| Item
1.01 |
Entry
into a Material Definitive Agreement. |
On
February 17, 2023, Clearday, Inc. (the “Company”), entered into a Securities Purchase Agreement (the “Securities
Purchase Agreement”) to issue an unsecured promissory note (the “Note”) to
an institutional lender. We used the net proceeds of this financing to fund our operations.
On
February 17, 2023, we entered into a Securities Purchase Agreement with an institutional lender (the “Lender”) to issue an
unsecured promissory note (the “Note”) to the Lender. This Note provides for the proceeds to us of approximately $135,000
and provides for an original issue discount of $22,217 or 12%, resulting in a principal obligation of $172,217. We paid $15,000 in placement
fees in connection with the issuance and sale of the securities to the Lender. The Note provides a
one-time interest charge of 12% on such principal amount or $20,666 and a one year maturity. Monthly
payments on the Note of the accrued, unpaid interest and outstanding principal, subject to adjustment, shall be paid in
ten (10) payments each in the amount of $19,288.30 (a total payback to the Holder of $192,883). The first such payment is due April 16,
2023 with nine (9) subsequent payments each month thereafter, which payments are subject to a 10
day grace period, or shorter if the payment date is not a business day.
The Note provides specified events of default (a “Event of Default”) including failure to timely pay the
monetary obligations under the Note and such breach continues for a period of ten (10) days after written notice from the Noteholder’
a breach of covenants under the Note or the Securities Purchase Agreement that continues for a period of twenty (20) days after written
notice by the Noteholder; breach of any representation and warranty in the Note or Securities Purchase Agreement; commencement of bankruptcy
or similar proceedings; failure to maintain the listing of Clearday’s common stock on at least one of the Over-the-Counter markets
such as the OTCQX; the failure of Clearday to comply with the reporting requirements of the Securities Exchange Act; Clearday’s
liquidation, or a financial statement restatement by Clearday. Upon any Event of Default, the obligations under the Note will accrue
interest at an annual rate of 22% and, if such Event of Default is continuing at any time that is 180 days after the date of the Note,
provide the Noteholder the right and option to convert the obligations under the Note to shares of Clearday’s common stock. The
price for any such conversion is equal to 75% (or a 25% discount) of the average of the five (5) lowest per share daily volume-weighted
average price of Clearday’s common stock over the ten (10) consecutive trading days that are not subject to specified market disruptions
immediately preceding the date of the conversion. The conversion right of the holder of the Note is subject to a customary limitation
on beneficial ownership of 4.99% of Clearday’s common stock. Each of the Note and the Securities Purchase Agreement has other customary
covenants and provisions, including representations and warranties, payment of brokers, and indemnification, that Clearday will not sell,
lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business without the consent of the
holder of the Note and Clearday will maintain a reserve of authorized and unissued shares of common stock sufficient for full conversion
of the obligations under the Note.
As
additional consideration, we issued to the Lender a Common Stock Purchase Warrant (“Warrant”) to purchase 225,000 shares
of our Common Stock at an exercise price per share of $0.75. The Warrant expires five years from March 16, 2023. The Warrant provides
for customary “cashless” exercise of such Warrant and adjustments to the exercise price and shares underlying each warrant,
including adjustment in the event of an issuance of common stock or deemed issuance of common stock at a price that is lower than the
then exercise price on a “full rachet” basis.
Each
of the Note and the Warrant was issued in a transaction that is exempt from the registration requirements of the Securities Act of 1933,
as amended (the “Securities Act”), under Section 4(a)(2) thereof.
The
foregoing descriptions of the Note, Warrant and the Securities Purchase Agreement are not complete and are qualified in their entirety
by reference to the full text of each such document, which is filed as Exhibit 10.1, Exhibit 10.2 and Exhibit 10.3 to this Report, respectively,
and are incorporated herein by reference.
On
February 17, 2023, our subsidiary, AIU Alternative Care (“Innovative Care”), received
a $50,000 loan by one of our directors, Alan Channing, and issued a convertible unsecured promissory note (the “Convertible Note”).
The loan provides for a 12% per annum (1% per month) interest that accrues and is payable at the maturity of the loan or upon prepayment
or conversion, if earlier. We also agreed to issue $5,000 of our common stock to this lender at the per share price of $0.75. This loan
is due January 31, 2024. The principal and the accrued and unpaid interests of this loan may be converted into our shares of common stock
by the lender at the per share price of $0.75, subject to appropriate adjustments for any stock splits, reverse stock splits mergers,
consolidations or similar transactions (the “Loan Conversion Price”). We also have the right to convert the principal and
the accrued and unpaid interest on the loan at the Loan Conversion Price upon certain events:
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The issuance by Innovative Care or us or any of our other subsidiaries of any equity securities in one or more offerings with aggregate
gross proceeds of at least $5 million; |
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The issuance by us or any of our subsidiaries of convertible debt securities that were issued with gross proceeds in an aggregate amount
of at least $5 million; |
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The listing by us of our common stock to the New York Stock
Exchange, the NYSE American or any tier of the NASDAQ market in connection with an offering of securities us or any of our subsidiaries
in connection with any merger, consolidation or similar transaction with another person in which we are the surviving entity; or |
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The exchange of the shares of our common stock for the
common stock or other security that is listed on the New York Stock Exchange, the NYSE American or any tier of the NASDAQ market
in connection with any merger, consolidation or similar transaction with another person in which Clearday is not the surviving entity
or in which Clearday becomes a subsidiary of such other person, including without limitation, any special purpose acquisition corporation. |
Each of the Convertible Note and our shares of
common stock was issued in a transaction that is exempt from the registration requirements of the Securities Act of 1933, as amended
(the “Securities Act”), under Section 4(a)(2) thereof.
The
foregoing descriptions of this loan and the Convertible Note are not complete and are qualified in their entirety by reference to the
full text of each such document, which is filed as Exhibit 10.4 and is incorporated herein by reference.