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Indebtedness
9 Months Ended
Sep. 30, 2023
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.

 

At September 30,  Total 
2024   16,059,812 
2025   5,471,130 
2026   

4,049,224

2027   -
2028   -
Thereafter   494,900 
Total obligations  $26,075,066 

 

The following tables summarizes the Company’s debt.

 

At September 30,  Total 
Facility Indebtedness   11,637,726 
Merchant Cash Advance Loans   2,925,196 
Indebtedness Allocated to Real Estate   983,346 
Other Corporate Indebtedness   7,387,798 
TIC Purchase Agreements   3,141,000 
Total Obligations   26,075,066 
Debt Discount & Derivatives   (1,651,845)
Total obligations, net  $24,423,221 

 

The following table provides details of the Company’s debt at September 30, 2023, and December 31, 2022:

 

Indebtedness of Facilities and Properties

 

  Maturity Date  Interest Rate   September 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 
IPFS D&O Insurance  August 2024   8.80%   118,277    - 
Bank Direct Payable  December 2022   3.13%   -    80,381 
Bank Direct Payable  November 2023   6.99%   104,947    - 
AIU Sixth Street  February 2023   12.00%   -    49,593 
1800 Diagonal Lending  February 2024   12.00%   94,016    116,760 
Equity Secure Fund I, LLC*  March 2024   18.00%   1,097,610    1,000,000 
Invesque, Inc. **  July 2025   10.00%   3,960,616    - 

 

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         14,562,922    10,434,193 
Less: current maturities         14,562,922    10,434,193 
        $-   $- 

 

 

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Indebtedness Allocated to real estate

 

Real Estate:              
Artesia Note  September 2033   Variable   $-   $211,721 
Carpenter Enterprises  Demand Note   Variable    178,346    300,000 
Leander Stearns National Association  February 2023   10.38%   805,000    805,000 
Notional amount of debt         983,346    1,316,721 
Less: current maturities         983,346    805,000 
        $-   $511,721 

 

Other (Corporate) Indebtedness

 

AGP Contract and Note^***  March 2023   5.00%  $550,000   $550,000 
Cibolo Creek Partners  December 2025   0.09%   358,008    421,470 
Cibolo Creek Partners promissory note  December 2025   0.09%   50,215    96,208 
EIDL SBA Treas 310  December 2051   3.75%   494,900    494,900 
Firstfire  May 2023   12.00%   -    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%   557,992    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 (convertible to common stock   September 2024   8.00%   2,235,000    - 
Rom Papadopolous  January 2024        50,000      
Convertible Notes Issued by AIU Alternative Care, Inc.  January 2024   12.00%   749,000    - 
                   
Notional amount of debt         7,387,798    3,852,587 
Less: current maturities           5,984,672    2,340,009 
           $1,403,126   $1,512,578 
                   
TIC Purchase Agreements  No Specified Date   8.00%  $3,141,000   $3,141,000 
                   
       Total    26,075,066    18,744,501 
Less Debt Discount & Derivatives           (1,651,845)   (1,004,271)
       Total   $24,423,221   $17,740,230 

 

^ Obligation is in default. The interest rate set forth is the stated rate 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 the Company is continuing the process to have these obligations forgiven.
@

Obligation is in payment default. Neither lender has 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.

Mast Hill LP granted a forbearance dated October 4, 2023 until the earlier of (i) the closing of the Viveon Merger (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 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”).

Jefferson Street Capital LLC granted a forbearance to October 31, 2023, but as of the date of this Report has not exercised additional legal measures towards enforcement of payment of the debt. The Company is working on a longer-term solution. However, there can be no assurance that we will be able to extend any the forbearances with any of these lenders on acceptable terms or at all or that we 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 were modified in the third quarter of 2023.
** Obligation amended and is in default as of the date of this Report as described below.
*** Obligation amended effective December 31, 2023 to, among other matters, waive the default by extending the maturity date to September 2024 and increase the principal amount to $578,795.89 which is the principal plus the accrued and unpaid interest.

 

 

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.