Mitesco, Inc 10-Q for FY2021 Q3
Mitesco, Inc. (MITI)
About this 10-Q
Mitesco, Inc filed this 10-Q on November 16, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).
Headline figures
Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $13.53K
- compared with $0 a year earlier
- Net loss
- $1.77M
- compared with a net loss of $1.04M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For the quarter ended
OR
For the transition period from _________ to _________
Commission File Number
(Exact Name of Registrant as Specified in its Charter)
| | | |
| (State Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices) (Zip code)
(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 |
| | |
|
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. ☒ 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). ☒ 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 ☐ |
| | 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 ☐
As of November 8, 2021, the registrant had outstanding
Table of Contents
|
PART I – FINANCIAL INFORMATION |
|||
|
Item 1. |
4 |
||
|
Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 |
4 |
||
|
5 |
|||
|
6 |
|||
|
8 |
|||
|
10 |
|||
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
26 |
|
|
Item 3. |
29 |
||
|
Item 4. |
29 |
||
|
PART II – OTHER INFORMATION |
|||
|
Item 1. |
30 |
||
|
Item 1A. |
30 |
||
|
Item 2. |
32 |
||
|
Item 3. |
34 |
||
|
Item 4. |
34 |
||
|
Item 5. |
34 |
||
|
Item 6. |
34 |
||
|
37 |
|||
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MITESCO, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
|
Unaudited |
||||||||
|
September 30, |
December 31, |
|||||||
|
ASSETS |
2021 |
2020 |
||||||
|
Current assets |
||||||||
|
Cash and cash equivalents |
$ | $ | ||||||
|
Accounts Receivable |
||||||||
|
Inventory |
||||||||
|
Prepaid expenses |
||||||||
|
Total current assets |
||||||||
|
Right to use operating leases, net |
||||||||
|
Construction in progress |
||||||||
| Fixed assets, net of accumulated depreciation of $ |
||||||||
|
Total Assets |
$ | $ | ||||||
|
LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY |
||||||||
|
Current liabilities |
||||||||
|
Accounts payable and accrued liabilities |
||||||||
|
Accrued interest |
||||||||
|
Derivative liabilities |
||||||||
|
Lease liability - operating leases, current |
||||||||
| Convertible notes payable, net of discount of $ |
||||||||
|
Convertible note payable, in default |
||||||||
|
SBA Loan Payable |
||||||||
|
Other current liabilities |
||||||||
|
Preferred stock dividends payable |
||||||||
|
Total current liabilities |
||||||||
|
Lease Liability- operating leases, non-current |
||||||||
|
Total Liabilities |
$ | $ | ||||||
|
Commitments and contingencies |
||||||||
|
Stockholders' equity (deficit) |
||||||||
| Preferred stock, $ |
- | |||||||
| Preferred stock, Series A, $ |
||||||||
| Preferred stock, Series C, $ |
||||||||
| Preferred stock, Series X, $ |
||||||||
|
Common stock subscribed |
- | |||||||
| Common stock, $ |
||||||||
|
Additional paid-in capital |
||||||||
|
Accumulated deficit |
( |
) | ( |
) | ||||
|
Total stockholders' equity (deficit) |
( |
) | ( |
) | ||||
|
Total liabilities and stockholders' equity (deficit) |
$ | $ | ||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
MITESCO, INC.
STATEMENT OF OPERATIONS
|
Unaudited |
Unaudited |
|||||||||||||||
|
For the Three |
For the Three |
For the Nine |
For the Nine |
|||||||||||||
|
Months Ended |
Months Ended |
Months Ended |
Months Ended |
|||||||||||||
|
September 30, |
September 30, |
September 30, |
September 30, |
|||||||||||||
|
2021 |
2020 |
2021 |
2020 |
|||||||||||||
|
Revenue |
$ | $ | $ | $ | ||||||||||||
|
Cost of goods sold |
||||||||||||||||
|
Gross Profit (loss) |
||||||||||||||||
|
Operating expenses: |
||||||||||||||||
|
General and administrative |
||||||||||||||||
|
Total operating expenses |
||||||||||||||||
|
Net Operating Loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
Other income (expense): |
||||||||||||||||
|
Interest expense |
( |
) | ( |
) | ( |
) | ||||||||||
|
Loss on legal settlement |
( |
) | ||||||||||||||
|
Gain on settlement of accounts payable |
||||||||||||||||
|
Gain on settlement of accrued salary |
||||||||||||||||
|
Gain on settlement of notes payable |
||||||||||||||||
|
Grant Income |
( |
) | ||||||||||||||
|
(Loss) Gain on revaluation of derivative liabilities |
( |
) | ||||||||||||||
|
Total other expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
Loss before provision for income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
Provision for income taxes |
||||||||||||||||
|
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
Preferred stock dividends |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
Preferred stock deemed dividends |
( |
) | ||||||||||||||
|
Net loss available to common shareholders |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
Net loss per share - basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
Weighted average shares outstanding - basic and diluted |
||||||||||||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
MITESCO, INC.
STATEMENT OF STOCKHOLDERS EQUITY
| Preferred Stock Series A | Preferred Stock Series C | Preferred Stock Series X | Common Stock |
Additional Paid-in |
Stock | Stock | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||
|
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
capital |
Subscribed |
Payable |
Deficit |
Total |
||||||||||||||||||||||||||||||||||||||||
|
Balance, June 30, 2020 |
$ | - | $ | - | $ | $ | $ | $ | - | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||||||||
|
Vesting of common stock issued to employees |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
|
Vesting of stock options issued to employees |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
|
Common stock issued for services |
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
|
Common stock issued for conversion of notes payable and accrued interest |
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
|
Preferred stock dividends |
- | - | - | - | - | - | - | - | ( |
) | - | - | - | ( |
) | |||||||||||||||||||||||||||||||||||||
|
Loss for the period ended September 30, 2020 |
- | - | - | - | - | - | - | - | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
|
Balance, September 30, 2020 |
$ | - | $ | - | $ | $ | $ | $ | - | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||||||||
|
Balance, June 30, 2021 |
- | $ | - | $ | $ | $ | $ | ( |
) | $ | - | $ | ( |
) | $ | |||||||||||||||||||||||||||||||||||||
|
Vesting of common stock issued to employees |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
|
Vesting of stock options issued to employees |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
|
Stock options exercised for cash |
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
|
Exercise of options by cashless conversion |
- | - | - | - | - | - | ( |
) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
|
Cash paid for common stock subscribed |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
|
Shares of common stock issued for conversion of Preferred Stock Series C |
- | - | ( |
) | ( |
) | - | - | ( |
) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
|
Common stock subscribed for accounts payable and accrued liabilities |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
|
Preferred stock dividends |
- | - | - | - | - | - | - | - | ( |
) | - | - | - | ( |
) | |||||||||||||||||||||||||||||||||||||
|
Loss for the period September 30, 2021 |
- | - | - | - | - | - | - | - | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
|
Balance, September 30, 2021 |
- | $ | - | $ | $ | $ | $ | $ | $ | - | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||||||||
| Preferred Stock Series A | Preferred Stock Series C | Preferred Stock Series X | Common Stock |
Additional Paid-in |
Stock | Stock | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||
|
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Paid-in capital |
Subscribed |
Payable |
Deficit |
Total |
||||||||||||||||||||||||||||||||||||||||
|
Balance, December 31, 2019 |
- | $ | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||
|
Vesting of common stock issued to employees |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
|
Vesting of stock options issued to employees |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
|
Common stock issued for services |
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
|
Settlement of derivative liabilities |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
|
Common stock issued in warrant settlement agreement |
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
|
Common stock issued for conversion of notes payable and accrued interest |
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
|
Issuance of Preferred A stock to consultants |
- | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
|
Preferred stock dividends |
- | - | - | - | - | - | - | - | ( |
) | - | - | - | ( |
) | |||||||||||||||||||||||||||||||||||||
|
Loss for the period ended September 30, 2020 |
- | - | - | - | - | - | - | - | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
|
Balance, September 30, 2020 |
$ | - | $ | - | $ | $ | $ | $ | - | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||||||||
|
Balance, December 31, 2020 |
- | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||
|
Vesting of common stock issued to employees |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
|
Vesting of stock options issued to employees |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
|
Common stock issued for services |
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
|
Common stock issued for conversion of notes payable and accrued interest |
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
|
Sale of common stock in private placement |
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
|
Sale of Preferred Stock Series C |
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
|
Warrants issued with Preferred Stock Series C |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
|
Conversion of Preferred Stock Series A to common stock |
( |
) | ( |
) | - | - | - | - | ( |
) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
|
Shares issued for exercise of stock options |
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
|
Net shares issued in connection with settlement agreement |
- | - | - | - | ( |
) | ( |
) | ( |
) | ( |
) | - | - | - | |||||||||||||||||||||||||||||||||||||
|
Shares of common stock issued for conversion of Preferred Stock Series C |
- | - | ( |
) | ( |
) | - | - | ( |
) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
|
Common stock subscribed for accounts payable and accrued liabilities |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
|
Deemed dividend on conversion of Preferred Stock Series A to common stock |
- | - | - | - | - | - | - | - | - | - | ( |
) | - | |||||||||||||||||||||||||||||||||||||||
|
Deemed dividend on Preferred Stock Series C |
- | - | - | - | - | - | - | - | - | - | ( |
) | - | |||||||||||||||||||||||||||||||||||||||
|
Preferred stock dividends |
- | - | - | - | - | - | - | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||||
|
Loss for the period ended September 30, 2021 |
- | - | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||
|
Balance, September 30, 2021 |
- | $ | - | $ | $ | $ | $ | $ | $ | - | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
MITESCO, INC.
STATEMENT OF CASH FLOWS
|
Unaudited |
||||||||
|
For the Nine |
For the Nine |
|||||||
|
Months Ended |
Months Ended |
|||||||
|
September 30, |
September 30, |
|||||||
|
2021 |
2020 |
|||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
|
Net loss |
$ | ( |
) | $ | ( |
) | ||
|
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
|
Depreciation |
||||||||
|
Preferred A stock issued to consultants |
||||||||
|
Amortization of right-to-use asset |
||||||||
|
Gain on settlement of notes payable |
( |
) | - | |||||
|
Gain on settlement of accounts payable |
( |
) | ||||||
|
Gain on conversion of accrued salary |
( |
) | ||||||
|
Gain (Loss) on revaluation of derivative liabilities |
( |
) | ||||||
|
Derivative expense |
||||||||
|
Amortization of loan fees |
||||||||
|
Amortization of discount on notes payable |
||||||||
|
Share-based compensation |
||||||||
|
Changes in assets and liabilities: |
||||||||
|
Accounts receivables |
( |
) | ||||||
|
Prepaid expenses |
( |
) | ||||||
|
Due from related party |
||||||||
|
Inventory |
( |
) | ||||||
|
Accounts payable and accrued liabilities |
||||||||
|
Operating lease liability |
||||||||
|
Other current liabilities |
||||||||
|
Accrued interest |
||||||||
|
Net cash used in operating activities |
( |
) | ( |
) | ||||
|
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
|
Cash paid for acquisition of fixed assets |
( |
) | ||||||
|
Net cash used in investing activities |
( |
) | ||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
|
Proceeds from private placement of common stock |
||||||||
|
Proceeds from sales of Series C Preferred Stock, net of fees |
||||||||
|
Proceeds from notes payable, net of discount |
||||||||
|
Proceeds from sale of common stock |
||||||||
|
Principal payments on notes payable |
( |
) | ( |
) | ||||
|
Net cash provided by financing activities |
||||||||
|
Net increase in cash and cash equivalents |
||||||||
|
Cash and cash equivalents at beginning of period |
||||||||
|
Cash and cash equivalents at end of period |
$ | $ | ||||||
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
||||||||
|
Interest paid |
$ | $ | ||||||
|
Income taxes paid |
$ | $ | ||||||
|
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
||||||||
|
Stock issued for conversion of debt and accrued interest |
$ | $ | ||||||
|
Settlement of derivative liabilities |
$ | ( |
) | $ | ||||
|
Cashless exercise of warrants |
$ | $ | ||||||
|
Issued of Series A Preferred Stock to consultants |
$ | $ | ||||||
|
Preferred stock dividend |
$ | $ | ||||||
|
Deemed dividends on Preferred Stock |
$ | $ | ||||||
|
Derivative discounts |
$ | $ | ||||||
|
Conversion of Series A Preferred stock to common stock |
$ | $ | ||||||
|
Conversion of Series C Preferred stock to common stock |
$ | $ | ||||||
|
Conversion of accounts payable to common stock |
$ | $ | ||||||
|
Conversion of accrued payroll to common stock |
$ | $ | ||||||
|
Conversion of accounts payable to common stock subscribed |
$ | $ | - | |||||
|
Shares issued for debt conversion |
$ | - | $ | |||||
|
Shares issued for accrued salary conversion |
$ | - | $ | |||||
|
Accrued interest converted to equity |
$ | - | $ |
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
MITESCO, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(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, we restructured our operations and acquired Newco4pharmacy, LLC, a development stage company which sought to acquire compounding pharmacy businesses. As a part of the restructuring, we completed a “spin out” of our former business line. On April 24, 2020, we changed our name to Mitesco, Inc.
Since 2020, our 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, we formed a wholly owned subsidiary, Mitesco N.A. LLC, which holds The Good Clinic LLC, a Colorado limited liability company for our clinic business. We also have a subsidiary in Dublin, Ireland, Acelerar Healthcare Holdings, LTD, with a view toward technology acquisitions, operations and potentially investments from the European marketplace.
We opened our first The Good Clinic in Minneapolis, Minnesota in the first quarter of 2021 and have three (3) operating at the time of this filing. We have four (4) additional sites under contract with build-out underway and anticipate having seven (7) more in operation in the greater Minneapolis and Denver metropolitan areas before the end of 2022. We are making plans for up to fifty (50) operating units before the end of 2023 from internal growth, and we may entertain acquisition of existing clinics as well.
Note 2 - Financial Condition, Going Concern and Management Plans
As of September 30, 2021, the Company had cash of $
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. During the nine months ended September 30, 2021, the Company closed on a $
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 (the “Note”) with Bank of America for a loan in the original principal amount of approximately $
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 – Summary of Significant Accounting Policies
Principles of Consolidation – The accompanying 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 anticipate that we will rely on the operating activities of certain legal entities in which we will not maintain a controlling ownership interest but over which we will have indirect influence and of which we will be considered 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 $
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 |
|
||
|
Furniture & fixtures |
|
||
|
Machinery & equipment |
|
||
|
Leasehold improvements |
|
||
In 2020, the Company entered into a lease for a clinic facility in Minneapolis, Minnesota. In connection with the facility, the Company incurred costs to design, engineer, build and install furniture and equipment in the facility. $
Revenue Recognition – On January 1, 2018, we adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition (Topic 605). Results for reporting periods beginning after January 1, 2018, are presented under Topic 606. The impact of adopting the new revenue standard was not material to our financial statements and there was no adjustment to beginning retained earnings on January 1, 2018.
Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
We determine revenue recognition through the following steps:
|
● |
identification of the contract, or contracts, with a customer; |
|
● |
identification of the performance obligations in the contract; |
|
● |
determination of the transaction price; |
|
● |
allocation of the transaction price to the performance obligations in the contract; and |
|
● |
recognition of revenue when, or as, we satisfy a performance obligation. |
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.
Income Taxes- The Company accounts for income taxes under the asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s condensed consolidated financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than possible enactments of changes in the tax laws or rates.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. The Company has determined that a valuation allowance is needed due to recent taxable net operating losses, the sale of profitable divisions and the limited taxable income in the carry back periods. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and certain tax loss carryforwards, less any valuation allowance.
The Company accounts for uncertain tax positions as required in that a position taken or expected to be taken in a tax return is recognized in the consolidated financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. The Company does not have any material unrecognized tax benefits. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as components of interest expense and other expense, respectively, in arriving at pretax income or loss. The Company does not have any interest and penalties accrued. The Company is generally no longer subject to U.S. federal, state, and local income tax examinations for the years before 2018.
Business Combinations- The Company accounts for business combinations by recognizing the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair values on the acquisition date. The purchase price allocation process requires management to make significant estimates and assumptions, especially with respect to intangible assets, estimated contingent consideration payments and pre-acquisition contingencies. Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to:
|
● |
future expected cash flows from product sales, support agreements, consulting contracts, other customer contracts, and acquired developed technologies and patents; and |
|
● |
discount rates utilized in valuation estimates. |
Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. Additionally, any change in the fair value of the acquisition-related contingent consideration subsequent to the acquisition date, including changes from events after the acquisition date, such as changes in our estimates of relevant revenue or other targets, will be recognized in earnings in the period of the estimated fair value change. A change in fair value of the acquisition-related contingent consideration or the occurrence of events that cause results to differ from our estimates or assumptions could have a material effect on the consolidated financial position, statements of operations or cash flows in the period of the change in the estimate.
Impairment of Long-Lived Assets-Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed would be separately presented in the consolidated balance sheet and reported at the lower of the carrying amount or fair value less costs to sell and are no longer depreciated. The assets and liabilities of a disposal group classified as held-for-sale would be presented separately in the appropriate asset and liability sections of the consolidated balance sheet, if material. The Company had no impairment charges.
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 Adopted in the Year
In June 2018, the FASB issued ASU 2018-07 “Improvements to Non-employee Share-Based Payment Accounting”, which simplifies the accounting for share-based payments granted to non-employees for goods and services. Under the ASU, most of the guidance on such payments to non-employees would be aligned with the requirements for share-based payments granted to employees. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.
In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company has adopted ASU No. 2019-12, “Income Taxes (Topic 740) however giving the Company’s historical losses and full valuation allowance it did not have an impact on its condensed consolidated financial statements and related disclosures.
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 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 nine months ended September 30, 2021, and 2020, respectively:
|
For the three months ended September 30, |
For the nine months ended September 30, |
|||||||||||||||
|
2021 |
2020 |
2021 |
2020 |
|||||||||||||
|
Numerator |
||||||||||||||||
|
Net loss applicable to common shareholders |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
Denominator |
||||||||||||||||
|
Weighted Average shares outstanding |
||||||||||||||||
|
Net loss per share |
||||||||||||||||
|
Basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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 September 30, 2021, and 2020, the following shares were issuable and excluded from the calculation of diluted loss:
|
For the nine months ended September 30, |
||||||||
|
2021 |
2020 |
|||||||
|
Common stock options |
||||||||
|
Common stock purchase warrants |
||||||||
|
Convertible Preferred Stock Series C |
||||||||
|
Accrued interest on Preferred Stock |
||||||||
|
Potentially dilutive securities |
||||||||
Note 5 – Related Party Transactions
For the three months ended September 30, 2021:
On July 21, 2021, the Company issued a total of
On August 26, 2021, the Company issued
During the three months ended September 30, 2021, the Company accrued dividends on its Series X Preferred Stock in the total amount of $
For the nine months ended September 30, 2021:
On July 21, 2021, the Company issued a total of 3,000,000 stock option awards to the Company’s executive officers: 1,500,000 to its Chief Executive Officer, 750,000 to its Chief Financial Officer and 750,000 to its Chief Legal Officer. The options will expire on the anniversary of the grant date and will vest following the Company’s achievement of a total of $30 million of revenues over four consecutive quarters, as recorded under generally accepted accounting principles of the United States of America. The options have a strike price of $0.25 the amount was based on the price of the lowest investment amount offered to outside investors in 2021 and is higher than the closing price on the date they were granted.
On August 26, 2021, the Company issued 312,800 restricted shares of the Company’s common stock priced at $0.25, vesting immediately, in lieu of $78,200 of cash compensation owed to the Company’s Chief Executive Officer for services rendered to the Company prior to 2021.
During the nine months ended September 30, 2021, the Company accrued dividends on its Series X Preferred Stock in the total amount of $
For the three months ended September 30, 2020:
On August 1, 2020, the Company agreed to issue 1,000,000 ten-year options to a non-management director. These options have a fair value of $56,037, an exercise price of $0.05 per share, and vest over a three-year period. The Company valued these options using the Black-Scholes valuation model. During the nine months ended September 30, 2020, the amount of $11,595 was charged to operations in connection these options.
For the nine months ended September 30, 2020:
On February 27, 2020, the Company agreed to issue
On March 2, 2020, the Company agreed to issue
On June 1, 2020, the Company agreed to issue
On August 1, 2020, the Company agreed to issue
During the nine months ended September 30, 2020, the Company charged the amount of $
During the nine months ended September 30, 2020, the Company accrued dividends on its Series X Preferred stock in the total amount of $
Note 6 - Right to Use Assets and Lease Liabilities – Operating Leases
The Company leases clinic and administrative facilities under operating leases. The Company evaluates its contracts to determine if an arrangement is a lease at inception and classify it as a finance or operating lease. Currently, all the Company’s leases are classified as operating leases. Leased assets and corresponding liabilities are recognized based on the present value of the lease payments over the lease term. The lease terms may include options to extend when it is reasonably certain that the Company will exercise that option.
Topic ASC 842 requires the Company to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. Right-of-use assets are recorded in other assets on the Company’s condensed consolidated balance sheets. Current and non-current lease liabilities are recorded in other accruals within current liabilities and other non-current liabilities, respectively, on its condensed consolidated balance sheets. Costs associated with operating leases are recognized on a straight-line basis within operating expenses over the term of the lease.
On November 1, 2020, the Company entered into an agreement to open a clinic in Minneapolis, Minnesota. The initial lease term is
On May 24, 2021, the Company entered into an agreement to open a clinic in St. Louis Park, Minnesota, which is expected to begin operations in the third quarter of 2021. The initial lease term is
Additionally, on June 8, 2021, the Company entered into an agreement to open a clinic in Eden Prairie, Minnesota, which is expected to begin operation in the third quarter of 2021. The initial lease term is
On June 24, 2021, the Company entered into an agreement to open an administrative office in St. Louis Park, Minnesota. The initial lease term is
On August 31, 2021, the Company entered into an agreement to open a clinic in St. Paul, Minnesota, which is expected to begin operation in the fourth quarter of 2021. The initial lease term is for
On September 9, 2021, the Company entered into an agreement to open a clinic in Minneapolis, Minnesota, which is expected to begin operation in the fourth quarter of 2021. The initial lease term is for
On September 28, 2021, the Company entered into an agreement to open a clinic in Denver, Colorado, which is expected to begin operation in the first quarter of 2022. The initial lease term is for
As of September 30, 2021, the Company had total operating lease liabilities of approximately $
|
Right to use assets – operating leases are summarized below: |
September 30, 2021 |
December 31, 2020 |
||||||
|
Clinics |
$ | $ | ||||||
|
Administrative office |
||||||||
|
Right to use assets, net |
$ | $ | ||||||
|
Operating lease liabilities are summarized below: |
September 30, 2021 |
December 31, 2020 |
||||||
|
Clinics |
$ | $ | ||||||
|
Administrative office |
||||||||
|
Lease liability |
$ | $ | ||||||
|
Less: current portion |
( |
) |
( |
) |
||||
|
Lease liability, non-current |
$ | $ | ||||||
The Company’s lease expense was entirely comprised of operating leases. Lease expense for the three months ended September 30, 2021, was $
Maturity analysis under these lease agreements are as follows:
|
For the twelve months ended September 30, 2022 |
$ | |||
|
For the twelve months ended September 30, 2023 |
||||
|
For the twelve months ended September 30, 2024 |
||||
|
For the twelve months ended September 30, 2025 |
||||
|
For the twelve months ended September 30, 2026 |
||||
|
Thereafter |
||||
|
Total |
$ | |||
|
Less: Present value discount |
( |
) |
||
|
Lease liability |
$ |
Note 7 – Debt
All obligations disclosed in this section haves been fully satisfied as of the date of this filing and the Company has no further requirements related to these notes except for the Company’s PPP Loan which remains outstanding.
August 2014 Series C and D Convertible Debenture
On March 30, 2021, the Company issued
March 2016 Convertible Note A
On March 24, 2021, the Company paid cash in the amount of $
Eagle Equities Note 4
On January 4, 2021, the Company issued
Eagle Equities Note 5
On January 11, 2021, the Company issued
Eagle Equities Note 6
On January 21, 2021, the Company issued
Eagle Equities Note 7
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 7 whereby the Company issued
Eagle Equities Note 8
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 8 whereby the Company issued
Eagle Equities Note 9
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 9 whereby the Company issued
Eagle Equities Note 10
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 10 whereby the Company issued
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 (the “Note”) with Bank of America for a loan in the original principal amount of approximately $
Notes Payable Table 1:
|
September 30, 2021 |
December 31, 2020 |
|||||||
|
Total notes payable |
$ | $ | ||||||
|
Less: Discount |
( |
) |
||||||
|
Notes payable - net of discount |
$ | $ | ||||||
|
Current Portion, net of discount |
$ | $ | ||||||
|
Long-term portion, net of discount |
$ | $ | ||||||
Note 8 – Derivative Liabilities
Certain of the Company’s convertible notes and warrants contain features that create derivative liabilities. The pricing model the Company uses for determining fair value of its derivatives is the Lattice Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs involves management’s judgment and may impact net income. The derivative components of these notes are valued at issuance, at conversion, at restructure, and at each period end.
Derivative liability activity for the nine months ended September 30, 2021, are summarized in the table below:
|
December 31, 2020 |
$ | |||
|
Settled upon conversion or exercise |
( |
) |
||
|
Gain on revaluation |
||||
|
September 30, 2021 |
$ |
Note 9 – Stockholders’ Equity (Deficit)
Common Stock
The Company has authorized
Common Stock Transactions During the Nine Months Ended September 30, 2021
On January 4, 2021, the Company issued
On January 6, 2021, the Company issued
On January 11, 2021, the Company issued
On January 14, 2021, the Company issued
On January 21, 2021, the Company issued
On January 28, 2021, the Company issued
On February 1, 2021, the Company issued
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 7 whereby the Company issued
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 8 whereby the Company issued
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 9 whereby the Company issued
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 10 whereby the Company issued
On February 22, 2021, the Company issued
On March 11, 2021, the Company issued
On March 17, 2021, the Company issued
On March 23, 2021, the Company issued
On April 19, 2021, the Company issued
On May 4 through May 26, 2021, the Company issued
On May 12, 2021, the Company issued
On June 10 through June 29, 2021, the Company issued
On June 23, 2021, the Company cancelled
On August 26, 2021, the Company issued
Between August 11, 2021 and September 2, 2021 the Company issued
Also, during the nine months ended September 30, 2021, the Company charged the amount of $
Common Stock Transactions During the Nine Months Ended September 30, 2020
During the nine months ended September 30, 2020, the Company issued
Also, during the nine months ended September 30, 2020, the holder of the Eagle Equities Note 1 converted the following amounts of principal and accrued interest to common stock: On June 5, 2020, principal of $
Also, during the nine months ending September 30, 2020, the Company issued
Also, during the nine months ended September 30, 2020, the Company charged the amount of $
Also, during the nine months ended September 30, 2020, the Company entered into agreements to issue
Also, during the nine months ended September 30, 2020, the Company entered into agreements with two note holders regarding the exercise price of warrants held by the note holders. These agreements resulted in the following: (i) the Company issued
Also, during the nine months ended September 30, 2020, the Company issued
Preferred Stock
Series A Preferred Stock
Series A Preferred Stock Transactions During the Nine Months Ended September 30, 2021
During the nine months ended September 30, 2021, the Company accrued dividends in the amount of $
Series A Preferred Stock Transactions During the Nine Months Ended September 30, 2020
On March 2, 2020, the Company issued
Series C Preferred Stock
Series C Preferred Stock Transactions During the Nine Months Ended September 30, 2021
On March 25, 2021, the Company entered into Securities Purchase Agreements (the “SPAs”) with four institutional investors (the “Investors” and each an “Investor”) pursuant to which the Company sold to the Investors in a private placement an aggregate of
On May 4 through May 26, 2021,
On August 11, 2021 through September 2, 2021,
During the nine months ended September 30, 2021, the Company accrued dividends on the Series C Preferred Stock in the amount of $
Series C Preferred Stock Transactions During the Nine Months ended September 30, 2020
None.
Series X Preferred Stock
The Series X Preferred Stock has a par value of $
Series X Preferred Stock Transactions During the Nine Months Ended September 30, 2021
During the nine months ended September 30, 2021, the Company accrued dividends on its Series X Preferred Stock in the total amount of $
Series X Preferred Stock Transactions During the Nine Months Ended September 30, 2020
None.
Stock Options
The following table summarizes the options outstanding on September 30, 2021, 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 |
|||||||||||||||
| $ |
$ | $ | ||||||||||||||||||
Transactions involving stock options are summarized as follows:
|
Shares |
Weighted- Average Exercise Price ($) |
|||||||
|
Outstanding on December 31, 2020 |
$ | |||||||
|
Granted |
||||||||
|
Exercised |
( |
) |
||||||
|
Outstanding on September 30, 2021 |
$ | |||||||
Aggregate intrinsic value of options outstanding and exercisable on September 30, 2021, and 2020 was $
On September 30, 2021, the total stock-based compensation cost related to unvested awards not yet recognized was $
The Black-Scholes option pricing model is used to estimate the fair value of stock options granted under the Company’s share-based compensation plans. The weighted average assumptions used in calculating the fair values of stock options as of September 30, 2021, was as follows:
|
September 30, |
||||
|
2021 |
||||
|
Volatility |
% |
|||
|
Dividends |
$ | |||
|
Risk-free interest rates |
% |
|||
|
Term (years) |
||||
Warrants
The following table summarizes the warrants outstanding on September 30, 2021, and the related prices for the warrants to purchase shares of the Company’s common stock:
|
Shares |
Weighted- Average Exercise Price ($) |
|||||||
|
Outstanding on December 31, 2020 |
$ | |||||||
|
Granted |
$ | |||||||
|
Exercised |
- | $ | - | |||||
|
Outstanding on September 30, 2021 |
$ | |||||||
Note 10 – Fair Value of Financial Instruments
The following summarizes the Company’s derivative financial liabilities that are recorded at fair value on a recurring basis on September 30, 2021, and December 31, 2020.
|
Fair value measured at September 30, 2021 |
||||||||||||||||
|
Quoted prices in active |
Significant other |
Significant |
||||||||||||||
|
markets |
observable inputs |
unobservable inputs |
Fair value at |
|||||||||||||
|
(Level 1) |
(Level 2) |
(Level 3) |
September 30, 2021 |
|||||||||||||
|
Derivative liability |
$ | $ | $ | $ | ||||||||||||
|
Fair value measured at December 31, 2020 |
||||||||||||||||
|
Quoted prices in active |
Significant other |
Significant |
||||||||||||||
|
markets |
observable inputs |
unobservable inputs |
Fair value at |
|||||||||||||
|
(Level 1) |
(Level 2) |
(Level 3) |
December 31, 2020 |
|||||||||||||
|
Derivative liability |
$ | $ | $ | $ | ||||||||||||
Note 11 – Commitments and Contingencies
Legal
There is no pending or anticipated legal actions at this time.
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 (the “Note”) with Bank of America for a loan in the original principal amount of approximately $
Note 12 -- Subsequent Events
Subsequent to September 30, 2021, the Company initiated a bridge financing round ahead of its anticipated-up listing to a national exchange. The Company intends to raise between
ITEM 2. MANAGEMENT’S 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 miss ion is to increase convenience and access to care, improve the quality of care, and reduce its cost. Technology is a key part to our approach to deliver on these three goals. We recognize the essential nature of the clinician client relationship and its importance to achieving these superior outcomes. Our view is that technology must enhance these human interactions, not operate independently. As such, we are seeking innovative technologies that enable both consumers and clinicians to achieve more convenient and better outcomes with greater efficiency.
We opened our flagship primary care clinic “The Good Clinic” in Northeast Minneapolis, Minnesota in February 2021, and have added two additional operating clinics as of the date of this filing. We announced leases for four (4) plan additional clinics in the Twin Cities area of Minnesota and two (2) new clinics in the greater Denver, Colorado area. These new locations are expected to open in Q4 of 2021 and Q1 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. Already, our clinic is being viewed as an amenity for the high-rise development in which we are located. We plan to mirror this approach within the two Lennar locations with which we have signed letters of intent to build clinics in these residential developments in Denver. We may also seek to grow through the acquisition of existing clinic operations which would be converted into our operating approach.
Additionally, we have implemented a corporate structure that we believe allows us to expand into international markets. We have a wholly owned subsidiary in Dublin, Ireland, Acelerar Healthcare Holdings, Ltd. We intend to use this location as a base for European operations. In the European community the investment in healthcare technology has been significant. In many cases, even more robust than in the North American markets. We believe that as a result of expected low economic growth in the European community, several technology businesses based there may become our targets for acquisition at attractive valuations. We believe that these businesses may benefit from the larger markets found in North America and elsewhere in the world.
We also see the European community as an opportunity for capital as we expand our business. The interest rates in this area of the world are currently very low or even at zero. As such, raising funds in the European market may prove attractive when compared to local alternatives. Further, there are equity and debt markets based in Europe that may provide liquidity to our investors, should we be able to list and trade our financial instruments in those marketplaces. We may seek a dual listing for our common stock to trade there. We believe this avenue may increase both the size and liquidity of the shareholder base.
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, and any additional pharmacy acquisitions or other such transactions we may pursue, we may experience large expenditures specific to the transactions that are not incident to our operations.
Comparison of the Three Months Ended September 30, 2021 and 2020
Revenue
The Company recognized revenue of approximately $13,500 for the three months ended September 30, 2021, compared to $0 for the three months ended September 30, 2020. The increase in revenue is the result of the opening of The Good Clinic’s three location.
Cost of Sales
The Company incurred approximately $2,500 of cost of goods sold for the three months ended September 30, 2021, compared to $0 for the three months ended September 30, 2020. The increase in cost of goods sold is the result of the opening of The Good Clinic’s third location.
Gross Profit
Our gross profit was approximately $11,000 for the three months ended September 30, 2021, compared to $0 for the three months ended September 30, 2020.
Operating Expenses
Our total operating expenses for the three months ended September 30, 2021, were approximately $1,780,000. For the comparable period in 2020, the operating expenses were approximately $608,000.
Operating expenses for the three months ended September 30, 2021, were comprised primarily of $581,000 payroll and payroll taxes; $202,000 of non-cash compensation, $313,000 in legal and professional fees; $143,000 in marketing; $423,000 in other operation costs and $147,000 in consulting fees.
Operating expenses for the three months ended September 30, 2020 was $608,000. Operating expenses for the three months ended September 30, 2020 were comprised primarily of $183,000 in payroll and payroll taxes, including $99,000 in non-cash compensation; $139,000 in legal and professional fees; $123,000 in consulting fees, $40,000 in board of director fees; $81,000 in marketing and public relations; $31,000 in office and facilities costs; and $10,000 in insurance costs.
Other Income and Expenses
Interest expense was approximately $0 for the three months ended September 30, 2021, compared to approximately $537,000 for the nine months ended September 30, 2020.
During the three months ended September 30, 2021, the Company declared Preferred Stock dividends of approximately $40,000 compared to approximately $19,000 for the three months ended September 30, 2020.
For the three months ended September 30, 2021, we had a net loss available to common shareholders of approximately $1,810,000 or a net loss per share, basic and diluted of ($0.01) compared to a net loss available to common shareholders of approximately $1,056,000, or a net loss per share, basic and diluted of ($0.01), for the three months ended September 30, 2020.
Comparison of the Nine Months Ended September 30, 2021 and 2020
Revenue
During the nine months ended September 30, 2021, the Company recognized $25,000 of revenue compared to $0 for the nine months end September 30, 2020. The Increase is the result of opening The Good Clinic’s three location.
Cost of Sales
The Company incurred approximately $8,000 of cost of goods sold for the nine months ended September 30, 2021, compared to $0 for the nine months ended September 30, 2020. The increase in cost of goods sold is the result of the opening of The Good Clinic’s three location.
Gross Profit
Our gross profit was approximately $17,000 for the nine months ended September 30, 2021, compared to $0 for the nine months ended September 30, 2020.
Operating Expenses
Our total operating expenses for the nine months ended September 30, 2021, were $4,137,000 compared to $1,730,000 for the nine months ended September 30, 2020
Operating Expense for the nine months ended September 30, 2021, were comprised primarily of $1,056,000 payroll and payroll taxes; $539,000 of non-cash compensation, $920,000 in legal and professional fees; $445,000 in marketing; $764,000 in other operation costs $413,000 in consulting fees.
Our total operating expenses for the nine months ended September 30, 2020 were $1,730,000. Operating expenses for the nine months ended September 30, 2020 were composed primarily of $648,000 in payroll and payroll taxes, including $259,000 in non-cash compensation; $373,000 in legal and professional fees; $309,000 in consulting fees, $85,000 in board of director and advisory board fees; $218,000 in marketing and public relations; $42,000 in insurance costs; $40,000 in office and facilities costs; and $15,000 in travel costs.
Other Income and Expenses
Interest expense was approximately $966,000 for the nine months ended September 30, 2021, compared to approximately $1,124,000 for the nine months ended September 30, 2020.
During the nine months ended September 30, 2021, we recorded a gain on settlement of accounts payable of approximately $6,000, compared to a gain on settlement of accounts payable in the amount of $397,000 in the prior period.
During the nine months ended September 30, 2020, we recorded a gain on the settlement of notes payable of approximately $1,800. There was not an equivalent gain or loss in the comparable prior period.
During the nine months ended September 30, 2021, the Company declared Preferred Stock dividends of approximately $115,000 compared to approximately $56,000 for the nine months ended September 30, 2020.
During the nine months ended September 30, 2021, we recorded a loss on a legal settlement of $70,000. There was not an equivalent gain or loss in the comparable prior period.
For the nine months ended September 30, 2021, we had a net loss available to common shareholders of approximately $6,089,000, or a net loss per share, basic and diluted of ($0.03) compared to a net loss available to common shareholders of approximately $2,004,000, or a net loss per share, basic and diluted of ($0.02), for the nine months ended September 30, 2020.
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 September 30, 2021, we had cash of approximately $442,000 compared to cash of approximately $65,000 as of December 31, 2020.
Net cash used in operating activities was approximately $1,625,000 for the nine months ended September 30, 2021. This is the result of our business development efforts pertaining to the start-up of the first three clinics. Cash used in operations for the nine months ended September 30, 2020, was approximately $1,192,000.
Net cash used in investing activities was approximately $2,300,000 for the nine months ended September 30, 2021. The amounts relate to the purchase of fixed assets and leasehold improvement on our first clinic. No cash was used for investing activities for the nine months ended September 30, 2020.
Net cash provided by financing activities for the nine months ended September 30, 2021, was approximately $4,302,000, consisting of proceeds from a private placement offering of common stock of $1,668,000 and $2,760,000 from the sale of Series C Preferred Stock and warrants. Partially offsetting the proceeds was approximately $178,000 of payment on notes payable. Net cash provided by financing activities for the nine months ended September 30, 2020, was approximately $1,210,000 consisting of approximately $1,381,000 of proceeds from notes payable offset by payments on notes payable of approximately $171,000.
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 third quarter ended September 30, 2021, 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
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 (the “Note”) with Bank of America for a loan in the original principal amount of approximately $460,000, and the Company received the full amount of the loan proceeds on May 4, 2020. The current balance is $460,406 and the Company is currently in discussions for a) a partial forgiveness and b) the conversion of any remaining balance into a term note.
ITEM 1A. RISK FACTORS
Special Notice Regarding the Worldwide Covid-19 Crisis
The world economy is facing significant uncertainties as a result of the worldwide COVID-19 crisis. While we are a small company and have a limited workforce, it is likely we will face increased risk in the case that our financing needs are delayed; our acquisition targets face liquidity issues; or if our professional relationships are challenged from limited staff availability or access. We cannot predict with any certainty whether and to what degree the disruption caused by the COVID-19 pandemic and reactions thereto will continue and expect to face difficulty in developing our business and building our planned clinics. It is not possible for us to accurately predict the duration or magnitude of the adverse results of the outbreak and its effects on our business, results of operations or financial condition at this time, but such effects may be material. The COVID-19 pandemic may also have the effect of heightening many of the other risks identified elsewhere in this section.
Investing in our common stock involves a high degree of risk You should carefully consider the following risks, together with all the other information in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and notes thereto. If any of the following risks materializes, our operating results, financial condition and liquidity could be materially adversely affected. As a result, the trading price of our common stock could decline, and you could lose part or all your investment. The following information updates, and should be read in conjunction with, the information disclosed in Part I, Item1A, “Risk Factors,” contained in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on March 25, 2021 . Except as disclosed below, there have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on March 25, 2021. If any of the following risks materializes, our operating results, financial condition and liquidity could be materially adversely
There is substantial doubt about our ability to continue as a going concern as a result of our limited operating history, history of losses and financial resources, and if we are unable to generate significant revenue or secure financing, we may be required to cease or curtail our operations.
We have a long history of losses and incurred net losses of approximately $2.9 million and $3.9 million for the years ended December 31, 2020, and 2019, respectively and net losses of approximately $5.6 million and $2.0 million for the nine months ended September 30, 2021, and 2020, respectively. We have nominal revenues from our operations. The Report of our Independent Registered Public Accounting Firm issued in connection with our audited financial statements for the calendar year ended December 31, 2020, expressed substantial doubt about our ability to continue as a going concern, due to the fact that we have recurring operating losses and our lack of liquidity and working capital. The Company’s continuance is dependent on raising capital and generating revenues sufficient to sustain operations. We have not generated revenues from our present business plan. If we generate revenue more slowly than we anticipate, or if our operating expenses are higher than we expect, we may not be able to pay our operating expenses or achieve profitability and our financial condition could suffer. Whether we can achieve cash flow levels sufficient to support our operations cannot be accurately predicted. Unless such cash flow levels are achieved, we will need to borrow additional funds or sell debt or equity securities, or some combination thereof, to obtain funding for our operations. Such additional funding may not be available on commercially reasonable terms, or at all. As of the nine months ended September 30, 2021, we have only generated revenues of $25,000.
The issuance of additional shares of our common stock, convertible notes, convertible Preferred Stock, and other convertible securities may dilute the percentage ownership of the then-existing stockholders and may make it more difficult to raise additional equity capital.
As of September 30, 2021, there are outstanding options and warrants to purchase 18,386,211and 12,600,000 shares of common stock, respectively. In addition, we have outstanding Series C Preferred Stock that converts into 8,237,425 shares of common stock, and dividends on Preferred Stock is convertible into an additional 494,883 shares of common stock. The exercise of such options and warrants and conversion of convertible securities would dilute the then-existing stockholders’ percentage ownership of our stock, and any sales in the public market of common stock underlying such securities could adversely affect prevailing market prices for the common stock. Moreover, the terms upon which we would be able to obtain additional equity capital could be adversely affected because the holders of our options and warrants can be expected to exercise them at a time when we would, likely, be able to obtain any needed capital on terms more favorable to us than those provided by such securities.
We may become involved in legal proceedings that could have a material adverse impact on our business, results of operations and financial condition.
By operating in the health care industry, we will face an inherent business risk of exposure to personal injury claims. We plan to obtain liability insurance in the future; however, we do not have liability insurance coverage to protect us from such claims. A successful personally liability claim, or series of claims brought against us, more than our insurance coverage, would negatively impact our financial condition.
From time to time and in the ordinary course of our business, we and certain of our subsidiaries may become involved in various legal proceedings and claims, including for example, employment disputes and litigation; client disputes and litigation alleging solution and implementation defects, personal injury, intellectual property infringement, violations of law and breaches of contract and warranties; and other third party disputes and litigation alleging personal injury, intellectual property infringement, violations of law, and breaches of contracts and warranties.
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 (the “Note”) with Bank of America for a loan in the original principal amount of approximately $460,000, and the Company received the full amount of the loan proceeds on May 4, 2020.
All such legal proceedings are inherently unpredictable and, regardless of the merits of the claims, litigation may be expensive, time-consuming, and disruptive to our operations and distracting to management. If resolved against us, such legal proceedings could result in excessive verdicts, injunctive relief or other equitable relief that may affect how we operate our business. Similarly, if we settle such legal proceedings, it may affect how we operate our business. Future court decisions, alternative dispute resolution awards, business expansion or legislative activity may increase our exposure to litigation and regulatory investigations. In some cases, substantial non-economic remedies or punitive damages may be sought. Although we maintain liability insurance coverage, there can be no assurance that such coverage will cover any verdict, judgment or settlement that may be entered against us, that such coverage will prove to be adequate or that such coverage will continue to remain available on acceptable terms, if at all. If we incur liability that exceeds our insurance coverage or that is not within the scope of the coverage in legal proceedings brought against us, it could have a material adverse effect on our business, results of operations and financial condition.
The terms of our outstanding Series C Preferred Stock may limit our ability to raise additional equity capital or pursue acquisitions, which may impact funding of our ongoing operations and cause significant dilution to existing stockholders.
On March 25, 2021, we entered into Securities Purchase Agreements with four institutional pursuant to which the Company sold to the Investors in a private placement an aggregate of 3,000,000 units (the “Units” and each a “Unit”) with a purchase price of $1.00 per Unit, with each Unit consisting of (a) one share of a newly formed Series C Convertible Preferred Stock, par value $0.01 per share (the “Series C 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”) to purchase 2.1 shares of common stock at a purchase price of $0.75 per whole share. The aggregate gross proceeds to the Company were $3,000,000 and the number of shares of Common Stock initially issuable upon conversion of the Series C Preferred Stock is 12,600,000 shares of Common stock and the aggregate number of shares of common stock initially issuable upon exercise of the warrants is 12,600,000 shares of Common Stock.
Holders of the Series C Preferred Stock were provided price protections for the $0.25 conversion price (the “Conversion Price”), pursuant to which, in the event the company issues or sells any securities, including options or convertible securities, or amends 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, which shall not apply to any Exempt Issuance (as defined in the Certificate of Designations of the Series C Preferred Stock (the “COD”)). Further, holders of the Series C Preferred Stock shall have the right to participate in any offering by the Company of its Common Stock or Common Stock Equivalents in a transaction exempt from registration under the Securities Act of 1933, as amended, 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 by the Company and shall not apply to any Exempt Issuance or a public offering.
ITEM 2. SALE OF UNREGISTERED SECURITIES
During the nine months ended September 30, 2021, we offered and sold securities below.
On January 4, 2021, we 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, we 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, we 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, we 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, we 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, we 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, we 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, we entered into a settlement agreement with the holders of the Eagle Equities Note 7 whereby we 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, we entered into a settlement agreement with the holders of the Eagle Equities Note 8 whereby we 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, we entered into a settlement agreement with the holders of the Eagle Equities Note 10 whereby we 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, we issued 336,000 shares of common stock for the exercise of options at a price of $0.03 per share.
On March 11, 2021, was 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.
On March 17, 2021, we issued 300,000 shares of common stock at a price of $0.31 per share to a service provider.
On March 23, 2021, we issued 461,358 shares of common stock at a price of $0.26 per share to the underwriters of the 2021 Private Placement.
On March 25, 2021, we entered into Securities Purchase Agreements (the “SPAs”) with four institutional investors (the “Investors” and each an “Investor”) pursuant to which we sold to the Investors in a private placement an aggregate of 3,000,000 units (the “Units” and each a “Unit”) with a purchase price of $1.00 per Unit, with each Unit consisting of (a) one share of a newly formed Series C Convertible Preferred Stock, par value $0.01 per share (the “Series C Preferred Stock”), (b) 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 (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. The aggregate gross proceeds to the Company were $3,000,000 and the number of shares of Common Stock initially issuable upon conversion of the Series C Preferred Stock is 12,600,000 shares of Common stock and the aggregate number of shares of Common Stock initially issuable upon exercise of the Warrants is 12,600,000 shares of Common Stock. We also issued to the placement agent and its designee 463,320 shares of Common Stock.
In addition, on March 29, 2021, we issued 300,000 shares of common stock as payment for services to be rendered for investor relations services having a value of $.2830 per share.
On March 30, 2021, we issued 272,837 shares of common stock as settlement for amount sowed under the Series D Convertible Note share to the underwriters of the 2021 Private Placement.
On March 31, 2021, we completed the private offering previously reported on February 10, 2021, by issuing an aggregate of 6,672,000 shares of our restricted common stock to investors for $1,668,000 in proceeds pursuant to a Securities Purchase Agreement (“SPA”). The transaction was executed directly with us, and no brokers, dealers or representatives were involved.
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 a consultant.
Between June 10, 2021, and 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.
On August 26, 2021, the Company issued 312,800 restricted shares of the Company’s common stock priced at $0.25, vesting immediately, in lieu of $78,200 of cash compensation owed to the Company’s Chief Executive Officer for services rendered to the Company prior to 2021.
Also, during the nine months ended September 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 $201,292 to operations in connection with the vesting of options granted to its officers and board members.
Except for the issuances of common stock upon conversion of notes or the exchange of Common Stock for Series A Preferred Stock or notes which were effected relying on Section 3(a)(9) of the Securities Act as the common stock was exchanged by us with our existing security holders exclusively and no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange, the securities issued in each of the transactions described above were issued relying on Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder. The recipients of the securities in each of these transactions relying on Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions. All recipients had adequate access, through their employment or other relationship with us or through other access to information provided by us, to information about us. The sales of these securities were made without any general solicitation or advertising.
The shares of common stock issued pursuant to the SPA and to the investor relations services were issued in a transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) in reliance on Section 4(a)(2) thereof. Accordingly, the shares of common stock have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.
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 |
8-K |
10.2 |
1/31/2012 |
|||||||
|
3.3 |
10-K |
3.3 |
4/16/2013 |
|||||||
|
3.4 |
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 |
8-K |
3.07 |
3/13/2020 |
|||||||
|
3.7 |
10-Q |
3.7 |
8/14/2020 |
|||||||
|
3.8 |
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 |
|
Form Type |
Exhibit Number |
Date Filed |
Filed Herewith |
|||||||
|
3.10 |
8-K |
3.1 |
03/26/2021 |
|||||||
|
3.11 |
8-K |
3.2 |
03/26/2021 |
|||||||
|
4.1# |
Mitesco, Inc. 2021 Omnibus Securities and Incentive Plan (File No. 333-252293) |
8-K |
10.1 |
01/27/2021 |
||||||
|
4.2 |
8-K |
4.1 |
03/26/2021 |
|||||||
|
4.3 |
8-K |
4.2 |
03/26/2021 |
|||||||
|
10.1 |
Form of Securities Purchase Agreement used for private placement of restricted common stock |
8-K |
10.01 |
02/10/2021 |
||||||
|
10.2 |
8-K |
10.02 |
02/10/2021 |
|||||||
|
10.3 |
8-K |
10.03 |
02/10/2021 |
|||||||
|
10.4 |
8-K |
10.04 |
02/10/2021 |
|||||||
|
10.5 |
8-K |
10.05 |
02/10/2021 |
|||||||
|
10.6 |
Form of Exchange Agreement for Restricted Common Stock with Four (4) Parties Regarding Clinic Assets |
8-K |
10.06 |
02/10/2021 |
||||||
|
10.7# |
8-K |
10.1 |
03/17/2021 |
|||||||
|
10.8 |
8-K |
10.1 |
03/26/2021 |
|||||||
|
10.9 |
8-K |
10.2 |
03/26/2021 |
|||||||
|
10.10 |
Engagement Letter, by and between Carter, Terry & Company and Mitesco, Inc., dated January 6, 2021 |
8-K |
10.3 |
03/26/2021 |
||||||
|
10.11 |
8-K |
10.4 |
03/26/2021 |
|||||||
|
10.12# |
Employment Agreement by and between Jenny Lindstrom and Mitesco, Inc., dated as of April 6, 2021 |
8-K |
10.1 |
04/12/2021 |
|
Form Type |
Exhibit Number |
Date Filed |
Filed Herewith |
|||||||
|
31.1 |
X |
|||||||||
|
31.2 |
X |
|||||||||
|
32.1 |
X |
|||||||||
|
32.2 |
X |
|||||||||
|
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 three months ended September 30, 2021, to be signed on its behalf by the undersigned, thereunto duly authorized.
|
MITESCO, INC. F/K/A TRUE NATURE HOLDING, INC. |
||||
|
Dated: November 15, 2021 |
By: |
/s/ Phillip J. Keller |
||
|
Phillip J. Keller Chief Financial Officer and Principal Financial Officer |
||||