What changed in this filing

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Item 1. Financial Statements

2022-05-16 compared with 2021-11-16 · 345 added, 513 removed, 292 unchanged (75% of the section changed)

1 unchanged sentence

MITESCO, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

September 30,

CONDENSED CONSOLIDATED BALANCE SHEETS

Current assets

12 unchanged sentences

Lease liability - operating leases, current

Convertible notes payable, net of discount of $ 0 and $ 756,795

Convertible note payable, in default

Notes payable, net of discounts of $ 671,973 and $ 411,568

SBA Loan Payable

9 unchanged sentences

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 September 30, 2021 and December 31, 2020

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

Preferred stock, Series X, $ 0.01 par value, 24,227 shares issued and outstanding at September 30, 2021;

26,227 shares issued and outstanding at December 31, 2020

Preferred stock, Series A, $ 0.01 par value, 0 and 4,800 shares issued and outstanding as of March 31, 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 March 31, 2022 and December 31, 2021, respectively

Preferred stock, Series D, $ 0.01 par value, 3,100,000 and 3,100,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

Preferred stock, Series X, $ 0.01 par value, 24,227 shares issued and outstanding at March 31, 2022 and December 31, 2021

Common stock subscribed

Common stock, $ 0.01 par value, 500,000,000 shares authorized, 212,853,706 and 155,381,183 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

Common stock, $ 0.01 par value, 500,000,000 shares authorized, 219,756,894 and 213,333,170 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

2 unchanged sentences

Total liabilities and stockholders' equity (deficit)

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

See accompanying notes to these unaudited condensed consolidated financial statements.

MITESCO, INC.

STATEMENT OF OPERATIONS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three

September 30,

Cost of goods sold

Revenue-services

Revenue-products

Total revenue

Cost of goods sold-services

Cost of goods sold-products

Total cost of goods sold

Gross profit (loss)

5 unchanged sentences

Interest expense

Loss on legal settlement

Gain on settlement of accounts payable

Gain on settlement of accrued salary

Gain on settlement of notes payable

(Loss) Gain on revaluation of derivative liabilities

Gain (loss) on waiver fee shares

Gain (loss) on settlement of accrued salary

Gain (loss) on settlement of accounts payable

Gain (loss) on settlement of notes payable

Gain (loss) on revaluation of derivative liabilities

Total other expense

6 unchanged sentences

Weighted average shares outstanding - basic and diluted

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

See accompanying notes to these unaudited condensed consolidated financial statements.

MITESCO, INC.

STATEMENT OF STOCKHOLDERS EQUITY

Preferred Stock Series A

Preferred Stock Series C

Preferred Stock Series X

Balance, June 30, 2020

Vesting of common stock issued to employees

Vesting of stock options issued to employees

Common stock issued for services

Common stock issued for conversion of notes payable and accrued interest

Preferred stock dividends

Loss for the period ended September 30, 2020

Balance, September 30, 2020

Balance, June 30, 2021

Vesting of common stock issued to employees

Vesting of stock options issued to employees

Stock options exercised for cash

Exercise of options by cashless conversion

Cash paid for common stock subscribed

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

Common stock subscribed for accounts payable and accrued liabilities

Preferred stock dividends

Loss for the period September 30, 2021

Balance, September 30, 2021

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH 31, 2022 and 2021

Preferred Stock Series A

Preferred Stock Series C

Preferred Stock Series D

Preferred Stock Series X

Paid-in capital

Balance, December 31, 2020

2 unchanged sentences

Common stock issued for services

Settlement of derivative liabilities

Common stock issued in warrant settlement agreement

Common stock issued for conversion of notes payable and accrued interest

Issuance of Preferred A stock to consultants

Preferred stock dividends

Loss for the period ended September 30, 2020

Balance, September 30, 2020

Balance, December 31, 2020

Vesting of common stock issued to employees

Vesting of stock options issued to employees

Common stock issued for services

Common stock issued for conversion of notes payable and accrued interest

Sale of common stock in private placement

Sale of Preferred Stock Series C

Sales of Preferred Stock Series C

Warrants issued with Preferred Stock Series C

Conversion of Preferred Stock Series A to common stock

Shares issued for exercise of stock options

Net shares issued in connection with settlement agreement

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

Common stock subscribed for accounts payable and accrued liabilities

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

1 unchanged sentence

Preferred stock dividends

Loss for the period ended September 30, 2021

Balance, September 30, 2021

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

Loss for the period ended March 31, 2021

Balance, March 31, 2021

Balance, December 31, 2021

Vesting of common stock issued to employees

Vesting of stock options issued to employees

Conversion of accounts payable to common stock

Commitment fee shares

Waiver fee shares

Warrants issued with note payable - Diamond 1

Warrants issued with note payable - Diamond 2

Gain on settlement of accrued payroll

Issuance of shares previously subscribed for conversion of accounts payable

Preferred stock dividends

Loss for the period ended March 31, 2022

Balance, March 31, 2022

See accompanying notes to these unaudited condensed consolidated financial statements.

MITESCO, INC.

STATEMENT OF CASH FLOWS

September 30,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net loss to net cash used in operating activities:

Preferred A stock issued to consultants

Amortization of right-to-use asset

Gain on settlement of notes payable

Gain on settlement of accounts payable

Net gain on settlement of notes payable

Financing cost - waiver fee shares

Gain on waiver fee shares

Gain on conversion of accrued salary

(Gain) loss on revaluation of derivative liabilities

Derivative expense

Amortization of loan fees

Loss on settlement of accounts payable

Amortization of discount on notes payable

3 unchanged sentences

Prepaid expenses

Due from related party

Accounts payable and accrued liabilities

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Proceeds from sales of Series C Preferred Stock, net of fees

Proceeds from notes payable - related parties, net of discount

Proceeds from notes payable, net of discount

Proceeds from sale of common stock

Principal payments on notes payable

3 unchanged sentences

Cash and cash equivalents at end of period

See accompanying notes to these unaudited condensed consolidated financial statements.

MITESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Interest paid

Income taxes paid

NON-CASH INVESTING AND FINANCING ACTIVITIES:

1 unchanged sentence

Settlement of derivative liabilities

Cashless exercise of warrants

Issued of Series A Preferred Stock to consultants

Preferred stock dividend

Deemed dividends on Preferred Stock

Derivative discounts

Conversion of Series A Preferred stock to common stock

Conversion of Series C Preferred stock to common stock

Capital expenditures included in accounts payable

Conversion of accounts payable to common stock

Conversion of accrued payroll to common stock

Conversion of accounts payable to common stock subscribed

Shares issued for debt conversion

Shares issued for accrued salary conversion

Accrued interest converted to equity

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

See accompanying notes to these unaudited condensed consolidated financial statements.

MITESCO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 AND 2021

Note 1 – Description of Business

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

In March of 2020, we formed a wholly owned subsidiary, Mitesco N.A.

LLC, which holds The Good Clinic LLC, a Colorado limited liability company for our clinic business.

We also have a subsidiary in Dublin, Ireland, Acelerar Healthcare Holdings, LTD, with a view toward technology acquisitions, operations and potentially investments from the European marketplace.

We opened our first The Good Clinic in Minneapolis, Minnesota in the first quarter of 2021 and have three (3) operating at the time of this filing.

We have four (4) additional sites under contract with build-out underway and anticipate having seven (7) more in operation in the greater Minneapolis and Denver metropolitan areas before the end of 2022.

We are making plans for up to fifty (50) operating units before the end of 2023 from internal growth, and we may entertain acquisition of existing clinics as well.

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

We opened our first The Good Clinic in Minneapolis, Minnesota in the first quarter of 2021 and have six operating at the time of this filing.

We intend on opening up to 50 new clinics in the next three years, in addition to any existing sites we might acquire.

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

As of September 30, 2021, the Company had cash of $ 442,000 , current liabilities of $ 3,166,000 , and has incurred a loss from operations and has generated minimal revenue.

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

In addition, the Company develops and deploys software and systems for the healthcare marketplace.

The Company intends to a) develop and acquire telemedical technologies, and b) evaluate other healthcare related opportunities both domestically and on an international basis.

On November 19, 2021, the Company closed a bridge financing round totaling $ 3.1 million of a Series D preferred stock sold to investors in a private placement.

Each Series D Unit will have a purchase price 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 share (the “Series D Preferred Stock”), (b) one warrant (the “Series A Warrants”) to purchase 2.1 shares of the Company’s Common Stock at a purchase price of $0.50 per whole share of Common Stock, and (c) one warrant (the “Series B Warrants” 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 on October 18, 2021 (the “COD”), there are 10,000,000 shares of the Company’s 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 Company’s underwriters that 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 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 (the “Conversion Price”).

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.

As of the date of this filing the Company has closed on $ 3,100,000 of its Series D Preferred stock.

To achieve our growth strategy, it is anticipated the Company will need to raise additional financing prior to up listing on Nasdaq.

We will not proceed with this offering in the event our Common Stock is not approved for listing on the Nasdaq Capital Market though we will continue to seek financing for our expansion and operating needs in the debt or equity markets.

The Company) issued a 10% Promissory Note due June 30, 2022, dated December 30, 2021, to the Michael C.

Howe Living Trust (the “Lender”).

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 (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 $ 850,000 and was funded on December 30, 2021.

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 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.

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 Agreement 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 to be 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.

The Company’s Board of Directors approved the Agreement on January 5, 2022.

As of March 31, 2022, the Company had cash and cash equivalents of $ 0.3 million, current liabilities of $ 7.7 million, and has incurred a loss from operations.

The Company intends to a) develop and own primary care clinics operated by nurse practitioners, b) develop and acquire telemedical technologies, and c) evaluate other healthcare related opportunities.

The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to execute its business plan.

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

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

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

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

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

The Company believes that the necessary capital will be raised and has entered discussions to do so with certain individuals and companies.

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

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

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

Small Business Administration.

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

The current balance is $ 460,406 and the Company is currently in discussions for a) a partial forgiveness and b) the conversion of any remaining balance into a term note.

6 unchanged sentences

Note 3 – Summary of Significant Accounting Policies

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of Mitesco, Inc., and its wholly owned subsidiaries MitescoNA, LLC, The Good Clinic, LLC, and Acelerar Healthcare Holdings, LTD.

In addition, we anticipate that we will rely on the operating activities of certain legal entities in which we will not maintain a controlling ownership interest but over which we will have indirect influence and of which we will be considered the primary beneficiary.

Principles of Consolidation – The accompanying condensed consolidated financial statements include the accounts of Mitesco, Inc., and its wholly owned subsidiaries MitescoNA, LLC, The Good Clinic, LLC, and Acelerar Healthcare Holdings, LTD.

In addition, we manage two entities under a variable interest entity arrangement and have control over the operating activities of these legal entities in which we do not maintain a controlling ownership interest but over which we will have direct influence over the operations and are 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.

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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 $ 442,000 as of September 30, 2021, and $ 65,000 as of December 31, 2020.

The Company had cash and cash equivalents of approximately $ 0.3 million as of March 31, 2022, and $ 1.2 million as of December 31, 2021.

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.

6 unchanged sentences

Term of lease

In 2020, the Company entered into a lease for a clinic facility in Minneapolis, Minnesota.

In connection with the facility, the Company incurred costs to design, engineer, build and install furniture and equipment in the facility.

$ 417,000 was recorded in construction in progress on the balance sheet as of December 31, 2020.

The facility was completed, and the Company received its certificate of occupancy, in the first quarter of 2021.

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

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

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

During the three months ended September 30, 2021 the Company entered into three new clinic leases.

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

During the fourth quarter of 2021 we expect to have expenditures of approximately $ 3 million related to construction and equipment related to these new clinic locations.

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

2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition (Topic 605).

Results for reporting periods beginning after January 1, 2018, are presented under Topic 606.

The impact of adopting the new revenue standard was not material to our financial statements and there was no adjustment to beginning retained earnings on January 1, 2018.

Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

We determine revenue recognition through the following steps:

identification of the contract, or contracts, with a customer;

identification of the performance obligations in the contract;

determination of the transaction price;

allocation of the transaction price to the performance obligations in the contract;

recognition of revenue when, or as, we satisfy a performance obligation.

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) and therefore included as a reduction to net operating revenues in 2018.

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.

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In addition, certain conversion features are recognized as beneficial conversion features to the extent the conversion price as defined in the convertible note is less than the closing stock price on the issuance of the convertible notes.

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

The conversion features of the convertible notes are embedded derivatives and are separately valued and accounted for on the consolidated balance sheet with changes in fair value recognized during the period of change as a separate component of other income/expense.

Fair values for exchange-traded securities and derivatives are based on quoted market prices.

The pricing model the Company uses for determining the fair value of its derivatives is the Lattice Model.

Valuations derived from this model are subject to ongoing internal and external verification and review.

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

As of September 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.

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Diluted loss per share is computed by dividing net loss by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to warrants, options, and convertible instruments.

Income Taxes- The Company accounts for income taxes under the asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s condensed consolidated financial statements or tax returns.

In estimating future tax consequences, the Company generally considers all expected future events other than possible enactments of changes in the tax laws or rates.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized.

The Company has determined that a valuation allowance is needed due to recent taxable net operating losses, the sale of profitable divisions and the limited taxable income in the carry back periods.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and certain tax loss carryforwards, less any valuation allowance.

The Company accounts for uncertain tax positions as required in that a position taken or expected to be taken in a tax return is recognized in the consolidated financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities.

A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

The Company does not have any material unrecognized tax benefits.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as components of interest expense and other expense, respectively, in arriving at pretax income or loss.

The Company does not have any interest and penalties accrued.

The Company is generally no longer subject to U.S.

federal, state, and local income tax examinations for the years before 2018.

Business Combinations- The Company accounts for business combinations by recognizing the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair values on the acquisition date.

The purchase price allocation process requires management to make significant estimates and assumptions, especially with respect to intangible assets, estimated contingent consideration payments and pre-acquisition contingencies.

Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to:

future expected cash flows from product sales, support agreements, consulting contracts, other customer contracts, and acquired developed technologies and patents;

discount rates utilized in valuation estimates.

Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results.

Additionally, any change in the fair value of the acquisition-related contingent consideration subsequent to the acquisition date, including changes from events after the acquisition date, such as changes in our estimates of relevant revenue or other targets, will be recognized in earnings in the period of the estimated fair value change.

A change in fair value of the acquisition-related contingent consideration or the occurrence of events that cause results to differ from our estimates or assumptions could have a material effect on the consolidated financial position, statements of operations or cash flows in the period of the change in the estimate.

Impairment of Long-Lived Assets- Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.

If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Assets to be disposed would be separately presented in the consolidated balance sheet and reported at the lower of the carrying amount or fair value less costs to sell and are no longer depreciated.

The assets and liabilities of a disposal group classified as held-for-sale would be presented separately in the appropriate asset and liability sections of the consolidated balance sheet, if material.

The Company had no impairment charges.

Financial Instruments and Fair Values- The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

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Unless otherwise discussed, the Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact on its financial position or results of operations upon adoption.

Recent Accounting Standards Adopted in the Year

In June 2018, the FASB issued ASU 2018-07 “Improvements to Non-employee Share-Based Payment Accounting”, which simplifies the accounting for share-based payments granted to non-employees for goods and services.

Under the ASU, most of the guidance on such payments to non-employees would be aligned with the requirements for share-based payments granted to employees.

The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.

In December 2019, the FASB issued ASU No.

2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application.

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

The Company has adopted ASU No.

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

Recent Accounting Standards Not Yet Adopted

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Adoption is either a modified retrospective method or a fully retrospective method of transition.

We are currently assessing the impact the new guidance will have on our consolidated financial statements.

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.

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Diluted loss per common share is computed similarly to basic loss per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock.

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

For the three months ended September 30,

For the nine months ended September 30,

The following table sets forth the computation of loss per share for the three months ended March 31, 2022, and 2021, respectively:

For the Three Months Ended

Net loss applicable to common shareholders

Weighted Average shares outstanding

Weighted average common shares outstanding

Net loss per share:

1 unchanged sentence

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

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

For the nine months ended September 30,

As of March 31, 2022, and 2021, the following shares were issuable and excluded from the calculation of diluted loss:

For the Three Months Ended

Common stock options

1 unchanged sentence

Convertible Preferred Stock Series C

Convertible Preferred Stock Series D

Accrued interest on Preferred Stock

1 unchanged sentence

Note 5 – Related Party Transactions

For the three months ended September 30, 2021:

On July 21, 2021, the Company issued a total of 3,000,000 stock option awards to the Company’s executive officers:

1,500,000 to its Chief Executive Officer, 750,000 to its Chief Financial Officer and 750,000 to its Chief Legal Officer.

The options will expire on the ten- year anniversary of the grant date and will vest following the Company’s achievement of a total of $30 million of revenues over four consecutive quarters , as recorded under generally accepted accounting principles of the United States of America.

The options have a strike price of $ 0.25 the amount was based on the price of the lowest investment amount offered to outside investors in 2021 and is higher than the closing price on the date they were granted.

On August 26, 2021, the Company issued 312,800 restricted shares of the Company’s common stock priced at $ 0.25 , vesting immediately, in lieu of $ 78,200 of cash compensation owed to the Company’s Chief Executive Officer for services rendered to the Company prior to 2021.

During the three months ended September 30, 2021, the Company accrued dividends on its Series X Preferred Stock in the total amount of $ 15,141 .

Of this amount, a total of $ 2,000 was payable to officers and directors, $ 7,816 was payable to a related party shareholder, and $ 5,325 was payable to non-related parties.

For the nine months ended September 30, 2021:

On July 21, 2021, the Company issued a total of 3,000,000 stock option awards to the Company’s executive officers:

1,500,000 to its Chief Executive Officer, 750,000 to its Chief Financial Officer and 750,000 to its Chief Legal Officer.

The options will expire on the ten-year anniversary of the grant date and will vest following the Company’s achievement of a total of $30 million of revenues over four consecutive quarters, as recorded under generally accepted accounting principles of the United States of America.

The options have a strike price of $0.25 the amount was based on the price of the lowest investment amount offered to outside investors in 2021 and is higher than the closing price on the date they were granted.

On August 26, 2021, the Company issued 312,800 restricted shares of the Company’s common stock priced at $0.25, vesting immediately, in lieu of $78,200 of cash compensation owed to the Company’s Chief Executive Officer for services rendered to the Company prior to 2021.

During the nine months ended September 30, 2021, the Company accrued dividends on its Series X Preferred Stock in the total amount of $ 46,677 .

Of this amount, a total of $ 6,000 was payable to officers and directors, $ 23,444 was payable to a related party shareholder, and $ 17,233 was payable to non-related parties.

For the three months ended September 30, 2020:

On August 1, 2020, the Company agreed to issue 1,000,000 ten-year options to a non-management director.

These options have a fair value of $56,037, an exercise price of $0.05 per share, and vest over a three-year period.

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

During the nine months ended September 30, 2020, the amount of $11,595 was charged to operations in connection these options.

For the nine months ended September 30, 2020:

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

These options have a fair value at issuance of $ 39,162 per director (a total of $ 78,324 ), an exercise price of $ 0.05 per share, and vest over a three-year period.

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

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

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

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

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

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

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

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

During the three months ended September 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 1, 2020, the Company agreed to issue 1,000,000 ten-year options to a non-management director.

These options have a fair value of $ 28,460 , an exercise price of $ 0.03 per share, and vest over a three-year period.

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

During the nine months ended September 30, 2020, the amount of $ 9,487 was charged to operations in connection these options.

On August 1, 2020, the Company agreed to issue 1,000,000 ten-year options to a non-management director.

These options have a fair value of $ 56,037 , an exercise price of $ 0.05 per share, and vest over a three-year period.

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

During the nine months ended September 30, 2020, the amount of $ 11,595 was charged to operations in connection these options.

During the nine months ended September 30, 2020, the Company charged the amount of $ 69,342 to operations in connection with the vesting of restricted common stock as follows:

$ 27,196 for shares issued to management;

$ 26,511 for shares issued to board members;

and $ 15,635 related to shares issued to an employee.

Julie Smith, our 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 also remain outstanding;

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

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

During the nine months ended September 30, 2020, the Company accrued dividends on its Series X Preferred stock in the total amount of $ 49,176 .

Of this amount, a total of $ 9,750 was payable to officers and directors, ,$ 23,443 was payable to a related party shareholder, and $ 15,983 was payable to non-related parties.

For the three months ended March 31, 2022:

Mitesco, Inc.

(the “Company”) issued a 10% Promissory Note due August 14, 2022, dated February 14, 2022, to Lawrence Diamond (the “Lender”).

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.

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 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.

Mitesco, Inc., issued a promissory notes to pay to the order of Lawrence Diamond (the “Lender” and collectively with the Borrower, the “Parties”) on the Termination Date (as defined below), the principal amount of $235,294 (the “Principal Amount”) plus an amount equal to ten percent of such Principal Amount.

The purchase price for this promissory note (this “Note”) shall be $200,000 (the “Purchase Price”) and shall be payable by the Lender to the Borrower on the Issue Date.

As further consideration for the Purchase Price payable hereunder, promptly following the Issue Date, the Borrower shall issue to the Lender a common stock purchase warrants, entitling the Lender to purchase 200,000 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.

(b) As further consideration for the Purchase Price payable hereunder, promptly following the Issue Date, the Borrower shall also issue to the Lender 192,000 restricted shares.

The Company shall instruct its transfer agent to issue one (1) certificate or book entry statement representing 192,000 shares promptly following the execution hereof.

Note 6 – Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following at March 31, 2022 and 2021:

Trade accounts payable

Accrued payroll and payroll taxes

Total accounts payable and accrued liabilities

Note 7 - Right to Use Assets and Lease Liabilities – Operating Leases

The Company leases clinic and administrative facilities under operating leases.

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

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

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

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

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

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

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

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

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

The initial lease term is 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 .

On August 31, 2021, the Company entered into an agreement to open a clinic in St.

Paul, Minnesota, which is expected to begin operation in the fourth quarter of 2021.

The initial lease term is for 114 months.

Fixed rent payments under the initial term are approximately $ 663,000 .

On September 9, 2021, the Company entered into an agreement to open a clinic in Minneapolis, Minnesota, which is expected to begin operation in the fourth quarter of 2021.

The initial lease term is for 90 months.

Fixed rent payments under the initial term are approximately $ 489,000 .

On September 28, 2021, the Company entered into an agreement to open a clinic in Denver, Colorado, which is expected to begin operation in the first quarter of 2022.

The initial lease term is for 96 months.

Fixed rent payments under the initial term are approximately $ 640,000 .

As of September 30, 2021, the Company had total operating lease liabilities of approximately $ 3.2 million and right-of-use assets of approximately $ 3.1 million, which were included in the condensed consolidated balance sheet.

The Company has operating leases for its clinic with a remaining lease term of approximately 7.3 years.

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

Lease expense for the three months ended March 31, 2022 and 2021 amounted to $ 230,973 and $ 10,642 , respectively.

The Company’s ROU asset amortization for the three months ended March 31, 2022 and 2021 was $ 267,463 and $ 4,318 , respectively.

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

As of March 31, 2022, the Company had total operating lease liabilities of approximately $ 4.1 million and right-of-use assets of approximately $ 3.6 million, which were included in the condensed consolidated balance sheet.

Right to use assets – operating leases are summarized below:

September 30,

Administrative office

Right to use assets, net

Operating lease liabilities are summarized below:

September 30,

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 September 30, 2021, was $ 153,300 and for 2020 was $ 0 .

For the nine months ended September 30, 2021, and 2020 amounted to $ 212,500 and $ 0 , respectively.

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

The Company’s ROU asset amortization for the nine months ended September 30, 2021, and 2020 was $ 71,349 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 September 30, 2022

For the twelve months ended September 30, 2023

For the twelve months ended September 30, 2024

For the twelve months ended September 30, 2025

For the twelve months ended September 30, 2026

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 March 31, 2027

Present value discount

1 unchanged sentence

Note 8 – Debt

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

August 2014 Series C and D Convertible Debenture

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

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

These obligations have been fully satisfied as of the date of this filing and the Company has no further requirements related to these matters.

March 2016 Convertible Note A

On March 24, 2021, the Company paid cash in the amount of $ 55,368 as settlement of principal and accrued interest in the amount of $ 41,000 and $ 13,167 , respectively, due under the March 2016 Convertible Note A.

The Company recognized a loss in the amount of $ 1,201 on this transaction.