Material Agreement Form 8 K

Item 1.01 Entry into a Material Definitive Agreement.

Background

As previously disclosed, on September 1, 2023, Aclarion, Inc. (the "Company", "we" and "us") closed a financing for $862,500 of unsecured non-convertible notes due September 1, 2024.

Exchange Agreement

On August 14, 2024, the Company entered into an exchange agreement (the "Exchange Agreement") with the note holders accredited investors to exchange approximately $930,000 of principal and accrued interest on the notes for 930 shares of newly issued Series B convertible preferred stock ("Series B Preferred Stock") at a purchase price of $1,000 per share of Series B Preferred Stock. The Series B Preferred Stock is convertible into Common Stock at an initial conversion price ("Conversion Price") of $0.234 per share of Common Stock.

Terms of the Series B Preferred Stock

The Company has filed a Certificate of Designations of Preferences, Rights and Limitations of Series B Preferred Stock ("Certificate of Designations") with the Secretary of State of the State of Delaware.

Rank

The Certificate of Designations provides that the Series B Preferred Stock ranks senior to the Common Stock with respect to dividends and rights upon liquidation.

Voting Rights

Except as otherwise required by law (or with respect to approval of certain actions), the Series B Preferred Stock will not have voting rights.

Dividends

Holders of the Series B Preferred Stock will be entitled to dividends in the amount of 10% per annum, payable quarterly.

The Company has the option to pay dividends on the Series B Preferred Stock in additional shares of Common Stock, provided that no equity conditions failure (as defined in the Certificate of Designations) then exists. If the Company elects to pay in the form of Common Stock, the number of dividend shares to be issued shall be calculated by using a "Dividend Conversion Price" equal to the lower of (i) the then applicable Series B Conversion Price as in effect on the applicable dividend date, or (ii) 90% of the lowest volume weighted average price of the Common Stock during the five (5) consecutive trading day period ending and including the trading day immediately preceding the applicable dividend date.

The Company also has the option to cumulate or "capitalize" the dividends, in which case the accrued dividend amount shall be added to the stated value of each share of Series B Preferred Stock.

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