Alset AI adds disclosure about $3M loan from Gilling

Executive Summary

• Alset AI Ventures Inc. has provided an update on its previously announced loan transaction with insider Randy Gilling, revising the structure due to tax considerations while maintaining the total principal amount of up to $3 million.
• The transaction involves the issuance of non-convertible debentures bearing 6% annual interest, payable quarterly in cash or common shares, with a maturity of three years from issuance.
• The financing is structured in multiple tranches, with specific warrant terms attached to each tranche to compensate the lender, subject to TSX Venture Exchange approval.

Key Details

• Transaction Structure: Up to $3 million in non-convertible debentures purchased by lender Randy Gilling (an insider holding >10% of shares) at $1,000 per debenture.
• Interest Terms: 6.0% per annum, payable quarterly in arrears (March 31, June 30, Sept 30, Dec 31). Interest may be paid in cash or common shares at the company's discretion, subject to TSX-V approval.
• Maturity: Three years following the applicable issuance date.
• Tranche Schedule:
  • Tranche 1: $500,000 shortly after TSX-V approval.
  • 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 (Tranches 1-3):
  • Issuance: 3,333,333 warrants per tranche.
  • Exercise Price: 15 cents per share.
  • Expiration: Three years from the effective date of the transaction.
• Warrant Terms (Tranches 4-5):
  • Quantity: Determined by lender and company at issuance, capped at the principal amount divided by the last closing share price.
  • Exercise Price: Greater of 15 cents or the market price at issuance.
  • Expiration: Same as debenture maturity.
• Early Repayment Clause: If principal is repaid within one year, the maturity date for proportionate warrants is reduced to the later of one year from issuance or 30 days after repayment.
• Ownership Cap: Exercise of warrants is restricted if it causes the lender to acquire >19.99% of common shares without prior approval of disinterested shareholders and TSX-V.
• Board Observer Rights: Lender receives board observer rights via an agreement dated March 2, 2026, terminating when the principal and all accrued interest are fully repaid.
• Regulatory Status: Transaction is a related-party transaction under MI 61-101 but relies on exemptions from formal valuation and minority approval as the fair market value does not exceed 25% of market capitalization. Subject to final TSX-V approval.
• Use of Proceeds: Working capital and general corporate purposes to advance AI investment and infrastructure strategy.

Notable Quotes

• None explicitly quoted in the text, though the company states: "The company is relying on exemptions from the formal valuation and minority approval requirements... as the fair market value of the transaction does not exceed 25 per cent of the company's market capitalization."