Generative AI Solutions Corp. (“GenAI” or the “Company”) (CSE: AICO) (OTCQB: AICOF) announces that it has entered into a memorandum of understanding (the “Memorandum of Understanding“) which is expected to result in the addition of approximately 17 million hours per year of AI compute time resources to be sold as services to an arm’s length third party resulting in the sale of approximately 85 million AI compute hours over the next five years.
The Company previously announced in its July 13, 2023 press release that its wholly owned subsidiary, MAI Cloud Solutions Inc. (“MAI Cloud“), had entered into a purchase agreement dated July 12, 2023 (the “Supply Agreement“) with an arm’s length third-party customer headquartered in Silicon Valley (the “Customer“), pursuant to which, among other things, MAI Cloud agreed to provide the Customer with access to approximately 350,000 hours per year of AI (“Artificial Intelligence“) compute services (the “Services“) using H100 graphics processing units (the “Equipment“) for a period of up to seven years subject to the terms and conditions of the Supply Agreement.
In consideration for Services, the Customer agreed to pay MAI Cloud a fee of approximately $70,000 per month (“Revenue“). If the terms of the Supply Agreement are completed for the full term, it is anticipated that MAI Cloud will receive an aggregate of approximately $6 million in Revenue at a gross margin of approximately $3.5 million. Approximately $850,000 in Revenue will be paid in the first 12 months of the term at a gross margin of approximately $500,000. Pursuant to the terms and conditions of the Supply Agreement, the Customer agreed to pay 10% of the first year’s Revenue within 14 days of the Equipment being made available for use by the Customer, which is anticipated to be within the next 30-45 days. In accordance with the terms and conditions of the Supply Agreement, the Customer is obligated to pay for the Services for the first 12 months (the “Initial Term“) following the effective date of the Supply Agreement (the “Effective Date“), provided that the Equipment and Services continue to meet the requirements specified in the Supply Agreement.
The Company is pleased to announce that it has now entered into the Memorandum of Understanding with the Customer dated August 24, 2023 pursuant to which the Customer has agreed to negotiate commercially reasonable terms with the Company to increase the AI compute time supplied by the Company to the Customer through the provision of approximately 2,000 (two-thousand) GPUs (the “Required GPUs“), which has the potential to provide approximately 17 million hours of AI compute time per annum.
Pursuant to the terms of the Memorandum of Understanding, the parties will use commercially reasonable efforts to negotiate a form of definitive agreement (the “Proposed Agreement“), and the Company and MAI Cloud will use commercially reasonable efforts to obtain the Required GPUs within six months of the date of the MOU.
The term of the Proposed Agreement is expected to be five years, extendable for an additional two years, from its execution, which is expected to occur in the next 30 days.