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Item 3. Legal Proceedings

2024-04-16 compared with 2023-07-14 · 77 added, 31 removed, 9 unchanged (92% of the section changed)

1 unchanged sentence

From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business.

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

Small Business Administration.

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

On April 25, 2020, the Company entered into an unsecured Promissory Note (the “Note”) with Bank of America for a loan in the original principal amount of $460,406, and the Company received the full amount of the loan proceeds on May 4, 2020.

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

The Company investigated the terms of the application and discovered its former President had erroneously represented it was refinancing an Economic Injury Disaster Loan when no such loan had been received.

Bank of America requested that the Company remit the funds received back to Bank of America.

The Company negotiated the conversion of this to a 60 month note at 1% interest.

We are currently in default on this note.

If we are not successful bring it current, it could have a material adverse effect on our financial condition.

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

The Good Clinic believes the lawsuit is without merit.

The Company was not named in the suit.

The Company expects to resolve it for nominal consideration.

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

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.

1 unchanged sentence

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

The Company has a number of legal situations involved with the winding down of its clinic business activities including claims regarding certain construction contracts and as a part of the process of cancellation of leases.

See “Properties” for additional details.

The following is a summary as of the date of this filing:

The Wayzata, MN clinic leases was terminated for a commitment to pay $25,000.

The two Denver, Colorado clinic lease, known as Quincy and Radiant, possession has been relinquished to the landlords.

The lease obligations remain in negotiations as does the handling of the mechanics liens placed on the properties.

The Eagan clinic, aka Vikings clinic, gave up possession in January of 2023.

The mechanics lien has been placed on the property and was settled by the landlord in a confidential settlement with the lien holder.

Mitesco is now in settlement negotiations with the landlord for the handling of lease obligations.

Paul clinic possession was relinquished in March 2023.

The handling of lease obligations remain in negotiations as does the handling of the mechanics liens placed on the properties.

Louis Park clinic possession was relinquished in April 2023.

The handling of lease obligations remain in negotiations as does the handling of the mechanics liens placed on the properties.

The Maple Grove clinic eviction occurred in April 2023.

The handling of lease obligations remain in negotiations as does the handling of the mechanics liens placed on the properties.

The Northeast Minneapolis clinic, aka Nordhaus clinic, possession was relinquished in May 2023.

There is no lien on the property.

The handling of lease obligations remains in negotiations with the landlord.

The Company has a number of legal situations involved with the winding down of its clinic business activities.

These include claims regarding certain construction contracts and cancellation of leases as noted below:

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 by 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.

MINE SAFETY DISCLOSURES

1 unchanged sentence

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 3. Legal Proceedings