| Item 1.01 |
Entry into a Material
Definitive Agreement. |
Summary.
Clearday,
Inc. (“Clearday” or the “Company”) obtained additional financings in the gross amount of approximately $350,000
prior to the payment of fees and expenses, including placement fees. The net proceeds from these financings will be used to fund innovative
services at Clearday, including robotic services that will be provided by the initial robots that Clearday has ordered and expects
delivery during July, 2022, providing enhanced room options at our residential facilities and general working purposes.
Factoring
Agreements.
Two
subsidiaries of Clearday: MCA Naples Operating Company LLC (“MCA Naples”),
and Memory Care at Good Shepard LLC (“MCA Good Shepard”
and together with “MCA Naples”, “MCA”), entered
into separate agreements with an institutional financing party (each, a
“Purchaser”) to provide an aggregate net financing amount of approximately $200,000 prior to expenses
and fees of approximately $11,046.00.
MCA
Naples entered into a Future Receipts Sale and Purchase Agreement dated as of May 24, 2022; and MCA Good Shepard entered into
a Revenue Purchase Agreement dated as of May 25, 2022. Under each agreement, the subsidiary sold to a Purchaser a specified percentage
of its future receipts (as defined by the applicable agreement), which include the future resident revenues in the residential care facility.
An aggregate purchased amount of such future receipts of $284,000 was sold for an aggregate amount of $200,000, less origination and
other fees, which resulted in a net aggregate amount of $188,925. Each agreement provides the Purchaser specified customary collection
procedures for the collection and remittance of the weekly payable amount including direct payments from a specified authorized bank
account of approximately $5,917 under the MCA Naples agreement and $5,999 under the MCA Good Shepard agreement. Each agreement expressly
provides that the sale of the future receipts shall be construed and treated for all purposes as a true and complete sale of receivables
at a discount, and not a loan. Each agreement provides that the title to the sold future receivables is transferred to the Purchaser
under such agreement free and clear of all liens and includes customary remedies that may be exercised by such Purchaser upon a breach
or default, including payment of attorney fees and costs of collection and, under the MCA Good Shepard agreement, an amount equal to
30% of the then outstanding purchased amount of future receipts. Each agreement also provides customary provisions regarding, among other
matters, representations, warranties and covenants, indemnification, arbitration, governing law and venue. Each agreement also provides
for the grant by the applicable subsidiary of a security interest in the future receivables and other related collateral under the Uniform
Commercial Code in accounts and proceeds.
Each
agreement includes a separate agreement that provides for the irrevocable, absolute, and unconditional guaranty by James Walesa, the
Company’s Chairman and Chief Executive Officer, of all of the of the obligations under such agreement. Each such Guaranty
provides customary provisions, including representations, warranties and covenants.
The
foregoing descriptions of each agreement are not complete and are qualified in their entirety by reference to the full text of such agreements,
filed as Exhibit 10.1 and as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.
Unsecured
Loan.
On
May 27, 2022, Clearday, Inc. (the “Company”), entered into a Securities Purchase Agreement (the “Note
Purchase Agreement”) to issue an unsecured promissory note (the “Note”) to an institutional lender.
The
Note provides for the net funding to Clearday of $150,000 after payment of specified expenses of $3,750 and provides for an original
issue discount of $18,450, resulting in a principal obligation of $172,200 and a one-time interest charge of 12% on such principal amount.
We paid $15,000 in placement fees in connection with the sale of the Note. The Note is not registered and was sold as a private placement
exempt from the registration requirements of the Securities Act of 1933, as amended, under Section 4(a)(2) thereof.
The
Note provides for a one year maturity. Monthly payments on the Note of $19,286.40 will be made by Clearday with the first payment being
on July 26, 2022, which payments are subject to a 10 day grace period. The Note is unsecured. The Note provides specified events of default
(an “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 Note
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 Note 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 OTCQB; 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
Noteholder is subject to a customary limitation on beneficial ownership of 4.99% of Clearday’s common stock.
The
Note Purchase Agreement also provides a covenant by Clearday that, while the Note is outstanding, Clearday will provide
the lender under the Note any terms that are provided under new financings requiring payment to the new lender that are more favorable
under such new financings than the terms provided under the Note and Note Purchase Agreement, other than for certain specified financings
including factoring or revenue purchase agreements. In the event that the new financing is more than $250,000, then the more favorable
terms are limited to the terms regarding the conversion of the Note to Clearday common stock upon a default.
Each
of the Note and the Note Purchase Agreement has customary other 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 Noteholder and Clearday will maintain a reserve of authorized and unissued
shares of common stock sufficient for full conversion of the obligations under the Note.
The
foregoing descriptions of the Note Purchase Agreement and the Note are not complete and are qualified in their entirety by reference
to the full text of each such agreement, which is filed as Exhibit 10.3 and Exhibit 10.4 to this Current Report on Form 8-K and is incorporated
herein by reference.
Forward
Looking Statements
This
communication contains forward-looking statements (including within the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended, and Section 27A of the Securities Act of 1933, as amended) concerning the Company. These statements may discuss goals, intentions
and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs
of the management of the Company, as well as assumptions made by, and information currently available to, management. Forward-looking
statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include
words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,”
“plan,” “likely,” “believe,” “estimate,” “project,” “intend,”
and other similar expressions. Statements that are not historical facts are forward-looking statements. Forward-looking statements are
based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual
results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without
limitation: the risks regarding the Company and its business, generally; risks related to the Company’s ability to correctly estimate
and manage its operating expenses and develop its innovate non-acute care businesses and the acceptance of its proposed products and
services, including with respect to future financial and operating results; the ability of the Company to protect its intellectual property
rights; competitive responses to the Company’s businesses including its innovative non-acute care business; unexpected costs, charges
or expenses; regulatory requirements or developments; changes in capital resource requirements; and legislative, regulatory, political
and economic developments. The foregoing review of important factors that could cause actual events to differ from expectations should
not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the
risk factors included in the Company’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K filed with the SEC and the registration statement regarding the Company’s previously announced merger, that was filed
and declared effective. The Company can give no assurance that the actual results will not be materially different than those based on
the forward looking statements. Except as required by applicable law, the Company undertakes no obligation to revise or update any forward-looking
statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
