Arch Therapeutics, Inc. announced that it has entered into a Securities Purchase Agreement with certain institutional and accredited individual investors to issue secured convertible promissory notes at the principal amount of $2,220,000 and for the gross proceeds of $1,850,000, after deducting issuance discounts on May 15, 2024. The 2024 First Notes become due and payable on June 30, 2024. The 2024 First Notes bear interest on the unpaid principal balance at a rate of 10% per annum accruing from the Closing Date until the 2024 First Notes become 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 Notes.

Any amount of principal or interest on the 2024 First Notes which is not paid when due shall bear interest at the rate of the lesser of (i) eighteen percent (18%) per annum or (ii) the maximum amount allowed by law from the due date thereof until payment in full (the ? Default Interest ?). The 2024 First Notes are convertible into an aggregate of 4,440,000 shares of Common Stock (such shares of Common Stock, the ?

Conversion Shares ?) at the option of each holder of the 2024 First Notes (a ? Holder ? and, all holders of 2024 First Notes together, the ?

Holders ?) from the Closing Date at the Conversion Price (as defined below) through the later of (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in the 2024 First Note); provided, however , certain 2024 First Notes include 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 Notes Ownership Limitation; provided that the Notes Ownership Limitation may only be increased to a maximum of 9.99% of the outstanding shares of the Company?s Common Stock; and (ii) any increase in the Notes Ownership Limitation will not become effective until the 61st day after delivery of such waiver notice. The initial conversion price of the 2024 First Notes shall be equal to $0.50 per share and may be reduced or increased proportionately as a result of any stock dividends, recapitalizations. The issuance and sale of the 2024 First Notes has not been, and will not upon issuance be, registered under the Securities Act, and the 2024 First Notes may not be offered or sold in the United States absent registration under or exemption from the Securities Act and any applicable state securities laws.

The Securities will be issued and sold in reliance upon an exemption from registration afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated under Securities Act based on the following facts: each of the Investors has represented that it is an accredited investor as defined in Rule 501 promulgated under the Securities Act; that it is acquiring the Securities for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities; the Company used no advertising or general solicitation in connection with the issuance and sale of the 2024 First Notes to the Investors; and the Securities will be issued as restricted securities.