RCAR RenovaCare Inc (CE)

Item 1.01. Entry into a Material Definitive Agreement.

On March 18, 2022 (the “Issuance Date”), RenovaCare, Inc. (the “Company”) borrowed $800,000 from Kalen Capital Corporation, an Alberta Canada corporation wholly owned by the Company’s Chairman, Harmel S. Rayat (the “Lender”). The loan is represented by the Company’s Convertible Promissory Note Dated as of the Issuance Date (the “Note”). The Outstanding Balance of the Note is due and payable on June 30, 2024 (the “Maturity Date”). Any capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such term in the Note.

The Note carries an interest rate of 1% per annum. All interest calculations hereunder shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months, shall compound daily and shall be payable in accordance with the terms of this Note. The Note may be prepaid. The Note is unsecured.

The Note has a mandatory conversion feature. In the event that the Company issues and sells shares of its Equity Securities on or before the Maturity Date, in an equity financing with total proceeds to the Borrower, from third-parties other than the Lender or any of its Affiliates, of not less than ten million dollars ($10,000,000) (and excluding the conversion of this Note, and conversion or cancellation of other indebtedness) (a “Qualified Financing”), then the Outstanding Balance shall automatically convert in whole without any further action by the Lender into such Equity Securities (as defined below) sold in the Qualified Financing at a conversion price equal to eighty percent (80%) of the price per share paid by the investors purchasing such Equity Securities in the Qualified Financing. The number of Equity Securities to be issued and delivered to Lender on the consummation of a Qualified Financing, shall be determined as per the following formula: the Outstanding Balance (on the date of the consummation of the Qualified Financing) divided by the Mandatory Conversion Price.

The Note contains a voluntary conversion mechanism whereby the Lender may convert, at any time after June 30, 2023, in whole or in part, the Outstanding Balance into shares of the Common Stock at a conversion price of $0.45 per share. The Note contains customary events of default (each an “Event of Default”). If there shall be any Event of Default in addition to any other remedies that the Lender may have, at the option and upon written notice to the Company (which election and notice shall not be required in the event of certain in the case of specified Events of Default the Note shall accelerate and the then Outstanding Balance shall become due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the documents evidencing the same to the contrary notwithstanding.

There are no registration rights with respect to any of the Company’s securities issuable upon conversion of any portion of the Outstanding Balance.

The Company entered into the Loan transaction in order to obtain additional funds to defray ongoing litigation expenses. 

The foregoing provides only brief descriptions of the material terms of the Note, and does not purport to be a complete description of the rights and obligations of the parties thereunder, and such descriptions are qualified in their entirety by reference to the full text of the Note filed as an exhibit to this Current Report on Form 8-K, and incorporated herein by reference.