8-K: Awaysis Capital Secures $1.6 Million Convertible Note and Acquires Chial Mountain Assets

Awaysis Capital, Inc. has entered into a $1.6 million convertible promissory note agreement and acquired substantially all assets of Chial Mountain Ltd., including real estate in Belize.

Summary

• Awaysis Capital, Inc. has secured a $1,600,000 senior convertible promissory note from Michael Singh, due on June 30, 2025, with a 3.5% annual interest rate.
• The note is convertible into common stock at a price equal to the closing price on the trading day prior to conversion.
• Awaysis Capital also acquired all the stock and substantially all the assets of Chial Mountain Ltd. for an estimated $5,500,000.
• The acquisition includes over 21 acres of real property in Belize with approximately 35 villas.
• The purchase price for Chial Mountain was paid with $2,400,000 in cash, a $1,500,000 secured promissory note, and the $1,600,000 convertible note.
• The $1,500,000 promissory note is due on the earlier of February 15, 2025, or the up-listing of Awaysis Capital to the NYSE American and bears no interest.
• Both the promissory note and the convertible note are secured by first priority liens on substantially all of Awaysis Capital's assets.

Sentiment

Score: 6

Explanation: The document indicates a significant acquisition and financing activity, which is generally positive for growth. However, the debt obligations and potential dilution from the convertible note introduce some risk, resulting in a neutral to slightly positive sentiment.

Positives

• Awaysis Capital has secured significant funding through the convertible note.
• The acquisition of Chial Mountain provides Awaysis with substantial real estate assets in Belize.
• The convertible note provides flexibility for both the company and the holder.
• The company has secured first priority liens on its assets, which may be beneficial for future financing.

Negatives

• The company has taken on a significant debt obligation with the $1,600,000 convertible note and $1,500,000 promissory note.
• The notes are secured by first priority liens on substantially all of the company's assets, which could limit future financial flexibility.
• The company is subject to potential adjustments to the purchase price of Chial Mountain based on future appraisals.
• The promissory note is due on the earlier of February 15, 2025, or the up-listing of Awaysis Capital to the NYSE American, which could create pressure to achieve the up-listing.

Risks

• The company's ability to repay the notes depends on its future financial performance.
• The conversion of the note could dilute existing shareholders.
• The company is exposed to risks associated with real estate development and operations in Belize.
• The company is subject to potential adjustments to the purchase price of Chial Mountain based on future appraisals.
• The company is subject to the risk of not achieving the up-listing to the NYSE American by February 15, 2025, which would trigger the repayment of the $1,500,000 promissory note.

Future Outlook

The company expects to further develop and renovate the acquired properties as an Awaysis branded residential enclave community. The company will amend the 8-K filing to include any required historical and/or pro forma financial statements.

Management Comments

• Andrew Trumbach, Co-CEO of Awaysis Capital, signed the agreements on behalf of the company.
• Michael Singh, Chairman and Co-CEO of Awaysis Capital, is the holder of both the promissory note and the convertible note.

Industry Context

This announcement reflects a trend of companies seeking growth through strategic acquisitions and leveraging debt financing. The real estate development sector is often characterized by such transactions, particularly in emerging markets like Belize.

Comparison to Industry Standards

• The use of convertible notes is a common financing method for growth companies, allowing for potential equity upside for investors.
• The interest rate of 3.5% on the convertible note is relatively low, which may be attractive to the company.
• The acquisition of real estate assets is a typical strategy for companies in the hospitality and residential development sectors.
• The use of a secured promissory note is a common practice in acquisitions, providing security for the seller.
• Comparable companies in the real estate development sector often use a mix of debt and equity financing to fund acquisitions and development projects. For example, companies like Wyndham Destinations and Marriott Vacations Worldwide use similar strategies to expand their portfolios.

Related Party Transactions

• The acquisition of Chial Mountain Ltd. is a related-party transaction as Chial Mountain is an affiliate of Michael Singh, the company's Chairman and Co-CEO.
• The promissory note and convertible note are with Michael Singh, a related party.

Stakeholder Impact

• Shareholders may experience dilution if the convertible note is converted into equity.
• Employees may see changes as the company integrates the acquired assets.
• Customers may benefit from the development of new residential offerings.
• Creditors are impacted by the new debt obligations and the first priority liens on the company's assets.
• Suppliers may see increased business opportunities as the company expands its operations.

Next Steps

• The company will develop and renovate the acquired properties.
• The company will file an amendment to the 8-K with required financial statements.
• The company will need to manage its debt obligations and work towards the up-listing to the NYSE American.

Key Dates

Keywords

convertible note, promissory note, acquisition, real estate, Belize, Awaysis Capital, Chial Mountain, financing, debt, equity