Arch Therapeutics, Inc. announced that it has entered into a securities purchase agreement with certain institutional investor to issue a 2024 First Note convertible into shares of Common Stock in the principal amount of $180,000 which includes a $30,000 original issue discount in respect of the 2024 first note for the gross proceeds of $150,000 on June 12, 2024. The 2024 First Note becomes due and payable on June 30, 2024 and may be prepaid provided that an Event of Default has not occurred. The 2024 First Note bears interest on the unpaid principal balance at a rate equal to ten percent per annum accruing from the Second Closing Date until the 2024 First Note becomes due and payable at maturity or upon their conversion, acceleration or by prepayment, and may become due and payable upon the occurrence of an Event of Default under the 2024 First Note.

The 2024 First Note is convertible into an aggregate of 360,000 shares of Common Stock at the option of the holder of the 2024 First Note from the Second Closing Date at the Conversion Price through the later of the Maturity Date and the date of payment of the Default Amount provided, however, the 2024 First Note includes a provision preventing such conversion if, as a result, the holder, together with its affiliates and any other persons whose beneficial ownership of company common stock would be aggregated with the Holder?s, would be deemed to beneficially own more than 4.99% of the outstanding shares of the company?s common stock immediately after giving effect to the conversion and provided further, the Holder, upon notice to the company, may increase or decrease the note Ownership Limitation; provided that the Note Ownership Limitation may only be increased to a maximum of 9.99% of the outstanding shares of the Company?s Common Stock and any increase in the Note Ownership Limitation will not become effective until the 61st day after delivery of such waiver notice. The initial conversion price of the 2024 First Note shall be equal to $0.50 per share and may be reduced or increased proportionately. If the company fails to deliver the shares of common stock issuable upon a conversion by the Deadline then the company is obligated to pay such 2024 First Note Holder $5,000 per day in cash for each day beyond the deadline.