Alset AI closes $500,000 first tranche of loan

Executive Summary

• Alset AI Ventures Inc. closed the first tranche of a loan transaction with insider lender Randy Gilling, receiving $500,000 in principal and issuing non-convertible debentures and warrants.
• The company amended a revenue agreement with Silver Birch Growth Inc. (SBG), agreeing to pay a $500,000 cash fee for services related to the launch of its cloud compute business, Lyken.AI.
• The transaction is structured as a related party transaction under MI 61-101, with additional tranches of up to $2.5 million expected to close in the coming weeks under similar terms.

Key Details

• Transaction Structure: Closed first tranche of a loan facility up to $3 million total.
• Principal Amount: $500,000 advanced by lender Randy Gilling (insider holding >10% of shares).
• Debenture Terms:
  • Issued 500 non-convertible debentures at $1,000 each.
  • Interest rate: 6.0% per annum, payable in cash or common shares (at company discretion, subject to TSX-V approval).
  • Maturity: Three years from the effective date (Feb. 24, 2026).
  • Trustee: Endeavor Trust Corp.
  • Hold Period: Four months plus one day.
• Warrant Terms (Tranche 1):
  • Issued 3,333,333 non-transferrable warrants.
  • Exercise Price: 15 cents per share.
  • Expiration: Three years from the effective date.
  • Hold Period: Four months plus one day.
• Future Tranches Schedule:
  • Tranche 2: $500,000 within 2-7 days of Tranche 1.
  • Tranche 3: $500,000 within 30 days of Tranche 2.
  • Tranche 4: $500,000 within 60 days of Tranche 3.
  • Tranche 5: $1,000,000 at management's discretion.
• Warrant Terms for Additional Tranches:
  • Tranches 2 & 3: 3,333,333 warrants each, exercisable at 15 cents for three years.
  • Tranches 4 & 5: Number of warrants determined by lender/company, not exceeding principal amount divided by last closing share price. Exercise price is the greater of 15 cents or market price.
• Repayment Condition: If principal is repaid within one year, the maturity date for proportionate warrants reduces to the later of one year from issuance or 30 days from repayment.
• Board Observer Agreement: Lender granted right to observe board meetings until the entire principal and accrued interest are repaid.
• Related Party Amendment: Amended revenue agreement with Silver Birch Growth Inc. (SBG).
  • SBG is a related party via Mr. Gilling’s >50% ownership.
  • Company agreed to pay $500,000 cash fee to SBG for services regarding the launch of Lyken.AI.
• Regulatory Status: Both the loan and the amendment are treated as related party transactions under MI 61-101. The company relied on exemptions from formal valuation and minority approval as the fair market value does not exceed 25% of market capitalization. No material change report was filed 21 days prior, deemed reasonable as details were not settled.
• Use of Proceeds: Working capital and general corporate purposes to support the growth of Lyken.AI and the AI infrastructure strategy.

Notable Quotes

• "The closing of the first tranche of our strategic loan facility reinforces our financial position as we advance our AI investment and infrastructure strategy. With additional capital available through additional tranches on company-friendly terms, we are well positioned to pursue opportunities across the artificial intelligence value chain, sourcing and developing innovative companies that drive diversified exposure for our shareholders." — Adam Ingrao, Chief Executive Officer