What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-10 compared with 2021-05-14 · 272 added, 154 removed, 473 unchanged (47% of the section changed)

4 unchanged sentences

Cash and cash equivalents

Accounts Receivable

Due from related party

Prepaid expenses

2 unchanged sentences

Construction in progress

Property Plant & Equipment, net of accumulated depreciation of $19,590 and $1,572

Fixed assets, net of accumulated depreciation of $ 19,590 and $ 1,572

LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY

18 unchanged sentences

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 March 31, 2021 and December 31, 2020

Preferred stock, Series C, $0.01 par value, 3,000,000 and 0 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

Preferred stock, Series X, $0.01 par value, 26,227 shares issued and outstanding as of March 31, 2021 and December 31, 2020

Common stock, $0.01 par value, 500,000,000 shares authorized, 197,694,698 and 155,381,183 shares issued and outstanding as of March 31, 2021 and December 31, 2020 and 2019, respectively

Preferred stock, Series A, $ 0.01 par value, 0 and 4,800 shares issued and outstanding as of June 30, 2021 and December 31, 2020

Preferred stock, Series C, $ 0.01 par value, 1,940,644 and 0 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Preferred stock, Series X, $ 0.01 par value, 24,227 shares issued and outstanding as of June 30, 2021;

26,227 shares issued and outstanding as of December 31, 2020

Common stock subscribed

Common stock, $ 0.01 par value, 500,000,000 shares authorized, 208,188,705 and 155,381,183 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

2 unchanged sentences

Total liabilities and stockholders' equity (deficit)

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

MITESCO, INC.

10 unchanged sentences

Interest expense

Loss on legal settlement

Gain on settlement of accounts payable

9 unchanged sentences

Weighted average shares outstanding - basic and diluted

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

MITESCO, INC.

3 unchanged sentences

Preferred Stock Series X

Paid-in capital

Balance, March 31, 2020

Vesting of common stock issued to employees

Vesting of stock options issued to employees

Settlement of derivative liabilities

Common stock issued in warrant settlement agreement

Common stock issued for conversion of notes payable and accrued interest

Preferred stock dividends

Loss for the period ended June 30, 2020

Balance, June 30, 2020

Balance, March 31, 2021

Vesting of common stock issued to employees

Vesting of stock options issued to employees

Shares issued to directors for exercise of options

Net shares cancelled in connection with settlement agreement

Shares issued for professional fees

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

Preferred stock dividends

Loss for the period ended June 30, 2021

Balance, June 30, 2021

Balance, December 31, 2019

4 unchanged sentences

Common stock issued in warrant settlement agreement

Common stock issued for conversion of notes payable and accrued interest

Issuance of Preferred A stock to consultants

Preferred stock dividends

Loss for the period ended March 31, 2020

Balance, March 31, 2020

Loss for the period ended June 30, 2020

Balance, June 30, 2020

Balance, December 31, 2020

4 unchanged sentences

Sale of common stock in private placement

Sales of Preferred Stock Series C and warrants, net of costs

Sale of Preferred Stock Series C

Warrants issued with Preferred Stock Series C

Conversion of Preferred Stock Series A to common stock

Shares issued for exercise of stock options

Net shares issued in connection with settlement agreement

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

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

2 unchanged sentences

Loss for the period ended March 31, 2021

Balance, March 31, 2021

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

Balance, June 30, 2021

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

MITESCO, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the Three

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Gain on settlement of accounts payable

(Gain) on revaluation of Preferred Stock Series A

Loss on conversion of Pref Stock Series A to common stock

Gain (Loss) on revaluation of derivative liabilities

3 unchanged sentences

Changes in assets and liabilities:

Accounts receivables

Prepaid expenses

Due from related party

Accounts payable and accrued liabilities

Operating lease liability

Due to related parties

Other current liabilities

22 unchanged sentences

Preferred stock dividend

Deemed dividends on Preferred Stock

Derivative discounts

Beneficial conversion feature

Conversion of Series A Preferred stock to common stock

Deemed dividends on Preferred Stock

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements.

Conversion of Series C Preferred stock to common stock

Conversion of accounts payable to common stock

Conversion of accrued payroll to common stock

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

MITESCO, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2021 and 2020

June 30, 2021, and 2020

Note 1 – Description of Business

5 unchanged sentences

On April 24, 2020, we changed our name to Mitesco, Inc.

During 2020, our operations have focused on establishing medical clinics utilizing nurse practitioners under The Good Clinic name and development and acquisition of telemedicine technology.

Since 2020, our operations have focused on establishing medical clinics utilizing nurse practitioners under The Good Clinic name and development and acquisition of telemedicine technology.

In March of 2020, we formed a wholly owned subsidiary, The Good Clinic LLC, a Colorado limited liability company for our clinic business.

We opened our first The Good Clinic in Minneapolis, Minnesota in the first quarter of 2021.

We opened our first The Good Clinic in Minneapolis, Minnesota in the first quarter of 2021 and anticipate opening seven more in the greater Minneapolis and Denver metropolitan areas before the end of 2021.

N ote 2 - Financial Condition, Going Concern and Management Plans

As of March 31, 2021, the Company had cash of $2,756,000, current liabilities of $1,319,000, and has incurred a loss from operations and has generated minimal revenue.

As of June 30, 2021, the Company had cash of $ 1,686,000 , current liabilities of $ 1,326,000 , and has incurred a loss from operations and has generated minimal revenue.

The Company’s principal operation is the development and operation of primary care health and wellness clinics operated by nurse practitioners.

4 unchanged sentences

The Company’s continuance is dependent on raising capital and generating revenues sufficient to sustain operations.

During the three months ended March 31, 2021, the Company closed on a $3,000,000 series C Preferred Stock and warrants offering and $1,668,000 restricted common stock offering.

In order to continue its expansion plans the Company believes that additional capital will need to be raised and has entered discussions to do so with certain companies.

During the six months ended June 30, 2021, the Company closed on a $ 3,000,000 Series C Preferred Stock and warrants offering and $ 1,668,000 restricted common stock offering.

To continue its expansion plans, the Company believes that additional capital will need to be raised and has entered discussions to do so with certain companies.

However, as of the date of these consolidated financial statements, no formal agreement exists.

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

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

PPP Loan and Smith Matter

During March 2020, in response to the COVID-19 crisis, the federal government announced plans to offer loans to small businesses in various forms, including the Payroll Protection Program, or "PPP", established as part of the Corona Virus Aid, Relief and Economic Security Act (“CARES Act”) and administered by the U.S.

Small Business Administration.

On April 18, 2020, the Company’s former President and COO completed and submitted an application on behalf of the Company to Bank of America, NA (“Bank of America”) for a PPP loan, which was subsequently approved.

On April 25, 2020, the Company entered into an unsecured Promissory Note (the “Note”) with Bank of America for a loan in the original principal amount of approximately $460,000, and the Company received the full amount of the loan proceeds on May 4, 2020.

On April 18, 2020, the Company’s former President and COO completed and applied on behalf of the Company to Bank of America, NA (“Bank of America”) for a PPP loan, which was subsequently approved.

On April 25, 2020, the Company entered an unsecured Promissory Note (the “Note”) with Bank of America for a loan in the original principal amount of approximately $ 460,000 , and the Company received the full amount of the loan proceeds on May 4, 2020.

On July 21, 2020, Bank of America notified the Company in writing that it should not have received $ 440,000 of the loan proceeds disbursed under the Note.

3 unchanged sentences

If we are not successful in negotiating repayment terms, it could have a material adverse effect on our financial condition.

As of the date of this filing the Company has not restructured the loan and Bank of America has not taken any adversarial actions with regard to the loan.

During management's review of the loan application after the loan had been disbursed to the Company, it was determined that the information provided by its former President and COO in the application was not representative of the Company’s situation.

2 unchanged sentences

In August 2020, the former President and COO filed a complaint alleging discrimination under certain provisions of the anti-discrimination laws of that state.

The Company believes that the action is without merit and intends to vigorously defend itself.

The Company does not believe it the action will have a material impact on the Company.

As of the date of this filing the Company has been advised by the convening judicial organization that it has dismissed this matter, and as such the individual who initiated this action is open to pursue litigation in other venues if they desire.

The Company has had some impact on its operations as a result of the effects of the COVID-19 pandemic, primarily with accessibility to staffing, consultants and in the capital markets, and it is adjusting as needed within its available resources.

As of the date of this filing the Company has been advised by the convening judicial organization that it has dismissed this matter.

The former President requested a “Right-to-Sue” letter, which she received, giving her a right to sue in District Court for 90 days from the date of the dismissed action.

On June 23, 2021, the Company and the former President and COO reached a confidential settlement and release agreement releasing both parties of any future claims.

COVID -19 Impact

The Company has had some impact on its operations because of the effects of the COVID-19 pandemic, primarily with accessibility to staffing, consultants and in the capital markets, and it is adjusting as needed within its available resources.

The Company will continue to assess the effect of the pandemic on its operations.

13 unchanged sentences

Cash - The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.

The Company had cash and cash equivalents of approximately $2,756,000 and $65,000 as of March 31, 2021 and 2020, respectively .

The Company had cash and cash equivalents of approximately $ 1,686,000 as of June 30, 2021, and $ 65,000 as of December 31, 2020.

Property, Plant, and Equipment - Property and equipment is recorded at the lower of cost or estimated net recoverable amount and is depreciated using the straight-line method over its estimated useful life.

11 unchanged sentences

During the three months ended March 31, 2021, the costs previously recorded as construction in progress were recorded to fixed assets and are being depreciated over their useful lives or lease term as appropriate.

During the three months ended June 30, 2021, no additional fixed assets were acquired.

During the three months ended June 30, 2021, the Company entered into three additional lease, two leases are for two new clinics and one lease was for the new corporate headquarters.

With the signing of the three additional leases late in the second quarter we anticipate additional expenditures for fixed assets and leasehold improvements.

Revenue Recognition – On January 1, 2018, we adopted Accounting Standards Update No.

32 unchanged sentences

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.

Beneficial Conversion Features and Deemed Dividends- The Company records a deemed dividend on Preferred Stock when, on the date of issuance, the conversion rate is less than the Company’s stock price.

The Company also records, when necessary, deemed dividends for the exchange of Preferred Stock for common stock, based on the market price of common stock in excess of the carrying value of the Preferred Stock.

Derivative Financial Instruments - Derivatives are recorded on the consolidated balance sheet at fair value.

4 unchanged sentences

The model uses market-sourced inputs such as interest rates and stock price volatilities.

As of March 31, 2021 the Company had retired all derivative instruments.

As of June 30, 2021, the Company had retired all derivative instruments.

Common Stock Purchase Warrants- The Company accounts for common stock purchase warrants in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Accounting for Derivative Instruments and Hedging Activities.

52 unchanged sentences

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements and related disclosures.

The Company has adopted ASU No.

2019-12, “Income Taxes (Topic 740) however giving the Company’s historical losses and full valuation allowance it did not have an impact on its condensed consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)”.

10 unchanged sentences

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 months ended March 31, 2021 and 2020, respectively:

The following table sets forth the computation of loss per share for the three and six months ended June 30, 2021, and 2020, respectively:

Three Months Ended June 30,

Net loss applicable to common shareholders

2 unchanged sentences

Basic and diluted

Six Months Ended June 30,

Net loss applicable to common shareholders

Weighted average common shares outstanding

Net loss per share data:

Basic and diluted

The Company excluded all common equivalent shares outstanding for warrants, options, and convertible instruments to purchase common stock from the calculation of diluted net loss per share because all such securities are antidilutive for the periods presented.

As of March 31, 2021 and 2020, the following shares were issuable and excluded from the calculation of diluted loss:

As of June 30, 2021, and 2020, the following shares were issuable and excluded from the calculation of diluted loss:

Convertible Preferred Stock Series C

1 unchanged sentence

Note 5 – Related Party Transactions

For the three months ended March 31, 2021:

On March 17, 2021, the Company issued 1,000,000 ten-year options with an exercise price of $0.31 to its Chief Financial Officer.

These options had a fair value at issuance of $301,910.

The Company valued these options using the Black-Scholes valuation model.

The options vest as follows:

250,000 options vest 90 days from issuance:

250,000 options vest one year from issuance;

and 500,000 options vest based upon the Company’s achieving certain performance targets.

During the three months ended March 31, 2021, the Company accrued dividends on its Series X Preferred Stock in the total amount of $16,000.

For the three months ended June 30, 2021:

During the three months ended June 30, 2021, the Company accrued dividends on its Series X Preferred Stock in the total amount of $ 15,144 .

Of this amount, a total of $ 2,000 was payable to officers and directors, $ 7,816 was payable to a related party shareholder, and $ 5,328 was payable to non-related parties.

For the three months ended March 31, 2020:

For the six months ended June 30, 2021:

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

Of this amount, a total of $ 4,000 was payable to officers and directors, $ 15,630 was payable to a related party shareholder, and $ 11,906 was payable to non-related parties.

For the three months ended June 30, 2020:

During the three months ended June 30, 2020, the Company charged the amount of $ 19,374 to operations in connection with the vesting of restricted common stock as follows:

$ 6,205 for shares issued to management;

$ 10,110 for shares issued to board members;

and $ 3,059 related to shares issued to an employee.

Julie Smith, the Company’s former President, Chief Operating Officer, and a Board member, resigned effective June 30, 2020.

At the time of her resignation, a total of 1,000,000 shares of the Company’s common stock issued to Ms.

Smith for compensation as a board member were vested and remain outstanding;

an additional 250,000 shares of common stock issued to Ms.

Smith for compensation as an officer were vested and remain outstanding;

750,000 shares of common stock to be issued to Ms.

Smith for compensation as an officer had not vested, and these shares were cancelled.

On June 30, 2020, the Company accrued dividends on its Series X Preferred stock in the total amount of $ 32,784 .

Of this amount, a total of $ 6,500 was payable to officers and directors, $ 15,629 was payable to a related party shareholder, and $ 10,655 was payable to non-related parties.

For the six months ended June 30, 2020:

On February 27, 2020, the Company agreed to issue 1,000,000 ten-year options to its two non-management directors (a total of 2,000,000 options).

1 unchanged sentence

The Company valued these options using the Black-Scholes valuation model.

On December 14, 2020, the exercise price of these options was rest to $0.03 per share reflecting the market price at the time (see note 10).

During the three- months ended June 30, 2020, the amount of $ 3,264 was charged to operations in connection with each 1,000,000-option grant (a total of $ 6,528 for all 2,000,000 options).

On March 2, 2020, the Company agreed to issue 1,500,000 ten-year options to each of its Chief Executive Officer, its President, and a consultant (a total of 4,500,000 options).

These options had a total fair value at issuance of $176,000, an exercise price of $0.05 per share, and vest over a three-year period.

These options have a fair value at issuance of $ 58,743 per individual (a total of $ 176,229 ), an exercise price of $ 0.05 per share, and vest over a three-year period.

The Company valued these options using the Black-Scholes valuation model.

Smith, the Company’s former President, Chief Operating Officer, and a Board member resigned effective June 30, 2020;

Julie Smith, the Company’s President, Chief Operating Officer, and a Board member resigned effective June 30, 2020;

the 1,500,000 options that the Company agreed to issue to Ms.

Smith were cancelled;

a total of $1,632 was charged to operations representing the fair value of these options through Ms.

Smith’s resignation date.

On December 14, 2020, the exercise price of the 1,500,000 options granted to each of its Chief Executive Officer and a consultant was changed to $0.03 per share reflecting the market price at the time (see Note 9).

Smith were cancelled, and no vesting of these options was recorded during the three months ended June 30, 2020.

During the three months ended June 30, 2020, the amount of $ 4,896 was charged to operations in connection with each of the remaining 1,500,000 option grants (a total of $ 9,792 for all 3,000,000 remaining options).

On June 30, 2020, the Company accrued dividends on its Series X Preferred stock in the total amount of $32,784.

Of this amount, a total of $6,500 was payable to officers and directors, $15,629 was payable to a related party shareholder, and $10,655 was payable to non-related parties.

Note 6 - Right to Use Assets and Lease Liabilities – Operating Leases

The Company has an operating lease for its clinic with a remaining lease term of approximately 7.5 years.

The Company’s lease expense was entirely comprised of operating leases.

Lease expense for the three months ended March 31, 2021 and 2020 amounted to $16,000 and $0, respectively.

The Company’s ROU asset amortization for the three months ended March 31, 2021 and 2020 was $6,000 and $0, respectively.

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

The Company leases clinic and administrative facilities under operating leases.

The Company evaluates its contracts to determine if an arrangement is a lease at inception and classify it as a finance or operating lease.

Currently, all the Company’s leases are classified as operating leases.

Leased assets and corresponding liabilities are recognized based on the present value of the lease payments over the lease term.

The lease terms may include options to extend when it is reasonably certain that the Company will exercise that option.

Topic ASC 842 requires the Company to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.

Right-of-use assets are recorded in other assets on the Company’s condensed consolidated balance sheets.

Current and non-current lease liabilities are recorded in other accruals within current liabilities and other non-current liabilities, respectively, on its condensed consolidated balance sheets.

Costs associated with operating leases are recognized on a straight-line basis within operating expenses over the term of the lease.

On November 1, 2020, the Company entered into an agreement to open a clinic in Minneapolis , Minnesota.

The initial lease term is 8 years.

Fixed rent payments under the initial term are approximately $ 511,000 .

On May 24, 2021, the Company entered into an agreement to open a clinic in St.

Louis Park, Minnesota, which is expected to begin operations in the third quarter of 2021.

The initial lease term is seven years .

Fixed rent payments under the initial term are approximately $ 673,000 .

Additionally, on June 8, 2021, the Company entered into an agreement to open a clinic in Eden Prairie , Minnesota, which is expected to begin operation in the third quarter of 2021.

The initial lease term is eight years .

Fixed rent payments under the initial term are approximately $ 620,000 .

On June 24, 2021, the Company entered into an agreement to open an administrative office in St.

Louis Park, Minnesota.

The initial lease term is 2.5 years.

Fixed rent payments under the initial term are approximately $ 244,000 .

As of June 30, 2021, the Company had total operating lease liabilities of approximately $ 1.4 million and right-of-use assets of approximately $ 1.3 million, which were included in the condensed consolidated balance sheet.

Right to use assets – operating leases are summarized below:

Administrative office

Right to use assets, net

Operating lease liabilities are summarized below:

Administrative office

Lease liability

1 unchanged sentence

Lease liability, non-current

The Company’s lease expense was entirely comprised of operating leases.

Lease expense for the three months ended June 30, 2021, was 2020 was $ 38,500 and $ 0 .

For the six months ended June 30, 2021, and 2020 amounted to $ 59,200 and $ 0 , respectively.

The Company’s ROU asset amortization for the three months ended June 30, 2021, and 2020 was $ 18,500 and $ 0 , respectively.

The Company’s ROU asset amortization for the six months ended June 30, 2021, and 2020 was $ 24,700 and $ 0 , respectively the difference between the lease expense and the associated ROU asset amortization consists of interest at a rate of 12 % per annum.

Maturity analysis under these lease agreements are as follows:

For the twelve months ended March 31, 2022

For the twelve months ended March 31, 2023

For the twelve months ended March 31, 2024

For the twelve months ended March 31, 2025

For the twelve months ended March 31, 2026

For the twelve months ended June 30, 2022

For the twelve months ended June 30, 2023

For the twelve months ended June 30, 2024

For the twelve months ended June 30, 2025

For the twelve months ended June 30, 2026

Present value discount

1 unchanged sentence

Note 7 – Debt

August 2014 Series C and D Convertible Debentures

All obligations disclosed in this section haves been fully satisfied as of the date of this filing and the Company has no further requirements related to these notes except for the Company ’ s PPP Loan which remains outstanding.

August 2014 Series C and D Convertible Debenture

On March 30, 2021, the Company issued 272,837 shares of common stock and paid cash in the amount of $ 122,166 as settlement of principal and accrued interest in the amounts of $ 110,833 and $ 71,526 , respectively, due under the Series C Debenture and principal and accrued interest in the amounts of $ 11,333 and $ 8,722 due under the Series C Debenture.

The Company recognized a gain in the amount of $ 3,035 on this transaction.

This obligation has been fully satisfied as of the date of this filing and the Company has no further requirements related to this matter.