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Form 10-Q Mitesco, Inc. For: Jun 30

August 12, 2022 9:17 AM EDT


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 


 

FORM 10-Q

 


 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarter ended June 30, 2022

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                           to                        

 

Commission File Number 000-53601

 

mitesco_logo1.jpg
 

MITESCO, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

 

87-0496850

(State Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer Identification Number)

 

1660 Highway 100 South, Suite 432

St. Louis Park, MN 55416

(Address of principal executive offices) (Zip code)

 

(844) 383-8689

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

N/A

N/A

N/A

 

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ NO ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ NO ☐

 

Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large, accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large, accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer

Smaller reporting company

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. YES ☐ NO

 

As of August 10, 2022, the registrant had outstanding 225,523,273 shares of common stock issued and outstanding.

 

 

 

Table of Contents

 

PART I  FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

5

 

Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021

 

5

 

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021

 

6

 

Condensed Consolidated Stockholder’s Deficit for the three and six months ended June 30, 2022 and 2021

 

7

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021

 

9

 

Notes to Condensed Consolidated Financial Statements

 

11

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

34

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

 

38

 

 

 

 

Item 4.

Controls and Procedures.

 

38

 

 

 

 

PART II  OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings.

 

39

 

 

 

 

Item 1A.

Risk Factors.

 

39

 

 

 

 

Item 2.

Sale of Unregistered Securities.

 

39

 

 

 

 

Item 3.

Defaults Upon Senior Secured Securities.

 

40

 

 

 

 

Item 4.

Mine Safety Disclosures.

 

40

 

 

 

 

Item 5.

Other Information.

 

40

 

 

 

 

Item 6.

Exhibits.

 

41

 

 

 

 

Signatures

 

43

 

 

 

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

 

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon our current assumptions, expectations, and beliefs concerning future developments and their potential effect on our business. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “approximately,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other comparable terminology, although the absence of these words does not necessarily mean that a statement is not forward-looking. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements.

 

Factors that may cause or contribute actual results to differ from these forward-looking statements include, but are not limited to:

 

● adverse economic conditions;

 

● the Company’s ability to raise capital to fund its operations

 

● industry competition

 

● the Company’s ability to integrate its acquisitions

 

● the Company’s ability to attract and retain qualified senior management and technical personnel;

 

● the continued effect of the Covid-19 pandemic on the Company’s operations; and

 

These forward-looking statements represent our intentions, plans, expectations, assumptions, and beliefs about future events and are subject to risks, uncertainties and other factors. Considering these risks, uncertainties, and assumptions, the events described in the forward-looking statements may not occur or may occur to a different extent or at a different time than we have described.

 

All forward-looking statements speak only as of the date of this Report. Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, or other information contained herein, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise. We caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance.

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

MITESCO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   

June 30,

   

December 31,

 

ASSETS

 

2022

   

2021

 
   

(unaudited)

         

Current assets

               

Cash and cash equivalents

  $ 35,821     $ 1,164,483  

Accounts Receivable

    114,064       44,313  

Inventory

    33,420       25,314  

Prepaid expenses

    125,762       72,985  

Total current assets

    309,067       1,307,095  
                 

Right to use operating leases, net

    3,883,529       3,886,866  

Construction in progress

    943,689       1,984,701  

Fixed assets, net of accumulated depreciation of $594,051 and $19,590

    5,683,497       3,476,164  
                 

Total Assets

  $ 10,819,782     $ 10,654,826  
                 

LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY

               

Current liabilities

               

Accounts payable and accrued liabilities

  $ 5,788,713     $ 3,976,064  

Accrued interest

    79,530       7,657  

Derivative liabilities

    265,962       -  

Lease liability - operating leases, current

    260,700       161,838  

Notes payable, net of discounts of $1,620,263 and $411,568

    3,317,203       588,432  

SBA Loan Payable

    460,406       460,406  

Other current liabilities

    96,136       169,422  

Preferred stock dividends payable

    268,200       195,169  

Total current liabilities

    10,536,850       5,558,988  
                 

Lease Liability- operating leases, non-current

    4,132,964       3,972,964  
                 

Total Liabilities

    14,669,814       9,531,952  
                 

Commitments and contingencies

    -      
-
 
                 

Stockholders' equity (deficit)

               
                 

Preferred stock, $0.01 par value, 100,000,000 shares authorized; 500,000 shares designated Series A; 3,000,000 shares designated Series C; 10,000,000 shares designated Series D; and 400,000 shares designated Series X:

    -       -  

Preferred stock, Series A, $0.01 par value, 0 and 4,800 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

    -       -  

Preferred stock, Series C, $0.01 par value, 940,644 and 940,644 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

    9,406       9,406  

Preferred stock, Series D, $0.01 par value, 3,100,000 and 3,100,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

    31,000       31,000  

Preferred stock, Series X, $0.01 par value, 24,227 shares issued and outstanding at June 30, 2022 and December 31, 2021

    242       242  

Common stock subscribed

    36,575       132,163  

Common stock, $0.01 par value, 500,000,000 shares authorized, 225,209,745 and 213,333,170 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

    2,257,880       2,133,332  

Additional paid-in capital

    26,743,676       24,295,063  

Accumulated deficit

    (32,928,811 )     (25,478,332 )

Total stockholders' equity (deficit)

    (3,850,032 )     1,122,874  
                 

Total liabilities and stockholders' equity (deficit)

  $ 10,819,782     $ 10,654,826  

 

See accompanying notes to these unaudited condensed consolidated financial statements.

 

 

MITESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

   

For the Three

   

For the Six

 
   

Months Ended

   

Months Ended

 
   

June 30,

   

June 30,

 
   

2022

   

2021

   

2022

   

2021

 
                                 

Revenue-services

  $ 180,375     $ 8,244     $ 272,836     $ 11,216  

Revenue-products

    (11,290 )     -       16,625       -  

Total revenue

    169,085       8,244       289,461       11,216  
                                 

Cost of goods sold-services

  $ 605,706     $ 3,605     $ 1,183,262     $ 5,318  

Cost of goods sold-products

    481       -       11,248       -  

Total cost of goods sold

    606,187       3,605       1,194,510       5,318  
                                 

Gross (loss) profit

    (437,102 )     4,639       (905,049 )     5,898  
                                 

Operating expenses:

                               

General and administrative

  $ 2,340,929     $ 1,403,210     $ 4,904,758     $ 2,356,118  
                                 

Total operating expenses

    2,340,929       1,403,210       4,904,758       2,356,118  
                                 

Net Operating Loss

    (2,778,031 )     (1,398,571 )     (5,809,807 )     (2,350,220 )
                                 

Other income (expense):

                               

Interest expense

    (862,211 )     (1,135 )     (1,690,536 )     (966,123 )

Loss on legal settlement

    -       (70,000 )     -       (70,000 )

(Loss) Gain on waiver and commitment fee shares

    (11,619 )     -       186,654       -  

Gain on settlement of accrued salary

    -       -       15,032       -  

Loss (Gain) on settlement of accounts payable

    -       -       (78,235 )     6,045  

Gain on settlement of notes payable

    -       -       -       1,836  

Grant income

    -       52       -       52  

Loss on revaluation of derivative liabilities

    (153,424 )     -       (73,587 )     (493,455 )

Total other expense

    (1,027,254 )     (71,083 )     (1,640,672 )     (1,521,645 )
                                 

Loss before provision for income taxes

    (3,805,285 )     (1,469,654 )     (7,450,479 )     (3,871,865 )
                                 

Provision for income taxes

    -       -       -       -  
                                 

Net loss

  $ (3,805,285 )   $ (1,469,654 )   $ (7,450,479 )   $ (3,871,865 )
                                 

Preferred stock dividends

    (80,392 )     (54,115 )     (160,084 )     (74,614 )

Preferred stock deemed dividends

    -       -       -       (332,242 )
                                 

Net loss available to common shareholders

  $ (3,885,677 )   $ (1,523,769 )   $ (7,610,563 )   $ (4,278,721 )
                                 

Net loss per share - basic and diluted

  $ (0.02 )   $ (0.01 )   $ (0.03 )   $ (0.02 )
                                 

Weighted average shares outstanding - basic and diluted

    221,523,073       201,678,218       217,634,736       194,455,386  

 

See accompanying notes to these unaudited condensed consolidated financial statements.

 

 

MITESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERSEQUITY (DEFICIT)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 and 2021

(UNAUDITED)

 

   

Preferred Stock Series A

   

Preferred Stock Series C

   

Preferred Stock Series D

   

Preferred Stock Series X

   

Common Stock

   

Additional

   

Common Stock

   

Accumulated

         
   

Shares

   

Amount

   

Shares

   

Amount

   

Shares

   

Amount

   

Shares

   

Amount

   

Shares

   

Amount

   

Paid-in capital

   

Subscribed

   

Deficit

   

Total

 

Balance, March 31, 2022

    -     $ -       940,644     $ 9,406       3,100,000     $ 31,000       24,227     $ 242       219,756,894     $ 2,197,570     $ 25,517,634     $ 128,015     $ (29,123,526 )     (1,239,659 )

Vesting of common stock issued to employees

    -       -       -       -       -       -       -       -                       1,474       -       -       1,474  

Vesting of stock options issued to employees

    -       -       -       -       -       -       -       -                       135,295       -       -       135,295  

Shares issued for services

    -       -       -       -       -       -       -       -       750,000       7,500       95,625       -       -       103,125  

Waiver fee shares

    -       -       -       -       -       -       -       -       720,000       7,200       84,240       (91,440 )     -       -  

Commitment fee shares

    -       -       -       -       -       -       -       -       3,577,720       41,559       843,793       -       -       885,352  

Warrants issued with notes payable - Insiders

    -       -       -       -       -       -       -       -                       63,005       -       -       63,005  

Shares issued for Series X dividends

    -       -       -       -       -       -       -       -       405,131       4,051       83,002       -       -       87,053  

Preferred stock dividends

    -       -       -       -       -       -       -       -                       (80,392 )     -       -       (80,392 )

Loss for the period ended June 30, 2022

    -       -       -       -       -       -       -       -                               -       (3,805,285 )     (3,805,285 )

Balance, June 30, 2022

    -     $ -       940,644     $ 9,406       3,100,000     $ 31,000       24,227     $ 242       225,209,745     $ 2,257,880     $ 26,743,676     $ 36,575     $ (32,928,811 )   $ (3,850,032 )
                                                                                                                 

Balance, December 31, 2021

    -     $ -       940,644     $ 9,406       3,100,000     $ 31,000       24,227     $ 242       213,333,170     $ 2,133,332     $ 24,295,063     $ 132,163     $ (25,478,332 )     1,122,874  

Vesting of common stock issued to employees

    -       -       -       -       -       -       -       -                       2,986                       2,986  

Vesting of stock options issued to employees

    -       -       -       -       -       -       -       -                       302,310                       302,310  

Conversion of accounts payable to common stock

    -       -       -       -       -       -       -       -       3,179,650       31,797       546,438                       578,235  

Commitment fee shares

    -       -       -       -       -       -       -       -       5,297,720       58,759       1,069,899                       1,128,658  

Waiver fee shares

    -       -       -       -       -       -       -       -       2,261,721       22,617       344,541       -               367,158  

Shares issued for services

    -       -       -       -       -       -       -       -       750,000       7,500       95,625                       103,125  

Warrants issued with note payable - Diamond 1

    -       -       -       -       -       -       -       -                       2,914                       2,914  

Warrants issued with note payable - Diamond 2

                                                                                    2,213                       2,213  

Gain on settlement of accrued payroll

                                                                    (400,000 )     (4,000 )     4,000                       -  

Issuance of shares previously subscribed for conversion of accounts payable

                                                                    382,353       3,824       91,764       (95,588 )             -  

Warrants issued with notes payable - Insiders

    -       -       -       -       -       -       -       -                       63,005                       63,005  

Shares issued for Series X dividends

    -       -       -       -       -       -       -       -       405,131       4,051       83,002                       87,053  

Preferred stock dividends

    -       -       -       -       -       -       -       -                       (160,084 )                     (160,084 )

Loss for the six months ended June 30, 2022

    -       -       -       -       -       -       -       -                                       (7,450,479 )     (7,450,479 )

Balance, June 30, 2022

    -     $ -       940,644     $ 9,406       3,100,000     $ 31,000       24,227     $ 242       225,209,745     $ 2,257,880     $ 26,743,676     $ 36,575     $ (32,928,811 )   $ (3,850,032 )

 

 

MITESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERSEQUITY (DEFICIT)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 and 2021

(UNAUDITED)

 

    Preferred Stock Series A       

Preferred Stock Series C

   

Preferred Stock Series D

   

Preferred Stock Series X

   

Common Stock

   

Additional

   

Common Stock

   

Accumulated

         
    Shares     Amount    

Shares

    Amount    

Shares

    Amount    

Shares

    Amount    

Shares

    Amount    

Paid-in capital

   

Subscribed

   

Deficit

   

Total

 

Balance, March 31, 2021

    -               3,000,000     $ 30,000       -     $ -       26,227     $ 262       197,694,698     $ 1,976,965     $ 17,513,684     $ -     $ (17,171,621 )   $ 2,349,290  

Vesting of common stock issued to employees

    -               -       -       -       -       -       -       -       -       3,889       -       -       3,889  

Vesting of stock options issued to employees

    -               -       -       -       -       -       -       -       -       195,352       -       -       195,352  

Shares issued to directors for exercise of options

    -               -       -       -       -       -       -       7,616,668       76,166       152,334       (41,000 )     -       187,500  

Net shares cancelled in connection with settlement agreement

    -               -       -       -       -       (2,000 )     (20 )     (1,362,047 )     (13,620 )     141,550       -       -       127,910  

Shares issued for professional fees

    -               -       -       -       -       -       -       1,962       2       (2 )     -       -       -  

Shares of common stock issued for conversion of Preferred Stock Series C

    -               (1,059,356 )     (10,594 )     -       -       -       -       4,237,424       42,374       (31,780 )     -       -       -  

Preferred stock dividends

    -               -       -       -       -       -       -       -       -       (54,115 )     -       -       (54,115 )

Loss for the period ended June 30, 2021

    -               -       -       -       -       -       -       -       -       -       -       (1,469,654 )     (1,469,654 )

Balance, June 30, 2021

    -               1,940,644     $ 19,406       -     $ -       24,227     $ 242       208,188,705     $ 2,081,887     $ 17,920,912     $ (41,000 )   $ (18,641,275 )   $ 1,340,172  
                                                                                                                 
                                                                                                                 

Balance, December 31, 2020

    4,800     $ 48       -     $ -       -     $ -       26,227     $ 262       155,381,183     $ 1,553,812     $ 10,340,821     $ -     $ (14,437,168 )   $ (2,542,225 )

Vesting of common stock issued to employees

    -       -       -       -       -       -       -       -       -       -       7,897       -       -       7,897  

Vesting of stock options issued to employees

    -       -       -       -       -       -       -       -       -       -       201,294       -       -       201,294  

Common stock issued for services

    -       -       -       -       -       -       -       -       1,099,320       10,963       211,517       -       -       222,480  

Common stock issued for conversion of notes payable and accrued interest

    -       -       -       -       -       -       -       -       33,944,157       339,442       2,314,353       -       -       2,653,795  

Sale of common stock in private placement

    -       -       -       -       -       -       -       -       6,672,000       66,750       1,601,250       -       -       1,668,000  

Sale of Preferred Stock Series C

    -       -       3,000,000       30,000       -       -       -       -       -       -       1,461,283       -       -       1,491,283  

Warrants issued with Preferred Stock Series C

    -       -       -       -       -       -       -       -       -       -       1,268,717       -       -       1,268,717  

Conversion of Preferred Stock Series A to common stock

    (4,800 )     (48 )     -       -       -       -       -       -       600,000       6,000       (5,952 )     -       -       -  

Shares issued for exercise of stock options

    -       -       -       -       -       -       -       -       7,616,668       76,166       152,334       (41,000 )     -       187,500  

Net shares issued in connection with settlement agreement

    -       -       -       -       -       -       (2,000 )     (20 )     (1,362,047 )     (13,620 )     141,550       -       -       127,910  

Shares of common stock issued for conversion of Preferred Stock Series C

    -       -       (1,059,356 )     (10,594 )     -       -       -       -       4,237,424       42,374       (31,780 )     -       -       -  

Deemed dividend on conversion of Preferred Stock Series A to common stock

    -       -       -       -                       -       -       -       -       206,242       -       (206,242 )     -  

Deemed dividend on Preferred Stock Series C

    -       -       -       -       -       -       -       -       -       -       126,000       -       (126,000 )     -  

Preferred stock dividends

    -       -       -       -       -       -       -       -       -       -       (74,614 )             -       (74,614 )

Loss for the period ended June 30, 2021

    -       -               -       -       -                       -       -       -               (3,871,865 )     (3,871,865 )

Balance, June 30, 2021

    -     $ -       1,940,644     $ 19,406       -     $ -       24,227     $ 242       208,188,705     $ 2,081,887     $ 17,920,912     $ (41,000 )   $ (18,641,275 )   $ 1,340,172  

 

See accompanying notes to these unaudited condensed consolidated financial statements.

 

 

MITESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

   

For the Six

 
   

Months Ended

 
   

June 30,

 
   

2022

   

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES

               

Net loss

  $ (7,450,479 )   $ (3,871,865 )

Adjustments to reconcile net loss to net cash used in operating activities:

               

Depreciation

    417,340       36,456  

Amortization of right-to-use asset

    292,292       24,692  

Net gain on settlement of notes payable

    -       (1,836 )

Financing cost - waiver fee shares

    565,431       -  

Gain on waiver fee shares

    (198,273 )     -  

Commitment shares

    -       -  

Loss on commitment shares

    11,619       -  

Gain on conversion of accrued salary

    (15,032 )     -  

(Gain) loss on revaluation of derivative liabilities

    73,587       493,455  

Loss on settlement of accounts payable

    78,235       -  

Amortization of discount on notes payable

    1,017,861       756,795  

Share-based compensation

    305,296       559,579  

Changes in assets and liabilities:

               

Accounts receivables

    (69,751 )     (1,133 )

Prepaid expenses

    50,348       (28,843 )

Due from related party

    -       (26,163 )

Inventory

    (8,106 )     (2,109 )

Accounts payable and accrued liabilities

    934,220       (291,463 )

Operating lease liability, net

    (30,093 )     14,082  

Other current liabilities

    (73,286 )     880  

Accrued interest

    71,873       203,447  

Net cash used in operating activities

    (4,026,918 )     (2,134,026 )

CASH FLOWS FROM INVESTING ACTIVITIES

               

Cash paid for acquisition of fixed assets and construction in progress

    (190,200 )     (495,359 )

Net cash used in investing activities

    (190,200 )     (495,359 )

CASH FLOWS FROM FINANCING ACTIVITIES

               

Proceeds from private placement of common stock

    -       1,668,000  

Proceeds from sales of Series C Preferred Stock, net of fees

    -       2,760,000  

Proceeds from notes payable - related parties, net of discounts

    1,511,250       -  

Proceeds from notes payable, net of discounts

    1,812,500       -  

Principal payments on notes payable related parties

    (235,294 )     -  

Principal payments on notes payable

    -       (177,534 )

Net cash provided by financing activities

    3,088,456       4,250,466  

Net increase in cash and cash equivalents

    (1,128,662 )     1,621,081  
                 

Cash and cash equivalents at beginning of period

    1,164,483       64,789  

Cash and cash equivalents at end of period

  $ 35,821     $ 1,685,870  

 

See accompanying notes to these unaudited condensed consolidated financial statements.

 

 

MITESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

   

For the Six

 
   

Months Ended

 
   

June 30,

 
   

2022

   

2021

 
                 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

               

Interest paid

  $ 2,680     $ -  
                 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

               

Stock issued for conversion of debt and accrued interest

  $ -     $ 2,653,795  

Settlement of derivative liabilities

  $ -     $ (1,301,137 )

Discount on notes payable due to derivative liabilities

  $ -     $ -  

Preferred stock dividend

  $ 160,084     $ 74,614  

Deemed dividends on Preferred Stock

  $ -     $ 332,242  

Conversion of Series A Preferred stock to common stock

  $ -     $ 6,000  

Conversion of Series C Preferred stock to common stock

  $ -     $ 31,781  

Conversion of accounts payable to common stock

  $ 500,000     $ 102,333  

Conversion of accrued payroll to common stock

  $ -     $ 50,000  

Capital expenditures included in accounts payable

  $ 4,289,816     $ -  

 

See accompanying notes to these unaudited condensed consolidated financial statements.

 

 

MITESCO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022 AND 2021

(Unaudited)

 

Note 1 Description of Business

 

Company Overview

 

Mitesco, Inc. (the “Company,” “we,” “us,” or “our”) was formed in the state of Delaware on January 18, 2012. On December 9, 2015, the Company restructured its operations and acquired Newco4pharmacy, LLC, a development stage company which sought to acquire compounding pharmacy businesses. As a part of the restructuring, the Company completed a “spin out” of its former business line. On April 24, 2020, the Company changed its name to Mitesco, Inc.

 

Since 2020, the Company’s operations have focused on establishing medical clinics utilizing nurse practitioners under The Good Clinic name and development and acquisition of telemedicine technology. In March of 2020, the Company formed a wholly owned subsidiary, The Good Clinic LLC, a Colorado limited liability company for its clinic business.

 

The Company opened its first The Good Clinic in Minneapolis, Minnesota in the first quarter of 2021 and have six operating at the time of this filing. The Company intends on opening up to 50 new clinics in the next three years, in addition to any existing sites it might acquire.

 

Note 2 - Financial Condition, Going Concern and Management Plans

 

On November 19, 2021, the Company closed a bridge financing round totaling $3.1 million of a Series D preferred stock sold to investors in a private placement. Each Series D Unit will have a purchase price of $1.00 per Unit, with each Unit consisting of (a) one share of a newly formed Series D Convertible Preferred Stock, par value $0.01 per share (the “Series D Preferred Stock”), (b) one warrant (the “Series A Warrants”) to purchase 2.1 shares of the Company’s Common Stock at a purchase price of $0.50 per whole share of Common Stock, and (c) one warrant (the “Series B Warrants” and together with the Series A Warrants, the “Warrants”) to purchase 2.1 shares of Common Stock at a purchase price of $0.75 per whole share.

 

Pursuant to the Certificate of Designations, Preferences and Rights of the Series D Convertible Preferred Stock of the Company, Inc., filed with the Secretary of State of the State of Delaware on October 18, 2021 (the “COD”), there are 10,000,000 shares of the Company’s preferred stock that have been designated as the Series D Preferred Stock and each share of the Series D Preferred Stock is convertible at the option of the holder thereof, or automatically upon the request of the Company’s underwriters that the Series D Preferred Stock convert to shares of Common Stock or upon listing of the Company’s Common Stock on a national securities exchange. The number of shares of Common Stock issuable upon the conversion of each share of Series D Preferred Stock is calculated by dividing the Conversion Amount (defined in the COD as the Stated Value, $1.05 per share, plus accrued and unpaid dividends) by the $0.25 conversion price (the “Conversion Price”).

 

On November 11, 2021, the Company filed a registration statement on form S-1 in connection with a planned up-list to a national exchange; on June 30, 2022 the Company its third amendment to the S-1; and on August 3, 2022, the Company files its fourth amendment to the S-1.

 

As of the date of this filing, the Company has closed on $3,100,000 of its Series D Preferred stock. To achieve its growth strategy, the Company will need to raise additional financing prior to up listing on Nasdaq. The Company will not proceed with this offering in the event its Common Stock is not approved for listing on the Nasdaq Capital Market though it will continue to seek financing for its expansion and operating needs in the debt or equity markets.

 

Between December 30, 2021 through the date of this filing, the Company has entered into a total $5.0 million of promissory notes with certain related parties and other note holders. All notes carry a 10% interest rate per annum, accruing in monthly installments. These notes have been used to fund 2022 operations to date.

 

The Company entered into a debt-for-equity exchange agreement with Gardner Builders Holdings, LLC (the “Creditor”) on January 7, 2022 (the “Agreement”). Pursuant to the Agreement, the Company issued shares of restricted common stock, par value $0.01 per share, of MITI (the “Restricted Shares”) to the Creditor in exchange for the Company Debt Obligations, as defined below.

 

 

The Agreement settles for certain accounts payable amounts owed by the Company to the Creditor (the “Accounts Payable Amount”) as well as upcoming amounts that will become due between the date of the Agreement and April 1, 2022. The Agreement also settles incurred interest and penalties on the amounts due through January 5, 2022, as well as future interest payments on amounts incurred in the first quarter of 2022 (collectively, the “Additional Costs”, and combined with the Accounts Payable Amount, the “Company Debt Obligations”). The Accounts Payable Amount is $500,000, the Additional Costs is $294,912.56 and the conversion price is $0.25. As a result, 3,179,650 Restricted Shares were authorized to be issued.

 

As of June 30, 2022, the Company had cash and cash equivalents of $36,000, current liabilities of $10.5 million, and has incurred a loss from operations. The Company intends to a) develop and own primary care clinics operated by nurse practitioners, b) develop and acquire telemedical technologies, and c) evaluate other healthcare related opportunities. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to execute its business plan.

 

As a result of these factors, there is substantial doubt about the ability of the Company to continue as a going concern for one year from the date the financial statements are issued. The Company’s continuance is dependent on raising capital and generating revenues sufficient to sustain operations. The Company believes that the necessary capital will be raised and has entered discussions to do so with certain individuals and companies. However, as of the date of these condensed consolidated financial statements, no formal agreement exists.

 

The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts classified as liabilities that might be necessary should the Company be forced to take any such actions.

 

PPP Loan

 

During March 2020, in response to the COVID-19 crisis, the federal government announced plans to offer loans to small businesses in various forms, including the Payroll Protection Program, or “PPP”, established as part of the Corona Virus Aid, Relief and Economic Security Act (“CARES Act”) and administered by the U.S. Small Business Administration. On April 25, 2020, the Company entered an unsecured Promissory Note with Bank of America for a loan in the original principal amount of approximately $460,400, and the Company received the full amount of the loan proceeds on May 4, 2020. The June 30, 2022 balance, including accrued interest, was approximately $470,400.

 

COVID -19 Impact

 

The Company has had some impact on its operations because of the effects of the COVID-19 pandemic, primarily with accessibility to staffing, consultants and in the capital markets, and it is adjusting as needed within its available resources. The Company will continue to assess the effect of the pandemic on its operations. The extent to which the COVID-19 pandemic will continue to impact the Company’s business and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, the duration and effect of possible business disruptions and the short-term effects and ultimate effectiveness of the travel restrictions, quarantines, social distancing requirements and business closures in the United States and other countries to contain and treat the disease. While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing the Company’s ability to access capital, which could in the future negatively affect the Company’s liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect the Company’s business and the value of its securities.

 

Note 3 Basis of Presentation and Summary of Significant Accounting Policies

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of such interim results.

 

The results for the condensed consolidated statement of operations are not necessarily indicative of results to be expected for the year ending December 31, 2022 or for any future interim period. The condensed consolidated balance sheet at June 30, 2022 has been derived from unaudited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2021 and notes thereto included in the Company’s annual report on Form 10-K filed on April 5, 2022.

 

 

Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Mitesco, Inc., and its wholly owned subsidiaries MitescoNA, LLC, The Good Clinic, LLC, and Acelerar Healthcare Holdings, LTD. In addition, we manage two entities under a variable interest entity arrangement and have control over the operating activities of these legal entities in which we do not maintain a controlling ownership interest but over which we will have direct influence over the operations and are the primary beneficiary. We expect that these entities will typically be subject to nominee ownership and transfer restriction agreements that effectively transfer the majority of the economic risks and rewards of their ownership to the Company. The Company’s management, restriction and other agreements concerning such nominee-owned entities typically includes both financial terms and protective and participating rights to the entities’ operating, strategic and non-clinical governance decisions which transfer substantial powers over and economic responsibility for these entities to the Company. As such, the Company applies the guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 – Consolidation (“ASC 810”), to determine when an entity that is insufficiently capitalized or not controlled through its voting interests, referred to as a variable interest entity should be consolidated. All intercompany balances and transactions have been eliminated.

 

Use of Estimates - The preparation of these financial statements requires our management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and related notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment.

 

Cash - The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. The Company had cash and cash equivalents of approximately $36,000 as of June 30, 2022, and $1.2 million as of December 31, 2021.

 

Property, Plant, and Equipment - Property and equipment is recorded at the lower of cost or estimated net recoverable amount and is depreciated using the straight-line method over its estimated useful life. Property acquired in a business combination is recorded at estimated initial fair value. Property, plant, and equipment are depreciated using the straight-line method based on the lesser of the estimated useful lives of the assets or the lease term based upon the following life expectancy:

 

 

 

Years

Office equipment

 

 

3 to 5

Furniture & fixtures

 

 

3 to 7

Machinery & equipment

 

 

3 to 10

Leasehold improvements

 

 

Term of lease

 

Revenue Recognition – On January 1, 2018, the Company adopted the new revenue recognition accounting standard issued by the Financial Accounting Standards Board (“FASB”) and codified in the ASC as Topic 606 (“ASC 606”). The revenue recognition standard in ASC 606 outlines a single comprehensive model for recognizing revenue as performance obligations, defined in a contract with a customer as goods or services transferred to the customer in exchange for consideration, are satisfied. The standard also requires expanded disclosures regarding the Company’s revenue recognition policies and significant judgments employed in the determination of revenue.

 

The Company applied the modified retrospective approach to all contracts when adopting ASC 606. As a result, at the adoption of ASC 606 what was previously classified as the provision for bad debts in the statement of operations is now reflected as implicit price concessions (as defined in ASC 606). For changes in credit issues not assessed at the date of service, the Company will prospectively recognize those amounts in other operating expenses on the statement of operations. For periods prior to the adoption of ASC 606, the provision for bad debts has been presented consistent with the previous revenue recognition standards that required it to be presented separately as a component of net operating revenues.

 

Our revenues generally relate to net patient fees received from various payers and patients themselves under contracts in which our performance obligations are to provide services to the patients. Revenues are recorded during the period our obligations to provide services are satisfied. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges and generally provide for payments based upon predetermined rates for services or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals.

 

Stock-Based Compensation-We recognize the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation cost for stock options is estimated at the grant date based on each option’s fair-value as calculated by the Black-Scholes-Merton (“BSM”) option-pricing model. Share-based compensation arrangements may include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.

 

 

Equity instruments issued to those other than employees are recognized pursuant to FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This ASU relates to the accounting for non-employee share-based payments. The amendment in this update expands the scope of Topic 718 to include all share-based payment transactions in which a grantor acquired goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The ASU excludes share-based payment awards that relate to: (1) financing to the issuer; or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts from Customers. The share-based payments are to be measured at grant-date fair value of the equity instruments that the entity is obligated to issue when the goods or service has been delivered or rendered and all other conditions necessary to earn the right to benefit from the equity instruments have been satisfied. This standard became effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. We adopted the provisions of this ASU on January 1, 2019. The adoption had no impact on our results of operations, cash flows, or financial condition.

 

Convertible Instruments-The Company reviews the terms of convertible debt and equity instruments to determine whether there are conversion features or embedded derivative instruments including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. In circumstances where the convertible instrument contains more than one embedded derivative instrument, including conversion options that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single compound instrument. Also, in connection with the sale of convertible debt and equity instruments, the Company may issue free standing warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. When convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for separately, the total proceeds allocated to the convertible host instruments are first allocated to the fair value of the bifurcated derivative instrument. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, usually resulting in those instruments being recorded at a discount from their face amount. When the Company issues debt securities, which bear interest at rates that are lower than market rates, the Company recognizes a discount, which is offset against the carrying value of the debt. Such discount from the face value of the debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income. In addition, certain conversion features are recognized as beneficial conversion features to the extent the conversion price as defined in the convertible note is less than the closing stock price on the issuance of the convertible notes.

 

Common Stock Purchase Warrants-The Company accounts for common stock purchase warrants in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Accounting for Derivative Instruments and Hedging Activities. As is consistent with its handling of stock compensation and embedded derivative instruments, the Company’s cost for stock warrants is estimated at the grant date based on each warrant’s fair-value as calculated by the Black Sholes option-pricing model value method for valuing the impact of the expense associated with these warrants.

 

Stockholders Equity-Shares of common stock issued for other than cash have been assigned amounts equivalent to the fair value of the service or assets received in exchange.

 

Per Share Data-Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the year. Diluted loss per share is computed by dividing net loss by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to warrants, options, and convertible instruments.

 

Financial Instruments and Fair Values-The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument. In determining fair value, we use various valuation methodologies and prioritize the use of observable inputs. We assess the inputs used to measure fair value using a three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market:

 

Level 1 – inputs include exchange quoted prices for identical instruments and are the most observable.

 

Level 2 – inputs include brokered and/or quoted prices for similar assets and observable inputs such as interest rates.

 

Level 3 – inputs include data not observable in the market and reflect management judgment about the assumptions market participants would use in pricing the asset or liability.

 

The use of observable and unobservable inputs and their significance in measuring fair value are reflected in our hierarchy assessment. The carrying amount of cash, prepaid assets, accounts payable and accrued liabilities approximate fair value due to the short-term maturities of these instruments. Because cash and cash equivalents are readily liquidated, management classifies these values as Level 1. The fair value of the derivative liabilities approximates their book value as the instruments are short-term in nature and contain market rates of interest. Because there is no ready market or observable transactions, management classifies the derivative liabilities as Level 3.

 

 

New Accounting Standards

 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed, the Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact on its financial position or results of operations upon adoption.

 

Recent Accounting Standards Not Yet Adopted

 

In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)”. This ASU reduces the number of accounting models for convertible debt instruments and convertible Preferred Stock. As well as amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related EPS guidance. This standard is effective for us on January 1, 2022, including interim periods within those fiscal years. Adoption is either a modified retrospective method or a fully retrospective method of transition. We are currently assessing the impact the new guidance will have on our condensed consolidated financial statements.

 

There are various other updates recently issued, most of which represent technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

 

Note 4 Net Loss Per Share Applicable to Common Shareholders

 

Net Loss per Share Applicable to Common Stockholders

 

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted loss per common share is computed similarly to basic loss per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock.

 

The following table sets forth the computation of loss per share for the three and six months ended June 30, 2022, and 2021, respectively:

 

   

For the Three Months Ended

   

For the Six Months Ended

 
   

June 30,

   

June 30,

 
   

2022

   

2021

   

2022

   

2021

 

Numerator:

                               

Net loss applicable to common shareholders

  $ (3,885,677 )   $ (1,523,769 )   $ (7,610,563 )   $ (4,278,721 )
                                 

Denominator:

                               

Weighted average common shares outstanding

    221,523,073       201,678,218       217,634,736       194,455,386  
                                 

Net loss per share:

                               

Basic and diluted

  $ (0.02 )   $ (0.01 )   $ (0.03 )   $ (0.02 )

 

The Company excluded all common equivalent shares outstanding for warrants, options, and convertible instruments to purchase common stock from the calculation of diluted net loss per share because all such securities are antidilutive for the periods presented. As of June 30, 2022, and 2021, the following shares were issuable and excluded from the calculation of diluted loss:

 

   

For the Six Months Ended

 
   

June 30,

 
   

2022

   

2021

 

Common stock options

    16,354,961       11,696,211  

Common stock purchase warrants

    33,290,673       12,600,000  

Convertible Preferred Stock Series C

    4,362,575       8,150,705  

Accrued interest on Preferred Stock

    480,056       376,803  

Potentially dilutive securities

    54,488,265       32,823,719  

 

 

Note 5 Related Party Transactions

 

For the six months ended June 30, 2022:

 

Mitesco, Inc. (the “Company”) issued a 10% Promissory Note due June 30, 2022, dated December 30, 2021, to the Michael C. Howe Living Trust (the “Lender”). Michael C. Howe is the Chief Executive Officer of the Good Clinic LLC, one of our subsidiaries. The principal amount of the Note is $1,000,000, carries a 10% interest rate per annum, payable in monthly installments, and had a maturity date that is the earlier of (i) six months from the date of execution (on July 19, 2022 this date was extended to September 10, 2022) or (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE.  The purchase price of the Note payable to the Company for the Note was $850,000 and was funded on December 30, 2021. An original issue discount in the amount of $150,000 was recorded. The amount payable at maturity will be $1,000,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Note, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. At June 30, 2022, the principal balance of this note was $1,000,000; $116,507 of the original issue discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discount at June 30, 2022 was $33,493.

 

The Company issued a 10% Promissory Note due August 14, 2022, dated February 14, 2022 (the “Diamond Note 1”), to Lawrence Diamond (the “Lender”). Mr. Diamond is the Chief Executive Officer of the Company and a member of its Board of Directors. The principal amount of the Note is $175,000, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) six (6) months from the date of execution, or (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Note payable to the Company for the Note was $148,750 and was funded on February 14, 2022. The amount payable at maturity will be $175,000 plus 10% of that amount plus accrued and unpaid interest. Following an event of default, as defined in the Note, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition to the Note and Lender will be issued 367,500 5-year warrants that may be exercised at $.50 per share and 367,500 5-year warrants that may be exercised at $.75 per share. These warrants have all of the same terms as those previously issued in conjunction with the Company’s Series C Preferred shares and its Series D Preferred shares. The warrants have an aggregate commitment date fair value of $2,914. At June 30, 2022, the principal balance of this note was $175,000; $20,877 of the original issue discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discount at June 30, 2022 was $5,373.

 

The Company issued a 10% Promissory Note due June 18, 2022 (the “Diamond Note 2”), dated March 18, 2022, to Lawrence Diamond (the “Lender”), which was subsequently amended. Lawrence Diamond is the Chief Executive Officer of the Company. The principal amount of the Diamond Note is $235,294, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) April 4, 2022, (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE, or (iii) the date of receipt of the Company of the next round of debt or equity financing in an amount of at least $1,000,000. The purchase price of the Diamond Note payable to the Company for the Diamond Note was $200,000 and was funded on March 18, 2022. The amount payable at maturity will be $235,294 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Diamond Note, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Diamond Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition, the Lender will be issued 200,000 5-year warrants that may be exercised on substantially the same terms as the Series A warrant issued in connection with the Company’s Series D Convertible Preferred Stock. The warrants have an aggregate commitment date fair value of $2,213. All amounts due for The Diamond Note, with the exception of $23,529, was paid on April 8, 2022. $23,529 remained outstanding as of June 30, 2022.

 

On March 22, 2022, the Company issued 168,221 shares of common stock with a contract price of $0.25 per share or $42,055 and a grant date market value of $0.127 per share or $21,364 were issued to Larry Diamond, its Chief Executive Officer, as compensation for the waiver of certain covenants as set forth and defined in Diamond Note 1. 

 

On April 27, 2022, the Company issued 96,471 shares of common stock with a contract price of $0.25 per share or $24,118 and a grant date market value of $0.16 or $15,434 to Larry Diamond, its Chief Executive Officer, as commitment shares as set forth and defined in Diamond Note 2. The Company also issued five-year warrants to purchase 92,942 shares of common stock at a price of $0.50 to Mr. Diamond pursuant to a promissory note.

 

 

On April 27, 2022, the Company issued a 10% Promissory Note due June 30, 2022 (the “Diamond Note 3”) to Lawrence Diamond (the “Lender”). Lawrence Diamond is the Chief Executive Officer of the Company. The principal amount of the Diamond Note 3 is $235,294, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) April 4, 2022 (on July 12, 2022 this date was extended to September 10, 2022) (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE, or (iii) the date of receipt of the Company of the next round of debt or equity financing in an amount of at least $1,000,000. The purchase price of the Diamond Note 3 payable to the Company for the Diamond Note 3 was $200,000 and was funded on April 27, 2022. The amount payable at maturity will be $235,294 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Diamond Note 3, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note 3 contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Diamond Note 3, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. At June 30, 2022, the principal balance of this note was $235,294; $13,858 of the original issue discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discount at June 30, 2022 was $21,436.

 

The Company issued a 10% Promissory Note due as described below (the “Diamond Note 4”), dated May 18, 2022, to Lawrence Diamond. The principal amount of the Diamond Note 4 is $47,059.00, carries a 10% interest rate per annum, payable in monthly installments, and had an initial maturity date that was the earlier of (i) four business days after the date on which we successfully lists its shares of common stock on Nasdaq or NYSE, or (ii) two business days after the date of receipt of the Company of the next round of debt or equity financing in a net amount of at least $600,000. On August 3, 2022, the maturity date was amended to (i) September 10, 2022 or (ii) five days after the date on which we successfully list our shares of common stock on any of the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market. The purchase price of the Diamond Note 4 payable to us for the Diamond Note 4was $40,000 and was funded on May 18, 2022. The amount payable at maturity will be $47,059 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Diamond Note 4, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note 4 contains a “most favored nations” clause that provides that, so long as the Diamond Note 4is outstanding, if we issue any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Diamond Note 4, we shall notify Mr. Diamond of such term, and such term, at the option of Mr. Diamond, shall become a part of the Note. In addition, Mr. Diamond will be issued (1) 19,294 five-year warrants (the “May 18 Diamond Warrants”) that may be exercised on substantially the same terms as the Series A warrant issued in connection with our Series D Convertible Preferred Stock and (2) 19,294 shares of Common Stock as commitment shares. At June 30, 2022, the principal balance of this note was $47,059; $1,862 of the original issue discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discount at June 30, 2022 was $5,197.

 

On May 23, 2022, the Company issued a 10% Promissory Note due as described below (the “Finnegan Note 1”) to Jessica Finnegan.  The principal amount of the Finnegan Note 1 is $47,059, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) four business days after the date on which we successfully lists its shares of common stock on Nasdaq or NYSE, or (ii) two business days after the date of receipt of the Company of the next round of debt or equity financing in a net amount of at least $600,000. The purchase price of the Finnegan Note 1 was $40,000 resulting in an original issue discount of $7,059 and was funded on May 18, 2022. The amount payable at maturity will be $47,059 plus 10% of that amount plus any accrued and unpaid interest, resulting in a premium and related discount in the amount of $4,706. Following an event of default, as defined in the Finnegan Note 1, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Finnegan Note 1 contains a “most favored nations” clause that provides that, so long as the Finnegan Note 1 is outstanding, if we issue any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Finnegan Note 1, we shall notify Ms. Finnegan of such term, and such term, at the option of Ms. Finnegan, shall become a part of the Note. In addition, Ms. Finnegan will be issued (1) 19,295 five-year warrants with a fair value of $2,000 (the “May 18 Finnegan Warrants”) that may be exercised on substantially the same terms as the Series A warrant issued in connection with our Series D Convertible Preferred Stock and (2) 19,295 shares of Common Stock with a value of $3,240 as commitment shares; these amounts were charged to discount on the note, resulting in a total discount on this note in the amount of $17,005. At June 30, 2022, the principal balance of this note was $47,059; $3,843 of the discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining discounts at June 30, 2022 were $13,162.

 

The Company issued five 10% Promissory Notes due as described below (collectively, the “May 26 Notes”), dated May 26, 2022, to Larry Diamond, Jenny Lindstrom, and other related parties (the “May 26 Lenders”), in respect of which we received proceeds of $175,000. Jenny Lindstrom is the Chief Legal Officer of the Company.

 

 

The May 26 Notes carry a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) November 30, 2022, or (ii) the date on which we successfully lists our shares of common stock on Nasdaq or NYSE. The aggregate amount payable at maturity will be $205,883 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the May 26 Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The May 26 Notes contain a “most favored nations” clause that provides that, so long as the May 26 Notes are outstanding, if we issue any new security, which the May 26 Lenders reasonably believe contains a term that is more favorable than those in the May 26 Notes, we shall notify the May 26 Lenders of such term, and such term, at the option of the May 26 Lenders, shall become a part of the May 26 Notes. In addition, the May 26 Lenders will be issued in the aggregate (1) 84,412 five-year warrants (the “May 26 Warrants”) and (2) 84,412 shares of Common Stock as commitment shares. The May 26 Warrants have an initial exercise price of $0.50 per share. The May 26 Warrants are not exercisable for six months following their issuance. The May 26 Lenders may exercise the May 26 Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the May 26 Warrants are not then registered pursuant to an effective registration statement. At June 30, 2022, the principal balance of these notes were $205,883; $6,631 of the original issue discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discounts at June 30, 2022 were $24,252.

 

The Company issued a 10% Promissory Note due as described below ( the “Howe Note”), dated June 9, 2022, to Michael C. Howe Living Trust and in respect of which we received proceeds of $255,000. Michael C. Howe is the Chief Executive Officer of the Good Clinic LLC, one of the Company’s subsidiaries.

 

The Howe Note carries a 10% interest rate per annum, payable in monthly installments. The Howe Note has a maturity date that is the earlier of (i) September 10, 2022, or (ii) the date on which we successfully list our shares of common stock on Nasdaq or NYSE. The amount payable at maturity will be $300,000 plus 10% of that amount plus any accrued and unpaid interest. In addition, the Company issued (1) 123,000 five-year warrants with a fair value of $21,500 and (2) 123,000 shares of Common Stock with a market value of $44,000 as commitment shares. The Warrants have an initial exercise price of $0.50 per share and are not exercisable for six months following their issuance. At June 30, 2022, the principal balance of this note was $300,000; $5,798 of the original issue discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discount at June 30, 2022 were $39,202.

 

On June 13, 2022, the Company issued 200,000 ten-year options with an exercise price of $0.25 and a fair value of $23,316 to Tom Brodmerkel, its Chairman, to the position of Chief Financial Officer.

 

Note 6 Accounts Payable and Accrued Liabilities

 

Accounts payable and accrued liabilities consisted of the following at June 30, 2022 and 2021:

 

   

June 30,

   

December 31,

 
   

2022

   

2021

 

Trade accounts payable

  $ 5,447,673     $ 3,933,305  

Accrued payroll and payroll taxes

    341,040       23,554  

Other

    -       19,205  

Total accounts payable and accrued liabilities

  $ 5,788,713     $ 3,976,064  

 

Note 7 - Right to Use Assets and Lease Liabilities Operating Leases

 

The Company has operating leases for its clinic with a remaining lease term of approximately 7.2 years. The Company’s lease expense was entirely comprised of operating leases. Lease expense for the three months ended June 30, 2022 and 2021 amounted to approximately $199,800 and $38,500, respectively. Lease expense for the six months ended June 30, 2022 and 2021 amounted to approximately $389,300 and $59,200, respectively.

 

The Company’s ROU asset amortization for the three months ended June 30, 2022 and 2021 was approximately $85,200 and $18,500, respectively. The Company’s ROU asset amortization for the six months ended June 30, 2022 and 2021 was approximately $165,700 and $24,700, respectively.

 

The difference between the lease expense and the associated ROU asset amortization consists of interest at a rate of 12% per annum.

 

 

As of June 30, 2022, the Company had total operating lease liabilities of approximately $4.4 million and right-of-use assets of approximately $3.9 million, which were included in the condensed consolidated balance sheet.

 

Right to use assets – operating leases are summarized below:

 
                 
   

June 30,

   

December 31,

 
   

2022

   

2021

 

Right to use assets, net

  $ 3,883,529     $ 3,886,866  

 

Right to use assets – operating leases are summarized below:

 
   

June 30,

   

December 31,

 
   

2022

   

2021

 

Lease liability

  $ 4,393,664     $ 4,134,802  

Less: current portion

    (260,700 )     (161,838 )

Lease liability, non-current

  $ 4,132,964     $ 3,972,964  

 

Maturity analysis under these lease agreements are as follows:

 
         

For the twelve months ended June 30, 2023

  $ 746,876  

For the twelve months ended June 30, 2024

    907,369  

For the twelve months ended June 30, 2025

    897,472  

For the twelve months ended June 30, 2026

    916,801  

For the twelve months ended June 30, 2027

    937,074  

Thereafter

    2,361,735  

Total

    6,767,327  

Less: Present value discount

    (2,373,663 )

Lease liability

  $ 4,393,664  

 

Note 8 Debt

 

Howe Note 1

 

Mitesco, Inc. (the “Company”) issued a 10% Promissory Note (the “Howe Note 1”) due June 30, 2022, dated December 30, 2021, to the Michael C. Howe Living Trust (the “Lender”). Michael C. Howe is the Chief Executive Officer of the Good Clinic LLC, one of our subsidiaries. The principal amount of the Note is $1,000,000, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) six months from the date of execution (on July 19, 2022 this date was extended to September 10, 2022), or (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Note payable to the Company for the Note was $850,000 and was funded on December 30, 2021. An original issue discount in the amount of $150,000 was recorded. The amount payable at maturity will be $1,000,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Note, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. At June 30, 2022, the principal balance of this note was $1,000,000; $116,507 of the original issue discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discount at June 30, 2022 was $33,493.

 

Warrants. As further consideration for the Purchase Price payable hereunder, promptly following the Issue Date, the Borrower shall issue to the Lender two common stock purchase warrants, entitling the Lender to purchase (i) 2,100,000 shares of the Borrower’s common stock on substantially the same terms as the Series A warrant issued in connection with the Borrower’s Series D Convertible Preferred Stock, and (ii) 2,100,000 shares of the Borrower’s common stock on substantially the same terms as the Series B warrant issued in connection with the Borrower’s Series D Convertible Preferred Stock. one warrant (the “Series A Warrants”) to purchase 2.1 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) at a purchase price of $0.50 per whole share of Common Stock, and one warrant (the “Series B Warrants” and together with the Series A Warrants, the “Warrants”) to purchase 2.1 shares of Common Stock at a purchase price of $0.75 per whole share. Given the current stock price is less than the exercise price of the warrants, the warrants have no value.

 

 

Diamond Note 1

 

The Company issued a 10% Promissory Note due August 14, 2022, dated February 14, 2022 (the “Diamond Note 1”), to Lawrence Diamond (the “Lender”). Mr. Diamond is the Chief Executive Officer of the Company and a member of its Board of Directors. The principal amount of the Diamond Note 1 is $175,000, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) six (6) months from the date of execution, or (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Note payable to the Company for the Note was $148,750 and was funded on February 14, 2022. The amount payable at maturity will be $175,000 plus 10% of that amount plus accrued and unpaid interest. Following an event of default, as defined in the Note, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition to the Note and Lender will be issued 367,500 5-year warrants that may be exercised at $.50 per share and 367,500 5-year warrants that may be exercised at $.75 per share. These warrants have all of the same terms as those previously issued in conjunction with the Company’s Series C Preferred shares and its Series D Preferred shares. The warrants have an aggregate commitment date fair value of $2,914. At June 30, 2022, the principal balance of this note was $175,000; $20,877 of the original issue discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discount at June 30, 2022 was $5,373.

 

On March 22, 2022, the Company issued 168,221 shares of common stock with a contract price of $0.25 per share of $42,055 and a grant date market value of $0.127 per share or $21,364 were issued to Larry Diamond, its Chief Executive Officer, as compensation for the waiver of certain covenants as set forth and defined in Diamond Note 1.

 

Diamond Note 2

 

The Company issued a 10% Promissory Note due June 18, 2022 (the “Diamond Note 2”), dated March 18, 2022, to Lawrence Diamond (the “Lender”), which was subsequently amended. Lawrence Diamond is the Chief Executive Officer of the Company. The principal amount of the Diamond Note 2 is $235,294, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) April 4, 2022 (on July 12, 2022 this date was extended to September 10, 2022), (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE, or (iii) the date of receipt of the Company of the next round of debt or equity financing in an amount of at least $1,000,000. The purchase price of the Diamond Note payable to the Company for the Diamond Note was $200,000 and was funded on March 18, 2022. The amount payable at maturity will be $235,294 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Diamond Note, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Diamond Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition, the Lender will be issued 200,000 5-year warrants that may be exercised on substantially the same terms as the Series A warrant issued in connection with the Company’s Series D Convertible Preferred Stock. The warrants have an aggregate commitment date fair value of $2,213. All amounts due for The Diamond Note, with the exception of $23,529, was paid on April 8, 2022. $23,529 remained outstanding as of June 30, 2022.

 

On April 27, 2022, the Company issued 96,471 shares of common stock with a contract price of $0.25 per share or $24,118 and a grant date market value of $0.16 or $15,434 to Larry Diamond, it’s Chief Executive Officer, as commitment shares as set forth and defined in Diamond Note 2. The Company also issued five-year warrants to purchase 92,942 shares of common stock at a price of $0.50 to Mr. Diamond pursuant to a promissory note.

 

 

AJB Capital Note

 

On March 18, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with AJB Capital Investments, LLC (the “Investor”) with respect to the sale and issuance to the Investor of: (i) an initial commitment fee in the amount of $430,000 in the form of 1,720,000 shares (the “Commitment Fee Shares”) of the Company’s common stock (the “Common Stock”), which Commitment Fee Shares can be decreased to 720,000 shares ($180,000) if the Company repays the Note on or prior to its maturity (the “True-Up Provision”), (ii) a promissory note in the aggregate principal amount of $750,000, and (iii) Common Stock Purchase Warrants to purchase up to an aggregate of 750,000 shares of the Common Stock (the “Warrants”). The Note and Warrants were issued on March 17, 2022 (the “Original Issue Date”) and were held in escrow pending effectiveness of the Purchase Agreement. Pursuant to the terms of the Purchase Agreement, the initial Commitment Fee Shares were issued at a value of $430,000, the Note was issued in a principal amount of $750,000 for a purchase price of $675,000, resulting in an original issue discount of $75,000; the warrants had a commitment date fair value of $24,952; and the commitment fee shares had a commitment date fair value of $324,962, resulting in a total discount in the amount of $424,914. The Warrants were issued, with an initial exercise price of $0.50 per share, subject to adjustment as described herein. The aggregate cash subscription amount received by the Company from the Investor for the issuance of the Commitment Fee Shares, Note and Warrants was $616,250, due to a reduction in the $675,000 purchase price as a result of broker, legal, and transaction fees. $194,656 of the discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining discount at June 30, 2022 was $230,258. At June 30, 2022, the principal balance of this note was $750,000.

 

Anson East Master Fund LP and Anson Investments Master Fund LP

 

On April 6, 2022, the Company entered into separate Securities Purchase Agreement with each of Anson East Master Fund LP and Anson Investments Master Fund LP with respect to the sale and issuance to AEMF and AIMF of: (i) an aggregate initial commitment fee in the amount of $430,000 in the form of 1,720,000 shares (the “Commitment Fee Shares”) of the Company’s common stock (the “Common Stock”), which Commitment Fee Shares can be decreased to 722,400 shares ($180,000) if the Company repays the Notes on or prior their maturity, (ii) promissory notes in the aggregate principal amount of $750,000 (the “Notes”), and (iii) Common Stock Purchase Warrants to purchase up to an aggregate of 750,000 shares of the Common Stock (the “Warrants”) at an initial exercise price of $0.50 per share, subject to adjustment. The Notes and Warrants were issued on April 6, 2022 (the “Original Issue Date”) and were held in escrow pending effectiveness of the Purchase Agreements. The notes were issued in a total principal amount of $750,000 for a total purchase price of $675,000, resulting in an original issue discount of $75,000; the warrants had an aggregate commitment date fair value of $168,130; and the commitment shares had an aggregate commitment date fair value of $563,665, resulting in a total discount in the amount of $638,665. $160,121 of the discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining discount at June 30, 2022 was $478,544. At June 30, 2022, the principal balance of this note was $750,000.

 

GS Capital Partners

 

On April 18, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with GS Capital Partners (the “Investor”) with respect to the sale and issuance to the Investor of: (i) an initial commitment fee in the amount of $159,259 in the form of 637,036 shares (the “Commitment Fee Shares”) of the Company’s common stock (the “Common Stock”), which Commitment Fee Shares can be decreased to 266,280 shares ($66,570) if the Company repays the Note on or prior to their maturity, (ii) promissory note in the principal amount of $277,777, and (iii) Common Stock Purchase Warrants to purchase up to 277,777 shares of the Common Stock (the “Warrants”) at an initial exercise price of $0.50 per share, subject to adjustment. The Note and Warrants were issued on April 18, 2022 (the “Original Issue Date”) and were held in escrow pending effectiveness of the Purchase Agreement. The notes were issued in a total principal amount of $277,777 for a total purchase price of $250,000, resulting in an original issue discount of $27,777; the warrants had an aggregate commitment date fair value of $26,846; and the commitment shares had an aggregate commitment date fair value of $135,312. The Company also recorded a discount in the amount of $22,500 for the costs of financing, resulting in a total discount in the amount of $212,435. $54,386 of the discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining discount at June 30, 2022 was $159,049. At June 30, 2022, the principal balance of this note was $277,777.

 

 

Diamond Note 3

 

On April 27, 2022, the Company issued a 10% Promissory Note due June 30, 2022 (the “Diamond Note 3”) to Lawrence Diamond (the “Lender”). Lawrence Diamond is the Chief Executive Officer of the Company. The principal amount of the Diamond Note 3 is $235,294, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) April 4, 2022 (on July 12, 2022 this date was extended to September 10, 2022), (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE, or (iii) the date of receipt of the Company of the next round of debt or equity financing in an amount of at least $1,000,000. The purchase price of the Diamond Note 3 payable to the Company for the Diamond Note 3 was $200,000 resulting in an original issue discount of $35,294 and was funded on April 27, 2022. The amount payable at maturity will be $235,294 plus 10% of that amount plus any accrued and unpaid interest, resulting in a premium and related discount in the amount of $23,529. The Company also issued 96,471 shares of stock with a value of $16,200 as a commitment fee and five-year warrants with a fair value of $8,800 to purchase 96,471 shares of common stock at a price of $0.50 per share; these amounts were charged to discount on the note, resulting in a total discount on this note in the amount of $83,823. Following an event of default, as defined in the Diamond Note 3, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note 3 contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Diamond Note 3, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. At June 30, 2022, the principal balance of this note was $235,294; $34,861 of the discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining discounts at June 30, 2022 were $48,962.

 

Kishon Investments, LLC

 

On May 10, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Kishon Investments, LLC (the “Investor”) with respect to the sale and issuance to the Investor of: (i) an initial commitment fee in the amount of $159,259 in the form of 637,036 shares (the “Commitment Fee Shares”) of the Company’s common stock (the “Common Stock”), (ii) promissory note in the principal amount of $277,777 due on November 10, 2022, and (iii) Common Stock Purchase Warrants to purchase up to 277,777 shares of the Common Stock (the “Warrants”) at an initial exercise price of $0.50 per share, subject to adjustment. The Note and Warrants were issued on May 10, 2022 (the “Original Issue Date”) and were held in escrow pending effectiveness of the Purchase Agreement. The note was issued in a total principal amount of $277,777 for a total purchase price of $250,000, resulting in an original issue discount of $27,777; the warrants had an aggregate commitment date fair value of $15,780; and the commitment shares had an aggregate commitment date fair value of $122,712, resulting in a total discount in the amount of $166,269. $32,463 of the discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining discount at June 30, 2022 was $133,806. At June 30, 2022, the principal balance of this note was $277,777.

 

Diamond Note 4

 

The Company issued a 10% Promissory Note due as described below (the “Diamond Note 4”), dated May 18, 2022, to Lawrence Diamond. The principal amount of the Diamond Note 4 is $47,059, carries a 10% interest rate per annum, payable in monthly installments, and had a maturity date that was the earlier of (i) four business days after the date on which we successfully lists its shares of common stock on Nasdaq or NYSE, or (ii) two business days after the date of receipt of the Company of the next round of debt or equity financing in a net amount of at least $600,000. On August 3, 2022, the maturity date was amended to (i) September 10, 2022 or (ii) five days after the date on which we successfully list our shares of common stock on any of the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market. The purchase price of the Diamond Note 4payable to us for the Diamond Note 4was $40,000, resulting in an original issue discount of $7,059, and was funded on May 18, 2022. The amount payable at maturity will be $47,059 plus 10% of that amount plus any accrued and unpaid interest, resulting in a premium and related discount in the amount of $4,706. Following an event of default, as defined in the Diamond Note 4, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note 4contains a “most favored nations” clause that provides that, so long as the Diamond Note 4is outstanding, if we issue any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Diamond Note 4, we shall notify Mr. Diamond of such term, and such term, at the option of Mr. Diamond, shall become a part of the Note. In addition, Mr. Diamond will be issued (1) 19,294 five-year warrants (the “May 18 Diamond Warrants”) with a fair value of $2,960 that may be exercised on substantially the same terms as the Series A warrant issued in connection with our Series D Convertible Preferred Stock and (2) 19,294 shares of Common Stock with a value of $3,160 as commitment shares; these amounts were charged to discount on the note, resulting in a total discount on this note in the amount of $17,885. At June 30, 2022, the principal balance of this note was $47,059; $5,392 of the discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining discount at June 30, 2022 were $12,493.

 

 

Finnegan Note 1

 

On May 23, 2022, the Company issued a 10% Promissory Note due as described below (the “Finnegan Note 1”) to Jessica Finnegan. The principal amount of the Finnegan Note 1 is $47,059, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) four business days after the date on which we successfully lists its shares of common stock on Nasdaq or NYSE, or (ii) two business days after the date of receipt of the Company of the next round of debt or equity financing in a net amount of at least $600,000. The purchase price of the Finnegan Note 1 was $40,000 resulting in an original issue discount of $7,059 and was funded on May 18, 2022. The amount payable at maturity will be $47,059 plus 10% of that amount plus any accrued and unpaid interest, resulting in a premium and related discount in the amount of $4,706. Following an event of default, as defined in the Finnegan Note 1, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Finnegan Note 1 contains a “most favored nations” clause that provides that, so long as the Finnegan Note 1 is outstanding, if we issue any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Finnegan Note 1, we shall notify Ms. Finnegan of such term, and such term, at the option of Ms. Finnegan, shall become a part of the Note. In addition, Ms. Finnegan will be issued (1) 19,295 five-year warrants with a fair value of $2,000 (the “May 18 Finnegan Warrants”) that may be exercised on substantially the same terms as the Series A warrant issued in connection with our Series D Convertible Preferred Stock and (2) 19,295 shares of Common Stock with a value of $3,240 as commitment shares; these amounts were charged to discount on the note, resulting in a total discount on this note in the amount of $17,005. At June 30, 2022, the principal balance of this note was $47,059; $3,843 of the discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining discounts at June 30, 2022 were $13,162.

 

May 26, 2022 Notes

 

The Company issued five 10% Promissory Notes due as described below (collectively, the “May 26 Notes”), dated May 26, 2022, to Larry Diamond, Jenny Lindstrom, and other related parties (the “May 26 Lenders”), in the aggregate principal amount of $205,883.

 

The May 26 Notes carry a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) November 30, 2022, or (ii) the date on which we successfully lists our shares of common stock on Nasdaq or NYSE. The aggregate principal amount payable at maturity will be $205,883 plus 10% of that amount plus any accrued and unpaid interest, resulting in an aggregate premium and related discount in the amount of $20,588. The aggregate amount funded was $175,000 resulting in an original issue discount of $30,883. Following an event of default, as defined in the May 26 Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The May 26 Notes contain a “most favored nations” clause that provides that, so long as the May 26 Notes are outstanding, if we issue any new security, which the May 26 Lenders reasonably believe contains a term that is more favorable than those in the May 26 Notes, we shall notify the May 26 Lenders of such term, and such term, at the option of the May 26 Lenders, shall become a part of the May 26 Notes. In addition, the May 26 Lenders were issued in the aggregate (1) 84,412 five-year warrants (the “May 26 Warrants”) with an aggregate fair value of $8,750 and (2) 84,412 shares of Common Stock as commitment shares with an aggregate value of $14,175; these amounts were charged to discount on the note, resulting in an aggregate discount on these notes in the amount of $74,396. The May 26 Warrants have an initial exercise price of $0.50 per share. The May 26 Warrants are not exercisable for six months following their issuance. The May 26 Lenders may exercise the May 26 Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the May 26 Warrants are not then registered pursuant to an effective registration statement. At June 30, 2022, the principal balance of these notes was $205,883; $6,631 of the discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining discounts at June 30, 2022 were $24,252.

 

June 9, 2022 Notes

 

The Company issued two 10% Promissory Notes due as described below (individually, the “Howe Note” and the “Dragon Note”, and collectively, the “June 9 Notes”), dated June 9, 2022, to Michael C. Howe Living Trust and Dragon Dynamic Funds Platform Ltd. (the “June 9 Lenders”) in the aggregate principal amount of $888,235. Michael C. Howe is the Chief Executive Officer of the Good Clinic LLC, one of the Company’s subsidiaries.

 

 

The June 9 Notes carry a 10% interest rate per annum, payable in monthly installments. The Howe Note has a maturity date that is the earlier of (i) September 10, 2022, or (ii) the date on which we successfully list our shares of common stock on Nasdaq or NYSE. The Dragon Note has a maturity date that is the earlier of (i) December 9, 2022, or (ii) the date on which we successfully list our shares of common stock on Nasdaq or NYSE. The aggregate amount payable at maturity will be $888,235 plus 10% of that amount plus any accrued and unpaid interest, resulting in a premium and related discount in the aggregate amount of $58,824. The aggregate amount funded was $755,000 resulting in an original issue discount of $133,235. In addition, the June 9 Lenders will be issued in the aggregate (1) 364,176 five-year warrants (the “June 9 Warrants”) with a fair value of $32,465 and (2) 364,176 shares of Common Stock with a value of $66,440 as commitment shares; these amounts were charged to discount on the note. The Company also paid issuance costs related to these notes in the aggregate amount of $77,500 which were charged to discount on the notes, resulting in an aggregate discount on these notes in the amount of $368,464. The June 9 Warrants have an initial exercise price of $0.50 per share. The June 9 Warrants are not exercisable for six months following their issuance. At June 30, 2022, the principal balance of these notes were $888,235; $45,607 of the discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining discounts at June 30, 2022 were $322,857.

 

PPP Loan

 

During March 2020, in response to the COVID-19 crisis, the federal government announced plans to offer loans to small businesses in various forms, including the Payroll Protection Program, or “PPP”, established as part of the Corona Virus Aid, Relief and Economic Security Act (“CARES Act”) and administered by the U.S. Small Business Administration. On April 25, 2020, the Company entered an unsecured Promissory Note with Bank of America for a loan in the original principal amount of approximately $460,400, and the Company received the full amount of the loan proceeds on May 4, 2020. The June 30, 2022 balance, including accrued interest, was $470,375.

 

These amounts are reflected in the table below:

 

Notes Payable Table 1:

 

   

June 30,

   

December 31,

 
   

2022

   

2021

 

Notes Payable

  $ 4,937,466     $ 1,000,000  

PPP Loan

    460,406       460,406  
      5,397,872       1,460,406  

Less: Discounts

    (1,620,263 )     (411,568 )

Notes payable - net of discounts

  $ 3,777,609     $ 1,048,838  
                 

Current Portion, net of discounts

  $ 3,777,609     $ 1,048,838  

Long-term portion, net of discounts

  $ -     $ -  

 

Note 9 Stockholders Equity (Deficit)

 

Common Stock

 

The Company has authorized 500,000,000 shares of common stock, par value $0.01; 225,209,745 shares were issued and outstanding on June 30, 2022.

 

Common Stock Transactions During the Six Months Ended June 30, 2022

 

On January 12, 2022, the Company entered into a settlement agreement with an ex-employee. Pursuant to the terms of this agreement, the Company agreed to pay the amount of $19,032 for accrued salary, and the employee returned to the Company for cancellation 400,000 shares of common stock previously issued as compensation. These shares were valued at par value of $0.01 or a total value of $4,000; the Company recorded a gain on cancellation of these shares in the amount of $15,032.

 

The Company entered into a debt-for-equity exchange agreement with Gardner Builders Holdings, LLC (“Gardner”) on January 7, 2022 (the “Debt for Equity Agreement”). Pursuant to the Debt for Equity Agreement, the Company issued shares of restricted common stock to Gardner in exchange for the Company Debt Obligations, as defined below.

 

 

The Agreement settled for certain accounts payable amounts owed by the Company to the Creditor (the “Accounts Payable Amount”) as well as upcoming amounts that will become due between the date of the Agreement and April 1, 2022. The Agreement also settled accrued interest and penalties on the amounts due through January 5, 2022, as well as interest payments on amounts incurred in the first quarter of 2022 (collectively, the “Additional Costs”, and combined with the Accounts Payable Amount, the “Company Debt Obligations”). The Accounts Payable Amount was $500,000, the Additional Costs were $294,912 and the conversion price was $0.25. As a result, 3,179,650 Restricted Shares were authorized to be issued.

 

On March 22, 2022 and March 31, 2022, the Company issued an aggregate 1,541,721 shares of common stock as waiver fees to holders of the Series C and Series D Preferred Stock for their waivers of certain covenants as set forth and defined in the Series C and Series D Certificates of Designations. The Company valued these shares at their contractual price of $0.25 per share and recorded the amount of $385,431 as waiver fees during the six months ended June 30, 2022. The Company recorded an aggregate gain upon issuance of these shares in the amount of $198,273 based on the market price of the Company’s common stock on the date of issuance.

 

On March 31, 2022, the Company issued 1,720,000 Commitment Fee Shares to AJB Capital Investors, LLC. A Monte Carlo model was used to value the warrants and call features, and a probability weighted expected return model was used to value the True-Up Provision. The contractual price of the common stock $0.25 per share; valuation purposes, the common stock was valued at the market price on the date of the transaction of $0.127 per share. The derivative liability was valued at $106,608 on the date of the transaction and was revalued at $75,158 on June 30, 2022. The discount on the notes due to the Commitment Fee Shares and warrants was valued at $349,914. The Company recorded the amount of $226,106 to additional paid-in capital pursuant to this transaction.

 

On March 31, 2022, the Company issued 382,353 shares of common stock at a price of $0.25 per share which were previously subscribed for the conversion of accounts payable in the amount of $95,558.

 

On April 18, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with GS Capital Partners (the “Investor”) with respect to the sale and issuance to the Investor of: (i) an initial commitment fee in the amount of $159,259 in the form of 637,036 shares (the “Commitment Fee Shares”) of the Company’s common stock (the “Common Stock”), which Commitment Fee Shares can be decreased to 266,280 shares ($66,570) if the Company repays the Note on or prior to their maturity, (ii) promissory note in the principal amount of $277,777, and (iii) Common Stock Purchase Warrants to purchase up to 277,777 shares of the Common Stock (the “Warrants”). The Note and Warrants were issued on April 18, 2022 (the “Original Issue Date”) and were held in escrow pending effectiveness of the Purchase Agreement.

 

Pursuant to the terms of the Purchase Agreement, the initial Commitment Fee Shares were issued at a value of $159,259, the Note was issued in the principal amount of $277,777 for a purchase price of $250,000, resulting in the original issue discount of $27,777; and the Warrants were issued, with an initial exercise price of $0.50 per share, subject to adjustment.

 

On April 27, 2022, the Company issued 720,000 shares of stock to Cavalry Fund 1 LP as compensation for the waiver of certain covenants as set forth in the Series C Certificate of Designation.

 

On April 27, 2022, the Company issued 96,471 shares of common stock with a contract price of $0.25 per share or $24,118 and a grant date market value of $0.16 or $15,434 to Larry Diamond, its Chief Executive Office, as commitment shares as set forth and defined in Diamond Note 3. The Company recorded these shares at their relative fair value of the components of Diamond Note 3, or $16,200, and recorded a loss in the amount of $765 on this transaction. The Company also issued five-year warrants to purchase 96,471 shares of common stock at a price of $0.50 to Mr. Diamond pursuant to Diamond Note 3. See Note 8.

 

On May 10, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Kishon Investments, LLC (the “Investor”) with respect to the sale and issuance to the Investor of: (i) an initial commitment fee in the amount of $159,259 in the form of 637,036 shares (the “Commitment Fee Shares”) of the Company’s common stock (the “Common Stock”), (ii) promissory note in the principal amount of $277,777 due on November 10, 2022, and (iii) Common Stock Purchase Warrants to purchase up to 277,777 shares of the Common Stock (the “Warrants”). The Note and Warrants were issued on May 10, 2022 (the “Original Issue Date”) and were held in escrow pending effectiveness of the Purchase Agreement.

 

Pursuant to the terms of the Purchase Agreement, the initial Commitment Fee Shares were issued at a value of $159,259, the Note was issued in the principal amount of $277,777 for a purchase price of $250,000, resulting in the original issue discount of $27,777; and the Warrants were issued, with an initial exercise price of $0.50 per share, subject to adjustment. See Note 8.

 

 

On May 18, 2022, the Company issued 19,294 shares of common stock to Larry Diamond, it’s Chief Executive Officer at a contractual price of $0.25 per share and a market price at issuance date of $0.1517 per share as commitment shares as set forth and defined in Diamond Note 4. The Company recorded these shares at their relative fair value of the components of Diamond Note 4, or $3,160, and recorded a loss in the amount of $249 on this transaction. The Company also issued five-year warrants to purchase 19,294 shares of common stock at a price of $0.50 to Mr. Diamond pursuant to Diamond Note 4. See Note 8.

 

On May 23, 2022, the Company issued 19,295 shares of common stock to Jessica Finnegan at a contractual price of $0.25 per share and a market price at issuance date of $0.1794 per share as commitment shares as set forth and defined in Finnegan Note 1. The Company recorded these shares at their relative fair value of the components of Finnegan Note 1, or $3,240, and recorded a gain in the amount of $222 on this transaction. The Company also issued five-year warrants to purchase 19,295 shares of common stock at a price of $0.50 to Ms. Finnegan pursuant to Finnegan Note 1. See Note 8.

 

On May 26, 2022, the Company issued 84,412 shares of common stock to the May 26 Lenders at a contractual price of $0.25 per share and a market price at issuance date of $0.1517 per share as commitment shares as set forth and defined in the May 26, 2022 Notes. The Company recorded these shares at their relative fair value of the components of the May 26 Note, or $14,175, and recorded a loss in the amount of $1,369 on these transactions. The Company also issued five-year warrants to purchase 84,412 shares of common stock at a price of $0.50 to the May 26 Lenders pursuant to the May 26, 2022. See Note 8.

 

On June 9, 2022, the Company issued 364,176 shares of common stock to the June 9 Lenders at a contractual price of $0.25 per share and a market price at issuance date of $0.1485 per share as commitment shares as set forth and defined in the June 9 Notes. The Company recorded these shares at the relative fair value of the components of June 9 Notes, or $66,400, and recorded an aggregate loss in the amount of $9,356 on these transactions. The Company also issued five-year warrants to purchase 364,176 shares of common stock at a price of $0.50 to the May 26 Lenders pursuant to the June 9 notes. See Note 8.

 

Common Stock Transactions During the Six Months Ended June 30, 2021

 

On January 4, 2021, the Company issued 4,123,750 shares of common stock at a price of $0.012 per share pursuant to the conversion of $45,000 of principal and $4,485 of accrued interest in Eagle Equities Note 4.

 

On January 6, 2021, the Company issued 3,505,964 shares of common stock at a price of $0.01224 per share pursuant to the conversion of $39,000 of principal and $3,913 of accrued interest in Eagle Equities Note 4.

 

On January 11, 2021, the Company issued 4,463,507 shares of common stock at a price of $0.01224 per share pursuant to the conversion of $50,000 of principal and $4,633 of accrued interest in Eagle Equities Note 5.

 

On January 14, 2021, the Company issued 4,319,378 shares of common stock at a price of $0.01266 per share pursuant to the conversion of $50,000 of principal and $4,683 of accrued interest in Eagle Equities Note 5.

 

On January 21, 2021, the Company issued 6,449,610 shares of common stock at a price of $0.0154 per share pursuant to the conversion of $93,000 of principal and $6,324 of accrued interest in Eagle Equities Note 6.

 

On January 28, 2021, the Company issued 7,285,062 shares of common stock at a price of $0.01575 per share pursuant to the conversion of $107,200 of principal and $7,540 of accrued interest in Eagle Equities Note 6.

 

On February 1, 2021, the Company issued 6,672,000 shares of common stock in a private placement (the “2021 Private Placement”) at a price of $0.25 per share for cash proceeds of $1,668,000.

 

On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 7 whereby the Company issued 1,184,148 shares of common stock at a price of $0.24984 per share in satisfaction of $200,200 of principal and all accrued interest and prepayment penalties due under this note.

 

On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 8 whereby the Company issued 639,593 shares of common stock at a price of $0.23851 per share in satisfaction of $114,400 of principal and all accrued interest and prepayment penalties due under this note.

 

On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 9 whereby the Company issued 605,177 shares of common stock at a price of $0.24984 per share in satisfaction of $114,400 of principal and all accrued interest and prepayment penalties due under this note.

 

 

On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 10 whereby the Company issued 1,095,131 shares of common stock at a price of $0.23748 per share in satisfaction of $200,200 of principal and all accrued interest and prepayment penalties due under this note.

 

On February 22, 2021, the Company issued 336,000 shares of common stock for the exercise of options at a price of $0.03 per share.

 

On March 11, 2021, the Company issued 600,000 shares of common stock to four officers of The Good Clinic in exchange for 4,800 shares of Series A Preferred Stock. The 4,800 shares of Series A Preferred Stock were cancelled.

 

On March 17, 2021, the Company issued 300,000 shares of common stock at a price of $0.31 per share to a service provider.

 

On March 23, 2021, the Company issued 461,358 shares of common stock at a price of $0.26 per share to the underwriters of the 2021 Private Placement.

 

On April 19, 2021, the Company issued 1,962 shares of common stock for professional fees which had been performed in a prior period. The Company recorded these shares at the par value of $0.01 per share.

 

On May 4 through May 26, 2021, the Company issued 4,237,424 shares of common stock for the conversion of 1,059,356 shares of Series C Preferred Stock at a price of $0.25 per share.

 

On May 12, 2021, the Company issued 2,500,000 shares of common stock at a price of $0.03 per share for the exercise of stock options by an investor.

 

On June 10 through June 29, 2021, the Company issued 5,116,668 shares of common stock at a price of $0.03 per share for the exercise of stock options by officers and directors.

 

On June 23, 2021, the Company cancelled 2,000,000 shares of common stock held by an ex-officer in connection with a settlement agreement. The cancellation of these shares was recorded at the par value of $0.01 per share. Also, in connection with the settlement agreement, the Company issued 637,953 shares to the ex-officer at the market price of $.20 per share.

 

Also, during the six months ended June 30, 2021, the Company charged the amount of $7,897 to operations in connection with the vesting of stock granted to its officers and board members; the Company also charged the amount of $201,294 to operations in connection with the vesting of options granted to its officers and board members.

 

Preferred Stock

 

We have authorized to issue 100,000,000 shares of Preferred Stock with such rights designations and preferences as determined by our Board of Directors. We have designated 500,000 shares of series A stock, 3,000,000 shares of Series C Preferred, 10,000,000 shares of Series D Preferred and we have designated 400,000 shares as Series X Preferred Stock.

 

Series A Preferred Stock

 

Series A Preferred Stock Transactions During the Six Months Ended June 30, 2022

 

None.

 

Series A Preferred Stock Transactions During the Six Months Ended June 30, 2021

 

During the six months ended June 30, 2021, the Company accrued dividends in the amount of $1,000 on the Series A Preferred Stock. On March 11, 2021, the Company issued 600,000 shares of common stock to the four officers of The Good Clinic in exchange for the previously issued Series A Preferred Stock and accrued dividends. The Series A preferred stock was canceled. The Preferred Stock was valued at cost of $71,558, and the common stock was valued at the market price of $0.463 per share or a total value of $277,800. This transaction resulted in a deemed dividend to the Preferred A shareholders in the amount of $206,242.

 

 

Series C Preferred Stock

 

Series C Preferred Stock Transactions During the Six Months Ended June 30, 2022

 

During the six months ended June 30, 2022, the Company accrued dividends on the Series C Preferred Stock in the amount of $32,955.

 

Series C Preferred Stock Transactions During the Six Months Ended June 30, 2021

 

On March 25, 2021, the Company sold 3,000,000 shares of its Series C Preferred Stock along with (i) five-year warrants to purchase 6,300,000 shares of the Company’s common stock at a price of $0.50 per share, and (ii) five-year warrants to purchase 6,300,000 shares of the Company’s common stock at a price of $0.75 per share for proceeds of $3,000,000.

 

Between May 4 and May 26, 2021, 1,059,356 shares of Series C Preferred Stock were converted at a price of $0.25 per share to 4,237,424 shares of common stock. During the six months ended June 30, 2021, the Company accrued dividends on the Series C Preferred Stock in the amount of $42,078.

 

The Series C Preferred Stock has the following terms:

 

Ranking. The Series C Preferred Stock and the Series D Preferred, discussed below, ranks senior to all other preferred stock of the Company except in relation to the Series X Cumulative Redeemable Perpetual Preferred Stock, which ranks Pari passu to the Series C Preferred Stock, with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company.

 

Voting Rights. Holders of the Series C Preferred Stock have the right to vote on any matter presented to holders of our Common Stock for their action or consideration at any meeting of the stockholders (or by written consent of stockholders in lieu of meeting), each holder of our Series C Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series C preferred Stock held by such holder, as described below, are convertible as of the record date for determining stockholders entitled to vote on (or consent to) such matter, voting with the Common Stock as a single class.

 

Conversion. Each holder of our Series C Preferred Stock is entitled to convert their shares of Series C Preferred Stock, in whole or in part, at the Conversion Rate, which is determined by dividing the Conversion Amount (the Stated Value of $1.05, plus any accrued but unpaid dividends) by the Conversion Price ($0.25 per share). In addition, upon certain triggering events, the holders of our Series C Preferred Stock have the right to convert their Series C Preferred Stock at the lesser of the Conversion Price or 75% of the average VWAP for the five trading days prior to the date of the notice of conversion. The Conversion Price is subject to adjustment upon certain stock splits and recapitalization as well as upon the sale of Common Stock or Common Stock Equivalents. Each share of the Series C Preferred Stock is convertible at the option of the holder thereof, or automatically or upon the closing of an underwritten offering of at least $10 million of the Company’s securities or upon listing of the Company’s Common Stock on a national securities exchange.

 

Dividends. Each share of Series C Preferred Stock accrues dividends on a quarterly basis in arrears, at the rate of 6% per annum of the Stated Value ($1.05 per share plus any accrued but unpaid dividends) and is to be paid within 15 days after the end of each of our fiscal quarters. Each holder of the Series C Preferred Stock is entitled to receive dividends or distributions on each share of the Series C Preferred Stock on an as converted into Common Stock basis when and if dividends are declared on the Common Stock by our Board of Directors.

 

Liquidation Rights. The holders of our Series C Preferred stock are entitled to receive in cash out of our assets, whether from capital or from earnings available for distribution to our stockholders (the “Liquidation Funds”), before any amount shall be paid to the holders of any of shares of capital stock that rank junior to the Series C Preferred Stock, but Pari passu with any shares of capital stock that have a parity ranking with the Series C Preferred stock (“Parity Stock”) then outstanding, an amount per share of Series C Preferred Stock equal to the greater of (A) the Conversion Amount on the date of such payment or (B) the amount per share such holder of the Series C Preferred Stock would receive if such holder converted their Series C Preferred Stock into Common Stock immediately prior to the date of such payment, provided that if the Liquidation Funds are insufficient to pay the full amount due to the holders of the Series C Preferred Stock and holders of shares of Parity Stock, then each holder Series C Preferred Stock and each holder of Parity Stock shall receive a percentage of the Liquidation Funds equal to the full amount of Liquidation Funds payable to such holder and such holder of Parity Stock as a liquidation preference, in accordance with their respective certificate of designations (or equivalent), as a percentage of the full amount of Liquidation Funds payable to all holders of Series C Preferred Stock and all holders of shares of Parity Stock. All such amounts shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution of any Liquidation Funds of the Corporation to the holders of shares of capital stock that may rank junior to that of the Series C Preferred Stock Junior Stock.

 

 

Rights and Preferences. The rights, preferences, and privileges of holders of our Series C Preferred Stock are subject to, and may be adversely affected by, the rights of holders of shares of any series of Preferred Stock that we may designate and issue in the future that may rank senior to the Series C Preferred Stock.

 

Redemption Rights. Upon receipt of a conversion notice, we have the right (but not the obligation) to redeem all or part of the Series C Preferred Stock (which the applicable holder of the Series C Preferred Stock is seeking to convert) at a price per share equal to the product of 125% of the (1) Stated Value plus (2) the Additional Amount (the “Redemption Price”). If we decide to exercise the redemption right, within one trading day, we shall deliver written notice to such holder(s) of Series C Preferred Stock that the Series C Preferred Stock will be redeemed (the “Redemption Notice”) on the date that is three trading days following the date of the Redemption Notice (such date, the “Redemption Date”). On the Redemption Date, we shall redeem the shares of Series C Preferred Stock specified in such request by paying in cash therefor a sum per share equal to the Redemption Price. In no event shall a Redemption Notice be given if we may not lawfully redeem our capital stock. On or before the Redemption Date, the Redemption Price for such shares shall be paid by wire transfer of immediately available funds to an account designated in writing by the applicable holder.

 

Price Adjustments Protection. The conversion price is subject to appropriate adjustment in the event of share dividends, share splits, reorganizations or similar events affecting our shares of Common Stock. Other than for certain exempt issuances, in the event we issue or sell any securities, including options or convertible securities, or amend outstanding securities, at an effective price, with an exercise price or at a conversion price less than the Conversion Price, then the Conversion Price shall be reduced to such lower price.

 

Preemptive or Similar Rights Additionally, except for a public offering or certain exempt issuances of our securities, holders of the Series C Preferred Stock shall have the right to participate in any offering of our Common Stock or Common Stock Equivalents (as defined in the COD) in a transaction exempt from registration under the Securities Act in an amount equal to an aggregate of 30% of the financing on the same terms, conditions and price provided to investors in such an offering, such right shall expire on the 15 month anniversary of the issuance date of the Series C Preferred Stock. Further, until the earlier of 18 months from the issuance date of the Series C Preferred Stock and the date that there are less than 20% of the shares of Series C Preferred Stock outstanding, the Investors have most favored nations protection in the event we issue or sell Common Stock or Common Stock Equivalents that the Investors believe are more favorable than the terms and conditions under the Private Placement.

 

Fully Paid and Nonassessable. All our issued and outstanding shares of Series C Preferred Stock are fully paid and nonassessable.

 

Series D Preferred Stock

 

Pursuant to the Certificate of Designations, Preferences and Rights of the Series D Preferred Stock of the Company, Inc., filed with the Secretary of State of the State of Delaware on October 18, 2021 (the “COD”), there are 10,000,000 shares of our preferred stock that have been designated as the Series D Preferred Stock and each share of the Series D Preferred Stock is convertible at the option of the holder thereof, or automatically upon the request of the our underwriters that the Series D Preferred Stock convert to shares of Common Stock or upon listing of the our Common Stock on a national securities exchange. The number of shares of Common Stock issuable upon the conversion of each share of Series D Preferred Stock is calculated by dividing the Conversion Amount (defined in the COD as the Stated Value, $1.05 per share, plus accrued and unpaid dividends) by the $0.25 conversion price. 

 

Series D Preferred Stock Transactions During the Six Months Ended June 30, 2022

 

During the six months ended June 30, 2022, the Company accrued dividends on the Series D Preferred Stock in the amount of $96,847.

 

Series D Preferred Stock Transactions During the Six Months Ended June 30, 2021

 

None.

 

 

Series X Preferred Stock

 

The Company has 24,227 shares of its 10% Series X Cumulative Redeemable Perpetual Preferred Stock (the “Series X Preferred Stock”) outstanding as of June 30, 2022 and December 31, 2021. The Series X Preferred Stock has a par value of $0.01 per share, no stated maturity, a liquidation preference of $25.00 per share, and will not be subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless the Company decides to redeem or otherwise repurchase the Series X Preferred Stock; the Series X Preferred Stock is not redeemable prior to November 4, 2020. The Series X Preferred Stock will rank senior to all classes of the Company’s common and preferred stock and accrues dividends at the rate of 10% on $25.00 per share. The Company reserves the right to pay the dividends in shares of the Company’s common stock at a price equal to the average closing price over the five days prior to the date of the dividend declaration. Each one share of the Series X Preferred Stock is entitled to 20,000 votes on all matters submitted to a vote of our shareholders.

 

Series X Preferred Stock Transactions During the Six Month Ended June 30, 2022

 

On June 7, 2022, the Company issued 405,131 shares of common stock at an average price of $0.2149 per share as payment for dividends payable on the Series X Preferred Stock in the amount of $87,053.

 

During the six months ended June 30, 2022, the Company accrued dividends in the amount of $30,282 on the Series X Preferred Stock.

 

Series X Preferred Stock Transactions During the Six Months Ended June 30, 2021

 

During the six months ended June 30, 2021, the Company accrued dividends in the amount of $31,536 on the Series X Preferred Stock.

 

Stock Options

 

The following table summarizes the options outstanding at June 30, 2022 and the related prices for the options to purchase shares of the Company’s common stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

average

 

 

 

 

 

 

average

 

 

 

 

 

 

 

 

 

 

average

 

 

exercise

 

 

 

 

 

 

exercise

 

 

Range of

 

 

Number of

 

 

remaining

 

 

price of

 

 

Number of

 

 

price of

 

 

exercise

 

 

options

 

 

contractual

 

 

outstanding

 

 

options

 

 

exercisable

 

 

prices

 

 

outstanding

 

 

life (years)

 

 

options

 

 

exercisable

 

 

options

 

 

$

0.03- 0.39

 

 

 

16,354,961

 

 

 

8.78

 

 

$

0.213

 

 

 

5,469,961

 

 

$

0.161

 

 

 

 

 

 

 

16,354,961

 

 

 

8.78

 

 

$

0.213

 

 

 

5,469,961

 

 

$

0.161

 

 

Transactions involving stock options are summarized as follows:

 

   

Shares

   

Weighted- Average

Exercise Price ($)

 

Outstanding at December 31, 2021

    18,329,543     $ 0.206  

Granted

    200,000     $ 0.25  

Expired

    (2,174,582

)

    0.155  

Outstanding at June 30, 2022

    16,354,961     $ 0.213  

Options vested and exercisable

    5,469,961     $ 0.161  

 

On June 13, 2022, the Company issued 200,000 ten-year options with an exercise price of $0.25 and a fair value of $23,316 to Tom Brodmerkel, its Chairman, to the position of Chief Financial Officer.

 

During the three months ended June 30, 2022 and 2021, the Company charged the amount of approximately $135,295 and $195,000, respectively, for the vesting of stock options. During the six months ended June 30, 2022 and 2021, the Company charged the amount of approximately $302,310 and $201,000, respectively, for the vesting of stock options.

 

At June 30, 2022, the total stock-based compensation cost related to unvested awards not yet recognized was $2.2 million.

 

 

The Company valued stock options during the six months ended June 30, 2022 and 2021 using the Black-Scholes valuation model utilizing the following variables:

 

   

June 30,

   

June 30,

 
   

2022

   

2021

 

Volatility

    143.6

%

    167.8% to 183.5

%

Dividends

  $ -     $ -  

Risk-free interest rates

    3.04

%

    0.82% to 1.69

%

Term (years)

    5.00       5.00 to 10.00  

 

Warrants

 

The following table summarizes the warrants outstanding on June 30, 2022, and the related prices for the warrants to purchase shares of the Company’s common stock (see note 8):

 

   

Shares

   

Weighted- Average

Exercise Price ($)

 
                 

Outstanding on December 31, 2021

    29,820,000     $ 0.625  

Granted

    3,470,673     $ 0.526  

Exercised

    -     $ -  

Outstanding on June 30, 2022

    33,290,673     $ 0.615  

 

The Company valued warrants during the six months ended June 30, 2022 and 2021 using the Black-Scholes valuation model utilizing the following variables:

 

   

June 30,

   

June 30,

 
   

2022

   

2021

 

Volatility

    143.6 to 150.7

%

    171.6% to 183.5

%

Dividends

  $ -     $ -  

Risk-free interest rates

    0.76% to 3.04

%

    1.15% to 1.63

%

Term (years)

    0.25 to 5.00       5.00 to 6.50  

 

Note 10 Commitments and Contingencies

 

Legal

 

There are no pending or anticipated legal actions at this time.

 

Note 11 Subsequent Events

 

On July 7, 2022, the Company issued two 10% Promissory Notes due as described below (individually, the “Schrier Note” and the “William Mackay Note”, and collectively, the “Notes”), to Charles Schrier and William Mackay Investments LLC, (together, the “Lenders”) and in respect of which the Company received proceeds of $270,000.

 

The Notes carry a 10% interest rate per annum, accrued monthly and payable at maturity. The Schrier Note has a maturity date that is the earlier of (i) January 8, 2023, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The William Mackay Note has a maturity date that is the earlier of (i) August 8, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE.

 

 

The aggregate amount payable at maturity will be $317,647 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Notes contain a “most favored nations” clause that provides that, so long as the Notes are outstanding, if the Company issues any new security, which the Lenders reasonably believe contains a term that is more favorable than those in the Notes, the Company shall notify the Lenders of such term, and such term, at the option of the Lenders, shall become a part of the Notes. In addition, the Lenders will be issued in the aggregate (1) 130,235 five-year warrants (the “Warrants”) and (2) 130,235 shares of Common Stock as commitment shares (“Commitment Shares”). The Commitment Shares are priced at $0.25. The Warrants have an initial exercise price of $0.50 per share. The Warrants are not exercisable for six months following their issuance. The Lenders may exercise the Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the Warrants are not then registered pursuant to an effective registration statement.

 

On July 21, 2022, the Company issued a 10% Promissory Notes due to Michael C Howe Living Trust (the “Lender”) and in respect of which the Company received proceeds of $255,000.

 

The Note carries a 10% interest rate per annum, accrued monthly and payable at maturity. The note has a maturity date that is the earlier of (i) September 10, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE

 

The amount payable at maturity will be $300,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition, the Lender will be issued (1) 123,000 five-year warrants (the “Warrants”) and (2) 123,000 shares of Common Stock as commitment shares (“Commitment Shares”). The Commitment Shares are priced at $0.25. The Warrants have an initial exercise price of $0.50 per share. The Warrants are not exercisable for six months following their issuance. The Lender may exercise the Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the Warrants are not then registered pursuant to an effective registration statement.

 

On July 21, 2022, the Company issued a 10% Promissory Notes due to Juan Carlos Iturregui (the “Lender”) and in respect of which the Company received proceeds of $25,000. Mr. Iturregui is a member of the Company’s Board of Directors.

 

The Note carries a 10% interest rate per annum, accrued monthly and payable at maturity. The note has a maturity date that is the earlier of (i) January 21, 2023, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE.

 

The amount payable at maturity will be $29,412 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition, the Lender will be issued (1) 12,059 five-year warrants (the “Warrants”) and (2) 12,059 shares of Common Stock as commitment shares (“Commitment Shares”). The Commitment Shares are priced at $0.25. The Warrants have an initial exercise price of $0.50 per share. The Warrants are not exercisable for six months following their issuance. The Lender may exercise the Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the Warrants are not then registered pursuant to an effective registration statement.

 

On July 26, 2022, the Company issued a 10% Promissory Notes due to Erik Scott Nommsen (the “Lender”) and in respect of which the Company received proceeds of $50,000.

 

The Note carries a 10% interest rate per annum, accrued monthly and payable at maturity. The note has a maturity date that is the earlier of (i) September 10, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE.

 

 

The amount payable at maturity will be $58,823 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition, the Lender will be issued (1) 24,117 five-year warrants (the “Warrants”) and (2) 24,117 shares of Common Stock as commitment shares (“Commitment Shares”). The Commitment Shares are priced at $0.25. The Warrants have an initial exercise price of $0.50 per share. The Warrants are not exercisable for six months following their issuance. The Lender may exercise the Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the Warrants are not then registered pursuant to an effective registration statement.

 

On July 27, 2022, the Company issued a 10% Promissory Notes due to James H. Caplan (the “Lender”) and in respect of which the Company received proceeds of $50,000.

 

The Note carries a 10% interest rate per annum, accrued monthly and payable at maturity. The note has a maturity date that is the earlier of (i) January 21, 2023, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE.

 

The amount payable at maturity will be $58,823 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition, the Lender will be issued (1) 24,117 five-year warrants (the “Warrants”) and (2) 24,117 shares of Common Stock as commitment shares (“Commitment Shares”). The Commitment Shares are priced at $0.25. The Warrants have an initial exercise price of $0.50 per share. The Warrants are not exercisable for six months following their issuance. The Lender may exercise the Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the Warrants are not then registered pursuant to an effective registration statement.

 

On August 3, 2022, the Company amended the maturity date of the Diamond Note 4 to the earlier of (i) September 10, 2022 or (ii) five days after the date on which we successfully list our shares of common stock on any of the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market.

 

On August 4, 2022, the Company issued a 10% Promissory Notes due to Jack Enright (the “Lender”) and in respect of which the Company received proceeds of $102,000.

 

The Note carries a 10% interest rate per annum, accrued monthly and payable at maturity. The note has a maturity of February 3, 2023.

 

The amount payable at maturity will be $120,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition, the Lender will be issued 49,200 shares of Common Stock as commitment shares (“Commitment Shares”). The Commitment Shares are priced at $0.25

 

On August 4, 2022, the Company issued a 10% Promissory Notes due to Jessica, Kevin C., Brody, Isabella and Jack Finnegan (collectively, the “Lenders”) and in respect of which the Company received proceeds of $25,000.

 

The Note carries a 10% interest rate per annum, accrued monthly and payable at maturity. The note has a maturity of February 3, 2023.

 

The amount payable at maturity will be $29,412 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lenders of such term, and such term, at the option of the Lenders, shall become a part of the Note. In addition, the Lenders will be issued in aggregate (1) 12,059 five-year warrants (the “Warrants”) and (2) 12,059 shares of Common Stock as commitment shares (“Commitment Shares”). The Commitment Shares are priced at $0.25. The Warrants have an initial exercise price of $0.50 per share. The Warrants are not exercisable for six months following their issuance. The Lenders may exercise the Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the Warrants are not then registered pursuant to an effective registration statement.

 

 

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein.

 

We are working to open primary care clinics around the US that are in residential centers and leverage the expertise, training, and license of Nurse Practitioners. We are focusing on wellness as a core of the practice. Mitesco’s mission is to increase convenience and access to care, improve the quality of care, and reduce its cost.

 

We opened our first primary care clinic “The Good Clinic” in Northeast Minneapolis, Minnesota in February 2021, and have added five additional operating clinics as of the date of this filing for a total of six clinics open and operating. We announced leases for two new clinics in the greater Denver, Colorado area. These new locations, and a new location in Wayzata, Minnesota are expected to open in the fourth quarter of 2022. We plan to open clinics in residential concentrations of population to enhance the convenience, especially timely due to the changes in community travel patterns resulting from the pandemic. Our clinicians use both telehealth (virtual) and in-person visits to treat and coach the clients along their journey to better health and quality of life. Our clinics are led by Nurse Practitioners that use their license, extensive training, expertise, and empathy to help people remain stable or improve their health. We emphasize wellness, beginning with a clients’ co-developed plan that identifies from where a person is starting and constructs a plan for how they can achieve their goals. The practice uses an integrated health approach that includes an assessment of both the individual’s behavioral and physical health and combines this with their activation level and their goals. The clinic offers wellness coaching, behavioral health care, episodic care, dermatologic services, and supplements. We seek to care for the whole person’s needs.

 

Like the first clinic, we seek to locate clinics convenient to residential centers. In pursuit of this approach, we intend to continue to expand our relationship with Lennar Corporation and other large-scale developers. While we have no formal relationship with these developers other than as a tenant, we believe such relationships give us an advantage in recruiting and retaining clients in close proximity to our locations

 

Business Summary

 

Our operating subsidiary, The Good ClinicTM, produced increased operational results in the second quarter of 2022 as compared to the first quarter of 2022.

 

During the first quarter of 2022, The Good Clinic client visits were driven mainly by the demand for COVID-19 testing and vaccinations, which generally require shorter appointments. Even though the visits are briefer, these interactions with new clients allow us to demonstrate our differentiating clinic experience. As a result, we converted first-time customers into ongoing clients.

 

Metrics from the three months ended June 30, 2022:

 

•         The Good Clinic recorded a 45% quarter-over-quarter increase in unique (i.e., first-time) clients.

•         The total number of visits in the second quarter of 2022 increased by 11%, as compared to the first quarter of 2022.

•         The average length of appointment times increased during the second quarter of 2022, which we measure as minutes of care. There was a 112% increase in total care minutes during the second quarter of 2022, as compared to the first quarter of 2022, with the average minutes per visit increasing by 91%.

 

These metrics indicate the client’s adoption of our primary care concept focused on preventive care and improved well-being. Moreover, the quarterly results illustrate that The Good Clinic providers are delivering more complex care and are therefore receiving higher per-visit reimbursements.

 

Results of Operations

 

The following period-to-period comparisons of our financial results are not necessarily indicative of results for the current period of any future periods. Further, as a result of any acquisitions of other businesses, we may experience large expenditures specific to the transactions that are not incident to our operations.

 

 

Comparison of the Three Months Ended June 30, 2022 and 2021

 

Revenue

 

The Company recognized revenue of approximately $0.2 million for the three months ended June 30, 2022, compared to $8,200 for the three months ended June 30, 2021. The increase in revenue is the result of the service and product revenue from The Good Clinic’s six locations.

 

Cost of Sales

 

The Company incurred approximately $0.6 million of cost of goods sold for the three months ended June 30, 2022, compared to $3,600 for the three months ended June 30, 2021. During the first quarter of 2021 there were only a few direct clinical services performed due to the lack of in force payer contracts and the newness of the clinic. As such, the allocation of the expenses related to clinical staff were attributed to operating expenses and not cost of sales. The increase in cost of goods sold is the result of the opening and operating of The Good Clinic’s six locations and having in force payer relationships.

 

Gross (Loss) Profit

 

Our gross loss was approximately $0.4 million for the three months ended June 30, 2022, compared to gross profit of $4,600 for the three months ended June 30, 2021.

 

Operating Expenses

 

Our total operating expenses for the three months ended June 30, 2022, were approximately $2.3 million. For the comparable period in 2021, the operating expenses were approximately $1.4 million.

 

Operating expenses for the three months ended June 30, 2022, were comprised primarily of $1.4 million of payroll, payroll taxes and employee benefit expenses, $0.2 million in rent and utilities, $0.1 million in legal and professional fees; $0.1 million in marketing; $0.2 million in depreciation, $0.2 million in stock-based compensation expenses and $0.1 million in other operating costs.

 

Operating expenses for the three months ended June 30, 2021 were comprised primarily of $0.4 million of payroll and payroll taxes; $0.3 million of non-cash compensation, $0.2 million in legal and professional fees; $0.1 million in marketing, $0.1 million in consulting fees and $0.3 million in other operation costs.

 

Other Income and Expenses

 

Interest expense was approximately $0.9 million for the three months ended June 30, 2022, compared to approximately $1,100 for the three months ended June 30, 2021.

 

During the three months ended June 30, 2022, we recorded a loss on waiver and commitment fee shares of approximately $11,600.

 

During the three months ended June 30, 2022, we recorded a loss on the revaluation of derivative liabilities of approximately $0.2 million

 

During the three months ended June 30, 2021, we recorded a loss on legal settlement of $70,000.

 

During the three months ended June 30, 2022, the Company declared Preferred Stock dividends of approximately $0.1 million compared to approximately $0.1 million for the three months ended June 30, 2021.

 

Net loss

 

For the three months ended June 30, 2022, we had a net loss available to common shareholders of approximately $3.9 million, or a net loss per share, basic and diluted of ($0.02) compared to a net loss available to common shareholders of approximately $1.5 million, or a net loss per share, basic and diluted of ($0.01), for the three months ended June 30, 2021.

 

 

Comparison of the Six Months Ended June 30, 2022 and 2021

 

Revenue

 

The Company recognized revenue of approximately $0.3 million for the six months ended June 30, 2022, compared to $11,200 for the six months ended June 30, 2021. The increase in revenue is the result of the service and product revenue from The Good Clinic’s six locations.

 

Cost of Sales

 

The Company incurred approximately $1.2 million of cost of goods sold for the six months ended June 30, 2022, compared to $5,300 for the six months ended June 30, 2021. During the first and second quarters of 2021 there were only a few direct clinical services performed due to the lack of in force payer contracts and the newness of the clinic. As such, the allocation of the expenses related to clinical staff were attributed to operating expenses and not cost of sales. The increase in cost of goods sold is the result of the opening and operating of The Good Clinic’s six locations and having in force payer relationships.

 

Gross (Loss) Profit

 

Our gross loss was approximately $0.9 million for the six months ended June 30, 2022, compared to gross profit of $5,900 for the six months ended June 30, 2021.

 

Operating Expenses

 

Our total operating expenses for the six months ended June 30, 2022, were approximately $4.9 million. For the comparable period in 2021, the operating expenses were approximately $2.4 million.

 

Operating expenses for the six months ended June 30, 2022, were comprised primarily of $2.4 million of payroll, payroll taxes and employee benefit expenses, $0.5 million in rent and utilities, $0.4 million in legal and professional fees, $0.2 million in marketing; $0.3 million in consulting fees, $0.4 million in depreciation, $0.4 million in stock-based compensation expenses and $0.3 million in other operating costs.

 

Operating expenses for the six months ended June 30, 2021 were comprised primarily of $0.5 million of payroll and payroll taxes; $0.3 million of non-cash compensation, $0.6 million in legal and professional fees, $0.3 million in marketing, $0.3 million in consulting fees and $0.4 million in other operation costs.

 

Other Income and Expenses

 

Interest expense was approximately $1.7 million for the six months ended June 30, 2022, compared to approximately $1.0 million for the six months ended June 30, 2021.

 

During the six months ended June 30, 2022, we recorded a gain on waiver and commitment fee shares of approximately $0.2 million.

 

During the six months ended June 30, 2022, we recorded a gain on settlement of accrued salary of approximately $15,000.

 

During the six months ended June 30, 2022, we recorded a loss on settlement of accounts payable of $0.1 million as compared to a gain on settlement of accounts payable of approximately $6,000 for the six months ended June 30, 2021.

 

During the six months ended June 30, 2022, we recorded a loss on the revaluation of derivative liabilities of approximately $0.1 million, compared to a loss of approximately $0.5 million for the six months ended June 30, 2021.

 

During the six months ended June 30, 2021, we recorded a loss on legal settlement of $0.1 million.

 

During the six months ended June 30, 2021, we recorded a gain on the settlement of notes payable of approximately $1,800.

 

During the six months ended June 30, 2022, the Company declared Preferred Stock dividends of approximately $0.2 million compared to approximately $0.1 million for the six months ended June 30, 2021.

 

During the six months ended June 30, 2021, the Company recorded Preferred Stock deemed dividends of approximately $0.3 million.

 

 

Net loss

 

For the six months ended June 30, 2022, we had a net loss available to common shareholders of approximately $7.6 million, or a net loss per share, basic and diluted of ($0.03) compared to a net loss available to common shareholders of approximately $4.3 million, or a net loss per share, basic and diluted of ($0.02), for the six months ended June 30, 2021.

 

Liquidity and Capital Resources

 

To date, we have not generated sufficient revenue from operations to support our operations. We have financed our operations through the sale of equity securities and short-term borrowings. As of June 30, 2022, we had cash of approximately $36,000 compared to cash of approximately $1.2 million as of December 31, 2021.

 

Net cash used in operating activities was approximately $4.0 million for the six months ended June 30, 2022. This is the result of our business development efforts pertaining to the start-up of the first six clinics. Cash used in operations for the six months ended June 30, 2021, was approximately $2.1 million.

 

Net cash used in investing activities was approximately $0.2 million for the six months ended June 30, 2022. The amounts relate to the purchase of fixed assets and leasehold improvement on our clinics. Net cash used for investing activities for the six months ended June 30, 2021 was $0.5 million.

 

Net cash provided by financing activities for the six months ended June 30, 2022, was approximately $3.1 million, consisting of proceeds from notes payable, net of discounts, of $3.3 million offset by principal payment on related party notes payable of $0.2 million. Net cash provided by financing activities for the six months ended June 30, 2021, was $4.3 million consisting of proceeds from a private placement offering of common stock of $1.7 million and $2.8 million from the sale of Series C Preferred Stock and warrants. Partially offsetting the proceeds was approximately $0.2 million of payment on notes payable.

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

(a) Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, the Company’s management has identified what it believes are material weaknesses in the Company’s disclosure controls and procedures and concluded that we did not have effective disclosure controls and procedures.

 

The deficiencies in our disclosure controls and procedures included (i) lack of segregation of duties and (ii) lack of sufficient resources to ensure that information required to be disclosed by the Company in the reports that the Company files or submits to the SEC are recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms, and (iii) lack of formal Control procedures related to the approval of related party transactions.

 

The Company intends to take corrective action to ensure that information required to be disclosed by the Company pursuant to the reports that the Company files or submits to the SEC is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

(b) Changes in Internal Control Over Financial Reporting

 

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our second quarter ended June 30, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. In addition to the other information set forth in this quarterly report on Form 10-Q, you should carefully consider the factors described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission on April 5, 2022. There have been no material changes to the risk factors described in that report.

 

ITEM 2. SALE OF UNREGISTERED SECURITIES

 

On January 12, 2022, the Company entered into a settlement agreement with an ex-employee. Pursuant to the terms of this agreement, the Company agreed to pay the amount of $19,032 for accrued salary, and the employee returned to the Company for cancellation 400,000 shares of common stock previously issued as compensation. These shares were valued at par value of $0.01 or a total value of $4,000; the Company recorded a gain on cancellation of these shares in the amount of $15,032.

 

The Company entered into a debt-for-equity exchange agreement with Gardner Builders Holdings, LLC (“Gardner”) on January 7, 2022 (the “Debt for Equity Agreement”). Pursuant to the Debt for Equity Agreement, the Company issued shares of restricted common stock to Gardner in exchange for the Company Debt Obligations, as defined below.

 

The Agreement settled for certain accounts payable amounts owed by the Company to the Creditor (the “Accounts Payable Amount”) as well as upcoming amounts that will become due between the date of the Agreement and April 1, 2022. The Agreement also settled accrued interest and penalties on the amounts due through January 5, 2022, as well as interest payments on amounts incurred in the first quarter of 2022 (collectively, the “Additional Costs”, and combined with the Accounts Payable Amount, the “Company Debt Obligations”). The Accounts Payable Amount was $500,000, the Additional Costs were $294,912 and the conversion price was $0.25. As a result, 3,179,650 Restricted Shares were authorized to be issued.

 

On March 22, 2022 and March 31, 2022, the Company issued an aggregate 1,541,721 shares of common stock as waiver fees to holders of the Series C and Series D Preferred Stock for their waivers of certain covenants as set forth and defined in the Series C and Series D Certificates of Designations. The Company valued these shares at their contractual price of $0.25 per share and recorded the amount of $385,431 as waiver fees during the six months ended June 30, 2022. The Company recorded an aggregate gain upon issuance of these shares in the amount of $198,273 based on the market price of the Company’s common stock on the date of issuance.

 

On March 31, 2022, the Company issued 1,720,000 Commitment Fee Shares to AJB Capital Investors, LLC; see note 8. A Monte Carlo model was used to value the warrants and call features, and a probability weighted expected return model was used to value the True-Up Provision. The contractual price of the common stock $0.25 per share; valuation purposes, the common stock was valued at the market price on the date of the transaction of $0.12695 per share. The derivative liability was valued at $106,608 on the date of the transaction. The discount on the notes due to the Commitment Fee Shares and warrants was valued at $349,914. The Company recorded the amount of $226,106 to additional paid-in capital pursuant to this transaction.

 

On March 31, 2022, the Company issued 382,353 shares of common stock at a price of $0.25 per share which were previously subscribed for the conversion of accounts payable in the amount of $95,558.

 

 

On April 6, 2022, the Company issued an aggregate of 1,720,000 shares of commitment fee shares and Common Stock Purchase Warrants to purchase up to an aggregate of 750,000 shares of the Common Stock to Anson East Master Fund LP and Anson Investments Master Fund LP. The commitment fee shares were issued at an aggregate value of $359,480. The initial exercise price for the warrants is $0.50 per share.

 

On April 18, 2022, the Company issued 637,036 shares of commitment fee shares and Common Stock Purchase Warrants to purchase up to 277,777 shares of the Common Stock to GS Capital Partners. The commitment fee shares were issued at an aggregate value of $113,392. The initial exercise price for the warrants is $0.50 per share.

 

On April 27, 2022, the Company issued 96,471 shares of common stock with a contract price of $0.25 per share or $24,118 and a grant date market value of $0.16 or $15,434 to Larry Diamond, its Chief Executive Officer, as commitment fee shares as set forth and defined in Diamond Note 3.  The Company recorded these shares at their relative fair value of the components of Diamond Note 3, or $16,200, and recorded a loss in the amount of $765 on this transaction.  The Company also issued five-year warrants to purchase up to 96,471 shares of the Common Stock to Lawrence Diamond. The initial exercise price for the warrants is $0.50 per share.

 

On May 10, 2022, the Company issued 637,036 shares of commitment fee shares and Common Stock Purchase Warrants to purchase up to 277,777 shares of the Common Stock to Kishon Investments, LLC. The commitment fee shares were issued at an aggregate value of $94,918. The initial exercise price for the warrants is $0.50 per share.

 

On May 18, 2022, the Company issued 19,294 shares of common stock to Larry Diamond, it’s Chief Executive Officer at a contractual price of $0.25 per share and a market price at issuance date of $0.1517 per share as commitment shares as set forth and defined in Diamond Note 4. The Company recorded these shares at their relative fair value of the components of Diamond Note 4, or $3,160, and recorded a loss in the amount of $249 on this transaction. The Company also issued five-year warrants to purchase 19,294 shares of common stock at a price of $0.50 to Mr. Diamond pursuant to Diamond Note 4. 

 

On May 23, 2022, the Company issued 19,295 shares of common stock to Jessica Finnegan at a contractual price of $0.25 per share and a market price at issuance date of $0.1794 per share as commitment shares as set forth and defined in Finnegan Note 1. The Company recorded these shares at their relative fair value of the components of Finnegan Note 1, or $3,240, and recorded a gain in the amount of $222 on this transaction. The Company also issued five-year warrants to purchase 24,118 shares of common stock at a price of $0.50 to Ms. Finnegan pursuant to Finnegan Note 1.

 

On May 26, 2022, the Company issued 84,412 shares of common stock to the May 26 Lenders at a contractual price of $0.25 per share and a market price at issuance date of $0.1517 per share as commitment shares as set forth and defined in the May 26, 2022 Notes. The Company recorded these shares at their relative fair value of the components of the May 26 Note, or $14,175, and  recorded a loss in the amount of $1,369 on these transactions. The Company also issued five-year warrants to purchase 84,412 shares of common stock at a price of $0.50 to the May 26 Lenders pursuant to the May 26, 2022.

 

On June 9, 2022, the Company issued 364,176 shares of common stock to the June 9 Lenders at a contractual price of $0.25 per share and a market price at issuance date of $0.1485 per share as commitment shares as set forth and defined in the June 9 Notes. The Company recorded these shares at the relative fair value of the components of June 9 Notes, or $66,400, and recorded an aggregate loss in the amount of $9,356 on these transactions. The Company also issued five-year warrants to purchase 364,176 shares of common stock at a price of $0.50 to the May 26 Lenders pursuant to the June 9 notes.

 

ITEM 3. DEFAULTS ON SENIOR SECURED SECURITIES

 

Not Applicable.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not Applicable.

 

ITEM 5. OTHER INFORMATION

 

Not Applicable.

 

 

ITEM 6. EXHIBITS

 

The following exhibits are included with this Quarterly Report on Form 10Q

 

 

 

 

 

Form

Type

 

Exhibit

Number

 

Date

Filed

 

Filed

Herewith

 

 

 

 

 

 

 

 

 

 

 

3.1

 

Certificate of Incorporation of Trunity Holdings, Inc., dated January 18, 2012.

 

8-K

 

10.1

 

1/31/2012

 

 

 

 

 

 

 

 

 

 

 

 

 

3.2

 

Bylaws of Trunity Holdings, Inc., dated January 18, 2012.

 

8-K

 

10.2

 

1/31/2012

 

 

 

 

 

 

 

 

 

 

 

 

 

3.3

 

Certificate of Ownership Merging between Trunity Holdings, Inc. and Brain Tree International, Inc. dated January 24, 2012.

 

10-K

 

3.3

 

4/16/2013

 

 

 

 

 

 

 

 

 

 

 

 

 

3.4

 

Certificate of Amendment to the Certificate of Incorporation of Trunity Holdings, Inc., dated December 24, 2015.

 

8-K

 

3.1(i)

 

1/06/2016

 

 

 

 

 

 

 

 

 

 

 

 

 

3.5

 

Certificate of Designations of Series X Preferred Stock of True Nature Holding, Inc.

 

8-K

 

3.6

 

1/06/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

3.6

 

Form of Amended and Restated Certificate of Designations of Series A Preferred Stock of True Nature Holding, Inc.

 

8-K

 

3.07

 

3/13/2020

 

 

                     

3.7

 

Certificate of Amendment of the Certificate of Incorporation of True Nature Holding, Inc. dated April 21, 2020.

 

10-Q

 

3.7

 

8/14/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

3.8

 

Certificate of Amendment of Certificate of Incorporation, dated as of November 5, 2020, correcting December 24, 2015, Certificate of Amendment.

 

10-Q

 

3.8

 

11/13/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

3.9

 

Bylaws of Mitesco, Inc., as amended, dated November 10, 2020

 

10-Q

 

3.9

 

11/13/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

3.10

 

Certificate of Designations, Preferences and Rights of the Series C Convertible Preferred Stock of Mitesco, Inc.

 

8-K

 

3.1

 

03/26/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

3.11

 

Certificate of Correction to the Certificate of Designations, Preferences and Rights of the Series C Convertible Preferred Stock of Mitesco, Inc.

 

8-K

 

3.2

 

03/26/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

3.12

 

Certificate of Incorporation of Trunity Holdings, Inc., as amended

 

S-1

 

3.12

 

2/10/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

3.13

 

Certificate of Designations, Preferences and Rights of the Series D Convertible Preferred Stock of Mitesco, Inc.

 

8-K

 

3.1

 

10/22/2021

 

 

                     

4.1

 

Promissory Note in the principal amount of $750,000 dated March 17, 2022

 

8-K

 

4.1

 

03/24/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

4.2

 

Promissory Note in the principal amount of $235,294 dated March 18, 2022

 

8-K

 

4.2

 

03/24/2022

 

 

 

 

 

 

 

 

Form

Type

 

Exhibit

Number

 

Date

Filed

 

Filed

Herewith

 

 

 

 

 

 

 

 

 

 

 

10.1

 

Promissory Note between the Company and Michael C. Howe Living Trust, dated December 30, 2021

 

8-K

 

10.1

 

01/05/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

10.2

 

Debt for Equity Exchange Agreement between the Company and Gardner Builders Holdings, LLC, dated January 7, 2022

 

8-K

 

10.1

 

02/02/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

10.3

 

Form of Promissory Note and Form of Warrant Agreement

 

8-K

 

10.1

 

02/17/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

10.4

 

Employment Agreement for Ms. Finnegan Dated January 12, 2022

 

8-K

 

10.1

 

03/03/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

10.5

 

Securities Purchase Agreement, between Mitesco, Inc. and AJB Capital Investments, LLC, dated March 18, 2022

 

8-K

 

10.1

 

03/24/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

10.6

 

Common Stock Purchase Warrant dated March 17, 2022

 

8-K

 

10.2

 

03/24/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

31.1

 

Certification by the Principal Executive Officer of the Registrant pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

31.2

 

Certification by the Principal Financial Officer of the Registrant pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

32.1

 

Certification by the Principal Executive Officer and Principal Financial Officer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

32.2

 

Certification by the Principal Financial Officer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

99.1

 

Investor Presentation

 

8-K

 

99.3

 

03/03/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

101.INS **

 

INLINE XBRL INSTANCE DOCUMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101.SCH **

 

INLINE XBRL TAXONOMY EXTENSION SCHEMA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101.CAL **

 

INLINE XBRL TAXONOMY EXTENSION CALCULATION LINKBASE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101.DEF **

 

INLINE XBRL TAXONOMY EXTENSION DEFINITION LINKBASE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101.LAB **

 

INLINE XBRL TAXONOMY EXTENSION LABEL LINKBASE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101.PRE **

 

INLINE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

104

 

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

#

 

Management contract or compensatory plan or arrangement required to be identified pursuant to Item 15(a)(3) of this report.

 

 

 

 

 

 

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q for the period ended June 30, 2022, to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

MITESCO, INC. F/K/A TRUE NATURE HOLDING, INC.

 

 

 

 

 

 

 

 

 

Dated: August 12, 2022

By:

/s/ Thomas Brodmerkel

 

 

 

Thomas Brodmerkel

 

 

 

Chief Financial Officer and Principal Financial Officer

 

 

 

 

 

 

43
 
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EXHIBIT 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14 OR RULE 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

 

I, Lawrence Diamond, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Mitesco, Inc.;

 

2.

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

 

4.

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and

 

d)

Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date:  August 12, 2022

 

 

/s/  Lawrence Diamond

Lawrence Diamond

Chief Executive Officer and Principal Executive Officer

 

 

 

 

 

EXHIBIT 31.2

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14 OR RULE 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

 

I, Thomas Brodmerkel, certify that:

 

1.

I have reviewed this quarterly report on Form 10-Q of Mitesco, Inc.;

 

2.

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

 

4.

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and

 

d)

Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date:  August 12, 2022

 

 

/s/  Thomas Brodmerkel

Thomas Brodmerkel

Chief Financial Officer and Principal Financial Officer

 

 

 

 

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

In connection with the quarterly report of Mitesco, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof, I, Lawrence Diamond, Chief Executive Officer and Director of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

1.  

The quarterly report on Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.  

The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date:  August 12, 2022

 

 

/s/ Lawrence Diamond

Lawrence Diamond

Chief Executive Officer and Principal Executive Officer

 

 

 

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

In connection with the quarterly report of Mitesco, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof, I, Thomas Brodmerkel, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

1.  

The quarterly report on Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.  

The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date:  August 12, 2022

 

 

/s/ Thomas Brodmerkel

Thomas Brodmerkel

Chief Financial Officer and Principal Financial Officer

 

 

 

 

 

 


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