10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 0-21074

CLEARDAY, INC.

(Exact name of registrant as specified in its charter)

Delaware	77-0158076
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

8800 Village Drive, Suite 106, San Antonio, Texas 78217

(Address of principal executive offices & zip code)

(210) 451-0839

(Registrant’s telephone number including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ or No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001	CLRD	OTCQX

We had 25,985,132 shares of our common stock outstanding as of the close of business on August 30, 2023.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995 for these forward-looking statements. Our forward-looking statements relate to future events or our future performance and include, but are not limited to, statements concerning our business strategy, future commercial revenues, market growth, capital requirements, new product introductions, expansion plans and the adequacy of our funding. Other statements contained in this Report that are not historical facts are also forward-looking statements. We have tried, wherever possible, to identify forward-looking statements by terminology such as “may,” “will,” “could,” “should,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and other comparable terminology.

We caution investors that any forward-looking statements presented in this Report, or that we may make orally or in writing from time to time, are based on the beliefs of, assumptions made by, and information currently available to, us. Such statements are based on assumptions and the actual outcome will be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences may be material. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on known results and trends at the time they are made, to anticipate future results or trends.

Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include the following:

● Our limited cash and a history of losses;

● Our ability to finance our innovative care products and services, including our Longevity-tech platform and products and services that are in development;

● The impact of any financing activity on the level of our stock price;

● The impact of any default by us of certain indebtedness and the exercise by the lenders of their respective remedies including the right to convert stock and exercise warrants at a price that is a discount to our trading price;

● The additional dilutive impact of any issuances of securities to raise capital, including any capital in anticipation and in advance of the previously reported merger (the “Viveon Merger”) of us with Viveon Health Acquisition Corp.;

● The timing and amount of financing acquired in connection with the Viveon Merger;

● The cost and uncertainty from compliance with environmental regulations and the regulations related to operating our memory care facilities and adult day care centers;

● The effect of pandemics and other public health related issues on our businesses, including actions or additional regulations by State and Federal governments;

● Local, regional, national and international economic conditions and events, and the impact they may have on us and our customers;

● The impact of inflation to our businesses, including increases in our labor costs and other costs we pay for goods and services;

● The impact of a shortage of workers in our industries and our ability to maintain costs while properly staffing our facilities;

● The availability of state funds through civil money penalty grant programs;

● Increases in tort and insurance liability costs;

● Delays or nonpayment to us, including payments related to government or agency reimbursements;

● Our ability to pay our liabilities, including tax obligations and the exercise of remedies by holders of our indebtedness; and

● Circumstances that adversely affect the ability of older adults or their families to pay for our services, such as economic downturns, weakening investment returns, higher levels of unemployment among our residents or potential residents’ family members, lower levels of consumer confidence, stock market volatility and/or changes in demographics.

For further discussion of these and other factors see “Risk Factors” in our Annual Report on Form 10-K, as amended and supplemented.

This Report and all subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances after the date of this Report.

I

Clearday, Inc.

June 30, 2023

FORM 10-Q

Table of Contents

		Page
PART I	Financial Information
Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets – June 30, 2023 and December 31, 2022 (Unaudited)	1
	Condensed Consolidated Statements of Operations – For The Six months Ended June 30, 2023 and 2022 (Unaudited)	2
	Condensed Consolidated Statements of Mezzanine Equity, Convertible Preferred Stock and Stockholder’s Deficit – Six Months Ended June 30, 2023 and 2022 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows – For The Six months Ended June 30, 2023 and 2022 (Unaudited)	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4	Evaluation of Disclosure Controls and Procedures.	30
PART II	Other Information
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	31

References in this Report to the “Clearday”, “Company”, “we”, “us” include Clearday, Inc. and its consolidated subsidiaries, unless otherwise expressly stated or the context indicates otherwise.

The mark “Clearday” is protected under applicable intellectual property laws. Solely for convenience, trademarks of Clearday referred to in this Report may appear without the ^TM symbol, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and related intellectual property rights.

II

Clearday, Inc.

Condensed Consolidated Balance Sheets

June 30, 2023 and December 31, 2022

(Unaudited)

	June 30, 2023			December 31, 2022
ASSETS
Current assets:
Cash	$	8,093		$	195,638
Restricted cash		10,000			10,000
Accounts receivable, net		381,883			47,705
Prepaid expenses		142,042			213,289
Total current assets		542,018			466,632
Non-current assets
Operating lease right-of-use assets		-			22,792,752
Real estate property and equipment, net		6,127,735			6,522,979
Intangible assets, net		3,312,000			3,680,000
Other long-term assets		264,258			288,155
Total assets	$	10,246,011		$	33,750,518
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	3,641,431		$	6,324,002
Accrued expenses		6,260,831			8,415,609
Derivative liabilities		5,675,083			2,320,547
Accrued interest		1,275,823			294,370
Related Party Payables		750,432			672,597
Deferred revenue		-			901,235
Current portion long-term debt		17,007,210			16,347,290
Current portion of operating lease liabilities		-			2,907,605
Other current liabilities		1,086,013			1,140,106
Total current liabilities		35,696,823			39,323,361
Long-term liabilities:
Operating lease liabilities, net of current portion		-			24,415,791
Long-term debt, less current portion, net		5,620,489			1,392,940
Total liabilities		41,317,313			65,132,092
Mezzanine equity
Series F 6.75% Convertible Preferred Stock, $.001 par value, 5,000,000 share authorized, 4,369,529 and 4,797,052 issued and outstanding on June 30, 2023 and December 31, 2022, respectively. Liquidation value $99,125,693 and $96,296,493 on June 30, 2023 and December 31, 2022, respectively.		18,623,139			20,448,079
Deficit:
Preferred Stock, $0.001 par value, 10,000,000 shares authorized
Series A Convertible Preferred Stock, $0.001 par value, 2,000,000 shares authorized, 328,925 shares issued and outstanding, as of both June 30, 2023 and December 31, 2022. Liquidation value of $329 as of both June 30, 2023 and December 31, 2022		329			329
Common Stock, $0.001 par value, 80,000,000 shares authorized, 25,977,628 and 20,805,448 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		25,978			20,805
Additional paid-in-capital		22,985,945			16,098,182
Accumulated deficit		(83,755,699	)		(79,671,065	)
Clearday, Inc. stockholders’ deficit		(60,743,447	)		(63,551,749	)
Non-controlling interest in subsidiaries		11,049,006			11,722,096
Clearday Inc. stockholder’s total deficit		(49,694,441	)		(51,829,653	)
TOTAL LIABLITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT	$	10,246,011		$	33,750,518

See accompanying notes to the unaudited condensed consolidated financial statements.

1

Clearday, Inc.

Condensed Consolidated Statements Of Operations

For The Three and Six Months Ended June 30, 2023 and 2022

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
REVENUES
Resident fee revenue, net	$	436,684		$	3,068,470		$	3,332,010		$	6,193,231
Adult day care		159,766			64,724			248,807			148,620
Commercial property rental revenue		22,581			2,358			44,718			3,919
		619,031			3,135,552			3,625,535			6,345,770
OPERATING EXPENSES
Wages & general operating expenses		851,499			4,437,616			4,697,974			9,071,672
Selling, general and administrative expenses		944,385			992,433			1,877,016			2,385,803
Depreciation and amortization expense		229,247			185,044			526,073			372,259
Total operating expenses		2,025,131			5,615,093			7,101,063			11,829,734
Operating loss		(1,406,100	)		(2,479,541	)		(3,475,528	)		(5,483,964	)
Other (income) expenses
Interest expense		1,719,216			395,045			2,434,049			896,643
PPP loan forgiveness		-			(349,500	)		-			(992,316	)
Derivative financing costs		-			-			2,567,460			-
Fair value of derivative		1,082,946			-			(482,286	)		-
Extinguishment of debt		-			-			653,814			-
(Gain)/loss on disposal of asset		(5,925	)		-			100,542			-
Loss on impairment								318,936
(Gain)/loss on termination of lease		193,758			-			(4,336,886	)		-
Other (income)/expenses		(198,429	)		(279,011	)		299,695			(422,900	)
Total other (income)/expenses, net		2,791,566			(233,466	)		1,555,324			(518,573	)
Net loss from continuing operations		(4,197,666	)		(2,246,075	)		(5,030,852	)		(4,965,391	)
Loss from discontinued operations, net of tax		-			(85,753	)		-			(170,980	)
Net loss		(4,197,666	)		(2,331,828	)		(5,030,852	)		(5,136,371	)
Net loss attributable to non-controlling interest		(395,263	)		(74,147	)		(946,218	)		(218,412	)
Preferred stock dividend		(1,644,987	)		(1,655,926	)		(3,343,771	)		(3,274,941	)
Net loss attributable to Clearday, Inc. common stockholders	$	(6,237,916	)	$	(4,061,901	)	$	(9,320,841	)	$	(8,629,724	)
Basic and diluted loss per share attributable to Clearday, Inc.
Net loss from continued operations		(0.16	)		(0.13	)		(0.20	)		(0.30	)
Net loss from discontinued operations		0.00			0.00			0.00			(0.01	)
Net loss		(0.16	)		(0.13	)		(0.20	)		(0.31	)
Weighted average common shares basic and diluted outstanding		25,468,230			17,775,792			24,721,121			16,408,710

See accompanying notes to the unaudited condensed consolidated financial statements.

2

Clearday, Inc.

Consolidated Statements of Mezzanine Equity, Convertible Preferred Stock and Stockholders’ Deficit

Six Months Ended June 30,

	Mezzanine Equity Series F Preferred Stock				Preferred Stock Series A				Common Stock				Additional Paid- in			Accumulated			Clearday, Inc. Stockholders’			Non-Controlling			Total
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Deficit			Interest			Deficit
Balance at December 31, 2021		4,797,052	$	16,857,267		328,925	$	329		14,914,458	$	14,915	$	17,069,481		$	(65,208,327	)	$	(48,123,602	)	$	11,330,695		($	36,792,907	)
PIK dividends accruals on convertible Preferred Stock F				3,274,941		-		-						(3,274,941	)					(3,274,941	)					(3,274,941	)
Series F Preferred F Stock converted to common Stock						-		-		2,861,334		2,859		(2,853	)		-			6						6
Accrued of series I convertible Preferred Stock in subsidiary						-		-															273,128			273,128
Series I adjustment						-		-									(669,904	)		(669,904	)					(669,904	)
Shares issued for Loan						-		-																		-
Dissolution of Longhorn Hospitality														(3,871,239	)		3,871,239			-						-
Net loss						-		-				-		-			(5,136,371	)		(5,136,371	)		(218,412	)		(5,354,783	)
Balance at June 30, 2022		4,797,052		20,132,208		328,925		329		17,775,792		17,774		9,920,448			(67,143,363	)		(57,204,812	)		11,385,411			(45,819,401	)

See accompanying notes to the unaudited condensed consolidated financial statements.

3

	Mezzanine Equity Series F Preferred Stock						Preferred Stock Series A				Common Stock				Additional Paid- in			Accumulated			Clearday, Inc. Stockholders’			Non-Controlling			Total
	Shares			Amount			Shares		Amount		Shares		Amount		Capital			Deficit			Deficit			Interest			Deficit
Balance at December 31, 2022		4,797,052		$	20,448,079			328,925	$	329		20,805,448	$	20,805	$	16,098,182		$	(79,671,065	)	$	(63,551,749	)	$	11,722,096		$	(51,829,653	)
PIK dividends accruals on convertible Preferred Stock F					3,343,771											(3,343,771	)					(3,343,771	)					(3,343,771	)
Series F Preferred F Stock converted to common Stock		(427,523	)		(5,168,712	)				-		616,253		616		5,168,096			-			5,168,712						5,168,712
Accrued of series I convertible Preferred Stock in subsidiary																									273,128			273,128
Debt discount from derivative settlements																881,127						881,127						881,127
Stock Compensation for services												254,609		256		214,131						214,387						214,387
Shares issued for Loan												83,160		83		70,602						70,685						70,685
Stock issued for extinguishment of debt												4,218,158		4,218		3,897,578						3,901,796						3,901,796
Net loss																			(4,084,634	)		(4,084,634	)		(946,218	)		(5,030,852	)
Balance at June 30, 2023		4,369,529			18,623,139			328,925		329		25,977,628		25,978		22,985,945			(83,755,699	)		(60,743,447	)		11,049,006			(49,694,441	)

See accompanying notes to the unaudited condensed consolidated financial statements.

4

Clearday, Inc.

Condensed Consolidated Statements Of Cash Flows

For The Six Months Ended June 30, 2023 and 2022

(Unaudited)

	June 30, 2023			June 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(5,030,852	)	$	(5,136,371	)
Loss from discontinued operations, net of tax		-			(170,980	)
Loss from continued operations		(5,030,852	)		(4,965,391	)
Adjustments required to reconcile net loss to cash flows used in operating activities
Depreciation and amortization		526,073			372,259
Amortization of right of use assets		-			920,473
Shares issued for loan commitment		70,685			-
Shares issued for services		214,388			-
Financing costs from derivative liabilities		2,567,460			-
Gain on termination of lease		(4,336,886	)		-
Series I preferred stock accumulated dividend		273,128			-
Change in fair value of the derivatives		(482,286	)		-
Amortization of debt discount related to derivatives		1,236,995			-
Amortization of debt issuance costs		115,883			433,001
Loss on extinguishment of debt		653,814			-
Loss on sale of fixed assets		100,542			-
Bad debt expense		159,650			-
Gain on PPP loan forgiveness		-			(992,316	)
Changes in operating assets and liabilities
Accounts receivable		(493,828	)		(67,736	)
Other current assets		23,897			-
Prepaid expenses		71,247			(243,270	)
Accounts payable		565,411			1,427,151
Accrued liabilities		1,845,221			1,195,821
Deferred revenue		(901,235	)		-
Related party payables		77,835			-
Other non-current assets		-			680,335
Other liabilities		(54,093	)		(172,501	)
Change in operating lease liability		-			(462,233	)
Net cash used in operating activities		(2,796,951	)		(1,874,407	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		136,630			-
Payments for property and equipment		-			(28,310	)
Net cash provided by (used in) investing activities of the continuing operations		136,630			(28,310	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of long-term debt and notes payable		(903,429	)		(2,255,374	)
Borrowings on debt		3,376,205			3,394,568
Net cash provided by in financing activities		2,472,776			1,139,194
Change in cash and restricted cash from continuing operations		(187,545	)		(763,523	)
Change in cash and restricted cash from discontinued operations		-			(201,552	)
Cash and restricted cash at beginning of the period		205,638			-
Cash and restricted cash at end of period	$	18,093		$	(965,075	)
Reconciliation of cash and restricted cash consist of the following:
End of period
Cash and cash equivalents		8,093			-
Restricted cash		10,000			10,000
Total cash and restricted cash	$	18,093		$	10,000
Beginning of period
Cash and cash equivalents		195,638			965,075
Restricted cash		10,000			10,000
Total cash and restricted cash	$	205,638		$	975,075
Supplemental disclosures of cash flow information
Cash paid for interest	$	215,602		$	-
Cash paid for income taxes		-			-
Supplemental disclosures of non-cash investing and financing activities:
Early lease termination fee	$	27,323,396		$	-
Series F incentive shares converted to common stock		5,168,712
Indebtedness used to pay off rent expense		3,212,305
Accounts payable exchanged for common shares		3,247,982
Settlements on derivative liability		881,127			-
PIK dividends for Series F Preferred Stock		3,343,771			-
Debt discount on derivative liability	$	2,150,489		$	-

See accompanying notes to the unaudited condensed consolidated financial statements.

5

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business and Going Concern

Organization, Description of Business

Clearday, Inc., a Delaware corporation (the “Company”), formerly known as Superconductor Technologies Inc. (“STI”), was established in 1987 and closed a merger (the “AIU Merger”) with Allied Integral United, Inc., a Delaware corporation (“AIU”), on September 9, 2021. The Company continued the businesses of AIU and continued one of the businesses of STI. AIU was incorporated on December 20, 2017, and began its business on December 31, 2018 when it acquired memory care residential facilities and other businesses (the “2018 Acquisition”) that was conducted since November 2010. Since the 2018 Acquisition, the Company has been developing innovative care and wellness products and services focusing on the longevity market, including its Longevity-tech platform. In the first quarter of 2023, the Company disposed of three of its four full time memory care communities to focus on its digital care services, including robotics and its Longevity-tech platform. During the second quarter of 2023, the Company operated one residential care facility and one adult daycare facility and marketed its digital care services to third parties.

Going Concern

As of June 30, 2023, we have an accumulated deficit of $83,755,699. During the period ended June 30, 2023, we had a net loss from operations of $5,030,852 and net cash used in operating activities of $2,796,951. During the year ended December 31, 2022, we had a net loss from operations of $14,462,738 and cash used in operating activities of $3,978,027. The Company plans to continue to fund its losses from operations and capital funding needs through public or private equity or debt financing or other sources, including capital that may be available in connection with the Viveon Merger. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned programs. Any of these actions could materially harm the Company’s business, results of operations and prospects. The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result should the Company not continue as a going concern. Management does not believe they have sufficient cash for the next twelve months from the date of this report to continue as a going concern without raising additional capital.

2. Summary of Significant Accounting Policies

The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the interim reporting rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments (unless otherwise indicated), necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company, including its wholly owned subsidiaries and AIU Alternative Care, Inc., a Delaware corporation (“AIU Alt Care”) and Clearday Alternative Care Oz Fund, L.P, a Delaware limited partnership (“Clearday OZ Fund”). The Company owns all of the voting interests of AIU Alt Care and the sole general partner of Clearday OZ Fund, and less than 1% of the preferred economic interests in such companies.

The certificate of incorporation of AIU Alt Care authorizes 1,500,000 shares of preferred stock designated as its Series I 10.25% cumulative convertible preferred stock, par value $0.01 per share (the “Alt Care Preferred Stock”) of which 700,000 is designated Alt Care Preferred Stock; and 1,500,000 of common stock. Each share of the Alt Care Preferred Stock has a stated value equal to the $10.00 Alt Care Preferred Stock original issue price.

AIU Alt Care formed AIU Impact Management, LLC, which is the sole general partner and manager of Clearday OZ Fund. Clearday OZ Fund allocates 99% of income gains and losses to the limited partners and 1% to its general partner (AIU Impact Management, LLC).

6

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Each of the Alt Care Preferred Stock and the limited partnership interests in Clearday OZ Fund (“Clearday OZ LP Interests”) may be exchanged by the holder of such securities into shares of Clearday common stock. The exchange rate for each of the Alt Care Preferred Stock and the Clearday OZ LP Interests are equal to (i) the aggregate investment amount for such security plus accrued and unpaid dividends at 10.25% per annum, (ii) divided by 80% of the 20 consecutive day volume weighted closing price of the Common Stock of Clearday preceding the conversion date.

The Company reports its non-controlling interest in subsidiaries as a separate component of equity in the condensed consolidated balance sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common stockholders on the face of the condensed consolidated statement of operations.

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in conformity with GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Classification of Convertible Preferred Stock

The Company applied ASC 480, “Distinguishing Liabilities from Equity”, and revised the condensed consolidated presentation of its convertible preferred stock whose redemption is outside the control of the issuer. Registrants having such securities outstanding are required to present separately, in balance sheets, amounts applicable to the following three general classes of securities: (i) preferred stocks subject to mandatory redemption requirements or whose redemption is outside the control of the issuer; (ii) preferred stocks which are not redeemable or are redeemable solely at the option of the issuer; and (iii) common stocks. In addition, the rules require disclosure of redemption terms, five-year maturity data, and changes in redeemable preferred stock.

Use of Estimates

The Company’s condensed consolidated financial statement preparation requires that management make estimates and assumptions which affect the reporting of assets and liabilities and the related disclosure of contingent assets and liabilities in order to report these condensed consolidated financial statements in conformity with GAAP. Actual results could differ from those estimates.

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, the Chief Executive Officer, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as two operating segments, the Longevity-tech Platform and personal care.

Cash, and Restricted Cash

Cash, consisting of short-term, highly liquid investments and money market funds with original maturities of three months or less at the date of purchase, are carried at cost plus accrued interest, which approximates market value.

Restricted cash includes cash that the Company deposited as security for obligations arising from property taxes, property insurance and replacement reserve the Company is required to establish escrows as required by its mortgages and certain resident security deposits.

Accounts Receivable

The Company records accounts receivable at their estimated net realizable value. Additionally, the Company estimates allowances for uncollectible amounts based upon factors which include, but are not limited to, historical payment trends, write-off experience, and the age of the receivable as well as a review of specific accounts, the terms of the agreements, the residents, the payers’ financial capacity to pay and other factors which may include likelihood and cost of litigation.

7

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Real Estate Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation and amortization. Maintenance and repairs are charged to operations as incurred. Depreciation and amortization are based on the straight-line method over the estimated useful lives of the related assets. When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the accounts, and any resulting gain or loss is reflected in operations in the period realized.

Depreciation is computed on the straight-line method with useful lives as follows:

Asset Class	Estimated Useful Life (in years)
Buildings and building improvements		39
Leasehold improvements		15
Furniture and fixtures and equipment		7
Computer equipment and software		5

Intangible Assets, Net

Software Capitalization

With regards to developing software, any application costs incurred during the development stage, both internal expenses and those paid to third parties are capitalized and amortized per FASB Topic ASC350-40 (“Internal-Use Software Accounting & Capitalization”). Once the software has been developed, the costs to maintain and train others for its use will be expensed. With regards to developing software, any application costs incurred during the development state, both internal expenses and those paid to third parties are capitalized and amortized based on the estimated useful life of five years.

Impairment Assessment

The Company evaluates intangible assets and other long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions or other events that indicate an assets’ carrying amount may not be recoverable. Recoverability of these assets is measured by comparing the carrying amount of each asset to the future cash flows the asset is expected to generate. If the cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value.

Revenue Recognition

The Company recognizes revenue from contracts with customers in accordance with ASC Topic 606, “Revenue from Contracts with Customers”, or ASC Topic 606, using the practical expedient in paragraph 606-10-10-4 that allows for the use of a portfolio approach, because we have determined that the effect of applying the guidance to our portfolios of contracts within the scope of ASC Topic 606 on our condensed consolidated financial statements would not differ materially from applying the guidance to each individual contract within the respective portfolio or our performance obligations within such portfolio. The five-step model defined by ASC Topic 606 requires the Company to: (i) identify its contracts with customers, (ii) identify its performance obligations under those contracts, (iii) determine the transaction prices of those contracts, (iv) allocate the transaction prices to its performance obligations in those contracts and (v) recognize revenue when each performance obligation under those contracts is satisfied. Revenue is recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services.

8

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A substantial portion of the Company’s revenue from its independent living and assisted living communities relates to contracts with residents for services that are generally under ASC Topic 606. The Company’s contracts with residents and other customers that are within the scope of ASC Topic 606 are generally short-term in nature. The Company has determined that services performed under those contracts are considered one performance obligation in accordance with ASC Topic 606 as such services are regarded as a series of distinct events with the same timing and pattern of transfer to the resident or customer. Revenue is recognized for those contracts when the Company’s performance obligation is satisfied by transferring control of the service provided to the resident or customer, which is generally when the services are provided over time.

Resident fees at our residential communities consist of regular monthly charges for basic housing and support services and fees for additional requested services, such as assisted living services, personalized health services and ancillary services. Fees are specified in our agreements with residents, which are generally short term (30 days to one year), with regular monthly charges billed in advance. Funds received from residents in advance of services provided are not material to our condensed consolidated financial statements. Our senior living communities require payment of an upfront entrance fee in advance of a resident moving into the community; substantially all these community fees are non-refundable and are initially recorded as deferred revenue in our condensed consolidated balance sheets. These deferred amounts are then amortized on a straight-line basis into revenue over the term of the resident’s agreement. When the resident no longer resides within our community, the remaining deferred non-refundable fees are recognized in revenue. Revenue recorded and deferred in connection with community fees is not material to our condensed consolidated. Revenue for basic housing and support services and additional requested services is recognized in accordance with ASC Topic 606 and measured based on the consideration specified in the resident agreement and is recorded when the services are provided.

Resident Care Contracts

Resident fees at the Company’s senior living communities may consist of regular monthly charges for basic housing and support services and fees for additional requested services and ancillary services. Fees are specified in the Company’s agreements with residents, which are generally short term (30 days to one year), with regular monthly charges billed on the first of the month. Funds received from residents in advance of services are not material to the Company’s condensed consolidated financial statements.

Below is a table that shows the breakdown by percentage of revenues related to contracts with residents versus resident fees for support or ancillary services.

	For the three-month period ended June 30,
	2023		%			2022		%
Revenue from contracts with customers:
Resident rent - over time	$	436,684		70	%	$	3,068,470		98	%
Day care – point in time		159,766		26	%		64,724		2	%
Amenities and conveniences - point in time		22,581		4	%		2,358		0	%
Total revenue from contracts with customers	$	619,031		100	%	$	3,135,552		100	%

	For the six month periods ended June 30,
	2023		%			2022		%
Revenue from contracts with customers:
Resident rent - over time	$	3,332,010		92	%		6,193,231		98	%
Day care		248,807		7	%		148,620		2	%
Amenities and conveniences - point in time		44,718		1	%		3,919		0	%
Total revenue from contracts with customers	$	3,625,535		100	%	$	6,345,770		100	%

Financial Instruments

In accordance with the reporting requirements of the FASB ASC Topic 825, “Financial Instruments”, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to the consolidated financial statements when the fair value is different than the carrying value of those financial instruments. The Company does not have assets or liabilities measured at fair value on a recurring basis except its derivative liability.

9

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at the balance sheet dates, nor gains or losses reported in the statements of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held during the periods presented, except as disclosed.

Fair Value Measurement

ASC Topic 820, “Fair Value Measurements”, provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.

Level 2 - Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs.

Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value.

The following tables present the Company’s assets and liabilities that were measured and recognized at fair value as of June 30, 2023 and December 31, 2022:

June 30, 2023
	Level 1	Level 2	Level 3	Total
Derivative liability	-	-	5,675,083	5,675,083

December 31, 2022
	Level 1	Level 2	Level 3	Total
Derivative liability	-	-	2,320,547	2,320,547

Under the Company’s contract ordering policy, the Company first considers common shares issued and outstanding as well as reserved but unissued equity awards, such as under an equity award program. All remaining equity linked instruments such as, but not limited to, options, warrants, and debt and equity with conversion features are evaluated based on the date of issuance. If the number of shares which may be issued under the Company’s agreements exceed the authorized number of shares or are unable to be determined, equity linked instruments from that date forward are considered to be derivative liabilities until such time as the number of shares which may be issued under the Company’s agreements no longer exceed the authorized number of shares and are able to be determined.

The Company has outstanding note agreements containing provisions meeting the definition of derivative liability which therefore require bifurcation. Further, pursuant to the Company’s contract ordering policy, any issuance of equity linked instruments subsequent to the initial triggering agreement will result in derivative liabilities.

At June 30, 2023, the Company estimated the fair value of the conversion feature derivatives embedded in the notes payable and warrants based on assumptions used in the Cox-Ross-Rubinstein binomial pricing model using the following inputs: the price of the Company’s common stock of $0.80; risk-free interest rates ranging from 4.13% to 5.47%; expected volatility of the Company’s common stock ranging from 135% to 310%; estimated exercise prices ranging from $0.35 to $0.75; and terms from one to sixty months.

At December 31, 2022, the Company estimated the fair value of the conversion feature derivatives embedded in the notes payable and warrants based on assumptions used in the Cox-Ross-Rubinstein binomial pricing model using the following inputs: the price of the Company’s common stock of $0.56; risk-free interest rates ranging from 3.99% to 4.76%; expected volatility of the Company’s common stock ranging from 183% to 572%; estimated exercise prices ranging from $0.35 to $0.43; and terms from three to sixty months.

10

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the changes in the Company’s Level 3 derivative liability at fair value is as follows:

Balance - December 31, 2022	$	2,320,547
Additions		4,717,949
Settlements		(881,127	)
Change in fair value		(482,286	)
Balance - June 30, 2023	$	5,675,083

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC Topic 815, “Derivatives and Hedging Activities”.

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

Research and Development Costs

Research and development costs are charged to expense as incurred and are included in operating expenses. There were no research and development costs incurred in the three or six months ended June 30, 2023 or 2022.

Advertising Costs

The costs of advertising are expensed as incurred. Advertising expenses are included in the Company’s operating expenses. There were no advertising expenses in the three or six months ended June 30, 2023 or 2022.

Lease Accounting

The Company follows ASC Topic 842, “Leases”. The Company has elected the practical expedient to account for each separate lease component of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments to be capitalized. All ROU assets were written off effective March 31, 2023, when the Company disposed of the three leased properties described in Note 5 — Leases.

Income Taxes

The Company’s income tax expense includes U.S. income taxes. Certain items of income and expense are not reported in tax returns and financial statements in the same year. The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences to be included in the Company’s condensed consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse, while the effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

11

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company can recognize a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized.

Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income, and, to the extent, the Company believes that the Company is more likely than not that all or a portion of deferred tax assets will not be realized, the Company establishes a valuation allowance to reduce the deferred tax assets to the appropriate valuation.

Company includes the related tax expense or tax benefit within the tax provision in the condensed consolidated statement of operations in that period. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. In the future, if the Company determines that it would be able to realize its deferred tax assets in excess of their net recorded amount, the Company will make an adjustment to the deferred tax asset valuation allowance and record an income tax benefit within the tax provision in the condensed consolidated statement of operations in that period.

The Company pays franchise taxes in certain states in which it has operations. The Company has included franchise taxes in general and administrative and operating expenses in its condensed consolidated statements of operations.

Earnings Per Share

FASB ASC Topic 260, “Earnings Per Share”, requires a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share (EPS) computations.

Basic earnings (loss) per share are computed by dividing income (loss) attributable to Clearday shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

Commitments and Contingencies

The Company has been, is currently, and expects in the future to be involved in claims, lawsuits, and regulatory and other government audits, investigations and proceedings arising in the ordinary course of the Company’s business, some of which may involve material amounts. The Company establishes accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Also, the defense and resolution of these claims, lawsuits, and regulatory and other government audits, investigations and proceedings may require the Company to incur significant expense. The Company accounts for claims and litigation losses in accordance with ASC Topic 450, “Contingencies”. Under ASC Topic 450, loss contingency provisions are recorded for probable and estimable losses at the Company’s best estimate of a loss or, when a best estimate cannot be made, at the Company’s estimate of the minimum loss. These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment, and are refined as additional information becomes known. Accordingly, the Company is often initially unable to develop a best estimate of loss and therefore the estimated minimum loss amount, which could be zero, is recorded; then, as information becomes known, the minimum loss amount is updated, as appropriate. Occasionally, a minimum or best estimate amount may be increased or decreased when events result in a changed expectation.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470- 20)” and “Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (a) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, “Debt: Debt with Conversion and Other Options”, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (b) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (c) revises the guidance in ASC 260, “Earnings Per Share, to require entities to calculate diluted earnings per share for convertible instruments by using the “if-converted” method.” In addition, entities must presume share settlement for purposes of calculating diluted earnings per share when an instrument may be settled in cash or shares. For smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023. The Company is currently evaluating the impact that ASU 2020-06 may have on its condensed consolidated financial statements and related disclosures.

12

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2023, there were several new accounting pronouncements issued by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

3. Real Estate, Property and Equipment

The Company’s real estate, property and equipment consisted of the following at the respective balance sheet dates:

	June 30, 2023			December 31, 2022
Land	$	2,081,879		$	2,231,879
Building and building improvements		4,975,244			4,975,243
Leasehold Improvements		710,317			846,754
Computers		57,166			332,809
Furniture, fixtures, and equipment		72,213			1,379,219
Other Equipment		74,935			518,145
Construction in progress		138,187			138,187
Total		8,109,941			10,422,236
Less accumulated depreciation		(1,982,206	)		(3,899,257	)
Real estate, property and equipment, net	$	6,127,735		$	6,522,979

The Company recorded depreciation expenses relating to real estate, property, and equipment in the amount of $526,073 and $372,259 for the periods ended June 30, 2023, and 2022, respectively.

4. Intangible Assets, Net

Software Capitalization.

At June 30, 2023 and June 30, 2022, $3,312,000 and $3,680,000, respectively were the balances that will be amortized based on the estimated useful life of five years. The Company began this amortization starting January 1, 2023.

Developed intangible assets subject to amortization are as follows:

	June 30, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount	Weighted-Average Remaining Useful Life (Years)
Developed technology	3,680,000	$	368,000	$	3,312,000	4.50

The Company recorded amortization expense related to its intangible assets in the amounts of $368,000 and $0 for the periods ended June 30, 2023 and June 30, 2022, respectively.

Expected future amortization expense for intangible assets as of June 30, 2023, is as follows:

Fiscal Years
2023 (remaining)	$	368,000
2024		736,000
2025		736,000
2026		736,000
2027		736,000
Thereafter		-
Total	$	3,312,000

13

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted-Average Remaining Useful Life (Years)
Developed technology	$	3,680,000	$	-	$	3,680,000		5.00

5. Leases

Lease Terminations

On March 31, 2023, the Company entered into agreements (collectively, the “Lease Transition Agreement”) to terminate the leases (“Community Leases”) for three of its four residential care facilities, which account for all of Clearday’s leased residential care facilities. The Community Leases related to residential communities (the “Communities”) located in Westover, Texas, New Braunfels, Texas and Little Rock, Arkansas. Terminating the Community Leases removed right of use liabilities and right of use assets related to these Community Leases, as of December 31, 2022 and the write-off or elimination of the related net leasehold improvements and personal property in these Communities. We currently have no material economic rights or obligations under the Community Leases other than for payment obligations under the Lease Transition Agreements. The tenants of the Community Leases and the guarantors, including Clearday, Inc., entered a Lease Transition Agreement with the Lessor of the properties dated March 31, 2023. The Lease Transition Agreement provided, among other matters, that the aggregate liability of the Clearday subsidiaries that are tenants under the Community Leases are reduced to amount (the “Repayment Amount”) that is equal to the sum of: (1) past due rent payments under the Community Leases of $1,284,770 (“Past Due Community Lease Amounts”), (2) a fixed amount arising from the termination of the Community Leases of $1,710,777 (“Rent Differential Amount”), (3) the amount of additional advances (“Critical Expenses Advances”) by Landlord to pay critical expenses plus the premium for tail insurance policy in favor of the Landlord (the obligation for such premiums are limited $275,000), (4) plus an additional amount that is equal to the greater of $25,000 or 5% of such Critical Expenses Advances. The Critical Expense Advances and additional amount were determined in the second quarter of 2023. The Repayment Amount is due and payable over a period maturing on July 31, 2025, as follows: (1) on closing date of the previously announced proposed merger (the “Viveon Merger”) with Viveon Health Acquisition Corp., a Delaware corporation (“Viveon”), a payment equal to 10% of the new money that is raised in connection with the Viveon Merger (subject to a minimum payment of $300,000 and a maximum payment of $500,000); provided that if the Viveon Merger does not close by July 31, 2023, then a payment of $300,000 will be paid on July 31, 2023 or such other date agreed by Landlord and Clearday, which under the terms of the First Amendment to the Lease Transition Agreement, is September 30, 2023, subject to certain extensions; (2) $400,000 payable quarterly commencing on December 31, 2023, and (3) beginning with the calendar quarter ending December 31, 2023 10% of the Excess Cash Flow, generally based on earnings before interest, taxes, depreciation, and amortization of Clearday. The current guarantors of the Community Leases (a subsidiary of Clearday, Inc. and two individuals) continued to guaranty the obligations, as modified by the Lease Transition Agreement, and provided a security interest on the collateral specified in such guarantees.

14

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In connection with the Lease Transition Agreements, the tenants under the Community Leases and the Clearday, Inc. subsidiaries that operated the Communities signed a promissory note for the Repayment Amount and the Past Due Community Lease Amounts and Clearday, Inc. agreed to be an additional guarantor of the obligations of the Community Leases, as modified and limited by the Community Lease Transition Agreement, which is less than approximately $4,000,000 under the terms of a Guaranty (the “Guaranty”). Clearday also agreed to cooperate with Landlord to facility the termination of the Community Leases the sale of the furniture and fixtures at the Communities to the New Operator so that New Operator may enter into a lease or purchase of the Communities and operate the memory care businesses in the Communities or other businesses at the Communities that they choose to conduct.

In connection with the proposed termination of the Community Leases, the subsidiaries that operate the Communities (the “Current Operators”) and subsidiaries of the New Operator (“New Communities Operators”) entered into the Operations Transfer Agreement dated as of April 1, 2023 (the “OTA”). The OTA provided that the New Communities Operators will purchase the personal property and other assets of the Current Operators used at the Communities to enable the New Communities Operators to conduct their business at the Communities under new leases or other arrangements with the Landlord. Such purchase and sale will close on the date that the New Communities Operators receive the licenses, authorizations and approvals from the applicable Texas and Arkansas governmental agencies to conduct a licensed residential memory care business at the Communities and they enter into new leases with the Landlord (the “Commencement Date”). The New Communities Operators entered into new agreements with the residents at the Communities, effective the Commencement Date and were responsible for any operating losses of the facilities from and after March 31, 2023. The Current Operators have provided notice to each of the residents at the Communities that their agreements with the Current Operators have been terminated, effective on the Commencement Date. The New Communities Operators are not affiliated with the Company or its officers or directors. The OTA and Interim Agreements provide for the asset purchase and sale of the memory care businesses at the Communities, and the transfer of certain agreements and the assumption of certain specified liabilities. The Current Operators, each of which is a subsidiary of Clearday, Inc., remain obligated for liabilities that are not assumed by the New Operators. The New Communities Operators have employed, or offered employment to, all of our employees at these communities and will fund and be responsible for any operating cash losses for the Communities.

6. Indebtedness

As of June 30, 2023, and December 31, 2022, the current portion of long-term debt within the Company’s condensed consolidated financial statements was $17,007,210 and $16,347,290, respectively.

During the six months ended June 30, 2023 and 2022, we incurred interest expense totaling $1,197,054 and $896,643, respectively.

15

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the Company’s debt as of June 30, 2023 and December 31, 2022:

As of June 30,	Total
2023		15,615,892
2024		2,333,909
2025		4,956,948
2026		1,518,682
Thereafter		-
Total obligations	$	24,425,431

Indebtedness of Facilities

	Maturity Date	Interest Rate			June 30, 2023		December 31, 2022
Naples Equity Loan ^	May 2023		9.95	%	$	4,550,000	$	4,550,000
Gearhart Loan ^	December 2022		7.00	%		193,578		193,578
SBA PPP Loans #	February 2022		1.00	%		1,518,682		1,518,682
Bank Direct Payable	December 2022		3.13	%		-		80,381
AIU Sixth Street	February 2023		12.00	%		-		49,593
1800 Diagonal Lending	October 2024		12.00	%		45,303		116,760
1800 Diagonal Lending	February 2024		12.00	%		134,723		-
Equity Secure Fund I, LLC*	March 2024		18.00	%		1,097,610		1,000,000
Invesque, Inc.	July 2025		10.00	%		3,977,470

Merchant Cash Advance Loans (^^)

Naples Operating PIRS Capital	March 2023	0.00	%	$	338,000	$	338,000
Little Rock Libertas	February 2023	0.00	%		326,330		326,330
PIRS Capital Financing Agreement	March 2023	0.00	%		144,659		144,659
Naples Samson #1	May 2023	0.00	%		76,916		76,916
Naples LG Funding #2	April 2023	0.00	%		171,170		171,170
Little Rock Premium Funding	April 2023	0.00	%		211,313		211,313
Little Rock KIT Funding	December 2022	0.00	%		89,400		89,400
Little Rock Samson Funding #4	February 2023	0.00	%		170,501		170,501
Naples Operating SWIFT	December 2022	0.00	%		111,750		111,750
New Braunfels Samson Cloud Fund	February 2023	0.00	%		308,035		308,035
New Braunfels Samson Group	February 2023	0.00	%		375,804		375,804
Westover Hills One River	December 2022	0.00	%		128,298		128,301
Westover Hills FOX Capitol	March 2023	0.00	%		109,384		109,384
Westover Hills Arsenal	October 2023	0.00	%		95,882		95,882
Westover Samson Funding	March 2023	0.00	%		267,754		267,754
Subtotal merchant cash advance loans					2,925,196		2,925,199
Notional amount of debt					14,442,562		10,434,193
Less: current maturities					14,442,562		10,434,193
				$	-	$	-

16

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Indebtedness Allocated to real estate

Real Estate:
Artesia Note	June 2033	Variable		$	-	$	211,721
Carpenter Enterprises	Demand Note	Variable			237,180		300,000
Leander Stearns National Association	February 2023	10.38	%		805,000		805,000
Notional amount of debt					1,042,180		1,316,721
Less: current maturities					805,000		805,000
				$	237,180	$	511,721

Other (Corporate) Indebtedness

AGP Contract ^	March 2023	5.00	%	$	550,000		$	550,000
Cibolo Creek Partners	December 2025	0.09	%		388,276			421,470
Cibolo Creek Partners promissory note	December 2025	0.09	%		91,208			96,208
EIDL SBA Treas 310	December 2051	3.75	%		494,900			494,900
Firstfire	May 2023	12.00	%		(1,378	)		95,054
Five C’s Loan ^	December 2022	9.85	%		325,000			325,000
GS Capital	May 2023	12.00	%		-			50,955
Jefferson Street Capital LLC @	May 2023	12.00	%		16,800			84,000
KOBO, L.P.	October 2023	Floating	%		500,000			500,000
Mast Hill LP @	May 2023	12.00	%		300,000			420,000
Mast Hill LP @	July 2023	12.00	%		252,000			315,000
Round Rock Development Partners Note	December 2025	0.09	%		500,000			500,000
Jefferson Street Capital LLC (February 2023)	February 2024	12.00	%		192,883			-
Mast Hill LP (January 2023)@	January 2024	12.00	%		756,000			-
Bridge Financings		8.00			685,000			-
Convertible Notes Issued by AIU Alternative Care, Inc.	January 2024	12.00	%		749,000			-
Notional amount of debt					5,799,689			3,852,587
Less: current maturities					1,942,422			2,340,009
				$	3,857,267		$	1,512,578
TIC Purchase Agreements	No Specified Date	8.00	%	$	3,141,000		$	3,141,000
		Total			24,425,431			18,744,501
		Less Debt Discount & Derivatives			(1,797,732	)		(1,004,271	)
		Total		$	22,627,699		$	17,740,230

^	Obligation is in default. Interest rate set forth is the stated rated of interest. The actual rate of interest has increased under the terms of the obligation.
^^	We have ceased payment of these obligations. Obligations are subject to litigation for nonpayment, as previously reported. See Note 7 — Commitments and Contingencies.
#	SBA PPP obligations are past due and in the Company is continuing the process to have these obligations forgiven.
@	Obligation is in payment default. Each lender has not exercised any of their remedies. Each lender has the right to exercise remedies including the conversion of the promissory note into shares of our common stock and collection of default interest and other amounts, and in the case of Mast Hill to exercise the Lender Remedy Warrants described in Note 10 — Deficit. Jefferson Street Capital LLC has granted a forbearance to October 31, 2023. Mast Hill LP has granted a forbearance dated October 4, 2023 until the earlier of (i) the closing of the merger (“Merger”) with Viveon Health Acquisition Corp under the merger agreement dated as of April 5, 2023, as amended, (ii) to January 2, 2024 (90 days from the date of the forbearance), (iii) the date that Clearday, Inc. or any of its subsidiaries makes an assignment for the benefit of creditors, or applies for or consents to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed. or (iv) the date that bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Clearday, Inc. or any of its subsidiaries (the earlier of the aforementioned (i), (ii), (iii) or (iv) shall be referred to herein as the “Waiver Expiration Date”). There can be no assurance that the Company will be able to extend any the forbearances with any of these lenders on acceptable terms or at all or that Clearday will be able to comply with the terms of the forbearance provided by Mast Hill LP which includes that Clearday provide net proceeds from additional financings by Clearday under the terms of the promissory notes with such lender, unless such payment is excused by such lender.
*	Obligations have been modified as of June 5, 2023.

17

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Equity Secure Fund I, LLC Modification

As of June 5, 2023, AIU 8800 Village Drive, LLC, the subsidiary of Clearday, Inc. that owns the property in San Antonio, Texas used for our headquarters and production facilities, extended, modified and rearranged the mortgage financing of such property, to extend the maturity to March 26, 2024, obtain additional financing for the payment of taxes and certain other amounts, increase the interest rate to 18% per annum, provide a right, if there are no uncured defaults under such mortgage financing, to extend the maturity of the mortgage financing for an additional twelve months for payment of a fee equal to 1% of the original ($1 million) principal amount of the mortgage note and reduce the interest rate to 16.75% during such extension period.

Bridge Financings.

The Company has received certain advances that are payable on demand and on October 6, 2023, issued Senior Convertible Notes (“Bridge Notes”) as payment of such advances with interest accruing under Bridge Note as of the date of each such advance. The Company is continuing such offering of Bridge Notes of an amount of up to $16,000,000, or such other amount as determined by the Company, to accredited investors in an offering that is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). Each Bridge Note will accrue interest at 8% per annum, increased by 4% per annum during an Event of Default as defined in the Bridge Note. The Bridge Notes will be payable on June 30, 2024 (the “Bridge Note Maturity Date”). The Bridge Notes will provide for conversion into shares of our common stock based on a contingency. In the event that the merger agreement dated as of April 5, 2023, as amended, (the “Viveon Merger Agreement”) with Viveon Health Acquisition Corp., a Delaware corporation (“Viveon”) providing for the proposed merger (“Viveon Merger”) is terminated, then the conversion price for our shares of common stock will be the lower of $0.82 per share and a price per share equal to a 25% discount to the volume weighted average price per share for our common stock for the ten (10) trading days preceding such termination date. If the Viveon Merger Agreement is not terminated, then at the closing of the Viveon Merger, the principal and accrued interest of the Bridge Notes will be converted at a price per share equal to $0.82 subject to ratable adjustment in the event of any stock split, reverse stock split, merger, consolidation, combination or similar transactions, and such shares of our common stock will be exchanged for shares of Viveon common stock under the terms of the Viveon Merger Agreement. The Bridge Notes have certain restrictions including the incurrence of additional related party transactions, restricted payments, maintenance of insurance and not change in our business and that the net proceeds of such financings would be used for the repayment of existing indebtedness and general corporate and working capital purposes of us and Viveon in anticipation of the Viveon Merger. We have agreed to share the net cash proceeds raised in any financing with Viveon as described in Note 9 — Related Party Transactions. The foregoing description of the form of the Bridge Notes is qualified in their entirety by reference to the full text of the Bridge Note, which is incorporated by reference into this report as Exhibit 10.1.

7. Commitments and Contingencies

Contingencies

Simpsonville litigation

The tenant, MCA Simpsonville Operating Company LLC, referred to as Tenant, of the MCA community that is located in Simpsonville, South Carolina, referred to as the Simpsonville Facility, and other affiliates of the Company have a dispute with the landlord of the Simpsonville Facility, MC-Simpsonville, SC-UT, LLC, referred to as the Landlord, and its affiliates (Embree Group of Companies: Embree Construction Group, Inc., Embree Asset Group, Inc., and Embree Capital Markets Group, Inc., referred to collectively as Embree) under the terms of the lease. After non-payment, the Landlord instituted litigation (“Simpsonville Action 1”) that is captioned and numbered MC-Simpsonville, SC-UT, LLC v. Steve Person, et. al., Cause No. 19-0651-C368 in the 368^th Judicial District Court of Williamson County, Texas. After the trial court issued a judgment on damages in the amount of $2,801,365 and appeals of this judgment this action was settled on August 5, 2022 as reflected by an Agreed Final Judgment for an aggregate amount of $3,012,011, including costs and expenses in favor of the plaintiff, of which $2,763,936 was settled by the release of a cash bond that Tenant previously deposited with the Court and the remaining amount of $248,075 to be paid within six months after the entry of the judgment. The Company has not paid this amount. In connection with the settlement of Simpsonville Action 1, Tenant entered into an agreement to transfer certain operations, including lease obligations, of the Simpsonville Facility Tenant and Landlord terminated the lease of the Simpsonville Facility as contemplated by such agreement to transfer of certain operations, including lease obligations, which permitted the Landlord to sell the Simpsonville Facility to a third party and thereby limit the future obligations under the lease.

The Landlord filed a second action on April 9, 2021 (Simpsonville Action 2), for claims similar to Simpsonville Action 1 including relief for payment of rent past due and reimbursement of taxes from October 2020 to the time of the trial in this action. This action captioned and numbered MC-Simpsonville, SC-UT, LLC v. Steve Person, James Walesa and Trident Healthcare Properties I, LP (“Trident”), Cause No. 21-0513-C425 in the 425^th Judicial District Court of Williamson County, Texas. The court granted summary judgment in this matter in favor of the Landlord on April 14, 2023. On September 14, 2023, the court entered an order (the “Judgment Enforcement Order”) requiring the turnover of non-exempt assets of the defendants Steve Person and James Walesa and the assets of Trident Healthcare Properties I, LP and the appointment of a receiver to enforce the summary judgement. The Judgment Enforcement Order provides, in part, that “Nothing in this Order is intended to delay, hinder or disrupt the closing of the [Viveon] merger.” The Judgment Enforcement Order also provides certain restrictions regarding the sale or transfer of the Clearday securities owned by Steve Person or James Walesa, providing in part that “Any liquidation of the Clearday shares by Receiver requires approval of this Court, after notice and hearing, or written agreement of the parties. Nothing herein, however, prevents the transfer of the shares under the expected merger so long as Defendant and the receivership estate retain their rights in such shares. No party, including Defendants, shall encumber the shares except as specifically provided herein.”

Under the structure used for the lease and operations of the Simpsonville Facility, a subsidiary of Clearday, Inc., Tenant, is the direct obligor under the lease and another subsidiary of Clearday, Trident, is a guarantor of the lease obligations. Neither Tenant or Trident have any material assets. We are assessing the exposure of these matters to Clearday, Inc. under these actions, including any liability under indemnification agreements with the individual guarantors. We expect to offer to negotiate a settlement of the summary judgement. There can be no assurance that any such settlement discussions will be held or that there will be any settlement of these actions on terms that are acceptable or at all.

Employment related taxes

Certain subsidiaries of the Company that operate hotel assets did not pay employment related taxes such as required withholdings for Texas State unemployment taxes and federal income tax and employee and employer contributions for FICA (Social Security and Medicare) taxes, and federal unemployment tax for certain periods from December 31, 2018, to December 31, 2021. These subsidiaries have since made the appropriate filings with the Internal Revenue Service and the Company has accrued the full estimated amount of the underpaid taxes as well as the estimated penalties and interest. As of June 30, 2023, the amount of the estimated taxes, penalties, and interest, assuming that there is no waiver or mitigation of the penalties, is $311,000. The Company has accrued this amount in its financial statements as of June 30, 2023. The amount that was accrued in the condensed consolidated financial statements as of December 31, 2022, was $261,000.

Certain subsidiaries of the Company that operate its residential care communities have not paid employment related taxes such as required withholdings for federal income tax and employee and employer contributions for FICA (Social Security and Medicare) taxes, and federal and state unemployment tax from and after the payroll periods that ended September 16, 2022, to the date of this Report. These subsidiaries have since made the appropriate filings with the Internal Revenue Service and the Company has accrued the amount of the underpayment in its financial statements as of June 30, 2023 and December 31, 2022, of approximately $1,197,672 and $527,000, respectively, which amount does not include any taxes, penalties, and interest. In connection with these matters, on August 3, 2023, the Internal Revenue Service issued a tax lien against MCA Management Company, Inc., a dormant and inactive subsidiary of Clearday, Inc. that does not have any assets.

Payroll related taxes

In the fourth quarter of 2021, certain subsidiaries of the Company did not remit payroll taxes related to the Earned Retentions Tax Credit (“ERTC”). The ERTC program permitted an offset for such obligations and was terminated during the fourth quarter with an effective termination date of September 30, 2021. As a result, the Company has accrued $1,097,000 in such payroll taxes. These subsidiaries have applied for certain tax credits, including ERTC and Families First Coronavirus Response Act. The Company expects to use such credits that will be applied to reduce these payroll tax liabilities. There is no assurance that any such tax credits will be received.

18

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Merchant advance loans

Certain subsidiaries of the Company that operate residential care facilities (“MCA Borrowers”) incurred certain financings through merchant credit advances. Such financings were provided by creditors under agreements (“MCA Agreements”) that describe the transaction as the sale of future receivables by the applicable MCA Borrower. The aggregate accrued amount of these financings is approximately $2,925,196, as summarized in Note 6 — Indebtedness. Eight of these financing parties have commenced actions alleging, among other matters, a breach of the MCA Agreement for non-payment and a breach of the guaranty by the applicable guarantors. These actions demand monetary damages that, in the aggregate, are approximately $1,531,640, plus other costs, fees and certain other amounts.

These actions are:

1.	Premium Merchant Funding 18, LLC v Memory Care at Good Shepherd LLC and James Walesa (a guarantor), filed in state court in Kings County, New York on August 19, 2022 (summary judgement in this matter was entered in favor of the plaintiff and such judgement was not appealed by us);
2.	Libertas Funding LLC v. Memory Care at Good Shepherd, LLC, et. al. including James Walesa (a guarantor), filed in state court in Monroe County, New York on August 24, 2022 (summary judgement in this matter was entered in favor of the Company’s subsidiary and such judgement was not appealed by us, and this judgement was entered in the State of Texas);
3.	Cloudfund LLC v MCA New Braunfels Operating Company LLC et. al. including James Walesa (a guarantor), filed in state court in Nassau County, New York on August 29, 2022;
4.	Cloudfund LLC v MCA Naples Operating Company, LLC and James Walesa (a guarantor), filed in state court in Nassau County, New York on August 30, 2022 (summary judgement in this matter was entered in favor of the plaintiff and such judgement was not appealed);
5.	Swift Funding Source Inc. v MCA Naples Operating Company LLC et. al. including Christin Hemmens (a guarantor), filed in state court in Ontario County, New York on August 31, 2022;
6.	Pirs Capital, LLC v MCA Westover Hills Operating Company, LLC et. al. including James Walesa (a guarantor), filed in state court in New York County, New York on September 8, 2022;
7.	Prosperum Capital Partners, LLC dba Arsenal Funding v MCA Westover Hills Operating Company LLC et. al. including James Walesa (a guarantor), filed in state court in Kings County, New York on September 28, 2022;
8.	Fox Capital Group, Inc. v MCA Westover Hills Operating Company LLC et. al. including James Walesa (a guarantor), filed in state court in Bexar County, Texas on October 25, 2022.

James Walesa is the Company’s Chief Executive Officer, and/or Christin Hemmens, is an officer of Clearday. Other than as set forth above, each of these actions are in the pleading or discovery stage of litigation.

Naples Equity Loan: The mortgage lender for the Naples, Florida facility commenced an action for nonpayment of the mortgage note. The action is captioned A.AD.A, INC.; Anga Properties, LLC; Arce Holdings, LLC; Benfam Holdings LLC; Carolina Resources, LLC; Emilio Diaz SD Investment Account, LLC; Michael B. and Irma B. Goldstein; David J. Gonzalez; Hersab Holdings, LLC; Indocan Investment USA Corporation; Armando Navarro; Robbia Properties LLC; Shochat Holdings I LLC; and Wekwit, Inc. (collectively referred to as the Naples Lender) vs. MCA Naples, LLC (“MCA Naples”), Case No. 11-2023-CA-000243-0001- flied in the Circuit Court in and for Collier County, Florida (the “Benworth Action”). This litigation arises from the nonpayment under the mortgage and promissory note. The Benworth Action demands payment of the principal amount of the promissory note of $4,550,000 together with default interest, late charges, costs advanced, insurance advances, attorney’s fees and costs and seeks the Final Judgment of Foreclosure and such further relief as the court deems just and proper. The Benworth Action also seeks the amount from James Walesa, the Company’s Chief Executive Officer, under the personal irrevocable and unconditional guaranty, in favor of Benworth Capital Partners, LLC, of the obligations of MCA Naples under the mortgage and promissory note. A clerk’s default was entered against MCA Naples on May 15, 2023 and against Mr. Walesa on May 31, 2023. On July 5, 2023, MCA Naples filed a motion to set aside the default and the defaults were set aside. MCA Naples, LLC filed its Answer and Defenses. A Motion to Dismiss the Complaint was filed on behalf of Mr. Walesa and is set for a hearing on November 6, 2023. Plaintiffs filed a Motion for Summary Judgment which was denied on October 3, 2023We believe that the fair value of the mortgaged property has a fair value that is significantly greater than the amount mortgage obligations and intends to negotiate a forbearance or other modification of the mortgage or refinance the mortgage obligations or assist in a sale and modification of the mortgage note. There can be no assurance, however, that any such transaction will be consummated on acceptable terms or at all.

Leander Stearns National Association, the mortgage lender for the property (“Leander Property”) owned by Leander Associates, Ltd., (“Leander”), a Texas limited partnership that is a consolidated subsidiary of Clearday, Inc., has commenced litigation regarding the nonpayment of a mortgage loan obligations of approximately $875,000 seeking repayment of the mortgage loan of $805,000 that was due February 10, 2023, and additional amounts, including interest and late fees. Leander and the mortgage lender entered into a Forbearance Agreement as of May 22, 2023 and the first amendment thereto dated September 8, 2023, that, among other matters, provided a forbearance period and extended the maturity of the mortgage loan to October 21, 2023, and requires certain payments to the mortgage lender, including monthly installment payments to the mortgage lender of all accrued, unpaid interest starting on September 15, 2023 and continuing on the same day of each month thereafter until the New Maturity Date (as defined below) with interest calculated on the unpaid principal balance as set forth in the Note. The mortgage loan under the forbearance agreement, as amended, provides that the mortgage lender deferred certain past-due interest to the extended maturity date of October 21, 2023. Leander has entered into a purchase and sale agreement for the Leander Property for a value that is in excess of the amounts owed to the mortgage lender and the other financing by us owed to KOBO LP with respect to the Leander Property. We believe that the net proceeds to Leander from the sale of the Leander Property will not be material after giving effect to the payments to the mortgage lender, and existing financing of net proceeds to KOBO LP and other financings of such proceeds, and transaction brokerage fees and other costs.

The Company has been threatened with litigation by the law firm Rigrodsky Law, P.A. alleging unjust enrichment in connection with stockholder litigation commenced by such firm related to the AIU Merger and claiming damages of $200,000. This law firm alleges that the complaint that was filed caused material supplemental disclosures. The Company is assessing these allegations and expects to respond appropriately. 

19

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In addition, from time to time, the Company becomes involved in litigation matters in the ordinary course of its business. Such litigations include an action that alleges negligence and other claims regarding the death of a resident in a memory care facility. Although the Company is unable to predict with certainty the eventual outcome of any litigation, the Company does not believe any of its currently pending litigation is likely to have a material adverse effect on its business.

Indemnification Agreements

Certain lease and other obligations of the Company are guaranteed in whole or in part by James Walesa and/or BJ Parrish and others. The Company has agreed to indemnify and hold each such individual harmless for all liabilities and payments on account of any such guaranty. The lease obligations of the Company for its lease obligations for four of its five MCA facilities, including the lease of the MCA community that is in Simpsonville, South Carolina, referred to as the Simpsonville facility. This is the facility that is the subject of litigation and judgement against certain of the Company’s subsidiaries. We have been fully indemnified by James Walesa for all obligations that the Company may incur with respect to an adverse judgement against the Company, including any post-judgement interest. Such indemnification by James Walesa is under an agreement dated as of July 30, 2020. Under such agreement, James Walesa receives a fee equal to 2% of the total amount payable by AIU or any of its subsidiaries which is payable in units of shares of the AIU Alt Care Preferred and Clearday Warrants at $10.00 per unit, which is the same as the cash payment for such units by third parties in the offering of such units by AIU Alt Care. If Mr. Walesa is required to make any payments under this indemnification, the Company will issue shares of AIU Alt Care Preferred and Clearday Warrants, at $10.00 per unit, for the amount of such payment.

Subsequently, an amendment to the indemnification agreement above was signed on January 19, 2021, in which additional securities were pledged on behalf of James Walesa for all obligations that Company may incur with respect to an adverse judgement and/or any post-judgement interest. In the event that Mr. Walesa is required to make any payments under this amended indemnification agreement, then Company will issue shares of AIU Care, AIU Warrants and AIU Common Stock at $10.00 per unit as well as Series A Preferred at $20.00 per unit, for the amount of such payment.

20

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. Earnings Per Share

Basic net income (loss) per common share is calculated by dividing the net income (loss) attributable to Clearday shareholders by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of common shares and potentially dilutive securities outstanding for the period. For the Company’s diluted earnings per share calculation, the Company uses the “if-converted” method for preferred stock and convertible debt and the “treasury stock” method for Warrants and Options.

The following tables set forth the potentially dilutive shares that were anti-dilutive in their respective periods as the Company had net losses for the periods ended June 30, 2023 and 2022, respectively.

		For the Six Months Ended
Dilution shares calculation	June 30,
		2023	2022
Series A Convertible Preferred Stock		328,925	328,925
Series F 6.75% Convertible Preferred Stock		4,538,616	4,797,052
Series I 10.25% Convertible Preferred Stock		1,365,640	320,657
Limited Partnership Units		99,038	99,038
Warrants		7,618,820	4,036,320
Bridge Notes		835,366	-
Total participating securities		14,786,405	9,581,992

9. Related Party Transactions

Debt. and Guarantees

The Company’s indebtedness includes amounts loaned to us by executive management. In addition, the Company incurs debt that is personally guaranteed by certain executives, officers and directors for which they receive a guarantee fee. There is a guarantee fee agreement in place that details the amount of the fee as well as payment terms. The amount of the fee is capped at 1% of the amount of the outstanding note regardless of how many guarantors there are on the loan unless otherwise determined by the Company’s Board of Directors.

We owe (1) Richard Morris, our General Counsel, (i) for a loan in the amount of $336,538 including principal and interest (ii) past due rent for our robots of approximately $127,933 including interest (2) James Walesa, our Chief Executive Officer, approximately $143,141 in loan guaranty fees. (3) B.J. Parrish, our Chief Operating Officer $44,722 in loan guaranty fees. (4) Steve Parsons, our shareholder $24,198 in loan guaranty fees. Christen Hemmings is owed approximately $130,000 in unsecured short term non-interest-bearing debt and additional amounts for loan guaranty fees.

Cibolo Creek Partners, LLC (“Cibolo Creek”) and its affiliate Round Rock Development Partners, LP (“RRDP”) prior to December 31, 2018, made loans to us under revolving credit notes that bear interest at the then applicable federal rate and are payable on demand or other date specified by such lender. In December 2018, AIU acquired businesses affiliated with Cibolo Creek. As of June 30, 2023, Cibolo Creek and Round Rock were owed $479,484 and $500,000 respectively, by the Company. As of December 31, 2022, AIU, Inc., Cibolo Creek and Round Rock were owed $89,381, $517,678 and $500,000 respectively, by the Company. These amounts are included in Note 6 – Indebtedness.

Stockdale Financing.

On May 22, 2023, Stockdale Associates, Ltd. (“Stockdale”), a wholly owned subsidiary of Clearday, Inc. entered into a sales transaction with James Walesa, the Chief Executive Officer of the Company, for the land of approximately 1.5 acres owned by Stockdale located in the city of Stockdale, Texas (the “Stockdale Property”). The aggregate purchase price for the Stockdale Property was approximately $155,925. Mr. Walesa used the Stockdale Property to obtain mortgage financing from a third party (the “Stockdale Mortgage Loan”). Stockdale may repurchase the Stockdale Property at any time upon payment to Mr. Walesa of $175,000, plus interest on such an amount at a rate of 10.9% annually based on the basis of a 360-day year, less $19,075. Stockdale is required to pay Mr. Walesa the approximate sum of $1,590 per month commencing July 1, 2024, and pay all other amounts required under the Stockdale Mortgage Loan and all amounts including property taxes, required for the ownership of the property. The Stockdale Mortgage Loan matures, and the Stockdale’s repurchase right terminates, on June 1, 2028. A $5,925 gain on the sale of the Stockdale property was recognized and included in Gain/loss on disposal of assets on our condensed consolidated financial statements.

Viveon Merger

We have agreed to invest approximately 48% of the net proceeds from advances or the issuance of our Bridge Notes with Viveon. As of June 30, 2023 we have invested approximately $319,000 of such net proceeds in Viveon under the terms of a promissory note issued by Viveon (the “Viveon Note”). We have subsequently invested approximately $558,700 as of August 11, 2023 for a total investment of approximately $877,600. We made this investment in Viveon to pay a portion of Viveon’s working capital expenses incurred in anticipation of the Viveon Merger. Because the indebtedness under this Viveon Note will be eliminated in the Viveon Merger or likely uncollectible in the event the Viveon Merger is not closed because we do not have the right to any of Viveon’s assets in their trust account, which is their only asset, we have recorded an allowance for doubtful accounts in the full amount of such investment. We have also amended the terms of the Viveon Merger Agreement to, among other matters, increase the number of shares of Viveon common stock that will be issued in the Merger to increase the valuation of Clearday to $500 million based on, among other factors, the demonstrated benefits of Clearday’s longevity care platform.

10. Deficit

The certificate of incorporation of Clearday, Inc. provides for 80,000,000 authorized shares of Common Stock and 10,000,000 authorized shares of preferred stock, each par value $0.001 per share.

Liquidation Preference

In the event of the Company’s liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all the Company’s debts and other liabilities and the satisfaction of any liquidation preferences that may be granted to the holders of any then outstanding shares of preferred stock.

21

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Rights and Preferences

Holders of common stock have no preemptive, conversion or subscription rights, and there is no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock, which the Company may designate and issue in the future.

Voting Rights

Each holder of common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. The Company’s amended and restated certificate of incorporation and amended and restated bylaws do not provide for cumulative voting rights. Because of this absence of cumulative voting, the holders of most of the shares of common stock entitled to vote in any election of directors can elect all the directors standing for election, if they should so choose. In addition, the Company’s amended and restated certificate of incorporation also provides that the Company’s directors may be removed only for cause by the affirmative vote of the holders of at least 75% of the consolidated voting power of all the Company’s stockholders entitled to vote on the election of directors, voting together as a single class.

Subject to supermajority votes for some matters, matters shall be decided by the affirmative vote of the Company’s stockholders having a majority in voting power of the votes cast by the stockholders present or represented and voting on such matter, provided that the holders of the Company’s common stock are not allowed to vote on any amendment to the Company’s certificate of incorporation that relates solely to the terms of one or more series of preferred stock if the holders of such affected series are entitled, either separately or together with the holders or one or more such series, to approve such amendment. The affirmative vote of the holders of at least 75% of the votes that all of the Company’s stockholders would be entitled to cast in any annual election of directors and, in some cases, the affirmative vote of a majority of minority stockholders entitled to vote in any annual election of directors are required to amend or repeal the Company’s bylaws, amend or repeal certain provisions of the Company’s certificate of incorporation, approve certain transactions with certain affiliates, or approve the sale or liquidation of the Company. The vote of most minority stockholders applies when an individual or entity and its affiliates or associates together own more than 50% of the voting power of the Company’s then outstanding capital stock.

Preferred Stock

The Company has 5,000,000 shares of Series F 6.75% cumulative convertible common stock, $0.001 par value, authorized with 4,369,529 and 4,797,052 issued and outstanding as of June 30, 2023, and December 31, 2022, respectively. The Series F Preferred Stock has a stated value of $20.00 per share is exchangeable at the option of the holder into approximately 2.38 shares of the Company’s Common Stock, subject to adjustment for specified fundamental transactions such as stock splits, reverse stock splits and stock combinations. See Note 11 — Mezzanine Equity, for accounting treatment of the Series F Preferred Stock.

The Company’s Series A Preferred Stock has a $.001 par value, 2,000,000 shares authorized, and 328,925 shares issued and outstanding as of June 30, 2023 and December 31, 2022. Except for a preference on liquidation of $0.01 per share, each share of Series A Preferred Stock is the economic equivalent of ten twelfths of a share of common stock into which it is convertible. Except as required by law, the Series A Preferred Stock will not have any voting rights.

Dividends and Distributions

For the six-month periods ended June 30, 2023, and 2022, the Company accrued dividends for the 6.75% Series F preferred stock in the amount of $3,343,771 and $1,655,926 respectively.

22

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Warrants

The Company has three separate types of warrants that are outstanding:

● warrants that were granted and outstanding by Superconductor Technologies Inc. (“STI”) prior to the September 9, 2021, effective date of the previously disclosed merger (the “AIU Merger”) with Allied Integral United, Inc. (“AIU”);

● warrants assumed by the Company that were granted by AIU prior to the effective date of the AIU Merger; and

● warrant that were issued by the Company after the AIU Merger.

The following is a summary of such outstanding warrants at June 30 2023:

Warrants (“STI Warrants”) issued by STI prior to September 9, 2021, the effective date of the AIU Merger.

	Common Shares
	Total		Currently Exercisable		Exercise Price per Share		Expiration Date
Warrants related to March 2018 financing		7,331		7,331	$	245.84	September 9, 2023
Warrants related to July 2018 financing		119,241		119,241	$	75.48	July 25, 2023
Warrants related to July 2018 financing		7,154		7,154	$	94.35	July 25, 2023
Warrants related to May 2019 financing		5,518		5,518	$	26.96	May 23, 2024
Warrants related to October 2019 financing		100,719		100,719	$	5.39	October 10, 2024
Warrants related to October 2019 financing		14,336		14,336	$	6.74	October 8, 2024

Warrants that were issued by Clearday Operations, Inc. prior to the effective date of the AIU Merger:

	Common Shares
	Total		Currently Exercisable		Exercise Price per Share		Expiration Date
Warrants issued in connection with financings *		3,281,508		3,281,508	$	5.00	November 15, 2029
Warrants issued to a consultant ^		500,000		500,000	$	11.00	August 10, 2026

*

Two of our subsidiaries have preferred securities that are classified under GAAP as Non-Controlling Interest: (1) the preferred stock designated as the Series I 10.25% cumulative convertible preferred stock, par value $0.01 per share of AIU Alt Care (the “Alt Care Preferred Stock”); and (2) the preferred limited partnership interests of Clearday OZ Fund (the “Clearday OZ LP Interests”). As of June 30, 2023, there are 1,376,118 warrants that were issued by Clearday to investors in the Alt Care Preferred Stock and the Clearday OZ LP Interests that may be exercised for an aggregate of 3,281,508 shares of the Company’s Common Stock. The exercise price per share for each is $5.00 per share, subject to adjustment for specified fundamental transactions such as stock splits, reverse stock splits and stock combinations.

^

The Company also has a warrant issued to a consultant representing 500,000 shares of the Company’s Common Stock at an exercise price of $11.00 per share, which may be paid by customary cashless exercise. Such warrant is subject to adjustment for specified fundamental transactions such as stock splits, reverse stock splits and stock combinations.

23

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Warrants issued by Clearday, Inc. after the effective date of the AIU Merger to Lenders:

Each of the following warrants (“Lender Remedy Warrants”) were issued in connection with a financing and provides that the warrant may only be issued upon an event of default under the related promissory note.

	Common Shares
	Outstanding		Exercisable		Exercise Price		Maturity Date
Related to the January 12, 2023, Financing (Mast Hill LP)		1,134,000		0	$	0.75	5 years after Trigger Date*
Related to the September 30, 2022, Financing (Mast Hill LP)		472,500		0	$	0.50	5 years after Trigger Date*
Related to the July 1, 2022, Financing (Mast Hill LP)		900,000		0	$	0.50	5 years after Trigger Date*

* Trigger Date is defined as the date of an Event of Default under the promissory note that is related to the financing in which this warrant was issued, which default has not been waived.

The additional warrants were also issued to lenders:

	Common Shares
Related to the February 17, 2023, Financing (Jefferson Street Capital LLC)		225,000	225,000	$	0.75	March 16, 2028
Related to the January 12, 2023, Financing (Mast Hill LP)		851,000	851,000	$	0.75	February 14, 2028

Derivative Calculation

During the period ended June 30, 2023, the Company calculated the fair value of the warrants granted based on assumptions used in the Cox-Ross-Rubinstein binomial pricing model using the following inputs: the price of the Company’s common stock on the date of issuance ranging from $0.75 to $0.85; risk-free interest rates ranging from 3.53% to .474.06%; volatility ranging from 183% to 184% based on the historical volatility of the Company’s common stock; exercise prices ranging from $0.50 to $0.75; and terms of sixty months.

Stock Options

On June 30, 2023, we continued to have the two active equity award option plans, the 2003 Equity Incentive Plan and the 2013 Equity Incentive Plan (collectively, the “Stock Option Plan”). Although we can only grant new options under the 2013 Equity Incentive Plan. Under our Stock Option Plan, stock awards were made to our former directors, key employees, consultants, and non-employee directors and consisted of stock options, restricted stock awards, performance awards, and performance share awards. Stock options were granted at prices no less than the market value on the date of grant. There were no stock option exercises during the six and twelve months ended June 30, 2023 or December 31, 2022. There were no stock options that were exercisable on June 30, 2023.

24

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock

During the second quarter of 2023, we issued approximately 208,430 shares of our common stock to consultants, including a former employee.

Registered Shares

During the second quarter of 2023, we issued approximately 616,253 shares of common stock upon the conversion of our Series F Preferred stock. Such shares were registered under our prior registration statement.

As of June 30, 2023, there was no unamortized stock compensation.

Non-Controlling Interest

In November 2019, a certificate of incorporation was entered into by AIU Alt Care for Series I 10.25% cumulative convertible preferred stock, par value $0.01 per share that authorizes the issuance of 1,500,000 shares of preferred stock and 1,500,000 of common stock and designated 700,000 as Series I Preferred Stock. Each share of Series I Preferred Stock has a stated value equal to the Series I Preferred Stock original issue price. For the six months ended June 30, 2023 and 2022, there was no amount invested in AIU Alt Care.

In October 2019, AIU Alt Care formed AIU Impact Management, LLC and they formed Clearday OZ Fund, which is managed by AIU Impact Management, LLC, as the general partner. For the three months ended June 30, 2023 and 2022, there was no amount invested in Clearday OZ Fund.

The exchange rate for each of the Alt Care Preferred Stock and the limited partnership units in Clearday OZ Fund to Clearday, Inc. Common Stock is equal to (i) the aggregate investment amount for such security plus accrued dividends at 10.25% per annum, (ii) divided by 80% of the 20 consecutive day volume weighted closing price of the Common Stock of Clearday preceding the conversion date. Prior to the merger, these securities were exchangeable to shares of AIU common stock at a rate of 1 share for every $10.00 of aggregate amount of the investment plus such accrued dividends.

Non-Controlling Interest Loss Allocation

The Company applied ASC 810-10 guidance to correctly allocate the percentage of loss attributable to the NCI of each company. For the period ended June 30, 2023, the loss for AIU Alt Care is $38,394 and Clearday Oz Fund loss is $917,382. Based on 99% ownership interest, AIU Alt Care and Clearday OZ fund incurred a loss attributable to the NCI in the amount of $38,010 and $908,208, respectively in the period ended June 30, 2023 and incurred gains of $1,663 and losses of $218,412, respectively, for the period ended June 30, 2022.

Cumulative Convertible Preferred Stock and Limited Partnership Interests in Subsidiaries (NCI)

For the period ended June 30, 2023 no additional shares of AIU Alt Care Preferred Stock or Clearday OZ LP Interests were issued. At June 30, 2023, 89,700 shares of AIU Alt Care Preferred Stock were outstanding and 244,473 units of Clearday OZ LP Interests were outstanding.

The terms and conditions of the Alt Care Preferred Stock and the Clearday OZ LP Interests allow the investors in such interests to exchange such securities into the Company’s common stock at the conversion price equal to 80% of the 20 consecutive day volume weighted closing price of the Common Stock of Clearday preceding the conversion date.

Dividends on the Alt Care Preferred Stock and preferred distributions on the units of limited partnership interests in Clearday OZ Fund are at each calendar quarterly month end at the applicable dividend rate (10.25%) on the original issue price of the Alt Care Preferred Stock or the units limited partnership interests. Dividends will either (a) be payable in cash, if and to the extent declared by the board of directors or the general partner, or (b) by issuing Dividend Shares equal to the aggregate accrued dividend divided by the Series I Original Issue Price. Dividends, if noticed to the Holder, will be payable after the Dividend Payment Date. Accrued dividends totaled $ for the six-month period ended June 30, 2023.

25

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Each of the Company, AIU Alt Care and Clearday OZ Fund shall redeem the Alt Care Preferred Stock or the units of limited partnership interests on the 10 Year Redemption Date that is ten years after the final closing of the offering. The securities provide for a redemption in cash or shares of common stock at the option of Clearday, Inc., in an amount equal to the unreturned investment in the Alt Care Preferred Stock or units of limited partnership interests. Upon consummation of certain equity offerings prior to May 1, 2022, AIU Alt Care may, at its option, redeem all or a part of the Alt Care Preferred Stock for the liquidation preference plus a make-whole premium. In addition, upon the occurrence of, among other things (i) any change of control, (ii) a liquidation, dissolution, or winding up, (iii) certain insolvency events, or (iv) certain asset sales, each holder may require the Company to redeem for cash all such holder’s then outstanding shares of Alt Care Preferred Stock.

The Certificate of Designation also sets forth certain limitations on the Company’s ability to declare or make certain dividends and distributions and engage in certain reorganizations. The limited partnership agreement has similar provisions.

Subject to certain exceptions, the holders of Alt Care Preferred Stock and the units of limited partnership interests have no voting power and no right to vote on any matter at any time, either as a separate series or class or together with any other series or class of shares of capital stock or partnership interests, and are not be entitled to call a meeting of such holders for any purpose, nor are they entitled to participate in any meeting of the holders of the Company’s common stock or participate in the management of Clearday OZ Fund by its general partner.

11. Mezzanine Equity

The Company has 10,000,000 shares of preferred stock authorized, par value $0.001 per share, including 5,000,000 designated as Series F Preferred Stock and 4,369,529 shares outstanding as of June 30, 2023. Pursuant to the Certificate of Designations of Series F Preferred Stock, upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation (“Liquidation Event”), including any Deemed Liquidation Event, as defined in the Certificate of Designations and unless otherwise determined by the majority of the holders of the Series F Preferred Stock that a transaction is not a Deemed Liquidation Event, the holders of then outstanding Series F Preferred Stock shall be entitled to be paid a liquidation preference (“Preference Amount”) out of the assets of the Company available for distribution to its stockholders equal to the original issue price and, plus any accumulated and unpaid dividends. As the payment of this Preference Amount is not solely within the control of the Company, the Series F Preferred Stock does not qualify as permanent equity and has been classified as mezzanine equity. The Series F Preferred Stock is not redeemable, and it was not probable that there would be a Liquidation Event as of June 30, 2023. Therefore, the Company is not currently required to accrete the Series F Preferred Stock to the aggregate liquidation value.

12. Subsequent Events

We evaluated subsequent events and transactions occurring after June 30, 2023, through the date of this Report to determine if there were any such events or transactions requiring adjustment to or disclosure in the accompanying condensed consolidated financial statements, noting none other than the following.

Viveon Merger

Amendment to the Viveon Merger Agreement

On August 28, 2023, Viveon, its subsidiary VHAC2 Merger Sub, Inc., a Delaware corporation (“Merger Sub”), the Company, Viveon Health LLC, a Delaware limited liability company (“SPAC Representative”), and Clearday SR LLC, a Delaware limited liability company (“Company Representative”) entered into the First Amendment to Viveon Merger Agreement (the “First Amendment”) that amended and modified the Viveon Merger Agreement to, among other things, (i) increase the merger consideration from $250,000,000 to $500,000,000 (plus the aggregate exercise price for all Clearday options and warrants), payable in shares of common stock of Viveon, (ii) provide that holders of all of the Company’s common and preferred stock as of the effective time of the Viveon Merger will be entitled to receive a pro rata portion of the additional 5 million shares of Viveon common stock, in the aggregate (the “Earnout Shares”), if at any time during the period beginning on the date of the closing of the Viveon Merger (the “Closing Date”) and ending on the fifth anniversary of the Closing Date (the “Earnout Eligibility Period”), the Adjusted Net Income (as defined in the Viveon Merger Agreement) for any 12 month period is a positive number or there is a change of control of Viveon during the Earnout Eligibility Period. The foregoing description of the First Amendment is not complete and is subject to and qualified in its entirety by reference to the First Amendment which is filed with the Company’s Current Report on Form 8-K filed on August 29, 2023, as Exhibit 2.1, the terms of which are incorporated by reference herein.

Modification of Indebtedness

A subsidiary of the Company, Leander Associates Ltd., modified the terms of its mortgage loan as described in Note 7 — Commitments and Contingencies.

Bridge Financings

We incurred additional financings of a gross amount of approximately $1.7 million as advances and the issuances of the Bridge Notes described in Note 6 — Indebtedness, of which we shared approximately $768,000 with Viveon as described in Note 9 — Related Party Transactions.

Additional Financings

We received approximately $58,000 as an advance from KOBO, L.P. (“Kobo”) and are negotiating an amendment to the Property Sale Proceeds Advance to reflect this advance and waive the prior payment defaults by Leander. We expect that this amendment will provide that the sole owner of Leander will provide grant a security interest in Leander and, if Kobo is required to enforce its remedies for any additional default, that the net proceeds of any sale of the Leander Property above the mortgage obligation and the amounts owed to Kobo will be shared: 80% to Kobo and 20% to us.

26

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Report. Some of the information contained in this discussion and analysis, including information with respect Clearday, its plans, and strategy for its business and related financing, includes forward-looking statements that involve risks and uncertainties.

Overview

We provide technologies and innovative care solutions to address the global aging crises. We have used our extensive experience in senior care, including owning and operating high-performing residential care facilities in the most challenging senior care venues (Memory and Alzheimer’s treatment), to develop our purpose-built Longevity-tech platform for the 170 million Americans turning 50 by 2030. Our Longevity-tech platform intentionally moves our focus from a facility-driven real estate business to a healthcare technologies business that is designed to capture the massive unmet senior care need. We believe that the currently available longevity-tech solutions do not address this significant market and that we are able to modernize the nearly 54,000 U.S. daily care, skilled nursing, and long-term care facilities.

We have recently shifted our business strategy to move from a facility-driven real estate business to a health technology company in order to capture the massive unmet need caused by today’s disconnected longevity-tech market. At the end of the first quarter of 2023 and the beginning of the second quarter of 2023, we:

● entered into a merger agreement (“Viveon Merger Agreement”) with Viveon Health Acquisition Corp., a Delaware corporation (“Viveon”), that is a special purpose acquisition corporation or SPAC and that has its shares of common stock listed on the NYSE American exchange; and

● exited from three of our four residential care facilities and limit our financial investment in the capital-intensive residential memory care businesses by terminating our leases (“MCA Facility Leases”) of these three facilities (“MCA Facilities”) that were operated through our Memory Care America LLC (“MCA”) subsidiary.

The termination of the MCA Facility Leases will significantly change our financial operations and cash flows for a period following March 31, 2023, primarily by reducing our operating losses and debt that we were required to incur to fund such losses.

Seasonality

Residential care facilities are seasonal in nature. Generally, the Naples residential care facility suffers revenue losses in summer months as some families of residents temporarily move to Northern areas and bring their resident family members with them; and during the winter months as there is often an increase in the loss of residents during these periods primarily because of flu and other health issues during such periods. We do not expect our Longevity-tech platform businesses to have such seasonality.

Results of Operations

Our operating revenues prior to March 31, 2023, were predominately from our adult day care center and four residential memory care facilities, three of which we exited as of such dat. MCA earns revenue from its communities primarily by providing services to individual residents for a specified monthly fee, which fee includes all services such as room, meals and programs and to a lesser extent, certain community fees for a resident to move into a facility. All of MCA’s revenues are “private pay” which are charged directly to the resident and paid by such individual’s family or administrator. Residents may terminate services upon advance notice of a specified period. A portion of our revenues were from our adult day care business. Our adult day care service earns revenues primarily by providing services to individual clients for weekday sessions, which includes activities. Our revenues from our adult day care service includes reimbursements to veterans under a program by the United States Department of Veterans Affairs (VA).

27

Our operating expenses are primarily the expenses of our MCA facilities as well as the expenses that we incur in our other businesses, including adult day care and our Longevity-tech platform. Expenses incurred by MCA are primarily wages and benefits, including wages and wage-related expenses; operating expenses, including utilities, housekeeping, dietary, maintenance, regulatory requirements, insurance and administrative costs and salaries; lease expenses which ended effective March 31, 2023; other general and administrative expenses; depreciation and amortization expense on buildings and furniture and equipment; and interest expenses for loans and other financings related to the MCA businesses.

Operating Summary for the Three-Months Ending June 30, 2023 and 2022

We reduced our net operating loss by approximately 42% or approximately $1.0 million during the quarter ending June 30, 2023, compared to the quarter ending June 30, 2022, primarily by reducing our total operating expenses by approximately 63% or approximately $3.6 million offset by a decrease in total revenues by approximately 80% or approximately $2.5 million.

SG&A Expenses were primarily insurance, interest expense, bank fees, equity-based compensation and audit and other professional fees and decreased by 2% or approximately less than $0.02 million, primarily due to a decrease of our property and casualty insurance resulting from the termination of the Community Leases.

Revenues. Revenues decreased by approximately 80% or $2.5 million to approximately $0.62 million during the quarter ending June 30, 2023, from approximately $3.1 million during the quarter ending June 30, 2022, primarily due to lower revenues reflecting the Community Leases that we terminated effective March 31, 2023, offset by an increase of revenues during such period from our adult day care center and, to a smaller extent, increased commercial property rental income during this period. We have been able to significantly increase the daily rate during the second quarter of 2023 charged at our adult day care community due in large part to the deployment of our Longevity-tech platform and accepting clients that require a greater attention and care. In the third quarter of 2023, we have also deployed our Longevity-tech platform at our Naples memory care community and began to increase rates at that community which we expect will enable better operating results in future periods.

Operating Expense. Operating expenses decreased by approximately 63% or approximately $3.5 million to approximately $2.1 million during the quarter ending June 30, 2023 (a greater decrease than our decrease in revenues during this period) from approximately $5.6 million during the quarter ending June 30, 2022, primarily due to: (1) lower wages and general operating expenses of approximately 15% or approximately $3.7 million resulting primarily from lower employee wages and related expenses related to the reduction of resident care staff at the terminated Community Leases, offset in part by increased wages and related expenses due to an increase in executives and staff developing and marketing our Longevity-tech platform, and (2) lower selling, general and administrative expenses, including healthcare insurance expense, of approximately 36.8% or approximately 0.5 million resulting primarily from changes in personnel reflecting our pivot to a longevity technology company and reduced professional and consulting fees

Research & Development. We did not have any research and development expenses during the quarter ending June 30, 2023 or June 30, 2022.

Interest. Our interest expense increased by approximately 335% or approximately $1.3 million to $1.7 million during the quarter ending June 30, 2023 from $0.4 million during the quarter ending June 30, 2022. The increase of interest expense resulted primarily because of additional debt incurred during the period, including the note payable to Invesque, Inc. arising from the termination of the Community Leases and higher interest rates charged, including default interest rates and other fees and expenses arising from defaults, primarily the Benworth Action and, to a smaller extent, the mortgage loan on the Leander Property and a greater interest rate related to the mortgage on our headquarters property. The amount of interest expense does not include any accrual of interest for unpaid interest under the MCA Agreements, each of which are not being paid by us. See Item 3 Legal Proceedings.

Impairment. There was not any impairment taken during the second quarter of 2023 as compared to the second quarter of 2022.

Other income increased during the second quarter ending June 30, 2023, to approximately $0.2 million from approximately $0.3 million or approximately 29% primarily due from the fair value of derivatives. In addition to our operating expenses incurred by us for the operation of the three properties under the Community Leases, we recognized approximately $0.19 million under the Lease Transition Agreements related to expenses incurred by these properties during April, 2023, which will be a nonrecurring expense.

Operating Summary for the Six-Months Ending June 30, 2023 and 2022

We reduced our net operating loss by approximately 38% or approximately $2.1 million during the six months ending June 30, 2023, compared to the same period ending June 30, 2022, primarily by reducing our total operating expenses by approximately 40% or approximately $4.7 million offset by a decrease in total revenues by approximately 43% or approximately $2.7 million.

Revenues. Revenues decreased by approximately 43% or $2.7 million to approximately $3.6 million during the six months ending June 30, 2023, from approximately $6.3 million during the same period ending June 30, 2022, primarily due to lower revenues reflecting the Community Leases that we terminated effective March 31, 2023, offset by an increase of revenues during such period from our adult day care center and, to a smaller extent, increased commercial property rental income during this period. The decrease was less of a percentage during the six-month period compared to the three month period ending June 30, 2023 primarily because we operated the Community Leases for half of this six month period. We have been able to significantly increase the daily rate during the second quarter of 2023 charged at our adult day care community due in large part to the deployment of our Longevity-tech platform and accepting clients that require a greater attention and care. In the third quarter of 2023, we have also deployed our Longevity-tech platform at our Naples memory care community and began to increase rates at that community which we expect will enable better operating results in future periods.

Operating Expense. Operating expenses decreased by approximately 40% or approximately $4.7 million to approximately $7.0 million during the six months ending June 30, 2023 from approximately $11.8 million during the same period ending June 30, 2022, primarily due to (1) lower wages and general operating expenses of approximately 26% or approximately $0.629 million resulting primarily from lower employee wages and related expenses related to the reduction of resident care staff at the terminated Community Leases offset in part by increased wages and related expenses due to an increase in executives and staff developing and marketing our Longevity-tech platform, and (2) lower selling, general and administrative expenses, including healthcare insurance expense, of approximately 29% or approximately 0.7 million resulting primarily from changes in personnel reflecting our pivot to a longevity technology company and reduced professional and consulting fees.

Research & Development. We did not record any research and development expenses during the six-month ending June 30, 2023 or the six months ending June 30, 2022.

Interest. Our interest expense increased by approximately 171% or approximately $1.5 to $2.4 million during the six months ending June 30, 2023, from $0.896 million during the same ending June 30, 2022. Our interest expense during the six months ending June, 30, 2023 was primarily debt incurred during the later part of this period including the note payable to Invesque incurred on March 31, 2023 and higher interest rates charged, including default interest rates and other fees and expenses arising from defaults, primarily the Benworth Action and, to a smaller extent, the mortgage loan on the Leander Property and a greater interest rate related to the mortgage on our headquarters property. The amount of interest expense does not include any accrual of interest for unpaid interest under the MCA Agreements, each of which are not being paid by us. See Item 3 Legal Proceedings.

Impairment. There was not any impairment taken during the six months period of 2023 as compared to the same period of 2022.

Other Income or Loss. Other income increased during the second quarter ending June 30, 2023, to approximately $1.5 million from approximately ($0.5) million or approximately 400% primarily due to the interest expense and derivative financing costs. In addition to our operating expenses incurred by us for the operation of the three properties under the Community Leases, we recognized approximately $0.19 million under the Lease Transition Agreements related to expenses incurred by these properties during April 2023, which will be a nonrecurring expense.

28

Government Programs

We participated in the ERTC program and expect additional cash payments under the ERTC. We have applied for payments under the Families First Coronavirus Response Act (the “FFCRA”), as amended by the COVID-related Tax Relief Act of 2020 and expect to utilize the federal tax credits available under the federal Work Opportunity Tax Credit (WOTC). The amount of savings under WOTC is subject to the hiring of workers from certain disadvantaged targeted categories and is generally calculated as a percentage of wages over a twelve-month period up to worker maximum by targeted category. We did not have any PPP Loan Forgiveness during the second quarter of 2023.

Contractual Obligations and Commitments

See the “Commitment and Contingencies” section within Note 7 — Commitments and Contingencies of the condensed consolidated financial statements within this Report, which information is incorporated herein by reference.

We entered into the Lease Transition Agreement to terminate the Community Leases as described in Note 5 — Leases. We amended this agreement on September 8, 2023, effective July 31, 2023. This Agreement provided for our obligation to pay approximately $3.5 million with $300,000 payable on July 31, 2023. We paid $50,000 of this amount on July 31, 2023, and under the amendment are required to pay the remaining $250,000 on September 30, 2023, subject to additional extensions. The foregoing description of terms and conditions of the amendment to the Lease Transition Agreement are not complete and qualified in their entirety to the provisions of such amendment which is provided as Exhibit 10.2 of this Report.

Legal Proceedings

Clearday is subject to legal proceedings. The disclosures in this part of Management’s Discussion and Analysis of Financial Condition and Results of Operations are provided under Item 1 Note 7 — Commitments and Contingencies to the financial statements – Commitments and Contingencies.

Off-Balance Sheet Arrangements

None.

Liquidity and Capital Resources

Cash, consisting of short-term, highly liquid investments and money market funds with original maturities of nine months or less at the date of purchase, are carried at cost plus accrued interest, which approximates market.

Restricted cash as of June 30, 2023, and December 31, 2022, includes cash that Clearday deposited as security for obligations arising from property taxes, property insurance and replacement reserve Clearday is required to establish escrows as required by Clearday’s mortgages and certain resident security deposits.

We have continued to sustain significant operating losses and have used cash raised by the issuing of securities and the issuance of debt, including convertible debt, to fund such losses. We expect to continue to incur losses until we are able to realize revenues from our Longevity-tech platform. However, we expect to have lower operating losses going forward primarily because of the termination of the Community Leases under the Lease Transition Agreements.

Our existing liquidity may not be sufficient to fund our operations, including payroll, anticipated capital expenditures, working capital, and other financing requirements for the foreseeable future. We may require more financing than anticipated, especially if our planned sales or revenues of our Longevity-tech platform are delayed or the closing of the Viveon Merger is delayed.

We expect our operating working capital needs to be less after the termination of the Community Leases under the Lease Transition Agreement as we will not incur the cash losses incurred in operating these communities, offset in part because of the amounts payable under the Lease Transition Agreement which is funded through a note that we issued to the landlord.

As noted in Note 6 — Indebtedness, we have loans and other indebtedness that are in default. The lenders may exercise remedies including the sale of assets in a foreclosure process. We expect to negotiate with these lenders a deferment of payment obligations and a payment plan that may be funded, in part, by the sale of our securities, including the Bridge Financings. There can be no assurance, however, that we will be able to defer such payment obligations on acceptable terms, or at all, or that we will raise sufficient additional funds on acceptable terms, or at all.

We have undertaken certain actions in our Naples residential care community and our San Antonio adult daycare community including increasing rates that we expect will lower our operating working capital deficit. We increased our resident fees in the Naples community in July and expect to continue to increase the rates, in large part, because of the incorporation of the Longevity-tech platform. We have been able to raise our daily rates at our adult daycare center and are planning to open additional adult daycare centers that we believe will generate net operating income.

We will incur ongoing recurring expenses associated with professional fees for accounting, legal, and other expenses for annual reports, quarterly reports, proxy statements, the Viveon Merger and other filings under the Exchange Act. These obligations will reduce our ability and resources to fund other aspects of our business. We hope to be able to use our status as a public company to increase our ability to use non-cash means of settling obligations and compensate certain independent contractors who provide professional services to us, although there can be no assurances that we will be successful in any of those efforts.

We continue to take actions to close the Viveon Merger and expect that Viveon will be in a position to make the requisite registration statement and proxy filings for the merger.

Cash Flows from Operating Activities

During the six-months ending June 30, 2023, and 2022, our operating activities primarily consisted of revenue from our residential and adult daycare communities and payments or accruals for employees and other operating expenses and payment of some of our liabilities.

Cash Flows from Investing Activities

During the six-months ending June 30, 2023, and 2022, our investing activities were related to our investment in Viveon which enabled Viveon to pay certain operating and merger related expenses and costs.

Cash Flows from Financing Activities

During the six-months ending June 30, 2023, and 2022, our financing activities consisted of transactions in which we raised proceeds through the issuance of debt or equity securities. During the six-months ending June 30, 2023, we raised proceeds primarily from the issuance of debt to institutional lenders and the advances or subscriptions for Bridge Financings in the aggregate amount of $3.1 million and issued our common stock for the payment of compensation for consulting services, we repaid outstanding indebtedness in the aggregate amount of approximately $0.9 million. During the six-months ending June 30, 2022, we raised proceeds from the issuance of debt in the aggregate amount of approximately $4.207 million, primarily from the issuance of $465,000 of debt to institutional lenders, $2,425,105 financing insurance premiums, $805,000 refinancing of certain of our properties through mortgage refinancing and $521,013 through Merchant Cash Advance Loans and we repaid outstanding indebtedness in the aggregate amount of approximately $1.0 million.

Critical Accounting Policies and Significant Judgments and Estimates

The preparation of the condensed consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

For a description of the accounting policies that, in management’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see “Management’s Discussion and Analysis of Financial Condition, Results of Operations – Critical Accounting Policies and Estimates” and the notes to our consolidated financial statements included in this quarterly analysis.

During the three months ending June 30, 2023, there were no significant changes in our accounting policies and estimates other than the newly adopted accounting standards that are disclosed in Note 2 — Summary of Significant Accounting Policies to our consolidated financial statements included in this Report.

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Impact of Climate Change

Concerns about climate change have resulted in various treaties, laws and regulations that are intended to limit carbon emissions and address other environmental concerns. These and other laws may cause energy or other costs at The Company’s communities to increase. In the long term, the Company believes any such increased costs will be passed through and paid by the Company’s residents and other customers in higher charges for The Company’s services. However, in the short term, these increased costs, if material in amount, could materially and adversely affect the Company’s financial condition and results of operations.

Some observers believe severe weather in different parts of the world over the last few years is evidence of global climate change. Severe weather has had and may continue to have an adverse effect on certain senior living communities The Company operates. Flooding caused by rising sea levels and severe weather events, including hurricanes, tornadoes and widespread fires may have an adverse effect on the senior living communities the Company operates. The Company mitigates these risks by procuring insurance coverage. The Company believes adequate to protect the Company from material damages and losses resulting from the consequences of losses caused by climate change. However, the Company cannot be sure that its mitigation efforts will be sufficient or that future storms, rising sea levels or other changes that may occur due to future climate change could not have a material adverse effect on the Company’s financial results.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this section.

Item 4. Evaluation of Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of our Chief Executive Officer and acting Chief Financial Officer (our principal executive officer and principal financial officer, respectively), has evaluated its disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Report. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired controls objectives. Any “material weaknesses” in the Company’s internal controls may arise because of the internal control environment of the Company. Based upon that evaluation, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were ineffective. Specifically, the company does not have adequate segregation of duties that adequately restrict user and privileged access to certain financial applications, programs, and data to appropriate company personnel; do not adequately limit access to electronic payment systems for authorized expenditures; and have inadequate cyber controls regarding the protection of our data and restricting data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately. Management has identified these weaknesses and have adopted a program to remediate such weaknesses.

Remediation Plan. The Company has instituted efforts to remediate these concerns and enhance The Company’s internal control environment to remediate these issues by the end of the year or. However, any failure to maintain effective controls could result in significant deficiencies or material weaknesses and cause the Company to fail to meet the Company’s periodic reporting obligations or result in material misstatements in the Company’s financial statements. The Company may also be required to incur costs to improve its internal control system and hire additional personnel. This could negatively impact the Company’s results of operations.

Changes in Internal Control over Financial Reporting

There have not been changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ending June 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except as noted below. We increased the number of our financial and accounting staff and remediated or mitigated certain internal control weaknesses such as segregation of duties.

Item 1. Legal Proceedings

Information on material developments in our legal proceedings is included in Note 7 — Commitments and Contingencies to our consolidated financial statements included in Part I, Item 1 of this Report.

ITEM 1A. Risk Factors

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this section.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In addition to the issuance of securities described by the Company in a Current Report on Form 8-K, the Company has issued the following shares of our common stock:

1.	On April 3, 2023, 25,097 shares to Dickson Co for accounting services that were provided by such person prior to 2022.
2.	On May 8, 2023, 133,333 shares to Outside The Box Capital Inc for marketing services to be provided by such person.
3.	On May 24, 2023, 50,000 shares to Kelly Rios, a former employee, as a bonus for additional post separate services provided by such individual.
4.	We issued approximately $1.2 million of Bridge Notes on September 29, 2023, which may be converted into approximately 1,463,415 shares of our common stock, assuming the conversion price of $0.82 per share of common stock, which is subject to adjustment in the event that the Viveon Merger Agreement is terminated or expires.

Each such issuance was exempt from the registration requirements of the Securities Act of 1933, as amended, under Section 4(a)(2) thereof, as each transaction was a privately negotiated transaction that did not involve any public offering. There was no underwriter or placement agent in any such transaction. There was no cash consideration for any such transaction. The Company received or will receive services from each such purchaser of the shares of common stock.

Item 3. Defaults Upon Senior Securities

Certain subsidiaries of the Company that operate residential care facilities (“MCA Borrowers”) incurred certain financings through merchant credit advances. Such financings were provided by creditors under agreements (“MCA Agreements”) that describe the transaction as the sale of future receivables by the applicable MCA Borrower. The aggregate accrued amount of these financings is approximately $2,925,195, as summarized in Part I, Item 1 Note 6 — Indebtedness. During the first quarter of 2023, the Company assessed its rights under the terms of these MCA Agreements and determined that it had rights and defenses to the continued payments to the creditors. The Company has not made payments on account of these MCA Agreements and, accordingly, these MCA Agreements are considered in default by the creditors. The inclusion of the disclosures in this Item 3 is not an admission that the MCA Borrowers are in default of its obligations under the MCA Agreements.

Defaults of indebtedness are noted in Item 1, Note 6 — Indebtedness which information is incorporated herein by reference.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.	Description
2.1	First Amendment to Merger Agreement, dated as of August 28, 2023, by and among Viveon Health Acquisition Corp., Clearday, Inc., VHAC2 Merger Sub, Inc., Viveon Health LLC and Clearday SR LLC.
10.1	Form of Senior Convertible Notes issued by Clearday, Inc.
10.2	First Amendment To Lease Transition Agreement entered into on September 8, 2023, effective as of July 31, 2023, by and between (1) the following entities referred to as “Landlord”: (i) MHI-MC San Antonio, LP, a Delaware limited partnership, (ii) MC New Braunfels, LP, a Delaware limited partnership, and (iii) MHI Little Rock, LP, a Delaware limited partnership; and (2) the following entities referred to as “MCA”: (i) MCA Mainstreet Tenant, LLC, a Tennessee limited liability company, (ii) MCA Westover Hills Operating Company, LLC, a Tennessee limited liability company, (iii) MCA New Braunfels Operating Company, LLC, a Tennessee limited liability company; (iv) and Memory Care at Good Shepherd, LLC, an Arkansas limited liability company.
31.1(1)	Certification of the Chief Executive Officer pursuant to Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2(1)	Certification of the Chief Financial Officer pursuant to Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1(1)	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2(1)	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS(2)	Inline XBRL Instance Document
101.SCH(2)	Inline XBRL Taxonomy Extension Schema Document
101.CAL(2)	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF(2)	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB(2)	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE(2)	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)
(1)	Filed herewith.
(2)	Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise are not subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized.

	CLEARDAY, INC.
Dated: October 16, 2023	/s/ BJ Parrish
	BJ Parrish
	Acting Chief Financial Officer
	/s/ James T. Walesa
	James T. Walesa
	President and Chief Executive Officer

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EX-2.1

Exhibit 2.1

FIRST AMENDMENT TO MERGER AGREEMENT

This First Amendment to Merger Agreement (this “Amendment”), dated as of August 28, 2023 is entered into by and among Clearday, Inc., a Delaware corporation (the “Company”), Viveon Health Acquisition Corp., a Delaware corporation (“Parent”), VHAC2 Merger Sub, Inc., a Delaware corporation (“Merger Sub”), Viveon Health LLC, a Delaware limited liability Company, in the capacity as the representative from and after the Effective Time for the stockholders of Parent (other than the Company Stockholders) as of immediately prior to the Effective Time (and their successors and assigns) in accordance with the terms and conditions of the Original Merger Agreement (as defined below) (the “SPAC Representative”), and Clearday SR LLC, a Delaware limited liability company, in the capacity as the representative from and after the Effective Time for the holders of Company Preferred Stock as of immediately prior to the Effective Time (and their successors and assigns) in accordance with the terms and conditions of the Original Merger Agreement (the “Company Representative” and each of the SPAC Representative and the Company Representative, a “Representative Party”).

RECITALS

WHEREAS, the Company, Parent, Merger Sub and the Representative Parties entered into that certain Merger Agreement dated as of April 5, 2023 (the “Original Merger Agreement”);

WHEREAS, the Company, Parent, Merger Sub and the Representative Parties desire to amend certain definitions in the Original Merger Agreement: “Company Earnout Holders”, “Company Knowledge Persons”, “Earnout Pro Rata Share” and “Per Share Merger Consideration Amount”;

WHEREAS, the Company, Parent, Merger Sub and the Representative Parties desire to amend certain other terms of the Original Merger Agreement as more fully set forth in this Amendment; and

WHEREAS, capitalized and other defined terms used in this Amendment and not otherwise defined herein have the respective meanings given to them in the Original Merger Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and promises set forth in this Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. Amendments of the Original Merger Agreement.

(a) Section 1.1 of the Original Merger Agreement. Section 1.1 of the Original Merger Agreement is hereby amended to amend and restate and/or add the following definitions:

(i) “Company Earnout Holders” means the holders of shares of Company Capital Stock as of immediately prior to the Effective Time, determined on the basis assuming that all of the shares of the Company Series A Preferred Stock and all of the shares of the Company Series F Preferred Stock were converted into shares of Company Common Stock immediately prior to the Effective Time, in accordance with their respective terms, who hold for a period of at least six (6) months following the Closing Date: (1) shares of Parent Common Stock issued upon exchange of their Company Capital Stock or (2) shares of Parent New Series A Preferred Stock or Parent New Series F Preferred Stock (as the case may be) issued in exchange of the Company Preferred Stock or shares of Parent Common Stock issued upon conversion of any such Company Preferred Stock.

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(ii) “Company Knowledge Persons” means each of the following individuals: Roberta Otto, Linda Carrasco, Richard Morris, BJ Parrish, Daniel Policy, Gary Sawina and James Walesa.

(iii) “Earnout Pro Rata Share” means, for each Company Earnout Holder, a percentage determined by the quotient of:

(1) The sum of (i) the total number of shares of Company Common Stock held by such Company Earnout Holder immediately prior to the Effective Time, plus (ii) the total number of shares of Company Common Stock issuable upon conversion of all shares of Company Series A Preferred Stock and Company Series F Preferred Stock that are held by such Company Earnout Holder immediately prior to the Effective Time;

divided by

(2) The sum of (i) the total number of shares of Company Common Stock and (ii) the total number of shares of the Company Common Stock issuable upon conversion of all shares of Company Series A Preferred Stock and Company Series F Preferred Stock, in each case, that are issued and outstanding immediately prior to the Effective Time.

(iv) “Per Share Merger Consideration Amount” means an amount equal to (a) the sum of (i) Five Hundred Million Dollars ($500,000,000), plus (ii) the Aggregate Exercise Price, divided by (b) the number of Fully Diluted Company Shares.”

(b) Amendment to Section 3.1(c). Section 3.1(c) of the Original Merger Agreement is hereby amended to read in its entirety as follows:

(c) Conversion of Shares of Company Common Stock. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than any such shares of Company Common Stock cancelled pursuant to Section 3.1(a) and any Dissenting Shares) shall, in accordance with the Company Certificate of Incorporation, be converted into the right to receive (i) a number of shares of Parent Common Stock equal to the Conversion Ratio; and (ii) a number of Earnout Shares in accordance with, and subject to the contingencies, set forth in Section 3.7.

(c) Amendment to Section 3.5. Section 3.5(a)(xiii)(E) of the Original Merger Agreement is hereby amended to read in its entirety as follows:

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(E) for each holder of Company Common Stock, Company Series A Preferred Stock and Company Series F Preferred Stock, its respective Earnout Pro Rata Share.

(d) Amendment to Section 11.21. Section 11.21(d) of the Original Merger Agreement is hereby amended to read in its entirety as follows:

(d) If the Company Representative shall die, become disabled, dissolve, resign or otherwise be unable or unwilling to fulfill its responsibilities as representative and agent of the Company Earnout Holders, then the Company Earnout Holders shall, within ten (10) Business Days after notice of such death, disability, dissolution, resignation or other event is provided by Parent to the Company Earnout Holders (which notice may be provided by the filing of a press release and Form 8-K with the SEC by Parent), appoint a successor Company Representative (by vote or written consent of the holders of Company Capital Stock that was held by such Company Earnout Holders that hold a plurality of the votes or consents provided by such Company Earnout Holders provided in writing to Parent, attention Secretary of the Corporation that are received on or prior to such tenth (10^th) Business Day. Any such successor so appointed shall become the “Company Representative” for purposes of this Agreement.

2. Representations and Warranties of the Company and the Company Representative. The Company and the Company Representative (each, a “Company Party”) hereby represent and warrant to Parent that each of the following representations and warranties are true, correct and complete as of the date of this Amendment and as of the Closing Date:

(a) Each Company Party has all requisite corporate power and authority to execute and deliver this Amendment and to consummate the transactions contemplated hereby, in the case of the Merger, subject to receipt of the Company Stockholder Approval. The execution and delivery by each Company Party of this Amendment and the consummation by each Company Party of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company. No other corporate proceedings on the part of either Company Party are necessary to authorize this Amendment or to consummate the transactions contemplated by this Amendment (other than, in the case of the Merger, the receipt of the Company Stockholder Approval). This Amendment has been duly executed and delivered by each Company Party and, assuming the due authorization, execution and delivery by each of the other parties hereto, this Amendment constitutes a legal, valid and binding obligation of such Company Party, enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.

(b) None of the execution, delivery or performance by either Company Party of this Amendment or the consummation by such Company Party of the transactions contemplated hereby does or will, in each case, subject to receipt of the Company Stockholder Approval, (a) contravene or conflict with the contravene or conflict with the organizational or constitutive documents of the Company Parties, (b) contravene or conflict with or constitute a violation of any provision of any Law or Order binding upon or applicable to the Company Parties or to any of its respective properties, rights or assets, (c) (i) require consent, approval or waiver under, (ii) constitute a default under or breach of (with or without the giving of notice or the passage of time or both), (iii) violate, (iv) give rise to any right of termination, cancellation, amendment or acceleration of any right or obligation of the Company Parties or to a loss of any material benefit to which the Company Parties are entitled, in the case of each of clauses (i) – (iv), under any provision of any Permit, Contract or other instrument or obligations binding upon the Company Parties or any of its respective properties, rights or assets, other than the obligation to pay indebtedness or other liabilities or convert such indebtedness or other liabilities into (A) Parent Common Stock or (B) Company Common Stock (which conversion into Company Common Stock would be on or prior to the Effective Time), (d) result in the creation or imposition of any Lien (except for Permitted Liens) on any of the Company Parties’ properties, rights or assets, or (e) require any consent, approval or waiver from any Person pursuant to any provision of the organizational or constitutive documents of the Company Parties.

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3. Representations and Warranties of the Parent Parties. Parent, Merger Sub and the SPAC Representative (the “Parent Parties”) hereby represent and warrant to the Company that each of the following representations and warranties are true, correct and complete as of the date of this Amendment and as of the Closing Date:

(a) Each of the Parent Parties has all requisite corporate power and authority to execute and deliver this Amendment and to consummate the transactions contemplated hereby, in the case of the Merger, subject to receipt of the Parent Stockholder Approval. The execution and delivery by each of the Parent Parties of this Amendment and the consummation by each of the Parent Parties of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of such Parent Party. No other corporate proceedings on the part of such Parent Party are necessary to authorize this Amendment or to consummate the transactions contemplated by this Amendment (other than, in the case of the Merger, the receipt of the Parent Stockholder Approval). This Amendment has been duly executed and delivered by such Parent Party and, assuming the due authorization, execution and delivery by each of the other parties hereto and thereto (other than a Parent Party), this Amendment constitutes a legal, valid and binding obligation of such Parent Party, enforceable against such Parent Party in accordance with its terms, subject to the Enforceability Exceptions.

(b) The execution, delivery and performance by a Parent Party of this Amendment or the consummation by a Parent Party of the transactions contemplated hereby do not and will not (a) contravene or conflict with the organizational or constitutive documents of the Parent Parties, or (b) contravene or conflict with or constitute a violation of any provision of any Law or any Order binding upon the Parent Parties.

4. No Waiver. No waiver of any breach or default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature.

5. Miscellaneous.

(a) Entire Agreement. The Original Merger Agreement, as amended by this Amendment, together with the Additional Agreements, sets forth the entire agreement of the parties with respect to the subject matter hereof and thereof and supersedes all prior and contemporaneous understandings and agreements related thereto (whether written or oral), all of which are merged herein.

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(b) Ratification. Except as amended hereby, the terms and provisions of the Original Merger Agreement shall remain unchanged and in full force and effect. In the event of any conflict between the terms of the Original Merger Agreement and the terms of this Amendment, the terms of this Amendment shall govern and control.

(c) Counterparts; Electronic Signatures. This Amendment may be executed in counterparts, each of which shall constitute an original, but all of which shall constitute one agreement. This Amendment shall become effective upon delivery to each party of an executed counterpart or the earlier delivery to each party of original, photocopied, or electronically transmitted signature pages that together (but need not individually) bear the signatures of all other parties.

(d) Governing Law. This Amendment and all disputes or controversies arising out of or relating to this Amendment or the transactions contemplated hereby, including the applicable statute of limitations, shall be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of Delaware.

(e) Incorporation by Reference. Sections 11.1 (Notices), 11.2 (Amendments; No Waivers; Remedies), 11.3 (Arm’s Length Bargaining; No Presumption Against Drafter), 11.5 (Expenses), 11.6 (No Assignment or Delegation), 11.10 (Severability), 11.11 (Further Assurances), 11.12 (Third Party Beneficiaries), 11.13 (Waiver), 11.14 (No Other Representations; No Reliance), 11.15 (Waiver of Jury Trial), 11.16 (Submission to Jurisdiction), 11.17(Attorneys’ Fees), 11.18 (Remedies) and 11.19 (Non-Recourse of the Merger Agreement) are hereby incorporated by reference herein mutatis mutandis.

[Signature Page Follows]

* * * * *

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Amendment as of the day and year first above written.

Parent:
VIVEON HEALTH ACQUISITION CORP.
By:	/s/ Jagi Gill
Name:	Jagi Gill
Title:	Chief Executive Officer
Merger Sub:
VHAC2 MERGER SUB, INC.
By:	/s/ Jagi Gill
Name:	Jagi Gill
Title:	Director
SPAC Representative:
VIVEON HEALTH, LLC, solely in the capacity as the SPAC Representative hereunder
By:	/s/ Romilos Papadopoulos
Name:	Romilos Papadopoulos
Title:	Managing Member

Company:
CLEARDAY, INC.
By:	/s/ James Walesa
Name:	James Walesa
Title:	Chief Executive Officer
Company Representative:
Clearday SR LLC, solely in the capacity as the Company Representative hereunder
By:	/s/ James Walesa
Name:	James Walesa, Manager
Title:	Authorized Signatory

EX-10.1

Exhibit 10.1

THIS SECURED CONVERTIBLE PROMISSORY NOTE (THE “NOTE”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER APPLICABLE FEDERAL OR STATE SECURITIES LAWS, AND HAS BEEN ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS, INCLUDING, WITHOUT LIMITATION, THE EXEMPTION CONTAINED IN SECTION 4(a)(2) OF THE SECURITIES ACT. THIS NOTE MAY NOT BE SOLD OR TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT HAS BECOME AND IS THEN EFFECTIVE WITH RESPECT TO SUCH SECURITIES, (2) THIS NOTE IS TRANSFERRED PURSUANT TO RULE 144 PROMULGATED UNDER THE SECURITIES ACT (OR ANY SUCCESSOR RULE) OR (3) THE COMPANY (AS HEREINAFTER DEFINED) HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT, TO THE EFFECT THAT THE PROPOSED SALE OR TRANSFER OF SUCH SECURITIES IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND ALL OTHER APPLICABLE FEDERAL OR STATE SECURITIES LAWS.

8% Senior Convertible Note

of

Clearday, Inc.

___________, 2023	San Antonio, Texas
	Principal Amount of this Note:

This 8% Senior Convertible Note is one of a series of duly authorized and issued notes of Clearday, Inc., a Delaware corporation (the “Company”) designated as its 8% Senior Convertible Notes, issued in an offering of in the original aggregate principal amount of Sixteen Million Dollars ($16,000,000) (collectively, the “Notes” and each Note comprising the Notes, a “Note”).

The Company, for value received, hereby promises unconditionally to pay to the order of

**********************, a _____________________________,

or such person’s assigns (collectively, the “Holder”), at the address set forth in Section 11 hereof, in lawful money of the United States of America (“Dollars” or “$”) and in immediately available funds, the principal amount set forth above on page 1 of this Note in UNITED STATES DOLLARS (the “Principal”), in full, on the Maturity Date (as defined below), and unpaid Interest (as defined below) in arrears on the Maturity Date.

Capitalized terms used, but not otherwise defined, herein shall have the respective definitions assigned thereto in the Subscription Agreement, between the Company and the Holder (the “Subscription Agreement”), between the Company and investors named therein.

The following is a statement of the rights of the Holder and the conditions to which this Note is subject, and to which the Holder hereof, by the acceptance of this Note, agrees:

All rights and remedies of the holder of this Note shall be pari passu with the holders of the other Notes. All obligations of the Company to the holder of this Note shall, unless otherwise expressly agreed by the Holder in writing, be paid or otherwise satisfied by the Company on a pro rata basis determined on the basis of the Principal and accrued and unpaid Interest thereon of this Note to the aggregate principal amount and accrued and unpaid Interest thereon of all of the Notes.

1. Definitions. For the purposes of this Note:

“Affiliate(s)” means, with respect to any given Person other than a partnership or limited liability company, any other Person directly or indirectly controlling, controlled by or under common control with such Person and with respect to a partnership, the partners of such partnership and with respect to a limited liability company, the members of such limited liability company.

“Business Combination” means the business combination contemplated by Merger Agreement.

“Business Day” means any day that is not a Saturday, Sunday or a legal holiday in the State of New York.

“Change of Control” means mean the following: (i) acquisition of the Company by means of merger or other form of corporate reorganization in which outstanding shares of Company are exchanged for securities or other consideration issued, or caused to be issued, by the acquiring Person or its Affiliate, other than a restructuring by Company where outstanding shares of Company are exchanged for shares of the acquiring Person and, immediately following the exchange, former stockholders of Company own all of the outstanding shares of the acquiring Person, (ii) a sale or other disposition of all or substantially all of the assets of Company (on a consolidated basis) in a single transaction or series of related transactions, (iii) any tender offer, exchange offer, stock purchase or other transaction or series of related transactions by Company in which the power to cast the majority of the eligible votes at a meeting of Company’s stockholders at which directors are elected is transferred to a single entity or group acting in concert, or (iv) a capital reorganization or reclassification of the Common Stock (other than a reorganization or reclassification in which the Common Stock are not converted into or exchanged for cash or other property, and, immediately after consummation of such transaction, the stockholders of Company immediately prior to such transaction own the Common Stock or other voting stock of Company in substantially the same proportions relative to each other as such stockholders owned immediately prior to such transaction). Notwithstanding anything contained herein to the contrary, the change in the state of incorporation of Company shall not in and of itself constitute a Change of Control.

“Common Stock” means the common stock, par value $0.001 per share, of the Company.

“Event of Default” shall have the meaning assigned to such term in Section 5.

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“Family Member” means, with respect to any Person, any parent, spouse, child, brother, sister or any other relative with a relationship (by blood, marriage or adoption) not more remote than first cousin to such Person.

“Interest” shall have the meaning assigned to such term in Section 2(b).

“Issue Date” of this Note means the date that the funds by the Holder are paid to and received by the Company, which is acknowledged to be the date first set forth on the first page of this Note.

“Lien” means any mortgage, pledge, lien, security interest or other charge or encumbrance of any kind.

“Maturity Date” means the earlier of (i) June 30, 2024, or (ii) the date of any Change in Control.

“Merger Agreement” means the Merger Agreement, dated as of April 5, 2023 (as amended or supplemented), by and among Company, Clearday SR LLC, in the capacity as the Company Representative, Viveon Health Acquisition Corp., VHAC2 Merger Sub, Inc. and Viveon Health LLC, in the capacity as the SPAC Representative.

“Person” means any individual, corporation, limited liability company, partnership, firm, joint venture, association, joint stock company, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

“SPAC” Viveon Health Acquisition Corp., a Delaware corporation.

“Subsidiaries” means, with respect to any specified Person, any other Person (x) whose board of directors or similar governing body, or a majority thereof, may presently by directly or indirectly elected or appointed by such specified Person, (y) whose management decisions and corporate actions are directly or indirectly subject to the present control of such specified Person, or (z) whose voting securities are more than 50% owned, directly or indirectly, by such specified Person.

“Transaction Documents” means this Note and the Subscription Agreement.

“VWAP” means volume weighted average price as reported by Bloomberg or a comparable nationally recognized service provider.

2. Principal; Interest; and Prepayment; Conversion; Exchange.

(a) Principal. Unless earlier converted in accordance with the provisions hereof, the entire unpaid Principal shall be paid in Dollars on the Maturity Date. Promptly following the payment in full of this Note, including all accrued and unpaid Interest and any other amounts owing hereunder, the Holder shall surrender this Note to the Company for cancellation.

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(b) Interest. Interest on the Note (“Interest”), during the period from the Issue Date through the Maturity Date, shall accrue on the Principal of the Note at a rate equal to 8% per annum (“Initial Interest Rate”). Interest shall be computed on the basis of a 360-day year applied to actual days elapsed. Notwithstanding the foregoing, upon the occurrence, and during the continuation, of an Event of Default, the Initial Interest Rate shall be increased by 4% per annum. Interest for the period commencing on the Issue Date and terminating on the Maturity Date shall be paid in arrears by the Company on the Maturity Date. The rate of interest payable under the Note from time to time shall in no event exceed the maximum rate, if any, permissible under applicable law. If the rate of interest payable under the Note is ever reduced as a result of the preceding sentence and at any time thereafter the maximum rate permitted by applicable law shall exceed the rate of interest provided hereunder, then the rate provided for hereunder shall be increased to the maximum rate permitted by applicable law for such period as required so that the total amount of interest received by the Holder is that which would have been received by the Holder but for the operation of the preceding sentence.

(c) Conversion.

(i) In the event that the Merger Agreement is terminated, all of the obligations under all of the Notes shall convert at a conversion price equal to the lower of US$0.82 per share and a price per share equal to a 25% discount to the VWAP of the common stock of the Company for the ten trading days preceding the date of the termination of the Merger Agreement.

(ii) Immediately prior to the consummation of the Business Combination, 100% of the Principal and the accrued and unpaid Interest shall convert as follows: such obligations of all of the Notes shall convert into shares of Common Stock at a conversion price equal to $0.82 per share, which price shall be subject to ratable adjustment in the event of any stock split, reverse stock split, merger, consolidation, combination or similar transactions.

(iii) The Company shall at all times while this Note remains outstanding to reserve and keep available out of its authorized but unissued Common Stock such number of its Common Stock as would from time to time be sufficient to effect the conversion in full the Notes assuming any termination of the Merger Agreement and if at any time the number of authorized but unissued Common Stock shall not be sufficient to effect the conversion in full of the Notes, the Company will commence such corporate actions as may, in the opinion of its counsel, be necessary to increase its authorized but unissued Common Stock to such number as shall be sufficient for such purpose.

3. Covenants of the Company.

The Company covenants and agrees with the Holder as follows:

(a) Related Party Transactions. Except as otherwise provided in this Section 3(a), neither the Company nor any Subsidiary will enter into directly or indirectly any transaction (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any officer, director, employee, or stockholder, or any Affiliate or Family Member of any officer, director, employee or stockholder (each, a “Related Person”) without the prior written consent of the Holder. The Company and any Subsidiary may enter into any transaction with any Related Person regarding the purchase of any of the Notes on the same terms as the issuance of this Note, any investment in the Company on terms and conditions that are substantially similar to an investment by a Person that is not a Related Person, that is consistent with prior transactions with Related Persons such as on demand financing of cash investment to the Company or a Subsidiary, guarantees of debt, compensation in the ordinary course or that is contingent on the consummation of the Business Combination.

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(b) Restricted Payments. The Company will not, directly or indirectly (i) purchase, redeem, retire or otherwise acquire for value any of its capital stock or other securities now or hereafter outstanding, return any capital to its stockholders, or distribute any of its assets to its stockholders or (ii) make any payment or declare any dividend on any of its capital stock or other securities, in either case, without the prior written consent of the Holder or (iii) any accrual of dividends that are paid in kind or the exchange or conversion of a security for shares of Common Stock.

(c) Insurance. The Company and the Subsidiaries will maintain customary insurance for general liabilities and other risks on terms and in amounts customarily carried by businesses similar to that of the Company and the Subsidiaries, respectively, and reasonably sufficient to avoid a material adverse change in the financial condition or results of operation of the Company and the Subsidiaries.

(d) No Change in Business. Neither the Company nor any Subsidiary will, without the prior written consent of the Holder or as contemplated by the Merger Agreement, change its respective line of business from that conducted by it as of the Issue Date.

(e) Use of Proceeds. The proceeds of the Notes shall be used for the repayment of existing indebtedness and general corporate and working capital purposes of each of the Company and the SPAC in anticipation of the Business Combination.

4. Events of Default. If one or more of the following events (“Events of Default”) shall have occurred and be continuing:

(a) the Company shall fail to pay any Principal of, or Interest on, this Note, or any fees or any other amount payable hereunder within ten (10) days of the due date of such payment;

(b) the Company shall fail to observe or perform any covenant or agreement of this Note or any of the other Transaction Documents;

(c) any representation, warranty, certification or statement made by the Company in any Transaction Document, or in any document delivered pursuant to any Transaction Document shall prove to have been incorrect in any material respect when made (or deemed made);

(d) a judgment or order for the payment of money in excess of $1,000,000 shall be rendered against the Company or any Subsidiary and such judgment or order shall continue unsatisfied and unstayed for a period of ten (10) days, in each case, other than with respect to litigation disclosed in filings with the Securities Exchange Commission.

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(e) the Company shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing, in each case, other than any Subsidiary that does not have an aggregate amount of net assets that may be distributed to the Company in excess of $1,000.

(f) an involuntary case or other proceeding shall be commenced against the Company or any Subsidiary seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed for a period of 60 days; or an order for relief shall be entered against the Company or any Subsidiary, as applicable, under the federal bankruptcy laws as now or hereafter in effect, in each case, other than any Subsidiary that does not have an aggregate amount of net assets that may be distributed to the Company in excess of $1,000; then, and in every such event, the Holder may, by written notice to the Company, declare the Principal (together with accrued Interest thereon and all other amounts owing hereunder) to be, and the Principal (together with accrued Interest thereon and all other amounts owing hereunder) shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company; provided, that in the case of any of the Events of Default specified in clause (e) or (f) above, without any notice to the Company or any other act by the Holder, the Principal (together with accrued Interest thereon and all other amounts owing hereunder) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company.

5. Payments; Extension of Maturity. Unless otherwise converted in accordance with the terms of this Note, all payments of Principal and Interest (and all other amounts owing hereunder) to be made by the Company in respect of this Note shall be made in Dollars by wire transfer to an account designated by the Holder by written notice to the Company. All amounts payable under this Note shall be paid free and clear of, and without reduction by reason of, any deduction, setoff, or counterclaim. If the Principal and accrued and unpaid Interest become due and payable on any day other than a Business Day, the Maturity Date shall be extended to the next succeeding Business Day, and to such payable amounts shall be added the Interest which shall have accrued during such extension period at the rate per annum herein specified.

6. Replacement of Note. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, and (in case of loss, theft or destruction) of indemnity reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and (if mutilated) upon surrender and cancellation of this Note, the Company shall make and deliver to the Holder a new note of like tenor in lieu of this Note. Any replacement note made and delivered in accordance with this Section 6 shall be dated as of the date hereof.

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7. Costs and Expenses. The Company shall be responsible for all expenses incurred by any Holder in connection with the conversion of the Principal and accrued and unpaid Interest (and other amounts) under this Note.

8. No Waivers by Delay or Partial Exercise. No delay by the Holder in exercising any powers or rights hereunder shall operate as a waiver of such power or right, nor shall any single or partial exercise of any power or right preclude other or further exercise thereof, or the exercise of any other power or right hereunder or otherwise.

9. Further Assurances. Each party agrees to execute such other documents, instruments, agreements and consents, and take such other actions as may be reasonably requested by the other parties hereto to effectuate the purposes of this Note.

10. Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given upon receipt (or upon rejection, or inability to deliver as addressed). Notice shall be sent by (a) hand delivery; (b) certified mail; or (c) reputable overnight delivery service. A party may subsequently modify their address below by written notice in accordance with this Section upon five (5) days’ prior written notice.

If to the Company:	Clearday, Inc.
	8800 Village Drive, Suite 106
	San Antonio, TX 78217
	Attention: James Walesa, Chief Executive Officer
If to the Holder:	*****
	Attention:

or to such other address or telecopy number as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith.

11. Amendments and Waivers. No modification, amendment or waiver of any provision of, or consent required by, this Note, nor any consent to any departure herefrom, shall be effective unless it is in writing and signed by each of the Company and the Holder. Such modification, amendment, waiver or consent shall be effective only in the specific instance and for the purpose for which given. The holder of the Notes may modify, amend or waive any provision of this Note and the other Notes, solely to the extent of waiving an Event of Default under this Note and the other Notes by the vote or consent of the holders of the Notes that hold a majority of the aggregate amount of the principal and accrued and unpaid Interest thereon of all of the Notes.

12. Exclusivity and Waiver of Rights. No failure to exercise and no delay in exercising on the part of any party, any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other right, power or privilege. The rights and remedies herein provided are cumulative and are not exclusive of any other rights or remedies provided by law.

-7-

13. Invalidity. Any term or provision of this Note shall be ineffective to the extent it is declared invalid or unenforceable, without rendering invalid or enforceable the remaining terms and provisions of this Note.

14. Headings. Headings used in this Note are inserted for convenience only and shall not affect the meaning of any term or provision of this Note.

15. Counterparts. This Note may be executed in one or more counterparts, each of which shall be deemed an original instrument, but all of which collectively shall constitute one and the same agreement.

16. Assignment. This Note and the rights and obligations hereunder shall not be assignable or transferable by the Company without the prior written consent of the Holder. The Holder may assign this Note and the rights and obligations hereunder without the prior written consent of the Company. Any instrument purporting to make an assignment in violation of this Section 17 shall be void.

17. Survival. Unless otherwise expressly provided herein, all representations warranties, agreements and covenants contained in this Note shall survive the execution hereof and shall remain in full force and effect until the payment in full of all Principal and accrued and unpaid Interest and all other amounts owing under this Note. All terms and conditions of this Agreement which by their nature should survive termination or other expiration of this Agreement, shall so survive.

18. Miscellaneous. This Note shall inure to the benefit of the Company and the Holder, and all their respective successors and permitted assigns. Nothing in this Note is intended or shall be construed to give to any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect of this Note or any provision herein contained.

19. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAWS PROVISIONS).

20. CONSENT TO JURISDICTION. THE COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND OF THE FEDERAL COURTS SITTING IN THE STATE OF TEXAS. THE COMPANY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT wOF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY MUST BE LITIGATED EXCLUSIVELY IN ANY SUCH STATE OR FEDERAL COURT THAT SITS IN THE CITY OF SAN ANTONIO, TEXAS, AND ACCORDINGLY, THE COMPANY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH LITIGATION IN ANY SUCH COURT.

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21. WAIVER OF JURY TRIAL. THE COMPANY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE. THE COMPANY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE HOLDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE HOLDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE HOLDER HAS BEEN INDUCED TO ENTER INTO THIS NOTE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 21.

22. Attorneys’ Fees. In the event that any suit or action is instituted to enforce any provision in this Note, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Note, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

23. Remedies Cumulative. Each party’s remedies under this Agreement shall be cumulative in nature.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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In Witness Whereof, the undersigned has executed this Note as of the date first above written.

CLEARDAY, INC.
By:
Name:	James T. Walesa
Title:	Chief Executive Officer

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EX-10.2

Exhibit 10.2

FIRST AMENDMENT TO LEASE TRANSITION AGREEMENT

This First Amendment to Lease Transition Agreement (this “Amendment”) is entered into effective as of July 31, 2023 (the “Amendment Effective Date”), by and between: (1) MHI-MC San Antonio, LP, a Delaware limited partnership (“MHI San Antonio”); MHI-MC New Braunfels, LP, a Delaware limited partnership (“MHI New Braunfels”); and MHI Little Rock, LP, a Delaware limited partnership (“MHI Little Rock”) (individually and collectively, MHI San Antonio, MHI New Braunfels, MHI Little Rock are “Landlord”), on the one hand; and (2) MCA Mainstreet Tenant, LLC, a Tennessee limited liability company (“Tenant”); MCA Westover Hills Operating Company, LLC, a Tennessee limited liability company (“MCA Westover Hills”); MCA New Braunfels Operating Company, LLC, a Tennessee limited liability company (“MCA New Braunfels”); and Memory Care at Good Shepherd, LLC, an Arkansas limited liability company (“MCA Good Shepherd”) (individually and collectively, Tenant, MCA Westover Hills, MCA New Braunfels, and MCA Good Shepherd are “MCA”), on the other hand.

Recitals:

A. Landlord and MCA are parties to that certain Lease Transition Agreement effective as of March 31, 2021 (the “Agreement”).

B. The Agreement provided, among other things, that Tenant shall make a Down Payment in accordance with Section 2.4(i) of the Agreement.

C. As of the Amendment Effective Date, Clearday and Viveon have not completed a merger, but remain parties to a merger agreement that has not been terminated. However, Clearday and Viveon have not filed any Securities and Exchange Commission (“SEC”) Form S-4 and thus the merger is not yet pending government review and/or other necessary approvals for which Tenant has the right under Section 2.4(i)(c) to exercise an Outside Down Payment Date Extension.

D. Tenant has requested to extend the Outside Down Payment Date, and Landlord, although under no obligation to do so, has agreed to extend the Outside Down Payment Date on the terms and conditions set forth in the Agreement and herein.

Agreement:

Now, Therefore, the parties hereby agree as follows:

1. Defined Terms. Any capitalized term used but not defined in this Amendment shall have the meaning that is given to that term in the Agreement.

2. Payment on August 4, 2023. On August 4, 2023, Tenant shall pay to Landlord the amount of $50,000.00 (the “Extension Payment”).¹ The Extension Payment shall be applied to first to accrued interest under Section 2.4 of the Agreement and then to the principal amounts constituting the Repayment Amount.

¹ The parties acknowledge that this payment was made prior to the execution of this Amendment.

1

3. Amendment of Section 2.4(i)(c). Section 2.4(i)(c) of the Agreement shall be deemed removed and replaced with the following:

(c) The “Outside Down Payment Date” shall be calculated as set forth herein. The initial Outside Down Payment Date shall be September 30, 2023. In the event that as of two business days prior to the Outside Down Payment Date (i) the merger has not been terminated by Clearday or Viveon and to Clearday’s knowledge there is no reason to believe the merger will be terminated prior to the Outside Down Payment Date and (ii) the merger is pending government review and/or other necessary approvals, Tenant may extend the Outside Down Payment Date for thirty days (an “Outside Down Payment Date Extension”) by delivering to Landlord prior to the Outside Down Payment Date notice of the Outside Down Payment Date Extension and proof that the merger is pending government review and/or such other necessary approvals. Tenant may exercise an Outside Down Payment Date Extension up to two times, provided that each such extension must meet the terms for an Outside Down Payment Date Extension as of the date of delivery of the notice of the extension to Landlord. Additionally, the Outside Down Payment Date may be extended by the written agreement of the parties.

4. Representations and Warranties. Each Tenant Party hereby represents and warrants that all representations and warranties set forth in Section 7.1 of this Agreement are true and correct as of the Amendment Effective Date and apply to this Amendment as if this Amendment were the Agreement.

5. Reaffirmation of Guaranties.

(a) Each Lease Guarantor hereby acknowledges and reaffirms its or his respective obligations under the Guaranty to which it or he is a party and all documents executed by that Lease Guarantor in connection therewith, including but not limited to the Reaffirmation and Agreement by Guarantor executed by each Lease Guarantor in connection with the Agreement.

(b) Clearday hereby acknowledges and reaffirms its obligations under the Guaranty executed by Clearday in connection with the Agreement (the “Clearday Guaranty”).

6. Waiver of Defenses. Tenant Parties, for themselves and their Affiliates, hereby waive and relinquish any and all defenses and any and all rights to setoff or recoupment of any kind whatsoever that they, or any person claiming by or through them, may now have or may claim to have with respect to Landlord or its Affiliates, including any defenses or rights to setoff or recoupment under or relating to the Leases, the Guaranty, the Clearday Guaranty, the Agreement, the Promissory Note, or the negotiation and execution of this Amendment and/or the First Amended and Restated Promissory Note.

7. No Further Modifications. Except as expressly modified in this Amendment, the Agreement shall remain in full force and effect and is expressly ratified and confirmed by the parties hereto.

8. Counterparts. This Agreement may be executed electronically and in counterparts, all of which executed counterparts shall together constitute a single document. Signature pages may be detached from the counterparts and attached to a single copy of this document to physically form one document. Executed versions of this Agreement may be delivered by the parties via facsimile transmission or email, either or both of which shall constitute delivery of an original.

[signature pages follow]

2

In Witness Whereof, this Agreement has been executed as of September 8, 2023.

MCA:

MCA Mainstreet Tenant, LLC, a Tennessee limited liability company;

MCA Westover Hills Operating Company, LLC, a Tennessee limited liability company;

MCA New Braunfels Operating Company, LLC, a Tennessee limited liability company; and

Memory Care at Good Shepherd, LLC, an Arkansas limited liability company

By:

Name:

Title:

EXISTING Guarantor:

Trident Healthcare Properties I, L.P., a Delaware limited partnership; and

Memory Care America, LLC, a Tennessee limited liability company

By:

Name:

Title:

By:
	James Walesa

By:
	Steve Person

CLEARDAY:

Clearday, Inc., a Delaware corporation

By:

Name:

Title:

[signatures continue on following page]

S-1

LANDLORD:

MHI-MC San Antonio, LP,

MHI-MC New Braunfels, LP, and

MHI Little Rock, L.P.,

each a Delaware limited partnership

By:
Name:	Scott E. White
Title:	Chief Executive Officer

S-2

EX-31.1

EXHIBIT 31.1

Statement Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Principal Executive Officer

Regarding Facts and Circumstances Relating to Exchange Act Filings

I, James T. Walesa, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Clearday, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 16, 2023
	/s/ James T. Walesa
	James T. Walesa
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Statement Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Principal Financial Officer

Regarding Facts and Circumstances Relating to Exchange Act Filings

I, BJ Parrish, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Clearday, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 16, 2023
	/s/ BJ Parrish
	BJ Parrish
	Acting Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Statement Pursuant to Section 906 the Sarbanes-Oxley Act of 2002 By

Principal Executive Officer

Regarding Facts and Circumstances Relating to Exchange Act Filings

Dated: October 16, 2023

I, James T. Walesa, Chief Executive Officer of Clearday, Inc., hereby certify, to my knowledge, that:

1. the accompanying Quarterly Report on Form 10-Q of Clearday, Inc. for the three month period ended June 30, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934, as amended; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Clearday, Inc.

IN WITNESS WHEREOF, the undersigned has executed this Statement as of the date first written above.

/s/ James T. Walesa

James T. Walesa

President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

Statement Pursuant to Section 906 the Sarbanes-Oxley Act of 2002 By

Principal Financial Officer

Regarding Facts and Circumstances Relating to Exchange Act Filings

Dated: October 16, 2023

I, BJ Parrish, Chief Financial Officer of Clearday, Inc., hereby certify, to my knowledge, that:

1. the accompanying Quarterly Report on Form 10-Q of Clearday, Inc. for the three month period ended June 30, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities and Exchange Act of 1934, as amended; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Clearday, Inc.

/s/ BJ Parrish

BJ Parrish

Chief Financial Officer

XML

Cover - shares	6 Months Ended
	Jun. 30, 2023	Aug. 30, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2023
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	0-21074
Entity Registrant Name	CLEARDAY, INC.
Entity Central Index Key	0000895665
Entity Tax Identification Number	77-0158076
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	8800 Village Drive
Entity Address, Address Line Two	Suite 106
Entity Address, City or Town	San Antonio
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78217
City Area Code	(210)
Local Phone Number	451-0839
Title of 12(b) Security	Common Stock, par value $0.001
Trading Symbol	CLRD
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		25,985,132

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash	$ 8,093	$ 195,638
Restricted cash	10,000	10,000
Accounts receivable, net	381,883	47,705
Prepaid expenses	142,042	213,289
Total current assets	542,018	466,632
Non-current assets
Operating lease right-of-use assets		22,792,752
Real estate property and equipment, net	6,127,735	6,522,979
Intangible assets, net	3,312,000	3,680,000
Other long-term assets	264,258	288,155
Total assets	10,246,011	33,750,518
Current liabilities:
Accounts payable	3,641,431	6,324,002
Accrued expenses	6,260,831	8,415,609
Derivative liabilities	5,675,083	2,320,547
Accrued interest	1,275,823	294,370
Deferred revenue		901,235
Current portion long-term debt	17,007,210	16,347,290
Current portion of operating lease liabilities		2,907,605
Total current liabilities	35,696,823	39,323,361
Long-term liabilities:
Operating lease liabilities, net of current portion		24,415,791
Long-term debt, less current portion, net	5,620,489	1,392,940
Total liabilities	41,317,313	65,132,092
Mezzanine equity
Series F 6.75% Convertible Preferred Stock, $.001 par value, 5,000,000 share authorized, 4,369,529 and 4,797,052 issued and outstanding on June 30, 2023 and December 31, 2022, respectively. Liquidation value $99,125,693 and $96,296,493 on June 30, 2023 and December 31, 2022, respectively.	18,623,139	20,448,079
Deficit:
Preferred Stock value
Common Stock, $0.001 par value, 80,000,000 shares authorized, 25,977,628 and 20,805,448 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	25,978	20,805
Additional paid-in-capital	22,985,945	16,098,182
Accumulated deficit	(83,755,699)	(79,671,065)
Clearday, Inc. stockholders’ deficit	(60,743,447)	(63,551,749)
Non-controlling interest in subsidiaries	11,049,006	11,722,096
Clearday Inc. stockholder’s total deficit	(49,694,441)	(51,829,653)
TOTAL LIABLITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT	10,246,011	33,750,518
Series A Convertible Preferred Stock [Member]
Deficit:
Preferred Stock value	329	329
Related Party [Member]
Current liabilities:
Other current liabilities	750,432	672,597
Nonrelated Party [Member]
Current liabilities:
Other current liabilities	$ 1,086,013	$ 1,140,106

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Preferred stock dividend rate percentage	6.75%	6.75%
Temporary equity, par value	$ 0.001	$ 0.001
Temporary equity, shares authorized	5,000,000	5,000,000
Temporary equity, shares issued	4,369,529	4,797,052
Temporary equity, shares outstanding	4,369,529	4,797,052
Temporary equity, liquidation preference	$ 99,125,693	$ 96,296,493
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	80,000,000	80,000,000
Common stock, shares issued	25,977,628	20,805,448
Common stock, shares outstanding	25,977,628	20,805,448
Series A Convertible Preferred Stock [Member]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares, issued	328,925	328,925
Preferred stock, shares, outstanding	328,925	328,925
Preferred stock, liquidation preference, value	$ 329	$ 329

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
REVENUES
Total revenues	$ 619,031	$ 3,135,552	$ 3,625,535	$ 6,345,770
OPERATING EXPENSES
Wages & general operating expenses	851,499	4,437,616	4,697,974	9,071,672
Selling, general and administrative expenses	944,385	992,433	1,877,016	2,385,803
Depreciation and amortization expense	229,247	185,044	526,073	372,259
Total operating expenses	2,025,131	5,615,093	7,101,063	11,829,734
Operating loss	(1,406,100)	(2,479,541)	(3,475,528)	(5,483,964)
Other (income) expenses
Interest expense	1,719,216	395,045	2,434,049	896,643
PPP loan forgiveness		(349,500)		(992,316)
Derivative financing costs			2,567,460
Fair value of derivative	1,082,946		(482,286)
Extinguishment of debt			653,814
(Gain)/loss on disposal of asset	(5,925)		100,542
Loss on impairment			318,936
(Gain)/loss on termination of lease	193,758		(4,336,886)
Other (income)/expenses	(198,429)	(279,011)	299,695	(422,900)
Total other (income)/expenses, net	2,791,566	(233,466)	1,555,324	(518,573)
Net loss from continuing operations	(4,197,666)	(2,246,075)	(5,030,852)	(4,965,391)
Loss from discontinued operations, net of tax		(85,753)		(170,980)
Net loss	(4,197,666)	(2,331,828)	(5,030,852)	(5,136,371)
Net loss attributable to non-controlling interest	(395,263)	(74,147)	(946,218)	(218,412)
Preferred stock dividend	(1,644,987)	(1,655,926)	(3,343,771)	(3,274,941)
Net loss attributable to Clearday, Inc. common stockholders	$ (6,237,916)	$ (4,061,901)	$ (9,320,841)	$ (8,629,724)
Basic and diluted loss per share attributable to Clearday, Inc.
Net loss from continued operations, basic	$ (0.16)	$ (0.13)	$ (0.20)	$ (0.30)
Net loss from continued operations, diluted	(0.16)	(0.13)	(0.20)	(0.30)
Net loss/income from discontinued operations, basic	0.00	0.00	0.00	(0.01)
Net loss/income from discontinued operations, diluted	0.00	0.00	0.00	(0.01)
Net loss, basic	(0.16)	(0.13)	(0.20)	(0.31)
Net loss, diluted	$ (0.16)	$ (0.13)	$ (0.20)	$ (0.31)
Weighted average common shares basic	25,468,230	17,775,792	24,721,121	16,408,710
Weighted average common shares diluted	25,468,230	17,775,792	24,721,121	16,408,710
Resident Fee [Member]
REVENUES
Total revenues	$ 436,684	$ 3,068,470	$ 3,332,010	$ 6,193,231
Adult Day Care [Member]
REVENUES
Total revenues	159,766	64,724	248,807	148,620
Commercial Property Rental Revenue [Member]
REVENUES
Total revenues	$ 22,581	$ 2,358	$ 44,718	$ 3,919

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Consolidated Statements of Mezzanine Equity, Convertible Preferred Stock and Stockholder's Deficit - USD ($)	Temporary Equity Series F [Member]	Series A Convertible Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total
Balance at Dec. 31, 2021	$ 16,857,267	$ 329	$ 14,915	$ 17,069,481	$ (65,208,327)	$ (48,123,602)	$ 11,330,695	$ 36,792,907
Balance, shares at Dec. 31, 2021	4,797,052	328,925	14,914,458
PIK dividends accruals on convertible Preferred Stock F	$ 3,274,941			(3,274,941)		(3,274,941)		(3,274,941)
PIK dividends accruals on Convertible Preferred Stock F, shares
Series F Preferred F Stock converted to common Stock			$ 2,859	(2,853)		6		6
Series F Preferred F Stock converted to Common Stock, shares			2,861,334
Accrued of series I convertible Preferred Stock in subsidiary							273,128	273,128
Series I adjustment					(669,904)	(669,904)		(669,904)
Shares issued for Loan
Dissolution of Longhorn Hospitality				(3,871,239)	3,871,239
Net loss					(5,136,371)	(5,136,371)	(218,412)	(5,354,783)
Balance at Jun. 30, 2022	$ 20,132,208	$ 329	$ 17,774	9,920,448	(67,143,363)	(57,204,812)	11,385,411	(45,819,401)
Balance, shares at Jun. 30, 2022	4,797,052	328,925	17,775,792
Balance at Dec. 31, 2022	$ 20,448,079	$ 329	$ 20,805	16,098,182	(79,671,065)	(63,551,749)	11,722,096	(51,829,653)
Balance, shares at Dec. 31, 2022	4,797,052	328,925	20,805,448
PIK dividends accruals on convertible Preferred Stock F	$ 3,343,771			(3,343,771)		(3,343,771)		(3,343,771)
Series F Preferred F Stock converted to common Stock	$ (5,168,712)		$ 616	5,168,096		5,168,712		5,168,712
Series F Preferred F Stock converted to Common Stock, shares	(427,523)		616,253
Accrued of series I convertible Preferred Stock in subsidiary							273,128	273,128
Shares issued for Loan			$ 83	70,602		70,685		70,685
Net loss					(4,084,634)	(4,084,634)	(946,218)	(5,030,852)
Debt discount from derivative settlements				881,127		881,127		881,127
Stock Compensation for services			$ 256	214,131		214,387		214,387
Stock compensation for services, shares			254,609
Shares issued for Loan, shares			83,160
Stock issued for extinguishment of debt			$ 4,218	3,897,578		3,901,796		3,901,796
Stock issued for extinguishment of liabilities, shares			4,218,158
Balance at Jun. 30, 2023	$ 18,623,139	$ 329	$ 25,978	$ 22,985,945	$ (83,755,699)	$ (60,743,447)	$ 11,049,006	$ (49,694,441)
Balance, shares at Jun. 30, 2023	4,369,529	328,925	25,977,628

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (4,197,666)	$ (2,331,828)	$ (5,030,852)	$ (5,136,371)
Loss from discontinued operations, net of tax		(85,753)		(170,980)
Loss from continued operations	(4,197,666)	(2,246,075)	(5,030,852)	(4,965,391)
Adjustments required to reconcile net loss to cash flows used in operating activities
Depreciation and amortization			526,073	372,259
Amortization of right of use assets				920,473
Shares issued for loan commitment			70,685
Shares issued for services			214,388
Financing costs from derivative liabilities			2,567,460
Gain on termination of lease			(4,336,886)
Series I preferred stock accumulated dividend			273,128
Change in fair value of the derivatives			(482,286)
Amortization of debt discount related to derivatives			1,236,995
Amortization of debt issuance costs			115,883	433,001
Loss on extinguishment of debt			653,814
Loss on sale of fixed assets			100,542
Bad debt expense			159,650
Gain on PPP loan forgiveness				(992,316)
Changes in operating assets and liabilities
Accounts receivable			(493,828)	(67,736)
Other current assets			23,897
Prepaid expenses			71,247	(243,270)
Accounts payable			565,411	1,427,151
Accrued liabilities			1,845,221	1,195,821
Deferred revenue			(901,235)
Related party payables			77,835
Other non-current assets				680,335
Other liabilities			(54,093)	(172,501)
Change in operating lease liability				(462,233)
Net cash used in operating activities			(2,796,951)	(1,874,407)	$ (3,978,027)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment			136,630
Payments for property and equipment				(28,310)
Net cash provided by (used in) investing activities of the continuing operations			136,630	(28,310)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of long-term debt and notes payable			(903,429)	(2,255,374)
Borrowings on debt			3,376,205	3,394,568
Net cash provided by in financing activities			2,472,776	1,139,194
Change in cash and restricted cash from continuing operations			(187,545)	(763,523)
Change in cash and restricted cash from discontinued operations				(201,552)
Cash and restricted cash at beginning of the period			205,638
Cash and restricted cash at end of period	18,093	(965,075)	18,093	(965,075)	205,638
Beginning of period
Cash and cash equivalents	8,093		8,093		195,638
Restricted cash	10,000	10,000	10,000	10,000	10,000
Total cash and restricted cash	$ 18,093	$ 10,000	18,093	10,000	205,638
Cash and cash equivalents			195,638	965,075	965,075
Restricted cash			10,000	10,000	10,000
Total cash and restricted cash			205,638	975,075	$ 975,075
Supplemental disclosures of cash flow information
Cash paid for interest			215,602
Cash paid for income taxes
Supplemental disclosures of non-cash investing and financing activities:
Early lease termination fee			27,323,396
Series F incentive shares converted to common stock			5,168,712
Indebtedness used to pay off rent expense			3,212,305
Accounts payable exchanged for common shares			3,247,982
Settlements on derivative liability			881,127
PIK dividends for Series F Preferred Stock			3,343,771
Debt discount on derivative liability			$ 2,150,489

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Description of Business and Going Concern

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Description of Business and Going Concern

1. Description of Business and Going Concern

Organization, Description of Business

Clearday, Inc., a Delaware corporation (the “Company”), formerly known as Superconductor Technologies Inc. (“STI”), was established in 1987 and closed a merger (the “AIU Merger”) with Allied Integral United, Inc., a Delaware corporation (“AIU”), on September 9, 2021. The Company continued the businesses of AIU and continued one of the businesses of STI. AIU was incorporated on December 20, 2017, and began its business on December 31, 2018 when it acquired memory care residential facilities and other businesses (the “2018 Acquisition”) that was conducted since November 2010. Since the 2018 Acquisition, the Company has been developing innovative care and wellness products and services focusing on the longevity market, including its Longevity-tech platform. In the first quarter of 2023, the Company disposed of three of its four full time memory care communities to focus on its digital care services, including robotics and its Longevity-tech platform. During the second quarter of 2023, the Company operated one residential care facility and one adult daycare facility and marketed its digital care services to third parties.

Going Concern

As of June 30, 2023, we have an accumulated deficit of $83,755,699. During the period ended June 30, 2023, we had a net loss from operations of $5,030,852 and net cash used in operating activities of $2,796,951. During the year ended December 31, 2022, we had a net loss from operations of $14,462,738 and cash used in operating activities of $3,978,027. The Company plans to continue to fund its losses from operations and capital funding needs through public or private equity or debt financing or other sources, including capital that may be available in connection with the Viveon Merger. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, or suspend or curtail planned programs. Any of these actions could materially harm the Company’s business, results of operations and prospects. The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result should the Company not continue as a going concern. Management does not believe they have sufficient cash for the next twelve months from the date of this report to continue as a going concern without raising additional capital.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the interim reporting rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments (unless otherwise indicated), necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company, including its wholly owned subsidiaries and AIU Alternative Care, Inc., a Delaware corporation (“AIU Alt Care”) and Clearday Alternative Care Oz Fund, L.P, a Delaware limited partnership (“Clearday OZ Fund”). The Company owns all of the voting interests of AIU Alt Care and the sole general partner of Clearday OZ Fund, and less than 1% of the preferred economic interests in such companies.

The certificate of incorporation of AIU Alt Care authorizes 1,500,000 shares of preferred stock designated as its Series I 10.25% cumulative convertible preferred stock, par value $0.01 per share (the “Alt Care Preferred Stock”) of which 700,000 is designated Alt Care Preferred Stock; and 1,500,000 of common stock. Each share of the Alt Care Preferred Stock has a stated value equal to the $10.00 Alt Care Preferred Stock original issue price.

AIU Alt Care formed AIU Impact Management, LLC, which is the sole general partner and manager of Clearday OZ Fund. Clearday OZ Fund allocates 99% of income gains and losses to the limited partners and 1% to its general partner (AIU Impact Management, LLC).

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Each of the Alt Care Preferred Stock and the limited partnership interests in Clearday OZ Fund (“Clearday OZ LP Interests”) may be exchanged by the holder of such securities into shares of Clearday common stock. The exchange rate for each of the Alt Care Preferred Stock and the Clearday OZ LP Interests are equal to (i) the aggregate investment amount for such security plus accrued and unpaid dividends at 10.25% per annum, (ii) divided by 80% of the 20 consecutive day volume weighted closing price of the Common Stock of Clearday preceding the conversion date.

The Company reports its non-controlling interest in subsidiaries as a separate component of equity in the condensed consolidated balance sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common stockholders on the face of the condensed consolidated statement of operations.

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in conformity with GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Classification of Convertible Preferred Stock

The Company applied ASC 480, “Distinguishing Liabilities from Equity”, and revised the condensed consolidated presentation of its convertible preferred stock whose redemption is outside the control of the issuer. Registrants having such securities outstanding are required to present separately, in balance sheets, amounts applicable to the following three general classes of securities: (i) preferred stocks subject to mandatory redemption requirements or whose redemption is outside the control of the issuer; (ii) preferred stocks which are not redeemable or are redeemable solely at the option of the issuer; and (iii) common stocks. In addition, the rules require disclosure of redemption terms, five-year maturity data, and changes in redeemable preferred stock.

Use of Estimates

The Company’s condensed consolidated financial statement preparation requires that management make estimates and assumptions which affect the reporting of assets and liabilities and the related disclosure of contingent assets and liabilities in order to report these condensed consolidated financial statements in conformity with GAAP. Actual results could differ from those estimates.

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, the Chief Executive Officer, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as two operating segments, the Longevity-tech Platform and personal care.

Cash, and Restricted Cash

Cash, consisting of short-term, highly liquid investments and money market funds with original maturities of three months or less at the date of purchase, are carried at cost plus accrued interest, which approximates market value.

Restricted cash includes cash that the Company deposited as security for obligations arising from property taxes, property insurance and replacement reserve the Company is required to establish escrows as required by its mortgages and certain resident security deposits.

Accounts Receivable

The Company records accounts receivable at their estimated net realizable value. Additionally, the Company estimates allowances for uncollectible amounts based upon factors which include, but are not limited to, historical payment trends, write-off experience, and the age of the receivable as well as a review of specific accounts, the terms of the agreements, the residents, the payers’ financial capacity to pay and other factors which may include likelihood and cost of litigation.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Real Estate Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation and amortization. Maintenance and repairs are charged to operations as incurred. Depreciation and amortization are based on the straight-line method over the estimated useful lives of the related assets. When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the accounts, and any resulting gain or loss is reflected in operations in the period realized.

Depreciation is computed on the straight-line method with useful lives as follows:

Asset Class	Estimated Useful Life (in years)
Buildings and building improvements		39
Leasehold improvements		15
Furniture and fixtures and equipment		7
Computer equipment and software		5

Intangible Assets, Net

Software Capitalization

With regards to developing software, any application costs incurred during the development stage, both internal expenses and those paid to third parties are capitalized and amortized per FASB Topic ASC350-40 (“Internal-Use Software Accounting & Capitalization”). Once the software has been developed, the costs to maintain and train others for its use will be expensed. With regards to developing software, any application costs incurred during the development state, both internal expenses and those paid to third parties are capitalized and amortized based on the estimated useful life of five years.

Impairment Assessment

The Company evaluates intangible assets and other long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions or other events that indicate an assets’ carrying amount may not be recoverable. Recoverability of these assets is measured by comparing the carrying amount of each asset to the future cash flows the asset is expected to generate. If the cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value.

Revenue Recognition

The Company recognizes revenue from contracts with customers in accordance with ASC Topic 606, “Revenue from Contracts with Customers”, or ASC Topic 606, using the practical expedient in paragraph 606-10-10-4 that allows for the use of a portfolio approach, because we have determined that the effect of applying the guidance to our portfolios of contracts within the scope of ASC Topic 606 on our condensed consolidated financial statements would not differ materially from applying the guidance to each individual contract within the respective portfolio or our performance obligations within such portfolio. The five-step model defined by ASC Topic 606 requires the Company to: (i) identify its contracts with customers, (ii) identify its performance obligations under those contracts, (iii) determine the transaction prices of those contracts, (iv) allocate the transaction prices to its performance obligations in those contracts and (v) recognize revenue when each performance obligation under those contracts is satisfied. Revenue is recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A substantial portion of the Company’s revenue from its independent living and assisted living communities relates to contracts with residents for services that are generally under ASC Topic 606. The Company’s contracts with residents and other customers that are within the scope of ASC Topic 606 are generally short-term in nature. The Company has determined that services performed under those contracts are considered one performance obligation in accordance with ASC Topic 606 as such services are regarded as a series of distinct events with the same timing and pattern of transfer to the resident or customer. Revenue is recognized for those contracts when the Company’s performance obligation is satisfied by transferring control of the service provided to the resident or customer, which is generally when the services are provided over time.

Resident fees at our residential communities consist of regular monthly charges for basic housing and support services and fees for additional requested services, such as assisted living services, personalized health services and ancillary services. Fees are specified in our agreements with residents, which are generally short term (30 days to one year), with regular monthly charges billed in advance. Funds received from residents in advance of services provided are not material to our condensed consolidated financial statements. Our senior living communities require payment of an upfront entrance fee in advance of a resident moving into the community; substantially all these community fees are non-refundable and are initially recorded as deferred revenue in our condensed consolidated balance sheets. These deferred amounts are then amortized on a straight-line basis into revenue over the term of the resident’s agreement. When the resident no longer resides within our community, the remaining deferred non-refundable fees are recognized in revenue. Revenue recorded and deferred in connection with community fees is not material to our condensed consolidated. Revenue for basic housing and support services and additional requested services is recognized in accordance with ASC Topic 606 and measured based on the consideration specified in the resident agreement and is recorded when the services are provided.

Resident Care Contracts

Resident fees at the Company’s senior living communities may consist of regular monthly charges for basic housing and support services and fees for additional requested services and ancillary services. Fees are specified in the Company’s agreements with residents, which are generally short term (30 days to one year), with regular monthly charges billed on the first of the month. Funds received from residents in advance of services are not material to the Company’s condensed consolidated financial statements.

Below is a table that shows the breakdown by percentage of revenues related to contracts with residents versus resident fees for support or ancillary services.

	For the three-month period ended June 30,
	2023		%			2022		%
Revenue from contracts with customers:
Resident rent - over time	$	436,684		70	%	$	3,068,470		98	%
Day care – point in time		159,766		26	%		64,724		2	%
Amenities and conveniences - point in time		22,581		4	%		2,358		0	%
Total revenue from contracts with customers	$	619,031		100	%	$	3,135,552		100	%

	For the six month periods ended June 30,
	2023		%			2022		%
Revenue from contracts with customers:
Resident rent - over time	$	3,332,010		92	%		6,193,231		98	%
Day care		248,807		7	%		148,620		2	%
Amenities and conveniences - point in time		44,718		1	%		3,919		0	%
Total revenue from contracts with customers	$	3,625,535		100	%	$	6,345,770		100	%

Financial Instruments

In accordance with the reporting requirements of the FASB ASC Topic 825, “Financial Instruments”, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to the consolidated financial statements when the fair value is different than the carrying value of those financial instruments. The Company does not have assets or liabilities measured at fair value on a recurring basis except its derivative liability.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at the balance sheet dates, nor gains or losses reported in the statements of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held during the periods presented, except as disclosed.

Fair Value Measurement

ASC Topic 820, “Fair Value Measurements”, provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.

Level 2 - Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs.

Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value.

The following tables present the Company’s assets and liabilities that were measured and recognized at fair value as of June 30, 2023 and December 31, 2022:

June 30, 2023
	Level 1	Level 2	Level 3	Total
Derivative liability	-	-	5,675,083	5,675,083

December 31, 2022
	Level 1	Level 2	Level 3	Total
Derivative liability	-	-	2,320,547	2,320,547

Under the Company’s contract ordering policy, the Company first considers common shares issued and outstanding as well as reserved but unissued equity awards, such as under an equity award program. All remaining equity linked instruments such as, but not limited to, options, warrants, and debt and equity with conversion features are evaluated based on the date of issuance. If the number of shares which may be issued under the Company’s agreements exceed the authorized number of shares or are unable to be determined, equity linked instruments from that date forward are considered to be derivative liabilities until such time as the number of shares which may be issued under the Company’s agreements no longer exceed the authorized number of shares and are able to be determined.

The Company has outstanding note agreements containing provisions meeting the definition of derivative liability which therefore require bifurcation. Further, pursuant to the Company’s contract ordering policy, any issuance of equity linked instruments subsequent to the initial triggering agreement will result in derivative liabilities.

At June 30, 2023, the Company estimated the fair value of the conversion feature derivatives embedded in the notes payable and warrants based on assumptions used in the Cox-Ross-Rubinstein binomial pricing model using the following inputs: the price of the Company’s common stock of $0.80; risk-free interest rates ranging from 4.13% to 5.47%; expected volatility of the Company’s common stock ranging from 135% to 310%; estimated exercise prices ranging from $0.35 to $0.75; and terms from one to sixty months.

At December 31, 2022, the Company estimated the fair value of the conversion feature derivatives embedded in the notes payable and warrants based on assumptions used in the Cox-Ross-Rubinstein binomial pricing model using the following inputs: the price of the Company’s common stock of $0.56; risk-free interest rates ranging from 3.99% to 4.76%; expected volatility of the Company’s common stock ranging from 183% to 572%; estimated exercise prices ranging from $0.35 to $0.43; and terms from three to sixty months.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the changes in the Company’s Level 3 derivative liability at fair value is as follows:

Balance - December 31, 2022	$	2,320,547
Additions		4,717,949
Settlements		(881,127	)
Change in fair value		(482,286	)
Balance - June 30, 2023	$	5,675,083

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC Topic 815, “Derivatives and Hedging Activities”.

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

Research and Development Costs

Research and development costs are charged to expense as incurred and are included in operating expenses. There were no research and development costs incurred in the three or six months ended June 30, 2023 or 2022.

Advertising Costs

The costs of advertising are expensed as incurred. Advertising expenses are included in the Company’s operating expenses. There were no advertising expenses in the three or six months ended June 30, 2023 or 2022.

Lease Accounting

The Company follows ASC Topic 842, “Leases”. The Company has elected the practical expedient to account for each separate lease component of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments to be capitalized. All ROU assets were written off effective March 31, 2023, when the Company disposed of the three leased properties described in Note 5 — Leases.

Income Taxes

The Company’s income tax expense includes U.S. income taxes. Certain items of income and expense are not reported in tax returns and financial statements in the same year. The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences to be included in the Company’s condensed consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse, while the effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company can recognize a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized.

Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income, and, to the extent, the Company believes that the Company is more likely than not that all or a portion of deferred tax assets will not be realized, the Company establishes a valuation allowance to reduce the deferred tax assets to the appropriate valuation.

Company includes the related tax expense or tax benefit within the tax provision in the condensed consolidated statement of operations in that period. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. In the future, if the Company determines that it would be able to realize its deferred tax assets in excess of their net recorded amount, the Company will make an adjustment to the deferred tax asset valuation allowance and record an income tax benefit within the tax provision in the condensed consolidated statement of operations in that period.

The Company pays franchise taxes in certain states in which it has operations. The Company has included franchise taxes in general and administrative and operating expenses in its condensed consolidated statements of operations.

Earnings Per Share

FASB ASC Topic 260, “Earnings Per Share”, requires a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share (EPS) computations.

Basic earnings (loss) per share are computed by dividing income (loss) attributable to Clearday shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

Commitments and Contingencies

The Company has been, is currently, and expects in the future to be involved in claims, lawsuits, and regulatory and other government audits, investigations and proceedings arising in the ordinary course of the Company’s business, some of which may involve material amounts. The Company establishes accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Also, the defense and resolution of these claims, lawsuits, and regulatory and other government audits, investigations and proceedings may require the Company to incur significant expense. The Company accounts for claims and litigation losses in accordance with ASC Topic 450, “Contingencies”. Under ASC Topic 450, loss contingency provisions are recorded for probable and estimable losses at the Company’s best estimate of a loss or, when a best estimate cannot be made, at the Company’s estimate of the minimum loss. These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment, and are refined as additional information becomes known. Accordingly, the Company is often initially unable to develop a best estimate of loss and therefore the estimated minimum loss amount, which could be zero, is recorded; then, as information becomes known, the minimum loss amount is updated, as appropriate. Occasionally, a minimum or best estimate amount may be increased or decreased when events result in a changed expectation.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470- 20)” and “Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (a) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, “Debt: Debt with Conversion and Other Options”, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (b) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (c) revises the guidance in ASC 260, “Earnings Per Share, to require entities to calculate diluted earnings per share for convertible instruments by using the “if-converted” method.” In addition, entities must presume share settlement for purposes of calculating diluted earnings per share when an instrument may be settled in cash or shares. For smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023. The Company is currently evaluating the impact that ASU 2020-06 may have on its condensed consolidated financial statements and related disclosures.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2023, there were several new accounting pronouncements issued by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

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Real Estate, Property and Equipment

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Real Estate, Property and Equipment

3. Real Estate, Property and Equipment

The Company’s real estate, property and equipment consisted of the following at the respective balance sheet dates:

	June 30, 2023			December 31, 2022
Land	$	2,081,879		$	2,231,879
Building and building improvements		4,975,244			4,975,243
Leasehold Improvements		710,317			846,754
Computers		57,166			332,809
Furniture, fixtures, and equipment		72,213			1,379,219
Other Equipment		74,935			518,145
Construction in progress		138,187			138,187
Total		8,109,941			10,422,236
Less accumulated depreciation		(1,982,206	)		(3,899,257	)
Real estate, property and equipment, net	$	6,127,735		$	6,522,979

The Company recorded depreciation expenses relating to real estate, property, and equipment in the amount of $526,073 and $372,259 for the periods ended June 30, 2023, and 2022, respectively.

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Intangible Assets, Net

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets, Net

4. Intangible Assets, Net

Software Capitalization.

At June 30, 2023 and June 30, 2022, $3,312,000 and $3,680,000, respectively were the balances that will be amortized based on the estimated useful life of five years. The Company began this amortization starting January 1, 2023.

Developed intangible assets subject to amortization are as follows:

	June 30, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount	Weighted-Average Remaining Useful Life (Years)
Developed technology	3,680,000	$	368,000	$	3,312,000	4.50

The Company recorded amortization expense related to its intangible assets in the amounts of $368,000 and $0 for the periods ended June 30, 2023 and June 30, 2022, respectively.

Expected future amortization expense for intangible assets as of June 30, 2023, is as follows:

Fiscal Years
2023 (remaining)	$	368,000
2024		736,000
2025		736,000
2026		736,000
2027		736,000
Thereafter		-
Total	$	3,312,000

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted-Average Remaining Useful Life (Years)
Developed technology	$	3,680,000	$	-	$	3,680,000		5.00

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Leases

6 Months Ended

Jun. 30, 2023

Leases

Leases

5. Leases

Lease Terminations

On March 31, 2023, the Company entered into agreements (collectively, the “Lease Transition Agreement”) to terminate the leases (“Community Leases”) for three of its four residential care facilities, which account for all of Clearday’s leased residential care facilities. The Community Leases related to residential communities (the “Communities”) located in Westover, Texas, New Braunfels, Texas and Little Rock, Arkansas. Terminating the Community Leases removed right of use liabilities and right of use assets related to these Community Leases, as of December 31, 2022 and the write-off or elimination of the related net leasehold improvements and personal property in these Communities. We currently have no material economic rights or obligations under the Community Leases other than for payment obligations under the Lease Transition Agreements. The tenants of the Community Leases and the guarantors, including Clearday, Inc., entered a Lease Transition Agreement with the Lessor of the properties dated March 31, 2023. The Lease Transition Agreement provided, among other matters, that the aggregate liability of the Clearday subsidiaries that are tenants under the Community Leases are reduced to amount (the “Repayment Amount”) that is equal to the sum of: (1) past due rent payments under the Community Leases of $1,284,770 (“Past Due Community Lease Amounts”), (2) a fixed amount arising from the termination of the Community Leases of $1,710,777 (“Rent Differential Amount”), (3) the amount of additional advances (“Critical Expenses Advances”) by Landlord to pay critical expenses plus the premium for tail insurance policy in favor of the Landlord (the obligation for such premiums are limited $275,000), (4) plus an additional amount that is equal to the greater of $25,000 or 5% of such Critical Expenses Advances. The Critical Expense Advances and additional amount were determined in the second quarter of 2023. The Repayment Amount is due and payable over a period maturing on July 31, 2025, as follows: (1) on closing date of the previously announced proposed merger (the “Viveon Merger”) with Viveon Health Acquisition Corp., a Delaware corporation (“Viveon”), a payment equal to 10% of the new money that is raised in connection with the Viveon Merger (subject to a minimum payment of $300,000 and a maximum payment of $500,000); provided that if the Viveon Merger does not close by July 31, 2023, then a payment of $300,000 will be paid on July 31, 2023 or such other date agreed by Landlord and Clearday, which under the terms of the First Amendment to the Lease Transition Agreement, is September 30, 2023, subject to certain extensions; (2) $400,000 payable quarterly commencing on December 31, 2023, and (3) beginning with the calendar quarter ending December 31, 2023 10% of the Excess Cash Flow, generally based on earnings before interest, taxes, depreciation, and amortization of Clearday. The current guarantors of the Community Leases (a subsidiary of Clearday, Inc. and two individuals) continued to guaranty the obligations, as modified by the Lease Transition Agreement, and provided a security interest on the collateral specified in such guarantees.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In connection with the Lease Transition Agreements, the tenants under the Community Leases and the Clearday, Inc. subsidiaries that operated the Communities signed a promissory note for the Repayment Amount and the Past Due Community Lease Amounts and Clearday, Inc. agreed to be an additional guarantor of the obligations of the Community Leases, as modified and limited by the Community Lease Transition Agreement, which is less than approximately $4,000,000 under the terms of a Guaranty (the “Guaranty”). Clearday also agreed to cooperate with Landlord to facility the termination of the Community Leases the sale of the furniture and fixtures at the Communities to the New Operator so that New Operator may enter into a lease or purchase of the Communities and operate the memory care businesses in the Communities or other businesses at the Communities that they choose to conduct.

In connection with the proposed termination of the Community Leases, the subsidiaries that operate the Communities (the “Current Operators”) and subsidiaries of the New Operator (“New Communities Operators”) entered into the Operations Transfer Agreement dated as of April 1, 2023 (the “OTA”). The OTA provided that the New Communities Operators will purchase the personal property and other assets of the Current Operators used at the Communities to enable the New Communities Operators to conduct their business at the Communities under new leases or other arrangements with the Landlord. Such purchase and sale will close on the date that the New Communities Operators receive the licenses, authorizations and approvals from the applicable Texas and Arkansas governmental agencies to conduct a licensed residential memory care business at the Communities and they enter into new leases with the Landlord (the “Commencement Date”). The New Communities Operators entered into new agreements with the residents at the Communities, effective the Commencement Date and were responsible for any operating losses of the facilities from and after March 31, 2023. The Current Operators have provided notice to each of the residents at the Communities that their agreements with the Current Operators have been terminated, effective on the Commencement Date. The New Communities Operators are not affiliated with the Company or its officers or directors. The OTA and Interim Agreements provide for the asset purchase and sale of the memory care businesses at the Communities, and the transfer of certain agreements and the assumption of certain specified liabilities. The Current Operators, each of which is a subsidiary of Clearday, Inc., remain obligated for liabilities that are not assumed by the New Operators. The New Communities Operators have employed, or offered employment to, all of our employees at these communities and will fund and be responsible for any operating cash losses for the Communities.

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Indebtedness

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Indebtedness

6. Indebtedness

As of June 30, 2023, and December 31, 2022, the current portion of long-term debt within the Company’s condensed consolidated financial statements was $17,007,210 and $16,347,290, respectively.

During the six months ended June 30, 2023 and 2022, we incurred interest expense totaling $1,197,054 and $896,643, respectively.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the Company’s debt as of June 30, 2023 and December 31, 2022:

As of June 30,	Total
2023		15,615,892
2024		2,333,909
2025		4,956,948
2026		1,518,682
Thereafter		-
Total obligations	$	24,425,431

Indebtedness of Facilities

	Maturity Date	Interest Rate			June 30, 2023		December 31, 2022
Naples Equity Loan ^	May 2023		9.95	%	$	4,550,000	$	4,550,000
Gearhart Loan ^	December 2022		7.00	%		193,578		193,578
SBA PPP Loans #	February 2022		1.00	%		1,518,682		1,518,682
Bank Direct Payable	December 2022		3.13	%		-		80,381
AIU Sixth Street	February 2023		12.00	%		-		49,593
1800 Diagonal Lending	October 2024		12.00	%		45,303		116,760
1800 Diagonal Lending	February 2024		12.00	%		134,723		-
Equity Secure Fund I, LLC*	March 2024		18.00	%		1,097,610		1,000,000
Invesque, Inc.	July 2025		10.00	%		3,977,470

Merchant Cash Advance Loans (^^)

Naples Operating PIRS Capital	March 2023	0.00	%	$	338,000	$	338,000
Little Rock Libertas	February 2023	0.00	%		326,330		326,330
PIRS Capital Financing Agreement	March 2023	0.00	%		144,659		144,659
Naples Samson #1	May 2023	0.00	%		76,916		76,916
Naples LG Funding #2	April 2023	0.00	%		171,170		171,170
Little Rock Premium Funding	April 2023	0.00	%		211,313		211,313
Little Rock KIT Funding	December 2022	0.00	%		89,400		89,400
Little Rock Samson Funding #4	February 2023	0.00	%		170,501		170,501
Naples Operating SWIFT	December 2022	0.00	%		111,750		111,750
New Braunfels Samson Cloud Fund	February 2023	0.00	%		308,035		308,035
New Braunfels Samson Group	February 2023	0.00	%		375,804		375,804
Westover Hills One River	December 2022	0.00	%		128,298		128,301
Westover Hills FOX Capitol	March 2023	0.00	%		109,384		109,384
Westover Hills Arsenal	October 2023	0.00	%		95,882		95,882
Westover Samson Funding	March 2023	0.00	%		267,754		267,754
Subtotal merchant cash advance loans					2,925,196		2,925,199
Notional amount of debt					14,442,562		10,434,193
Less: current maturities					14,442,562		10,434,193
				$	-	$	-

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Indebtedness Allocated to real estate

Real Estate:
Artesia Note	June 2033	Variable		$	-	$	211,721
Carpenter Enterprises	Demand Note	Variable			237,180		300,000
Leander Stearns National Association	February 2023	10.38	%		805,000		805,000
Notional amount of debt					1,042,180		1,316,721
Less: current maturities					805,000		805,000
				$	237,180	$	511,721

Other (Corporate) Indebtedness

AGP Contract ^	March 2023	5.00	%	$	550,000		$	550,000
Cibolo Creek Partners	December 2025	0.09	%		388,276			421,470
Cibolo Creek Partners promissory note	December 2025	0.09	%		91,208			96,208
EIDL SBA Treas 310	December 2051	3.75	%		494,900			494,900
Firstfire	May 2023	12.00	%		(1,378	)		95,054
Five C’s Loan ^	December 2022	9.85	%		325,000			325,000
GS Capital	May 2023	12.00	%		-			50,955
Jefferson Street Capital LLC @	May 2023	12.00	%		16,800			84,000
KOBO, L.P.	October 2023	Floating	%		500,000			500,000
Mast Hill LP @	May 2023	12.00	%		300,000			420,000
Mast Hill LP @	July 2023	12.00	%		252,000			315,000
Round Rock Development Partners Note	December 2025	0.09	%		500,000			500,000
Jefferson Street Capital LLC (February 2023)	February 2024	12.00	%		192,883			-
Mast Hill LP (January 2023)@	January 2024	12.00	%		756,000			-
Bridge Financings		8.00			685,000			-
Convertible Notes Issued by AIU Alternative Care, Inc.	January 2024	12.00	%		749,000			-
Notional amount of debt					5,799,689			3,852,587
Less: current maturities					1,942,422			2,340,009
				$	3,857,267		$	1,512,578
TIC Purchase Agreements	No Specified Date	8.00	%	$	3,141,000		$	3,141,000
		Total			24,425,431			18,744,501
		Less Debt Discount & Derivatives			(1,797,732	)		(1,004,271	)
		Total		$	22,627,699		$	17,740,230

^	Obligation is in default. Interest rate set forth is the stated rated of interest. The actual rate of interest has increased under the terms of the obligation.
^^	We have ceased payment of these obligations. Obligations are subject to litigation for nonpayment, as previously reported. See Note 7 — Commitments and Contingencies.
#	SBA PPP obligations are past due and in the Company is continuing the process to have these obligations forgiven.
@	Obligation is in payment default. Each lender has not exercised any of their remedies. Each lender has the right to exercise remedies including the conversion of the promissory note into shares of our common stock and collection of default interest and other amounts, and in the case of Mast Hill to exercise the Lender Remedy Warrants described in Note 10 — Deficit. Jefferson Street Capital LLC has granted a forbearance to October 31, 2023. Mast Hill LP has granted a forbearance dated October 4, 2023 until the earlier of (i) the closing of the merger (“Merger”) with Viveon Health Acquisition Corp under the merger agreement dated as of April 5, 2023, as amended, (ii) to January 2, 2024 (90 days from the date of the forbearance), (iii) the date that Clearday, Inc. or any of its subsidiaries makes an assignment for the benefit of creditors, or applies for or consents to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed. or (iv) the date that bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Clearday, Inc. or any of its subsidiaries (the earlier of the aforementioned (i), (ii), (iii) or (iv) shall be referred to herein as the “Waiver Expiration Date”). There can be no assurance that the Company will be able to extend any the forbearances with any of these lenders on acceptable terms or at all or that Clearday will be able to comply with the terms of the forbearance provided by Mast Hill LP which includes that Clearday provide net proceeds from additional financings by Clearday under the terms of the promissory notes with such lender, unless such payment is excused by such lender.
*	Obligations have been modified as of June 5, 2023.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Equity Secure Fund I, LLC Modification

As of June 5, 2023, AIU 8800 Village Drive, LLC, the subsidiary of Clearday, Inc. that owns the property in San Antonio, Texas used for our headquarters and production facilities, extended, modified and rearranged the mortgage financing of such property, to extend the maturity to March 26, 2024, obtain additional financing for the payment of taxes and certain other amounts, increase the interest rate to 18% per annum, provide a right, if there are no uncured defaults under such mortgage financing, to extend the maturity of the mortgage financing for an additional twelve months for payment of a fee equal to 1% of the original ($1 million) principal amount of the mortgage note and reduce the interest rate to 16.75% during such extension period.

Bridge Financings.

The Company has received certain advances that are payable on demand and on October 6, 2023, issued Senior Convertible Notes (“Bridge Notes”) as payment of such advances with interest accruing under Bridge Note as of the date of each such advance. The Company is continuing such offering of Bridge Notes of an amount of up to $16,000,000, or such other amount as determined by the Company, to accredited investors in an offering that is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). Each Bridge Note will accrue interest at 8% per annum, increased by 4% per annum during an Event of Default as defined in the Bridge Note. The Bridge Notes will be payable on June 30, 2024 (the “Bridge Note Maturity Date”). The Bridge Notes will provide for conversion into shares of our common stock based on a contingency. In the event that the merger agreement dated as of April 5, 2023, as amended, (the “Viveon Merger Agreement”) with Viveon Health Acquisition Corp., a Delaware corporation (“Viveon”) providing for the proposed merger (“Viveon Merger”) is terminated, then the conversion price for our shares of common stock will be the lower of $0.82 per share and a price per share equal to a 25% discount to the volume weighted average price per share for our common stock for the ten (10) trading days preceding such termination date. If the Viveon Merger Agreement is not terminated, then at the closing of the Viveon Merger, the principal and accrued interest of the Bridge Notes will be converted at a price per share equal to $0.82 subject to ratable adjustment in the event of any stock split, reverse stock split, merger, consolidation, combination or similar transactions, and such shares of our common stock will be exchanged for shares of Viveon common stock under the terms of the Viveon Merger Agreement. The Bridge Notes have certain restrictions including the incurrence of additional related party transactions, restricted payments, maintenance of insurance and not change in our business and that the net proceeds of such financings would be used for the repayment of existing indebtedness and general corporate and working capital purposes of us and Viveon in anticipation of the Viveon Merger. We have agreed to share the net cash proceeds raised in any financing with Viveon as described in Note 9 — Related Party Transactions. The foregoing description of the form of the Bridge Notes is qualified in their entirety by reference to the full text of the Bridge Note, which is incorporated by reference into this report as Exhibit 10.1.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

7. Commitments and Contingencies

Contingencies

Simpsonville litigation

The tenant, MCA Simpsonville Operating Company LLC, referred to as Tenant, of the MCA community that is located in Simpsonville, South Carolina, referred to as the Simpsonville Facility, and other affiliates of the Company have a dispute with the landlord of the Simpsonville Facility, MC-Simpsonville, SC-UT, LLC, referred to as the Landlord, and its affiliates (Embree Group of Companies: Embree Construction Group, Inc., Embree Asset Group, Inc., and Embree Capital Markets Group, Inc., referred to collectively as Embree) under the terms of the lease. After non-payment, the Landlord instituted litigation (“Simpsonville Action 1”) that is captioned and numbered MC-Simpsonville, SC-UT, LLC v. Steve Person, et. al., Cause No. 19-0651-C368 in the 368^th Judicial District Court of Williamson County, Texas. After the trial court issued a judgment on damages in the amount of $2,801,365 and appeals of this judgment this action was settled on August 5, 2022 as reflected by an Agreed Final Judgment for an aggregate amount of $3,012,011, including costs and expenses in favor of the plaintiff, of which $2,763,936 was settled by the release of a cash bond that Tenant previously deposited with the Court and the remaining amount of $248,075 to be paid within six months after the entry of the judgment. The Company has not paid this amount. In connection with the settlement of Simpsonville Action 1, Tenant entered into an agreement to transfer certain operations, including lease obligations, of the Simpsonville Facility Tenant and Landlord terminated the lease of the Simpsonville Facility as contemplated by such agreement to transfer of certain operations, including lease obligations, which permitted the Landlord to sell the Simpsonville Facility to a third party and thereby limit the future obligations under the lease.

The Landlord filed a second action on April 9, 2021 (Simpsonville Action 2), for claims similar to Simpsonville Action 1 including relief for payment of rent past due and reimbursement of taxes from October 2020 to the time of the trial in this action. This action captioned and numbered MC-Simpsonville, SC-UT, LLC v. Steve Person, James Walesa and Trident Healthcare Properties I, LP (“Trident”), Cause No. 21-0513-C425 in the 425^th Judicial District Court of Williamson County, Texas. The court granted summary judgment in this matter in favor of the Landlord on April 14, 2023. On September 14, 2023, the court entered an order (the “Judgment Enforcement Order”) requiring the turnover of non-exempt assets of the defendants Steve Person and James Walesa and the assets of Trident Healthcare Properties I, LP and the appointment of a receiver to enforce the summary judgement. The Judgment Enforcement Order provides, in part, that “Nothing in this Order is intended to delay, hinder or disrupt the closing of the [Viveon] merger.” The Judgment Enforcement Order also provides certain restrictions regarding the sale or transfer of the Clearday securities owned by Steve Person or James Walesa, providing in part that “Any liquidation of the Clearday shares by Receiver requires approval of this Court, after notice and hearing, or written agreement of the parties. Nothing herein, however, prevents the transfer of the shares under the expected merger so long as Defendant and the receivership estate retain their rights in such shares. No party, including Defendants, shall encumber the shares except as specifically provided herein.”

Under the structure used for the lease and operations of the Simpsonville Facility, a subsidiary of Clearday, Inc., Tenant, is the direct obligor under the lease and another subsidiary of Clearday, Trident, is a guarantor of the lease obligations. Neither Tenant or Trident have any material assets. We are assessing the exposure of these matters to Clearday, Inc. under these actions, including any liability under indemnification agreements with the individual guarantors. We expect to offer to negotiate a settlement of the summary judgement. There can be no assurance that any such settlement discussions will be held or that there will be any settlement of these actions on terms that are acceptable or at all.

Employment related taxes

Certain subsidiaries of the Company that operate hotel assets did not pay employment related taxes such as required withholdings for Texas State unemployment taxes and federal income tax and employee and employer contributions for FICA (Social Security and Medicare) taxes, and federal unemployment tax for certain periods from December 31, 2018, to December 31, 2021. These subsidiaries have since made the appropriate filings with the Internal Revenue Service and the Company has accrued the full estimated amount of the underpaid taxes as well as the estimated penalties and interest. As of June 30, 2023, the amount of the estimated taxes, penalties, and interest, assuming that there is no waiver or mitigation of the penalties, is $311,000. The Company has accrued this amount in its financial statements as of June 30, 2023. The amount that was accrued in the condensed consolidated financial statements as of December 31, 2022, was $261,000.

Certain subsidiaries of the Company that operate its residential care communities have not paid employment related taxes such as required withholdings for federal income tax and employee and employer contributions for FICA (Social Security and Medicare) taxes, and federal and state unemployment tax from and after the payroll periods that ended September 16, 2022, to the date of this Report. These subsidiaries have since made the appropriate filings with the Internal Revenue Service and the Company has accrued the amount of the underpayment in its financial statements as of June 30, 2023 and December 31, 2022, of approximately $1,197,672 and $527,000, respectively, which amount does not include any taxes, penalties, and interest. In connection with these matters, on August 3, 2023, the Internal Revenue Service issued a tax lien against MCA Management Company, Inc., a dormant and inactive subsidiary of Clearday, Inc. that does not have any assets.

Payroll related taxes

In the fourth quarter of 2021, certain subsidiaries of the Company did not remit payroll taxes related to the Earned Retentions Tax Credit (“ERTC”). The ERTC program permitted an offset for such obligations and was terminated during the fourth quarter with an effective termination date of September 30, 2021. As a result, the Company has accrued $1,097,000 in such payroll taxes. These subsidiaries have applied for certain tax credits, including ERTC and Families First Coronavirus Response Act. The Company expects to use such credits that will be applied to reduce these payroll tax liabilities. There is no assurance that any such tax credits will be received.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Merchant advance loans

Certain subsidiaries of the Company that operate residential care facilities (“MCA Borrowers”) incurred certain financings through merchant credit advances. Such financings were provided by creditors under agreements (“MCA Agreements”) that describe the transaction as the sale of future receivables by the applicable MCA Borrower. The aggregate accrued amount of these financings is approximately $2,925,196, as summarized in Note 6 — Indebtedness. Eight of these financing parties have commenced actions alleging, among other matters, a breach of the MCA Agreement for non-payment and a breach of the guaranty by the applicable guarantors. These actions demand monetary damages that, in the aggregate, are approximately $1,531,640, plus other costs, fees and certain other amounts.

These actions are:

1.	Premium Merchant Funding 18, LLC v Memory Care at Good Shepherd LLC and James Walesa (a guarantor), filed in state court in Kings County, New York on August 19, 2022 (summary judgement in this matter was entered in favor of the plaintiff and such judgement was not appealed by us);
2.	Libertas Funding LLC v. Memory Care at Good Shepherd, LLC, et. al. including James Walesa (a guarantor), filed in state court in Monroe County, New York on August 24, 2022 (summary judgement in this matter was entered in favor of the Company’s subsidiary and such judgement was not appealed by us, and this judgement was entered in the State of Texas);
3.	Cloudfund LLC v MCA New Braunfels Operating Company LLC et. al. including James Walesa (a guarantor), filed in state court in Nassau County, New York on August 29, 2022;
4.	Cloudfund LLC v MCA Naples Operating Company, LLC and James Walesa (a guarantor), filed in state court in Nassau County, New York on August 30, 2022 (summary judgement in this matter was entered in favor of the plaintiff and such judgement was not appealed);
5.	Swift Funding Source Inc. v MCA Naples Operating Company LLC et. al. including Christin Hemmens (a guarantor), filed in state court in Ontario County, New York on August 31, 2022;
6.	Pirs Capital, LLC v MCA Westover Hills Operating Company, LLC et. al. including James Walesa (a guarantor), filed in state court in New York County, New York on September 8, 2022;
7.	Prosperum Capital Partners, LLC dba Arsenal Funding v MCA Westover Hills Operating Company LLC et. al. including James Walesa (a guarantor), filed in state court in Kings County, New York on September 28, 2022;
8.	Fox Capital Group, Inc. v MCA Westover Hills Operating Company LLC et. al. including James Walesa (a guarantor), filed in state court in Bexar County, Texas on October 25, 2022.

James Walesa is the Company’s Chief Executive Officer, and/or Christin Hemmens, is an officer of Clearday. Other than as set forth above, each of these actions are in the pleading or discovery stage of litigation.

Naples Equity Loan: The mortgage lender for the Naples, Florida facility commenced an action for nonpayment of the mortgage note. The action is captioned A.AD.A, INC.; Anga Properties, LLC; Arce Holdings, LLC; Benfam Holdings LLC; Carolina Resources, LLC; Emilio Diaz SD Investment Account, LLC; Michael B. and Irma B. Goldstein; David J. Gonzalez; Hersab Holdings, LLC; Indocan Investment USA Corporation; Armando Navarro; Robbia Properties LLC; Shochat Holdings I LLC; and Wekwit, Inc. (collectively referred to as the Naples Lender) vs. MCA Naples, LLC (“MCA Naples”), Case No. 11-2023-CA-000243-0001- flied in the Circuit Court in and for Collier County, Florida (the “Benworth Action”). This litigation arises from the nonpayment under the mortgage and promissory note. The Benworth Action demands payment of the principal amount of the promissory note of $4,550,000 together with default interest, late charges, costs advanced, insurance advances, attorney’s fees and costs and seeks the Final Judgment of Foreclosure and such further relief as the court deems just and proper. The Benworth Action also seeks the amount from James Walesa, the Company’s Chief Executive Officer, under the personal irrevocable and unconditional guaranty, in favor of Benworth Capital Partners, LLC, of the obligations of MCA Naples under the mortgage and promissory note. A clerk’s default was entered against MCA Naples on May 15, 2023 and against Mr. Walesa on May 31, 2023. On July 5, 2023, MCA Naples filed a motion to set aside the default and the defaults were set aside. MCA Naples, LLC filed its Answer and Defenses. A Motion to Dismiss the Complaint was filed on behalf of Mr. Walesa and is set for a hearing on November 6, 2023. Plaintiffs filed a Motion for Summary Judgment which was denied on October 3, 2023We believe that the fair value of the mortgaged property has a fair value that is significantly greater than the amount mortgage obligations and intends to negotiate a forbearance or other modification of the mortgage or refinance the mortgage obligations or assist in a sale and modification of the mortgage note. There can be no assurance, however, that any such transaction will be consummated on acceptable terms or at all.

Leander Stearns National Association, the mortgage lender for the property (“Leander Property”) owned by Leander Associates, Ltd., (“Leander”), a Texas limited partnership that is a consolidated subsidiary of Clearday, Inc., has commenced litigation regarding the nonpayment of a mortgage loan obligations of approximately $875,000 seeking repayment of the mortgage loan of $805,000 that was due February 10, 2023, and additional amounts, including interest and late fees. Leander and the mortgage lender entered into a Forbearance Agreement as of May 22, 2023 and the first amendment thereto dated September 8, 2023, that, among other matters, provided a forbearance period and extended the maturity of the mortgage loan to October 21, 2023, and requires certain payments to the mortgage lender, including monthly installment payments to the mortgage lender of all accrued, unpaid interest starting on September 15, 2023 and continuing on the same day of each month thereafter until the New Maturity Date (as defined below) with interest calculated on the unpaid principal balance as set forth in the Note. The mortgage loan under the forbearance agreement, as amended, provides that the mortgage lender deferred certain past-due interest to the extended maturity date of October 21, 2023. Leander has entered into a purchase and sale agreement for the Leander Property for a value that is in excess of the amounts owed to the mortgage lender and the other financing by us owed to KOBO LP with respect to the Leander Property. We believe that the net proceeds to Leander from the sale of the Leander Property will not be material after giving effect to the payments to the mortgage lender, and existing financing of net proceeds to KOBO LP and other financings of such proceeds, and transaction brokerage fees and other costs.

The Company has been threatened with litigation by the law firm Rigrodsky Law, P.A. alleging unjust enrichment in connection with stockholder litigation commenced by such firm related to the AIU Merger and claiming damages of $200,000. This law firm alleges that the complaint that was filed caused material supplemental disclosures. The Company is assessing these allegations and expects to respond appropriately. 

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In addition, from time to time, the Company becomes involved in litigation matters in the ordinary course of its business. Such litigations include an action that alleges negligence and other claims regarding the death of a resident in a memory care facility. Although the Company is unable to predict with certainty the eventual outcome of any litigation, the Company does not believe any of its currently pending litigation is likely to have a material adverse effect on its business.

Indemnification Agreements

Certain lease and other obligations of the Company are guaranteed in whole or in part by James Walesa and/or BJ Parrish and others. The Company has agreed to indemnify and hold each such individual harmless for all liabilities and payments on account of any such guaranty. The lease obligations of the Company for its lease obligations for four of its five MCA facilities, including the lease of the MCA community that is in Simpsonville, South Carolina, referred to as the Simpsonville facility. This is the facility that is the subject of litigation and judgement against certain of the Company’s subsidiaries. We have been fully indemnified by James Walesa for all obligations that the Company may incur with respect to an adverse judgement against the Company, including any post-judgement interest. Such indemnification by James Walesa is under an agreement dated as of July 30, 2020. Under such agreement, James Walesa receives a fee equal to 2% of the total amount payable by AIU or any of its subsidiaries which is payable in units of shares of the AIU Alt Care Preferred and Clearday Warrants at $10.00 per unit, which is the same as the cash payment for such units by third parties in the offering of such units by AIU Alt Care. If Mr. Walesa is required to make any payments under this indemnification, the Company will issue shares of AIU Alt Care Preferred and Clearday Warrants, at $10.00 per unit, for the amount of such payment.

Subsequently, an amendment to the indemnification agreement above was signed on January 19, 2021, in which additional securities were pledged on behalf of James Walesa for all obligations that Company may incur with respect to an adverse judgement and/or any post-judgement interest. In the event that Mr. Walesa is required to make any payments under this amended indemnification agreement, then Company will issue shares of AIU Care, AIU Warrants and AIU Common Stock at $10.00 per unit as well as Series A Preferred at $20.00 per unit, for the amount of such payment.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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Earnings Per Share

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Earnings Per Share

8. Earnings Per Share

Basic net income (loss) per common share is calculated by dividing the net income (loss) attributable to Clearday shareholders by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of common shares and potentially dilutive securities outstanding for the period. For the Company’s diluted earnings per share calculation, the Company uses the “if-converted” method for preferred stock and convertible debt and the “treasury stock” method for Warrants and Options.

The following tables set forth the potentially dilutive shares that were anti-dilutive in their respective periods as the Company had net losses for the periods ended June 30, 2023 and 2022, respectively.

		For the Six Months Ended
Dilution shares calculation	June 30,
		2023	2022
Series A Convertible Preferred Stock		328,925	328,925
Series F 6.75% Convertible Preferred Stock		4,538,616	4,797,052
Series I 10.25% Convertible Preferred Stock		1,365,640	320,657
Limited Partnership Units		99,038	99,038
Warrants		7,618,820	4,036,320
Bridge Notes		835,366	-
Total participating securities		14,786,405	9,581,992

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Related Party Transactions

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Related Party Transactions

9. Related Party Transactions

Debt. and Guarantees

The Company’s indebtedness includes amounts loaned to us by executive management. In addition, the Company incurs debt that is personally guaranteed by certain executives, officers and directors for which they receive a guarantee fee. There is a guarantee fee agreement in place that details the amount of the fee as well as payment terms. The amount of the fee is capped at 1% of the amount of the outstanding note regardless of how many guarantors there are on the loan unless otherwise determined by the Company’s Board of Directors.

We owe (1) Richard Morris, our General Counsel, (i) for a loan in the amount of $336,538 including principal and interest (ii) past due rent for our robots of approximately $127,933 including interest (2) James Walesa, our Chief Executive Officer, approximately $143,141 in loan guaranty fees. (3) B.J. Parrish, our Chief Operating Officer $44,722 in loan guaranty fees. (4) Steve Parsons, our shareholder $24,198 in loan guaranty fees. Christen Hemmings is owed approximately $130,000 in unsecured short term non-interest-bearing debt and additional amounts for loan guaranty fees.

Cibolo Creek Partners, LLC (“Cibolo Creek”) and its affiliate Round Rock Development Partners, LP (“RRDP”) prior to December 31, 2018, made loans to us under revolving credit notes that bear interest at the then applicable federal rate and are payable on demand or other date specified by such lender. In December 2018, AIU acquired businesses affiliated with Cibolo Creek. As of June 30, 2023, Cibolo Creek and Round Rock were owed $479,484 and $500,000 respectively, by the Company. As of December 31, 2022, AIU, Inc., Cibolo Creek and Round Rock were owed $89,381, $517,678 and $500,000 respectively, by the Company. These amounts are included in Note 6 – Indebtedness.

Stockdale Financing.

On May 22, 2023, Stockdale Associates, Ltd. (“Stockdale”), a wholly owned subsidiary of Clearday, Inc. entered into a sales transaction with James Walesa, the Chief Executive Officer of the Company, for the land of approximately 1.5 acres owned by Stockdale located in the city of Stockdale, Texas (the “Stockdale Property”). The aggregate purchase price for the Stockdale Property was approximately $155,925. Mr. Walesa used the Stockdale Property to obtain mortgage financing from a third party (the “Stockdale Mortgage Loan”). Stockdale may repurchase the Stockdale Property at any time upon payment to Mr. Walesa of $175,000, plus interest on such an amount at a rate of 10.9% annually based on the basis of a 360-day year, less $19,075. Stockdale is required to pay Mr. Walesa the approximate sum of $1,590 per month commencing July 1, 2024, and pay all other amounts required under the Stockdale Mortgage Loan and all amounts including property taxes, required for the ownership of the property. The Stockdale Mortgage Loan matures, and the Stockdale’s repurchase right terminates, on June 1, 2028. A $5,925 gain on the sale of the Stockdale property was recognized and included in Gain/loss on disposal of assets on our condensed consolidated financial statements.

Viveon Merger

We have agreed to invest approximately 48% of the net proceeds from advances or the issuance of our Bridge Notes with Viveon. As of June 30, 2023 we have invested approximately $319,000 of such net proceeds in Viveon under the terms of a promissory note issued by Viveon (the “Viveon Note”). We have subsequently invested approximately $558,700 as of August 11, 2023 for a total investment of approximately $877,600. We made this investment in Viveon to pay a portion of Viveon’s working capital expenses incurred in anticipation of the Viveon Merger. Because the indebtedness under this Viveon Note will be eliminated in the Viveon Merger or likely uncollectible in the event the Viveon Merger is not closed because we do not have the right to any of Viveon’s assets in their trust account, which is their only asset, we have recorded an allowance for doubtful accounts in the full amount of such investment. We have also amended the terms of the Viveon Merger Agreement to, among other matters, increase the number of shares of Viveon common stock that will be issued in the Merger to increase the valuation of Clearday to $500 million based on, among other factors, the demonstrated benefits of Clearday’s longevity care platform.

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Deficit

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Deficit

10. Deficit

The certificate of incorporation of Clearday, Inc. provides for 80,000,000 authorized shares of Common Stock and 10,000,000 authorized shares of preferred stock, each par value $0.001 per share.

Liquidation Preference

In the event of the Company’s liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all the Company’s debts and other liabilities and the satisfaction of any liquidation preferences that may be granted to the holders of any then outstanding shares of preferred stock.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Rights and Preferences

Holders of common stock have no preemptive, conversion or subscription rights, and there is no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock, which the Company may designate and issue in the future.

Voting Rights

Each holder of common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. The Company’s amended and restated certificate of incorporation and amended and restated bylaws do not provide for cumulative voting rights. Because of this absence of cumulative voting, the holders of most of the shares of common stock entitled to vote in any election of directors can elect all the directors standing for election, if they should so choose. In addition, the Company’s amended and restated certificate of incorporation also provides that the Company’s directors may be removed only for cause by the affirmative vote of the holders of at least 75% of the consolidated voting power of all the Company’s stockholders entitled to vote on the election of directors, voting together as a single class.

Subject to supermajority votes for some matters, matters shall be decided by the affirmative vote of the Company’s stockholders having a majority in voting power of the votes cast by the stockholders present or represented and voting on such matter, provided that the holders of the Company’s common stock are not allowed to vote on any amendment to the Company’s certificate of incorporation that relates solely to the terms of one or more series of preferred stock if the holders of such affected series are entitled, either separately or together with the holders or one or more such series, to approve such amendment. The affirmative vote of the holders of at least 75% of the votes that all of the Company’s stockholders would be entitled to cast in any annual election of directors and, in some cases, the affirmative vote of a majority of minority stockholders entitled to vote in any annual election of directors are required to amend or repeal the Company’s bylaws, amend or repeal certain provisions of the Company’s certificate of incorporation, approve certain transactions with certain affiliates, or approve the sale or liquidation of the Company. The vote of most minority stockholders applies when an individual or entity and its affiliates or associates together own more than 50% of the voting power of the Company’s then outstanding capital stock.

Preferred Stock

The Company has 5,000,000 shares of Series F 6.75% cumulative convertible common stock, $0.001 par value, authorized with 4,369,529 and 4,797,052 issued and outstanding as of June 30, 2023, and December 31, 2022, respectively. The Series F Preferred Stock has a stated value of $20.00 per share is exchangeable at the option of the holder into approximately 2.38 shares of the Company’s Common Stock, subject to adjustment for specified fundamental transactions such as stock splits, reverse stock splits and stock combinations. See Note 11 — Mezzanine Equity, for accounting treatment of the Series F Preferred Stock.

The Company’s Series A Preferred Stock has a $.001 par value, 2,000,000 shares authorized, and 328,925 shares issued and outstanding as of June 30, 2023 and December 31, 2022. Except for a preference on liquidation of $0.01 per share, each share of Series A Preferred Stock is the economic equivalent of ten twelfths of a share of common stock into which it is convertible. Except as required by law, the Series A Preferred Stock will not have any voting rights.

Dividends and Distributions

For the six-month periods ended June 30, 2023, and 2022, the Company accrued dividends for the 6.75% Series F preferred stock in the amount of $3,343,771 and $1,655,926 respectively.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Warrants

The Company has three separate types of warrants that are outstanding:

● warrants that were granted and outstanding by Superconductor Technologies Inc. (“STI”) prior to the September 9, 2021, effective date of the previously disclosed merger (the “AIU Merger”) with Allied Integral United, Inc. (“AIU”);

● warrants assumed by the Company that were granted by AIU prior to the effective date of the AIU Merger; and

● warrant that were issued by the Company after the AIU Merger.

The following is a summary of such outstanding warrants at June 30 2023:

Warrants (“STI Warrants”) issued by STI prior to September 9, 2021, the effective date of the AIU Merger.

	Common Shares
	Total		Currently Exercisable		Exercise Price per Share		Expiration Date
Warrants related to March 2018 financing		7,331		7,331	$	245.84	September 9, 2023
Warrants related to July 2018 financing		119,241		119,241	$	75.48	July 25, 2023
Warrants related to July 2018 financing		7,154		7,154	$	94.35	July 25, 2023
Warrants related to May 2019 financing		5,518		5,518	$	26.96	May 23, 2024
Warrants related to October 2019 financing		100,719		100,719	$	5.39	October 10, 2024
Warrants related to October 2019 financing		14,336		14,336	$	6.74	October 8, 2024

Warrants that were issued by Clearday Operations, Inc. prior to the effective date of the AIU Merger:

	Common Shares
	Total		Currently Exercisable		Exercise Price per Share		Expiration Date
Warrants issued in connection with financings *		3,281,508		3,281,508	$	5.00	November 15, 2029
Warrants issued to a consultant ^		500,000		500,000	$	11.00	August 10, 2026

*

Two of our subsidiaries have preferred securities that are classified under GAAP as Non-Controlling Interest: (1) the preferred stock designated as the Series I 10.25% cumulative convertible preferred stock, par value $0.01 per share of AIU Alt Care (the “Alt Care Preferred Stock”); and (2) the preferred limited partnership interests of Clearday OZ Fund (the “Clearday OZ LP Interests”). As of June 30, 2023, there are 1,376,118 warrants that were issued by Clearday to investors in the Alt Care Preferred Stock and the Clearday OZ LP Interests that may be exercised for an aggregate of 3,281,508 shares of the Company’s Common Stock. The exercise price per share for each is $5.00 per share, subject to adjustment for specified fundamental transactions such as stock splits, reverse stock splits and stock combinations.

^

The Company also has a warrant issued to a consultant representing 500,000 shares of the Company’s Common Stock at an exercise price of $11.00 per share, which may be paid by customary cashless exercise. Such warrant is subject to adjustment for specified fundamental transactions such as stock splits, reverse stock splits and stock combinations.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Warrants issued by Clearday, Inc. after the effective date of the AIU Merger to Lenders:

Each of the following warrants (“Lender Remedy Warrants”) were issued in connection with a financing and provides that the warrant may only be issued upon an event of default under the related promissory note.

	Common Shares
	Outstanding		Exercisable		Exercise Price		Maturity Date
Related to the January 12, 2023, Financing (Mast Hill LP)		1,134,000		0	$	0.75	5 years after Trigger Date*
Related to the September 30, 2022, Financing (Mast Hill LP)		472,500		0	$	0.50	5 years after Trigger Date*
Related to the July 1, 2022, Financing (Mast Hill LP)		900,000		0	$	0.50	5 years after Trigger Date*

* Trigger Date is defined as the date of an Event of Default under the promissory note that is related to the financing in which this warrant was issued, which default has not been waived.

The additional warrants were also issued to lenders:

	Common Shares
Related to the February 17, 2023, Financing (Jefferson Street Capital LLC)		225,000	225,000	$	0.75	March 16, 2028
Related to the January 12, 2023, Financing (Mast Hill LP)		851,000	851,000	$	0.75	February 14, 2028

Derivative Calculation

During the period ended June 30, 2023, the Company calculated the fair value of the warrants granted based on assumptions used in the Cox-Ross-Rubinstein binomial pricing model using the following inputs: the price of the Company’s common stock on the date of issuance ranging from $0.75 to $0.85; risk-free interest rates ranging from 3.53% to .474.06%; volatility ranging from 183% to 184% based on the historical volatility of the Company’s common stock; exercise prices ranging from $0.50 to $0.75; and terms of sixty months.

Stock Options

On June 30, 2023, we continued to have the two active equity award option plans, the 2003 Equity Incentive Plan and the 2013 Equity Incentive Plan (collectively, the “Stock Option Plan”). Although we can only grant new options under the 2013 Equity Incentive Plan. Under our Stock Option Plan, stock awards were made to our former directors, key employees, consultants, and non-employee directors and consisted of stock options, restricted stock awards, performance awards, and performance share awards. Stock options were granted at prices no less than the market value on the date of grant. There were no stock option exercises during the six and twelve months ended June 30, 2023 or December 31, 2022. There were no stock options that were exercisable on June 30, 2023.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock

During the second quarter of 2023, we issued approximately 208,430 shares of our common stock to consultants, including a former employee.

Registered Shares

During the second quarter of 2023, we issued approximately 616,253 shares of common stock upon the conversion of our Series F Preferred stock. Such shares were registered under our prior registration statement.

As of June 30, 2023, there was no unamortized stock compensation.

Non-Controlling Interest

In November 2019, a certificate of incorporation was entered into by AIU Alt Care for Series I 10.25% cumulative convertible preferred stock, par value $0.01 per share that authorizes the issuance of 1,500,000 shares of preferred stock and 1,500,000 of common stock and designated 700,000 as Series I Preferred Stock. Each share of Series I Preferred Stock has a stated value equal to the Series I Preferred Stock original issue price. For the six months ended June 30, 2023 and 2022, there was no amount invested in AIU Alt Care.

In October 2019, AIU Alt Care formed AIU Impact Management, LLC and they formed Clearday OZ Fund, which is managed by AIU Impact Management, LLC, as the general partner. For the three months ended June 30, 2023 and 2022, there was no amount invested in Clearday OZ Fund.

The exchange rate for each of the Alt Care Preferred Stock and the limited partnership units in Clearday OZ Fund to Clearday, Inc. Common Stock is equal to (i) the aggregate investment amount for such security plus accrued dividends at 10.25% per annum, (ii) divided by 80% of the 20 consecutive day volume weighted closing price of the Common Stock of Clearday preceding the conversion date. Prior to the merger, these securities were exchangeable to shares of AIU common stock at a rate of 1 share for every $10.00 of aggregate amount of the investment plus such accrued dividends.

Non-Controlling Interest Loss Allocation

The Company applied ASC 810-10 guidance to correctly allocate the percentage of loss attributable to the NCI of each company. For the period ended June 30, 2023, the loss for AIU Alt Care is $38,394 and Clearday Oz Fund loss is $917,382. Based on 99% ownership interest, AIU Alt Care and Clearday OZ fund incurred a loss attributable to the NCI in the amount of $38,010 and $908,208, respectively in the period ended June 30, 2023 and incurred gains of $1,663 and losses of $218,412, respectively, for the period ended June 30, 2022.

Cumulative Convertible Preferred Stock and Limited Partnership Interests in Subsidiaries (NCI)

For the period ended June 30, 2023 no additional shares of AIU Alt Care Preferred Stock or Clearday OZ LP Interests were issued. At June 30, 2023, 89,700 shares of AIU Alt Care Preferred Stock were outstanding and 244,473 units of Clearday OZ LP Interests were outstanding.

The terms and conditions of the Alt Care Preferred Stock and the Clearday OZ LP Interests allow the investors in such interests to exchange such securities into the Company’s common stock at the conversion price equal to 80% of the 20 consecutive day volume weighted closing price of the Common Stock of Clearday preceding the conversion date.

Dividends on the Alt Care Preferred Stock and preferred distributions on the units of limited partnership interests in Clearday OZ Fund are at each calendar quarterly month end at the applicable dividend rate (10.25%) on the original issue price of the Alt Care Preferred Stock or the units limited partnership interests. Dividends will either (a) be payable in cash, if and to the extent declared by the board of directors or the general partner, or (b) by issuing Dividend Shares equal to the aggregate accrued dividend divided by the Series I Original Issue Price. Dividends, if noticed to the Holder, will be payable after the Dividend Payment Date. Accrued dividends totaled $ for the six-month period ended June 30, 2023.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Each of the Company, AIU Alt Care and Clearday OZ Fund shall redeem the Alt Care Preferred Stock or the units of limited partnership interests on the 10 Year Redemption Date that is ten years after the final closing of the offering. The securities provide for a redemption in cash or shares of common stock at the option of Clearday, Inc., in an amount equal to the unreturned investment in the Alt Care Preferred Stock or units of limited partnership interests. Upon consummation of certain equity offerings prior to May 1, 2022, AIU Alt Care may, at its option, redeem all or a part of the Alt Care Preferred Stock for the liquidation preference plus a make-whole premium. In addition, upon the occurrence of, among other things (i) any change of control, (ii) a liquidation, dissolution, or winding up, (iii) certain insolvency events, or (iv) certain asset sales, each holder may require the Company to redeem for cash all such holder’s then outstanding shares of Alt Care Preferred Stock.

The Certificate of Designation also sets forth certain limitations on the Company’s ability to declare or make certain dividends and distributions and engage in certain reorganizations. The limited partnership agreement has similar provisions.

Subject to certain exceptions, the holders of Alt Care Preferred Stock and the units of limited partnership interests have no voting power and no right to vote on any matter at any time, either as a separate series or class or together with any other series or class of shares of capital stock or partnership interests, and are not be entitled to call a meeting of such holders for any purpose, nor are they entitled to participate in any meeting of the holders of the Company’s common stock or participate in the management of Clearday OZ Fund by its general partner.

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Mezzanine Equity

6 Months Ended

Jun. 30, 2023

Mezzanine Equity

Mezzanine Equity

11. Mezzanine Equity

The Company has 10,000,000 shares of preferred stock authorized, par value $0.001 per share, including 5,000,000 designated as Series F Preferred Stock and 4,369,529 shares outstanding as of June 30, 2023. Pursuant to the Certificate of Designations of Series F Preferred Stock, upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation (“Liquidation Event”), including any Deemed Liquidation Event, as defined in the Certificate of Designations and unless otherwise determined by the majority of the holders of the Series F Preferred Stock that a transaction is not a Deemed Liquidation Event, the holders of then outstanding Series F Preferred Stock shall be entitled to be paid a liquidation preference (“Preference Amount”) out of the assets of the Company available for distribution to its stockholders equal to the original issue price and, plus any accumulated and unpaid dividends. As the payment of this Preference Amount is not solely within the control of the Company, the Series F Preferred Stock does not qualify as permanent equity and has been classified as mezzanine equity. The Series F Preferred Stock is not redeemable, and it was not probable that there would be a Liquidation Event as of June 30, 2023. Therefore, the Company is not currently required to accrete the Series F Preferred Stock to the aggregate liquidation value.

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Subsequent Events

6 Months Ended

Jun. 30, 2023

Subsequent Events [Abstract]

Subsequent Events

12. Subsequent Events

We evaluated subsequent events and transactions occurring after June 30, 2023, through the date of this Report to determine if there were any such events or transactions requiring adjustment to or disclosure in the accompanying condensed consolidated financial statements, noting none other than the following.

Viveon Merger

Amendment to the Viveon Merger Agreement

On August 28, 2023, Viveon, its subsidiary VHAC2 Merger Sub, Inc., a Delaware corporation (“Merger Sub”), the Company, Viveon Health LLC, a Delaware limited liability company (“SPAC Representative”), and Clearday SR LLC, a Delaware limited liability company (“Company Representative”) entered into the First Amendment to Viveon Merger Agreement (the “First Amendment”) that amended and modified the Viveon Merger Agreement to, among other things, (i) increase the merger consideration from $250,000,000 to $500,000,000 (plus the aggregate exercise price for all Clearday options and warrants), payable in shares of common stock of Viveon, (ii) provide that holders of all of the Company’s common and preferred stock as of the effective time of the Viveon Merger will be entitled to receive a pro rata portion of the additional 5 million shares of Viveon common stock, in the aggregate (the “Earnout Shares”), if at any time during the period beginning on the date of the closing of the Viveon Merger (the “Closing Date”) and ending on the fifth anniversary of the Closing Date (the “Earnout Eligibility Period”), the Adjusted Net Income (as defined in the Viveon Merger Agreement) for any 12 month period is a positive number or there is a change of control of Viveon during the Earnout Eligibility Period. The foregoing description of the First Amendment is not complete and is subject to and qualified in its entirety by reference to the First Amendment which is filed with the Company’s Current Report on Form 8-K filed on August 29, 2023, as Exhibit 2.1, the terms of which are incorporated by reference herein.

Modification of Indebtedness

A subsidiary of the Company, Leander Associates Ltd., modified the terms of its mortgage loan as described in Note 7 — Commitments and Contingencies.

Bridge Financings

We incurred additional financings of a gross amount of approximately $1.7 million as advances and the issuances of the Bridge Notes described in Note 6 — Indebtedness, of which we shared approximately $768,000 with Viveon as described in Note 9 — Related Party Transactions.

Additional Financings

We received approximately $58,000 as an advance from KOBO, L.P. (“Kobo”) and are negotiating an amendment to the Property Sale Proceeds Advance to reflect this advance and waive the prior payment defaults by Leander. We expect that this amendment will provide that the sole owner of Leander will provide grant a security interest in Leander and, if Kobo is required to enforce its remedies for any additional default, that the net proceeds of any sale of the Leander Property above the mortgage obligation and the amounts owed to Kobo will be shared: 80% to Kobo and 20% to us.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company, including its wholly owned subsidiaries and AIU Alternative Care, Inc., a Delaware corporation (“AIU Alt Care”) and Clearday Alternative Care Oz Fund, L.P, a Delaware limited partnership (“Clearday OZ Fund”). The Company owns all of the voting interests of AIU Alt Care and the sole general partner of Clearday OZ Fund, and less than 1% of the preferred economic interests in such companies.

The certificate of incorporation of AIU Alt Care authorizes 1,500,000 shares of preferred stock designated as its Series I 10.25% cumulative convertible preferred stock, par value $0.01 per share (the “Alt Care Preferred Stock”) of which 700,000 is designated Alt Care Preferred Stock; and 1,500,000 of common stock. Each share of the Alt Care Preferred Stock has a stated value equal to the $10.00 Alt Care Preferred Stock original issue price.

AIU Alt Care formed AIU Impact Management, LLC, which is the sole general partner and manager of Clearday OZ Fund. Clearday OZ Fund allocates 99% of income gains and losses to the limited partners and 1% to its general partner (AIU Impact Management, LLC).

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Each of the Alt Care Preferred Stock and the limited partnership interests in Clearday OZ Fund (“Clearday OZ LP Interests”) may be exchanged by the holder of such securities into shares of Clearday common stock. The exchange rate for each of the Alt Care Preferred Stock and the Clearday OZ LP Interests are equal to (i) the aggregate investment amount for such security plus accrued and unpaid dividends at 10.25% per annum, (ii) divided by 80% of the 20 consecutive day volume weighted closing price of the Common Stock of Clearday preceding the conversion date.

The Company reports its non-controlling interest in subsidiaries as a separate component of equity in the condensed consolidated balance sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common stockholders on the face of the condensed consolidated statement of operations.

Basis of Presentation

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in conformity with GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Classification of Convertible Preferred Stock

Classification of Convertible Preferred Stock

The Company applied ASC 480, “Distinguishing Liabilities from Equity”, and revised the condensed consolidated presentation of its convertible preferred stock whose redemption is outside the control of the issuer. Registrants having such securities outstanding are required to present separately, in balance sheets, amounts applicable to the following three general classes of securities: (i) preferred stocks subject to mandatory redemption requirements or whose redemption is outside the control of the issuer; (ii) preferred stocks which are not redeemable or are redeemable solely at the option of the issuer; and (iii) common stocks. In addition, the rules require disclosure of redemption terms, five-year maturity data, and changes in redeemable preferred stock.

Use of Estimates

Use of Estimates

The Company’s condensed consolidated financial statement preparation requires that management make estimates and assumptions which affect the reporting of assets and liabilities and the related disclosure of contingent assets and liabilities in order to report these condensed consolidated financial statements in conformity with GAAP. Actual results could differ from those estimates.

Segment Reporting

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, the Chief Executive Officer, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as two operating segments, the Longevity-tech Platform and personal care.

Cash, and Restricted Cash

Cash, and Restricted Cash

Cash, consisting of short-term, highly liquid investments and money market funds with original maturities of three months or less at the date of purchase, are carried at cost plus accrued interest, which approximates market value.

Restricted cash includes cash that the Company deposited as security for obligations arising from property taxes, property insurance and replacement reserve the Company is required to establish escrows as required by its mortgages and certain resident security deposits.

Accounts Receivable

Accounts Receivable

The Company records accounts receivable at their estimated net realizable value. Additionally, the Company estimates allowances for uncollectible amounts based upon factors which include, but are not limited to, historical payment trends, write-off experience, and the age of the receivable as well as a review of specific accounts, the terms of the agreements, the residents, the payers’ financial capacity to pay and other factors which may include likelihood and cost of litigation.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Real Estate Property and Equipment, Net

Real Estate Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation and amortization. Maintenance and repairs are charged to operations as incurred. Depreciation and amortization are based on the straight-line method over the estimated useful lives of the related assets. When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the accounts, and any resulting gain or loss is reflected in operations in the period realized.

Depreciation is computed on the straight-line method with useful lives as follows:

Asset Class	Estimated Useful Life (in years)
Buildings and building improvements		39
Leasehold improvements		15
Furniture and fixtures and equipment		7
Computer equipment and software		5

Intangible Assets, Net

Intangible Assets, Net

Software Capitalization

Software Capitalization

With regards to developing software, any application costs incurred during the development stage, both internal expenses and those paid to third parties are capitalized and amortized per FASB Topic ASC350-40 (“Internal-Use Software Accounting & Capitalization”). Once the software has been developed, the costs to maintain and train others for its use will be expensed. With regards to developing software, any application costs incurred during the development state, both internal expenses and those paid to third parties are capitalized and amortized based on the estimated useful life of five years.

Impairment Assessment

Impairment Assessment

The Company evaluates intangible assets and other long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions or other events that indicate an assets’ carrying amount may not be recoverable. Recoverability of these assets is measured by comparing the carrying amount of each asset to the future cash flows the asset is expected to generate. If the cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue from contracts with customers in accordance with ASC Topic 606, “Revenue from Contracts with Customers”, or ASC Topic 606, using the practical expedient in paragraph 606-10-10-4 that allows for the use of a portfolio approach, because we have determined that the effect of applying the guidance to our portfolios of contracts within the scope of ASC Topic 606 on our condensed consolidated financial statements would not differ materially from applying the guidance to each individual contract within the respective portfolio or our performance obligations within such portfolio. The five-step model defined by ASC Topic 606 requires the Company to: (i) identify its contracts with customers, (ii) identify its performance obligations under those contracts, (iii) determine the transaction prices of those contracts, (iv) allocate the transaction prices to its performance obligations in those contracts and (v) recognize revenue when each performance obligation under those contracts is satisfied. Revenue is recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A substantial portion of the Company’s revenue from its independent living and assisted living communities relates to contracts with residents for services that are generally under ASC Topic 606. The Company’s contracts with residents and other customers that are within the scope of ASC Topic 606 are generally short-term in nature. The Company has determined that services performed under those contracts are considered one performance obligation in accordance with ASC Topic 606 as such services are regarded as a series of distinct events with the same timing and pattern of transfer to the resident or customer. Revenue is recognized for those contracts when the Company’s performance obligation is satisfied by transferring control of the service provided to the resident or customer, which is generally when the services are provided over time.

Resident fees at our residential communities consist of regular monthly charges for basic housing and support services and fees for additional requested services, such as assisted living services, personalized health services and ancillary services. Fees are specified in our agreements with residents, which are generally short term (30 days to one year), with regular monthly charges billed in advance. Funds received from residents in advance of services provided are not material to our condensed consolidated financial statements. Our senior living communities require payment of an upfront entrance fee in advance of a resident moving into the community; substantially all these community fees are non-refundable and are initially recorded as deferred revenue in our condensed consolidated balance sheets. These deferred amounts are then amortized on a straight-line basis into revenue over the term of the resident’s agreement. When the resident no longer resides within our community, the remaining deferred non-refundable fees are recognized in revenue. Revenue recorded and deferred in connection with community fees is not material to our condensed consolidated. Revenue for basic housing and support services and additional requested services is recognized in accordance with ASC Topic 606 and measured based on the consideration specified in the resident agreement and is recorded when the services are provided.

Resident Care Contracts

Resident Care Contracts

Resident fees at the Company’s senior living communities may consist of regular monthly charges for basic housing and support services and fees for additional requested services and ancillary services. Fees are specified in the Company’s agreements with residents, which are generally short term (30 days to one year), with regular monthly charges billed on the first of the month. Funds received from residents in advance of services are not material to the Company’s condensed consolidated financial statements.

Below is a table that shows the breakdown by percentage of revenues related to contracts with residents versus resident fees for support or ancillary services.

	For the three-month period ended June 30,
	2023		%			2022		%
Revenue from contracts with customers:
Resident rent - over time	$	436,684		70	%	$	3,068,470		98	%
Day care – point in time		159,766		26	%		64,724		2	%
Amenities and conveniences - point in time		22,581		4	%		2,358		0	%
Total revenue from contracts with customers	$	619,031		100	%	$	3,135,552		100	%

	For the six month periods ended June 30,
	2023		%			2022		%
Revenue from contracts with customers:
Resident rent - over time	$	3,332,010		92	%		6,193,231		98	%
Day care		248,807		7	%		148,620		2	%
Amenities and conveniences - point in time		44,718		1	%		3,919		0	%
Total revenue from contracts with customers	$	3,625,535		100	%	$	6,345,770		100	%

Financial Instruments

Financial Instruments

In accordance with the reporting requirements of the FASB ASC Topic 825, “Financial Instruments”, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to the consolidated financial statements when the fair value is different than the carrying value of those financial instruments. The Company does not have assets or liabilities measured at fair value on a recurring basis except its derivative liability.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at the balance sheet dates, nor gains or losses reported in the statements of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held during the periods presented, except as disclosed.

Fair Value Measurement

Fair Value Measurement

ASC Topic 820, “Fair Value Measurements”, provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.

Level 2 - Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs.

Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value.

The following tables present the Company’s assets and liabilities that were measured and recognized at fair value as of June 30, 2023 and December 31, 2022:

June 30, 2023
	Level 1	Level 2	Level 3	Total
Derivative liability	-	-	5,675,083	5,675,083

December 31, 2022
	Level 1	Level 2	Level 3	Total
Derivative liability	-	-	2,320,547	2,320,547

Under the Company’s contract ordering policy, the Company first considers common shares issued and outstanding as well as reserved but unissued equity awards, such as under an equity award program. All remaining equity linked instruments such as, but not limited to, options, warrants, and debt and equity with conversion features are evaluated based on the date of issuance. If the number of shares which may be issued under the Company’s agreements exceed the authorized number of shares or are unable to be determined, equity linked instruments from that date forward are considered to be derivative liabilities until such time as the number of shares which may be issued under the Company’s agreements no longer exceed the authorized number of shares and are able to be determined.

The Company has outstanding note agreements containing provisions meeting the definition of derivative liability which therefore require bifurcation. Further, pursuant to the Company’s contract ordering policy, any issuance of equity linked instruments subsequent to the initial triggering agreement will result in derivative liabilities.

At June 30, 2023, the Company estimated the fair value of the conversion feature derivatives embedded in the notes payable and warrants based on assumptions used in the Cox-Ross-Rubinstein binomial pricing model using the following inputs: the price of the Company’s common stock of $0.80; risk-free interest rates ranging from 4.13% to 5.47%; expected volatility of the Company’s common stock ranging from 135% to 310%; estimated exercise prices ranging from $0.35 to $0.75; and terms from one to sixty months.

At December 31, 2022, the Company estimated the fair value of the conversion feature derivatives embedded in the notes payable and warrants based on assumptions used in the Cox-Ross-Rubinstein binomial pricing model using the following inputs: the price of the Company’s common stock of $0.56; risk-free interest rates ranging from 3.99% to 4.76%; expected volatility of the Company’s common stock ranging from 183% to 572%; estimated exercise prices ranging from $0.35 to $0.43; and terms from three to sixty months.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the changes in the Company’s Level 3 derivative liability at fair value is as follows:

Balance - December 31, 2022	$	2,320,547
Additions		4,717,949
Settlements		(881,127	)
Change in fair value		(482,286	)
Balance - June 30, 2023	$	5,675,083

Convertible Instruments

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC Topic 815, “Derivatives and Hedging Activities”.

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

Research and Development Costs

Research and Development Costs

Research and development costs are charged to expense as incurred and are included in operating expenses. There were no research and development costs incurred in the three or six months ended June 30, 2023 or 2022.

Advertising Costs

Advertising Costs

The costs of advertising are expensed as incurred. Advertising expenses are included in the Company’s operating expenses. There were no advertising expenses in the three or six months ended June 30, 2023 or 2022.

Lease Accounting

Lease Accounting

The Company follows ASC Topic 842, “Leases”. The Company has elected the practical expedient to account for each separate lease component of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments to be capitalized. All ROU assets were written off effective March 31, 2023, when the Company disposed of the three leased properties described in Note 5 — Leases.

Income Taxes

Income Taxes

The Company’s income tax expense includes U.S. income taxes. Certain items of income and expense are not reported in tax returns and financial statements in the same year. The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences to be included in the Company’s condensed consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse, while the effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company can recognize a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized.

Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income, and, to the extent, the Company believes that the Company is more likely than not that all or a portion of deferred tax assets will not be realized, the Company establishes a valuation allowance to reduce the deferred tax assets to the appropriate valuation.

Company includes the related tax expense or tax benefit within the tax provision in the condensed consolidated statement of operations in that period. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. In the future, if the Company determines that it would be able to realize its deferred tax assets in excess of their net recorded amount, the Company will make an adjustment to the deferred tax asset valuation allowance and record an income tax benefit within the tax provision in the condensed consolidated statement of operations in that period.

The Company pays franchise taxes in certain states in which it has operations. The Company has included franchise taxes in general and administrative and operating expenses in its condensed consolidated statements of operations.

Earnings Per Share

Earnings Per Share

FASB ASC Topic 260, “Earnings Per Share”, requires a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share (EPS) computations.

Basic earnings (loss) per share are computed by dividing income (loss) attributable to Clearday shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

Commitments and Contingencies

Commitments and Contingencies

The Company has been, is currently, and expects in the future to be involved in claims, lawsuits, and regulatory and other government audits, investigations and proceedings arising in the ordinary course of the Company’s business, some of which may involve material amounts. The Company establishes accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Also, the defense and resolution of these claims, lawsuits, and regulatory and other government audits, investigations and proceedings may require the Company to incur significant expense. The Company accounts for claims and litigation losses in accordance with ASC Topic 450, “Contingencies”. Under ASC Topic 450, loss contingency provisions are recorded for probable and estimable losses at the Company’s best estimate of a loss or, when a best estimate cannot be made, at the Company’s estimate of the minimum loss. These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of considerable judgment, and are refined as additional information becomes known. Accordingly, the Company is often initially unable to develop a best estimate of loss and therefore the estimated minimum loss amount, which could be zero, is recorded; then, as information becomes known, the minimum loss amount is updated, as appropriate. Occasionally, a minimum or best estimate amount may be increased or decreased when events result in a changed expectation.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470- 20)” and “Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (a) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, “Debt: Debt with Conversion and Other Options”, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (b) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (c) revises the guidance in ASC 260, “Earnings Per Share, to require entities to calculate diluted earnings per share for convertible instruments by using the “if-converted” method.” In addition, entities must presume share settlement for purposes of calculating diluted earnings per share when an instrument may be settled in cash or shares. For smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023. The Company is currently evaluating the impact that ASU 2020-06 may have on its condensed consolidated financial statements and related disclosures.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2023, there were several new accounting pronouncements issued by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Schedule of Estimated Useful Lives

Depreciation is computed on the straight-line method with useful lives as follows:

Asset Class	Estimated Useful Life (in years)
Buildings and building improvements		39
Leasehold improvements		15
Furniture and fixtures and equipment		7
Computer equipment and software		5

Schedule of Revenue from Contract with Customers

Below is a table that shows the breakdown by percentage of revenues related to contracts with residents versus resident fees for support or ancillary services.

	For the three-month period ended June 30,
	2023		%			2022		%
Revenue from contracts with customers:
Resident rent - over time	$	436,684		70	%	$	3,068,470		98	%
Day care – point in time		159,766		26	%		64,724		2	%
Amenities and conveniences - point in time		22,581		4	%		2,358		0	%
Total revenue from contracts with customers	$	619,031		100	%	$	3,135,552		100	%

	For the six month periods ended June 30,
	2023		%			2022		%
Revenue from contracts with customers:
Resident rent - over time	$	3,332,010		92	%		6,193,231		98	%
Day care		248,807		7	%		148,620		2	%
Amenities and conveniences - point in time		44,718		1	%		3,919		0	%
Total revenue from contracts with customers	$	3,625,535		100	%	$	6,345,770		100	%

Schedule of Assets and Liabilities Measured at Fair Value

The following tables present the Company’s assets and liabilities that were measured and recognized at fair value as of June 30, 2023 and December 31, 2022:

June 30, 2023
	Level 1	Level 2	Level 3	Total
Derivative liability	-	-	5,675,083	5,675,083

December 31, 2022
	Level 1	Level 2	Level 3	Total
Derivative liability	-	-	2,320,547	2,320,547

Summary of Activity of Level 3 Liabilities

A reconciliation of the changes in the Company’s Level 3 derivative liability at fair value is as follows:

Balance - December 31, 2022	$	2,320,547
Additions		4,717,949
Settlements		(881,127	)
Change in fair value		(482,286	)
Balance - June 30, 2023	$	5,675,083

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Real Estate, Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Schedule of Real Estate, Property and Equipment

The Company’s real estate, property and equipment consisted of the following at the respective balance sheet dates:

	June 30, 2023			December 31, 2022
Land	$	2,081,879		$	2,231,879
Building and building improvements		4,975,244			4,975,243
Leasehold Improvements		710,317			846,754
Computers		57,166			332,809
Furniture, fixtures, and equipment		72,213			1,379,219
Other Equipment		74,935			518,145
Construction in progress		138,187			138,187
Total		8,109,941			10,422,236
Less accumulated depreciation		(1,982,206	)		(3,899,257	)
Real estate, property and equipment, net	$	6,127,735		$	6,522,979

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Intangible Assets, Net (Tables)

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Expected Future Amortization Expense for Intangible Assets

Developed intangible assets subject to amortization are as follows:

	June 30, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount	Weighted-Average Remaining Useful Life (Years)
Developed technology	3,680,000	$	368,000	$	3,312,000	4.50

	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted-Average Remaining Useful Life (Years)
Developed technology	$	3,680,000	$	-	$	3,680,000		5.00

 

Schedule of Future Amortization Expense for Intangible Assets

Expected future amortization expense for intangible assets as of June 30, 2023, is as follows:

Fiscal Years
2023 (remaining)	$	368,000
2024		736,000
2025		736,000
2026		736,000
2027		736,000
Thereafter		-
Total	$	3,312,000

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Indebtedness (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Schedule of Long Term Debt

The following table summarizes the Company’s debt as of June 30, 2023 and December 31, 2022:

As of June 30,	Total
2023		15,615,892
2024		2,333,909
2025		4,956,948
2026		1,518,682
Thereafter		-
Total obligations	$	24,425,431

Schedule of Maturity Debt

Indebtedness of Facilities

	Maturity Date	Interest Rate			June 30, 2023		December 31, 2022
Naples Equity Loan ^	May 2023		9.95	%	$	4,550,000	$	4,550,000
Gearhart Loan ^	December 2022		7.00	%		193,578		193,578
SBA PPP Loans #	February 2022		1.00	%		1,518,682		1,518,682
Bank Direct Payable	December 2022		3.13	%		-		80,381
AIU Sixth Street	February 2023		12.00	%		-		49,593
1800 Diagonal Lending	October 2024		12.00	%		45,303		116,760
1800 Diagonal Lending	February 2024		12.00	%		134,723		-
Equity Secure Fund I, LLC*	March 2024		18.00	%		1,097,610		1,000,000
Invesque, Inc.	July 2025		10.00	%		3,977,470

Merchant Cash Advance Loans (^^)

Naples Operating PIRS Capital	March 2023	0.00	%	$	338,000	$	338,000
Little Rock Libertas	February 2023	0.00	%		326,330		326,330
PIRS Capital Financing Agreement	March 2023	0.00	%		144,659		144,659
Naples Samson #1	May 2023	0.00	%		76,916		76,916
Naples LG Funding #2	April 2023	0.00	%		171,170		171,170
Little Rock Premium Funding	April 2023	0.00	%		211,313		211,313
Little Rock KIT Funding	December 2022	0.00	%		89,400		89,400
Little Rock Samson Funding #4	February 2023	0.00	%		170,501		170,501
Naples Operating SWIFT	December 2022	0.00	%		111,750		111,750
New Braunfels Samson Cloud Fund	February 2023	0.00	%		308,035		308,035
New Braunfels Samson Group	February 2023	0.00	%		375,804		375,804
Westover Hills One River	December 2022	0.00	%		128,298		128,301
Westover Hills FOX Capitol	March 2023	0.00	%		109,384		109,384
Westover Hills Arsenal	October 2023	0.00	%		95,882		95,882
Westover Samson Funding	March 2023	0.00	%		267,754		267,754
Subtotal merchant cash advance loans					2,925,196		2,925,199
Notional amount of debt					14,442,562		10,434,193
Less: current maturities					14,442,562		10,434,193
				$	-	$	-

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Indebtedness Allocated to real estate

Real Estate:
Artesia Note	June 2033	Variable		$	-	$	211,721
Carpenter Enterprises	Demand Note	Variable			237,180		300,000
Leander Stearns National Association	February 2023	10.38	%		805,000		805,000
Notional amount of debt					1,042,180		1,316,721
Less: current maturities					805,000		805,000
				$	237,180	$	511,721

Other (Corporate) Indebtedness

AGP Contract ^	March 2023	5.00	%	$	550,000		$	550,000
Cibolo Creek Partners	December 2025	0.09	%		388,276			421,470
Cibolo Creek Partners promissory note	December 2025	0.09	%		91,208			96,208
EIDL SBA Treas 310	December 2051	3.75	%		494,900			494,900
Firstfire	May 2023	12.00	%		(1,378	)		95,054
Five C’s Loan ^	December 2022	9.85	%		325,000			325,000
GS Capital	May 2023	12.00	%		-			50,955
Jefferson Street Capital LLC @	May 2023	12.00	%		16,800			84,000
KOBO, L.P.	October 2023	Floating	%		500,000			500,000
Mast Hill LP @	May 2023	12.00	%		300,000			420,000
Mast Hill LP @	July 2023	12.00	%		252,000			315,000
Round Rock Development Partners Note	December 2025	0.09	%		500,000			500,000
Jefferson Street Capital LLC (February 2023)	February 2024	12.00	%		192,883			-
Mast Hill LP (January 2023)@	January 2024	12.00	%		756,000			-
Bridge Financings		8.00			685,000			-
Convertible Notes Issued by AIU Alternative Care, Inc.	January 2024	12.00	%		749,000			-
Notional amount of debt					5,799,689			3,852,587
Less: current maturities					1,942,422			2,340,009
				$	3,857,267		$	1,512,578
TIC Purchase Agreements	No Specified Date	8.00	%	$	3,141,000		$	3,141,000
		Total			24,425,431			18,744,501
		Less Debt Discount & Derivatives			(1,797,732	)		(1,004,271	)
		Total		$	22,627,699		$	17,740,230

^	Obligation is in default. Interest rate set forth is the stated rated of interest. The actual rate of interest has increased under the terms of the obligation.
^^	We have ceased payment of these obligations. Obligations are subject to litigation for nonpayment, as previously reported. See Note 7 — Commitments and Contingencies.
#	SBA PPP obligations are past due and in the Company is continuing the process to have these obligations forgiven.
@	Obligation is in payment default. Each lender has not exercised any of their remedies. Each lender has the right to exercise remedies including the conversion of the promissory note into shares of our common stock and collection of default interest and other amounts, and in the case of Mast Hill to exercise the Lender Remedy Warrants described in Note 10 — Deficit. Jefferson Street Capital LLC has granted a forbearance to October 31, 2023. Mast Hill LP has granted a forbearance dated October 4, 2023 until the earlier of (i) the closing of the merger (“Merger”) with Viveon Health Acquisition Corp under the merger agreement dated as of April 5, 2023, as amended, (ii) to January 2, 2024 (90 days from the date of the forbearance), (iii) the date that Clearday, Inc. or any of its subsidiaries makes an assignment for the benefit of creditors, or applies for or consents to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed. or (iv) the date that bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Clearday, Inc. or any of its subsidiaries (the earlier of the aforementioned (i), (ii), (iii) or (iv) shall be referred to herein as the “Waiver Expiration Date”). There can be no assurance that the Company will be able to extend any the forbearances with any of these lenders on acceptable terms or at all or that Clearday will be able to comply with the terms of the forbearance provided by Mast Hill LP which includes that Clearday provide net proceeds from additional financings by Clearday under the terms of the promissory notes with such lender, unless such payment is excused by such lender.
*	Obligations have been modified as of June 5, 2023.

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Schedule of Anti-Dilutive Shares Compensation of Earnings (Loss) Per Share

The following tables set forth the potentially dilutive shares that were anti-dilutive in their respective periods as the Company had net losses for the periods ended June 30, 2023 and 2022, respectively.

		For the Six Months Ended
Dilution shares calculation	June 30,
		2023	2022
Series A Convertible Preferred Stock		328,925	328,925
Series F 6.75% Convertible Preferred Stock		4,538,616	4,797,052
Series I 10.25% Convertible Preferred Stock		1,365,640	320,657
Limited Partnership Units		99,038	99,038
Warrants		7,618,820	4,036,320
Bridge Notes		835,366	-
Total participating securities		14,786,405	9,581,992

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Deficit (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Summary of Outstanding Warrants

The following is a summary of such outstanding warrants at June 30 2023:

Warrants (“STI Warrants”) issued by STI prior to September 9, 2021, the effective date of the AIU Merger.

	Common Shares
	Total		Currently Exercisable		Exercise Price per Share		Expiration Date
Warrants related to March 2018 financing		7,331		7,331	$	245.84	September 9, 2023
Warrants related to July 2018 financing		119,241		119,241	$	75.48	July 25, 2023
Warrants related to July 2018 financing		7,154		7,154	$	94.35	July 25, 2023
Warrants related to May 2019 financing		5,518		5,518	$	26.96	May 23, 2024
Warrants related to October 2019 financing		100,719		100,719	$	5.39	October 10, 2024
Warrants related to October 2019 financing		14,336		14,336	$	6.74	October 8, 2024

Warrants that were issued by Clearday Operations, Inc. prior to the effective date of the AIU Merger:

	Common Shares
	Total		Currently Exercisable		Exercise Price per Share		Expiration Date
Warrants issued in connection with financings *		3,281,508		3,281,508	$	5.00	November 15, 2029
Warrants issued to a consultant ^		500,000		500,000	$	11.00	August 10, 2026

*

Two of our subsidiaries have preferred securities that are classified under GAAP as Non-Controlling Interest: (1) the preferred stock designated as the Series I 10.25% cumulative convertible preferred stock, par value $0.01 per share of AIU Alt Care (the “Alt Care Preferred Stock”); and (2) the preferred limited partnership interests of Clearday OZ Fund (the “Clearday OZ LP Interests”). As of June 30, 2023, there are 1,376,118 warrants that were issued by Clearday to investors in the Alt Care Preferred Stock and the Clearday OZ LP Interests that may be exercised for an aggregate of 3,281,508 shares of the Company’s Common Stock. The exercise price per share for each is $5.00 per share, subject to adjustment for specified fundamental transactions such as stock splits, reverse stock splits and stock combinations.

^

The Company also has a warrant issued to a consultant representing 500,000 shares of the Company’s Common Stock at an exercise price of $11.00 per share, which may be paid by customary cashless exercise. Such warrant is subject to adjustment for specified fundamental transactions such as stock splits, reverse stock splits and stock combinations.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Warrants issued by Clearday, Inc. after the effective date of the AIU Merger to Lenders:

Each of the following warrants (“Lender Remedy Warrants”) were issued in connection with a financing and provides that the warrant may only be issued upon an event of default under the related promissory note.

	Common Shares
	Outstanding		Exercisable		Exercise Price		Maturity Date
Related to the January 12, 2023, Financing (Mast Hill LP)		1,134,000		0	$	0.75	5 years after Trigger Date*
Related to the September 30, 2022, Financing (Mast Hill LP)		472,500		0	$	0.50	5 years after Trigger Date*
Related to the July 1, 2022, Financing (Mast Hill LP)		900,000		0	$	0.50	5 years after Trigger Date*

* Trigger Date is defined as the date of an Event of Default under the promissory note that is related to the financing in which this warrant was issued, which default has not been waived.

The additional warrants were also issued to lenders:

	Common Shares
Related to the February 17, 2023, Financing (Jefferson Street Capital LLC)		225,000	225,000	$	0.75	March 16, 2028
Related to the January 12, 2023, Financing (Mast Hill LP)		851,000	851,000	$	0.75	February 14, 2028

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Description of Business and Going Concern (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Accounting Policies [Abstract]
Accumulated deficit	$ 83,755,699		$ 79,671,065
Net loss from operations	5,030,852		14,462,738
Cash used in operating activities	$ 2,796,951	$ 1,874,407	$ 3,978,027

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Schedule of Estimated Useful Lives (Details)	Jun. 30, 2023
Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	39 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	15 years
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	7 years
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	5 years

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Schedule of Revenue from Contract with Customers (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Product Information [Line Items]
Revenues	$ 619,031	$ 3,135,552	$ 3,625,535	$ 6,345,770
Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration risk, percentage	100.00%	100.00%	100.00%	100.00%
Transferred over Time [Member]
Product Information [Line Items]
Revenues	$ 436,684	$ 3,068,470	$ 3,332,010	$ 6,193,231
Transferred over Time [Member] | Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration risk, percentage	70.00%	98.00%	92.00%	98.00%
Transferred at Point in Time [Member]
Product Information [Line Items]
Revenues	$ 159,766	$ 64,724	$ 248,807	$ 148,620
Transferred at Point in Time [Member] | Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration risk, percentage	26.00%	2.00%	7.00%	2.00%
Transferred At Point In Time One [Member]
Product Information [Line Items]
Revenues	$ 22,581	$ 2,358	$ 44,718	$ 3,919
Transferred At Point In Time One [Member] | Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration risk, percentage	4.00%	0.00%	1.00%	0.00%

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Schedule of Assets and Liabilities Measured at Fair Value (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Platform Operator, Crypto-Asset [Line Items]
Derivative liability	$ 5,675,083	$ 2,320,547
Fair Value, Inputs, Level 1 [Member]
Platform Operator, Crypto-Asset [Line Items]
Derivative liability
Fair Value, Inputs, Level 2 [Member]
Platform Operator, Crypto-Asset [Line Items]
Derivative liability
Fair Value, Inputs, Level 3 [Member]
Platform Operator, Crypto-Asset [Line Items]
Derivative liability	$ 5,675,083	$ 2,320,547

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Summary of Activity of Level 3 Liabilities (Details) - Fair Value, Inputs, Level 3 [Member]	6 Months Ended
	Jun. 30, 2023 USD ($)
Platform Operator, Crypto-Asset [Line Items]
Balance - December 31, 2022	$ 2,320,547
Additions	4,717,949
Settlements	(881,127)
Change in fair value	(482,286)
Balance - June 30, 2023	$ 5,675,083

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Summary of Significant Accounting Policies (Details Narrative) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Nov. 30, 2019
Property, Plant and Equipment [Line Items]
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, dividend rate, percentage	6.75%	6.75%
Preferred stock, par or stated value per share	$ 0.001	$ 0.001
Common stock, shares authorized	80,000,000	80,000,000
Classification of redeemable preferred stock, description	Registrants having such securities outstanding are required to present separately, in balance sheets, amounts applicable to the following three general classes of securities: (i) preferred stocks subject to mandatory redemption requirements or whose redemption is outside the control of the issuer; (ii) preferred stocks which are not redeemable or are redeemable solely at the option of the issuer; and (iii) common stocks. In addition, the rules require disclosure of redemption terms, five-year maturity data, and changes in redeemable preferred stock.
Finite-Lived Intangible Asset, Useful Life	5 years
Risk-free interest rates, minimum	4.13%	3.99%
Risk-free interest rates, maximum	5.47%	4.76%
Common stock expected volatility, minimum	135.00%	183.00%
Common stock expected volatility, maximum	310.00%	572.00%
Income tax examination description	greater than 50% likelihood
Alt Care Preferred Stock [Member]
Property, Plant and Equipment [Line Items]
Dividend payment restrictions schedule, description	the aggregate investment amount for such security plus accrued and unpaid dividends at 10.25% per annum, (ii) divided by 80% of the 20 consecutive day volume weighted closing price of the Common Stock of Clearday preceding the conversion date.
Common Stock [Member]
Property, Plant and Equipment [Line Items]
Common stock, shares authorized	80,000,000
Common stock price per share	$ 0.80	$ 0.56
AIU Impact Management LLC [Member]
Property, Plant and Equipment [Line Items]
Equity method investment, ownership percentage	1.00%
Alt Care Preferred Stock [Member]
Property, Plant and Equipment [Line Items]
Preferred stock, shares authorized	700,000
Preferred stock, par or stated value per share	$ 10.00
AIU Alt Care Inc [Member]
Property, Plant and Equipment [Line Items]
Preferred stock, shares authorized	1,500,000
Common stock, shares authorized	1,500,000		1,500,000
AIU Alt Care Inc [Member] | Series I Cumulative Convertible Preferred Stock [Member]
Property, Plant and Equipment [Line Items]
Preferred stock, dividend rate, percentage	10.25%
Preferred stock, par or stated value per share	$ 0.01
AIU Impact Management LLC [Member]
Property, Plant and Equipment [Line Items]
Percentage of income and gain	99.00%
Maximum [Member]
Property, Plant and Equipment [Line Items]
Exercise prices	$ 0.75	0.43
Minimum [Member]
Property, Plant and Equipment [Line Items]
Exercise prices	$ 0.35	$ 0.35
AIU Alternative Care Inc [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Percentage of voting interest acquired	1.00%

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Schedule of Real Estate, Property and Equipment (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Real estate, property and equipment, net	$ 6,127,735	$ 6,522,979
Memory Care Facilities and Corporate [Member]
Property, Plant and Equipment [Line Items]
Real estate, property and equipment, gross	8,109,941	10,422,236
Less accumulated depreciation	(1,982,206)	(3,899,257)
Real estate, property and equipment, net	6,127,735	6,522,979
Land [Member] | Memory Care Facilities and Corporate [Member]
Property, Plant and Equipment [Line Items]
Real estate, property and equipment, gross	2,081,879	2,231,879
Building Improvements [Member] | Memory Care Facilities and Corporate [Member]
Property, Plant and Equipment [Line Items]
Real estate, property and equipment, gross	4,975,244	4,975,243
Leasehold Improvements [Member] | Memory Care Facilities and Corporate [Member]
Property, Plant and Equipment [Line Items]
Real estate, property and equipment, gross	710,317	846,754
Computer Equipment [Member] | Memory Care Facilities and Corporate [Member]
Property, Plant and Equipment [Line Items]
Real estate, property and equipment, gross	57,166	332,809
Furniture, Fixtures and Equipment [Member] | Memory Care Facilities and Corporate [Member]
Property, Plant and Equipment [Line Items]
Real estate, property and equipment, gross	72,213	1,379,219
Equipment [Member] | Memory Care Facilities and Corporate [Member]
Property, Plant and Equipment [Line Items]
Real estate, property and equipment, gross	74,935	518,145
Construction in Progress [Member] | Memory Care Facilities and Corporate [Member]
Property, Plant and Equipment [Line Items]
Real estate, property and equipment, gross	$ 138,187	$ 138,187

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Real Estate, Property and Equipment (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Impairment Effects on Earnings Per Share [Line Items]
Depreciation expenses	$ 526,073	$ 372,259
Property, Plant and Equipment [Member]
Impairment Effects on Earnings Per Share [Line Items]
Depreciation expenses	$ 526,073	$ 372,259

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Schedule of Expected Future Amortization Expense for Intangible Assets (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Accumulated Amortization	$ 368,000		$ 0
Weighted-Average Remaining Useful Life	5 years
Development Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible Assets, Gross (Excluding Goodwill)	$ 3,680,000	$ 3,680,000
Finite-Lived Intangible Assets, Accumulated Amortization	368,000
Intangible Assets, Net (Excluding Goodwill)	$ 3,312,000	$ 3,680,000
Weighted-Average Remaining Useful Life	4 years 6 months	5 years

XML

Schedule of Future Amortization Expense for Intangible Assets (Details)	Jun. 30, 2023 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2023 (remaining)	$ 368,000
2024	736,000
2025	736,000
2026	736,000
2027	736,000
Thereafter
Total	$ 3,312,000

XML

Intangible Assets, Net (Details Narrative) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Capitalized computer software, net	$ 3,312,000	$ 3,680,000
Estimated useful life	5 years
Amortization expenses	$ 368,000	$ 0

XML

Leases (Details Narrative)	Mar. 31, 2023 USD ($)
Lease Transition Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Past due community lease amounts	$ 1,284,770
Rent differential amount	1,710,777
Critical expenses advances	$ 275,000
Repayments percentage	10.00%
Lease Transition Agreement [Member] | July 31, 2023 [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Lease cost	$ 300,000
Excess cash flow, rate	10.00%
Lease Transition Agreement [Member] | December 31, 2023 [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Quarterly payment	$ 400,000
Lease Transition Agreement [Member] | Maximum [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Critical expenses advances	25,000
Repayments amount	500,000
Lease Transition Agreement [Member] | Minimum [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Repayments amount	300,000
Community Lease Transition Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Repayments amount	$ 4,000,000

XML

Schedule of Long Term Debt (Details)	Jun. 30, 2023 USD ($)
Debt Disclosure [Abstract]
2023	$ 15,615,892
2024	2,333,909
2025	4,956,948
2026	1,518,682
Thereafter
Total obligations	$ 24,425,431

XML

Schedule of Maturity Debt (Details) - USD ($)		6 Months Ended
		Jun. 30, 2023	Jun. 05, 2023	Dec. 31, 2022
Short-Term Debt [Line Items]
Interest Rate			16.75%
Notional amount of debt		$ 24,425,431
Long term debt, non-current		5,620,489		$ 1,392,940
Indebtedness Allocated To Real Estate [Member]
Short-Term Debt [Line Items]
Notional amount of debt		1,042,180		1,316,721
Less: current maturities		805,000		805,000
Notes payable		237,180		511,721
Long-Term Debt, Gross		$ (1,042,180)		(1,316,721)
Indebtedness Allocated To Real Estate [Member] | Artesia Note [Member]
Short-Term Debt [Line Items]
Maturity Date		June 2033
Notional amount of debt				211,721
Long-Term Debt, Gross				(211,721)
Indebtedness Allocated To Real Estate [Member] | Carpenter Enterprises [Member]
Short-Term Debt [Line Items]
Maturity Date		Demand Note
Notional amount of debt		$ 237,180		300,000
Long-Term Debt, Gross		$ (237,180)		(300,000)
Indebtedness Allocated To Real Estate [Member] | Leander Stearns National Association [Member]
Short-Term Debt [Line Items]
Maturity Date		February 2023
Interest Rate		10.38%
Notional amount of debt		$ 805,000		805,000
Long-Term Debt, Gross		(805,000)		(805,000)
Other Corporate Indebtedness [Member]
Short-Term Debt [Line Items]
Notional amount of debt		5,799,689		3,852,587
Long-Term Debt, Gross		(5,799,689)		(3,852,587)
Long term debts current		1,942,422		2,340,009
Long term debts non current		3,857,267		1,512,578
Notes payable gross		24,425,431		18,744,501
Less debt discount & derivatives		(1,797,732)		(1,004,271)
Notes payable net		$ 22,627,699		17,740,230
Other Corporate Indebtedness [Member] | Convertible Notes Issued by AIU Alternative Care, Inc. [Member]
Short-Term Debt [Line Items]
Interest Rate		12.00%
Notional amount of debt	[1]	$ 749,000
Long-Term Debt, Gross	[1]	$ (749,000)
Other Corporate Indebtedness [Member] | AGP contract [Member]
Short-Term Debt [Line Items]
Maturity Date	[2]	March 2023
Interest Rate	[2]	5.00%
Notional amount of debt	[2]	$ 550,000		550,000
Long-Term Debt, Gross	[2]	$ (550,000)		(550,000)
Other Corporate Indebtedness [Member] | Cibolo Creek Partners [Member]
Short-Term Debt [Line Items]
Maturity Date		December 2025
Interest Rate		0.09%
Notional amount of debt		$ 388,276		421,470
Long-Term Debt, Gross		$ (388,276)		(421,470)
Other Corporate Indebtedness [Member] | Cibolo Creek Partners Promissory Note [Member]
Short-Term Debt [Line Items]
Maturity Date		December 2025
Interest Rate		0.09%
Notional amount of debt		$ 91,208		96,208
Long-Term Debt, Gross		$ (91,208)		(96,208)
Other Corporate Indebtedness [Member] | EIDL SBA Treas 310 [Member]
Short-Term Debt [Line Items]
Maturity Date		December 2051
Interest Rate		3.75%
Notional amount of debt		$ 494,900		494,900
Long-Term Debt, Gross		$ (494,900)		(494,900)
Other Corporate Indebtedness [Member] | Firstfire [Member]
Short-Term Debt [Line Items]
Maturity Date		May 2023
Interest Rate		12.00%
Notional amount of debt		$ 1,378		95,054
Long-Term Debt, Gross		$ (1,378)		(95,054)
Other Corporate Indebtedness [Member] | Five C Loan [Member]
Short-Term Debt [Line Items]
Maturity Date	[2]	December 2022
Interest Rate	[2]	9.85%
Notional amount of debt	[2]	$ 325,000		325,000
Long-Term Debt, Gross	[2]	$ (325,000)		(325,000)
Other Corporate Indebtedness [Member] | GS Capital [Member]
Short-Term Debt [Line Items]
Maturity Date		May 2023
Interest Rate		12.00%
Notional amount of debt				50,955
Long-Term Debt, Gross				(50,955)
Other Corporate Indebtedness [Member] | Jefferson Street Capital LLC [Member]
Short-Term Debt [Line Items]
Maturity Date	[3]	May 2023
Interest Rate	[3]	12.00%
Notional amount of debt	[3]	$ 16,800		84,000
Long-Term Debt, Gross	[3]	$ (16,800)		(84,000)
Other Corporate Indebtedness [Member] | KOBOLP [Member]
Short-Term Debt [Line Items]
Maturity Date	[2]	October 2023
Notional amount of debt	[2]	$ 500,000		500,000
Long-Term Debt, Gross	[2]	$ (500,000)		(500,000)
Other Corporate Indebtedness [Member] | Mast Hill Note 1 [Member]
Short-Term Debt [Line Items]
Maturity Date	[3]	May 2023
Interest Rate	[3]	12.00%
Notional amount of debt	[3]	$ 300,000		420,000
Long-Term Debt, Gross	[3]	$ (300,000)		(420,000)
Other Corporate Indebtedness [Member] | Mast Hill Note 2 [Member]
Short-Term Debt [Line Items]
Maturity Date	[3]	July 2023
Interest Rate	[3]	12.00%
Notional amount of debt	[3]	$ 252,000		315,000
Long-Term Debt, Gross	[3]	$ (252,000)		(315,000)
Other Corporate Indebtedness [Member] | Round Rock Development Partners Note [Member]
Short-Term Debt [Line Items]
Maturity Date		December 2025
Interest Rate		0.09%
Notional amount of debt		$ 500,000		500,000
Long-Term Debt, Gross		$ (500,000)		(500,000)
Other Corporate Indebtedness [Member] | Jefferson Street Capital LLC February 2023 [Member]
Short-Term Debt [Line Items]
Maturity Date		February 2024
Interest Rate		12.00%
Notional amount of debt		$ 192,883
Long-Term Debt, Gross		$ (192,883)
Other Corporate Indebtedness [Member] | Mast Hill LP January 2023 [Member]
Short-Term Debt [Line Items]
Maturity Date	[3]	January 2024
Interest Rate	[3]	12.00%
Notional amount of debt	[3]	$ 756,000
Long-Term Debt, Gross	[3]	$ (756,000)
Other Corporate Indebtedness [Member] | Bridge Financings [Member]
Short-Term Debt [Line Items]
Interest Rate		8.00%
Notional amount of debt	[1]	$ 685,000
Long-Term Debt, Gross	[1]	$ (685,000)
Other Corporate Indebtedness [Member] | Convertible Notes Issued by AIU Alternative Care, Inc. [Member]
Short-Term Debt [Line Items]
Maturity Date		January 2024
Other Corporate Indebtedness [Member] | TIC Purchase Agreements [Member]
Short-Term Debt [Line Items]
Interest Rate		8.00%
Notional amount of debt		$ 3,141,000		3,141,000
Long-Term Debt, Gross		$ (3,141,000)		(3,141,000)
Indebtedness of Facilities [Member] | Naples Mortgage Loan [Member]
Short-Term Debt [Line Items]
Maturity Date	[2]	May 2023
Interest Rate	[2]	9.95%
Notional amount of debt	[2]	$ 4,550,000		4,550,000
Long-Term Debt, Gross	[2]	$ (4,550,000)		(4,550,000)
Indebtedness of Facilities [Member] | Gearhart Loan [Member]
Short-Term Debt [Line Items]
Maturity Date	[2]	December 2022
Interest Rate	[2]	7.00%
Notional amount of debt	[2]	$ 193,578		193,578
Long-Term Debt, Gross	[2]	$ (193,578)		(193,578)
Indebtedness of Facilities [Member] | SBA PPP Loans [Member]
Short-Term Debt [Line Items]
Maturity Date	[4]	February 2022
Interest Rate	[4]	1.00%
Notional amount of debt	[4]	$ 1,518,682		1,518,682
Long-Term Debt, Gross	[4]	$ (1,518,682)		(1,518,682)
Indebtedness of Facilities [Member] | Bank Direct Payable [Member]
Short-Term Debt [Line Items]
Maturity Date	[2]	December 2022
Interest Rate	[2]	3.13%
Notional amount of debt	[2]			80,381
Long-Term Debt, Gross	[2]			(80,381)
Indebtedness of Facilities [Member] | AIU Sixth Street [Member]
Short-Term Debt [Line Items]
Maturity Date		February 2023
Interest Rate		12.00%
Notional amount of debt				49,593
Long-Term Debt, Gross				(49,593)
Indebtedness of Facilities [Member] | 1800 Diagonal Lending [Member]
Short-Term Debt [Line Items]
Maturity Date		October 2024
Interest Rate		12.00%
Notional amount of debt		$ 45,303		116,760
Long-Term Debt, Gross		$ (45,303)		(116,760)
Indebtedness of Facilities [Member] | 1800 Diagonal Lending One [Member]
Short-Term Debt [Line Items]
Maturity Date		February 2024
Interest Rate		12.00%
Notional amount of debt		$ 134,723
Long-Term Debt, Gross		$ (134,723)
Indebtedness of Facilities [Member] | Equity Secure Fund I, LLC [Member]
Short-Term Debt [Line Items]
Maturity Date	[1]	March 2024
Interest Rate	[1]	18.00%
Notional amount of debt	[1]	$ 1,097,610		1,000,000
Long-Term Debt, Gross	[1]	$ (1,097,610)		(1,000,000)
Indebtedness of Facilities [Member] | Invesque Inc [Member]
Short-Term Debt [Line Items]
Maturity Date		July 2025
Interest Rate		10.00%
Notional amount of debt		$ 3,977,470
Long-Term Debt, Gross		(3,977,470)
Merchant Cash Advance Loans [Member]
Short-Term Debt [Line Items]
Notional amount of debt	[5]	2,925,196		2,925,199
Notional amount of debt	[5]	14,442,562		10,434,193
Less: current maturities	[5]	14,442,562		10,434,193
Long term debt, non-current	[5]
Long-Term Debt, Gross	[5]	$ (2,925,196)		(2,925,199)
Merchant Cash Advance Loans [Member] | Naples Operating PIRS Capital [Member]
Short-Term Debt [Line Items]
Maturity Date	[5]	March 2023
Interest Rate	[5]	0.00%
Notional amount of debt	[5]	$ 338,000		338,000
Long-Term Debt, Gross	[5]	$ (338,000)		(338,000)
Merchant Cash Advance Loans [Member] | Little Rock Libertas [Member]
Short-Term Debt [Line Items]
Maturity Date	[5]	February 2023
Interest Rate	[5]	0.00%
Notional amount of debt	[5]	$ 326,330		326,330
Long-Term Debt, Gross	[5]	$ (326,330)		(326,330)
Merchant Cash Advance Loans [Member] | PIRS Capital Financing Agreement [Member]
Short-Term Debt [Line Items]
Maturity Date	[5]	March 2023
Interest Rate	[5]	0.00%
Notional amount of debt	[5]	$ 144,659		144,659
Long-Term Debt, Gross	[5]	$ (144,659)		(144,659)
Merchant Cash Advance Loans [Member] | Naples Samson [Member]
Short-Term Debt [Line Items]
Maturity Date	[5]	May 2023
Interest Rate	[5]	0.00%
Notional amount of debt	[5]	$ 76,916		76,916
Long-Term Debt, Gross	[5]	$ (76,916)		(76,916)
Merchant Cash Advance Loans [Member] | Naples LG Funding [Member]
Short-Term Debt [Line Items]
Maturity Date	[5]	April 2023
Interest Rate	[5]	0.00%
Notional amount of debt	[5]	$ 171,170		171,170
Long-Term Debt, Gross	[5]	$ (171,170)		(171,170)
Merchant Cash Advance Loans [Member] | Little Rock Premium Funding [Member]
Short-Term Debt [Line Items]
Maturity Date	[5]	April 2023
Interest Rate	[5]	0.00%
Notional amount of debt	[5]	$ 211,313		211,313
Long-Term Debt, Gross	[5]	$ (211,313)		(211,313)
Merchant Cash Advance Loans [Member] | Little Rock KIT Funding [Member]
Short-Term Debt [Line Items]
Maturity Date	[5]	December 2022
Interest Rate	[5]	0.00%
Notional amount of debt	[5]	$ 89,400		89,400
Long-Term Debt, Gross	[5]	$ (89,400)		(89,400)
Merchant Cash Advance Loans [Member] | Little Rock Samson Funding [Member]
Short-Term Debt [Line Items]
Maturity Date	[5]	February 2023
Interest Rate	[5]	0.00%
Notional amount of debt	[5]	$ 170,501		170,501
Long-Term Debt, Gross	[5]	$ (170,501)		(170,501)
Merchant Cash Advance Loans [Member] | Naples Operating SWIFT [Member]
Short-Term Debt [Line Items]
Maturity Date	[5]	December 2022
Interest Rate	[5]	0.00%
Notional amount of debt	[5]	$ 111,750		111,750
Long-Term Debt, Gross	[5]	$ (111,750)		(111,750)
Merchant Cash Advance Loans [Member] | New Braunfels Samson Cloud Fund [Member]
Short-Term Debt [Line Items]
Maturity Date	[5]	February 2023
Interest Rate	[5]	0.00%
Notional amount of debt	[5]	$ 308,035		308,035
Long-Term Debt, Gross	[5]	$ (308,035)		(308,035)
Merchant Cash Advance Loans [Member] | New Braunfels Samson Group [Member]
Short-Term Debt [Line Items]
Maturity Date	[5]	February 2023
Interest Rate	[5]	0.00%
Notional amount of debt	[5]	$ 375,804		375,804
Long-Term Debt, Gross	[5]	$ (375,804)		(375,804)
Merchant Cash Advance Loans [Member] | Westover Hills One River [Member]
Short-Term Debt [Line Items]
Maturity Date	[5]	December 2022
Interest Rate	[5]	0.00%
Notional amount of debt	[5]	$ 128,298		128,301
Long-Term Debt, Gross	[5]	$ (128,298)		(128,301)
Merchant Cash Advance Loans [Member] | Westover Hills FOX Capital [Member]
Short-Term Debt [Line Items]
Maturity Date	[5]	March 2023
Interest Rate	[5]	0.00%
Notional amount of debt	[5]	$ 109,384		109,384
Long-Term Debt, Gross	[5]	$ (109,384)		(109,384)
Merchant Cash Advance Loans [Member] | Westover Hills Arsenal [Member]
Short-Term Debt [Line Items]
Maturity Date	[5]	October 2023
Interest Rate	[5]	0.00%
Notional amount of debt	[5]	$ 95,882		95,882
Long-Term Debt, Gross	[5]	$ (95,882)		(95,882)
Merchant Cash Advance Loans [Member] | Westover Samson Funding [Member]
Short-Term Debt [Line Items]
Maturity Date	[5]	March 2023
Interest Rate	[5]	0.00%
Notional amount of debt	[5]	$ 267,754		267,754
Long-Term Debt, Gross	[5]	$ (267,754)		$ (267,754)

[1] Obligations have been modified as of June 5, 2023.

[2] Obligation is in default. Interest rate set forth is the stated rated of interest. The actual rate of interest has increased under the terms of the obligation.

[3] Obligation is in payment default. Each lender has not exercised any of their remedies. Each lender has the right to exercise remedies including the conversion of the promissory note into shares of our common stock and collection of default interest and other amounts, and in the case of Mast Hill to exercise the Lender Remedy Warrants described in Note 10 — Deficit. Jefferson Street Capital LLC has granted a forbearance to October 31, 2023. Mast Hill LP has granted a forbearance dated October 4, 2023 until the earlier of (i) the closing of the merger (“Merger”) with Viveon Health Acquisition Corp under the merger agreement dated as of April 5, 2023, as amended, (ii) to January 2, 2024 (90 days from the date of the forbearance), (iii) the date that Clearday, Inc. or any of its subsidiaries makes an assignment for the benefit of creditors, or applies for or consents to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed. or (iv) the date that bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Clearday, Inc. or any of its subsidiaries (the earlier of the aforementioned (i), (ii), (iii) or (iv) shall be referred to herein as the “Waiver Expiration Date”). There can be no assurance that the Company will be able to extend any the forbearances with any of these lenders on acceptable terms or at all or that Clearday will be able to comply with the terms of the forbearance provided by Mast Hill LP which includes that Clearday provide net proceeds from additional financings by Clearday under the terms of the promissory notes with such lender, unless such payment is excused by such lender.

[4] SBA PPP obligations are past due and in the Company is continuing the process to have these obligations forgiven.

[5] We have ceased payment of these obligations. Obligations are subject to litigation for nonpayment, as previously reported. See Note 7 — Commitments and Contingencies.

XML

Indebtedness (Details Narrative) - USD ($)		6 Months Ended
	Jun. 05, 2023	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Short-Term Debt [Line Items]
Long term debt		$ 24,425,431
Incurred interest expense		$ 1,197,054	$ 896,643
Debt instrument, maturity date	Mar. 26, 2024	Feb. 10, 2023
Increase in interest rate	18.00%
Debt instrument, interest rate during period	1.00%
Principal amount	$ 1,000,000
Interest rate	16.75%
Senior Convertible Notes [Member]
Short-Term Debt [Line Items]
Debt instrument, maturity date		Jun. 30, 2024
Increase in interest rate		4.00%
Interest rate		8.00%
Debt Instrument, Description		In the event that the merger agreement dated as of April 5, 2023, as amended, (the “Viveon Merger Agreement”) with Viveon Health Acquisition Corp., a Delaware corporation (“Viveon”) providing for the proposed merger (“Viveon Merger”) is terminated, then the conversion price for our shares of common stock will be the lower of $0.82 per share and a price per share equal to a 25% discount to the volume weighted average price per share for our common stock for the ten (10) trading days preceding such termination date. If the Viveon Merger Agreement is not terminated, then at the closing of the Viveon Merger, the principal and accrued interest of the Bridge Notes will be converted at a price per share equal to $0.82 subject to ratable adjustment in the event of any stock split, reverse stock split, merger, consolidation, combination or similar transactions, and such shares of our common stock will be exchanged for shares of Viveon common stock under the terms of the Viveon Merger Agreement.
Senior Convertible Notes [Member] | Maximum [Member]
Short-Term Debt [Line Items]
Bridge notes		$ 16,000,000
Memory Care Core and Corporate Facilities [Member]
Short-Term Debt [Line Items]
Long term debt		$ 17,007,210		$ 16,347,290

XML

Commitments and Contingencies (Details Narrative) - USD ($)				6 Months Ended
	Jun. 05, 2023	Oct. 21, 2022	Aug. 05, 2022	Jun. 30, 2023	Dec. 31, 2022
Loss Contingencies [Line Items]
Loss Contingency, Damages Awarded, Value		$ 2,801,365
Long-Term Purchase Commitment, Amount			$ 3,012,011
Cash			2,763,936	$ 8,093	$ 195,638
[custom:PaymentOfAmount]			$ 248,075
Loss contingency accrual at carrying value				311,000
Accrued					$ 261,000
Accrued underpaid payroll tax				1,097,000
Loss contingency damages value				2,925,196
Loss contingency, damages paid, value				1,531,640
Participating Mortgage Loans, Mortgage Obligations, Amount				$ 875,000
Debt Instrument, Maturity Date	Mar. 26, 2024			Feb. 10, 2023
Percentage of fee payable				2.00%
Preferred stock, par value				$ 0.001	$ 0.001
Series A Preferred Stock [Member]
Loss Contingencies [Line Items]
Preferred stock, par value				0.001	$ 0.001
Clearday Oz Fund [Member]
Loss Contingencies [Line Items]
Warrant price per share				10.00
AIU Alt Care Inc [Member] | Series A Preferred Stock [Member]
Loss Contingencies [Line Items]
Common stock price per share				10.00
Preferred stock, par value				$ 20.00
Real Estate Loan [Member]
Loss Contingencies [Line Items]
Repayments of Debt				$ 805,000
Promissory Note [Member]
Loss Contingencies [Line Items]
Loss contingency, damages paid, value				$ 4,550,000

XML

Schedule of Anti-Dilutive Shares Compensation of Earnings (Loss) Per Share (Details) - shares	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total participating securities	14,786,405	9,581,992
Series A Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total participating securities	328,925	328,925
Series F 6.75% Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total participating securities	4,538,616	4,797,052
Series I 10.25% Cumulative Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total participating securities	1,365,640	320,657
Limited Partnership Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total participating securities	99,038	99,038
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total participating securities	7,618,820	4,036,320
Bridge Notes [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total participating securities	835,366

XML

Related Party Transactions (Details Narrative)		3 Months Ended		6 Months Ended
	May 22, 2023 USD ($) a	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Aug. 11, 2023 USD ($)	Aug. 10, 2023 USD ($)	Jun. 05, 2023 USD ($)	Dec. 31, 2022 USD ($)
Related Party Transaction [Line Items]
Guarantee fee, percentage				1.00%
Debt instrument face amount								$ 1,000,000
Number of common stock issued				$ 273,128	$ 273,128
Interest rate								16.75%
Gain/loss on disposal of assets		$ 5,925		$ (100,542)
Viveon Merger Agreement [Member]
Related Party Transaction [Line Items]
Percentage of advances invested		48.00%		48.00%
Stock issued during period, value, acquisitions				$ 500,000,000
AIU Inc [Member] | Related Party [Member]
Related Party Transaction [Line Items]
Due to related parties		$ 479,484		479,484
Cibolo Creek Partners LLC [Member] | Related Party [Member]
Related Party Transaction [Line Items]
Due to related parties		0		0					$ 517,678
A I U [Member] | Related Party [Member]
Related Party Transaction [Line Items]
Due to related parties									89,381
Round Rock Development Partners LP [Member] | Related Party [Member]
Related Party Transaction [Line Items]
Due to related parties									500,000
Richard Morris [Member]
Related Party Transaction [Line Items]
Payments for Rent				127,933
Jim Walesa [Member]
Related Party Transaction [Line Items]
Loan fee				143,141
Chief Executive Officer [Member]
Related Party Transaction [Line Items]
Loan fee				44,722
Number of common stock issued				24,198
Christen Hemmings [Member]
Related Party Transaction [Line Items]
Proceeds from Short-Term Debt				130,000
James Walesa [Member]
Related Party Transaction [Line Items]
Acres | a	1.5
Payments to acquire land	$ 155,925
Payments for repurchase of land	$ 175,000
Interest rate	10.90%
Debt Instrument, Periodic Payment, Interest	$ 19,075
Debt instrument periodic payment	$ 1,590
Debt instrument date of first required payment	Jul. 01, 2024
PPP Loans [Member]
Related Party Transaction [Line Items]
Debt instrument face amount									$ 336,538
Promissory Note [Member] | Viveon Merger Agreement [Member]
Related Party Transaction [Line Items]
Promissory note		$ 319,000		$ 319,000
Promissory Note [Member] | Viveon Merger Agreement [Member] | Subsequent Event [Member]
Related Party Transaction [Line Items]
Promissory note						$ 877,600	$ 558,700

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Summary of Outstanding Warrants (Details) - $ / shares		Feb. 17, 2023	Jan. 12, 2023	Sep. 30, 2022	Jul. 01, 2022	Jun. 30, 2023
Warrant One [Member]
Class of Warrant or Right [Line Items]
Total						7,331
Currently exercisable						7,331
Exercise price per share						$ 245.84
Expiration date						Sep. 09, 2023
Warrant Two [Member]
Class of Warrant or Right [Line Items]
Total						119,241
Currently exercisable						119,241
Exercise price per share						$ 75.48
Expiration date						Jul. 25, 2023
Warrant Three [Member]
Class of Warrant or Right [Line Items]
Total						7,154
Currently exercisable						7,154
Exercise price per share						$ 94.35
Expiration date						Jul. 25, 2023
Warrant Four [Member]
Class of Warrant or Right [Line Items]
Total						5,518
Currently exercisable						5,518
Exercise price per share						$ 26.96
Expiration date						May 23, 2024
Warrant Five [Member]
Class of Warrant or Right [Line Items]
Total						100,719
Currently exercisable						100,719
Exercise price per share						$ 5.39
Expiration date						Oct. 10, 2024
Warrant Six [Member]
Class of Warrant or Right [Line Items]
Total						14,336
Currently exercisable						14,336
Exercise price per share						$ 6.74
Expiration date						Oct. 08, 2024
AIU Warrants [Member]
Class of Warrant or Right [Line Items]
Total	[1]					3,281,508
Currently exercisable	[1]					3,281,508
Exercise price per share	[1]					$ 5.00
Expiration date	[1]					Nov. 15, 2029
AIU Warrants One [Member]
Class of Warrant or Right [Line Items]
Total	[2]					500,000
Currently exercisable	[2]					500,000
Exercise price per share						$ 11.00
Expiration date						Aug. 10, 2026
AIU Merger To Lender Warrants [Member]
Class of Warrant or Right [Line Items]
Outstanding			1,134,000	472,500	900,000
Exercisable			0	0	0
Exercise price			$ 0.75	$ 0.50	$ 0.50
Maturity date	[3]		5 years after Trigger Date	5 years after Trigger Date	5 years after Trigger Date
Additional Lender Warrants [Member]
Class of Warrant or Right [Line Items]
Outstanding		225,000	851,000
Exercisable		225,000	851,000
Exercise price		$ 0.75	$ 0.75
Maturity date		March 16, 2028	February 14, 2028

[1] Two of our subsidiaries have preferred securities that are classified under

[2] The Company also has a warrant issued to a consultant representing 500,000 shares of the Company’s Common Stock at an exercise price of $11.00 per share, which may be paid by customary cashless exercise. Such warrant is subject to adjustment for specified fundamental transactions such as stock splits, reverse stock splits and stock combinations.

[3] Trigger Date is defined as the date of an Event of Default under the promissory note that is related to the financing in which this warrant was issued, which default has not been waived.

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Summary of Outstanding Warrants (Details) (Parenthetical)	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Warrants description	(1) the preferred stock designated as the Series I 10.25% cumulative convertible preferred stock, par value $0.01 per share of AIU Alt Care (the “Alt Care Preferred Stock”); and (2) the preferred limited partnership interests of Clearday OZ Fund (the “Clearday OZ LP Interests”)
Consultant [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Warrants to purchase common stock	500,000
Warrants exercise price | $ / shares	$ 11.00
Clearday OZ LP Interests [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Warrants issued	1,376,118
Warrants to purchase common stock	3,281,508
Warrants exercise price | $ / shares	$ 5.00

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Deficit (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Nov. 30, 2019	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock shares authorized		80,000,000		80,000,000		80,000,000
Preferred stock, shares authorized		10,000,000		10,000,000		10,000,000
Common stock par value		$ 0.001		$ 0.001		$ 0.001
Preferred stock, par value		$ 0.001		$ 0.001		$ 0.001
Voting rights				Each holder of common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors
Preferred stock, shares authorized		5,000,000		5,000,000		5,000,000
Dividend rate percentage				6.75%		6.75%
Risk-free interest rates, minimum				4.13%		3.99%
Risk-free interest rates, maximum				5.47%		4.76%
Common stock expected volatility, minimum				135.00%		183.00%
Common stock expected volatility, maximum				310.00%		572.00%
Net loss				$ (5,030,852)	$ (5,354,783)
AIU Alt Care Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Ownership interest		99.00%		99.00%
AIU Alt Care Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock shares authorized	1,500,000	1,500,000		1,500,000
Preferred stock, shares authorized		1,500,000		1,500,000
Capital Units, Authorized	700,000
Allied Integral United Inc [Member] | AIU Alt Care Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares authorized	1,500,000
Conversion of stock description	Common Stock is equal to (i) the aggregate investment amount for such security plus accrued dividends at 10.25% per annum, (ii) divided by 80% of the 20 consecutive day volume weighted closing price of the Common Stock of Clearday preceding the conversion date. Prior to the merger, these securities were exchangeable to shares of AIU common stock at a rate of 1 share for every $10.00 of aggregate amount of the investment plus such accrued dividends.
Net loss				$ 38,394
Income (Loss) attributable to noncontrolling interest, before tax				38,010	1,663
Allied Integral United Inc [Member] | Clearday Oz Fund [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Net loss				917,382
Income (Loss) attributable to noncontrolling interest, before tax				$ 908,208	$ 218,412
Consultants [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stock issued		208,430
Minimum [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Exercise prices		$ 0.35		$ 0.35		$ 0.35
Maximum [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Exercise prices		$ 0.75		$ 0.75		$ 0.43
Series F Convertible Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Dividend rate percentage				6.75%
Series F Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares authorized		10,000,000		10,000,000
Preferred stock, par value		$ 0.001		$ 0.001
Dividend rate percentage				6.75%	6.75%
Preferred stock, shares outstanding		4,369,529		4,369,529
Stock issued upon conversion		616,253
Series A Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares authorized		2,000,000		2,000,000		2,000,000
Preferred stock, par value		$ 0.001		$ 0.001		$ 0.001
Preferred stock, shares issued		328,925		328,925		328,925
Preferred stock, shares outstanding		328,925		328,925		328,925
Preferred stock liquidation preference		$ 0.01		$ 0.01
Series A Preferred Stock [Member] | AIU Alt Care Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, par value		20.00		$ 20.00
Series F 6.75% Convertible Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Dividends, Preferred Stock				$ 3,343,771	$ 1,655,926
Convertible Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Dividend rate percentage	10.25%
Series I 10.25% Cumulative Convertible Preferred Stock [Member] | Allied Integral United Inc [Member] | AIU Alt Care Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, par value	$ 0.01
Series I Cumulative Convertible Preferred Stock [Member] | AIU Alt Care Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, par value		$ 0.01		$ 0.01
Dividend rate percentage				10.25%
Series I Cumulative Convertible Preferred Stock [Member] | Allied Integral United Inc [Member] | AIU Alt Care Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Shares outstanding				89,700
Partnership Interest [Member] | Allied Integral United Inc [Member] | Clearday Oz Fund [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Conversion of stock		$ 0	$ 0	$ 0	0
Conversion price				80.00%
Partnership Interest [Member] | Series I Cumulative Convertible Preferred Stock [Member] | Allied Integral United Inc [Member] | AIU Alt Care Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Shares outstanding				244,473
Common Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock shares authorized		80,000,000		80,000,000
Common stock price per share, maximum		$ 0.80		$ 0.80		$ 0.56
Net loss
Common Stock [Member] | Series F Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, par value		$ 2.38		$ 2.38
Common Stock [Member] | Superconductor Technologies Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Voting rights				The vote of most minority stockholders applies when an individual or entity and its affiliates or associates together own more than 50% of the voting power of the Company’s then outstanding capital stock
Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares authorized		10,000,000		10,000,000
Common stock par value		$ 0.001		$ 0.001
Preferred stock, par value		0.001		$ 0.001
Dividend rate percentage				10.25%
Preferred Stock [Member] | Series A 6.75% Cumulative Convertible Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, par value		$ 0.001		$ 0.001		$ 0.001
Preferred stock, shares authorized		5,000,000		5,000,000
Preferred stock, shares issued		4,369,529		4,369,529
Preferred stock, shares outstanding		4,369,529		4,369,529		4,797,052
Preferred Stock [Member] | Series F Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, par value		$ 20.00		$ 20.00
Warrant [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Risk-free interest rates, minimum				3.53%
Risk-free interest rates, maximum				474.06%
Common stock expected volatility, minimum				183.00%
Common stock expected volatility, maximum				184.00%
Warrant [Member] | Minimum [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock price per share, maximum		0.75		$ 0.75
Exercise prices		0.50		0.50
Warrant [Member] | Maximum [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock price per share, maximum		0.85		0.85
Exercise prices		$ 0.75		$ 0.75

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Mezzanine Equity (Details Narrative) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, par value	$ 0.001	$ 0.001
Series F Preferred Stock [Member]
Preferred stock, shares authorized	10,000,000
Preferred stock, par value	$ 0.001
Preferred stock shares designated	5,000,000
Preferred stock shares outstanding	4,369,529

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Subsequent Events (Details Narrative) - USD ($) shares in Millions		6 Months Ended
	Aug. 28, 2023	Jun. 30, 2023	Jun. 30, 2022
Subsequent Event [Line Items]
Merger consideration		$ 273,128	$ 273,128
Subsequent Event [Member]
Subsequent Event [Line Items]
Property sale proceeds	$ 58,000
Subsequent Event [Member] | KOBOLP [Member]
Subsequent Event [Line Items]
Ownership percentage	80.00%
Subsequent Event [Member] | Clearday Inc [Member]
Subsequent Event [Line Items]
Ownership percentage	20.00%
Subsequent Event [Member] | Bridge Loan [Member] | Viveon Merger Agreement [Member]
Subsequent Event [Line Items]
Additional financings	$ 1,700,000
Promissory note	$ 768,000
Merger Consideration [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Number of shares issued	5
Merger Consideration [Member] | Subsequent Event [Member] | Minimum [Member] | Options And Warrants [Member]
Subsequent Event [Line Items]
Merger consideration	$ 250,000,000
Merger Consideration [Member] | Subsequent Event [Member] | Maximum [Member] | Options And Warrants [Member]
Subsequent Event [Line Items]
Merger consideration	$ 500,000,000