Item 1.01 Entry into a Material Definitive Agreement.

As previously disclosed in the Current Report on Form 8-K filed by Arch Therapeutics, Inc. (the "Company") with the Securities and Exchange Commission ("SEC") on May 21, 2024, the Company entered into a Securities Purchase Agreement, dated May 15, 2024 (the "SPA"), with certain institutional and accredited individual investors who have previously purchased secured promissory notes from the Company, providing for the issuance and sale by the Company to the investors certain Secured Promissory Notes (each a "2024 First Note" and collectively, the "2024 First Notes") convertible into shares of common stock, par value $0.001 per share (the "Common Stock") (the "Convertible Notes Offering"). The initial closing of the Convertible Notes Offering occurred on May 15, 2024 (the "Initial Closing Date").

As previously disclosed in the Current Report on Form 8-K filed by the Company with the SEC on June 18, 2024, the Company consummated a second closing on June 12, 2024 (the "Second Closing") of the Convertible Notes Offering pursuant to the terms and conditions of the SPA with a certain institutional investor (the "Investor") providing for the issuance and sale by the Company to the Investor a 2024 First Note convertible into shares of Common Stock. The 2024 First Note was issued as part of the Convertible Notes Offering previously authorized by the Company's board of directors. In connection with the Second Closing of the Convertible Notes Offering, the Company issued and sold to the Investor a 2024 First Note in the principal amount of $180,000, which includes a $30,000 original issue discount in respect of the 2024 First Note. The net proceeds for the sale of the 2024 First Note was approximately $150,000, after deducting issuance discounts. The Second Closing of the sale of the 2024 First Note under the SPA occurred on June 12, 2024.

On June 26, 2024, the Company consummated a third closing (the "Third Closing") of the Convertible Notes Offering pursuant to the terms and conditions of the SPA with the Investor providing for the issuance and sale by the Company to the Investor an additional 2024 First Note convertible into shares of Common Stock. The 2024 First Note was issued as part of the Convertible Notes Offering previously authorized by the Company's board of directors. In connection with the Third Closing of the Convertible Notes Offering, the Company issued and sold to the Investor a 2024 First Note in the principal amount of $90,000, which includes a $15,000 original issue discount in respect of the 2024 First Note. The net proceeds for the sale of the 2024 First Note was approximately $75,000, after deducting issuance discounts. The Third Closing of the sale of the 2024 First Note under the SPA occurred on June 26, 2024 (the "Third Closing Date").

Use of Proceeds

The Company intends to use the net proceeds from the Convertible Notes Offering primarily for working capital and general corporate purposes, and has not allocated specific amounts for any specific purposes.

2024 First Note

The 2024 First Note becomes due and payable on June 30, 2024 (the "Maturity Date") and may be prepaid provided that an Event of Default (as defined therein) has not occurred. The 2024 First Note bears interest on the unpaid principal balance at a rate equal to 10% (computed on the basis of the actual number of days elapsed in a 360-day year) per annum accruing from the Third 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. Any amount of principal or interest on the 2024 First Note which is not paid when due shall bear interest at the rate of the lesser of (i) 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 Note is convertible into an aggregate of 360,000 shares of Common Stock (such shares of Common Stock, the "Conversion Shares") at the option of the holder of the 2024 First Note (the "Holder") from the Third 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, 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 (the "Note Ownership Limitation") 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 (i) 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 (ii) any increase in the Note Ownership Limitation will not become effective until the 61st day after delivery of such waiver notice.