UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.Washington, DC 20549
FORM 10-Q
☑ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly periodquarter ended June 30, 20202021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________________ to _________________________
Commission File Number 000-53601
MITESCO, INC.
(Exact nameName of registrantRegistrant as specifiedSpecified in its charter)Charter)
Delaware | 87-0496850 | |
(State Other Jurisdiction of Incorporation or | (I.R.S. Employer | |
| Identification | |
|
| |
|
|
1660 Highway 100 South, Suite 432
St. Louis Park, MN 55416
(Address of principal executive offices) (Zip code)
844-383-8689
(Registrant’s telephone number, including area code: (844) 383-8689code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None.
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
N/A | N/A | N/A |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐
Indicate by check mark whether the registrantregistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ NoYES ☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ NoYES ☒ NO ☐
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large, accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large, accelerated filer | ☐ | Accelerated filer | ☐ | |
Non-accelerated filer ☒ |
| Smaller reporting company |
| |
Emerging growth company |
| ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesAct. YES ☐ No ☑NO ☒
As of August 6, 2020, 107,734,6935, 2021, the registrant had outstanding 208,188,705 shares of the registrant’s common stock, $0.01 par value, were outstanding. Common.
Table of Contents
PART I – FINANCIAL INFORMATION | |||||
ITEM 1. |
|
| 4 | ||
| 4 | |||||
| 5 | |||||
| 6 | |||||
| 7 | |||||
| 8 | |||||
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
| 23 | ||
ITEM 3. |
| 26 | |||
ITEM 4. |
| ||||
PART II – OTHER INFORMATION | |||||
| |||||
ITEM 1. |
| 27 | |||
ITEM 1A. |
| 27 | |||
ITEM 2. |
|
| |||
|
| 30 | |||
| ITEM 3. | DEFAULTS ON SENIOR SECURED SECURITIES. | 32 | |||
ITEM 4. | 32 | ||||
ITEM 5. | 32 | ||||
ITEM 6. |
| 32 | |||
| 35 | ||||
PART I –
ITEM1. FINANCIAL INFORMATIONSTATEMENTS.
|
MITESCO, INC.
Condensed Consolidated Balance SheetsCONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) June 30, | December 31, | |||||||
ASSETS | 2020 | 2019 | ||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 17,542 | $ | 83,245 | ||||
Prepaid expenses | - | 9,721 | ||||||
Total current assets | 17,542 | 92,966 | ||||||
Fixed assets, net of accumulated depreciation of $786 and $0 | 7,068 | 7,854 | ||||||
Total Assets | $ | 24,610 | $ | 100,820 | ||||
LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 433,534 | $ | 648,714 | ||||
Accrued interest | 128,581 | 82,870 | ||||||
Derivative liabilities | 981,697 | 1,488,423 | ||||||
Convertible notes payable, net of discount of $749,713 and $646,888 | 172,287 | 77,112 | ||||||
SBA Loan Payable | 460,406 | - | ||||||
Convertible note payable, in default | 122,166 | 122,166 | ||||||
Other current liabilities | 93,573 | - | ||||||
Preferred stock dividends payable | 36,751 | - | ||||||
Total current liabilities | 2,428,995 | 2,419,285 | ||||||
Total Liabilities | 2,428,995 | 2,419,285 | ||||||
Commitments and contingencies | - | - | ||||||
Stockholders' equity (deficit) | ||||||||
Preferred stock, $0.01 par value, 100,000,000 shares authorized; 500,000 shares designated Series A; 400,000 shares designated Series X: | ||||||||
Preferred stock, Series A, $0.01 par value, 4,800 and 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019 | 48 | - | ||||||
Preferred stock, Series X, $0.01 par value, 26,227 shares issued and outstanding as of June 30, 2020 and December 31, 2019 | 262 | 262 | ||||||
Common stock, $0.01 par value, 500,000,000 shares authorized, 98,796,144 and 81,268,443 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | 987,962 | 812,684 | ||||||
Additional paid-in capital | 9,058,332 | 8,407,977 | ||||||
Stock payable | 37,186 | 37,186 | ||||||
Accumulated deficit | (12,488,175 | ) | (11,576,574 | ) | ||||
Total (deficiency in) stockholders' equity | (2,404,385 | ) | (2,318,465 | ) | ||||
Total liabilities and stockholders' equity | $ | 24,610 | $ | 100,820 | ||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
Unaudited | ||||||||
June 30, | December 31, | |||||||
ASSETS | 2021 | 2020 | ||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 1,685,870 | $ | 64,789 | ||||
Accounts Receivable | 1,133 | 0 | ||||||
Due from related party | 26,163 | 0 | ||||||
Inventory | 2,109 | 0 | ||||||
Prepaid expenses | 28,843 | 0 | ||||||
Total current assets | 1,744,118 | 64,789 | ||||||
Right to use operating leases, net | 1,307,387 | 310,361 | ||||||
Construction in progress | 0 | 417,082 | ||||||
Fixed assets, net of accumulated depreciation of $19,590 and $1,572 | 882,267 | 6,282 | ||||||
Total Assets | $ | 3,933,772 | $ | 798,514 | ||||
LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | 590,366 | 1,069,331 | ||||||
Accrued interest | 5,309 | 137,522 | ||||||
Derivative liabilities | 0 | 807,682 | ||||||
Lease liability - operating leases, current | 89,507 | 8,905 | ||||||
Convertible notes payable, net of discount of $0 and $756,795 | 0 | 317,405 | ||||||
Convertible note payable, in default | 0 | 122,166 | ||||||
SBA Loan Payable | 460,406 | 460,406 | ||||||
Other current liabilities | 96,136 | 95,256 | ||||||
Preferred stock dividends payable | 84,579 | 9,967 | ||||||
Total current liabilities | 1,326,303 | 3,028,640 | ||||||
Lease Liability- operating leases, non-current | 1,267,297 | 312,099 | ||||||
Total Liabilities | $ | 2,593,600 | $ | 3,340,739 | ||||
Commitments and contingencies | - | - | ||||||
Stockholders' equity (deficit) | ||||||||
Preferred stock, $0.01 par value, 100,000,000 shares authorized; 500,000 shares designated Series A; 3,000,000 shares designated Series C; and 400,000 shares designated Series X: | - | - | ||||||
Preferred stock, Series A, $0.01 par value, 0 and 4,800 shares issued and outstanding as of June 30, 2021 and December 31, 2020 | 0 | 48 | ||||||
Preferred stock, Series C, $0.01 par value, 1,940,644 and 0 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | 19,406 | 0 | ||||||
Preferred stock, Series X, $0.01 par value, 24,227 shares issued and outstanding as of June 30, 2021; 26,227 shares issued and outstanding as of December 31, 2020 | 242 | 262 | ||||||
Common stock subscribed | (41,000 | ) | - | |||||
Common stock, $0.01 par value, 500,000,000 shares authorized, 208,188,705 and 155,381,183 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | 2,081,887 | 1,553,812 | ||||||
Additional paid-in capital | 17,920,912 | 10,340,821 | ||||||
Accumulated deficit | (18,641,275 | ) | (14,437,168 | ) | ||||
Total stockholders' equity (deficit) | 1,340,172 | (2,542,225 | ) | |||||
Total liabilities and stockholders' equity (deficit) | $ | 3,933,772 | $ | 798,514 | ||||
MITESCO, INC.
Unaudited Condensed Consolidated Statements of Operations
For the Three | For the Three | For the Six | For the Six | |||||||||||||
Months Ended | Months Ended | Months Ended | Months Ended | |||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
Operating expenses: | ||||||||||||||||
General and administrative | 625,838 | 226,250 | 1,122,332 | 447,501 | ||||||||||||
Total operating expenses | 625,838 | 226,250 | 1,122,332 | 447,501 | ||||||||||||
Net Operating Loss | (625,838 | ) | (226,250 | ) | (1,122,332 | ) | (447,501 | ) | ||||||||
Other income (expense): | ||||||||||||||||
Grant income | 3,000 | - | 3,000 | - | ||||||||||||
Interest expense | (396,907 | ) | (164,504 | ) | (587,035 | ) | (324,901 | ) | ||||||||
Gain on settlement of accounts payable | 306,319 | - | 348,611 | - | ||||||||||||
(Loss) Gain on derivative liabilities | (50,214 | ) | - | 446,155 | - | |||||||||||
Loss on legal settlement | - | (26,924 | ) | (26,924 | ) | |||||||||||
Loss on conversion of notes | - | (58,935 | ) | - | (158,659 | ) | ||||||||||
Total other expense | (137,802 | ) | (250,363 | ) | 210,731 | (510,484 | ) | |||||||||
Net loss | $ | (763,640 | ) | $ | (476,613 | ) | $ | (911,601 | ) | $ | (957,985 | ) | ||||
Preferred stock dividend | (19,392 | ) | - | (36,751 | ) | - | ||||||||||
Net loss available to common shareholders | $ | (783,032 | ) | $ | (476,613 | ) | $ | (948,352 | ) | $ | (957,985 | ) | ||||
Net loss per share - basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | ||||
Weighted average shares outstanding - basic and diluted | 88,833,282 | 33,986,267 | 86,408,229 | 33,188,078 | ||||||||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
MITESCO, INC.
Condensed Consolidated Statements of Changes in Stockholders’ Deficit
FOR THE THREE MONTHS ENDED JUNE 30 | ||||||||||||||||||||||||||||||||||||||||
Preferred Stock Series A | Preferred Stock Series X | Common Stock | Additional Paid-in | Stock | Accumulated | |||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | capital | Payable | Deficit | Total | |||||||||||||||||||||||||||||||
Balance, March 31, 2019 | - | - | - | - | 33,316,861 | 333,168 | 5,993,643 | 37,186 | (8,172,684 | ) | (1,808,687 | ) | ||||||||||||||||||||||||||||
Stock issued to employees subject to vesting | - | - | - | - | 1,000,000 | 10,000 | (10,000 | ) | - | - | - | |||||||||||||||||||||||||||||
Stock issued for conversion of notes payable | - | - | - | - | 3,359,444 | 33,594 | 131,831 | - | - | 165,425 | ||||||||||||||||||||||||||||||
Shares issued for legal settlement | - | - | - | - | 1,401,224 | 14,012 | 87,016 | - | - | 101,028 | ||||||||||||||||||||||||||||||
Discount on notes payable due to conversion feature | - | - | - | - | - | - | 143,555 | - | - | 143,555 | ||||||||||||||||||||||||||||||
Vesting of shares issued to employees | - | - | - | - | - | - | 22,218 | - | - | 22,218 | ||||||||||||||||||||||||||||||
Imputed interest | - | - | - | - | - | - | 2,250 | - | - | 2,250 | ||||||||||||||||||||||||||||||
Net loss for the period | - | - | - | - | - | - | - | - | (476,613 | ) | (476,613 | ) | ||||||||||||||||||||||||||||
Balance, June 30, 2019 (unaudited) | - | - | - | - | 39,077,529 | $ | 390,774 | $ | 6,370,513 | $ | 37,186 | $ | (8,649,297 | ) | $ | (1,850,824 | ) | |||||||||||||||||||||||
Balance, March 31, 2020 | 4,800 | $ | 48 | 26,227 | $ | 262 | 86,566,999 | $ | 865,670 | $ | 8,688,893 | $ | 37,186 | $ | (11,724,535 | ) | $ | (2,132,476 | ) | |||||||||||||||||||||
Vesting of common stock issued to employees | - | - | - | - | - | - | 19,374 | - | - | 19,374 | ||||||||||||||||||||||||||||||
Vesting of stock options issued to employees | - | - | - | - | - | - | 20,508 | - | - | 20,508 | ||||||||||||||||||||||||||||||
Settlement of derivative liabilities | - | - | - | - | - | - | 297,672 | - | - | 297,672 | ||||||||||||||||||||||||||||||
Common stock issued in warrant settlement agreement | - | - | - | - | 2,901,440 | 29,014 | 51,277 | - | - | 80,291 | ||||||||||||||||||||||||||||||
Common stock issued for conversion of notes payable and accrued interest | - | - | - | - | 9,327,705 | 93,278 | - | - | - | 93,278 | ||||||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | - | - | (19,392 | ) | - | - | (19,392 | ) | ||||||||||||||||||||||||||||
Loss for the period ended June 30, 2020 | - | - | - | - | - | - | - | - | (763,640 | ) | (763,640 | ) | ||||||||||||||||||||||||||||
Balance, June 30, 2020 (unaudited) | 4,800 | $ | 48 | 26,227 | $ | 262 | 98,796,144 | $ | 987,962 | $ | 9,058,332 | $ | 37,186 | $ | (12,488,175 | ) | $ | (2,404,385 | ) | |||||||||||||||||||||
FOR THE SIX MONTHS ENDED JUNE 30 | ||||||||||||||||||||||||||||||||||||||||
Preferred Stock Series A | Preferred Stock Series X | Common Stock | Additional Paid-in | Stock | Accumulated | |||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | capital | Payable | Deficit | Total | |||||||||||||||||||||||||||||||
Balance, December 31, 2018 | - | - | - | - | 31,598,236 | $ | 315,982 | $ | 5,684,208 | $ | 37,186 | $ | (7,691,312 | ) | $ | (1,653,936 | ) | |||||||||||||||||||||||
Stock issued for services | - | - | - | - | 200,000 | 2,000 | 15,480 | - | - | 17,480 | ||||||||||||||||||||||||||||||
Stock issued to employees subject to vesting | - | - | - | - | 1,000,000 | 10,000 | (10,000 | ) | - | - | - | |||||||||||||||||||||||||||||
Stock issued for conversion of notes payable | - | - | - | - | 5,278,069 | 52,780 | 302,629 | - | - | 355,409 | ||||||||||||||||||||||||||||||
Stock issued for legal settlement | - | - | - | - | 1,401,224 | 14,012 | 87,016 | - | - | 101,028 | ||||||||||||||||||||||||||||||
Discount on notes payable due to conversion feature | - | - | - | - | - | - | 223,087 | - | - | 223,087 | ||||||||||||||||||||||||||||||
Discount on notes payable due to warrants | - | - | - | - | - | - | 34,500 | - | - | 34,500 | ||||||||||||||||||||||||||||||
Cancellation of shares | - | - | - | - | (400,000 | ) | (4,000 | ) | 4,000 | - | - | - | ||||||||||||||||||||||||||||
Vesting of shares issued to employees | - | - | - | - | - | - | 25,093 | - | - | 25,093 | ||||||||||||||||||||||||||||||
Imputed interest | - | - | - | - | - | - | 4,500 | - | - | 4,500 | ||||||||||||||||||||||||||||||
Net loss for the period | - | - | - | - | - | - | - | - | (957,985 | ) | (957,985 | ) | ||||||||||||||||||||||||||||
Balance, June 30, 2019 (unaudited) | - | - | - | - | 39,077,529 | $ | 390,774 | $ | 6,370,513 | $ | 37,186 | $ | (8,649,297 | ) | $ | (1,850,824 | ) | |||||||||||||||||||||||
Balance, December 31, 2019 | - | $ | - | 26,227 | $ | 262 | 81,268,443 | $ | 812,684 | $ | 8,407,977 | $ | 37,186 | $ | (11,576,574 | ) | $ | (2,318,465 | ) | |||||||||||||||||||||
Vesting of common stock issued to employees | - | - | - | - | - | - | 53,050 | - | - | 53,050 | ||||||||||||||||||||||||||||||
Vesting of stock options issued to employees | - | - | - | - | - | - | 27,580 | - | - | 27,580 | ||||||||||||||||||||||||||||||
Common stock issued for services | - | - | - | - | 200,000 | 2,000 | 5,680 | - | - | 7,680 | ||||||||||||||||||||||||||||||
Settlement of derivative liabilities | - | - | - | - | - | - | 528,995 | - | - | 528,995 | ||||||||||||||||||||||||||||||
Common stock issued in warrant settlement agreement | - | - | - | - | 7,999,996 | 80,000 | 291 | - | - | 80,291 | ||||||||||||||||||||||||||||||
Common stock issued for conversion of notes payable and accrued interest | - | - | - | - | 9,327,705 | 93,278 | - | - | - | 93,278 | ||||||||||||||||||||||||||||||
Issuance of Preferred A stock to consultants | 4,800 | 48 | - | - | - | - | 71,510 | - | - | 71,558 | ||||||||||||||||||||||||||||||
Preferred stock dividends, $3.62 per share (10% of stated value per year) | - | - | - | - | - | - | (36,751 | ) | - | - | (36,751 | ) | ||||||||||||||||||||||||||||
Loss for the period ended June 30, 2020 | - | - | - | - | - | - | - | - | (911,601 | ) | (911,601 | ) | ||||||||||||||||||||||||||||
Balance, June 30, 2020 (unaudited) | 4,800 | $ | 48 | 26,227 | $ | 262 | 98,796,144 | $ | 987,962 | $ | 9,058,332 | $ | 37,186 | $ | (12,488,175 | ) | $ | (2,404,385 | ) | |||||||||||||||||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
MITESCO, INC.
Unaudited Condensed Consolidated Statement of Cash FlowsUNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Six | For the Six | |||||||
Months Ended | Months Ended | |||||||
June 30, | June 30, | |||||||
2020 | 2019 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (911,601 | ) | $ | (957,985 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 786 | - | ||||||
Loss on conversion of notes payable to common stock | - | 158,659 | ||||||
Loss on legal settlement | - | 26,924 | ||||||
Gain on settlement of accounts payable | (348,611 | ) | - | |||||
Gain on derivative liabilities | (446,155 | ) | - | |||||
Derivative expense | 43,009 | - | ||||||
Amortization of discount on notes payable | 386,175 | 261,035 | ||||||
Share-based compensation | 159,868 | 42,573 | ||||||
Imputed interest | 4,500 | |||||||
Changes in assets and liabilities: | ||||||||
Prepaid expenses | 9,721 | 2,500 | ||||||
Accounts payable and accrued liabilities | 226,199 | 83,793 | ||||||
Due to related parties | - | 36,151 | ||||||
Other current liabilities | 805 | - | ||||||
Accrued interest | 53,695 | 37,508 | ||||||
Net cash used in operating activities | (826,109 | ) | (304,342 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from notes payable, net of discount | 931,406 | 313,558 | ||||||
Principal payments on notes payable | (171,000 | ) | (10,236 | ) | ||||
Net cash provided by financing activities | 760,406 | 303,322 | ||||||
Net increase (decrease) in cash and cash equivalents | (65,703 | ) | (1,020 | ) | ||||
Cash and cash equivalents at beginning of period | 83,245 | 1,304 | ||||||
Cash and cash equivalents at end of period | $ | 17,542 | $ | 284 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Interest paid | $ | 2,680 | $ | 2,236 | ||||
Income taxes paid | $ | - | $ | - | ||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Par value of shares returned for cancellation | $ | - | $ | 4,000 | ||||
Shares issued for debt conversion | $ | - | $ | 196,750 | ||||
Stock issued for legal settlement | $ | - | $ | 101,028 | ||||
Discount due to warrants | $ | - | $ | 34,500 | ||||
Beneficial conversion feature | $ | 506,726 | $ | 223,087 | ||||
Settlement of derivative liabilities | $ | 664,684 | $ | - | ||||
Issuance of Series A Preferred Stock to consultants | $ | 71,558 | $ | - | ||||
Preferred stock dividends payable | $ | 36,751 | $ | - | ||||
Exercise of cashless warrants | $ | 50,986 | $ | - | ||||
Derivative discounts | $ | 485,000 | $ | - | ||||
For the Three | For the Three | For the Six | For the Six | |||||||||||||
Months Ended | Months Ended | Months Ended | Months Ended | |||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenue | $ | 8,244 | $ | 0 | $ | 11,216 | $ | 0 | ||||||||
Cost of goods sold | 3,605 | 5,318 | ||||||||||||||
Gross Profit (loss) | 4,639 | 0 | 5,898 | 0 | ||||||||||||
Operating expenses: | ||||||||||||||||
General and administrative | 1,403,210 | 625,838 | 2,356,118 | 1,122,332 | ||||||||||||
Total operating expenses | 1,403,210 | 625,838 | 2,356,118 | 1,122,332 | ||||||||||||
Net Operating Loss | (1,398,571 | ) | (625,838 | ) | (2,350,220 | ) | (1,122,332 | ) | ||||||||
Other income (expense): | ||||||||||||||||
Interest expense | (1,135 | ) | (396,907 | ) | (966,123 | ) | (587,035 | ) | ||||||||
Loss on legal settlement | (70,000 | ) | 0 | (70,000 | ) | 0 | ||||||||||
Gain on settlement of accounts payable | 0 | 306,319 | 6,045 | 348,611 | ||||||||||||
Gain on settlement of notes payable | 0 | 1,836 | ||||||||||||||
Grant Income | 52 | 3,000 | 52 | 3,000 | ||||||||||||
| (Loss) Gain on revaluation of derivative liabilities | 0 | (50,214 | ) | (493,455 | ) | 446,155 | ||||||||||
Total other expense | (71,083 | ) | (137,802 | ) | (1,521,645 | ) | 210,731 | |||||||||
Loss before provision for income taxes | (1,469,654 | ) | (763,640 | ) | (3,871,865 | ) | (911,601 | ) | ||||||||
Provision for income taxes | 0 | 0 | 0 | 0 | ||||||||||||
Net loss | $ | (1,469,654 | ) | $ | (763,640 | ) | $ | (3,871,865 | ) | $ | (911,601 | ) | ||||
Preferred stock dividends | (54,115 | ) | (19,392 | ) | (74,614 | ) | (36,751 | ) | ||||||||
Preferred stock deemed dividends | 0 | 0 | (332,242 | ) | 0 | |||||||||||
Net loss available to common shareholders | $ | (1,523,769 | ) | $ | (783,032 | ) | $ | (4,278,721 | ) | $ | (948,352 | ) | ||||
Net loss per share - basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.01 | ) | ||||
| Weighted average shares outstanding - basic and diluted | 201,678,218 | 88,833,282 | 194,455,386 | 86,408,229 | ||||||||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
MITESCO, INC.
CONDENSED CONSOLIDATED UNAUDITED STATEMENT OF STOCKHOLDER'S DEFICIT
Preferred Stock Series A | Preferred Stock Series C | Preferred Stock Series X | Common Stock | Additional | Stock | Stock | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Paid-in capital | Subscribed | Payable | Deficit | Total | ||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2020 | 4,800 | $ | 48 | - | $ | - | 26,227 | $ | 262 | 86,566,999 | $ | 865,670 | $ | 8,688,893 | $ | - | $ | 37,186 | $ | (11,724,535 | ) | $ | (2,132,476 | ) | ||||||||||||||||||||||||||||
Vesting of common stock issued to employees | - | - | - | - | - | - | - | - | 19,374 | - | - | - | 19,374 | |||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees | - | - | - | - | - | - | - | - | 20,508 | - | - | - | 20,508 | |||||||||||||||||||||||||||||||||||||||
Settlement of derivative liabilities | - | - | - | - | - | - | - | - | 297,672 | - | - | - | 297,672 | |||||||||||||||||||||||||||||||||||||||
Common stock issued in warrant settlement agreement | - | - | - | - | - | - | 2,901,440 | 29,014 | 51,277 | - | - | - | 80,291 | |||||||||||||||||||||||||||||||||||||||
Common stock issued for conversion of notes payable and accrued interest | - | - | - | - | - | - | 9,327,705 | 93,278 | - | - | - | - | 93,278 | |||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | - | - | - | - | (19,392 | ) | - | - | - | (19,392 | ) | |||||||||||||||||||||||||||||||||||||
Loss for the period ended June 30, 2020 | - | - | - | - | - | - | - | (763,640 | ) | (763,640 | ) | |||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2020 | 4,800 | $ | 48 | - | $ | - | 26,227 | $ | 262 | 98,796,144 | $ | 987,962 | $ | 9,058,332 | $ | - | $ | 37,186 | $ | (12,488,175 | ) | $ | (2,404,385 | ) | ||||||||||||||||||||||||||||
Balance, March 31, 2021 | - | - | 3,000,000 | 30,000 | 26,227 | 262 | 197,694,698 | 1,976,965 | 17,513,684 | - | - | (17,171,621 | ) | 2,349,290 | ||||||||||||||||||||||||||||||||||||||
Vesting of common stock issued to employees | - | - | - | - | - | - | - | - | 3,889 | - | - | - | 3,889 | |||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees | - | - | - | - | - | - | - | - | 195,352 | - | - | - | 195,352 | |||||||||||||||||||||||||||||||||||||||
Shares issued to directors for exercise of options | - | - | - | - | - | - | 7,616,668 | 76,166 | 152,334 | (41,000 | ) | - | - | 187,500 | ||||||||||||||||||||||||||||||||||||||
Net shares cancelled in connection with settlement agreement | - | - | - | - | (2,000 | ) | (20 | ) | (1,362,047 | ) | (13,620 | ) | 141,550 | - | - | - | 127,910 | |||||||||||||||||||||||||||||||||||
Shares issued for professional fees | - | - | - | - | - | - | 1,962 | 2 | (2 | ) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
Shares of common stock issued for conversion of Preferred Stock Series C | - | - | (1,059,356 | ) | (10,594 | ) | - | - | 4,237,424 | 42,374 | (31,780 | ) | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | - | - | - | - | (54,115 | ) | - | - | - | (54,115 | ) | |||||||||||||||||||||||||||||||||||||
Loss for the period ended June 30, 2021 | - | - | - | - | - | - | - | - | - | (1,469,654 | ) | (1,469,654 | ) | |||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | - | $ | - | 1,940,644 | $ | 19,406 | 24,227 | $ | 242 | 208,188,705 | $ | 2,081,887 | $ | 17,920,912 | $ | (41,000 | ) | $ | - | $ | (18,641,275 | ) | $ | 1,340,172 | ||||||||||||||||||||||||||||
| - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | - | $ | - | - | $ | - | 26,227 | $ | 262 | 81,268,443 | $ | 812,684 | $ | 8,407,977 | $ | 37,186 | $ | (11,576,574 | ) | $ | (2,318,465 | ) | ||||||||||||||||||||||||||||||
Vesting of common stock issued to employees | - | - | - | - | - | - | - | - | 53,050 | - | - | 53,050 | ||||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees | - | - | - | - | - | - | - | - | 27,580 | - | - | 27,580 | ||||||||||||||||||||||||||||||||||||||||
Common stock issued for services | - | - | - | - | - | - | 200,000 | 2,000 | 5,680 | - | - | 7,680 | ||||||||||||||||||||||||||||||||||||||||
Settlement of derivative liabilities | - | - | - | - | - | - | - | - | 528,995 | - | - | 528,995 | ||||||||||||||||||||||||||||||||||||||||
Common stock issued in warrant settlement agreement | - | - | - | - | - | - | 7,999,996 | 80,000 | 291 | - | - | 80,291 | ||||||||||||||||||||||||||||||||||||||||
Common stock issued for conversion of notes payable and accrued interest | - | - | - | - | - | - | 9,327,705 | 93,278 | - | - | - | 93,278 | ||||||||||||||||||||||||||||||||||||||||
Issuance of Preferred A stock to consultants | 4,800 | 48 | - | - | - | - | - | - | 71,510 | 71,558 | ||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | - | - | - | - | (36,751 | ) | - | - | (36,751 | ) | ||||||||||||||||||||||||||||||||||||||
Loss for the period ended June 30, 2020 | - | - | - | - | - | - | - | - | - | - | (911,601 | ) | (911,601 | ) | ||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2020 | 4,800 | $ | 48 | - | $ | - | 26,227 | $ | 262 | 98,796,144 | $ | 987,962 | $ | 9,058,332 | $ | 37,186 | $ | (12,488,175 | ) | $ | (2,404,385 | ) | ||||||||||||||||||||||||||||||
Balance, December 31, 2020 | 4,800 | $ | 48 | - | $ | - | 26,227 | $ | 262 | 155,381,183 | $ | 1,553,812 | $ | 10,340,821 | $ | - | $ | - | $ | (14,437,168 | ) | $ | (2,542,225 | ) | ||||||||||||||||||||||||||||
Vesting of common stock issued to employees | - | - | - | - | - | - | - | - | 7,897 | - | - | - | 7,897 | |||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees | - | - | - | - | - | - | - | - | 201,294 | - | - | - | 201,294 | |||||||||||||||||||||||||||||||||||||||
Common stock issued for services | - | - | - | - | - | - | 1,099,320 | 10,963 | 211,517 | - | - | - | 222,480 | |||||||||||||||||||||||||||||||||||||||
Common stock issued for conversion of notes payable and accrued interest | - | - | - | - | - | - | 33,944,157 | 339,442 | 2,314,353 | - | - | - | 2,653,795 | |||||||||||||||||||||||||||||||||||||||
Sale of common stock in private placement | - | - | - | - | - | - | 6,672,000 | 66,750 | 1,601,250 | - | - | - | 1,668,000 | |||||||||||||||||||||||||||||||||||||||
Sale of Preferred Stock Series C | - | - | 3,000,000 | 30,000 | - | - | - | - | 1,461,283 | - | - | - | 1,491,283 | |||||||||||||||||||||||||||||||||||||||
Warrants issued with Preferred Stock Series C | - | - | - | - | - | - | - | - | 1,268,717 | - | - | - | 1,268,717 | |||||||||||||||||||||||||||||||||||||||
Conversion of Preferred Stock Series A to common stock | (4,800 | ) | (48 | ) | - | - | - | - | 600,000 | 6,000 | (5,952 | ) | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Shares issued for exercise of stock options | - | - | - | - | - | - | 7,616,668 | 76,166 | 152,334 | (41,000 | ) | - | - | 187,500 | ||||||||||||||||||||||||||||||||||||||
Net shares issued in connection with settlement agreement | - | - | - | - | (2,000 | ) | (20 | ) | (1,362,047 | ) | (13,620 | ) | 141,550 | - | - | - | 127,910 | |||||||||||||||||||||||||||||||||||
Shares of common stock issued for conversion of Preferred Stock Series C | - | - | (1,059,356 | ) | (10,594 | ) | - | - | 4,237,424 | 42,374 | (31,780 | ) | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Deemed dividend on conversion of Preferred Stock Series A to common stock | - | - | - | - | - | - | - | - | 206,242 | - | (206,242 | ) | - | |||||||||||||||||||||||||||||||||||||||
Deemed dividend on Preferred Stock Series C | - | - | - | - | - | - | - | - | 126,000 | - | - | (126,000 | ) | - | ||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | - | - | - | - | (74,614 | ) | - | - | (74,614 | ) | ||||||||||||||||||||||||||||||||||||||
Loss for the period ended March 31, 2021 | - | - | - | - | - | (3,871,865 | ) | (3,871,865 | ) | |||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | - | $ | - | 1,940,644 | $ | 19,406 | 24,227 | $ | 242 | 208,188,705 | $ | 2,081,887 | $ | 17,920,912 | $ | (41,000 | ) | $ | - | $ | (18,641,275 | ) | $ | 1,340,172 | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
MITESCO, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six | For the Six | |||||||
Months Ended | Months Ended | |||||||
June 30, | June 30, | |||||||
2021 | 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (3,871,865 | ) | $ | (911,601 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 36,456 | 786 | ||||||
Preferred A stock issued to consultants | 0 | |||||||
Amortization of right-to-use asset | 24,692 | 0 | ||||||
Gain on settlement of notes payable | (1,836 | ) | 386,175 | |||||
Gain on settlement of accounts payable | 0 | (348,611 | ) | |||||
(Gain) on revaluation of Preferred Stock Series A | - | - | ||||||
Loss on conversion of Pref Stock Series A to common stock | - | - | ||||||
Gain (Loss) on revaluation of derivative liabilities | 493,455 | (446,155 | ) | |||||
Derivative expense | 0 | 43,009 | ||||||
Amortization of discount on notes payable | 756,795 | 0 | ||||||
Share-based compensation | 559,579 | 159,868 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivables | (1,133 | ) | 0 | |||||
Prepaid expenses | (28,843 | ) | 9,721 | |||||
Due from related party | (26,163 | ) | 0 | |||||
Inventory | (2,109 | ) | 0 | |||||
Accounts payable and accrued liabilities | (291,463 | ) | 226,199 | |||||
Operating lease liability | 14,082 | 0 | ||||||
Other current liabilities | 880 | 805 | ||||||
Accrued interest | 203,447 | 53,695 | ||||||
Net cash used in operating activities | (2,134,026 | ) | (826,109 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Cash paid for acquisition of fixed assets | (495,359 | ) | 0 | |||||
Net cash used in investing activities | (495,359 | ) | 0 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from private placement of common stock | 1,668,000 | 0 | ||||||
Proceeds from sales of Series C Preferred Stock, net of fees | 2,760,000 | |||||||
Proceeds from notes payable, net of discount | 0 | 931,406 | ||||||
Principal payments on notes payable | (177,534 | ) | (171,000 | ) | ||||
Net cash provided by financing activities | 4,250,466 | 760,406 | ||||||
Net increase (decrease) in cash and cash equivalents | 1,621,081 | (65,703 | ) | |||||
Cash and cash equivalents at beginning of period | 64,789 | 83,245 | ||||||
Cash and cash equivalents at end of period | $ | 1,685,870 | $ | 17,542 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Interest paid | $ | 0 | $ | 2,680 | ||||
Income taxes paid | $ | 0 | $ | 0 | ||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Stock issued for conversion of debt and accrued interest | $ | 2,653,795 | $ | 0 | ||||
Settlement of derivative liabilities | $ | (1,301,137 | ) | $ | 664,684 | |||
Cashless exercise of warrants | $ | 0 | $ | 50,986 | ||||
Issued of Series A Preferred Stock to consultants | $ | 0 | $ | 71,558 | ||||
Preferred stock dividend | $ | 74,614 | $ | 36,751 | ||||
Deemed dividends on Preferred Stock | $ | 332,242 | $ | 0 | ||||
Derivative discounts | $ | - | $ | 485,000 | ||||
Beneficial conversion feature | $ | - | $ | 506,726 | ||||
Conversion of Series A Preferred stock to common stock | $ | 6,000 | $ | 0 | ||||
Conversion of Series C Preferred stock to common stock | $ | 31,781 | $ | 0 | ||||
Conversion of accounts payable to common stock | $ | 102,333 | $ | 0 | ||||
Conversion of accrued payroll to common stock | $ | 50,000 | $ | 0 | ||||
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
MITESCO, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)June 30, 2021, and 2020
Note 1 – Description of Business
Company Overview
Mitesco, Inc. (the “Company,” “we,” “us,” or “our”), previously known as Trunity Holdings, Inc., a Delaware corporation, and since 2016 known as True Nature Holding, Inc., became a publicly-traded company through a reverse triangular merger with Brain Tree International, Inc., a Utah corporation (“BTI”) in 2012. Trunity Holdings, Inc. was the parent company of our educational business, named Trunity, Inc., which was formed in the state of Delaware on July 28, 2009 through the acquisition of certain intellectual property from its three founders.January 18, 2012. On December 9, 2015, the Company made a decision to restructure Trunity Holdings, Inc., havingwe restructured our operations and acquired Newco4pharmacy, LLC, a development stage business aimed at a roll-up ofcompany which sought to acquire compounding pharmacy businesses. As a part of suchthe restructuring, we completed a “spin out” transaction of our educationalformer business line to our shareholders as of December 31, 2015.line. On April 24, 2020, True Nature Holding, Inc., now known aswe changed our name to Mitesco, Inc. (OTCQB:MITI) completed the change of its corporate identity based on final approval from FINRA.
Since 2020, our operations have focused on establishing medical clinics utilizing nurse practitioners under The Good Clinic name and development and acquisition of telemedicine technology. In March of 2020, we formed a wholly owned subsidiary, The Good Clinic LLC, a Colorado limited liability company for our clinic business.
We opened our first The Good Clinic in Minneapolis, Minnesota in the first quarter of 2021 and anticipate opening seven more in the greater Minneapolis and Denver metropolitan areas before the end of 2021.
Note 2 - Financial Condition, Going Concern and Management Plans
As of June 30, 2021, the Company had cash of $1,686,000, current liabilities of $1,326,000, and has incurred a loss from operations and has generated minimal revenue. The Company’s principal operation is the development and operation of primary care health and wellness clinics operated by nurse practitioners. In addition, the Company develops and deploys software and systems for the healthcare marketplace. The Company intends to a) develop and acquire telemedical technologies, and b) evaluate other healthcare related opportunities both domestically and on an international basis. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to execute its business plan.
As a result of these factors, there is substantial doubt about the ability of the Company to continue as a going concern for one year from the date the financial statements are issued. The Company’s continuance is dependent on raising capital and generating revenues sufficient to sustain operations. During the six months ended June 30, 2021, the Company closed on a $3,000,000 Series C Preferred Stock and warrants offering and $1,668,000 restricted common stock offering. To continue its expansion plans, the Company believes that additional capital will need to be raised and has entered discussions to do so with certain companies. However, as of the date of these consolidated financial statements, no formal agreement exists.
The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts classified as liabilities that might be necessary should the Company be forced to take any such actions.
PPP Loan and Smith Matter
During March 2020, in response to the COVID-19 crisis, the federal government announced plans to offer loans to small businesses in various forms, including the Payroll Protection Program, or "PPP", established as part of the Corona Virus Aid, Relief and Economic Security Act (“CARES Act”) and administered by the U.S. Small Business Administration. On April 18, 2020, the Company’s former President and COO completed and applied on behalf of the Company to Bank of America, NA (“Bank of America”) for a PPP loan, which was subsequently approved. On April 25, 2020, the Company entered an unsecured Promissory Note (the “Note”) with Bank of America for a loan in the original principal amount of approximately $460,000, and the Company received the full amount of the loan proceeds on May 4, 2020.
On July 21, 2020, Bank of America notified the Company in writing that it should not have received $440,000 of the loan proceeds disbursed under the Note. The Company investigated the terms of the application and discovered its former President had erroneously represented it was refinancing an Economic Injury Disaster Loan when no such loan had been received. Bank of America requested that the Company remit the funds received back to Bank of America. The Company is developingcurrently working with Bank of America on a portfoliorepayment plan. If we are not successful in negotiating repayment terms, it could have a material adverse effect on our financial condition. As of product offerings aimed at enhancing healthcare throughout the supply chain as well asdate of this filing the Company has not restructured the loan and Bank of America has not taken any adversarial actions with regard to consumers. We have acquired assetsthe loan.
During management's review of the loan application after the loan had been disbursed to the Company, it was determined that the information provided by its former President and intend to acquire and implement technologies and services to improveCOO in the quality of care, reduce cost, and enhance consumer convenience. We believe the holding company structure facilitates growth and should enable the acquired business to focus on scale. The goalapplication was not representative of the Company’s evolving portfoliosituation. After consulting with legal counsel and conferring with the Board of companies isDirectors, the Board of Directors, in executive session, voted to apply leading-edge solutionsremove the Company’s former President and Chief Operating Officer (“COO”) from its Board of Directors, and all operating roles due to the inaccuracy of the loan application. After that emphasize stakeholder valuedecision, the former President & COO submitted a resignation from all positions with the Company, which was accepted by the Board and leverages distinct sector trends. Sectorsmanagement.
In August 2020, the former President and COO filed a complaint alleging discrimination under certain provisions of interest include artificial intelligence (AI), population health management, data gathering solutions, electronic health records optimization, healthcare IT solutions, virtual care & care augmentation,the anti-discrimination laws of that state. As of the date of this filing the Company has been advised by the convening judicial organization that it has dismissed this matter. The former President requested a “Right-to-Sue” letter, which she received, giving her a right to sue in District Court for 90 days from the date of the dismissed action. On June 23, 2021, the Company and predictive analytics. the former President and COO reached a confidential settlement and release agreement releasing both parties of any future claims.
COVID -19 Impact
The Company formed a holding company structure for bothhas had some impact on its acquired assetsoperations because of the effects of the COVID-19 pandemic, primarily with accessibility to staffing, consultants and in the capital markets, and it is adjusting as needed within its available resources. The Company will continue to assess the effect of the pandemic on its operations. The extent to which the COVID-19 pandemic will continue to impact the Company’s business and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, the duration and effect of possible business disruptions and the short-term effects and ultimate effectiveness of the travel restrictions, quarantines, social distancing requirements and business closures in the United States and Europe, designedother countries to support efficiencies around taxation, legal,contain and economies of scale in administrative functions. We now have a wholly owned subsidiary in Dublin, Ireland, Acelerar Healthcare Holdings, Ltd., and intend to use that location as a base for European operations.
As a development stage company, we have two businesses in development. The first business is our product set “SimpleHIPAA” and “Simple HIPPA for Vets and Pets”. It is designed to transmit data generated attreat the time a prescription is writtendisease. While the potential economic impact brought by, a physician or veterinarian for the pharmacy. This information is embedded inside the application and made available to the healthcare provider and to the pharmacy. While providing a starting point for tracking healthcare information for the end user, it also establishes a communications method between the healthcare provider and the pharmacy. Currently, it is focused on e-prescribing between compounding pharmacies and their clients,duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing the physician for humansCompany’s ability to access capital, which could in the future negatively affect the Company’s liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect the Company’s business and the veterinarian for pets. A large Florida based pharmacy is the development partner and distributor that is introducing it to the marketplace. They have installed the software at more than 100 client sites since January 2020. We are told it is working as designed.value of its securities.
Our second active business is The Good Clinic, LLC. This business is establishing primary care medical clinics operated by Independent Nurse Practitioners. The Good Clinic provides the marketing, support services, systems, and clinical tools to allow an independent Nurse Practitioner to quickly open a clinic. The initial clinic is intended to be opened in Minneapolis, MN in the fourth quarter of 2020. These clinics are being designed to deliver primary care, spa, and dermatological services through in-person, over-the-phone, and telemedicine visits.
We are actively seeking acquisitions that fit our strategy. We seek to find businesses with proven scalable results and then make those technologies and services available to the those that can use them to improve their quality of life, their health, and cost of operation. Some of these businesses simply need marketing and distribution, others will benefit from combining with another technology to create a more complete solution. That is our mission: find the best, deliver efficiencies, make improvements if necessary, and then scale the business.
Note 2 3 – Summary of Significant Accounting Policies
BasisPrinciples of AccountingConsolidation –The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions to interim financial reporting as prescribed by the Securities and Exchange Commission (the “SEC”). The results for the interim periods are not necessarily indicative of results for the entire year. These interim financial statements do not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”), and should be read in conjunction with the consolidated financial statements include the accounts of Mitesco, Inc., and notes thereto filed withits wholly owned subsidiaries MitescoNA, LLC, The Good Clinic, LLC, and Acelerar Healthcare Holdings, LTD. In addition, we anticipate that we will rely on the SECoperating activities of certain legal entities in our Annual Report on Form 10-K forwhich we will not maintain a controlling ownership interest but over which we will have indirect influence and of which we will be considered the fiscal year ended December 31, 2019. Inprimary beneficiary. We expect that these entities will typically be subject to nominee ownership and transfer restriction agreements that effectively transfer the opinion of management, the unaudited Condensed Consolidated Financial Statements contained in this report include all known accruals and adjustments necessary for a fair presentationmajority of the economic risks and rewards of their ownership to the Company. The Company’s management, restriction and other agreements concerning such nominee-owned entities typically includes both financial position, resultsterms 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 operations,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 cash flows for the periods reported herein. Any such adjustments are of a normal recurring nature.transactions have been eliminated.
Use of Estimates -The preparation of these unaudited condensed financial statements requires our management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and related notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment.
Other Comprehensive LossCash - The Company does not have any items of other comprehensive loss and therefore its other comprehensive loss is the same as its net loss in its condensed consolidated statements of operations.
Cash -Allconsiders all highly liquid investments with a maturity datematurities of three months or less to be cash equivalents. The Company had cash and cash equivalents of approximately $1,686,000 as of June 30, 2021, and $65,000 as of December 31, 2020.
Property, Plant, and Equipment - Property and equipment is recorded at the datelower of purchasecost or estimated net recoverable amount and is depreciated using the straight-line method over its estimated useful life. Property acquired in a business combination is recorded at estimated initial fair value. Property, plant, and equipment are cash equivalents.depreciated using the straight-line method based on the lesser of the estimated useful lives of the assets or the lease term based upon the following life expectancy:
Years | |||
Office equipment | 3 to 5 | ||
Furniture & fixtures | 3 to 7 | ||
Machinery & equipment | 3 to 10 | ||
Leasehold improvements | Term of lease | ||
In 2020, the Company entered into a lease for a clinic facility in Minneapolis, Minnesota. In connection with the facility, the Company incurred costs to design, engineer, build and install furniture and equipment in the facility. $417,000 was recorded in construction in progress on the balance sheet as of December 31, 2020. The facility was completed, and the Company received its certificate of occupancy, in the first quarter of 2021. During the three months ended March 31, 2021, the costs previously recorded as construction in progress were recorded to fixed assets and are being depreciated over their useful lives or lease term as appropriate. During the three months ended June 30, 2021, no additional fixed assets were acquired. During the three months ended June 30, 2021, the Company entered into three additional lease, two leases are for two new clinics and one lease was for the new corporate headquarters. With the signing of the three additional leases late in the second quarter we anticipate additional expenditures for fixed assets and leasehold improvements.
Revenue Recognition – On January 1, 2018, we adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition (Topic 605). Results for reporting periods beginning after January 1, 2018, are presented under Topic 606. The impact of adopting the new revenue standard was not material to our financial statements and there was no adjustment to beginning retained earnings on January 1, 2018.
Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
We determine revenue recognition through the following steps:
● | identification of the contract, or contracts, with a customer; |
● | identification of the performance obligations in the contract; |
● | determination of the transaction price; |
● | allocation of the transaction price to the performance obligations in the contract; and |
● | recognition of revenue when, or as, we satisfy a performance obligation. |
Stock-Based Compensation-We recognize the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation cost for stock options areis estimated at the grant date based on each option’s fair-value as calculated by the Black-Scholes-Merton (“BSM”) option-pricing model. Share-based compensation arrangements may include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.
Equity instruments issued to those other than employees are recognized pursuant to FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This ASU relates to the accounting for non-employee share-based payments. The amendment in this update expands the scope of Topic 718 to include all share-based payment transactions in which a grantor acquired goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The ASU excludes share-based payment awards that relate to: (1) financing to the issuer; or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts from Customers. The share-based payments are to be measured at grant-date fair value of the equity instruments that the entity is obligated to issue when the goods or service has been delivered or rendered and all other conditions necessary to earn the right to benefit from the equity instruments have been satisfied. This standard will bebecame effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. We adopted the provisions of this ASU on January 1, 2019. The adoption had no impact on our results of operations, cash flows, or financial condition.
Convertible Instruments-The Company reviews the terms of convertible debt and equity instruments to determine whether there are conversion features or embedded derivative instruments including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. In circumstances where the convertible instrument contains more than one embedded derivative instrument, including conversion options that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single compound instrument. Also, in connection with the sale of convertible debt and equity instruments, the Company may issue free standing warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. When convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for separately, the total proceeds allocated to the convertible host instruments are first allocated to the fair value of the bifurcated derivative instrument. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, usually resulting in those instruments being recorded at a discount from their face amount. When the Company issues debt securities, which bear interest at rates that are lower than market rates, the Company recognizes a discount, which is offset against the carrying value of the debt. Such discount from the face value of the debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income. In addition, certain conversion features are recognized as beneficial conversion features to the extent the conversion price as defined in the convertible note is less than the closing stock price on the issuance of the convertible notes.
Derivative Financial Instruments- Derivatives are recorded on the consolidated balance sheet at fair value. The following assumptions were used for the valuationconversion features of the derivative liability related to the convertible notes that contain a derivative componentare embedded derivatives and are separately valued and accounted for on the consolidated balance sheet with changes in fair value recognized during the three months endedperiod of change as a separate component of other income/expense. Fair values for exchange-traded securities and derivatives are based on quoted market prices. The pricing model the Company uses for determining the fair value of its derivatives is the Lattice Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. As of June 30, 2020:2021, the Company had retired all derivative instruments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock Purchase Warrants-The Company accounts for common stock purchase warrants in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Accounting for Derivative Instruments and Hedging Activities. As is consistent with its handling of stock compensation and embedded derivative instruments, the Company’s cost for stock warrants is estimated at the grant date based on each warrant’s fair-value as calculated by the BSMBlack Sholes option-pricing model value method for valuing the impact of the expense associated with these warrants.
Stockholders’Stockholders’ Equity-Shares of common stock issued for other than cash have been assigned amounts equivalent to the fair value of the service or assets received in exchange. Common stock share and per share amounts in these financial statements have been adjusted for the effects of a one for 101 reverse stock split that occurred in January 2016.
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.
The Company has excluded all common equivalent shares outstanding for warrants, options and convertible instruments to purchase common stock from the calculation of diluted net loss per share because all such securities are antidilutive for the periods presented. As of June 30, 2020, there were 7,317,879 options outstanding excluded from calculation of diluted net loss; as of June 30, 2019, the Company had outstanding 1,425,000 warrants and 67,879 options excluded from the calculation of diluted net loss. The Company, at its discretion, may satisfy the accrued interest on its Series A and Series X Preferred Stock via the issuance of shares of common stock; at June 30, 2020 and December 31, 2019, there were 1,192,563 and 0 shares, respectively, potentially issuable in connection with such issuance.
Income Taxes- The Company accounts for income taxes under the asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s condensed consolidated financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than possible enactments of changes in the tax laws or rates.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. The Company has determined that a valuation allowance is needed due to recent taxable net operating losses, the sale of profitable divisions and the limited taxable income in the carry back periods. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and certain tax loss carryforwards, less any valuation allowance.
The Company accounts for uncertain tax positions as required in that a position taken or expected to be taken in a tax return is recognized in the condensed consolidated financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. The Company does not have any material unrecognized tax benefits. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as components of interest expense and other expense, respectively, in arriving at pretax income or loss. The Company does not have any interest and penalties accrued. The Company is generally no longer subject to U.S. federal, state, and local income tax examinations for the years before 2012.2018.
Business Combinations- The Company accounts for business combinations by recognizing the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair values on the acquisition date. The purchase price allocation process requires management to make significant estimates and assumptions, especially with respect to intangible assets, estimated contingent consideration payments and pre-acquisition contingencies. Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to:
● | future expected cash flows from product sales, support agreements, consulting contracts, other customer contracts, and acquired developed technologies and patents; and |
● | discount rates utilized in valuation estimates. |
Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. Additionally, any change in the fair value of the acquisition-related contingent consideration subsequent to the acquisition date, including changes from events after the acquisition date, such as changes in our estimates of relevant revenue or other targets, will be recognized in earnings in the period of the estimated fair value change. A change in fair value of the acquisition-related contingent consideration or the occurrence of events that cause results to differ from our estimates or assumptions could have a material effect on the condensed consolidated financial position, statements of operations or cash flows in the period of the change in the estimate.
Impairment of Long-Lived Assets-Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed would be separately presented in the condensed consolidated balance sheet and reported at the lower of the carrying amount or fair value less costs to sell and are no longer depreciated. The assets and liabilities of a disposal group classified as held-for-sale would be presented separately in the appropriate asset and liability sections of the condensed consolidated balance sheet, if material. The Company had no impairment charges.
Financial Instruments and Fair Values-The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument. In determining fair value, we use various valuation methodologies and prioritize the use of observable inputs. We assess the inputs used to measure fair value using a three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market:
Level 1 – inputs include exchange quoted prices for identical instruments and are the most observable.
Level 2 – inputs include brokered and/or quoted prices for similar assets and observable inputs such as interest rates.
Level 3 – inputs include data not observable in the market and reflect management judgment about the assumptions market participants would use in pricing the asset or liability.
The use of observable and unobservable inputs and their significance in measuring fair value are reflected in our hierarchy assessment. The carrying amount of cash, prepaid assets, accounts payable and accrued liabilities approximatesapproximate fair value due to the short-term maturities of these instruments. Because cash and cash equivalents are readily liquidated, management classifies these values as Level 1. The fair value of the debentures approximatederivative liabilities approximates their book value as the instruments are short-term in nature and contain market rates of interest. Because there is no ready market or observable transactions, management classifies the debenturesderivative liabilities as Level 3.
Recently Issued Accounting Standards-Standards
In June 2018, the FASB issued ASU 2018-07 “Improvements to Non-employee Share-Based Payment Accounting”, which simplifies the accounting for share-based payments granted to non-employees for goods and services. Under the ASU, most of the guidance on such payments to non-employees would be aligned with the requirements for share-based payments granted to employees. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company does not anticipate that the adoption of this standard will have a material impact on the Company’s consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company has adopted ASU No. 2019-12, “Income Taxes (Topic 740) however giving the Company’s historical losses and full valuation allowance it did not have an impact on its condensed consolidated financial statements and related disclosures.
In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)”. This ASU reduces the number of accounting models for convertible debt instruments and convertible Preferred Stock. As well as amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related EPS guidance. This standard is effective for us on January 1, 2022, including interim periods within those fiscal years. Adoption is either a modified retrospective method or a fully retrospective method of transition. We are currently assessing the impact the new guidance will have on our consolidated financial statements.
There are various other updates recently issued, most of which represent technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s condensed consolidated financial position, results of operations or cash flows.
Note 3 Note 4 – Financial Condition and Going Concern Net Loss Per Share Applicable to Common Shareholders
Net Loss per Share Applicable to Common Stockholders
Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted loss per common share is computed similarly to basic loss per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock.
The following table sets forth the computation of loss per share for the three and six months ended June 30, 2021, and 2020, respectively:
Three Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Numerator: | ||||||||
Net loss applicable to common shareholders | $ | (1,523,769 | ) | $ | (783,032 | ) | ||
Denominator: | ||||||||
Weighted average common shares outstanding | 201,678,218 | 88,833,282 | ||||||
Net loss per share data: | ||||||||
Basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | ||
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Numerator: | ||||||||
Net loss applicable to common shareholders | $ | (4,278,721 | ) | $ | (948,352 | ) | ||
Denominator: | ||||||||
Weighted average common shares outstanding | 194,455,386 | 86,408,229 | ||||||
Net loss per share data: | ||||||||
Basic and diluted | $ | (0.02 | ) | $ | (0.01 | ) | ||
The Company excluded all common equivalent shares outstanding for warrants, options, and convertible instruments to purchase common stock from the calculation of diluted net loss per share because all such securities are antidilutive for the periods presented. As of June 30, 2021, and 2020, the Company had cashfollowing shares were issuable and excluded from the calculation of $17,542, current liabilities of $2,428,995, and has incurred a loss from operations. The Company’s principal operation is the development and deployment of software and systems for the healthcare marketplace. The Company intends to develop solutions in a) healthcare records, b) the sale of applications in the health and wellness area from third parties in addition to its own developed products. The Company is also performing consulting services to certain entities in the pharmacy, medical and veterinary services area. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to execute its business plan.
As a result of these factors, there is substantial doubt about the ability of the Company to continue as a going concern. The Company’s continuance is dependent on raising capital and generating revenues sufficient to sustain operations. The Company believes that the necessary capital will be raised and has entered discussions to do so with certain individuals and companies. However, as of the date of these condensed consolidated financial statements, no formal agreement exists.
The accompanying 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.
During March 2020, in response to the COVID-19 crisis, the federal government announced plans to offer loans to small businesses in various forms, including the Payroll Protection Program, or "PPP", established as part of the Corona Virus Aid, Relief and Economic Security Act (“CARES Act”) and administered by the U.S. Small Business Administration. On April 18, 2020, the President and COO completed and submitted an application on behalf of the Company to Bank of America, NA (“Bank of America”) for a PPP loan, which was subsequently approved. On April 25, 2020 the Company entered into an unsecured Promissory Note (the “Note”) with Bank of America for a loan in the original principal amount of $460,406, and the Company received the full amount of the loan proceeds on May 4, 2020.
On July 21, 2020, Bank of America notified the Company in writing that it should not have received $440,000 of the loan proceeds disbursed under the Note representing an amount for the refinancing of an Economic Injury Disaster Loan, which the Company did not receive. Bank of America has required that the Company remit such funds back to Bank of America. The Company is currently working with Bank of America on a repayment plan.
During management's review of the loan application after the loan had been disbursed to the Company, it was determined that the information provided by its President and COO in the application was not representative of the Company’s situation. After consulting with legal counsel and conferring with the Board of Directors, the Board of Directors, in executive session, voted to remove the Company’s President and Chief Operating Officer (“COO”) from its Board of Directors, and all operating roles due to the inaccuracy of the loan application. Subsequent to that decision, the President & COO submitted a resignation from all positions with the Company, which was accepted by the Board and management.
The former President and COO has retained counsel and has indicated the individual’s intent to file an administrative charge of discrimination in Colorado under certain provisions of the anti-discrimination laws of that state. Although no administrative charge has been filed as of this date, if an administrative charge is filed, the company will vigorously defend itself.diluted loss:
June 30, | ||||||||
2021 | 2020 | |||||||
Options | 11,696,211 | 67,879 | ||||||
Warrants | 12,600,000 | 0 | ||||||
Convertible Preferred Stock Series C | 8,150,705 | 0 | ||||||
Accrued interest on Preferred Stock | 376,803 | 32,784 | ||||||
Total | 32,823,719 | 100,664 | ||||||
We have had some impact on our operations as a result of the effect of the pandemic, primarily with accessibility to staffing, consultants and in the capital markets, and we are adjusting as needed within our available resources. The Company will continue to assess the effect of the pandemic on its operations. The extent to which the COVID-19 pandemic will impact the Company’s business and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, the duration and effect of possible business disruptions and the short-term effects and ultimate effectiveness of the travel restrictions, quarantines, social distancing requirements and business closures in the United States and other countries to contain and treat the disease. While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing the Company’s ability to access capital, which could in the future negatively affect the Company’s liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect the Company’s business and the value of its common stock.
Note 4 5 – Related Party Transactions
RelatedFor the three months ended June 30, 2021:
During the three months ended June 30, 2021, the Company accrued dividends on its Series X Preferred Stock in the total amount of $15,144. Of this amount, a total of $2,000 was payable to officers and directors, $7,816 was payable to a related party transactions forshareholder, and $5,328 was payable to non-related parties.
For the six months ended June 30, 2021:
During the six months ended June 30, 2021, the Company accrued dividends on its Series X Preferred Stock in the total amount of $31,536. Of this amount, a total of $4,000 was payable to officers and directors, $15,630 was payable to a related party shareholder, and $11,906 was payable to non-related parties.
For the three months ended June 30, 2020:
During the three months ended June 30, 2020, werethe Company charged the amount of $19,374 to operations in connection with the vesting of restricted common stock as follows: $6,205 for shares issued to management; $10,110 for shares issued to board members; and $3,059 related to shares issued to an employee. Ms. Julie Smith, the Company’s former President, Chief Operating Officer, and a Board member, resigned effective June 30, 2020. At the time of her resignation, a total of 1,000,000 shares of the Company’s common stock issued to Ms. Smith for compensation as a board member were vested and remain outstanding; an additional 250,000 shares of common stock issued to Ms. Smith for compensation as an officer were vested and remain outstanding; 750,000 shares of common stock to be issued to Ms. Smith for compensation as an officer had not vested, and these shares were cancelled.
On June 30, 2020, the Company accrued dividends on its Series X Preferred stock in the total amount of $32,784. Of this amount, a total of $6,500 was payable to officers and directors, $15,629 was payable to a related party shareholder, and $10,655 was payable to non-related parties.
For the six months ended June 30, 2020:
On February 27, 2020, the Company agreed to issue 1,000,000 ten-year options to its two2 non-management directors (a total of 2,000,000 options). These options have a fair value at issuance of $39,162 per director (a total of $78,324), an exercise price of $0.05 per share, and vest over a three-year period. The Company valued these options using the Black-Scholes valuation model. During the three- months ended June 30, 2020, the amount of $3,264 was charged to operations in connection with each 1,000,000-option grant (a total of $6,528 for all 2,000,000 options).
On March 2, 2020, the Company agreed to issue 1,500,000 ten-year options to each of its Chief Executive Officer, its President, and a consultant (a total of 4,500,000 options). These options have a fair value at issuance of $58,743 per individual (a total of $176,229), an exercise price of $0.05 per share, and vest over a three-year period. The Company valued these options using the Black-Scholes valuation model. Julie Smith, the Company’s President, Chief Operating Officer, and a Board member resigned effective June 30, 2020; the 1,500,000 options that the Company agreed to issue to Ms. Smith were cancelled, and no vesting of these options was recorded during the three months ended June 30, 2020. During the three months ended June 30, 2020, the amount of $4,896 was charged to operations in connection with each of the remaining 1,500,000 option grants (a total of $9,792 for all 3,000,000 remaining options).
During the three months ended June 30, 2020, the Company charged the amount of $19,374 to operations in connection with the vesting of restricted common stock as follows: $6,205 for shares issued to management; $10,110 for shares issued to board members; and $3,059 related to shares issued to an employee. Julie Smith, the Company’s President, Chief Operating Officer, and a Board member, resigned effective June 30, 2020; at the time of her resignation, a total of 1,000,000 shares of the Company’s common stock issued to Ms. Smith for compensation as a board member were vested, and remain outstanding; an additional 250,000 shares of common stock issued to Ms. Smith for compensation as an officer were vested, and also remain outstanding; 750,000 shares of common stock to be issued to Ms. Smith for compensation as an officer had not vested, and these shares were cancelled.
AtOn June 30, 2020, the Company accrued dividends on its Series X Preferred stock in the total amount of $32,784. Of this amount, a total of $6,500 was payable to officers and directors,$15,629 $15,629 was payable to a related party shareholder, and $10,655 was payable to non-related parties.
Related party transactionsNote 6 - Right to Use Assets and Lease Liabilities – Operating Leases
The Company leases clinic and administrative facilities under operating leases. The Company evaluates its contracts to determine if an arrangement is a lease at inception and classify it as a finance or operating lease. Currently, all the Company’s leases are classified as operating leases. Leased assets and corresponding liabilities are recognized based on the present value of the lease payments over the lease term. The lease terms may include options to extend when it is reasonably certain that the Company will exercise that option.
Topic ASC 842 requires the Company to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the six months ended June 30, 2019 were as follows:lease term. Right-of-use assets are recorded in other assets on the Company’s condensed consolidated balance sheets. Current and non-current lease liabilities are recorded in other accruals within current liabilities and other non-current liabilities, respectively, on its condensed consolidated balance sheets. Costs associated with operating leases are recognized on a straight-line basis within operating expenses over the term of the lease.
On March 11, 2019,November 1, 2020, the Company issued 100,000 shares of common stockentered into an agreement to its President as compensation, and chargedopen a clinic in Minneapolis , Minnesota. The initial lease term is 8 years. Fixed rent payments under the fair valueinitial term are approximately $511,000.
On May 24, 2021, the Company entered into an agreement to open a clinic in St. Louis Park, Minnesota, which is expected to begin operations in the amountthird quarter of $8,740 to operations.2021. The initial lease term is seven years. Fixed rent payments under the initial term are approximately $673,000.
On March 11, 2019, the Company issued 100,000 shares of common stock to a board member as compensation, and charged the fair value in the amount of $8,740 to operations.
During the three months ended June 30, 2019, the Company accrued the amount of $2,875 in connection with the vested portion of a common stock award granted to its President.
At June 30, 2019, the Company had the following amounts due to related parties:
|
|
|
|
|
|
|
|
Note 5 – DebtAdditionally, on June 8, 2021, the Company entered into an agreement to open a clinic in Eden Prairie , Minnesota, which is expected to begin operation in the third quarter of 2021. The initial lease term is eight years. Fixed rent payments under the initial term are approximately $620,000.
August 2014 Series C Convertible DebentureOn June 24, 2021, the Company 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.
As part of June 30, 2021, the restructuring, all debentures issued by Trunity Holdings, Inc., to fundCompany had total operating lease liabilities of approximately $1.4 million and right-of-use assets of approximately $1.3 million, which were included in the former, educational business, were eligible to participate in a debt conversion; however, one debenture holder thatcondensed consolidated balance sheet.
Right to use assets – operating leases are summarized below: | June 30, 2021 | December 31, 2020 | ||||||
Clinics | $ | 1,106,667 | $ | 310,361 | ||||
Administrative office | 200,720 | 0 | ||||||
Right to use assets, net | $ | 1,307,387 | $ | 310,361 | ||||
Operating lease liabilities are summarized below: | June 30, 2021 | December 31, 2020 | ||||||
Clinics | $ | 1,147,945 | $ | 321,004 | ||||
Administrative office | 208,859 | 0 | ||||||
Lease liability | $ | 1,356,804 | $ | 321,004 | ||||
Less: current portion | (89,507 | ) | (8,905 | ) | ||||
Lease liability, non-current | $ | 1,267,297 | $ | 312,099 | ||||
The Company’s lease expense was issued a Series C Convertible Debenture (the “Series C Debenture”) in August 2014 with an aggregate face valueentirely comprised of $100,000 in exchange for the cancellation of Series B Convertible Debentures with a carrying value of $110,833 did not convert such debenture. The Series C Convertible Debenture accrues interest at an annual rate of 10%, matured November 2015, and is convertible into our common stock at a conversion rate of $20.20 per share. The holders of the Series C Debenture also received five-year warrants to acquire up to 4,950 shares post-split of common stock for an exercise price of $20.20 per share. The former educational business allocated the face value of the Series C Debenture to the warrants and the debentures based on its relative fair values, and allocated to the warrants, which was recorded as a discount against the Series C Debenture, with an offsetting entry to additional paid-in capital. The discount was fully expensed upon execution of the new debentures as debt extinguishment costs within discontinued operations. The Series C Debenture is currently in default. Details of activityoperating leases. Lease expense for the three months ended June 30, 2021, was 2020 are presented in Notes Payable Table 1, below.
November 2014 Series D Convertible Debenture
As part ofwas $38,500 and $0. For the restructuring all debentures issued by Trunity Holdings, Inc.,six months ended June 30, 2021, and 2020 amounted to fund the former, educational business were eligible to participate in a debt conversion; however, one debenture holder that was issued a Series D Convertible Debenture (the “Series D Debenture”) in November 2014 with an aggregate face value of $10,000 in exchange for the cancellation of Series B Convertible Debenture with a carrying value of $11,333 did not participate in the debt conversion restructuring.$59,200 and $0, respectively. The Series D Debenture accrues interest at an annual rate of 12%, matured November 2015, and is convertible into our common stock at a conversion rate of $16.67 per share. The holders of the Series D Debenture also received five-year warrants to acquire up to 495 shares of common stock for an exercise price of $20.20 per share on a post-split basis. The former educational business allocated the face value of the Series D Debenture to the warrants and the debentures based on their relative fair values, and allocated to the warrants, which was recorded as a discount against the Series D Debenture, with an offsetting entry to additional paid-in capital. The discount was fully expensed upon execution of the new debentures as debt extinguishment costs within discontinued operations. The Series D Debenture is currently in default. Details of activityCompany’s ROU asset amortization for the three months ended June 30, 2021, and 2020 are presented in Notes Payable Table 1, below.was $18,500 and $0, respectively. The Company’s ROU asset amortization for the six months ended June 30, 2021, and 2020 was $24,700 and $0, respectively the difference between the lease expense and the associated ROU asset amortization consists of interest at a rate of 12% per annum.
Maturity analysis under these lease agreements are as follows:
For the twelve months ended June 30, 2022 | $ | 242,476 | ||
For the twelve months ended June 30, 2023 | 341,085 | |||
For the twelve months ended June 30, 2024 | 294,286 | |||
For the twelve months ended June 30, 2025 | 254,470 | |||
For the twelve months ended June 30, 2026 | 259,850 | |||
Thereafter | 625,932 | |||
Total | $ | 2,018,099 | ||
Less: Present value discount | (661,295 | ) | ||
Lease liability | $ | 1,356,804 |
Note 7 – Debt
All obligations disclosed in this section haves been fully satisfied as of the date of this filing and the Company has no further requirements related to these notes except for the Company’s PPP Loan which remains outstanding.
August 2014 Series C and D Convertible Debenture
On March 30, 2021, the Company issued 272,837 shares of common stock and paid cash in the amount of $122,166 as settlement of principal and accrued interest in the amounts of $110,833 and $71,526, respectively, due under the Series C Debenture and principal and accrued interest in the amounts of $11,333 and $8,722 due under the Series C Debenture. The Company recognized a gain in the amount of $3,035 on this transaction. These obligations have been fully satisfied as of the date of this filing and the Company has no further requirements related to these matters.
March 2016 Convertible Note A
On March 18, 2016,24, 2021, the Company issued a 12% Convertible Promissory Note (the “Convertible Note A”)paid cash in the principal amount of $60,000 to a lender. Pursuant to$55,368 as settlement of principal and accrued interest in the terms of the Convertible Note A, the Company is obligated to pay monthly installments of not less than $1,000 the first of each month commencing the month following the execution of the Convertible Note A until its maturity on September 16, 2016 at which time the Company was obligated to repay the full principal amount of $41,000 and $13,167, respectively, due under the March 2016 Convertible Note A. The Convertible Note A is convertible byCompany recognized a loss in the holder at any time into sharesamount of $1,201 on this transaction. This obligation has been fully satisfied as of the Company’s common stock at pricedate of $1.00 per share,this filing and throughout the duration of the note, the holder has the right to participate in any financing the Company may engage in upon the same terms and conditions as all other investors. The Company allocated the face value of the Convertible Note Ahas no further requirements related to the shares and the note based on relative fair values, and the amount allocated to the shares of $18,750 was recorded as a discount against the note. The beneficial conversion feature of $9,375 was recorded as a debt discount with an offsetting entry to additional paid-in capital decreasing the note payable and increasing debt discount. The debt discount was amortized to interest expense during the year ended December 31, 2016. this matter.
Upon issuance of the ConvertibleEagle Equities Note A, the lender was awarded 15,000 restricted common stock as an origination fee which includes piggy-back registration rights. 4
On September 19, 2016,January 4, 2021, the Company issued the lender an additional 15,000 restricted4,123,750 shares of common stock at a price of $0.30$0.012 per share to extend the term of the loan agreement indefinitely. The costpursuant to the Company was $4,050conversion of $45,000 of principal and $4,485 of accrued interest in interest expense.Eagle Equities Note 4. On August 10, 2017,January 6, 2021, the Company issued 25,0003,505,964 shares of common stock withat a fair valueprice of $3,750 for$0.01224 per share pursuant to the conversion of $39,000 of principal and $3,913 of accrued interest through August 1, 2017 in Eagle Equities Note 4. These obligations have been fully satisfied as of the amountdate of $7,860. In April 2018,this filing and the Company has no further requirements related to these matters.
Eagle Equities Note 5
On January 11, 2021, the Company issued 75,0004,463,507 shares of common stock withat a valueprice of $7,500 as consideration for an extension$0.01224 per share pursuant to the conversion of the term$50,000 of the loan to July 1, 2018,principal and on August 13, 2018,$4,633 of accrued interest in Eagle Equities Note 5. On January 14, 2021, the Company issued an additional 75,0004,319,378 shares of common stock withat a valueprice of $6,750 for an extension$0.01266 per share pursuant to the conversion of $50,000 of principal and $4,683 of accrued interest in Eagle Equities Note 5. These obligations have been fully satisfied as of the termdate of this filing and the loanCompany has no further requirements related to October 31, 2018. Duringthese matters.
Eagle Equities Note 6
On January 21, 2021, the year ended December 31, 2019, the lender converted principal in the amount of $15,000 into 120,000Company issued 6,449,610 shares of common stock. The Company recordedstock at a lossprice of $0.0154 per share pursuant to the conversion of $93,000 of principal and $6,324 of accrued interest in the amount of $13,867 on this conversion. Also, during the year ended December 31, 2019,Eagle Equities Note 6. On January 28, 2021, the Company madeissued 7,285,062 shares of common stock at a price of $0.01575 per share pursuant to the conversion of $107,200 of principal paymentand $7,540 of accrued interest in Eagle Equities Note 6. These obligations have been fully satisfied as of the amountdate of $4,000 onthis filing and the Company has no further requirements related to these matters.
Eagle Equities Note 7
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 7 whereby the Company issued 1,184,148 shares of common stock at a price of $0.24984 per share in satisfaction of $200,200 of principal and all accrued interest and prepayment penalties due under this note. DetailsThese obligations have been fully satisfied as of activity for the three months ended June 30, 2020 are presented in Notes Payable Table 1, below.date of this filing and the Company has no further requirements related to these matters.
Eagle Equities Note 8
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 8 whereby the Company issued 639,593 shares of common stock at a price of $0.23851 per share in satisfaction of $114,400 of principal and all accrued interest and prepayment penalties due under this note. These obligations have been fully satisfied as of the date of this filing and the Company has no further requirements related to these matters.
Eagle Equities Note 9
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 9 whereby the Company issued 605,177 shares of common stock at a price of $0.24984 per share in satisfaction of $114,400 of principal and all accrued interest and prepayment penalties due under this note. These obligations have been fully satisfied as of the date of this filing and the Company has no further requirements related to these matters.
Eagle Equities Note 10
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 10 whereby the Company issued 1,095,131 shares of common stock at a price of $0.23748 per share in satisfaction of $200,200 of principal and all accrued interest and prepayment penalties due under this note. These obligations have been fully satisfied as of the date of this filing and the Company has no further requirements related to these matters.
Power Up Note 11
On September 12, 2019, the Company entered into a Securities Purchase Agreement with Power Up pursuant to which Power Up agreed to purchase a convertible promissory note (the “Power Up Note 11”) in the aggregate principal amount of $45,000. The Power Up Note 11 entitles the holder to 12% interest per annum and matures on July 15, 2020. Under the Power Up Note 11, Power Up may convert all or a portion of the outstanding principal of the Power Up Note 11 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Power Up Note 11, at a price equal to the higher of the variable conversion price or $0.00006 per share. The variable conversion price shall mean 55% of lowest trading price during the 25 trading day period ending on the last complete trading date prior to the date of conversion, provided, however, that Power Up may not convert the Power Up Note 11 to the extent that such conversion would result in beneficial ownership by Power Up and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Power Up Note 11 within 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 115%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Power Up Note 11, then such redemption premium is 120%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 125%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 130%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 135%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Power Up Note 11, there shall be no further right of prepayment. The Company recorded an original issue discount in the amount of $3,000 in connection with the Power Up Note 11; $3,000 was amortized to interest expense during the year ended December 31, 2019. The Company accrued interest in the amount of $1,642 on the Power Up Note 11 during the year ended December 31, 2019. During the year ended December 31, 2019, the Company determined that a derivative liability in the amount of $47,187 existed in connection with the variable rate conversion feature of the Power Up Note 11. $45,000 of this amount was charged to discount on the Power Up Note 11, and $2,187 was charged to interest expense.
During the six months ended June 30, 2020, the Company made a cash payment in the amount of $74,195 on the Power Up Note 11 which fully satisfied this obligation. This amount consisted of $45,000 of principal, $2,680 of accrued interest, and $23,815 of prepayment penalty. The Company revalued the derivative liability associated with the Power Up Note 11 at the time of payment, and recorded a gain on revaluation in the amount of $35,420. The Company credited the fair value of the derivative liability at the time of payment in the amount of $21,266 to additional paid-in capital. Details of additional activity for the three months ended June 30, 2020 are presented in Notes Payable Table 1, below.
Power Up Note 12
On October 7, 2019, the Company entered into a Securities Purchase Agreement with Power Up pursuant to which Power Up agreed to purchase a convertible promissory note (the “Power Up Note 12”) in the aggregate principal amount of $53,000 and an original issue discount of $3,000. The Power Up Note 12 entitles the holder to 12% interest per annum and matures on August 15, 2020. Under the Power Up Note 12, Power Up may convert all or a portion of the outstanding principal of the Power Up Note 12 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Power Up Note 12, at a price equal to the higher of the variable conversion price or $0.00006 per share. The variable conversion price shall mean 55% of lowest trading price during the 25 trading day period ending on the last complete trading date prior to the date of conversion, provided, however, that Power Up may not convert the Power Up Note 12 to the extent that such conversion would result in beneficial ownership by Power Up and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Power Up Note 12 within 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 115%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Power Up Note 12, then such redemption premium is 120%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 125%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 130%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 135%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Power Up Note 12, there shall be no further right of prepayment. The Company accrued interest in the amount of $1,499 on the Power Up Note 12 during the year ended December 31, 2019. During the year ended December 31, 2019, the Company determined that a derivative liability in the amount of $54,969 existed in connection with the variable rate conversion feature of the Power Up Note 12. $53,000 of this amount was charged to discount on the Power Up Note 12, and $2,187 was charged to interest expense. $6,502 of the discount was charged to operations during the year ended December 31, 2019.
During the three months ended June 30, 2020, the Company made a cash payment in the amount of $84,231 on the Power Up Note 12 which fully satisfied this obligation. This amount consisted of $53,000 of principal, $3,312 of accrued interest, and $27,919 of prepayment penalty. The Company revalued the derivative liability associated with the Power Up Note 12 at the time of payment, and recorded a gain on revaluation in the amount of $4,247. The Company credited the fair value of the derivative liability at the time of payment in the amount of $62,569 to additional paid-in capital. Details of additional activity for the three months ended June 30, 2020 are presented in Notes Payable Table 1, below.
Power Up Note 13
On November 11, 2019, the Company entered into a Securities Purchase Agreement with Power Up pursuant to which Power Up agreed to purchase a convertible promissory note (the “Power Up Note 13”) in the aggregate principal amount of $73,000 and an original issue discount of $3,000. The Power Up Note 13 entitles the holder to 12% interest per annum and matures on August 30, 2020. Under the Power Up Note 13, Power Up may convert all or a portion of the outstanding principal of the Power Up Note 13 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Power Up Note 12, at a price equal to the higher of the variable conversion price or $0.00006 per share. The variable conversion price shall mean 55% of lowest trading price during the 25 trading day period ending on the last complete trading date prior to the date of conversion, provided, however, that Power Up may not convert the Power Up Note 13 to the extent that such conversion would result in beneficial ownership by Power Up and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Power Up Note 13 within 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 115%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Power Up Note 13, then such redemption premium is 120%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 125%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 130%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 135%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Power Up Note 13, there shall be no further right of prepayment. The Company accrued interest in the amount of $1,414 on the Power Up Note 13 during the year ended December 31, 2019. During the year ended December 31, 2019, the Company determined that a derivative liability in the amount of $73,529 existed in connection with the variable rate conversion feature of the Power Up Note 13. $73,000 of this amount was charged to discount on the Power Up Note 13, and $529 was charged to interest expense. $6,091 of the discount was charged to operations during the year ended December 31, 2019.
During the three months ended June 30, 2020, the Company made a cash payment in the amount of $115,980 on the Power Up Note 13 which fully satisfied this obligation. This amount consisted of $73,000 of principal, $4,728 of accrued interest, and $38,252 of prepayment penalty. The Company revalued the derivative liability associated with the Power Up Note 13 at the time of payment, and recorded a gain on revaluation in the amount of $4,882. The Company credited the fair value of the derivative liability at the time of payment in the amount of $86,380 to additional paid-in capital. Details of additional activity for the three months ended June 30, 2020 are presented in Notes Payable Table 1, below.
Eagle Equities Note 1
On November 22, 2019, the Company entered into a Securities Purchase Agreement with Eagle Equities, LLC (“Eagle Equities”) pursuant to which Eagle Equities agreed to purchase a convertible promissory note (the “Eagle Equities Note 1”) in the aggregate principal amount of $256,000 and an original issue discount of $6,000. The Eagle Equities Note 1 entitles the holder to 12% interest per annum and matures on November 22, 2020. Under the Eagle Equities Note 1, Eagle Equities may convert all or a portion of the outstanding principal of the Eagle Equities Note 1 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Eagle Equities Note 1, at a price equal to 60% of lowest traded price during the 20 day trading period ending on the day the conversion notice is received by the Company, provided, however, that Eagle Equities may not convert the Eagle Equities Note 1 to the extent that such conversion would result in beneficial ownership by Eagle Equities and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Eagle Equities Note 1 during the 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 110%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Eagle Equities Note 1, then such redemption premium is 116%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 122%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 128%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 134%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Eagle Equities Note 1, there shall be no further right of prepayment. The Company accrued interest in the amount of $3,367 on the Eagle Equities Note 1 during the year ended December 31, 2019. During the year ended December 31, 2019, the Company determined that a derivative liability in the amount of $271,694 existed in connection with the variable rate conversion feature of the Eagle Equities Note 1. $256,000 of this amount was charged to discount on the Eagle Equities Note 1, and $15,694 was charged to interest expense. $7,784 of the discount was charged to operations during the year ended December 31, 2019.
During the three months ended June 30, 2020, the holder of the Eagle Equities Note 1 converted the following amounts of principal and accrued interest to common stock: On June 5, 2020, principal of $25,000 and accrued interest of $1,608 were converted at a price of $0.0132 per share into 2,015,783 shares of common stock; On June 17, 2020, principal of $25,000 and accrued interest of $1,708 were converted at a price of $0.0132 per share into 2,023,358 shares of common stock; On June 23, 2020, principal of $40,000 and accrued interest of $2,813 were converted at a price of $0.0132 per share into 3,243,434 shares of common stock; and on June 26, 2020, principal of $26,000 and accrued interest of $1,855 were converted at a price of $0.01362 per share into 2,045,130 shares of common stock. There were no gains or losses recorded, as these conversions were made pursuant to the terms of the agreement. Details of activity for the three months ended June 30, 2020 are presented in Notes Payable Table 1, below.
Eagle Equities Note 2
On December 19, 2019, the Company entered into a Securities Purchase Agreement with Eagle Equities pursuant to which Eagle Equities agreed to purchase a convertible promissory note (the “Eagle Equities Note 2”) in the aggregate principal amount of $256,000 and an original issue discount of $6,000. The Eagle Equities Note 2 entitles the holder to 12% interest per annum and matures on December 19, 2020. Under the Eagle Equities Note 2, Eagle Equities may convert all or a portion of the outstanding principal of the Eagle Equities Note 2 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Eagle Equities Note 2, at a price equal to 60% of lowest traded price during the 20 day trading period ending on the day the conversion notice is received by the Company, provided, however, that Eagle Equities may not convert the Eagle Equities Note 2 to the extent that such conversion would result in beneficial ownership by Eagle Equities and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Eagle Equities Note 2 during the 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 110%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Eagle Equities Note 2, then such redemption premium is 116%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 122%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 128%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 134%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Eagle Equities Note 2, there shall be no further right of prepayment. The Company accrued interest in the amount of $1,094 on the Eagle Equities Note 2 during the year ended December 31, 2019. During the year ended December 31, 2019, the Company determined that a derivative liability in the amount of $277,476 existed in connection with the variable rate conversion feature of the Eagle Equities Note 2. $256,000 of this amount was charged to discount on the Eagle Equities Note 2, and $21,476 was charged to interest expense. $8,393 of the discount was charged to operations during the year ended December 31, 2019. Details of activity for the three months ended June 30, 2020 are presented in Notes Payable Table 1, below.
Eagle Equities Note 3
On January 24, 2020, the Company entered into a Securities Purchase Agreement with Eagle Equities pursuant to which Eagle Equities agreed to purchase a convertible promissory note (the “Eagle Equities Note 3”) in the aggregate principal amount of $256,000 and an original issue discount of $6,000. The Eagle Equities Note 3 entitles the holder to 12% interest per annum and matures on January 24, 2021. Under the Eagle Equities Note 3, Eagle Equities may convert all or a portion of the outstanding principal of the Eagle Equities Note 3 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Eagle Equities Note 3, at a price equal to 60% of lowest traded price during the 20 day trading period ending on the day the conversion notice is received by the Company, provided, however, that Eagle Equities may not convert the Eagle Equities Note 3 to the extent that such conversion would result in beneficial ownership by Eagle Equities and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Eagle Equities Note 3 during the 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 110%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Eagle Equities Note 3, then such redemption premium is 116%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 122%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 128%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 134%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Eagle Equities Note 3, there shall be no further right of prepayment. During the three months ended March 31, 2020, the Company determined that a derivative liability in the amount of $272,412 existed in connection with the variable rate conversion feature of the Eagle Equities Note 3. $250,000 of this amount was charged to discount on the Eagle Equities Note 3, and $22,412 was charged to interest expense. Details of additional activity for the three months ended June 30, 2020 are presented in Notes Payable Table 1, below.
Eagle Equities Note 4
On March 10, 2020, the Company entered into a Securities Purchase Agreement with Eagle Equities pursuant to which Eagle Equities agreed to purchase a convertible promissory note (the “Eagle Equities Note 4”) in the aggregate principal amount of $129,000 and an original issue discount of $4,000. The Eagle Equities Note 4 entitles the holder to 12% interest per annum and matures on March 10, 2021. Under the Eagle Equities Note 4, Eagle Equities may convert all or a portion of the outstanding principal of the Eagle Equities Note 4 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Eagle Equities Note 4, at a price equal to 60% of lowest traded price during the 20 day trading period ending on the day the conversion notice is received by the Company, provided, however, that Eagle Equities may not convert the Eagle Equities Note 4 to the extent that such conversion would result in beneficial ownership by Eagle Equities and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Eagle Equities Note 4 during the 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 110%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Eagle Equities Note 4, then such redemption premium is 116%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 122%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 128%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 134%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Eagle Equities Note 4, there shall be no further right of prepayment. During the three months ended March 31, 2020, the Company determined that a derivative liability in the amount of $139,021 existed in connection with the variable rate conversion feature of the Eagle Equities Note 4. $125,000 of this amount was charged to discount on the Eagle Equities Note 4, and $14,021 was charged to interest expense. Details of additional activity for the three months ended June 30, 2020 are presented in Notes Payable Table 1, below.
Eagle Equities Note 5
On April 8, 2020, the Company entered into a Securities Purchase Agreement with Eagle Equities pursuant to which Eagle Equities agreed to purchase a convertible promissory note (the “Eagle Equities Note 5”) in the aggregate principal amount of $100,000 and an original issue discount of $4,000. The Eagle Equities Note 4 entitles the holder to 12% interest per annum and matures on April 8, 2021. Under the Eagle Equities Note 5, Eagle Equities may convert all or a portion of the outstanding principal of the Eagle Equities Note 5 into shares of Common Stock beginning on the date which is 180 days from the issuance date of the Eagle Equities Note 5, at a price equal to 60% of lowest traded price during the 20 day trading period ending on the day the conversion notice is received by the Company, provided, however, that Eagle Equities may not convert the Eagle Equities Note 5 to the extent that such conversion would result in beneficial ownership by Eagle Equities and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. If the Company prepays the Eagle Equities Note 5 during the 30 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 110%; if such prepayment is made between the 31st day and the 60th day after the issuance of the Eagle Equities Note 5, then such redemption premium is 116%; if such prepayment is made from the sixty first 61st to the 90th day after issuance, then such redemption premium is 122%; and if such prepayment is made from the 91st to the 120th day after issuance, then such redemption premium is 128%; and if such prepayment is made from the 121st to the 150th day after issuance, then such redemption premium is 134%; and if such prepayment is made from the 151st to the 180th day after issuance, then such redemption premium is 140%. After the 180th day following the issuance of the Eagle Equities Note 5, there shall be no further right of prepayment. During the three months ended June 30, 2020, the Company determined that a derivative liability in the amount of $106,576 existed in connection with the variable rate conversion feature of the Eagle Equities Note 5. $100,000 of this amount was charged to discount on the Eagle Equities Note 5, and $6,576 was charged to interest expense. Details of additional activity for the three months ended June 30, 2020 are presented in Notes Payable Table 1, below.
PPP Loan
On May 4, 2020, the Company received loan proceeds from Bank of America in the amount of $460,406 under the Paycheck Protection Program (the “PPP Loan”). The PPP loan was obtained pursuant to the CARES Act, which provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business plus Economic Injury Disaster Loan amounts. The loans and accrued interest are forgivable after sixty days providing the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the sixty-day period. According to its terms, the PPP Loan is payable over two years at an interest rate of 1%, with a deferral of payments for the first six months. Subsequent to June 30, 2020, the Company determined that errors had been made in the application submitted to obtain this loan.
On July 21, 2020, Bank of America notified the Company in writing that it should not have received $440,000 of the loan proceeds representing an amount fordisbursed under the Note. The Company investigated the terms of the application and discovered its former President had erroneously represented it was refinancing of an Economic Injury Disaster Loan whichwhen the Company did not receive.never applied for or received such a loan. Bank of America has requiredrequested that the Company remit suchreturn the funds it received back to Bank of America. The Company is currently in discussionsnegotiating a repayment plan with Bank of America to arrange terms for a repayment plan. The PPP Loanthough no modification has been classifiedagreed to as of the date of this filing. If we are not successful in negotiating repayment terms, it could have a current liabilitymaterial adverse effect on the Company’s balance sheet at June 30, 2020. See Note 9.
our financial condition. Details of additional activity for the three monthsquarter ended June 30, 20202021, are presented in Notes Payable Table 1, below.
Notes Payable Table 1:
Interest | Amortization | Interest | Amortization | |||||||||||||||||||||||||||||||||
Expense | of Discount | Expense | of Discount | |||||||||||||||||||||||||||||||||
3 months | 3 months | 6 months | 6 months | Discount | ||||||||||||||||||||||||||||||||
Principal Balance | Accrued Interest | ended | ended | ended | ended | Balance | ||||||||||||||||||||||||||||||
6/30/2020 | 12/31/2019 | 6/30/2020 | 12/31/2019 | 6/30/2020 | 6/30/2020 | 6/30/2020 | 6/30/2020 | 6/30/2020 | ||||||||||||||||||||||||||||
Series C Convertible Debenture | $ | 110,833 | $ | 110,833 | $ | 63,235 | $ | 57,709 | $ | 2,763 | $ | - | $ | 5,526 | $ | - | $ | - | ||||||||||||||||||
Series D Convertible Debenture | 11,333 | 11,333 | 7,704 | 7,026 | 339 | - | 678 | - | - | |||||||||||||||||||||||||||
Convertible Note A | 41,000 | 41,000 | 9,555 | 7,101 | 1,227 | - | 2,454 | - | - | |||||||||||||||||||||||||||
Power Up Note 11 | - | 45,000 | - | 1,805 | - | - | 875 | 38,498 | - | |||||||||||||||||||||||||||
Power Up Note 12 | - | 53,000 | - | 1,499 | 227 | 37,313 | 1,813 | 46,014 | - | |||||||||||||||||||||||||||
Power Up Note 13 | - | 73,000 | - | 1,488 | 1,056 | 57,005 | 3,240 | 66,554 | - | |||||||||||||||||||||||||||
Eagle Equity Note 1** | 140,000 | 256,000 | 10,261 | 3,367 | 7,220 | 126,403 | 14,879 | 139,197 | 109,019 | |||||||||||||||||||||||||||
Eagle Equity Note 2 | 256,000 | 256,000 | 16,329 | 1,010 | 7,659 | 28,461 | 15,318 | 40,279 | 207,328 | |||||||||||||||||||||||||||
Eagle Equity Note 3 | 256,000 | - | 13,298 | - | 7,659 | 16,406 | 13,298 | 25,903 | 230,097 | |||||||||||||||||||||||||||
Eagle Equity Note 4 | 129,000 | - | 4,750 | - | 3,859 | 8,378 | 4,750 | 15,800 | 113,200 | |||||||||||||||||||||||||||
Eagle Equity Note 5 | 100,000 | - | 2,729 | - | 2,729 | 13,931 | 2,729 | 13,931 | 90,069 | |||||||||||||||||||||||||||
PPP Loan | 460,406 | - | 719 | - | 719 | - | 719 | - | - | |||||||||||||||||||||||||||
Other | - | - | - | 1,865 | - | - | - | - | - | |||||||||||||||||||||||||||
Total | $ | 1,504,572 | $ | 846,166 | $ | 128,580 | $ | 82,870 | $ | 35,457 | $ | 287,8979 | $ | 67,865 | $ | 386,175 | $ | 749,713 | ||||||||||||||||||
** Subsequent to June 30, 2020, $140,000 of principal and $11,042 of accrued interest of this note were converted to a total of 8,938,549 shares of the Company’s common stock.
June 30, 2021 | December 31, 2020 | |||||||
Total notes payable | $ | 460,406 | $ | 1,656,772 | ||||
Less: Discount | 0 | (756,795 | ) | |||||
Notes payable - net of discount | $ | 460,406 | $ | 899,977 | ||||
Current Portion, net of discount | $ | 460,406 | $ | 899,977 | ||||
Long-term portion, net of discount | $ | 0 | $ | 0 | ||||
The total amount of notes payable at June 30, 2020 and December 31, 2019 is presented in Notes Payable Table 2 below:
Notes Payable Table 2:
June 30, 2020 | December 31, 2019 | |||||||
Total notes payable | $ | 1,504,572 | $ | 846,166 | ||||
Less: Discount | (749,713 | ) | (646,888 | ) | ||||
Notes payable - net of discount | $ | 754,859 | $ | 199,278 | ||||
Current Portion, net of discount | $ | 754,859 | $ | 199,278 | ||||
Long-term portion, net of discount | $ | - | $ | - | ||||
Note 6 8 – Derivative Liabilities
Certain of the Company’s convertible notes and warrants contain features that create derivative liabilities. The pricing model the Company uses for determining fair value of its derivatives is the Lattice Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs involves management’s judgment and may impact net income. The derivative components of these notes are valued at issuance, at conversion, at restructure, and at each period end.
Derivative liability activity for the year ended December 31, 2019 and the six months ended June 30, 2020 is2021, are summarized in the table below:
December 31, 2018 | $ | - | ||
Conversion features issued | 1,472,320 | |||
Warrants issued | 187,968 | |||
Settled upon conversion or exercise | (689,469 | ) | ||
Settled upon payment of note | (191,827 | ) | ||
Loss on revaluation | 709,431 | |||
December 31, 2019 | $ | 1,488,423 |
December 31, 2020 | $ | 807,682 | ||
Settled upon conversion or exercise | (1,301,137 | ) | ||
Gain on revaluation | 493,455 | |||
June 30, 2021 | $ | 0 |
Conversion features issued | 518,009 | |||
Settled upon conversion or exercise | (664,684 | ) | ||
Settled upon payment of note | (148,949 | ) | ||
Gain on revaluation | (211,102 | ) | ||
June 30, 2020 | $ | 981,697 |
Note 7 9 – Stockholders’ Deficit Stockholders’ Equity (Deficit)
Common Stock
The Company has authorized 500,000,000 shares of common stock, par value $0.01; 98,796,144 and 81,268,443208,188,705 shares were issued and outstanding aton June 30, 2020 and December 31, 2019, respectively.2021.
Common Stock Transactions During the SixMonths Ended June 30,, 2020 2021
On January 4, 2021, the Company issued 4,123,750 shares of common stock at a price of $0.012 per share pursuant to the conversion of $45,000 of principal and $4,485 of accrued interest in Eagle Equities Note 4.
On January 6, 2021, the Company issued 3,505,964 shares of common stock at a price of $0.01224 per share pursuant to the conversion of $39,000 of principal and $3,913 of accrued interest in Eagle Equities Note 4.
On January 11, 2021, the Company issued 4,463,507 shares of common stock at a price of $0.01224 per share pursuant to the conversion of $50,000 of principal and $4,633 of accrued interest in Eagle Equities Note 5.
On January 14, 2021, the Company issued 4,319,378 shares of common stock at a price of $0.01266 per share pursuant to the conversion of $50,000 of principal and $4,683 of accrued interest in Eagle Equities Note 5.
On January 21, 2021, the Company issued 6,449,610 shares of common stock at a price of $0.0154 per share pursuant to the conversion of $93,000 of principal and $6,324 of accrued interest in Eagle Equities Note 6.
On January 28, 2021, the Company issued 7,285,062 shares of common stock at a price of $0.01575 per share pursuant to the conversion of $107,200 of principal and $7,540 of accrued interest in Eagle Equities Note 6.
On February 1, 2021, the Company issued 6,672,000 shares of common stock in a private placement (the “2021 Private Placement”) at a price of $0.25 per share for cash proceeds of $1,668,000.
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 7 whereby the Company issued 1,184,148 shares of common stock at a price of $0.24984 per share in satisfaction of $200,200 of principal and all accrued interest and prepayment penalties due under this note.
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 8 whereby the Company issued 639,593 shares of common stock at a price of $0.23851 per share in satisfaction of $114,400 of principal and all accrued interest and prepayment penalties due under this note.
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 9 whereby the Company issued 605,177 shares of common stock at a price of $0.24984 per share in satisfaction of $114,400 of principal and all accrued interest and prepayment penalties due under this note.
On February 5, 2021, the Company entered into a settlement agreement with the holders of the Eagle Equities Note 10 whereby the Company issued 1,095,131 shares of common stock at a price of $0.23748 per share in satisfaction of $200,200 of principal and all accrued interest and prepayment penalties due under this note.
On February 22, 2021, the Company issued 336,000 shares of common stock for the exercise of options at a price of $0.03 per share.
On March 11, 2021, the Company issued 600,000 shares of common stock to 4 officers of The Good Clinic in exchange for 4,800 shares of Series A Preferred Stock. The 4,800 shares of Series A Preferred Stock were cancelled.
On March 17, 2021, the Company issued 300,000 shares of common stock at a price of $0.31 per share to a service provider.
On March 23, 2021, the Company issued 461,358 shares of common stock at a price of $0.26 per share to the underwriters of the 2021 Private Placement.
On April 19, 2021, the Company issued 1,962 shares of common stock for professional fees which had been performed in a prior period. The Company recorded these shares at the par value of $0.01 per share.
On May 4 through May 26, 2021, the Company issued 4,237,424 shares of common stock for the conversion of 1,059,356 shares of Series C Preferred Stock at a price of $0.25 per share.
On May 12, 2021, the Company issued 2,500,000 shares of common stock at a price of $0.03 per share for the exercise of stock options by an investor.
On June 10 through June 29, 2021, the Company issued 5,116,668 shares of common stock at a price of $0.03 per share for the exercise of stock options by officers and directors.
On June 23, 2021, the Company cancelled 2,000,000 shares of common stock held by an ex-officer in connection with a settlement agreement. The cancellation of these shares was recorded at the par value of $0.01 per share. Also, in connection with the settlement agreement, the Company issued 637,953 shares to the ex-officer at the market price of $.20 per share.
Also, during the six months ended June 30, 2021, the Company charged the amount of $7,897 to operations in connection with the vesting of stock granted to its officers and board members; the Company also charged the amount of $201,292 to operations in connection with the vesting of options granted to its officers and board members.
Common Stock Transactions During the Six Months Ended June 30, 2020
During the six months ended June 30, 2020, the Company issued 2,901,440 shares of common stock for the cashless exercise of warrants. These warrants were issued pursuant to a settlement agreement with a note holder regarding the effective price of warrants issued with regard to a variable conversion price feature which resulted in the issuance of 1,011,967 more shares than would have been issued prior to the settlement agreement. The Company recorded a loss in the amount of $24,894 on this transaction based upon the additional shares issued at the market price of the Company’s common stock.
Also, during the six months ended June 30, 2020, the holder of the Eagle Equities Note 1 converted the following amounts of principal and accrued interest to common stock: On June 5, 2020, principal of $25,000 and accrued interest of $1,608 were converted at a price of $0.0132 per share into 2,015,783 shares of common stock; On June 17, 2020, principal of $25,000 and accrued interest of $1,708 were converted at a price of $0.0132 per share into 2,023,358 shares of common stock; On June 23, 2020, principal of $40,000 and accrued interest of $2,813 were converted at a price of $0.0132 per share into 3,243,434 shares of common stock; and on June 26, 2020, principal of $26,000 and accrued interest of $1,855 were converted at a price of $0.01362 per share into 2,045,130 shares of common stock. There were no gains or losses recorded, as these conversions were made pursuant to the terms of the agreement.
Also, during the six months ending June 30, 2020, the Company issued 200,000 restricted shares of the Company’s common stock at valued $7,680 in exchange for services conducted on behalf of the Company. The value of these shares was based on the closing market price on the respective date of grant.
Also, during the six months ended June 30, 2020, the Company charged the amount of $53,050 to operations in connection with the vesting of stock granted to its officers and board members; the Company also charged the amount of $27,580 to operations in connection with the vesting of options granted to officers and board members.
Also, during the six months ended June 30, 2020, the Company entered into agreements to issue 500,000 options to each of four4 consultants (a total of 2,000,000 options). The options have a fair value of $20,930 per consultant (a total of $83,720). These agreements will become effective April 6, 2020, at which time the Company will begin to charge the value of these options to operations. The Company valued these options using the Black-Scholes valuation model.
Also, during the six months ended June 30, 2020, the Company entered into agreements with two note holders regarding the exercise price of warrants held by the note holders. These agreements resulted in the following: (i) the Company issued 1,000,000 shares of common stock, and the note holders agreed to cancel 2,769,482 warrants; the Company recorded a gain in the amount of $77,652 on this transaction; (ii) the Company issued 4,098,556 shares of common stock for the exercise of 4,480,938 warrants in a cashless transaction; the Company recorded a gain in the amount of $259,947 on this transaction, which is included in gain on derivative liabilities.
Common Stock Transactions During the Six Months Ended June 30, 2019
During the six months ending June 30, 2019, the Company issued 200,000 restricted shares of the Company’s common stock at valued $17,480 in exchange for services conducted on behalf of the Company. The value of these shares was based on the closing market price on the respective date of grant.
Also, during the six months ended June 30, 2019, the Company charged the amount of $2,875 to additional paid-in capital in connection with the vesting of stock granted to its President.
Also during the six months ended June 30, 2019, the Company issued, in seven transactions, a total of 1,918,625 shares in connection with the conversion of notes payable principal and accrued interest in the aggregate amount of $86,000 and $4,260, respectively; a loss in the aggregate amount of $99,724 was recognized on these transactions.
Also, during the six months ended June 30, 2019, the Company cancelled 400,000 shares of common stock issued to a former executive officer.
Preferred Stock
The Company has authorized 100,000,000 shares of Preferred Stock. At June 30, 2020, designations have been filed for the issuance of up to 400,000 shares of its Series X preferred stock, and for the issuance of up to 500,000 shares of its Series A Preferred stock.
Series A Preferred Stock
The Company has issued 4,800 and 0 shares of its 10% Series A Cumulative Redeemable Perpetual Preferred Stock (the “Series A Preferred Stock”) as of June 30, 2020 and December 31, 2019, respectively. The Series A Preferred Stock has a par value of $0.01 per share, no stated maturity, a liquidation preference of $25.00 per share, and will not be subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless the Company decides to redeem or otherwise repurchase the Series A Preferred Stock. The Series A Preferred Stock is not redeemable prior to March 3, 2023. The Series A Preferred Stock will rank senior to all classes of the Company’s common stock and will accrue dividends at the rate of 10% on $25.00 per share. The Company reserves the right to pay the dividends in shares of the Company’s common stock at a price equal to the average closing price over the five days prior to the date of the dividend declaration. The Series A Preferred Stock will have no voting rights. The Company valued the 4,800 shares of Series A Preferred Stock at $71,558 or approximately $14.91 per share based upon an analysis performed by an independent valuation consultant.
Series A Preferred Stock Transactions During the Six Months Ended June 30,, 2020
On March 2, 2020, the Company issued 4,800 shares of its Series A Preferred Stock to four4 individuals with certain skills and know-how to assist the Company in the development of its newly-formednewly formed subsidiary The Good Clinic,My Care, LLC. The Company hashad valued these shares at $71,558 or approximately $14.91 per share based upon an analysis performed by an independent valuation consultant. During the six months ended June 30, 2020, the Company accrued dividends in the amount of $3,967 on the Series A Preferred Stock. AtOn June 30, 2020, dividend payable on the Series A Preferred Stock was $3,967. AtOn June 30, 2020, if management determined to pay these dividends in shares of the Company’s common stock, this would result in the issuance of 98,780 shares of common stock based upon the average price of $0.0402 per share for the five dayfive-day period ended June 30, 2020.
Series A Preferred Stock Transactions During the Six Months Ended June 30, 2021
During the six months ended June 30, 2021, the Company accrued dividends in the amount of $1,000 on the Series A Preferred Stock. On March 11, 2021, the Company issued 600,000 shares of common stock to the four officers of The Good Clinic in exchange for the previously issued Series A Preferred Stock and accrued dividends. The Series A preferred stock was canceled.
Series C Preferred Stock
Series C Preferred Stock Transactions During the Six Months Ended June 30, 2021
On March 25, 2021, the Company entered into Securities Purchase Agreements (the “SPAs”) with four institutional investors (the “Investors” and each an “Investor”) pursuant to which the Company sold to the Investors in a private placement an aggregate of 3,000,000 units (the “Units” and each a “Unit”) with a purchase price of $1.00 per Unit, with each Unit consisting of (a) one share of a newly formed Series C Convertible Preferred Stock, par value $0.01 per share (the “Series C Preferred Stock”), (b) one warrant (the “Series A Warrants”) to purchase 2.1 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) at a purchase price of $0.50 per whole share of Common Stock, and (c) one warrant (the “Series B Warrants” and together with the Series A Warrants, the “Warrants”) to purchase 2.1 shares of Common Stock at a purchase price of $0.75 per whole share. The aggregate gross proceeds to the Company were $3,000,000 and the number of shares of Common Stock initially issuable upon conversion of the Series C Preferred Stock is 12,600,000 shares of Common stock and the aggregate number of shares of Common Stock initially issuable upon exercise of the Warrants is 12,600,000 shares of Common Stock.
On May 4 through May 26, 2021, 1,059,356 shares of Series C Preferred Stock were converted at a price of $0.25 per share to 4,237,424 shares of common stock. During the six months ended June 30, 2021, the Company accrued dividends on the Series C Preferred Stock in the amount of $42,078.
Series C Preferred Stock Transactions During the Six Months Ended June 30, 2020
None.
Series X Preferred Stock
The Company has issued 26,227 shares of its 10% Series X Cumulative Redeemable Perpetual Preferred Stock (the “Series X Preferred Stock”) as of June 30, 2020 and December 31, 2019 and 2018. The Series X Preferred Stock has a par value of $0.01 per share, no stated maturity, a liquidation preference of $25.00 per share, and will not be subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless the Company decides to redeem or otherwise repurchase the Series X Preferred Stock; the Series X Preferred Stock is not redeemable prior to November 4, 2020. The Series X Preferred Stock will rank senior to all classes of the Company’s common and preferred stock and will accrueaccrues dividends at the rate of 10% on $25.00 per share. The Company reserves the right to pay the dividends in shares of the Company’s common stock at a price equal to the average closing price over the five days prior to the date of the dividend declaration. TheEach one share of the Series X Preferred Stock will have “super” voting rights such that each share of Series X Preferred Stock will beis entitled to 20,000 votes. The Series X Preferred Stock hasvotes on all matters submitted to a fair valuevote of $34.73 as determined by the Company’s independent valuation consultant.our shareholders.
Series X Preferred Stock Transactions DuringFor the Six Months Ended six months ended June 30,, 2020 2021:
During the six months ended June 30, 2020,2021, the Company received for retirement 2,000 shares of Series X Preferred Stock pursuant to a settlement agreement. Also, during the six months ended June 30, 2021, the Company accrued dividends in the amount of $32,784 on the Series X Preferred Stock. At June 30, 2020, dividend payable on theits Series X Preferred Stock was $32,784. At June 30, 2020, if management determined to pay these dividends in shares of the Company’s common stock, this would result in the issuancetotal amount of 816,335 shares$31,536. Of this amount, a total of common stock based upon the average price of $0.0402 per share for the five day period ended June 30, 2020.$4,000 was payable to officers and directors, $15,630 was payable to a related party shareholder, and $11,906 was payable to non-related parties.
Stock Options
The following table summarizes the options outstanding aton June 30, 20202021, and the related prices for the options to purchase shares of the Company’s common stock:
Weighted | Weighted | |||||||||||||||||||||
Weighted | average | average | ||||||||||||||||||||
average | exercise | exercise | ||||||||||||||||||||
Range of | Number of | remaining | price of | Number of | price of | |||||||||||||||||
exercise | options | contractual | outstanding | options | exercisable | |||||||||||||||||
prices | outstanding | life (years) | options | exercisable | options | |||||||||||||||||
| $ | 0.03 | 250,000 | 9.93 | $ | 0.03 | - | $ | - | ||||||||||||||
| $ | 0.05 | 7,000,000 | 9.70 | $ | 0.05 | - | $ | - | ||||||||||||||
| $ | 21.40 | 67,879 | 2.67 | $ | 21.40 | 67,879 | $ | 21.40 | ||||||||||||||
| 7,317,879 | 9.70 | $ | 0.25 | 67,879 | $ | 21.40 | ||||||||||||||||
Weighted | Weighted | |||||||||||||||||||
Weighted | average | average | ||||||||||||||||||
average | exercise | exercise | ||||||||||||||||||
Range of | Number of | remaining | price of | Number of | price of | |||||||||||||||
exercise | options | contractual | outstanding | options | exercisable | |||||||||||||||
Prices | outstanding | life (years) | options | exercisable | options | |||||||||||||||
$0.03-$0.39 | 11,696,211 | 9.37 | $ | 0.16 | 7,945,000 | $ | 0.03 | |||||||||||||
Transactions involving stock options are summarized as follows:
Shares | Weighted- Average Exercise Price ($) | |||||||
Outstanding at December 31, 2018 | 67,879 | $ | 21.40 | |||||
Granted | - | - | ||||||
Cancelled | - | - | ||||||
Outstanding at December 31, 2019 | 67,879 | $ | 21.40 | |||||
Granted | 8,750,000 | $ | 0.05 | |||||
Cancelled | (1,500,000 | ) | - | |||||
Outstanding at June 30, 2020 | 7,317,879 | $ | 0.25 | |||||
Exercisable at June 30, 2020 | 67,879 | $ | 21.40 | |||||
Shares | Weighted- Average Exercise Price ($) | |||||||
Outstanding on December 31, 2020 | 13,453,879 | $ | 0.03 | |||||
Granted | 6,195,000 | 0.24 | ||||||
Exercised | (7,952,668 | ) | 0.03 | |||||
Outstanding on June 30, 2021 | 11,696,211 | $ | 0.16 | |||||
AtAggregate intrinsic value of options outstanding and exercisable on June 30, 2021, and 2020 was $929,550 and $0, respectively. Aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the fiscal period, which was $0.28 and $0.04 as of June 30, 2021, and 2020, respectively, and the exercise price multiplied by the number of options outstanding and exercisable.
On June 30, 2021, the total stock-based compensation cost related to unvested awards not yet recognized was $253,582. $1,205,961.
The Black-Scholes option pricing model is used to estimate the fair value of stock options granted under the Company’s share-based compensation plans. The weighted average assumptions used in calculating the fair values of stock options as of June 30, 2021, was as follows:
June 30, | ||||
2021 | ||||
Volatility | 167.8% to 183.5 | % | ||
Dividends | $ | 0 | ||
Risk-free interest rates | 0.82 % to 1.69 | % | ||
Term (years) | 5.00 to 10.00 | |||
Warrants
The following table summarizes the warrants outstanding aton June 30, 20202021, and the related prices for the warrants to purchase shares of the Company’s common stock:
Shares | Weighted- Average Exercise Price ($) | |||||||
Outstanding at December 31, 2018 | 1,167,653 | $ | 2.18 | |||||
Granted | 400,000 | $ | 0.00858 | |||||
Additional warrants due to trigger of ratchet feature | 6,659,382 | $ | 0.00858 | |||||
Exercised – cashless conversion | (3,514,900 | ) | $ | 0.00858 | ||||
Forfeited | (2,769,482 | ) | $ | 0.00858 | ||||
Expired | (142,653 | ) | 17.42 | |||||
Outstanding at December 31, 2019 | 1,800,000 | $ | 0.00858 | |||||
Granted | 6,582,382 | $ | 0.00858 | |||||
Exercised | (8,382,382 | ) | $ | 0.0561 | ||||
Outstanding at June 30, 2020 | - | $ | - | |||||
Shares | Weighted- Average Exercise Price ($) | |||||||
Outstanding on December 31, 2020 | - | $ | - | |||||
Granted | 12,600,000 | $ | 0.63 | |||||
Exercised | - |
| $ | - | ||||
Outstanding on June 30, 2021 | 12,600,000 | $ | 0.63 | |||||
Note 10 – Fair Value of Financial Instruments
The following summarizes the Company’s derivative financial liabilities that are recorded at fair value on a recurring basis on June 30, 2021, and December 31, 2020.
June 30, 2021 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities | ||||||||||||||||
Derivative liabilities | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
December 31, 2020 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities | ||||||||||||||||
Derivative liabilities | $ | 0 | $ | 0 | $ | 807,682 | $ | 807,682 | ||||||||
Note 8 11 – Commitments and Contingencies
Legal
National Council for Science and the Environment, Inc. v. Trunity Holdings, Inc., Case No. 2015 CA 009726 B, Superior Court for the District of Columbia, Civil Division.There is no pending or anticipated legal actions at this time except as noted below in “Other”.
This action was filed on December 16, 2015 by the National Council for Science and the Environment, Inc. (“NCSE”) in the District of Columbia Superior Court against Trunity Holdings, Inc. (which was a former name of the Company) and alleges claims for breach of contract. Acknowledgement of indebtedness and settlement agreement and quantum merit arising out of an agreement was entered into between NCSE and Trunity in 2014. The complaint sought damages in the amount of $177,270, inclusive of attorney’s fees, costs and accrued interest, continuing interest in the amount of 12% per annum and attorney’s fees and costs of collection relating to the case. The Company, in its answer dated January 27, 2016, denied the material allegations made by NCSE, asserted a number of affirmative defenses and filed a counterclaim alleging claims for fraud, negligent misrepresentation, breach of fiduciary duty, breach of contract and unjust enrichment. In its counterclaim, the Company sought actual and compensatory damages against NCSE that it believed exceed the amount sought by NCSE on its claims, pre-judgment interest, punitive damages and all costs and expenses, including attorney’s fees, incurred by the Company in bringing its claims against NCSE.PPP Loan
On September 23, 2016, the Company settled this obligation with an agreement to pay $48,500 to NCSE if paid by November 4, 2016, and $75,000 if paid later. On May 15, 2020, the Company entered into a further settlement agreement with NCSE whereby the Company paid $5,000 in cash for full settlement and release of all obligations. As such the Company has no further obligation to NCSE. This settlement was recorded during the three months ending June 30, 2020; the Company recognized a gain in the amount of $70,000 on this transaction.
Carlton Fields Jorden Burt, P.A.
This action was filed on May 18, 2017 by a law firm that represented the Company prior to the spin-out of the educational software business in 2016 with the intent of collection past due invoices in the aggregate amount of $241,828. The Company believes it has defenses against any such action. The Company has recorded a liability in the amount of $266,319 on its balance sheet at June 30, 2020.
On May 15,4, 2020, the Company entered into a settlement agreement with Carlton Fields whereby the Company paid $30,000 in cash for full settlement and release of all obligations. As such the Company has no further obligation to Carlton Fields. This settlement was recorded during the three months ending June 30, 2020; the Company recognized a gain in the amount of $236,319 on this transaction.
Other
Effective July 1, 2020, Ms. Julie Smith, the Company’s former President, Chief Operating Officer and a member of the Board of Directors resigned all positions with the Company. Ms. Smith has retained counsel and has indicated her intent to file an administrative charge of discrimination in Colorado under certain provisions of the anti-discrimination laws of that state. Although no administrative charge has been filed as of this date, if an administrative charge is filed, the company will vigorously defend itself.
Note 9 – Subsequent Events
PPP Loan Repayment
On April 25, 2020, the Companywe received a loan in the amount of $460,406 from the United States Small Business Administration under the Payroll Protection Program. Subsequent to June 30, 2020, the Companywe determined that errors had been made in the application submitted to obtain thisthe loan. On July 21, 2020, Bank of America notified the Company in writing that it should not have received $440,000 of the loan proceeds, representing an amount for the refinancing of an Economic Injury Disaster Loan which the Companywe did not receive. Bank of America has requiredrequested that the Companywe remit such funds back to Bank of America. TheWe are presently attempting to negotiate repayment or a restructure of the loan. If we are not successful in negotiating repayment terms, it could have a material adverse effect on our financial condition.
Smith Matter
During management's review of the Company’s recent PPP loan application after the loan had been disbursed to the Company, is currentlyit was determined that the information provided by Ms. Julie R. Smith, the Company’s former President and COO, was not representative of the Company’s situation. After consulting with legal counsel, the Board of Directors voted to remove Ms. Smith from its Board of Directors, and all other capacities due to the misstatements she made in discussionsthe loan application. Subsequent to that decision, effective July 1, 2020, Ms. Smith submitted a resignation from all positions with Bankthe Company, which was accepted by the Board and management. Ms. Smith subsequently retained counsel and has indicated her intent to file an administrative charge of America to arrange terms for a repayment plan.discrimination in Colorado under certain provisions of the anti-discrimination laws of that state.
Common Stock Issued for Conversion of Notes Payable
On July 9,August 18, 2020, the Company issued 3,188,735 sharesreceived formal notice that a complaint has been filed with the Colorado Civil Rights Division by Ms. Smith naming the Company as the Respondent. As of common stock atthe date of this filing the Company has been advised that the Colorado Civil Rights Division has dismissed this matter effective March 1, 2021. Ms. Smith requested a price“Right-to-Sue” letter, which she received, giving her a right to sue in District Court for 90 days from the date of $0.01518 per share pursuant to the conversion of $45,000 of principal and $3,405 of accrued interest in Eagle Equities Note 1.dismissed action.
On June 23, 2021, the Company and the former President and COO reached a confidential settlement and release agreement releasing both parties of any future claims.
Terra Nova Matter
On May 4, 2021, we were served with a Statement of Nature of Dispute, Claims and Issues to be Arbitrated in which Claimant Terra Nova makes claims related to alleged breach of an agreement between the Parties dated August 17, 2020. Terra Nova claims damages in the amount of $385,000. Although we intend to vigorously defend against the claims, there can be no assurance that we will be successful.
On July 17, 2020, the Company issued 3,429,814 shares of common stock at a price of $0.01572 per share pursuant to the conversion of $50,000 of principal and $3,917 of accrued interest in Eagle Equities Note 1.
On July 30, 2020, the Company issued 2,320,000 shares of common stock at a price of $0.021 per share pursuant to the conversion of $45,000 of principal and $3,720 of accrued interest in Eagle Equities Note 1.
Dr. H. Faraz Naqvi appointed to Board of Directors
On July 13, 2020, the Board of Directors appointed Dr. H. Faraz Naqvi to the Board of Directors of the Company. Dr. H. Faraz Naqvi currently serves as the Co-founder and CEO of Crossover Partners, based in Boston, Mass., whose mission is to invest in healthcare investments. He founded the firm in 2015. He joined the Board of Directors of UC Health, a health system based in Colorado and remains in that position. Since 2016 he has served as a member of the Board for the Health District of Northern Larimer County, Colorado. In 2012 the co-founder of Remote Health Access, whose mission is elderly care and telemedicine.
In May 2016 Dr. Naqvi founded Front Range Geriatric Medicine, a medical practice firm, and operated that practice from 2012 through 2019. Previously, Dr. Naqvi was founder of Avicenna Capital, located in London. The firm was a healthcare investment firm and was an affiliate of Brevan Howard Asset Management in London, UK. He was there from 2007 through 2009. Prior to founding Avicenna, Faraz was a Managing Director at Pequot Capital from 2001 until 2007, where he served as the manager of the $1.3 billion healthcare fund, about $1 billion of the firm’s healthcare allocation, and a $250 million emerging markets healthcare fund. From 1991 until 2001, Faraz managed roughly $4 billion in healthcare funds at Allianz/Dresdner RCM capital where he had the highest returning funds in the world for two years. He also served as an analyst with Bank of America/Montgomery Securities from 1997 and 1998. He began his finance career as a healthcare consultant with McKinsey & Co. from 1995 until 1997.
Dr. Naqvi is a Boettcher Scholar graduate of Colorado College (1986), studied economics at Trinity College, Cambridge University (1989) where he was a Marshall Scholar, received his M.D. from Harvard Medical School/M.I.T. (1993), where he performed angiogenesis research with Drs. Judah Folkman, Robert Langer and Marsha Moses. Faraz is board certified in internal medicine and geriatrics and licensed in California, New York and Colorado.
Mr. Juan Carlos Iturregui, Esq. appointed to Board of Directors
On July 31, 2020, the Board of Directors of the Company (the “Board”) appointed Mr. Juan Carlos Iturregui, Esq., to the Board.Mr. Juan Carlos Iturregui, age 55, is a licensed attorney with extensive experience in mergers and acquisitions, international and domestic business development and funding, with special expertise in the Central and South America markets. He is adept in working with the US Congress and executive branch, and foreign governments; he has an in-depth understanding of multilateral entities, stakeholders, and special interests in formulation of projects and policies. He is highly knowledgeable about emerging global political and economic developments. Mr. Iturregui is a proven professional committed to ethics, transparency and social responsibility.
In 2005, he founded Milan Americas, LLC, in Washington D.C., a business consultancy where he remains the Managing Director. This consulting practice specializes in commercial, regulatory and project development engagements with focus on infrastructure and renewable energy projects in Latin America, the Caribbean and Hispanic markets. He has also had a focus on healthcare where he played a key role in expansion of major US regional healthcare provider into a new marketplace. He also co-developed and co-owned the largest solar farm in the Caribbean Basin (27MW) in 2015.
During 2019 and until June 2020 Mr. Iturregui has been a Partner, and a Member of the firm’s Government Relations and the Infrastructure & Energy Practices with Nelson Mullins, LLP, Washington, D.C. office. Nelson Mullins is an Am Law 100 firm with 122 years of operations and with significant presence in Washington, D.C. and offices in 25 cities across the U.S.
In 2007 and until 2018, Mr. Iturregui was a Senior Advisor at Dentons, LLP, based in Washington, D.C., a global law firm with significant presence in Washington, D.C. and offices in 85 cities across 58 countries. He was the Senior Advisor and Counsel to the Global Chairman. He worked with the international team and leadership on expanding practices and services. He was an Advisor to the Chairman on issues/structures related to the global combination (merger) with SNR Denton in 2010.
From 2003 through 2005 he was with Quinn Gillespie & Associates, in Washington, D.C., a leading DC bipartisan public policy and communications firm where he was a Director. While there, he advocated public policy positions and initiatives regarding trade, tax, finance, health care, infrastructure development and appropriations on behalf of various entities, including Fortune 500 corporations, trade associations and local governments.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
From 2001 through 2002 he was with Hunton & Williams, LLP in Washington, D.C. where he was Senior Director of Government and Latin America Affairs.
From 1997 through 2000 he was with Verner, Lipfert, Bernard, McPherson & Hand, a Washington, D.C. based law firm as Senior Attorney and Director for International Affairs. Key projects included structuring greenfield outsourcing of a P-3 super-aqueduct project, consulting to a large power utility on contract negotiations with two large “IPPs” and coordinated coalition in a major trade litigation dispute with successful outcomes.
Mr. Iturregui was awarded a J.D. from The Catholic University of America, Washington, D.C. in 1990, and received a Bachelors degree from the University of Massachusetts, Amherst, MA in 1987.
Of note is Mr. Iturregui’s extensive experience in government and public service, including the following:
Board Member & Vice Chair — U.S. Inter-American Foundation (IAF) Appointed by President Barack Obama to serve six-year term (2015 – current). Appointment. Confirmed unanimously by the United States Senate. Promoted to Vice Chair by President Obama on July, 2016.
Member, Board of Visitors (Trustee), George Mason University (GMU) Appointed by the Governor of the Commonwealth of Virginia to serve four-year term (2019 – 2023). GMU is one of the largest Tier-1 public research universities in the nation.
Board Member & Vice Chair, American Red Cross, National Capital Region (2013-20).
Member—The President’s Export Council (PEC) (2007 – 2009) Council Member appointed by President George W. Bush to serve with Cabinet members and select bipartisan leaders of US Congress and company executives. Participated in high-level Trade Mission to Ukraine/Russia; worked on technical groups reporting to the Secretary of Commerce; approved and presented Special Report to the President of the United States.
Board Member (Independent Director) / Public Policy Committee Chair—Ability One/NISH (2005 – 2008). Oversaw $6.5 million public policy, legal, corporate communications and PR budget for $1.8 billion federally chartered annual program focused on creating employment opportunities for the severely disabled nationwide. Revamped benchmarks and metrics for the board and senior staff; institutionalized and expanded annual Congressional “fly-ins” and visits; restructured compliance guidelines and reporting requirements.
|
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes thereto contained in Part I, Item 1 of this Quarterly Report on Form 10-Q (this “Quarterly Report”). Our condensedconsolidated financial statements have been prepared and, unless otherwise stated, the information derived therefrom as presented in this discussion and analysis is presented, in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The information contained in this Quarterly Report is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report and in our other reports filed with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and subsequent reports on Form 8-K, which discuss our business in greater detail. Unless the context indicates otherwise, the “Company”, “we”, “us”, and “our” in this Item 2 and elsewhere in this Quarterly Report refer to Mitesco, Inc., a Delaware corporation, and its consolidated subsidiaries.
In addition to historical information, the following discussion contains forward-looking statements regarding future events and our future performance. In some cases, you can identify forward-looking statements by terminology such as “will”, “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “forecasts”, “potential” or “continue” or the negative of these terms or other comparable terminology. All statements made in this Quarterly Report other than statements of historical fact are forward-looking statements. These forward-looking statements involve risks and uncertainties and reflect only our current views, expectations and assumptions with respect to future events and our future performance. Such risks and uncertainties may be amplified by the COVID-19 pandemic and its potential impact on our business and the global economy. If risks or uncertainties materialize or assumptions prove incorrect, actual results or events could differ materially from those expressed or implied by such forward-looking statements. Risks that could cause actual results to differ from those expressed or implied by the forward-looking statements we make include, among others, risks related to: our ability to successfully implement our business plan, develop and commercialize our proprietary formulations in a timely manner or at all, identify and acquire additional proprietary formulations, manage our pharmacy operations, service our debt, obtain financing necessary to operate our business, recruit and retain qualified personnel, manage any growth we may experience and successfully realize the benefits of our acquisitions and collaborative arrangements we may pursue; competition from pharmaceutical companies, outsourcing facilities and pharmacies; general economic and business conditions; regulatory and legal risks and uncertainties related to our pharmacy operations and the pharmacy and pharmaceutical business in general; physician interest in and market acceptance of our current and any future formulations and compounding pharmacies generally; our limited operating history; and the other risks and uncertainties described under the heading “Risk Factors” in Item 1A of our Annual Report on Form 10-K and any other reports we file with the SEC. You should not place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made and, except as required by law, we undertake no obligation to revise or publicly update any forward-looking statement for any reason.
The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein.
We haveare working to open primary care clinics around the US that are in developmentresidential centers and leverage the expertise, training, and license of Nurse Practitioners. We are focusing on wellness as a suitecore of offerings aimed at enhancing healthcare throughout the supply chain as well aspractice. Mitesco’s miss ion is to consumers. We intendincrease convenience and access to acquire and implement technologies and services tocare, improve the quality of care, and reduce cost, and enhance consumer convenience.its cost. Technology is a key part to our approach to deliver on these three goals. We are focused on developing a portfolio of companies that provide healthcare technology solutions andrecognize the management team is seeking to develop long-term organizational value though these acquisitions and internal development. We believe the holding company structure will facilitate profitable growth and should enable the acquired business to focus on scale. The goalessential nature of the Company’s portfolio of companiesclinician client relationship and its importance to achieving these superior outcomes. Our view is that technology must enhance these human interactions, not operate independently. As such, we are seeking innovative technologies that enable both consumers and clinicians to apply leading-edge solutions that emphasize stakeholder valueachieve more convenient and leverages distinct sector trends. Sectors of interest include artificial intelligence (AI), population health management, data gathering solutions, electronic health records optimization, healthcare IT solutions, virtualbetter outcomes with greater efficiency.
We have opened our flagship primary care & care augmentation, and predictive analytics. The Company has formed a holding company structure for both its acquired assetsclinic “The Good Clinic” in Northeast Minneapolis, Minnesota. We plan to open an additional four to five clinics in the United StatesTwin Cities area of Minnesota and Europe, designedthen continue expansion of two to support efficiencies around taxation, legal,three clinics in the greater Denver, Colorado area, before the end of 2021. We plan to open clinics in residential concentrations of population to enhance the convenience, especially timely due to the changes in community travel patterns resulting from the pandemic. Our clinicians use both telehealth (virtual) and economiesin-person visits to treat and coach the clients along their journey to better health and quality of scalelife. Our clinics are led by Nurse Practitioners that use their license, extensive training, expertise, and empathy to help people remain stable or improve their health. We emphasize wellness, beginning with a clients’ co-developed plan that identifies from where a person is starting and constructs a plan for how they can achieve their goals. The practice uses an integrated health approach that includes an assessment of both the individual’s behavioral and physical health and combines this with their activation level and their goals. The clinic offers wellness coaching, behavioral health care, episodic care, dermatologic services, and supplements. We seek to care for the whole person’s needs.
Like the first clinic, we seek to locate clinics convenient to residential centers. In pursuit of this approach, we intend to continue to expand our relationship with Lennar Corporation and other developers. Already, our clinic is being viewed as an amenity for the high-rise development in administrative functions.which we are located. We plan to mirror this approach within the two Lennar locations with which we have signed letters of intent to build clinics in these residential developments in Denver. We may also seek to grow through the acquisition of existing clinic operations which would be converted into our operating approach
WeAdditionally, we have recently implemented a corporate structure that we believe will allowallows us to expand into international markets. We now have a wholly owned subsidiary in Dublin, Ireland, Acelerar Healthcare Holdings, Inc., andLtd. We intend to use thatthis location as a base for European operations. In the European community the investment in healthcare technology has been significant. In many cases, even more robust than in the North American markets. We believe that as a result of expected low economic growth in the European community, a number ofseveral technology businesses based there may become our targets for acquisition at attractive valuations. We believe that these businesses may benefit from the larger markets found in North America and elsewhere in the world. If these assumptions prove correct, the cost of international expansion for these businesses could be limited to marketing and product support.
We also see the European community as an opportunity for capital as we expand our business. The interest rates in this area of the world are currently very low or even at zero. As such, raising funds in the European market may prove attractive when compared to local alternatives. Further, there are equity and debt markets based in Europe that may provide liquidity to our investors, should we be able to list and trade our financial instruments in those marketplaces. We may seek a dual listing for our common stock or choose to list and trade our Preferred shares there. We believe this avenue may increase both the size and liquidity of the shareholder base.
While the Company has had limited technology development to this point, we do have a set of tools that allow data to be shared between healthcare providers, their pharmacy vendors, and with a personal healthcare records application. We believe we can quickly build and expand from this base with certain acquisitions. Beyond healthcare specific software and systems, we may choose to add a software and systems development business unit. Their clients may include other industries or application areas. We believe that cloud-based computing will continue to be the preferred approach to application development, and that technology developed for one industry may have immediate applicability in other areas including healthcare. If we are able to find a suitable candidate with this broad technology knowledge base, we may add them to our healthcare focused portfolio. In doing so, we will have created a development center to both serve the internal needs of the Company while continuing to serve the needs of other clients both in and out of the health care sector. Using this approach, we would hope to create a profit center, where there would otherwise simply be a captive cost center and would use a portion of their resources for internal needs.
Prior to 2020, our business was focused in the area of software and solutions in the healthcare sector, generally described as the healthcare technology (health-tech) market. Our initial implementation of “SimpleHIPAA”, and “SimpleHIPAA for Vets and Pets”, is intended to include data from pharmacy and prescribers, generated at the time a prescription is written. This information will be embedded inside the application and made available to the end user from both the healthcare provider and from the pharmacy. While providing a starting point for tracking healthcare information for the end user, it also establishes a communications method between the end user, the healthcare provider, and the pharmacy. This communications channel, often thought of as “telemedicine” can allow the end user to provide feedback to the healthcare provider, the pharmacy, or other parties of the end user’s choice. During the fourth quarter of 2019 we installed the solution at our first site and established a reseller agreement with that client so that they can sell the application under their own brand and create a revenue stream for the Company without further investment in cost of sales. This is a non-exclusive arrangement and we may choose to establish similar relationships with other providers in the marketplace in the future. We do not intend to build out a direct sales and marketing team for this product set, rather we intend to license the product to others who will sell and install the products.
Our holding company organization is small, and we intend to endeavor to keep the team small in number so that we are nimble to move to capitalize on opportunities, and to keep our overhead relatively low. We currently have 2 employees and a few consultants and advisors. While we do intend to add additional members to the senior management team in finance, marketing and technology, we do not expect a large-scale organization at the public holding company level in the near term. Further, if we are fortunate enough to find high quality advisors, we believe we will be better able to control the fully weighted cost of public company operations, when compared to a larger, internal staffing approach.
All of our plans are contingent on recruiting sufficient capital to provide for both our public company overhead, and to fund the acquisitions and growth needs of the target acquisitions. If we are unsuccessful in our funding efforts, the plans may stall, and even the limited overhead of the Company may require reductions.
Off-Balance Sheet Arrangements
Since our inception, except for standard operating leases, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities. We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Policies
For the three months ended June 30, 2020, there were no significant changes to our critical accounting policies and estimates from those disclosed in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
Recently Issued and Adopted Accounting Pronouncements
See Note 2 to our condensed consolidated financial statements included in this Quarterly Report.
Results of Operations
The following period-to-period comparisons of our financial results are not necessarily indicative of results for the current period orof any future period. Our software, systemsperiods. Further, as a result of any acquisitions of other businesses, and consulting operations activities have become our primary focus, along with engagement with our new and potential user base. This change in our operations will have and is expected to continue to have a significant impact on our financial results.
In this discussion of our results of operations and financial condition, amounts,any additional pharmacy acquisitions or other than per-share amounts, have been roundedsuch transactions we may pursue, we may experience large expenditures specific to the nearest thousand dollars.transactions that are not incident to our operations.
Three months and Six months ended June 30, 2021 and 2020
Revenue
The Company recognized revenue of approximately $8,200 for the three months ended June 30, 2021, compared to $0 for the three months ended June 30, 2020. The increase in revenue is the result of the opening of The Good Clinic’s first location. For the Three Monthssix months ended June 30,, 2020 and 2019 2021, the Company recognized $11,200 of revenue compared to $0 for the six months end June 30, 2020. The Increase is the result of opening The Good Clinic’s first location.
Cost of Sales
The Company incurred approximately $3,600 of cost of goods sold for the three months ended June 30, 2021, compared to $0 for the three months ended June 30, 2020. The increase in cost of goods sold is the result of the opening of The Good Clinic’s first location. The Company incurred approximately $5,300 of cost of goods sold for the six months ended June 30, 2021, compared to $0 for the six months ended June 30, 2020. The increase in cost of goods sold is the result of the opening of The Good Clinic’s first location.
Gross Profit
Our gross profit was approximately $4,600 for the three months ended June 30, 2021, compared to $0 for the three months ended June 30, 2020. Our gross profit was approximately $5,900 for the six months ended June 30, 2021, compared to $0 for the six months ended June 30, 2020.
Operating Expenses
Our total operating expenses for the three months ended June 30, 20202021, were $626,000.approximately $1,403,200. For the comparable period in 2019,2020, the operating expenses were $226,000. approximately $625,800. Our total operating expenses for the six months ended June 30, 2021, were $2,356,100 compared to $1,122,300 for the six months ended June 30, 2020
Operating expenses for the three months ended June 30, 2021, were comprised primarily of $357,300 payroll and payroll taxes; $327,200 of non-cash compensation, $225,000 in legal and professional fees; $149,000 in marketing; $157,000 in other operation costs $130,000 in consulting fees. Operating Expense for the six months ended June 30, 2021, were comprised primarily of $474,900 payroll and payroll taxes; $337,100 of non-cash compensation, $606,700 in legal and professional fees; $301,000 in marketing; $369,500 in other operation costs $266,900 in consulting fees.
Operating expenses for the three months ended June 30, 2020, were composedcomprised primarily of $201,000 in payroll, and payroll taxes, including $40,000 in non-cash compensation; $130,000 in legal and professional fees; $122,000fees and $120,000 in consulting fees, $24,000 in board of director fees; $110,000 in marketing and public relations;relations, $24,000 in board fees and $14,000 in insurance costs. Our total operating expenses for the three months period ended June 30, 2019 were $226,250. Operating expenses for the three months ended June 30, 2019 were comprised primarily of $104,000 in consulting fees, $40,000 in financial services and audit fees, $29,000 in compensation, $20,000 in travel, and $14,000 of insurance costs.
Grant income was $3,000 for the three months ended June 30, 2020; there was no comparable transaction during the prior period.
Interest expense was $397,000 for the three months ended June 30, 2020, compared to $165,000 for the three months ended June 30, 2019. Interest expense for the three months ended June 30, 2020 consisted of $35,000 accrued on notes payable; $1,000 of interest on a credit card; $284,000 amortization of the discount on convertible notes payable; and $11,000 of excess value of derivative. We also recognized $66,000 of interest expense in connection with a prepayment penalty on a note payable. Interest expense for the three months ended June 30, 2019 consisted of $138,000 in amortization of the discount on convertible debt; $20,000 of accrued interest; $4,000 of accrued interest to related parties, and $2,000 of interest imputed on related party debt.
During the three months ended June 30, 2020, we recorded a gain on settlement of accounts payable in the amount of $306,000; there was no comparable transaction in the prior period.
During the three months ended June 30, 2020, we recorded a loss on derivative liabilities in the amount of $50,000; there was no comparable transaction in the prior period.
During the three months ended June 30, 2020, we did not recognize any gains or losses on legal settlements, compared to a loss on legal settlement of $27,000 in the prior period.
During the three months ended June 30, 2020, we did not recognize any gains or losses on the conversion of notes payable, compared to a loss on conversion of notes payable of $59,000 in the prior period.
For the three months ended June 30, 2020, the Company had a net loss of $764,000, or a net loss per share, basic and diluted of ($0.01), compared to a net loss of $477,000, or a net loss per share, basic and diluted of ($0.01), for the three months ended June 30, 2019.
For the Six Months ended June 30, 2020 and 2019
Our total operating expenses for the six months ended June 30, 2020 were $1,122,000. For the comparable period in 2019, the operating expenses were $448,000. Operating expenses for the six months ended June 30, 2020, were composed primarily of $465,000 in payroll and payroll taxes, including $160,000 in non-cash compensation; $219,000 in legal and professional fees; $186,000 in consulting fees, $45,000 in board of director fees; $128,000 in marketing and public relations; and $32,000 in insurance costs.
Our total operating expensesOther Income and Expenses
Interest expense was approximately $1,000 for the sixthree months period ended June 30, 2019 comprised primarily of compensation expense of $128,000, consulting fees of $149,000, financial services, legal, and audit fees of $83,000, travel of $29,000, and insurance of $27,000.
Grant income was $3,0002021, compared to approximately $397,000 for the six months ended June 30, 2020; there was no comparable transaction during the prior period. 2020.
Interest expense was $587,000 forDuring the sixthree months ended June 30, 2020, compared to $325,000 for2021, we recorded a loss on a legal settlement of $70,000. There was not an equivalent gain or loss in the sixcomparable prior period.
During the three months ended June 30, 2019. Interest expense consisted2021, the Company declared Preferred Stock dividends of $66,000 accrued on notes payable; $2,000 of interest on a credit card; $382,000 amortization of the discount on convertible notes payable; and $47,000 of excess value of derivative. We also recognized $90,000 of interest expense in connection with a prepayment penalty on a note payable. Interest expenseapproximately 15,000 compared to approximately $19,000 for the sixthree months ended June 30, 2019, consisting of $261,000 of amortization of2020.
For the discount on convertible debt, $37,000 of accrued interest, $5,000 of interest imputed on related party debt, $16,000 of prepayment penalties on notes payable, and $7,000 of interest accrued on related party debt.
During the sixthree months ended June 30, 2020,2021, we recorded a gain on settlement of accounts payable in the amount of $349,000; there was no comparable transaction in the prior period.
During the six months ended June 30, 2020, we recorded a gain on derivative liabilities in the amount of $446,000; there was no comparable transaction in the prior period.
During the six months ended June 30, 2020, we did not recognize any gains or losses on legal settlements, compared to a loss on legal settlement of $27,000 in the prior period.
During the six months ended June 30, 2020, we did not recognize any gains or losses on the conversion of notes payable, compared to a loss on conversion of notes payable of $159,000 in the prior period.
For the six months ended June 30, 2020, the Company had a net loss available to common shareholders of $912,000,approximately $1,485,000 or a net loss per share, basic and diluted of ($0.01) compared to a net loss available to common shareholders of $958,000,approximately $783,000, or a net loss per share, basic and diluted of ($0.03)0.01), for the three months ended June 30, 2020.
Interest expense was approximately $966,000 for the six months ended June 30, 2021, compared to approximately $587,000 for the six months ended June 30, 2020.
During the six months ended June 30, 2021, we recorded a gain on settlement of accounts payable of approximately $6,000, compared to a gain on settlement of accounts payable in the amount of $349,000 in the prior period.
During the six months ended June 30, 2020, we recorded a gain on the settlement of notes payable of approximately $1,800. There was not an equivalent gain or loss in the comparable prior period.
During the six months ended June 30, 2021, the Company declared Preferred Stock dividends of approximately 367,000 compared to approximately $37,000 for the six months ended June 30, 2020.
For the six months ended June 30, 2021, we had a net loss available to common shareholders of approximately $4,240,000, or a net loss per share, basic and diluted of ($0.02) compared to a net loss available to common shareholders of approximately $948,000, or a net loss per share, basic and diluted of ($0.01), for the six months ended June 30, 2019.2020.
Liquidity and Capital Resources
To date, we have not generated sufficient revenue from operations to support our operations. We have financed our operations through the sale of convertible debtequity securities and equity securities.short-term borrowings. As of June 30, 2020,2021, we had a working capital deficitcash of $2,400,000.approximately $1,686,000 compared to cash of approximately $65,000 as of December 31, 2020.
During the six months ending June 30, 2020, the Company had netNet cash used in operating activities of $826,000. This consisted of Company’s net loss of $912,000, offset by depreciation expense of $1,000, derivative expense of $43,000, amortization of discount on notes payable of $386,000, and non-cash compensation in the amount of $159,000; offset by a gain on settlement of accounts payable of $349,000; and gain on revaluation of derivative liabilities of $446,000. The Company’s cash position was also increased by a net change in the components of working capital in the amount of $290,000.
During the six months ending June 30, 2019, the Company had net cash used in operating activities of $304,000. This consisted of Company’s net loss of $958,000, offset by a loss on conversion of notes payable of $159,000, loss on legal settlement of $27,000, imputed interest expense of $5,000, amortization of the discount on notes payable of $261,000, stock-based compensation in the amount of $43,000, and the net change in the components of working capital in the net amount of $160,000. The Company had cash provided by financing activities in the amount of $308,000 which consisted of the proceeds of notes payable in the amount of $314,000, less principal payments in the amount of $10,000. There was no cash provided by investing activities duringapproximately $2,134,000 for the six months ended June 30, 2019. The following securities are currently2021. This is the result of our business development efforts pertaining to the start-up of the first clinic. Cash used in default: the Company’s Series C Debenture, in the principal and accrued interest amounts of $111,000 and $52,000, respectively; and the November 2014 Convertible Debenture (Series D), in the principal and accrued interest amounts of $11,000 and $6,000, respectively.
The Company had cash provided by financing activities in the amount of $760,000, consisting of $931,000 from the issuance of notes payable, offset by principal payments on notes payable in the amount of $171,000.
There were no investing activities duringoperations for the six months ended June 30, 2020, or 2019.was approximately $826,000.
On May 4, 2020,Net cash used in investing activities was approximately $495,000 for the Company receivedsix months ended June 30, 2021. The amounts relate to the purchase of fixed assets and leasehold improvement on our first clinic. No cash was used for investing activities for the six months ended June 30, 2020.
Net cash provided by financing activities for the six months ended June 30, 2021, was approximately $4,250,000, consisting of proceeds from a loan in the amountprivate placement offering of $460,406common stock of $1,668,000 and $2,760,000 from the United States Small Business Administration undersale of Series C Preferred Stock and warrants. Partially offsetting the Payroll Protection Program. Subsequent toproceeds was approximately $178,000 of payment on notes payable. Net cash provided by financing activities for the six months ended June 30, 2020, the Company determined that errors had been made in the application submitted to obtain this loan. On July 21, 2020, Bankwas approximately $760,000 consisting of America notified the Company in writing that it should not have received $440,000approximately $931,000 of the loan proceeds representing an amount for the refinancingfrom notes payable offset by payments on notes payable of an Economic Injury Disaster Loan which the Company did not receive. Bank of America has required that the Company remit such funds back to Bank of America. The Company is currently in discussions with Bank of America to arrange terms for a repayment plan.approximately $171,000.
Based on our current assessment, we do not expect any material impact on our long-term liquidity due to the COVID-19 pandemic. However, we will continue to assess the effect of the pandemic on our operations. The extent to which the COVID-19 pandemic will impact our business and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, the duration and effect of possible business disruptions and the short-term effects and ultimate effectiveness of the travel restrictions, quarantines, social distancing requirements and business closures in the United States and other countries to contain and treat the disease. While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock.
Going Concern
The factors discussed above raise substantial doubt regarding our ability to continue as a going concern. Our condensed consolidated financial statements have been prepared on a going concern basis, which implies that we will continue to realize our assets and discharge our liabilities in the normal course of business. Our financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Recent Developments
On March 3, 2020, the Company announced that it is opening a new business aimed at empowering nurse practitioners to have their own independent primary care clinics in states where full practice authority for nurse practitioners is supported. The business assets that become the new venture were developed by a group of senior healthcare executives who previously brought to scale the business known as Minute Clinic, now a part of CVS. The Company completed the acquisition effective March 3, 2020, and the new venture is formalized through the formation of a subsidiary named The Good Clinic, LLC, and will be based in Minneapolis, Minnesota.
In addition to the new operating entity, the Company has formed Mitesco N.A., LLC, which will house all North American operations and acquisitions. For European acquisitions, the Company has formed Acelerar Healthcare Holdings, LTD., which is based in Dublin, Ireland and will house all European acquisitions.
On April 23, 2020, the Company completed a change of its corporate name from True Nature Holding, Inc. to Mitesco, Inc. The change was approved by FINRA along with a symbol change from “TNTY” to “MITI”. All references to True Nature Holding, Inc. shall mean Mitesco, Inc. and in various locations in this document we have noted Mitesco, Inc. F.K.A. (“formally known as”) True Nature Holding. Inc. The change is the name was for corporate marketing purposes only and there have been no material changes in the Company, its mission, management, structure or legal standing.
|
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
|
ITEM 4. CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures
AsOur 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 (the "Evaluation Date"), we carried out an evaluation regarding the three months ended June 30, 2020, under the supervision and with the participation of our management, including our Chief Executive Officer and Interim Chief Financial Officer who is also serving as our Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer, of the effectiveness of the design and operation of our disclosurereport. Disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based upon this evaluation, our management concluded that, as of the Evaluation Date, our disclosureinclude, without limitation, controls and procedures were not effectivedesigned to provide reasonable assuranceensure that (i) information required to be disclosed in the reports that are filedwe file or submittedsubmit under the Exchange Act is recorded, processed, summarized,accumulated and reported withincommunicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, the time periods specified byCompany’s management has identified what it believes are material weaknesses in the SEC's rulesCompany’s disclosure controls and forms,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 itthe Company files or submits underto the Exchange ActSEC are recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms, and (iii) lack of formal Control procedures related to the approval of related party transactions.
The Company intends to take corrective action to ensure that information required to be disclosed by the Company pursuant to the reports that the Company files or submits to the SEC is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management believes the Company's disclosure controls and procedures are not effective because of the small size of the Company's accounting staff which may prevent adequate controls, such as segregation of duties, which is due to the cost/benefit associated with such remediation. To address the material weaknesses, the Company performed additional analysis and other procedures in an effort to ensure our condensed consolidated financial statements included in this Quarterly Report have been prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Quarterly Report on Form 10-Q fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Limitations on Internal Controls
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that the Company’s disclosure controls and procedures will detect or uncover every situation involving the failure of persons within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports.
(b) Changes in Internal Control Over Financial Reporting
The Company’s management is also responsible for establishing and maintaining adequateThere have been no changes in our internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting(as defined in Rules 13a-15(f) and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. As15d-15(f) of the Evaluation Date, no changes in the Company’s internal control over financial reportingExchange Act) that occurred during our second quarter ended June 30, 2021, that havehas materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
During the three months ended June 30, 2020, there were no changes that materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
|
ITEM 1. LEGAL PROCEEDINGS
National CouncilPPP Loan
On May 4, 2020, we received a loan in the amount of $460,406 from the United States Small Business Administration under the Payroll Protection Program. Subsequent to June 30, 2020, we determined that errors had been made in the application submitted to obtain the loan. On July 21, 2020, Bank of America notified the Company in writing that it should not have received $440,000 of the loan proceeds, representing an amount for Sciencethe refinancing of an Economic Injury Disaster Loan which we did receive. Bank of America has requested that we remit such funds back to Bank of America. We are presently attempting to negotiate repayment of the loan. If we are not successful in negotiating repayment terms, it could have a material adverse effect on our financial condition.
Smith Matter
During management's review of the Company’s recent PPP loan application after the loan had been disbursed to the Company, it was determined that the information provided by Ms. Julie R. Smith, the Company’s former President and COO, was not representative of the Company’s situation. After consulting with legal counsel, the Board of Directors voted to remove Ms. Smith from its Board of Directors, and all other capacities due to the misstatements she made in the loan application. Subsequent to that decision, effective July 1, 2020, Ms. Smith submitted a resignation from all positions with the Company, which was accepted by the Board and management. Ms. Smith subsequently retained counsel and indicated her intent to file an administrative charge of discrimination in Colorado under certain provisions of the anti-discrimination laws of that state.
On August 18, 2020, the Company received formal notice that a complaint has been filed with the Colorado Civil Rights Division by Ms. Smith naming the Company as the Respondent. As of the date of this filing, we have been advised that the Colorado Civil Rights Division has dismissed this matter effective March 1, 2021. Ms. Smith requested a “Right-to-Sue” letter, which she received, giving her a right to sue in District Court for 90 days from the date of the dismissed action. On June 23, 2021, the Company and the Environment, Inc. v. Trunity Holdings, Inc., Case No. 2015 CA 009726 B, Superior Court forformer President and COO reached a confidential settlement and release agreement releasing both parties of any future claims which included the Districtcancellation of Columbia, Civil Division.
This action was filed on December 16, 2015 by the National Council for Sciencecertain previously issued shares and the Environment, Inc. (“NCSE”)stock options. The impact of this settlement is reflected in the state courtCompany’s financial statements as of June 30, 2021.
Terra Nova Matter
On May 4, 2021, Mitesco, Inc. was served with a Statement of Nature of Dispute, Claims and Issues to be Arbitrated in the District of Columbia against Trunity Holdings,which Claimant Terra Nova Capital Equities, Inc. (“Trunity”) and alleges(Terranova) makes claims forrelated to alleged breach of contract. Acknowledgement of indebtedness and settlement agreement and quantum merit arising out of an agreement entered into between NCSE and Trunity in 2014. The complaint seeksthe Parties dated August 17, 2020. Terra Nova claims damages in the amount of $177,270, inclusive of attorney’s fees, costs and accrued interest, continuing interest in the amount of 12% per annum and attorney’s fees and costs of collection relating to the case. The Company, in its answer dated January 27, 2016, denied the material allegations made by NCSE, asserted a number of affirmative defenses and filed a counterclaim alleging claims for fraud, negligent misrepresentation, breach of fiduciary duty, breach of contract and unjust enrichment. In its counterclaim,$385,000.
On June 3, 2021, the Company sought actual and compensatory damages against NCSE that it believes exceed the amount sought by NCSE on its claims, pre-judgment interest, punitive damages and all costs and expenses, including attorney’s fees, incurred by the Company in bringing its claims against NCSE.
On September 23, 2016, the Company settled this obligation with an agreement to pay $48,500 to NCSE if paid by November 4, 2016, and $75,000 if paid later. On May 15, 2020, the Company entered intoTerra Nova Capital Equities, Inc. reached a further settlement agreement with NCSE whereby the Company paid $5,000 in cash for full settlement and release of all obligations. As such the Company has no further obligation to NCSE. This settlement was recorded during the three months ending June 30, 2020; the Company recognized a gain in the amount of $70,000 with half being paid on this transaction.
Carlton Fields Jorden Burt, P.A.
This action was filed on May 18, 2017 by a law firm that represented the Company prior to the spin-outsigning of the educational software businessagreement and the remaining 50 percent being paid in 2016 with the intent of collection past due invoices in the aggregate amount of $241,828. equal installments on September 30, 2021, and December 31, 2021
On May 15, 2020, the Company entered into a settlement agreement with Carlton Fields whereby the Company paid $30,000 in cash for full settlement and release of all obligations. As such the Company has no further obligation to Carlton Fields. This settlement was recorded during the three months ending June 30, 2020; the Company recognized a gain in the amount of $236,319 on this transaction.
|
ITEM 1A. RISK FACTORS
In additionSpecial Notice Regarding the Worldwide Covid-19 Crisis
The world economy is facing significant uncertainties as a result of the worldwide COVID-19 crisis. While we are a small company and have a limited workforce, it is likely we will face increased risk in the case that our financing needs are delayed; our acquisition targets face liquidity issues; or if our professional relationships are challenged from limited staff availability or access. We cannot predict with any certainty whether and to what degree the disruption caused by the COVID-19 pandemic and reactions thereto will continue and expect to face difficulty in developing our business and building our planned clinics. It is not possible for us to accurately predict the duration or magnitude of the adverse results of the outbreak and its effects on our business, results of operations or financial condition at this time, but such effects may be material. The COVID-19 pandemic may also have the effect of heightening many of the other risks identified elsewhere in this section.
Investing in our common stock involves a high degree of risk factors set forthYou should carefully consider the following risks, together with all the other information in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and notes thereto. If any of the following risks materializes, our operating results, financial condition and liquidity could be materially adversely affected. As a result, the trading price of our common stock could decline, and you could lose part or all your investment. The following information updates, and should be read in conjunction with, the information disclosed in Part I- Item 1A “Risk Factors” ofI, Item1A, “Risk Factors,” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “10-K”), investors should consider2020, filed with the Securities and Exchange Commission on March 25, 2021 . Except as disclosed below, there have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on March 25, 2021. If any of the following risk factors:risks materializes, our operating results, financial condition and liquidity could be materially adversely
Risks RelatedThere is substantial doubt about our ability to continue as a going concern as a result of our Businesslimited operating history, history of losses and financial resources, and if we are unable to generate significant revenue or secure financing, we may be required to cease or curtail our operations.
OurWe have a long history of losses and incurred net losses of approximately $2.9 million and $3.9 million for the years ended December 31, 2020, and 2019, respectively and net losses of approximately $3.9 million and $0.9 million for the six months ended June 30, 2021, and 2020, respectively. We have nominal revenues from our operations. The Report of our Independent Registered Public Accounting Firm issued in connection with our audited financial statements for the calendar year ended December 31, 2020, expressed substantial doubt about our ability to continue as a going concern, due to the fact that we have recurring operating losses and our lack of liquidity and working capital. The Company’s continuance is dependent on raising capital and generating revenues sufficient to sustain operations. We have not generated revenues from our present business plan. If we generate revenue more slowly than we anticipate, or if our operating expenses are higher than we expect, we may not be able to pay our operating expenses or achieve profitability and our financial condition could suffer. Whether we can achieve cash flow levels sufficient to support our operations cannot be accurately predicted. Unless such cash flow levels are achieved, we will need to borrow additional funds or sell debt or equity securities, or some combination thereof, to obtain funding for our operations. Such additional funding may not be available on commercially reasonable terms, or at all. As of the six months ended June 30, 2021, we have only generated revenues of $11,200.
The issuance of additional shares of our common stock, convertible notes, convertible Preferred Stock, and other convertible securities may dilute the percentage ownership of the then-existing stockholders and may make it more difficult to raise additional equity capital.
As of June 30, 2021, there are outstanding options and warrants to purchase 11,696,211and 12,600,000 shares of common stock, respectively. In addition, we have outstanding Series C Preferred Stock that converts into 8,150,705 shares of common stock, and dividends on Preferred Stock is convertible into an additional 376,803 shares of common stock. The exercise of such options and warrants and conversion of convertible securities would dilute the then-existing stockholders’ percentage ownership of our stock, and any sales in the public market of common stock underlying such securities could adversely affect prevailing market prices for the common stock. Moreover, the terms upon which we would be able to obtain additional equity capital could be adversely affected because the holders of our options and warrants can be expected to exercise them at a time when we would, likely, be able to obtain any needed capital on terms more favorable to us than those provided by the evolving and ongoing COVID-19 global pandemic.such securities.
OurWe may become involved in legal proceedings that could have a material adverse impact on our business, results of operations and operations could be adversely affected by the effects of the recent and evolving COVID-19 virus, which was declared by the World Health Organization as a global pandemic. The COVID-19 pandemic has resulted in travel and other restrictions in order to reduce the spread of the disease, including state and local orders across the United States that, among other things, direct individuals to shelter at their places of residence, direct businesses and governmental agencies to cease non-essential operations at physical locations, prohibit certain non-essential gatherings and events and order cessation of non-essential travel.financial condition.
Remote work policies, quarantines, shelter-in-place and similar government orders, shutdownsBy operating in the health care industry, we will face an inherent business risk of exposure to personal injury claims. We plan to obtain liability insurance in the future; however, we do not have liability insurance coverage to protect us from such claims. A successful personally liability claim, or other restrictions on the conductseries of business operations related to the COVID-19 pandemic mayclaims brought against us, more than our insurance coverage, would negatively impact our business.financial condition.
The spread of COVID-19, which has caused a broad impact globally, may materially affect us economically. While the potential economic impact brought by, and the duration of, COVID-19 may be difficultFrom time to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which couldtime and in the future negatively affect our liquidity. In addition, a recession or market correction resulting from the spreadordinary course of COVID-19 could materially affect our business, we and the valuecertain of our common stock.subsidiaries may become involved in various legal proceedings and claims, including for example, employment disputes and litigation; client disputes and litigation alleging solution and implementation defects, personal injury, intellectual property infringement, violations of law and breaches of contract and warranties; and other third party disputes and litigation alleging personal injury, intellectual property infringement, violations of law, and breaches of contracts and warranties.
The global pandemic of COVID-19 continuesPPP Loan
During March 2020, in response to rapidly evolve. The extent to which the COVID-19 pandemic impactscrisis, the federal government announced plans to offer loans to small businesses in various forms, including the Payroll Protection Program, or "PPP", established as part of the Corona Virus Aid, Relief and Economic Security Act (“CARES Act”) and administered by the U.S. Small Business Administration. On April 18, 2020, the Company’s former President and COO completed and applied on behalf of the Company to Bank of America, NA (“Bank of America”) for a PPP loan, which was subsequently approved. On April 25, 2020, the Company entered an unsecured Promissory Note (the “Note”) with Bank of America for a loan in the original principal amount of $460,000, and the Company received the full amount of the loan proceeds on May 4, 2020.
On July 21, 2020, Bank of America notified the Company in writing that it should not have received $440,000 of the loan proceeds disbursed under the Note. The Company investigated the terms of the application and discovered its former President had erroneously represented it was refinancing an Economic Injury Disaster Loan when no such loan had been received. Bank of America has requested that the Company remit the funds received back to Bank of America. The Company is attempting to negotiate a payment plan with Bank of America plan. If we are not successful in negotiating repayment terms, it could have a material adverse effect on our businessfinancial condition.
Smith Matter
During management's review of the Company’s recent PPP loan application after the loan had been disbursed to the Company, it was determined that the information provided by Ms. Julie R. Smith, the Company’s former President and operations will depend on future developmentsCOO, was not accurate. After consulting with legal counsel, the Board of Directors voted to remove Ms. Smith from its Board of Directors, and all other capacities due to the misstatements she made in the loan application. Subsequent to that decision, effective July 1, 2020, Ms. Smith submitted a resignation from all positions with the Company, which was accepted by the Board and management. Ms. Smith subsequently retained counsel and has indicated her intent to file an administrative charge of discrimination in Colorado under certain provisions of the anti-discrimination laws of that state. On August 18, 2020, the Company received formal notice that a complaint has been filed with the Colorado Civil Rights Division by Ms. Smith naming the Company as the Respondent. The Company believes the claims are highly uncertainfrivolous and cannot be predicted with confidence atintends to vigorously defend against the timeallegations. As of the date of this Form 10-Q, such asfiling the ultimate geographic spreadCompany has been advised that the Colorado Civil Rights Division has dismissed this matter effective March 1, 2021. Ms. Smith requested a “Right-to-Sue” letter, which she received, giving her a right to sue in District Court for 90 days from the date of the disease,dismissed action.
Terra Nova Matter
On May 4, 2021, we were served with a Statement of Nature of Dispute, Claims and Issues to be Arbitrated in which Claimant Terra Nova makes claims related to alleged breach of an agreement between the durationParties dated August 17, 2020. Terra Nova claims damages in the amount of $385,000. Although we intend to vigorously defend against the claims, there can be no assurance that we will be successful.
All such legal proceedings are inherently unpredictable and, regardless of the outbreak, the duration and effect of business disruptions and the short-term effects and ultimate effectivenessmerits of the travel restrictions, quarantines, social distancing requirementsclaims, litigation may be expensive, time-consuming, and disruptive to our operations and distracting to management. If resolved against us, such legal proceedings could result in excessive verdicts, injunctive relief or other equitable relief that may affect how we operate our business. Similarly, if we settle such legal proceedings, it may affect how we operate our business. Future court decisions, alternative dispute resolution awards, business closuresexpansion or legislative activity may increase our exposure to litigation and regulatory investigations. In some cases, substantial non-economic remedies or punitive damages may be sought. Although we maintain liability insurance coverage, there can be no assurance that such coverage will cover any verdict, judgment or settlement that may be entered against us, that such coverage will prove to be adequate or that such coverage will continue to remain available on acceptable terms, if at all. If we incur liability that exceeds our insurance coverage or that is not within the scope of the coverage in the United States and other countries to contain and treat the disease. Accordingly, we do not yet know the full extent of potential delays or impactslegal proceedings brought against us, it could have a material adverse effect on our business, healthcare systems or the global economy as a whole. However, these impacts could adversely affect our business, financial condition, results of operations and growth prospects.financial condition.
|
The terms of our outstanding Series C Preferred Stock may limit our ability to raise additional equity capital or pursue acquisitions, which may impact funding of our ongoing operations and cause significant dilution to existing stockholders.
On AprilMarch 25, 2021, we entered into Securities Purchase Agreements with four institutional pursuant to which the Company sold to the Investors in a private placement an aggregate of 3,000,000 units (the “Units” and each a “Unit”) with a purchase price of $1.00 per Unit, with each Unit consisting of (a) one share of a newly formed Series C Convertible Preferred Stock, par value $0.01 per share (the “Series C Preferred Stock”), (b) one warrant (the “Series A Warrants”) to purchase 2.1 shares of the Company’s common stock, at a purchase price of $0.50 per whole share of common stock, and (c) one warrant (the “Series B Warrants”) to purchase 2.1 shares of common stock at a purchase price of $0.75 per whole share. The aggregate gross proceeds to the Company were $3,000,000 and the number of shares of Common Stock initially issuable upon conversion of the Series C Preferred Stock is 12,600,000 shares of Common stock and the aggregate number of shares of common stock initially issuable upon exercise of the warrants is 12,600,000 shares of Common Stock.
Holders of the Series C Preferred Stock were provided price protections for the $0.25 conversion price (the “Conversion Price”), pursuant to which, in the event the company issues or sells any securities, including options or convertible securities, or amends outstanding securities, at an effective price, with an exercise price or at a conversion price less than the Conversion Price, then the Conversion Price shall be reduced to such lower price, which shall not apply to any Exempt Issuance (as defined in the Certificate of Designations of the Series C Preferred Stock (the “COD”)). Further, holders of the Series C Preferred Stock shall have the right to participate in any offering by the Company of its Common Stock or Common Stock Equivalents in a transaction exempt from registration under the Securities Act of 1933, as amended, in an amount equal to an aggregate of 30% of the financing on the same terms, conditions and price provided to investors in such an offering, such right shall expire on the 15 month anniversary of the issuance date of the Series C Preferred Stock by the Company and shall not apply to any Exempt Issuance or a public offering.
ITEM 2. SALE OF UNREGISTERED SECURITIES
During the six months ended June 30, 2021, we offered and sold securities below.
On January 4, 2021, we issued 4,123,750 shares of common stock at a price of $0.012 per share pursuant to the conversion of $45,000 of principal and $4,485 of accrued interest in Eagle Equities Note 4.
On January 6, 2021, we issued 3,505,964 shares of common stock at a price of $0.01224 per share pursuant to the conversion of $39,000 of principal and $3,913 of accrued interest in Eagle Equities Note 4.
On January 11, 2021, we issued 4,463,507 shares of common stock at a price of $0.01224 per share pursuant to the conversion of $50,000 of principal and $4,633 of accrued interest in Eagle Equities Note 5.
On January 14, 2021, we issued 4,319,378 shares of common stock at a price of $0.01266 per share pursuant to the conversion of $50,000 of principal and $4,683 of accrued interest in Eagle Equities Note 5.
On January 21, 2021, we issued 6,449,610 shares of common stock at a price of $0.0154 per share pursuant to the conversion of $93,000 of principal and $6,324 of accrued interest in Eagle Equities Note 6.
On January 28, 2021, we issued 7,285,062 shares of common stock at a price of $0.01575 per share pursuant to the conversion of $107,200 of principal and $7,540 of accrued interest in Eagle Equities Note 6.
On February 1, 2021, we issued 6,672,000 shares of common stock in a private placement (the “2021 Private Placement”) at a price of $0.25 per share for cash proceeds of $1,668,000.
On February 5, 2021, we entered into a settlement agreement with the holders of the Eagle Equities Note 7 whereby we issued 1,184,148 shares of common stock at a price of $0.24984 per share in satisfaction of $200,200 of principal and all accrued interest and prepayment penalties due under this note.
On February 5, 2021, we entered into a settlement agreement with the holders of the Eagle Equities Note 8 2020,whereby we issued 639,593 shares of common stock at a price of $0.23851 per share in satisfaction of $114,400 of principal and all accrued interest and prepayment penalties due under this note.
On February 5, 2021, the Company entered into a Securities Purchase Agreementsettlement agreement with Eagle Equities pursuant to which Eagle Equities agreed to purchase a convertible promissory note (the “Eagle Equities Note 5”) in the aggregate principal amount of $100,000 and an original issue discount of $4,000. The Eagle Equities Note 4 entitles the holder to 12% interest per annum and matures on April 8, 2021. Under the Eagle Equities Note 5, Eagle Equities may convert all or a portion of the outstanding principalholders of the Eagle Equities Note 5 into9 whereby the Company issued 605,177 shares of Common Stock beginning oncommon stock at a price of $0.24984 per share in satisfaction of $114,400 of principal and all accrued interest and prepayment penalties due under this note.
On February 5, 2021, we entered into a settlement agreement with the date which is 180 days from the issuance dateholders of the Eagle Equities Note 5,10 whereby we issued 1,095,131 shares of common stock at a price equalof $0.23748 per share in satisfaction of $200,200 of principal and all accrued interest and prepayment penalties due under this note.
On February 22, 2021, we issued 336,000 shares of common stock for the exercise of options at a price of $0.03 per share.
On March 11, 2021, was issued 600,000 shares of common stock to 60%four officers of lowest tradedThe Good Clinic in exchange for 4,800 shares of Series A Preferred Stock.
On March 17, 2021, we issued 300,000 shares of common stock at a price of $0.31 per share to a service provider.
On March 23, 2021, we issued 461,358 shares of common stock at a price of $0.26 per share to the underwriters of the 2021 Private Placement.
On March 25, 2021, we entered into Securities Purchase Agreements (the “SPAs”) with four institutional investors (the “Investors” and each an “Investor”) pursuant to which we sold to the Investors in a private placement an aggregate of 3,000,000 units (the “Units” and each a “Unit”) with a purchase price of $1.00 per Unit, with each Unit consisting of (a) one share of a newly formed Series C Convertible Preferred Stock, par value $0.01 per share (the “Series C Preferred Stock”), (b) one warrant (the “Series A Warrants”) to purchase 2.1 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) at a purchase price of $0.50 per whole share of Common Stock, and (c) one warrant (the “Series B Warrants” and together with the Series A Warrants, the “Warrants”) to purchase 2.1 shares of Common Stock at a purchase price of $0.75 per whole share. The aggregate gross proceeds to the Company were $3,000,000 and the number of shares of Common Stock initially issuable upon conversion of the Series C Preferred Stock is 12,600,000 shares of Common stock and the aggregate number of shares of Common Stock initially issuable upon exercise of the Warrants is 12,600,000 shares of Common Stock. We also issued to the placement agent and its designee 463,320 shares of Common Stock.
In addition, on March 29, 2021, we issued 300,000 shares of common stock as payment for services to be rendered for investor relations services having a value of $.2830 per share.
On March 30, 2021, we issued 272,837 shares of common stock as settlement for amount sowed under the Series D Convertible Note share to the underwriters of the 2021 Private Placement.
On March 31, 2021, we completed the private offering previously reported on February 10, 2021, by issuing an aggregate of 6,672,000 shares of our restricted common stock to investors for $1,668,000 in proceeds pursuant to a Securities Purchase Agreement (“SPA”). The transaction was executed directly with us, and no brokers, dealers or representatives were involved.
On April 19, 2021, the Company issued 1,962 shares of common stock for professional fees which had been performed in a prior period. The Company recorded these shares at the par value of $0.01 per share.
On May 4 through May 26, 2021, the Company issued 4,237,424 shares of common stock for the conversion of 1,059,356 shares of Series C Preferred Stock at a price of $0.25 per share.
On May 12, 2021, the Company issued 2,500,000 shares of common stock at a price of $0.03 per share for the exercise of stock options by a consultant.
Between June 10, 2021, and June 29, 2021, the Company issued 5,116,668 shares of common stock at a price of $0.03 per share for the exercise of stock options by officers and directors.
On June 23, 2021, the Company cancelled 2,000,000 shares of common stock held by an ex-officer in connection with a settlement agreement. The cancellation of these shares was recorded at the par value of $0.01 per share. Also, in connection with the settlement agreement, the Company issued 637,953 shares to the ex-officer at the market price of $.20 per share.
Also, during the 20 day trading period endingsix months ended June 30, 2021, the Company charged the amount of $7,897 to operations in connection with the vesting of stock granted to its officers and board members; the Company also charged the amount of $201,292 to operations in connection with the vesting of options granted to its officers and board members.
Except for the issuances of common stock upon conversion of notes or the exchange of Common Stock for Series A Preferred Stock or notes which were effected relying on Section 3(a)(9) of the daySecurities Act as the conversion notice is receivedcommon stock was exchanged by us with our existing security holders exclusively and no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange, the Company,securities issued in each of the transactions described above were issued relying on Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder. The recipients of the securities in each of these transactions relying on Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions. All recipients had adequate access, through their employment or other relationship with us or through other access to information provided by us, to information about us. The sales of these securities were made without any general solicitation or advertising.
|
The shares of common stock issued pursuant to the SPA and to the investor relations services were issued in a transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) in reliance on Section 4(a)(2) thereof. Accordingly, the shares of common stock have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.
None.ITEM 3. DEFAULTS ON SENIOR SECURED SECURITIES
Not Applicable.
|
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable to the Company’s operations.Applicable.
|
ITEM 5. OTHER INFORMATION
None.
Not Applicable.
ITEM 6. EXHIBITS
The following exhibits are included with this Quarterly Report on Form 10Q
Form Type | Exhibit Number | Date Filed | Filed Herewith | |||||||
3.1 | Certificate of Incorporation of Trunity Holdings, Inc., dated January 18, 2012. | 8-K | 10.1 | 1/31/2012 | ||||||
3.2 | 8-K | 10.2 | 1/31/2012 | |||||||
3.3 | 10-K | 3.3 | 4/16/2013 | |||||||
3.4 | 8-K | 3.1(i) | 1/06/2016 | |||||||
3.5 | Certificate of Designations of Series X Preferred Stock of True Nature Holding, Inc. | 8-K | 3.6 | 1/06/2020 | ||||||
3.6 | 8-K | 3.07 | 3/13/2020 | |||||||
3.7 | 10-Q | 3.7 | 8/14/2020 | |||||||
3.8 | 10-Q | 3.8 | 11/13/2020 | |||||||
3.9 | Bylaws of Mitesco, Inc., as amended, dated November 10, 2020 | 10-Q | 3.9 | 11/13/2020 |
Form Type | Exhibit Number | Date Filed | Filed Herewith | |||||||
3.10 | 8-K | 3.1 | 03/26/2021 | |||||||
3.11 | 8-K | 3.2 | 03/26/2021 | |||||||
4.1# | Mitesco, Inc. 2021 Omnibus Securities and Incentive Plan (File No. 333-252293) | 8-K | 10.1 | 01/27/2021 | ||||||
4.2 | 8-K | 4.1 | 03/26/2021 | |||||||
4.3 | 8-K | 4.2 | 03/26/2021 | |||||||
10.1 | Form of Securities Purchase Agreement used for private placement of restricted common stock | 8-K | 10.01 | 02/10/2021 | ||||||
10.2 | 8-K | 10.02 | 02/10/2021 | |||||||
10.3 | 8-K | 10.03 | 02/10/2021 | |||||||
10.4 | 8-K | 10.04 | 02/10/2021 | |||||||
10.5 | 8-K | 10.05 | 02/10/2021 | |||||||
10.6 | Form of Exchange Agreement for Restricted Common Stock with Four (4) Parties Regarding Clinic Assets | 8-K | 10.06 | 02/10/2021 | ||||||
10.7# | 8-K | 10.1 | 03/17/2021 | |||||||
10.8 | 8-K | 10.1 | 03/26/2021 | |||||||
10.9 | 8-K | 10.2 | 03/26/2021 | |||||||
10.10 | Engagement Letter, by and between Carter, Terry & Company and Mitesco, Inc., dated January 6, 2021 | 8-K | 10.3 | 03/26/2021 | ||||||
10.11 | 8-K | 10.4 | 03/26/2021 | |||||||
10.12# | Employment Agreement by and between Jenny Lindstrom and Mitesco, Inc., dated as of April 6, 2021 | 8-K | 10.1 | 04/12/2021 |
Type |
|
Exhibit Number |
| |||||||||
| Herewith | |||||||||
| ||||||||||
| ||||||||||
| ||||||||||
| ||||||||||
| ||||||||||
| ||||||||||
| ||||||||||
| ||||||||||
| ||||||||||
| ||||||||||
| ||||||||||
| X | |||||||||
| X | |||||||||
| X | |||||||||
32.2 | X | |||||||||
101.INS ** | XBRL INSTANCE DOCUMENT | |||||||||
101.SCH ** | XBRL TAXONOMY EXTENSION SCHEMA | |||||||||
101.CAL ** | XBRL TAXONOMY EXTENSION CALCULATION LINKBASE | |||||||||
101.DEF ** | XBRL TAXONOMY EXTENSION DEFINITION LINKBASE | |||||||||
101.LAB ** | XBRL TAXONOMY EXTENSION LABEL LINKBASE | |||||||||
101.PRE ** | XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE | |||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||||
| # | Management contract or compensatory plan or arrangement required to be identified pursuant to Item 15(a)(3) of this report. |
* Filed herewith.
** Furnished herewith.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q for the three months ended June 30, 2021, to be signed on its behalf by the undersigned, thereunto duly authorized.
MITESCO, INC. F/K/A TRUE NATURE HOLDING, INC. | ||||
Dated: August | By: | /s/ | ||
Phillip J. Keller |
| |||
| ||||
and Principal Financial Officer | ||||