Indebtedness |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Indebtedness | 6. Indebtedness
At September 30, 2023, the Company had total outstanding debt in the amount of $24,423,221, net of debt discount and derivatives, of which $19,879,095 was, current. At December 31, 2022 the Company had total outstanding debt in the amount of $17,740,230, net of debt discount and derivatives, of which $16,347,290 was current. During the nine months ended September 30, 2023, and 2022, we incurred interest expenses totaling $3,919,180 and $1,927,622, respectively.
CLEARDAY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes future payments required to be made on the Company’s debt.
The following tables summarizes the Company’s debt.
The following table provides details of the Company’s debt at September 30, 2023, and December 31, 2022:
Indebtedness of Facilities and Properties
Merchant Cash Advance Loans (^^)
CLEARDAY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Indebtedness Allocated to real estate
Other (Corporate) Indebtedness
CLEARDAY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Equity Secure Fund I, LLC Modification
As of September 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 issued Senior Convertible Notes (“Bridge Notes”) during 2023. The Company is continuing such offerings 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 September 30, 2024 (the “Bridge Note Maturity Date”). The Bridge Notes will provide for conversion into shares of our common stock based on a contingency. If the 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 to our Quarterly Report on Form 10-Q for the quarter ending June 30, 2023, that was filed on October 17, 2023.
Invesque Obligations Amendment
Clearday and certain of its subsidiaries entered into the LTA Second Amendment effective December 15, 2023. Among other matters, the LTA Second Amendment deferred the due date for the initial Down Payment to December 31, 2023, and increased such amount payable from $300,000 to $350,000. The LTA Second Amendment provided customary representations and warranties of the parties thereto, reaffirmed the obligations under the Lease Transition Agreement, as amended, and the related guarantees and provided a waiver of defenses by Clearday and the guarantors party thereto. The obligations are in default as of January 2, 2024. The obligations provide a late charge (“Late Charge”) equal to 10% of the amount of any unpaid payment after the fifth day following the due date therefor to defray part of the increased cost of collecting late payments and the opportunity costs incurred by Landlord because of the unavailability of the funds. Additionally, the Landlord has customary rights upon the default under the Transition Agreement, the Guaranteed Note and the Guaranty. The Company expects to negotiate an additional deferral or amendment of the payment date of the Down Payment. There can be no assurance that any such additional deferral or amendment will be consummated on acceptable terms or at all.
AGP Contract and Note Amendment
Clearday entered into a Promissory Note and Second Amendment (“AGP Second Amended Note”), effective December 31, 2023, that amends Clearday’s obligations under the Promissory Note and Amendment (the “AGP First Amended Note”) dated July 6, 2022 of the initial principal amount of $550,000. The AGP First Amended Note amended the obligations under the Promissory Note dated September 10, 2021, issued with respect to obligations under the Advisory Agreement dated July 25, 2019 by and between Clearday Operations, Inc. and AIU, as amended. Effective December 31, 2023, the AGP Second Amended Note confirms obligations to $578,795.89 which equals the principal amount of the AGP First Amended Note of $550,000 plus accrued and unpaid interest, extended the maturity date to the earlier of (i) September 30, 2024 or (ii) the closing date of the Viveon Merger under the Viveon Merger Agreement or the date of an event of default, and (iii) deleted the obligation of Clearday to prepay the obligations by amounts of capital raised by equity or equity linked securities.
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