What changed in this filing

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Item 1A. Risk Factors

2024-04-16 compared with 2023-07-14 · 55 added, 258 removed, 258 unchanged (55% of the section changed)

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Such additional funding may not be available on commercially reasonable terms, or at all.

We need additional capital to fund our operations and cannot assure you that we will be able to obtain sufficient capital on reasonable terms or at all, and we may be forced to limit the scope of our operations.

We need additional capital to implement and fund our operations.

We will need additional capital to implement and fund our operations .

The extent of our capital needs will depend on numerous factors, including (i) the availability and terms of any financing available to us;

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The issuance of additional shares of our Common Stock, Warrants, convertible Preferred Stock and other convertible securities may dilute the percentage ownership of the then-existing stockholders and may make it more difficult to raise additional equity capital.

As of June 8, 2023, there were outstanding options and warrants to purchase 310,692 and 672,334 shares of Common Stock, respectively.

As of December 31, 2023, there were outstanding options and warrants to purchase 100,934 and 673,208 shares of Common Stock, respectively.

The exercise of such options and warrants and conversion of convertible securities would dilute the then-existing stockholders’ percentage ownership of our stock, and any sales in the public market of Common Stock underlying such securities could adversely affect prevailing market prices for the Common Stock.

Moreover, the terms upon which we would be able to obtain additional equity capital could be adversely affected because the holders of our options and warrants could exercise them at a time when we would likely be able to obtain any needed capital on terms more favorable to us than those provided by such securities.

In January 2024 we terminated our stock option plan and cancelled all outstanding options.

Our operating results and liquidity needs could be negatively affected by market fluctuations and economic downturn.

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In the event these economic conditions and concerns continue or worsen, and the markets continue to remain volatile, our operating results and liquidity could be adversely affected by those factors in many ways, including weakening demand for certain of our services and making it more difficult for us to raise funds if necessary, and our stock price may decline.

Mechanic ’ s liens were placed on six of our clinics that could have a material adverse impact on our business, results of operations, and financial condition.

In 2022, nine mechanic’s liens for an approximate total of $3.9 million were filed by several contractors against 7 of our 9 clinics.

In 2023, the landlord for the Eagan clinic and the landlord for the St.

Paul clinic reached confidential settlements with the contractors related to the liens.

The other landlords are continuing to negotiate with the contractors to resolve the liens.

We are currently in negotiations with landlords to settle the impact of the liens and the ongoing lease obligations related to the clinic properties.

There are no filed liens on the NE Minneapolis or Eden Prairie locations.

We are negotiating with the NE Minneapolis a settlement regarding our lease obligations that still remain after we relinquished possession of the property.

We are currently paying rent on the Eden Prairie clinic location with the intent to either reopen as capital comes available or to sell the location with The Good Clinic brand and assets.

All liens were filed pursuant to Minnesota’s and Colorado’s Mechanic’s statutes and relate to past due obligations for construction and related work on certain of our clinics.

Pursuant to Minnesota’s and Colorado’s Mechanic’s statutes, the contractor-creditors may have the ability to commence a mechanic’s lien foreclosure action against the real properties in question to recover amounts due, costs, legal fees, and interest.

We are attempting to negotiate modifications to our agreements with the contractor-creditors.

However, we cannot assure you that our efforts will be successful.

If we are unable to timely clear the mechanic’s liens filed against our clinics or otherwise negotiate modifications to our agreements with the contractor-creditors, it will have a material adverse impact on our business, results of operations, and financial condition.

Settlements with various leaseholders and vendors have created obligations that may hinder our ability to finance future operations

As a result of obligations to leaseholders and construction related vendors we now have settlement agreements and consent judgements in the total amount of approximately $3 million.

These obligations bear interest at various rates according to the local law in addition to the face amounts owed.

The existence of these obligations may inhibit our ability to attain further financing.

Risks Related to our Business .

Failure to attract and retain sufficient numbers of qualified personnel could also impede our future plans.

We must attract and retain sufficient medical professional employees to operate and execute our service model and growth plan even though there is a limited number of qualified medical professionals.

Each clinic that we open will need to be staffed with enough Nurse Practitioners to properly run the clinics.

We will face competition for Nurse Practitioners from a range of companies and providers, including traditional healthcare providers and medical practices that offer similar services.

Our business is also dependent upon the various insurance companies agreeing to reimburse patients for our services .

Currently, we only have insurance companies that have approved us as a service provider and have agreed to reimburse patients for use of our services.

For us to attract patients, we will need to be approved as a service provider by multiple service providers as patients typically do not want to pay out of pocket for the services we provide.

Our failure to be approved by additional insurance companies as a service provider will result in a material adverse impact on our business.

The evolving nature of our business and rapid changes in the healthcare industry make it difficult to anticipate the nature and amount of medical reimbursements, third-party private payments, and participation in certain government programs and thus to reliably predict our operating results.

Our strategy may incur significant costs, which could adversely affect our financial condition.

Our plan to enter strategic transactions involves significant costs, including financial advisory, legal, and accounting fees, and may include additional costs for items such as fairness opinions and severance payments.

We currently do not have significant revenue to pay these costs which could adversely affect our overall financial condition.

If we fail to do so, performance of the business will be adversely impacted.

If we are unable to implement our plan of operations effectively, it will have a material adverse effect on our ability to generate revenue.

We may become involved in legal proceedings that could have a material adverse impact on our business, results of operations and financial condition .

By operating in the health care industry, we will face an inherent business risk of exposure to personal injury claims.

Effective on April 19, 2021, we obtained malpractice insurance however, there can be no assurance that such insurance will adequately protect us from such claims.

A successful personally liability claim, or series of claims brought against us, more than our insurance coverage, would negatively impact our financial condition.

From time to time and in the ordinary course of our business, we and certain of our subsidiaries may become involved in various legal proceedings and claims, including for example, employment disputes and litigation;

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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 is currently working with Bank of America on a repayment plan.

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

Small Business Administration (the “SBA”).

On April 25, 2020, the Company entered an unsecured Promissory Note with Bank of America for a loan in the original principal amount of $460,400, and the Company received the full amount of the loan proceeds on May 4, 2020 (the “PPP Loan”).

The PPP Loan bears interest at the rate of 1% per year.

During the year ended December 31, 2022, the Company accrued interest in the amount of $4,632.

On July 12, 2023, the Company received confirmation of a payment plan arrangement from the SBA.

Pursuant to this payment plan, the Company agreed to pay a minimum of $2,595 each month until the loan is paid in full in July 2028.

The SBA confirmed the balance due on the loan, including principal and interest, was $467,117.

The Company will amortize the balance due on the loan including interest at the original PPP loan rate of 1% per annum;

a gain on restructure of debt in the amount of $40,622 was recorded on this transaction during the twelve months ended December 31, 2023, and the balance of the loan was recorded at the amount of $421,788 representing the net cash flows discounted at 1%.

During the twelve months ended December 31, 2023, the Company made principal payments of $11,555 on this loan;

during the twelve months ended December 31, 2023, the Company recorded interest in the amount of $5,719 on this loan.

On June 23, 2022, The Good Clinic LLC was notified that a former employee had filed a lawsuit for wrongful termination.

The Good Clinic believes the lawsuit is without merit.

Mitesco (Company) was not named in the suit.

We have settled this matter as of January 11, 2024 for total consideration consisting of a cash payment of $3,000.

On October 25, 2022, the Company was notified that a vendor filed a lawsuit related to a contract dispute naming both The Good Clinic and The CEO of the Good Clinic.

This suit was settled on May 5, 2023, and dismissed with prejudice on May 12, 2023.

The settlement included the issuance of the Company’s restricted common stock.

As a part of the settlement the Company issued 2,552 shares of its restricted common stock to the plaintiff and it issued to the CEO of The Good Clinic 19,622 of its restricted common stock, plus $3,000 in cash for reimbursement of expenses related to settling the suit with the vendor.

All such legal proceedings are inherently unpredictable and, regardless of the merits of the claims, litigation may be expensive, time-consuming, and disruptive to our operations and distracting to management.

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We are in an intensely competitive industry and there is no assurance we will be able to compete with our competitors who have greater resources than us.

While the telehealth market is in an early stage of development, it is competitive and we expect it to attract increased competition, which could make it difficult for us to succeed.

We also expect to face competition for our planned medical clinics using Nurse Practitioners.

We currently face competition in the telehealth industry from a range of companies, including specialized software and solution providers that offer similar solutions, often at substantially lower prices, and that are continuing to develop additional products and becoming more sophisticated and effective.

In addition, large, well-financed health systems have in some cases developed their own telehealth tools and may provide these solutions to their customers and patients at discounted prices.

The surge in interest in telehealth, and in particular the relaxation of HIPAA privacy and security requirements, has also attracted new competition from providers who utilize consumer-grade video conferencing platforms such as Zoom and Twilio.

Competition from large software companies or other specialized solution providers, communication tools and other parties could result in continued pricing pressures, which is likely to lead to price declines in certain product segments, which could negatively impact our sales, profitability, and market share.

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

We compete in a highly fragmented primary care market with direct and indirect competitors that offer varying levels of impact to key stakeholders such as 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 compete with walk-in clinics, traditional healthcare providers and medical practices, technology platforms, care management and coordination, digital health, telehealth and telemedicine and health information exchange.

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 we will serve provide services like 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.

In the future, we expect to encounter increased competition from system-affiliated hospitals and healthcare companies, as well as health insurers and private equity companies seeking to acquire providers, in specific geographic markets.

We also face competition from specialty hospitals (some of which are physician-owned), primary care providers and outpatient centers for market share in high margin services and for quality providers and personnel.

Furthermore, some of the clinics and medical offices that compete with us may be supported by 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.

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 patients 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.

Because we are a new business, our competitors may have greater name recognition, longer operating histories and significantly greater resources than we do.

Because we are a new business, our competitors may have greater name recognition, longer operating history and significantly greater resources than we do.

Further, our current or potential competitors may be acquired by third parties with greater available resources.

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Accordingly, new competitors or alliances may emerge that have greater market share, a larger customer base, more widely adopted proprietary technologies, greater marketing expertise, greater financial resources, and larger sales forces than we have, which could put us at a competitive disadvantage.

Our competitors could also be better positioned to serve certain segments of the telehealth market and medical clinic markets, which could create additional price pressure.

In addition, many healthcare provider organizations are consolidating to create integrated healthcare delivery systems with greater market power.

As provider networks and managed care organizations consolidate, thus decreasing the number of market participants, competition to provide products and services like ours could become more intense, and the importance of establishing and maintaining relationships with key industry participants could increase.

These industry participants may try to use their market power to negotiate price reductions for our products and services.

Considering these factors, even if our solution is more effective than those of our competitors, current or potential clients may accept competitive solutions in lieu of purchasing our solution.

If we are unable to successfully compete in the telehealth market, our business, financial condition, and results of operations could be materially adversely affected.

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.

There is no assurance we will be able to successfully compete in the markets in which we plan to operate which could cause you to lose your investment.

Our lack of registered trademarks and trade names could potentially harm our business.

Our federal trademark registration for the mark THE GOOD CLINIC is on the Supplemental Register, not the Principal Register.

The Supplemental Register does not confer the same rights and benefits as the Principal Register.

Registration on the Supplemental Register is not useful for challenging third parties who may infringe our trademark rights, and we would need to rely on our common law rights to pursue enforcement.

The Supplemental Register also does not confer nationwide priority of rights.

As we expand our business, we may encounter third parties with common law rights in certain geographic markets with trademark rights that prevent us from using the mark THE GOOD CLINIC in those markets.

The success of our planned business depends on our ability to develop, market, and advertise our clinics and telehealth services.

Our ability to establish effective marketing and advertising campaigns for any clinics and telemarketing services we develop is important to our success.

If we are unable to establish awareness of our brands and services, we may not be able to attract customers and generate revenue, which would have a material adverse effect on our financial condition and results of operations.

Rapid technological change in our industry presents us with significant risks and challenges.

The telehealth market is characterized by rapid technological change, changing consumer requirements, short product lifecycles and evolving industry standards.

Our success will depend on our ability to enhance our solution with next-generation technologies and to develop or to acquire and market new services to access new consumer populations.

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We have not yet generated significant revenues from our present operations and may not do so for an indefinite period of time.

Our strategy is to operate walk-in clinics, provide telemedicine and acquire complimentary business in the future.

Our future revenues and profitability depend upon our ability to successfully implement our growth strategy.

Our strategy to operate walk-in clinics, provide telemedicine and acquire complimentary business in the future was not successful.

Our future revenues and profitability depend upon our ability to successfully implement a growth strategy.

There can be no assurance given that we will be successful in executing our growth strategy, and even if we achieve our strategic plan, that we will realize, in full or in part, the anticipated benefits we expect our strategy will achieve.

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The failure to implement our plan of operations and manage any future growth effectively will materially and adversely affect our business.

Any damage to our reputation may materially and adversely affect our business, financial condition, and results of operations.

We believe that developing and maintaining our brand is critical and that our financial success is directly dependent on consumer perception of our brand.

Furthermore, the importance of our brand recognition may become even greater as competitors offer more services similar to ours.

We believe that our customers view our brand as one that is trusted, respected and effective.

Many factors, some of which are beyond our control, are important to maintaining our reputation and brand.

These factors include our ability to comply with ethical, social, medical, labor, and environmental standards.

Any actual or perceived failure in compliance with such standards could damage our reputation and brand.

The success of our brand may also suffer if our marketing strategy or services do not have the desired impact on our company’s image or its ability to attract consumers.

Further, our brand value could diminish significantly due to a number of factors, including consumer perception that we have acted in an irresponsible manner, adverse publicity about our clinics, our failure to maintain the integrity of our products, the failure of our services to deliver consistently positive customer experiences, or the services becoming unavailable to consumers.

Risks Related to Government Regulation

If the statutes and regulations in our industry change, our business could be adversely affected.

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.

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.

The impact on our planned operations of recent healthcare legislation and other changes in the healthcare industry and in healthcare spending is currently unknown, but may adversely affect our business, financial condition, and results of operations.

The impact on us of healthcare reform legislation and other changes in the healthcare industry and in healthcare spending is currently unknown, but may adversely affect our business, financial condition, and results of operations.

Our revenue is dependent on the healthcare industry and could be affected by changes in healthcare spending, reimbursement, and policy.

The healthcare industry is subject to changing political, regulatory, and other influences.

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 influence 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 federal and state 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.

We are regulated by 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 of 1935, as amended 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 Office of the Inspector General (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.

We cannot assure that the applicable regulatory authorities will not determine that some of our arrangements with physicians violate the federal Anti-Kickback Statute or other applicable laws.

An adverse determination 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.

We are regulated by the 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.

We must comply with 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.

A cyber security incident could cause a violation of HIPAA, breach of customer and patient privacy, or other negative impacts.

We will rely extensively on our information technology (“IT”) systems to manage scheduling and financial data, communicate with our future customers and their patients, vendors, and other third parties, and summarize and analyze operating results.

In addition, we have made significant investments in technology, including the engagement of a third-party IT provider.

A cyber-attack that bypasses our IT security systems could cause an IT security breach, a loss of protected health information, or other data subject to privacy laws, a loss of proprietary business information, or a material disruption of our IT business systems.

This in turn could have a material adverse impact on our business and result of operations.

In addition, our future results of operations, as well as our reputation, could be adversely impacted by theft, destruction, loss, or misappropriation of public health information, other confidential data, or proprietary business information.

Computer malware, viruses, and hacking and phishing attacks by third parties have become more prevalent in our industry, have occurred on our systems in the past, and may occur on our systems in the future.

Because techniques used to obtain unauthorized access to or sabotage systems change frequently and generally are not recognized until successfully launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.

As cyber-security threats develop and grow, it may be necessary to make significant further investments to protect data and infrastructure.

Due to the significant military action against Ukraine launched by Russia, the risk of such cyber-security threats has increased.

If an actual or perceived breach of our security occurs, (i) we could suffer severe reputational damage adversely affecting customer or investor confidence, (ii) the market perception of the effectiveness of our security measures could be harmed, (iii) we could lose potential sales, our ability to deliver our services or operate our business may be impaired, (iv) we may be subject to litigation or regulatory investigations or orders and (v) we may incur significant liabilities.

Our insurance coverage may not be adequate to cover the potentially significant losses that may result from security breaches.

We must comply with 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.

While operating our healthcare clinic subsidiary we were subject to federal, state, and local regulations governing the storage, use and disposal of waste materials and products.

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 to as those regulations are being implemented, which could adversely affect our operations.

We must comply with a range of other 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 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 state laws previously described, we may also be subject to other state fraud and abuse statutes and regulations if we expand our operations nationally.

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.

Changes in healthcare laws could create an uncertain environment and materially impact us.

We cannot predict the effect that the ACA and its implementation, amendment, or repeal and replacement, may have on our business, results of operations or financial condition.

Any changes in healthcare laws or regulations that reduce, curtail, or eliminate payments, government-subsidized programs, government-sponsored programs, and/or the expansion of Medicare or Medicaid, among other actions, could have a material adverse effect on our business, results of operations and financial condition.

For example, the ACA dramatically changed how healthcare services are covered, delivered, and reimbursed.

The ACA requires insurers to accept all applicants, regardless of pre-existing conditions, cover an extensive list of conditions and treatments, and charge the same rates, regardless of pre-existing condition or gender.

The ACA and the Health Care and Education Reconciliation Act of 2010 (collectively, the “Health Care Reform Acts”) also mandated changes specific to home health and hospice benefits under Medicare.

In 2012, the U.S.

Supreme Court upheld the constitutionality of the ACA, including the “individual mandate” provisions of the ACA that generally require all individuals to obtain healthcare insurance or pay a penalty.

However, the U.S.

Supreme Court also held that the provision of the ACA that authorized the Secretary of the U.S.

Department of Health and Human Services to penalize states that choose not to participate in the expansion of the Medicaid program by removing all its existing Medicaid funding was unconstitutional.

In response to the ruling, several state governors opposed its state’s participation in the expanded Medicaid program, which resulted in the ACA not providing coverage to some low-income persons in those states.

In addition, several bills have been, and are continuing to be, introduced in U.S.

Congress to amend all or significant provisions of the ACA, or repeal and replace the ACA with another law.

In December 2017, the individual mandate was repealed via the Tax Cuts and Jobs Act of 2017.

Afterwards, legal, and political challenges as to the constitutionality of the remaining provisions of the ACA resumed.

Our operations are subject to the nation ’ s healthcare laws, as amended, repealed, or replaced from time to time.

The net effect of the ACA on our business is subject to numerous variables, including the law’s complexity, lack of complete implementing regulations and interpretive guidance, gradual and potentially delayed implementation, or possible amendment, as well as the uncertainty as to the extent to which states will choose to participate in the expanded Medicaid program.

The continued implementation of provisions of the ACA, the adoption of new regulations thereunder and ongoing challenges thereto, also added uncertainty about the current state of U.S.

healthcare laws and could negatively impact our business, results of operations and financial condition.

Healthcare providers could be subject to federal and state investigations and payor audits.

Due to our participation in government and private healthcare programs, we are from time to time involved in inquiries, reviews, audits, and investigations by governmental agencies and private payors of our business practices, including assessments of our compliance with coding, billing, and documentation requirements.

Federal and state government agencies have active civil and criminal enforcement efforts against healthcare companies, and their executives and managers.

The Deficit Reduction Act, which provides a financial incentive to states to enact their own false claims acts, and similar laws encourage investigations against healthcare companies by different agencies.

These investigations could also be initiated by private whistleblowers.

Responding to audit and investigative activities are costly and disruptive to our business operations, even when the allegations are without merit.

If we are subject to an audit or investigation, a finding could be made that we or our affiliates erroneously billed or were incorrectly reimbursed, and we may be required to repay such agencies or payors, may be subjected to pre-payment reviews, which can be time-consuming and result in non-payment or delayed payments for the services we or our affiliates provide, and may be subject to financial sanctions or required to modify our operations.

Our revenues may depend on our patients ’ receipt of adequate reimbursement from private insurers and government sponsored healthcare programs.

Political, economic, and regulatory influences continue to change the healthcare industry in the United States.

If and when we start receiving reimbursements from third parties, the ability of patients to pay fees for our products will partially depend on the extent to which reimbursement for the costs of such materials and related treatments will continue to be available from private health coverage insurers and other similar organizations.

We may have difficulty gaining market acceptance for the products we sell if third-party payors do not provide adequate coverage and reimbursement to hospitals.

Major third-party payors of hospitals, such as private healthcare insurers, periodically revise their payment methodologies based, in part, upon changes in government sponsored healthcare programs.

We cannot predict these periodic revisions with certainty, and such revisions may result in stricter standards for reimbursement of hospital charges for certain specified products, potentially adversely impacting our business, results of operations, and financial conditions when we start receiving reimbursement from third party payors.

When we start receiving reimbursement from third party payors, the sales of our therapies will depend in part on the availability of reimbursement by third-party payors, such as government health administration authorities, private health insurers and other organizations.

Third-party payors often challenge the price and cost-effectiveness of medical treatments and services.

Governmental approval of health care products does not guarantee that these third-party payors will pay for the products.

Even if third-party payors do accept our therapeutic treatments, the amounts they pay may not be adequate to enable us to realize a profit.

Legislation and regulations affecting the pricing of therapies may change before our products and services are approved for marketing, and any such changes could further limit reimbursement, if any.

Future regulatory action remains uncertain.

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

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

If we or the manufacturers or distributors that supply our products fail to comply with all applicable laws, standards, and regulations, action by the FDA or other regulatory agencies could result in significant restrictions, including restrictions on the marketing or use of the products we sell or the withdrawal of the products we sell from the market.

Any such restrictions or withdrawals could materially affect our reputation, business, and operations.

Risks Related to Acquisitions

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Our executive officers, directors and certain key stockholders own and control a significant number of voting securities and so long as they do, they are able to control the outcome of stockholder voting.

Our executive officers, directors as well as certain other key shareholders are the owners of approximately 68% of the voting shares of the Company as of June 18, 2022 as a result of their ownership over our Series X Cumulative Redeemable Perpetual Preferred Stock (the “Series X Preferred Stock”), and Common Stock.

Our directors as well as certain other key shareholders are the owners of approximately 53% of the voting shares of the Company as of March 11, 2024 as a result of their ownership over our Series X Cumulative Redeemable Perpetual Preferred Stock (the “Series X Preferred Stock”), and Common Stock.

The Series X Preferred stock votes with our outstanding shares of Common Stock at the rate of 400 votes for each share owned, one (1) vote for each common holder.

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In addition, this ownership could discourage the acquisition of our Common Stock by potential investors and could have an anti-takeover effect, possibly depressing the trading price of our Common Stock.

Risks Relating to Ownership of our Units

Risks Relating to Ownership of our Stock

We completed a reverse stock split of our shares of common stock, which may reduce and may limit the market trading liquidity of the shares due to the reduced number of shares outstanding and may potentially have an anti-takeover effect.

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As a result, there can be no assurance that the Reverse Stock Split will result in the intended benefits, that the market price of our common stock will remain higher following the Reverse Stock Split or that the market price of our common stock will not decrease in the future.

Shares eligible for future sale may have adverse effects on our share price.

Shares eligible for future sale may have an adverse effect on our share price.

Sales of substantial amounts of shares or the perception that such sales could occur may adversely affect the prevailing market price for our shares.

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If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our Common Stock, Series A Warrants and Series B Warrants will depend in part on the research and reports that securities or industry analysts publish about us or our business.

The trading market for our Common Stock will depend in part on the research and reports that securities or industry analysts publish about us or our business.

Securities and industry analysts do not currently, and may never, publish research on our company.

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If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future, and as a result, investors in our Common Stock and Warrants could incur substantial losses.

Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future, and as a result, investors in our Common Stock could incur substantial losses.

Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future.

On June 8, 2023, the reported low sale price of our Common Stock was $0.92, while the reported high sales price was $1.02, with a closing price of $0.94.

For comparison purposes, on December 31, 2021, our stock price closed at $8.20.

The decrease in stock price is believed to be related to the closing of our clinics in 2022.

On April 1, 2024, the reported closing price of our Common Stock was $0.26, while on April 2, 2024 the reported closing sales price was $.43.

For comparison purposes during the last 52 weeks prior to April 2, 2024 our stock price had a low closing price of $.02 and a high closing price of $1.51.

The decrease in stock price is believed to be related to the closing of our clinics in 2022, as well as a general reduction in market liquidity for smaller companies and their stocks.

We may incur rapid and substantial decreases in our stock price in the foreseeable future that are unrelated to our operating performance or prospects.

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For example, the recent outbreak of the COVID-19 coronavirus has caused broad stock market and industry fluctuations.

In addition, sales of substantial amounts of our Common Stock and Warrants, or the perception that such sales might occur, could adversely affect prevailing market prices of our Common Stock and Warrants and our stock price may decline substantially in a short period of time.

In addition, sales of substantial amounts of our Common Stock, or the perception that such sales might occur, could adversely affect prevailing market prices of our Common Stock and Warrants and our stock price may decline substantially in a short period of time.

As a result, our stockholders could suffer losses or be unable to liquidate holdings.

As a result of this volatility, investors may experience losses on their investment in our Common Stock and Warrants.

The market price for our Common Stock and Warrants may be influenced by many factors, including the following:

sale of our Common Stock Warrants by our stockholders, executives, and directors;

As a result of this volatility, investors may experience losses on their investment in our Common Stock.

The market price for our Common Stock may be influenced by many factors, including the following:

sale of our Common Stock by our stockholders, executives, and directors;

volatility and limitations in trading volumes of our securities;

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market conditions or trends in our industry;

other events or factors, many of which may be out of our control.

These broad market and industry factors may seriously harm the market price of our Common Stock and Warrants, regardless of our operating performance.

Since the stock price of our Common Stock has fluctuated in the past, has been recently volatile and may be volatile in the future, investors in our Common Stock and Warrants could incur substantial losses.

These broad market and industry factors may seriously harm the market price of our Common Stock, regardless of our operating performance.

Since the stock price of our Common Stock has fluctuated in the past, has been recently volatile and may be volatile in the future, investors in our Common Stock could incur substantial losses.

In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies.

Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.

There can be no guarantee that our stock price will remain at current prices or that future sales of our Common Stock and Warrants will not be at prices lower than those sold to investors.

There can be no guarantee that our stock price will remain at current prices or that future sales of our Common Stock will not be at prices lower than those sold to investors.

Additionally, securities of certain companies have recently experienced significant and extreme volatility in stock price due to short sellers of shares of Common Stock, known as a “short squeeze.” These short squeezes have caused extreme volatility in those companies and in the market and have led to the price per share of those companies to trade at a significantly inflated rate that is disconnected from the underlying value of the company.

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Because we may issue preferred stock without the approval of our shareholders and have other anti-takeover defenses, it may be more difficult for a third party to acquire us and could depress our stock price.

In general, our Board may issue, without a vote of our shareholders, one or more additional series of preferred stock that have more than one vote per share, although our ability to designate and issue preferred stock is currently restricted by covenants in the Certificate of Designation for the Series C Preferred Stock.

Without these restrictions, our Board could issue preferred stock to investors who support us and our management and give effective control of our business to our management.

Additionally, issuance of preferred stock could block an acquisition resulting in both a drop in our stock price and a decline in interest of our Common Stock, Series A Warrants and Series B Warrants.

This could make it more difficult for shareholders to sell their Common Stock, Series A Warrants and Series B Warrants.

This could also cause the market price of our Common Stock, Series A Warrants and Series B Warrants to drop significantly, even if our business is performing well.

Offers or availability for sale of a substantial number of shares of our Common Stock, Series A Warrants and Series B Warrants may cause the price of our Common Stock, Series A Warrants and Series B Warrants to decline .

Sales of large blocks of our Common Stock, Series A Warrants and Series B Warrants could depress the price of our Common Stock, Series A Warrants and Series B Warrants.

The existence of these shares and shares of Common Stock that may be issuable upon conversion or exercise, as applicable, of outstanding shares of convertible preferred stock, warrants and options create a circumstance commonly referred to as an “overhang” which can act as a depressant to the price of our Common Stock, Series A Warrants and Series B Warrants.

This could make it more difficult for shareholders to sell their Common Stock.

This could also cause the market price of our Common Stock to drop significantly, even if our business is performing well.

Offers or availability for sale of a substantial number of shares of our Common Stock may cause the price of our Common Stock to decline .

Sales of large blocks of our Common Stock could depress the price of our Common Stock.

The existence of an overhang, whether sales have occurred or are occurring, also could make our ability to raise additional financing through the sale of equity or equity-linked securities more difficult in the future at a time and price that we deem reasonable or appropriate.

If our existing shareholders and investors seek to convert or exercise such securities or sell a substantial number of shares of our Common Stock, such selling efforts may cause significant declines in the market price of our Common Stock and Warrants.

In addition, the shares of our Common Stock, Series A Warrants and Series B Warrants sold in the offering will be freely tradable without restriction or further registration under the Securities Act of 1933, as amended (the “Securities Act”).

As a result, a substantial number of shares of our Common Stock, Series A Warrants and Series B Warrants may be sold in the public market following this offering.

If there are significantly more shares of Common Stock, Series A Warrants and Series B Warrants offered for sale than buyers are willing to purchase, then the market price of our Common Stock, Series A Warrants and Series B Warrants may decline to a market price at which buyers are willing to purchase the offered Common Stock Warrants and sellers remain willing to sell our Common Stock, Series A Warrants and Series B Warrants.

In addition, the shares of our Common Stock sold in the offering will be freely tradable without restriction or further registration under the Securities Act of 1933, as amended (the “Securities Act”).

As a result, a substantial number of shares of our Common Stock may be sold in the public market following this offering.

If there are significantly more shares of Common Stock offered for sale than buyers are willing to purchase, then the market price of our Common Stock, may decline to a market price at which buyers are willing to purchase the offered Common Stock Warrants and sellers remain willing to sell our Common

Risks Related to Cybersecurity

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Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program.

We rely on third parties (such as service providers and technologies) to process sensitive information in a variety of contexts, including without limitation third-party providers of cloud-based infrastructure, encryption and authentication technology, employee email, and other functions.

We may rely on third parties (such as service providers and technologies) to process sensitive information in a variety of contexts, including without limitation third-party providers of cloud-based infrastructure, encryption and authentication technology, employee email, and other functions.

Our ability to monitor these third parties’ cybersecurity practices is limited, and these third parties may not have adequate information security measures in place.

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None of the reports and other materials of third-party sources referred to in this Annual Report were prepared for use in, or in connection with, this Annual Report.

UNRESOLVED STAFF COMMENTS

Not applicable.

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 1A. Risk Factors