Clearday (CLRD) Risk Analysis

In addition, it is likely that Clearday will use its or a subsidiary's securities as consideration, in part or whole, for the purchase of acquired businesses as part of our asset and business acquisition strategy. Such securities may carry rights or preferences different from or superior to those of Clearday's common stock. Moreover, if such securities include Clearday's common stock or securities senior to or Pari passu to or convertible or exchangeable into shares of Clearday's common stock, the relative ownership interest of the holders of the Clearday's capital stock would be subject to dilution.

The market price of our common stock has been, and is expected to be, subject to significant volatility. The value of our common stock may decline regardless of our operating performance or prospects. Factors affecting our market price include: - liquidity and volume in the trading of our common stock;   - market perception as to our ability to develop and launch our innovative care products and services;   - our perceived prospects and liquidity, including our ability to sell non-core assets;   - our perceived ability to sell products and services directly to the residents in our residential care facilities and otherwise expand our revenues from current fees from our residential care business;   - variations in our operating results and whether we have achieved key business targets;   - changes in, or our failure to meet, earnings estimates;   - changes in securities analysts' buy/sell recommendations;   - differences between our reported results and those expected by investors and securities analysts;   - announcements of new contracts by us or our competitors;   - market reaction to any acquisitions, joint ventures or strategic investments announced by us or our competitors;   - general economic, political or stock market conditions; and   - the impact of inflation on our operations, including our ability to control costs, including labor, food, and energy expenses. Recent events have caused stock prices for many companies, including ours, to fluctuate in ways unrelated or disproportionate to their operating performance. The general economic, political and stock market conditions that may affect the market price of our common stock are beyond our control. The market price of our common stock at any particular time may not remain the market price in the future.

As of December 31, 2022, we had - warrants that are currently exercisable to purchase up to approximately 5,112,320 shares of our common stock at a weighted average exercise price of approximately $6.88 per share, including warrants issued during 2023 to our lenders to purchase up to 1,076,000 shares of our common stock at a weighted average exercise price of approximately $0.75 per share,   - securities that have been issued by our subsidiaries with an accrued amount equal to approximately $17,172,025 which may be exchanged for shares of our common stock at a price that is equal to the volume weighted average price of our common stock for 20 days prior to the date of such exchange, and   - Series F Preferred Stock that may be converted into approximately 12,038,095 shares of our common stock.   - an aggregate amount of 2,506,500 additional warrants that may be exercised by lenders upon the event of default of their loans at an average aggregate price per share of approximately $0.61. The holders may sell these shares in the public markets from time to time under a registration statement or, after the applicable six-month holding period is satisfied, under Rule 144, without limitations on the timing, amount or method of sale. Additionally, we have issued to certain lenders an aggregate amount of approximately $965,000 of senior notes and warrants to purchase an aggregate amount of approximately 1,372,500 shares of our common stock. These notes and warrants may be converted or exercised upon an event of default under such notes. The holders of such convertible or exchangeable for our shares of common stock may exercise such rights sell a large number of shares of our comment stock, which would likely cause the market price of our common stock to decline.

It is possible that the acquisition of most of our outstanding voting stock by another company could result in our stockholders receiving a premium over the public trading price for our shares. Provisions of our restated certificate of incorporation and our amended and restated bylaws, each as amended, and of Delaware corporate law could delay or make more difficult an acquisition of our company by merger, tender offer or proxy contest, even if it would create an immediate benefit to our stockholders. For example, our restated certificate of incorporation does not permit stockholders to act by written consent, and our bylaws generally require ninety days' advance notice of any matters to be brought before the stockholders at an annual or special meeting. In addition, our board of directors has the authority to issue shares of preferred stock and to determine the terms, rights and preferences of this preferred stock, including voting rights of those shares, without any further vote or action by the stockholders and while we are not listed on an exchange such as the NYSE American, we can issue a significant number of voting shares and voting power without stockholder approval. The rights of the holders of common stock may be subordinate to, and adversely affected by, the rights of holders of preferred stock that may be issued in the future. The issuance of preferred stock could also make it more difficult for a third party to acquire most of our outstanding voting stock, even at a premium over our public trading price. Furthermore, our certificate of incorporation also provides for a classified board of directors with directors divided into three classes serving staggered terms. These provisions may have the effect of delaying or preventing a change in control of us without action by our stockholders and, therefore, could adversely affect the price of our stock or the possibility of the sale of shares to an acquiring person.

The market price of the Clearday's common stock may decline as a result of a few reasons, including if: - the planned development and expansion by Clearday of the adult day care business or digital services or other innovative products and services is delayed or not successful; or         - Clearday's business and prospects are not consistent with the expectations of financial or industry analysts.

Clearday is a "smaller reporting company" under applicable SEC rules and regulations. As a "smaller reporting company," Clearday may rely on exemptions from certain disclosure requirements that are applicable to other public companies, such as simplified executive compensation disclosures and reduced financial statement disclosure requirements in our SEC filings. Clearday may continue to rely on such exemptions for so long as it remains a "smaller reporting company". These exemptions include reduced financial disclosure, reduced disclosure obligations regarding executive compensation, and not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002. Decreased disclosures in Clearday's SEC filings due to its status as a smaller reporting company may make it harder for investors to analyze the results of operations and financial prospects. Clearday cannot predict if investors will find Clearday's common stock less attractive if it relies on these exemptions. If some investors find Clearday's common stock less attractive as a result, there may be a less active trading market for Clearday's common stock and Clearday's stock price may be more volatile. Clearday may take advantage of the reporting exemptions applicable to a smaller reporting company until it is no longer a smaller reporting company, which status would end once it has a public float greater than $250 million. In that event, Clearday could still be a smaller reporting company if its annual revenues were below $100 million, and it has a public float of less than $700 million. Clearday's reliance on these exemptions may result in the public finding that Clearday's common stock to be less attractive and adversely impacts the market price of Clearday's common stock or the trading market thereof.

The DGCL contains provisions that may have the effect of making more difficult or delaying attempts by others to obtain control of Clearday, even when these attempts may be in the best interests of stockholders. Delaware law imposes conditions on certain business combination transactions with "interested stockholders". These provisions and others that could be adopted in the future could deter unsolicited takeovers or delay or prevent changes in Clearday's control or management, including transactions in which stockholders might otherwise receive a premium for their shares of common stock over then current market prices. These provisions may also limit the ability of stockholders to approve transactions that they may deem to be in their best interests.