What changed in this filing

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Item 1. Business

2024-04-16 compared with 2023-07-14 · 185 added, 199 removed, 65 unchanged (86% of the section changed)

Company Overview

The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein.

Mitesco, Inc.

(the “Company,” “we,” “us,” or “our”), previously known as True Nature Holding, Inc., which was previously known as Trunity Holdings, Inc., a Delaware corporation, incorporated on January 18, 2012.

Effective April 22, 2020, we changed our name to Mitesco, Inc.

We are a holding company with current operating plans to participate in the healthcare 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 our 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 (“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 medical practice focuses on whole person health and prevention.

During late 2022 we decided to close our clinics due to a lack of funding for their operations and growth plans.

We have always had a view toward additional healthcare technology and services offerings and are committing more time to that effort going forward.

(the “Company,” “we,” “us,” or “our”) was formed in the state of Delaware on January 18, 2012.

On December 9, 2015, we restructured our operations and acquired Newco4pharmacy, LLC, a development stage company which sought to acquire compounding pharmacy businesses.

As a part of the restructuring, we completed a “spin out” of our former business line.

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

On October 13, 2023, the Company effected a re-domestication to Nevada.

We are a holding company seeking to provide products, services and technology to make accessible higher quality, and more affordable healthcare solutions.

We have recently discontinued the business activities within “The Good Clinic, LLC” healthcare subsidiary due to lack of profitability and limited funding.

We have a number of near-term opportunities that we hope to pursue, assuming the capital markets make sufficient funding available at reasonable rates.

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There also continues to be a heightened level of review and/or audit by federal and state regulators of the health and related benefits industry’s business and reporting practices.

As of the date of this filing, we are not subject any actual or anticipated regulatory reviews or audits relating to our operations.

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 laws and rules governing our businesses and interpretations of those laws and rules continue to evolve each year and are subject to frequent change.

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We cannot predict whether pending or future federal or state legislation will have an adverse effect on our business.

We can give no assurance that its 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 business practices, based on:

We 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 business practices, based on:

(i) future enactment of new health care or other laws or regulations;

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(iii) our pending or future federal or state governmental investigations.

Corporate Organizational Chart

Due to the prohibition of corporate medicine in Minnesota and Colorado, these entities are owned by licensed nurse practitioners and are managed and controlled under contract by The Good Clinic LLC using a variable interest entity structure.

A prohibition on the corporate practice of medicine by statute, regulation, board of medicine or attorney general guidance, or case law, exists in certain of the U.S.

states in which we operate.

These laws generally prohibit the practice of medicine by lay persons or entities and are intended to prevent unlicensed persons or entities from interfering with or inappropriately influencing providers’ professional judgment.

We do not own the Good Clinic MN PLLC or the Good Clinic CO PLLC (together, the “Good Clinic PLLCs”).

The Good Clinic LLC manages all administrative services.

All clinical decisions are the purview of the Good Clinic PLLCs.

The market for healthcare solutions including walk in clinics and telehealth services is competitive.

We compete in a fragmented primary care market with direct and indirect competitors that offer varying levels of impact to our stakeholders such as insurance companies, patients, and employers.

Our competitive success is contingent on our ability to simultaneously address the needs of key stakeholders efficiently and with superior outcomes at scale compared with competitors.

We expect to compete with walk-in clinics, traditional healthcare providers, and primary care medical practices, care management and coordination, digital health, and telehealth companies.

Competition in our market involves rapidly changing technologies, evolving regulatory requirements and industry expectations, frequent new product and service introductions and changes in customer and patient requirements.

If we are unable to keep pace with the evolving needs of our clients, members and partners and continue to develop and introduce new applications and services in a timely and efficient manner, demand for our solutions and services may be reduced and our business and results of operations would be harmed.

Our business is dependent on completing our clinics and gaining patients and customers in our target markets.

However, the healthcare market is competitive, which could make it difficult for us to succeed.

We face competition in the healthcare industry for our solutions and services from a range of companies and providers, including traditional healthcare providers and medical practices that offer similar services.

These competitors primarily include primary care providers who are employed by or affiliated with health networks.

Our indirect competitors also include episodic consumer-driven point solutions such as telemedicine as well as urgent care providers.

Generally, urgent care providers in the local communities will provide services similar to those we intend to offer, and our competitors (1) are more established than we are, (2) may offer a broader array of services or more desirable facilities to patients and providers than ours, and (3) may have larger or more specialized medical staffs to admit and refer patients, among other things.

Our competition varies by state but generally includes local health systems, primary care physician offices and urgent care centers.

Discontinued Operations and Debt Exchange Agreement

We have discontinued business activities as a result of the closure of “The Good Clinic, LLC” healthcare subsidiary in late 2022.

It has been permanently shuttered due to a lack of profitability.

On December 8, 2023, the Company sold the remaining assets of The Good Clinic, LLC to Leading Primary Care LLC, a company organized by Michael C.

Howe, the former CEO of The Good Clinic, LLC for total consideration of approximately $2.5 million in the form of forgiveness of certain notes payable held by Howe.

As a result, the accounts of The Good Clinic, LLC have been included in “Net (loss) from discontinued operations” in our consolidated statements of operations.

Additionally, these assets and liabilities have been presented as discontinued operations in our consolidated balance sheet as of December 31, 2023 and December 31, 2022.

See Note 4 - Discontinued Operations for additional information.

Reverse Stock Split

On December 12, 2022, our board of directors approved the filing of a certificate of amendment to our amended and restated certificate of incorporation (the “Amendment”) with the Secretary of State of the State of Delaware to affect a one-for-fifty reverse stock split.

The Amendment became effective at 5:00 p.m.

Eastern Time on December 12, 2022.

Pursuant to the Amendment, at the effective time of the Amendment, every fifty (50) shares of our issued and outstanding common stock was automatically combined into one (1) issued and outstanding share of common stock.

The Reverse Stock Split affected all shares of our common stock outstanding immediately prior to the effective time of the 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 the number of shares issuable upon the exercise or vesting of all stock options and warrants issued by us and outstanding immediately prior to the effective time of the Amendment, which resulted in a proportionate decrease in the number of shares of our common stock reserved for issuance upon exercise or vesting of such stock options and warrants and a proportionate increase in the exercise price of all such stock options and warrants.

In addition, the number 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 amounts of common stock presented in this Annual Report on Form 10k have been retroactively adjusted to reflect the Reverse Stock Split.

On January 4, 2023, the Company disclosed in a DEF 14C filing with the SEC that its shareholders had authorized the Board of Directors to affect a reverse split of up to four (4) to one (1) reverse split.

Authorization to be available until December 18, 2025.

The SEC filing can be found at the following link:

https://www.sec.gov/Archives/edgar/data/802257/000118518523000003/mitesco20230104_def14c.htm

On February 20, 2024 the Board of Directors of Mitesco unanimously voted to terminate this previously approved authorization.

There is a large market for acquisitions by other holding companies, investors, private equity, venture capital and other existing businesses in the subject matter areas of the targets.

Our competitors may have greater name recognition, longer operating histories and significantly greater financial and other resources than we do.

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If we are unable to compete in the healthcare market, our business would be harmed.

We may encounter increased competition from system-affiliated hospitals and healthcare companies, health insurers and private equity companies seeking to acquire providers in specific geographic markets.

We also may face competition from primary care providers, and outpatient centers for market share and for providers and personnel.

Furthermore, some of the clinics and medical offices that compete with us may be government agencies or not-for-profit organizations supported by endowments and charitable contributions and can finance capital expenditures and operations on a tax-exempt basis.

Competitors may also be better positioned to contract with leading health network partners in our target markets.

If our competitors are better able to attract patients, contract with health network partners, recruit providers, expand services or obtain favorable managed care contracts at their facilities than we are, we may experience an overall decline in member volumes and net revenue.

We cannot assure we will be able to compete in the markets in which we operate which could cause you to lose your investment.

We cannot be assured that we will be able to compete any of the markets in which we intend to operate.

This could cause you to lose your investment.

Our Competitive Strengths

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As additional capital is available to the Company, we will pursue the acquisition of existing healthcare services and technology business, and we may consider opening new clinics using our revised and less capital-intensive approach going forward:

Experienced management team - with a proven track record of growing healthcare services companies.

Experienced Board of Directors - that have been recruited for their specific expertise in business strategy, operations, healthcare, business development, accounting, public company management, information systems and technology, investment banking, merger & acquisitions, regulatory affairs, state, federal, and international law, political process lobbying,

Cost Advantage - Based on Bureau of Labor Statistics for Physician providers, the 2022 median annual pay for a Nurse Practitioner (NP) was $121,610 compared to the median annual pay for Family Medicine Physicians was $225,190.

CMS established NP reimbursement at 85% of physician reimbursement for the same medical, surgical, and diagnostic procedure or service.

Based on these considerations we believe we will have approximately a forty percent (40%) labor cost advantage over the traditional primary care service provider by employing Nurse Practitioners as the primary healthcare professional as compared to a traditional physician-employed care models.

Diversified product line including

Insurance paid (Commercial, Medicare and Medicaid) and cash paid primary care and behavioral services

Preventative care

Wellness care

Nutrition coaching

Population health services management

Telehealth care

Department of Transportation annual exams and First Responder Exams

In-clinic product sales of books, vitamins, supplements, and essential oils

Large healthcare market opportunity

U.S.’s total spending on healthcare equaled 19.7% of GDP at about $4.1 Trillion in 2020 according to the Centers for Medicare & Medicaid Services.

Assuming that consumers want to lower their health care costs, we believe we can provide lower health care costs to consumers by utilizing primary care and Nurse Practitioners versus specialists.

Grandview Research values the US primary care market at $260.1 billion in 2021 and expects it to expand at a compound rate (CAGR) of 3.2% from 2022 to 2030.

The WHO calls primary health care “the most inclusive, equitable, cost-effective and efficient approach to enhance people’s physical and mental health, as well as their social well-being.” CMS in their Primary Care First Model brief notes, “Primary care is central to a high-functioning healthcare system and thus, there is an urgent need to preserve and strengthen primary care.” The Advisory Board noted in their February 24, 2022, daily briefing that “investors are also pouring billions into primary care companies, amounting to $16 billion in 2021 alone.” The Good Clinic locations provide net new primary care access for the US healthcare consumer.

skin care market is large and growing.

According to an October 2021 report by Statista, the U.S.

skin care market was estimated at $17.5 billion in 2020.

The North America dietary supplements market is estimated $48.4 billion in 2021 and is expected to grow at a compound annual growth rate (CAGR) of 5.6% from 2022 to 2030 according to a report from Grand View Research.

Shortage of primary care providers – We believe there is a primary care physician shortage in America.

The Association of American Medical Colleges in a June 21, 2021 report, states that there is a 17,800 to as much as 48,000 shortfall of primary care physicians by 2034.

The Good Clinic is just one of a few organizations providing net new capacity to serve the people impacted by the shortage.

Experienced team - with a proven track record of growing businesses both organically and through acquisition.

Public company experience – solid knowledge of the equity markets and participants in the financing of public companies.

Compliance experience – extensive securities law experience and in SEC reporting.

Knowledge of audit and accounting requirements – any acquisition into a publicly held company must be able to be fully audited according to PCOAB standards.

Operational Overview

During the year ended December 31, 2022, we have focused on establishing medical clinics utilizing nurse practitioners and telemedicine technology under “The Good Clinic” name.

Our strategy is to utilize a mix of nurse practitioners and telemedicine technology in clinics to improve patient experiences and outcomes 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 acquisition of existing healthcare technology and services businesses.

Serving the Market

We believe there is a looming shortage of primary care providers in the United States.

Approximately 27 States in the U.S.

allow Nurse Practitioners to operate as fully independent primary care providers.

Another 13 allow Nurse Practitioners broad autonomy in providing primary care services.

By using Nurse Practitioners, we plan to focus on direct patient care, patient education and helping people to manage their health more effectively.

The Good Clinics are designed to improve access to basic affordable primary care and empower Nurse Practitioners to function as healthcare providers.

According to an American Association of Colleges of Nursing report from April 2022, there are more than 355,000 Nurse practitioners practicing in the US making the necessary expertise readily available.

This is a significant increase from the approximately 91,000 practicing in 2010.

According to the Bureau of Labor Statistics 2021 data, Nurse Practitioners median annual pay was 48% less than their physician counterparts.

Like any consumer-focused business, locating a clinic is one-part art and one-part science.

We evaluate concentration of primary care practices within the zip code and examine average wait-times for appointments and ensure the local markets are already using Nurse Practitioners as primary care providers.

We focus on convenience that includes locations near residential centers, adequate parking, good retail visibility in higher traffic areas and the presence of other retail businesses close by.

Billing and Payment

The Good Clinics bills health insurance companies for allowed medical services and accepts payment in cash or credit cards for client selected and non-covered services.

We will also explore partnering with local small to mid-size businesses of all types to provide near-site employer clinics for wellness exams, chronic disease management, department of transportation exams, physicals, virus testing, occupational health services and other healthcare related services traditionally offered by primary care providers.

We plan to generate business for The Good Clinics through a combination of partnerships with residential developers and local marketing and advertising, direct sales of occupational medical services to companies (flu shots, workers injury treatment services, drug testing, and health promotion programs), public relations efforts with local charities, city and county organizations, hospitals and medical providers, networking and promotional events and open houses.

We have used internal marketing including brochures, posters, magazines, health promotion articles, and educational materials that point to our services.

Upon having a new patient, we plan to initiate client follow-up and schedule return visits.

To assure broad access of insured clients in the medical service area, we plan to participate in contracts with health insurance providers, and the Medicare program, making The Good Clinics services fully reimbursable for its clients.

The Good Clinic is about delivering a convenient individualized care experience built on education, expertise, and empathy.

We are the patient’s partner in obtaining quality and affordable medical care.

The Good Clinic supports patient care with both in-clinic and telehealth visits.

Healthcare Industry Insight

According to a recent report published by Centers for Medicare and Medicaid Services (“CMS”) which examined the market for 2020, health care expenditures continue to consume an increasing portion of most economies.

In the U.S., health care spending increased 9.7 percent to $4.1 trillion in 2020, and now represents 19.7 percent of the U.S.’ Gross Domestic Product (“GDP”).

An aging population and high levels of chronic conditions are contributing to expectations that health care expenditures will continue growing faster than the economy.

The CMS estimates annual U.S.

healthcare spending will grow at an average rate of 5.1 percent through 2030 and reach $6.8 trillion, or 19.6 percent of U.S.

GDP, by 2030.

We believe this trajectory is unsustainable and support the widespread call for investment in expanding access to primary care.

Establishing a longitudinal primary care relationship has significant value to the individual and the overall healthcare system as detailed in an Eden Health May 2021 posting.

Adults in the U.S.

who have a primary care provider have 19% lower odds of premature death than those who only see specialists for their care.

Patients with a primary care provider save 33% on healthcare costs compared to those who only see specialists.

Access to primary care helps avoid unnecessary trips to the emergency room, where care can cost as much as 4x that of other outpatient care.

Catching and treating problems during regular check-ups is far less expensive than treating an advanced illness — in fact, if everyone saw a primary care provider first for their care, it would save the U.S.

an estimated $67 billion every year.

Patients report a 10% increase in patient satisfaction with healthcare when they have a primary care provider.

During 2021 and through the year ended December 31, 2022, we focused on establishing medical clinics utilizing nurse practitioners and telemedicine technology under “The Good Clinic” name.

Our strategy was to utilize a mix of nurse practitioners and telemedicine technology in clinics to improve patient experiences and outcomes and reduce healthcare costs as compared to other available treatment options.

As previously noted, we made a strategic decision to shutter the clinic in the fourth quarter of 2022 and released the entire staff.

Our senior management team and the Board of Directors within the holding company was replaced in December 2023, adding individuals with greater knowledge of turnaround management, and acquisition development.

As we redevelop our new strategy for lower cost operations, we expect to focus on the acquisition of existing technology and services businesses, or those with very near-term potential.

Management/Human Capital

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After a period of five years of use, or sooner based upon our marketing resources and our use of the name, we intend to apply to have the name transferred to the Principle Register.

These assets, along with remaining clinic equipment, operating documentation and computers were sold in exchange for cancellation of certain debts, as noted below.

Debt Exchange Agreement

On December 8, 2023, effective November 30, 2023, the Company sold the remaining assets of The Good Clinic, LLC to Leading Primary Care LLC, a company organized by Michael C.

Howe, the former CEO of The Good Clinic, LLC for total consideration of approximately $2.5 million.

Consideration consisted of cancelling existing notes payable and accrued interest owed to Mr.

Howe in the amount of approximately $2.5 million.

The Company recognized a contribution to capital on this transaction in the amount of approximately $2.5 million as Mr.

Howe is a related party.

On December 8, 2023, Mr.

Howe also exchanged (i) 500,000 shares of Series D Preferred Stock with a stated value of approximately $0.5 million and accrued dividends of approximately $67,000, and (ii) accrued salary owed to Mr.

Howe in the amount of approximately $38,000 or approximately $25,000 (the investment incentive of 65% applied only to the accrued salary portion), for 655 shares of the Company’s Series F Preferred Stock with a liquidation value of approximately $0.6 million.

Other than the conversion of incentive of the approximately $25,000, there was no gain or loss recorded on this transaction.

See the Form 8k filing of December 13, 2023, located here, for additional details:

https://www.sec.gov/Archives/edgar/data/802257/000118518523001292/0001185185-23-001292-index.htm .

Government Regulation

The healthcare industry is a highly regulated industry by both federal and state governments.

We are subject to other federal and state healthcare laws that could have a material adverse effect on our business, financial condition, or results of operations.

We operate in a highly regulated and evolving environment with rigorous regulatory enforcement.

Acquisitions of many businesses are subject to federal, state and local review and regulation.

Any legal or regulatory action could be time-consuming and costly.

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Any regulatory action could have a negative impact on us and materially affect our reputation, business, and operations.

healthcare industry has undergone significant changes designed to improve patient safety, improve clinical outcomes, and increase access to medical care.

These changes include enactments and repeals of various healthcare related laws and regulation.

Our operations and economic viability may be adversely affected by the changes in such regulations, including:

(i) federal and state fraud and abuse laws;

(ii) federal and state anti-kickback statutes;

(iii) federal and state false claims laws;

(iv) federal and state self-referral laws;

(v) state restrictions on fee splitting;

(vi) laws regarding the privacy and confidentiality of patient information;

and (vii) other laws and government regulations.

Our operations and economic viability may be adversely affected by the changes in such regulations.

If there are changes in laws, regulations, or administrative or judicial interpretations, we may have to change our future business practices, or our business practices could be challenged as unlawful, which could have a material adverse effect on our business, financial condition, and results of operations.

See the description below for certain of the laws, regulations, or administrative or judicial interpretations that we are currently subject to and the “Risk Factors” section.

The Affordable Care Act

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (the “Affordable Care Act” or the “ACA”) in 2010 made major changes in how healthcare is delivered and reimbursed and increased access to health insurance benefits to the uninsured and underinsured population of the United States.

Since its enactment, there have been judicial and Congressional challenges to certain aspects of the ACA as well as recent efforts by the current administration to repeal or replace certain aspects of the ACA.

For example, the Tax Cuts and Jobs Act of 2017 was enacted, which includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” Since the enactment of the Tax Cuts and Jobs Act of 2017, there have been additional amendments to certain provisions of the ACA, and we expect the current administration and Congress will likely continue to seek to modify all, or certain provisions of, the ACA.

It is uncertain the extent to which any such changes may impact our business or financial condition.

Congress may consider other legislation to repeal and replace elements of the ACA.

In December 2019, a federal appeals court held that the individual mandate portion of the ACA was unconstitutional and left open the question whether the remaining provisions of the ACA would be valid without the individual mandate.

We continue to evaluate the effect that the ACA and its possible modification or repeal and replacement has on our business.

It is uncertain the extent to which any such changes may impact our business or financial condition.

Other legislative changes have been proposed and adopted since the ACA was enacted.

These changes include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year pursuant to the Budget Control Act of 2011 and subsequent laws, which began in 2013 and will remain in effect through 2029 unless additional Congressional action is taken.

In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

New laws may result in additional reductions in Medicare and other healthcare funding, which may materially adversely affect customer demand and affordability for our products and services and, accordingly, the results of our financial operations.

Additional changes that may affect our business include the expansion of new programs such as Medicare payment for performance initiatives for physicians under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) which first affected physician payment in 2019.

At this time, it is unclear how the introduction of the Medicare quality payment program will impact overall physician reimbursement.

Such changes in the regulatory environment may also result in changes to our payor mix that may affect our operations and revenue.

In addition, certain provisions of the ACA authorize voluntary demonstration projects, which include the development of bundling payments for acute, inpatient hospital services, physician services and post-acute services for episodes of hospital care.

Further, the ACA may adversely affect payors by increasing medical costs generally, which could have an effect on the industry and potentially impact our business and revenue as payors seek to offset these increases by reducing costs in other areas.

Certain of these provisions are still being implemented and the full impact of these changes on us cannot be determined at this time.

Uncertainty regarding future amendments to the ACA as well as new legislative proposals to reform healthcare and government insurance programs, along with the trend toward managed healthcare in the United States, could result in reduced demand and prices for our services.

We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments and other third-party payors will pay for healthcare products and services, which could adversely affect our business, financial condition, and results of operations.

Federal Anti-Kickback Statutes

The federal Anti-Kickback Statute is a provision of the Social Security Act of 1972 that prohibits as a felony offense the knowing and willful offer, payment, solicitation or receipt of any form of remuneration in return for, or to induce, (1) the referral of a patient for items or services for which payment may be made in whole or part under Medicare, Medicaid, or other federal healthcare programs, (2) the furnishing or arranging for the furnishing of items or services reimbursable under Medicare, Medicaid, or other federal healthcare programs or (3) the purchase, lease, or order or arranging or recommending the purchasing, leasing or ordering of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs.

The Patient Protection and Affordable Care Act (“ACA”) amended section 1128B of the Social Security Act to make it clear that a person need not have actual knowledge of the statute, or specific intent to violate the statute, as a predicate for a violation.

The OIG, which has the authority to impose administrative sanctions for violation of the statute, has adopted as its standard for review a judicial interpretation which concludes that the statute prohibits any arrangement where even one purpose of the remuneration is to induce or reward referrals.

A violation of the Anti-Kickback Statute is a felony punishable by imprisonment, criminal fines of up to $25,000, civil fines of up to $50,000 per violation, and three times the amount of the unlawful remuneration.

A violation also can result in exclusion from Medicare, Medicaid, or other federal healthcare programs.

In addition, pursuant to the changes of the ACA, a claim that includes items or services resulting from a violation of the Anti-Kickback Statute is a false claim for purposes of the False Claims Act.

Federal Stark Law

The federal Stark Law, 42 U.S.C.

1395nn, also known as the physician self-referral law, generally prohibits a provider from referring Medicare and Medicaid patients to an entity (including hospitals) providing ‘‘designated health services,’’ if the physician or a member of the physician’s immediate family has a ‘‘financial relationship’’ with the entity, unless a specific exception applies.

Designated health services include, among other services, inpatient hospital services, outpatient prescription drug services, clinical laboratory services, certain imaging services (e.g., MRI, CT, ultrasound), and other services that our affiliated physicians may order for their patients.

The prohibition applies regardless of the reasons for the financial relationship and the referral;

and therefore, unlike the federal Anti-Kickback Statute, intent to violate the law is not required.

Like the Anti-Kickback Statute, the Stark Law contains statutory and regulatory exceptions intended to protect certain types of transactions and arrangements.

Unlike safe harbors under the Anti-Kickback Statute with which compliance is voluntary, an arrangement must comply with every requirement of a Stark Law exception, or the arrangement is in violation of the Stark Law.

Because the Stark Law and implementing regulations continue to evolve and are detailed and complex, while we attempt to structure our relationships to meet an exception to the Stark Law, there can be no assurance that the arrangements entered into by us with affiliated physicians and facilities will be found to be in compliance with the Stark Law, as it ultimately may be implemented or interpreted.

The penalties for violating the Stark Law can include the denial of payment for services ordered in violation of the statute, mandatory refunds of any sums paid for such services, and civil penalties of up to $15,000 for each violation, double damages, and possible exclusion from future participation in the governmental healthcare programs.

A person who engages in a scheme to circumvent the Stark Law’s prohibitions may be fined up to $100,000 for each applicable arrangement or scheme.

Some states have enacted statutes and regulations against self-referral arrangements similar to the federal Stark Law, but which may be applicable to the referral of patients regardless of their payor source and which may apply to different types of services.

These state laws may contain statutory and regulatory exceptions that are different from those of the federal law and that may vary from state to state.

An adverse determination under these state laws and/or the federal Stark Law could subject us to different liabilities, including criminal penalties, civil monetary penalties, and exclusion from participation in Medicare, Medicaid, or other health care programs, any of which could have a material adverse effect on our business, financial condition, or results of operations.

Health Information Privacy and Security Standards

The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended, contain detailed requirements concerning the use and disclosure of individually identifiable patient health information (“PHI”) by various healthcare providers, such as medical groups.

HIPAA covered entities must implement certain administrative, physical, and technical security standards to protect the integrity, confidentiality and availability of certain electronic health information received, maintained, or transmitted.

HIPAA also implemented standard transaction code sets and standard identifiers that covered entities must use when submitting or receiving certain electronic healthcare transactions, including billing and claim collection activities.

Violations of the HIPAA privacy and security rules may result in civil and criminal penalties, including a tiered system of civil money penalties that range from $100 to $50,000 per violation, with a cap of $1.5 million per year for identical violations.

A HIPAA covered entity must also promptly notify affected individuals where a breach affects more than 500 individuals and report breaches affecting fewer than 500 individuals annually.

State attorneys general may bring civil actions on behalf of state residents for violations of the HIPAA privacy and security rules, obtain damages on behalf of state residents, and enjoin further violations.

Many states also have laws that protect the privacy and security of confidential, personal information, which may be similar to or even more stringent than HIPAA.

Some of these state laws may impose fines and penalties on violators and may afford private rights of action to individuals who believe their personal information has been misused.

We expect increased federal and state privacy and security enforcement efforts.

Environmental and Occupational Safety and Health Administration Regulations

We are subject to federal, state, and local regulations governing the storage, use and disposal of waste materials and products.

We have been subject to federal, state, and local regulations governing the storage, use and disposal of waste materials and products with regard to our previous clinic subsidiary operations.

Although we believe that our safety procedures for storing, handling, and disposing of these materials and products comply with the standards prescribed by law and regulation, we cannot eliminate the risk of accidental contamination or injury from those hazardous materials.

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We cannot predict the frequency of compliance, monitoring, or enforcement actions to which we may be subject as those regulations are being implemented, which could adversely affect our operations.

Federal and State Healthcare Laws

We are subject to other federal and state healthcare laws that could have a material adverse effect on our business, financial condition, or results of operations.

The Health Care Fraud Statute prohibits any person from knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, which can be either a government or private payor plan.

Violation of this statute, even in the absence of actual knowledge of or specific intent to violate the statute, may be charged as a felony offense and may result in fines, imprisonment, or both.

The Health Care False Statement Statute prohibits, in any matter involving a federal health care program, anyone from knowingly and willfully falsifying, concealing, or covering up, by any trick, scheme or device, a material fact, or making any materially false, fictitious, or fraudulent statement or representation, or making or using any materially false writing or document knowing that it contains a materially false or fraudulent statement.

A violation of this statute may be charged as a felony offense and may result in fines, imprisonment, or both.

Under the Civil Monetary Penalties Law of the Social Security Act, a person (including an organization) is prohibited from knowingly presenting or causing to be presented to any United States officer, employee, agent, or department, or any state agency, a claim for payment for medical or other items or services where the person knows or should know (a) the items or services were not provided as described in the coding of the claim, (b) the claim is a false or fraudulent claim, (c) the claim is for a service furnished by an unlicensed physician, (d) the claim is for medical or other items or service furnished by a person or an entity that is in a period of exclusion from the program, or (e) the items or services are medically unnecessary items or services.

Violations of the law may result in penalties of up to $10,000 per claim, treble damages, and exclusion from federal healthcare programs.

In addition, the office of inspector general (“OIG”) may impose civil monetary penalties against any physician who knowingly accepts payment from a hospital (as well as against the hospital making the payment) as an inducement to reduce or limit medically necessary services provided to Medicare or Medicaid program beneficiaries.

Further, except as permitted under the Civil Monetary Penalties Law, a person who offers or transfers to a Medicare or Medicaid beneficiary any remuneration that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider of Medicare or Medicaid payable items or services may be liable for civil money penalties of up to $10,000 for each wrongful act.

In addition to the laws previously described, we may also be subject to other state fraud and abuse statutes and regulations if we expand our operations nationally.

For example, Minnesota imposes a provider tax on healthcare providers and Colorado mandates that all patient facing providers are COVID-19 vaccinated.

Generally, we operationalize our policies and procedures to be uniform across all jurisdictions in a manner that also complies with all local and state requirements.

Many states have adopted a form of anti-kickback law, self-referral prohibition, and false claims and insurance fraud prohibition.

The scope of these laws and the interpretations of them vary from state to state and are enforced by state courts and regulatory authorities, each with broad discretion.

Generally, state laws reach to all healthcare services and not just those covered under a governmental healthcare program.

A determination of liability under any of these laws could result in fines and penalties and restrictions on our ability to operate in these states.

We cannot assure that our arrangements or business practices will not be subject to government scrutiny or be found to violate applicable fraud and abuse laws.

Recent Developments

We have 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 hope to slowly open clinics, using the same staffing approach, but with a wider range of services for a broader portion of the population with healthcare needs.

The clinics closed and leases lost include the clinic in 1) Eagan, MN, 2) St.

We are a holding company with current operating plans to acquire one or more existing businesses that may have the ability to scale i operations organically, or through additional acquisitions and capital from the public equity markets.

While from late 2012 through late 2022 we did operate a subsidiary focused on primary care focused healthcare clinics, we made a strategic decision to close those clinic due to a lack of profitability.

The clinics closed and leases cancelled include the clinics in:

1) Eagan, MN, 2) St.

Paul MN, 3) St.

Louis Park, MN, 4) Maple Grove, MN, 5) NE Minneapolis, 6) Wayzata, MN (under construction), and 7) two clinics in Denver, CO (under construction).

We have settlements in place, or in process with the leaseholders and construction entities which participated in the clinic operation.

We expect continued efforts to negotiate the settlement of any remaining liabilities during the first half of 2024.

There were investments of over $15 million generated from the sale of certain securities, and debt instruments starting in 2021 and continuing through 2023.

As we move forward, we expect to integrate those securities into common stock, or certain forms of preferred shares where we may find a path of liquidity in the public equity markets for their ultimate repayment.

We currently operate with a three (3) person Board of Directors and a small number of advisors and consultants.

Two (2) of our Board members have assumed operating roles in order to minimize operating expenses.

They are not compensated for their operating roles and received only a small stock issuance in consideration of their role as a member of the Board.

There is no source of cash revenue currently, instead we have relied on small debt offerings from existing institutional shareholders.

We expect to continue our efforts to reduce our costs of carry from prior issuances of securities by renegotiating their terms.

Our ability to attract acquisitions, and the capital necessary to grow those acquisitions, we depend on a liquid market for our common stock, continued compliance with all securities laws, and the availability for capital within the current investor base, and with new participants.

Reverse Stock Split

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This reverse stock split was effected as of December 12, 2022.

Gardner Debt for Equity Agreement

Authorization to be available until December 18, 2025.

The SEC filing can be found at the following link:

https://www.sec.gov/Archives/edgar/data/802257/000118518523000003/mitesco20230104_def14c.htm

On February 20, 2024 the Board of Directors of Mitesco unanimously voted to terminate this previously approved authorization.

Legal Settlements on Sites Previously Operated by The Good Clinic, LLC Subsidiary

Nordhaus Clinic

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

The initial lease term is eight years.

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

On November 6, 2023, the Company received a termination notice from the landlord indicating the lease had been terminated.

No additional claims have been received from the landlord and the Company believes no additional amounts are owed.

Egan Clinic a.k.a.

On October 14, 2021, we entered into an agreement to open a clinic in Eagan, Minnesota, which began operations in the fourth quarter of 2021.

The initial lease term is for 96 months.

Fixed rent payments under the initial term are approximately $767,000.

A Summary Judgment was granted on December 4, 2023, in the amount of $488,491, and the entry of final judgment was entered on December 15, 2023 and the Company has released the property back to the leaseholder.

Paul Clinic a.k.a.

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

Paul, Minnesota, which began operations in the fourth quarter of 2021.

The initial lease term is for 114 months.

Fixed rent payments under the initial term are approximately $1,153,000.

A stipulation for Judgment was filed on December 21, 2023 in the amount of $415,266.

The stipulated judgment includes $178,542 in unpaid back rent, $172,124 in resolution of mechanics’ liens, and $64,600 in attorneys’ fees.

Final entry of judgment by the Court was entered against the Company on January 19, 2024, and the Company has released the property back to the leaseholder.

Louis Park Clinic a.k.a.

Excelsior & Grand

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

Louis Park, Minnesota, which began 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.

The Company agreed to and executed a Confession of Judgment in the amount of $425,351 on April 2, 2024 and has released the property back to the leaseholder.

We received the fully executed and recorded judgement on April 10, 2024.

Eden Prairie Clinic a.k.a.

On June 8, 2021, we entered into an agreement to open a clinic in Eden Prairie, Minnesota, which began 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.

The Company has surrendered possession of the property and is currently in negotiations the amounts owed and is in the process of settling the remaining amounts owed.

Maple Grove Clinic a.k.a.

On October 8, 2021, we entered into an agreement to open a clinic in Maple Grove, Minnesota which began operation in the fourth quarter of 2021.

The initial lease term is for 108 months.

Fixed rent payments under the initial term are approximately $1,153,127.

On October 22, 2022, the Company entered into a settlement agreement with the leaseholder for $219,576 and the Company has released the property back to the leaseholder.

Radiant Clinic a.k.a.

On September 9, 2021, we entered into an agreement to open a clinic in Denver, Colorado, which was expected to begin operation in the first quarter of 2023 but possession of which has been relinquished to the landlords.

The initial lease term is for 90 months.

Fixed rent payments under the initial term are approximately $782,000.

As of April 10, 2024, the Company has settled the amounts owed to the leaseholder and full resolution of all liens for approximately $530,000 and the Company has released the property back to the leaseholder.

Quincy Clinic a.k.a.

On September 28, 2021, we entered into an agreement to open a clinic in Denver, Colorado, which was expected to begin operation in the first quarter of 2023 but possession of which has been relinquished to the landlords.

The initial lease term is for 94 months.

Fixed rent payments under the initial term are approximately $1,079,000.

A Final Judgment was granted on November 14, 2023, in the amount of $348,764 including interest, fees and other costs.

The Company has released the property back to the leaseholder.

The following table summarizes the status of our property settlements as noted above and the total settlement amounts as of the date of the filing:

ALSO KNOWN AS:

PROPERTY NAME/OWNER

ORIGINAL OBLIGATION

SETTLEMENT AMOUNT

TYPE OF SETTLEMENT

MINNEAPOLIS, MN

CASH PAYMENT OBLIGATION

DEFAULT JUDGEMENT

LOUIS PARK, MN

EXCELSIOR & GRAND

DEFAULT JUDGEMENT

CONTINENTAL 560

DEFAULT JUDGEMENT

MAPLE GROVE, MN

SETTLEMENT AGREE

DEFAULT JUDGEMENT

Administrative offices

On June 24, 2021, we 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.

We have not entered into a settlement agreement on this site as of the date of this filing but expect to shortly.

Gardner Debt for Equity Agreement and other obligations

The Company entered into a debt-for-equity exchange agreement with Gardner Builders Holdings, LLC (the “Creditor”) on January 7, 2022 (the “Agreement”).

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

As of the date of this filing the Company has begun an effort to negotiate the remaining obligations with Gardner and hopes to have a complete resolution during the third quarter of fiscal 2023.

Much of the amounts claimed by Gardner has been resolved by the settlements with the various leaseholders where Gardner had filed liens.

During 2021 and through 2022 a total of $2,305,155 was paid by the Company directly to Gardner for their services.

As of the date of this filing the Company is continuing an effort to negotiate a settlement of any remaining obligations to this vendor.

Smaller Reporting Company

We are subject to the reporting requirements of Section 13 of the Exchange Act, and subject to the disclosure requirements of Regulation S-K of the SEC, as a “smaller reporting company.” That designation will relieve us of some of the informational requirements of Regulation S-K.

Sarbanes/Oxley Act

Except for the limitations excluded by the JOBS Act discussed under the preceding heading “Smaller Reporting Company,” we are also subject to the Sarbanes-Oxley Act of 2002.

The Sarbanes/Oxley Act created a strong and independent accounting oversight board to oversee the conduct of auditors of public companies and strengthens auditor independence.

It also requires steps to enhance the direct responsibility of senior members of management for financial reporting and for the quality of financial disclosures made by public companies;

establishes clear statutory rules to limit, and to expose to public view, possible conflicts of interest affecting securities analysts;

creates guidelines for audit committee members’ appointment, compensation and oversight of the work of public companies’ auditors;

management assessment of our internal controls;

prohibits certain insiders from trading during pension fund blackout periods;

requires companies and auditors to evaluate internal controls and procedures;

and establishes a federal crime of securities fraud, among other provisions.

Compliance with the requirements of the Sarbanes/Oxley Act will substantially increase our legal and accounting costs.

Exchange Act Reporting Requirements

Section 14(a) of the Exchange Act requires all companies with securities registered pursuant to Section 12(g) of the Exchange Act, like we are, to comply with the rules and regulations of the SEC regarding proxy solicitations, as outlined in Regulation 14A.

Matters submitted to shareholders at a special or annual meeting thereof or pursuant to a written consent will require us to provide our shareholders with the information outlined in Schedules 14A (where proxies are solicited) or 14C (where consents in writing to the action have already been received or anticipated to be received) of Regulation 14, as applicable;

and preliminary copies of this information must be submitted to the SEC at least 10 days prior to the date that definitive copies of this information are forwarded to our shareholders.

We are also required to file annual reports on Form 10-K and quarterly reports on Form 10-Q with the SEC on a regular basis, and will be required to timely disclose certain material events (e.g., changes in corporate control;

acquisitions or dispositions of a significant amount of assets other than in the ordinary course of business;

and bankruptcy) in a Current Report on Form 8-K.

Number of Total Employees and Number of Full Time Employees

As of the date of this Annual Report, we have 3 full-time employees and no part-time employees.

We do not now, or expect in the near term, to provide any benefits to our employees, advisors or consultants.

We have historically provided incentive stock options and other equity incentives to officers, directors and key employees to provide ownership and alignment of interests with our shareholders.

As a company, we seek diversity and inclusion in our workplace.

Other Corporate Information

Our website is www.mitescoinc.com and our principal executive offices is located at 18202 Minnetonka Blvd, Suite 100, Deephaven, MN 55391.

Our website is www.mitescoinc.com and our principal executive offices is located at 505 Beachland Blvd, Vero Beach, Florida 32963.

Our telephone number is (844) 383 8689.

We make available free of charge on our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after we electronically file or furnish such materials to the SEC.

Our website and the information contained therein or connected thereto are not intended to be incorporated into this Form 10-K.

Our website (www.mitescoinc.com) and the information contained therein or connected thereto are not intended to be incorporated into this Form 10-K.

Our filings are also available through the SEC website www.sec.gov.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business