Alset AI Announces Closing of First Tranche of Loan Transaction of up to $3 Million

Executive Summary

• Alset AI Ventures Inc. closed the first tranche of a up‑to $3 million related‑party loan, receiving $500,000 in cash from insider lender Randy Gilling.
• The company issued 500 non‑convertible debentures at $1,000 each (6% annual interest, three‑year maturity) and 3,333,333 non‑transferable warrants exercisable at $0.15 per share.
• Additional tranches are scheduled, potentially providing up to another $2.5 million in debentures and further warrant issuances; proceeds will fund working capital and general corporate purposes for the Lyken.AI cloud compute business.

Key Details

• First Tranche Funding: $500,000 cash advanced on February 24, 2026.
• Debentures Issued (Tranche 1): 500 debentures @ $1,000 each; total principal $500,000; interest 6.0% per annum payable in cash or common shares at company’s discretion; maturity three years from issuance; subject to TSXV approval and a four‑month plus one‑day hold period.
• Warrants Issued (Tranche 1): 3,333,333 non‑transferable warrants, each convertible into one common share at $0.15, exercisable for three years from the effective date; also subject to TSXV approval and a four‑month plus one‑day hold period.
• Planned Additional Tranches:
• 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: Up to $1,000,000 at management’s discretion.
• Debentures for Additional Tranches: Up to 2,500 additional debentures @ $1,000 each (aggregate principal up to $2,500,000) on terms substantially similar to Tranche 1; three‑year maturity from respective issuance dates.
• Warrants for Tranches 2 & 3: 3,333,333 warrants per tranche, exercisable at $0.15 per share for three years from each issuance date.
• Warrants for Tranches 4 & 5: Number to be determined; not to exceed the dollar amount of debentures issued divided by the last closing price of common shares; exercise price the greater of $0.15 or market price.
• Use of Proceeds: Working capital and general corporate purposes, primarily to support growth of flagship cloud compute business Lyken.AI.
• Related‑Party Considerations: Lender Randy Gilling holds >10% of Alset AI common shares; transaction qualifies as a “related party transaction” under MI 61‑101; company relies on exemption thresholds (transaction <25% market cap). No material change report filed, deemed non‑material per the company.
• Board Observer Agreement: Lender granted right to observe board meetings; terminates upon full repayment of loan and accrued interest.
• Amended Revenue Agreement with Silver Birch Growth Inc.: Alset AI will pay a cash fee of $500,000 for services related to Lyken.AI launch; also a related‑party transaction under MI 61‑101 with similar exemption rationale.

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…we are well‑positioned to pursue opportunities across the artificial intelligence value chain…” – Adam Ingrao, CEO