Form 10-Q/A - Quarterly report [Sections 13 or 15(d)]: [Amend]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

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

For the quarterly period ended March 31, 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 25,997,628 shares of our common stock outstanding as of the close of business on July 14, 2023.

Clearday, Inc.

Explanatory Note

Clearday, Inc. (the “Company”) is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, which was originally filed with the Securities and Exchange Commission (“SEC”) on July 17, 2023 (the “Original Filing”), to amend the Company’s unaudited condensed consolidated financial statements as of March 31, 2023 and make certain other amendments. The Company has previously filed its Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (the “June 10Q”). The amendments provided in this filing have been incorporated in the June 10Q and the Company does not expect to make any amendments to the June 10Q.

Part I, Item 1 Condensed Consolidated Financial Statements has been amended to reflect the following amendments:

	*Item*	As Amended			Original Filing			Difference
●	Changes to the Condensed Consolidated Balance Sheet:

	ASSETS
	Non-Current assets
^[1]	Real estate property and equipment, net		6,321,749			6,227,965			93,784
^[1]	Total assets		10,346,008			10,252,224			93,784

	LIABILITIES, MEZZANINE EQUITY AND DEFICIT
	Current liabilities:
^[2]	Accrued expenses		5,989,892			5,966,110			23,782
^[3]	Accrued interest		895,013			471,684			423,329
^[2]	Related party payables		738,725			708,366			30,359
^[2][3]	Total current liabilities		32,828,102			32,350,632			477,470
^[2][3]	Total liabilities		37,452,825			36,975,355			477,470

	Deficit
^[4]	Additional paid-in-capital		19,132,830			19,193,946			(61,116	)
^[5]	Accumulated deficit		(79,606,718	)		(79,011,020	)		(595,698	)
^[6]	Clearday, Inc. Stockholders’ deficit:		(60,448,365	)		(59,791,551	)		(656,814	)
^[7]	Non-controlling interest in subsidiaries		11,307,705			11,034,577			273,128
	Total deficit		(49,140,660	)		(48,756,974	)		(383,686	)
	TOTAL LIABLITIES, MEZZANINE EQUITY AND DEFICIT		10,346,008			10,252,224			93,784

●	Changes to the Condensed Consolidated Statements of Operations
	Operating Expenses
^[8]	Wages & general operating expenses		3,846,475			3,815,150			31,325
^[9]	Selling, general and administrative expenses		904,989			880,485			24,504
^[10]	Depreciation and amortization expense		296,826			324,044			(27,218	)
^[11]	Total operating expenses		5,048,290			5,019,679			28,611
^[11]	Operating Loss		(2,041,786	)		(2,013,175	)		(28,611	)
	Other (income) expenses
^[12]	Interest Expense		714,833			549,033			165,800
^[13]	Loss (gain) on the sale of fixed assets		106,467			192,407			(85,940	)
^[14]	Other (income)/expenses		498,124			10,897			487,227
^[15]	Total other (income)/expenses		(1,555,178	)		(2,122,265	)		567,087
^[16]	Net income (loss) from continuing operations		(486,608	)		109,090			(595,698	)
^[16]	Net loss attributable to Clearday, Inc. common stockholders		(2,736,347	)		(2,140,649	)		(595,698	)

	Basic and diluted loss per share attributable to Clearday, Inc.
^[17]	Weighted average common shares basic and diluted outstanding		23,910,818			24,187,743			(276,925	)

●	Changes to the Condensed Consolidated Statements of Mezzanine Equity, Convertible Preferred Stock and Stockholders’ Deficit
^[18]	Accrual of Series I Convertible Preferred Stock in subsidiary		136,564			(136,564	)		273,128
^[19]	Stock compensation for services (common stock par value amount)		75			-			75
^[19]	Stock compensation for services (common stock additional paid in capital amount)		(61,191	)		-			(61,191	)
^[18]	Non-Controlling Interest		11,307,705			11,034,577			273,128
	Total Deficit		49,140,660			48,756,974			383,686

●	Changes to the Condensed Consolidated Statements Of Cash Flows
	CASH FLOWS FROM OPERATING ACTIVITIES
^[20]	Net income (loss)		(486,608	)		109,090			(595,698	)
^[20]	Loss from continued operations		(486,608	)		109,090			(595,698	)
^[2]	Adjustments required to reconcile net income (loss) to cash flows used in operating activities
^[21]	Depreciation and amortization		296,826			324,044			(27,218	)
^[22]	Shares issued for services		(61,116	)		-			(61,116	)
^[23]	Loss (gain) on the sale of fixed assets		106,467			192,407			(85,940	)
^[18]	Series I preferred stock accumulated dividend		136,564			(136,564	)		273,128
^[24]	Accrued liabilities		1,193,473			746,362			447,111
^[9]	Related party payables		66,128			35,769			30,359
^[25]	Net cash used in activities of continuing operations		(1,066,342	)		(1,046,967	)		(19,375	)
^[25]	Net cash used in operating activities		(1,066,342	)		(1,046,967	)		(19,375	)

	CASH FLOWS FROM FINANCING ACTIVITIES
^[26]	Proceeds from long-term debt		1,619,316			1,534,560			84,756
^[26]	Net cash provided by in financing activities		970,195			885,439			84,756
^[27]	Change in cash and restricted cash from discontinued operations		-			195,638			(195,638	)
^[27]	Cash and restricted cash at beginning of the year		205,638			10,000			195,638
	CASH FLOWS FROM INVESTING ACTIVITIES
^[28]	Payments for property and equipment		(18,063	)		(37,437	)		19,374
^[28]	Net cash provided by (used in) investing activities of the continuing operations		(18,063	)		(37,437	)		19,374

Explanation of the amendments or revisions:

¹	To correct the overstatement of depreciation expense on buildings and leasehold improvements, net of additional depreciation expense described in note 10, below.

²	To correct the understatement of accrued expenses, including an amount for consulting fees that were paid by the issuance of common stock and to correct the accrued amount payable to related persons as of March 31, 2023.

³	To correct the understatement of default interest for the Naples Equity Loan, including amounts accrued for prior periods that, as reported in the Original Filing, was in default and subject to additional amounts for fees, charges and interest.

⁴	To correct the overstatement of the additional paid in capital that was reported in the Original Filing.

⁵	To reflect the aggregate adjustments to Net income (loss) from continuing operations described below in note 16.

⁶	To reflect the aggregate changes to the Additional paid-in-capital and the Accumulated deficit described in notes 4 and 5.

⁷	To correct the accrual of Series I Convertible Preferred Stock in subsidiary that was reported in error in the Original Filing.

⁸	To correct the accrual for additional amounts including interest related to employment related taxes such as required withholdings for federal income tax and employee and employer contributions for FICA (Social Security and Medicare) taxes.

⁹	To correct the accrual for expenses related to consulting services of approximately (19,228), certain expenses related to the Simpsonville Facility of approximately 13,373, and rent by the Company of robots from a related party of $30,359.

¹⁰	To correct the depreciation and amortization expense amount for the six month period.

¹¹	To correct each balance, which is the aggregate of the adjustments described in notes 8, 9, and 10.

¹²	To correct the amount of the additional interest related to the Naples Equity Loan at the default interest rate for the three months ending March 31, 2023.

¹³	To correct the amount related to the loss on disposition of assets in the Community Leases that were terminated under the Lease Termination Agreement.

¹⁴

To correct the accrual for the (i) Simpsonville Action 2 in the amount of $210,324 to reflect the summary judgment in this matter in favor of the Landlord on April 14, 2023 that was not appealed by the defendants and the judgment to enforce the summary judgment that was entered on September 14, 2023, each as described in Note 8 Commitments and Contingencies to the condensed consolidated financial statements; and (ii) prior accrual of interest, fees and costs related to the Naples Equity Loan of $257,592; and (iii) other adjustments including increase of other income related to the disposition of certain assets, net of depreciation.

¹⁵	To correct this balance, which is the aggregate of the adjustments described in notes 12, 13, and 14.

¹⁶	To correct this balance, which reflects the adjustments described in notes 11 and 15.

¹⁷	To correct the amount of the weighted average common shares basic and diluted outstanding that was incorrectly stated in the Original Filing.

¹⁸	To correct the computation of the non-controlling interest in the subsidiaries that was not correctly reported in the Original Filing, which is the same adjustment described in note 7.

¹⁹	To correct the amount of stock compensation for services that was not correctly stated in the Original Filing. This amendment is also to Stock Compensation for services – Total Deficit.

²⁰	To correct this amount to reflect the aggregate adjustments to the net income described in note 16.

²¹	To correct this amount to reflect the aggregate adjustments to depreciation and amortization expense described in note 10.

²²	To correct this amount to reflect the aggregate adjustments related to issuance of common stock for consulting services described in note 19.

²³	To correct this amount to reflect the aggregate adjustment related to the loss on the disposition of assets described in note 13.

²⁴	To correct this amount to reflect the aggregate adjustment related to the increase of certain liabilities described in notes 2 and 3.

²⁵	To correct this amount to reflect the aggregate adjustments to this financial statement described in notes 20-24, inclusive.

²⁶	To correct the amount of the net cash provided by in financing activities that was reported in error in the Original Filing.

²⁷	To correct these amounts to reflect the proper classification in these balances that were incorrectly classified in discontinued operations in the Original Filing.

²⁸	To reflect the correct amount of purchases (net) of property, plant and equipment for the period.

This Amendment No. 1 also

●	Revised the footnotes to the Company’s condensed consolidated financial statements provided in this Report,
●	Revised the Condensed Consolidated Statements of Mezzanine Equity, Convertible Preferred Stock and Stockholders’ Deficit – Three Months Ended March 31, 2023 (Unaudited) to make conforming changes to the amendments described above,
●	Revised the Condensed Consolidated Statements Of Cash Flows to add to the supplemental disclosures of non-cash investing and financing activities for the following: settlements on derivative liability; Converted Preferred Shares Series F to Common Shares; PIK dividends for Series F preferred shares; Discount on derivative liability; Termination of leases; Accounts payable exchanged for common shares; and Notes payable used to pay rent expense,
●	Supplemented such footnotes to include the amortization expense related to intangible assets for the three months ending March 31, 2023 in Note 4 — and corrected a reference to the amortization expense and carrying value for Developed technology as of December 31, 2022,
●	Corrected the referenced interest rate for certain indebtedness in Note 7 — Indebtedness, Intangible Assets, Net,
●	Revised the disclosures to Note 8 — Commitments and Contingencies to include events to the date of the filing of this Amendment No. 1,
●	Revised the disclosure regarding derivative calculation in Note 11 — Deficit,
●	Revised the disclosure regarding the sale of a property (the Stockdale Financing) and deleted the error that references such transaction as an off balance sheet financing,
●	Revised the subsequent events to include the additional subsequent events to the date of the filing of this Amendment No. 1, and
●	Revised Part I, Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations to reflect the amendments described above.

In addition, the Company’s Principal Executive and Principal Financial Officer has provided new certifications dated as of the date of this filing in connection with this Form 10-Q/A (Exhibits 31.1, 31.2, 32.1 and 32.2).

The Company has considered the materiality of the amendments set forth in this Amendment No. 1 to assess whether the errors in the Original Filing were material to a reasonable investor’s perspective based on the total mix of information that has been provided to investors in the Company’s filings with the SEC, and considered relevant facts and circumstances including both quantitative and qualitative factors, including without limitation that the Company continued to incur a significant net loss from continuing operations and that the Company’s revised net cash used in activities of continuing operations was not materially different from the amount in the Original Filing. The Company notes that there is no executive compensation that would be subject to any clawback of executive compensation if the financial statements included in the Original Filing were restated.

Except as described above, no changes have been made to the Original Filing, and this Amendment No. 1 does not modify, amend or update in any way the financial or other information contained in the Original Filing.

No other material changes have been made to the Original Report. Except as may otherwise be stated, this Form 10-Q/A continues to speak as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update any related disclosures made in the Form 10-Q.

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

	●	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.

Clearday, Inc.

March 31, 2023

FORM 10-Q

Table of Contents

		Page
PART I	Financial Information
Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets – March 31, 2023 and December 31, 2022 (Unaudited)	1
	Condensed Consolidated Statements of Operations – For The Three Months Ended March 31, 2023 and 2022 (Unaudited)	2
	Condensed Consolidated Statements of Mezzanine Equity, Convertible Preferred Stock and Stockholders’ Deficit – Three Months Ended March 31, 2023 and 2022 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows – For The Three Months Ended March 31, 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	32
Item 3	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4	Evaluation of Disclosure Controls and Procedures.	35
PART II	Other Information
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	36

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.

Clearday, Inc.

Condensed Consolidated Balance Sheets

March 31, 2023 and December 31, 2022

(Unaudited)

	March 31, 2023			December 31, 2022
ASSETS
Current assets:
Cash	$	81,429		$	195,638
Restricted cash		10,000			10,000
Accounts receivable, net		58,447			47,705
Prepaid expenses		113,666			213,289
Other current assets		466			-
Total current assets		264,008			466,632

Non-current assets
Operating lease right-of-use assets		-			22,792,752
Real estate property and equipment, net		6,321,749			6,522,979
Intangible assets, net		3,496,000			3,680,000
Other long-term assets		264,251			288,155
Total assets	$	10,346,008		$	33,750,518

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	3,599,141		$	6,324,002
Accrued expenses		5,989,892			8,415,609
Derivative liabilities		3,748,918			2,320,547
Accrued interest		895,013			294,370
Related party payables		738,725			672,597
Deferred revenue		13,466			901,235
Current portion long-term debt		16,746,935			16,347,290
Operating lease liabilities		-			2,907,605
Other current liabilities		1,096,012			1,140,106
Total current liabilities		32,828,102			39,323,361

Long-term liabilities:
Operating lease liabilities		-			24,415,791
Long-term debt, less current portion, net		4,624,723			1,392,940
Total liabilities		37,452,825			65,132,092

Mezzanine equity
Series F 6.75% Convertible Preferred Stock, $.001 par value, 5,000,000 share authorized, 4,791,401 and 4,797,052 issued and outstanding on March 31, 2023 and December 31, 2022, respectively. Liquidation value $102,380,677 and $101,162,577 on March 31, 2023 and December 31, 2022, respectively.		22,033,843			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 and 328,925 shares issued and outstanding, as of March 31, 2023 and December 31, 2022, respectively. Liquidation value of $329 and $329 on March 31, 2023 and December 31, 2022, respectively		329			329
Common Stock, $0.001 par value, 25,194,402 and 20,805,448 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively		25,194			20,805
Additional paid-in-capital		19,132,830			16,098,182
Accumulated deficit		(79,606,718	)		(79,671,065	)
Clearday, Inc. Stockholders’ deficit:		(60,448,365	)		(63,551,749	)
Non-controlling interest in subsidiaries		11,307,705			11,722,096
Total deficit	$	(49,140,660	)	$	(51,829,653	)
TOTAL LIABLITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT	$	10,346,008		$	33,750,518

See accompanying notes to the unaudited condensed consolidated financial statements.

Clearday, Inc.

Condensed Consolidated Statements Of Operations

For The Three Months Ended March 31, 2023 and 2022

(Unaudited)

	2022			2022
	Three Months Ended March 31,
	2023			2022
REVENUES
Resident fee revenue, net	$	2,895,326		$	3,124,761
Adult day care		89,041			83,896
Commercial property rental revenue		22,137			1,561
Total revenues		3,006,504			3,210,218
OPERATING EXPENSES
Wages & general operating expenses		3,846,475			4,634,056
Selling, general and administrative expenses		904,989			1,393,370
Depreciation and amortization expense		296,826			187,215
Total operating expenses		5,048,290			6,214,641

Operating loss		(2,041,786	)		(3,004,423	)

Other (income) expenses
Interest expense		714,833			501,598
PPP loan forgiveness		-			(642,816	)
Derivative financing costs		2,567,460			-
Changes in fair value of derivative		(1,565,232	)		-
Loss on disposal of assets		106,467			-
Gain on termination of lease		(4,530,644	)		-
Extinguishment of debt		653,814			-
Other income		498,124			(143,889	)
Total other income		(1,555,178	)		(285,107	)

Net loss from continuing operations		(486,608	)		(2,719,316	)
Loss from discontinued operations, net of tax		-			(85,227	)
Net loss		(486,608	)		(2,804,543	)
Net loss attributable to non-controlling interest		(550,955	)		(144,265	)
Preferred stock dividend		(1,698,784	)		(1,619,015	)
Net loss attributable to Clearday, Inc. common stockholders	$	(2,736,347	)	$	(4,567,823	)

Basic and diluted loss per share attributable to Clearday, Inc.
Net loss from continued operations		(0.11	)		(0.29	)
Net loss from discontinued operations		0.00			(0.01	)
Net loss		(0.11	)		(0.30	)
Weighted average common shares basic and diluted outstanding		23,910,818			15,010,907

See accompanying notes to the unaudited condensed consolidated financial statements.

Clearday, Inc.

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

Three Months Ended March 31, 2023 and 2022

(Unaudited)

	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Deficit			Interest			Deficit
	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		-		1,619,015		-		-		-		-		(1,619,015	)		-			(1,619,015	)		-			(1,619,015	)
Series F Incentive Common Stock		-		-		-		-		2,861,334		2,859		(2,853	)		-			6			-			6
Series F shares converted to common stock
Series F shares converted to common stock, shares
Accrual of Series I Convertible Preferred Stock in subsidiary		-		-		-		-		-		-		-			-			-			136,564			136,564
Series I adjustment		-		-		-		-		-		-		-			(669,904	)		(669,904	)		-			(669,904	)
Debt discount from derivative settlements
Stock issued for extinguishment of liabilities
Stock issued for extinguishment of liabilities, shares
Stock Compensation for services		-		-		-		-		-		-		-			-			-			-			-
Stock Compensation for services, shares
Shares issued for Loan		-		-		-		-		-		-		-			-			-			-			-
Shares issued for Loan, shares
Dissolution of Longhorn Hospitality		-		-		-		-		-		-		(3,871,239	)		3,871,239			-			-			-
Redemption of series F shares		-		-		-		-		-		-		-			-			-			-			-
Officer Compensation and debt conversion		-		-		-		-		-		-		-			-			-			-			-
Net loss		-		-		-		-		-		-		-			(2,804,543	)		(2,804,543	)		(144,265	)		(2,948,808	)
Balance at March 31, 2022		4,797,052	$	18,476,282		328,925	$	329		17,775,792	$	17,774	$	11,576,374		$	(64,811,535	)	$	(53,217,058	)	$	11,322,994		$	(41,894,064	)

See accompanying notes to the unaudited condensed consolidated financial statements.

	Shares			Amount			Shares		Amount		Shares		Amount		Capital			Deficit			Deficit			Interest			Deficit
	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	)
Balance		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		-			1,698,784			-		-		-		-		(1,698,784	)		-			(1,698,784	)		-			(1,698,784	)
Series F shares converted to common stock		(5,651	)		(113,020	)		-		-		13,449		13		113,007			-			113,020			-			113,020
Accrued of series I Convertible Preferred Stock in subsidiary		-			-			-		-		-		-		-			-			-			136,564			136,564
Debt discount from derivative settlements		-			-			-		-		-		-		713,435			-			713,435			-			713,435
Stock Compensation for services		-			-			-		-		74,187		75		(61,191	)		-			(61,116	)		-			(61,116	)
Shares issued for Loan		-			-			-		-		83,160		83		70,603			-			70,686			-			70,686
Stock issued for extinguishment of liabilities		-			-			-		-		4,218,158		4,218		3,897,578			-			3,901,796			-			3,901,796
Net loss		-			-			-		-		-		-		-			64,347			64,347			(550,955	)		(486,608	)
Balance at March 31, 2023		4,791,401		$	22,033,843			328,925	$	329		25,194,402	$	25,194	$	19,132,830		$	(79,606,718	)	$	(60,448,365	)	$	11,307,705		$	(49,140,660	)
Balance		4,791,401			22,033,843			328,925		329		25,194,402		25,194		19,132,830			(79,606,718	)		(60,448,365	)		11,307,705			(49,140,660	)

See accompanying notes to the unaudited condensed consolidated financial statements.

Clearday, Inc.

Condensed Consolidated Statements Of Cash Flows

For The Three Months Ended March 31, 2023 and 2022

(Unaudited)

	2023			2022
	Three Months Ended March 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(486,608	)	$	(2,804,543	)
Loss from discontinued operations, net of tax		-			(85,227	)
Loss from continued operations		(486,608	)		(2,719,316	)
Adjustments required to reconcile net loss to cash flows used in operating activities
Depreciation and amortization		296,826			187,215
Amortization of right of use assets		-			459,750
Shares issued for loan commitment		70,686			-
Shares issued for services		(61,116	)		-
Financing costs from derivative liabilities		2,567,460			-
Gain on termination of leases		(4,530,644	)		-
Series I preferred stock accumulated dividend		136,564			-
Loss on the sale of fixed assets		106,467			-
Bad debt expense		179,854			-
Change in fair value of the derivatives		(1,565,232	)		-
Amortization of debt issuance costs		241,504			501,970
Amortization of discount on derivatives		540,760			-
Loss on extinguishment of debt		653,814			-
Gain on PPP loan forgiveness		-			(642,816	)

Changes in operating assets and liabilities
Accounts receivable		(190,596	)		6,145
Other current assets		23,438			-
Prepaid expenses		99,623			(433,839	)
Accounts payable		523,121			902,548
Accrued expenses		-			(181,935	)
Accrued liabilities		1,193,472			-
Deferred revenue		(887,769	)		-
Related party payable		66,128			-
Other current liabilities		(44,094	)		113,000
Change in operating lease liability		-			(227,777	)
Net cash used in operating activities of continuing operations		(1,066,342	)		(2,035,055	)
Net cash used in activities of discontinued operations		-			(45,421	)
Net cash used in operating activities		(1,066,342	)		(2,080,476	)

CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property and equipment		(18,063	)		(13,348	)
Net cash used in investing activities of continuing operations		(18,063	)		(13,348	)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of debt		-			(977,263	)
Proceeds from long-term debt		1,619,316			-
Payment of long-term debt		(649,121	)		-
Payments on lease obligations		-			12,929,498
Borrowings on debt, net		-			2,130,268
Net cash provided by financing activities		970,195			14,082,503

Change in cash and restricted cash from continuing operations		(114,209	)		(895,398	)
Change in cash and restricted cash from discontinued operations		-			56,159
Cash and restricted cash at beginning of the year		205,638			975,075
Cash and restricted cash at end of year	$	91,429		$	135,836

Reconciliation of cash and restricted cash consist of the following:
End of period
Cash and cash equivalents		81,429			125,836
Restricted cash		10,000			10,000
Total cash and restricted cash	$	91,429		$	135,836
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	$	649,121		$	-
Cahs paid for income taxes		-			-

Supplemental disclosures of non-cash investing and financing activities:
Settlements on derivative liability		713,435			-
PIK dividends for Series F preferred stock		1,698,784			-
Converted Preferred Shares Series F to Common Shares		113,020			-
Discount on derivative liability		1,139,578			-
Termination of leases		27,323,396			-
Accounts payable exchanged for common shares		3,247,982			-
Notes payable used to pay rent expense		3,018,547			-

See accompanying notes to the unaudited condensed consolidated financial statements.

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 (“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 care platform.

Going Concern

As of March 31, 2023, we have an accumulated deficit of $79,606,718. During the period ended March 31, 2023, we had a net loss from operations of $486,608 and net cash used in operating activities of $1,066,342. 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 to a limited extent, the continued sale of its non-core assets and sale or disposition of other assets. 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 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. In 2019, 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”), were formed. 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.

In November 2019, AIU Alt Care filed a certificate of designation that authorized preferred stock designated as the Series I 10.25% cumulative convertible preferred stock, par value $0.01 per share (the “Alt Care Preferred Stock”). The certificate of incorporation of AIU Alt Care authorizes 1,500,000 shares of 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. For the year ended on December 31, 2021, $897,000 was invested in AIU Alt Care in exchange for 89,700 shares of Alt Care Preferred Stock.

In October 2019, AIU Alt Care formed AIU Impact Management, LLC and Clearday OZ Fund were formed. AIU Impact Management, LLC manages Clearday OZ Fund as its general partner, owns 1% of Clearday OZ Fund and allocates 99% of income gains and losses accordingly to the limited partners.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 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 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 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 financial statement 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 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:

Schedule of Estimated Useful Lives

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

Intangible Assets, Net

Software Capitalization.

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 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.

The Company evaluates and tests the recoverability of its goodwill for impairment at least annually during its fourth quarter of each fiscal year or more often if and when circumstances indicate that goodwill may not be recoverable.

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. Some of 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 and included in accrued expenses and other current liabilities in our 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 financial statements. 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 periods ended March 31,
	2023		%			2022		%
Revenue from contracts with customers:
Resident rent - over time	$	2,895,326		96	%	$	3,124,761		97	%
Day care		89,041		3	%		83,896		3	%
Amenities and conveniences - point in time		22,137		1	%		1,561		0	%
Total revenue from contracts with customers	$	3,006,504		100	%	$	3,210,218		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 condensed 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 March 31, 2023 and December 31, 2022:

March 31, 2023
	Level 1		Level 2		Level 3		Total
Derivative liability		-		-	$	3,748,918	$	3,748,918

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 a 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 March 31, 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 $0.51; risk-free interest rates ranging from 3.60% to 4.94%; expected volatility of the Company’s common stock ranging from 182% to 421%; estimated exercise prices ranging from $0.35 to $0.43; 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 $0.75; 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		3,707,038
Settlements		(713,435	)
Change in fair value		(1,565,232	)
Balance - March 31, 2023	$	3,748,918

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 months ended March 31, 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 months ended March 31, 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 available to common stockholders 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 establish 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 financial statements and related disclosures.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 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 condensed 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:

	March 31, 2023			December 31, 2022

Land	$	2,231,879		$	2,231,879
Building and building improvements		4,975,243			4,975,243
Leasehold Improvements		710,317			846,754
Computers		57,192			332,809
Furniture, fixtures, and equipment		72,213			1,379,219
Other Equipment		74,937			518,145
Work in progress		138,187			138,187
Total		8,259,968			10,422,236
Less accumulated depreciation		(1,938,219	)		(3,899,257	)
Real estate, property and equipment, net	$	6,321,749		$	6,522,979

The Company recorded depreciation and amortization expenses relating to real estate, property, and equipment in the amount of $112,826 and $501,797 for the periods ended March 31, 2023, and December 31, 2022, respectively.

4. Intangible Assets, Net

Software Capitalization.

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 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. At March 31, 2023 and March 31, 2022, $3,496,000 and $2,240,000, 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.

Acquired intangible assets subject to amortization are as follows:


	March 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted-Average Remaining Useful Life (Years)
Developed technology	$	3,680,000	$	184,000	$	3,496,000		4.75

Expected future amortization expense for intangible assets as of March 31, 2023 is as follows:


Fiscal Years
2023 (remaining)	$	552,000
2024		736,000
2025		736,000
2026		736,000
2027		736,000
Thereafter		-
Total	$	3,496,000


	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted-Average Remaining Useful Life (Years)
Developed technology	$	2,240,000	$	-	$	2,240,000		5.75

The Company recorded amortization expense related to its intangible assets in the amounts of $184,000 and $0 for the periods ended March 31, 2023 and March 31, 2022, respectively.

5. Leases

Lease Terminations

On March 31, 2023, the Company entered into agreements (collectively, the “Lease Termination 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 will remove 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. As of March 31, 2023, we had no material economic rights or obligations under the Community Leases other than for payment obligations under the Lease Termination 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 with Viveon Health Acquisition Corp. (the “Viveon Merger”), 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; (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 interests on the collateral specified in such guarantees.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In connection with the Lease Termination 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 provides 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 will enter into new agreements with the residents at the Communities, effective the Commencement Date, which agreements, according to statements by the New Communities Operators, will be at the same price as the rates charged by Current Operators. The Current Operators have provided a notice to each of the residents at the Communities that their current agreement will terminate, effective the Commencement Date. In connection with the OTA, the Current Operators and the New Communities Operators entered into Interim Management and Security Agreements or an Interim Consulting and Security Agreement, as applicable, dated as of April 1, 2023 (the “Interim Agreements”). The Interim Agreements provide that the New Communities Operators will assist with operating the Communities as an independent contractor, pending their receipt of government authorizations and approvals necessary to operate memory care residential care businesses at the Communities. 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. Under the Interim Agreements, the New Communities Operators is an independent contractor that has employed, or offered employment to, all of the employees of the Current Operators at the Communities and will fund and be responsible for any operating cash losses for the Communities.

6. Discontinued Operations

The following statement is the condensed consolidated statement of operations for the Company’s discontinued operations for the period ended March 31, 2022:


REVENUES
Commercial property rental revenue	$	14,239
Total revenues, net		14,239

Costs and expenses
Operating expenses		-
General and administrative expenses		36,636
Total operating expenses	$	36,636

Loss from operations		(22,307	)

Other/(income) expenses
Interest expense		44,151
Gain on disposal of assets		-
Equity income from investees, net of applicable taxes		-
Impairment expense (recovery)		-
Other (income) expenses		18,768
Total (income)/expense		62,920

Net loss	$	(85,227	)

7. Indebtedness

As of March 31, 2023 and December 31, 2022, the current portion of long-term debt within the Company’s financial statements was $16,746,935 and $16,347,290, respectively.

During the periods ended March 31, 2023 and 2022, we incurred interest expenses totaling $714,833 and $501,598, respectively.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Schedule of Long Term Debt

As of March 31,	Total
2022		6,839,277
2023		9,635,591
2024		1,494,886
2025		4,461,182
Thereafter		494,900
Total obligations	$	22,925,835

Indebtedness of Facilities

Schedule of Maturity Debt

	Maturity Date	Interest Rate			March 31, 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	%		31,569		80,381
AIU Sixth Street	February 2023		12.00	%		-		49,593
1800 Diagonal Lending	October 2024		12.00	%		93,408		116,760
1800 Diagonal Lending	February 2024		12.00	%		173,594		-
Equity Secure Fund I, LLC*	June 2022		11.50	%		1,000,000		1,000,000
Invesque	July 2025		10.00	%		3,458,504		-

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
Notional amount of debt					13,944,531		10,434,193
Less: current maturities					13,944,531		10,434,193
				$	-	$	-

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Indebtedness Allocated to Assets Held For Sale

Real Estate:
Artesia Note	June 2033	Variable		$	-	$	211,721
Carpenter Enterprises	Demand Note	Variable			300,000		300,000
Leander Stearns National Association ^	February 2023	10.38	%		805,000		805,000
Notional amount of debt					1,105,000		1,316,721
Less: current maturities					805,000		805,000
				$	300,000	$	511,721

Other (Corporate) Indebtedness


AGP Contract ^	March 2023	5.00	%	$	550,000		$	550,000
Cibolo Creek Partners	December 2025	0.09	%		411,470		$	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	%		37,195			95,054
Five C’s Loan ^	December 2022	9.85	%		325,000			325,000
GS Capital	May 2023	12.00	%		12,048			50,955
Jefferson Street Capital LLC @	May 2023	12.00	%		33,600			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			-
Convertible Notes Issued by AIU Alternative Care, Inc.	January 2024	12.00	%		279,000			-

Notional amount of debt					4,735,304			3,852,587
Less: current maturities					2,009,843			2,340,009
				$	2,725,461		$	1,512,578

TIC Purchase Agreements	No Specified Date	8.00	%	$	3,141,000		$	3,141,000

		Total			22,925,835			18,744,501
		Less Debt Discount & Derivatives			(1,554,177	)		(1,004,271	)
		Total		$	21,371,658		$	17,740,230

^	Obligation is in default. The interest rate noted above is the stated rate of interest and does not reflect the default rate of interest.
^^	We have ceased payment of these obligations. Obligations are subject to litigation for nonpayment, as previously reported. See Note 8 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 and the Company continues to negotiate with each lender a payment schedule. The interest rate noted above is the stated rate of interest and does not reflect the default rate of interest. Subsequently, each lender has provided a forbearance of their remedies which was in effect as of the date of this Report.
*	Obligations have been modified as described in Note 13 Subsequent Events.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Mast Hill Financing – January 2023

On January 13, 2023, the Company incurred a loan in the principal amount of $756,000, by issuing a promissory note (“MH Loan 1 Note”) that included original issue discount of $75,600. The Company paid $68,040 in placement fees and $12,000 of legal fees and expenses of the lender. The net proceeds of this loan were used to repay the obligations of a mortgage on a land asset held by a subsidiary (“Artesia”) of approximately $213,000 and the remaining amount was used for general working purposes. The obligations under this loan incur interest equal to 12% per annum, subject to increase to the lesser of 16% per annum or the maximum amount permitted by law upon an Event of Default as defined by MH Loan 1 Note. The loan is due and payable on January 26, 2024. Interest and principal are payable from and after April 12, 2023, subject to a five business day grace period, in equal monthly payments of $75,600 plus accrued and unpaid interest, subject to the Company’s right to extend any or each of the first three such payments for 30 days upon payment of a fee equal to 10% of the amount due on such payment date. The loan may be prepaid upon notice of seven trading days without payment or penalties or fees other than a $750 administrative fee. The Company paid the lender a commitment fee of 83,160 shares of its common stock (“MH Loan 1 Commitment Shares”) and issued two warrants to the lender. One warrant (the “MH Loan Note Warrant”) may be exercised for 1,134,000 shares of the Company’s common stock from and after an Event of Default, as defined under MH Loan 1 Note, at a price per share of $0.75. The other warrant (the “MH Loan 1 Other Warrant”) may be exercised for 851,000 shares of the Company’s common stock at a price per share of $0.75. Each of the MH Loan 1 Note Warrant and the MH Loan 1 Other Warrant provide for customary “cashless” exercise of such warrant and adjustments to the exercise price and shares underlying each warrant, including adjustment in the event of an issuance of common stock or deemed issuance of common stock at a price that is lower than then exercise price on a “full rachet” basis. Artesia absolutely and unconditionally guaranteed to the lender the full amount of the loan under the terms and conditions of that certain guaranty (the “Guaranty”). Such Guarantee is secured by all assets of Artesia and the proceeds therefrom, including the land asset located at 6465 7 Rivers Highway, Artesia, NM. Artesia has agreed to record a mortgage with respect to such property in form mutually determined by Lender and Artesia. The lender has certain remedies, including the right to convert the unpaid amount of the loan, from and after an Event of Default, at a price per share equal to $0.50. The exercise price of each warrant and the conversion price of MH Loan 1 Note are subject to adjustment in the event the Company issues shares of common stock or equivalents at a price per share that is lower than then exercise or conversion price. The Company reserved shares of its common stock for issuance upon conversion of MH Loan 1 Note or the warrants and has agreed to register the shares of common stock for resale under the Securities Act of 1933, as amended. The Company granted the lender with a right of first refusal with respect to any bona fide offer of any financing , subject to exceptions for certain specified transactions: (1) a bona fide offer of capital or financing from a nationally recognized broker dealer that is retained by Borrower and acceptable to the Holder, which acceptance will not be unreasonably delayed, withheld or conditioned (“Investment Banker”), or any person or party that is introduced to the Company by the Investment Banker in its capacity as a placement agent, (ii) a bona fide offer of capital or financing from a person or party if such capital or financing is used by the Company for the acquisition or refinance of real property so long as (a) any security interest granted to such person or party is solely limited to the real property being acquired or refinanced and (b) such person or party shall have no rights at any time in such transaction or any related transaction to acquire Common Stock or Common Stock Equivalents of the Company (each a “Real Property Transaction”), as well as (iii) a bona fide offer of specified capital or financing through certain financing transactions. MH Loan 1 Note is subject to repayment from the use of proceeds of certain transactions. If, prior to the full repayment or satisfaction of the MH Loan 1 Note’s obligations, the Company receives cash proceeds of more than $2,000,000.00 (the “Minimum Threshold”) in the aggregate, from the sale of assets or issuance of the Company’s securities, including pursuant to an Equity Line of Credit (as defined in MH Loan 1 Note), then the Lender may require us to apply up to 50% of such proceeds after the Minimum Threshold to repay all or any portion of the outstanding obligation under the Note; provided that such repayment obligation is not applicable to Real Property Transactions, the sale of assets to customers of the Company in the ordinary course of business, the sale of interests in real estate, or any Small Business Administration Economic Injury Disaster Loan. Additionally, the Company provided the lender with rights to receive terms provided under any other financing transaction that are more favorable than under MH Loan 1 Note, other than Real Property Transactions and certain other transactions.

1800 Diagonal Lending – February 2023

On February 10, 2023, the Company issued an unsecured promissory note (the “1800 Note”) to an institutional lender in the aggregate amount of $194,360, including original issue discount of $20,824. The Company used the proceeds of this financing to fund the Company’s operations and repay approximately $19,280 of existing indebtedness to this lender that was incurred April 5, 2022. The 1800 Note provides for the net funding to Clearday of $150,000 after payment of specified expenses of $4,250 and provides for an original issue discount of $19,286, resulting in a principal obligation of $194,360 and a one-time interest charge of 12% on such principal amount.

The 1800 Note provides for a one-year maturity. Monthly payments on the 1800 Note of approximately $21,768 will be made by Clearday with the first payment being on March 30, 2023, which payments are subject to a 10-day grace period. The 1800 Note provides specified events of default (an “Event of Default”) including failure to timely pay the monetary obligations under the 1800 Note and such breach continues for a period of ten (10) days after written notice from the 1800 Noteholder’ a breach of covenants under the 1800 Note or the Purchase Agreement that continues for a period of twenty (20) days after written notice by the 1800 Noteholder; breach of any representation and warranty in the 1800 Note or Purchase Agreement; commencement of bankruptcy or similar proceedings; failure to maintain the listing of Clearday’s common stock on at least one of the Over-the-Counter markets such as the OTCQX or OTCQB; the failure of Clearday to comply with the reporting requirements of the Securities Exchange Act; Clearday’s liquidation, or a financial statement restatement by Clearday.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Upon any Event of Default, the obligations under the 1800 Note will accrue interest at an annual rate of 22% and, if such Event of Default is continuing at any time that is 180 days after the date of the 1800 Note, provide the 1800 Noteholder the right and option to convert the obligations under the 1800 Note to shares of Clearday’s common stock. The price for any such conversion is equal to 75% (or a 25% discount) of the average of the five (5) lowest per share daily volume-weighted average price of Clearday’s common stock over the ten (10) consecutive trading days that are not subject to specified market disruptions immediately preceding the date of the conversion. The conversion right of the 1800 Noteholder is subject to a customary limitation on beneficial ownership of 4.99% of Clearday’s common stock.

Jefferson Street – February 2023

On February 17, 2023, the Company issued an unsecured promissory note (the “Jefferson Street Note”) to an institutional lender. the Company used the net proceeds of this financing to fund the Company’s operations.

On February 17, 2023, the Company entered into a Securities Purchase Agreement with an institutional lender (the “Lender”) to issue an unsecured promissory note (the “Jefferson Street Note”) to the Lender. This Jefferson Street Note provides for the proceeds to us of approximately $135,000 and provides for an original issue discount of $22,217 or 12%, resulting in a principal obligation of $172,217. The Company paid $15,000 in placement fees in connection with the issuance and sale of the securities to the Lender. The Jefferson Street Note provides a one-time interest charge of 12% on such principal amount or $20,666 and a one-year maturity. Monthly payments on the Jefferson Street Note of the accrued, unpaid interest and outstanding principal, subject to adjustment, shall be paid in ten (10) payments each in the amount of $19,288.30 (a total payback to the Holder of $192,883). The first such payment is due April 16, 2023, with nine (9) subsequent payments each month thereafter, which payments are subject to a 10 day grace period, or shorter if the payment date is not a business day.

The Jefferson Street Note provides specified events of default (a “Event of Default”) including failure to timely pay the monetary obligations under the Jefferson Street Note and such breach continues for a period of ten (10) days after written notice from the Jefferson Street Noteholder’ a breach of covenants under the Jefferson Street Note or the Securities Purchase Agreement that continues for a period of twenty (20) days after written notice by the Jefferson Street Noteholder; breach of any representation and warranty in the Jefferson Street Note or Securities Purchase Agreement; commencement of bankruptcy or similar proceedings; failure to maintain the listing of Clearday’s common stock on at least one of the Over-the-Counter markets such as the OTCQX; the failure of Clearday to comply with the reporting requirements of the Securities Exchange Act; Clearday’s liquidation, or a financial statement restatement by Clearday. Upon any Event of Default, the obligations under the Jefferson Street Note will accrue interest at an annual rate of 22% and, if such Event of Default is continuing at any time that is 180 days after the date of the Jefferson Street Note, provide the Jefferson Street Noteholder the right and option to convert the obligations under the Jefferson Street Note to shares of Clearday’s common stock. The price for any such conversion is equal to 75% (or a 25% discount) of the average of the five (5) lowest per share daily volume-weighted average price of Clearday’s common stock over the ten (10) consecutive trading days that are not subject to specified market disruptions immediately preceding the date of the conversion. The conversion right of the holder of the Jefferson Street Note is subject to a customary limitation on beneficial ownership of 4.99% of Clearday’s common stock. Each of the Jefferson Street Note and the Securities Purchase Agreement has other customary covenants and provisions, including representations and warranties, payment of brokers, and indemnification, that Clearday will not sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business without the consent of the holder of the Jefferson Street Note and Clearday will maintain a reserve of authorized and unissued shares of common stock sufficient for full conversion of the obligations under the Jefferson Street Note.

As additional consideration, the Company issued to the Lender a Common Stock Purchase Jefferson Street Warrant (“Jefferson Street Warrant”) to purchase 225,000 shares of the Company’s Common Stock at an exercise price per share of $0.75. The Jefferson Street Warrant expires five years from March 16, 2023. The Jefferson Street Warrant provides for customary “cashless” exercise of such Jefferson Street Warrant and adjustments to the exercise price and shares underlying each warrant, including adjustment in the event of an issuance of common stock or deemed issuance of common stock at a price that is lower than then exercise price on a “full rachet” basis.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Convertible Notes Issued by AIU Alternative Care, Inc.

From February 17, 2023 to April 10, 2023, a subsidiary of the Company, AIU Alternative Care, Inc. (“AIU Alt Care”), issued convertible unsecured promissory notes (each, a “Convertible Note” and collectively, the “Convertible Notes”) to lenders in a private placement of such securities, including related persons. The aggregate gross proceeds of such Convertible Notes to March 31, 2023 are approximately 279,000 and to April 10, 2023 is approximately $549,000. Each Convertible Note provides for interest at the rate a 12% per annum (1% per month) that accrues and is payable at the maturity of the loan or upon prepayment or conversion, if earlier. The lender under each Convertible Note was also issued 10% of the principal amount in the Company’s common stock at the per share price of $0.75. The loan under each Convertible Note is due January 31, 2024. The principal and the accrued and unpaid interests of each loan may be converted into the Company’s shares of common stock by such lender at the per share price of $0.75, subject to appropriate adjustments for any stock splits, reverse stock splits mergers, consolidations or similar transactions (the “Loan Conversion Price”). The Company also has the right to convert the principal and the accrued and unpaid interest on the loan at the Loan Conversion Price upon certain events:

	●	The issuance by AIU Alt Care or the Company or any of its other subsidiaries of any equity securities in one or more offerings with aggregate gross proceeds of at least $5 million;
	●	The issuance by the Company or any of its other subsidiaries of convertible debt securities that were issued with gross proceeds in an aggregate amount of at least $5 million;
	●	The listing by the Company or its common stock to the New York Stock Exchange, the NYSE American or any tier of the NASDAQ market in connection with an offering of securities by the Company or any of its subsidiaries in connection with any merger, consolidation or similar transaction with another person in which the Company is the surviving entity; or
	●	The exchange of the shares of the Company’s common stock for the common stock or other security that is listed on the New York Stock Exchange, the NYSE American or any tier of the NASDAQ market in connection with any merger, consolidation or similar transaction with another person in which Clearday is not the surviving entity or in which Clearday becomes a subsidiary of such other person, including without limitation, any special purpose acquisition corporation.

8. Commitments and Contingencies

Contingencies

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 368th 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 425th 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.

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 December 31, 2022, 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 March 31, 2023. The amount that was accrued in the condensed consolidated financial statements as of December 31, 2022 was $261,000.

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.

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 period that ended September 16, 2022. 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 March 31, 2023 and December 31, 2022, of approximately $978,000 and $527,000, respectively, which amount does not include any taxes, penalties, and interest.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 Note 7 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 the Company has entered a notice to appeal);
	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 may be appealed by the plaintiff);
	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 the Company has have entered a notice to appeal);
	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 hearing on November 6, 2023. Plaintiffs filed a Motion for Summary Judgment which was denied on October 3, 2023. We 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

Certain subsidiaries of the Company that operate hotel assets have not paid 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 the period from December 31, 2018, to December 31, 2019. 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 March 31, 2023, the amount of the estimated taxes, penalties, and interest, assuming that there is no waiver or mitigation of the penalties, is $467,451 The Company has accrued this amount in its condensed consolidated financial statements, which amount does not include credits that the Company expects this subsidiary to receive.

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

9. Earnings Per Share

Basic net income (loss) per common share is calculated by dividing the net income (loss) attributable to common stockholders 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 March 31, 2023 and 2022, respectively.

	2023		2022
	For the Three Months Ended
Dilution shares calculation	March 31,
	2023		2022
Series A Convertible Preferred Stock		328,925		328,925
Series F 6.75% Convertible Preferred Stock		4,791,401		4,797,052
Series I 10.25% Convertible Preferred Stock		682,820		320,657
Limited Partnership Units		99,038		99,038
Warrants		7,618,820		4,038,801
Total participating securities		13,521,004		9,586,495

10. Related Party Transactions

Debt.

There are some loans in which executive management has loaned money to the Company. In addition, there are loans made by the Company itself in which certain executives personally guarantee the debt.

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 then applicable federal rate and are payable on demand or other date that was specified by such lender. In December 2018, AIU acquired businesses affiliated with Cibolo Creek. As of December 31, 2022, AIU, Inc., Cibolo Creek and Round Rock were owed $66,208, $411,470 and $500,000 respectively by the Company.

We owe (1) Richard Morris, our General Counsel, $330,175 for loans and rent of approximately 94,650 for rental payments regarding our robots and certain other advances and reimbursements and (2) James Walesa, our Chief Executive Officer, approximately $44,165 in loan guaranty fees. Christin Hemmens, another related party is owed approximately $130,000 in unsecured short term non-interest bearing debt, and (3) BJ Parrish approximately $44,000 in loan guaranty fees.

Guarantees

From time-to-time certain officers and directors will personally guarantee a loan. There is a guaranteed fee agreement in place that details the amount of the fee as well as payment terms for certain executives in the Company. 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.

11. 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.

On January 27, 2023, the Company issued 4,218,158 shares of the Company’s Common Stock in consideration of approximately $3,248,000 of accrued amounts payable to Thinktiv, Inc. and for continued services technology and advisory services during the first quarter as from time to time mutually agreed.

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 4,791,401 and 4,797,052 issued and outstanding as of March 31, 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 12 – Mezzanine Equity – Mezzanine, 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 March 31, 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 periods ended March 31, 2023, and 2022, the Company accrued dividends for the 6.75% Series F preferred stock in the amount of $1,698,784 and $1,619,015 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 March 31 2023:

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

Summary of Outstanding Warrants

	Total		Currently Exercisable		Exercise Price per Share		Expiration Date
	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 March 31, 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 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

Stock Options

On March 31, 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 three and twelve months ended March 31, 2023 or December 31, 2022. There were no stock options that were exercisable on March 31, 2023.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock

During the first quarter of 2023, we issued approximately 4,326,415 shares of our common stock to consultants, including an exchange of 4,218,158 shares for $3,248,000 of accrued expenses, as previously reported, and reflected an adjustment (decrease) of stock issuance to consultants in the amount 25,097.

Registered Shares

During the first quarter of 2023, we issued approximately 48,802 shares of common stock upon the conversion of our Series F Preferred stock. Such shares were registered under our prior registration statement.

As of March 31, 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 three months ended March 31, 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 March 31, 2023 and 2022, $0 and $0 was invested in Clearday OZ Fund, respectively.

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 March 31, 2023, the loss for AIU Alt Care is $16,190 and Clearday Oz Fund loss is $540,330. Based on 99% ownership interest, AIU Alt Care and Clearday OZ fund incurred a loss attributable to the NCI in the amount of $16,028 and $534,927, respectively in the period ended March 31, 2023 and incurred gains of $3,252 and losses of $145,772, respectively, for the period ended March 31, 2022.

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

For the period ended March 31, 2023 no additional shares of AIU Alt Care Preferred Stock or Clearday OZ LP Interests were issued. At March 31, 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. At March 31, 2023, AIU Alt Care and Clearday OZ Fund had outstanding 2,010,150 warrants.

Each warrant has a term of ten years and provides for the purchase of 1 share of the Company’s common stock at a cash exercise price equal to $5.00 per share. The number of shares of the Company’s common stock and the warrant exercise price will be subject to adjustment for stock dividends, stock splits, combinations or other similar recapitalizations.

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 $682,820 for the period ended March 31, 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.

12. 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 4,791,401 shares outstanding as of March 31, 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 or temporary equity. The Series F Preferred Stock is not redeemable, and it was not probable that there would be a Liquidation Event as of March 31, 2023. Therefore, the Company is not currently required to accrete the Series F Preferred Stock to the aggregate liquidation value.

13. Subsequent Events

We evaluated subsequent events and transactions occurring after March 31, 2023, through the date of this Report.

Viveon Merger

Merger Agreement

On April 5, 2023, the Company entered into a Merger Agreement (the “Merger Agreement”), by and among the Company, Viveon Health Acquisition Corp., a Delaware corporation (“Viveon” or “Viveon Health”), 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 (as defined in the Merger Agreement) for the stockholders of Viveon (other than the Company Stockholders (as defined in the Merger Agreement)) as of immediately prior to the Effective Time (and their successors and assigns) in accordance with the terms and conditions of the Merger Agreement, and the Company 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 defined in the Merger Agreement) as of immediately prior to the Effective Time (and their successors and assigns) in accordance with the terms and conditions of the Merger Agreement. Pursuant to the terms of the Merger Agreement, a business combination between Viveon and the Company will be effected through the Viveon Merger of Merger Sub with and into the Company, with the Company surviving the Viveon Merger as a wholly owned subsidiary of Viveon and Viveon will change its name to “Clearday Holdings, Inc.” (the “Merger”). The board of directors of the Company has (i) approved and declared advisable the Merger Agreement, the Merger and the other transactions contemplated thereby and (ii) resolved to recommend approval of the Merger Agreement, the Merger and related transactions by the stockholders of the Company. Capitalized terms used herein but not defined shall have the meanings ascribed thereto in the Merger Agreement, which is attached hereto as Exhibit 2.1.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Merger Consideration

The total consideration to be paid at Closing (the “Merger Consideration”) by Viveon to the Company security holders (and holders who have the right to acquire the Company capital stock) will be an amount equal to $250 Million (plus the aggregate exercise price for all the Company options and warrants). The Merger Consideration will be payable in shares of common stock, par value $0.0001 per share, of Viveon (“Viveon Common Stock”) valued at $10 per share.

In addition, the holders of Company Preferred Stock will have the contingent right to earn up to 5,000,000 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 (the “Closing Date”) and ending on the fifth anniversary of the Closing Date (the “Earnout Eligibility Period”), the Adjusted Net Income for any Earnout Period is a positive number for the first time during the Earnout Eligibility Period (the “Earnout Milestone”).

If, following the Closing Date and prior to end of the Earnout Eligibility Period, there is a Change of Control, then, immediately prior to such Change of Control, all the Earnout Shares not yet earned shall be earned by the Company Earnout Holders and shall be released from escrow and delivered to the Company Earnout Holders, and the Company Earnout Holders shall be eligible to participate in such Change of Control transaction with respect to such Earnout Shares.

The Earnout Shares will be placed in escrow and will not be released from escrow until they are earned as a result of the occurrence of the Earnout Milestone or a Change of Control, if applicable. The Earnout Shares that are not earned on or before the expiration of the Earnout Eligibility Period shall be automatically forfeited and cancelled.

Cancellation of Securities. Each share of the Company capital stock, if any, that is owned by Viveon, Merger Sub, the Company, or any of their subsidiaries (as treasury stock or otherwise) immediately prior to the effective time of the Merger (the “Effective Time”), will automatically be cancelled and retired without any conversion or consideration.

Preferred Stock. At the Effective Time, each issued and outstanding share of the Company’s Series F Cumulative Convertible Preferred Stock, par value $0.001 per share (the “Company Series F Preferred Stock”) (other than any such shares of the Company capital stock cancelled as described above and any dissenting shares), will be converted into the right to receive: (A) one (1) share of Parent New Series F Preferred Stock plus (B) a number of Earnout Shares in accordance with, and subject to the contingencies, set forth in the Merger Agreement.

Each issued and outstanding share of the Company’s Series A Convertible Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”) (other than any such shares of the Company capital stock cancelled as described above and any dissenting shares), will be converted into the right to receive: (A) one (1) share of Parent New Series A Preferred Stock plus (B) a number of Earnout Shares in accordance with, and subject to the contingencies, set forth in the Merger Agreement.

Common Stock. At the Effective Time, each issued and outstanding share of the Company’s common stock, par value $0.001 per share (the “Company Common Stock”) (other than any such shares of the Company capital stock cancelled as described above and any dissenting shares) will be converted into the right to receive a number of shares of Viveon Common Stock equal to the Conversion Ratio. The “Conversion Ratio” as defined in the Merger Agreement means an amount equal to (a)(i) the sum of $250 Million, plus the aggregate exercise or conversion price of outstanding the Company’s stock options and warrants (excluding unvested options and options or warrants with an exercise or conversion price of $5.00 or more), divided by (ii) the number of fully diluted the Company capital stock (including Company Preferred Stock, warrants, stock options, convertible notes, and any other convertible securities) (excluding unvested options and options or warrants with an exercise or conversion price of $5.00 or more and assuming a conversion price of the Company subsidiary securities as provided in the Merger Agreement); divided by (b) $10.00.

Stock Options. At the Effective Time, each outstanding option to purchase shares of the Company Common Stock will be converted into an option to purchase, subject to substantially the same terms and conditions as were applicable under such options prior to the Effective Time, shares of Viveon Common Stock equal to the number of shares subject to such option prior to the Effective Time multiplied by the Conversion Ratio, at an exercise price per share of Viveon Common Stock equal to the exercise price per share of the Company Common Stock subject to such option divided by the Conversion Ratio.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Warrants. Contingent on and effective as of immediately prior to the Effective Time, each outstanding warrant to purchase shares of the Company Preferred Stock or the Company Common Stock will be treated in accordance with the terms thereof.

Convertible Notes. Contingent on and effective as of immediately prior to the Effective Time, the Company’s convertible notes outstanding as of immediately prior to the Effective Time, will be treated in accordance with the terms of the relevant agreements governing such convertible notes.

Subsidiary Capital Stock. At and as of the Effective Time, the Alt Care Preferred Stock and the Clearday OZ LP Interests (collectively, the “Subsidiary Capital Stock”) will remain in full force and effect with the right to acquire the Viveon Common Stock with such adjustments noted in the terms of such Subsidiary Capital Stock.

Representations and Warranties

The Merger Agreement contains customary representations and warranties of the parties thereto with respect to, among other things, (a) corporate existence and power, (b) authorization to enter into the Merger Agreement and related transactions; subsidiaries, (c) governmental authorization, (d) non-contravention, (e) capitalization, (f) corporate records, (g) consents, (h) financial statements, (i) internal accounting controls, (j) absence of certain changes, (k) properties; title to assets, (l) litigation, (m) material contracts, (n) licenses and permits, (o) compliance with laws, (p) intellectual property, (q) privacy and data security, (r) employee matters and benefits, (s) tax matters, (t) real property, (u) environmental laws, (v) finders’ fees, (w) directors and officers, (x) anti-money laundering laws, (y) insurance, (z) related party transactions, and (aa) certain representations related to securities law and activity. Viveon has additional representations and warranties, including (a) issuance of shares, (b) trust fund, (c) listing, (d) board approval, (e) SEC documents and financial statements, (f) certain business practices, (g) expenses, indebtedness and other liabilities and (h) brokers and other advisors.

Covenants

The Merger Agreement includes customary covenants of the parties with respect to operation of their respective businesses prior to consummation of the Merger and efforts to satisfy conditions to consummation of the Merger. The Merger Agreement also contains additional covenants of the parties, including, among others, access to information, cooperation in the preparation of the Registration Statement and Proxy Statement (as each such terms are defined in the Merger Agreement) required to be filed in connection with the Merger and to obtain all requisite approvals of each party’s respective stockholders. Viveon and the Company have each also agreed to include in the Proxy Statement the recommendation of its respective board that its stockholders approve all of the proposals to be presented at its respective special meeting. In addition, each of Viveon and the Company have agreed to use commercially reasonable efforts to solicit and finalize definitive documentation for a committed equity in an aggregate amount that, together with the funds in the Trust Account after giving effect to potential redemptions from Viveon’s public stockholders, together with financing programs available to the Company after the Closing, will provide to the Company working capital to meet its short term commercial development goals.

Viveon has also agreed to prepare a proxy statement to seek the approval of its stockholders (the “Extension Proposal”) to amend its organizational documents to extend the period of time Viveon is afforded under its organizational documents and IPO prospectus to consummate an initial business combination for an additional three months, from June 30,2023 to September 30, 2023 (or such earlier date as Viveon and the Company may agree in writing).

Each party’s representations, warranties and pre-Closing covenants will not survive Closing and no party has any post-Closing indemnification obligations.

Viveon Equity Incentive Plan, Viveon has agreed to approve and adopt an equity incentive plan (the “Incentive Plan”) to be effective as of the Closing and in a form mutually acceptable to Viveon and the Company, subject to approval of the Incentive Plan by the Viveon stockholders. The Incentive Plan will provide for an initial aggregate share reserve equal to 8% of the number of shares of Viveon Common Stock issued and outstanding at the Closing and an “evergreen” provision that is mutually agreeable to Viveon and the Company will provide for an automatic increase on the first day of each fiscal year in the number of shares available for issuance under the Incentive Plan as mutually determined by Viveon and the Company.

Non-Solicitation Restrictions

Each of Viveon and the Company has agreed that from the date of the Merger Agreement to the Effective Time or, if earlier, the valid termination of the Merger Agreement in accordance with its terms, it will not initiate any negotiations with any party relating to an Alternative Transaction (as such term is defined in the Merger Agreement) or enter into any agreement relating to such a proposal, other than as expressly excluded from the definition of an Alternative Transaction. Each of Viveon and the Company has also agreed to be responsible for any acts or omissions of any of its respective representatives that, if they were the acts or omissions of Viveon and the Company, as applicable, would be deemed a breach of the party’s obligations with respect to these non-solicitation restrictions.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Conditions to Closing

The consummation of the Merger is conditioned upon, among other things, (i) the absence of any applicable law or order restraining, prohibiting or imposing any condition on the consummation of the Merger and related transactions, (ii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) receipt of any consent, approval or authorization required by any Authority (as defined in the Merger Agreement), (iv) Viveon having net tangible assets of at least $5,000,001 (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act), unless Viveon’s amended and restated certificate of incorporation shall have been amended to remove such requirement prior to or concurrently with the Closing, (v) approval by the Company’s stockholders of the Merger and related transactions, (vi) approval by Viveon’s stockholders of the Merger and related transactions, (vii) the conditional approval for listing by NYSE American (or an alternate exchange) of the shares of Viveon Common Stock to be issued in connection with the transactions contemplated by the Merger Agreement and satisfaction of initial and continued listing requirements, and (viii) the Registration Statement becoming effective in accordance with the provisions of the Securities Act of 1933, as amended (“Securities Act”).

Solely with respect to Viveon and Merger Sub, the consummation of the Merger is conditioned upon, among other things, (i) the Company having duly performed or complied with all of its obligations under the Merger Agreement in all material respects, (ii) the representations and warranties of the Company, other than certain fundamental representations as defined in the Merger Agreement, being true and correct in all respects unless failure would not have or reasonably be expected to have a Material Adverse Effect (as defined in the Merger Agreement) on the Company or any of its subsidiaries, (iii) certain fundamental representations, as defined in the Merger Agreement, being true and correct in all respects, other than de minimis inaccuracies, (iv) no event having occurred that would result in a Material Adverse Effect on the Company or any of its subsidiaries, (v) the Company and its securityholders having executed and delivered to Viveon each Additional Agreement (as defined in the Merger Agreement) to which they each are a party and (vi) the Company delivering certain certificates to Viveon.

Solely with respect to the Company, the consummation of the Merger is conditioned upon, among other things, (i) Viveon and Merger Sub having duly performed or complied with all of their respective obligations under the Merger Agreement in all material respects, (ii) the representations and warranties of Viveon and Merger Sub, other than certain fundamental representations as defined in the Merger Agreement, being true and correct in all respects unless failure to be true and correct would not have or reasonably be expected to have a Material Adverse Effect on Viveon or Merger Sub and their ability to consummate the Merger and related transactions, (iii) certain fundamental representations, as defined in the Merger Agreement, being true and correct in all respects, other than de minimis inaccuracies, (iv) no event having occurred that would result in a Material Adverse Effect on Viveon or Merger Sub, (v) the Amended Parent Charter (as defined in the Merger Agreement) being filed with, and declared effective by, the Delaware Secretary of State, (vi) Viveon delivering certain certificates to the Company, (vii) the size and composition of the post-Closing board of directors of Viveon having been appointed as set forth in the Merger Agreement and (viii) Viveon, Viveon Health LLC (“Sponsor”) and other stockholders, as applicable, having executed and delivered to the Company each Additional Agreement to which they each are a party.

Termination

The Merger Agreement may be terminated at any time prior to the Effective Time as follows:

(i) by either Viveon or the Company, if (A) the Merger and related transactions are not consummated on or before the latest of (1) June 30, 2023, (2) if the Extension Proposal is approved, September 30, 2023 and (3) if one or more extensions to a date following September 30, 2023 are obtained at the election of Viveon, with Viveon stockholder vote, in accordance with the Viveon’s amended and restated certificate of incorporation, the last date for Viveon to consummate a business combination pursuant to such extensions; and (B) the material breach or violation of any representation, warranty, covenant or obligation under the Merger Agreement by the party seeking to terminate the Merger Agreement was not the cause of, or resulted in, the failure of the Closing to occur on or before the Outside Closing Date, without liability to the other party;

(ii) by either Viveon or the Company, if any Authority has issued any final decree, order, judgment, award, injunction, rule or consent or enacted any law, having the effect of permanently enjoining or prohibiting the consummation of the Merger, provided that, the party seeking to terminate cannot have breached its obligations under the Merger Agreement and such breach was a substantial cause of, or substantially resulted in, such action by the Authority; and

(iii) by mutual written consent of Viveon and the Company duly authorized by each of their respective boards of directors.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Certain Related Agreements

Parent Support Agreements. Concurrently with the execution of the Merger Agreement, Viveon, the Company and the Sponsor and the officers and directors of Viveon entered into a support agreement (the “Parent Support Agreement”) pursuant to which the Sponsor and the officers and directors of Viveon have agreed to vote all shares of Viveon common stock beneficially owned by them, including any additional shares of Viveon they acquire ownership of or the power to vote: (i) in favor of the Merger and related transactions, (ii) against any action reasonably be expected to impede, delay, or materially and adversely affect the Merger and related transactions, and (iii) in favor of an extension of the period of time Viveon is afforded to consummate an initial business combination.

Company Support Agreements. Concurrently with the execution of the Merger Agreement, Viveon, the Company and certain stockholders of the Company entered into a support agreement (the “Company Support Agreement”), pursuant to which such the Company stockholders have agreed to vote all common and preferred stock of the Company beneficially owned by them, including any additional shares of the Company they acquire ownership of or the power to vote, in favor of the Merger and related transactions and against any action reasonably be expected to impede, delay, or materially and adversely affect the Merger and related transactions.

Lock-Up Agreements. In connection with the Closing, certain the Company stockholders will each agree, subject to certain customary exceptions, not to (i) offer, sell contract to sell, pledge or otherwise dispose of, directly or indirectly, any Lockup Shares, (ii) enter into a transaction that would have the same effect, (iii) enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Lock-Up Shares or otherwise, (iv) engage in any short sales or other arrangement with respect to the Lock-Up Shares or (v) publicly announce any intention to effect any transaction specified in clause (i), (ii) or (iii) until the date that is six months after the Closing Date (the “Lock-Up Period”). The term “Lockup Shares” mean the Merger Consideration Shares and the Earnout Shares, if any, whether or not earned prior to the end of the Lock-up Period, together with any other shares of Viveon Common Stock, and including any securities convertible into, or exchangeable for, or representing the rights to receive Viveon Common Stock, if any, acquired during the Lock-up Period. If the closing price of Viveon Common Stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period following the Closing Date, 50% of the Lock-up Shares will be released from the lock-up. The existing escrow provisions of Viveon Common Stock held by certain stockholders will remain in effect.

Amended and Restated Registration Rights Agreement. At the Closing, Viveon will enter into an amended and restated registration rights agreement (the “Amended and Restated Registration Rights Agreement”) with certain existing stockholders of Viveon and the Company with respect to their shares of Viveon Common Stock acquired before or pursuant to the Merger, and including the shares issuable on conversion of the warrants issued to the Sponsor in connection with Viveon’s initial public offering and any shares issuable on conversion of loans or other convertible securities. The agreement amends and restates the registration rights agreement Viveon entered into on December 22, 2020 in connection with its initial public offering. Subject to the Lock-Up Agreements described above, the holders of a majority of the shares held by the existing Viveon stockholders, and the holders of a majority of the shares held by the Company stockholders will each be entitled to make one demand that the Company register such securities for resale under the Securities Act, or two demands each if Viveon is eligible to use Form S-3 or a similar short-form registration statement. In addition, the holders will have certain “piggy-back” registration rights that require Viveon to include such securities in registration statements that Viveon otherwise files. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering Viveon’s securities. Viveon will bear the expenses incurred in connection with the filing of any such registration statements.

The foregoing descriptions of agreements and the transactions and documents contemplated thereby are not complete and are subject to and qualified in their entirety by reference to the Merger Agreement, form of Parent Support Agreement, form of Company Support Agreement, form of Lock-Up Agreement, and form of Amended and Restated Registration Rights Agreement.

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.

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 s 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 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 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.

Modification of Indebtedness

A subsidiary of the Company, Leander Associates Ltd., modified the terms of its mortgage loan as described in Note 8, Commitments and Contingencies.

Additional Note Issuances

As noted in Note 7 Indebtedness, AIU Alt Care continued to issue its Convertible Notes after March 31, 2023 to April 10, 2023.

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

The following discussion should be read in conjunction with the condensed 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 (“MC Facility Leases”) of these three facilities (“MC Facilities”) that were operated through our Memory Care America LLC (“MCA”) subsidiary.

The termination of the MC 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, residential care facilities suffer revenue losses in 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 during the first quarter of 2023 were predominately from our four residential memory care facilities, three of which we exited as of March 31, 2023, and our adult day care center. MCA earns revenue 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. A part of our revenues includes reimbursements to veterans under a program by the United States Department of Veterans Affairs (VA).

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 as of 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.

SG&A Expenses were primarily insurance, interest expense, bank fees, equity-based compensation and audit and other professional fees.

We reduced our operating loss by approximately 32.0% or approximately $0.96 million during the quarter ending March 31, 2023 compared to the quarter ending March 31, 2022, primarily by reducing our total operating expenses by approximately 18.8% or approximately $1.2 million offset by a smaller decrease in total revenues by approximately 6.3% or approximately $0.2 million.

Revenues. Revenues decreased by approximately 6.3% or $0.2 million to approximately $3.0 million during the quarter ending March 31, 2023 from approximately $3.2 million during the quarter ending March 31, 2022, primarily due to decreased revenues of approximately $0.2 million or approximately 7.3% related to our MCA facilities due to lower residents fees primarily from a promotions that were offered during this period, offset by additional revenues from our adult day care and, to a smaller extent, increased commercial property rental income during this period. We have been able to increase the daily rate charged at our adult day care community due in large part to the deployment of our Longevity-tech platform. We have also deployed our Longevity-tech platform at our remaining memory care community and expect to continue to increase rates at that community.

Operating Expense. Operating expenses decreased by approximately 18.8% or approximately $1.2 million to approximately $5.0 million during the quarter ending March 31, 2023 from approximately $6.2 million during the quarter ending March 31, 2022, primarily due to (1) lower wages and general operating expenses of approximately 17.0% or approximately $0.8 million resulting primarily from lower resident care wages and related expenses offset in part by increased executives and staff developing and marketing our Longevity-tech platform, and (2) lower selling, general and administrative expenses of approximately 35.1% or approximately $0.5 million resulting primarily from changes in personnel reflecting out pivot to a longevity technology company and reduced professionally and consulting fees.

Research & Development. We did not incur any research and development expenses during the quarter ending March 31, 2023 or March 31, 2022.

Interest. Our interest expense increased by approximately 42.5% or approximately $0.2 million to $0.7 million during the quarter ending March 31, 2023 from $0.5 million during the quarter ending March 31, 2022. Our interest expense during the first quarters of 2023 and 2022 was primarily allocated to the operations of our residential care facilities. The increase in MCA allocated interest is primarily due to our high interest loans financings that were incurred to fund operating expenses and the development costs for our innovative products and services in advance of amounts received from the Internal Revenue Service under the employee retention tax credit (“ERTC”) program which was delayed. The interest expense that was not allocated to MCA related primarily to the mortgage on our headquarters building and other real estate assets. 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 first quarter of 2023.

Other income increased significantly during the first quarter of March 31, 2023 to approximately $1.6 million from approximately $0.3 million or approximately 445.5% primarily due from the approximate $4.5 million gain on the termination of three of our residential care communities offset in large part by derivative financing costs of approximately $2.6 million and, to a smaller extent, from other interest expense and the gain on the disposal of assets.

Government Programs

We participated in 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 first quarter of 2023.

Contractual Obligations and Commitments

See the “Commitment and Contingencies” section within Note 8 Commitments and Contingencies of the condensed consolidated financial statements within this Report, which information is incorporated herein by reference.

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 8 Commitments and Contingencies to the financial statements – Commitments and Contingencies.

Off-Balance Sheet Arrangements

None.

Cash and Restricted Cash

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 March 31, 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.

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 condensed consolidated financial statements included in this quarterly analysis.

During the three months ended March 31, 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 condensed consolidated financial statements included in this Report.

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 ended March 31, 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 8 Commitments and Contingencies to our condensed 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.

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 as of the date of the Original Filing:

	1.	On January 3, 2023 and May 8, 2023, 25,097 or an aggregate of 50,194 shares to Dickson Co for accounting services that were provided by such person.
	2.	On May 8, 2023, 133,333 shares to Outside The Box Capital Inc for marketing services to be provided by such person.

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 7 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 7 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
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.

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 31, 2023	/s/ BJ Parrish
	BJ Parrish
	Acting Chief Financial Officer

	/s/ James T. Walesa
	James T. Walesa
	President and Chief Executive Officer

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 31, 2023
	/s/ James T. Walesa
	James T. Walesa
	President and Chief Executive Officer

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 31, 2023
	/s/ BJ Parrish
	BJ Parrish
	Acting Chief Financial Officer

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 31, 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 March 31, 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

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 31, 2023

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

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

Cover - shares	3 Months Ended
Cover - shares	Mar. 31, 2023	Jul. 14, 2023
Cover [Abstract]
Document Type	10-Q/A
Amendment Flag	true
Amendment Description	Clearday, Inc. (the “Company”) is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, which was originally filed with the Securities and Exchange Commission (“SEC”) on July 17, 2023 (the “Original Filing”), to amend the Company’s unaudited condensed consolidated financial statements as of March 31, 2023 and make certain other amendments. The Company has previously filed its Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (the “June 10Q”). The amendments provided in this filing have been incorporated in the June 10Q and the Company does not expect to make any amendments to the June 10Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2023
Document Fiscal Period Focus	Q1
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		25,997,628

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash	$ 81,429	$ 195,638
Restricted cash	10,000	10,000
Accounts receivable, net	58,447	47,705
Prepaid expenses	113,666	213,289
Other current assets	466
Total current assets	264,008	466,632
Non-current assets
Operating lease right-of-use assets		22,792,752
Real estate property and equipment, net	6,321,749	6,522,979
Intangible assets, net	3,496,000	3,680,000
Other long-term assets	264,251	288,155
Total assets	10,346,008	33,750,518
Current liabilities:
Accounts payable	3,599,141	6,324,002
Accrued expenses	5,989,892	8,415,609
Derivative liabilities	3,748,918	2,320,547
Accrued interest	895,013	294,370
Deferred revenue	13,466	901,235
Current portion long-term debt	16,746,935	16,347,290
Operating lease liabilities		2,907,605
Total current liabilities	32,828,102	39,323,361
Long-term liabilities:
Operating lease liabilities		24,415,791
Long-term debt, less current portion, net	4,624,723	1,392,940
Total liabilities	37,452,825	65,132,092
Mezzanine equity
Series F 6.75% Convertible Preferred Stock, $.001 par value, 5,000,000 share authorized, 4,791,401 and 4,797,052 issued and outstanding on March 31, 2023 and December 31, 2022, respectively. Liquidation value $102,380,677 and $101,162,577 on March 31, 2023 and December 31, 2022, respectively.	22,033,843	20,448,079
Deficit:
Common Stock, $0.001 par value, 25,194,402 and 20,805,448 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	25,194	20,805
Additional paid-in-capital	19,132,830	16,098,182
Accumulated deficit	(79,606,718)	(79,671,065)
Clearday, Inc. Stockholders’ deficit:	(60,448,365)	(63,551,749)
Non-controlling interest in subsidiaries	11,307,705	11,722,096
Total deficit	(49,140,660)	(51,829,653)
TOTAL LIABLITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT	10,346,008	33,750,518
Series A Convertible Preferred Stock [Member]
Deficit:
Series A Convertible Preferred Stock, $0.001 par value, 2,000,000 shares authorized, 328,925 and 328,925 shares issued and outstanding, as of March 31, 2023 and December 31, 2022, respectively. Liquidation value of $329 and $329 on March 31, 2023 and December 31, 2022, respectively	329	329
Related Party [Member]
Current liabilities:
Other current liabilities	738,725	672,597
Nonrelated Party [Member]
Current liabilities:
Other current liabilities	$ 1,096,012	$ 1,140,106

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 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	4,791,401	4,797,052
Temporary equity, shares outstanding	4,791,401	4,797,052
Temporary equity, liquidation preference	$ 102,380,677	$ 101,162,577
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 issued	25,194,402	20,805,448
Common stock, shares outstanding	25,194,402	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

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
REVENUES
Total revenues	$ 3,006,504	$ 3,210,218
OPERATING EXPENSES
Wages & general operating expenses	3,846,475	4,634,056
Selling, general and administrative expenses	904,989	1,393,370
Depreciation and amortization expense	296,826	187,215
Total operating expenses	5,048,290	6,214,641
Operating loss	(2,041,786)	(3,004,423)
Other (income) expenses
Interest expense	714,833	501,598
PPP loan forgiveness		(642,816)
Derivative financing costs	2,567,460
Changes in fair value of derivative	(1,565,232)
Loss on disposal of assets	106,467
Gain on termination of lease	(4,530,644)
Extinguishment of debt	653,814
Other income	498,124	(143,889)
Total other income	(1,555,178)	(285,107)
Net loss from continuing operations	(486,608)	(2,719,316)
Loss from discontinued operations, net of tax		(85,227)
Net loss	(486,608)	(2,804,543)
Net loss attributable to non-controlling interest	(550,955)	(144,265)
Preferred stock dividend	(1,698,784)	(1,619,015)
Net loss attributable to Clearday, Inc. common stockholders	(2,736,347)	(4,567,823)
Resident Fee [Member]
REVENUES
Total revenues	2,895,326	3,124,761
Adult Day Care [Member]
REVENUES
Total revenues	89,041	83,896
Commercial Property Rental Revenue [Member]
REVENUES
Total revenues	$ 22,137	$ 1,561

Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Statement [Abstract]
Net loss per share from continued operations, basic	$ (0.11)	$ (0.29)
Net loss per share from continued operations, diluted	(0.11)	(0.29)
Net loss per share from discontinued operations, basic	0.00	(0.01)
Net loss per share from discontinued operations, diluted	0.00	(0.01)
Net loss per share, basic	(0.11)	(0.30)
Net loss per share, diluted	$ (0.11)	$ (0.30)
Weighted average common shares outstanding, basic	23,910,818	15,010,907
Weighted average common shares outstanding, diluted	23,910,818	15,010,907

Condensed Consolidated Statements of Mezzanine Equity, Convertible Preferred Stock and Stockholders' Deficit (Unaudited) - 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	$ 1,619,015			(1,619,015)		(1,619,015)		(1,619,015)
PIK dividends accruals on Convertible Preferred Stock F, shares
Series F Incentive Common Stock			$ 2,859	(2,853)		6		6
Series F Incentive Common Stock, shares			2,861,334
Accrued of series I Convertible Preferred Stock in subsidiary							136,564	136,564
Series I adjustment					(669,904)	(669,904)		(669,904)
Stock Compensation for services
Shares issued for Loan
Dissolution of Longhorn Hospitality				(3,871,239)	3,871,239
Redemption of series F shares
Officer Compensation and debt conversion
Net loss					(2,804,543)	(2,804,543)	(144,265)	(2,948,808)
Balance at Mar. 31, 2022	$ 18,476,282	$ 329	$ 17,774	11,576,374	(64,811,535)	(53,217,058)	11,322,994	(41,894,064)
Balance, shares at Mar. 31, 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	$ 1,698,784			(1,698,784)		(1,698,784)		(1,698,784)
Series F shares converted to common stock	$ (113,020)		$ 13	113,007		113,020		113,020
Series F shares converted to common stock, shares	(5,651)		13,449
Accrued of series I Convertible Preferred Stock in subsidiary							136,564	136,564
Debt discount from derivative settlements				713,435		713,435		713,435
Stock issued for extinguishment of liabilities			$ 4,218	3,897,578		3,901,796		3,901,796
Stock issued for extinguishment of liabilities, shares			4,218,158
Stock Compensation for services			$ 75	(61,191)		(61,116)		(61,116)
Stock compensation for services, shares			74,187
Shares issued for Loan			$ 83	70,603		70,686		70,686
Shares issued for Loan, shares			83,160
Net loss					64,347	64,347	(550,955)	(486,608)
Balance at Mar. 31, 2023	$ 22,033,843	$ 329	$ 25,194	$ 19,132,830	$ (79,606,718)	$ (60,448,365)	$ 11,307,705	$ (49,140,660)
Balance, shares at Mar. 31, 2023	4,791,401	328,925	25,194,402

Condensed Consolidated Statements of Cash flows (Unaudited) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (486,608)	$ (2,804,543)
Loss from discontinued operations, net of tax		(85,227)
Net loss from continuing operations	(486,608)	(2,719,316)
Adjustments required to reconcile net loss to cash flows used in operating activities
Depreciation and amortization	296,826	187,215
Amortization of right of use assets		459,750
Shares issued for loan commitment	70,686
Shares issued for services	(61,116)
Financing costs from derivative liabilities	2,567,460
Gain on termination of leases	(4,530,644)
Series I preferred stock accumulated dividend	136,564
Loss on the sale of fixed assets	106,467
Bad debt expense	179,854
Change in fair value of the derivatives	(1,565,232)
Amortization of debt issuance costs	241,504	501,970
Amortization of discount on derivatives	540,760
Loss on extinguishment of debt	653,814
Gain on PPP loan forgiveness		(642,816)
Changes in operating assets and liabilities
Accounts receivable	(190,596)	6,145
Other current assets	23,438
Prepaid expenses	99,623	(433,839)
Accounts payable	523,121	902,548
Accrued expenses		(181,935)
Accrued liabilities	1,193,472
Deferred revenue	(887,769)
Related party payable	66,128
Other current liabilities	(44,094)	113,000
Change in operating lease liability		(227,777)
Net cash used in operating activities of continuing operations	(1,066,342)	(2,035,055)
Net cash used in activities of discontinued operations		(45,421)
Net cash used in operating activities	(1,066,342)	(2,080,476)	$ (3,978,027)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property and equipment	(18,063)	(13,348)
Net cash used in investing activities of continuing operations	(18,063)	(13,348)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of debt		(977,263)
Proceeds from long-term debt	1,619,316
Payment of long-term debt	(649,121)
Payments on lease obligations		12,929,498
Borrowings on debt, net		2,130,268
Net cash provided by financing activities	970,195	14,082,503
Change in cash and restricted cash from continuing operations	(114,209)	(895,398)
Change in cash and restricted cash from discontinued operations		56,159
Cash and restricted cash at beginning of the year	205,638	975,075	975,075
Cash and restricted cash at end of year	91,429	135,836	205,638
Beginning of period
Cash and cash equivalents	81,429	125,836	195,638
Restricted cash	10,000	10,000	10,000
Total cash and restricted cash	91,429	135,836	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	649,121
Cahs paid for income taxes
Supplemental disclosures of non-cash investing and financing activities:
Settlements on derivative liability	713,435
PIK dividends for Series F preferred stock	1,698,784
Converted Preferred Shares Series F to Common Shares	113,020
Discount on derivative liability	1,139,578
Termination of leases	27,323,396
Accounts payable exchanged for common shares	3,247,982
Notes payable used to pay rent expense	$ 3,018,547

Description of Business and Going Concern

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Description of Business and Going Concern

1. Description of Business and Going Concern

Organization, Description of Business

Going Concern

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principles of Consolidation

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

Classification of Convertible Preferred Stock

Use of Estimates

Segment Reporting

Cash, and Restricted Cash

Accounts Receivable

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Real Estate Property and Equipment, Net

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

Schedule of Estimated Useful Lives

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

Intangible Assets, Net

Software Capitalization.

Impairment Assessment

Revenue Recognition

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Resident Care Contracts

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 periods ended March 31,
	2023		%			2022		%
Revenue from contracts with customers:
Resident rent - over time	$	2,895,326		96	%	$	3,124,761		97	%
Day care		89,041		3	%		83,896		3	%
Amenities and conveniences - point in time		22,137		1	%		1,561		0	%
Total revenue from contracts with customers	$	3,006,504		100	%	$	3,210,218		100	%

Financial Instruments

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurement

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

March 31, 2023
	Level 1		Level 2		Level 3		Total
Derivative liability		-		-	$	3,748,918	$	3,748,918

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

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		3,707,038
Settlements		(713,435	)
Change in fair value		(1,565,232	)
Balance - March 31, 2023	$	3,748,918

Convertible Instruments

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

Research and Development Costs

Advertising Costs

Lease Accounting

Income Taxes

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

Commitments and Contingencies

Recently Issued Accounting Pronouncements

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Real Estate, Property and Equipment

3 Months Ended

Mar. 31, 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:

	March 31, 2023			December 31, 2022

Land	$	2,231,879		$	2,231,879
Building and building improvements		4,975,243			4,975,243
Leasehold Improvements		710,317			846,754
Computers		57,192			332,809
Furniture, fixtures, and equipment		72,213			1,379,219
Other Equipment		74,937			518,145
Work in progress		138,187			138,187
Total		8,259,968			10,422,236
Less accumulated depreciation		(1,938,219	)		(3,899,257	)
Real estate, property and equipment, net	$	6,321,749		$	6,522,979

Intangible Assets, Net

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets, Net

4. Intangible Assets, Net

Software Capitalization.

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 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. At March 31, 2023 and March 31, 2022, $3,496,000 and $2,240,000, 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.

Acquired intangible assets subject to amortization are as follows:


	March 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted-Average Remaining Useful Life (Years)
Developed technology	$	3,680,000	$	184,000	$	3,496,000		4.75

Expected future amortization expense for intangible assets as of March 31, 2023 is as follows:


Fiscal Years
2023 (remaining)	$	552,000
2024		736,000
2025		736,000
2026		736,000
2027		736,000
Thereafter		-
Total	$	3,496,000


	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted-Average Remaining Useful Life (Years)
Developed technology	$	2,240,000	$	-	$	2,240,000		5.75

The Company recorded amortization expense related to its intangible assets in the amounts of $184,000 and $0 for the periods ended March 31, 2023 and March 31, 2022, respectively.

Leases

3 Months Ended

Mar. 31, 2023

Leases

Leases

5. Leases

Lease Terminations

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Discontinued Operations

3 Months Ended

Mar. 31, 2023

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

6. Discontinued Operations

The following statement is the condensed consolidated statement of operations for the Company’s discontinued operations for the period ended March 31, 2022:


REVENUES
Commercial property rental revenue	$	14,239
Total revenues, net		14,239

Costs and expenses
Operating expenses		-
General and administrative expenses		36,636
Total operating expenses	$	36,636

Loss from operations		(22,307	)

Other/(income) expenses
Interest expense		44,151
Gain on disposal of assets		-
Equity income from investees, net of applicable taxes		-
Impairment expense (recovery)		-
Other (income) expenses		18,768
Total (income)/expense		62,920

Net loss	$	(85,227	)

Indebtedness

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Indebtedness

7. Indebtedness

As of March 31, 2023 and December 31, 2022, the current portion of long-term debt within the Company’s financial statements was $16,746,935 and $16,347,290, respectively.

During the periods ended March 31, 2023 and 2022, we incurred interest expenses totaling $714,833 and $501,598, respectively.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Schedule of Long Term Debt

As of March 31,	Total
2022		6,839,277
2023		9,635,591
2024		1,494,886
2025		4,461,182
Thereafter		494,900
Total obligations	$	22,925,835

Indebtedness of Facilities

Schedule of Maturity Debt

	Maturity Date	Interest Rate			March 31, 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	%		31,569		80,381
AIU Sixth Street	February 2023		12.00	%		-		49,593
1800 Diagonal Lending	October 2024		12.00	%		93,408		116,760
1800 Diagonal Lending	February 2024		12.00	%		173,594		-
Equity Secure Fund I, LLC*	June 2022		11.50	%		1,000,000		1,000,000
Invesque	July 2025		10.00	%		3,458,504		-

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
Notional amount of debt					13,944,531		10,434,193
Less: current maturities					13,944,531		10,434,193
				$	-	$	-

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Indebtedness Allocated to Assets Held For Sale

Real Estate:
Artesia Note	June 2033	Variable		$	-	$	211,721
Carpenter Enterprises	Demand Note	Variable			300,000		300,000
Leander Stearns National Association ^	February 2023	10.38	%		805,000		805,000
Notional amount of debt					1,105,000		1,316,721
Less: current maturities					805,000		805,000
				$	300,000	$	511,721

Other (Corporate) Indebtedness


AGP Contract ^	March 2023	5.00	%	$	550,000		$	550,000
Cibolo Creek Partners	December 2025	0.09	%		411,470		$	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	%		37,195			95,054
Five C’s Loan ^	December 2022	9.85	%		325,000			325,000
GS Capital	May 2023	12.00	%		12,048			50,955
Jefferson Street Capital LLC @	May 2023	12.00	%		33,600			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			-
Convertible Notes Issued by AIU Alternative Care, Inc.	January 2024	12.00	%		279,000			-

Notional amount of debt					4,735,304			3,852,587
Less: current maturities					2,009,843			2,340,009
				$	2,725,461		$	1,512,578

TIC Purchase Agreements	No Specified Date	8.00	%	$	3,141,000		$	3,141,000

		Total			22,925,835			18,744,501
		Less Debt Discount & Derivatives			(1,554,177	)		(1,004,271	)
		Total		$	21,371,658		$	17,740,230

^	Obligation is in default. The interest rate noted above is the stated rate of interest and does not reflect the default rate of interest.
^^	We have ceased payment of these obligations. Obligations are subject to litigation for nonpayment, as previously reported. See Note 8 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 and the Company continues to negotiate with each lender a payment schedule. The interest rate noted above is the stated rate of interest and does not reflect the default rate of interest. Subsequently, each lender has provided a forbearance of their remedies which was in effect as of the date of this Report.
*	Obligations have been modified as described in Note 13 Subsequent Events.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Mast Hill Financing – January 2023

1800 Diagonal Lending – February 2023

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Jefferson Street – February 2023

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Convertible Notes Issued by AIU Alternative Care, Inc.

	●	The issuance by AIU Alt Care or the Company or any of its other subsidiaries of any equity securities in one or more offerings with aggregate gross proceeds of at least $5 million;
	●	The issuance by the Company or any of its other subsidiaries of convertible debt securities that were issued with gross proceeds in an aggregate amount of at least $5 million;
	●	The listing by the Company or its common stock to the New York Stock Exchange, the NYSE American or any tier of the NASDAQ market in connection with an offering of securities by the Company or any of its subsidiaries in connection with any merger, consolidation or similar transaction with another person in which the Company is the surviving entity; or
	●	The exchange of the shares of the Company’s common stock for the common stock or other security that is listed on the New York Stock Exchange, the NYSE American or any tier of the NASDAQ market in connection with any merger, consolidation or similar transaction with another person in which Clearday is not the surviving entity or in which Clearday becomes a subsidiary of such other person, including without limitation, any special purpose acquisition corporation.

Commitments and Contingencies

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

8. Commitments and Contingencies

Contingencies

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 the Company has entered a notice to appeal);
	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 may be appealed by the plaintiff);
	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 the Company has have entered a notice to appeal);
	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.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Indemnification Agreements

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Earnings Per Share

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Earnings Per Share

9. Earnings Per Share

	2023		2022
	For the Three Months Ended
Dilution shares calculation	March 31,
	2023		2022
Series A Convertible Preferred Stock		328,925		328,925
Series F 6.75% Convertible Preferred Stock		4,791,401		4,797,052
Series I 10.25% Convertible Preferred Stock		682,820		320,657
Limited Partnership Units		99,038		99,038
Warrants		7,618,820		4,038,801
Total participating securities		13,521,004		9,586,495

Related Party Transactions

3 Months Ended

Mar. 31, 2023

Related Party Transactions

10. Related Party Transactions

Debt.

There are some loans in which executive management has loaned money to the Company. In addition, there are loans made by the Company itself in which certain executives personally guarantee the debt.

Guarantees

Deficit

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Deficit

11. 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

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Rights and Preferences

Voting Rights

Preferred Stock

Dividends and Distributions

For the periods ended March 31, 2023, and 2022, the Company accrued dividends for the 6.75% Series F preferred stock in the amount of $1,698,784 and $1,619,015 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 March 31 2023:

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

Summary of Outstanding Warrants

	Total		Currently Exercisable		Exercise Price per Share		Expiration Date
	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 March 31, 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 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

Stock Options

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock

Registered Shares

As of March 31, 2023, there was no unamortized stock compensation.

Non-Controlling Interest

Non-Controlling Interest Loss Allocation

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

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Mezzanine Equity

3 Months Ended

Mar. 31, 2023

Mezzanine Equity

Mezzanine Equity

12. Mezzanine Equity

Subsequent Events

3 Months Ended

Mar. 31, 2023

Subsequent Events [Abstract]

Subsequent Events

13. Subsequent Events

We evaluated subsequent events and transactions occurring after March 31, 2023, through the date of this Report.

Viveon Merger

Merger Agreement

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Merger Consideration

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Representations and Warranties

Covenants

Each party’s representations, warranties and pre-Closing covenants will not survive Closing and no party has any post-Closing indemnification obligations.

Non-Solicitation Restrictions

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Conditions to Closing

Termination

The Merger Agreement may be terminated at any time prior to the Effective Time as follows:

(iii) by mutual written consent of Viveon and the Company duly authorized by each of their respective boards of directors.

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Certain Related Agreements

Amendment to the Viveon Merger Agreement

Stockdale Financing

Modification of Indebtedness

A subsidiary of the Company, Leander Associates Ltd., modified the terms of its mortgage loan as described in Note 8, Commitments and Contingencies.

Additional Note Issuances

As noted in Note 7 Indebtedness, AIU Alt Care continued to issue its Convertible Notes after March 31, 2023 to April 10, 2023.

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

Basis of Presentation

Classification of Convertible Preferred Stock

Classification of Convertible Preferred Stock

Use of Estimates

Use of Estimates

Segment Reporting

Segment Reporting

Cash, and Restricted Cash

Cash, and Restricted Cash

Accounts Receivable

Accounts Receivable

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Real Estate Property and Equipment, Net

Real Estate Property and Equipment, Net

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

Schedule of Estimated Useful Lives

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

Intangible Assets, Net

Intangible Assets, Net

Software Capitalization

Software Capitalization.

Impairment Assessment

Impairment Assessment

Revenue Recognition

Revenue Recognition

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Resident Care Contracts

Resident Care Contracts

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 periods ended March 31,
	2023		%			2022		%
Revenue from contracts with customers:
Resident rent - over time	$	2,895,326		96	%	$	3,124,761		97	%
Day care		89,041		3	%		83,896		3	%
Amenities and conveniences - point in time		22,137		1	%		1,561		0	%
Total revenue from contracts with customers	$	3,006,504		100	%	$	3,210,218		100	%

Financial Instruments

Financial Instruments

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurement

Fair Value Measurement

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

March 31, 2023
	Level 1		Level 2		Level 3		Total
Derivative liability		-		-	$	3,748,918	$	3,748,918

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

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		3,707,038
Settlements		(713,435	)
Change in fair value		(1,565,232	)
Balance - March 31, 2023	$	3,748,918

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”.

Research and Development Costs

Research and Development Costs

Advertising Costs

Advertising Costs

Lease Accounting

Lease Accounting

Income Taxes

Income Taxes

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

Commitments and Contingencies

Commitments and Contingencies

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Schedule of Estimated Useful Lives

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

Schedule of Estimated Useful Lives

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

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 periods ended March 31,
	2023		%			2022		%
Revenue from contracts with customers:
Resident rent - over time	$	2,895,326		96	%	$	3,124,761		97	%
Day care		89,041		3	%		83,896		3	%
Amenities and conveniences - point in time		22,137		1	%		1,561		0	%
Total revenue from contracts with customers	$	3,006,504		100	%	$	3,210,218		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 March 31, 2023 and December 31, 2022:

March 31, 2023
	Level 1		Level 2		Level 3		Total
Derivative liability		-		-	$	3,748,918	$	3,748,918

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		3,707,038
Settlements		(713,435	)
Change in fair value		(1,565,232	)
Balance - March 31, 2023	$	3,748,918

Real Estate, Property and Equipment (Tables)

3 Months Ended

Mar. 31, 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:

	March 31, 2023			December 31, 2022

Land	$	2,231,879		$	2,231,879
Building and building improvements		4,975,243			4,975,243
Leasehold Improvements		710,317			846,754
Computers		57,192			332,809
Furniture, fixtures, and equipment		72,213			1,379,219
Other Equipment		74,937			518,145
Work in progress		138,187			138,187
Total		8,259,968			10,422,236
Less accumulated depreciation		(1,938,219	)		(3,899,257	)
Real estate, property and equipment, net	$	6,321,749		$	6,522,979

Intangible Assets, Net (Tables)

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Expected Future Amortization Expense for Intangible Assets

Acquired intangible assets subject to amortization are as follows:


	March 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted-Average Remaining Useful Life (Years)
Developed technology	$	3,680,000	$	184,000	$	3,496,000		4.75


	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted-Average Remaining Useful Life (Years)
Developed technology	$	2,240,000	$	-	$	2,240,000		5.75

Schedule of Future Amortization Expense for Intangible Assets

Expected future amortization expense for intangible assets as of March 31, 2023 is as follows:


Fiscal Years
2023 (remaining)	$	552,000
2024		736,000
2025		736,000
2026		736,000
2027		736,000
Thereafter		-
Total	$	3,496,000

Discontinued Operations (Tables)

3 Months Ended

Mar. 31, 2023

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Discontinued Operations for Consolidated Statement of Operations


REVENUES
Commercial property rental revenue	$	14,239
Total revenues, net		14,239

Costs and expenses
Operating expenses		-
General and administrative expenses		36,636
Total operating expenses	$	36,636

Loss from operations		(22,307	)

Other/(income) expenses
Interest expense		44,151
Gain on disposal of assets		-
Equity income from investees, net of applicable taxes		-
Impairment expense (recovery)		-
Other (income) expenses		18,768
Total (income)/expense		62,920

Net loss	$	(85,227	)

Indebtedness (Tables)

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Schedule of Long Term Debt

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

Schedule of Long Term Debt

As of March 31,	Total
2022		6,839,277
2023		9,635,591
2024		1,494,886
2025		4,461,182
Thereafter		494,900
Total obligations	$	22,925,835

Schedule of Maturity Debt

Indebtedness of Facilities

Schedule of Maturity Debt

	Maturity Date	Interest Rate			March 31, 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	%		31,569		80,381
AIU Sixth Street	February 2023		12.00	%		-		49,593
1800 Diagonal Lending	October 2024		12.00	%		93,408		116,760
1800 Diagonal Lending	February 2024		12.00	%		173,594		-
Equity Secure Fund I, LLC*	June 2022		11.50	%		1,000,000		1,000,000
Invesque	July 2025		10.00	%		3,458,504		-

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
Notional amount of debt					13,944,531		10,434,193
Less: current maturities					13,944,531		10,434,193
				$	-	$	-

CLEARDAY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Indebtedness Allocated to Assets Held For Sale

Real Estate:
Artesia Note	June 2033	Variable		$	-	$	211,721
Carpenter Enterprises	Demand Note	Variable			300,000		300,000
Leander Stearns National Association ^	February 2023	10.38	%		805,000		805,000
Notional amount of debt					1,105,000		1,316,721
Less: current maturities					805,000		805,000
				$	300,000	$	511,721

Other (Corporate) Indebtedness


AGP Contract ^	March 2023	5.00	%	$	550,000		$	550,000
Cibolo Creek Partners	December 2025	0.09	%		411,470		$	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	%		37,195			95,054
Five C’s Loan ^	December 2022	9.85	%		325,000			325,000
GS Capital	May 2023	12.00	%		12,048			50,955
Jefferson Street Capital LLC @	May 2023	12.00	%		33,600			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			-
Convertible Notes Issued by AIU Alternative Care, Inc.	January 2024	12.00	%		279,000			-

Notional amount of debt					4,735,304			3,852,587
Less: current maturities					2,009,843			2,340,009
				$	2,725,461		$	1,512,578

TIC Purchase Agreements	No Specified Date	8.00	%	$	3,141,000		$	3,141,000

		Total			22,925,835			18,744,501
		Less Debt Discount & Derivatives			(1,554,177	)		(1,004,271	)
		Total		$	21,371,658		$	17,740,230

^	Obligation is in default. The interest rate noted above is the stated rate of interest and does not reflect the default rate of interest.
^^	We have ceased payment of these obligations. Obligations are subject to litigation for nonpayment, as previously reported. See Note 8 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 and the Company continues to negotiate with each lender a payment schedule. The interest rate noted above is the stated rate of interest and does not reflect the default rate of interest. Subsequently, each lender has provided a forbearance of their remedies which was in effect as of the date of this Report.
*	Obligations have been modified as described in Note 13 Subsequent Events.

Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

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

	2023		2022
	For the Three Months Ended
Dilution shares calculation	March 31,
	2023		2022
Series A Convertible Preferred Stock		328,925		328,925
Series F 6.75% Convertible Preferred Stock		4,791,401		4,797,052
Series I 10.25% Convertible Preferred Stock		682,820		320,657
Limited Partnership Units		99,038		99,038
Warrants		7,618,820		4,038,801
Total participating securities		13,521,004		9,586,495

Deficit (Tables)

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Summary of Outstanding Warrants

The following is a summary of such outstanding warrants at March 31 2023:

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

Summary of Outstanding Warrants

	Total		Currently Exercisable		Exercise Price per Share		Expiration Date
	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 March 31, 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 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

Description of Business and Going Concern (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Accounting Policies [Abstract]
Accumulated deficit	$ 79,606,718		$ 79,671,065
Net income (loss)	486,608	$ 2,719,316
Net cash used in operating activities	$ 1,066,342	$ 2,080,476	3,978,027
Loss from continued operations			$ 14,462,738

Schedule of Estimated Useful Lives (Details)	Mar. 31, 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
Equipment [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
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	7 years

Schedule of Revenue from Contract with Customers (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Product Information [Line Items]
Revenues	$ 3,006,504	$ 3,210,218
Revenue from Contract with Customer Benchmark [Member] \| Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration risk, percentage	100.00%	100.00%
Transferred over Time [Member]
Product Information [Line Items]
Revenues	$ 2,895,326	$ 3,124,761
Transferred over Time [Member] \| Revenue from Contract with Customer Benchmark [Member] \| Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration risk, percentage	96.00%	97.00%
Transferred Day Care [Member]
Product Information [Line Items]
Revenues	$ 89,041	$ 83,896
Transferred Day Care [Member] \| Revenue from Contract with Customer Benchmark [Member] \| Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration risk, percentage	3.00%	3.00%
Transferred at Point in Time [Member]
Product Information [Line Items]
Revenues	$ 22,137	$ 1,561
Transferred at Point in Time [Member] \| Revenue from Contract with Customer Benchmark [Member] \| Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration risk, percentage	1.00%	0.00%

Schedule of Assets and Liabilities Measured at Fair Value (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Platform Operator, Crypto-Asset [Line Items]
Derivative liability	$ 3,748,918	$ 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	$ 3,748,918	$ 2,320,547

Summary of Activity of Level 3 Liabilities (Details) - Fair Value, Inputs, Level 3 [Member]	3 Months Ended
	Mar. 31, 2023 USD ($)
Platform Operator, Crypto-Asset [Line Items]
Balance - December 31, 2022	$ 2,320,547
Additions	3,707,038
Settlements	(713,435)
Change in fair value	(1,565,232)
Balance - March 31, 2023	$ 3,748,918

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended	12 Months Ended
	Nov. 30, 2019	Mar. 31, 2023	Dec. 31, 2022	Dec. 31, 2021	Oct. 31, 2019
Property, Plant and Equipment [Line Items]
Preferred stock, dividend rate, percentage		6.75%	6.75%
Preferred stock, par or stated value per share		$ 0.001	$ 0.001
Preferred stock, shares authorized		10,000,000	10,000,000
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.
Estimated useful life of intangible asset		5 years
Risk-free interest rates, minimum		3.60%	3.99%
Risk-free interest rates, maximum		4.94%	4.76%
Common stock expected volatility, minimum		182.00%	183.00%
Common stock expected volatility, maximum		421.00%	572.00%
Income tax examination description		greater than 50% likelihood
AIU Impact Management LLC [Member]
Property, Plant and Equipment [Line Items]
Equity method investment, ownership percentage					1.00%
Preferred Stock [Member]
Property, Plant and Equipment [Line Items]
Preferred stock, dividend rate, percentage		10.25%
Preferred stock, par or stated value per share		$ 0.001
Preferred stock, shares authorized		10,000,000
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		$ 0.51	$ 0.56
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
Investments				$ 897,000
AIU Alt Care Inc [Member] \| Preferred Stock [Member]
Property, Plant and Equipment [Line Items]
Conversion of stock, shares converted				89,700
AIU Impact Management LLC [Member]
Property, Plant and Equipment [Line Items]
Percentage of income and gain					99.00%
Series I Cumulative Convertible Preferred Stock [Member] \| AIU Alt Care Inc [Member]
Property, Plant and Equipment [Line Items]
Preferred stock, dividend rate, percentage	10.25%
Preferred stock, par or stated value per share	$ 0.01
Alt Care Preferred Stock [Member]
Property, Plant and Equipment [Line Items]
Preferred stock, par or stated value per share	$ 10.00
Preferred stock, shares authorized	700,000
Maximum [Member]
Property, Plant and Equipment [Line Items]
Exercise prices		0.43	0.75
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%

Schedule of Real Estate, Property and Equipment (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Real estate, property and equipment, net	$ 6,321,749	$ 6,522,979
Memory Care Facilities and Corporate [Member]
Property, Plant and Equipment [Line Items]
Real estate, property and equipment, gross	8,259,968	10,422,236
Less accumulated depreciation	(1,938,219)	(3,899,257)
Real estate, property and equipment, net	6,321,749	6,522,979
Land [Member] \| Memory Care Facilities and Corporate [Member]
Property, Plant and Equipment [Line Items]
Real estate, property and equipment, gross	2,231,879	2,231,879
Building Improvements [Member] \| Memory Care Facilities and Corporate [Member]
Property, Plant and Equipment [Line Items]
Real estate, property and equipment, gross	4,975,243	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	57,192	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	74,937	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

Real Estate, Property and Equipment (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Impairment Effects on Earnings Per Share [Line Items]
Depreciation, Depletion and Amortization	$ 296,826	$ 187,215
Property, Plant and Equipment [Member]
Impairment Effects on Earnings Per Share [Line Items]
Depreciation, Depletion and Amortization	$ 112,826		$ 501,797

Schedule of Expected Future Amortization Expense for Intangible Assets (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Remaining Useful Life	5 years
Development Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible Assets, Gross (Excluding Goodwill)	$ 3,680,000	$ 2,240,000
Finite-Lived Intangible Assets, Accumulated Amortization	184,000
Intangible Assets, Net (Excluding Goodwill)	$ 3,496,000	$ 2,240,000
Weighted-Average Remaining Useful Life	4 years 9 months	5 years 9 months

Schedule of Future Amortization Expense for Intangible Assets (Details)	Mar. 31, 2023 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2023 (remaining)	$ 552,000
2024	736,000
2025	736,000
2026	736,000
2027	736,000
Thereafter
Total	$ 3,496,000

Intangible Assets, Net (Details Narrative) - USD ($)	3 Months Ended
Intangible Assets, Net (Details Narrative) - USD ($)	Mar. 31, 2023	Mar. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Capitalized computer software, net	$ 3,496,000	$ 2,240,000
Finite-lived intangible asset, useful life	5 years
Amortization	$ 184,000	$ 0

Leases (Details Narrative) - USD ($)		3 Months Ended
Leases (Details Narrative) - USD ($)	Mar. 31, 2023	Mar. 31, 2023	Mar. 31, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Repayments amount			$ 977,263
Lease Transition Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Past due community lease amounts	$ 1,284,770	1,284,770
Rent differential amount	1,710,777	1,710,777
Critical expenses advances	$ 275,000	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	$ 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

Schedule of Discontinued Operations for Consolidated Statement of Operations (Details)	3 Months Ended
	Mar. 31, 2022 USD ($)
REVENUES
Total revenues, net	$ 14,239
Costs and expenses
Operating expenses
General and administrative expenses	36,636
Total operating expenses	36,636
Loss from operations	(22,307)
Other/(income) expenses
Interest expense	44,151
Gain on disposal of assets
Equity income from investees, net of applicable taxes
Impairment expense (recovery)
Other (income) expenses	18,768
Total (income)/expense	62,920
Net loss	(85,227)
Commercial Property Rental Revenue [Member]
REVENUES
Total revenues, net	$ 14,239

Schedule of Long Term Debt (Details)	Mar. 31, 2023 USD ($)
Debt Disclosure [Abstract]
2022	$ 6,839,277
2023	9,635,591
2024	1,494,886
2025	4,461,182
Thereafter	494,900
Total obligations	$ 22,925,835

Schedule of Maturity Debt (Details) - USD ($)

3 Months Ended

Mar. 31, 2023

Dec. 31, 2022

Indebtedness (Details Narrative) - USD ($)						2 Months Ended	3 Months Ended
Indebtedness (Details Narrative) - USD ($)	Apr. 10, 2023	Feb. 17, 2023	Feb. 10, 2023	Jan. 27, 2023	Jan. 13, 2023	Apr. 10, 2023	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Short-Term Debt [Line Items]
Long term debt							$ 22,925,835
Incurred interest expense							$ 714,833	$ 501,598
Number of share				4,218,158			4,218,158
Share price							$ 5.00
Warrant One [Member]
Short-Term Debt [Line Items]
Share price							245.84
Warrant Two [Member]
Short-Term Debt [Line Items]
Share price							$ 75.48
Jefferson Street Capital LLC [Member]
Short-Term Debt [Line Items]
Debt instrument, description							Upon any Event of Default, the obligations under the Jefferson Street Note will accrue interest at an annual rate of 22% and, if such Event of Default is continuing at any time that is 180 days after the date of the Jefferson Street Note, provide the Jefferson Street Noteholder the right and option to convert the obligations under the Jefferson Street Note to shares of Clearday’s common stock. The price for any such conversion is equal to 75% (or a 25% discount) of the average of the five (5) lowest per share daily volume-weighted average price of Clearday’s common stock over the ten (10) consecutive trading days that are not subject to specified market disruptions immediately preceding the date of the conversion. The conversion right of the holder of the Jefferson Street Note is subject to a customary limitation on beneficial ownership of 4.99% of Clearday’s common stock. Each of the Jefferson Street Note and the Securities Purchase Agreement has other customary covenants and provisions, including representations and warranties, payment of brokers, and indemnification, that Clearday will not sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business without the consent of the holder of the Jefferson Street Note and Clearday will maintain a reserve of authorized and unissued shares of common stock sufficient for full conversion of the obligations under the Jefferson Street Note.
Mast Hill Financing [Member] \| MH Loan One Note [Member]
Short-Term Debt [Line Items]
Loan principal amount					$ 756,000
Discount					75,600
Placement fees					68,040
Debt discount					12,000
Proceeds from debt					$ 213,000
Convertible debt, percentage					12.00%
Maturity date					Jan. 26, 2024
Total payback					$ 75,600
Administrative fee					$ 750
Mast Hill Financing [Member] \| MH Loan One Note [Member] \| Common Stock [Member]
Short-Term Debt [Line Items]
Number of share					83,160
Share price					$ 0.50
Debt description					(1) a bona fide offer of capital or financing from a nationally recognized broker dealer that is retained by Borrower and acceptable to the Holder, which acceptance will not be unreasonably delayed, withheld or conditioned (“Investment Banker”), or any person or party that is introduced to the Company by the Investment Banker in its capacity as a placement agent, (ii) a bona fide offer of capital or financing from a person or party if such capital or financing is used by the Company for the acquisition or refinance of real property so long as (a) any security interest granted to such person or party is solely limited to the real property being acquired or refinanced and (b) such person or party shall have no rights at any time in such transaction or any related transaction to acquire Common Stock or Common Stock Equivalents of the Company (each a “Real Property Transaction”), as well as (iii) a bona fide offer of specified capital or financing through certain financing transactions. MH Loan 1 Note is subject to repayment from the use of proceeds of certain transactions. If, prior to the full repayment or satisfaction of the MH Loan 1 Note’s obligations, the Company receives cash proceeds of more than $2,000,000.00 (the “Minimum Threshold”) in the aggregate, from the sale of assets or issuance of the Company’s securities, including pursuant to an Equity Line of Credit (as defined in MH Loan 1 Note), then the Lender may require us to apply up to 50% of such proceeds after the Minimum Threshold to repay all or any portion of the outstanding obligation under the Note; provided that such repayment obligation is not applicable to Real Property Transactions, the sale of assets to customers of the Company in the ordinary course of business, the sale of interests in real estate, or any Small Business Administration Economic Injury Disaster Loan. Additionally, the Company provided the lender with rights to receive terms provided under any other financing transaction that are more favorable than under MH Loan 1 Note, other than Real Property Transactions and certain other transactions.
Mast Hill Financing [Member] \| MH Loan One Note [Member] \| Common Stock [Member] \| Warrant One [Member]
Short-Term Debt [Line Items]
Warrants exercised					1,134,000
Share price					$ 0.75
Mast Hill Financing [Member] \| MH Loan One Note [Member] \| Common Stock [Member] \| Warrant Two [Member]
Short-Term Debt [Line Items]
Warrants exercised					851,000
Share price					$ 0.75
Mast Hill Financing [Member] \| MH Loan One Note [Member] \| Maximum [Member]
Short-Term Debt [Line Items]
Convertible debt, percentage					16.00%
Debt additional percent					10.00%
Thousand Eight Hundred Diagonal Lending [Member]
Short-Term Debt [Line Items]
Incurred interest expense			$ 4,250
Discount			19,286
Proceeds from Issuance of Debt			$ 150,000
Interest rate			12.00%
Thousand Eight Hundred Diagonal Lending [Member] \| Unsecured Promissory Note [Member]
Short-Term Debt [Line Items]
Loan principal amount			$ 194,360
Discount			20,824
Total payback			21,768
Debt Instrument, Decrease, Forgiveness			19,280
Securities Purchase Agreement [Member] \| Jefferson Street Note [Member]
Short-Term Debt [Line Items]
Loan principal amount		$ 135,000
Discount		22,217
Placement fees		15,000
Total payback		$ 19,288.30
Number of share		225,000
Share price		$ 0.75
Principal amount		$ 172,217	$ 194,360
Interest rate		12.00%
Fee amount		$ 20,666
Maturity description		one-year maturity
Payment frequency		shall be paid in ten (10) payments
Total payback		$ 192,883
One Thousand Eight Hundred Diagonal [Member]
Short-Term Debt [Line Items]
Debt instrument, description							Upon any Event of Default, the obligations under the 1800 Note will accrue interest at an annual rate of 22% and, if such Event of Default is continuing at any time that is 180 days after the date of the 1800 Note, provide the 1800 Noteholder the right and option to convert the obligations under the 1800 Note to shares of Clearday’s common stock. The price for any such conversion is equal to 75% (or a 25% discount) of the average of the five (5) lowest per share daily volume-weighted average price of Clearday’s common stock over the ten (10) consecutive trading days that are not subject to specified market disruptions immediately preceding the date of the conversion. The conversion right of the 1800 Noteholder is subject to a customary limitation on beneficial ownership of 4.99% of Clearday’s common stock.
Innovative Care [Member] \| Convertible Note [Member]
Short-Term Debt [Line Items]
Convertible debt, percentage		10.00%
Share price		$ 0.75
Gross proceeds	$ 549,000						$ 279,000
Interest rate	12.00%					12.00%
Innovative Care [Member] \| Convertible Note [Member] \| Minimum [Member]
Short-Term Debt [Line Items]
Interest rate	1.00%					1.00%
Innovative Care [Member] \| Equity Securities [Member]
Short-Term Debt [Line Items]
Gross proceeds						$ 5,000,000
Innovative Care [Member] \| Convertible Debt Securities [Member]
Short-Term Debt [Line Items]
Gross proceeds						$ 5,000,000
Memory Care Core and Corporate Facilities [Member]
Short-Term Debt [Line Items]
Long term debt							$ 16,746,935		$ 16,347,290

Commitments and Contingencies (Details Narrative) - USD ($)			3 Months Ended
	Oct. 21, 2022	Aug. 05, 2022	Mar. 31, 2023	Dec. 31, 2022
Loss Contingency, Damages Awarded, Value	$ 2,801,365
Aggregate amount		$ 3,012,011
Release of cash		2,763,936	$ 81,429	$ 195,638
Payment of cash		$ 248,075
Loss contingency accrual at carrying value			467,451	311,000
Accrued liabilities				261,000
Accrued underpaid payroll tax			1,097,000
Accrued underpayment excluding taxes, penalties and interest			978,000	$ 527,000
Loss contingency damages value			2,925,195
Merger and claiming damages			$ 1,531,640
Percentage of fee payable			2.00%
Preferred stock, par value			$ 0.001	$ 0.001
Series A Preferred Stock [Member]
Preferred stock, par value			$ 0.001	$ 0.001
Law Firm Rigrodsky Law, P.A [Member]
Merger and claiming damages			$ 200,000
Clearday Oz Fund [Member]
Warrant price per share			$ 10.00
AIU Alt Care Inc [Member] \| Series A Preferred Stock [Member]
Common stock price per share			10.00
Preferred stock, par value			$ 20.00

Schedule of Anti-Dilutive Shares Compensation of Earnings (Loss) Per Share (Details) - shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total participating securities	13,521,004	9,586,495
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	4,791,401	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	682,820	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	4,038,801

Related Party Transactions (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Related Party Transaction [Line Items]
Guarantee fee, percentage	1.00%
Richard Morris [Member]
Related Party Transaction [Line Items]
Unsecured debt	$ 330,175
Payments for rent	94,650
Jim Walesa [Member]
Related Party Transaction [Line Items]
Loan fee	44,165
Christin Hemmens [Member]
Related Party Transaction [Line Items]
Unsecured short term debt	130,000
BJ Parrish [Member]
Related Party Transaction [Line Items]
Loan fee	$ 44,000
AIU Inc [Member] \| Related Party [Member]
Related Party Transaction [Line Items]
Due to related parties		$ 66,208
Cibolo Creek Partners LLC [Member] \| Related Party [Member]
Related Party Transaction [Line Items]
Due to related parties		411,470
Round Rock Development Partners LP [Member] \| Related Party [Member]
Related Party Transaction [Line Items]
Due to related parties		$ 500,000

Summary of Outstanding Warrants (Details) (Parenthetical)	3 Months Ended
	Mar. 31, 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”)
Warrants to purchase common stock	1
Warrants exercise price \| $ / shares	$ 5.00
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

Deficit (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended		12 Months Ended
Deficit (Details Narrative) - USD ($)	Jan. 27, 2023	Nov. 30, 2019	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares authorised			10,000,000		10,000,000
Preferred stock, par value			$ 0.001		$ 0.001
Shares outstanding	4,218,158		4,218,158
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
Dividend rate percentage			6.75%		6.75%
Risk-free interest rates, minimum			3.60%		3.99%
Risk-free interest rates, maximum			4.94%		4.76%
Expected volatility, minimum			182.00%		183.00%
Expected volatility, maximum			421.00%		572.00%
Net loss			$ (486,608)	$ (2,948,808)
Warrant term			10 years
Warrant rights			1
Share price			$ 5.00
Accured dividends			$ 682,820
AIU Alt Care Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Ownership interest			99.00%
Consultants [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stock issued			4,326,415
Stock issued			25,097
Minimum [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Exercise prices			$ 0.35		$ 0.35
Maximum [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Exercise prices			$ 0.43		$ 0.75
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 authorised			10,000,000
Preferred stock, par value			$ 0.001
Dividend rate percentage			6.75%	6.75%
Preferred stock, shares outstanding			4,791,401
Series F Preferred Stock [Member] \| Consultants [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Stock issued upon conversion			48,802
Series A Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares authorised			2,000,000		2,000,000
Preferred stock, par value			$ 0.001		$ 0.001
Preferred stock, shares issued			328,925		328,925
Preferred stock, shares outstanding			328,925		328,925
Preferred stock liquidation preference			$ 0.01
Series F 6.75% Convertible Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Dividends preferred stock			$ 1,698,784	$ 1,619,015
Convertible Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Dividend rate percentage		10.25%
Thinktiv Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accrued payables	$ 3,248,000		3,248,000
AIU Alt Care Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock, shares authorised		1,500,000
Preferred stock, shares authorised		1,500,000
Capital units authorised		700,000
AIU Alt Care Inc [Member] \| Allied Integral United Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
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			16,190
Income (Loss) attributable to noncontrolling interest, before tax			$ 16,028	3,252
AIU Alt Care Inc [Member] \| Series A Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, par value			$ 20.00
AIU Alt Care Inc [Member] \| Series I Cumulative Convertible Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, par value		$ 0.01
Dividend rate percentage		10.25%
AIU Alt Care Inc [Member] \| Series I Cumulative Convertible Preferred Stock [Member] \| Allied Integral United Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Shares outstanding			89,700
AIU Alt Care Inc [Member] \| Allied Integral United Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, shares authorised		1,500,000
AIU Alt Care Inc [Member] \| Allied Integral United Inc [Member] \| Series I 10.25% Cumulative Convertible Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, par value		$ 0.01
AIU Alt Care Inc [Member] \| Partnership Interest [Member] \| Series I Cumulative Convertible Preferred Stock [Member] \| Allied Integral United Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Shares outstanding			244,473
Clearday Oz Fund [Member] \| Allied Integral United Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Net loss			$ 540,330
Income (Loss) attributable to noncontrolling interest, before tax			534,927	145,772
Clearday Oz Fund [Member] \| Partnership Interest [Member] \| Allied Integral United Inc [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Conversion of stock			$ 0	0
Conversion price			80.00%
Warrants outstanding			2,010,150
Common Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock, shares authorised			80,000,000
Common stock price per share			$ 0.51		$ 0.56
Stock issued upon conversion			13,449
Net loss
Common Stock [Member] \| Series F Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, par value			$ 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 authorised			10,000,000
Preferred stock, par value			$ 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
Shares outstanding			5,000,000
Preferred stock, shares issued			4,791,401		4,797,052
Preferred stock, shares outstanding			4,791,401		4,797,052
Preferred Stock [Member] \| Series F Preferred Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Preferred stock, par value			$ 20.00
Warrant [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock price per share			$ 0.51
Risk-free interest rates, minimum			3.60%
Risk-free interest rates, maximum			4.94%
Expected volatility, minimum			182.00%
Expected volatility, maximum			421.00%
Warrant [Member] \| Minimum [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Exercise prices			$ 0.35
Warrant [Member] \| Maximum [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Exercise prices			$ 0.43

Subsequent Events (Details Narrative) $ / shares in Units, shares in Millions				3 Months Ended
	Aug. 28, 2023 USD ($) shares	May 22, 2023 USD ($) a	Apr. 05, 2023 USD ($) $ / shares	Mar. 31, 2023 USD ($) $ / shares	Mar. 31, 2022 USD ($)	Dec. 31, 2022 USD ($) $ / shares
Subsequent Event [Line Items]
Equal amount				$ 136,564	$ 136,564
Common stock, par value \| $ / shares				$ 0.001		$ 0.001
Preferred stock, par value \| $ / shares				$ 0.001		$ 0.001
Net tangible assets				$ 6,321,749		$ 6,522,979
Merger consideration	$ 250,000,000
Maximum [Member]
Subsequent Event [Line Items]
Merger consideration	$ 500,000,000
Series A Convertible Preferred Stock [Member]
Subsequent Event [Line Items]
Preferred stock, par value \| $ / shares				$ 0.001		$ 0.001
Common Stock [Member]
Subsequent Event [Line Items]
Additional shares issued \| shares	5
Common Stock [Member]
Subsequent Event [Line Items]
Equal amount
Share price, per share \| $ / shares				$ 0.51		$ 0.56
Subsequent Event [Member] \| James Walesa [Member]
Subsequent Event [Line Items]
Area of land \| a		1.5
Purchase price		$ 155,925
Repurchase asset		$ 175,000
Repurchase asset interest		10.90%
Repurchase asset		$ 19,075
Repurchase asset		1,590
Business combination gain		$ 5,925
Subsequent Event [Member] \| Incentive Plan [Member]
Subsequent Event [Line Items]
Initial aggregate share reserve equal, rate			8.00%
Subsequent Event [Member] \| Merger Agreement [Member]
Subsequent Event [Line Items]
Share price per share \| $ / shares			$ 10.00
Conversion of stock, description			(i) the sum of $250 Million, plus the aggregate exercise or conversion price of outstanding the Company’s stock options and warrants (excluding unvested options and options or warrants with an exercise or conversion price of $5.00 or more), divided by (ii) the number of fully diluted the Company capital stock (including Company Preferred Stock, warrants, stock options, convertible notes, and any other convertible securities) (excluding unvested options and options or warrants with an exercise or conversion price of $5.00 or more and assuming a conversion price of the Company subsidiary securities as provided in the Merger Agreement); divided by (b) $10.00
Conversion of stock, amount			$ 250,000,000
Net tangible assets			$ 5,000,001
Lock-up shares, rate			50.00%
Subsequent Event [Member] \| Common Stock [Member] \| Merger Agreement [Member]
Subsequent Event [Line Items]
Share price, per share \| $ / shares			$ 12.50
Merger Consideration [Member] \| Subsequent Event [Member] \| Series F Cumulative Convertible Preferred Stock [Member]
Subsequent Event [Line Items]
Preferred stock, par value \| $ / shares			0.001
Merger Consideration [Member] \| Subsequent Event [Member] \| Series A Convertible Preferred Stock [Member]
Subsequent Event [Line Items]
Preferred stock, par value \| $ / shares			$ 0.001
Merger Consideration [Member] \| Subsequent Event [Member] \| Options And Warrants [Member]
Subsequent Event [Line Items]
Equal amount			$ 250,000,000
Merger Consideration [Member] \| Subsequent Event [Member] \| Viveon Common Stock [Member]
Subsequent Event [Line Items]
Common stock, par value \| $ / shares			$ 0.0001
Share price per share \| $ / shares			$ 10
Number of shares issued			$ 5,000,000
Merger Consideration [Member] \| Subsequent Event [Member] \| Common Stock [Member]
Subsequent Event [Line Items]
Common stock, par value \| $ / shares			$ 0.001

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