VHAQ Viveon Health Acquisition Corp

NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS AND GOING CONCERN

Viveon Health Acquisition Corp. (the “Company” or “Viveon”) is a newly organized blank check company incorporated as a Delaware company on August 7, 2020. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (“Business Combination”).

The Company has neither engaged in any operations nor generated any revenues as of March 31, 2023. The Company’s only activities for the three months ended March 31, 2023 and 2022 were organizational activities, those necessary to prepare for the Company’s initial public offering (the “Initial Public Offering”), described below, and, after the Initial Public Offering, identifying a target company for a Business Combination. The Company does not expect to generate any operating revenues until after the completion of our Business Combination. The Company generates non-operating income in the form of interest income on marketable securities held after the Initial Public Offering. The Company incurs expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. The Company’s sponsor is Viveon Health, LLC, a Delaware limited liability company (the “Sponsor”).

The registration statement for the Initial Public Offering was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on December 22, 2020. On December 28, 2020, the Company consummated the Initial Public Offering of 17,500,000 units (the “Units” and, with respect to the common stock included in the Units being offered, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $175,000,000, which is discussed in Note 3. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 18,000,000 warrants (the “Private Warrants”), at a price of $0.50 per Private Warrant, which is discussed in Note 4.

On December 30, 2020, the underwriters fully exercised the over-allotment option by purchasing 2,625,000 Units (the “Over-Allotment Units”), generating aggregate of gross proceeds of $26,250,000.

Upon closing of the Initial Public Offering and the sale of the Over-Allotment Units, $203,262,500 (approximately $10.10 per Unit) from net offering proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Warrants was placed in a trust account (the “Trust Account”) and invested in U.S. government securities, with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act 1940, as amended (the “Investment Company Act”), which invest only in direct U.S. government treasury obligations. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its tax obligations, the proceeds from the Initial Public Offering will not be released from the Trust Account until the earliest to occur of (1) the completion of the initial Business Combination within 15 months, unless extended to a total of 24 months, pursuant to the terms of an amendment to the Company’s amended and restated certificate of incorporation (the “Amended and Restated Certificate of Incorporation”), and (2) the Company’s redemption of 100% of the outstanding Public Shares if the Company has not completed a Business Combination in the required time period.

While the Company’s management has broad discretion with respect to the specific application of the cash held outside of the Trust Account, substantially all of the net proceeds from the Initial Public Offering and the sale of the Private Warrants, which are placed in the Trust Account, are intended to be applied generally toward completing a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the assets held in the Trust Account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting commissions) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires an interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In connection with any proposed initial Business Combination, the Company will either (1) seek stockholder approval of such initial Business Combination at a meeting called for such purpose at which public stockholders may seek to convert their Public Shares, regardless of whether they vote for or against the proposed Business Combination, into their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable) or (2) provide its public stockholders with the opportunity to sell their Public Shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable), in each case subject to the limitations described herein. The Public Shares subject to redemption were recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”).

If the Company determines to engage in a tender offer, such tender offer will be structured so that each public stockholder may tender any or all of his, her or its Public Shares rather than some pro rata portion of his, her or its shares. If enough stockholders tender their shares so that the Company is unable to satisfy any applicable closing condition set forth in the definitive agreement related to its initial Business Combination, or the Company is unable to maintain net tangible assets of at least $5,000,001, the Company will not consummate such initial Business Combination. The decision as to whether it will seek stockholder approval of a proposed Business Combination or will allow stockholders to sell their shares to the Company in a tender offer will be made by the Company based on a variety of factors such as the timing of the transaction or whether the terms of the transaction would otherwise require us to seek stockholder approval.

If the Company provides stockholders with the opportunity to sell their shares to it by means of a tender offer, it will file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial Business Combination as is required under the SEC’s proxy rules. If the Company seeks stockholder approval of its initial Business Combination, the Company will consummate the Business Combination only if a majority of the outstanding shares of common stock present in person or by proxy at a meeting of the Company are voted in favor of the Business Combination.

Notwithstanding the foregoing redemption rights, if the Company seeks stockholder approval of its initial Business Combination and the Company does not conduct redemptions in connection with its initial Business Combination pursuant to the tender offer rules, (the Amended and Restated Certificate of Incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its Public Shares with respect to more than an aggregate of 20% of the shares sold in the Initial Public Offering, without the Company’s prior consent. The Company’s Sponsor, officers and directors (the “initial stockholders”) have agreed not to propose any amendment to the Amended and Restated Certificate of Incorporation (a) that would modify the substance or timing of the Company’s obligation to provide for the redemption of its Public Shares in connection with an initial Business Combination or to redeem 100% of its Public Shares if the Company does not complete its initial Business Combination within 15 months from the closing of the Initial Public Offering or (b) with respect to any other material provisions relating to stockholders’ rights or pre-initial Business Combination activity, unless the Company provide its public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On March 18, 2022, the Company held a stockholder meeting to extend the date by which the Company has to consummate a business combination from March 28, 2022 (the “Original Termination Date”) to June 28, 2022. In connection with the extension, the Company made a deposit into the Trust Account of $720,000 on March 23, 2022. As part of the meeting, stockholders redeemed 15,092,126 shares resulting in redemption payments out of the Trust Account totaling approximately $152,451,819. In addition, stockholders approved a proposal to allow the Company, without another stockholder vote, to elect to extend the date to consummate a Business Combination on a monthly basis for up to six times by an additional one month each time, upon five days’ advance notice prior to the applicable deadline, for a total of up to nine months after the Original Termination Date, unless the closing of the proposed Business Combination with Suneva Medical, Inc. as described below or any potential alternative initial Business Combination shall have occurred.

On each of June 23, 2022, July 26, 2022, August 30, 2022, September 28, 2022, and October 28, 2022 the Company deposited $240,000 into the Trust Account to extend the date to consummate a Business Combination through July 28, 2022, August 28, 2022, September 28, 2022, October 28, 2022, and November 28, 2022 (the “Extended Date”), respectively. The Company made a deposit of $240,000 to extend the date to consummate a Business Combination until the earlier of the closing of a Business Combination or December 28, 2022.

On December 23, 2022, the Company held its 2022 Annual Meeting of Stockholders, to among other things, seek approval to amend the Company’s Amended and Restated Certificate of Incorporation, to allow the Company to extend the date to consummate a Business Combination on a monthly basis for up to six times by an additional one month each time for a total of up to six months from December 28, 2022 until June 30, 2023 (the “Second Extended Date”), upon three calendar days’ advance notice prior to the applicable monthly deadline unless the closing of any potential initial business combination shall have occurred prior to the Second Extended Date. On each of December 27, 2022, January 26, 2023, February 27, 2023, March 27, 2023, April 28, 2023 and May 24, 2023, the Company deposited $100,000 into the Trust Account to extend the date to consummate a Business Combination through January 31, 2023, February 28, 2023, March 31, 2023, April 30, 2023, May 31, 2023 and June 30, 2023, respectively.

On June 22, 2023, the Company held a stockholder meeting to amend the Company’s Amended and Restated Certificate of Incorporation, to allow the Company, without another stockholder vote, to elect to extend the date to consummate a business combination on a monthly basis for up to six times by an additional one month until December 31, 2023, by depositing $85,000 into the trust account and (ii) further extend the date by which the Company must consummate an initial business combination (without seeking additional approval from the stockholders) for up to an additional three months, from January 1, 2024 to March 31, 2024, with no additional deposits to be made into the Trust Account during such period, each such extension for an additional one month period, (the “Third Extended Date”).

On June 22, 2023, the Company held a stockholder meeting (the “June 2023 Stockholders Meeting”) in which stockholders voted to (A) amend the Company’s Amended and Restated Certificate of Incorporation, to allow the Company to (i) initially extend the date by which the Company must consummate an initial business combination up to six times, each such extension for an additional one month period, until December 31, 2023, by depositing into the Trust Account, the amount of $85,000 for each one-month extension until December 31, 2023, and (ii) further extend the date by which the Company must consummate an initial business combination (without seeking additional approval from the stockholders) for up to an additional three months, from January 1, 2024 to March 31, 2024, with no additional deposits to be made into the Trust Account during such period, each such extension for an additional one month period, (the “Third Extended Date”), unless the closing of the proposed initial business combination with Clearday, Inc., or any potential alternative initial business combination shall have occurred prior to the Third Extended Date; and (B) to amend the Company’s Investment Management Trust Agreement, dated as of December 22, 2020, by and between the Company and the Trustee to reflect the foregoing extensions and deposits.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In connection with the stockholders’ vote at the June 2023 Stockholders Meeting, 227,359 shares of common stock were tendered for redemption. As a result, approximately $2,498,947 (approximately $10.99 per share) were removed from the Company’s Trust Account to pay such holders, without taking into account additional allocation of payments to cover any tax obligation of the Company, such as franchise taxes, but not including any excise tax, since that date. Following redemptions, the Company has 1,617,415 shares of public common stock outstanding, and approximately $17,777,324 remained in the Trust Account.

On June 27, 2023, July 27, 2023, August 28, 2023, September 29, 2023, October 27, 2023, and December 1, 2023, the Company deposited $85,000 in the Trust Account, to extend the date by which the Company can complete an initial business combination by one month to July 31, 2023, August 31, 2023, September 30, 2023, October 31, 2023, November 30, 2023, and December 31, 2023, respectively.

On March 27, 2024, the Company held a Special Meeting of Shareholders (“the March 2024 Stockholders Meeting”) in which voted to amend the Company’s Amended and Restated Certificate of Incorporation, to allow the Company to allow the Company to extend the date by which the Company must consummate a business combination up to six times, each such extension for an additional one month period, until September 30, 2024 (the “Fourth Extended Date”), upon one calendar day advance notice to Continental Stock Transfer & Trust Company, prior to the applicable monthly deadline, unless the closing of the proposed Business Combination with Clearday, Inc., or any potential alternative initial business combination shall have occurred prior to the Fourth Extended Date. It also voted to amend the Company’s Investment Management Trust Agreement, allowing the Company to extend the date by which the Company must consummate a business combination up to six times, each such extension for an additional one month period, until September 30, 2024, by depositing into the Trust Account the amount of $35,000 (the “Extension Payment”) for each one-month extension until September 30, 2024. On March 28, 2024 a deposit of $35,000 was made into the Trust Account to extend to April 30, 2024.

The Company is currently in default of the Extension Payments for May and June of 2024. The Company anticipates that it will make the outstanding payments in June, 2024.

On March 27, 2024 stockholders elected to redeem 968,350 Public Shares, resulting in a redemption of $11,267,175 from the Trust Account. Subsequent to the redemptions, 649,065 Public Shares remained.

The Company’s initial stockholders agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares (as defined in Note 5) held by them if the Company fails to complete its initial Business Combination within the Combination Period. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete its initial Business Combination within the Combination Period.

Merger Agreement

On January 12, 2022, the Company entered into a Merger Agreement (the “Old Merger Agreement”) by and among the Company, VHAC Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Old Merger Sub”), and Suneva Medical, Inc., a Delaware corporation (“Suneva”). Pursuant to the terms of the Merger Agreement, a Business Combination between the Company and Suneva would have been effected through the merger of Old Merger Sub with and into Suneva, with Suneva surviving the merger as a wholly owned subsidiary of the Company (the “Old Merger”). The board of directors of the Company had (i) approved and declared advisable the Old Merger Agreement, the Old Merger and the other transactions contemplated thereby and (ii) resolved to recommend approval of the Old Merger Agreement and related transactions by the stockholders of the Company.

On July 13, 2022, the Company, Old Merger Sub, and Suneva entered into the Second Amendment to Old Merger Agreement (the “Second Amendment”) that amended and modified the Old Merger Agreement to extend the outside closing date to December 31, 2022 and to reduce the amount of parent closing cash required as a closing condition from $50 million to $30 million, net of Suneva expenses and Viveon expenses (“Parent Expenses”) and net of repayment of the $1.5 million Subordinated Convertible Promissory Note (as defined in Note 6) issued by Suneva to Intuitus Suneva Debt LLC (an entity affiliated with Viveon’s Chief Financial Officer), dated May 10, 2022 (unless converted into Suneva capital stock at the consummation of the business combination, which conversion is mandatory except in the case of a default by Suneva). Further, the defined term Parent Expenses was amended to include the Viveon’s operating expenses, severance payments and deferred compensation.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On November 10, 2022, the Company, Old Merger Sub, and Suneva entered into the Third Amendment to Old Merger Agreement (the “Third Amendment”) that amended and modified the Old Merger Agreement to (i) fix the aggregate exercise price for all of the in-the-money Suneva options and warrants at $2,582,075, representing the aggregate exercise price for all the in-the-money Suneva options and warrants outstanding as of the date of the Third Amendment, and extend the outside closing date from December 31, 2022 to March 31, 2023, to the extent the Company’s stockholders approve an amendment to its Amended and Restated Certificate of Incorporation to extend the date by which the Company has to consummate a business combination to June 30, 2023.

On February 2, 2023, legal counsel for Viveon sent a letter informing Suneva’s legal counsel that Viveon decided, effective immediately, to unilaterally terminate the Old Merger Agreement pursuant to Sections 10.2(a) and 10.3 thereof, based upon material breaches of the Old Merger Agreement by Suneva. The termination letter was sent without prejudice and reserved all of Viveon, Old Merger Sub and Viveon Health, LLC (Viveon’s sponsor) rights, claims and remedies, specifically including those within the Merger Agreement, against Suneva and others associated with Suneva who participated in the merger discussions and arrangements, and waived none.

Merger Agreement with Clearday

On April 5, 2023, the Company entered into a Merger Agreement (the “Merger Agreement”), by and among Viveon, Clearday, Inc., a Delaware corporation (“Clearday”), VHAC2 Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Viveon (“New Merger Sub”), Viveon Health LLC, a Delaware limited liability Company, in the capacity as the representative from and after the effective time for the stockholders of the Company (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 Clearday 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 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 the Company and Clearday will be effected through the merger of New Merger Sub with and into Clearday, with Clearday surviving the merger as a wholly owned subsidiary of the Company and the Company 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 Company. Capitalized terms used herein but not defined shall have the meanings ascribed thereto in the Merger Agreement.

On August 28, 2023, the Company, Clearday, Merger Sub, SPAC Representative and Company Representative entered into the First Amendment to Merger Agreement (the “First Amendment”) that amended and modified the 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 Company Capital Stock (including Company Common Stock, Company Series A Preferred Stock and Company Series F Preferred Stock) as of the effective time of the Merger will be entitled to receive a pro rata portion of the Earnout Shares, and (iii) amend the mechanics for appointing a successor Company Representative.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Consideration

Merger Consideration

The total consideration to be paid at closing (the “Merger Consideration”) by the Company to Clearday security holders (and holders who have the right to acquire Clearday capital stock) was an amount equal to $250 Million (plus the aggregate exercise price for all Clearday options and warrants) per the Merger Agreement. The First Amendment increased the Merger Consideration to an amount equal to $500 Million (plus the aggregate exercise price for all Clearday options and warrants). The Merger Consideration will be payable in shares of the Company’s common stock, par value $0.0001 per share, valued at $10 per share.

Earnout Payments

In addition, the holders of Clearday preferred stock will have the contingent right to earn up to 5,000,000 shares of the Company’s 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 (as defined below) for any Earnout Period is a positive number for the first time during the Earnout Eligibility Period (the “Earnout Milestone”). Under the Merger Agreement, Adjusted Net Income means for any Earnout Period, the consolidated net income or loss for such period calculated in accordance with U.S. GAAP applied on a basis consistent with past practice, of (a) for periods prior to the Closing, the Company and its subsidiaries (the “Company Group”), and (b) for periods from and after the Closing, of us and our subsidiaries (including the Company Group), in each case before adjusting for the following to the extent deducted/added in calculating consolidated net income or loss: (1) interest expense/income; (2) income tax expense/tax credits; (3) depreciation and amortization; (4) transaction expenses; (5) extraordinary items; (6) any income or loss attributable to us that accrues in accordance with U.S. GAAP on or prior to the Closing Date; and (7) all gains or losses in connection with sales or dispositions of assets and investments not in the ordinary course of business.

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 Clearday earnout holders and shall be released from escrow and delivered to the Clearday earnout holders, and the Clearday 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.

Treatment of Clearday Securities

Cancellation of Securities.

Each share of Clearday capital stock, if any, that is owned by the Company, New Merger Sub, Clearday, 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 Clearday’s Series F Cumulative Convertible Preferred Stock, par value $0.001 per share (“Clearday Series F Preferred Stock”) (other than any such shares of Clearday 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.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Each issued and outstanding share of Clearday’s Series A Convertible Preferred Stock, par value $0.001 per share (“Clearday Series A Preferred Stock”) (other than any such shares of Clearday 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 Clearday’s common stock, par value $0.001 per share (“Clearday Common Stock”) (other than any such shares of Clearday capital stock cancelled as described above and any dissenting shares) will be converted into the right to receive a number of shares of the Company’s 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 increased by the First Amendment to $500 Million, plus the aggregate exercise or conversion price of outstanding Clearday’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 Clearday capital stock (including Clearday 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 Clearday subsidiary securities as provided in the Merger Agreement); divided by (b) $10.00.

Merger Sub Securities.

Each share of common stock, par value $0.0001 per share, of New Merger Sub issued and outstanding immediately prior to the Effective Time will be converted into and become one newly issued share of common stock of the surviving corporation.

Stock Options.

At the Effective Time, each outstanding option to purchase shares of Clearday 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 the Company’s 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 the Company’s common stock equal to the exercise price per share of Clearday Common Stock subject to such option divided by the Conversion Ratio.

Warrants.

Contingent on and effective as of immediately prior to the effective time, each outstanding warrant to purchase shares of Clearday Preferred Stock or Clearday 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, Clearday’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 subsidiary capital stock will remain in full force and effect with the right to acquire the Clearday Common Stock with such adjustments noted in the terms of such subsidiary capital stock.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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. The Company 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. The Company and Clearday 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 the Company and Clearday 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 the Company’s public stockholders, together with financing programs available to Clearday after the Closing, will provide to Clearday working capital to meet its short term commercial development goals.

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

The Company 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 the Company and Clearday, subject to approval of the Incentive Plan by the Company’s stockholders. The Incentive Plan will provide for an initial aggregate share reserve equal to 8% of the number of shares of the Company’s common stock issued and outstanding at the Closing and an “evergreen” provision that is mutually agreeable to the Company and Clearday 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 the Company and Clearday.

Non-Solicitation Restrictions

Each of the Company and Clearday 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 the Company and Clearday 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 the Company and Clearday, as applicable, would be deemed a breach of the party’s obligations with respect to these non-solicitation restrictions.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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) the Company 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 the Company’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 Clearday’s stockholders of the Merger and related transactions, (vi) approval by the Company’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 the Company’s 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 the Company and New Merger Sub, the consummation of the Merger is conditioned upon, among other things, (i) Clearday having duly performed or complied with all of its obligations under the Merger Agreement in all material respects, (ii) the representations and warranties of Clearday, 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 Clearday 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 Clearday or any of its subsidiaries, (v) Clearday and its securityholders having executed and delivered to the Company each additional agreement (as defined in the Merger Agreement) to which they each are a party and (vi) Clearday delivering certain certificates to the Company.

Solely with respect to Clearday, the consummation of the Merger is conditioned upon, among other things, (i) Viveon and New 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 the Company 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 the Company or New 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 the Company or New 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) the Company delivering certain certificates to Clearday, (vii) the size and composition of the post-Closing board of directors of the Company having been appointed as set forth in the Merger Agreement and (viii) the Company, Viveon Health LLC and other stockholders, as applicable, having executed and delivered to Clearday 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 the Company or Clearday, if (A) the Merger and related transactions are not consummated on or before the latest of (i) June 30, 2023 or (ii) in accordance with the Company’s amended and restated certificate of incorporation, the last date for the Company to consummate a business combination pursuant to an extension; 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;

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(ii) by either the Company or Clearday, 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 the Company and Clearday duly authorized by each of their respective boards of directors.

The Merger Agreement and other agreements described below have been included to provide investors with information regarding their respective terms. They are not intended to provide any other factual information about the Company, Clearday or the other parties thereto. In particular, the assertions embodied in the representations and warranties in the Merger Agreement were made as of a specified date, are modified or qualified by information in one or more disclosure letters prepared in connection with the execution and delivery of the Merger Agreement, may be subject to a contractual standard of materiality different from what might be viewed as material to investors, or may have been used for the purpose of allocating risk between the parties. Accordingly, the representations and warranties in the Merger Agreement are not necessarily characterizations of the actual state of facts about the Company, Clearday or the other parties thereto at the time they were made or otherwise and should only be read in conjunction with the other information that the Company or Clearday makes publicly available in reports, statements and other documents filed with the SEC. The Company and Clearday investors and securityholders are not third-party beneficiaries under the Merger Agreement.

Certain Related Agreements

Parent Support Agreements.

Concurrently with the execution of the Merger Agreement, the Company, Clearday and the Sponsor and the officers and directors of the Company entered into a support agreement (the “Parent Support Agreement”) pursuant to which the Sponsor and the officers and directors of the Company have agreed to vote all shares of the Company’s common stock beneficially owned by them, including any additional shares of the Company 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 the Company is afforded to consummate an initial business combination.

Company Support Agreements.

Concurrently with the execution of the Merger Agreement, the Company, Clearday and certain stockholders of Clearday entered into a support agreement (the “Company Support Agreement”), pursuant to which such Clearday stockholders have agreed to vote all common and preferred stock of Clearday beneficially owned by them, including any additional shares of Clearday 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.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Lock-Up Agreements.

In connection with the closing, certain Clearday 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 the Company’s common stock, and including any securities convertible into, or exchangeable for, or representing the rights to receive the Company’s common stock, if any, acquired during the Lock-up Period. If the closing price of the Company’s 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 the Company’s common stock held by certain stockholders will remain in effect.

Amended and Restated Registration Rights Agreement.

At the Closing Date, the Company will enter into an amended and restated registration rights agreement (the “Amended and Restated Registration Rights Agreement”) with certain existing stockholders of the Company and Clearday with respect to their shares of the Company’s 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 the Company’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 the Company 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 Company’s existing stockholders, and the holders of a majority of the shares held by the Clearday stockholders will each be entitled to make one demand that Clearday register such securities for resale under the Securities Act, or two demands each if the Company 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 the Company to include such securities in registration statements that the Company otherwise files. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Going Concern

As of March 31, 2023, the Company had $77,861 of cash and cash equivalents held outside the Trust Account available for working capital needs. In connection with the Company’s assessment of going concern considerations in accordance with FASB’s ASC Subtopic 205-40, Presentation of Financial Statements - Going Concern, management has determined that if the Company is unable to raise additional funds to alleviate liquidity needs or complete a Business Combination by September 30, 2024 in accordance with the latest extension, then the Company will cease all operations except for the purpose of liquidating. The liquidity condition and date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern one year from the date that these unaudited condensed consolidated financial statements are issued. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be unable to continue as a going concern. The Company intends to complete a Business Combination before the mandatory liquidation date or obtain approval for an extension.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Risks & Uncertainties

The credit and financial markets have experienced extreme volatility and disruptions due to the current conflict between Ukraine and Russia. The conflict is expected to have further global economic consequences, including but not limited to the possibility of severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in inflation rates and uncertainty about economic and political stability. In addition, the United States and other countries have imposed sanctions on Russia which increases the risk that Russia, as a retaliatory action, may launch cyberattacks against the United States, its government, infrastructure and businesses. The conflict between Israel and Hamas in early October 2023 and Israel’s subsequent declaration of war against Hamas may have severe adverse effects on regional and global economic markets. The war between Hamas and Israel and the varying involvement of the United States and other countries, as well as political and civil unrest related to the foregoing, makes it difficult to predict the conflict’s impact on global economic and market conditions and, as a result, the situation presents material uncertainty and risk with respect to the Company

Inflation Reduction Act of 2022 and Excise Tax

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which, among other things, imposes a 1% excise tax on the fair market value of stock repurchased by publicly traded U.S. corporations and certain U.S. subsidiaries of publicly traded non-U.S. corporations beginning in 2023, with certain exceptions (the “Excise Tax”). Because we are a Delaware corporation and our securities trade on the New York Stock Exchange, we will likely be considered a “covered corporation” within the meaning of the Inflation Reduction Act. While not free from doubt, absent any further guidance from Congress or the U.S. Department of the Treasury, there is significant risk that the Excise Tax will apply to any redemptions of our common stock after December 31, 2022, including redemptions in connection with an initial Business Combination and any amendment to our certificate of incorporation to extend the time to consummate an initial Business Combination, unless an exemption is available. In addition, the Excise Tax may make a transaction with us less appealing to potential business combination targets, and thus, potentially hinder our ability to enter into and consummate an initial Business Combination. Further, the application of the Excise Tax in the event of a liquidation after December 31, 2022 is uncertain, and could impact the per-share amount that would otherwise be received by our stockholders in connection with our liquidation.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 3. INITIAL PUBLIC OFFERING

On December 28, 2020, the Company sold 17,500,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one share of common stock, par value $0.0001 per share, one redeemable warrant (the “Public Warrants”) and one right (the “Rights”). Each Public Warrant entitles the holder thereof to purchase one-half (1/2) of a share of common stock at a price of $11.50 per whole share. Each Right entitles the holder thereof to receive one-twentieth (1/20) of a share of common stock upon consummation of an initial Business Combination.

On December 30, 2020, the Company sold 2,625,000 Over-Allotment Units pursuant to the underwriters’ full exercise of the over-allotment option (see Note 7), generating aggregate of gross proceeds of $26,250,000.

NOTE 4. PRIVATE PLACEMENT

Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 18,000,000 Private Warrants at a price of $0.50 per warrant ($9,000,000 in the aggregate), each exercisable to purchase one-half of one share common stock at a price of $11.50 per whole share, in a private placement that closed simultaneously with the closing of that offering. A portion of the purchase price of the Private Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account.

NOTE 5. RELATED PARTY TRANSACTIONS

Founder Shares

In August 2020, the Sponsor paid $25,000, or approximately $0.007 per share, to cover certain offering costs in consideration for 3,593,750 shares of common stock, par value $0.0001 (the “Founder Shares”). On December 3, 2020, the Company declared a share dividend of 0.36 for each outstanding share, resulting in 4,887,500 shares outstanding, and on December 22, 2020 the Company declared a share dividend of 0.03 resulting in 5,031,250 shares which includes an aggregate of up to 656,250 shares that are subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part, and up to an aggregate of 1,006,250 shares of common stock (or 875,000 shares of common stock to the extent that the underwriters’ over-allotment was not exercised, pro rata) that are subject to forfeiture to the extent that Rights are exercised upon consummation of an initial Business Combination. In connection with the underwriters’ fully exercise of their over-allotment option on December 30, 2020 (see Note 7), the 656,250 shares were no longer subject to forfeiture.

The Founder Shares were placed into an escrow account maintained by Continental Stock Transfer & Trust Company acting as escrow agent. 50% of these shares will not be transferred, assigned, sold or released from escrow until the earlier of (i) 6 months after the date of the consummation of the initial Business Combination or (ii) the date on which the closing price of the Company’s shares of 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 commencing after the initial Business Combination and the remaining 50% of the Founder Shares will not be transferred, assigned, sold or released from escrow until 6 months after the date of the consummation of the initial Business Combination, or earlier, in either case, if, subsequent to its initial Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of its stockholders having the right to exchange their shares of common stock for cash, securities or other property.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

During the escrow period, the holders of these shares will not be able to sell or transfer their securities except (1) to any persons (including their affiliates and stockholders) participating in the Private Placement of the Private Warrants, officers, directors, stockholders, employees and members of the Company’s Sponsor and its affiliates, (2) amongst initial stockholders or their respective affiliates, or to the Company’s officers, directors, advisors and employees, (3) if a holder is an entity, as a distribution to its, partners, stockholders or members upon its liquidation, (4) by bona fide gift to a member of the holder’s immediate family or to a trust, the beneficiary of which is a holder or a member of a holder’s immediate family, for estate planning purposes, (5) by virtue of the laws of descent and distribution upon death, (6) pursuant to a qualified domestic relations order, (7) by certain pledges to secure obligations incurred in connection with purchases of the Company’s securities, (8) by private sales at prices no greater than the price at which the shares were originally purchased or (9) for the cancellation of up to 656,250 shares of common stock subject to forfeiture to the extent that the underwriters’ over-allotment is not exercised in full or in part or in connection with the consummation of the Company’s initial Business Combination.

On December 23, 2020, the Sponsor transferred 81,000 of its Founder Shares of the Company to three board members (the “Transferees”) (27,000 Founder Shares to each Transferee) for a nominal fee. On April 30, 2021, the Sponsor subsequently transferred 27,000 of its Founder Shares of the Company to a new board member (the “Additional Transferee”, and, together with the Transferees, the “Directors”). These awards are subject to ASC 718.

Under ASC 718, stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The Founder Shares vested immediately, and, as such, in accordance with ASC 718, the Company recognized compensation expense on the transfer date in an amount equal to the number of Founders Shares sold times the grant date fair value per share less the amount initially received for the purchase of the Founders Shares. he Company did not recognize compensation expense for the three months ended March 31, 2023 and 2022.

Note Agreements Payable - Related Party

The Company entered into a series of Note Agreements with several lenders affiliated with our Sponsor, Viveon Health LLC and Intuitus Group LLC, and Intuitus Capital LLC for which the Chief Financial Officer of the Company is the Sole Proprietor for up to an aggregate amount totaling $1,955,000 (see Note 6). As of March 31, 2023 and December 31, 2022, the balance on the Notes was $1,955,000.

Promissory Notes - Related Party

The Chief Financial Officer of the Company loaned the Company $440,000 to cover expenses related to ongoing operations, of which $75,000 was funded on December 27, 2022, $60,000 was funded on January 20, 2023, $125,000 was funded on January 26, 2023, $105,000 was funded on February 24, 2023, and $75,000 was funded on March 21, 2023. As of March 31, 2023, and December 31, 2022, the outstanding balance of the loans were $440,000 and $75,000, respectively.

Subsequent to March 31, 2023, the Chief Financial Officer of the Company loaned the Company an additional $396,000 through the date of this filing of which $15,000 was funded on April 14, 2023, $105,000 was funded on April 28, 2023, $70,000 was funded on June 27, 2023, $12,000 was funded on September 29, 2023, $35,000 was funded on November 30, 2023, $50,000 was funded on December 28, 2023, $80,000 was funded on December 29, 2023, $6,000 was funded on April 30, 2023, $23,000 was funded on April 30, 2023, $30,000 was funded on May 3, 2024, and $20,000 was funded on May 9, 2024. These loans are non-interest bearing and payable upon consummation of the Company’s Initial Business Combination.

 The Chief Executive Officer of the Company loaned the Company $100,000 to cover expenses related to ongoing operations, which was funded on March 28, 2023. The loan agreement were signed on April 2, 2023. As of March 31, 2023, and December 31, 2022, the outstanding balance of the loan was $100,000 and $0, respectively.

Subsequent to March 31, 2023, our Chief Executive Officer of the Company, loaned the Company an additional $100,000 through the date of this filing of which $100,000 was funded on December 21, 2023. This loan is non-interest bearing and payable upon consummation of the Company’s initial Business Combination.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Eight investors in the Sponsor, loaned the Company $295,000 in the aggregate to cover expenses related to ongoing operations of which $67,000 was funded through two loans on March 31, 2023. As of March 31, 2023, and December 31, 2022, the outstanding balance of these loans was $67,000 and $0, respectively.

Subsequent to March 31, 2023, the eight investors loaned the Company an additional $228,000 through the date of this filing of which $33,000 was funded on April 5, 2023, $100,000 was funded on January 25, 2024, $50,000 funded on January 26, 2024, $20,000 funded on February 6, 2024, and $25,000 funded on February 12, 2024. These loans are non-interest bearing and payable upon consummation of the Company’s Initial Business Combination.

As noted above the total amount funded under the promissory notes - related party is $607,000 and $75,000 as of March 31, 2023, and December 31, 2022, respectively. The Company considered the imputed interest from the promissory notes - related party as capital contributions increasing Additional Paid-in Capital on the condensed consolidated statement of stockholders’ equity on the date the loans were funded. The debt discount is amortized over the length of the loan considered to be the earlier of a business combination or December 31, 2023, using their synthetic credit rating, which is an estimate of the effective interest rate at which the Company could borrow within the open market. The synthetic credit ratings as of January 20, 2023, January 26, 2023, February 24, 2023, March 21, 2023 were 25.1%, 24.9%, 23.2%, and 27.2%, respectively. The aggregate debt discount recorded on the promissory notes - related party for the three months ended March 31, 2023 and 2022 was $101,555 and $0, respectively. The carrying value of the promissory notes, net of discount are $514,240 and $75,000 as of March 31, 2023, and December 31, 2022, respectively. For the three months ended March 31, 2023, the amortization of the discount resulted in interest expense of $8,795.

Subsequent to March 31, 2023, in connection with the Merger Agreement the Chief Executive Officer, Chief Financial Officer and the eight investors in the Sponsor have agreed to exchange the outstanding balances of their loans in the amounts of $100,000, $642,000, and $295,000 respectively, pursuant to the terms of an exchange agreement with Viveon dated as of October 10, 2023 for a separate series of Clearday senior convertible promissory notes, which are described in Note 6. This exchange is contingent on the closing of the Business Combination.

Clearday Note

On May 12, 2023, the Company entered into an unsecured promissory note with Clearday (the “Clearday Note”). The Clearday Note is non-interest bearing, and will mature upon the earlier of (i) the first anniversary of the issuance date and (ii) the date of the closing of the Business Combination. As of March 31, 2023, and December 31, 2022, the outstanding balance of these loans was $0, respectively. On May 12, 2024 there was an extension that the promissory note would mature earlier of (i) the date of the closing the Business Combination and (ii) such earlier date as the parties shall from time to time agree in writing.

Subsequent to March 31, 2023, proceeds provided to the Company under the Clearday Note were approximately $1,761,362. Funds in the Trust Account may not be used to repay the obligations under the Clearday Note. The Company used such funds for general working capital purposes.

Working Capital Loans

In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Each loan would be evidenced by a promissory note. The notes would be repaid upon consummation of the Company’s initial Business Combination, without interest. As of March 31, 2023 and December 31, 2022, the Company had no borrowings under Working Capital Loans.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Administrative Service Fee

Commencing on the date of the Company’s final prospectus prepared in connection with the Initial Public Offering, the Company agreed to pay an affiliate of the Sponsor a total of $20,000 per month for office space, utilities and secretarial support. Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. The Company incurred $60,000 and $60,000 of administrative service fees for the three months ended March 31, 2023 and 2022, respectively. The accrued amounts are included in Due to related party on the unaudited condensed consolidated balance sheets. As of March 31, 2023 and December 31, 2022, $110,000 and $50,000 of such expenses were recorded in Due to related party, respectively.

Due to Related Party

The Company’s directors and officers are reimbursed for any reasonable out-of-pocket expenses incurred by them in connection with certain activities on behalf of the Company, such as identifying and investigating possible target businesses and Business Combinations. For the three months ended March 31, 2023, the Company’s Chief Financial Officer paid $144,780 of expenses on behalf of the Company. For the three months ended March 31, 2022, $2,905 of such expenses were incurred. As of March 31, 2023 and 2022, $150,586 and $5,806 of such expenses were recorded in Due to related party, respectively.

Due from Related Party

As of December 31, 2021, the Company had a receivable of $15,000 in connection with a payment made by the Company to a vendor on behalf of a related party. During the year ended December 31, 2022, the Company was repaid for the receivable. As of March 31, 2023 and December 31, 2022, the Company had receivables of $0 in connection with a payment made by the Company to a vendor for a related party.

NOTE 6. NOTE AGREEMENTS PAYABLE

On March 21, 2022, March 23, 2022, April 4, 2022, April 27, 2022, May 9, 2022, October 27, 2022, and November 25, 2022, in connection with the extension of the date by which the Company has to consummate a Business Combination (see Note 7), the Company entered into subscription agreements with several lenders for a loan of up to $4,000,000, in the aggregate (the “Subscription Agreements”).

Pursuant to the Subscription Agreements, the Company issued a series of unsecured senior promissory notes in the aggregate principal amount of up to $4,000,000 (the “Notes”) to the subscribers. Of the $4,000,000 in Notes, $1,955,000 was subscribed for by several related parties affiliated with our sponsor, Viveon Health LLC, and the balance in the amount of $2,045,000 was subscribed for by parties that are not related to our sponsor.

Pursuant to the terms of the Subscription Agreements, the subscribers also received warrants to purchase one share of our common stock for every $2.00 of the funded principal amount of the Notes up to 2,000,000 shares of our common stock, in the aggregate, at an exercise price of $11.50 per share, subject to adjustment (the “Subscription Warrants”). The Subscription Warrant term commences on the Exercise Date (as hereinafter defined) for a period of 49 months. The Subscription Warrants are exercisable commencing on the date of the initial business combination (the “Exercise Date”) and have a cashless exercise feature that is available at any time on or after the Exercise Date. Commencing on the date 13 months following the Exercise Date, the subscribers have the right, but not the obligation, to put the Subscription Warrants to us at a purchase price of $5.00 per share. We have agreed to file, within thirty (30) calendar days after the consummation of an initial business combination, a registration statement with the Securities and Exchange Commission to register for resale the shares of common stock underlying the Subscription Warrants.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 The Notes do not bear interest and mature upon the earlier of (i) the closing of our initial business combination, and (ii) December 31, 2022 (the “Maturity Date”). The Notes provide for a credit line up to the maximum amount of $4,000,000. We will not have the right to re-borrow any portion of any loans made under the Notes once repaid. As of March 31, 2023, a commitment fee in the amount of $400,000, equal to 10% of the maximum principal amount of the Note, had been paid to the subscribers, on a pro rata basis. In the event that we do not consummate a business combination by the Maturity Date, the Notes will be repaid only from amounts remaining outside of our Trust Account, if any. Subsequent to March 31, 2023, in connection with the Merger Agreement a majority of the holders of the Notes and Subscription Warrants have agreed to exchange such Notes and Subscription Warrants pursuant to the terms of an exchange agreement with Viveon dated as of May 1, 2023 (the Exchange Agreement”) for a separate series of Clearday senior convertible promissory notes (the “Clearday Senior Convertible Notes”). This exchange is contingent on the closing of the Business Combination. The Clearday Senior Convertible Notes bear 8% interest per annum and mature upon the earlier of (i) June 30, 2024, or (ii) the date of any Change in Control. Upon the consummation of the business combination and the exchange of the Subscription Agreements for the Clearday Senior Convertible Notes, the lenders will forfeit their Subscription Warrants as part of the exchange. One lender has chosen not to convert to Clearday Senior Convertible Notes. The balance owed to this lender under the Notes is considered due upon demand by the lender. As of the date of this filing of this Quarterly Report the lender has not requested payment of the Note.

On March 21, 2022, an initial amount of $2,700,000 was drawn down from the Notes. $720,000 of the loan proceeds was deposited into our Trust Account in connection with extending the business combination completion window from March 28, 2022 until June 28, 2022. After June 28, 2022, we elected to continue to extend such date until December 28, 2022 by making a monthly deposit of $240,000 into the Trust Account each month for each monthly period until December 28, 2022.

See Note 9 for additional terms of the Subscription Warrants. Pursuant to a warrant cancellation and forfeiture agreement dated as of August 16, 2023, one of the Company’s directors agreed to forfeit for cancellation 89,029 of the warrant shares underlying the warrant issued to an affiliate that he controls in connection with the Notes described above.

In accordance with ASC 470-20-25-1 and ASC 815-15-30-2, the proceeds from the issuance of the Notes were allocated to the Notes and Subscription Warrants using the with-and-without method. Under this method, the Company first allocated the proceeds from the issuance of the Notes to the Subscription Warrants based on their initial fair value measurement of $5,370,185 for the Subscription Warrants issued on March 21, 2022, $337,991 for the Subscription Warrants issued on March 23, 2022, $341,967 for the Subscription Warrants issued on April 4, 2022, $417,037 for the Subscription Warrants issued on April 27, 2022, $162,003 for the Subscription Warrants issued on May 9, 2022, $65,326 for the Subscription Warrants issued on October 27, 2022, and $121,093 for the Subscription Warrants issued on November 25, 2022. The measurement of the Subscription Warrants fair value was determined utilizing a Monte Carlo simulation model considering all relevant assumptions current at the dates of issuance. See Note 10 for additional details on the assumptions used. The initial fair value of the Subscription Warrants exceeded the proceeds received from the issuance of the Notes. As such, the proceeds allocated to the Notes were $354,233. The Company recognized no gain or loss on issuance of the Subscription Warrants for the three months ended March 31, 2023.

On March 27, 2024, the Company held a Special Meeting of Shareholders (“the March 2024 Stockholders Meeting”) in which voted to amend the Company’s Amended and Restated Certificate of Incorporation, to allow the Company to allow the Company to extend the date by which the Company must consummate a business combination up to six times, each such extension for an additional one month period, until September 30, 2024 (the “Fourth Extended Date”), upon one calendar day advance notice to Continental Stock Transfer & Trust Company, prior to the applicable monthly deadline, unless the closing of the proposed Business Combination with Clearday, Inc., or any potential alternative initial business combination shall have occurred prior to the Fourth Extended Date. It also voted to amend the Company’s Investment Management Trust Agreement, allowing the Company to extend the date by which the Company must consummate a business combination up to six times, each such extension for an additional one month period, until September 30, 2024, by depositing into the Trust Account the amount of $35,000 (the “Extension Payment”) for each one-month extension until September 30, 2024. On March 28, 2024 a deposit of $35,000 was made into the Trust Account to extend to April 30, 2024.

The Company is currently in default of the Extension Payments for May and June of 2024. The Company anticipates that it will make the outstanding payments in June, 2024.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company complies with ASC Topic 835, Interest (“ASC 835”). In accordance with ASC 835-30, discounts to the principal amounts are included in the carrying value of the Notes and amortized to “Interest expense” over the remaining term of the underlying debt to the Original Maturity Date. The Company recorded a $3,645,777 debt discount upon issuance of the Notes, respectively. As of March 31, 2023 and December 31, 2022 the discount was fully amortized to interest expense over the term of the debt to the Original Maturity Date. For the three months ended March 31, 2023 and for the three months ended March 31, 2022, the amortization of the discount resulted in interest expense of $0 and $99,543, respectively. The carrying value of the Notes is $4,000,000 as of March 31, 2023 and December 31, 2022, respectively.

NOTE 7. COMMITMENTS AND CONTINGENCIES

Underwriting Agreement

The Company granted the underwriter a 45-day option to purchase up to 2,625,000 additional shares of common stock to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. The underwriters exercised the over-allotment option in full on December 28, 2020.

The underwriter was paid a cash underwriting fee of $0.20 per share, or $4,025,000 in the aggregate, upon the closing of the Initial Public Offering. In addition, $0.35 per share, or $7,043,750 in the aggregate was payable to the underwriter for deferred underwriting commissions. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

In addition, subject to certain conditions, the Company granted the underwriters of the Initial Public Offering, for a period of 12 months after the date of the consummation of a Business Combination, a right of first refusal to act as book-running managing underwriter or placement agent, with at least 30% of the economics, for any and all future public and private equity, convertible and debt offerings. In accordance with FINRA Rule 5110(f)(2)(E)(i), such right of first refusal shall not have a duration of more than three years from the effective date of the registration statement related to our initial public offering. Subsequently this agreement was voided.

Registration Rights

The holders of the Company’s Founder Shares issued and outstanding as well as the holders of the Private Warrants (and underlying securities) are entitled to registration rights pursuant to an agreement signed in connection with the Initial Public Offering. The holders of a majority of these securities are entitled to make up to two demands that the Company registers such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the Private Warrants (and underlying securities) can elect to exercise these registration rights at any time after the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s consummation of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Vendor Agreements

On May 18, 2021, the Company entered into an agreement with a transactional and strategic advisory firm (the “Strategic Advisor”) for advisory services as needed by the Company in connection with a Business Combination. Pursuant to this agreement, the Company incurred approximately $875,000 in fees. As of March 31, 2023 and December 31, 2022, $500,000 of such fees remain unpaid and are included in accrued costs and expenses on the unaudited condensed consolidated balance sheets. On November 1, 2021, the Company and the Strategic Advisor entered into an amendment to the agreement. Pursuant to this amendment, the Company will pay the Strategic Advisor a fee of $2,625,000, inclusive of the $500,000 accrued as of March 31, 2023 and December 31, 2022. The remaining $2,125,000 is contingent upon the consummation of the Business Combination.

On October, 8, 2021, the Company entered into an agreement with a financial advisor (the “Exclusive Financial Advisor”) for financial advisory services such as financial and transaction feasibility analysis, assistance in negotiations, assistance in capital planning, and other customary services in connection with a Business Combination, pursuant to which the Company will pay the Exclusive Financial Advisor a fee of $1,500,000 contingent upon the consummation of the Business Combination. As a result of the termination of the merger agreement between the Company and Suneva, this agreement was terminated on January 31, 2023, and there are no related contingent fees for the agreement.

On October 25, 2021, the Company entered into an agreement with a Consultant for investor relations and public relations services in connection with a Business Combination with Suneva. The Consulting Agreement specifically identified Suneva as the target of the Business Combination. Pursuant to the agreement, the Consultant would be paid a fee of $15,000 per month from the date of the agreement until the Business Combination with Suneva, with an additional $15,000 accruing each month until the Business Combination date. Additionally, pursuant to the agreement, the Consultant would be paid a success fee of $300,000 contingent upon the consummation of the Business Combination with Suneva, a performance based fee of up to $200,000 upon the consummation of the Business Combination with Suneva if the Consultant achieved certain objectives, a retainer of $34,000 due upon the consummation of the Business Combination with Suneva which would be held to the term of the agreement, a fee of $17,000 per month for investor relations services for the combined entity commencing upon the consummation of the Business Combination with Suneva with the first payment due within 5 days of the Business Combination with Suneva and subsequent monthly payments due upon the first of the corresponding month of services, and a fee of $17,000 per month for public relations services for the combined entity commencing upon the consummation of the Business Combination with Suneva with the first payment due within 5 days of the Business Combination with Suneva and subsequent monthly payments due upon the first of the corresponding month of services. The Consultant stopped providing services in February 2023.

On October 5, 2023, a legal complaint was filed in Connecticut Superior Court against the Company and Suneva by the Consultant. The Complaint alleges that the Company and Suneva owe the Consultant unpaid fees under an October 25, 2021 consulting agreement and asserts claims for breach of contract, breach of implied contract, unjust enrichment, and quantum meruit. As of the date of this filing, this action is not pending and has not been officially docketed with the Connecticut Superior Court. The Company is continuing to assess the merits of the complaint but believes that the claims by the Consultant against the Company are without merit and the Company intends to defend the action if it is properly initiated.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On November 1, 2021, the Company entered into an agreement with a financial advisor (the “Second Financial Advisor”) for financial advisory services such as guidance on valuation and transaction structure and terms, assistance in negotiations, coordination of due diligence, documentation, and transaction closing, and introduction of the Company to institutional investors in connection with a Business Combination, pursuant to which the Company will pay the Second Financial Advisor a fee of $400,000 contingent upon the consummation of the Business Combination. As a result of the termination of the merger agreement between the Company and Suneva, this agreement was terminated on January 31, 2023, and there are no related contingent fees for the agreement.

On November 2, 2021, the Company entered into an agreement with a financial advisor (the “Third Financial Advisor”) for financial advisory services such as market related advice and assistance in connection with a Business Combination, pursuant to which the Company will pay the Third Financial Advisor a fee of $500,000 contingent upon the consummation of the Business Combination. As a result of the termination of the merger agreement between the Company and Suneva, this agreement was terminated on June 9, 2023, and there are no related contingent fees for the agreement.

 On November 5, 2021, the Company entered into an agreement with an advisor (the “Advisor”) for services such as assistance in refining strategic objectives, preparation or refinement of solicitation materials, identification, contact, and solicitation of or potential investors and other sources of capital, and assistance in review, selection, negotiation, and closing of a transaction in connection with a Business Combination, pursuant to which the Company will pay the Advisor a fee of $200,000 contingent upon the consummation of the Business Combination. As a result of the termination of the merger agreement between the Company and Suneva, this agreement was terminated on June 19, 2023, and there are no related contingent fees for the agreement.

On February 17, 2022, the Company entered into an agreement with a broker-dealer (the “Broker-Dealer”) for services such as providing the Company with capital markets advisory services with regard to a forward purchase agreement, convertible private investment in public equity (“PIPE”), secured credit facility, and any other capital structure topics in connection with a Business Combination, pursuant to which the Company will pay the Broker-Dealer a fee of $250,000. This agreement was terminated on June 9, 2023, as a result of the termination of the merger agreement between the Company and Suneva. Pursuant to the terms of the agreement the Broker-Dealer will remain entitled to the fee of $250,000 if a Business Combination is consummated within 24 months after the termination date. The Company is pursuing a waiver from the Broker-Dealer to waive the $250,000 fee upon a Business Combination. As such, the fee remains contingent upon the consummation of the Business Combination.

On May 9, 2023, the Company entered into an agreement with a placement agent (the “Placement Agent) for services such as advising and assisting the Company in identifying one or more investors that are “accredited” or “qualified institutional buyers. Contingent upon the consummation of the Business Combination, the Company will pay the Placement Agents a cash fee equal to eight percent (8.0%) of the gross proceeds received by the Company.

Extensions

On March 18, 2022, the Company held an Annual Meeting of Stockholders for the purpose of approving various proposals, including an amendment to the Company’s Amended and Restated Certificate of Incorporation to extend the date to consummate the Business Combination.

On March 18, 2022, stockholders elected to redeem 15,092,126 shares of the Company’s common stock, resulting in redemption payments out of the Trust Account totaling approximately $152,451,819. Subsequent to the redemptions, 5,032,874 shares of common stock remained in the Trust Account.

On March 21, 2022, March 23, 2022, April 4, 2022, April 27, 2022, May 9, 2022, October 27, 2022, and November 25, 2022, the Company entered into the Note Agreements (see Note 6). The Note Agreements included Subscription Warrants (see Note 9). The entry into the Note Agreements and the terms of the Notes and Subscription Warrants was approved by the Audit Committee of the Board of Directors of the Company at a meeting held on March 21, 2022.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On March 23, 2022, the Company filed an amendment to its Amended and Restated Certificate of Incorporation with the Delaware Secretary of State to extend the date to consummate a Business Combination for a total of up to nine months after the Original Termination Date, unless the closing of the proposed Business Combination with any potential initial Business Combination shall have occurred. The Amendment was approved by the Company’s stockholders at its Annual Meeting of Stockholders held on March 18, 2022.

On December 23, 2022, the Company held its 2022 Annual Meeting of the Stockholders in which they voted to extend the date to consummate a business combination until June 30, 2023. . On each of December 27, 2022, January 26, 2023, February 27, 2023, March 27, 2023, April 28, 2023 and May 24, 2023, the Company deposited $100,000 into the Trust Account to extend the date to consummate a Business Combination through January 31, 2023, February 28, 2023, March 31, 2023, April 30, 2023, May 31, 2023 and June 30, 2023, respectively.  

On December 23, 2022, stockholders elected to redeem 3,188,100 Public Shares, resulting in a redemption payable as of December 31, 2022 of $34,004,514 included in common stock tendered for redemption on the unaudited condensed consolidated balance sheet. On January 25, 2023, redemption payments out of the trust account totaled $34,004,514. Subsequent to the redemptions, 1,844,774 Public Shares remained.

On June 22, 2023, the Company held a stockholder meeting (the “June 2023 Stockholders Meeting”) in which stockholders voted to (A) amend the Company’s Amended and Restated Certificate of Incorporation, to allow the Company to (i) initially extend the date by which the Company must consummate an initial business combination up to six times, each such extension for an additional one month period, until December 31, 2023, by depositing into the Trust Account, the amount of $85,000 for each one-month extension until December 31, 2023, and (ii) further extend the date by which the Company must consummate an initial business combination (without seeking additional approval from the stockholders) for up to an additional three months, from January 1, 2024 to March 31, 2024, with no additional deposits to be made into the Trust Account during such period, each such extension for an additional one month period, (the “Third Extended Date”), unless the closing of the proposed initial business combination with Clearday, Inc., or any potential alternative initial business combination shall have occurred prior to the Third Extended Date; and (B) to amend the Company’s Investment Management Trust Agreement, dated as of December 22, 2020, by and between the Company and the Trustee to reflect the foregoing extensions and deposits.

On March 27, 2024, the Company held a Special Meeting of Shareholders (“the March 2024 Stockholders Meeting”) in which voted to amend the Company’s Amended and Restated Certificate of Incorporation, to allow the Company to allow the Company to extend the date by which the Company must consummate a business combination up to six times, each such extension for an additional one month period, until September 30, 2024 (the “Fourth Extended Date”), upon one calendar day advance notice to Continental Stock Transfer & Trust Company, prior to the applicable monthly deadline, unless the closing of the proposed Business Combination with Clearday, Inc., or any potential alternative initial business combination shall have occurred prior to the Fourth Extended Date. It also voted to amend the Company’s Investment Management Trust Agreement, allowing the Company to extend the date by which the Company must consummate a business combination up to six times, each such extension for an additional one month period, until September 30, 2024, by depositing into the Trust Account the amount of $35,000 (the “Extension Payment”) for each one-month extension until September 30, 2024. On March 28, 2024 a deposit of $35,000 was made into the Trust Account to extend to April 30, 2024.

The Company is currently in default of the Extension Payments for May and June of 2024. The Company anticipates that it will make the outstanding payments June 2024.

On March 27, 2024 stockholders elected to redeem 968,350 Public Shares, resulting in a redemption of $11,267,175 from the Trust Account. Subsequent to the redemptions, 649,065 Public Shares remained.

 In connection with the stockholders’ vote at the June 2023 Stockholders Meeting, 227,359 shares of common stock were tendered for redemption. As a result, approximately $2,498,947 (approximately $10.99 per share) were removed from the Company’s Trust Account to pay such holders, without taking into account additional allocation of payments to cover any tax obligation of the Company, such as franchise taxes, but not including any excise tax, since that date. Following redemptions, the Company has 1,617,415 shares of public common stock outstanding, and approximately $17,777,324 will remain in the Trust Account.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On June 27, 2023, July 27, 2023, August 28, 2023, September 29, 2023, October 2, 2023, October 27, 2023, and December 1, 2023, the Company deposited $85,000 in the Trust Account, to extend the date by which the Company can complete an initial business combination by one month to July 31, 2023, August 31, 2023, September 30, 2023 and October 31, 2023, November 30, 2023, and December 31, 2023, respectively. From January 1, 2024 to March 31, 2024 , there were no additional deposits to be made into the Trust Account.

From January 1, 2024 through the filing date , there were additional deposits of $35,000 made into the Trust Account.

NOTE 8. STOCKHOLDERS’ DEFICIT

Preferred stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 and with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of March 31, 2023 and December 31, 2022, there was no preferred stock issued or outstanding.

Common stock — The Company is authorized to issue 60,000,000 shares of common stock with a par value of $0.0001 per share. Holders are entitled to one vote for each share of common stock. As of March 31, 2023 and December 31, 2022, there were 5,031,250 shares of common stock issued and outstanding, excluding 1,844,774 shares of common stock subject to possible redemption.

Rights — Except in cases where the Company is not the surviving company in a Business Combination, each holder of a Right will automatically receive one-twentieth (1/20) of a share of common stock upon consummation of the initial Business Combination. In the event the Company will not be the surviving company upon completion of the initial Business Combination, each holder of a Right will be required to affirmatively convert his, her or its rights in order to receive the one-twentieth (1/20) of a share underlying each right upon consummation of the Business Combination. The Company will not issue fractional shares in connection with an exchange of Rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Delaware General Corporation Law. As a result, holders must hold Rights in multiples of 20 in order to receive shares for all Rights upon closing of a Business Combination. If the Company is unable to complete an initial Business Combination within the required time period and the Company redeems the Public Shares for the funds held in the Trust Account, holders of Rights will not receive any of such funds for their Rights and the Rights will expire worthless.

NOTE 9. WARRANTS

Each Public Warrant entitles the holder thereof to purchase one-half (1/2) of a share of common stock at a price of $11.50 per whole share, subject to adjustment. Pursuant to the warrant agreement, a warrant holder may exercise its rights only for a whole number of shares. This means that only an even number of shares may be exercised at any given time by a warrant holder.

The Company may call the Public Warrants for redemption (except the Private Warrants):

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

If the Company calls the Public Warrants for redemption as described above, its management will have the option to require all holders that wish to exercise Public Warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the Public Warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the Public Warrants, multiplied by the difference between the exercise price of the Public Warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the Company’s common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Public Warrants. Whether the Company will exercise its option to require all holders to exercise their Public Warrants on a “cashless basis” will depend on a variety of factors including the price of our common shares at the time the Public Warrants are called for redemption, its cash needs at such time and concerns regarding dilutive share issuances.

If (x) the Company issues additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.50 per share of common stock (with such issue price or effective issue price to be determined in good faith by its board of directors, and in the case of any such issuance to its Sponsor, initial stockholders or their affiliates, without taking into account any founders’ shares held by them prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial Business Combination on the date of the consummation of our initial Business Combination (net of redemptions), and (z) the market value is below $9.50 per share, the exercise price of the Public Warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of (i) the market value or (ii) the price at which the Company issues the additional shares of common stock or equity-linked securities and the $16.50 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 165% of the market value. The Public Warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to the Company, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of shares of common stock and any voting rights until they exercise their Public Warrants and receive shares of common stock. After the issuance of shares of common stock upon exercise of the Public Warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.

Private Warrants

The Private Warrants are identical to the Public Warrants except that the Private Warrants will be non-redeemable and may be exercised on a cashless basis at the option of the holder, in each case so long as they continue to be held by the initial purchasers or their permitted transferees.

Subscription Warrants

The Subscription Warrant term commences on the Exercise Date (as hereinafter defined) for a period of 49 months. The Subscription Warrants are exercisable commencing on the date of the initial Business Combination (the “Exercise Date”) and have a cashless exercise feature that is available at any time on or after the Exercise Date at the option of the holder. Commencing on the date 13 months following the Exercise Date, the subscribers have the right, but not the obligation, to put the Subscription Warrants to the Company at a purchase price of $5.00 per share. The Company has agreed to file, within thirty (30) calendar days after the consummation of an initial Business Combination, a registration statement with the Securities and Exchange Commission to register for resale the shares of common stock underlying the Subscription Warrants.

VIVEON HEALTH ACQUISITION CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

As of March 31, 2023 and December 31, 2022, there were 20,125,000 Public Warrants and 18,000,000 Private Warrants outstanding, respectively. As of March 31, 2023 and December 31, 2022, there were 2,000,000 Subscription Warrants outstanding. The Company accounts for the Public Warrants, Private Warrants, and Subscription Warrants in accordance with the guidance contained in ASC 815-40. The Public Warrants qualify for equity treatment under ASC 815-40. Such guidance provides that because the Private Warrants and Subscription Warrants do not meet the criteria for equity treatment thereunder, the Private Warrants and Subscription Warrants must be recorded as a liability.

NOTE 10. FAIR VALUE MEASUREMENTS

The following tables present information about the Company’s financial instruments that are measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022, and indicate the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value: