Item 1.01 Entry into a Material
Definitive Agreement
Revolving
Credit Line. Value Exchange International, Inc., a Nevada corporation, (“Company”) and American Pacific Bancorp, Inc.,
a Texas corporation located in Houston, Texas, (“APB”) signed a Loan Agreement, Security Agreement and Revolving Credit Promissory
Note (“Note”), each dated July 26, 2022 but fully executed and closed as of July 27, 2022, whereby APB will provide a $1
million secured revolving credit line to the Company (“Credit Line”). Loan Agreement, Security Agreement and Note may be
referred to collectively as “Credit Line Documents”. The Credit Line Documents provide for a fixed 8% annual interest on
sums advanced, two year maturity date for unpaid sums loaned and unpaid interest accrued thereon, and calendar quarterly payments of
accrued interest on any sums advanced under Credit Line (interest payments commencing on September 30, 2022). Principal of the Credit
Line may be used for Company’s working capital needs (including any expansion of Company’s operations) as well as payment
of origination fee for Credit Line, costs of closing the Credit Line and costs of preparation of Credit Line Documents, including legal
fees. The Credit Line is secured by a first, senior lien on all of the Company’s assets and accounts receivable.
No Pre-Payment
Penalty. There is no penalty for pre-payment of sums owed under the Credit Line Documents. In the event of a default under the Credit
Line Documents, the default interest rate is the lesser of the highest interest rate allowed under laws of State of Texas or fixed rate
of 18% annual interest.
Demand
Right for Unpaid Principal and Interest Accrued Thereon. The amounts due under the Credit Line Documents may be called immediately
by APB upon events of default (subject to any cure period) or unilaterally by APB without an event of default or conditions.
Negative
Covenants. For the two-year term of the Credit Line Documents, and except for: (1) the increase in number of shares of authorized
capital stock and shares of common stock approved by Company shareholders at July 18, 2022 Annual Meeting of Shareholders; (2) execution
of leases or similar agreements to open and operate new facilities, or to continue to operate facilities, used to conduct Company’s
business, whether located in existing markets or new markets for the Company’s business; (3) and transactions in the normal course
of business by the Company that are required to meet obligations to its customers or perform Company’s obligations under usual
and customary service and product agreements or obligations; APB must approve in advance: the Company purchasing, acquiring or redeeming
its equity securities (except for acquisitions and redemption under the Company’s 2022 Equity Incentive Plan”); any reorganization
or recapitalization involving the Company, including reclassification of Company’s equity securities; any material change in Company’s
capital structure or general business objects or purpose; or change of Company’s name; or the sale, lease, transfer, relocation
or disposal of all, substantially all, or any material part of Company’s operating assets necessary to conduct of its business
in the normal course of business, excluding inventory and products for sale or license or lease to customers, and (whether in a single
transaction or in a series of transactions); or purchase or acquisition of another business or operation.
Governing
Law. The Loan Agreement, Security Agreement and Note are each governed by laws of State of Texas and any dispute concerning the Credit
Line Documents is to be resolved in federal or state courts in or for Harris County, Texas.
The above
summary of the Loan Agreement, Security Agreement and Note is qualified in its entirety by reference to the Loan Agreement, which is
attached to this Current Report on Form 8-K as Exhibit 10.1, the Security Agreement, which is attached to this Current Report on Form
8-K as Exhibit 10.2, and the Note, which is attached to this Current Report on Form 8-K as Exhibit 10.3.
Affiliation
of APB. APB is affiliated with Chan Heng Fai, a director and principal shareholder of the Company, by virtue of Mr. Chan’s
equity ownership of parent company of APB and his service as the Executive Chairman of the parent company of APB. Company Directors Chan
Heng Fai and Lum Kan Fai recused themselves from discussion and approval of the Credit Line Documents and Term Sheet thereto.
Forward
Looking Statements. The summary of the Credit Line Documents may contain “forward looking statements” under the Private
Securities Litigation Reform Act of 1995. Specifically, the permitted use of sums loaned under the Credit Line Documents for funding
possible expansion of Company business operations is a not a representation or guarantee by the Company of any future expansion of Company
operations or an indication of or representation as to future business or financial performance or activities of the Company. As previously
disclosed by the Company, any expansion of Company’s operations within existing markets or new geographical markets would require
third party funding or a significant increase in operational net income. Whether the Company will attempt to expand its operations in
an existing markets or new geographical markets will depend on a number of factors above and beyond availability of funding. Global and
regional economic conditions, business and financial demands and requirements of existing customer accounts, unexpected operational costs
or liabilities, impact of inflation on expansion costs, regulatory and legal barriers to expansion, availability of necessary skilled
workers, changes in competition in existing and prospective markets for Company products and services and other risk factors unknown
or not foreseen by the Company will impact on any decision to attempt any expansion of operations. Actual results of operations and business
development activities may vary significantly from any results implied by forward looking statements. There are many factors affecting
a decision to expand operations and those factors are subject to change or may be unforeseen or unforeseeable by the Company. Those factors
include meeting the demands of existing business operations in established markets and the response of competition to any effort to expand
operations.