)
(Loss) gain from discontinued operations		(5	)		70,341			(41,039	)		93,930
Net loss	$	(505,801	)	$	(707,513	)	$	(1,108,490	)	$	(1,153,648	)
Loss per common share:
Loss from continuing operations per common share – basic and diluted	$	(0.01	)	$	(0.06	)	$	(0.02	)	$	(0.10	)
Loss from discontinued operations per common share – basic and diluted	$	(0.00	)	$	0.00		$	(0.00	)	$	0.00
Loss per common share – basic and diluted	$	(0.01	)	$	(0.06	)	$	(0.02	)	$	(0.10	)
Weighted average shares outstanding – basic and diluted		58,243,463			12,497,725			46,307,744			12,041,395

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

5

Verus International, Inc.

Condensed Consolidated Statement of Changes in Stockholders’ Deficit

For the Six Months Ended April 30, 2022 and 2021

(Unaudited)

	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, 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														32,181,998		32		405,787							405,819
Stock-based compensation for restricted shares under employment contract																		22,395							22,395
Shares of common stock to be issued for board member services rendered																				5,000					5,000
Net loss																						(602,689	)		(602,689	)
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	)
Conversion of convertible promissory notes to common stock														31,494,615		32		124,129							124,161
Stock-based compensation for restricted shares under employment contract																		13,438							13,438
Shares of common stock to be issued for board member services rendered																				5,000					5,000
Net loss																						(505,801	)		(505,801	)
Balance, April 30, 2022		28,944,601	$	29		-	$	-		680,801	$	1		87,521,179	$	88	$	47,455,109	$	15,000	$	(51,272,169	)	$	(3,801,942	)

	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
Conversion of convertible promissory notes to common stock														1,685,918		2		464,652							464,654
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

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

6

Verus International, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the Six Months Ended
	April 30,
	2022			2021
Cash flows from operating activities:
Net loss	$	(1,108,490	)	$	(1,153,648	)
Adjustments to reconcile net loss to net cash used in operating activities:
Initial derivative liability expense		143,657			800,213
Loss on extinguishment and settlement of debt		115,086			34,941
Amortization of original issue discounts and deferred financing costs		76,779			64,764
Loss (Gain) on change in fair value of derivative liability		55,399			(27,972	)
Allowance for accounts receivable		52,600			-
Default principal increase on convertible notes payable		47,100			-
Stock-based compensation		45,833			(40,523	)
Depreciation and amortization		20,416			20,935
Gain on settlement of liabilities		-			(104,774	)
Changes in operating assets and liabilities:
Increase in accounts receivable		-			(347,844	)
Decrease in inventory		-			17,400
Decrease in prepaid expenses		-			41,729
Increase in other assets		-			(805	)
Increase in accounts payable and accrued expenses		331,325			107,915
Decrease in right to use and lease obligation, net		-			(9,386	)
Net cash used in operating activities of continuing operations		(220,295	)		(597,055	)
Net cash provided by (used in) operating activities of discontinued operations		41,062			(72,120	)
Net cash used in operating activities		(179,233	)		(669,175	)
Cash flows from financing activities:
Proceeds from issuance of convertible notes payable, net of commissions		120,000			496,400
Proceeds from issuance of notes payable		-			240,325
Payments applied to convertible promissory notes		-			(63,000	)
Net cash provided by financing activities of continuing operations		120,000			673,725
Net (decrease) increase in cash		(59,233	)		4,550
Cash at beginning of period		66,022			6,150
Cash at end of period	$	6,789		$	10,700
Supplemental disclosure:
Cash paid for interest	$	-		$	18,765

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

7

	For the Six Months Ended
	April 30,
	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	$	529,980	$	583,310
Shares		63,676,613		1,998,174
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	$	-	$	28,100
Shares		-		107,364

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

8

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 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.

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, were focused on international consumer packaged goods, foodstuff distribution and wholesale trade. Our fine food products were sourced in the United States and exported internationally. We 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.

9

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

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

Through October 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. During the three months ended October 31, 2021, we made a decision to cease operating as an international supplier of consumer food products, whereby we cancelled and settled all supplier and 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 financial statements for the years ended October 31, 2021 and 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 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 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 (see Note 11).

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 six months ended April 30, 2022 and 2021 include the operations of BLF effective April 25, 2019, Verus MENA effective May 1, 2018, and Verus Foods, Inc. effective January 2017. The operating results and associated assets and liabilities from BLF and Verus MENA have been classified as discontinued operations in the unaudited consolidated financial statements for the six months ended April 30, 2022 and 2021 (see Note 11). 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, 2021, contained in the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2022. The results of operations for the six months ended April 30, 2022, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending October 31, 2022.

10

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 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 this 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.

11

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Concentrations of Credit Risk

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.

Revenue Risk

The Company’s products accounts receivable, net and revenues are geographically concentrated with customers located domestically in the United States. In addition, significant concentrations exist with a limited number of customers. Approximately 36% of accounts receivable, net at April 30, 2022 were concentrated with two customers. There was no revenue generated during the six months ended April 30, 2022, therefore, no concentration of revenue risk existed for the six months ended April 30, 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 products from a limited number suppliers. Increases in the prices of the 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 products or our suppliers cease to be available to us, we could experience shortages in our products or be unable to meet our commitments to customers. Alternative sources of 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.

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 April 30, 2022 or October 31, 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 April 30, 2022 and October 31, 2021, the Company’s cash balances did not exceed the FDIC limit.

12

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 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 April 30, 2022 and October 31, 2021, we determined $250,600 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.

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 measures its 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.

13

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 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 April 30, 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 six months ended April 30, 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).

14

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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.

Derivative Instruments

The Company accounts 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.

15

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 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:

	April 30, 2022		October 31, 2021
Period-end AED: USD exchange rate	$	0.27229	$	0.27230

Income statement:

	For the Three Months Ended				For the Six Months Ended
	April 30,				April 30,
	2022		2021		2022		2021
Average Period AED: USD exchange rate	$	0.27229	$	0.27228	$	0.27229	$	0.27228

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, 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, 2021 and 2020.

16

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Earnings Per 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 and six months ended April 30, 2022 and 2021, as we incurred a net loss for those periods. At April 30, 2022, there were outstanding warrants to purchase approximately 1,340,000 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 2,900,000 shares of the Company’s common stock to be issued, and approximately 546,000,000 shares of the Company’s common stock issuable upon the conversion of convertible notes payable which may dilute future EPS. At April 30, 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 107,000 shares of the Company’s common stock to be issued, and approximately 5,400,000 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 nutraceutical products industry, and its prospects for success are tied indirectly to interest rates and the worldwide demand for the Company’s nutraceutical products.

Recently Adopted Accounting Standards

Effective November 1, 2021, the Company adopted ASU 2019-12, Income Taxes (Topic 740), which amended and simplified the accounting for income taxes by removing certain exceptions to the general principles of Topic 740, and also improved consistent application of and simplified U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company determined the adoption of ASU 2019-12 did not have a material impact on its unaudited condensed consolidated financial statements.

17

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 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 $1,067,451 and has used cash in operating activities of continuing operations of $220,295 for the six months ended April 30, 2022. At April 30, 2022, the Company had a working capital deficit of $3,961,708, and an accumulated deficit of $51,272,169. 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 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 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 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: LEASES

At April 30, 2022, the Company was party to one operating lease for its corporate office and domestic warehouse operations in Stafford, Texas. Effective February 8, 2021, the Company terminated the operating lease for its corporate office at Gaithersburg, Maryland and entered into a new, short-term lease, which the Company subsequently terminated. The Company also terminated its 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.

18

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 4: LEASES (continued)

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.

Lease expense for operating leases, consisting of lease payments, is recognized on a straight-line basis over the lease term. Included in lease expense are any variable lease payments incurred in the period that were not included in the initial lease liability. Lease expense for finance leases consists of the amortization of the ROU asset, which is calculated on a straight-line basis over the shorter of the useful life of the asset or the lease term, and interest expense on the lease liability, which is calculated using the effective interest rate method. The Company had no finance leases at April 30, 2022.

For the six months ended April 30, 2022, the Company had operating lease costs of $50,298, which are included in general and administrative expenses in the unaudited consolidated statements of operations. For the six months ended April 30, 2022, the Company made operating lease cash payments of $16,900, which are included in cash flows from operating activities of continuing operations in the unaudited consolidated statements of cash flows. At April 30, 2022, the Company had operating lease costs of $42,327 accrued for future payment, which are included in accounts payable and accrued expenses in the unaudited consolidated balance sheets.

At April 30, 2022, the remaining lease term for our domestic warehouse operations is 19 months, and the discount rate is 5%. Future annual minimum cash payments required under this operating type lease at April 30, 2022 are as follows:

Future Minimum Lease Payments:
Remainder of fiscal year 2022	$	50,298
2023		100,596
2024		8,383
Total Minimum Lease Payments	$	159,277
Less: amount representing interest		(6,447	)
Present Value of Lease Liabilities	$	152,830
Less: current portion		(95,115	)
Long-Term Portion	$	57,715

19

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 5: REVENUE DISAGGREGATION

The Company did not generate any revenue from continuing operations for the six months ended April 30, 2022, and therefore did not have any revenue disaggregation. For the six months ended April 30, 2021, the Company’s largest two customers accounted for approximately 29% of its total revenue.

NOTE 6: DEBT

Convertible Notes Payable

On April 7, 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 $88,500. The note matures on April 7, 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 various dates through November 1, 2021, the aggregate outstanding principal and accrued interest of $92,483 was converted into an aggregate of 4,607,401 shares of the Company’s common stock. The Company recorded an aggregate loss on extinguishment of debt of $64,602 as a result of the Company issuing shares of its common stock to fully satisfy this obligation.

On April 8, 2021, the Company issued and sold a convertible promissory note to an accredited investor in the principal amount of $150,000 (including a $20,000 original issuance discount). The note matured on April 8, 2022, bears interest at a rate of 8% 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 180^th 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 $282,500 and deferred financing costs of $5,200. The original issue discount and deferred financing costs were amortized over the term of the note. On various dates through April 25, 2022, the aggregate outstanding principal and accrued interest of $69,286 was converted into an aggregate of 13,475,052 shares of the Company’s common stock. The Company recorded an aggregate loss on extinguishment of debt of $26,605 as a result of the Company issuing shares of its common stock. At April 30, 2022, the aggregate balance of the convertible promissory note and accrued interest was $91,804. At April 30, 2022, the aggregate balance of the convertible promissory note, net of original issue discount and deferred financing costs was $91,804.

On April 15, 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 matured 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 be prepaid by the Company at any time prior to the 180^th 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 $238,200 and deferred financing costs of $11,700. The original issue discount and deferred financing costs were amortized over the term of the note. On various dates through April 29, 2022, the aggregate outstanding principal and accrued interest of $81,765 was converted into an aggregate of 22,203,195 shares of the Company’s common stock. The Company recorded an aggregate loss on extinguishment of debt of $26,529 as a result of the Company issuing shares of its common stock. At April 30, 2022, the aggregate balance of the convertible promissory note and accrued interest was $72,105. At April 30, 2022, the aggregate balance of the convertible promissory note, net of original issue discount and deferred financing costs was $72,105.

20

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 6: DEBT (continued)

On June 29, 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 $85,750. 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. On various dates through April 29, 2022, the aggregate outstanding principal of $92,700, which includes $6,950 of $10,225 of additional principal due to the occurrence and subsequent cure of an Event of Default, was converted into an aggregate of 24,321,086 shares of the Company’s common stock. The Company recorded an aggregate loss on extinguishment of debt of $54,279 as a result of the Company issuing shares of its common stock. At April 30, 2022, the aggregate balance of the convertible promissory note and accrued interest was $8,567. The aggregate balance of the convertible promissory note, net of deferred financing costs at April 30, 2022 was $2,648.

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. At April 30, 2022, the aggregate balance of the convertible promissory note and accrued interest was $119,105, which includes $36,875 of additional principal due to the occurrence and subsequent cure of an Event of Default. The aggregate balance of the convertible promissory note, net of deferred financing costs at April 30, 2022 was $109,639.

On August 12, 2021, the Company issued and sold a convertible promissory note to an accredited investor 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 days prior to conversion and may be prepaid by the Company at any time prior to the 180^th 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 $226,620 and deferred financing costs of $8,800. The original issue discount and deferred financing costs are being amortized over the term of the note. At April 30, 2022, the aggregate balance of the convertible promissory note and accrued interest was $118,752. At April 30, 2022, the aggregate balance of the convertible promissory note, net of original issue discount and deferred financing costs was $104,695.

On November 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 $78,750. The note matures on November 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 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. 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 $143,657 and deferred financing costs of $3,750. At April 30, 2022, the aggregate balance of the convertible promissory note and accrued interest was $84,263. The aggregate balance of the convertible promissory note, net of deferred financing costs at April 30, 2022 was $76,818.

21

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 6: DEBT (continued)

On December 10, 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 $48,750. The note matures on December 10, 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 April 30, 2022, the aggregate balance of the convertible promissory note and accrued interest was $51,742. The aggregate balance of the convertible promissory note, net of deferred financing costs at April 30, 2022 was $46,459.

At April 30, 2022 and October 31, 2021, there was $489,909 and $530,358 of convertible notes payable outstanding, net of discounts of $11,141 and $42,442, respectively.

During the six months ended April 30, 2022 and 2021, amortization of original issue discount and issuance costs amounted to $38,801 and $38,753, respectively.

During the six months ended April 30, 2022, an aggregate of $258,034 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. During the six months ended April 30, 2021, an aggregate of $320,131 of convertible notes, including accrued interest, were converted into shares of the Company’s common stock and there were payments of an aggregate of $91,457 toward the outstanding balances of convertible notes.

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 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 interest payment schedule, as amended by the Third Note Amendment, is satisfied by the Company, the Company will not be in default 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. 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 District Court for the District of 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 (see Note 10).

22

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 6: DEBT (continued)

At April 30, 2022, the aggregate balance of the Monaco Note and accrued interest was $851,298. Through April 30, 2022, the Company paid an aggregate of $116,152 of accrued interest in accordance with the provisions of the Fourth Note Amendment.

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 matured on July 1, 2020, incurred 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 provided 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 April 30, 2022, the Company has not paid any amount toward the outstanding balance of this promissory note. At April 30, 2022, the aggregate balance of the promissory note and accrued interest was $352,945. 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 the promissory note by December 31, 2021. 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).

On February 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 were amortized over the term of the note. As of April 30, 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. On April 25, 2022, the aggregate outstanding principal and accrued interest of $9,505 was converted into an aggregate of 2,795,644 shares of the Company’s common stock. The Company recorded an aggregate loss on extinguishment of debt of $1,677 as a result of the Company issuing shares of its common stock. At April 30, 2022, the aggregate balance of the promissory note and accrued interest was $397,657.

23

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 6: DEBT (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 (8.452% at April 30, 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 April 30, 2022, the aggregate balance outstanding under the Credit Facility including accrued interest was $457,400. 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, 2021 to April 30, 2022.

	Conversion feature derivative liability
October 31, 2021	$	471,219
Initial fair value of derivative liability charged to other expense		143,657
Loss on change in fair value included in earnings		55,399
Derivative liability relieved by conversions of convertible promissory notes		(147,354	)
April 30, 2022	$	522,921

24

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 7: DERIVATIVE LIABILITY (continued)

Total derivative liability at April 30, 2022 and October 31, 2021 amounted to $522,921 and $471,219, respectively. The change in fair value included in earnings for the six months ended April 30, 2022 of $55,399 is due in part to the quoted market price of the Company’s common stock decreasing from $0.02 at October 31, 2021 to $0.003 at April 30, 2022, coupled with substantially reduced conversion prices due to the effect of “ratchet” provisions incorporated within the convertible notes payable.

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 April 30, 2022:

Expected volatility	243.5% - 281.6		%
Expected term	3.0 – 6.2 months
Risk-free interest rate		0.850% - 1.410	%
Stock price	$	0.003

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 April 30, 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 87,521,179 are issued at April 30, 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 April 30, 2022, (B) 1,000,000 shares have been designated as Series B Convertible Preferred Stock, of which no shares are outstanding at April 30, 2022 and (C) 1,000,000 have been designated as Series C Convertible Preferred Stock, of which 680,801 shares are outstanding at April 30, 2022.

25

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 8: STOCKHOLDERS’ 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 six months ended April 30, 2022, the Company:

● issued 63,676,613 shares of its common stock valued at $529,980, as repayment for outstanding principal and interest on convertible promissory notes as requested by the note holders in accordance with contractual terms.

● recorded 2,724,138 shares of its common stock valued at $10,000, as shares to be issued to a board member for services rendered.

During the six months ended April 30, 2021, the Company:

● issued 1,998,174 shares of its common stock valued at $583,310, 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 107,364 shares of its common stock as shares to be issued to a vendor for services rendered.

Common Stock Warrants

At April 30, 2022, there were warrants to purchase up to 1,339,114 shares of the Company’s common stock outstanding which may dilute future EPS. There were no warrants earned or granted during the six months ended April 30, 2022. There were 1,280,000 warrants that were forfeited due to expiration during the six months ended April 30, 2022.

26

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 8: STOCKHOLDERS’ DEFICIT (continued)

The following table sets forth common share purchase warrants outstanding at April 30, 2022:

				Weighted
				Average
				Exercise		Intrinsic
	Warrants			Price		Value
Outstanding, October 31, 2021		2,619,114		$	2.24	$	-
Warrants granted and issued		-		$	-	$	-
Warrants exercised		-		$	-	$	-
Warrants forfeited		(1,280,000	)	$	1.41	$	-
Outstanding, April 30, 2022		1,339,114		$	3.03	$	-
Common stock issuable upon exercise of warrants		1,339,114		$	3.03	$	-

								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 April 30,		Contractual		Exercise		At April 30,		Exercise
Prices		2022		Life (Years)		Price		2022		Price
$	3.00		1,337,114		0.53	$	3.00		1,337,114	$	3.00
$	25.00		2,000		0.67	$	25.00		2,000	$	25.00
			1,339,114		0.55	$	3.03		1,339,114	$	3.03

NOTE 9: COMMITMENTS AND CONTINGENCIES

Contracts and Commitments Executed Pursuant Employment Agreements

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 January 31, 2022, the Company was party to one operating lease for its corporate office and domestic warehouse operations in Stafford, Texas. The Company incurs rent expense of $8,383 per month for its corporate office and 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 SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 10: 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 complaint for violation of federal securities laws was filed which names our former Chief Executive Officer, our former Chief Financial Officer, and Verus, as defendants. This class action complaint was filed on behalf of all persons and entities who purchased or otherwise acquired securities of Verus between June 17, 2019 and October 8, 2020. On November 9, 2021 this complaint was dismissed.

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.

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.

28

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 11: 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 consolidated financial statements for the three and six months ended April 30, 2022 and 2021.

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

	April 30, 2022						October 31, 2021
	Discontinued		Continuing		Total		Discontinued		Continuing		Total
Assets
Current Assets
Cash	$	326	$	6,789	$	7,115	$	2,221	$	66,022	$	68,243
Accounts receivable, net		-		250,618		250,618		-		303,218		303,218
Inventory		-		145,129		145,129		-		145,129		145,129
Prepaid expenses		-		-		-		4,084		-		4,084
Other assets		-		16,144		16,144		99,669		16,144		115,813
Total Current Assets		326		418,680		419,006		105,974		530,513		636,487
Property and equipment, net		-		64,651		64,651		-		85,067		85,067
Operating lease right-of-use asset, net		-		152,830		152,830		-		198,637		198,637
Total Assets	$	326	$	636,161	$	636,487	$	105,974	$	814,217	$	920,191
Liabilities
Current Liabilities
Accounts payable and accrued expenses	$	162,752	$	783,844	$	946,596	$	227,338	$	638,315	$	865,653
Operating lease liability		-		95,115		95,115		-		92,771		92,771
Interest payable		-		541,602		541,602		-		368,709		368,709
Due to former officer		-		221,586		221,586		-		221,586		221,586
Notes payable		-		1,562,985		1,562,985		-		1,533,294		1,533,294
Convertible notes payable, net		-		489,909		489,909		-		530,358		530,358
Derivative liability		-		522,921		522,921		-		471,219		471,219
Total Current Liabilities		162,752		4,217,962		4,380,714		227,338		3,856,252		4,083,590
Operating lease liability, net of current portion		-		57,715		57,715		-		105,866		105,866
Total Liabilities	$	162,752	$	4,275,677	$	4,438,429	$	227,338	$	3,962,118	$	4,189,456

29

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 11: DISCONTINUED OPERATIONS (continued)

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

	Three Months Ended April 30,
	2022									2021
	Discontinued			Continuing			Total			Discontinued		Continuing			Total
Revenue	$	-		$	-		$	-		$	2,962,836	$	347,844		$	3,310,680
Cost of revenue		-			-			-			2,394,853		168,791			2,563,644
Gross Profit		-			-			-			567,984		179,052			747,036
Salaries and benefits		-			61,497			61,497			55,997		173,741			229,738
Selling and promotions expense		-			-			-			56,471		-			56,471
Legal and professional fees		-			25,000			25,000			6,807		-			6,807
General and administrative		5			135,143			135,148			378,366		203,145			581,511
Total Operating Expenses		5			221,640			221,645			497,642		376,886			874,528
Operating (loss) income		(5	)		(221,640	)		(221,645	)		70,342		(197,834	)		(127,492	)
Other Income (Expense):
Interest expense		-			(102,373	)		(102,373	)		-		(80,784	)		(80,784	)
(Loss) Gain on change in fair value of derivative liability		-			(112,451	)		(112,451	)		-		(11,235	)		(11,235	)
Default principal increase on convertible notes payable		-			(47,100	)		(47,100	)		-		-			-
Amortization of original issue discounts and deferred financing costs		-			(17,738	)		(17,738	)		-		(37,252	)		(37,252	)
Loss on extinguishment and settlement of debt		-			(4,494	)		(4,494	)		-		(34,823	)		(34,823	)
Initial derivative liability expense		-			-			-			-		(520,701	)		(520,701	)
Gain on settlement of liabilities		-			-			-			-		104,774			104,774
Total Other (Expense) Income		-			(284,156	)		(284,156	)		-		(580,021	)		(580,021	)
(Loss) income before income taxes		(5	)		(505,796	)		(505,801	)		70,342		(777,855	)		(707,513	)
Income taxes		-			-			-			-		-			-
Net (loss) income	$	(5	)	$	(505,796	)	$	(505,801	)	$	70,342	$	(777,855	)	$	(707,513	)

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VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 11: DISCONTINUED OPERATIONS (continued)

	Six Months Ended April 30,
	2022									2021
	Discontinued			Continuing			Total			Discontinued		Continuing			Total
Revenue	$	-		$	-		$	-		$	6,417,480	$	347,844		$	6,765,324
Cost of revenue		-			-			-			5,256,125		168,867			5,424,992
Gross Profit		-			-			-			1,161,355		178,977			1,340,332
Salaries and benefits		11,450			131,953			143,403			101,392		153,960			255,352
Selling and promotions expense		-			-			-			138,501		-			138,501
Legal and professional fees		-			75,000			75,000			30,476		-			30,476
General and administrative		29,590			236,683			266,273			797,057		358,481			1,155,538
Total Operating Expenses		41,039			443,637			484,676			1,067,425		512,442			1,579,867
Operating (loss) income		(41,039	)		(443,637	)		(484,676	)		93,930		(333,465	)		(239,535	)
Other Income (Expense):
Interest expense		-			(185,793	)		(185,793	)		-		(146,941	)		(146,941	)
(Loss) Gain on change in fair value of derivative liability		-			(55,399	)		(55,399	)		-		27,972			27,972
Default principal increase on convertible notes payable		-			(47,100	)		(47,100	)		-		-			-
Amortization of original issue discounts and deferred financing costs		-			(76,779	)		(76,779	)		-		(64,764	)		(64,764	)
Loss on extinguishment and settlement of debt		-			(115,086	)		(115,086	)		-		(34,941	)		(34,941	)
Initial derivative liability expense		-			(143,657	)		(143,657	)		-		(800,213	)		(800,213	)
Gain on settlement of liabilities		-			-			-			-		104,774			104,774
Total Other (Expense) Income		-			(623,814	)		(623,814	)		-		(914,113	)		(914,113	)
(Loss) income before income taxes		(41,039	)		(1,067,451	)		(1,108,490	)		93,930		(1,247,578	)		(1,153,648	)
Income taxes		-			-			-			-		-			-
Net (loss) income	$	(41,039	)	$	(1067,451	)	$	(1,108,490	)	$	93,930	$	(1,247,578	)	$	(1,153,648	)

NOTE 12: SUBSEQUENT EVENTS

Subsequent to April 30, 2022, an aggregate of 402,744,703 shares of the Company’s common stock have been issued for conversions under convertible promissory notes.

On May 10, 2022, 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 $38,750. The note matures on May 10, 2023, 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.

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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, 2021 found in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on April 15, 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

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, were focused on international consumer packaged goods, foodstuff distribution and wholesale trade. Our fine food products were sourced in the United States and exported internationally. We 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.

Through October 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 included the United Arab Emirates (“UAE”), Oman, Bahrain, Qatar, Kingdom of Saudi Arabia and Kuwait. During the three months ended October 31, 2021, we made a decision to cease operating as an international supplier of consumer food products, whereby we cancelled and settled all supplier and 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 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 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.

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Recent Developments

Litigation

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.

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.

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 April 15, 2022 are those that depend most heavily on these judgments and estimates. As of April 30, 2022, there had been no material changes to any of the critical accounting policies contained therein.

Results of Operations

Three months ended April 30, 2022 compared to three months ended April 30, 2021

Continuing Operations

Revenue

For the three months ended April 30, 2022, there was no revenue from continuing operations, compared to $347,844 of revenue for the three months ended April 30, 2021. The decrease in revenue is due to no nutraceutical product sales for the three months ended April 30, 2022.

Cost of Revenue

There was no cost of revenue for the three months ended April 30, 2022, compared to $168,792 for the three months ended April 30, 2021.

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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 $221,640 for the three months ended April 30, 2022, compared to $376,885 for the three months ended April 30, 2021, a decrease of $155,245, or 41%. The decrease is primarily due to a decrease of $112,243 in salaries and benefits due to reduced headcount, coupled with a decrease of $68,002 in general and administrative expenses due to expense rationalization initiatives. These decreases were partially offset by an increase in legal and professional fees of $25,000.

Other (Expense) Income

Our other income (expense), net decreased by $295,865, or 51%, for the three months ended April 30, 2022. The decrease is primarily the result of decreases in amortization of original issue discounts and deferred financing costs, loss on convertible note payable extinguishment / settlement, and initial derivative liability expense, partially offset by increases in interest expense, default principal increase on convertible notes payable, and loss on change in fair value of derivative liability, coupled with a decrease in gain on settlement of liabilities.

Net Loss from Continuing Operations

We generated a net loss from continuing operations of $505,796 for the three months ended April 30, 2022, compared to a net loss of $777,854 for the three months ended April 30, 2021, a decrease of $272,058. The decrease in net loss is primarily driven by the decreases in operating expenses and other expenses as disclosed above.

Discontinued Operations

For the three months ended April 30, 2022, there are no revenue, cost of revenue, or other income (expense) from discontinued operations. For the three months ended April 30, 2022, operating expenses were $5, generating a net loss of $5 from discontinued operations. For the three months ended April 30, 2021, we generated $2,962,836 of revenue, incurred $2,394,853 of cost of revenue, incurred $497,642 of operating expenses, and generated net income of $70,342 from discontinued operations.

Six months ended April 30, 2022 compared to six months ended April 30, 2021

Continuing Operations

Revenue

For the six months ended April 30, 2022, there was no revenue from continuing operations, compared to $347,844 of revenue for the six months ended April 30, 2021. The decrease in revenue is due to no nutraceutical product sales for the six months ended April 30, 2022.

Cost of Revenue

There was no cost of revenue for the six months ended April 30, 2022, compared to $168,867 for the six months ended April 30, 2021.

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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 $443,637 for the six months ended April 30, 2022, compared to $512,442 for the six months ended April 30, 2021, a decrease of $68,805, or 13%. The decrease is primarily due to a decrease of $22,007 in salaries and benefits due to reduced headcount, coupled with a decrease of $121,798 in general and administrative expenses due to expense rationalization initiatives. These decreases were partially offset by an increase in legal and professional fees of $75,000.

Other (Expense) Income

Our other income (expense), net decreased by $290,299, or 32%, for the six months ended April 30, 2022. The decrease is primarily the result of decreases in initial derivative liability expense, partially offset by increases in interest expense, amortization of original issue discounts and deferred financing costs, loss on convertible note payable extinguishment / settlement, default principal increase on convertible notes payable, loss on change in fair value of derivative liability, and gain on settlement of liabilities.

Net Loss from Continuing Operations

We generated a net loss from continuing operations of $1,067,451 for the six months ended April 30, 2022, compared to a net loss of $1,247,578 for the six months ended April 30, 2021, a decrease of $180,1278. The decrease in net loss is primarily driven by the decreases in operating expenses and other expenses as disclosed above.

Discontinued Operations

For the six months ended April 30, 2022, there are no revenue, cost of revenue, or other income (expense) from discontinued operations. For the six months ended April 30, 2022, operating expenses were $41,039, generating a net loss of $41,039 from discontinued operations. For the six months ended April 30, 2021, we generated $6,417,480 of revenue, incurred $5,256,125 of cost of revenue, incurred $1,067,425 of operating expenses, and generated net income of $93,930 from discontinued operations.

Liquidity and Capital Resources

At April 30, 2022, we had $6,789 of cash and a working capital deficit of $3,961,708 as compared to cash of $66,022 and a working capital deficit of $3,447,103 at October 31, 2021.

Net cash used in operating activities of continuing operations was $220,295 for the six months ended April 30, 2022, a decrease of $376,760 from $597,055 used during the six months ended April 30, 2021. The decrease in net cash used in operating activities of continuing operations was primarily due to an increase in accounts payable, coupled with a decrease in accounts receivable and net loss, partially offset by a net decrease in non-cash charges.

There was no net cash used in investing activities of continuing operations for the six months ended April 30, 2022 and 2021.

We have financed our operations since inception primarily through proceeds from equity and debt financings and revenue derived from operations. During the six months ended April 30, 2022, net cash provided by financing activities of continuing operations was $120,000 as compared to $673,725 during the six months ended April 30, 2021. The decrease in net cash provided by financing activities of continuing operations was primarily due to lower net proceeds from the issuance of convertible notes payable and notes payable, partially offset by lower payments applied to convertible promissory notes. 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.

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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, we temporarily closed our domestic and international offices and required all of 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 our financial condition and results of operations will depend on future developments, such as the ultimate duration and scope of the pandemic, its impact on our 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 this Annual Report on Form 10-K. Even after the pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred as a result of the pandemic. Therefore, we cannot reasonably estimate the impact at this time. We continue to actively monitor the pandemic and may determine to take further actions that alter our business operations as may be required by federal, state, or local authorities or that we determine are in the best interests of 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.

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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 April 30, 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 ineffective as of April 30, 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 six months ended April 30, 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 six months ended April 30, 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.

37

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.

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 complaint for violation of federal securities laws was filed which names our former Chief Executive Officer, our former Chief Financial Officer, and Verus, as defendants. This class action complaint was filed on behalf of all persons and entities who purchased or otherwise acquired securities of Verus between June 17, 2019 and October 8, 2020. On November 9, 2021 this complaint was dismissed.

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.

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.

38

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.

39

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)
4.1+	2015 Stock Incentive Plan (Incorporated by reference to Exhibit 4.1 of Form S-8 filed on August 7, 2015)
4.2+	2018 Equity Incentive Plan (Incorporated by reference to Exhibit 4.2 of Form 10-K filed on March 19, 2019)
4.3	Description of the Registrant’s Securities (Incorporated by reference to Exhibit 4.3 of Form 10-K filed on April 13, 2020)
4.4+	2020 Equity Incentive Plan (Incorporated by reference to Appendix B of Definitive Information Statement filed on November 6, 2020)

40

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)
10.35*	Form of Securities Purchase Agreement dated May 10, 2022
10.36*	Form of Note dated May 10, 2022

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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.

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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)

June 21, 2022

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EX-10.35

Exhibit 10.35

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of May 10, 2022, by and between VERUS INTERNATIONAL, INC., a Delaware corporation, with its address at 9841 Washingtonian Blvd., #390, Gaithersburg, MD 20878 (the “Company”), and [___], with its address at [___] (the “Buyer”).

WHEREAS:

A. The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”); and

B. Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement a convertible note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of $38,750.00 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), convertible into shares of common stock, $0.000001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note.

NOW THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as follows:

1. Purchase and Sale of Note.

a. Purchase of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase from the Company such principal amount of Note as is set forth immediately below the Buyer’s name on the signature pages hereto.

b. Form of Payment. On the Closing Date (as defined below), (i) the Buyer shall pay the purchase price for the Note to be issued and sold to it at the Closing (as defined below) (the “Purchase Price”) by wire transfer of immediately available funds to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Note in the principal amount equal to the Purchase Price as is set forth immediately below the Buyer’s name on the signature pages hereto, and (ii) the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase Price.

c. Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be 12:00 noon, Eastern Standard Time on or about May 11, 2022, or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.

2. Buyer’s Representations and Warranties. The Buyer represents and warrants to the Company that:

a. Investment Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act.

b. Accredited Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).

c. Reliance on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.

d. Information. The Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer.

e. Legends. The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the 1933 Act; or may be sold pursuant to an applicable exemption from registration, the Conversion Shares may bear a restrictive legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (2) THE ISSUER OF SUCH SECURITIES RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY ACCEPTABLE TO THE ISSUER’S TRANSFER AGENT, THAT SUCH SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.”

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The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to an exemption from registration without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

f. Authorization; Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms.

3. Representations and Warranties of the Company. The Company represents and warrants to the Buyer that:

a. Organization and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted. “Subsidiaries” means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership interest.

b. Authorization; Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance and reservation for issuance of the Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required, (iii) this Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true and official representative with authority to sign this Agreement and the other documents executed in connection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery by the Company of the Note, each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

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c. Capitalization. As of the date hereof, the authorized common stock of the Company consists of 7,500,000,000 authorized shares of Common Stock, $0.000001 par value per share, of which 87,519,179 shares are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable. .

d. Issuance of Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note in accordance with its respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.

e. No Conflicts. The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity. “Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith.

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f. SEC Documents; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “SEC Documents”). Upon written request the Company will deliver to the Buyer true and complete copies of the SEC Documents, except for such exhibits and incorporated documents. As of their respective dates or if amended, as of the dates of the amendments, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates or if amended, as of the dates of the amendments, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). The Company is subject to the reporting requirements of the 1934 Act.

g. Absence of Certain Changes. Since January 3,1 2022, except as set forth in the SEC Documents, there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status of the Company or any of its Subsidiaries.

h. Absence of Litigation. Except as set forth in the SEC Documents, there is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

i. No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the Buyer will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholder approval provisions applicable to the Company or its securities.

j. No Brokers. The Company has taken no action which would give rise to any claim by any person for brokerage commissions, transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby.

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k. No Investment Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment Company”). The Company is not controlled by an Investment Company.

l. Breach of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties set forth in this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an Event of default under Section 3.4 of the Note.

4. COVENANTS.

a. Best Efforts. The Company shall use its best efforts to satisfy timely each of the conditions described in Section 7 of this Agreement.

b. Form D; Blue Sky Laws. The Company agrees to timely make any filings required by federal and state laws as a result of the closing of the transactions contemplated by this Agreement.

c. Use of Proceeds. The Company shall use the proceeds for general working capital purposes.

d. Expenses. At the Closing, the Company’s obligation with respect to the transactions contemplated by this Agreement is to reimburse Buyer’ expenses shall be $3,750.00 for Buyer’s legal fees and due diligence fee.

e. Corporate Existence. So long as the Buyer beneficially owns any Note, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company’s assets, except with the prior written consent of the Buyer.

f. Breach of Covenants. If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an event of default under Section 3.4 of the Note.

g. Failure to Comply with the 1934 Act/Negative Designation Removal. So long as the Note is outstanding, the Company shall comply with the 1934 Act; the Company shall continue to be subject to the reporting requirements of the 1934 Act; and, if OTCMarkets.com designates the Company as “Caveat Emptor” or “Shell Risk” (collectively, “Negative Designation”), the Company shall immediately cause OTCMarkets.com to remove such designation. Any Negative Designation shall in any case be removed from OTCMarkets within five (5) days or such failure shall be an Event of Default pursuant to the Note.

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h. The Buyer is Not a “Dealer”. The Buyer and the Company hereby acknowledge and agree that the Buyer has not: (i) acted as an underwriter; (ii) acted as a market maker or specialist; (iii) acted as “de facto” market maker; or (iv) conducted any other professional market activities such as providing investment advice, extending credit and lending securities in connection; and thus that the Buyer is not a “Dealer” as such term is defined in the 1934 Act.

5. Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent to issue certificates, registered in the name of the Buyer or its nominee, for the Conversion Shares in such amounts as specified from time to time by the Buyer to the Company upon conversion of the Note in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”). In the event that the Company proposes to replace its transfer agent, the Company shall provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to this Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount as such term is defined in the Note) signed by the successor transfer agent to Company and the Company. Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to an exemption from registration, all such certificates shall bear the restrictive legend specified in Section 2(e) of this Agreement. The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Note; (ii) it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing)(electronically or in certificated form) any certificate for Conversion Shares to be issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; and (iii) it will not fail to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and/or this Agreement. If the Buyer provides the Company and the Company’s transfer, at the cost of the Buyer, with an opinion of counsel in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Act, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by the Buyer. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.

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6. Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Note to the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:

a. The Buyer shall have executed this Agreement and delivered the same to the Company.

b. The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.

c. The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date.

d. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

7. Conditions to The Buyer’s Obligation to Purchase. The obligation of the Buyer hereunder to purchase the Note at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:

a. The Company shall have executed this Agreement and delivered the same to the Buyer.

b. The Company shall have delivered to the Buyer the duly executed Note (in such denominations as the Buyer shall request) in accordance with Section 1(b) above.

c. The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to the Buyer, shall have been delivered to and acknowledged in writing by the Company’s Transfer Agent.

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d. The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Buyer shall have received a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Buyer including, but not limited to certificates with respect to the Board of Directors’ resolutions relating to the transactions contemplated hereby.

e. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

f. No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not limited to a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act reporting obligations.

g. The Conversion Shares shall have been authorized for quotation on an exchange or electronic quotation system and trading in the Common Stock on such exchange or electronic quotation system shall not have been suspended by the SEC or an exchange or electronic quotation system.

h. The Buyer shall have received an officer’s certificate described in Section 3(d) above, dated as of the Closing Date.

8. Governing Law; Miscellaneous.

a. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Virginia without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of Virginia or in the federal courts located in the state and city of Alexandria. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Company and Buyer waive trial by jury. The Buyer shall be entitled to recover from the Company its reasonable attorney’s fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement, the Note or any related document or agreement by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

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b. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.

c. Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.

d. Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

e. Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the majority in interest of the Buyer.

f. Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be as set forth in the heading of this Agreement with a copy by fax only to (which copy shall not constitute notice) to [___], Attn: [___], facsimile: [___], e-mail: [___]. Each party shall provide notice to the other party of any change in address.

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g. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, the Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction from the Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, without the consent of the Company.

h. Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The Company agrees to indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.

i. Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

j. No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

k. Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Agreement, that the Buyer shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.

VERUS INTERNATIONAL, INC.
By:
	Apurva Dhruv
	Chief Executive Officer
	[___]
By:
	[___]
	[___]

AGGREGATE SUBSCRIPTION AMOUNT:

Aggregate Principal Amount of Note:	$	38,750.00
Aggregate Purchase Price:	$	38,750.00

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EX-10.36

Exhibit 10.36

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.

Principal Amount: $38,750.00	Issue Date: May 10, 2022
Purchase Price: $38,750.00

CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED, VERUS INTERNATIONAL, INC., a Delaware corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of [___], or registered assigns (the “Holder”) the sum of $38,750.00 together with any interest as set forth herein, on May 10, 2023 (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of nine percent (9%)(the “Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.000001 par value per share (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).

This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.

The following terms shall apply to this Note:

ARTICLE I. CONVERSION RIGHTS

1.1 Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III), each in respect of the remaining outstanding amount of this Note to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non- assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”); provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.4 hereof.

1.2 Conversion Price. The Conversion Price shall be equal to the lesser of: (i) the Variable Conversion Price (as defined herein) and (ii) the Fixed Conversion Price (as defined herein); (subject, in each case, to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall mean 63% multiplied by the Market Price (as defined herein) (representing a discount rate of 37%). “Market Price” means the average of the lowest VWAP (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “VWAP” shall mean the daily dollar volume-weighted average sale price for the Common Stock on the Principal Market on any particular Trading Day during the period beginning at 9:30 a.m., New York City Time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York City Time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg through its “Volume at Price” functions or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York City Time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York City Time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the OTCBB or by the OTC Markets Group. If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the holder of the Note. All such determinations of VWAP shall to be appropriately and equitably adjusted in accordance with the provisions set forth herein for any stock dividend, stock split, stock combination or other similar transaction occurring during any period used to determine the Market Price (or other period utilizing VWAPs). “Trading Day” shall mean a day on which there is trading on the Principal Market. “Principal Market” shall mean the OTCBB or such other principal market, exchange or electronic quotation system on which the Common Stock is then listed for trading. “Fixed Conversion Price” shall be $0.00005.

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1.3 Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved six times the number of shares that would be issuable upon full conversion of the Note (assuming that the 4.99% limitation set forth in Section 1.1 is not in effect)(based on the respective Conversion Price of the Note (as defined in Section 1.2) in effect from time to time, initially 338,575,797 shares)(the “Reserved Amount”). The Reserved Amount shall be increased (or decreased with the written consent of the Holder) from time to time in accordance with the Borrower’s obligations hereunder. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Note. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Note.

If, at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.

1.4 Method of Conversion.

(a) Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, this Note may be converted by the Holder in whole or in part at any time from time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower (upon payment in full of any amounts owed hereunder).

If at any time the Conversion Price as determined hereunder for any conversion would be less than the par value of the Common Stock, then at the sole discretion of the Holder, the Conversion Price hereunder may equal such par value for such conversion and the Conversion Amount for such conversion may be increased to include Additional Principal, where “Additional Principal” means such additional amount to be added to the Conversion Amount to the extent necessary to cause the number of conversion shares issuable upon such conversion to equal the same number of conversion shares as would have been issued had the Conversion Price not been adjusted by the Holder to the par value price.

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(b) Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion.

(c) Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Purchase Agreement. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations hereunder, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion.

(d) Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions set forth herein, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.

(e) Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly, the parties acknowledge that the liquidated damages provision contained in this Section 1.4(e) are justified.

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1.5 Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration (such as Rule 144 or a successor rule) (“Rule 144”); or (iii) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement).

Any restrictive legend on certificates representing shares of Common Stock issuable upon conversion of this Note shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if the Borrower or its transfer agent shall have received an opinion of counsel from Holder’s counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that (i) a public sale or transfer of such Common Stock may be made without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected; or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the Act; or otherwise may be sold pursuant to an exemption from registration. In the event that the Company does not reasonably accept the opinion of counsel provided by the Holder with respect to the transfer of Securities pursuant to an exemption from registration (such as Rule 144), at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

1.6 Effect of Certain Events.

(a) Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article III). “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.

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(b) Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of the Note, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, ten (10) days prior written notice (but in any event at least five (5) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Note. The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

(c) Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.

1.7 Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time during the periods set forth on the table immediately following this paragraph (the “Prepayment Periods”), the Borrower shall have the right, exercisable on not more than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.7. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to Holder, or upon the direction of the Holder as specified by the Holder in a writing to the Borrower (which shall direction to be sent to Borrower by the Holder at least one (1) business day prior to the Optional Prepayment Date). If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash equal to the percentage (“Prepayment Percentage”) as set forth in the table immediately following this paragraph opposite the applicable Prepayment Period, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Section 1.4 hereof (the “Optional Prepayment Amount”). If the Borrower delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.7.

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Prepayment Period	Prepayment Percentage
1. The period beginning on the Issue Date and ending on the date which is ninety (90) days following the Issue Date.	122%
2. The period beginning on the date that is ninety-one (91) day from the Issue Date and ending one hundred twenty (120) days following the Issue Date.	132%
3. The period beginning on the date that is one hundred twenty-one (121) day from the Issue Date and ending one hundred eighty (180) days following the Issue Date.	139%

After the expiration of one hundred eighty (180) days following the Issue Date, the Borrower shall have no right of prepayment.

ARTICLE II. CERTAIN COVENANTS

2.1 Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.

ARTICLE III. EVENTS OF DEFAULT

If any of the following events of default (each, an “Event of Default”) shall occur:

3.1 Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.

3.2 Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty-eight (48) hours of a demand from the Holder.

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3.3 Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of twenty (20) days after written notice thereof to the Borrower from the Holder.

3.4 Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

3.5 Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.

3.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.

3.7 Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.

3.8 Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.

3.9 Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

3.10 Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

3.11 Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

8

3.12 Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.

3.13 Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. “Other Agreements” means, collectively, all agreements and instruments between, among or by: (1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided, however, the term “Other Agreements” shall not include the related or companion documents to this Note. Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder.

Upon the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation of any Event of Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due on this Note upon a Trading Market Prepayment Event pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or 3.14 exercisable through the delivery of written notice to the Borrower by such Holders (the “Default Notice”), and upon the occurrence of an Event of Default specified the remaining sections of Articles III (other than failure to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the greater of (i) 150% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment Date”) plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the “Default Sum”) or (ii) the “parity value” of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the “Conversion Date” for purposes of determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Closing Price for the Common Stock during the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment Date (the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity.

9

If the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.

ARTICLE IV. MISCELLANEOUS

4.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

4.2 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

If to the Borrower, to:
	VERUS INTERNATIONAL, INC.
	9841 Washingtonian Blvd., #390
	Gaithersburg, MD 20878
	Attn: Apurva Dhruv, Chief Executive Officer
	Fax:
	Email: andy@verusfoods.com
If to the Holder:
	[___]
	Email: [___]

10

4.3 Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.

4.4 Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or other lending arrangement; and may be assigned by the Holder without the consent of the Borrower.

4.5 Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.

4.6 Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Virginia without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the state courts of Virginia or in the federal courts located in the state and city of Alexandria, Virginia. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury. The Holder shall be entitled to recover from the Borrower its reasonable attorney’s fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Note, any agreement or any other document delivered in connection with this Note by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

4.7 Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.

4.8 Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required.

11

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this on May 10, 2022

VERUS INTERNATIONAL, INC.
By:
	Apurva Dhruv
	Chief Executive Officer

12

EXHIBIT A -- NOTICE OF CONVERSION

The undersigned hereby elects to convert $_______________ principal amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of VERUS INTERNATIONAL, INC., a Delaware corporation (the “Borrower”) according to the conditions of the convertible note of the Borrower dated as of May 10, 2022 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.

Box Checked as to applicable instructions:

[  ]	The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).
	Name of DTC Prime Broker:
	Account Number:
[  ]	The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:

Date of conversion:		____________
Applicable Conversion Price:	$	____________
Number of shares of common stock to be issued pursuant to conversion of the Notes:		____________
Amount of Principal Balance due remaining under the Note after this conversion:		____________
[___]

By:
Name:	[___]
Title:	[___]
Date:

13

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Apurva Dhruv, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Verus International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 21, 2022

/s/ Apurva Dhruv

Apurva Dhruv

Chief Executive Officer (Principal Executive, Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL 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

I, Apurva Dhruv, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Verus International, Inc. on Form 10-Q for the period ended April 30, 2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Verus International, Inc.

Date: June 21, 2022

By:	/s/ Apurva Dhruv
Name:	Apurva Dhruv
Title:	Chief Executive Officer (Principal Executive, Financial and Accounting Officer)

XML

Cover - shares	6 Months Ended
	Apr. 30, 2022	Jun. 14, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Apr. 30, 2022
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--10-31
Entity File Number	001-34106
Entity Registrant Name	VERUS INTERNATIONAL, INC.
Entity Central Index Key	0001430523
Entity Tax Identification Number	11-3820796
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	4300 Greenbriar Drive
Entity Address, City or Town	Stafford
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77477
City Area Code	(301)
Local Phone Number	329-2700
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		490,265,882

XML

Condensed Consolidated Balance Sheets - USD ($)	Apr. 30, 2022	Oct. 31, 2021
Current Assets
Cash	$ 6,789	$ 66,022
Accounts receivable, net	250,618	303,218
Inventory	145,129	145,129
Other assets	16,144	16,144
Assets of discontinued operations	326	105,974
Total Current Assets	419,006	636,487
Property and equipment, net	64,651	85,067
Operating lease right-of-use asset	152,830	198,637
Total Assets	636,487	920,191
Current Liabilities
Accounts payable and accrued expenses	783,844	638,315
Operating lease liability	95,115	92,771
Interest payable	541,602	368,709
Due to former officer	221,586	221,586
Notes payable	1,562,985	1,533,294
Convertible notes payable, net	489,909	530,358
Derivative liability	522,921	471,219
Liabilities of discontinued operations	162,752	227,338
Total Current Liabilities	4,380,714	4,083,590
Operating lease liability, net of current portion	57,715	105,866
Total Liabilities	4,438,429	4,189,456
Stockholders’ Deficit
Common stock, $0.000001 par value; 7,500,000,000 shares authorized and 87,521,179 and 23,844,566 shares issued at April 30, 2022 and October 31, 2021, respectively (as adjusted for a 1-for-500 reverse stock split as discussed in Note 1)	88	24
Additional paid-in-capital	47,455,109	46,889,360
Shares to be issued	15,000	5,000
Accumulated deficit	(51,272,169)	(50,163,679)
Total Stockholders’ Deficit	(3,801,942)	(3,269,265)
Total Liabilities and Stockholders’ Deficit	636,487	920,191
Series A Convertible Preferred Stock [Member]
Stockholders’ Deficit
Preferred stock value	29	29
Series B Convertible Preferred Stock [Member]
Stockholders’ Deficit
Preferred stock value
Series C Convertible Preferred Stock [Member]
Stockholders’ Deficit
Preferred stock value	$ 1	$ 1

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	6 Months Ended	12 Months Ended
	Apr. 30, 2022	Oct. 31, 2021
Common stock, par value	$ 0.000001	$ 0.000001
Common stock, shares authorized	7,500,000,000	7,500,000,000
Common stock, shares issued	87,521,179	23,844,566
Reverse stock split	1-for-500 reverse stock split	1-for-500 reverse stock split
Series A Convertible Preferred Stock [Member]
Convertible preferred stock, par value	$ 0.000001	$ 0.000001
Convertible preferred stock, shares authorized	120,000,000	120,000,000
Convertible preferred stock, shares issued	28,944,601	28,944,601
Convertible preferred stock, shares outstanding	28,944,601	28,944,601
Series B Convertible Preferred Stock [Member]
Convertible preferred stock, par value	$ 0.000001	$ 0.000001
Convertible preferred stock, shares authorized	1,000,000	1,000,000
Convertible preferred stock, shares issued	0	0
Convertible preferred stock, shares outstanding	0	0
Series C Convertible Preferred Stock [Member]
Convertible preferred stock, par value	$ 0.000001	$ 0.000001
Convertible preferred stock, shares authorized	1,000,000	1,000,000
Convertible preferred stock, shares issued	680,801	680,801
Convertible preferred stock, shares outstanding	680,801	680,801

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Apr. 30, 2022	Apr. 30, 2021	Apr. 30, 2022	Apr. 30, 2021
Income Statement [Abstract]
Revenue		$ 347,844		$ 347,844
Cost of revenue		168,792		168,867
Gross Profit		179,052		178,977
Operating Expenses:
Salaries and benefits	61,497	173,740	131,953	153,960
Legal and professional fees	25,000		75,000
General and administrative	135,143	203,145	236,684	358,482
Total Operating Expenses	221,640	376,885	443,637	512,442
Operating loss	(221,640)	(197,833)	(443,637)	(333,465)
Other (Expense) Income:
Interest expense	(102,373)	(80,784)	(185,793)	(146,941)
Amortization of original issue discounts and deferred financing costs	(17,738)	(37,252)	(76,779)	(64,764)
Loss on extinguishment and settlement of convertible notes payable	(4,494)	(34,823)	(115,086)	(34,941)
(Loss) gain on change in fair value of derivative liability	(112,451)	(11,235)	(55,399)	27,972
Default principal increase on convertible notes payable	(47,100)		(47,100)
Initial derivative liability expense		(520,701)	(143,657)	(800,213)
Gain on settlement of liabilities		104,774		104,774
Total Other (Expense) Income	(284,156)	(580,021)	(623,814)	(914,113)
Loss from continuing operations before income taxes	(505,796)	(777,854)	(1,067,451)	(1,247,578)
Income taxes
Loss from continuing operations	(505,796)	(777,854)	(1,067,451)	(1,247,578)
Discontinued operations (Note 11)
(Loss) gain from discontinued operations	(5)	70,341	(41,039)	93,930
Net loss	$ (505,801)	$ (707,513)	$ (1,108,490)	$ (1,153,648)
Loss per common share:
Loss from continuing operations per common share – basic and diluted	$ (0.01)	$ (0.06)	$ (0.02)	$ (0.10)
Loss from discontinued operations per common share – basic and diluted	(0.00)	0.00	(0.00)	0.00
Loss per common share – basic and diluted	$ (0.01)	$ (0.06)	$ (0.02)	$ (0.10)
Weighted average shares outstanding – basic and diluted	58,243,463	12,497,725	46,307,744	12,041,395

XML

Condensed Consolidated Statement of Changes in Stockholders' Deficit (Unaudited) - USD ($)	Series A Preferred Stock [Member] Preferred Stock [Member]	Series B Preferred Stock [Member] Preferred Stock [Member]	Series C Preferred Stock [Member] Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Common Stock To Be Issued [Member]	Retained Earnings [Member]	Total
Beginning balance at Oct. 31, 2020	$ 29		$ 1	$ 10	$ 45,562,840		$ (44,164,783)	$ 1,398,097
Beginning Balance, shares at Oct. 31, 2020	28,944,601		680,801	10,278,867
Conversion of convertible promissory notes to common stock				$ 2	464,652			464,654
Conversion of convertible promissory notes to common stock, shares				1,685,918
Net loss							(446,135)	(446,135)
Issuance of common stock for vendor services					18,964			18,964
Issuance of common stock for vendor services, shares				67,728
Shares of common stock to be issued for vendor services						13,100		13,100
Ending balance at Jan. 31, 2021	$ 29		$ 1	$ 12	46,046,456	13,100	(44,610,918)	1,448,680
Ending Balance, shares at Jan. 31, 2021	28,944,601		680,801	12,032,512
Beginning balance at Oct. 31, 2020	$ 29		$ 1	$ 10	45,562,840		(44,164,783)	1,398,097
Beginning Balance, shares at Oct. 31, 2020	28,944,601		680,801	10,278,867
Net loss								(1,153,648)
Ending balance at Apr. 30, 2021	$ 29		$ 1	$ 13	46,271,776	28,100	(45,318,431)	981,488
Ending Balance, shares at Apr. 30, 2021	28,944,601		680,801	12,744,768
Beginning balance at Jan. 31, 2021	$ 29		$ 1	$ 12	46,046,456	13,100	(44,610,918)	1,448,680
Beginning Balance, shares at Jan. 31, 2021	28,944,601		680,801	12,032,512
Conversion of convertible promissory notes to common stock					118,658			118,658
Conversion of convertible promissory notes to common stock, shares				312,256
Stock-based compensation for restricted shares under employment contract					18,663			18,663
Net loss							(707,513)	(707,513)
Shares of common stock to be issued for vendor services						15,000		15,000
Issuance of common stock for note payable issuance				$ 1	87,999			88,000
Issuance of common stock for note payable issuance, shares				400,000
Ending balance at Apr. 30, 2021	$ 29		$ 1	$ 13	46,271,776	28,100	(45,318,431)	981,488
Ending Balance, shares at Apr. 30, 2021	28,944,601		680,801	12,744,768
Beginning balance at Oct. 31, 2021	$ 29		$ 1	$ 24	46,889,360	5,000	(50,163,679)	(3,269,265)
Beginning Balance, shares at Oct. 31, 2021	28,944,601		680,801	23,844,566
Conversion of convertible promissory notes to common stock				$ 32	405,787			405,819
Conversion of convertible promissory notes to common stock, shares				32,181,998
Stock-based compensation for restricted shares under employment contract					22,395			22,395
Shares of common stock to be issued for board member services rendered						5,000		5,000
Net loss							(602,689)	(602,689)
Ending balance at Jan. 31, 2022	$ 29		$ 1	$ 56	47,317,542	10,000	(50,766,368)	(3,438,740)
Ending Balance, shares at Jan. 31, 2022	28,944,601		680,801	56,026,564
Beginning balance at Oct. 31, 2021	$ 29		$ 1	$ 24	46,889,360	5,000	(50,163,679)	(3,269,265)
Beginning Balance, shares at Oct. 31, 2021	28,944,601		680,801	23,844,566
Net loss								(1,108,490)
Ending balance at Apr. 30, 2022	$ 29		$ 1	$ 88	47,455,109	15,000	(51,272,169)	(3,801,942)
Ending Balance, shares at Apr. 30, 2022	28,944,601		680,801	87,521,179
Beginning balance at Jan. 31, 2022	$ 29		$ 1	$ 56	47,317,542	10,000	(50,766,368)	(3,438,740)
Beginning Balance, shares at Jan. 31, 2022	28,944,601		680,801	56,026,564
Conversion of convertible promissory notes to common stock				$ 32	124,129			124,161
Conversion of convertible promissory notes to common stock, shares				31,494,615
Stock-based compensation for restricted shares under employment contract					13,438			13,438
Shares of common stock to be issued for board member services rendered						5,000		5,000
Net loss							(505,801)	(505,801)
Ending balance at Apr. 30, 2022	$ 29		$ 1	$ 88	$ 47,455,109	$ 15,000	$ (51,272,169)	$ (3,801,942)
Ending Balance, shares at Apr. 30, 2022	28,944,601		680,801	87,521,179

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended				6 Months Ended		12 Months Ended
	Apr. 30, 2022	Jan. 31, 2022	Apr. 30, 2021	Jan. 31, 2021	Apr. 30, 2022	Apr. 30, 2021	Oct. 31, 2021
Cash flows from operating activities:
Net loss	$ (505,801)	$ (602,689)	$ (707,513)	$ (446,135)	$ (1,108,490)	$ (1,153,648)
Adjustments to reconcile net loss to net cash used in operating activities:
Initial derivative liability expense			520,701		143,657	800,213
Loss on extinguishment and settlement of debt	4,494		34,823		115,086	34,941
Amortization of original issue discounts and deferred financing costs	17,738		37,252		76,779	64,764
Loss (Gain) on change in fair value of derivative liability	112,451		11,235		55,399	(27,972)
Allowance for accounts receivable					52,600
Default principal increase on convertible notes payable	47,100				47,100
Stock-based compensation					45,833	(40,523)
Depreciation and amortization					20,416	20,935
Gain on settlement of liabilities			(104,774)			(104,774)
Changes in operating assets and liabilities:
Increase in accounts receivable						(347,844)
Decrease in inventory						17,400
Decrease in prepaid expenses						41,729
Increase in other assets						(805)
Increase in accounts payable and accrued expenses					331,325	107,915
Decrease in right to use and lease obligation, net						(9,386)
Net cash used in operating activities of continuing operations					(220,295)	(597,055)
Net cash provided by (used in) operating activities of discontinued operations					41,062	(72,120)
Net cash used in operating activities					(179,233)	(669,175)
Cash flows from financing activities:
Proceeds from issuance of convertible notes payable, net of commissions					120,000	496,400
Proceeds from issuance of notes payable						240,325
Payments applied to convertible promissory notes						(63,000)
Net cash provided by financing activities of continuing operations					120,000	673,725
Net (decrease) increase in cash					(59,233)	4,550
Cash at beginning of period		$ 66,022		$ 6,150	66,022	6,150	$ 6,150
Cash at end of period	$ 6,789		$ 10,700		6,789	10,700	$ 66,022
Supplemental disclosure:
Cash paid for interest						18,765
Common Stock Issued In Exchange For Conversion Of Convertible Promissory Note And Accrued Interest [Member]
Supplemental disclosure of non-cash investing and financing activities:
Value					$ 529,980	$ 583,310
Shares					63,676,613	1,998,174
Common Stock Issued For Note Payable Issuance [Member]
Supplemental disclosure of non-cash investing and financing activities:
Value						$ 88,000
Shares						400,000
Common Stock Issued For Vendor Services [Member]
Supplemental disclosure of non-cash investing and financing activities:
Value						$ 18,964
Shares						67,728
Common Stock To Be Issued For Vendor Services [Member]
Supplemental disclosure of non-cash investing and financing activities:
Value						$ 28,100
Shares						107,364

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NATURE OF BUSINESS AND BASIS OF PRESENTATION

6 Months Ended

Apr. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF BUSINESS AND BASIS OF PRESENTATION

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.

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, were focused on international consumer packaged goods, foodstuff distribution and wholesale trade. Our fine food products were sourced in the United States and exported internationally. We 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 INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

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

Through October 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. During the three months ended October 31, 2021, we made a decision to cease operating as an international supplier of consumer food products, whereby we cancelled and settled all supplier and 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 financial statements for the years ended October 31, 2021 and 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 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 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 (see Note 11).

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 six months ended April 30, 2022 and 2021 include the operations of BLF effective April 25, 2019, Verus MENA effective May 1, 2018, and Verus Foods, Inc. effective January 2017. The operating results and associated assets and liabilities from BLF and Verus MENA have been classified as discontinued operations in the unaudited consolidated financial statements for the six months ended April 30, 2022 and 2021 (see Note 11). 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, 2021, contained in the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2022. The results of operations for the six months ended April 30, 2022, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending October 31, 2022.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 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 this 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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Apr. 30, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Concentrations of Credit Risk

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.

Revenue Risk

The Company’s products accounts receivable, net and revenues are geographically concentrated with customers located domestically in the United States. In addition, significant concentrations exist with a limited number of customers. Approximately 36% of accounts receivable, net at April 30, 2022 were concentrated with two customers. There was no revenue generated during the six months ended April 30, 2022, therefore, no concentration of revenue risk existed for the six months ended April 30, 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 products from a limited number suppliers. Increases in the prices of the 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 products or our suppliers cease to be available to us, we could experience shortages in our products or be unable to meet our commitments to customers. Alternative sources of 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.

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 April 30, 2022 or October 31, 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 April 30, 2022 and October 31, 2021, the Company’s cash balances did not exceed the FDIC limit.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 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 April 30, 2022 and October 31, 2021, we determined $250,600 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.

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 measures its 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 SIX MONTHS ENDED APRIL 30, 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 April 30, 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 six months ended April 30, 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 SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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.

Derivative Instruments

The Company accounts 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.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 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:

	April 30, 2022		October 31, 2021
Period-end AED: USD exchange rate	$	0.27229	$	0.27230

Income statement:

	For the Three Months Ended				For the Six Months Ended
	April 30,				April 30,
	2022		2021		2022		2021
Average Period AED: USD exchange rate	$	0.27229	$	0.27228	$	0.27229	$	0.27228

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, 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, 2021 and 2020.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Earnings Per 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 and six months ended April 30, 2022 and 2021, as we incurred a net loss for those periods. At April 30, 2022, there were outstanding warrants to purchase approximately 1,340,000 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 2,900,000 shares of the Company’s common stock to be issued, and approximately 546,000,000 shares of the Company’s common stock issuable upon the conversion of convertible notes payable which may dilute future EPS. At April 30, 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 107,000 shares of the Company’s common stock to be issued, and approximately 5,400,000 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 nutraceutical products industry, and its prospects for success are tied indirectly to interest rates and the worldwide demand for the Company’s nutraceutical products.

Recently Adopted Accounting Standards

Effective November 1, 2021, the Company adopted ASU 2019-12, Income Taxes (Topic 740), which amended and simplified the accounting for income taxes by removing certain exceptions to the general principles of Topic 740, and also improved consistent application of and simplified U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company determined the adoption of ASU 2019-12 did not have a material impact on its unaudited condensed consolidated financial statements.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 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.

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GOING CONCERN

6 Months Ended

Apr. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GOING CONCERN

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 $1,067,451 and has used cash in operating activities of continuing operations of $220,295 for the six months ended April 30, 2022. At April 30, 2022, the Company had a working capital deficit of $3,961,708, and an accumulated deficit of $51,272,169. 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 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 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 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.

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LEASES

6 Months Ended

Apr. 30, 2022

Leases

LEASES

NOTE 4: LEASES

At April 30, 2022, the Company was party to one operating lease for its corporate office and domestic warehouse operations in Stafford, Texas. Effective February 8, 2021, the Company terminated the operating lease for its corporate office at Gaithersburg, Maryland and entered into a new, short-term lease, which the Company subsequently terminated. The Company also terminated its 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.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 4: LEASES (continued)

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.

Lease expense for operating leases, consisting of lease payments, is recognized on a straight-line basis over the lease term. Included in lease expense are any variable lease payments incurred in the period that were not included in the initial lease liability. Lease expense for finance leases consists of the amortization of the ROU asset, which is calculated on a straight-line basis over the shorter of the useful life of the asset or the lease term, and interest expense on the lease liability, which is calculated using the effective interest rate method. The Company had no finance leases at April 30, 2022.

For the six months ended April 30, 2022, the Company had operating lease costs of $50,298, which are included in general and administrative expenses in the unaudited consolidated statements of operations. For the six months ended April 30, 2022, the Company made operating lease cash payments of $16,900, which are included in cash flows from operating activities of continuing operations in the unaudited consolidated statements of cash flows. At April 30, 2022, the Company had operating lease costs of $42,327 accrued for future payment, which are included in accounts payable and accrued expenses in the unaudited consolidated balance sheets.

At April 30, 2022, the remaining lease term for our domestic warehouse operations is 19 months, and the discount rate is 5%. Future annual minimum cash payments required under this operating type lease at April 30, 2022 are as follows:

Future Minimum Lease Payments:
Remainder of fiscal year 2022	$	50,298
2023		100,596
2024		8,383
Total Minimum Lease Payments	$	159,277
Less: amount representing interest		(6,447	)
Present Value of Lease Liabilities	$	152,830
Less: current portion		(95,115	)
Long-Term Portion	$	57,715

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

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REVENUE DISAGGREGATION

6 Months Ended

Apr. 30, 2022

Revenue from Contract with Customer [Abstract]

REVENUE DISAGGREGATION

NOTE 5: REVENUE DISAGGREGATION

The Company did not generate any revenue from continuing operations for the six months ended April 30, 2022, and therefore did not have any revenue disaggregation. For the six months ended April 30, 2021, the Company’s largest two customers accounted for approximately 29% of its total revenue.

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DEBT

6 Months Ended

Apr. 30, 2022

Debt Disclosure [Abstract]

DEBT

NOTE 6: DEBT

Convertible Notes Payable

On April 7, 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 $88,500. The note matures on April 7, 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 various dates through November 1, 2021, the aggregate outstanding principal and accrued interest of $92,483 was converted into an aggregate of 4,607,401 shares of the Company’s common stock. The Company recorded an aggregate loss on extinguishment of debt of $64,602 as a result of the Company issuing shares of its common stock to fully satisfy this obligation.

On April 8, 2021, the Company issued and sold a convertible promissory note to an accredited investor in the principal amount of $150,000 (including a $20,000 original issuance discount). The note matured on April 8, 2022, bears interest at a rate of 8% 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 180^th 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 $282,500 and deferred financing costs of $5,200. The original issue discount and deferred financing costs were amortized over the term of the note. On various dates through April 25, 2022, the aggregate outstanding principal and accrued interest of $69,286 was converted into an aggregate of 13,475,052 shares of the Company’s common stock. The Company recorded an aggregate loss on extinguishment of debt of $26,605 as a result of the Company issuing shares of its common stock. At April 30, 2022, the aggregate balance of the convertible promissory note and accrued interest was $91,804. At April 30, 2022, the aggregate balance of the convertible promissory note, net of original issue discount and deferred financing costs was $91,804.

On April 15, 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 matured 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 be prepaid by the Company at any time prior to the 180^th 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 $238,200 and deferred financing costs of $11,700. The original issue discount and deferred financing costs were amortized over the term of the note. On various dates through April 29, 2022, the aggregate outstanding principal and accrued interest of $81,765 was converted into an aggregate of 22,203,195 shares of the Company’s common stock. The Company recorded an aggregate loss on extinguishment of debt of $26,529 as a result of the Company issuing shares of its common stock. At April 30, 2022, the aggregate balance of the convertible promissory note and accrued interest was $72,105. At April 30, 2022, the aggregate balance of the convertible promissory note, net of original issue discount and deferred financing costs was $72,105.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 6: DEBT (continued)

On June 29, 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 $85,750. 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. On various dates through April 29, 2022, the aggregate outstanding principal of $92,700, which includes $6,950 of $10,225 of additional principal due to the occurrence and subsequent cure of an Event of Default, was converted into an aggregate of 24,321,086 shares of the Company’s common stock. The Company recorded an aggregate loss on extinguishment of debt of $54,279 as a result of the Company issuing shares of its common stock. At April 30, 2022, the aggregate balance of the convertible promissory note and accrued interest was $8,567. The aggregate balance of the convertible promissory note, net of deferred financing costs at April 30, 2022 was $2,648.

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. At April 30, 2022, the aggregate balance of the convertible promissory note and accrued interest was $119,105, which includes $36,875 of additional principal due to the occurrence and subsequent cure of an Event of Default. The aggregate balance of the convertible promissory note, net of deferred financing costs at April 30, 2022 was $109,639.

On August 12, 2021, the Company issued and sold a convertible promissory note to an accredited investor 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 days prior to conversion and may be prepaid by the Company at any time prior to the 180^th 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 $226,620 and deferred financing costs of $8,800. The original issue discount and deferred financing costs are being amortized over the term of the note. At April 30, 2022, the aggregate balance of the convertible promissory note and accrued interest was $118,752. At April 30, 2022, the aggregate balance of the convertible promissory note, net of original issue discount and deferred financing costs was $104,695.

On November 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 $78,750. The note matures on November 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 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. 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 $143,657 and deferred financing costs of $3,750. At April 30, 2022, the aggregate balance of the convertible promissory note and accrued interest was $84,263. The aggregate balance of the convertible promissory note, net of deferred financing costs at April 30, 2022 was $76,818.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 6: DEBT (continued)

On December 10, 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 $48,750. The note matures on December 10, 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 April 30, 2022, the aggregate balance of the convertible promissory note and accrued interest was $51,742. The aggregate balance of the convertible promissory note, net of deferred financing costs at April 30, 2022 was $46,459.

At April 30, 2022 and October 31, 2021, there was $489,909 and $530,358 of convertible notes payable outstanding, net of discounts of $11,141 and $42,442, respectively.

During the six months ended April 30, 2022 and 2021, amortization of original issue discount and issuance costs amounted to $38,801 and $38,753, respectively.

During the six months ended April 30, 2022, an aggregate of $258,034 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. During the six months ended April 30, 2021, an aggregate of $320,131 of convertible notes, including accrued interest, were converted into shares of the Company’s common stock and there were payments of an aggregate of $91,457 toward the outstanding balances of convertible notes.

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 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 interest payment schedule, as amended by the Third Note Amendment, is satisfied by the Company, the Company will not be in default 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. 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 District Court for the District of 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 (see Note 10).

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 6: DEBT (continued)

At April 30, 2022, the aggregate balance of the Monaco Note and accrued interest was $851,298. Through April 30, 2022, the Company paid an aggregate of $116,152 of accrued interest in accordance with the provisions of the Fourth Note Amendment.

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 matured on July 1, 2020, incurred 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 provided 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 April 30, 2022, the Company has not paid any amount toward the outstanding balance of this promissory note. At April 30, 2022, the aggregate balance of the promissory note and accrued interest was $352,945. 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 the promissory note by December 31, 2021. 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).

On February 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 were amortized over the term of the note. As of April 30, 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. On April 25, 2022, the aggregate outstanding principal and accrued interest of $9,505 was converted into an aggregate of 2,795,644 shares of the Company’s common stock. The Company recorded an aggregate loss on extinguishment of debt of $1,677 as a result of the Company issuing shares of its common stock. At April 30, 2022, the aggregate balance of the promissory note and accrued interest was $397,657.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 6: DEBT (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 (8.452% at April 30, 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 April 30, 2022, the aggregate balance outstanding under the Credit Facility including accrued interest was $457,400. 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).

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DERIVATIVE LIABILITY

6 Months Ended

Apr. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE LIABILITY

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, 2021 to April 30, 2022.

	Conversion feature derivative liability
October 31, 2021	$	471,219
Initial fair value of derivative liability charged to other expense		143,657
Loss on change in fair value included in earnings		55,399
Derivative liability relieved by conversions of convertible promissory notes		(147,354	)
April 30, 2022	$	522,921

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 7: DERIVATIVE LIABILITY (continued)

Total derivative liability at April 30, 2022 and October 31, 2021 amounted to $522,921 and $471,219, respectively. The change in fair value included in earnings for the six months ended April 30, 2022 of $55,399 is due in part to the quoted market price of the Company’s common stock decreasing from $0.02 at October 31, 2021 to $0.003 at April 30, 2022, coupled with substantially reduced conversion prices due to the effect of “ratchet” provisions incorporated within the convertible notes payable.

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 April 30, 2022:

Expected volatility	243.5% - 281.6		%
Expected term	3.0 – 6.2 months
Risk-free interest rate		0.850% - 1.410	%
Stock price	$	0.003

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 April 30, 2022, the Company did not have any derivative instruments that were designated as hedges.

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STOCKHOLDERS’ DEFICIT

6 Months Ended

Apr. 30, 2022

Equity [Abstract]

STOCKHOLDERS’ DEFICIT

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 87,521,179 are issued at April 30, 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 April 30, 2022, (B) 1,000,000 shares have been designated as Series B Convertible Preferred Stock, of which no shares are outstanding at April 30, 2022 and (C) 1,000,000 have been designated as Series C Convertible Preferred Stock, of which 680,801 shares are outstanding at April 30, 2022.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 8: STOCKHOLDERS’ 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 six months ended April 30, 2022, the Company:

● issued 63,676,613 shares of its common stock valued at $529,980, as repayment for outstanding principal and interest on convertible promissory notes as requested by the note holders in accordance with contractual terms.

● recorded 2,724,138 shares of its common stock valued at $10,000, as shares to be issued to a board member for services rendered.

During the six months ended April 30, 2021, the Company:

● issued 1,998,174 shares of its common stock valued at $583,310, 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 107,364 shares of its common stock as shares to be issued to a vendor for services rendered.

Common Stock Warrants

At April 30, 2022, there were warrants to purchase up to 1,339,114 shares of the Company’s common stock outstanding which may dilute future EPS. There were no warrants earned or granted during the six months ended April 30, 2022. There were 1,280,000 warrants that were forfeited due to expiration during the six months ended April 30, 2022.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 8: STOCKHOLDERS’ DEFICIT (continued)

The following table sets forth common share purchase warrants outstanding at April 30, 2022:

				Weighted
				Average
				Exercise		Intrinsic
	Warrants			Price		Value
Outstanding, October 31, 2021		2,619,114		$	2.24	$	-
Warrants granted and issued		-		$	-	$	-
Warrants exercised		-		$	-	$	-
Warrants forfeited		(1,280,000	)	$	1.41	$	-
Outstanding, April 30, 2022		1,339,114		$	3.03	$	-
Common stock issuable upon exercise of warrants		1,339,114		$	3.03	$	-

								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 April 30,		Contractual		Exercise		At April 30,		Exercise
Prices		2022		Life (Years)		Price		2022		Price
$	3.00		1,337,114		0.53	$	3.00		1,337,114	$	3.00
$	25.00		2,000		0.67	$	25.00		2,000	$	25.00
			1,339,114		0.55	$	3.03		1,339,114	$	3.03

XML

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Apr. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 9: COMMITMENTS AND CONTINGENCIES

Contracts and Commitments Executed Pursuant Employment Agreements

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 January 31, 2022, the Company was party to one operating lease for its corporate office and domestic warehouse operations in Stafford, Texas. The Company incurs rent expense of $8,383 per month for its corporate office and domestic warehouse operations in Stafford, Texas. The term of this operating lease is through November 30, 2023.

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LITIGATION

6 Months Ended

Apr. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

LITIGATION

NOTE 10: 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 complaint for violation of federal securities laws was filed which names our former Chief Executive Officer, our former Chief Financial Officer, and Verus, as defendants. This class action complaint was filed on behalf of all persons and entities who purchased or otherwise acquired securities of Verus between June 17, 2019 and October 8, 2020. On November 9, 2021 this complaint was dismissed.

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.

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.

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DISCONTINUED OPERATIONS

6 Months Ended

Apr. 30, 2022

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

NOTE 11: 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 consolidated financial statements for the three and six months ended April 30, 2022 and 2021.

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

	April 30, 2022						October 31, 2021
	Discontinued		Continuing		Total		Discontinued		Continuing		Total
Assets
Current Assets
Cash	$	326	$	6,789	$	7,115	$	2,221	$	66,022	$	68,243
Accounts receivable, net		-		250,618		250,618		-		303,218		303,218
Inventory		-		145,129		145,129		-		145,129		145,129
Prepaid expenses		-		-		-		4,084		-		4,084
Other assets		-		16,144		16,144		99,669		16,144		115,813
Total Current Assets		326		418,680		419,006		105,974		530,513		636,487
Property and equipment, net		-		64,651		64,651		-		85,067		85,067
Operating lease right-of-use asset, net		-		152,830		152,830		-		198,637		198,637
Total Assets	$	326	$	636,161	$	636,487	$	105,974	$	814,217	$	920,191
Liabilities
Current Liabilities
Accounts payable and accrued expenses	$	162,752	$	783,844	$	946,596	$	227,338	$	638,315	$	865,653
Operating lease liability		-		95,115		95,115		-		92,771		92,771
Interest payable		-		541,602		541,602		-		368,709		368,709
Due to former officer		-		221,586		221,586		-		221,586		221,586
Notes payable		-		1,562,985		1,562,985		-		1,533,294		1,533,294
Convertible notes payable, net		-		489,909		489,909		-		530,358		530,358
Derivative liability		-		522,921		522,921		-		471,219		471,219
Total Current Liabilities		162,752		4,217,962		4,380,714		227,338		3,856,252		4,083,590
Operating lease liability, net of current portion		-		57,715		57,715		-		105,866		105,866
Total Liabilities	$	162,752	$	4,275,677	$	4,438,429	$	227,338	$	3,962,118	$	4,189,456

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 11: DISCONTINUED OPERATIONS (continued)

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

	Three Months Ended April 30,
	2022									2021
	Discontinued			Continuing			Total			Discontinued		Continuing			Total
Revenue	$	-		$	-		$	-		$	2,962,836	$	347,844		$	3,310,680
Cost of revenue		-			-			-			2,394,853		168,791			2,563,644
Gross Profit		-			-			-			567,984		179,052			747,036
Salaries and benefits		-			61,497			61,497			55,997		173,741			229,738
Selling and promotions expense		-			-			-			56,471		-			56,471
Legal and professional fees		-			25,000			25,000			6,807		-			6,807
General and administrative		5			135,143			135,148			378,366		203,145			581,511
Total Operating Expenses		5			221,640			221,645			497,642		376,886			874,528
Operating (loss) income		(5	)		(221,640	)		(221,645	)		70,342		(197,834	)		(127,492	)
Other Income (Expense):
Interest expense		-			(102,373	)		(102,373	)		-		(80,784	)		(80,784	)
(Loss) Gain on change in fair value of derivative liability		-			(112,451	)		(112,451	)		-		(11,235	)		(11,235	)
Default principal increase on convertible notes payable		-			(47,100	)		(47,100	)		-		-			-
Amortization of original issue discounts and deferred financing costs		-			(17,738	)		(17,738	)		-		(37,252	)		(37,252	)
Loss on extinguishment and settlement of debt		-			(4,494	)		(4,494	)		-		(34,823	)		(34,823	)
Initial derivative liability expense		-			-			-			-		(520,701	)		(520,701	)
Gain on settlement of liabilities		-			-			-			-		104,774			104,774
Total Other (Expense) Income		-			(284,156	)		(284,156	)		-		(580,021	)		(580,021	)
(Loss) income before income taxes		(5	)		(505,796	)		(505,801	)		70,342		(777,855	)		(707,513	)
Income taxes		-			-			-			-		-			-
Net (loss) income	$	(5	)	$	(505,796	)	$	(505,801	)	$	70,342	$	(777,855	)	$	(707,513	)

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 11: DISCONTINUED OPERATIONS (continued)

	Six Months Ended April 30,
	2022									2021
	Discontinued			Continuing			Total			Discontinued		Continuing			Total
Revenue	$	-		$	-		$	-		$	6,417,480	$	347,844		$	6,765,324
Cost of revenue		-			-			-			5,256,125		168,867			5,424,992
Gross Profit		-			-			-			1,161,355		178,977			1,340,332
Salaries and benefits		11,450			131,953			143,403			101,392		153,960			255,352
Selling and promotions expense		-			-			-			138,501		-			138,501
Legal and professional fees		-			75,000			75,000			30,476		-			30,476
General and administrative		29,590			236,683			266,273			797,057		358,481			1,155,538
Total Operating Expenses		41,039			443,637			484,676			1,067,425		512,442			1,579,867
Operating (loss) income		(41,039	)		(443,637	)		(484,676	)		93,930		(333,465	)		(239,535	)
Other Income (Expense):
Interest expense		-			(185,793	)		(185,793	)		-		(146,941	)		(146,941	)
(Loss) Gain on change in fair value of derivative liability		-			(55,399	)		(55,399	)		-		27,972			27,972
Default principal increase on convertible notes payable		-			(47,100	)		(47,100	)		-		-			-
Amortization of original issue discounts and deferred financing costs		-			(76,779	)		(76,779	)		-		(64,764	)		(64,764	)
Loss on extinguishment and settlement of debt		-			(115,086	)		(115,086	)		-		(34,941	)		(34,941	)
Initial derivative liability expense		-			(143,657	)		(143,657	)		-		(800,213	)		(800,213	)
Gain on settlement of liabilities		-			-			-			-		104,774			104,774
Total Other (Expense) Income		-			(623,814	)		(623,814	)		-		(914,113	)		(914,113	)
(Loss) income before income taxes		(41,039	)		(1,067,451	)		(1,108,490	)		93,930		(1,247,578	)		(1,153,648	)
Income taxes		-			-			-			-		-			-
Net (loss) income	$	(41,039	)	$	(1067,451	)	$	(1,108,490	)	$	93,930	$	(1,247,578	)	$	(1,153,648	)

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SUBSEQUENT EVENTS

6 Months Ended

Apr. 30, 2022

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 12: SUBSEQUENT EVENTS

Subsequent to April 30, 2022, an aggregate of 402,744,703 shares of the Company’s common stock have been issued for conversions under convertible promissory notes.

On May 10, 2022, 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 $38,750. The note matures on May 10, 2023, 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.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Apr. 30, 2022

Accounting Policies [Abstract]

Use of Estimates

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

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.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Concentrations of Credit Risk

Concentrations of Credit Risk

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.

Revenue Risk

The Company’s products accounts receivable, net and revenues are geographically concentrated with customers located domestically in the United States. In addition, significant concentrations exist with a limited number of customers. Approximately 36% of accounts receivable, net at April 30, 2022 were concentrated with two customers. There was no revenue generated during the six months ended April 30, 2022, therefore, no concentration of revenue risk existed for the six months ended April 30, 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 products from a limited number suppliers. Increases in the prices of the 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 products or our suppliers cease to be available to us, we could experience shortages in our products or be unable to meet our commitments to customers. Alternative sources of 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.

Cash and Cash Equivalents

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 April 30, 2022 or October 31, 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 April 30, 2022 and October 31, 2021, the Company’s cash balances did not exceed the FDIC limit.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounts Receivable

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 April 30, 2022 and October 31, 2021, we determined $250,600 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

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.

Property and Equipment

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

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

Fair Value of Financial Instruments

The Company measures its 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 SIX MONTHS ENDED APRIL 30, 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 April 30, 2022, the Company had a Level 3 financial instrument related to its derivative liability.

Revenue Recognition

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

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

Shipping and Handling Costs

Shipping and Handling Costs

Shipping and handling costs for freight expense on goods shipped are included in cost of sales. For the six months ended April 30, 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 SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Customer Deposits

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

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.

Derivative Instruments

Derivative Instruments

The Company accounts 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

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.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign Currency Translation

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:

	April 30, 2022		October 31, 2021
Period-end AED: USD exchange rate	$	0.27229	$	0.27230

Income statement:

	For the Three Months Ended				For the Six Months Ended
	April 30,				April 30,
	2022		2021		2022		2021
Average Period AED: USD exchange rate	$	0.27229	$	0.27228	$	0.27229	$	0.27228

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

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, 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, 2021 and 2020.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Earnings Per Share

Earnings Per 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 and six months ended April 30, 2022 and 2021, as we incurred a net loss for those periods. At April 30, 2022, there were outstanding warrants to purchase approximately 1,340,000 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 2,900,000 shares of the Company’s common stock to be issued, and approximately 546,000,000 shares of the Company’s common stock issuable upon the conversion of convertible notes payable which may dilute future EPS. At April 30, 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 107,000 shares of the Company’s common stock to be issued, and approximately 5,400,000 shares of the Company’s common stock issuable upon the conversion of convertible notes payable which may dilute future EPS.

Modification/Extinguishment of Debt

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

Concentrations, Risks and Uncertainties

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

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

Effective November 1, 2021, the Company adopted ASU 2019-12, Income Taxes (Topic 740), which amended and simplified the accounting for income taxes by removing certain exceptions to the general principles of Topic 740, and also improved consistent application of and simplified U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company determined the adoption of ASU 2019-12 did not have a material impact on its unaudited condensed consolidated financial statements.

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recently Issued Accounting Standards Not Yet Adopted

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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Apr. 30, 2022

Accounting Policies [Abstract]

SCHEDULE OF FOREIGN CURRENCY TRANSLATION OF EXCHANGE RATES

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:

	April 30, 2022		October 31, 2021
Period-end AED: USD exchange rate	$	0.27229	$	0.27230

Income statement:

	For the Three Months Ended				For the Six Months Ended
	April 30,				April 30,
	2022		2021		2022		2021
Average Period AED: USD exchange rate	$	0.27229	$	0.27228	$	0.27229	$	0.27228

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LEASES (Tables)

6 Months Ended

Apr. 30, 2022

Leases

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

Future Minimum Lease Payments:
Remainder of fiscal year 2022	$	50,298
2023		100,596
2024		8,383
Total Minimum Lease Payments	$	159,277
Less: amount representing interest		(6,447	)
Present Value of Lease Liabilities	$	152,830
Less: current portion		(95,115	)
Long-Term Portion	$	57,715

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DERIVATIVE LIABILITY (Tables)

6 Months Ended

Apr. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

SCHEDULE OF DERIVATIVE LIABILITY MEASURED AT FAIR VALUE RECURRING BASIS

The derivative liability is measured at fair value on a recurring basis using significant unobservable inputs (Level 3) from October 31, 2021 to April 30, 2022.

	Conversion feature derivative liability
October 31, 2021	$	471,219
Initial fair value of derivative liability charged to other expense		143,657
Loss on change in fair value included in earnings		55,399
Derivative liability relieved by conversions of convertible promissory notes		(147,354	)
April 30, 2022	$	522,921

SCHEDULE OF FAIR VALUE ASSUMPTIONS OF DERIVATIVE LIABILITY

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 April 30, 2022:

Expected volatility	243.5% - 281.6		%
Expected term	3.0 – 6.2 months
Risk-free interest rate		0.850% - 1.410	%
Stock price	$	0.003

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STOCKHOLDERS’ DEFICIT (Tables)

6 Months Ended

Apr. 30, 2022

Equity [Abstract]

SCHEDULE OF COMMON SHARE PURCHASE WARRANTS OUTSTANDING

The following table sets forth common share purchase warrants outstanding at April 30, 2022:

				Weighted
				Average
				Exercise		Intrinsic
	Warrants			Price		Value
Outstanding, October 31, 2021		2,619,114		$	2.24	$	-
Warrants granted and issued		-		$	-	$	-
Warrants exercised		-		$	-	$	-
Warrants forfeited		(1,280,000	)	$	1.41	$	-
Outstanding, April 30, 2022		1,339,114		$	3.03	$	-
Common stock issuable upon exercise of warrants		1,339,114		$	3.03	$	-

SCHEDULE OF SHARE-BASED COMPENSATION, ACTIVITY

								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 April 30,		Contractual		Exercise		At April 30,		Exercise
Prices		2022		Life (Years)		Price		2022		Price
$	3.00		1,337,114		0.53	$	3.00		1,337,114	$	3.00
$	25.00		2,000		0.67	$	25.00		2,000	$	25.00
			1,339,114		0.55	$	3.03		1,339,114	$	3.03

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DISCONTINUED OPERATIONS (Tables)

6 Months Ended

Apr. 30, 2022

Discontinued Operations and Disposal Groups [Abstract]

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

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

	April 30, 2022						October 31, 2021
	Discontinued		Continuing		Total		Discontinued		Continuing		Total
Assets
Current Assets
Cash	$	326	$	6,789	$	7,115	$	2,221	$	66,022	$	68,243
Accounts receivable, net		-		250,618		250,618		-		303,218		303,218
Inventory		-		145,129		145,129		-		145,129		145,129
Prepaid expenses		-		-		-		4,084		-		4,084
Other assets		-		16,144		16,144		99,669		16,144		115,813
Total Current Assets		326		418,680		419,006		105,974		530,513		636,487
Property and equipment, net		-		64,651		64,651		-		85,067		85,067
Operating lease right-of-use asset, net		-		152,830		152,830		-		198,637		198,637
Total Assets	$	326	$	636,161	$	636,487	$	105,974	$	814,217	$	920,191
Liabilities
Current Liabilities
Accounts payable and accrued expenses	$	162,752	$	783,844	$	946,596	$	227,338	$	638,315	$	865,653
Operating lease liability		-		95,115		95,115		-		92,771		92,771
Interest payable		-		541,602		541,602		-		368,709		368,709
Due to former officer		-		221,586		221,586		-		221,586		221,586
Notes payable		-		1,562,985		1,562,985		-		1,533,294		1,533,294
Convertible notes payable, net		-		489,909		489,909		-		530,358		530,358
Derivative liability		-		522,921		522,921		-		471,219		471,219
Total Current Liabilities		162,752		4,217,962		4,380,714		227,338		3,856,252		4,083,590
Operating lease liability, net of current portion		-		57,715		57,715		-		105,866		105,866
Total Liabilities	$	162,752	$	4,275,677	$	4,438,429	$	227,338	$	3,962,118	$	4,189,456

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 11: DISCONTINUED OPERATIONS (continued)

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

	Three Months Ended April 30,
	2022									2021
	Discontinued			Continuing			Total			Discontinued		Continuing			Total
Revenue	$	-		$	-		$	-		$	2,962,836	$	347,844		$	3,310,680
Cost of revenue		-			-			-			2,394,853		168,791			2,563,644
Gross Profit		-			-			-			567,984		179,052			747,036
Salaries and benefits		-			61,497			61,497			55,997		173,741			229,738
Selling and promotions expense		-			-			-			56,471		-			56,471
Legal and professional fees		-			25,000			25,000			6,807		-			6,807
General and administrative		5			135,143			135,148			378,366		203,145			581,511
Total Operating Expenses		5			221,640			221,645			497,642		376,886			874,528
Operating (loss) income		(5	)		(221,640	)		(221,645	)		70,342		(197,834	)		(127,492	)
Other Income (Expense):
Interest expense		-			(102,373	)		(102,373	)		-		(80,784	)		(80,784	)
(Loss) Gain on change in fair value of derivative liability		-			(112,451	)		(112,451	)		-		(11,235	)		(11,235	)
Default principal increase on convertible notes payable		-			(47,100	)		(47,100	)		-		-			-
Amortization of original issue discounts and deferred financing costs		-			(17,738	)		(17,738	)		-		(37,252	)		(37,252	)
Loss on extinguishment and settlement of debt		-			(4,494	)		(4,494	)		-		(34,823	)		(34,823	)
Initial derivative liability expense		-			-			-			-		(520,701	)		(520,701	)
Gain on settlement of liabilities		-			-			-			-		104,774			104,774
Total Other (Expense) Income		-			(284,156	)		(284,156	)		-		(580,021	)		(580,021	)
(Loss) income before income taxes		(5	)		(505,796	)		(505,801	)		70,342		(777,855	)		(707,513	)
Income taxes		-			-			-			-		-			-
Net (loss) income	$	(5	)	$	(505,796	)	$	(505,801	)	$	70,342	$	(777,855	)	$	(707,513	)

VERUS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED APRIL 30, 2022 AND 2021

(UNAUDITED)

NOTE 11: DISCONTINUED OPERATIONS (continued)

	Six Months Ended April 30,
	2022									2021
	Discontinued			Continuing			Total			Discontinued		Continuing			Total
Revenue	$	-		$	-		$	-		$	6,417,480	$	347,844		$	6,765,324
Cost of revenue		-			-			-			5,256,125		168,867			5,424,992
Gross Profit		-			-			-			1,161,355		178,977			1,340,332
Salaries and benefits		11,450			131,953			143,403			101,392		153,960			255,352
Selling and promotions expense		-			-			-			138,501		-			138,501
Legal and professional fees		-			75,000			75,000			30,476		-			30,476
General and administrative		29,590			236,683			266,273			797,057		358,481			1,155,538
Total Operating Expenses		41,039			443,637			484,676			1,067,425		512,442			1,579,867
Operating (loss) income		(41,039	)		(443,637	)		(484,676	)		93,930		(333,465	)		(239,535	)
Other Income (Expense):
Interest expense		-			(185,793	)		(185,793	)		-		(146,941	)		(146,941	)
(Loss) Gain on change in fair value of derivative liability		-			(55,399	)		(55,399	)		-		27,972			27,972
Default principal increase on convertible notes payable		-			(47,100	)		(47,100	)		-		-			-
Amortization of original issue discounts and deferred financing costs		-			(76,779	)		(76,779	)		-		(64,764	)		(64,764	)
Loss on extinguishment and settlement of debt		-			(115,086	)		(115,086	)		-		(34,941	)		(34,941	)
Initial derivative liability expense		-			(143,657	)		(143,657	)		-		(800,213	)		(800,213	)
Gain on settlement of liabilities		-			-			-			-		104,774			104,774
Total Other (Expense) Income		-			(623,814	)		(623,814	)		-		(914,113	)		(914,113	)
(Loss) income before income taxes		(41,039	)		(1,067,451	)		(1,108,490	)		93,930		(1,247,578	)		(1,153,648	)
Income taxes		-			-			-			-		-			-
Net (loss) income	$	(41,039	)	$	(1067,451	)	$	(1,108,490	)	$	93,930	$	(1,247,578	)	$	(1,153,648	)

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NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details Narrative) - shares				6 Months Ended	12 Months Ended
	Jan. 13, 2021	Oct. 06, 2020	May 02, 2018	Apr. 30, 2022	Oct. 31, 2021	Oct. 09, 2012
Stockholders' equity, reverse stock split	adjusted to reflect a 1-for-500 reverse stock split	Common Stock at a ratio of 1-for-500 (the “Reverse Stock Split”)		1-for-500 reverse stock split	1-for-500 reverse stock split
Owned percentage						80.00%
Verus Foods MENA Limited [Member]
Number of shares issued in exchange transaction			75
Percentage for common stock ownership in exchange			25.00%
Series A Convertible Preferred Stock [Member]
Preferred stock, designated shares				120,000,000	120,000,000	93,000,000

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SCHEDULE OF FOREIGN CURRENCY TRANSLATION OF EXCHANGE RATES (Details) - United Arab Emirates, Dirhams	3 Months Ended		6 Months Ended
	Apr. 30, 2022	Apr. 30, 2021	Apr. 30, 2022	Apr. 30, 2021	Oct. 31, 2021
Period-End [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Foreign currency exchange rate	0.27229		0.27229		0.27230
Average Period [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Foreign currency exchange rate, average period	0.27229	0.27228	0.27229	0.27228

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended
	Apr. 30, 2022	Apr. 30, 2021	Oct. 31, 2021
Product Information [Line Items]
Allowance for doubtful accounts	$ 52,600
Warrant [Member]
Product Information [Line Items]
Warrants outstanding	1,340,000	2,620,000
Conversion of Series A and Series C Convertible Preferred Stock [Member]
Product Information [Line Items]
Conversion of convertible notes payable	194,000	194,000
Convertible Notes Payable [Member]
Product Information [Line Items]
Conversion of convertible notes payable, Shares to be issued	2,900,000
Conversion of convertible notes payable	546,000,000	107,000
Convertible Notes Payable One [Member]
Product Information [Line Items]
Conversion of convertible notes payable		5,400,000
Minimum [Member]
Product Information [Line Items]
Estimated useful life of property and equipment	3 years
Maximum [Member]
Product Information [Line Items]
Estimated useful life of property and equipment	7 years
Accounts Receivable [Member]
Product Information [Line Items]
Allowance for doubtful accounts	$ 250,600		$ 198,000
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Two Customers [Member]
Product Information [Line Items]
Concentration risk percentage	36.00%

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GOING CONCERN (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Apr. 30, 2022	Apr. 30, 2021	Apr. 30, 2022	Apr. 30, 2021	Oct. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net loss from continuing operations	$ 505,796	$ 777,854	$ 1,067,451	$ 1,247,578
Net used cash in operating activities of continuing operations			220,295	$ 597,055
Working capital	3,961,708		3,961,708
Accumulated deficit	$ 51,272,169		$ 51,272,169		$ 50,163,679

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SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS (Details) - USD ($)	Apr. 30, 2022	Oct. 31, 2021
Leases
Remainder of fiscal year 2022	$ 50,298
2023	100,596
2024	8,383
Total Minimum Lease Payments	159,277
Less: amount representing interest	(6,447)
Present Value of Lease Liabilities	152,830
Less: current portion	(95,115)	$ (92,771)
Long-Term Portion	$ 57,715	$ 105,866

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LEASES (Details Narrative)	6 Months Ended
	Apr. 30, 2022 USD ($)
Leases
Operating lease cost	$ 50,298
Operating lease cash payments	16,900
Operating lease costs future payment	$ 42,327
Weighted average remaining lease term	19 months
Operating lease discount rate	5.00%

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REVENUE DISAGGREGATION (Details Narrative)	6 Months Ended
	Apr. 30, 2021
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Two Customers [Member]
Disaggregation of Revenue [Line Items]
Concentration risk percentage	29.00%

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DEBT (Details Narrative) - USD ($)																			3 Months Ended		6 Months Ended
	Apr. 29, 2022	Apr. 25, 2022	Apr. 25, 2022	Dec. 10, 2021	Nov. 05, 2021	Nov. 02, 2021	Aug. 12, 2021	Aug. 05, 2021	Jun. 29, 2021	Apr. 15, 2021	Apr. 08, 2021	Apr. 07, 2021	Feb. 08, 2021	Feb. 02, 2021	Mar. 31, 2020	Jul. 31, 2019	Feb. 08, 2019	Jan. 26, 2019	Apr. 30, 2022	Apr. 30, 2021	Apr. 30, 2022	Apr. 30, 2021	Oct. 31, 2021	Nov. 08, 2019
Short-Term Debt [Line Items]
Loss on extinguishment and settlement of debt																			$ (4,494)	$ (34,823)	$ (115,086)	$ (34,941)
Debt discount																			11,141		11,141		$ 42,442
Convertible notes payable outstanding																			489,909		489,909		$ 530,358
Amortization of discounts and debt issuance costs																					38,801	38,753
Payments of debt																						91,457
Proceeds from note payable																						240,325
Revolving Credit Agreement [Member]
Short-Term Debt [Line Items]
Credit facility																$ 500,000
LIBOR-based rate, description																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 (8.452% at April 30, 2022)
Credit facility, percentage																					8.452%
Credit facility, outstanding																			457,400		$ 457,400
Fourth Note Amendment [Member]
Short-Term Debt [Line Items]
Interest payable																			116,152		116,152
Donald P. Monaco Insurance Trust [Member]
Short-Term Debt [Line Items]
Note interest rate																								18.00%
Donald P. Monaco Insurance Trust [Member] | Fourth Note Amendment [Member]
Short-Term Debt [Line Items]
Interest payable																			851,298		851,298
Convertible Promissory Notes One [Member]
Short-Term Debt [Line Items]
Note interest rate											24.00%
Convertible Note [Member]
Short-Term Debt [Line Items]
Value of debt converted into share																					258,034	$ 320,131
Accredited Investor [Member]
Short-Term Debt [Line Items]
Note interest rate										24.00%
Accredited Investor [Member] | Convertible Promissory Note [Member]
Short-Term Debt [Line Items]
Convertible promissory note and accrued interest		$ 69,286	$ 69,286																91,804		91,804
Debt instrument conversion of shares		13,475,052
Loss on extinguishment and settlement of debt		$ 26,605
Original issue discount and deferred financing costs																			91,804		91,804
Accredited Investor [Member] | Convertible Promissory Notes One [Member]
Short-Term Debt [Line Items]
Debt principal amount											$ 150,000
Note interest rate, description											bears interest at a rate of 8% per annum (increasing to 24% per annum upon the occurrence of an Event of Default (as defined in the note))
Note interest rate											8.00%
Debt discount											$ 20,000
Debt instrument, maturity date											Apr. 08, 2022
Conversion of debenture convertion percentage											60.00%
Original issue discount and deferred financing costs											$ 5,200
Accredited Investor [Member] | Convetible Promissory Notes Two [Member]
Short-Term Debt [Line Items]
Debt principal amount										$ 143,000
Note interest rate, description										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))
Note interest rate										6.00%
Convertible promissory note and accrued interest	$ 81,765																		72,105		72,105
Debt instrument conversion of shares	22,203,195
Loss on extinguishment and settlement of debt	$ 26,529
Debt discount										$ 13,000
Debt instrument, maturity date										Apr. 15, 2022
Conversion of debenture convertion percentage										60.00%
Contract with Customer, Liability										$ 238,200	$ 282,500
Original issue discount and deferred financing costs										$ 11,700									72,105		72,105
Accredited Investor [Member] | Convertible Promissory Notes Five [Member]
Short-Term Debt [Line Items]
Debt principal amount							$ 110,000
Note interest rate, description							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))
Convertible promissory note and accrued interest																			118,752		118,752
Debt discount							$ 10,000
Debt instrument, maturity date							Aug. 12, 2022
Conversion of debenture convertion percentage							60.00%
Contract with Customer, Liability							$ 226,620
Original issue discount and deferred financing costs							$ 8,800												104,695		104,695
Accredited Investor [Member] | Convertible Promissory Notes Six [Member]
Short-Term Debt [Line Items]
Note interest rate							6.00%
Accredited Investor [Member] | Promissory Note [Member]
Short-Term Debt [Line Items]
Debt principal amount															$ 312,500
Note interest rate, description															incurred 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))
Debt discount															$ 62,500
Debt instrument, maturity date															Jul. 01, 2020
Proceeds from note payable															$ 150,000
Accredited Investor [Member] | Promissory Note [Member] | AGC Global Solutions Inc [Member]
Short-Term Debt [Line Items]
Convertible promissory note and accrued interest																			352,945		352,945
Accredited Investor [Member] | Convetible Promissory Notes One [Member]
Short-Term Debt [Line Items]
Note interest rate															4.00%
Accredited Investor [Member] | Promissory Notes [Member]
Short-Term Debt [Line Items]
Note interest rate															18.00%
Securities Purchase Agreement [Member] | Accredited Investor [Member] | Convertible Promissory Note [Member]
Short-Term Debt [Line Items]
Debt principal amount												$ 88,500
Note interest rate, description												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
Note interest rate												9.00%
Convertible promissory note and accrued interest						$ 92,483
Debt instrument conversion of shares						4,607,401
Loss on extinguishment and settlement of debt						$ 64,602
Securities Purchase Agreement [Member] | Accredited Investor [Member] | Convertible Promissory Notes Three [Member]
Short-Term Debt [Line Items]
Note interest rate, description									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
Note interest rate									9.00%
Convertible promissory note and accrued interest	$ 92,700																		8,567		8,567
Debt instrument conversion of shares	24,321,086
Loss on extinguishment and settlement of debt	$ 54,279
Debt instrument, maturity date									Jun. 29, 2022
Original issue discount and deferred financing costs																			2,648		2,648
Convertible promissory note and occurrence	6,950
Debt default	$ 10,225
Securities Purchase Agreement [Member] | Accredited Investor [Member] | Convetible Promissory Notes Four [Member]
Short-Term Debt [Line Items]
Debt principal amount								$ 73,750
Note interest rate, description								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))
Note interest rate								9.00%
Convertible promissory note and accrued interest																			119,105		119,105
Debt instrument, maturity date								Aug. 05, 2022
Original issue discount and deferred financing costs																			109,639		109,639
Convertible promissory note and occurrence																			36,875		36,875
Securities Purchase Agreement [Member] | Accredited Investor [Member] | Convertible Promissory Notes Six [Member]
Short-Term Debt [Line Items]
Debt principal amount					$ 78,750
Note interest rate, description					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))
Note interest rate					9.00%
Convertible promissory note and accrued interest																			84,263		84,263
Debt instrument, maturity date					Nov. 05, 2022
Contract with Customer, Liability					$ 143,657
Original issue discount and deferred financing costs					$ 3,750														76,818		76,818
Securities Purchase Agreement [Member] | Accredited Investor [Member] | Convertible Promissory Notes Seven [Member]
Short-Term Debt [Line Items]
Debt principal amount				$ 48,750
Note interest rate, description				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))
Note interest rate				9.00%
Convertible promissory note and accrued interest																			51,742		51,742
Debt instrument, maturity date				Dec. 10, 2022
Original issue discount and deferred financing costs																			46,459		46,459
Securities Purchase Agreement [Member] | Accredited Investor [Member] | Promissory Notes [Member]
Short-Term Debt [Line Items]
Debt principal amount														$ 303,000
Note interest rate														12.00%
Convertible promissory note and accrued interest		$ 9,505	$ 9,505																$ 397,657		397,657
Debt instrument conversion of shares			2,795,644
Loss on extinguishment and settlement of debt			$ 1,677
Debt discount														$ 39,500
Debt instrument, maturity date														Feb. 01, 2022
Proceeds from issuance of debt													$ 240,325
Payments for fees													23,175
Repayments of notes payable													$ 42,420
Amortization of debt discount premium																					$ 42,420
Securities Purchase Agreement [Member] | Accredited Investor [Member] | Promissory Notes [Member] | Common Stock [Member]
Short-Term Debt [Line Items]
Debt instrument conversion of shares													200,000
Securities Purchase Agreement [Member] | Accredited Investor [Member] | Promissory Notes [Member] | Common Stock One [Member]
Short-Term Debt [Line Items]
Debt instrument conversion of shares													200,000
Securities Purchase Agreement [Member] | Investor [Member] | Convertible Promissory Notes Three [Member]
Short-Term Debt [Line Items]
Debt principal amount									$ 85,750
Amendment #1 [Member] | Donald P. Monaco Insurance Trust [Member]
Short-Term Debt [Line Items]
Note interest rate																		12.00%
Note payable																		$ 530,000
Debt instrument, maturity date, description																		the maturity date of the Monaco Note was extended to January 26, 2020
Amendment Two [Member] | Donald P. Monaco Insurance Trust [Member]
Short-Term Debt [Line Items]
Debt instrument, maturity date, description																	the maturity date of the Monaco Note was extended to November 8, 2019
Agreement [Member] | Accredited Investor [Member] | Promissory Note [Member]
Short-Term Debt [Line Items]
Proceeds from note payable															$ 60,000

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SCHEDULE OF DERIVATIVE LIABILITY MEASURED AT FAIR VALUE RECURRING BASIS (Details) - Fair Value, Inputs, Level 3 [Member]	6 Months Ended
	Apr. 30, 2022 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Conversion feature derivative liability, Beginning	$ 471,219
Initial fair value of derivative liability charged to other expense	143,657
Loss on change in fair value included in earnings	55,399
Derivative liability relieved by conversions of convertible promissory notes	(147,354)
Conversion feature derivative liability, Ending	$ 522,921

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SCHEDULE OF FAIR VALUE ASSUMPTIONS OF DERIVATIVE LIABILITY (Details)	6 Months Ended
	Apr. 30, 2022
Measurement Input, Price Volatility [Member] | Minimum [Member]
Derivative [Line Items]
Derivative liability measurement input, percentage	243.5
Measurement Input, Price Volatility [Member] | Maximum [Member]
Derivative [Line Items]
Derivative liability measurement input, percentage	281.6
Measurement Input, Expected Term [Member] | Minimum [Member]
Derivative [Line Items]
Derivative liability measurement input, months	3 months
Measurement Input, Expected Term [Member] | Maximum [Member]
Derivative [Line Items]
Derivative liability measurement input, months	6 months 6 days
Measurement Input, Risk Free Interest Rate [Member] | Minimum [Member]
Derivative [Line Items]
Derivative liability measurement input, percentage	0.850
Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member]
Derivative [Line Items]
Derivative liability measurement input, percentage	1.410
Measurement Input, Share Price [Member]
Derivative [Line Items]
Derivative liability measurement input, percentage	0.003

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DERIVATIVE LIABILITY (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Apr. 30, 2022	Apr. 30, 2021	Apr. 30, 2022	Apr. 30, 2021	Oct. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative liability	$ 522,921		$ 522,921		$ 471,219
Fair value of derivative liability	$ 112,451	$ 11,235	$ 55,399	$ (27,972)
Conversion price, decrease			$ 0.003		$ 0.02

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SCHEDULE OF COMMON SHARE PURCHASE WARRANTS OUTSTANDING (Details)	6 Months Ended
	Apr. 30, 2022 $ / shares shares
Accumulated Other Comprehensive Income (Loss) [Line Items]
Warrants, Outstanding Ending Balance | shares	1,339,114
Common stock issuable upon exercise of warrants, Warrants | shares	1,339,114
Warrant [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Warrants, Outstanding Beginning Balance | shares	2,619,114
Weighted Average Exercise Price, Beginning Balance	$ 2.24
Intrinsic Value, Beginning Balance
Warrants, Warrants granted and issued | shares
Weighted Average Exercise Price, Warrants granted and issued
Intrinsic Value, Warrants granted and issued
Warrants, Warrants exercised | shares
Weighted Average Exercise Price, Warrants exercised
Intrinsic Value, Warrants exercised
Warrants, Warrants forfeited | shares	(1,280,000)
Weighted Average Exercise Price, Warrants forfeited	$ 1.41
Intrinsic Value, Warrants forfeited
Warrants, Outstanding Ending Balance | shares	1,339,114
Weighted Average Exercise Price, Ending Balance	$ 3.03
Intrinsic Value, Ending Balance
Common stock issuable upon exercise of warrants, Warrants | shares	1,339,114
Common stock issuable upon exercise of warrants, Weighted Average Exercise Price	$ 3.03
Common stock issuable upon exercise of warrants, Intrinsic Value

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SCHEDULE OF SHARE-BASED COMPENSATION, ACTIVITY (Details)	6 Months Ended
	Apr. 30, 2022 $ / shares shares
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Number of Warrants Outstanding shares | shares	1,339,114
Warrants Outstanding Weighted Average Remaining Contractual Life (Years)	6 months 18 days
Warrants Outstanding Weighted Average Exercise Price	$ 3.03
Number of Warrants Exercisable shares | shares	1,339,114
Warrants Exercisable Weighted Average Exercise Price	$ 3.03
Range One [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise Prices	$ 3.00
Number of Warrants Outstanding shares | shares	1,337,114
Warrants Outstanding Weighted Average Remaining Contractual Life (Years)	6 months 10 days
Warrants Outstanding Weighted Average Exercise Price	$ 3.00
Number of Warrants Exercisable shares | shares	1,337,114
Warrants Exercisable Weighted Average Exercise Price	$ 3.00
Range Two [Member]
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise Prices	$ 25.00
Number of Warrants Outstanding shares | shares	2,000
Warrants Outstanding Weighted Average Remaining Contractual Life (Years)	8 months 1 day
Warrants Outstanding Weighted Average Exercise Price	$ 25.00
Number of Warrants Exercisable shares | shares	2,000
Warrants Exercisable Weighted Average Exercise Price	$ 25.00

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STOCKHOLDERS’ DEFICIT (Details Narrative) - USD ($)				3 Months Ended				6 Months Ended		12 Months Ended
	Jan. 13, 2021	Nov. 18, 2020	Oct. 06, 2020	Apr. 30, 2022	Jan. 31, 2022	Apr. 30, 2021	Jan. 31, 2021	Apr. 30, 2022	Apr. 30, 2021	Oct. 31, 2021	Oct. 09, 2012
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares authorized				7,625,000,000				7,625,000,000
Common stock, shares authorized				7,500,000,000				7,500,000,000		7,500,000,000
Common stock, par value				$ 0.000001				$ 0.000001		$ 0.000001
Common stock, shares issued				87,521,179				87,521,179		23,844,566
Reverse stock split description	adjusted to reflect a 1-for-500 reverse stock split		Common Stock at a ratio of 1-for-500 (the “Reverse Stock Split”)					1-for-500 reverse stock split		1-for-500 reverse stock split
2020 Plan [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares authorized			750,000,000
Number of shares issued on post split			1,500,000
Amendment #1 [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Reverse stock split description		Common Stock at a ratio of 1-for-500 (the “Reverse Stock Split”)
Series A Convertible Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares authorized				120,000,000				120,000,000		120,000,000	93,000,000
Preferred stock, par value				$ 0.000001				$ 0.000001		$ 0.000001
Preferred stock, shares outstanding				28,944,601				28,944,601		28,944,601
Series B Convertible Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares authorized				1,000,000				1,000,000		1,000,000
Preferred stock, par value				$ 0.000001				$ 0.000001		$ 0.000001
Preferred stock, shares outstanding				0				0		0
Series C Convertible Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares authorized				1,000,000				1,000,000		1,000,000
Preferred stock, par value				$ 0.000001				$ 0.000001		$ 0.000001
Preferred stock, shares outstanding				680,801				680,801		680,801
Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares authorized				125,000,000				125,000,000
Preferred stock, par value				$ 0.000001				$ 0.000001
Common Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock shares issued upon conversion				31,494,615	32,181,998	312,256	1,685,918
Number of restricted shares issued									400,000
Common Stock [Member] | Maximum [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Warrants to purchase common stock				1,339,114				1,339,114
Common Stock [Member] | Note Holders [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock shares issued upon conversion								63,676,613	1,998,174
Stock issued during period value issues								$ 529,980	$ 583,310
Common Stock [Member] | Board Member [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stock issued for service rendered, shares								2,724,138
Stock issued for service rendered, value								$ 10,000
Common Stock [Member] | Vendor [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stock issued for service rendered, shares									67,728
Common Stock [Member] | Vendor One [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stock issued for service rendered, shares									107,364
Common Stock [Member] | Commitment Shares [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of restricted shares issued									200,000
Common Stock [Member] | Returnable Shares [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of restricted shares issued									200,000
Warrant [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Warrants, Warrants granted and issued
Weighted Average Exercise Price, Warrants forfeited								1,280,000

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COMMITMENTS AND CONTINGENCIES (Details Narrative)	3 Months Ended
	Jan. 31, 2022 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 8,383

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SCHEDULE OF DISCONTINUED OPERATIONS INCLUDED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS (Details) - USD ($)	3 Months Ended				6 Months Ended
	Apr. 30, 2022	Jan. 31, 2022	Apr. 30, 2021	Jan. 31, 2021	Apr. 30, 2022	Apr. 30, 2021	Oct. 31, 2021
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash	$ 6,789				$ 6,789		$ 66,022
Accounts receivable, net	250,618				250,618		303,218
Inventory	145,129				145,129		145,129
Other assets	16,144				16,144		16,144
Total Current Assets	419,006				419,006		636,487
Property and equipment, net	64,651				64,651		85,067
Operating lease right-of-use asset, net	152,830				152,830		198,637
Total Assets	636,487				636,487		920,191
Accounts payable and accrued expenses	783,844				783,844		638,315
Operating lease liability	95,115				95,115		92,771
Interest payable	541,602				541,602		368,709
Due to former officer	221,586				221,586		221,586
Notes payable	1,562,985				1,562,985		1,533,294
Convertible notes payable, net	489,909				489,909		530,358
Total Current Liabilities	4,380,714				4,380,714		4,083,590
Operating lease liability, net of current portion	57,715				57,715		105,866
Total Liabilities	4,438,429				4,438,429		4,189,456
Revenue			$ 347,844			$ 347,844
Cost of revenue			168,792			168,867
Gross Profit			179,052			178,977
Legal and professional fees	25,000				75,000
General and administrative	135,143		203,145		236,684	358,482
Total Operating Expenses	221,640		376,885		443,637	512,442
Operating (loss) income	(221,640)		(197,833)		(443,637)	(333,465)
Interest expense	(102,373)		(80,784)		(185,793)	(146,941)
(Loss) Gain on change in fair value of derivative liability	(112,451)		(11,235)		(55,399)	27,972
Default principal increase on convertible notes payable	(47,100)				(47,100)
Amortization of original issue discounts and deferred financing costs	(17,738)		(37,252)		(76,779)	(64,764)
Loss on extinguishment and settlement of debt	(4,494)		(34,823)		(115,086)	(34,941)
Initial derivative liability expense			(520,701)		(143,657)	(800,213)
Gain on settlement of liabilities			104,774			104,774
Total Other (Expense) Income	(284,156)		(580,021)		(623,814)	(914,113)
(Loss) income before income taxes	(505,796)		(777,854)		(1,067,451)	(1,247,578)
Income taxes
Net (loss) income	(505,801)	$ (602,689)	(707,513)	$ (446,135)	(1,108,490)	(1,153,648)
Continuing Operation [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash	6,789				6,789		66,022
Accounts receivable, net	250,618				250,618		303,218
Inventory	145,129				145,129		145,129
Prepaid expenses
Other assets	16,144				16,144		16,144
Total Current Assets	418,680				418,680		530,513
Property and equipment, net	64,651				64,651		85,067
Operating lease right-of-use asset, net	152,830				152,830		198,637
Total Assets	636,161				636,161		814,217
Accounts payable and accrued expenses	783,844				783,844		638,315
Operating lease liability	95,115				95,115		92,771
Interest payable	541,602				541,602		368,709
Due to former officer	221,586				221,586		221,586
Notes payable	1,562,985				1,562,985		1,533,294
Convertible notes payable, net	489,909				489,909		530,358
Derivative liability	522,921				522,921		471,219
Total Current Liabilities	4,217,962				4,217,962		3,856,252
Operating lease liability, net of current portion	57,715				57,715		105,866
Total Liabilities	4,275,677				4,275,677		3,962,118
Revenue			347,844			347,844
Cost of revenue			168,791			168,867
Gross Profit			179,052			178,977
Salaries and benefits	61,497		173,741		131,953	153,960
Selling and promotions expense
Legal and professional fees	25,000				75,000
General and administrative	135,143		203,145		236,683	358,481
Total Operating Expenses	221,640		376,886		443,637	512,442
Operating (loss) income	(221,640)		(197,834)		(443,637)	(333,465)
Interest expense	(102,373)		(80,784)		(185,793)	(146,941)
(Loss) Gain on change in fair value of derivative liability	(112,451)		(11,235)		(55,399)	27,972
Default principal increase on convertible notes payable	(47,100)				(47,100)
Amortization of original issue discounts and deferred financing costs	(17,738)		(37,252)		(76,779)	(64,764)
Loss on extinguishment and settlement of debt	(4,494)		(34,823)		(115,086)	(34,941)
Initial derivative liability expense			(520,701)		(143,657)	(800,213)
Gain on settlement of liabilities			104,774			104,774
Total Other (Expense) Income	(284,156)		(580,021)		(623,814)	(914,113)
(Loss) income before income taxes	(505,796)		(777,855)		(1,067,451)	(1,247,578)
Income taxes
Net (loss) income	(505,796)		(777,855)		(1,067,451)	(1,247,578)
Parent Company [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash	7,115				7,115		68,243
Accounts receivable, net	250,618				250,618		303,218
Inventory	145,129				145,129		145,129
Prepaid expenses							4,084
Other assets	16,144				16,144		115,813
Total Current Assets	419,006				419,006		636,487
Property and equipment, net	64,651				64,651		85,067
Operating lease right-of-use asset, net	152,830				152,830		198,637
Total Assets	636,487				636,487		920,191
Accounts payable and accrued expenses	946,596				946,596		865,653
Operating lease liability	95,115				95,115		92,771
Interest payable	541,602				541,602		368,709
Due to former officer	221,586				221,586		221,586
Notes payable	1,562,985				1,562,985		1,533,294
Convertible notes payable, net	489,909				489,909		530,358
Derivative liability	522,921				522,921		471,219
Total Current Liabilities	4,380,714				4,380,714		4,083,590
Operating lease liability, net of current portion	57,715				57,715		105,866
Total Liabilities	4,438,429				4,438,429		4,189,456
Revenue			3,310,680			6,765,324
Cost of revenue			2,563,644			5,424,992
Gross Profit			747,036			1,340,332
Salaries and benefits	61,497		229,738		143,403	255,352
Selling and promotions expense			56,471			138,501
Legal and professional fees	25,000		6,807		75,000	30,476
General and administrative	135,148		581,511		266,273	1,155,538
Total Operating Expenses	221,645		874,528		484,676	1,579,867
Operating (loss) income	(221,645)		(127,492)		(484,676)	(239,535)
Interest expense	(102,373)		(80,784)		(185,793)	(146,941)
(Loss) Gain on change in fair value of derivative liability	(112,451)		(11,235)		(55,399)	27,972
Default principal increase on convertible notes payable	(47,100)				(47,100)
Amortization of original issue discounts and deferred financing costs	(17,738)		(37,252)		(76,779)	(64,764)
Loss on extinguishment and settlement of debt	(4,494)		(34,823)		(115,086)	(34,941)
Initial derivative liability expense			(520,701)		(143,657)	(800,213)
Gain on settlement of liabilities			104,774			104,774
Total Other (Expense) Income	(284,156)		(580,021)		(623,814)	(914,113)
(Loss) income before income taxes	(505,801)		(707,513)		(1,108,490)	(1,153,648)
Income taxes
Net (loss) income	(505,801)		(707,513)		(1,108,490)	(1,153,648)
Discontinued Operations [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash	326				326		2,221
Accounts receivable, net
Inventory
Prepaid expenses							4,084
Other assets							99,669
Total Current Assets	326				326		105,974
Property and equipment, net
Operating lease right-of-use asset, net
Total Assets	326				326		105,974
Accounts payable and accrued expenses	162,752				162,752		227,338
Operating lease liability
Interest payable
Due to former officer
Notes payable
Convertible notes payable, net
Derivative liability
Total Current Liabilities	162,752				162,752		227,338
Operating lease liability, net of current portion
Total Liabilities	162,752				162,752		$ 227,338
Revenue			2,962,836			6,417,480
Cost of revenue			2,394,853			5,256,125
Gross Profit			567,984			1,161,355
Salaries and benefits			55,997		11,450	101,392
Selling and promotions expense			56,471			138,501
Legal and professional fees			6,807			30,476
General and administrative	5		378,366		29,590	797,057
Total Operating Expenses	5		497,642		41,039	1,067,425
Operating (loss) income	(5)		70,342		(41,039)	93,930
Interest expense
(Loss) Gain on change in fair value of derivative liability
Default principal increase on convertible notes payable
Amortization of original issue discounts and deferred financing costs
Loss on extinguishment and settlement of debt
Initial derivative liability expense
Gain on settlement of liabilities
Total Other (Expense) Income
(Loss) income before income taxes	(5)		70,342		(41,039)	93,930
Income taxes
Net (loss) income	$ (5)		$ 70,342		$ (41,039)	$ 93,930

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SUBSEQUENT EVENTS (Details Narrative) - USD ($)			2 Months Ended	3 Months Ended
	May 10, 2022	Apr. 07, 2021	Jun. 19, 2022	Apr. 30, 2022	Jan. 31, 2022	Apr. 30, 2021	Jan. 31, 2021	Apr. 15, 2021
Subsequent Event [Line Items]
Common stock issued for conversion				$ 124,161	$ 405,819	$ 118,658	$ 464,654
Accredited Investor [Member]
Subsequent Event [Line Items]
Debt interest rate								24.00%
Convertible Promissory Note [Member] | Securities Purchase Agreement [Member] | Accredited Investor [Member]
Subsequent Event [Line Items]
Debt principal amount		$ 88,500
Note interest rate, description		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
Debt interest rate		9.00%
Subsequent Event [Member] | Convertible Promissory Notes [Member]
Subsequent Event [Line Items]
Common stock issued for conversion			$ 402,744,703
Subsequent Event [Member] | Convertible Promissory Notes [Member] | Securities Purchase Agreement [Member] | Accredited Investor [Member]
Subsequent Event [Line Items]
Debt principal amount	$ 38,750
Subsequent Event [Member] | Convertible Promissory Note [Member] | Securities Purchase Agreement [Member] | Accredited Investor [Member]
Subsequent Event [Line Items]
Debt instrument, maturity date	May 10, 2023
Note interest rate, description	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)
Debt interest rate	9.00%