Mitesco, Inc 10-Q for FY2024 Q3
Mitesco, Inc. (MITI)
About this 10-Q
Mitesco, Inc filed this 10-Q on November 25, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).
Headline figures
Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $23.5K
- compared with $0 a year earlier
- Net income
- $2.08M
- compared with a net loss of $1.55M a year earlier
- Diluted EPS
- $0.29
- compared with -$0.48 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:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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N/A |
N/A |
N/A |
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.
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).
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 ☐ No
As of November 25, 2024, the registrant had
Table of Contents
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PART I – FINANCIAL INFORMATION |
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Item 1. |
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Consolidated Balance Sheets as of September 30, 2024, and December 31, 2023 |
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Consolidated Stockholder’s Deficit for the three and nine months ended September 30, 2024, and 2023 |
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Consolidated Statements of Cash Flows for the nine months ended September 30, 2024, and 2023 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
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Item 3. |
36 |
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Item 4. |
36 |
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PART II – OTHER INFORMATION |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MITESCO, INC.
CONSOLIDATED BALANCE SHEETS
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September 30, 2024 (Unaudited) |
December 31, 2023 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
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Prepaids and other current assets |
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Total current assets |
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Total assets |
$ | $ | ||||||
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current liabilities: |
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Accounts payable and accrued liabilities |
$ | $ | ||||||
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Accrued interest |
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Accrued interest - related party |
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Derivative liabilities |
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Lease liability - operating lease, current |
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Notes payable, net |
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Notes payable - related parties, net |
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SBA loan payable |
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Other current liabilities |
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Preferred stock dividends payable |
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Preferred stock dividends payable - related parties |
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Legal settlements |
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Total current liabilities |
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Total liabilities |
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Stockholders' deficit |
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Preferred stock, $0.01 par value, 100,000,000 shares authorized; 500,000 shares designated Series A; 3,000,000 shares designated Series C; 10,000,000 shares designated Series D; 10,000 shares designated as Series E; 140,000 shares designated as Series F, and 27,324 shares designated Series X. |
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| Preferred stock, Series A, $ |
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| Preferred stock, Series C, $ |
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| Preferred stock, Series D, $ |
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| Preferred stock, Series F, $ |
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| Preferred stock, Series X, $ |
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| Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
( |
) | ( |
) | ||||
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Total stockholders' deficit |
( |
) | ( |
) | ||||
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Total liabilities and stockholders' deficit |
$ | $ | ||||||
See accompanying notes to these unaudited consolidated financial statements.
MITESCO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
Three Months Ended |
Nine Months Ended |
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September 30, 2024 |
September 30, 2023 |
September 30, 2024 |
September 30, 2023 |
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Revenue |
$ | $ | $ | $ | ||||||||||||
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OPERATING EXPENSES: |
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Cost of operations |
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General and administrative |
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Impairment of fixed assets |
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Total operating expenses |
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Net loss from operations |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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OTHER INCOME (EXPENSES): |
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Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Interest expense - related parties |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Equity investment incentive |
( |
) | ( |
) | ||||||||||||
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Gain on termination of operating lease |
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Gain on settlement of notes payable |
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Gain on settlement of accounts payable |
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Loss on settlement of true-up obligations |
( |
) | ||||||||||||||
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Loss on legal settlement |
( |
) | ||||||||||||||
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Other income |
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(Loss) Gain on revaluation of derivative liabilities |
( |
) | ( |
) | ||||||||||||
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Total other income (expense) |
( |
) | ( |
) | ||||||||||||
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Net income (loss) from continuing operations |
( |
) | ( |
) | ||||||||||||
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Net income (loss) from discontinued operations |
( |
) | ( |
) | ||||||||||||
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Consolidated net loss |
( |
) | ( |
) | ||||||||||||
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Preferred stock dividends |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Preferred stock dividends - related parties |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Net income (loss) available to common shareholders |
$ | $ | ( |
) | ( |
) | ||||||||||
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Basic net income (loss) per common share - continuing operations |
$ | $ | ( |
) | ( |
) | ||||||||||
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Basic net income (loss) per common share - discontinued operations |
$ | $ | ( |
) | ( |
) | ||||||||||
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Basic net income (loss) per common share |
$ | $ | ( |
) | ( |
) | ||||||||||
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Diluted net income (loss) per common share - continuing operations |
$ | $ | ( |
) | ( |
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Diluted net income (loss) per common share - discontinued operations |
$ | $ | ( |
) | ( |
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Diluted net income (loss) per common share |
$ | $ | ( |
) | ( |
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Basic weighted average shares outstanding |
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Diluted weighted average shares outstanding |
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See accompanying notes to these unaudited consolidated financial statements.
MITESCO, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024, and 2023
(UNAUDITED)
|
Preferred Stock Series C |
Preferred Stock Series D |
Preferred Stock Series F |
Preferred Stock Series X |
Common Stock |
Additional Paid-in |
Common Stock |
Accumulated |
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Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Capital |
Subscribed |
Deficit |
Total |
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Balance, December 31, 2023 |
- | $ | - | $ | $ | $ | $ | $ | $ | - | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||||||||||||
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Shares issued for Series X dividends |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
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Preferred stock dividends |
- | - | - | - | - | - | - | - | - | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||||||
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Net income |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
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Balance, March 31, 2024 |
- | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||||
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Shares issued for Series X dividends |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
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Shares issued as compensation |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
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Preferred stock dividends |
- | - | - | - | - | - | - | - | - | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||||||
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Series X shares issued as compensation |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
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Net loss |
- | - | - | - | - | - | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
|
Balance, June 30, 2024 |
- | $ | - | $ | $ | $ | $ | $ | $ | - | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||||||||||||
|
Shares issued for conversion of account payable |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
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Shares issued for conversion of notes payable and accrued interest |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
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Shares issued for conversion of notes payable and accrued interest – related parties |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
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Shares issued for conversion of Series F preferred shares and accrued dividends |
- | - | - | - | ( |
) | ( |
) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
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Shares issued for conversion of Series D preferred shares and accrued dividends |
- | - | ( |
) | ( |
) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
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Shares issued for conversion of Series X preferred shares |
- | - | - | - | - | - | ( |
) | ( |
) | ( |
) | - | - | - | |||||||||||||||||||||||||||||||||||||||||
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Shares issued for Series X dividends |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
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Shares issued as compensation |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
|
Preferred stock dividends |
- | - | - | - | - | - | - | - | - | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||||||
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Net income |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
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Balance, Sept 30, 2024 |
- | $ | - | $ | $ | $ | $ | $ | $ | - | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||||||||||||
|
Balance, December 31, 2022 |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Shares issued for conversion of note payable |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
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Vesting of stock options issued to employees |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
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Shares issued to service providers |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
|
Shares issued for Series X dividends |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
|
Preferred stock dividends |
- | - | - | - | - | - | - | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||||||||
|
Net loss |
- | - | - | - | - | - | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
|
Balance, March 31, 2023 |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||
|
Shares issued as commission for fundraising |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
|
Shares issued for true-up agreement |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
|
Shares issued legal settlement |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
|
Shares issued for previously subscribed shares |
- | - | - | - | - | - | - | - | ( |
) | - | - | ||||||||||||||||||||||||||||||||||||||||||||
|
Shares issued for Series X dividends |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
|
Vesting of stock options issued to employees |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
|
Series F shares issued for conversion of accounts payable |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
|
Series F shares sold for cash |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
|
Series F shares issued for conversion of Series C and Series D preferred shares |
( |
) | ( |
) | ( |
) | ( |
) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
|
Series F shares issued for conversion of debt |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
|
Series A dividends previously satisfied |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
|
Preferred stock dividends |
- | - | - | - | - | - | - | - | - | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||||||
|
Net loss |
- | - | - | - | - | - | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
|
Balance, June 30, 2023 |
- | $ | - | $ | $ | $ | $ | $ | $ | - | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||||||||||||
|
Conversion of accounts payable to common stock |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
|
Conversion of accrued salary, debt and board fees to common stock – related parties |
- | - | - | - | - | - | - | - | ( |
) | - | |||||||||||||||||||||||||||||||||||||||||||||
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Conversion of debt to Series F preferred stock |
-- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
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Conversion of debt accrued salaries to Series F preferred stock - RP |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
|
Transaction costs Series F preferred stock sold for cash |
- | - | - | - | - | - | - | - | - | - | ( |
) | -- | ( |
) | |||||||||||||||||||||||||||||||||||||||||
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Vesting of stock options issued to employees |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
|
Preferred stock dividends |
- | - | - | - | - | - | - | - | - | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||||||
|
Net loss |
- | - | - | - | - | - | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
|
Balance, September 30, 2023 |
- | $ | - | $ | $ | $ | $ | $ | $ | - | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||||||||||||
See accompanying notes to these unaudited consolidated financial statements.
MITESCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
Nine Months Ended |
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September 30, 2024 |
September 30, 2023 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income (loss) from continuing operations |
$ | $ | ( |
) | ||||
|
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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Impairment of fixed assets |
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Depreciation expense |
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Penalties on notes payable |
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Equity investment incentive |
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Amortization of discount on notes payable |
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Amortization of discount on notes payable - related parties |
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Share based compensation |
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Shares issued as compensation for fundraising |
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Shares issued for true-up liability |
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Gain on settlement of note payable |
( |
) | ( |
) | ||||
|
Gain on settlement of accounts payable |
( |
) | ( |
) | ||||
|
Gain (loss) on lease terminations |
( |
) | ||||||
|
Gain (loss) on revaluation of derivative liabilities |
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Loss on legal settlement |
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Other income |
( |
) | ||||||
|
Changes in operating assets and liabilities: |
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Accounts receivable |
( |
) | ||||||
|
Prepaid expenses |
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Accounts payable and accrued liabilities |
( |
) | ||||||
|
Accrued interest |
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Accrued interest - related parties |
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Net cash used in operating activities from continuing operations |
( |
) | ( |
) | ||||
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Net cash used in operating activities from discontinued operations |
( |
) | ||||||
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Net cash used in operating activities |
( |
) | ( |
) | ||||
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Net cash provided by investing activities from discontinued operations |
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Net cash provided by investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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|
Principal payments on SBA Loan |
( |
) | ( |
) | ||||
|
Proceeds from notes payable, net of discounts |
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Proceeds from sale of Series F Preferred stock, net of fees |
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Net cash provided by financing activities |
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Net change in cash |
( |
) | ||||||
|
Cash at beginning of period |
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Cash at end of period |
$ | $ | ||||||
|
Supplemental disclosure of cash flow information: |
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Cash paid for interest |
$ | $ | ||||||
|
Cash paid for taxes |
$ | $ | ||||||
|
Supplemental disclosure of financing cash flow information: |
||||||||
|
Stock Issued for common stock subscribed |
$ | $ | ||||||
|
Preferred stock dividends |
$ | $ | ||||||
|
Conversion of accounts payable to Series F preferred stock |
$ | $ | ||||||
|
Conversion of Series C and Series D preferred stock to Series F preferred stock |
$ | $ | ||||||
|
Conversion of notes payable and accrued interest to Series F preferred stock |
$ | $ | ||||||
|
Shares issued for Series X dividends |
$ | $ | ||||||
|
Conversion of accounts payable to common stock |
$ | $ | ||||||
|
Conversion of notes payable to common stock |
$ | $ | ||||||
|
Conversion of notes payable to common stock - related party |
$ | $ | ||||||
|
Conversion of Series F Preferred Stock and accrued dividends to common stock |
$ | $ | ||||||
|
Conversion of Series D Preferred Stock and accrued dividends to common stock |
$ | $ | ||||||
|
Conversion of Series X Preferred Stock and accrued dividends to common stock |
$ | $ | ||||||
|
Series A accrued dividends reclassified to APIC from prior transaction |
$ | $ | ||||||
|
Increase in capital expenditures included in accounts payable |
$ | $ | ||||||
See accompanying notes to these unaudited consolidated financial statements.
MITESCO, INC.
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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. In October 2023, the Company completed a move of its corporate status to Nevada from Delaware in order to effect reduced costs.
The details can be found at: https://www.sec.gov/ix?doc=/Archives/edgar/data/0000802257/000118518523001074/mitesco20231016_8k.htm.
From 2020 through 2022, our operations were focused on establishing medical clinics utilizing Nurse Practitioners under The Good Clinic name and development and acquisition of telemedicine technology. We opened our first The Good Clinic in Minneapolis, Minnesota in the first quarter of 2021 and had six operating clinics during the year ended December 31, 2022, with two additional sites under contract. In the fourth quarter of fiscal 2022, we made the strategic decision to close the entire clinic operation and release our staff due to a lack of profitability.
We are a holding company seeking to provide products, services and technology. We have a number of near-term opportunities that we hope to pursue, assuming the capital markets make sufficient funding available at reasonable rates. During the first quarter of 2024 we recruited a number of individuals to a newly formed Advisory Board, who might assist the Company in determining the viability of certain ventures going forward. These individuals have a background in data center services, cyber and data security and software applications related to infrastructure design, implementation and management including geographical information systems (GIS).
In June 2024 we announced the formation of two (2) new wholly owned business units, Centcore, LLC, who is providing data center services including cloud computing and application hosting, and Vero Technology Ventures, LLC, whose aim is to seek investment and acquisition opportunities, generally in the areas of cloud computing and data center related applications.
Centcore has two (2) areas of focus. The first, generic data center services, is aimed at hosting applications for a specific user, sometimes referred to as “managed services offerings” or MSO, where the client moves the software licensed from various vendors, or internally developed, into our data center where we maintain the computing, communications and backup environment. The second focus involves hosting application software developed by software vendors, from which they will sell the use of the software by their end user clients on a “cloud” basis. By taking this approach, we hope to gain the business of the vendor, and their clients, perhaps allowing us to grow at a faster rate with lower cost of sales. We have developed the “Centcore Partner Program” where we will help promote the software vendors who are hosting in our data centers. If we are successful helping the vendor grow his business, we will have provided a “value added service”, and benefit from increased utilization of our computing resources by not only the vendor, but also his new end user clients. Our initial focus for this area is on software providers who serve the “infrastructure” market doing design, engineering, construction and maintenance of significant assets. We desire to create “life cycle” relationships with both the design teams, and owners which may include private owners such as manufacturers and utilities, or publicly owned assets for municipalities, states or federal governments, domestically and internationally.
We have retained proven professionals in the data center, cyber security and infrastructure services areas to support our needs on a per hour basis, which we believe will allow us to control our costs relative to business activity, without significant staffing internally.
Note 2: Going Concern
As of September 30, 2024, the Company had cash and cash equivalents of approximately $
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. However, as of the date of these consolidated financial statements, no formal agreement exists.
The accompanying 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.
The COVID-19 pandemic, decades-high inflation and concerns about an economic recession in the United States or other major markets has resulted in, among other things, volatility in the capital markets that may have the effect of 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 due to these factors could materially affect the Company’s business and the value of its common stock.
Note 3: Summary of Significant Accounting Policies
Basis of Presentation – The consolidated financial statements are prepared in conformity with accounting principles accepted in the United States of America (“GAAP”).
The consolidated financial statements and related disclosures as of September 30, 2024, are unaudited, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. In our opinion, these unaudited financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for the fair statement of the results for the interim periods. These unaudited financial statements should be read in conjunction with the audited financial statements of the Company for the years ended December 31, 2023, and 2022 included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 16, 2024. The results of operations for the nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the full year ended December 31, 2024.
Principles of Consolidation – The accompanying consolidated financial statements include the accounts of Mitesco, Inc., and its wholly owned subsidiaries Mitesco NA, LLC, The Good Clinic, LLC, Vero Technology Ventures, LLC, and Centcore, LLC. In addition, we relied on the operating activities of certain legal entities in which we did not maintain a controlling ownership interest, but over which we had indirect influence and of which we were considered the primary beneficiary. These entities are typically 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, restrictions 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.
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. Potential common stock equivalents are determined using the treasury stock method. For diluted net loss per share purposes, the Company excludes stock options and other stock-based awards, including shares issued as a result of option exercises that are subject to repurchase by the Company, whose effect would be anti-dilutive from the calculation.
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Three Months Ended |
Nine Months Ended |
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September 30, 2024 |
September 30, 2023 |
September 30, 2024 |
September 30, 2023 |
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Net profit (loss) attributable to common stockholders |
$ | $ | ( |
) | $ | $ | ( |
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Preferred stock dividends |
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Interest expense associated with convertible debt |
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Net income (loss) for dilutive calculation |
$ | $ | ( |
) | $ | $ | ( |
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Basic weighted average shares outstanding |
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Dilutive effect of preferred stock |
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Dilutive effect of convertible debt |
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Dilutive effect of common stock warrants |
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Weighted average shares outstanding for diluted net income (loss) per share |
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Discontinued Operations - The accompanying financial statements are prepared with the guidance of ASU 2014-08, “Reporting Discontinued Operations”, and ASC Topic 205, Presentation of Financial Statements, and ASC Topic 360, Property, Plant and Equipment.
Recent Accounting Standards – In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis. The Company is currently evaluating the effect of this pronouncement on its disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the disclosures required for income taxes. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.
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 have a material impact on the Company’s consolidated financial position, results of operations or cash flows.
Note 4: Discontinued Operations
In the fourth quarter of fiscal 2022, we made the strategic decision to close the entire clinic operation and release our staff due to a lack of profitability. On December 8, 2023, the Company sold the remaining assets of The Good Clinic, LLC to Leading Primary Care LLC, a company organized by Michael C. Howe, the former CEO of The Good Clinic, LLC for total consideration of approximately $
The Company had no assets or liabilities classified that were classified as held as part of discontinued operations as of September 30, 2024, or December 31, 2023.
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Three Months Ended |
Nine Months Ended |
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September 30, |
September 30, |
September 30, |
September 30, |
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2024 |
2023 |
2024 |
2023 |
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Revenue |
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Cost of goods sold |
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Gross margin |
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Selling, general, and administrative expenses |
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Impairment of assets |
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Other (income) expense: |
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Gain on termination of operating lease |
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Gain on sale of assets |
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Gain on settlement of accounts payable |
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Interest expense |
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Loss from discontinued operations, net of tax |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
The following information presents the major classes of line items constituting significant operating and investing cash flow activities in the consolidated statements of cash flow relating to discontinued operations:
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Nine Months Ended |
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September 30, |
September 30, |
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2024 |
2023 |
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Depreciation expense |
$ | $ | ||||||
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Impairment of property and equipment |
$ | $ | ||||||
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Changes in accounts payable and accrued liabilities |
$ | $ | ||||||
Note 5: Accounts Payable and Accrued Liabilities
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September 30, |
December 31, |
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2024 |
2023 |
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Trade accounts payable |
$ | $ | ||||||
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Accrued payroll and payroll taxes |
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Total accounts payable and accrued liabilities |
$ | $ | ||||||
Note 6: Right to Use Assets and Lease Liabilities – Operating Leases
The Company had operating leases for its clinics for which the Company is currently in negotiations with the Lessors to settle the remaining amounts owed after closing the clinic facilities. The Company’s lease expense was entirely comprised of operating leases and is reported as a component of discontinued operations as a result of closing of the clinics and the subsequent sale of the assets. As of December 31, 2023, the Company had impaired all balances of the related right to use assets.
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September 30, 2024 |
December 31, 2023 |
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Lease liability |
$ | $ | ||||||
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Less: current portion |
( |
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Lease liability, non-current |
$ | $ | ||||||
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For the period ended December 31, 2024 |
$ | |||
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For the period ended December 31, 2025 |
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For the period ended December 31, 2026 |
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For the period ended December 31, 2027 |
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For the period ended December 31, 2028 |
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Thereafter |
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Total |
$ | |||
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Less: Present value discount |
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Lease liability |
$ |
As of December 31, 2023, the Company has entered into settlement agreements for certain of our leases in the amount of $
Note 7: SBA Loan Payable
PPP Loan Conversion to SBA 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 (the “SBA”). On April 25, 2020, the Company entered an unsecured Promissory Note with Bank of America for a loan in the original principal amount of $
On July 12, 2023, the Company received confirmation of a payment plan arrangement from the SBA. Pursuant to this payment plan, the Company agreed to pay a minimum of $
Note 8: Notes Payable
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September 30, 2024 |
December 31, 2023 |
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Kishon Note |
$ | $ | ||||||
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Finnegan Note 1 |
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Finnegan Note 2 |
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Schrier Note |
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Nommsen Note |
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Caplan Note |
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Finnegan Note 3 |
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Lightmas Note |
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Lewis Note |
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Goff Note |
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Hagan Note |
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Cavalry Note 1 |
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Cavalry Note 2 |
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Mercer Note 1 |
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Mercer Note 2 |
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ABJ Note |
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Cavalry Note 3 |
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Mercer Note 3 |
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ABJ Note 2 |
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Cavalry Note 4 |
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Mercer Note 4 |
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ABJ Note 3 |
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Mercer Note 4 |
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ABJ Note 3 |
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Total Notes Payable |
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Current Portion |
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Long-term portion |
$ | $ | ||||||
Kishon Note
On May 10, 2022, the Company entered into a Securities Purchase Agreement (the “Kishon Agreement”) with Kishon Investments, LLC (“Kishon”) with respect to the sale and issuance to Kishon of: (i) an initial commitment fee in the amount of $
The Kishon Note was issued in the principal amount of $
During the year ended December 31, 2023, a default penalty in the amount of $
Finnegan Note 1
On May 23, 2022, the Company issued a 10% Promissory Note in the principal amount of $
Principal and accrued interest in the amount of $
Finnegan Note 2
On May 26, 2022, the Company issued a 10% Promissory Note in the principal amount of $
At December 31, 2023principal and accrued interest in the amount of $
Schrier Note
On July 7, 2022, the Company issued a 10% Promissory Note in the principal amount of $
At December 31, 2023, principal and accrued interest in the amount of $
Nommsen Note
On July 26, 2022, the Company issued a 10% Promissory Note in the principal amount of $
At December 31, 2023, principal and accrued interest in the amount of $
Caplan Note
On July 27, 2022, the Company issued a 10% Promissory Note in the principal amount of $
At December 31, 2023, principal and accrued interest in the amount of $
Finnegan Note 3
On August 4, 2022, the Company issued a 10% Promissory Note in the principal amount of $
At December 31, 2023, principal and accrued interest in the amount of $
Lightmas Note
On September 2, 2022, the Company issued a 10% Promissory Note in the principal amount of $
At December 31, 2023, principal and accrued interest in the amount of $
Lewis Note
On September 2, 2022, the Company issued a 10% Promissory Note in the principal amount of $
At December 31, 2023, principal and accrued interest in the amount of $
Goff Note
On September 2, 2022, the Company issued a 10% Promissory Note in the principal amount of $
At December 31, 2023, principal and accrued interest in the amount of $
Hagan Note
On September 2, 2022, the Company issued a 10% Promissory Note in the principal amount of $
At December 31, 2023, principal and accrued interest in the amount of $
Cavalry 2024 Note 1
On January 23, 2024, the Company issued a 10% Promissory Note in the principal amount of $
At September 30, 2024, principal and accrued interest in the amount of $
Cavalry 2024 Note 2
On February 28, 2024, the Company issued a 10% Promissory Note in the principal amount of $
At September 30, 2024, principal and accrued interest in the amount of $
Cavalry 2024 Note 3
On May 13, 2024, the Company issued a 10% Promissory Note in the principal amount of $
At September 30, 2024, principal and accrued interest in the amount of $
Cavalry 2024 Note 4
On July 19, 2024, the Company issued a 10% Promissory Note in the principal amount of $
At September 30, 2024, principal and accrued interest in the amount of $
Mercer 2024 Note 1
On January 23, 2024, the Company issued a 10% Promissory Note in the principal amount of $
At September 30, 2024, principal and accrued interest in the amount of $
Mercer 2024 Note 2
On February 28, 2024, the Company issued a 10% Promissory Note in the principal amount of $
At September 30, 2024, principal and accrued interest in the amount of $
Mercer 2024 Note 3
On May 13, 2024, the Company issued a 10% Promissory Note in the principal amount of $
At September 30, 2024, principal and accrued interest in the amount of $
Mercer 2024 Note 4
On July 19, 2024, the Company issued a 10% Promissory Note in the principal amount of $
At September 30, 2024, principal and accrued interest in the amount of $
Mercer 2024 Note 5
On September 6, 2024, the Company issued a 10% Promissory Note in the principal amount of $
At September 30, 2024, principal and accrued interest in the amount of $
AJB 2024 Note 1
On February 28, 2024, the Company issued a 10% Promissory Note in the principal amount of $
At September 30, 2024, principal and accrued interest in the amount of $
AJB 2024 Note 2
On May 15, 2024, the Company issued a 10% Promissory Note in the principal amount of $
At September 30, 2024, principal and accrued interest in the amount of $
AJB 2024 Note 3
On July 19, 2024, the Company issued a 10% Promissory Note in the principal amount of $
At September 30, 2024, principal and accrued interest in the amount of $
AJB 2024 Note 4
On September 6, 2024, the Company issued a 10% Promissory Note in the principal amount of $
At September 30, 2024, principal and accrued interest in the amount of $
Aggregate interest expense on the above notes payable was $
Note 9: Notes Payable – Related Parties
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September 30, 2024 |
December 31, 2023 |
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M Diamond Note |
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Dobbertin Note |
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Lindstrom Note |
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Mitchell Note |
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Leath Note |
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November 29, 2022, Notes |
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Notes Payable |
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Current Portion, net of discount |
$ | $ | ||||||
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Long-term portion, net of discount |
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M Diamond Note
On May 26, 2022, the Company issued a 10% Promissory Note in the principal amount of $
At December 31, 2023, principal and accrued interest in the amount of $
Dobbertin Note
On May 26, 2022, the Company issued a 10% Promissory Note in the principal amount of $
At December 31, 2023, principal and accrued interest in the amount of $
Lindstrom Note
On May 26, 2022, the Company issued a 10% Promissory Note in the principal amount of $
At December 31, 2023, principal and accrued interest in the amount of $
Mitchell Note
On September 2, 2022, the Company issued a 10% Promissory Note in the principal amount of $
At December 31, 2023, principal and accrued interest in the amount of $
Leath Note
On September 15, 2022, the Company issued a 10% Promissory Note in the principal amount of $
At December 31, 2023, principal and accrued interest in the amount of $
November 29, 2022, Notes
On November 29, 2022, the Company issued seven identical promissory notes (the “November 29 Notes”) in related party transactions to the following individuals: (1) Thomas Brodmerkel, who was the Company’s CFO and Board Member; (2) Lawrence Diamond, who was the Company’s Chief Executive Officer and Board Member; (3) Sheila Schweitzer, who was a Board Member; (4) Faraz Naqvi, a former Board Member; (5) Juan Carlos Iturregui, who was a Board Member; (6) Jenny Lindstrom, who was the Company’s former Vice President and Chief Legal Officer; and (7) Michael C. Howe, who was the Chief Executive Officer of The Good Clinic, one of our subsidiaries (collectively, the “November 29 Lenders”).
The November 29 notes have due dates of
Concurrent with the November 29 Notes, the Company entered into separate exchange agreements (the “November 29 Notes Exchange Agreements”). Pursuant to the November 29 Notes Exchange Agreements, amounts due under the November 29 Notes will be exchanged for a number Series E Convertible Preferred Stock equal to 150% of the principal amount of the Notes. No transactions occurred pursuant to the November 29 Notes Exchange Agreements during the year ended December 31, 2022.
During the year ended December 31, 2023, interest in the amount of $
On September 29, 2023, three of the November 29 Lenders (1) Thomas Brodmerkel, (2) Lawrence Diamond, and (3) Faraz Naqvi converted their November 29 Notes into shares of the Company’s Series F Preferred Stock as follows: Each of the noteholders converted an equity investment incentive in the amount of $
In each case at the time of the issuance of the Series F Preferred shares there were also certain notes, accrued fees, accrued salaries or other amounts included in the total renumeration before the conversion into the Series F Preferred shares.
On September 29, 2023, one of the November 29 Lenders, Sheila Schweitzer, converted her November 29 Note into shares of the Company’s restricted common stock as follows: principal of $
On December 8, 2023, pursuant to the Howe debt exchange agreement, Mr. Howe exchanged his note in the principal amount of $
At December 31, 2023, there was principal and interest in the aggregate amount of $
Aggregate interest expense as described on the above notes payable – related parties was $
Note 10: 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 Monte Carlo 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 restructuring, and at each period end.
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December 31, 2023 |
$ | |||
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True-up features issued |
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Settled upon conversion or exercise |
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Loss on revaluation |
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September 30, 2024 |
$ |
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Volatility | % | % | ||||||
| Stock Price | $ | $ | ||||||
| Risk-free interest rates | % | % | ||||||
| Term (years) | ||||||||
Certain of our notes payable contain a commitment fee obligation with a true-up feature. The following assumptions were used for the valuation of the derivative liability associated with this obligation:
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The stock price would fluctuate with the Company projected volatility. |
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The projected volatility curve from an annualized analysis for each valuation date was based on the historical volatility of the Company and the term remaining for the True-Up obligation. |
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The Company expected the note would be repaid 90% of the time by the maturity date, at which point the Company would redeem the 1,000,000 redeemable commitment fee shares for $1. |
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In the event the Company did not repay the note in time, the shareholders would sell their shares subject to volume restrictions. |
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Discount rates were based on risk-free rates in effect based on the remaining term. 50,000 simulations were run for each Monte Carlo simulation. |
Note 11: Stockholders’ Equity (Deficit)
Common Stock
The Company has authorized
During the nine months ended September 30, 2024, the Company issued
During the nine months ended September 30, 2024, the Company issued
During the nine months ended September 30, 2024, the Company issued
During the nine months ended September 30, 2024, the Company issued
During the nine months ended September 30, 2024, the Company issued
During the nine months ended September 30, 2024, the Company issued
During the nine months ended September 30, 2024, the Company issued
Preferred Stock
We have authorized to issue
Series A Preferred Stock
The Series A Preferred Stock has a par value of $
Series C Preferred Stock
The Series C Preferred Stock has a par value of $
Series D Preferred Stock
The Series D Preferred Stock has a par value of $
During the nine months ended September 30, 2024, a holder of
The Company accrued dividends in the amount of $
Series E Preferred Stock
On November 7, 2022, the Company filed a Certificate of Designations, Preferences and Rights of Series E Convertible Perpetual Preferred Stock (the “Series E”) with the Delaware Secretary of State. The number of shares of Series E designated is
As long as any shares of Series E are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series E, (a) alter or change the preferences, rights, privileges or powers given to the Series E or alter or amend the Certificate of Incorporation or bylaws, (b) increase or decrease (other than by conversion) the number of authorized shares of Series E, or (c) create or authorize any new class of shares that has a preference over Series E.
Unless previously converted into shares of Common Stock, any shares of Series E issued and outstanding, shall be redeemable at the option of the Company for cash at a redemption price per share equal to 110% of the initial issuance price, or $
Each share of Series E shall become convertible, at the option of the holder, commencing on the date of issuance, into such number of fully paid and non-assessable shares of Common Stock. The conversion price shall be, as of the conversion date, (a) prior to the date of the qualified offering the average VWAP per share of the Common Stock for the five (5) trading days prior to the date of conversion and (b) on or following the date of the qualified offering, the qualified offering price (the “Conversion Price”). Immediately following the 120th day following the qualified offering, the Conversion Price shall be adjusted to the lesser of (a) the average VWAP per share of the Common Stock for the five (5) trading days immediately following the 120th day following the qualified offering and (b) the Conversion Price on such date, which shall in no event be less than $
Series F Preferred Stock
On March 23, 2023, the Company filed a Certificate of Designations, Preferences and Rights of Series F 12% PIK $
Holders of shares of the Series F Preferred Stock are entitled to receive payment-in-kind dividends payable only in additional shares of Series F Preferred Stock (“PIK Dividends”) at rate of 12% per annum.
The Series F Preferred Stock will be convertible into common stock of the Company upon the listing of the Company’s stock on any of the following trading markets: the NYSE, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, or the Nasdaq Global Select Market. The conversion price will be calculated as 65% of the volume-weighted average price of the Company’s common stock on the conversion date. The number of shares issuable upon conversion will be calculated as the liquidation preference of the Series F Preferred stock plus any accrued but unpaid dividends divided by the conversion price.
There are
On May 17, 2024, the holders of approximately 54.90% of the Series F Preferred shares, having met in person on May 8, 2024, have granted consent to the following modification to the terms of the Series F Preferred, effective May 15, 2024 all dividends, and any obligation to pay dividends shall cease. Any dividends accrued until May 15, 2024, shall be issued as noted in the original certificate of designation.
During the nine months ended September 30, 2024, holders of
The Company accrued dividends in the amount of $
Series X Preferred Stock
The Company has
During the nine months ended September 30, 2024, the Company issued
During the nine months ended September 30, 2024, the Company issued
During the nine months ended September 30, 2024, holders of
The Company accrued dividends in the amount of $
Stock Options
On January 21, 2021, the Company filed a Form S-8 containing the Mitesco Omnibus Securities and Incentive Plan (“the Plan”) with the SEC. In Sections 4.2 and 4.3 of the Plan it is noted that the Board of Directors has the authority for the administration of the Plan. On January 7, 2024, the Board of Directors voted to a) cancel, revoke and terminate any previously issued options that have not already been exercised. For a number of technical reasons, the Plan is no longer valid, and in addition to cancellation of any outstanding options, the Board has voted to formally terminate the Plan.
A copy of the Form S-8 which references the Plan can be found at: https://www.sec.gov/Archives/edgar/data/802257/000118518521000098/ex_221520.htm
| 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 | |||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | |||||||||||||||||||||
|
Shares |
Weighted- Average Exercise Price ($) |
|||||||
|
Outstanding at December 31, 2023 |
$ | |||||||
|
Granted |
||||||||
|
Cancelled/Expired |
( |
) | $ | |||||
|
Exercised |
||||||||
|
Outstanding at September 30, 2024 |
$ | |||||||
|
Options vested and exercisable |
$ | |||||||
At September 30, 2024, the total stock-based compensation cost related to unvested awards not yet recognized was $
Warrants
The Company has announced that it intends to cancel all outstanding warrants, and certain language to complete this has been added to all documents related to the conversion of outstanding debts, notes, accounts payable and other senior securities.
| Weighted | Weighted | |||||||||||||||||||||
| Weighted | average | average | ||||||||||||||||||||
| average | exercise | exercise | ||||||||||||||||||||
| Range of | Number of | remaining | price of | Number of | price of | |||||||||||||||||
| exercise | warrants | contractual | outstanding | warrants | exercisable | |||||||||||||||||
| prices | outstanding | life (years) | warrants | exercisable | warrants | |||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | |||||||||||||||||||||
|
Shares |
Weighted- Average Exercise Price ($) |
|||||||
|
Outstanding at December 31, 2023 |
$ | |||||||
|
Granted |
$ | |||||||
|
Cancelled |
( |
) | $ | ( |
) | |||
|
Exercised |
$ | |||||||
|
Outstanding at September 30, 2024 |
$ | |||||||
At September 30, 2024, there was no intrinsic value on the issued or vested options.
Note 12: Fair Value of Financial Instruments
|
September 30, 2024 |
||||||||||||||||
|
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
|
Liabilities |
||||||||||||||||
|
Derivative liabilities |
$ | $ | $ | $ | ||||||||||||
|
December 31, 2023 |
||||||||||||||||
|
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
|
Liabilities |
||||||||||||||||
|
Derivative liabilities |
$ | $ | $ | $ | ||||||||||||
Note 13: Income Taxes
Deferred income taxes result from the temporary differences primarily attributable to amortization of intangible assets and debt discount and an accumulation of net operating loss carryforwards for income tax purposes with a valuation allowance against the carryforwards for book purposes.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Included in deferred tax assets are Federal and State net operating loss carryforwards of approximately $
|
2024 |
||||||||
|
Expected tax at statutory rates |
$ | % | ||||||
|
Permanent Differences |
( |
) | % | |||||
|
State Income Tax, Net of Federal benefit |
% | |||||||
|
Other |
% | |||||||
|
Current Year Change in Valuation Allowance |
( |
) | ( |
)% | ||||
|
Prior Year True-Ups |
% | |||||||
|
Income tax expense |
$ | % | ||||||
Deferred income taxes reflect the tax impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations.
Deferred income taxes include the net tax effects of net operating loss (NOL) carryforwards and the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
|
As of |
||||||||
|
September 30, 2024 |
December 31, 2023 |
|||||||
|
Deferred Tax Assets (Liabilities): |
||||||||
|
Accrued payroll |
$ | $ | ||||||
|
ASC842-ROU Asset |
||||||||
|
ASC842-ROU (Liability) |
||||||||
|
Loss from derivatives |
( |
) | ( |
) | ||||
|
Waiver and commitment fee shares |
||||||||
|
Stock based compensation |
( |
) | ( |
) | ||||
|
Depreciation |
||||||||
|
Net operating loss |
||||||||
|
Net deferred tax assets (liabilities) |
||||||||
|
Valuation allowance |
( |
) | ( |
) | ||||
|
Net deferred tax assets (liabilities) |
$ | $ | ||||||
Note 14: Commitments and Contingencies
Legal
From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business.
On June 23, 2022, The Good Clinic LLC was notified that a former employee had filed a lawsuit for wrongful termination. The Good Clinic believes the lawsuit is without merit. Mitesco (Company) was not named in the suit. We have settled this matter as of January 11, 2024, for total consideration consisting of a cash payment of $
On October 25, 2022, the Company was notified that a vendor filed a lawsuit related to a contract dispute naming both The Good Clinic and The CEO of the Good Clinic. This suit was settled on May 5, 2023, and dismissed with prejudice on May 12, 2023. The settlement included the issuance of the Company’s restricted common stock. As a part of the settlement the Company issued
The Company has a number of legal situations involved with the winding down of its clinic’s business activities. These include claims regarding certain construction contracts and cancellation of leases as noted below:
Nordhaus Clinic
On November 1, 2020, we entered into an agreement to open a clinic in Minneapolis, Minnesota. The initial lease term is
Egan Clinic a.k.a. Vikings
On October 14, 2021, we entered into an agreement to open a clinic in Eagan, Minnesota, which began operations in the fourth quarter of 2021. The initial lease term is for
St. Paul Clinic a.k.a. The Grove
On August 31, 2021, we entered into an agreement to open a clinic in St. Paul, Minnesota, which began operations in the fourth quarter of 2021. The initial lease term is for
St. Louis Park Clinic a.k.a. Excelsior & Grand
On May 24, 2021, we entered into an agreement to open a clinic in St. Louis Park, Minnesota, which began operations in the third quarter of 2021. The initial lease term is
Eden Prairie Clinic a.k.a. TP Elevate
On June 8, 2021, we entered into an agreement to open a clinic in Eden Prairie, Minnesota, which began operation in the third quarter of 2021. The initial lease term is
Maple Grove Clinic a.k.a. Arbor Lakes
On October 8, 2021, we entered into an agreement to open a clinic in Maple Grove, Minnesota which began operation in the fourth quarter of 2021. The initial lease term is for
Radiant Clinic a.k.a. LMC Welton
On September 9, 2021, we entered into an agreement to open a clinic in Denver, Colorado, which was expected to begin operation in the first quarter of 2023 but possession of which has been relinquished to the landlords. The initial lease term is for
Quincy Clinic a.k.a. 1776 Curtis
On September 28, 2021, we entered into an agreement to open a clinic in Denver, Colorado, which was expected to begin operation in the first quarter of 2023 but possession of which has been relinquished to the landlords. The initial lease term is for
|
LOCATION |
|
ALSO KNOWN AS: |
|
PROPERTY NAME/OWNER |
|
ORIGINAL OBLIGATION (NOT INC. CAPX) |
|
|
SETTLEMENT AMOUNT |
|
TYPE OF SETTLEMENT |
||
|
MINNEAPOLIS, MN |
|
NORDHAUS |
|
LENNAR |
|
$ |
|
|
|
$ |
- |
|
N.A. |
|
WAYZETTA, MN |
|
PROMINADE |
|
WAZETTA BAY |
|
$ |
|
|
|
$ |
|
|
CASH PAYMENT OBLIGATION |
|
EAGAN, MN |
|
EAGAN CLINIC |
|
VIKINGS |
|
$ |
|
|
|
$ |
|
|
DEFAULT JUDGEMENT |
|
ST. LOUIS PARK, MN |
|
EXCELSIOR & GRAND |
|
EXCELSIOR |
|
$ |
|
|
|
$ |
|
|
DEFAULT JUDGEMENT |
|
ST. PAUL, MN |
|
THE GROVE |
|
CONTINENTAL 560 |
|
$ |
|
|
|
$ |
|
|
DEFAULT JUDGEMENT |
|
EDEN PRARIE |
|
ELEVATE |
|
TP ELEVATE |
|
$ |
|
|
|
$ |
- |
|
IN PROCESS |
|
MAPLE GROVE, MN |
|
ARBOR LAKES |
|
BUTTNICK |
|
$ |
|
|
|
$ |
|
|
SETTLEMENT AGREE |
|
DENVER, CO |
|
LMC WELTON |
|
RADIANT |
|
$ |
|
|
|
$ |
|
|
DEFAULT JUDGEMENT |
|
DENVER, CO |
|
1776 CURTIS |
|
QUINCY |
|
$ |
|
|
|
$ |
|
|
DEFAULT JUDGEMENT |
|
|
|
|
|
TOTAL |
|
$ |
|
|
|
$ |
|
|
|
Administrative offices
On June 24, 2021, we entered into an agreement to open an administrative office in St. Louis Park, Minnesota. The initial lease term is
Note 15: Subsequent Events
Additional conversion of debt and senior securities
During the Q4 period of FY2024 the Company continued its restructuring efforts and has now completed the conversion of an additional $
Director Compensation
On November 13, 2024 the Board of Directors approved the issuance of
Advisory Board Compensation
The Company appointed two (2) new members to its Advisory Board in October 2024. Each of the new members of the Advisory Board has been issued
Series X Preferred Stock Dividend Issuance
The Company issued
Change in voting control
Subsequent to September 30, 2024, two additional holders of the Company’s Series X Preferred stock have opted to exchange
|
NAME |
NUMBER OF SERIES X PREFERRED SHARES |
VOTES AT 400 EACH |
ADD COMMON SHARES OWNED |
TOTAL VOTING |
% OF TOTAL SHARE VOTES |
|||||
|
MACK LEATH |
|
|
|
|
|
|||||
|
JORDAN BALENCIC |
|
|
|
|
|
|||||
|
JOHN MITCHELL |
|
|
|
|
|
|||||
|
ANGLO IRISH MANAGEMENT LLC |
|
|
|
|
|
|||||
|
Total |
|
|
|
|
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References to the “Company,” “Mitesco, Inc.,” “our,” “us” or “we” refer to Mitesco, Inc. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
History and Outlook
We are a holding company seeking to provide products, services and technology. From 2020 through 2022, the Company was executing against a strategic plan to open primary care clinics utilizing advanced degreed nurse practitioners in select markets. The clinics operated under the name The Good Clinic. However, the business failed to achieve profitability, and the markets were not favorable to additional funding, therefore in late 2022 the decision was made to close the clinics and release all employees.
We are a holding company seeking to provide products, services and technology. We have a number of near-term opportunities that we hope to pursue, assuming the capital markets make sufficient funding available at reasonable rates. During the first quarter of 2024 we recruited a number of individuals to a newly formed Advisory Board, who might assist the Company in determining the viability of certain ventures going forward. These individuals have a background in data center services, cyber and data security and software applications related to infrastructure design, implementation and management including geographical information systems (GIS).
In June 2024 we announced the formation of two (2) new wholly owned business units, Centcore, LLC, who is providing data center services including cloud computing and application hosting, and Vero Technology Ventures, LLC, whose aim is to seek investment and acquisition opportunities, generally in the areas of cloud computing and data center related applications.
Centcore has two (2) areas of focus. The first, generic data center services, is aimed at hosting applications for a specific user, sometimes referred to as “managed services offerings” or MSO, where the client moves the software licensed from various vendors, or internally developed, into our data center where we maintain the computing, communications and backup environment. The second focus involves hosting application software developed by software vendors, from which they will sell the use of the software by their end user clients on a “cloud” basis. By taking this approach, we gain the business of the vendor, and their clients, perhaps allowing us to grow at a faster rate with lower cost of sales. We have developed the “Centcore Partner Program” where we will help promote the software vendors who are hosting in our data centers. If we are successful helping the vendor grow his business, we will have provided a “value added service”, and benefit from increased utilization of our computing resources by not only the vendor, but also his new end user clients. Our initial focus for this area is on software providers who serve the “infrastructure” market doing design, engineering, construction and maintenance of significant assets. We desire to create “life cycle” relationships with both the design teams, and owners which may include private owners such as manufacturers and utilities, or publicly owned assets for municipalities, states or federal governments, domestically and internationally.
We have retained proven professionals in the data center, cyber security and infrastructure services areas to support our needs on a per hour basis, which we believe will allow us to control our costs relative to business activity, without significant staffing internally. The Vero Technology Ventures arm is actively reviewing potential early-stage cloud computing solution vendors and is developing its own artificial intelligence (A.I.) based application set. The new ‘Robo’ application utilizes A.I. to promote more efficient sales and marketing within certain markets, and with highly targeted market research.
Advisory Board Expansion
The current board comprises individuals with specific expertise to assist Mitesco in finding and evaluating qualified companies and businesses for integration into the public holding company. The Advisory Board is a non-executive board, and its participants shall not be subject to any of the regulations under Section 16 of the Securities Act. Each member of the Advisory Board has been issued 75,000 shares of restricted common stock in consideration of their contributions for a 12-month term.
The latest appointments to the Advisory Board are executives whose careers have focused on data center business development and data center systems software, as noted here:
Gabriel Crawford has over 20 years’ experience in data center development from site selection, design/ build/ engineering services, and, most recently, hyperscale and AI co-location leasing.
Most recently, Mr. Crawford was at Dallas-based Center Square DC, which specializes in delivering a comprehensive suite of colocation and data center services with more than 50 data centers owned and operated. Prior to that engagement, he was with Chirisa Investments creating long-term value for customers in digital infrastructure, communications and real estate. While at Digital Fortress, a privately-held data center co-location company based in Seattle, Washington, he managed more than 1,500 clients who entrusted their applications and servers to their mission-critical facilities and network with data centers in Seattle, WA, Tukwila, WA, Lynwood, WA, Denver, CO and Chicago, IL. Earlier in his career, Mr. Crawford held positions at both early stage and mature data center operators, in addition to offering consulting services. His educational background includes a bachelor’s degree from the University of Maine. He is based in Vero Beach, Florida.
Jim Clifton is a senior sales and marketing executive focused on systems software, data analytics and innovative implementation to improve productivity across corporations and workforces worldwide.
Most recently, Mr. Clifton drove sales at Alteryx, an intuitive, code-free platform for data preparation, blending, analytics, and automation. Prior to that he was with VMware, developing both cloud and on-prem business to expand the utilization of systems across disparate users. While at Cumberland Group he headed a practice aimed at IoT productivity using real-time dashboards and other online tools. At Star Mobile he focused on mobile application implementation of corporate cloud-based applications. Other professional sales and management positions included Citrix, Symantec and Verisign, where he oversaw implementation of new technologies for key corporate clients. Jim’s education includes a bachelor’s degree from the University of Georgia and a master’s degree from Mercer University. He is based in St. Simons, Georgia
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. Results of discontinued operations are excluded from the accompanying results of operations for all periods presented, unless otherwise noted. See Note 3 – discontinued operations in the accompanying notes to consolidated financial statements. 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, 2024, and 2023.
Revenues
We had revenues of $23,500 for the three months ended September 30, 2024, compared to $0 in the comparable period. The revenues were related to our newly formed subsidiary Centcore, LLC.
Operating Expenses
Our total operating expenses for the three months ended September 30, 2024, were $239,742. For the comparable period in 2023, the operating expenses were $41,876. The increase is the result of the Company’s focus on establishing the operations of its newly formed subsidiaries.
Other Income and Expenses
Interest expense was $50,979 for the three months ended September 30, 2024, compared to $69,776 for the three months ended September 30, 2023. The decrease was a result of reduced debt balances in the current period.
Interest expense – related parties was $10,587 for the three months ended September 30, 2024, compared to $34,820 in the prior period. The decrease was a result of reduced debt balances in the current period.
During the three months ended September 30, 2023, we recorded equity investment incentives of approximately $1.2 million. There were no comparable transactions in the current period.
During the three months ended September 30, 2024, we recorded a gain on settlement of debt of $693,768 compared to $25,000 for the three months ended September 30, 2023.
During the three months ended September 30, 2024, we recorded a gain on settlement of accounts payable of $1,024,583 compared to $159,524 for the three months ended September 30, 2023.
During the three months ended September 30, 2023, we recorded a loss on revaluation of derivative liabilities of $14,725. There were no comparable transactions in the current period.
For the three months ended September 30, 2024, we had a net loss available to common shareholders from discontinued operations of $0, compared to a net loss available to common shareholders from discontinued operations of $376,352 for the three months ended September 30, 2023.
Comparison of the Nine Months Ended September 30, 2024, and 2023.
Revenues
We had revenues of $29,500 for the nine months ended September 30, 2024, compared to $0 in the comparable period. The revenues were related to our newly formed subsidiary Centcore, LLC.
Operating Expenses
Our total operating expenses for the nine months ended September 30, 2024, were $721,095. For the comparable period in 2023, the operating expenses were $2,362,056. The decrease is the result of the winding down of the Company’s clinic operations with The Good Clinic, LLC subsidiary.
Other Income and Expenses
Interest expense was $159,206 for the nine months ended September 30, 2024, compared to 1,575,278 for the nine months ended September 30, 2023. The decrease was a result of reduced debt balances in the current period.
Interest expense – related parties was $26,133 for the nine months ended September 30, 2024, compared to $108,343 in the prior period. The decrease was a result of reduced debt balances in the current period.
During the nine months ended September 30, 2024, we recorded a gain on termination of operating lease of $869,690. There were no comparable transactions in the prior period.
During the nine months ended September 30, 2023, we recorded equity investment incentives of approximately $7.6 million. There were no comparable transactions in the current period.
During the nine months ended September 30, 2024, we recorded a gain on settlement of debt of $693,768 compared to $25,000 for the nine months ended September 30, 2023.
During the nine months ended September 30, 2023, we recorded a gain on sales of assets of $20,097. There were no comparable transactions in the current period.
During the nine months ended September 30, 2024, we recorded a gain on settlement of accounts payable of $1,024,583 compared to $33,092 for the nine months ended September 30, 2023.
During the nine months ended September 30, 2023, we recorded a loss on settlement of true-up obligation of $119,370. There were no comparable transactions in the current period.
During the nine months ended September 30, 2023, we recorded a loss on legal settlement of $18,759. There were no comparable transactions in the current period.
During the nine months ended September 30, 2023, we recorded a loss on revaluation of derivative liabilities of $85,765. There were no comparable transactions in the current period.
For the nine months ended September 30, 2024, we had a net loss available to common shareholders from discontinued operations of $0, compared to a net loss available to common shareholders from discontinued operations of $3,075,155.
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 November 21, 2024, we had cash of approximately $114,000 compared to cash of approximately $32,000 as of September 30, 2024. Our Company’s recurring losses from operations and negative cash flows from operations and our need to raise additional funding to finance our operations raise substantial doubt about our ability to continue as a going concern.
Net cash used in operating activities was $399,775 for the nine months ended September 30, 2024. This is the result of the winding down of the Company’s clinic operations. Cash used in operations for the nine months ended September 30, 2023, was $845,947, of which $428,688 was related to cash used in operating activities from discontinued operations.
The Company had no investing activities for the nine months ended September 30, 2024. During the nine months ended September 30, 2023, the Company received cash of $102,967 related to the sale of fixed assets used in discontinued operations.
Net cash provided by financing activities for the nine months ended September 30, 2024, was $428,759, compared to $733,664 for the nine months ended September 30, 2023. Cash provided by financing activities was the result of cash proceeds from notes payable of $449,000, offset by the repayment of principal on the SBA loan in the amount of $20,241.
At September 30, 2024, we had the following current liabilities which are payable in cash: Accounts payable and accrued liabilities of $5.7 million; notes payable of $1.0 million; notes payable to related parties of $0.2 million; SBA Loan Payable of $0.4 million; legal settlements of $2.5 million; accrued interest payable of $0.4 million; accrued interest payable to related parties of $0.01 million; and other current liabilities of $0.1 million. We also have the following liabilities which are payable in stock: derivative liabilities of $0.2 million, preferred stock dividends of $1.7 million, and preferred stock dividends payable to related parties of $0.2 million.
We have agreements from three (3) of our institutional investors to provide interim funding so that the Company may stay current with its accounting and reporting requirements under the Securities Act of 1934, settle obligations from the prior healthcare clinic operations and find a new business area to engage within. Through September 30, 2024, the total amount loaned under 12-month, 10% interest simple notes are $449,000, with roughly $250,000 attributable to accounting and compliance, $50,000 generally related to settlements and legal related, with the remaining for general expenses including T&E and communications.
In May 2024 we reached an agreement with the holders of our Series F Preferred shares to wave all interest payments permanently beginning May 15, 2024. This creates a reduction in accrued interest of over $200,000 per month. Similar adjustments with other holders of debt and interest paying equity are expected.
The Company is working with its institutional investors on a plan to eliminate all existing obligations through the issuance of a new preferred stock which would be issued to the holder in lieu of debt. It is envisioned that this stock would be listed and traded separately from the Company’s common stock. This plan is in its early stages and there can be no guarantee that it will be fully implemented, approved by the SEC for trading, or accepted by all creditors, some of which may be required to see a reduction in the amounts currently owned in order to get consent from the larger investor group.
The Company has relationships with a number of consultants who are assisting in the creation of the new business units. It is anticipated that this approach will continue indefinitely as it does not desire to create the overhead associated with a large employment force.
The following table summarizes the status of our property-related settlements as noted above and the total settlement amounts as of the date of the filing:
|
LOCATION |
|
ALSO KNOWN AS: |
|
PROPERTY NAME/OWNER |
|
ORIGINAL OBLIGATION (NOT INC. CAPX) |
|
|
SETTLEMENT AMOUNT |
|
TYPE OF SETTLEMENT |
||
|
MINNEAPOLIS, MN |
|
NORDHAUS |
|
LENNAR |
|
$ |
511,000 |
|
|
$ |
- |
|
N.A. |
|
WAYZETTA, MN |
|
PROMINADE |
|
WAZETTA BAY |
|
$ |
407,000 |
|
|
$ |
25,000 |
|
CASH PAYMENT OBLIGATION |
|
EAGAN, MN |
|
EAGAN CLINIC |
|
VIKINGS |
|
$ |
767,000 |
|
|
$ |
488,491 |
|
DEFAULT JUDGEMENT |
|
ST. LOUIS PARK, MN |
|
EXCELSIOR & GRAND |
|
EXCELSIOR |
|
$ |
673,000 |
|
|
$ |
425,350 |
|
DEFAULT JUDGEMENT |
|
ST. PAUL, MN |
|
THE GROVE |
|
CONTINENTAL 560 |
|
$ |
1,153,000 |
|
|
$ |
415,606 |
|
DEFAULT JUDGEMENT |
|
EDEN PRARIE |
|
ELEVATE |
|
TP ELEVATE |
|
$ |
620,000 |
|
|
$ |
- |
|
IN PROCESS |
|
MAPLE GROVE, MN |
|
ARBOR LAKES |
|
BUTTNICK |
|
$ |
1,153,127 |
|
|
$ |
219,575 |
|
SETTLEMENT AGREE |
|
DENVER, CO |
|
LMC WELTON |
|
RADIANT |
|
$ |
782,000 |
|
|
$ |
530,000 |
|
DEFAULT JUDGEMENT |
|
DENVER, CO |
|
1776 CURTIS |
|
QUINCY |
|
$ |
1,079,000 |
|
|
$ |
348,764 |
|
DEFAULT JUDGEMENT |
|
|
|
|
|
TOTAL |
|
$ |
7,145,127 |
|
|
$ |
2,452,786 |
|
|
Critical Accounting Estimates
Management uses various estimates and assumptions in preparing our financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Accounting estimates that are the most important to the presentation of our results of operations and financial condition, and which require the greatest use of judgment by management, are designated as our critical accounting estimates. We have the following critical accounting estimates:
|
|
● |
Estimates and assumptions used in the valuation of derivative liabilities: Management utilizes a lattice model to estimate the fair value of derivative liabilities. The model includes subjective assumptions that can materially affect the fair value estimates. |
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 an 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.
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 the nine months ended September 30, 2024, 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
From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business.
On June 23, 2022, The Good Clinic LLC was notified that a former employee had filed a lawsuit for wrongful termination. The Good Clinic believes the lawsuit is without merit. Mitesco (Company) was not named in the suit. We have settled this matter as of January 11, 2024, for total consideration consisting of a cash payment of $3,000.
On October 25, 2022, the Company was notified that a vendor filed a lawsuit related to a contract dispute naming both The Good Clinic and The CEO of the Good Clinic. This suit was settled on May 5, 2023, and dismissed with prejudice on May 12, 2023. The settlement included the issuance of the Company’s restricted common stock. As a part of the settlement the Company issued 2,552 shares of its restricted common stock to the plaintiff and issued to the CEO of The Good Clinic 19,622 of its restricted common stock, plus $3,000 in cash for reimbursement of expenses related to settling the suit with the vendor.
The Company has a number of legal situations involved with the winding down of its clinic’s business activities. These include claims regarding certain construction contracts and cancellation of leases as noted below:
Nordhaus Clinic
On November 1, 2020, we entered into an agreement to open a clinic in Minneapolis, Minnesota. The initial lease term is eight years. Fixed rent payments under the initial term are approximately $511,000. On November 6, 2023, the Company received a termination notice from the landlord indicating the lease had been terminated. No additional claims have been received by the landlord and the Company believes no additional amounts are owed.
Egan Clinic a.k.a. Vikings
On October 14, 2021, we entered into an agreement to open a clinic in Eagan, Minnesota, which began operations in the fourth quarter of 2021. The initial lease term is for 96 months. Fixed rent payments under the initial term are approximately $767,000. A Summary Judgment was granted on December 4, 2023, in the amount of $488,491, and the entry of final judgment was entered on December 15, 2023, and the Company has released the property back to the leaseholder.
St. Paul Clinic a.k.a. The Grove
On August 31, 2021, we entered into an agreement to open a clinic in St. Paul, Minnesota, which began operations in the fourth quarter of 2021. The initial lease term is 114 months. Fixed rent payments under the initial term are approximately $1,153,000. A stipulation for Judgment was filed on December 21, 2023, in the amount of $415,266. The stipulated judgment includes $178,542 in unpaid back rent, $172,124 in resolution of mechanics’ liens, and $64,600 in attorneys’ fees. The final entry of judgment by the Court was entered against the Company on January 19, 2024, and the Company has released the property back to the leaseholder.
St. Louis Park Clinic a.k.a. Excelsior & Grand
On May 24, 2021, we entered into an agreement to open a clinic in St. Louis Park, Minnesota, which began operations in the third quarter of 2021. The initial lease term is seven years. Fixed rent payments under the initial term are approximately $673,000. The Company agreed to and executed a Confession of Judgment in the amount of $425,351 on April 2, 2024, and has released the property back to the leaseholder. We received the fully executed and recorded judgement on April 10, 2024.
Eden Prairie Clinic a.k.a. TP Elevate
On June 8, 2021, we entered into an agreement to open a clinic in Eden Prairie, Minnesota, which began operation in the third quarter of 2021. The initial lease term is eight years. Fixed rent payments under the initial term are approximately $620,000. The Company has surrendered possession of the property and is currently in negotiations with the amounts owed and is in the process of settling the remaining amounts owed.
Maple Grove Clinic a.k.a. Arbor Lakes
On October 8, 2021, we entered into an agreement to open a clinic in Maple Grove, Minnesota which began operation in the fourth quarter of 2021. The initial lease term is 108 months. Fixed rent payments under the initial term are approximately $1,153,127. On October 22, 2022, the Company entered into a settlement agreement with the leaseholder for $219,576 and the Company released the property back to the leaseholder.
Radiant Clinic a.k.a. LMC Welton
On September 9, 2021, we entered into an agreement to open a clinic in Denver, Colorado, which was expected to begin operation in the first quarter of 2023 but possession of which has been relinquished to the landlords. The initial lease term is for 90 months. Fixed rent payments under the initial term are approximately $782,000. As of April 10, 2024, the Company has settled the amounts owed to the leaseholder and full resolution of all liens for approximately $530,000 and the Company has released the property back to the leaseholder.
Quincy Clinic a.k.a. 1776 Curtis
On September 28, 2021, we entered into an agreement to open a clinic in Denver, Colorado, which was expected to begin operation in the first quarter of 2023 but possession of which has been relinquished to the landlords. The initial lease term is 94 months. Fixed rent payments under the initial term are approximately $1,079,000. A Final Judgment was granted on November 14, 2023, in the amount of $348,764 including interest, fees and other costs. The Company has released the property back to the leaseholder.
The following table summarizes the status of our property-related settlements as noted above and the total settlement amounts as of the date of the filing:
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LOCATION |
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ALSO KNOWN AS: |
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PROPERTY NAME/OWNER |
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ORIGINAL OBLIGATION (NOT INC. CAPX) |
|
|
SETTLEMENT AMOUNT |
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TYPE OF SETTLEMENT |
||
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MINNEAPOLIS, MN |
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NORDHAUS |
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LENNAR |
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$ |
511,000 |
|
|
$ |
- |
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N.A. |
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WAYZETTA, MN |
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PROMINADE |
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WAZETTA BAY |
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$ |
407,000 |
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$ |
25,000 |
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CASH PAYMENT OBLIGATION |
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EAGAN, MN |
|
EAGAN CLINIC |
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VIKINGS |
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$ |
767,000 |
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|
$ |
488,491 |
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DEFAULT JUDGEMENT |
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ST. LOUIS PARK, MN |
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EXCELSIOR & GRAND |
|
EXCELSIOR |
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$ |
673,000 |
|
|
$ |
425,350 |
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DEFAULT JUDGEMENT |
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ST. PAUL, MN |
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THE GROVE |
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CONTINENTAL 560 |
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$ |
1,153,000 |
|
|
$ |
415,606 |
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DEFAULT JUDGEMENT |
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EDEN PRARIE |
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ELEVATE |
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TP ELEVATE |
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$ |
620,000 |
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|
$ |
- |
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IN PROCESS |
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MAPLE GROVE, MN |
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ARBOR LAKES |
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BUTTNICK |
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$ |
1,153,127 |
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|
$ |
219,575 |
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SETTLEMENT AGREE |
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DENVER, CO |
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LMC WELTON |
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RADIANT |
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$ |
782,000 |
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|
$ |
530,000 |
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DEFAULT JUDGEMENT |
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DENVER, CO |
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1776 CURTIS |
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QUINCY |
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$ |
1,079,000 |
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|
$ |
348,764 |
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DEFAULT JUDGEMENT |
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|
|
|
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TOTAL |
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$ |
7,145,127 |
|
|
$ |
2,452,768 |
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Administrative offices
On June 24, 2021, we entered into an agreement to open an administrative office in St. Louis Park, Minnesota. The initial lease term is 2.5 years. Fixed rent payments under the initial term are approximately $244,000. We have not entered into a settlement agreement on this site as of the date of this filing but expect to shortly.
ITEM 1A. RISK FACTORS
Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. In addition to the other information set forth in this quarterly report on Form 10-Q, you should carefully consider the factors described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission on April 16, 2024. There have been no material changes to the risk factors described in that report.
ITEM 2. SALE OF UNREGISTERED SECURITIES
Common Stock
On September 19, 2024, the Company issued a total of 25,573 shares of restricted common stock for the payment of dividends due for its Series X Preferred stock during the third quarter of 2024 using the $.80 price per share as noted above.
During the three months ended September 30, 2024, the Company issued 300,000 shares of common stock to its board of directors. The Company recorded a compensation expense of $72,000 based on the closing stock price on the date of issuance.
During the three months ended September 30, 2024, the Company issued 200,000 shares of common stock to consultants. The Company recorded a compensation expense of $29,250 based on the closing stock price on the date of issuance.
ITEM 3. DEFAULTS ON SENIOR SECURED SECURITIES
Not Applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS
The following exhibits are included with this Quarterly Report on Form 10-Q.
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Form Type |
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Exhibit Number |
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Date Filed |
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Filed Herewith |
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3.1 |
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Certificate of Incorporation of Trunity Holdings, Inc., dated January 18, 2012. |
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8-K |
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10.1 |
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1/31/2012 |
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3.2 |
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8-K |
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10.2 |
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1/31/2012 |
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3.3 |
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10-K |
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3.3 |
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4/16/2013 |
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3.4 |
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8-K |
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3.1(i) |
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1/06/2016 |
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3.5 |
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Certificate of Designations of Series X Preferred Stock of True Nature Holding, Inc. |
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8-K |
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3.6 |
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1/06/2020 |
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3.6 |
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8-K |
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3.07 |
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3/13/2020 |
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3.7 |
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10-Q |
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3.7 |
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8/14/2020 |
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3.8 |
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10-Q |
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3.8 |
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11/13/2020 |
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Form Type |
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Exhibit Number |
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Date Filed |
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Filed Herewith |
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3.9 |
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Bylaws of Mitesco, Inc., as amended, dated November 10, 2020 |
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10-Q |
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3.9 |
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11/13/2020 |
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3.10 |
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8-K |
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3.1 |
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03/26/2021 |
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3.11 |
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8-K |
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3.2 |
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03/26/2021 |
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31.1 |
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X |
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32.1 |
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X |
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101.INS ** |
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XBRL INSTANCE DOCUMENT |
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101.SCH ** |
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XBRL TAXONOMY EXTENSION SCHEMA |
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101.CAL ** |
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XBRL TAXONOMY EXTENSION CALCULATION LINKBASE |
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101.DEF ** |
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XBRL TAXONOMY EXTENSION DEFINITION LINKBASE |
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101.LAB ** |
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XBRL TAXONOMY EXTENSION LABEL LINKBASE |
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101.PRE ** |
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XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE |
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104 |
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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#
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Management contract or compensatory plan or arrangement required to be identified pursuant to Item 15(a)(3) of this report. |
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q for the period ended September 30, 2024, to be signed on its behalf by the undersigned, thereunto duly authorized.
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MITESCO, INC. |
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Dated: November 25, 2024 |
By: |
/s/ Mack Leath |
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Mack Leath Chief Executive Officer, Chief Financial Officer and Principal Financial Officer |
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EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO RULE 13a-14 OR RULE 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Mack Leath, certify that:
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1. |
I have reviewed this quarterly report on Form 10-Q of Mitesco, Inc.; |
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2. |
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; |
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4. |
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; |
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b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and |
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d) |
Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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5. |
I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): |
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a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 25, 2024
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/s/ Mack Leath |
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Mack Leath Chief Executive Officer, Chief Financial Officer and Principal Executive Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Mitesco, Inc. (the “Company”) on Form 10-Q for the nine months ended September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof, I, Mack Leath, Chief Executive Officer, Chief Financial Officer, and Director of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
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1. |
The quarterly report on Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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2. |
The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 25, 2024
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/s/ Mack Leath |
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Mack Leath Chief Executive Officer, Chief Financial Officer, and Principal Executive Officer |