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"). Pursuant 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
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
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
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