SCHEDULE 13D/A: Major Shareholder Group Increases Stake in Value Exchange International Through Convertible Debt

A group led by Heng Fai Ambrose Chan, including Alset Inc. and Hapi Metaverse Inc., has increased its beneficial ownership in Value Exchange International, Inc. to nearly 70% through a series of convertible debt agreements.

Summary

• Heng Fai Ambrose Chan, Alset Inc., and Hapi Metaverse Inc. collectively report beneficial ownership of 69.9% of Value Exchange International, Inc. (VEII) common stock.
• This ownership includes direct shareholdings and significant convertible debt instruments.
• Hapi Metaverse Inc. provided a $1,000,000 loan to VEII on December 15, 2023, convertible at $0.045 per share, with five detachable warrants per converted share, exercisable at $0.045 for five years. This loan has not yet been converted.
• Hapi Metaverse Inc. also provided a $110,000 loan to VEII on July 15, 2024, convertible at $0.06 per share.
• Alset Inc. received a $30,000 Convertible Promissory Note from VEII on March 28, 2025, convertible at $0.0166 per share, accruing interest at 5% per annum.
• The percentage ownership is based on 43,500,762 shares of Common Stock outstanding.

Sentiment

Score: 6

Explanation: The document indicates continued financial support from major shareholders, which is positive for the company's liquidity. However, the low conversion prices and potential for significant dilution from the convertible debt and warrants introduce a notable negative aspect for existing minority shareholders.

Positives

• Significant capital infusion for Value Exchange International, Inc. through convertible loans totaling $1,140,000.
• Continued strong commitment and increased beneficial ownership by a key shareholder group, indicating confidence.
• The loans provide operational flexibility for VEII without immediate equity dilution, as conversion is optional for the lenders.

Negatives

• Potential for substantial future dilution of existing shareholders if the convertible debt and warrants are fully exercised, especially given the low conversion prices ($0.0166, $0.045, $0.06 per share).
• The $1,000,000 loan from Hapi Metaverse Inc. includes five detachable warrants per converted share, which could lead to further significant dilution.
• The reporting persons have not acquired any shares in the last 60 days, indicating the increase in beneficial ownership is primarily due to the convertible instruments rather than open market purchases.

Risks

• Dilution Risk: The conversion of outstanding convertible debt and exercise of warrants at low prices could significantly dilute the ownership percentage and per-share value for existing shareholders.
• Conversion Price Volatility: The effectiveness of the conversion terms is highly dependent on VEII's future stock price performance.
• Control Concentration: The reporting group already holds a significant majority stake (nearly 70%), which could limit the influence of other shareholders on corporate decisions.
• Debt Repayment Risk: If the loans are not converted, VEII will be obligated to repay the principal plus interest, potentially straining its financial resources.

Future Outlook

The document indicates a strategic intent by the reporting persons to maintain and potentially increase their significant ownership stake in Value Exchange International, Inc. through the conversion of existing debt instruments. The future conversion of these loans and exercise of warrants will depend on the discretion of the lenders and the company's stock performance.

Industry Context

This filing reflects a common strategy in the small-cap or distressed company space where significant shareholders provide financing through convertible instruments, often at prices below market value, to support operations while increasing their potential equity stake. The involvement of entities like Hapi Metaverse Inc. suggests a potential strategic alignment with technology or metaverse-related ventures, though the core business of VEII is not detailed in this filing.

Corporate Governance

Related Party Transactions

• Hapi Metaverse Inc. (majority-owned by Alset Inc., which is controlled by Heng Fai Chan) provided two convertible loans to VEII totaling $1,110,000.
• Alset Inc. (controlled by Heng Fai Chan) received a $30,000 convertible promissory note from VEII.
• Heng Fai Chan is Chairman and CEO of Alset Inc. and Chairman of Hapi Metaverse Inc., establishing clear related-party relationships for these transactions.

Stakeholder Impact

• Shareholders: Potential for significant dilution if convertible debt and warrants are exercised at low prices, which could negatively impact per-share value. However, the capital infusion provides financial stability to the company.
• Creditors: The convertible nature of the debt means that these loans could convert to equity, reducing the company's debt burden, or remain as debt with interest obligations.
• Company (VEII): Receives capital infusion to support operations, but at the cost of potential future equity dilution.

Next Steps

• Potential conversion of the $1,000,000 loan from Hapi Metaverse Inc. into VEII common stock at $0.045 per share, which would also trigger the issuance of five detachable warrants per converted share.
• Potential conversion of the $110,000 loan from Hapi Metaverse Inc. into VEII common stock at $0.06 per share.
• Potential conversion of the $30,000 Convertible Promissory Note from Alset Inc. into VEII common stock at $0.0166 per share.

Key Dates

Recommendation

Keywords

Value Exchange International, VEII, Schedule 13D/A, Beneficial Ownership, Convertible Debt, Warrants, Heng Fai Ambrose Chan, Alset Inc., Hapi Metaverse Inc., Shareholder Group, Dilution, Corporate Governance, SEC Filing