GENERATION NEXT FRANCHISE BRANDS, INC. (OTCMKTS:VEND) Files An 8-K Bankruptcy or Receivership
Item 1.03 Bankruptcy or Receivership.
On December 15, 2019, Generation Next Franchise Brands, Inc. (the “Company”) filed a voluntary petition (the “Bankruptcy Petition”) for reorganization under Chapter 11 of the U.S. Bankruptcy Code (the “Bankruptcy Code”) in the U.S. Bankruptcy Court for the District of Nevada (the “Court”). The Company intends to use this court-supervised process to continue its review of a range of options to maximize value and address its financial obligations
The Company continues to operate its business and manage its properties as a “debtor-in-possession” under the jurisdiction of the Court and in accordance with the Bankruptcy Code and orders of the Court. The Company has filed a number of customary “first day” motions seeking Court authorization to support its operations during the court-supervised process. The Company expects to receive Court approval for these requests shortly.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The Company, Reis & Irvy’s, Inc., 19 Degrees, Inc., and Generation Next Vending Robots, Inc. (collectively, jointly and severally, the “Borrower”) entered into a Business Loan and Security Loan Agreement (“Loan Agreement”) with Genext Loan LLC (“Lender”). to the Loan Agreement, entered into November 15, 2019 and funded November 21, 2019, the Lender agreed to loan the Company an aggregate of $300,000.00 in principal amount. The loan bears interest at a rate of 20% per annum with principal and interest on the notes due on the earlier of February 13, 2020 or the date that the Company files for voluntary or involuntary bankruptcy. On December 3, 2019 Gennext Loan LLC funded an additional $25,000 making the aggregate principal balance $325,000.00. The filing of the voluntary petition for reorganization under chapter 11 of the Bankruptcy Code as described in Item 1.03 above could cause the acceleration of the due date for the loan, which as of the date consist of $330,416 in principal and accrued interest.
Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.
The filing of the Bankruptcy Petition constituted an event of default under the Company’s notes payable, resulting in the acceleration of the Company’s obligations under the notes. Thus, all outstanding debt under the notes (among other obligations) is in default and accelerated, but subject to stay under the Bankruptcy Code. The outstanding principal amount of such debt is currently $4.8 million.
The information set forth under Item 2.03 of this Report is incorporated into this Item 2.04 by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On November 26, 2019, Art Budman, resigned as a director of the Company. Mr. Budman’s resignation was not the result of any disagreement with the Company.
On December 9, 2019, Chris Maudlin resigned as a director of the Company. Mr. Maudlin’s resignation was not the result of any disagreement with the Company.
On December 10, 2019, Lavaille Lavette resigned as a director of the Company. Ms. Lavette’s resignation was not the result of any disagreement with the Company.
On December 13, 2019, Thomas McChesney resigned as a director of the Company. Mr. McChesney’s resignation was not the result of any disagreement with the Company.
About GENERATION NEXT FRANCHISE BRANDS, INC. (OTCMKTS:VEND)
Generation NEXT Franchise Brands, Inc. formerly Fresh Healthy Vending International, Inc., is a franchise development company and operator of Company-owned vending machines, micro markets and frozen yogurt robots. The Company provides a portfolio of fresh, organic and all-natural snacks and drinks. The micro market provides fresh full meal options, such as salads, sandwiches and wraps. The micro market is designed for implementation in corporate environments, hotel lobbies, auto dealerships and other retail environments. The Company is focused on setting up national distribution partners to carry the consumable products required for the frozen yogurt robots. It outsources non-core functions to third-party vendors. Its services include machine manufacturing, transport, location set-up, maintenance, inventory, food management and ordering, payment processing and cash management. As of June 30, 2016, the Company and its franchisees operated over 3,000 vending machines and micro markets.