UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 20222023
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 Name of Registrant as Specified in its Charter)
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| 87-0496850 |
(State Other Jurisdiction of Incorporation or Organization) |
| (I.R.S. Employer Identification Number) |
1660 Highway18202 Minnetonka Blvd., Suite 100 South, Suite 432
St. Louis Park,Deephaven, MN 5541655391
(Address of principal executive offices) (Zip code)
(844) 383-8689844-383-8689
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
N/A | N/A | N/A |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ NO ☐
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large, accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large, accelerated filer ☐ | Accelerated filer ☐ |
Non-accelerated filer ☒ | Smaller reporting company ☒ |
| Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. YES ☐ NONo ☒
As of August 10, 2022,December 4, 2023, the registrant had outstanding 225,523,2735,567,957 shares of common stock issued and outstanding.
Table of Contents
PART I – FINANCIAL INFORMATION |
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Item 1. |
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| Condensed Consolidated Balance Sheets as of June 30, |
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
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Item 3. |
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Item 4. |
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PART II – OTHER INFORMATION |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon our current assumptions, expectations, and beliefs concerning future developments and their potential effect on our business. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “approximately,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other comparable terminology, although the absence of these words does not necessarily mean that a statement is not forward-looking. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements.
Factors that may cause or contribute actual results to differ from these forward-looking statements include, but are not limited to:
● adverse economic conditions;
● the Company’s ability to raise capital to fund its operations
● industry competition
● the Company’s ability to integrate its acquisitions
● the Company’s ability to attract and retain qualified senior management and technical personnel;
● the continued effect of the Covid-19 pandemic on the Company’s operations; and
These forward-looking statements represent our intentions, plans, expectations, assumptions, and beliefs about future events and are subject to risks, uncertainties and other factors. Considering these risks, uncertainties, and assumptions, the events described in the forward-looking statements may not occur or may occur to a different extent or at a different time than we have described.
All forward-looking statements speak only as of the date of this Report. Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, or other information contained herein, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise. We caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance.
PART I. FINANCIAL INFORMATION
ItemITEM 1. Financial StatementsFINANCIAL STATEMENTS
MITESCO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, | December 31, | |||||||
ASSETS | 2022 | 2021 | ||||||
(unaudited) | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 35,821 | $ | 1,164,483 | ||||
Accounts Receivable | 114,064 | 44,313 | ||||||
Inventory | 33,420 | 25,314 | ||||||
Prepaid expenses | 125,762 | 72,985 | ||||||
Total current assets | 309,067 | 1,307,095 | ||||||
Right to use operating leases, net | 3,883,529 | 3,886,866 | ||||||
Construction in progress | 943,689 | 1,984,701 | ||||||
Fixed assets, net of accumulated depreciation of $594,051 and $19,590 | 5,683,497 | 3,476,164 | ||||||
Total Assets | $ | 10,819,782 | $ | 10,654,826 | ||||
LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 5,788,713 | $ | 3,976,064 | ||||
Accrued interest | 79,530 | 7,657 | ||||||
Derivative liabilities | 265,962 | - | ||||||
Lease liability - operating leases, current | 260,700 | 161,838 | ||||||
Notes payable, net of discounts of $1,620,263 and $411,568 | 3,317,203 | 588,432 | ||||||
SBA Loan Payable | 460,406 | 460,406 | ||||||
Other current liabilities | 96,136 | 169,422 | ||||||
Preferred stock dividends payable | 268,200 | 195,169 | ||||||
Total current liabilities | 10,536,850 | 5,558,988 | ||||||
Lease Liability- operating leases, non-current | 4,132,964 | 3,972,964 | ||||||
Total Liabilities | 14,669,814 | 9,531,952 | ||||||
Commitments and contingencies | - | - | ||||||
Stockholders' equity (deficit) | ||||||||
Preferred stock, $0.01 par value, 100,000,000 shares authorized; 500,000 shares designated Series A; 3,000,000 shares designated Series C; 10,000,000 shares designated Series D; and 400,000 shares designated Series X: | - | - | ||||||
Preferred stock, Series A, $0.01 par value, 0 and 4,800 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | - | - | ||||||
Preferred stock, Series C, $0.01 par value, 940,644 and 940,644 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 9,406 | 9,406 | ||||||
Preferred stock, Series D, $0.01 par value, 3,100,000 and 3,100,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 31,000 | 31,000 | ||||||
Preferred stock, Series X, $0.01 par value, 24,227 shares issued and outstanding at June 30, 2022 and December 31, 2021 | 242 | 242 | ||||||
Common stock subscribed | 36,575 | 132,163 | ||||||
Common stock, $0.01 par value, 500,000,000 shares authorized, 225,209,745 and 213,333,170 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 2,257,880 | 2,133,332 | ||||||
Additional paid-in capital | 26,743,676 | 24,295,063 | ||||||
Accumulated deficit | (32,928,811 | ) | (25,478,332 | ) | ||||
Total stockholders' equity (deficit) | (3,850,032 | ) | 1,122,874 | |||||
Total liabilities and stockholders' equity (deficit) | $ | 10,819,782 | $ | 10,654,826 | ||||
June 30, | December 31, | |||||||
ASSETS | 2023 | 2022 | ||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 255,891 | $ | 35,623 | ||||
Accounts Receivable | - | 30,943 | ||||||
Prepaid expenses | 59,830 | 113,722 | ||||||
Total current assets | 315,721 | 180,288 | ||||||
Right to use operating leases, net | - | 544,063 | ||||||
Fixed assets, net of accumulated depreciation of $1.1 million and $.06 million | - | 1,877,629 | ||||||
Total Assets | $ | 315,721 | $ | 2,601,980 | ||||
LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 8,295,208 | $ | 7,353,215 | ||||
Accrued interest | 569,149 | 362,094 | ||||||
Accrued interest - related parties | 228,622 | 198,753 | ||||||
Derivative liabilities | 138,212 | 568,912 | ||||||
Lease liability - operating leases, current | 544,143 | 442,866 | ||||||
Notes payable, net of discounts of $0 and $0.4 million | 1,598,765 | 5,112,701 | ||||||
Notes payable - related parties, net of discounts of $0 and $22,670 | 2,799,632 | 2,776,962 | ||||||
SBA Loan Payable | 460,406 | 460,406 | ||||||
Other current liabilities | 96,136 | 96,136 | ||||||
Preferred stock dividends payable | 490,439 | 395,407 | ||||||
Preferred stock dividends payable - related parties | 30,052 | 35,019 | ||||||
Total current liabilities | 15,250,764 | 17,802,471 | ||||||
Lease Liability- operating leases, non-current | 3,522,684 | 3,936,858 | ||||||
Total Liabilities | 18,773,448 | 21,739,329 | ||||||
Commitments and contingencies | - | - | ||||||
Stockholders' equity (deficit) | ||||||||
Preferred stock, $0.01 par value, 100,000,000 shares authorized; 500,000 shares designated Series A; 3,000,000 shares designated Series C; 10,000,000 shares designated Series D; 10,000 shares designated as Series E; 140,000 shares designated as Series F, and 27,324 shares designated Series X. | - | - | ||||||
Preferred stock, Series A, $0.01 par value, 0 shares issued and outstanding as of June 30, 2023 and December 31, 2022 | - | - | ||||||
Preferred stock, Series C, $0.01 par value, 0 and 1,047,619 shares issued and outstanding as of June 30, 2023 and December 31, 2022 | - | 10,476 | ||||||
Preferred stock, Series D, $0.01 par value, 750,000 and 3,100,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022 | 7,500 | 31,000 | ||||||
Preferred stock, Series F, $0.01 par value, 16,353 and 0 shares issued and outstanding as of June 30, 2023 and December 31, 2022 | 163 | - | ||||||
Preferred stock, Series X, $0.01 par value, 24,227 shares issued and outstanding at June 30, 2023 and December 31, 2022 | 242 | 242 | ||||||
Common stock subscribed | - | 36,575 | ||||||
Common stock, $0.01 par value, 500,000,000 shares authorized, 5,138,575 and 4,630,372 shares issued and outstanding as of June 30, 2023 and December 31, respectively | 51,388 | 46,305 | ||||||
Additional paid-in capital | 43,355,536 | 29,452,514 | ||||||
Accumulated deficit | (61,872,556 | ) | (48,714,461 | ) | ||||
Total stockholders' deficit | (18,457,727 | ) | (19,137,349 | ) | ||||
Total liabilities and stockholders' equity (deficit) | $ | 315,721 | $ | 2,601,980 | ||||
See accompanying notes to these unaudited condensed consolidated financial statements.
MITESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three | For the Six | For the Three Months | For the Six Months | |||||||||||||||||||||||||||||
Months Ended | Months Ended | Ended | Ended | |||||||||||||||||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
Revenue-services | $ | 180,375 | $ | 8,244 | $ | 272,836 | $ | 11,216 | $ | - | $ | 180,375 | $ | - | $ | 272,836 | ||||||||||||||||
Revenue-products | (11,290 | ) | - | 16,625 | - | - | (11,290 | ) | - | 16,625 | ||||||||||||||||||||||
Total revenue | 169,085 | 8,244 | 289,461 | 11,216 | - | 169,085 | - | 289,461 | ||||||||||||||||||||||||
Cost of goods sold-services | $ | 605,706 | $ | 3,605 | $ | 1,183,262 | $ | 5,318 | $ | 5,601 | $ | 605,706 | $ | 8,020 | $ | 1,183,262 | ||||||||||||||||
Cost of goods sold-products | 481 | - | 11,248 | - | - | 481 | - | 11,248 | ||||||||||||||||||||||||
Total cost of goods sold | 606,187 | 3,605 | 1,194,510 | 5,318 | 5,601 | 606,187 | 8,020 | 1,194,510 | ||||||||||||||||||||||||
Gross (loss) profit | (437,102 | ) | 4,639 | (905,049 | ) | 5,898 | ||||||||||||||||||||||||||
Gross (loss) | (5,601 | ) | (437,102 | ) | (8,020 | ) | (905,049 | ) | ||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||
General and administrative | $ | 2,340,929 | $ | 1,403,210 | $ | 4,904,758 | $ | 2,356,118 | $ | 774,681 | $ | 2,340,929 | $ | 2,786,085 | $ | 4,904,758 | ||||||||||||||||
Impairment of fixed assets | 71,569 | - | 2,343,462 | - | ||||||||||||||||||||||||||||
Total operating expenses | 2,340,929 | 1,403,210 | 4,904,758 | 2,356,118 | 846,250 | 2,340,929 | 5,129,547 | 4,904,758 | ||||||||||||||||||||||||
Net Operating Loss | (2,778,031 | ) | (1,398,571 | ) | (5,809,807 | ) | (2,350,220 | ) | (851,851 | ) | (2,778,031 | ) | (5,137,567 | ) | (5,809,807 | ) | ||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||||||||
Interest expense | (862,211 | ) | (1,135 | ) | (1,690,536 | ) | (966,123 | ) | (110,819 | ) | (862,211 | ) | (1,486,885 | ) | (1,690,536 | ) | ||||||||||||||||
Interest expense - related parties | (113,674 | ) | - | (242,836 | ) | - | ||||||||||||||||||||||||||
Equity investment incentives | (6,429,107 | ) | - | (6,429,107 | ) | - | ||||||||||||||||||||||||||
Financing cost | (18,617 | ) | - | (18,617 | ) | - | ||||||||||||||||||||||||||
Gain on termination of operating lease | - | - | 287,897 | - | ||||||||||||||||||||||||||||
Gain on forgiveness of debt | 25,000 | - | 25,000 | - | ||||||||||||||||||||||||||||
Gain on sale of assets | 20,097 | - | 20,097 | - | ||||||||||||||||||||||||||||
Gain on issuance of shares to service provider | 33,092 | - | 33,092 | - | ||||||||||||||||||||||||||||
Loss on settlement of true-up obligation | (119,370 | ) | - | (119,370 | ) | - | ||||||||||||||||||||||||||
(Loss) Gain on waiver and commitment fee shares | - | (11,619 | ) | - | 186,654 | |||||||||||||||||||||||||||
Loss on legal settlement | - | (70,000 | ) | - | (70,000 | ) | (18,759 | ) | - | (18,759 | ) | - | ||||||||||||||||||||
(Loss) Gain on waiver and commitment fee shares | (11,619 | ) | - | 186,654 | - | |||||||||||||||||||||||||||
Gain on settlement of accrued salary | - | - | 15,032 | - | - | - | - | 15,032 | ||||||||||||||||||||||||
Loss (Gain) on settlement of accounts payable | - | - | (78,235 | ) | 6,045 | |||||||||||||||||||||||||||
Gain on settlement of notes payable | - | - | - | 1,836 | ||||||||||||||||||||||||||||
Grant income | - | 52 | - | 52 | ||||||||||||||||||||||||||||
Loss on revaluation of derivative liabilities | (153,424 | ) | - | (73,587 | ) | (493,455 | ) | |||||||||||||||||||||||||
Loss on settlement of accounts payable | - | - | - | (78,235 | ) | |||||||||||||||||||||||||||
(Loss) Gain on revaluation of derivative liabilities | 39,738 | (153,424 | ) | (71,040 | ) | (73,587 | ) | |||||||||||||||||||||||||
Total other expense | (1,027,254 | ) | (71,083 | ) | (1,640,672 | ) | (1,521,645 | ) | (6,692,419 | ) | (1,027,254 | ) | (8,020,528 | ) | (1,640,672 | ) | ||||||||||||||||
Loss before provision for income taxes | (3,805,285 | ) | (1,469,654 | ) | (7,450,479 | ) | (3,871,865 | ) | (7,544,270 | ) | (3,805,285 | ) | (13,158,095 | ) | (7,450,479 | ) | ||||||||||||||||
Provision for income taxes | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Net loss | $ | (3,805,285 | ) | $ | (1,469,654 | ) | $ | (7,450,479 | ) | $ | (3,871,865 | ) | $ | (7,544,270 | ) | $ | (3,805,285 | ) | $ | (13,158,095 | ) | $ | (7,450,479 | ) | ||||||||
Preferred stock dividends | (80,392 | ) | (54,115 | ) | (160,084 | ) | (74,614 | ) | (409,420 | ) | (18,070 | ) | (471,243 | ) | (36,051 | ) | ||||||||||||||||
Preferred stock deemed dividends | - | - | - | (332,242 | ) | |||||||||||||||||||||||||||
Preferred stock dividends - related parties | (59,125 | ) | (62,322 | ) | (77,121 | ) | (124,033 | ) | ||||||||||||||||||||||||
Net loss available to common shareholders | $ | (3,885,677 | ) | $ | (1,523,769 | ) | $ | (7,610,563 | ) | $ | (4,278,721 | ) | $ | (8,012,815 | ) | $ | (3,885,677 | ) | $ | (13,706,459 | ) | $ | (7,610,563 | ) | ||||||||
Net loss per share - basic and diluted | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.02 | ) | $ | (1.55 | ) | $ | (0.88 | ) | $ | (2.76 | ) | $ | (1.75 | ) | ||||||||
Weighted average shares outstanding - basic and diluted | 221,523,073 | 201,678,218 | 217,634,736 | 194,455,386 | 5,157,610 | 4,430,461 | 4,963,755 | 4,352,695 | ||||||||||||||||||||||||
See accompanying notes to these unaudited condensed consolidated financial statements.
MITESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 20222023 and 20212022
(UNAUDITED)
Preferred Stock Series A | Preferred Stock Series C | Preferred Stock Series D | Preferred Stock Series X | Common Stock | Additional | Common Stock | Accumulated | Preferred Stock Series A | Preferred Stock Series C | Preferred Stock Series D | Preferred Stock Series F | Preferred Stock Series X | Common Stock | Additional Paid-in | Common Stock | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Paid-in capital | Subscribed | Deficit | Total | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | capital | Subscribed | Deficit | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2022 | - | $ | - | 940,644 | $ | 9,406 | 3,100,000 | $ | 31,000 | 24,227 | $ | 242 | 219,756,894 | $ | 2,197,570 | $ | 25,517,634 | $ | 128,015 | $ | (29,123,526 | ) | (1,239,659 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of common stock issued to employees | - | - | - | - | - | - | - | - | 1,474 | - | - | 1,474 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees | - | - | - | - | - | - | - | - | 135,295 | - | - | 135,295 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for services | - | - | - | - | - | - | - | - | 750,000 | 7,500 | 95,625 | - | - | 103,125 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Waiver fee shares | - | - | - | - | - | - | - | - | 720,000 | 7,200 | 84,240 | (91,440 | ) | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitment fee shares | - | - | - | - | - | - | - | - | 3,577,720 | 41,559 | 843,793 | - | - | 885,352 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued with notes payable - Insiders | - | - | - | - | - | - | - | - | 63,005 | - | - | 63,005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for Series X dividends | - | - | - | - | - | - | - | - | 405,131 | 4,051 | 83,002 | - | - | 87,053 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | - | - | - | - | (80,392 | ) | - | - | (80,392 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss for the period ended June 30, 2022 | - | - | - | - | - | - | - | - | - | (3,805,285 | ) | (3,805,285 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2022 | - | $ | - | 940,644 | $ | 9,406 | 3,100,000 | $ | 31,000 | 24,227 | $ | 242 | 225,209,745 | $ | 2,257,880 | $ | 26,743,676 | $ | 36,575 | $ | (32,928,811 | ) | $ | (3,850,032 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | - | $ | - | 940,644 | $ | 9,406 | 3,100,000 | $ | 31,000 | 24,227 | $ | 242 | 213,333,170 | $ | 2,133,332 | $ | 24,295,063 | $ | 132,163 | $ | (25,478,332 | ) | 1,122,874 | - | $ | - | 940,644 | $ | 9,406 | 3,100,000 | $ | 31,000 | - | 24,227 | $ | 242 | 4,266,669 | $ | 42,667 | $ | 26,385,728 | $ | 132,163 | $ | (25,478,332 | ) | $ | 1,122,874 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of common stock issued to employees | - | - | - | - | - | - | - | - | 2,986 | 2,986 | - | - | - | - | - | - | - | - | - | - | - | - | 1,512 | - | - | 1,512 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees | - | - | - | - | - | - | - | - | 302,310 | 302,310 | - | - | - | - | - | - | - | - | - | - | - | - | 167,015 | - | - | 167,015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of accounts payable to common stock | - | - | - | - | - | - | - | - | 3,179,650 | 31,797 | 546,438 | 578,235 | - | - | - | - | - | - | - | - | - | - | 63,593 | 636 | 577,599 | - | - | 578,235 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitment fee shares | - | - | - | - | - | - | - | - | 5,297,720 | 58,759 | 1,069,899 | 1,128,658 | - | - | - | - | - | - | - | - | - | - | 34,400 | 344 | 242,962 | - | - | 243,306 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Waiver fee shares | - | - | - | - | - | - | - | - | 2,261,721 | 22,617 | 344,541 | - | 367,158 | - | - | - | - | - | - | - | - | - | - | 30,835 | 308 | 275,410 | 91,440 | - | 367,158 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for services | - | - | - | - | - | - | - | - | 750,000 | 7,500 | 95,625 | 103,125 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued with note payable - Diamond 1 | - | - | - | - | - | - | - | - | 2,914 | 2,914 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued with note payable - Diamond 2 | 2,213 | 2,213 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued with note payable | - | - | - | - | - | - | - | - | - | - | 5,127 | - | - | 5,127 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain on settlement of accrued payroll | (400,000 | ) | (4,000 | ) | 4,000 | - | - | - | - | - | - | - | - | - | - | - | (8,000 | ) | (80 | ) | 80 | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares previously subscribed for conversion of accounts payable | 382,353 | 3,824 | 91,764 | (95,588 | ) | - | - | - | - | - | - | - | - | - | - | - | 7,648 | 76 | 95,512 | (95,588 | ) | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | - | - | - | - | - | - | - | - | (79,692 | ) | - | - | (79,692 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss for the three months ended March 31, 2022 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (3,645,194 | ) | (3,645,194 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2022 | - | - | 940,644 | $ | 9,406 | 3,100,000 | $ | 31,000 | - | $ | - | 24,227 | $ | 242 | 4,395,145 | $ | 43,951 | $ | 27,671,253 | $ | 128,015 | $ | (29,123,526 | ) | $ | (1,239,659 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of common stock issued to employees | - | - | - | - | - | - | - | - | - | - | - | - | 1,474 | - | - | 1,474 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees | - | - | - | - | - | - | - | - | - | - | - | - | 135,295 | - | - | 135,295 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for services | - | - | - | - | - | - | - | - | - | - | 15,000 | 150 | 102,975 | - | - | 103,125 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of waiver fee shares | - | - | - | - | - | - | - | - | - | - | 14,400 | 144 | 91,296 | (91,440 | ) | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of commitment fee shares | - | - | - | - | - | - | - | - | - | - | 71,555 | 716 | 884,636 | - | - | 885,352 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued with notes payable - Insiders | - | - | - | - | - | - | - | - | 63,005 | 63,005 | - | - | - | - | - | - | - | - | - | - | - | - | 63,005 | - | - | 63,005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for Series X dividends | - | - | - | - | - | - | - | - | - | - | 8,103 | 82 | 86,971 | - | - | 87,053 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | - | - | - | - | - | - | - | - | (80,392 | ) | - | - | (80,392 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss for the three months ended June 30, 2022 | - | - | - | - | - | - | - | - | - | - | - | - | - | (3,805,285 | ) | (3,805,285 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2022 | - | - | 940,644 | $ | 9,406 | 3,100,000 | $ | 31,000 | - | $ | - | 24,227 | $ | 242 | 4,504,203 | $ | 45,043 | $ | 28,956,513 | $ | 36,575 | $ | (32,928,811 | ) | $ | (3,850,032 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | - | $ | - | 940,644 | $ | 9,406 | 3,100,000 | $ | 31,000 | - | 24,227 | $ | 242 | 4,266,669 | $ | 42,667 | $ | 26,385,728 | $ | 132,163 | (25,478,332 | ) | 1,122,874 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of common stock issued to employees | - | - | - | - | - | - | - | - | - | - | - | - | 2,986 | - | - | 2,986 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees | - | - | - | - | - | - | - | - | - | - | - | - | 302,310 | - | - | 302,310 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for services | - | - | - | - | - | - | - | - | - | - | 15,000 | 150 | 102,975 | - | - | 103,125 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of accounts payable to common stock | - | - | - | - | - | - | - | - | - | - | 63,593 | 636 | 577,599 | - | - | 578,235 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of commitment fee shares | - | - | - | - | - | - | - | - | - | - | 105,955 | 1,060 | 1,127,598 | - | - | 1,128,658 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of waiver fee shares | - | - | - | - | - | - | - | - | - | - | 45,235 | 452 | 366,706 | - | - | 367,158 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued with note payable | - | - | - | - | - | - | - | - | - | - | - | - | 68,132 | - | - | 68,132 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain on settlement of accrued payroll | - | - | - | - | - | - | - | - | - | - | (8,000 | ) | (80 | ) | 80 | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares previously subscribed for conversion of accounts payable | - | - | - | - | - | - | - | - | - | - | 7,648 | 76 | 95,512 | (95,588 | ) | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for Series X dividends | - | - | - | - | - | - | - | - | 405,131 | 4,051 | 83,002 | 87,053 | - | - | - | - | - | - | - | - | - | - | 8,103 | 82 | 86,971 | - | - | 87,053 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | - | - | - | - | (160,084 | ) | (160,084 | ) | - | - | - | - | - | - | - | - | - | - | - | - | (160,084 | ) | - | - | (160,084 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss for the six months ended June 30, 2022 | - | - | - | - | - | - | - | - | (7,450,479 | ) | (7,450,479 | ) | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (7,450,479 | ) | (7,450,479 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2022 | - | $ | - | 940,644 | $ | 9,406 | 3,100,000 | $ | 31,000 | 24,227 | $ | 242 | 225,209,745 | $ | 2,257,880 | $ | 26,743,676 | $ | 36,575 | $ | (32,928,811 | ) | $ | (3,850,032 | ) | - | - | 940,644 | $ | 9,406 | 3,100,000 | $ | 31,000 | - | $ | - | 24,227 | $ | 242 | 4,504,203 | $ | 45,043 | $ | 28,956,513 | $ | 36,575 | $ | (32,928,811 | ) | $ | (3,850,032 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2022 | - | $ | - | 1,047,619 | $ | 10,476 | 3,100,000 | $ | 31,000 | - | - | 24,227 | $ | 242 | 4,630,372 | $ | 46,305 | $ | 29,452,514 | $ | 36,575 | $ | (48,714,461 | ) | $ | (19,137,349 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for conversion of note payable | - | - | - | - | - | - | - | - | - | - | 57,138 | 571 | 82,885 | - | - | 83,456 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees | - | - | - | - | - | - | - | - | - | - | - | - | 933 | - | - | 933 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock to service providers | - | - | - | - | - | - | - | - | - | - | 300,000 | 3,000 | 894,000 | - | - | 897,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | - | - | - | - | - | - | - | - | (79,818 | ) | - | - | (79,818 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for dividends on Series X Preferred Stock | - | - | - | - | - | - | - | - | - | - | 8,063 | 81 | 35,248 | - | - | 35,329 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss for the three months ended March 31, 2023 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (5,613,825 | ) | (5,613,825 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2023 | - | $ | - | 1,047,619 | $ | 10,476 | 3,100,000 | $ | 31,000 | - | $ | - | 24,227 | $ | 242 | 4,995,573 | $ | 49,957 | 30,385,762 | $ | 36,575 | $ | (54,328,286 | ) | $ | (23,814,274 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued as commission for fundraising | - | - | - | - | - | - | - | - | - | - | 2,952 | 30 | 3,778 | - | - | 3,808 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for true-up agreement | - | - | - | - | - | - | - | - | - | - | 94,738 | 947 | 118,423 | - | - | 119,370 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for legal settlement | - | - | - | - | - | - | - | - | - | - | 22,174 | 222 | 18,537 | - | - | 18,759 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued previously subscribed | - | - | - | - | - | - | - | - | - | - | 2,926 | 30 | 36,545 | (36,575 | ) | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees | - | - | - | - | - | - | - | - | - | - | 933 | - | - | 933 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series A dividends previously satisfied | - | - | - | - | - | - | - | - | - | - | - | - | 10,967 | - | - | 10,967 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | - | - | - | - | - | - | - | - | (468,545 | ) | - | - | (468,545 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for dividends on Series X Preferred Stock | - | - | - | - | - | - | - | - | - | - | 20,212 | 202 | 25,033 | - | - | 25,235 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for conversion of accounts payable | - | - | - | - | - | - | 147 | 2 | - | - | - | - | 146,212 | - | - | 146,214 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares sold for cash | - | - | - | - | - | - | 1,746 | 17 | - | - | - | - | 1,655,483 | - | - | 1,655,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series C Preferred Stock to Series F Preferred Stock | - | - | (1,047,619 | ) | (10,476 | ) | - | - | 2,289 | 22 | - | - | - | - | 1,198,450 | - | - | 1,187,996 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series D Preferred Stock to Series F Preferred Stock | - | - | - | - | (2,350,000 | ) | (23,500 | ) | 4,055 | 41 | - | - | - | - | 1,610,965 | - | - | 1,587,506 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Debt to Series F Preferred Stock | - | - | - | - | - | - | 8,116 | 81 | - | - | - | - | 8,612,993 | - | - | 8,613,074 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss for the three months ended June 30, 2023 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (7,544,270 | ) | (7,544,270 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2023 | - | $ | - | - | $ | - | 750,000 | $ | 7,500 | 16,353 | $ | 163 | 24,227 | $ | 242 | 5,138,575 | $ | 51,388 | $ | 43,355,536 | $ | - | $ | (61,872,556 | ) | $ | (18,457,727 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2022 | - | $ | - | 1,047,619 | $ | 10,476 | 3,100,000 | $ | 31,000 | - | - | 24,227 | $ | 242 | 4,630,372 | $ | 46,305 | $ | 29,452,514 | $ | 36,575 | (48,714,461 | ) | (19,137,349 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued as commission for fundraising | - | - | - | - | - | - | - | - | - | - | 2,952 | 30 | 3,778 | - | - | 3,808 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for true-up agreement | - | - | - | - | - | - | - | - | - | - | 94,738 | 947 | 118,423 | - | - | 119,370 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for legal settlement | - | - | - | - | - | - | - | - | - | - | 22,174 | 222 | 18,537 | - | - | 18,759 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued previously subscribed | - | - | - | - | - | - | - | - | - | - | 2,926 | 30 | 36,545 | (36,575 | ) | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued to service providers | - | - | - | - | - | - | - | - | - | - | 300,000 | 3,000 | 894,000 | - | - | 897,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees | - | - | - | - | - | - | - | - | - | - | - | - | 1,866 | - | - | 1,866 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series A dividends previously satisfied | - | - | - | - | - | - | - | - | - | - | - | - | 10,967 | - | - | 10,967 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | - | - | - | - | - | - | - | - | (548,363 | ) | - | - | (548,363 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for dividends on Series X Preferred Stock | - | - | - | - | - | - | - | - | - | - | 28,275 | 283 | 60,281 | - | - | 60,564 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for conversion of accounts payable | - | - | - | - | - | - | 147 | 2 | - | - | - | - | 146,212 | - | - | 146,214 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for conversion of note payable | - | - | - | - | - | - | - | - | - | - | 57,138 | 571 | 82,885 | - | - | 83,456 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares sold for cash | - | - | - | - | - | - | 1,746 | 17 | - | - | - | - | 1,655,483 | - | - | 1,655,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series C Preferred Stock to Series F Preferred Stock | - | - | (1,047,619 | ) | (10,476 | ) | - | - | 2,289 | 22 | - | - | - | - | 1,198,450 | - | - | 1,187,996 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series D Preferred Stock to Series F Preferred Stock | - | - | - | - | (2,350,000 | ) | (23,500 | ) | 4,055 | 41 | - | - | - | - | 1,610,965 | - | - | 1,587,506 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Debt to Series F Preferred Stock | - | - | - | - | - | - | 8,116 | 81 | - | - | - | - | 8,612,993 | - | - | 8,613,074 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss for the six months ended June 30, 2023 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (13,158,095 | ) | (13,158,095 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2023 | - | $ | - | - | $ | - | 750,000 | $ | 7,500 | 16,353 | $ | 163 | 24,227 | $ | 242 | 5,138,575 | $ | 51,388 | $ | 43,355,536 | $ | - | $ | (61,872,556 | ) | $ | (18,457,727 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to these unaudited condensed consolidated financial statements.
MITESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six Months | ||||||||
Ended | ||||||||
June 30, | ||||||||
2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | (13,158,095 | ) | $ | (7,450,479 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Impairment of assets | 2,343,462 | - | ||||||
Depreciation | 78,230 | 417,340 | ||||||
Penalties on notes payable | 1,027,778 | - | ||||||
Amortization of right-to-use asset | - | 292,292 | ||||||
Amortization of discount on notes payable | 32,011 | 1,017,861 | ||||||
Amortization of discount on notes payable - related parties | 22,670 | - | ||||||
Share-based compensation | 898,866 | 305,296 | ||||||
Shares issued as compensation for fundraising | 36,900 | - | ||||||
Shares issued for true-up liability | 119,370 | - | ||||||
Conversion fees on notes payable | 75,000 | - | ||||||
Equity investment incentive on notes payable | 3,195,374 | - | ||||||
Incentive on conversion of Series C to Series F Preferred Stock | 1,016,887 | - | ||||||
Incentive on conversion of Series D to Series F Preferred Stock | 1,371,846 | - | ||||||
Investment incentive on cash sales of Series F Preferred Stock | 845,000 | - | ||||||
Commissions on sales of Series F Preferred Stock | 72,000 | - | ||||||
Gain on forgiveness of note payable | (25,000 | ) | - | |||||
Financing cost - waiver fee shares | - | 565,431 | ||||||
Gain on waiver fee shares | - | (198,273 | ) | |||||
Loss on commitment shares | - | 11,619 | ||||||
Gain on conversion of accrued salary | - | (15,032 | ) | |||||
Gain on lease terminations | (287,897 | ) | - | |||||
Loss on revaluation of derivative liabilities | 71,040 | 73,587 | ||||||
Gain on shares issued to service provider | (33,092 | ) | - | |||||
Gain on sale of equipment | (8,876 | ) | - | |||||
Loss on legal settlement | 18,759 | - | ||||||
Loss on settlement of accounts payable | - | 78,235 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivables | 30,943 | (69,751 | ) | |||||
Prepaid expenses | 53,892 | 50,348 | ||||||
Inventory | - | (8,106 | ) | |||||
Accounts payable and accrued liabilities | 1,202,357 | 934,220 | ||||||
Operating lease liability, net | - | (30,093 | ) | |||||
Other current liabilities | - | (73,286 | ) | |||||
Accrued interest | 452,474 | 71,873 | ||||||
Accrued interest - related parties | 29,869 | - | ||||||
Net cash used in operating activities | (518,232 | ) | (4,026,918 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Cash paid for acquisition of fixed assets and construction in progress | - | (190,200 | ) | |||||
Net cash used in investing activities | - | (190,200 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from sale of Series F Preferred Stock, net of costs | 738,500 | - | ||||||
Proceeds from notes payable - related parties, net of discounts | - | 1,511,250 | ||||||
Proceeds from notes payable, net of discounts | - | 1,812,500 | ||||||
Principal payments on notes payable related parties | - | (235,294 | ) | |||||
Net cash provided by financing activities | 738,500 | 3,088,456 | ||||||
Net increase (decrease) in cash and cash equivalents | 220,268 | (1,128,662 | ) | |||||
Cash and cash equivalents at beginning of period | 35,623 | 1,164,483 | ||||||
Cash and cash equivalents at end of period | $ | 255,891 | $ | 35,821 | ||||
See accompanying notes to these unaudited condensed consolidated financial statements.
MITESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 and 2021CASH FLOWS
(UNAUDITED)
| Preferred Stock Series A | Preferred Stock Series C | Preferred Stock Series D | Preferred Stock Series X | Common Stock | Additional | Common Stock | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Paid-in capital | Subscribed | Deficit | Total | |||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2021 | - | 3,000,000 | $ | 30,000 | - | $ | - | 26,227 | $ | 262 | 197,694,698 | $ | 1,976,965 | $ | 17,513,684 | $ | - | $ | (17,171,621 | ) | $ | 2,349,290 | ||||||||||||||||||||||||||||||||||
Vesting of common stock issued to employees | - | - | - | - | - | - | - | - | - | 3,889 | - | - | 3,889 | |||||||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees | - | - | - | - | - | - | - | - | - | 195,352 | - | - | 195,352 | |||||||||||||||||||||||||||||||||||||||||||
Shares issued to directors for exercise of options | - | - | - | - | - | - | - | 7,616,668 | 76,166 | 152,334 | (41,000 | ) | - | 187,500 | ||||||||||||||||||||||||||||||||||||||||||
Net shares cancelled in connection with settlement agreement | - | - | - | - | - | (2,000 | ) | (20 | ) | (1,362,047 | ) | (13,620 | ) | 141,550 | - | - | 127,910 | |||||||||||||||||||||||||||||||||||||||
Shares issued for professional fees | - | - | - | - | - | - | - | 1,962 | 2 | (2 | ) | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Shares of common stock issued for conversion of Preferred Stock Series C | - | (1,059,356 | ) | (10,594 | ) | - | - | - | - | 4,237,424 | 42,374 | (31,780 | ) | - | - | - | ||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | - | - | - | - | - | (54,115 | ) | - | - | (54,115 | ) | |||||||||||||||||||||||||||||||||||||||||
Loss for the period ended June 30, 2021 | - | - | - | - | - | - | - | - | - | - | - | (1,469,654 | ) | (1,469,654 | ) | |||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | - | 1,940,644 | $ | 19,406 | - | $ | - | 24,227 | $ | 242 | 208,188,705 | $ | 2,081,887 | $ | 17,920,912 | $ | (41,000 | ) | $ | (18,641,275 | ) | $ | 1,340,172 | |||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | 4,800 | $ | 48 | - | $ | - | - | $ | - | 26,227 | $ | 262 | 155,381,183 | $ | 1,553,812 | $ | 10,340,821 | $ | - | $ | (14,437,168 | ) | $ | (2,542,225 | ) | |||||||||||||||||||||||||||||||
Vesting of common stock issued to employees | - | - | - | - | - | - | - | - | - | - | 7,897 | - | - | 7,897 | ||||||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees | - | - | - | - | - | - | - | - | - | - | 201,294 | - | - | 201,294 | ||||||||||||||||||||||||||||||||||||||||||
Common stock issued for services | - | - | - | - | - | - | - | - | 1,099,320 | 10,963 | 211,517 | - | - | 222,480 | ||||||||||||||||||||||||||||||||||||||||||
Common stock issued for conversion of notes payable and accrued interest | - | - | - | - | - | - | - | - | 33,944,157 | 339,442 | 2,314,353 | - | - | 2,653,795 | ||||||||||||||||||||||||||||||||||||||||||
Sale of common stock in private placement | - | - | - | - | - | - | - | - | 6,672,000 | 66,750 | 1,601,250 | - | - | 1,668,000 | ||||||||||||||||||||||||||||||||||||||||||
Sale of Preferred Stock Series C | - | - | 3,000,000 | 30,000 | - | - | - | - | - | - | 1,461,283 | - | - | 1,491,283 | ||||||||||||||||||||||||||||||||||||||||||
Warrants issued with Preferred Stock Series C | - | - | - | - | - | - | - | - | - | - | 1,268,717 | - | - | 1,268,717 | ||||||||||||||||||||||||||||||||||||||||||
Conversion of Preferred Stock Series A to common stock | (4,800 | ) | (48 | ) | - | - | - | - | - | - | 600,000 | 6,000 | (5,952 | ) | - | - | - | |||||||||||||||||||||||||||||||||||||||
Shares issued for exercise of stock options | - | - | - | - | - | - | - | - | 7,616,668 | 76,166 | 152,334 | (41,000 | ) | - | 187,500 | |||||||||||||||||||||||||||||||||||||||||
Net shares issued in connection with settlement agreement | - | - | - | - | - | - | (2,000 | ) | (20 | ) | (1,362,047 | ) | (13,620 | ) | 141,550 | - | - | 127,910 | ||||||||||||||||||||||||||||||||||||||
Shares of common stock issued for conversion of Preferred Stock Series C | - | - | (1,059,356 | ) | (10,594 | ) | - | - | - | - | 4,237,424 | 42,374 | (31,780 | ) | - | - | - | |||||||||||||||||||||||||||||||||||||||
Deemed dividend on conversion of Preferred Stock Series A to common stock | - | - | - | - | - | - | - | - | 206,242 | - | (206,242 | ) | - | |||||||||||||||||||||||||||||||||||||||||||
Deemed dividend on Preferred Stock Series C | - | - | - | - | - | - | - | - | - | - | 126,000 | - | (126,000 | ) | - | |||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | - | - | - | - | - | - | - | - | - | - | (74,614 | ) | - | (74,614 | ) | |||||||||||||||||||||||||||||||||||||||||
Loss for the period ended June 30, 2021 | - | - | - | - | - | - | - | - | (3,871,865 | ) | (3,871,865 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | - | $ | - | 1,940,644 | $ | 19,406 | - | $ | - | 24,227 | $ | 242 | 208,188,705 | $ | 2,081,887 | $ | 17,920,912 | $ | (41,000 | ) | $ | (18,641,275 | ) | $ | 1,340,172 | |||||||||||||||||||||||||||||||
For the Six | ||||||||
Months Ended | ||||||||
June 30, | ||||||||
2023 | 2022 | |||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Interest paid | $ | - | $ | 2,680 | ||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Stock issued for common stock subscribed | $ | 82,885 | $ | - | ||||
Preferred stock dividend | $ | 548,363 | $ | 160,084 | ||||
| Conversion of accounts payable to Series F Preferred Stock | $ | 146,214 | $ | - | ||||
Conversion of Series C Preferred stock to Series F Preferred Stock | $ | 181,563 | $ | - | ||||
Conversion of Series D Preferred stock to Series F Preferred Stock | $ | 239,118 | $ | - | ||||
Conversion of notes payable and accrued interest to Series F Preferred Stock | $ | 8,111,253 | $ | - | ||||
Conversion of accounts payable to common stock | $ | - | $ | 500,000 | ||||
Capital expenditures included in accounts payable | $ | 110,511 | $ | 4,289,816 | ||||
See accompanying notes to these unaudited condensed consolidated financial statements.
MITESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six | ||||||||
Months Ended | ||||||||
June 30, | ||||||||
2022 | 2021 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (7,450,479 | ) | $ | (3,871,865 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 417,340 | 36,456 | ||||||
Amortization of right-to-use asset | 292,292 | 24,692 | ||||||
Net gain on settlement of notes payable | - | (1,836 | ) | |||||
Financing cost - waiver fee shares | 565,431 | - | ||||||
Gain on waiver fee shares | (198,273 | ) | - | |||||
Commitment shares | - | - | ||||||
Loss on commitment shares | 11,619 | - | ||||||
Gain on conversion of accrued salary | (15,032 | ) | - | |||||
(Gain) loss on revaluation of derivative liabilities | 73,587 | 493,455 | ||||||
Loss on settlement of accounts payable | 78,235 | - | ||||||
Amortization of discount on notes payable | 1,017,861 | 756,795 | ||||||
Share-based compensation | 305,296 | 559,579 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivables | (69,751 | ) | (1,133 | ) | ||||
Prepaid expenses | 50,348 | (28,843 | ) | |||||
Due from related party | - | (26,163 | ) | |||||
Inventory | (8,106 | ) | (2,109 | ) | ||||
Accounts payable and accrued liabilities | 934,220 | (291,463 | ) | |||||
Operating lease liability, net | (30,093 | ) | 14,082 | |||||
Other current liabilities | (73,286 | ) | 880 | |||||
Accrued interest | 71,873 | 203,447 | ||||||
Net cash used in operating activities | (4,026,918 | ) | (2,134,026 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Cash paid for acquisition of fixed assets and construction in progress | (190,200 | ) | (495,359 | ) | ||||
Net cash used in investing activities | (190,200 | ) | (495,359 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from private placement of common stock | - | 1,668,000 | ||||||
Proceeds from sales of Series C Preferred Stock, net of fees | - | 2,760,000 | ||||||
Proceeds from notes payable - related parties, net of discounts | 1,511,250 | - | ||||||
Proceeds from notes payable, net of discounts | 1,812,500 | - | ||||||
Principal payments on notes payable related parties | (235,294 | ) | - | |||||
Principal payments on notes payable | - | (177,534 | ) | |||||
Net cash provided by financing activities | 3,088,456 | 4,250,466 | ||||||
Net increase in cash and cash equivalents | (1,128,662 | ) | 1,621,081 | |||||
Cash and cash equivalents at beginning of period | 1,164,483 | 64,789 | ||||||
Cash and cash equivalents at end of period | $ | 35,821 | $ | 1,685,870 | ||||
See accompanying notes to these unaudited condensed consolidated financial statements.
MITESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six | ||||||||
Months Ended | ||||||||
June 30, | ||||||||
2022 | 2021 | |||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Interest paid | $ | 2,680 | $ | - | ||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Stock issued for conversion of debt and accrued interest | $ | - | $ | 2,653,795 | ||||
Settlement of derivative liabilities | $ | - | $ | (1,301,137 | ) | |||
Discount on notes payable due to derivative liabilities | $ | - | $ | - | ||||
Preferred stock dividend | $ | 160,084 | $ | 74,614 | ||||
Deemed dividends on Preferred Stock | $ | - | $ | 332,242 | ||||
Conversion of Series A Preferred stock to common stock | $ | - | $ | 6,000 | ||||
Conversion of Series C Preferred stock to common stock | $ | - | $ | 31,781 | ||||
Conversion of accounts payable to common stock | $ | 500,000 | $ | 102,333 | ||||
Conversion of accrued payroll to common stock | $ | - | $ | 50,000 | ||||
Capital expenditures included in accounts payable | $ | 4,289,816 | $ | - | ||||
See accompanying notes to these unaudited condensed consolidated financial statements.
MITESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 20222023 AND 20212022
(Unaudited)
Note 1 –1: Description of Business
Company Overview
Mitesco, Inc. (the “Company,” “we,” “us,” or “our”) was formed in the state of Delaware on January 18, 2012. On December 9, 2015, the Companywe restructured itsour operations and acquired Newco4pharmacy, LLC, a development stage company which sought to acquire compounding pharmacy businesses. As a part of the restructuring, the Companywe completed a “spin out” of itsour former business line. On April 24, 2020, the Companywe changed itsour name to Mitesco, Inc.
Since 2020,We are a holding company with current operating plans to participate in the Company’s operations have focusedhealthcare industry through the development of healthcare services, and with a view toward additional services and technology that may find a ready market in the healthcare industry. During early 2022 we continued on establishing medicalour plan to open primary care clinics around the United States in select markets, utilizing the experience, expertise, and training of licensed, advanced degreed nurse practitioners under(“Nurse Practitioners”). During 2022 our clinics provided complete primary care, as well as a limited set of offerings addressing more specific needs for the general public. The Good Clinic namemedical practice focuses on whole person health and developmentprevention. During late 2022 we decided to close our clinics due to a lack of funding for their operations and acquisitiongrowth plans.
We have always had a view toward additional healthcare technology and services offerings and are committing more time to that effort going forward. We have a number of telemedicine technology. In Marchnear-term opportunities that we hope to pursue, assuming the capital markets make sufficient funding available at reasonable rates.
Our operations are subject to comprehensive federal, state, and local laws and regulations in the jurisdictions in which it does business. There also continues to be a heightened level of 2020,review and/or audit by federal and state regulators of the Company formed a wholly owned subsidiary, health and related benefits industry’s business and reporting practices. As of the date of this filing, we are not subject to any actual or anticipated regulatory reviews or audits relating to our operations.
The Good Clinic LLC, a Colorado limited liability company for its cliniclaws and rules governing our businesses and interpretations of those laws and rules continue to evolve each year and are subject to frequent change. The application of these complex legal and regulatory requirements to the detailed operation of our businesses creates areas of uncertainty. Further, there are numerous proposed health care, financial services and other laws and regulations at the federal and state level some of which could adversely affect our businesses if they are enacted. We cannot predict whether pending or future federal or state legislation will have an adverse effect on our business.
The Company openedWe can give no assurance that the businesses, financial condition, operating results and/or cash flows will not be materially adversely affected, or that we will not be required to materially change its first The Good Clinicbusiness practices, based on: (i) future enactment of new health care or other laws or regulations; (ii) the interpretation or application of existing laws or regulations, including the laws and regulations described in Minneapolis, Minnesotathis Government Regulation section, as they may relate to one or more of our businesses, one or more of the industries in which we compete and/or the first quarter of 2021 and have six operating at the time of this filing. The Company intends on opening up to 50 new clinics in the next three years, in addition to any existing sites it might acquire.
Note 2 - Financial Condition, Going Concern and Management Planshealth care industry generally; (iii) our pending or future federal or state governmental investigations.
Reverse Stock Split
On November 19, 2021,December 12, 2022, our board of directors approved the Company closed a bridge financing round totaling $3.1 millionfiling of a Series D preferred stock soldcertificate of amendment to investors in a private placement. Each Series D Unit will have a purchase priceour amended and restated certificate of $1.00 per Unit, with each Unit consisting of (a) one share of a newly formed Series D Convertible Preferred Stock, par value $0.01 per shareincorporation (the “Series D Preferred Stock”“Amendment”), (b) one warrant (the “Series A Warrants”) to purchase 2.1 shares of the Company’s Common Stock at a purchase price of $0.50 per whole share of Common Stock, and (c) one warrant (the “Series B Warrants” and together with the Series A Warrants, the “Warrants”) to purchase 2.1 shares of Common Stock at a purchase price of $0.75 per whole share.
Pursuant to the Certificate of Designations, Preferences and Rights of the Series D Convertible Preferred Stock of the Company, Inc., filed with the Secretary of State of the State of Delaware to affect the one-for-fifty. The Amendment became effective at 5:00 p.m. Eastern Time on October 18, 2021 (the “COD”), there are 10,000,000December 12, 2022.
Pursuant to the Amendment, at the effective time of the Amendment, every fifty (50) shares of the Company’s preferredour issued and outstanding common stock that have been designated as the Series D Preferred Stockwas automatically combined into one (1) issued and eachoutstanding share of common stock. The Reverse Stock Split affected all shares of our common stock outstanding immediately prior to the Series D Preferred Stock is convertible at the optioneffective time of the holder thereof, Amendment. No fractional shares were issued as a result of the Reverse Stock Split. Stockholders of record who would otherwise be entitled to receive a fractional share received a full share thereof. As a result of the Reverse Stock Split, proportionate adjustments were made to the per share exercise price and/or automaticallythe number of shares issuable upon the requestexercise or vesting of all stock options and warrants issued by us and outstanding immediately prior to the effective time of the Company’s underwriters thatAmendment, which resulted in a proportionate decrease in the Series D Preferred Stock convert to shares of Common Stock or upon listing of the Company’s Common Stock on a national securities exchange. The number of shares of Common Stock issuableour common stock reserved for issuance upon the conversionexercise or vesting of each share of Series D Preferred Stock is calculated by dividing the Conversion Amount (definedsuch stock options and warrants and a proportionate increase in the COD asexercise price of all such stock options and warrants. In addition, the Stated Value, $1.05number of shares reserved for issuance under our equity compensation plans immediately prior to the effective time of the Amendment were reduced proportionately. All share and per share plus accrued and unpaid dividends) byamounts of common stock presented in this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect the $0.25 conversion price (the “Conversion Price”).Reverse Stock Split.
On November 11, 2021, the Company filed a registration statement on form S-1 in connection with a planned up-list to a national exchange; on June 30, 2022 the Company its third amendment to the S-1; and on August 3, 2022, the Company files its fourth amendment to the S-1.
As of the date of this filing, the Company has closed on $3,100,000 of its Series D Preferred stock. To achieve its growth strategy, the Company will need to raise additional financing prior to up listing on Nasdaq. The Company will not proceed with this offering in the event its Common Stock is not approved for listing on the Nasdaq Capital Market though it will continue to seek financing for its expansion and operating needs in the debt or equity markets.
Between December 30, 2021 through the date of this filing, the Company has entered into a total $5.0 million of promissory notes with certain related parties and other note holders. All notes carry a 10% interest rate per annum, accruing in monthly installments. These notes have been used to fund 2022 operations to date.
The Company entered into a debt-for-equity exchange agreement with Gardner Builders Holdings, LLC (the “Creditor”) on January 7, 2022 (the “Agreement”). Pursuant to the Agreement, the Company issued shares of restricted common stock, par value $0.01 per share, of MITI (the “Restricted Shares”) to the Creditor in exchange for the Company Debt Obligations, as defined below.
The Agreement settles for certain accounts payable amounts owed by the Company to the Creditor (the “Accounts Payable Amount”) as well as upcoming amounts that will become due between the date of the AgreementNote 2: Financial Condition, Going Concern and April 1, 2022. The Agreement also settles incurred interest and penalties on the amounts due through January 5, 2022, as well as future interest payments on amounts incurred in the first quarter of 2022 (collectively, the “Additional Costs”, and combined with the Accounts Payable Amount, the “Company Debt Obligations”). The Accounts Payable Amount is $500,000, the Additional Costs is $294,912.56 and the conversion price is $0.25. As a result, 3,179,650 Restricted Shares were authorized to be issued.Management Plans
As of June 30, 2022,2023, the Company had cash and cash equivalents of $36,000,$0.3 million, current liabilities of $10.5$15.3 million, and has incurred significant losses from the previous clinic operations, now discontinued. Our strategy is to utilize a loss from operations. The Company intends to a) develop and own primary care clinics operated bymix of nurse practitioners b) develop and acquire telemedical technologies,telemedicine technology in clinics to improve patient experiences and c) evaluateoutcomes and reduce healthcare costs as compared to other available treatment options. As previously noted, we made a strategic decision to reduce our capital needs by closing our clinic operations in the fourth quarter of 2022 and releasing a significant portion of our staff. As we redevelop our new strategy for lower cost operations, we expect to focus on acquisitions of existing healthcare related opportunities.technology and services businesses. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to execute its business plan.
Effective December 8, 2022, we closed all of our clinic locations due to a lack of funding. Subsequent to that date we have lost possession of all clinic locations. Due to difficulty in securing financing, we are uncertain of when or even if we will be able to resume operations at any clinic location.
As a result of these factors, there is substantial doubt about the ability of the Company to continue as a going concern for one year from the date the financial statements are issued. The Company’s continuance is dependent on raising capital and generating revenues sufficient to sustain operations. The Company believes that the necessary capital will be raised and has entered discussions to do so with certain individuals and companies. However, as of the date of these condensed consolidated financial statements, no formal agreement exists.
The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts classified as liabilities that might be necessary should the Company be forced to take any such actions.
PPP Loan
During March 2020, in response to theThe 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, Reliefpandemic, decades-high inflation and Economic Security Act (“CARES Act”) and administered by the U.S. Small Business Administration. On April 25, 2020, the Company enteredconcerns about an unsecured Promissory Note with Bank of America for a loaneconomic recession in the original principal amount of approximately $460,400, and the Company received the full amount of the loan proceeds on May 4, 2020. The June 30, 2022 balance, including accrued interest, was approximately $470,400.
COVID -19 Impact
The CompanyUnited States or other major markets has had some impact on its operations because of the effects of the COVID-19 pandemic, primarily with accessibility to staffing, consultants andresulted in, among other things, volatility in the capital markets and it is adjusting as needed within its available resources. The Company will continue to assessthat may have the effect of the pandemic on its operations. The extent to which the COVID-19 pandemic will continue to impact the Company’s business and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, the duration and effect of possible business disruptions and the short-term effects and ultimate effectiveness of the travel restrictions, quarantines, social distancing requirements and business closures in the United States and other countries to contain and treat the disease. While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing the Company’s ability to access capital, which could in the future negatively affect the Company’s liquidity. In addition, a recession or market correction resulting from the spread of COVID-19due to these factors could materially affect the Company’s business and the value of its securities.common stock.
Note 3 – Basis of Presentation and3: Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of such interim results.
The results for the condensed consolidated statement of operations are not necessarily indicative of results to be expected for the year ending December 31, 2022 or for any future interim period. The condensed consolidated balance sheet at June 30, 2022 has been derived from unaudited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2021 and notes thereto included in the Company’s annual report on Form 10-K filed on April 5, 2022.
Principles of Consolidation – The accompanying condensed consolidated financial statements include the accounts of Mitesco, Inc., and its wholly owned subsidiaries MitescoNA,Mitesco NA, LLC, and The Good Clinic, LLC, and Acelerar Healthcare Holdings, LTD.LLC. In addition, we manage two entities under a variable interest entity arrangement and have control overanticipate that we will rely on the operating activities of thesecertain legal entities in which we dowill not maintain a controlling ownership interest but over which we will have directindirect influence over the operations and areof which we will be considered the primary beneficiary. We expect that these entities will typically be subject to nominee ownership and transfer restriction agreements that effectively transfer the majority of the economic risks and rewards of their ownership to the Company. The Company’s management, restriction and other agreements concerning such nominee-owned entities typically includes both financial terms and protective and participating rights to the entities’ operating, strategic and non-clinical governance decisions which transfer substantial powers over and economic responsibility for these entities to the Company. As such, the Company applies the guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 – Consolidation (“ASC 810”), to determine when an entity that is insufficiently capitalized or not controlled through its voting interests, referred to as a variable interest entity should be consolidated. All intercompany balances and transactions have been eliminated.
Use of Estimates - The preparation of these financial statements requires our management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and related notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment.
Cash -Significant Accounting Policies The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. The Company had cash and cash equivalents of approximately $36,000 as of June 30, 2022, and $1.2 million as of December 31, 2021.
Property, Plant, and Equipment - Property and equipment is recorded atThere have been no material changes in the lower of cost or estimated net recoverable amount and is depreciated usingCompany’s significant accounting policies from those previously disclosed in the straight-line method over its estimated useful life. Property acquired in a business combination is recorded at estimated initial fair value. Property, plant, and equipment are depreciated using the straight-line method based on the lesser of the estimated useful lives of the assets or the lease term based upon the following life expectancy:2022 Annual Report.
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Revenue Recognition – On January 1, 2018, the Company adopted the new revenue recognition accounting standard issued by the Financial Accounting Standards Board (“FASB”) and codified in the ASC as Topic 606 (“ASC 606”). The revenue recognition standard in ASC 606 outlines a single comprehensive model for recognizing revenue as performance obligations, defined in a contract with a customer as goods or services transferred to the customer in exchange for consideration, are satisfied. The standard also requires expanded disclosures regarding the Company’s revenue recognition policies and significant judgments employed in the determination of revenue.
The Company applied the modified retrospective approach to all contracts when adopting ASC 606. As a result, at the adoption of ASC 606 what was previously classified as the provision for bad debts in the statement of operations is now reflected as implicit price concessions (as defined in ASC 606). For changes in credit issues not assessed at the date of service, the Company will prospectively recognize those amounts in other operating expenses on the statement of operations. For periods prior to the adoption of ASC 606, the provision for bad debts has been presented consistent with the previous revenue recognition standards that required it to be presented separately as a component of net operating revenues.
Our revenues generally relate to net patient fees received from various payers and patients themselves under contracts in which our performance obligations are to provide services to the patients. Revenues are recorded during the period our obligations to provide services are satisfied. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges and generally provide for payments based upon predetermined rates for services or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals.
Stock-Based Compensation-We recognize the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation cost for stock options is estimated at the grant date based on each option’s fair-value as calculated by the Black-Scholes-Merton (“BSM”) option-pricing model. Share-based compensation arrangements may include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant.
Equity instruments issued to those other than employees are recognized pursuant to FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This ASU relates to the accounting for non-employee share-based payments. The amendment in this update expands the scope of Topic 718 to include all share-based payment transactions in which a grantor acquired goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The ASU excludes share-based payment awards that relate to: (1) financing to the issuer; or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts from Customers. The share-based payments are to be measured at grant-date fair value of the equity instruments that the entity is obligated to issue when the goods or service has been delivered or rendered and all other conditions necessary to earn the right to benefit from the equity instruments have been satisfied. This standard became effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. We adopted the provisions of this ASU on January 1, 2019. The adoption had no impact on our results of operations, cash flows, or financial condition.
Convertible Instruments-The Company reviews the terms of convertible debt and equity instruments to determine whether there are conversion features or embedded derivative instruments including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. In circumstances where the convertible instrument contains more than one embedded derivative instrument, including conversion options that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single compound instrument. Also, in connection with the sale of convertible debt and equity instruments, the Company may issue free standing warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. When convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for separately, the total proceeds allocated to the convertible host instruments are first allocated to the fair value of the bifurcated derivative instrument. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, usually resulting in those instruments being recorded at a discount from their face amount. When the Company issues debt securities, which bear interest at rates that are lower than market rates, the Company recognizes a discount, which is offset against the carrying value of the debt. Such discount from the face value of the debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income. In addition, certain conversion features are recognized as beneficial conversion features to the extent the conversion price as defined in the convertible note is less than the closing stock price on the issuance of the convertible notes.
Common Stock Purchase Warrants-The Company accounts for common stock purchase warrants in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Accounting for Derivative Instruments and Hedging Activities. As is consistent with its handling of stock compensation and embedded derivative instruments, the Company’s cost for stock warrants is estimated at the grant date based on each warrant’s fair-value as calculated by the Black Sholes option-pricing model value method for valuing the impact of the expense associated with these warrants.
Stockholders’ Equity-Shares of common stock issued for other than cash have been assigned amounts equivalent to the fair value of the service or assets received in exchange.
Per Share Data-Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the year. Diluted loss per share is computed by dividing net loss by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to warrants, options, and convertible instruments.
Financial Instruments and Fair Values-The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument. In determining fair value, we use various valuation methodologies and prioritize the use of observable inputs. We assess the inputs used to measure fair value using a three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market:
Level 1 – inputs include exchange quoted prices for identical instruments and are the most observable.
Level 2 – inputs include brokered and/or quoted prices for similar assets and observable inputs such as interest rates.
Level 3 – inputs include data not observable in the market and reflect management judgment about the assumptions market participants would use in pricing the asset or liability.
The use of observable and unobservable inputs and their significance in measuring fair value are reflected in our hierarchy assessment. The carrying amount of cash, prepaid assets, accounts payable and accrued liabilities approximate fair value due to the short-term maturities of these instruments. Because cash and cash equivalents are readily liquidated, management classifies these values as Level 1. The fair value of the derivative liabilities approximates their book value as the instruments are short-term in nature and contain market rates of interest. Because there is no ready market or observable transactions, management classifies the derivative liabilities as Level 3.
New Accounting Standards
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed, the Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact on its financial position or results of operations upon adoption.
Recent Accounting Standards Not Yet Adopted
In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)”. This ASU reduces the number of accounting models for convertible debt instruments and convertible Preferred Stock. As well as amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related EPS guidance. This standard is effective for us on January 1, 2022, including interim periods within those fiscal years. Adoption is either a modified retrospective method or a fully retrospective method of transition. We are currently assessing the impact the new guidance will have on our condensed consolidated financial statements.
There are various other updates recently issued, most of which represent technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s consolidated financial position, results of operations or cash flows.
Note 4 –4: Net Loss Per Share Applicable to Common Shareholders
Net Loss per Share Applicable to Common Stockholders
Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted loss per common share is computed similarly to basic loss per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock.
The following table sets forth the computation of loss per share for the three and six months ended June 30, 2022,2023, and 2021,2022, respectively:
For the Three Months Ended | For the Six Months Ended | For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||||||||||
Net loss applicable to common shareholders | $ | (3,885,677 | ) | $ | (1,523,769 | ) | $ | (7,610,563 | ) | $ | (4,278,721 | ) | $ | (8,012,815 | ) | $ | (3,885,677 | ) | $ | (13,706,459 | ) | $ | (7,610,563 | ) | ||||||||
Denominator: | ||||||||||||||||||||||||||||||||
Weighted average common shares outstanding | 221,523,073 | 201,678,218 | 217,634,736 | 194,455,386 | 5,157,610 | 4,430,461 | 4,963,755 | 4,352,695 | ||||||||||||||||||||||||
Net loss per share: | ||||||||||||||||||||||||||||||||
Basic and diluted | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.02 | ) | $ | (1.55 | ) | $ | (0.88 | ) | $ | (2.76 | ) | $ | (1.75 | ) | ||||||||
The Company excluded all common equivalent shares outstanding for warrants, options, and convertible instruments to purchase common stock from the calculation of diluted net loss per share because all such securities are antidilutive for the periods presented. As of June 30, 2022,2023, and 2021,2022, the following shares were issuable and excluded from the calculation of diluted loss:
For the Six Months Ended | For the Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Common stock options | 16,354,961 | 11,696,211 | 209,381 | 327,099 | ||||||||||||
Common stock purchase warrants | 33,290,673 | 12,600,000 | 673,208 | 665,813 | ||||||||||||
Convertible Preferred Stock Series C | 4,362,575 | 8,150,705 | ||||||||||||||
Convertible Preferred Stock | 63,000 | 87,252 | ||||||||||||||
Accrued interest on Preferred Stock | 480,056 | 376,803 | 11,057 | 9,601 | ||||||||||||
Potentially dilutive securities | 54,488,265 | 32,823,719 | 956,646 | 1,089,765 | ||||||||||||
Note 5 –5: Related Party Transactions
For the six months ended June 30, 2023:
During the six months ended June 30, 2023, the Company accrued dividends on its Series X Preferred Stock in the total amount of $30,283. Of this amount, a total of $3,937 was payable to officers and directors, $15,747 was payable to a related party shareholder, and $10,599 was payable to non-related parties.
During the six months ended June 30, 2023, the Company issued a total of 28,275 shares of common stock for accrued dividends on its Series X Preferred Stock. Of this amount, a total of 3,739 shares were issued to officers and directors, 14,586 were issued to a related party shareholder, and 9,950 were issued to non-related parties.
For the six months ended June 30, 2022:
Mitesco, Inc. (the “Company”) issued a 10% Promissory Note due June 30, 2022, dated December 30, 2021, to the Michael C. Howe Living Trust (the “Lender”). Michael C. Howe is the Chief Executive Officer of the Good Clinic LLC, one of our subsidiaries. The principal amount of the Note is $1,000,000, carries a 10% interest rate per annum, payable in monthly installments, and had a maturity date that is the earlier of (i) six months from the date of execution (on July 19, 2022 this date was extended to September 10, 2022) or (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Note payable to the Company for the Note was $850,000 and was funded on December 30, 2021. An original issue discount in the amount of $150,000 was recorded. The amount payable at maturity will be $1,000,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Note, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. At June 30, 2022, the principal balance of this note was $1,000,000; $116,507 of the original issue discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discount at June 30, 2022 was $33,493.
The Company issued a 10% Promissory Note due August 14, 2022, dated February 14, 2022 (the “Diamond Note 1”), to Lawrence Diamond (the “Lender”). Mr. Diamond is the Chief Executive Officer of the Company and a member of its Board of Directors. The principal amount of the Note is $175,000, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) six (6) months from the date of execution, or (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Note payable to the Company for the Note was $148,750 and was funded on February 14, 2022. The amount payable at maturity will be $175,000 plus 10% of that amount plus accrued and unpaid interest. Following an event of default, as defined in the Note, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition to the Note and Lender will be issued 367,5007,350 5-year warrants that may be exercised at $.50$25.00 per share and 367,5007.350 5-year warrants that may be exercised at $.75$37.50 per share. These warrants have all of the same terms as those previously issued in conjunction with the Company’s Series C Preferred shares and its Series D Preferred shares. The warrants have an aggregate commitment date fair value of $2,914. At June 30, 2022, the principal balance of this note was $175,000; $20,877 of the original issue discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discount at June 30, 2022 was $5,373.
The Company issued a 10% Promissory Note due June 18, 2022 (the “Diamond Note 2”), dated March 18, 2022, to Lawrence Diamond (the “Lender”), which was subsequently amended. Lawrence Diamond is the Chief Executive Officer of the Company. The principal amount of the Diamond Note is $235,294, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) April 4, 2022, (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE, or (iii) the date of receipt of the Company of the next round of debt or equity financing in an amount of at least $1,000,000. The purchase price of the Diamond Note payable to the Company for the Diamond Note was $200,000 and was funded on March 18, 2022. The amount payable at maturity will be $235,294 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Diamond Note, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Diamond Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition, the Lender will be issued 200,0004,000 5-year warrants that may be exercised on substantially the same terms as the Series A warrant issued in connection with the Company’s Series D Convertible Preferred Stock. The warrants have an aggregate commitment date fair value of $2,213. All amounts due for The Diamond Note, with the exception of $23,529, was paid on April 8, 2022. $23,529 remained outstanding as of June 30, 2022.
On March 22, 2022, the Company issued 168,2213,364 shares of common stock with a contract price of $0.25$12.50 per share or $42,055 and a grant date market value of $0.127$6.35 per share or $21,364 were issued to Larry Diamond, its Chief Executive Officer, as compensation for the waiver of certain covenants as set forth and defined in Diamond Note 1.
On April 27, 2022, the Company issued 96,4711,929 shares of common stock with a contract price of $0.25$12.50 per share or $24,118 and a grant date market value of $0.16$8.00 or $15,434 to Larry Diamond, its Chief Executive Officer, as commitment shares as set forth and defined in Diamond Note 2. The Company also issued five-year warrants to purchase 92,9421,859 shares of common stock at a price of $0.50$25.00 to Mr. Diamond pursuant to a promissory note.
On April 27, 2022, the Company issued a 10% Promissory Note due June 30, 2022 (the “Diamond Note 3”) to Lawrence Diamond (the “Lender”). Lawrence Diamond is the Chief Executive Officer of the Company. The principal amount of the Diamond Note 3 is $235,294, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) April 4, 2022 (on July 12, 2022 this date was extended to September 10, 2022) (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE, or (iii) the date of receipt of the Company of the next round of debt or equity financing in an amount of at least $1,000,000. The purchase price of the Diamond Note 3 payable to the Company for the Diamond Note 3 was $200,000 and was funded on April 27, 2022. The amount payable at maturity will be $235,294 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Diamond Note 3, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note 3 contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Diamond Note 3, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. At June 30, 2022, the principal balance of this note was $235,294; $13,858 of the original issue discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discount at June 30, 2022 was $21,436.
The Company issued a 10% Promissory Note due as described below (the “Diamond Note 4���4”), dated May 18, 2022, to Lawrence Diamond. The principal amount of the Diamond Note 4 is $47,059.00,$47,059, carries a 10% interest rate per annum, payable in monthly installments, and had an initial maturity date that was the earlier of (i) four business days after the date on which we successfully lists its shares of common stock on Nasdaq or NYSE, or (ii) two business days after the date of receipt of the Company of the next round of debt or equity financing in a net amount of at least $600,000. On August 3, 2022, the maturity date was amended to (i) September 10, 2022 or (ii) five days after the date on which we successfully list our shares of common stock on any of the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market. The purchase price of the Diamond Note 4 payable to us for the Diamond Note 4was $40,000 and was funded on May 18, 2022. The amount payable at maturity will be $47,059 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Diamond Note 4, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note 4 contains a “most favored nations” clause that provides that, so long as the Diamond Note 4is outstanding, if we issue any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Diamond Note 4, we shall notify Mr. Diamond of such term, and such term, at the option of Mr. Diamond, shall become a part of the Note. In addition, Mr. Diamond will be issued (1) 19,294386 five-year warrants (the “May 18 Diamond Warrants”) that may be exercised on substantially the same terms as the Series A warrant issued in connection with our Series D Convertible Preferred Stock and (2) 19,294386 shares of Common Stock as commitment shares. At June 30, 2022, the principal balance of this note was $47,059; $1,862 of the original issue discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discount at June 30, 2022 was $5,197.
On May 23, 2022, the Company issued a 10% Promissory Note due as described below (the “Finnegan Note 1”) to Jessica Finnegan. The principal amount of the Finnegan Note 1 is $47,059, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) four business days after the date on which we successfully lists its shares of common stock on Nasdaq or NYSE, or (ii) two business days after the date of receipt of the Company of the next round of debt or equity financing in a net amount of at least $600,000. The purchase price of the Finnegan Note 1 was $40,000 resulting in an original issue discount of $7,059 and was funded on May 18, 2022. The amount payable at maturity will be $47,059 plus 10% of that amount plus any accrued and unpaid interest, resulting in a premium and related discount in the amount of $4,706. Following an event of default, as defined in the Finnegan Note 1, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Finnegan Note 1 contains a “most favored nations” clause that provides that, so long as the Finnegan Note 1 is outstanding, if we issue any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Finnegan Note 1, we shall notify Ms. Finnegan of such term, and such term, at the option of Ms. Finnegan, shall become a part of the Note. In addition, Ms. Finnegan will be issued (1) 19,295386 five-year warrants with a fair value of $2,000 (the “May 18 Finnegan Warrants”) that may be exercised on substantially the same terms as the Series A warrant issued in connection with our Series D Convertible Preferred Stock and (2) 19,295386 shares of Common Stock with a value of $3,240 as commitment shares; these amounts were charged to discount on the note, resulting in a total discount on this note in the amount of $17,005. At June 30, 2022, the principal balance of this note was $47,059; $3,843 of the discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining discounts at June 30, 2022 were $13,162.
The Company issued five 10% Promissory Notes due as described below (collectively, the “May 26 Notes”), dated May 26, 2022, to Larry Diamond, Jenny Lindstrom, and other related parties (the “May 26 Lenders”), in respect of which we received proceeds of $175,000. Jenny Lindstrom iswas the Chief Legal Officer of the Company.
The May 26 Notes carry a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) November 30, 2022, or (ii) the date on which we successfully lists our shares of common stock on Nasdaq or NYSE. The aggregate amount payable at maturity will be $205,883 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the May 26 Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The May 26 Notes contain a “most favored nations” clause that provides that, so long as the May 26 Notes are outstanding, if we issue any new security, which the May 26 Lenders reasonably believe contains a term that is more favorable than those in the May 26 Notes, we shall notify the May 26 Lenders of such term, and such term, at the option of the May 26 Lenders, shall become a part of the May 26 Notes. In addition, the May 26 Lenders will be issued in the aggregate (1) 84,412 five-year1,688 five-year warrants (the “May 26 Warrants”) and (2) 84,4121,688 shares of Common Stock as commitment shares. The May 26 Warrants have an initial exercise price of $0.50$25.00 per share. The May 26 Warrants are not exercisable for six months following their issuance. The May 26 Lenders may exercise the May 26 Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the May 26 Warrants are not then registered pursuant to an effective registration statement. At June 30, 2022, the principal balance of these notes were $205,883; $6,631 of the original issue discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discounts at June 30, 2022 were $24,252.
The Company issued a 10% Promissory Note due as described below ( the(the “Howe Note”), dated June 9, 2022, to Michael C. Howe Living Trust and in respect of which we received proceeds of $255,000. Michael C. Howe is the Chief Executive Officer of the Good Clinic LLC, one of the Company’s subsidiaries.
The Howe Note carries a 10% interest rate per annum, payable in monthly installments. The Howe Note has a maturity date that is the earlier of (i) September 10, 2022, or (ii) the date on which we successfully list our shares of common stock on Nasdaq or NYSE. The amount payable at maturity will be $300,000 plus 10% of that amount plus any accrued and unpaid interest. In addition, the Company issued (1) 123,0002,460 five-year warrants with a fair value of $21,500 and (2) 123,0002,460 shares of Common Stock with a market value of $44,000 as commitment shares. The Warrants have an initial exercise price of $0.50$25.00 per share and are not exercisable for six months following their issuance. At June 30, 2022, the principal balance of this note was $300,000; $5,798 of the original issue discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discount at June 30, 2022 were $39,202.
On June 13, 2022, the Company issued 200,0004,000 ten-year options with an exercise price of $0.25$12.50 and a fair value of $23,316 to Tom Brodmerkel, its then Chairman, to the position of Chief Financial Officer.
Note 6 –6: Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consisted of the following at June 30, 20222023 and 2021:December 31, 2022:
June 30, | December 31, | June 30, | December 31, | |||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Trade accounts payable | $ | 5,447,673 | $ | 3,933,305 | $ | 7,373,434 | $ | 6,761,793 | ||||||||
Accrued payroll and payroll taxes | 341,040 | 23,554 | 921,774 | 590,915 | ||||||||||||
Other | - | 19,205 | - | 507 | ||||||||||||
Total accounts payable and accrued liabilities | $ | 5,788,713 | $ | 3,976,064 | $ | 8,295,208 | $ | 7,353,215 | ||||||||
Note 7 -7: Right to Use Assets and Lease Liabilities – Operating Leases
TheDuring the year ended December 31, 2022, the Company has operating leases forrecognized an impairment of Right-to-Use (RTU) assets in the amount of $3.2 million in connection with the closing of its clinic with a remaining lease term of approximately 7.2 years. The Company’s lease expense was entirely comprised of operating leases. Lease expense forclinics during the three months ended June 30, 2022 and 2021 amounted to approximately $199,800 and $38,500, respectively. Lease expense forperiod. During the six months ended June 30, 2022 and 2021 amounted to approximately $389,300 and $59,200, respectively.
The2023, the Company recognized an additional impairment in the amount of $0.5 million in connection with its remaining leased properties. This amount is included in Impairment of Fixed Assets on the Company’s ROU asset amortizationstatement of operations for the three months ended June 30, 2022 and 2021 was approximately $85,200 and $18,500, respectively. The Company’s ROU asset amortization for the six months ended June 30, 2022 and 2021 was approximately $165,700 and $24,700, respectively.2023.
The difference betweenAs of June 30, 2023, the Company had total operating lease expenseliabilities of approximately $4.1 million and right-of-use assets of $0, which were included in the associated ROU asset amortization consists of interest at a rate of 12% per annum.condensed consolidated balance sheet.
Right to use assets – operating leases are summarized below:
June 30, 2023 | December 31, 2022 | |||||||
Right to use assets, net | $ | - | $ | 544,063 | ||||
As of June 30, 2022, the Company had total operatingOperating lease liabilities of approximately $4.4 million and right-of-use assets of approximately $3.9 million, which were included in the condensed consolidated balance sheet.are summarized below:
Right to use assets – operating leases are summarized below: | ||||||||
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Right to use assets, net | $ | 3,883,529 | $ | 3,886,866 | ||||
June 30, 2023 | December 31, 2022 | |||||||
Lease liability | $ | 4,066,827 | $ | 4,379,724 | ||||
Less: current portion | (544,143 | ) | (442,866 | ) | ||||
Lease liability, non-current | $ | 3,522,684 | $ | 3,936,858 | ||||
Right to use assets – operating leases are summarized below: | ||||||||
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Lease liability | $ | 4,393,664 | $ | 4,134,802 | ||||
Less: current portion | (260,700 | ) | (161,838 | ) | ||||
Lease liability, non-current | $ | 4,132,964 | $ | 3,972,964 | ||||
Maturity analysis under these lease agreements are as follows:
Maturity analysis under these lease agreements are as follows: | ||||||||
For the twelve months ended June 30, 2023 | $ | 746,876 | ||||||
For the twelve months ended June 30, 2024 | 907,369 | $ | 1,290,393 | |||||
For the twelve months ended June 30, 2025 | 897,472 | 830,040 | ||||||
For the twelve months ended June 30, 2026 | 916,801 | 847,998 | ||||||
For the twelve months ended June 30, 2027 | 937,074 | 866,899 | ||||||
For the twelve months ended June 30, 2028 | 884,275 | |||||||
Thereafter | 2,361,735 | 1,364,396 | ||||||
Total | 6,767,327 | $ | 6,084,001 | |||||
Less: Present value discount | (2,373,663 | ) | (2,017,174 | ) | ||||
Lease liability | $ | 4,393,664 | $ | 4,066,827 | ||||
Note 8 – Debt8: SBA Loan Payable
Howe Note 1PPP Loan
Mitesco, Inc. (the “Company”) issued a 10% Promissory Note (the “Howe Note 1”) due June 30, 2022, dated December 30, 2021, to the Michael C. Howe Living Trust (the “Lender”). Michael C. Howe is the Chief Executive Officer of the Good Clinic LLC, one of our subsidiaries. The principal amount of the Note is $1,000,000, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) six months from the date of execution (on July 19, 2022 this date was extended to September 10, 2022), or (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Note payable to the Company for the Note was $850,000 and was funded on December 30, 2021. An original issue discount in the amount of $150,000 was recorded. The amount payable at maturity will be $1,000,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Note, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. At June 30, 2022, the principal balance of this note was $1,000,000; $116,507 of the original issue discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discount at June 30, 2022 was $33,493.
Warrants. As further consideration for the Purchase Price payable hereunder, promptly following the Issue Date, the Borrower shall issue to the Lender two common stock purchase warrants, entitling the Lender to purchase (i) 2,100,000 shares of the Borrower’s common stock on substantially the same terms as the Series A warrant issued in connection with the Borrower’s Series D Convertible Preferred Stock, and (ii) 2,100,000 shares of the Borrower’s common stock on substantially the same terms as the Series B warrant issued in connection with the Borrower’s Series D Convertible Preferred Stock. one warrant (the “Series A Warrants”) to purchase 2.1 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) at a purchase price of $0.50 per whole share of Common Stock, and one warrant (the “Series B Warrants” and together with the Series A Warrants, the “Warrants”) to purchase 2.1 shares of Common Stock at a purchase price of $0.75 per whole share. Given the current stock price is less than the exercise price of the warrants, the warrants have no value.
Diamond Note 1
The Company issued a 10% Promissory Note due August 14, 2022, dated February 14, 2022 (the “Diamond Note 1”), to Lawrence Diamond (the “Lender”). Mr. Diamond is the Chief Executive Officer of the Company and a member of its Board of Directors. The principal amount of the Diamond Note 1 is $175,000, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) six (6) months from the date of execution, or (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Note payable to the Company for the Note was $148,750 and was funded on February 14, 2022. The amount payable at maturity will be $175,000 plus 10% of that amount plus accrued and unpaid interest. Following an event of default, as defined in the Note, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition to the Note and Lender will be issued 367,500 5-year warrants that may be exercised at $.50 per share and 367,500 5-year warrants that may be exercised at $.75 per share. These warrants have all of the same terms as those previously issued in conjunction with the Company’s Series C Preferred shares and its Series D Preferred shares. The warrants have an aggregate commitment date fair value of $2,914. At June 30, 2022, the principal balance of this note was $175,000; $20,877 of the original issue discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining original issue discount at June 30, 2022 was $5,373.
On March 22, 2022, the Company issued 168,221 shares of common stock with a contract price of $0.25 per share of $42,055 and a grant date market value of $0.127 per share or $21,364 were issued to Larry Diamond, its Chief Executive Officer, as compensation for the waiver of certain covenants as set forth and defined in Diamond Note 1.
Diamond Note 2
The Company issued a 10% Promissory Note due June 18, 2022 (the “Diamond Note 2”), dated March 18, 2022, to Lawrence Diamond (the “Lender”), which was subsequently amended. Lawrence Diamond is the Chief Executive Officer of the Company. The principal amount of the Diamond Note 2 is $235,294, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) April 4, 2022 (on July 12, 2022 this date was extended to September 10, 2022), (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE, or (iii) the date of receipt of the Company of the next round of debt or equity financing in an amount of at least $1,000,000. The purchase price of the Diamond Note payable to the Company for the Diamond Note was $200,000 and was funded on March 18, 2022. The amount payable at maturity will be $235,294 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Diamond Note, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Diamond Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition, the Lender will be issued 200,000 5-year warrants that may be exercised on substantially the same terms as the Series A warrant issued in connection with the Company’s Series D Convertible Preferred Stock. The warrants have an aggregate commitment date fair value of $2,213. All amounts due for The Diamond Note, with the exception of $23,529, was paid on April 8, 2022. $23,529 remained outstanding as of June 30, 2022.
On April 27, 2022, the Company issued 96,471 shares of common stock with a contract price of $0.25 per share or $24,118 and a grant date market value of $0.16 or $15,434 to Larry Diamond, it’s Chief Executive Officer, as commitment shares as set forth and defined in Diamond Note 2. The Company also issued five-year warrants to purchase 92,942 shares of common stock at a price of $0.50 to Mr. Diamond pursuant to a promissory note.
AJB Capital Note
On March 18, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with AJB Capital Investments, LLC (the “Investor”) with respect to the sale and issuance to the Investor of: (i) an initial commitment fee in the amount of $430,000 in the form of 1,720,000 shares (the “Commitment Fee Shares”) of the Company’s common stock (the “Common Stock”), which Commitment Fee Shares can be decreased to 720,000 shares ($180,000) if the Company repays the Note on or prior to its maturity (the “True-Up Provision”), (ii) a promissory note in the aggregate principal amount of $750,000, and (iii) Common Stock Purchase Warrants to purchase up to an aggregate of 750,000 shares of the Common Stock (the “Warrants”). The Note and Warrants were issued on March 17, 2022 (the “Original Issue Date”) and were held in escrow pending effectiveness of the Purchase Agreement. Pursuant to the terms of the Purchase Agreement, the initial Commitment Fee Shares were issued at a value of $430,000, the Note was issued in a principal amount of $750,000 for a purchase price of $675,000, resulting in an original issue discount of $75,000; the warrants had a commitment date fair value of $24,952; and the commitment fee shares had a commitment date fair value of $324,962, resulting in a total discount in the amount of $424,914. The Warrants were issued, with an initial exercise price of $0.50 per share, subject to adjustment as described herein. The aggregate cash subscription amount received by the Company from the Investor for the issuance of the Commitment Fee Shares, Note and Warrants was $616,250, due to a reduction in the $675,000 purchase price as a result of broker, legal, and transaction fees. $194,656 of the discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining discount at June 30, 2022 was $230,258. At June 30, 2022, the principal balance of this note was $750,000.
Anson East Master Fund LP and Anson Investments Master Fund LP
On April 6, 2022, the Company entered into separate Securities Purchase Agreement with each of Anson East Master Fund LP and Anson Investments Master Fund LP with respect to the sale and issuance to AEMF and AIMF of: (i) an aggregate initial commitment fee in the amount of $430,000 in the form of 1,720,000 shares (the “Commitment Fee Shares”) of the Company’s common stock (the “Common Stock”), which Commitment Fee Shares can be decreased to 722,400 shares ($180,000) if the Company repays the Notes on or prior their maturity, (ii) promissory notes in the aggregate principal amount of $750,000 (the “Notes”), and (iii) Common Stock Purchase Warrants to purchase up to an aggregate of 750,000 shares of the Common Stock (the “Warrants”) at an initial exercise price of $0.50 per share, subject to adjustment. The Notes and Warrants were issued on April 6, 2022 (the “Original Issue Date”) and were held in escrow pending effectiveness of the Purchase Agreements. The notes were issued in a total principal amount of $750,000 for a total purchase price of $675,000, resulting in an original issue discount of $75,000; the warrants had an aggregate commitment date fair value of $168,130; and the commitment shares had an aggregate commitment date fair value of $563,665, resulting in a total discount in the amount of $638,665. $160,121 of the discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining discount at June 30, 2022 was $478,544. At June 30, 2022, the principal balance of this note was $750,000.
GS Capital Partners
On April 18, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with GS Capital Partners (the “Investor”) with respect to the sale and issuance to the Investor of: (i) an initial commitment fee in the amount of $159,259 in the form of 637,036 shares (the “Commitment Fee Shares”) of the Company’s common stock (the “Common Stock”), which Commitment Fee Shares can be decreased to 266,280 shares ($66,570) if the Company repays the Note on or prior to their maturity, (ii) promissory note in the principal amount of $277,777, and (iii) Common Stock Purchase Warrants to purchase up to 277,777 shares of the Common Stock (the “Warrants”) at an initial exercise price of $0.50 per share, subject to adjustment. The Note and Warrants were issued on April 18, 2022 (the “Original Issue Date”) and were held in escrow pending effectiveness of the Purchase Agreement. The notes were issued in a total principal amount of $277,777 for a total purchase price of $250,000, resulting in an original issue discount of $27,777; the warrants had an aggregate commitment date fair value of $26,846; and the commitment shares had an aggregate commitment date fair value of $135,312. The Company also recorded a discount in the amount of $22,500 for the costs of financing, resulting in a total discount in the amount of $212,435. $54,386 of the discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining discount at June 30, 2022 was $159,049. At June 30, 2022, the principal balance of this note was $277,777.
Diamond Note 3
On April 27, 2022, the Company issued a 10% Promissory Note due June 30, 2022 (the “Diamond Note 3”) to Lawrence Diamond (the “Lender”). Lawrence Diamond is the Chief Executive Officer of the Company. The principal amount of the Diamond Note 3 is $235,294, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) April 4, 2022 (on July 12, 2022 this date was extended to September 10, 2022), (ii) the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE, or (iii) the date of receipt of the Company of the next round of debt or equity financing in an amount of at least $1,000,000. The purchase price of the Diamond Note 3 payable to the Company for the Diamond Note 3 was $200,000 resulting in an original issue discount of $35,294 and was funded on April 27, 2022. The amount payable at maturity will be $235,294 plus 10% of that amount plus any accrued and unpaid interest, resulting in a premium and related discount in the amount of $23,529. The Company also issued 96,471 shares of stock with a value of $16,200 as a commitment fee and five-year warrants with a fair value of $8,800 to purchase 96,471 shares of common stock at a price of $0.50 per share; these amounts were charged to discount on the note, resulting in a total discount on this note in the amount of $83,823. Following an event of default, as defined in the Diamond Note 3, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note 3 contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Diamond Note 3, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. At June 30, 2022, the principal balance of this note was $235,294; $34,861 of the discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining discounts at June 30, 2022 were $48,962.
Kishon Investments, LLC
On May 10, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Kishon Investments, LLC (the “Investor”) with respect to the sale and issuance to the Investor of: (i) an initial commitment fee in the amount of $159,259 in the form of 637,036 shares (the “Commitment Fee Shares”) of the Company’s common stock (the “Common Stock”), (ii) promissory note in the principal amount of $277,777 due on November 10, 2022, and (iii) Common Stock Purchase Warrants to purchase up to 277,777 shares of the Common Stock (the “Warrants”) at an initial exercise price of $0.50 per share, subject to adjustment. The Note and Warrants were issued on May 10, 2022 (the “Original Issue Date”) and were held in escrow pending effectiveness of the Purchase Agreement. The note was issued in a total principal amount of $277,777 for a total purchase price of $250,000, resulting in an original issue discount of $27,777; the warrants had an aggregate commitment date fair value of $15,780; and the commitment shares had an aggregate commitment date fair value of $122,712, resulting in a total discount in the amount of $166,269. $32,463 of the discount was amortized to interest expense during the six months ended June 30, 2022, and the remaining discount at June 30, 2022 was $133,806. At June 30, 2022, the principal balance of this note was $277,777.
Diamond Note 4
The Company issued a 10% Promissory Note due as described below (the “Diamond Note 4”), dated May 18, 2022, to Lawrence Diamond. The principal amount of the Diamond Note 4 is $47,059, carries a 10% interest rate per annum, payable in monthly installments, and had a maturity date that was the earlier of (i) four business days after the date on which we successfully lists its shares of common stock on Nasdaq or NYSE, or (ii) two business days after the date of receipt of the Company of the next round of debt or equity financing in a net amount of at least $600,000. On August 3, 2022, the maturity date was amended to (i) September 10, 2022 or (ii) five days after the date on which we successfully list our shares of common stock on any of the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market. The purchase price of the Diamond Note 4payable to us for the Diamond Note 4was $40,000, resulting in an original issue discount of $7,059, and was funded on May 18, 2022. The amount payable at maturity will be $47,059 plus 10% of that amount plus any accrued and unpaid interest, resulting in a premium and related discount in the amount of $4,706. Following an event of default, as defined in the Diamond Note 4, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note 4contains a “most favored nations” clause that provides that, so long as the Diamond Note 4is outstanding, if we issue any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Diamond Note 4, we shall notify Mr. Diamond of such term, and such term, at the option of Mr. Diamond, shall become a part of the Note. In addition, Mr. Diamond will be issued (1) 19,294 five-year warrants (the “May 18 Diamond Warrants”) with a fair value of $2,960 that may be exercised on substantially the same terms as the Series A warrant issued in connection with our Series D Convertible Preferred Stock and (2) 19,294 shares of Common Stock with a value of $3,160 as commitment shares; these amounts were charged to discount on the note, resulting in a total discount on this note in the amount of $17,885. At June 30, 2022, the principal balance of this note was $47,059; $5,392 of the discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining discount at June 30, 2022 were $12,493.
Finnegan Note 1
On May 23, 2022, the Company issued a 10% Promissory Note due as described below (the “Finnegan Note 1”) to Jessica Finnegan. The principal amount of the Finnegan Note 1 is $47,059, carries a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) four business days after the date on which we successfully lists its shares of common stock on Nasdaq or NYSE, or (ii) two business days after the date of receipt of the Company of the next round of debt or equity financing in a net amount of at least $600,000. The purchase price of the Finnegan Note 1 was $40,000 resulting in an original issue discount of $7,059 and was funded on May 18, 2022. The amount payable at maturity will be $47,059 plus 10% of that amount plus any accrued and unpaid interest, resulting in a premium and related discount in the amount of $4,706. Following an event of default, as defined in the Finnegan Note 1, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Finnegan Note 1 contains a “most favored nations” clause that provides that, so long as the Finnegan Note 1 is outstanding, if we issue any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Finnegan Note 1, we shall notify Ms. Finnegan of such term, and such term, at the option of Ms. Finnegan, shall become a part of the Note. In addition, Ms. Finnegan will be issued (1) 19,295 five-year warrants with a fair value of $2,000 (the “May 18 Finnegan Warrants”) that may be exercised on substantially the same terms as the Series A warrant issued in connection with our Series D Convertible Preferred Stock and (2) 19,295 shares of Common Stock with a value of $3,240 as commitment shares; these amounts were charged to discount on the note, resulting in a total discount on this note in the amount of $17,005. At June 30, 2022, the principal balance of this note was $47,059; $3,843 of the discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining discounts at June 30, 2022 were $13,162.
May 26, 2022 Notes
The Company issued five 10% Promissory Notes due as described below (collectively, the “May 26 Notes”), dated May 26, 2022, to Larry Diamond, Jenny Lindstrom, and other related parties (the “May 26 Lenders”), in the aggregate principal amount of $205,883.
The May 26 Notes carry a 10% interest rate per annum, payable in monthly installments, and has a maturity date that is the earlier of (i) November 30, 2022, or (ii) the date on which we successfully lists our shares of common stock on Nasdaq or NYSE. The aggregate principal amount payable at maturity will be $205,883 plus 10% of that amount plus any accrued and unpaid interest, resulting in an aggregate premium and related discount in the amount of $20,588. The aggregate amount funded was $175,000 resulting in an original issue discount of $30,883. Following an event of default, as defined in the May 26 Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The May 26 Notes contain a “most favored nations” clause that provides that, so long as the May 26 Notes are outstanding, if we issue any new security, which the May 26 Lenders reasonably believe contains a term that is more favorable than those in the May 26 Notes, we shall notify the May 26 Lenders of such term, and such term, at the option of the May 26 Lenders, shall become a part of the May 26 Notes. In addition, the May 26 Lenders were issued in the aggregate (1) 84,412 five-year warrants (the “May 26 Warrants”) with an aggregate fair value of $8,750 and (2) 84,412 shares of Common Stock as commitment shares with an aggregate value of $14,175; these amounts were charged to discount on the note, resulting in an aggregate discount on these notes in the amount of $74,396. The May 26 Warrants have an initial exercise price of $0.50 per share. The May 26 Warrants are not exercisable for six months following their issuance. The May 26 Lenders may exercise the May 26 Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the May 26 Warrants are not then registered pursuant to an effective registration statement. At June 30, 2022, the principal balance of these notes was $205,883; $6,631 of the discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining discounts at June 30, 2022 were $24,252.
June 9, 2022 Notes
The Company issued two 10% Promissory Notes due as described below (individually, the “Howe Note” and the “Dragon Note”, and collectively, the “June 9 Notes”), dated June 9, 2022, to Michael C. Howe Living Trust and Dragon Dynamic Funds Platform Ltd. (the “June 9 Lenders”) in the aggregate principal amount of $888,235. Michael C. Howe is the Chief Executive Officer of the Good Clinic LLC, one of the Company’s subsidiaries.
The June 9 Notes carry a 10% interest rate per annum, payable in monthly installments. The Howe Note has a maturity date that is the earlier of (i) September 10, 2022, or (ii) the date on which we successfully list our shares of common stock on Nasdaq or NYSE. The Dragon Note has a maturity date that is the earlier of (i) December 9, 2022, or (ii) the date on which we successfully list our shares of common stock on Nasdaq or NYSE. The aggregate amount payable at maturity will be $888,235 plus 10% of that amount plus any accrued and unpaid interest, resulting in a premium and related discount in the aggregate amount of $58,824. The aggregate amount funded was $755,000 resulting in an original issue discount of $133,235. In addition, the June 9 Lenders will be issued in the aggregate (1) 364,176 five-year warrants (the “June 9 Warrants”) with a fair value of $32,465 and (2) 364,176 shares of Common Stock with a value of $66,440 as commitment shares; these amounts were charged to discount on the note. The Company also paid issuance costs related to these notes in the aggregate amount of $77,500 which were charged to discount on the notes, resulting in an aggregate discount on these notes in the amount of $368,464. The June 9 Warrants have an initial exercise price of $0.50 per share. The June 9 Warrants are not exercisable for six months following their issuance. At June 30, 2022, the principal balance of these notes were $888,235; $45,607 of the discounts were amortized to interest expense during the six months ended June 30, 2022, and the remaining discounts at June 30, 2022 were $322,857.
PPP Loan
During March 2020, in response to the COVID-19 crisis, the federal government announced plans to offer loans to small businesses in various forms, including the Payroll Protection Program, or “PPP”, established as part of the Corona Virus Aid, Relief and Economic Security Act (“CARES Act”) and administered by the U.S. Small Business Administration. On April 25, 2020, the Company entered an unsecured Promissory Note with Bank of America for a loan in the original principal amount of approximately $460,400, and the Company received the full amount of the loan proceeds on May 4, 2020.2020 (the “PPP Loan”). The PPP Loan bears interest at the rate of 1% per year. During the year ended December 31, 2022, the Company accrued interest in the amount of $4,632.
During the three and six months ended June 30, 2022 balance, including2023, the Company accrued interest in the amount of $1,135 and $2,270, respectively, on the PPP Loan; at June 30, 2023, the balance due on this loan was $470,375.principal in the amount of $460,400 and accrued interest in the amount of $13,559. This loan was in default at June 30, 2023. See note 15.
Note 9: Notes Payable
AJB Note
On March 18, 2022, the Company entered into a Securities Purchase Agreement (the “AJB Agreement”) with AJB Capital Investments, LLC (“AJB”) with respect to the sale and issuance to AJB of: (i) an initial commitment fee in the amount of $430,000 in the form of 34,400 shares (the “AJB Commitment Fee Shares”) of the Company’s Common Stock, (ii) a promissory note in the aggregate principal amount of $750,000 (the “AJB Note”), and (iii) Common Stock Purchase Warrants to purchase 15,000 shares of the Company’s Common Stock (the “AJB Warrants”). The AJB Note and AJB Warrants were issued on March 17, 2022 and were held in escrow pending effectiveness of the AJB Agreement. Should AJB receive net proceeds of less than $430,000 from the sale of the AJB Commitment Fee Shares, the Company will issue additional shares to AJB or pay the shortfall amount to AJB in cash (the “AJB True-up Obligation”. The terms of the AJB Agreement resulted in the Company recording a derivative liability in the initial amount of $106,608. On November 18, 2022, the Company issued 91,328 shares of common stock to AJB and recorded a loss in the amount of $9,007 in connection with the settlement of the AJB True-up Obligation. See notes 11 and 12.
The AJB Note was issued in the principal amount of $750,000 for a purchase price of $675,000, resulting in an original issue discount of $75,000, and has a due date, as extended, of March 17, 2023. The AJB Note bears interest at the rate of 10% per year for the first six months and 12% thereafter. In the event of default as defined in the AJB Note this rate will increase to 18% and the AJB Note will become convertible at a price per share equal to the lowest trading price during the previous twenty trading days prior to the conversion date. The AJB Note entered default status on October 6, 2022. The AJB Commitment Fee Shares and AJB Warrants resulted in a discount to the AJB Note in the amount of $349,914. The Company charged the amount of $62,000 to interest on the AJB Note during the year ended December 31, 2022. Discounts in the amount of $424,914 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $750,000 and $22,833, respectively, were due on the AJB Note at December 31, 2022.
During the six months ended June 30, 2023, a default penalty in the amount of $375,000 and an additional fee in the amount of $15,000 were added to the principal amount of the AJB note. During the three and six months ended June 30, 2023, interest in the amounts of $6,270 and $62,897, respectively, was accrued on the AJB Note.
On April 11, 2023, an equity investment incentive in the amount of $800,800 representing 65% of the total amount due under the AJB Note, along with original principal of $750,000, the default penalty of $375,000, the fee of $15,000, and accrued interest of $92,000 (a total of $2,032,800) was converted to 2,033 shares of the Company’s Series F Preferred Stock. Other than the equity investment incentive of $800,800, there was no additional gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. At June 30, 2023, there were no amounts due under the AJB Note.
Anson Investments Note
On April 6, 2022, the Company entered into a Securities Purchase Agreement (the “Anson Investments Agreement”) with Anson Investments Master Fund LP (“Anson Investments”) with respect to the sale and issuance to Anson Investments of: (i) an initial commitment fee in the amount of $322,500 in the form of 25,800 shares (the “Anson Investments Commitment Fee Shares”) of the Company’s Common Stock, (ii) a promissory note in the aggregate principal amount of $562,500 (the “Anson Investments Note”), and (iii) Common Stock Purchase Warrants to purchase 11,250 shares of the Common Stock (the “Anson Investments Warrants”). Should Anson Investments receive net proceeds of less than $322,500 from the sale of the Anson Investments Commitment Fee Shares, the Company will issue additional shares to Anson Investments or pay the shortfall amount to Anson Investments in cash. The terms of the Anson Investments Agreement resulted in the Company recording a derivative liability in the initial amount of $27,040.
The Anson Investments Note was issued in the principal amount of $562,500 for a purchase price of $506,250 resulting in an original issue discount of $56,250. The Anson Investments Note has a due date of October 6, 2022 and bears interest at the rate of 10% per year for the first six months and 12% thereafter. In the event of default as defined in the Anson Investments Note this rate will increase to 18% and the Anson Investment Note will become convertible at a price per share equal to the lowest trading price during the previous twenty trading days prior to the conversion date. The Anson Investments Note entered default status on October 6, 2022. The Anson Investments Commitment Fee Shares and Anson Investments Warrants resulted in a discount to the Anson Investments Note in the amount of $416,375. The Company charged the amount of $68,844 to interest on the Anson Investments note during the year ended December 31, 2022. Discounts in the amount of $472,625 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $562,500 and $41,500, respectively, were due on the AJB Note at December 31, 2022.
During the six months ended June 30, 2023, a default penalty in the amount of $281,250 and an additional fee in the amount of $15,000 were added to the principal amount of the Anson Investments Note. During the three and six months ended June 30, 2023, interest in the amounts of $4,724 and $27,157, respectively, was accrued on the Anson Investments Note.
On April 11, 2023, an equity investment incentive in the amount of $602,815 representing 65% of the total amount due under the Anson Investments Note, along with original principal of $562,500, the default penalty of $281,250, the fee of $15,000, and accrued interest of $68,657 (a total of $1,530,222) was converted to 1,531 shares of the Company’s Series F Preferred Stock. Other than the equity investment incentive of $602,815, there was no gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. At June 30, 2023, there were no amounts due under the Anson Investments Note.
Anson East Note
On April 6, 2022, the Company entered into a Securities Purchase Agreement (the “Anson East Agreement”) with Anson East Master Fund LP (“Anson East”) with respect to the sale and issuance to Anson East of: (i) an initial commitment fee in the amount of $107,500 in the form of 8,600 shares (the “Anson East Commitment Fee Shares”) of the Company’s Common Stock, (ii) a promissory note in the aggregate principal amount of $187,500 (the “Anson East Note”), and (iii) Common Stock Purchase Warrants to purchase 3,750 shares of the Company’s common stock (the “Anson East Warrants”). Should Anson East receive net proceeds of less than $107,500 from the sale of the Anson East Commitment Fee Shares, the Company will issue additional shares to Anson East or pay the shortfall amount to Anson East in cash. The terms of the Anson East Agreement resulted in the Company recording a derivative liability in the initial amount of $9,014.
The Anson East Note was issued in the principal amount of $187,500 for a purchase price of $168,750 resulting in an original issue discount of $18,750. The Anson East Note has a due date of October 6, 2022 and bears interest at the rate of 10% per year for the first six months and 12% thereafter. In the event of default as defined in the Anson East Note this rate will increase to 18%, and the Anson East Note will become convertible at a price per share equal to the lowest trading price during the previous twenty trading days prior to the conversion date. The Anson East Note entered default status on October 6, 2022. The Anson East Commitment Fee Shares and Anson East Warrants resulted in a discount to the Anson East Note in the amount of $147,290. The Company charged the amount of $22,948 to interest on the Anson Investments note during the year ended December 31, 2022. Discounts in the amount of $166,040 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $187,500 and $13,833, respectively, were due on the Anson East Note at December 31, 2022.
During the six months ended June 30, 2023, a default penalty in the amount of $93,750 and an additional fee in the amount of $15,000 were added to the principal amount of the Anson East Note. During the three and six months ended June 30, 2023, the amounts of $9,552 and $23,385, respectively, was accrued on the Anson East Note.
On April 11, 2023, an equity investment incentive in the amount of $207,763 representing 65% of the total amount due under the Anson East Note, along with original principal of $187,500, the default penalty of $93,750, the fee of $15,000, and accrued interest of $23,385 (a total of $527,398) was converted to 528 shares of the Company’s Series F Preferred Stock. Other than the equity investment incentive of $207,763, there was no gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. At June 30, 2023, there were no amounts due under the Anson East Note.
GS Capital Note
On April 18, 2022, the Company entered into a Securities Purchase Agreement (the “GS Capital Agreement”) with GS Capital Investments, LLC (“GS Capital”) with respect to the sale and issuance to GS Capital of: (i) an initial commitment fee in the amount of $159,259 in the form of 12,741 shares (the “GS Capital Commitment Fee Shares”) of the Company’s Common Stock, (ii) a promissory note in the aggregate principal amount of $277,777 (the “GS Capital Note”), and (iii) Common Stock Purchase Warrants to purchase 5,556 shares of the Company’s common stock (the “GS Capital Warrants”). Should GS Capital receive net proceeds of less than $159,259 from the sale of the GS Capital Commitment Fee Shares, the Company will issue additional shares to GS Capital or pay the shortfall amount to GS Capital in cash. The terms of the GS Capital Agreement resulted in the Company recording a derivative liability in the initial amount of $21,920.
The GS Capital Note was issued in the principal amount of $277,777 for a purchase price of $250,000 resulting in an original issue discount of $27,777. The GS Capital Note has a due date of November 10, 2022 and bears interest at the rate of 10% per year for the first six months and 12% thereafter. In the event of default as defined in the GS Capital Note this rate will increase to 18%, and the GS Capital Note will become convertible at a price per share equal to the lowest trading price during the previous twenty trading days prior to the conversion date. The GS Capital Note entered default status on October 19, 2022. The GS Capital Commitment Fee Shares and GS Capital Warrants resulted in a discount to the GS Capital Note in the amount of $162,158. The Company charged the amount of $32,155 to interest on the GS Capital Note during the year ended December 31, 2022. Discounts in the amount of $212,435 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $277,777 and $19,578, respectively, were due on the GS Capital Note at December 31, 2022.
During the six months ended June 30, 2023, GS Capital converted an aggregate amount of $72,777 of principal and $8,679 of accrued interest in the GS Capital Note into an aggregate of 57,140 shares of the Company’s common stock at an average price of $1.46 per share. These conversions were made pursuant to the terms of the GS Capital Note, and no gain or loss was recorded on these transactions. During the six months ended June 30, 2023, a default penalty in the amount of $138,889 and an additional fee in the amount of $15,000 were added to the principal amount of the GS Capital Note. During the three and six months ended June 30, 2023, interest in the amount of $2,374 and $13,965, respectively, was accrued on the GS Capital Note.
On April 11, 2023, an equity investment incentive in the amount of $249,439 representing 65% of the total amount due under the GS Capital Note, along with original principal of $205,000, the default penalty of $138,889, the fee of $15,000, and accrued interest of $24,864 (a total of $633,192) was converted to 634 shares of the Company’s Series F Preferred Stock. Other than the equity investment incentive of $249,439, there was no gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. At June 30, 2023, there were no amounts due under the GS Capital Note.
Kishon Note
On May 10, 2022, the Company entered into a Securities Purchase Agreement (the “Kishon Agreement”) with Kishon Investments, LLC (“Kishon”) with respect to the sale and issuance to Kishon of: (i) an initial commitment fee in the amount of $159,259 in the form of 12,741 shares (the “Kishon Commitment Fee Shares”) of the Company’s Common Stock, (ii) a promissory note in the aggregate principal amount of $277,777 (the “Kishon Note”), and (iii) Common Stock Purchase Warrants to purchase 5,556 shares of the Company’s common stock (the “Kishon Warrants”). Should Kishon receive net proceeds of less than $159,259 from the sale of the Kishon Commitment Fee Shares, the Company will issue additional shares to Kishon or pay the shortfall amount to Kishon in cash. The terms of the Kishon Agreement resulted in the Company recording a derivative liability in the initial amount of $27,793.
The Kishon Note was issued in the principal amount of $277,777 for a purchase price of $250,000 resulting in an original issue discount of $27,777. The Kishon Note has a due date of November 10, 2022 and bears interest at the rate of 10% per year for the first six months and 12% thereafter. In the event of default as defined in the Kishon Note this rate will increase to 18%, and the Kishon Note will become convertible at a price per share equal to the lowest trading price during the previous twenty trading days prior to the conversion date. The Kishon Note entered default status on November 11, 2022. The Kishon Commitment Fee Shares and Kishon Warrants resulted in a discount to the Kishon Note in the amount of $138,492. The Company charged the amount of $28,624 to interest on the Kishon Note during the year ended December 31, 2022. Discounts in the amount of $181,269 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $277,777 and $17,822, respectively, were due on the Kishon Note at December 31, 2022.
During the six months ended June 30, 2023, a default penalty in the amount of $138,889 and an additional fee in the amount of $15,000 were added to the principal amount of the Kishon Note. During the three and six months ended June 30, 2023, interest in the amounts of $19,641 and $31,645 was accrued on the Kishon Note. At June 30, 2023, principal and interest in the amount of $431,666 and $49,467, respectively, were due on the Kishon Note. This note was in default at December 31, 2022 and June 30, 2023.
Finnegan Note 1
On May 23, 2022, the Company issued a 10% Promissory Note in the principal amount of $47,059 to Jessica Finnegan (the “Finnegan Note 1”). The Finnegan Note 1 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 20, 2022, as extended, or (ii) five (5) business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Finnegan Note 1 was $40,000; the amount payable at maturity will be $47,059 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Finnegan Note 1, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Finnegan Note 1 entered default status on November 21, 2022, and the interest rate increased to 18%. The Finnegan Note 1 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Ms. Finnegan reasonably believes contains a term that is more favorable than those in the Finnegan Note 1, the Company shall notify Ms. Finnegan of such term, and such term, at the option of Ms. Finnegan, shall become a part of the Finnegan Note 1. In addition, Ms. Finnegan received five-year warrants to purchase 386 shares of common stock at a price of $25.00 per share with a fair value of $2,000 at the date of issuance, and 1,930 shares of common stock with a value of $3,240; these amounts were recorded as discounts to the Finnegan Note 1. Interest in the amount of $3,285 was accrued on the Finnegan Note 1 during the year ended December 31, 2022. Discounts in the amount of $17,005 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $51,765 and $3,285, respectively, were due on the Finnegan Note 1 at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $2,142 and $4,260, respectively, was accrued on the Finnegan Note 1; principal and accrued interest in the amount of $51,765 and $7,590, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
M Diamond Note
On May 26, 2022, the Company issued a 10% Promissory Note in the principal amount of $58,823 to Melissa Diamond (the “M Diamond Note”). The M Diamond Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the M Diamond Note was $50,000; the amount payable at maturity will be $58,823 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the M Diamond Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The M Diamond Note entered default status on December 1, 2022, and the interest rate increased to 18%. The M Diamond Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Ms. Diamond reasonably believes contains a term that is more favorable than those in the M Diamond Note, the Company shall notify Ms. Diamond of such term, and such term, at the option of Ms. Diamond, shall become a part of the M Diamond Note. In addition, Ms. Diamond received five-year warrants to purchase 483 shares of common stock at a price of $25.00 per share with a fair value of $2,500 at the date of issuance, and 483 shares of common stock with a value of $4,050; these amounts were recorded as discounts to the M Diamond Note. Interest in the amount of $3,929 was accrued on the M Diamond Note during the year ended December 31, 2022. Discounts in the amount of $21,256 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $64,705 and $3,929, respectively, were due on the M Diamond Note at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $2,676 and $5,323, respectively, was accrued on the M Diamond Note; principal and accrued interest in the amount of $64,705 and $9,307, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Finnegan Note 2
On May 26, 2022, the Company issued a 10% Promissory Note in the principal amount of $29,412 to Jessica Finnegan (the “Finnegan Note 2”). The Finnegan Note 2 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Finnegan Note 2 was $25,000; the amount payable at maturity will be $29,412 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Finnegan Note 2, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Finnegan Note 2 entered default status on December 1, 2022, and the interest rate increased to 18%. The Finnegan Note 2 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Ms. Finnegan reasonably believes contains a term that is more favorable than those in the Finnegan Note 2, the Company shall notify Ms. Finnegan of such term, and such term, at the option of Ms. Finnegan, shall become a part of the Finnegan Note 2. In addition, Ms. Finnegan received five-year warrants to purchase 242 shares of common stock at a price of $25.00 per share with a fair value of $1,250 at the date of issuance, and 242 shares of common stock with a value of $2,025; these amounts were recorded as discounts to the Finnegan Note 2. Interest in the amount of $1,965 was accrued on the Finnegan Note 2 during the year ended December 31, 2022. Discounts in the amount of $10,625 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $32,353 and $1,965, respectively, were due on the Finnegan Note 2 at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $1,339 and $2,663, respectively, was accrued on the Finnegan Note 2; principal and accrued interest in the amount of $32,353 and $4,564, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Dragon Note
On June 9, 2022, the Company issued a 10% Promissory Note in the principal amount of $588,235 (the “Dragon Note”) to Dragon Dynamic Funds Platform Ltd (“Dragon Dynamic”). The Dragon Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) December 9, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Dragon Note was $500,000; the amount payable at maturity will be $588,235 plus 10% of that amount plus any accrued and unpaid interest. Costs in the amount of $47,500 were charged to discount on the Dragon Note. Following an event of default as defined in the Dragon Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Dragon Note entered default status on December 10, 2022, and the interest rate increased to 18%. The Dragon Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Dragon Dynamic reasonably believes contains a term that is more favorable than those in the Dragon Note, the Company shall notify Dragon Dynamic of such term, and such term, at the option of Dragon Dynamic, shall become a part of the Dragon Note. In addition, Dragon Dynamic received five-year warrants to purchase 4,824 shares of common stock at a price of $25.00 per share with a fair value of $21,500 at the date of issuance, and 4,824 shares of common stock with a value of $44,000; these amounts were recorded as discounts to the Dragon Note. Interest in the amount of $35,874 was accrued on the Dragon Note during the year ended December 31, 2022. Discounts in the amount of $260,059 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $647,059 and $35,874, respectively, were due on the Dragon Note at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $3,235 and $29,706, respectively, was accrued on the Dragon Note.
On April 11, 2023, an equity investment incentive in the amount of $463,539 representing 65% of the total amount due under the Dragon Note, along with original principal of $647,059 and accrued interest of $66,078 (a total of $1,176,676) was converted to 1,177 shares of the Company’s Series F Preferred Stock. Other than the equity investment incentive of $463,539, there was no gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. At June 30, 2023, there were no amounts due under the Dragon Note.
Mackay Note
On July 7, 2022, the Company issued a 10% Promissory Note in the principal amount of $294,118 to Mackay Investments, LLC (the “Mackay Note”). The Mackay Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) August 10, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Mackay Note was $250,000; the amount payable at maturity will be $294,118 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Mackay Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Mackay Note entered default status on August 11, 2022, and the interest rate increased to 18%. The Mackay Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mackay Investments, LLC reasonably believes contains a term that is more favorable than those in the Mackay Note, the Company shall notify Mackay Investments, LLC of such term, and such term, at the option of Mackay Investments, LLC , shall become a part of the Mackay Note. In addition, Mackay Investments, LLC received five-year warrants to purchase 2,412 shares of common stock at a price of $25.00 per share with a fair value of $10,250 at the date of issuance, and 2,412 shares of common stock with a value of $44,118; these amounts were recorded as discounts to the Mackay Note. Interest in the amount of $20,193 was accrued on the Mackay Note during the year ended December 31, 2022. Discounts in the amount of $96,280 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $323,530 and $20,193, respectively, were due on the Mackay Note at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $13,382 and $26,617, respectively was accrued on the Mackay Note; principal and accrued interest in the amount of $323,530 and $50,425 respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Schrier Note
On July 7, 2022, the Company issued a 10% Promissory Note in the principal amount of $23,259 to Charles Schrier (the “Schrier Note”). The Schrier Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) January 8, 2023, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Schrier Note was $20,000; the amount payable at maturity will be $23,529 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Schrier Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Schrier Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Schrier reasonably believes contains a term that is more favorable than those in the Schrier Note, the Company shall notify Mr. Schrier of such term, and such term, at the option of Mr. Schrier, shall become a part of the Schrier Note. In addition, Mr. Schrier received five-year warrants to purchase 193 shares of common stock at a price of $25.00 per share with a fair value of $820 at the date of issuance, and 193 shares of common stock with a value of $1,000; these amounts were recorded as discounts to the Schrier Note. Interest in the amount of $1,141 was accrued on the Schrier Note during the year ended December 31, 2022. Discounts in the amount of $7,367 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $335 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $25,882 and $1,141, respectively, were due on the Schrier Note at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $1,070 and $2,087, respectively, was accrued on the Schrier Note; principal and accrued interest in the amount of $25,882 and $3,244, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Nommsen Note
On July 26, 2022, the Company issued a 10% Promissory Note in the principal amount of $58,823 to Eric S. Nommsen (the “Nommsen Note”). The Nommsen Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, as extended, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Nommsen Note was $50,000; the amount payable at maturity will be $58,823 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Nommsen Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Nommsen Note entered default status on December 1, 2022, and the interest rate increased to 18%. The Nommsen Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Nommsen reasonably believes contains a term that is more favorable than those in the Nommsen Note, the Company shall notify Mr. Nommsen of such term, and such term, at the option of Mr. Nommsen, shall become a part of the Nommsen Note. In addition, Mr. Nommsen received five-year warrants to purchase 483 shares of common stock at a price of $25.00 per share with a fair value of $1,850 at the date of issuance, and 483 shares of common stock with a value of $2,350; these amounts were recorded as discounts to the Nommsen Note. Interest in the amount of $2,946 was accrued on the Nommsen Note during the year ended December 31, 2022. Discounts in the amount of $18,905 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $64,705 and $2,946, respectively, were due on the Nommsen Note at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $2,676 and $5,323 was accrued on the Nommsen Note; principal and accrued interest in the amount of $64,705 and $8,310, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Caplan Note
On July 27, 2022, the Company issued a 10% Promissory Note in the principal amount of $58,823 to James H. Caplan (the “Caplan Note”). The Caplan Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) January 21, 2023, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Caplan Note was $50,000; the amount payable at maturity will be $58,823 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Caplan Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Caplan Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Caplan reasonably believes contains a term that is more favorable than those in the Caplan Note, the Company shall notify Mr. Caplan of such term, and such term, at the option of Mr. Caplan, shall become a part of the Caplan Note. In addition, Mr. Caplan received five-year warrants to purchase 483 shares of common stock at a price of $25.00 per share with a fair value of $1,850 at the date of issuance, and 483 shares of common stock with a value of $2,350; these amounts were recorded as discounts to the Caplan Note. Interest in the amount of $2,531 was accrued on the Caplan Note during the year ended December 31, 2022. Discounts in the amount of $16,675 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $2,230 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $64,705 and $2,531, respectively, were due on the Caplan Note at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $2,677 and $5,049, respectively, was accrued on the Caplan Note; principal and accrued interest in the amount of $64,705 and $7,614, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Finnegan Note 3
On August 4, 2022, the Company issued a 10% Promissory Note in the principal amount of $29,412 (the “Finnegan Note 3”) to Jessica, Kevin C., Brody, Isabella and Jack Finnegan (collectively, the “Finnegans”). The Finnegan Note 3 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) February 3, 2023, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Finnegan Note 3 was $25,000; the amount payable at maturity will be $29,412 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Finnegan Note 3, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Finnegan Note 3 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which The Finnegans reasonably believes contains a term that is more favorable than those in the Finnegan Note 3, the Company shall notify The Finnegans of such term, and such term, at the option of The Finnegans, shall become a part of the Finnegan Note 3. In addition, The Finnegans received five-year warrants to purchase 242 shares of common stock at a price of $25.00 per share with a fair value of $850 at the date of issuance, and 242 shares of common stock with a value of $1,100; these amounts were recorded as discounts to the Finnegan Note 3. Interest in the amount of $1,200 was accrued on the Finnegan Note 3 during the year ended December 31, 2022. Discounts in the amount of $7,575 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $1,728 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $32,353 and $1,200, respectively, were due on the Finnegan Note 3 at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $1,338 and $2,440, respectively, was accrued on the Finnegan Note 3; principal and accrued interest in the amount of $32,353 and $3,663, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Enright Note
On August 4, 2022, the Company issued a 10% Promissory Note in the principal amount of $120,000 to Jack Enright (the “Enright Note”). The Enright Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) February 3, 2023, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Enright Note was $102,000; the amount payable at maturity will be $120,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Enright Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Enright Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Enright reasonably believes contains a term that is more favorable than those in the Enright Note, the Company shall notify Mr. Enright of such term, and such term, at the option of Mr. Enright, shall become a part of the Enright Note. In addition, Mr. Enright received 984 shares of common stock with a value of $6,317; this amount was recorded as a discount to the Enright Note. Interest in the amount of $4,899 was accrued on the Enright Note during the year ended December 31, 2022. Discounts in the amount of $29,571 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $6,746 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $132,000 and $4,899, respectively, were due on the Enright Note at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $5,460 and $9,953, respectively, was accrued on the Enright Note; principal and accrued interest in the amount of $132,000 and $14,920, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Mitchell Note
On September 2, 2022, the Company issued a 10% Promissory Note in the principal amount of $71,000 to John Mitchell (the “Mitchell Note”). The Mitchell Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Mitchell Note was $60,350; the amount payable at maturity will be $71,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Mitchell Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Mitchell Note entered default status on December 1, 2022, and the interest rate increased to 18%. The Mitchell Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Mitchell reasonably believes contains a term that is more favorable than those in the Mitchell Note, the Company shall notify Mr. Mitchell of such term, and such term, at the option of Mr. Mitchell, shall become a part of the Mitchell Note. In addition, Mr. Mitchell received 582 shares of common stock with a value of $3,124; this amount was recorded as a discount to the Mitchell Note. Interest in the amount of $2,817 was accrued on the Mitchell Note during the year ended December 31, 2022. Discounts in the amount of $20,874 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $78,100 and $2,817, respectively, were due on the Mitchell Note at December 31, 2022. The Mitchell Note was in default at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $3,230 and $6,425, respectively, was accrued on the Mitchell Note; principal and accrued interest in the amount of $78,100 and $9,281, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Lightmas Note
On September 2, 2022, the Company issued a 10% Promissory Note in the principal amount of $60,000 to Frank Lightmas (the “Lightmas Note”). The Lightmas Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Lightmas Note was $51,000; the amount payable at maturity will be $60,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Lightmas Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Lightmas Note entered default status on December 1, 2022, and the interest rate increased to 18%. The Lightmas Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Lightmas reasonably believes contains a term that is more favorable than those in the Lightmas Note, the Company shall notify Mr. Lightmas of such term, and such term, at the option of Mr. Lightmas, shall become a part of the Lightmas Note. In addition, Mr. Lightmas received 492 shares of common stock with a value of $2,640; this amount was recorded as a discount to the Lightmas Note. Interest in the amount of $2,380 was accrued on the Lightmas Note during the year ended December 31, 2022. Discounts in the amount of $17,640 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $66,000 and $2,380, respectively, were due on the Lightmas Note at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $2,730 and $5,430, respectively, was accrued on the Lightmas Note; principal and accrued interest in the amount of $66,000 and $7,843, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Lewis Note
On September 2, 2022, the Company issued a 10% Promissory Note in the principal amount of $30,000 to Lisa Lewis (the “Lewis Note”). The Lewis Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Lewis Note was $25,500; the amount payable at maturity will be $30,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Lewis Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Lewis Note entered default status on December 1, 2022, and the interest rate increased to 18%. The Lewis Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Ms. Lewis reasonably believes contains a term that is more favorable than those in the Lewis Note, the Company shall notify Ms. Lewis of such term, and such term, at the option of Ms. Lewis, shall become a part of the Lewis Note. In addition, Ms. Lewis received 246 shares of common stock with a value of $1,320; this amount was recorded as a discount to the Lewis Note. Interest in the amount of $1,190 was accrued on the Lewis Note during the year ended December 31, 2022. Discounts in the amount of $8,820 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $33,000 and $1,190, respectively, were due on the Lewis Note at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $1,365 and $2,715 was accrued on the Lewis Note; principal and accrued interest in the amount of $33,000 and $3,922, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Goff Note
On September 2, 2022, the Company issued a 10% Promissory Note in the principal amount of $30,000 to Sharon Goff (the “Goff Note”). The Goff Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Goff Note was $25,500; the amount payable at maturity will be $30,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Goff Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Goff Note entered default status on December 1, 2022, and the interest rate increased to 18%. The Goff Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Ms. Goff reasonably believes contains a term that is more favorable than those in the Goff Note, the Company shall notify Ms. Goff of such term, and such term, at the option of Ms. Goff, shall become a part of the Goff Note. In addition, Ms. Goff received 246 shares of common stock with a value of $1,320; this amount was recorded as a discount to the Goff Note. Interest in the amount of $1,190 was accrued on the Goff Note during the year ended December 31, 2022. Discounts in the amount of $8,820 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $33,000 and $1,190, respectively, were due on the Goff Note at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $1,365 and $2,715, respectively, was accrued on the Goff Note; principal and accrued interest in the amount of $30,000 and $3,922, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Hagan Note
On September 2, 2022, the Company issued a 10% Promissory Note in the principal amount of $100,000 to Cliff Hagan (the “Hagan Note”). The Hagan Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) December 10, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Hagan Note was $85,000; the amount payable at maturity will be $100,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Hagan Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Hagan Note entered default status on December 11, 2022, and the interest rate increased to 18%. The Hagan Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Hagan reasonably believes contains a term that is more favorable than those in the Hagan Note, the Company shall notify Mr. Hagan of such term, and such term, at the option of Mr. Hagan, shall become a part of the Hagan Note. In addition, Mr. Hagan received 820 shares of common stock with a value of $4,715; this amount was recorded as a discount to the Hagan Note. Interest in the amount of $3,556 was accrued on the Hagan Note during the year ended December 31, 2022. Discounts in the amount of $29,715 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $110,000 and $3,556, respectively, were due on the Hagan Note at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $4,550 and $9,050, respectively, was accrued on the Hagan Note; principal and accrued interest in the amount of $110,000 and $12,656, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Darling Note
On September 14, 2022, the Company issued a 10% Promissory Note in the principal amount of $200,000 to Darling Capital, LLC (“Darling”), (the “Darling Note”). The Darling Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) December 15, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Darling Note was $170,000; the amount payable at maturity will be $200,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Darling Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Darling Note entered default status on December 15, 2022, and the interest rate increased to 18%. The Darling Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Darling reasonably believes contains a term that is more favorable than those in the Darling Note, the Company shall notify Darling of such term, and such term, at the option of Darling shall become a part of the Darling Note. In addition, Darling received 1,640 shares of common stock with a value of $10,824; this amount was recorded as a discount to the Darling Note. Interest in the amount of $6,619 was accrued on the Darling Note during the year ended December 31, 2022. Discounts in the amount of $60,824 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $220,000 and $6,619, respectively, were due on the Darling Note at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $1,100 and $10,100, respectively, was accrued on the Darling Note. On April 11, 2023, an equity investment incentive in the amount of $153,927 representing 65% of the total amount due under the Darling Note, along with original principal of $220,000 and accrued interest of $16,811 (a total of $390,738) was converted to 391 shares of the Company’s Series F Preferred Stock. Other than the equity investment incentive of $153,927, there was no gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. At June 30, 2023, there were no amounts due under the Darling Note.
Leath Note
On September 15, 2022, the Company issued a 10% Promissory Note in the principal amount of $50,000 to Mack Leath (the “Leath Note”). The Leath Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) December 15, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Leath Note was $42,500; the amount payable at maturity will be $55,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Leath Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Leath Note entered default status on December 16, 2022, and the interest rate increased to 18%. The Leath Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Leath reasonably believes contains a term that is more favorable than those in the Leath Note, the Company shall notify Mr. Leath of such term, and such term, at the option of Mr. Leath, shall become a part of the Leath Note. In addition, Mr. Leath received 410 shares of common stock with a value of $2,868; this amount was recorded as a discount to the Leath Note. Interest in the amount of $1,641 was accrued on the Leath Note during the year ended December 31, 2022. Discounts in the amount of $15,368 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $55,000 and $1,641, respectively, were due on the Leath Note at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $2,275 and $4,525 was accrued on the Leath Note; principal and accrued interest in the amount of $55,000 and $6,189, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Cavalry Note
On October 5, 2022, the Company issued a 10% Promissory Note in the principal amount of $500,000 to the Cavalry Fund LLP (“Cavalry”), (the “Cavalry Note”) with a due date of December 31, 2022. The Cavalry Note is subject to an exchange agreement (the “Series E Exchange Agreement”) whereby Cavalry will exchange (a) amounts due under the Cavalry Note, (b) 1,000,000 shares of the Company’s Series C Convertible Preferred Stock, and (c) 750,000 shares of the Company’s Series D Convertible Preferred Stock for a number of shares of the Company’s Series E Convertible Preferred Stock equal to 150% of the principal amount of the Cavalry Note plus 150% of the stated value of the Series C and Series D convertible Preferred Stock. See note 12. The Cavalry Note bears interest at the rate of 10% per annum which will accrue from the date of the note only if the Cavalry Note is not converted pursuant to the Series E Exchange Agreement by December 10, 2022. Following an event of default as defined in the Cavalry Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Cavalry Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Cavalry reasonably believes contains a term that is more favorable than those in the Cavalry Note, the Company shall notify the Cavalry of such term, and such term, at the option of Cavalry, shall become a part of the Cavalry Note. In addition, Cavalry received five-year warrants to purchase 750 shares of common stock at a price equal to the price of any warrant included in an offering in connection with listing at the Nasdaq Global Market. These warrants are not deemed issued at December 31, 2022 because the exercise price was not yet determined. Costs in the amount of $7,500 were also charged to discount on the Cavalry Note. Discounts in the amount of $10,500 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $500,000 and $11,918, respectively, were due on the Cavalry Note at December 31, 2022.
Concurrent with the Cavalry Note, the Company entered into an exchange agreement (the “Cavalry Exchange Agreement”). Pursuant to the Cavalry Exchange Agreement, Cavalry shall exchange (a) 1,000,000 shares of the Company’s Series C Convertible Preferred Stock (b) 750,000 shares of the Company’s Series D Convertible Preferred Stock and (c) amounts owing under the Cavalry Note, for a number of Series E Convertible Preferred Stock (the “Series E Shares”) equal to 150% of the principal amount of the Cavalry Note, plus 150% of the stated value of the Series C Shares and Series D Shares (the “Series E Exchange Value”). No transactions occurred pursuant to the Cavalry Exchange Agreement during the year ended December 31, 2022. See notes 12 and 16.
During the three and six months ended June 30, 2023, interest in the amount of $2,750 and $25,415 was accrued on the Cavalry Note. On April 11, 2023, an equity investment incentive in the amount of $349,266 representing 65% of the total amount due under the Cavalry Note, along with original principal of $500,000 and accrued interest of $37,333 (a total of $886,599) was converted to 887 shares of the Company’s Series F Preferred Stock. Other than the equity investment incentive of $349,266, there was no gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. At June 30, 2023, there were no amounts due under the Cavalry Note.
Mercer Note 1
On October 7, 2022, the Company issued a 10% Promissory Note in the principal amount of $300,000 to the Mercer Street Global Opportunity Fund (“Mercer”), (the “Mercer Note 1”) with a due date of December 31, 2022. The Mercer Note 1 is subject to the Series E Exchange Agreement whereby Mercer will exchange (a) amounts due under the Mercer Note 1, (b) 47,619 shares of the Company’s Series C Convertible Preferred Stock, and (c) 750,000 shares of the Company’s Series D Convertible Preferred Stock for a number of shares of the Company’s Series E Convertible Preferred Stock equal to 150% of the principal amount of the Mercer Note 1 plus 150% of the stated value of the Series C and Series D convertible Preferred Stock. See note 12. The Mercer Note 1 bears interest at the rate of 10% per annum which will accrue from the date of the note only if the Mercer Note 1 is not converted pursuant to the Series E Exchange Agreement by December 10, 2022. Following an event of default as defined in the Mercer Note 1, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Mercer Note 1 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mercer reasonably believes contains a term that is more favorable than those in the Mercer Note 1, the Company shall notify Mercer of such term, and such term, at the option of Mercer, shall become a part of the Mercer Note 1. In addition, Mercer received five-year warrants to purchase 750 shares of common stock at a price equal to the price of any warrant included in an offering in connection with listing at the Nasdaq Global Market. These warrants are not deemed issued at December 31, 2022 because the exercise price was not yet determined. Interest in the amount of $6,986 was accrued on the Mercer Note 1 during the year ended December 31, 2022. Discounts in the amount of $10,500 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $300,000 and $6,986, respectively, were due on the Mercer Note 1 at December 31, 2022.
Concurrent with the Mercer Note 1, the Company entered into an exchange agreement (the “Mercer Exchange Agreement”). Pursuant to the Mercer Exchange Agreement, Mercer shall exchange (a) 47,619 shares of the Company’s Series C Convertible Preferred Stock, (b) 750,000 shares of the Company’s Series D Convertible Preferred Stock, and (c) amounts owing under the Mercer Note, for a number of Series E Convertible Preferred Stock (the “Series E Shares”) equal to 150% of the principal amount of the Mercer Note, plus 150% of the stated value of the Series C Shares and Series D Shares (the “Series E Exchange Value”). No transactions occurred pursuant to the Cavalry Exchange Agreement during the year ended December 31, 2022. See note 12 and 16.
During the three and six months ended June 30, 2023, interest in the amount of $1,650 and $15,247, respectively, was accrued on the Mercer Note 1. On April 11, 2023, an equity investment incentive in the amount of $209,452 representing 65% of the total amount due under the Mercer Note 1, along with original principal of $300,000 and accrued interest of $22,233 (a total of $531,685) was converted to 531 shares of the Company’s Series F Preferred Stock. Other than the equity investment incentive of $209,452, there was no gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. At June 30, 2023, there were no amounts due under the Mercer Note 1.
Pinz Note
On October 10, 2022, the Company issued a 10% Promissory Note in the principal amount of $30,000 to the Pinz Capital Special Opportunities Fund (“Pinz”), (the “Pinz Note”) with a due date of December 31, 2022. The Pinz Note is subject to the Series E Exchange Agreement whereby Pinz will exchange (a) amounts due under the Pinz Note, (b) 100,000 shares of the Company’s Series D Convertible Preferred Stock for a number of shares of the Company’s Series E Convertible Preferred Stock equal to 150% of the principal amount of the Pinz Note plus 150% of the stated value of the Series D convertible Preferred Stock. See note 12. The Pinz Note bears interest at the rate of 10% per annum which will accrue from the date of the note only if the Pinz Note is not converted pursuant to the Series E Exchange Agreement by December 10, 2022. Following an event of default as defined in the Pinz Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Pinz Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which the Pinz Fund LLP reasonably believes contains a term that is more favorable than those in the Pinz Note, the Company shall notify the Pinz Fund LLP of such term, and such term, at the option of the Pinz Fund, LLP, shall become a part of the Pinz Note. In Interest in the amount of $6,986 was accrued on the Pinz Note during the year ended December 31, 2022. Discounts in the amount of $2,100 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $30,000 and $674, respectively, were due on the Pinz Note at December 31, 2022.
Concurrent with the Pinz Note, the Company entered into an exchange agreement (the “Pinz Exchange Agreement”). Pursuant to the Pinz Exchange Agreement, Pinz shall exchange (a) 100,000 shares of the Company’s Series D Convertible Preferred Stock, and (b) amounts owing under the Pinz Note, for a number of Series E Convertible Preferred Stock equal to 150% of the principal amount of the Pinz Note, plus 150% of the stated value of the Series D Shares. No transactions occurred pursuant to the Pinz Exchange Agreement during the year ended December 31, 2022. See note 12 and 16.
During the three and six months ended June 30, 2023, interest in the amount of $1,650 and $15,247, respectively, was accrued on the Pinz Note. On April 11, 2023, an equity investment incentive in the amount of $20,929 representing 65% of the total amount due under the Pinz Note, along with original principal of $30,000 and accrued interest of $2,198 (a total of $53,127) was converted to 54 shares of the Company’s Series F Preferred Stock. Other than the equity investment incentive of $20,929, there was no gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. At June 30, 2023, there were no amounts due under the Pinz Note.
Mercer Note 2
On October 24, 2022, the Company issued a 10% Promissory Note in the principal amount of $100,000 to Mercer (the “Mercer Note 2”) with a due date of December 31, 2022. The Mercer Note 2 is subject to the Series E Exchange Agreement whereby Mercer will exchange (a) amounts due under the Mercer Note 2 for a number of shares of the Company’s Series E Convertible Preferred Stock equal to 150% of the principal amount of the Mercer Note 2. See note 122. The Mercer Note 2 bears interest at the rate of 10% per annum which will accrue from the date of the note only if the Mercer Note 2 is not converted pursuant to the Series E Exchange Agreement by December 10, 2022. Following an event of default as defined in the Mercer Note 2, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Mercer Note 2 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mercer reasonably believes contains a term that is more favorable than those in the Mercer Note 2, the Company shall notify Mercer of such term, and such term, at the option of Mercer, shall become a part of the Mercer Note 2. In addition, Mercer received five-year warrants to purchase 750 shares of common stock at a price equal to the price of any warrant included in an offering in connection with listing at the Nasdaq Global Market. These warrants are not deemed issued at December 31, 2022 because the exercise price was not yet determined. Interest in the amount of $1,863 was accrued on the Mercer Note 2 during the year ended December 31, 2022. Discounts in the amount of $1,900 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $100,000 and $1,863, respectively, were due on the Mercer Note 2 at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $550 and $5,076, respectively, was accrued on the Mercer Note 2. On April 11, 2023, an equity investment incentive in the amount of $69,510 representing 65% of the total amount due under the Mercer Note 2, along with original principal of $100,000 and accrued interest of $6,939 (a total of $176,449) was converted to 177 shares of the Company’s Series F Preferred Stock. Other than the equity investment incentive of $69,510, there was no gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. At June 30, 2023, there were no amounts due under the Mercer Note 2.
Mercer Note 3
On December 2, 2022, the Company issued a 10% Promissory Note in the principal amount of $125,000 to Mercer (the “Mercer Note 3”) with a due date of May 21, 2023. The Mercer Note 3 is subject to the Series E Exchange Agreement whereby Mercer will exchange amounts due under the Mercer Note 3 for a number of shares of the Company’s Series E Convertible Preferred Stock equal to 150% of the principal amount of the Mercer Note 3. See note 12. The Mercer Note 3 bears interest at the rate of 10% per annum which will accrue from the date of the note only if the Mercer Note 3 is not converted pursuant to the Series E Exchange Agreement by May 10, 2023. Following an event of default as defined in the Mercer Note 3, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Mercer Note 3 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mercer reasonably believes contains a term that is more favorable than those in the Mercer Note 3, the Company shall notify Mercer of such term, and such term, at the option of Mercer, shall become a part of the Mercer Note 3. In addition, Mercer received five-year warrants to purchase 750 shares of common stock at a price equal to the price of any warrant included in an offering in connection with listing at the Nasdaq Global Market. These warrants are not deemed issued at December 31, 2022 because the exercise price was not yet. determined. Discounts in the amount of $4,028 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $20,972 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $125,000 and $993, respectively, were due on the Mercer Note 3 at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $382 and $3,521, respectively, was accrued on the Mercer Note 3. Also during the three and six months ended June 30, 2023, discounts in the amount of $12,500 and $20,972, respectively, were amortized to interest expense. On April 11, 2023, an equity investment incentive in the amount of $67,934 representing 65% of the total amount due under the Mercer Note 3, along with original principal of $100,000 and accrued interest of $4,514 (a total of $172,448) was converted to 173 shares of the Company’s Series F Preferred Stock. The premium on the Mercer Note 3 in the amount of $25,000 was forgiven by Mercer, and the Company recognized a gain on forgiveness of debt in the amount of $25,000. Other than the equity investment incentive of $67,934, there was no other gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. At June 30, 2023, there were no amounts due under the Mercer Note 3.
These amounts are reflected in the table below:
June 30, 2023 | December 31, 2022 | |||||||
Notes Payable | $ | 1,598,765 | $ | 5,144,742 | ||||
Less: Discount | - | (32,040 | ) | |||||
Notes payable - net of discount | $ | 1,598,765 | $ | 5,112,702 | ||||
Current Portion, net of discount | $ | 1,598,765 | $ | 5,112,702 | ||||
Long-term portion, net of discount | $ | - | $ | - | ||||
Interest expense on notes payable was $93,881 and $50,321 for the three months ended June 30, 2023 and 2022, respectively; interest expense on notes payable was $343,612 and $86,438 for the six months ended June 30, 2023 and 2022, respectively. Accrued interest on notes payable was $203,007 and $362,094 at June 30, 2023 and December 31, 2022, respectively.
Notes Payable Table 1:
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Notes Payable | $ | 4,937,466 | $ | 1,000,000 | ||||
PPP Loan | 460,406 | 460,406 | ||||||
| 5,397,872 | 1,460,406 | |||||||
Less: Discounts | (1,620,263 | ) | (411,568 | ) | ||||
Notes payable - net of discounts | $ | 3,777,609 | $ | 1,048,838 | ||||
Current Portion, net of discounts | $ | 3,777,609 | $ | 1,048,838 | ||||
Long-term portion, net of discounts | $ | - | $ | - | ||||
Note 910: Notes Payable – Related Parties
Howe Note 1
On December 30, 2021, we issued a 10% Promissory Note in the principal amount of $1,000,000 in a related party transaction to the Michael C. Howe Living Trust (the “Howe Note 1”). Michael C. Howe is the Chief Executive Officer of the Good Clinic LLC, one of our subsidiaries. The Howe Note 1 bears interest at the rate of 10% interest rate per annum and has a maturity date that is the earlier of (i) November 30, 2022, as extended, or (ii) five (5) business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Howe Note 1 was $850,000; the amount payable at maturity will be $1,000,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Howe Note 1, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Howe Note 1 entered delinquent status on December 1, 2022, and the interest rate increased to 18%. The Howe Note 1 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security, which Mr. Howe reasonably believes contains a term that is more favorable than those in the Howe Note 1, we shall notify Mr. Howe of such term, and such term, at the option of Mr. Howe, shall become a part of the Howe Note 1. In addition, Mr. Howe five-year warrants to purchase 42,000 shares of common stock at a price of $25.00 per share, and five-year warrants to purchase 42,000 shares of common stock at $37.50 per share with an aggregate fair value of $261,568 at the date of issuance, which was recorded as a discount to this note. Interest in the amount of $106,795 was accrued on the Howe Note 1 during the year ended December 31, 2022. Discounts in the amount of $511,568 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $1,100,000 and $106,795, respectively, were due on the Howe Note 1 at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $45,500 and $92,261, respectively, was accrued on the Howe Note 1; principal and accrued interest in the amount of $1,100,000 and $199,056, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Diamond Note 1
On February 24, 2022, the Company issued a 10% Promissory Note in the principal amount of $175,000 in a related party transaction to Lawrence Diamond, our Chief Executive Officer and a member of our Board of Directors (the “Diamond Note 1”). The Diamond Note 1 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, as extended, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Diamond Note 1 was $148,750; the amount payable at maturity will be $175,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Diamond Note 1, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note 1 entered default status on December 1, 2022, and the interest rate increased to 18%. The Diamond Note 1 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Diamond reasonably believes contains a term that is more favorable than those in the Diamond Note 1, the Company shall notify Mr. Diamond of such term, and such term, at the option of Mr. Diamond, shall become a part of the Diamond Note 2. In addition, Mr. Diamond received five-year warrants to purchase 7,350 shares of common stock at a price of $25.00 per share, and five-year warrants to purchase 7,350 shares of common stock at $37.50 per share with an aggregate fair value of $2,914 at the date of issuance, which was recorded as a discount to this note. Interest in the amount of $16,052 was accrued on the Diamond Note 1 during the year ended December 31, 2022. Discounts in the amount of $46,664 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $192,500 and $16,052, respectively, were due on the Diamond Note 1 at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $7,962 and $16,061, respectively, was accrued on the Diamond Note 1; principal and accrued interest in the amount of $192,500 and $32,113, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Diamond Note 2
On March 18, 2022, the Company issued a 10% Promissory Note in the principal amount of $235,294 in a related party transaction to Lawrence Diamond, our Chief Executive Officer and a member of our Board of Directors (the “Diamond Note 2). The Diamond Note 2 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, as extended, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Diamond Note 2 was $200,000; the amount payable at maturity will be $235,294 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Diamond Note 2, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note 2 entered default status on December 1, 2022, and the interest rate increased to 18%. The Diamond Note 2 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Diamond reasonably believes contains a term that is more favorable than those in the Diamond Note 2, the Company shall notify Mr. Diamond of such term, and such term, at the option of Mr. Diamond, shall become a part of the Diamond Note 2. In addition, Mr. Diamond received five-year warrants to purchase 1,930 shares of common stock at a price of $25.00 per share a fair value of $2,213 at the date of issuance, which was recorded as a discount to this note. Interest in the amount of $1,676 was accrued on the Diamond Note 2 during the year ended December 31, 2022. Principal in the amount of $235,294 was paid on the Diamond Note 2 during the year ended December 31, 2022. Discounts in the amount of $61,036 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $23,529 and $1,676, respectively, were due on the Diamond Note 2 at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $0 was accrued on the Diamond Note 2; principal and accrued interest in the amount of $23,529 and $1,699, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Diamond Note 3
On April 27, 2022,the Company issued a 10% Promissory Note in the principal amount of $235,294 in a related party transaction to Lawrence Diamond, our Chief Executive Officer and a member of our Board of Directors (the “Diamond Note 3”). The Diamond Note 3 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, as extended, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Diamond Note 3 was $200,000; the amount payable at maturity will be $235,294 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Diamond Note 3, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note 3 entered default status on December 1, 2022, and the interest rate increased to 18%. The Diamond Note 3 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Diamond reasonably believes contains a term that is more favorable than those in the Diamond Note 3, the Company shall notify Mr. Diamond of such term, and such term, at the option of Mr. Diamond, shall become a part of the Diamond Note 3. In addition, Mr. Diamond received five-year warrants to purchase 1,930 shares of common stock at a price of $25.00 per share with a fair value of $8,800 at the date of issuance, and 1,930 shares of common stock with a value of $16,200; these amounts were recorded as discounts on the Diamond Note 3. Interest in the amount of $17,586 was accrued on the Diamond Note 3 during the year ended December 31, 2022. Discounts in the amount of $83,823 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $258,823 and $17,586, respectively, were due on the Diamond Note 3 at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $10,706 and $21,538, respectively, was accrued on the Diamond Note 3; principal and accrued interest in the amount of $258,823 and $39,124, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Diamond Note 4
On May 18, 2022, the Company issued a 10% Promissory Note in the principal amount of $47,059 in a related party transaction to Lawrence Diamond, our Chief Executive Officer and a member of our Board of Directors (the “Diamond Note 4”). The Diamond Note 4 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, as extended, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Diamond Note 4 was $40,000; the amount payable at maturity will be $47,059 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Diamond Note 4, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note 4 entered default status on December 1, 2022, and the interest rate increased to 18%. The Diamond Note 4 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Diamond reasonably believes contains a term that is more favorable than those in the Diamond Note 4, the Company shall notify Mr. Diamond of such term, and such term, at the option of Mr. Diamond, shall become a part of the Diamond Note 4. In addition, Mr. Diamond received five-year warrants to purchase 386 shares of common stock at a price of $25.00 per share with a fair value of $2,960 at the date of issuance, and 1,930 shares of common stock with a value of $3,160; these amounts were recorded as discounts on the Diamond Note 4. Interest in the amount of $3,245 was accrued on the Diamond Note 4 during the year ended December 31, 2022. Discounts in the amount of $17,885 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $51,765 and $3,245, respectively, were due on the Diamond Note 4 at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $2,141 and $4,305 was accrued on the Diamond Note 4; principal and accrued interest in the amount of $51,765 and $7,550, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Diamond Note 5
On May 26, 2022, the Company issued a 10% Promissory Note in the principal amount of $58,823 in a related party transaction to Lawrence Diamond, our Chief Executive Officer and a member of our Board of Directors (the “Diamond Note 5”). The Diamond Note 5 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Diamond Note 5 was $50,000; the amount payable at maturity will be $58,823 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Diamond Note 5, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Diamond Note 5 entered default status on December 1, 2022, and the interest rate increased to 18%. The Diamond Note 5 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Diamond reasonably believes contains a term that is more favorable than those in the Diamond Note 5, the Company shall notify Mr. Diamond of such term, and such term, at the option of Mr. Diamond, shall become a part of the Diamond Note 5. In addition, Mr. Diamond received five-year warrants to purchase 483 shares of common stock at a price of $25.00 per share with a fair value of $2,500 at the date of issuance, and 483 shares of common stock with a value of $4,050; these amounts were recorded as discounts to the Diamond Note 5. Interest in the amount of $3,929 was accrued on the Diamond Note 5 during the year ended December 31, 2022. Discounts in the amount of $21,256 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $64,705 and $3,929, respectively, were due on the Diamond Note 5 at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $2,676 and $5,378, respectively, was accrued on the Diamond Note 5; principal and accrued interest in the amount of $64,705 and $9,307, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Lindstrom Note 1
On May 26, 2022, the Company issued a 10% Promissory Note in the principal amount of $41,176 in a related party transaction to Jenny Lindstrom, the Company’s Chief Legal Officer (the “Lindstrom Note 1”). The Lindstrom Note 1 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Lindstrom Note 1 was $35,000; the amount payable at maturity will be $41,176 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Lindstrom Note 1, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Lindstrom Note 1 entered default status on December 1, 2022, and the interest rate increased to 18%. The Lindstrom Note 1 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Ms. Lindstrom reasonably believes contains a term that is more favorable than those in the Lindstrom Note 1, the Company shall notify Ms. Lindstrom of such term, and such term, at the option of Ms. Lindstrom, shall become a part of the Lindstrom Note 1. In addition, Ms. Lindstrom received five-year warrants to purchase 338 shares of common stock at a price of $25.00 per share with a fair value of $1,750 at the date of issuance, and 338 shares of common stock with a value of $2,835; these amounts were recorded as discounts to the Lindstrom Note 1. Interest in the amount of $2,750 was accrued on the Lindstrom Note 1 during the year ended December 31, 2022. Discounts in the amount of $14,879 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $45,294 and $2,750, respectively, were due on the Lindstrom Note 1 at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $1,874 and $3,765, respectively, was accrued on the Lindstrom Note; principal and accrued interest in the amount of $45,294 and $6,515, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Dobbertin Note
On May 26, 2022, the Company issued a 10% Promissory Note in the principal amount of $17,647 in a related party transaction to Alexander Dobbertin (the “Dobbertin Note”). Mr. Dobbertin is the spouse of Jenny Lindstrom, the Company’s Chief Legal Officer. The Dobbertin Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Dobbertin Note was $15,000; the amount payable at maturity will be $17,647 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Dobbertin Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Dobbertin Note entered default status on December 1, 2022, and the interest rate increased to 18%. The Dobbertin Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Dobbertin reasonably believes contains a term that is more favorable than those in the Dobbertin Note, the Company shall notify Mr. Dobbertin of such term, and such term, at the option of Mr. Dobbertin, shall become a part of the Dobbertin Note. In addition, Mr. Dobbertin received five-year warrants to purchase 145 shares of common stock at a price of $25.00 per share with a fair value of $750 at the date of issuance, and 145 shares of common stock with a value of $1,215; these amounts were recorded as discounts to the Dobbertin Note. Interest in the amount of $1,179 was accrued on the Dobbertin Note during the year ended December 31, 2022. Discounts in the amount of $6,377 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $19,412 and $1,179, respectively, were due on the Dobbertin Note at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $803 and $1,614 was accrued on the Dobbertin Note; principal and accrued interest in the amount of $19,412 and $2,793, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Howe Note 2
On June 9, 2022, the Company issued a 10% Promissory Note in the principal amount of $300,000 in a related party transaction to the Michael C. Howe Living Trust (the “Howe Note 2”). Michael C. Howe is the Chief Executive Officer of the Good Clinic LLC, one of our subsidiaries. The Howe Note 2 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Howe Note 2 was $255,000; the amount payable at maturity will be $300,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Howe Note 2, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Howe Note 2 entered default status on December 1, 2022, and the interest rate increased to 18%. The Howe Note 2 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Howe reasonably believes contains a term that is more favorable than those in the Howe Note 2, the Company shall notify Mr. Howe of such term, and such term, at the option of Mr. Howe, shall become a part of the Howe Note 2. In addition, Mr. Howe received five-year warrants to purchase 2,460 shares of common stock at a price of $25.00 per share with a fair value of $10,965 at the date of issuance, and 2,460 shares of common stock with a value of $22,440; these amounts were recorded as discounts to the Howe Note 2. Interest in the amount of $18,888 was accrued on the Howe Note 2 during the year ended December 31, 2022. Discounts in the amount of $108,405 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $330,000 and $18,888, respectively, were due on the Howe Note 2 at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $13,650 and $27,412, respectively, was accrued on the Howe Note 2; principal and accrued interest in the amount of $330,000 and $46,300, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Howe Note 3
On July 21, 2022, the Company issued a 10% Promissory Note in the principal amount of $300,000 in a related party transaction to the Michael C. Howe Living Trust (the “Howe Note 3”). Michael C. Howe is the Chief Executive Officer of the Good Clinic LLC, one of our subsidiaries. The Howe Note 3 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, as extended, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Howe Note 3 was $255,000; the amount payable at maturity will be $300,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Howe Note 3, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Howe Note 3 entered default status on December 1, 2022, and the interest rate increased to 18%. The Howe Note 3 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Howe reasonably believes contains a term that is more favorable than those in the Howe Note 3, the Company shall notify Mr. Howe of such term, and such term, at the option of Mr. Howe, shall become a part of the Howe Note 3. In addition, Mr. Howe received five-year warrants to purchase 2,460 shares of common stock at a price of $25.00 per share with a fair value of $9,945 at the date of issuance, and 2,460 shares of common stock with a value of $12,495; these amounts were recorded as discounts to the Howe Note 3. Interest in the amount of $15,436 was accrued on the Howe Note 3 during the year ended December 31, 2022. Discounts in the amount of $97,440 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $330,000 and $15,436, respectively, were due on the Howe Note 3 at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $13,650 and $27,364, respectively, was accrued on the Howe Note 3; principal and accrued interest in the amount of $330,000 and $42,800, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Iturregui Note 1
On July 21, 2022, the Company issued a 10% Promissory Note in the principal amount of $29,412 in a related party transaction to Juan Carlos Iturregui, a member of the Company’s Board of Directors (the “Iturregui Note 1”). The Iturregui Note 1 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) January 21, 2023, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Iturregui Note 1 was $25,000; the amount payable at maturity will be $29,412 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Iturregui Note 1, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Iturregui Note 1 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Iturregui reasonably believes contains a term that is more favorable than those in the Iturregui Note 1, the Company shall notify Mr. Iturregui of such term, and such term, at the option of Mr. Iturregui, shall become a part of the Iturregui Note 1. In addition, Mr. Iturregui received five-year warrants to purchase 242 shares of common stock at a price of $25.00 per share with a fair value of $975 at the date of issuance, and 242 shares of common stock with a value of $1,225; these amounts were recorded as discounts to the Iturregui Note 1. Interest in the amount of $1,313 was accrued on the Iturregui Note 1 during the year ended December 31, 2022. Discounts in the amount of $8,464 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $1,089 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $32,353 and $1,313, respectively, were due on the Iturregui Note 1 at December 31, 2022.
During the three and six months ended June 2023, interest in the amount of $1,338 and $2,543, respectively, was accrued on the Iturregui Note 1; principal and accrued interest in the amount of $32,353 and $3,856, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
Howe Note 4
On August 18, 2022, the Company issued a 10% Promissory Note in the principal amount of $200,000 in a related party transaction to the Michael C. Howe Living Trust (the “Howe Note 4”). Michael C. Howe is the Chief Executive Officer of the Good Clinic LLC, one of our subsidiaries. The Howe Note 4 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Howe Note 4 was $170,000; the amount payable at maturity will be $200,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Howe Note 4, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Howe Note 4 entered default status on December 1, 2022, and the interest rate increased to 18%. The Howe Note 4 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Howe reasonably believes contains a term that is more favorable than those in the Howe Note 4, the Company shall notify Mr. Howe of such term, and such term, at the option of Mr. Howe, shall become a part of the Howe Note 4. In addition, Mr. Howe received 1,640 shares of common stock with a value of $10,775; this amount was recorded as a discount to the Howe Note 4. Interest in the amount of $8,756 was accrued on the Howe Note 4 during the year ended December 31, 2022. Discounts in the amount of $60,775 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $220,000 and $8,756, respectively, were due on the Howe Note 4 at December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $9,100 and $18,777, respectively, was accrued on the Howe Note 4; principal and accrued interest in the amount of $220,000 and $27,533, respectively, were due on this note at June 30, 2023. This note was in default at June 30, 2023.
November 29, 2022 Notes
On November 29, 2022, the Company issued seven identical promissory notes (the “November 29 Notes”) in related party transactions to the following individuals: (1) Thomas Brodmerkel, the Company’s CFO and Board Member; (2) Lawrence Diamond, the Company’s Chief Executive Officer and Board Member; (3) Sheila Schweitzer, Board Member; (4) Faraz Naqvi, a former Board Member; (5) Juan Carlos Iturregui, Board Member; (6) Jenny Lindstrom, the Company’s former Vice President and Chief Legal Officer; and (7) Michael C. Howe, Chief Executive Officer of The Good Clinic, one of our subsidiaries (collectively, the “November 29 Lenders”).
The November 29 notes have due dates of May 28, 2023. The November 29 Notes are subject to the Series E Exchange Agreement whereby each of the November 29 Lenders will exchange (a) amounts due under the November 29 Notes for a number of shares of the Company’s Series E Convertible Preferred Stock equal to 150% of the principal amount of each November 29 Note. See note 12. The November 29 Notes bear interest at the rate of 10% per annum which will accrue from the date of the note only if the November 29 Notes are not converted pursuant to the Series E Exchange Agreement by May 10, 2023. Following an event of default as defined in the November 29 Notes, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The November 29 Notes contain a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which November 29 Lender reasonably believes contains a term that is more favorable than those in the November 29 Note, the Company shall notify the November 29 Lenders of such term, and such term, at the option of the November 29 Lenders, shall become a part of the November 29 Note. In addition, each of the November 29 Lenders will receive five-year warrants to purchase 750 shares of the Company’s common stock at a price equal to the price of any warrant included in an offering in connection with listing at the Nasdaq Global Market. These warrants are not deemed issued at December 31, 2022 because the exercise price was not yet determined. Discounts in the amount of $667 were amortized to interest expense for each of the November 29 Notes during the year ended December 31, 2022, and discounts in the amount of $3,083 remained outstanding for each of the November 29 Notes at December 31, 2022. Principal and accrued interest in the amounts $18,750 and $164, respectively, were due on each of the seven November 29 Note at December 31, 2022.
Concurrent with the November 29 Notes, the Company entered into separate exchange agreements (the “November 29 Notes Exchange Agreements”). Pursuant to the November 29 Notes Exchange Agreements, amounts due under the November 29 Notes will be exchanged for a number Series E Convertible Preferred Stock equal to 150% of the principal amount of the Notes. No transactions occurred pursuant to the November 29 Notes Exchange Agreements during the year ended December 31, 2022.
During the three and six months ended June 30, 2023, interest in the amount of $612 and $1,083, respectively, was accrued on each of the November 29 Notes; principal and accrued interest in the amount of $18,750 and $1,247, respectively, were due on each of these notes at June 30, 2023. These notes were in default at June 30, 2023.
These amounts are reflected in the table below:
June 30, 2023 | December 31, 2022 | |||||||
Notes Payable | $ | 2,799,632 | $ | 2,799,632 | ||||
Less: Discount | $ | - | $ | (22,670 | ) | |||
Notes payable – net of discounts | $ | 2,799,632 | $ | 2,776,962 | ||||
Current Portion, net of discount | $ | 2,799,632 | $ | 2,776,962 | ||||
Long-term portion, net of discount | $ | - | $ | - | ||||
Interest expense on notes payable – related parties was $113,684 and $37,667 for the three months ended June 30, 2023 and 2022, respectively; interest expense on notes payable – related parties was $228,622 and $64,841 for the six months ended June 30, 2023 and 2022, respectively. Accrued interest on notes payable – related parties was $427,375 and $198,753 at June 30, 2023 and December 31, 2022, respectively.
Note 11: 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 restructuring, and at each period end.
Derivative liability activity for the for the periods ended June 30, 2023, December 31, 2022 and 2021 is summarized in the table below:
December 31, 2020 | $ | 807,683 | ||
Settled upon conversion or exercise | (1,302,138 | ) | ||
Loss on revaluation | 494,455 | |||
December 31, 2021 | $ | - | ||
True-up features issued | 192,375 | |||
Settled upon conversion or exercise | (310,641 | ) | ||
Loss on revaluation | 687,178 | |||
December 31, 2022 | $ | 568,912 | ||
Settled upon conversion or exercise | (501,740 | ) | ||
Loss on revaluation | 71,040 | |||
June 30, 2023 | $ | 138,212 |
The Company uses a Monte Carlo model to value certain features of its notes payable that create derivative liabilities. The following table summarizes the assumptions for the valuations:
December 31, | ||||
2022 | ||||
Volatility | 95.1% to 123.2 | % | ||
Stock Price | $ | 1.06 to 3.50 | ||
Risk-free interest rates | 4.35% to 4.37 | % | ||
Term (years) | 0.73 to 0.86 | |||
June 30, | ||||
2023 | ||||
Volatility | 159.6% to 172.6 | % | ||
Stock Price | $ | 1.24 to 1.44 | ||
Risk-free interest rates | 4.35 to 5.05 | % | ||
Term (years) | 0.36 to 0.61 | |||
Certain of our notes payable contain a commitment fee obligation with a true-up feature. The following assumptions were used for the valuation of the derivative liability associated with this obligation:
● | The stock price would fluctuate with the Company projected volatility. | |
● | The projected volatility curve from an annualized analysis for each valuation date was based on the historical volatility of the Company and the term remaining for the True-Up obligation. | |
● | The Company expected the note would be repaid 90% of the time by the maturity date, at which point the Company would redeem the 1,000,000 redeemable commitment fee shares for $1. | |
● | In the event the Company did not repay the note in time, the shareholders would sell their shares subject to volume restrictions. | |
● | Discount rates were based on risk free rates in effect based on the remaining term. 50,000 simulations were run for each Monte Carlo simulation. |
Note 12: Stockholders’ Equity (Deficit)
Common Stock
The Company has authorized 500,000,000 shares of common stock, par value $0.01; 225,209,7455,138,575 shares were issued and outstanding on June 30, 2022.2023.
Common Stock Transactions During the Six Months Ended June 30, 2023
On January 23, 2023, the Company issued 150,000 shares of common stock at the market price of $3.45 per share to a service provider. The aggregate value of $517,500 was charged to operations during the six months ended June 30, 2023.
On February 21, 2023, the Company issued 150,000 shares of common stock at the market price of $2.53 per share to a service provider. The aggregate value of $379,500 was charged to operations during the six months ended June 30, 2023.
During the six months ended June 30, 2023, GS Capital converted principal and accrued interest in a convertible note payable into shares of common stock as follows: On February 14, 2023, principal of $15,000 and accrued interest of $1,632 were converted at a price of $1.74 per share into 9,846 shares of common stock; on February 28, 2023, principal of $17,777 and accrued interest of $2,057 were converted at a price of $1.50 per share into 13,555 shares of common stock; on March 9, 2023, principal of $20,000 and accrued interest of $2,399 were converted at a price of $1.50 per share into 15,265 shares of common stock; and on March 28, 2023, principal of $20,000 and accrued interest of $2,581 were converted at a price of $1.25 per share into 18,472 shares of common stock. These conversions were made pursuant to the terms of the convertible note agreement and no gain or loss was recognized on these transactions.
On March 31, 2023, the Company issued a total of 8,063 shares of common stock for accrued dividends on its Series X Preferred Stock. Of this amount, a total of 1,066 shares were issued to officers and directors, 4,160 were issued to a related party shareholder, and 2,837 were issued to non-related parties.
On April 4, 2023, the Company issued 2,952 shares of common stock to a consultant at a price of $1.29 per share as a commission on funds previously raised. The Company recorded a gain in the amount of $33,092 on this transaction.
On April 4, 2023, the Company issued 94,738 shares of common stock to GS Capital at an average price of pursuant to a make-whole agreement entered into in connection with the GS Capital Warrants. See note 9. A gain in the amount of $21,506 was recorded on the settlement of this derivative liability. See note 11.
On May 5, 2023, the Company issued 2,552 shares of common stock to a vendor at a price of $0.85 per share, and on May 9, 2023, the Company issued 19,622 shares of common stock at a price of $0.85 per share to the Michael C. Howe Living Trust (the “Howe Trust”), an entity controlled by a related party. These shares were issued in satisfaction of a vendor dispute. The shares issued to the Howe Trust were reimbursement for shares previously issued to the vendor by the Howe Trust with regard to this dispute. There was no gain or loss recorded on these transactions.
On June 29, 2023, the Company issued a total of 20,212 shares of common stock for accrued dividends on its Series X Preferred Stock.
Of this amount, a total of 2,673 shares were issued to officers and directors, 10,426 were issued to a related party shareholder, and 7,113 were issued to non-related parties.
Effective June 30, 2023, the Company issued 2,926 shares of common stock at a price of $12.50 to a previous board member for the conversion of accounts payable in the amount of $36,575. These shares had been carried on the Company balance sheet as Common Stock Subscribed.
Common Stock Transactions During the Six Months Ended June 30, 2022
On January 12, 2022, the Company entered into a settlement agreement with an ex-employee. Pursuant to the terms of this agreement, the Company agreed to pay the amount of $19,032 for accrued salary, and the employee returned to the Company for cancellation 400,0008,000 shares of common stock previously issued as compensation. These shares were valued at par value of $0.01 or a total value of $4,000; the Company recorded a gain on cancellation of these shares in the amount of $15,032.
The Company entered into a debt-for-equity exchange agreement with Gardner Builders Holdings, LLC (“Gardner”) on January 7, 2022 (the “Debt for Equity Agreement”). Pursuant to the Debt for Equity Agreement, the Company issued shares of restricted common stock to Gardner in exchange for the Company Debt Obligations, as defined below.
The Agreement settled for certain accounts payable amounts owed by the Company to the Creditor (the “Accounts Payable Amount”) as well as upcoming amounts that will become due between the date of the Agreement and April 1, 2022. The Agreement also settled accrued interest and penalties on the amounts due through January 5, 2022, as well as future interest payments on amounts incurredto be accrued in the first quarter of 2022 (collectively, the “Additional Costs”, and combined with the Accounts Payable Amount, the “Company Debt Obligations”). The Accounts Payable Amount was $500,000, the Additional Costs were $294,912 and the conversion price was $0.25.$12.50. As a result, 3,179,65063,593 Restricted Shares were authorized to be issued. The Company’s Board of Directors approved the Agreement on January 5, 2022.
On March 22, 2022 and March 31, 2022, the Company issued an aggregate 1,541,72130,834 shares of common stock as waiver fees to holders of the Series C and Series D Preferred Stock for their waivers of certain covenants as set forth and defined in the Series C and Series DC Certificates of Designations. The Company valued these shares at their contractual price of $0.25$12.50 per share and recorded the amount of $385,431 as waiver fees during the sixthree months ended June 30,March 31, 2022. The Company recorded an aggregate gain upon issuance of these shares in the amount of $198,273 based on the market price of the Company’s common stock on the date of issuance.
On March 31, 2022, the Company issued 1,720,00034,400 Commitment Fee Shares to AJB Capital Investors, LLC.LLC; see note 8. The Company utilized an outside valuation consultant to value the commitment fee shares, the True-Up Provision, and warrants. A Monte Carlo model was used to value the warrants and call features, and a probability weighted expected return model was used to value the True-Up Provision. The contractual price of the common stock $0.25$12.50 per share; valuation purposes, the common stock was valued at the market price on the date of the transaction of $0.127$6.14 per share. The derivative liability was valued at $106,608 on the date of the transaction and was revalued at $75,158 on June 30, 2022.transaction. The discount on the notes due to the Commitment Fee Shares and warrants was valued at $349,914. The Company recorded the amount of $226,106 to additional paid-in capital pursuant to this transaction.
On March 31, 2022, the Company issued 382,3537,647 shares of common stock at a price of $0.25$12.50 per share which were previously subscribed for the conversion of accounts payable in the amount of $95,558.
On April 18, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with GS Capital Partners (the “Investor”) with respect to the sale and issuance to the Investor of: (i) an initial commitment fee in the amount of $159,259 in the form of 637,036 shares (the “Commitment Fee Shares”) of the Company’s common stock (the “Common Stock”), which Commitment Fee Shares can be decreased to 266,280 shares ($66,570) if the Company repays the Note on or prior to their maturity, (ii) promissory note in the principal amount of $277,777, and (iii) Common Stock Purchase Warrants to purchase up to 277,777 shares of the Common Stock (the “Warrants”). The Note and Warrants were issued on April 18, 2022 (the “Original Issue Date”) and were held in escrow pending effectiveness of the Purchase Agreement.
Pursuant to the terms of the Purchase Agreement, the initial Commitment Fee Shares were issued at a value of $159,259, the Note was issued in the principal amount of $277,777 for a purchase price of $250,000, resulting in the original issue discount of $27,777; and the Warrants were issued, with an initial exercise price of $0.50 per share, subject to adjustment.
On April 27, 2022, the Company issued 720,00014,400 shares of stock to Cavalry Fund 1 LP at a price of $6.35 per share for a total value of $91,440 as compensation for the waiver of certain covenants as set forth in the Series C Certificate of Designation. The Company recorded a gain in the amount of $88,560 on this transaction.
On April 27, 2022, the Company issued 96,4711,929 shares of common stock with a contract price of $0.25$12.50 per share or $24,118 and a grant date market value of $0.16$8.00 or $15,434 to Larry Diamond, its Chief Executive Office, as commitment shares as set forth and defined in Diamond Note 3. The Company recorded these shares at their relative fair value of the components of Diamond Note 3, or $16,200, and recorded a loss in the amount of $765 on this transaction. The Company also issued five-year warrants to purchase 96,4711,929 shares of common stock at a price of $0.50$12.50 to Mr. Diamond pursuant to Diamond Note 3. See Note 8.
On May 1, 2022, the Company issued 15,000 shares of common stock to a service provider at a price of $6.88 per share.
On May 10, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”)securities purchase agreement with Kishon Investments, LLC (the “Investor”) with respect to the sale and issuance to the Investor of: (i) an initial commitment fee in the amount of $159,259 in the form of 637,03612,741 shares (the “Commitment Fee Shares”) of the Company’s common stock, (the “Common Stock”), (ii) promissory note in the principal amount of $277,777 due on November 10, 2022, and (iii) Common Stock Purchase Warrantswarrants to purchase up to 277,7775,556 shares of the Common Stock (the “Warrants”).common stock. The Notenote and Warrantswarrants were issued on May 10, 2022 (the “Original Issue Date”) and were held in escrow pending effectiveness of the Purchase Agreement.
Pursuant to the terms of the Purchase Agreement,purchase agreement, the initial Commitment Fee Sharesshares were issued at a value of $159,259, the Notenote was issued in the principal amount of $277,777 for a purchase price of $250,000, resulting in the original issue discount of $27,777; and the Warrantswarrants were issued, with an initial exercise price of $0.50$12.50 per share, subject to adjustment. See Note 8.
On May 18, 2022, the Company issued 19,294386 shares of common stock to Larry Diamond, it’sits Chief Executive Officer at a contractual price of $0.25$12.50 per share and a market price at issuance date of $0.1517$7.585 per share as commitment shares as set forth and defined in Diamond Note 4. The Company recorded these shares at their relative fair value of the components of Diamond Note 4, or $3,160 and recorded a loss in the amount of $249 on this transaction. The Company also issued five-year warrants to purchase 19,294386 shares of common stock at a price of $0.50$12.50 to Mr. Diamond pursuant to Diamond Note 4. See Note 8.
On May 23, 2022, the Company issued 19,295386 shares of common stock to Jessica Finnegan at a contractual price of $0.25$12.50 per share and a market price at issuance date of $0.1794$8.97 per share as commitment shares as set forth and defined in Finnegan Note 1. The Company recorded these shares at their relative fair value of the components of Finnegan Note 1, or $3,240, and recorded a gain in the amount of $222 on this transaction. The Company also issued five-year warrants to purchase 19,295386 shares of common stock at a price of $0.50$12.50 to Ms. Finnegan pursuant to Finnegan Note 1. See Note 8.
On May 26, 2022, the Company issued 84,4121,688 shares of common stock to the May 26 Lenders at a contractual price of $0.25$12.50 per share and a market price at issuance date of $0.1517$7.585 per share as commitment shares as set forth and defined in the May 26, 2022 Notes. The Company recorded these shares at their relative fair value of the components of the May 26 Note, or $14,175, and recorded a loss in the amount of $1,369 on these transactions. The Company also issued five-year warrants to purchase 84,4121,688 shares of common stock at a price of $0.50$25.00 to the May 26 Lenders pursuant to the May 26, 2022. See Note 8.
On June 7, 2022, the Company issued 8,103 shares of common stock at a price of $12.50 per share to investors for accumulated dividends on Series X Preferred Stock. See Note 12.
On June 9, 2022, the Company issued 364,1767,284 shares of common stock to the June 9 Lenders at a contractual price of $0.25$12.50 per share and a market price at issuance date of $0.1485$7,425 per share as commitment shares as set forth and defined in the June 9 Notes. The Company recorded these shares at the relative fair value of the components of June 9 Notes, or $66,400, and recorded an aggregate loss in the amount of $9,356 on these transactions. The Company also issued five-year warrants to purchase 364,1767,284 shares of common stock at a price of $0.50$25.00 to the May 26 Lenders pursuant to the June 9 notes. See Note 8.
Common Stock Transactions During the Six Months EndedOn June 30, 2021
On January 4, 2021,22, 2022, the Company issued 4,123,7504,824 shares of common stock at fair value of $10.45 per share to Dragon Dynamic at a fair value of $10.45 per share as a commitment fee.
On June 22, 2022, the Company issued 12,741 shares of common stock at fair value of $10.45 per share to GS Capital at a fair value of $10.45 per share as a commitment fee.
On June 22, 2022, the Company issued 8,600 shares of common stock at fair value of $10.45 per share to Anson East and an additional 25,800 shares of common stock at a pricefair value 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$10.45 per share to Anson Investments as a service provider.commitment fee.
On March 23, 2021, the Company issued 461,358 shares of common stock at a price of $0.26 per share to the underwriters of the 2021 Private Placement.
On April 19, 2021, the Company issued 1,962 shares of common stock for professional fees which had been performed in a prior period. The Company recorded these shares at the par value of $0.01 per share.
On May 4 through May 26, 2021, the Company issued 4,237,424 shares of common stock for the conversion of 1,059,356 shares of Series C Preferred Stock at a price of $0.25 per share.
On May 12, 2021, the Company issued 2,500,000 shares of common stock at a price of $0.03 per share for the exercise of stock options by an investor.
On June 10 through June 29, 2021, the Company issued 5,116,668 shares of common stock at a price of $0.03 per share for the exercise of stock options by officers and directors.
On June 23, 2021, the Company cancelled 2,000,000 shares of common stock held by an ex-officer in connection with a settlement agreement. The cancellation of these shares was recorded at the par value of $0.01 per share. Also, in connection with the settlement agreement, the Company issued 637,953 shares to the ex-officer at the market price of $.20 per share.
Also, during the six months ended June 30, 2021, the Company charged the amount of $7,897 to operations in connection with the vesting of stock granted to its officers and board members; the Company also charged the amount of $201,294 to operations in connection with the vesting of options granted to its officers and board members.
Preferred Stock
We have authorized to issue 100,000,000 shares of Preferred Stock with such rights designations and preferences as determined by our Board of Directors. We have designated 500,000 shares ofas series A stock,Preferred, 3,000,000 shares ofas Series C Preferred, 10,000,000 shares ofas Series D Preferred, 10,000 shares as Series E Preferred, 140,000 as Series F Preferred, and we have designated 400,00027,324 shares as Series X Preferred Stock.Preferred.
Series A Preferred Stock Transactions During the Six Months Ended June 30, 2023
None.
Series A Preferred Stock Transactions During the Six Months Ended June 30, 2022
None.
Series C Preferred Stock
Series AC Preferred Stock Transactions During the Six Months Ended June 30, 20212023
During the six months ended June 30, 2021, theThe Company accrued dividends in the amount of $1,000$17,603 on the Series AC Preferred Stock.
On MarchApril 11, 2021, the Company issued 600,0002023, a total of 1,047,619 shares of common stock to the four officers of The Good Clinic in exchange for the previously issued Series AC Preferred Stock and accrued dividends. The Series A preferred stock was canceled. The Preferred Stock was valued at cost of $71,558, and the common stock was valued at the market price of $0.463 per share orwith a totalstated value of $277,800. This transaction resulted$1,100,000, accrued dividends in a deemed dividend to the Preferred A shareholdersamount $171,109, and equity investment incentives in the amount of $206,242.$1,016,888 were exchanged for 2,289 shares of Series F Preferred Stock.
Series C Preferred Stock
Series C Preferred Stock Transactions During the Six Months Ended June 30, 2022
During the six months ended June 30, 2022, theThe Company accrued dividends in the amount of $32,955 on the Series C Preferred Stock in the amount of $32,955.Stock.
Series D Preferred Stock
Series CD Preferred Stock Transactions During the Six Months Ended June 30, 20212023
On March 25, 2021, the Company sold 3,000,000 shares of its Series C Preferred Stock along with (i) five-year warrants to purchase 6,300,000 shares of the Company’s common stock at a price of $0.50 per share, and (ii) five-year warrants to purchase 6,300,000 shares of the Company’s common stock at a price of $0.75 per share for proceeds of $3,000,000.
Between May 4 and May 26, 2021, 1,059,356 shares of Series C Preferred Stock were converted at a price of $0.25 per share to 4,237,424 shares of common stock. During the six months ended June 30, 2021, theThe Company accrued dividends on the Series C Preferred Stock in the amount of $42,078.
The Series C Preferred Stock has the following terms:
Ranking. The Series C Preferred Stock and$64,397 on the Series D Preferred discussed below, ranks senior to all other preferred stockStock.
On April 11, 2023, a total of the Company except in relation to the2,350,000 shares of Series X Cumulative Redeemable Perpetual Preferred Stock, which ranks Pari passu to the Series CD Preferred Stock with respect toa stated value of $2,467,500, accrued dividends in the preferences as to dividends, distributionsamount $215,659, and payments uponequity investment incentives in the liquidation, dissolution and winding upamount of the Company.
Voting Rights. Holders of the Series C Preferred Stock have the right to vote on any matter presented to holders of our Common Stock$1,371,846 were exchanged for their action or consideration at any meeting of the stockholders (or by written consent of stockholders in lieu of meeting), each holder of our Series C Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the4,055 shares of Series C preferred Stock held by such holder, as described below, are convertible as of the record date for determining stockholders entitled to vote on (or consent to) such matter, votingF Preferred Stock. There was no gain or loss recorded in connection with the Common Stock as a single class.
Conversion. Each holder of our Series C Preferred Stock is entitled to convert their shares of Series C Preferred Stock, in whole or in part, at the Conversion Rate, which is determined by dividing the Conversion Amount (the Stated Value of $1.05, plus any accrued but unpaid dividends) by the Conversion Price ($0.25 per share). In addition, upon certain triggering events, the holders of our Series C Preferred Stock have the right to convert their Series C Preferred Stock at the lesser of the Conversion Price or 75% of the average VWAP for the five trading days prior to the date of the notice of conversion. The Conversion Price is subject to adjustment upon certain stock splits and recapitalization as well as upon the sale of Common Stock or Common Stock Equivalents. Each share of the Series C Preferred Stock is convertible at the option of the holder thereof, or automatically or upon the closing of an underwritten offering of at least $10 million of the Company’s securities or upon listing of the Company’s Common Stock on a national securities exchange.
Dividends. Each share of Series C Preferred Stock accrues dividends on a quarterly basis in arrears, at the rate of 6% per annum of the Stated Value ($1.05 per share plus any accrued but unpaid dividends) and is to be paid within 15 days after the end of each of our fiscal quarters. Each holder of the Series C Preferred Stock is entitled to receive dividends or distributions on each share of the Series C Preferred Stock on an as converted into Common Stock basis when and if dividends are declared on the Common Stock by our Board of Directors.
Liquidation Rights. The holders of our Series C Preferred stock are entitled to receive in cash out of our assets, whether from capital or from earnings available for distribution to our stockholders (the “Liquidation Funds”), before any amount shall be paid to the holders of any of shares of capital stock that rank junior to the Series C Preferred Stock, but Pari passu with any shares of capital stock that have a parity ranking with the Series C Preferred stock (“Parity Stock”) then outstanding, an amount per share of Series C Preferred Stock equal to the greater of (A) the Conversion Amount on the date of such payment or (B) the amount per share such holder of the Series C Preferred Stock would receive if such holder converted their Series C Preferred Stock into Common Stock immediately prior to the date of such payment, provided that if the Liquidation Funds are insufficient to pay the full amount due to the holders of the Series C Preferred Stock and holders of shares of Parity Stock, then each holder Series C Preferred Stock and each holder of Parity Stock shall receive a percentage of the Liquidation Funds equal to the full amount of Liquidation Funds payable to such holder and such holder of Parity Stock as a liquidation preference, in accordance with their respective certificate of designations (or equivalent), as a percentage of the full amount of Liquidation Funds payable to all holders of Series C Preferred Stock and all holders of shares of Parity Stock. All such amounts shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution of any Liquidation Funds of the Corporation to the holders of shares of capital stock that may rank junior to that of the Series C Preferred Stock Junior Stock.these transactions.
Rights and Preferences. The rights, preferences, and privileges of holders of our Series C Preferred Stock are subject to, and may be adversely affected by, the rights of holders of shares of any series of Preferred Stock that we may designate and issue in the future that may rank senior to the Series C Preferred Stock.
Redemption Rights. Upon receipt of a conversion notice, we have the right (but not the obligation) to redeem all or part of the Series C Preferred Stock (which the applicable holder of the Series C Preferred Stock is seeking to convert) at a price per share equal to the product of 125% of the (1) Stated Value plus (2) the Additional Amount (the “Redemption Price”). If we decide to exercise the redemption right, within one trading day, we shall deliver written notice to such holder(s) of Series C Preferred Stock that the Series C Preferred Stock will be redeemed (the “Redemption Notice”) on the date that is three trading days following the date of the Redemption Notice (such date, the “Redemption Date”). On the Redemption Date, we shall redeem the shares of Series C Preferred Stock specified in such request by paying in cash therefor a sum per share equal to the Redemption Price. In no event shall a Redemption Notice be given if we may not lawfully redeem our capital stock. On or before the Redemption Date, the Redemption Price for such shares shall be paid by wire transfer of immediately available funds to an account designated in writing by the applicable holder.
Price Adjustments Protection. The conversion price is subject to appropriate adjustment in the event of share dividends, share splits, reorganizations or similar events affecting our shares of Common Stock. Other than for certain exempt issuances, in the event we issue or sell any securities, including options or convertible securities, or amend outstanding securities, at an effective price, with an exercise price or at a conversion price less than the Conversion Price, then the Conversion Price shall be reduced to such lower price.
Preemptive or Similar Rights Additionally, except for a public offering or certain exempt issuances of our securities, holders of the Series C Preferred Stock shall have the right to participate in any offering of our Common Stock or Common Stock Equivalents (as defined in the COD) in a transaction exempt from registration under the Securities Act in an amount equal to an aggregate of 30% of the financing on the same terms, conditions and price provided to investors in such an offering, such right shall expire on the 15 month anniversary of the issuance date of the Series C Preferred Stock. Further, until the earlier of 18 months from the issuance date of the Series C Preferred Stock and the date that there are less than 20% of the shares of Series C Preferred Stock outstanding, the Investors have most favored nations protection in the event we issue or sell Common Stock or Common Stock Equivalents that the Investors believe are more favorable than the terms and conditions under the Private Placement.
Fully Paid and Nonassessable. All our issued and outstanding shares of Series C Preferred Stock are fully paid and nonassessable.
Series D Preferred Stock
Pursuant to the Certificate of Designations, Preferences and Rights of the Series D Preferred Stock of the Company, Inc., filed with the Secretary of State of the State of Delaware on October 18, 2021 (the “COD”), there are 10,000,000 shares of our preferred stock that have been designated as the Series D Preferred Stock and each share of the Series D Preferred Stock is convertible at the option of the holder thereof, or automatically upon the request of the our underwriters that the Series D Preferred Stock convert to shares of Common Stock or upon listing of the our Common Stock on a national securities exchange. The number of shares of Common Stock issuable upon the conversion of each share of Series D Preferred Stock is calculated by dividing the Conversion Amount (defined in the COD as the Stated Value, $1.05 per share, plus accrued and unpaid dividends) by the $0.25 conversion price.
Series D Preferred Stock Transactions During the Six Months Ended June 30, 2022
During the six months ended June 30, 2022, theThe Company accrued dividends in the amount of $96,847 on the Series D Preferred Stock in the amount of $96,847.Stock.
Series F Preferred Stock
On March 23, 2023, the Company filed a Certificate of Designations, Preferences and Rights of Series F 12% PIK $0.01 par value Convertible Perpetual Preferred Stock with the Delaware Secretary of State. The number of shares of Series F Preferred Stock designated is 140,000 and each share of Series F Preferred Stock has a liquidation preference of $1,000. The Series F Preferred Stock will rank senior to the Corporation’s Common Stock and on parity with all Preferred Stock of the Corporation with terms specifically providing that such Preferred Stock rank on parity with the Series F Preferred Stock with respect to rights to the distribution of assets upon any liquidation, dissolution or winding up of the Corporation; and (iii) junior to all Preferred Stock of the Corporation with terms specifically providing that such Preferred Stock rank senior to the Series F Preferred Stock with respect to rights to the distribution of assets upon any liquidation, dissolution or winding up of the Company.
Holders of shares of the Series F Preferred Stock are entitled to receive payment-in-kind dividends payable only in additional shares of Series F Preferred Stock (“PIK Dividends”) at rate of 12% per annum.
The Series F Preferred Stock will be convertible into common stock of the Company upon the listing of the Company’s stock on any of the following trading markets: the NYSE, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, or the Nasdaq Global Select Market. The conversion price will be calculated as 65% of the volume-weighted average price of the Company’s common stock on the conversion date. The number of shares issuable upon conversion will be calculated as the liquidation preference of the Series F Preferred stock plus any accrued but unpaid dividends divided by the conversion price.
Series DF Preferred Stock Transactions During the Six Months Ended June 30, 20212023
On April 11, 2023, the Company issued a total of 8,116 shares of Series F Preferred Stock at its liquidation value of $1,000 per share to nine investors upon the conversion of notes payable. The total amount converted was $8,111,334, consisting of principal $3,602,059, default penalties of $888,889, fees of $60,000, accrued interest of $365,012, and equity investment incentives of $3,195,374. There were no gains or losses recorded in connection with these transactions. See note 9.
On April 11, 2023, the Company issued a total of 2,289 shares of Series F Preferred Stock at its liquidation value of $1,000 per share to two investors upon the conversion of Series C Preferred Stock. The total amount converted was $2,287,997, consisting of the Series C Preferred Stock stated value of $1,100,000, accrued dividends of $171,109, and equity investment incentives of $1,016,888. There were no gains or losses recorded in connection with these transactions.
On April 11, 2023, the Company issued a total of 4,055 shares of Series F Preferred Stock to two investors at its liquidation value of $1,000 per share upon the conversion of Series D Preferred Stock. The total amount converted was $4,055,005 consisting of the Series D Preferred Stock stated value of $2,467,500, accrued dividends of $215,659, and equity investment incentives of $1,371,846. There were no gains or losses recorded in connection with these transactions.
On April 11, 2023, the Company sold a total of 1,746 shares of Series F Preferred Stock to three investors at its liquidation value of $1,000 per share for cash. The total value of Series F Preferred Stock of issued was $1,745,000 consisting of cash proceeds of $900,000 and an equity investment incentive of $845,000. There were no gains or losses recorded in connection with these transactions.
On April 11, 2023, the Company issued a total of 147 shares of Series F Preferred Stock at its liquidation value of $1,000 per share to two service providers for accounts payable in the amount of $146,214. There was no gain or loss recorded on these transactions.
The Company accrued dividends in the amount of $436,080 on the Series F Preferred Stock.
Series F Preferred Stock Transactions During the Six Months Ended June 30, 2022
None.
Series X Preferred Stock
The Company has 24,227 shares of its 10% Series X Cumulative Redeemable Perpetual Preferred Stock (the “Series X Preferred Stock”) outstanding as of June 30, 20222023 and December 31, 2021.2022. The Series X Preferred Stock has a par value of $0.01 per share, no stated maturity, a liquidation preference of $25.00 per share, and will not be subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless the Company decides to redeem or otherwise repurchase the Series X Preferred Stock; the Series X Preferred Stock is not redeemable prior to November 4, 2020. The Series X Preferred Stock will rank senior to all classes of the Company’s common and preferred stock and accrues dividends at the rate of 10% on $25.00 per share. The Company reserves the right to pay the dividends in shares of the Company’s common stock at a price equal to the average closing price over the five days prior to the date of the dividend declaration. Each one share of the Series X Preferred Stock is entitled to 20,000 votes on all matters submitted to a vote of our shareholders.
Series X Preferred Stock Transactions During the Six MonthMonths Ended June 30, 2023
During the six months ended June 30, 2023, the Company accrued dividends on its Series X Preferred Stock in the total amount of $30,283. Of this amount, a total of $3,937 was payable to officers and directors, $15,747 was payable to a related party shareholder, and $10,599 was payable to non-related parties.
During the six months ended June 30, 2023, the Company issued a total of 28,275 shares of common stock for accrued dividends on its Series X Preferred Stock. Of this amount, a total of 3,739 shares were issued to officers and directors, 14,586 were issued to a related party shareholder, and 9,950 were issued to non-related parties.
Series X Preferred Stock Transactions During the Six Months Ended June 30, 2022
On June 7, 2022, the Company issued 405,131 shares of common stock at an average price of $0.2149 per share as payment for dividends payable on the Series X Preferred Stock in the amount of $87,053.
During the six months ended June 30, 2022, the Company accrued dividends in the amount of $30,282 on the Series X Preferred Stock.
Series X Preferred Stock Transactions During the Six Months Ended June 30, 2021
During the six months ended June 30, 2021, the Company accrued dividends in the amount of $31,536 on the Series X Preferred Stock.
Stock Options
The following table summarizes the options outstanding at June 30, 20222023 and the related prices for the options to purchase shares of the Company’s common stock:
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$ | 1.50 - 16.00 | 209,381 | 7.69 | $ | 9.64 | 129,248 | $ | 7.74 | |||||||||||||||
209,381 | 7.69 | $ | 9.64 | 129,248 | $ | 7.74 | |||||||||||||||||
Transactions involving stock options are summarized as follows:
Shares | Weighted- Average Exercise Price ($) | Shares | Weighted- Average Exercise Price ($) (A) | |||||||||||||
Outstanding at December 31, 2021 | 18,329,543 | $ | 0.206 | |||||||||||||
Outstanding at December 31, 2022 | 310,692 | $ | 10.01 | |||||||||||||
Granted | 200,000 | $ | 0.25 | - | - | |||||||||||
Expired | (2,174,582 | ) | 0.155 | (101,311 | ) | 10.80 | ||||||||||
Outstanding at June 30, 2022 | 16,354,961 | $ | 0.213 | |||||||||||||
Outstanding at June 30, 2023 | 209,381 | $ | 9.64 | |||||||||||||
Options vested and exercisable | 5,469,961 | $ | 0.161 | 129,248 | $ | 7.74 | ||||||||||
On June 13, 2022, the Company issued 200,000 ten-year options with an exercise price of $0.25 and a fair value of $23,316 to Tom Brodmerkel, its Chairman, to the position of Chief Financial Officer.
During the three months ended June 30, 2022 and 2021, the Company charged the amount of approximately $135,295 and $195,000, respectively, for the vesting of stock options. During the six months ended June 30, 2022 and 2021, the Company charged the amount of approximately $302,310 and $201,000, respectively, for the vesting of stock options.
At June 30, 2022,2023, the total stock-based compensation cost related to unvested awards not yet recognized was $2.2$2.1 million.
The Company valued stock options during the six months ended June 30, 2022 and 2021 using the Black-Scholes valuation model utilizing the following variables:
June 30, | June 30, | |||||||
2022 | 2021 | |||||||
Volatility | 143.6 | % | 167.8% to 183.5 | % | ||||
Dividends | $ | - | $ | - | ||||
Risk-free interest rates | 3.04 | % | 0.82% to 1.69 | % | ||||
Term (years) | 5.00 | 5.00 to 10.00 | ||||||
Warrants
The following table summarizes the warrants outstanding on June 30, 2022,2023, and the related prices for the warrants to purchase shares of the Company’s common stock (see note 8):stock:
Shares | Weighted- Average Exercise Price ($) | |||||||
Outstanding on December 31, 2021 | 29,820,000 | $ | 0.625 | |||||
Granted | 3,470,673 | $ | 0.526 | |||||
Exercised | - | $ | - | |||||
Outstanding on June 30, 2022 | 33,290,673 | $ | 0.615 | |||||
The Company valued warrants during the six months ended June 30, 2022 and 2021 using the Black-Scholes valuation model utilizing the following variables:
June 30, | June 30, | |||||||
2022 | 2021 | |||||||
Volatility | 143.6 to 150.7 | % | 171.6% to 183.5 | % | ||||
Dividends | $ | - | $ | - | ||||
Risk-free interest rates | 0.76% to 3.04 | % | 1.15% to 1.63 | % | ||||
Term (years) | 0.25 to 5.00 | 5.00 to 6.50 | ||||||
Shares | Weighted- Average Exercise Price ($) | |||||||
Outstanding on December 31, 2022 | 672,334 | $ | 30.68 | |||||
Granted | 874 | $ | 2.50 | |||||
Exercised | - | $ | - | |||||
Outstanding on June 30, 2023 | 673,208 | $ | 30.64 | |||||
Note 13: Fair Value Measurements
The following summarizes the Company’s derivative financial liabilities that are recorded at fair value on a recurring basis at June 30, 2023 and December 31, 2022.
June 30, 2023 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities | ||||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | 138,212 | $ | 138,212 | ||||||||
| December 31, 2022 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities | ||||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | 568,912 | $ | 568,912 | ||||||||
Note 10 –14: Commitments and Contingencies
Legal
There are no pendingFrom time to time, we may become involved in legal proceedings or anticipated legal actions at this time.
Note 11 – Subsequent Eventsbe subject to claims arising in the ordinary course of our business.
On July 7,June 23, 2022, The Good Clinic LLC was notified that a former employee had filed a lawsuit for wrongful termination. The Good Clinic believes the lawsuit is without merit. Mitesco (Company) was not named in the suit. The Company expects to resolve it for nominal consideration. Mediation has been scheduled for January 30, 2024.
On October 25, 2022, the Company issued 2 10% Promissory Notes due as described below (individually,was notified that a vendor filed a lawsuit related to a contract dispute naming both The Good Clinic and The CEO of the “Schrier Note”Good Clinic. This suit was settled on May 5, 2023, and dismissed with prejudice on May 12, 2023. The settlement included the “William Mackay Note”, and collectively,issuance of the “Notes”), to Charles Schrier and William Mackay Investments LLC, (together,Company’s restricted common stock. As a part of the “Lenders”) and in respect of whichsettlement the Company received proceeds of $270,000.
The Notes carry a 10% interest rate per annum, accrued monthly and payable at maturity. The Schrier Note has a maturity date that is the earlier of (i) January 8, 2023, or (ii) five business days after the date on which the Company successfully lists itsissued 2,552 shares of its restricted common stock on Nasdaq or NYSE.to the plaintiff and it issued to the CEO of The William Mackay Note has a maturity date that is the earlierGood Clinic 19,622 of (i) August 8, 2022, or (ii) five business days after the date on which the Company successfully lists its shares ofrestricted common stock, on Nasdaq or NYSE.plus $3,000 in cash for reimbursement of expenses related to settling the suit with the vendor.
The aggregate amount payable at maturity will be $317,647 plus 10%Company has a number of that amount plus any accruedlegal situations involved with the winding down of its clinic business activities. These include claims regarding certain construction contracts and unpaid interest. Following an eventcancellation of default,leases. The following is a summary as defined in the Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Notes contain a “most favored nations” clause that provides that, so long as the Notes are outstanding, if the Company issues any new security, which the Lenders reasonably believe contains a term that is more favorable than those in the Notes, the Company shall notify the Lenders of such term, and such term, at the option of the Lenders, shall become a part of the Notes. In addition, the Lenders will be issued in the aggregate (1) 130,235 five-year warrants (the “Warrants”) and (2) 130,235 sharesthis filing:
● | The Wayzata, MN clinic leases was terminated for a commitment to pay $25,000. This amount has not been paid as of June 30, 2023. | |
● | The two Denver, Colorado clinic leases, known as Quincy and Radiant, possession has been relinquished to the landlords. The lease obligations remain in negotiations as does the handling of the mechanics liens placed on the property. The Company has verbally accepted a stipulated settlement to the Quincy lease obligation which has not been entered into the record or signed by either party. This settlement calls for (i) a stipulated judgment of $231,353, which includes all back rent and front rent through November 2023; (i) Interest of $16,700;(iii) Late fees of $22,434; (iv) attorney fees of $24,888; (v) Costs of $2,300. Claims for rent beyond November, and any defenses thereto, are preserved. | |
● | The Eagan clinic, aka Vikings clinic, the Good Clinic gave up possession in January of 2023. The mechanics lien has been placed on the property and was settled by the landlord in a confidential settlement. The Landlord terminated the lease as of March 3, 2023. Mitesco is now in settlement negotiations with the landlord for the handling of lease obligations. The Landlord filed suit against the Company on July 21, 2023 for unpaid rent, expenses related to unpaid lease obligations and the settled construction lien. The Company has received discovery requests and a renewed request to agree to a stipulated judgement. The discovery is onerous and not feasible for the Company to comply with given the current staff and limited resources. Negotiations are underway. | |
● | The St. Paul clinic possession was relinquished in March 2023. The handling of lease obligations remains in negotiation as does the handling of the mechanics liens placed on the properties. Our existing legal counsel has agreed to represent Mitesco, Inc. and The Good Clinic in these matters. In Ramsey County, Continental 560 Fund LLC (Case No. 62-CV-23-2910) initiated a lawsuit. The Company’s attorney will prepare a Notice of Appearance and draft Answer in the Continental 560 Fund matter. The deadline under the Minnesota Rules of Civil Procedure for filing an answer has passed. Accordingly, the plaintiff could seek a default judgment at any time. | |
● | The St. Louis Park clinic possession was relinquished in April 2023. The handling of lease obligations remains in negotiations as does the handling of the mechanics liens placed on the properties. The plaintiff’s counsel reached out to our attorney to reinitiate negotiations. We proposed to our attorney a settlement approach using a zero coupon note with common stock used as collateral. On November 1, 2023, were notified that the landlord had rejected our settlement proposal and wishes to proceed with the lawsuit. At that time, plaintiff Excelsior & Grand Apartments, LLC submitted interrogatories and request for the production of documents. | |
● | The Maple Grove clinic eviction occurred in April 2023. The handling of lease obligations remains in negotiations as does the handling of the mechanics liens placed on the properties. On August 22, 2023 the landlord filed a lawsuit related to alleged unmet lease obligations and related to a construction lien on the property by the general contractor related to alleged non-payment of construction expenses. We have been told the facility has been re-leased but have not received notice of such or cancelation of the lease. | |
● | The Northeast Minneapolis clinic, aka Nordhaus clinic, possession was relinquished in May 2023. There is no lien on the property. The handling of lease obligations remains in negotiations with the landlord. |
Note 15: Subsequent Events
Issuance of Common Stock as commitment shares (“Commitment Shares”). The Commitment Shares are priced at $0.25. The Warrants have an initial exercise price of $0.50 per share. The Warrants are not exercisable for six months following their issuance. The Lenders may exercise the Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the Warrants are not then registered pursuant to an effective registration statement.
On JulyAugust 21, 2022,2023, the Company issued a 10% Promissory Notes due to Michael C Howe Living Trust (the “Lender”) and in respect of which the Company received proceeds of $255,000.
The Note carries a 10% interest rate per annum, accrued monthly and payable at maturity. The note has a maturity date that is the earlier of (i) September 10, 2022, or (ii) five business days after the date on which the Company successfully lists its131,362 shares of common stock on Nasdaq or NYSEto a service provider at a price of $0.80 per share for accounts payable in the amount of $105,089.
The amount payable at maturity will be $300,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition, the Lender will be issued (1) 123,000 five-year warrants (the “Warrants”) and (2) 123,000 shares of Common Stock as commitment shares (“Commitment Shares”). The Commitment Shares are priced at $0.25. The Warrants have an initial exercise price of $0.50 per share. The Warrants are not exercisable for six months following their issuance. The Lender may exercise the Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the Warrants are not then registered pursuant to an effective registration statement.
On July 21, 2022,August 29, 2023, the Company issued a 10% Promissory Notes due to Juan Carlos Iturregui (the “Lender”) and in respect of which the Company received proceeds of $25,000. Mr. Iturregui is a member of the Company’s Board of Directors.
The Note carries a 10% interest rate per annum, accrued monthly and payable at maturity. The note has a maturity date that is the earlier of (i) January 21, 2023, or (ii) five business days after the date on which the Company successfully lists its43,750 shares of common stock on Nasdaq or NYSE.to a service provider at a price of $0.80 per share for accounts payable in the amount of $35,000.
The amount payable at maturity will be $29,412 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition, the Lender will be issued (1) 12,059 five-year warrants (the “Warrants”) and (2) 12,059 shares of Common Stock as commitment shares (“Commitment Shares”). The Commitment Shares are priced at $0.25. The Warrants have an initial exercise price of $0.50 per share. The Warrants are not exercisable for six months following their issuance. The Lender may exercise the Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the Warrants are not then registered pursuant to an effective registration statement.
On July 26, 2022,September 28, 2023, the Company issued a 10% Promissory Notes due to Erik Scott Nommsen (the “Lender”) and in respect of which the Company received proceeds of $50,000.
The Note carries a 10% interest rate per annum, accrued monthly and payable at maturity. The note has a maturity date that is the earlier of (i) September 10, 2022, or (ii) five business days after the date on which the Company successfully lists its49,226 shares of common stock on Nasdaq or NYSE.to a service provider at a price of $0.80 per share for accounts payable in the amount of $39,380.
On October 10, 2023, the Company issued 23,438 shares of common stock to a service provider at a price of $0.80 per share for accounts payable in the amount of $18,750.
The amount payable at maturity will be $58,823 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition, the Lender will be issued (1) 24,117 five-year warrants (the “Warrants”) and (2) 24,117 shares of Common Stock as commitment shares (“Commitment Shares”). The Commitment Shares are priced at $0.25. The Warrants have an initial exercise price of $0.50 per share. The Warrants are not exercisable for six months following their issuance. The Lender may exercise the Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the Warrants are not then registered pursuant to an effective registration statement.
On July 27, 2022,November 17, 2023, the Company issued a 10% Promissory Notes due to James H. Caplan (the “Lender”) and in respect of which the Company received proceeds of $50,000.
The Note carries a 10% interest rate per annum, accrued monthly and payable at maturity. The note has a maturity date that is the earlier of (i) January 21, 2023, or (ii) five business days after the date on which the Company successfully lists its181,606 shares of common stock on Nasdaq or NYSE.at a price of $0.80 per share to its Chief Operating Officer and Board Member for notes payable, accrued interest, conversion premium, payoff bonus, accrued salary, and board fees in the aggregate amount of $145,285.
The amount payable at maturity will be $58,823 plus 10%Issuance of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition, the Lender will be issued (1) 24,117 five-year warrants (the “Warrants”) and (2) 24,117 shares of CommonSeries F Preferred Stock as commitment shares (“Commitment Shares”). The Commitment Shares are priced at $0.25. The Warrants have an initial exercise price of $0.50 per share. The Warrants are not exercisable for six months following their issuance. The Lender may exercise the Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the Warrants are not then registered pursuant to an effective registration statement.
On August 3, 2022, the Company amended the maturity date of the Diamond Note 4 to the earlier of (i) September 10, 2022 or (ii) five days after the date on which we successfully list our shares of common stock on any of the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market.
On August 4, 2022,29, 2023, the Company issued 1,510 shares of Series F Preferred Stock at a 10% Promissory Notes dueprice of $1,000 per share to Jack Enright (the “Lender”)Larry Diamond, its CEO and a Board Member, for notes payable, accrued interest, conversion premium, payoff bonus, and accrued salary in respectthe aggregate amount of which$1,509,586.
On September 29, 2023, the Company issued 286 shares of Series F Preferred Stock at a price of $1,000 per share to Tom Brodmerkel, its CFO and a Board Member, for notes payable, accrued interest, conversion premium, payoff bonus, accrued salary, and accrued board fees in the aggregate amount of $285,698.
On September 29, 2023, the Company issued 210 shares of Series F Preferred Stock at a price of $1,000 per share to Juan Carlos Iturregui, a Board Member, for notes payable, accrued interest, conversion premium, payoff bonus, and accrued board fees in the aggregate amount of $209,970.
On September 29, 2023, the Company issued 656 shares of Series F Preferred Stock at a price of $1,000 per share to an investor for notes payable, conversion premium, accrued interest, payoff bonus, and accrued fees in the aggregate amount of $655,606.
On September 29, 2023, the Company issued 50 shares of Series F Preferred Stock at a price of $1,000 per share to an investor for notes payable, conversion premium, accrued interest, and payoff bonus in the aggregate amount of $49,825.
On September 29, 2023, the Company issued 255 shares of Series F Preferred Stock at a price of $1,000 per share to an investor for notes payable, conversion premium, accrued interest, and payoff bonus in the aggregate amount of $254,496.
Appointment of Director
On July 17, 2023, Mr. Allen Plunk was appointed to the Board of Directors of the Company.
Payment Plan for SBA Loan
On July 12, 2023, the Company received proceedsa restructured payment plan for the SBA Loan. The terms of $102,000.the plan call for payments in the amount of $2,595 each month until the loan is paid in full.
The Note carries a 10% interest rate per annum, accrued monthly and payable at maturity. The note has a maturity of February 3, 2023.Redomestication from Delaware to Nevada
The amount payable at maturity will be $120,000 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lender of such term, and such term, at the option of the Lender, shall become a part of the Note. In addition, the Lender will be issued 49,200 shares of Common Stock as commitment shares (“Commitment Shares”). The Commitment Shares are priced at $0.25.
On August 4, 2022,29, 2023, the Company’s shareholders approved the Redomestication of the Company issuedfrom Delaware to Nevada, and on October 13, 2023, the Company effected the Redomestication by filing (i) a 10% Promissory Notes duecertificate of conversion with the Secretary of State of the State of Delaware (the “Delaware Certificate of Conversion”); (ii) articles of conversion with the Secretary of State of the State of Nevada (the “Nevada Articles of Conversion”); and (iii) articles of incorporation with the Secretary of State of the State of Nevada (the “Nevada Articles of Incorporation”). Pursuant to Jessica, Kevin C., Brody, Isabellathe Plan of Conversion, the Company also adopted new Bylaws (the “Nevada Bylaws”).
Resignation of Director
On November 7, 2023, Mr. Juan Carlos Iturregui resigned from his position as a director effective November 5, 2023. The decision by Mr. Iturregui to resign was not the result of any disagreement with the Company on any matter relating to the operations, internal controls, policies or practices of the Company but related to his transition to public service on a full-time basis.
Court Order Stipulating Judgment
On November 14, 2023, the District Court, City and Jack Finnegan (collectively,County of Denver, Colorado, in Case Number 2022CV33173 consolidated with Case Number 2022cv33653, stipulated an entry of judgment against the “Lenders”)Company’s subsidiary The Good Clinic, LLC, and in respectfavor of whichGardner Builders Minneapolis, LLC, in the Company received proceedsamount of $25,000.
The Note carries a 10%$348,764 and interest at the rate of 12% per annum accrued monthly and payable at maturity. The note has a maturity of February 3, 2023.
Theuntil the amount payable at maturity will be $29,412 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default, as definedis paid in the Notes, the principal amount shall bear interest for each day until paid, at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Note contains a “most favored nations” clause that provides that, so long as the Note is outstanding, if the Company issues any new security, which the Lender reasonably believes contains a term that is more favorable than those in the Note, the Company shall notify the Lenders of such term, and such term, at the option of the Lenders, shall become a part of the Note. In addition, the Lenders will be issued in aggregate (1) 12,059 five-year warrants (the “Warrants”) and (2) 12,059 shares of Common Stock as commitment shares (“Commitment Shares”). The Commitment Shares are priced at $0.25. The Warrants have an initial exercise price of $0.50 per share. The Warrants are not exercisable for six months following their issuance. The Lenders may exercise the Warrants on a cashless basis if after the six-month anniversary of date of issuance, the shares of Common Stock underlying the Warrants are not then registered pursuant to an effective registration statement.full.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References to the “Company,”“Mitesco, Inc.,”“our,”“us” or “we” refer to Mitesco, Inc. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim financial statements and the notes thereto appearingcontained elsewhere herein.in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are workingsubject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,”“should,”“could,”“would,”“expect,”“plan,”“anticipate,”“believe,”“estimate,”“continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
History and Outlook
Mitesco Inc. is a holding company with plans to participate in the healthcare technology, services and/or delivery industries. From 2020 through 2022, the Company was executing against a strategic plan to open primary care clinics aroundutilizing advanced degreed nurse practitioners in select markets. The clinics operated under the USname The Good Clinic. The Company performed on the strategy and began implementing growth plans for The Good Clinic with limited funding. The Company believed that are in residential centers and leverage the expertise, training, and license of Nurse Practitioners. We are focusing on wellness as a coreupon execution of the practice. Mitesco’s mission isbusiness plan additional capital would be available on acceptable terms. However, the markets were not favorable to increase conveniencefunding and accessas the Covid-19 pandemic lingered on, the Company was unsuccessful accessing adequate capital when needed, therefore in late 2022 the decision was made to care, improveclose the quality of care, and reduce its cost.clinics. As a result, Mitesco currently has no operating business.
We opened our first primary care clinic “The Good Clinic” in Northeast Minneapolis, Minnesota in February 2021, and have added five additional operating clinics asSince the beginning of 2023, the dateCompany has focused on winding down operations of this filing for a total of six clinics open and operating. We announced leases for two new clinics in the greater Denver, Colorado area. These new locations, and a new location in Wayzata, Minnesota are expected to open in the fourth quarter of 2022. We plan to open clinics in residential concentrations of population to enhance the convenience, especially timely due to the changes in community travel patterns resulting from the pandemic. Our clinicians use both telehealth (virtual) and in-person visits to treat and coach the clients along their journey to better health and quality of life. Our clinics are led by Nurse Practitioners that use their license, extensive training, expertise, and empathy to help people remain stable or improve their health. We emphasize wellness, beginning with a clients’ co-developed plan that identifies from where a person is starting and constructs a plan for how they can achieve their goals. The practice uses an integrated health approach that includes an assessment of both the individual’s behavioral and physical health and combines this with their activation level and their goals. The clinic offers wellness coaching, behavioral health care, episodic care, dermatologic services, and supplements. We seek to care for the whole person’s needs.
Like the first clinic, we seek to locate clinics convenient to residential centers. In pursuit of this approach, we intend to continue to expand our relationship with Lennar Corporation and other large-scale developers. While we have no formal relationship with these developers other than as a tenant, we believe such relationships give us an advantage in recruiting and retaining clients in close proximity to our locations
Business Summary
Our operating subsidiary, The Good ClinicTM, produced increased operational results in the second quarter of 2022 as compared to the first quarter of 2022.
During the first quarter of 2022, The Good Clinic client visits were driven mainly byalong with reducing other costs. To that purpose the demand for COVID-19 testingCompany has terminated all but 4 employees; management and vaccinations, which generally require shorter appointments. Even though the visitsBoard members are briefer, these interactions with new clients allow usnot taking cash compensation, and there are ongoing discussions to demonstrate our differentiating clinic experience. As a result, we converted first-time customers into ongoing clients.
Metricsconvert amounts owed to equity. We are also selling the remaining assets consisting of furniture, equipment, and supplies; the funds generated from the three months ended June 30, 2022:
• The Good Clinic recorded a 45% quarter-over-quarter increase in unique (i.e., first-time) clients.
• The total numbersale of visits inassets will be used primarily to cover the second quarter of 2022 increased by 11%, as compared to the first quarter of 2022.
• The average length of appointment times increased during the second quarter of 2022, which we measure as minutes of care. There was a 112% increase in total care minutes during the second quarter of 2022, as compared to the first quarter of 2022, with the average minutes per visit increasing by 91%.
These metrics indicate the client’s adoptioncosts of our primary care concept focused on preventive care and improved well-being. Moreover,SEC filings. We have also completed the quarterly results illustrate that The Good Clinic providers are delivering more complex care and are therefore receiving higher per-visit reimbursements.process of redomiciling from Delaware to Nevada.
Results of Operations
The following period-to-period comparisons of our financial results are not necessarily indicative of results for the current period of any future periods. Further, as a result of any acquisitions of other businesses, and any additional pharmacy acquisitions or other such transactions we may pursue, we may experience large expenditures specific to the transactions that are not incident to our operations.
Comparison of the Three Months Ended June 30, 20222023 and 20212022
Revenue
The Company recognized revenue of $0 for the three months ended June 30, 2023, compared to approximately $0.2 million for the three months ended June 30, 2022, compared to $8,200 for the three months ended June 30, 2021.2022. The increase in revenuedecrease is the result of the service and product revenue from The Good Clinic’s six locations.discontinuation of the Company’s clinic operations.
Cost of Sales
The Company incurred approximately $0.6 million$5,601 of cost of goods sold for the three months ended June 30, 2022,2023, compared to $3,600$0.6 million for the three months ended June 30, 2021. During the first quarter of 2021 there were only a few direct clinical services performed due to the lack of in force payer contracts and the newness of the clinic. As such, the allocation of the expenses related to clinical staff were attributed to operating expenses and not cost of sales.2022. The increase in cost of goods solddecrease is the result of the opening and operatingdiscontinuation of The Good Clinic’s six locations and having in force payer relationships.the Company’s clinic operations.
Gross Profit/(Loss) Profit
Our gross loss was approximately$5,601 for the three months ended June 30, 2023, compared to gross loss of $0.4 million for the three months ended June 30, 2022, compared to gross profit2022. The decrease is the result of $4,600 for the three months ended June 30, 2021.discontinuation of the Company’s clinic operations.
Operating Expenses
Our total operating expenses for the three months ended June 30, 2022,2023, were approximately $2.3$0.8 million. For the comparable period in 2021,2022, the operating expenses were approximately $1.4$2.3 million. The decrease is the result of the discontinuation of the Company’s clinic operations.
During the current period we fully impaired our remaining fixed assets in the amount of $71,569.
General and administrative expenses for the three months ended June 30, 2023 were comprised primarily of share based payments to service providers of $0.9, payroll and related costs of $0.3 million, building and facility costs of $0.3 million, vendor finance charges of $0.1 million, advertising and marketing costs of $0.07 million, and IT/website costs of $0.07 million.
OperatingGeneral and administrative expenses for the three months ended June 30, 2022 were comprised primarily of $1.4$0.8 million ofin payroll and payroll taxes, $0.4 office and employee benefit expenses, $0.2 million in rentclinic supplies and utilities, $0.1services, $0.3 million in legal and professional fees; $0.1 million in marketing;fees, $0.2 million in depreciation,non-cash compensation, and $0.2 million in stock-based compensation expenses and $0.1 million in other operating costs.
Operating expenses for the three months ended June 30, 2021 were comprised primarily of $0.4 million of payroll and payroll taxes; $0.3 million of non-cash compensation, $0.2 million in legal and professional fees; $0.1 million in marketing, $0.1 million in consulting fees and $0.3 million in other operation costs.depreciation.
Other Income and Expenses
Interest expense was approximately $0.1 million for the three months ended June 30, 2023, compared to approximately $0.9 million for the three months ended June 30, 2022, compared to2022.
Interest expense – related parties was approximately $1,100$0.1 million for the three months ended June 30, 2021.2023, compared to approximately $0 in the prior period.
During the three months ended June 30, 2023, we recorded equity investment incentives of approximately $6.4 million. There were no comparable transactions in the prior period.
During the three months ended June 30, 2023, we recorded financing costs of $18,617. There were no comparable transactions in the prior period.
During the three months ended June 30, 2023, we recorded a gain on forgiveness of debt of $25,000. There were no comparable transactions in the prior period.
During the three months ended June 30, 2023, we recorded a gain on sale of assets of $20,097. There were no comparable transactions in the prior period.
During the three months ended June 30, 2023, we recorded a gain on issuance of shares to a service provider of $33,092. There were no comparable transactions in the prior period.
During the three months ended June 30, 2023, we recorded a loss on settlement of true-up obligation of $119,370. There were no comparable transactions in the prior period.
During the three months ended June 30, 2022, we recorded a loss on waiver and commitment fee shares of approximately $11,600.$11,619. There were no comparable transactions in the current period.
During the three months ended June 30, 2022,2023, we recorded a loss on legal settlement of $18,759. There were no comparable transactions in the revaluation of derivative liabilities of approximately $0.2 millionprior period.
During the three months ended June 30, 2021,2023, we recorded a gain on revaluation of derivative liabilities of $39,738 compared to a loss on legal settlement of $70,000.$153,424 in the prior period.
During the three months ended June 30, 2022, theThe Company declaredaccrued Preferred Stock dividends of approximately $0.1$0.5 million including $59,125 to related parties compared to approximately $0.1 million$80,392 including $62,322 to related parties for the three months ended June 30, 2021.
Net loss2022. The increase was due to accrued dividends on the Series F Preferred Stock.
For the three months ended June 30, 2022,2023, we had a net loss available to common shareholders of approximately $8.0 million, or a net loss per share, basic and diluted of ($1.55) compared to a net loss available to common shareholders of approximately $3.9 million, or a net loss per share, basic and diluted of ($0.02) compared to a net loss available to common shareholders of approximately $1.5 million, or a net loss per share, basic and diluted of ($0.01)0.88), for the three months ended June 30, 2021.2022.
Comparison of the Six Months Ended June 30, 20222023 and 20212022
Revenue
The Company recognized revenue of $0 for the six months ended June 30, 2023, compared to approximately $0.3 million for the six months ended June 30, 2022, compared to $11,200 for the six months ended June 30, 2021.2022. The increase in revenuedecrease is the result of the service and product revenue from The Good Clinic’s six locations.discontinuation of the Company’s clinic operations.
Cost of Sales
The Company incurred approximately $1.2 million$8,020 of cost of goods sold for the six months ended June 30, 2022,2023, compared to $5,300approximately $1.2 million for the six months ended June 30, 2021. During the first and second quarters of 2021 there were only a few direct clinical services performed due to the lack of in force payer contracts and the newness of the clinic. As such, the allocation of the expenses related to clinical staff were attributed to operating expenses and not cost of sales.2022. The increase in cost of goods solddecrease is the result of the opening and operatingdiscontinuation of The Good Clinic’s six locations and having in force payer relationships.the Company’s clinic operations.
Gross Profit/(Loss) Profit
Our gross loss was approximately $8,000 for the six months ended June 30, 2023, compared to gross loss of approximately $0.9 million for the six months ended June 30, 2022, compared to gross profit2022. The decrease is the result of $5,900 for the six months ended June 30, 2021.discontinuation of the Company’s clinic operations.
Operating Expenses
Our total operating expenses for the six months ended June 30, 2022,2023, were approximately $4.9$2.8 million. For the comparable period in 2021,2022, the operating expenses were approximately $2.4$4.9 million. The increase is the result of the discontinuation of the Company’s clinic operations.
During the current period we fully impaired our remaining operating assets in the amount of approximately $2.3 million.
OperatingGeneral and administrative expenses for the six months ended June 30, 2023 were comprised primarily of share based payments to service providers of $0.9 million, payroll and related costs of $0.5 million, building and facility costs of $0.5 million, legal, professional, and accounting costs of $0.2 million, advertising and marketing costs of $0.1 million, vendor finance charges of $0.1 million, advertising and marketing costs of $0.1 million, and IT/website costs of $0.1 million.
General and administrative expenses for the six months ended June 30, 2022 were comprised primarily of $2.4 million of payroll, payroll taxes and employee benefit expenses, $0.5$0.1 million in rentpayroll and utilities,payroll taxes, $0.4 million in legal and professional fees $0.2 million in marketing; $0.3and $0.1 million in consulting fees, $0.4 million in depreciation, $0.4 million in stock-based compensation expenses and $0.3 million in other operating costs.
Operating expenses for the six months ended June 30, 2021 were comprised primarily of $0.5 million of payroll and payroll taxes; $0.3 million of non-cash compensation, $0.6 million in legal and professional fees, $0.3 million in marketing, $0.3 million in consulting fees and $0.4 million in other operation costs.fees.
Other Income and Expenses
Interest expense was approximately $1.5 million for the six months ended June 30, 2023, compared to approximately $1.7 million for the six months ended June 30, 2022, compared to2022.
Interest expense – related parties was approximately $1.0$0.2 million for the six months ended June 30, 2021.2023, compared to $0 in the prior period.
During the six months ended June 30, 2023, we recorded equity investment incentives of approximately $6.4 million. There were no comparable transactions in the prior period.
During the six months ended June 30, 2023, we recorded financing costs of $18,617. There were no comparable transactions in the prior period.
During the six months ended June 30, 2023, we recorded a gain on termination of operating lease of approximately $0.3 million. There were no comparable transactions in the prior period.
During the six months ended June 30, 2023, we recorded a gain on forgiveness of debt of $25,000. There were no comparable transactions in the prior period.
During the six months ended June 30, 2023, we recorded a gain on sale of assets of $20,097. There were no comparable transactions in the prior period.
During the six months ended June 30, 2023, we recorded a gain on issuance of shares to a service provider of $33,092. There were no comparable transactions in the prior period.
During the six months ended June 30, 2023, we recorded a loss on settlement of true-up obligation of $119,370. There were no comparable transactions in the prior period.
During the six months ended June 30, 2022, we recorded a gainloss on waiver and commitment fee shares of approximately $0.2 million.$186,654. There were no comparable transactions in the current period.
During the six months ended June 30, 2023, we recorded a loss on legal settlement of $18,759. There were no comparable transactions in the prior period.
During the six months ended June 30, 2022, we recorded a gain on settlement of accrued salary of approximately $15,000.$15,032. There were no comparable transactions in the current period.
During the six months ended June 30, 2022, we recorded a loss on settlement of accounts payable of $0.1 million as compared to a gain on settlement of accounts payable of approximately $6,000 for$78,235. There were no comparable transactions in the six months ended June 30, 2021.current period.
During the six months ended June 30, 2022,2023, we recorded a loss on the revaluation of derivative liabilities of approximately $0.1 million,$71,040 compared to a loss of approximately $0.5 million for$73,587 in the six months ended June 30, 2021.prior period.
During the six months ended June 30, 2021, we recorded a loss on legal settlement of $0.1 million.
During the six months ended June 30, 2021, we recorded a gain on the settlement of notes payable of approximately $1,800.
During the six months ended June 30, 2022, theThe Company declaredaccrued Preferred Stock dividends of approximately $0.2$0.5 million including $59,125 to related parties compared to approximately $0.1 million$80,392 including $62,322 to related parties for the sixthree months ended June 30, 2021.
During2022. The increase was due to accrued dividends on the six months ended June 30, 2021, the Company recordedSeries F Preferred Stock deemed dividends of approximately $0.3 million.
Net lossStock.
For the six months ended June 30, 2022,2023, we had a net loss available to common shareholders of approximately $13.7 million, or a net loss per share, basic and diluted of ($2.76) compared to a net loss available to common shareholders of approximately $7.6 million, or a net loss per share, basic and diluted of ($0.03) compared to a net loss available to common shareholders of approximately $4.3 million, or a net loss per share, basic and diluted of ($0.02)1.75), for the six months ended June 30, 2021.2022.
Liquidity and Capital Resources
To date, we have not generated sufficient revenue from operations to support our operations. We have financed our operations through the sale of equity securities and short-term borrowings. As of JuneNovember 30, 2022,2023, we had cash of approximately $36,000$45,000 compared to cash of approximately $1.2 million$36,000 as of December 31, 2021.2022.
Net cash used in operating activities was approximately $4.0$0.5 million for the six months ended June 30, 2022.2023. This is the result of our business development efforts pertaining to the start-updiscontinuation of the first six clinics.Company’s clinic operations. Cash used in operations for the six months ended June 30, 2021,2022, was approximately $2.1$4.0 million.
Net cash used in investing activities was approximately $0.2 million$0 for the six months ended June 30, 2022. The amounts relate2023 compared to the purchase of fixed assets and leasehold improvement on our clinics. Net cash used for investing activitiesapproximately $190,000 for the six months ended June 30, 2021 was $0.5 million.2022.
Net cash provided by financing activities for the six months ended June 30, 2022,2023, was approximately$0.7 million, compared to $3.1 million consisting of proceeds from notes payable, net of discounts, of $3.3 million offset by principal payment on related party notes payable of $0.2 million. Net cash provided by financing activities for the sixthree months ended June 30, 2021, was $4.32022.
At June 30, 2023, we had the following current liabilities which are payable in cash: Accounts payable and accrued liabilities of $8.3 million; notes payable of $1.6 million; notes payable to related parties of $2.8 million; SBA Loan Payable of $0.5 million; lease liabilities of $0.5 million; accrued interest payable of $0.6 million; accrued interest payable to related parties of $0.2 million; and other current liabilities of $0.1 million. We also have the following liabilities which are payable in stock: derivative liabilities of $0.1 million, consistingpreferred stock dividends of proceeds from a private placement offering$0.5, and preferred stock dividends payable to related parties of common stock of $1.7 million and $2.8 million$30,000.
We have undertaken the following action plan to improve our liquidity: (i) We have raised approximately $194,000 from the sale of office equipment, supplies, and other assets; (ii) several institutional investors have invested in our Seres F Preferred Stock; (iii) we have restructured our SBA Loan; (iv) we are negotiating with vendors to convert our accounts payable into common stock or Series F Preferred stock, (iv) We are negotiating with lenders to convert our notes payable into Series F Preferred Stock, or revise the terms of the notes; (v) We are negotiating with landlords to resolve the amounts due under the leases by offering to convert these amounts to equity or promissory notes. See below for details regarding the progress we have made in the implementation of this plan.
Initial funds raised via the above efforts will be used primarily to complete the Company’s SEC filings.
SBA Loan
On July 12, 2023, the Company entered into a payment plan arrangement with the U.S. Small Business Administration regarding PPP Loan. The terms of the payment plan call for monthly payments of approximately $2,595 for 180 months beginning July 1, 2023 resulting in total payments in the amount of $0.5 million.
Sale of Series F Preferred Stock Sold for Cash
On April 11, 2023, the Company entered into securities purchase agreements (each a “Purchase Agreement”) with investors providing for the sale and issuance of (i) Series F 12% PIK Convertible Perpetual Preferred Stock, par value $0.01 per share (the “Series F Shares”) and (ii) warrants to purchase shares of Common Stock (the “Warrants,” and together with the Series F Shares, the “Securities”). The Warrants have an initial exercise price of $2.50 per share and the final number of shares of Common Stock the warrant is exercisable for will equal the number of shares of Common Stock into which the Series F Shares convert divided by 2. The Series F can be converted, at the option of the Series F shareholder into shares of the Company’s common stock at a price equal to 65% of the Volume Weighted Average Price ("VWAP”) on the conversion date. No conversions can occur until the Company has successfully completed an uplist to NASDAQ.
From April 11 through November 30, 2023, we have raised a total of $0.9 million through the sale of Series F Securities as follows:
On April 11, 2023, the Company entered into a Purchase Agreement for the sale of 863 Securities at a price of $1,000 per Security for cash in the amount of $0.4 million plus incentives in the amount of $0.5 million, calculated at the rate of 130% of the cash invested.
On April 11, 2023, the Company entered into a Purchase Agreement for the sale of 288 Securities at a price of $1,000 per Security for cash in the amount of $0.1 million plus incentives in the amount of $0.2 million calculated at the rate of 130% of the cash invested.
On April 11, 2023, the Company entered into a Purchase Agreement for the sale of 345 Securities at a price of $1,000 per Security for cash in the amount of $0.1 million plus incentives in the amount of $0.2 million calculated at the rate of 130% of the cash invested.
On June 30, 2023, the Company entered into a Purchase Agreement for the sale of 250 Securities at a price of $1,000 per Security for cash in the amount of $0.3 million.
Also in connection with the Purchase Agreements, the Company entered into separate exchange agreements pursuant to which the investors in the Series F Preferred Stock exchanged certain securities, as defined in each individual Exchange Agreement, for a number Series F Shares (based on their liquidation preference of $1,000) equal to 120%, 165% or 230%, depending on whether the investor is investing additional funds into the bridge financing, of the “Principal Amount,” “Stated Value” and/or liquidation preference of the Exchange Securities (including any payoff bonus, accrued dividends or interest).
Series F Preferred Stock Issued for Conversion of notes payable and accrued interest
Through November 30, 2023, we have converted a total of $4.9 million in debt and accrued interest to Series F Preferred Stock as follows:
On April 11, 2023, in transactions with nine investors, the Company issued an aggregate 8,116 shares of Series F Preferred Stock at a price of $1,000 per share in exchange for debt and accrued interest in the amount of $4.0 million, default fees of $0.9 million, and payoff incentives of $3.2 million. Payoff incentives were calculated at the rate of 65% of principal, default charges, fees, and accrue interest.
On September 29, 2023, in transactions with three investors, we converted an additional $1.0 million in debt and accrued interest into 961 shares of Series F Preferred Stock.
Series F Preferred Stock Issued for Conversion of Debt, Accrued Salaries, and Accrued Fees by Officers and Directors
We have issued a total of 2,006 shares of Series F Preferred Stock to officers and directors for the satisfaction of liabilities in the aggregate amount of $2.0 million as follows:
On September 29, 2023, 1,510 shares of Series F Preferred Stock were issued to Larry Diamond, our CEO and a board member, for debt, accrued interest, and accrued salary in the aggregate amount of $1.5 million; 210 shares of Series F Preferred Stock were issued to Juan Carlos Iturregui, a former board member, for debt, accrued interest, and accrued board fees in the aggregate amount of $0.2 million; and 286 shares of Series F Preferred Stock were issued to Tom Brodmerkel, our CFO, for debt, accrued interest, and accrued salary in the aggregate amount of $0.3 million.
Series F Preferred Stock Issued for Conversion of Series C and Series D Preferred Stock
Through June 30, 2023, we have converted a total Series C and D Preferred Stock and accrued interest with a total stated value in the amount of $4.0 million to Series F Preferred Stock as follows:
On April 11, 2023, in transactions with two investors, the Company issued an aggregate 2,051 shares of Series F Preferred Stock at a price of $1,000 per share in exchange for Series C Preferred Stock and warrants. Partially offsettingaccrued dividends with a stated value of $1.3 million and conversion incentives in the proceeds was approximatelyaggregate amount of $0.8 million. Conversion incentives were calculated at the rate of 80% of stated value of the Series C Preferred Stock converted for those holders of the Series C Preferred Stock who purchased additional Series F Preferred Stock for cash.
On April 11, 2023, in transactions with five investors, the Company issued an aggregate 3,884 shares of Series F Preferred Stock at a price of $1,000 per share in exchange for Series D Preferred Stock and accrued dividends with a stated value of $2.6 million and incentives in the aggregate amount of $1.2 million.
Series F Preferred Stock Issued for Conversion of Accounts Payable
Through June 30, 2023, we have converted a total of $0.1 million of accounts payable to Series F Preferred Stock as follows:
On June 29, 2023, we issued an aggregate 147 shares of Series F Preferred Stock to two creditors in satisfaction of accounts payable in the aggregate amount of $0.1 million.
Common Stock issued for conversion of Accounts payable
Through June 30, 2023, we have converted a total of $0.2 million of payment on notes payable.accounts payable to common stock as follows:
On June 29, 2023, we issued 131,362 shares of common stock at a price of $0.80 per share to a vendor in satisfaction of accounts payable in the amount of $0.1 million.
On August 29, 2023, we issued 43,750 shares of common stock at a price of $0.80 per share to a vendor in satisfaction of accounts payable in the amount of approximately $44,000.
On September 28, 2023, we issued 49,226 shares of common stock at a price of $0.80 per share to a vendor in satisfaction of accounts payable in the amount of approximately $49,000
We expect to continue to convert existing liabilities to our Series F Preferred Stock or to common stock and to raise additional funds via the sale of our Series F Preferred Stock, though there can be no assurance that we will be successful in doing so.
Critical Accounting Estimates
Management uses various estimates and assumptions in preparing our financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Accounting estimates that are the most important to the presentation of our results of operations and financial condition, and which require the greatest use of judgment by management, are designated as our critical accounting estimates. We have the following critical accounting estimates:
● | Estimates and assumptions used in the valuation of derivative liabilities: Management utilizes a lattice model to estimate the fair value of derivative liabilities. The model includes subjective assumptions that can materially affect the fair value estimates. |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, the Company’s management has identified what it believes are material weaknesses in the Company’s disclosure controls and procedures and concluded that we did not have effective disclosure controls and procedures.
The deficiencies in our disclosure controls and procedures included (i) lack of segregation of duties and (ii) lack of sufficient resources to ensure that information required to be disclosed by the Company in the reports that the Company files or submits to the SEC are recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms, and (iii) lack of formal Control procedures related to the approval of related party transactions.
The Company intends to take corrective action to ensure that information required to be disclosed by the Company pursuant to the reports that the Company files or submits to the SEC is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our second quarter ended June 30, 2022,2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business.
On June 23, 2022, The Good Clinic LLC was notified that a former employee had filed a lawsuit for wrongful termination. The Good Clinic believes the lawsuit is without merit. Mitesco (Company) was not named in the suit. The Company expects to resolve it for nominal consideration. Mediation has been scheduled for January 30, 2024.
On October 25, 2022, the Company was notified that a vendor filed a lawsuit related to a contract dispute naming both The Good Clinic and The CEO of the Good Clinic. This suit was settled on May 5, 2023, and dismissed with prejudice on May 12, 2023. The settlement included the issuance of the Company’s restricted common stock. As a part of the settlement the Company issued 2,552 shares of its restricted common stock to the plaintiff and it issued to the CEO of The Good Clinic 19,622 of its restricted common stock, plus $3,000 in cash for reimbursement of expenses related to settling the suit with the vendor.
The Company has a number of legal situations involved with the winding down of its clinic business activities. These include claims regarding certain construction contracts and cancellation of leases. The following is a summary as of this filing:
● | The Wayzata, MN clinic leases was terminated for a commitment to pay $25,000. | |
● | The two Denver, Colorado clinic leases, known as Quincy and Radiant, possession has been relinquished to the landlords. The lease obligations remain in negotiations as does the handling of the mechanics liens placed on the property. On December 1, 2023, a judgement was issued from the District Court of Denver County, Colorado against Mitesco, Inc. and The Good Clinic, LLC in favor of the landlord in the amount of $348,764. Claims for rent beyond November, and any defenses thereto, are preserved. | |
● | The Eagan clinic, aka Vikings clinic, the Good Clinic gave up possession in January of 2023. The mechanics lien has been placed on the property and was settled by the landlord in a confidential settlement. The Landlord terminated the lease as of March 3, 2023. Mitesco is now in settlement negotiations with the landlord for the handling of lease obligations. The Landlord file suit against the Company on July 21, 2023 for unpaid rent, expenses related to unpaid lease obligations and the settled construction lien. The Company has received discovery requests and a renewed request to agree to a stipulated judgement. The discovery is onerous and not feasible for the Company to comply with given the current staff and limited resources. Negotiations are underway. | |
● | The St. Paul clinic possession was relinquished in March 2023. The handling of lease obligations remains in negotiation as does the handling of the mechanics liens placed on the properties. Our existing legal counsel has agreed to represent Mitesco, Inc. and The Good Clinic in these matters. In Ramsey County, Continental 560 Fund LLC (Case No. 62-CV-23-2910) initiated a lawsuit. The Company’s attorney will prepare a Notice of Appearance and draft Answer in the Continental 560 Fund matter. The deadline under the Minnesota Rules of Civil Procedure for filing an answer has passed. Accordingly, the plaintiff could seek a default judgment at any time. | |
● | The St. Louis Park clinic possession was relinquished in April 2023. The handling of lease obligations remains in negotiations as does the handling of the mechanics liens placed on the properties. The plaintiff’s counsel reached out to our attorney to reinitiate negotiations. We proposed to our attorney a settlement approach using a zero coupon note with common stock used as collateral. We are awaiting reply. | |
● | The Maple Grove clinic eviction occurred in April 2023. The handling of lease obligations remains in negotiations as does the handling of the mechanics liens placed on the properties. On August 22, 2023 the landlord filed a lawsuit related to alleged unmet lease obligations and related to a construction lien on the property by the general contractor related to alleged non-payment of construction expenses. We have been told the facility has been re-leased but have not received notice of such or cancelation of the lease. | |
● | The Northeast Minneapolis clinic, aka Nordhaus clinic, possession was relinquished in May 2023. There is no lien on the property. The handling of lease obligations remains in negotiations with the landlord. |
ITEM 1A. RISK FACTORS
Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. In addition to the other information set forth in this quarterly report on Form 10-Q, you should carefully consider the factors described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021,2022, filed with the Securities and Exchange Commission on April 5, 2022.July 14, 2023. There have been no material changes to the risk factors described in that report.
ITEM 2. SALE OF UNREGISTERED SECURITIES
On January 12, 2022, the Company entered into a settlement agreement with an ex-employee. Pursuant to the terms of this agreement, the Company agreed to pay the amount of $19,032 for accrued salary, and the employee returned to the Company for cancellation 400,000 shares of common stock previously issued as compensation. These shares were valued at par value of $0.01 or a total value of $4,000; the Company recorded a gain on cancellation of these shares in the amount of $15,032.
The Company entered into a debt-for-equity exchange agreement with Gardner Builders Holdings, LLC (“Gardner”) on January 7, 2022 (the “Debt for Equity Agreement”). Pursuant to the Debt for Equity Agreement, the Company issued shares of restricted common stock to Gardner in exchange for the Company Debt Obligations, as defined below.
The Agreement settled for certain accounts payable amounts owed by the Company to the Creditor (the “Accounts Payable Amount”) as well as upcoming amounts that will become due between the date of the Agreement and April 1, 2022. The Agreement also settled accrued interest and penalties on the amounts due through January 5, 2022, as well as interest payments on amounts incurred in the first quarter of 2022 (collectively, the “Additional Costs”, and combined with the Accounts Payable Amount, the “Company Debt Obligations”). The Accounts Payable Amount was $500,000, the Additional Costs were $294,912 and the conversion price was $0.25. As a result, 3,179,650 Restricted Shares were authorized to be issued.Common Stock
On March 22, 2022 and March 31, 2022,January 23, 2023, the Company issued an aggregate 1,541,721150,000 shares of common stock at the market price of $3.19 per share to a service provider.
On February 21, 2023, the Company issued 150,000 shares of common stock at the market price of $2.27 per share to a service provider.
During the three months ended March 31, 2023, GS Capital converted principal and accrued interest in a convertible note payable into shares of common stock as waiver fees to holders of the Series C and Series D Preferred Stock for their waivers of certain covenants as set forth and defined in the Series C and Series D Certificates of Designations. The Company valued thesefollows: On February 14, 2023, 9,846 shares were issued at their contractuala price of $0.25$1.74 per share and recorded the amount of $385,431 as waiver fees during the six months ended June 30, 2022. The Company recorded an aggregate gain upon issuance of theseshare; on February 28, 2023, 13,555 shares in the amount of $198,273 based on the marketwere issued at a price of the Company’s common stock$1.50 per share; on the dateMarch 9, 2023, 15,265 shares were issued at a price of issuance.$1.50 per share; and on March 28, 2023, 18,472 shares were issued at a price of $1.25 per share.
On March 31, 2022,2023, the Company issued 1,720,000 Commitment Fee Shares to AJB Capital Investors, LLC; see note 8. A Monte Carlo model was used to value the warrants and call features, and a probability weighted expected return model was used to value the True-Up Provision. The contractual pricetotal of the8,063 shares of common stock $0.25 per share; valuation purposes, the common stock was valued at the market pricefor accrued dividends on the dateits Series X Preferred Stock. Of this amount, a total of the transaction of $0.12695 per share. The derivative liability was valued at $106,608 on the date of the transaction. The discount on the notes due1,066 shares were issued to the Commitment Fee Sharesofficers and warrants was valued at $349,914. The Company recorded the amount of $226,106directors, 4,160 were issued to additional paid-in capital pursuanta related party shareholder, and 2,837 were issued to this transaction.non-related parties.
On March 31, 2022,April 4, 2023, the Company issued 382,3532,952 shares of common stock to a consultant at a price of $1.29 per share as a commission on funds previously raised.
On April 4, 2023, the Company issued 94,738 shares of common stock to GS Capital at an average price of pursuant to a make-whole agreement entered into in connection with the GS Capital Warrants.
On May 5, 2023, the Company issued 2,552 shares of common stock to a vendor at a price of $0.85 per share, and on May 9, 2023, the Company issued 19,622 shares of common stock at a price of $0.25$0.85 per share whichto the Michael C. Howe Living Trust (the “Howe Trust”), an entity controlled by a related party. These shares were issued in satisfaction of a vendor dispute. The shares issued to the Howe Trust were reimbursement for shares previously subscribedissued to the vendor by the Howe Trust with regard to this dispute.
On June 29, 2023, the Company issued a total of 20,212 shares of common stock for accrued dividends on its Series X Preferred Stock. Of this amount, a total of 2,673 shares were issued to officers and directors, 10,426 were issued to a related party shareholder, and 7,113 were issued to non-related parties.
Effective June 30, 2023, the Company issued 2,926 shares of common stock at a price of $12.50 to a previous board member for the conversion of accounts payable in the amount of $95,558.$36,575. These shares had been carried on the Company balance sheet as Common Stock Subscribed.
Series F Preferred Stock
On April 11, 2023, the Company issued a total of 8,116 shares of Series F Preferred Stock at its liquidation value of $1,000 per share to nine investors upon the conversion of notes payable. The total amount converted was $8,111,334, consisting of principal $3,602,059, default penalties of $888,889, fees of $60,000, accrued interest of $365,012, and equity investment incentives of $3,195,374.
On April 6, 2022,11, 2023, the Company issued an aggregatea total of 1,720,0002,289 shares of commitment fee shares and CommonSeries F Preferred Stock Purchase Warrantsat its liquidation value of $1,000 per share to purchase up to an aggregatetwo investors upon the conversion of 750,000 sharesSeries C Preferred Stock. The total amount converted was $2,287,997, consisting of the CommonSeries C Preferred Stock to Anson East Master Fund LP and Anson Investments Master Fund LP. The commitment fee shares were issued at an aggregatestated value of $359,480. The initial exercise price for the warrants is $0.50 per share.$1,100,000, accrued dividends of $171,109, and equity investment incentives of $1,016,888.
On April 18, 2022,11, 2023, the Company issued 637,036a total of 4,055 shares of commitment fee shares and CommonSeries F Preferred Stock Purchase Warrants to purchase up to 277,777 sharestwo investors at its liquidation value of $1,000 per share upon the conversion of Series D Preferred Stock. The total amount converted was $4,055,005 consisting of the CommonSeries D Preferred Stock to GS Capital Partners. The commitment fee shares were issued at an aggregatestated value of $113,392. The initial exercise price for the warrants is $0.50 per share.$2,467,500, accrued dividends of $215,659, and equity investment incentives of $1,371,846.
On April 27, 2022,11, 2023, the Company issued 96,471sold a total of 1,746 shares of common stock with a contract priceSeries F Preferred Stock to three investors at its liquidation value of $0.25$1,000 per share or $24,118 and a grant date marketfor cash. The total value of $0.16 or $15,434 to Larry Diamond, its Chief Executive Officer, as commitment fee shares as set forthSeries F Preferred Stock of issued was $1,745,000 consisting of cash proceeds of $900,000 and defined in Diamond Note 3. The Company recorded these shares at their relative fair valuean equity investment incentive of the components of Diamond Note 3, or $16,200, and recorded a loss in the amount of $765 on this transaction. The Company also issued five-year warrants to purchase up to 96,471 shares of the Common Stock to Lawrence Diamond. The initial exercise price for the warrants is $0.50 per share.$845,000.
On May 10, 2022,April 11, 2023, the Company issued 637,036a total of 147 shares of commitment fee shares and CommonSeries F Preferred Stock Purchase Warrants to purchase up to 277,777 shares of the Common Stock to Kishon Investments, LLC. The commitment fee shares were issued at an aggregateits liquidation value of $94,918. The initial exercise price for the warrants is $0.50 per share.
On May 18, 2022, the Company issued 19,294 shares of common stock to Larry Diamond, it’s Chief Executive Officer at a contractual price of $0.25$1,000 per share and a market price at issuance date of $0.1517 per share as commitment shares as set forth and defined in Diamond Note 4. The Company recorded these shares at their relative fair value of the components of Diamond Note 4, or $3,160, and recorded a lossto two service providers for accounts payable in the amount of $249 on this transaction. The Company also issued five-year warrants to purchase 19,294 shares of common stock at a price of $0.50 to Mr. Diamond pursuant to Diamond Note 4.
On May 23, 2022, the Company issued 19,295 shares of common stock to Jessica Finnegan at a contractual price of $0.25 per share and a market price at issuance date of $0.1794 per share as commitment shares as set forth and defined in Finnegan Note 1. The Company recorded these shares at their relative fair value of the components of Finnegan Note 1, or $3,240, and recorded a gain in the amount of $222 on this transaction. The Company also issued five-year warrants to purchase 24,118 shares of common stock at a price of $0.50 to Ms. Finnegan pursuant to Finnegan Note 1.
On May 26, 2022, the Company issued 84,412 shares of common stock to the May 26 Lenders at a contractual price of $0.25 per share and a market price at issuance date of $0.1517 per share as commitment shares as set forth and defined in the May 26, 2022 Notes. The Company recorded these shares at their relative fair value of the components of the May 26 Note, or $14,175, and recorded a loss in the amount of $1,369 on these transactions. The Company also issued five-year warrants to purchase 84,412 shares of common stock at a price of $0.50 to the May 26 Lenders pursuant to the May 26, 2022.
On June 9, 2022, the Company issued 364,176 shares of common stock to the June 9 Lenders at a contractual price of $0.25 per share and a market price at issuance date of $0.1485 per share as commitment shares as set forth and defined in the June 9 Notes. The Company recorded these shares at the relative fair value of the components of June 9 Notes, or $66,400, and recorded an aggregate loss in the amount of $9,356 on these transactions. The Company also issued five-year warrants to purchase 364,176 shares of common stock at a price of $0.50 to the May 26 Lenders pursuant to the June 9 notes.$146,214.
ITEM 3. DEFAULTS ON SENIOR SECURED SECURITIES
Not Applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS
The following exhibits are included with this Quarterly Report on Form 10Q
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3.1 |
| Certificate of Incorporation of Trunity Holdings, Inc., dated January 18, 2012. |
| 8-K |
| 10.1 |
| 1/31/2012 |
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| Certificate of Incorporation of Trunity Holdings, Inc., dated January 18, 2012. | 8-K | 10.1 | 1/31/2012 | ||||||
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3.2 |
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| 8-K |
| 10.2 |
| 1/31/2012 |
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| 8-K | 10.2 | 1/31/2012 | ||||||||
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3.3 |
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| 10-K |
| 3.3 |
| 4/16/2013 |
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| 10-K | 3.3 | 4/16/2013 | ||||||||
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3.4 |
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| 8-K |
| 3.1(i) |
| 1/06/2016 |
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| 8-K | 3.1(i) | 1/06/2016 | ||||||||
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3.5 |
| Certificate of Designations of Series X Preferred Stock of True Nature Holding, Inc. |
| 8-K |
| 3.6 |
| 1/06/2020 |
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| Certificate of Designations of Series X Preferred Stock of True Nature Holding, Inc. | 8-K | 3.6 | 1/06/2020 | ||||||
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3.6 |
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| 8-K |
| 3.07 |
| 3/13/2020 |
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| 8-K | 3.07 | 3/13/2020 | ||||||||
3.7 |
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| 10-Q |
| 3.7 |
| 8/14/2020 |
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3.8 |
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| 10-Q |
| 3.8 |
| 11/13/2020 |
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3.9 |
| Bylaws of Mitesco, Inc., as amended, dated November 10, 2020 |
| 10-Q |
| 3.9 |
| 11/13/2020 |
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3.10 |
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| 8-K |
| 3.1 |
| 03/26/2021 |
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3.11 |
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| 3.2 |
| 03/26/2021 |
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3.12 |
| Certificate of Incorporation of Trunity Holdings, Inc., as amended |
| S-1 |
| 3.12 |
| 2/10/2022 |
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3.13 |
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| 3.1 |
| 10/22/2021 |
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4.1 |
| Promissory Note in the principal amount of $750,000 dated March 17, 2022 |
| 8-K |
| 4.1 |
| 03/24/2022 |
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4.2 |
| Promissory Note in the principal amount of $235,294 dated March 18, 2022 |
| 8-K |
| 4.2 |
| 03/24/2022 |
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10.1 |
| Promissory Note between the Company and Michael C. Howe Living Trust, dated December 30, 2021 |
| 8-K |
| 10.1 |
| 01/05/2022 |
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| 3.9 | Bylaws of Mitesco, Inc., as amended, dated November 10, 2020 | 10-Q | 3.9 | 11/13/2020 | ||||||||||||||||
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10.2 |
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3.10 | 8-K | 3.1 | 03/26/2021 | |||||||||||||||||
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10.3 |
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| 10.1 |
| 02/17/2022 |
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10.4 |
| Employment Agreement for Ms. Finnegan Dated January 12, 2022 |
| 8-K |
| 10.1 |
| 03/03/2022 |
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10.5 |
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| 10.1 |
| 03/24/2022 |
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10.6 |
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| 10.2 |
| 03/24/2022 |
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3.11 | 8-K | 3.2 | 03/26/2021 | |||||||||||||||||
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31.1 |
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31.2 |
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32.1 |
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32.2 |
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99.1 |
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| 99.3 |
| 03/03/2022 |
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101.INS ** |
| INLINE XBRL INSTANCE DOCUMENT |
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| XBRL INSTANCE DOCUMENT |
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101.SCH ** |
| INLINE XBRL TAXONOMY EXTENSION SCHEMA |
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| XBRL TAXONOMY EXTENSION SCHEMA |
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101.CAL ** |
| INLINE XBRL TAXONOMY EXTENSION CALCULATION LINKBASE |
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| XBRL TAXONOMY EXTENSION CALCULATION LINKBASE |
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101.DEF ** |
| INLINE XBRL TAXONOMY EXTENSION DEFINITION LINKBASE |
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| XBRL TAXONOMY EXTENSION DEFINITION LINKBASE |
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101.LAB ** |
| INLINE XBRL TAXONOMY EXTENSION LABEL LINKBASE |
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| XBRL TAXONOMY EXTENSION LABEL LINKBASE |
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101.PRE ** |
| INLINE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE |
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| XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE |
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104 |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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# |
| Management contract or compensatory plan or arrangement required to be identified pursuant to Item 15(a)(3) of this report. |
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| Management contract or compensatory plan or arrangement required to be identified pursuant to Item 15(a)(3) of this report. |
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q for the period ended June 30, 2022,2023, to be signed on its behalf by the undersigned, thereunto duly authorized.
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| MITESCO, INC. | ||||
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Dated: | By: | /s/ |
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Chief Financial Officer and Principal Financial Officer | |||||