Mitesco, Inc. 10-K

ITEM 3. LEGAL PROCEEDINGS 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: LOCATION PROPERTY NAME ORIGINAL OBLIGATION SETTLEMENT AMOUNT DATE OF AWARD INTEREST RATE INTEREST ACCRUED ON SETTLEMENT TOTAL SETTLEMENT OBLIGATION TYPE OF SETTLEMENT WAYZETTA, MN WAZETTA BAY $ 407,000 $ 25,000 NA $ 25,000 CASH PAYMENT OBLIGATION EAGAN, MN VIKINGS $ 767,000 $ 488,491 12/7/2023 10 % $ 52,195 $ 540,686 DEFAULT JUDGEMENT ST. LOUIS PARK, MN EXCELSIOR $ 673,000 $ 425,350 5/22/2024 10 % $ 25,987 $ 451,337 DEFAULT JUDGEMENT ST. PAUL, MN CONTINENTAL 560 $ 1,153,000 $ 415,266 1/22/2024 10 % $ 39,169 $ 454,775 DEFAULT JUDGEMENT MAPLE GROVE, MN BUTTNICK $ 1,153,127 $ 219,576 10/3/2022 10 % $ 49,200 $ 268,200 SETTLEMENT AGREEMENT DENVER, CO RADIANT $ 782,000 $ 530,000 $ 530,557 DISMISSED DENVER, CO QUINCY $ 1,079,000 $ 348,764 11/14/2023 12 % 47,356 $ 396,120 DEFAULT JUDGEMENT TOTAL $ 6,014,127 $ 2,452,447 $ 213,907 $ 2,666,675 Quincy Clinic a.k.a. 1776 Curtis 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 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 owner of the property has filed before the same court, an action against the Company (Case No. 2022 CV 33173, Division: 409, Consolidated with 2022CV33653) seeking to modify the final settlement for an additional $900,000. We intend to vigorously defend the Company as our position is that there is no basis for this claim. Administrative office 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 were approximately $244,000. We believe that there is no further obligation in this situation, but we do not have such documented in writing at this time. 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”). Pursuant to the Agreement, the Company issued shares of restricted common stock, par value $0.01 per share, of MITI (the “Restricted Shares”) to the Creditor in exchange for the Company Debt Obligations, as defined below. The Agreement settled certain accounts payable amounts owed by the Company to the Creditor (the “Accounts Payable Amount”) as well as then upcoming amounts that would become due between the date of the Agreement and April 1, 2022. The Agreement also settled incurred interest and penalties on the amounts due through January 5, 2022, as well as future interest payments on amounts to be incurred in the first quarter of 2022 (collectively, the “Additional Costs”, and combined with the Accounts Payable Amount, the “Company Debt Obligations”). The Accounts Payable Amount was $500,000, the Additional Costs were $294,912 and the conversion price was $12.50. As a result, 63,593 Restricted Shares were authorized to be issued. The Company’s Board of Directors approved the Agreement on January 5, 2022. Much of the amounts claimed by Gardner have 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. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 21 Table of Contents PART II