Psyched Wellness Announces Secured Term Loan

Psyched Wellness borrows US$230,000 from major shareholders to fund ongoing operations.

Risk flags

• ●The loan is a related party transaction, with lenders controlling over 10% of the company's shares. This raises potential conflicts of interest and limits independent oversight, as insiders may have incentives that diverge from minority shareholders.
• ●No operational, revenue, or cash flow data is disclosed alongside the financing. Without visibility into cash burn or sales performance, it is impossible to assess whether the US$230,000 loan addresses a shortfall or is adequate for ongoing needs.
• ●The loan is secured only by assets related to the AMA brand, not the entire company. If the AMA brand underperforms or loses value, the security may be insufficient to cover the debt, increasing risk for both lender and company.
• ●Reliance on exemptions from minority approval and formal valuation under MI 61-101 means shareholders have limited recourse or input on the transaction, reducing transparency and governance safeguards.

Bottom line

This announcement signals that Psyched Wellness is relying on insider financing to cover immediate operating and inventory costs, with US$230,000 borrowed from major shareholders under secured terms. The lack of any operational, revenue, or cash flow disclosure means investors cannot assess whether this funding is sufficient or merely postpones larger financial challenges. The related party nature of the deal, combined with regulatory exemptions, reduces independent oversight and transparency. No evidence supports claims of market leadership or growth, and the security is limited to the AMA brand's assets. For investors, the key takeaway is that this is a stopgap financing with limited visibility into the company's underlying health; further disclosure of cash position, burn rate, and operational results would be needed to reassess risk and outlook.

Announcement summary

(CSE: PSYC) (OTCQB: PSYCF) Psyched Wellness Ltd. announced that it has entered into secured term notes with Gotham Green Fund III, L.P. and Gotham Green Fund III (Q), L.P. for an aggregate principal amount of US$230,000. The proceeds of the Loan will be used by the Company for operating expenses and inventory purchases related to operating the Company's business under the AMA brand. The Loan bears interest at the rate equal to the applicable Secured Overnight Financing Rate (SOFR) plus 5% per annum, compounded annually, with all accrued interest together with the principal amount payable on August 4, 2028. Each Note is secured by a continuing security interest over all assets and property of the Company directly related to the Company's business under the AMA brand. The Loan constitutes a 'related party transaction' as the Lenders, together with their affiliates and/or co-investors, jointly control over 10% of the outstanding common shares of the Company. The Company is relying on the exemptions from formal valuation and minority approval requirements contained in Sections 5.5(a) and 5.7(1)(a) of MI 61-101, on the basis that the fair market value of the transaction does not exceed 25% of the Company's market capitalization. The company projects that the proceeds of the Loan will be used for operating expenses and inventory purchases related to operating the Company's business under the AMA brand.

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