April 28, 2021 - An investor in shares of Verus International, Inc. (OTC: VRUS) filed a lawsuit in the U.S. District Court for the District of Maryland over alleged violations of Federal Securities Laws by Verus International, Inc. in connection with certain allegedly false and misleading statements made between June 17, 2019 and October 8, 2020.
Gaithersburg, MD based Verus International, Inc. supplies consumer food products in the Middle East, North Africa, sub-Saharan Africa, the United Arab Emirates, Oman, Bahrain, Qatar, the Kingdom of Saudi Arabia, Kuwait, and the United States. Verus International, Inc. (OTC: VRUS) was purportedly the fourth fastest growing consumer products food company at the end of 2019, which included its acquisitions of the Big League Foods and a controlling interest in NutriBrands.
On April 3, 2020, Verus International, Inc. (OTC: VRUS) announced the acquisition of a controlling 51% interest in ZC Top Apparel Manufacturing, Inc., (“ZTAM”), a purported Philippines-based manufacturer of reusable N95 fabric masks and biohazard suits. Verus International, Inc. stated that it was “providing the funding and other resources” to begin fulfilling pending governmental orders on an expedited basis and that “protective gear could eclipse all of [Verus’s] existing revenue sources.”
However, in the weeks and months that followed, Verus International, Inc. (OTC: VRUS) revealed, that the rollout of sample masks and other PPE were encountering “logistical issues”, that Verus International, Inc. needed to secure a facility in Vietnam, seemingly unrelated to ZTAM, to produce sample masks months after the announcement, and that , ZTAM Chief Executive Officer (“CEO”) Ronald Ian Bilang (“Bilang”) cryptically tweeted about a potential escalation of regulatory investigations, involvement of the Office of International Affairs (“OIA”) and continued deafening silence from Verus and defendants.
On October 8, 2020, Verus International, Inc. announced that the Company issued a “Repayment and Notice of Rescission of Transaction” to ZTAM, as a result of “failure of contractual performance and breach of contract.” According to the press release, ZTAM did not register Verus’s “controlling interest of 51%” as required under the term sheet dated April 3, 2020.
According to the complaint the plaintiff alleges on behalf of purchasers of Verus International, Inc. (OTC: VRUS) common shares between June 17, 2019 and October 8, 2020, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between June 17, 2019 and October 8, 2020, the defendants made false and/or misleading statements and/or failed to disclose that Verus lacked the requisite resources, infrastructure and/or expertise to exploit its Big League Foods brand and its Major League Baseball (MLB) license, that the Company issues in production ramp-up were not fully resolved to enable the Company to fulfill customer orders, that as a result, the Company’s prospects and outlook were not as represented, that the Company’s internal controls for financial reporting and accounting were not sufficient with specific respect to stock-based compensation and classification of equity instruments, that as a result, the Company’s financial results, outlook and prospects were materially worse than represented, and that as a result of the foregoing, the Company’s public statements were materially false and misleading at all relevant times.