Item 3. Legal Proceedings
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business.
During March 2020, in response to the COVID-19 crisis, the federal government announced plans to offer loans to small businesses in various forms, including the Payroll Protection Program, or “PPP”, established as part of the Corona Virus Aid, Relief and Economic Security Act (“CARES Act”) and administered by the U.S. Small Business Administration. On April 18, 2020, the Company’s former President and COO completed and applied on behalf of the Company to Bank of America, NA (“Bank of America”) for a PPP loan, which was subsequently approved. On April 25, 2020, the Company entered into an unsecured Promissory Note (the “Note”) with Bank of America for a loan in the original principal amount of $460,406, and the Company received the full amount of the loan proceeds on May 4, 2020.
On July 21, 2020, Bank of America notified the Company in writing that it should not have received $440,000 of the loan proceeds disbursed under the Note. The Company investigated the terms of the application and discovered its former President had erroneously represented it was refinancing an Economic Injury Disaster Loan when no such loan had been received. Bank of America requested that the Company remit the funds received back to Bank of America. The Company negotiated the conversion of this to a 60 month note at 1% interest. We are currently in default on this note. If we are not successful bring it current, it could have a material adverse effect on our financial condition.
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. The Company was not named in the suit. The Company expects to resolve it for nominal consideration.
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On October 25, 2022, the company was notified that a vendor filed suit 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 including claims regarding certain construction contracts and as a part of the process of cancellation of leases. See “Properties” for additional details. The following is a summary as of the date of this filing:
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The Wayzata, MN clinic leases was terminated for a commitment to pay $25,000.
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The two Denver, Colorado clinic lease, 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 properties.
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The Eagan clinic, aka Vikings 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 with the lien holder. Mitesco is now in settlement negotiations with the landlord for the handling of lease obligations.
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The St. Paul clinic possession was relinquished in March 2023. The handling of lease obligations remain in negotiations as does the handling of the mechanics liens placed on the properties.
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The St. Louis Park clinic possession was relinquished in April 2023. The handling of lease obligations remain in negotiations as does the handling of the mechanics liens placed on the properties.
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The Maple Grove clinic eviction occurred in April 2023. The handling of lease obligations remain in negotiations as does the handling of the mechanics liens placed on the properties.
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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 4. MINE SAFETY DISCLOSURES
Not Applicable.
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PART II
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.