Mitesco, Inc. 10-K

ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Trading Market Our Common Stock is quoted on the OTC Pink Market with the symbol “MITI.” On March 21, 2024, the price of our Common Stock as reported on the OTC was $0.59 and we have approximately 2,000 holders of record of our Common Stock, and approximately 7,000 shareholders including smaller holders and those with restricted shares not currently in the market. DESCRIPTION OF OUR CAPITAL STOCK General The total number of shares of all classes of shares which we have authority to issue is 600,000,000 of which 500,000,000 shares are designated as “Common Stock” with a par value of $0.01 per share, and 100,000,000 shares are designated as “preferred stock.” As of December 31, 2024, we had 9,762,258 issued and outstanding shares of Common Stock, 563,077 shares of our Series A Preferred Stock issued or outstanding, 19,703 shares of our Series X Preferred Stock issued and outstanding and 25,000 shares of our Series D Preferred Stock issued. DIVIDEND POLICY We have never declared or paid any cash dividends on our Common Stock. Under the Nevada law, we may declare and pay dividends on our capital stock either out of our surplus, as defined in the relevant Nevada statutes, or if there is no such surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. If, however, the capital of our company, computed in accordance with the relevant Nevada statutes, has been diminished by depreciation in the value of our property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets, we are prohibited from declaring and paying out of such net profits and dividends upon any shares of our capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets shall have been repaired. The Company does not intend to declare or pay any cash dividends on its Common Stock in the foreseeable future. The holders of our Common Stock are entitled to receive only such dividends (cash or otherwise) as may be declared by our Board of Directors. Series A Preferred Stock During FY2024 we authorized the creation of up to 3,000,000 shares of a new Series A Preferred stock which has no voting rights, and pays no dividends, but ranks superior to all other securities, except for the Series X Preferred stock which is pari parsu with the Series A Preferred stock with regard to any liquidation of assets. As of the date of this filing there are 566,085 shares of Series A Preferred stock issued and outstanding. Series X Preferred Stock On December 31, 2019, we issued 26,227 shares of our Series X Preferred stock in order to settle certain of the Company’s obligations. The Series X Preferred shares have a liquidation preference of $25.00 per share and will pay a 10% per year dividend based upon the liquidation value. The dividend may be paid in cash or in the issuance of restricted Common Stock. If the Company chooses to pay the dividend in restricted Common Stock the number of shares issued to fulfill the dividend payment shall be determined based on the stock price on the date of the 15 th of the month, or the following trading day if it falls on a weekend. The Series X Preferred shares have 400 votes per share and votes with our Common Stock. As of the date of this filing, the outstanding Series X Preferred shares were 19,703. From July 2023 through September 2024, with consent of the holders, the Company used an $.80 share price in computing the number of shares to be issued to satisfy the dividend requirements, even though the actual market price was substantially lower. Starting in October 2024 the Company returned to a policy of using the actual market price in determining the number of shares to be issued in satisfaction of the dividends. Series D Preferred Stock Each share of Series D Preferred Stock accrues dividends on a quarterly basis in arrears, at the rate of 6% per annum of the Stated Value and to be paid within 15 days after the end of each of our fiscal quarters. The Series D Preferred Stock shares rank senior to all other preferred stock of the Company except in relation to the Company’s Series X Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company. There is a single holder of the Series D Preferred shares at this time, with an accrued value of approximately $30,000. 22 Table of Contents Equity Compensation Plans For information on the Company’s equity compensation plans, see “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.” Recent Sales of Unregistered Shares Common Stock Issuances in 2024 Restricted Common Stock Issuances A) During FY2024 the Company issued a total of 99,403 shares of restricted common stock for the payment of the Series X Preferred stock dividends to the nine (9) holders. Amounts noted include shares issued for five (5) holders who subsequently cancelled their Series X Preferred shares. The issuances were as follows: a. Holder Crone received a total of 5,625 shares. Crone exchanged his Preferred X shares as of September 28, 2024, for common stock using a $4.00 per share valuation; b. Holder DeLuca received a total of 6,759 shares. DeLuca exchanged his Preferred X shares as of September 28, 2024, for common stock using a $4.00 per share valuation; c. Holder Diamond, former CEO, received a total of 5,148 shares. Diamond exchanged his Preferred X shares as of September 28, 2024, for common stock using a $4.00 per share valuation; d. Holder Riewold received a total of 2,813 shares. Riewold exchanged his Preferred X shares as of September 28, 2024, for common stock using a $4.00 per share valuation; e. Holder Lightmas received a total of 7,594 shares. Lightmas exchanged his Preferred X shares as of September 28, 2024, for common stock using a $4.00 per share valuation; f. Holder Mitchell, a member of the Board of Directors, received a total of 8,661 shares for dividend payments; g. Holder Balencic, a member of the Board of Directors, received a total of 8,661 shares for dividend payments; h. Holder Leath, a member of the Board of Directors, received a total of 8,661 shares for dividend payments; i. Holder Anglo Irish Management LLC received a total of 45,122 shares for dividend payments. B) During FY2024 the Company issued the following shares to the Directors in consideration for their contributions outside of their roles as a Director; a. For efforts through June 30, 2024, each of Leath, Balencic and Mitchell issued 100,000 shares of restricted stock each, a total of 300,000 shares in aggregate; b. For efforts from July through December 31, 2024, each of Leath, Balencic and Mitchell issued 150,000 shares of restricted stock each, a total of 450,000 shares in aggregate. C) The members of the Advisory Board each received 75,000 shares of restricted stock for their contribution over a 12-month period, a total of 525,000 shares, as follows: a. Advisor Wade received 75,000 shares; Advisor Plybon received 75,000 shares; Advisor McLoughlin received 75,000 shares; Advisor Simon received 75,000 shares; Advisor Crawford received 75,000 shares; Advisor Clifton received 75,000 shares; Advisor M. Valania received 75,000 shares; D) A consultant, B. Valania, who is handling sales and marketing for the Company’s Centcore subsidiary, received a total of 200,000 shares of restricted stock as consideration for his efforts; E) A. Lance, wife of the CEO Leath, received a total of 100,000 shares of restricted stock as a part of the consideration for her web site business acquired in FY2024; 23 Table of Contents F) As a part of the FY2024 restructuring the following issuances of restricted stock were made to former executives of the Company, effective September 28, 2024: a. L. Diamond, former CEO, received 12,500 shares in exchange for the cancellation of his Series X Preferred shares, and 137,375 shares in exchange for cancellation of all other obligations and all outstanding warrants; b. M. Diamond, daughter of the former CEO, received 20,966 shares in exchange for cancellation of all obligations and any and all outstanding warrants; c. T. Brodmerkel, a former Director of the Company, received 5,212 shares in exchange for the cancellation of all obligations and any and all outstanding warrants; d. M. Howe, former CEO of the clinic subsidiary closed in FY2022, received 172,497 shares in exchange for cancellation of all other obligations and any and all outstanding warrants; e. F. Navqi, a former Director of the Company, received 4,500 in exchange for cancellation of all other obligations and any and all outstanding warrants; f. J. Inturregi, a former Director of the Company, received 13,864 shares in exchange for the cancellation of all other obligations and any and all outstanding warrants; g. A. Dobberlin, husband of a former officer of the Company, received 6,449 shares in exchange for cancellation of all other obligations and any and all outstanding warrants h. B. Case, a former officer of the clinic subsidiary closed in FY2022, received 30,802 shares in exchange for cancellation of all other obligations and any and all outstanding warrants G) As a part of the FY2024 restructuring the following issuances of restricted stock were made to current executives of the Company: a. J. Mitchell, a current Director of the Company, received 27,040 shares in consideration of the cancellation of all obligations to him prior to December 2023, including the cancellation of all warrants; b. M. Leath, a current Director of the Company, received 17,767 shares in consideration of the cancellation of all obligations to him prior to December 2023, including the cancellation of all warrants H) As a part of the FY2024 restructuring the following issuances of restricted stock were made to certain holders of obligations of the Company, effective September 28, 2024: a. R. Riewold received 12,500 shares in exchange for the cancellation of his Series X Preferred shares and cancellation of all other obligations and all outstanding warrants; b. F. Lightmas received 56,613 shares in exchange for the cancellation of his Series X Preferred shares and cancellation of all other obligations and all outstanding warrants; c. J. Crone received 18,025 shares in exchange for the cancellation of his Series X Preferred shares and cancellation of all other obligations and all outstanding warrants; d. Anson Investments received 617,020 shares in exchange for the cancellation of all obligations and all outstanding warrants; e. Anson East received 210,787 shares in exchange for the cancellation of all obligations and all outstanding warrants; f. Dragon Investments received 335,061 shares in exchange for the cancellation of all obligations and all outstanding warrants; g. Mackay Investments received 176,560 shares in exchange for the cancellation of all obligations, including that of its principal, and all outstanding warrants; h. Darling Investments received 111,075 shares in exchange for the cancellation of all obligations and all outstanding warrants; 24 Table of Contents i. Anglo Irish Management LLC received 58,718 shares in exchange for the cancellation of all obligations and all outstanding warrants of one of its shareholders; j. The principals of Intereum, a vendor of the clinic operations, received 135,345 shares in exchange for the cancellation of all obligations and all outstanding warrants; k. J. Enright received 68,625 shares in exchange for the cancellation of all obligations and all outstanding warrants; l. C. Hagan received 617,020 shares in exchange for the cancellation of all obligations and all outstanding warrants; m. J. Caplan received 37,238 shares in exchange for the cancellation of all obligations and all outstanding warrants; n. S. Bridges received 36,646 shares in exchange for the cancellation of all obligations and all outstanding warrants; o. E. Nommsen received 22,565 shares in exchange for the cancellation of all obligations and all outstanding warrants; p. R. Eisenberg, and his advisors, received 18,000 shares in exchange for the cancellation of all obligations and all outstanding warrants; q. S. Goff received 12,409 shares in exchange for the cancellation of all obligations and all outstanding warrants; r. L. Lewis received 12,409 shares in exchange for the cancellation of all obligations and all outstanding warrants; s. Carter, Terry & Company received 11,573 shares in exchange for the cancellation of all obligations and all outstanding warrants; t. C. Schrier received 8,615 shares in exchange for the cancellation of all obligations and all outstanding warrants; u. J. Ramsdell received 6,500 shares in exchange for the cancellation of all obligations and all outstanding warrants; v. C. Schuler received 5,113 shares in exchange for the cancellation of all obligations and all outstanding warrants; w. Imeson Consulting received 2,500 shares in exchange for the cancellation of all obligations and all outstanding warrants; x. Exchange Listing, LLC 750 shares in exchange for the cancellation of all obligations and all outstanding warrants; 25 Table of Contents ITEM 6. SELECTED FINANCIAL DATA Implications of Being a Smaller Reporting Company We are a “smaller reporting company” as defined in the Exchange Act. We may take advantage of certain of the scaled disclosures available to smaller reporting companies so long as the market value of our voting and non-voting Common Stock held by non-affiliates is less than $250.0 million measured on the last business day of our most recently completed second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our Common Stock held by non-affiliates is less than $700.0 million measured on the last business day of our most recently completed second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations, it may also make comparisons of our financial statements with other public companies difficult or impossible. ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with and is qualified in its entirety by and should be read together with our financial statements and the related notes thereto appearing elsewhere in this filing. This discussion contains certain forward-looking statements that involve risks and uncertainties, as described under the heading “Cautionary Note Regarding Forward-Looking Statements .” Actual results could differ materially from those projected in the forward-looking statements. Company Overview Mitesco, Inc. (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 shut down our former business line. On April 24, 2020, we changed our name to Mitesco, Inc. In October 2023, the Company changed its domicile from Delaware to Nevada in order to effect reduced costs. From 2020 through 2022, our operations were focused on establishing general practice medical clinics utilizing nurse practitioners under The Good Clinic name and development and acquisition of telemedicine technology. We opened our first The Good Clinic in Minneapolis, Minnesota in the first quarter of 2021 and had six operating clinics during the year ended December 31, 2022, with two additional sites under contract. In the fourth quarter of fiscal 2022, we made the strategic decision to close the entire clinic operation and release our staff due to a lack of profitability. The financial results and obligations are now accounted for as “discontinued operations”. Current Business Operations We are a holding company seeking to provide products, services and technology. In June 2024 we announced the formation of two (2) new wholly owned business units, Centcore, LLC (“Centcore”) that is providing data center services including cloud computing and application hosting, and Vero Technology Ventures, LLC (“VTV”), whose aim is to seek investment and acquisition opportunities, generally in the areas of cloud computing and data center related applications. Centcore has two (2) areas of focus. The first, generic data center services, is aimed at hosting applications for a specific user, sometimes referred to as “managed services offerings” or MSO, where the client moves the software licensed from various vendors, or internally developed, into our data center where we maintain the computing, communications and backup environment. We currently offer services through a “co-location” agreement with a data center based in Melbourne, Florida, which has relationships with eight (8) other data centers worldwide. Using this approach, we have an ability to rapidly expand the size of our computing resources quickly, at minimal expense. Over time we expect to create similar situations with other data centers worldwide based on our clients’ specific needs. The second focus involves hosting software applications developed by software vendors, from which they will sell the use of the software by their end user clients on a “cloud” basis. By taking this approach, we gain the business of the vendor, and their clients, perhaps allowing us to grow at a faster rate with lower cost of sales. We have developed the “Centcore Partner Program” where we will help promote the software vendors who are hosting in our data centers. If we are successful helping the vendor grow his business, we will have provided a “value added service”, and benefit from increased utilization of our computing resources by not only the vendor, but also his new end user clients. Our initial focus for this area is on software providers who serve the “technology infrastructure” market doing design, engineering, construction and maintenance of significant systems. We desire to create “life cycle” relationships as the design, construction and operational life of these systems includes document management and performance modeling over years, often from 5 to 20 years. 26 Table of Contents We have retained experienced professionals in the data center, cyber security and infrastructure services areas to support our needs on a per hour basis, which we believe will allow us to control our costs relative to business activity, without significant staffing internally. We have also formed an “Advisory Board” where individuals with experience in business areas where we have interest have agreed to assist us, receiving a nominal issuance of restricted common stock, in consideration of their advice. The Vero Technology Ventures arm is actively reviewing potential early-stage cloud computing solution vendors and is developing its own artificial intelligence (A.I.) based application set (VTV) is currently involved with the formation of a new software development project aimed at applying artificial intelligence (A.I.) to the sales process for various businesses including residential real estate using cloud computing based software. This initial effort dubbed “Robo Agent”, is expected to be available for initial users in Q3 of FY2025. Later versions may include similar functionality focused on other markets, generally in a “business to consumer” (B2C) selling situation. There are several other projects in evaluation, generally aimed at software that would operate on a cloud computing platform such as that which the Company has in its Centcore Data Center. FY2024 Debt Restructuring From FY2021 until late FY2022 the Company invested in an operating subsidiary, The Good Clinic, which was developing a series of primary care healthcare facilities. In late FY2022, as a result of a lack of adequate revenues and limited funding, it ceased operations. As of June 30, 2024, the Company had over $30 million in senior securities, notes and accounts payable related to that discontinued operation. In order to clear those obligations management began a restructuring which involved negotiations to reduce the overall debt, converting certain accredited institutional investors into a newly created Series A Amortizing Preferred stock (“Series A Preferred”), and all others into restricted common stock using a price per share of $4.00. As of the date of this filing it has converted over $25 million of its obligations, representing over $20 million of its senior securities, and over $2 million of notes and accounts payable, into 2,478,179 of restricted Common Stock, and 566,085 shares of Series A Preferred stock. The Series A Preferred stock is held by six (6) accredited institutional investors, while over 40 holders of obligations of the Company elected to receive common stock using the $4 per share valuation. Included in the above totals, effective December 31, 2024, the Company has entered into Obligation Exchange Agreements pursuant to which it has converted $580,132, including $32,132 of principal and interest, of its 2024 Bridge Notes into Series A Preferred shares, which resulted in the issuance of 23,206 shares of Series A Preferred shares to three (3) of its institutional investor. This extinguishes $580,132 of its short-term debt. As of the date of this filing all FY2024 bridge notes have been extinguished. Further, during January 2025 the Company issued 4,000 shares of its Series A Preferred shares in consideration of an investment of $100,000 by three (3) of its institutional investors. As part of the restructuring, the Company agreed to register shares of Common Stock issued and to be issued to Series A Preferred Stockholders. Advisory Board The Board of Directors authorized the creation of a new Advisory Board whose participants shall include subject matter experts in certain business areas under consideration by the Company. These positions are “non-executive” and as such are not governed by Section 16 of the Securities Act. The members of the advisory board do not have the authority to vote on matters brought to the Board of Directors and may only attend a meeting of the board of directors if they are invited. Also, the members of the advisory board are not bound by fiduciary duties and are not entitled to indemnification. The compensation for the participants shall be $60,000 per year, paid through the issuance of restricted common stock. The per share valuation to be used shall be determined by the Board of Directors based on the market of the Company’s common stock at the time of the appointment. For all appointments in FY2024 the valuation used was $.80 per share, resulting in the issuance of 75,000 shares of restricted common stock to each participant. The members of the advisory board do not have the authority to vote on matters brought to the board of directors and may only attend a meeting of the board of directors if they are invited. Also, the members of the advisory board are not bound by fiduciary duties and are not entitled to indemnification. The members of the Advisory Board are executives whose careers have focused on infrastructure related technology, cybersecurity, data center business development and data center systems software, and digital marketing as noted here: 1) Kristen Plybon is a cybersecurity professional with a strong background in data privacy with CIPP/US and CIPP/E certifications. She is a licensed attorney with a deep understanding of state, federal, and global data protection laws and regulations. 2) Nathaniel Wade is a professional specializing in cybersecurity and enterprise IT operations for a number of well-known Fortune 1,000, Department of Defense (DoD), and Federal Civilian (FedCiv) agencies specializing in design and implementation of cybersecurity programs for public safety, national defense, and intelligence communication systems; 27 Table of Contents 3) Tom Simon, the owner of Synthos LLC, a Seattle-based provider of development and support services specializing in GIS. Synthos’ services include data procurement and analysis, and spatial and statistical analysis using industry leading applications such as ESRI’s Arc-Info and Trimble Navigation. 4) Chris McLoughlin has spent his career in software and systems development and is an owner of Accucom Consulting, Inc., which specializes in network infrastructure, and Sentry RMS, which provides software to the public safety sector including various state and municipal law enforcement and fire agencies. 5) Gabriel Crawford has over 20 years of experience in data center development from location selection through power distribution engineering and financial structuring including co-location, data center design, key account recruitment and multi-site data distribution. 6) Jim Clifton is a seasoned Software Field Sales Director with over 20 years of experience in driving business growth through innovative go-to-market sales strategies focused on systems software, modern infrastructure, and data analytics and innovative implementation to improve productivity across corporations and workforces worldwide. 7) Mr. Marty Valania is a senior executive whose career has focused on the use of digital marketing in support of the newspaper industry, for both businesses (B2B), and direct to consumer selling. He is focused on assisting the Company establish a digital marketing operation in support of both their internal needs, and as a service to third parties. Results of Operations The following period-to-period comparisons of our financial results are not necessarily indicative of results for the current period or any future periods. Further, as a result of any acquisitions of other businesses, and any additional pharmacy acquisitions or other such transactions we may pursue, we may experience large expenditures specific to the transactions that are not incident to our operations. Comparison of the Twelve Months ending December 31, 2024, and 2023. Revenues We had revenues of $43,700 for the twelve months ended December 31, 2024, compared to $0 in the comparable period. The revenues were related to our newly formed subsidiary Centcore, LLC, and include sale of remote backup, general business applications, engineering analysis software and digital marketing related to our residential real estate software development effort. Operating Expenses Our total operating expenses for twelve months ended December 31, 2024, were $1,207,241. For the comparable period in 2023, the operating expenses were $2,586,668. The decrease is the result of the winding down of the Company’s clinic operations with The Good Clinic, LLC subsidiary. Other Income and Expenses Interest expense was $409,745 for the twelve months ended December 31, 2024, compared to $1,615,591 for the twelve months ended December 31, 2023. The decrease was a result of reduced debt balances in the current period. Interest expense – related parties was $28,474 for the twelve months ended December 31, 2024, compared to $109,502 in the prior period. The decrease was a result of reduced debt balances in the current period. During the twelve months ended December 31, 2024, we recorded a gain on termination of operating lease of $869,690. There were no comparable transactions in the prior period. During the twelve months ended December 31, 2023, we recorded equity investment incentives of approximately $7.6 million. There were no comparable transactions in the current period. During the twelve months ended December 31, 2024, we recorded a gain on settlement of debt of $515,964 compared to $25,000 for the twelve months ended December 31, 2023. During the twelve months ended December 31, 2024, we recorded a gain on settlement of accounts payable of $2,289,283 compared to $185,487 for the twelve months ended December 31, 2023. During the twelve months ended December 31, 2023, we recorded a gain on sales of assets of $8,876. There were no comparable transactions in the current period. During the twelve months ended December 31, 2023, we recorded a loss on settlement of true-up obligation of $119,370. There were no comparable transactions in the current period. During the twelve months ended December 31, 2023, we recorded a loss on legal settlement of $18,759. There were no comparable transactions in the current period. During the twelve months ended December 31, 2024, we recorded a loss of $4,585,124 on the revaluation of derivative liabilities under the default provision of certain securities, compared to a loss on revaluation of derivative liabilities of $85,773 in the prior period. 28 Table of Contents For the twelve months ended December 31, 2024, we had a net loss available to common shareholders from discontinued operations of $0, compared to a net loss available to common shareholders from discontinued operations of $1,368,991 for the twelve months ended December 31, 2023. For the twelve months ended December 31, 2024, we had an overall net loss available to common shareholders of $2,842,256, compared to a net loss available to common shareholders of $15,052,144 for the twelve months ended December 31, 2023. Liquidity and Capital Resources To date, we have not generated sufficient revenue from operations to support our operations. We have financed our operations through the sale of equity securities and short-term borrowings. As of December 31, 2024, we had cash of approximately $3,400 compared to cash of approximately $2,800 as of December 31, 2023. Our Company’s recurring losses from operations and negative cash flows from operations and our need to raise additional funding to finance our operations raise substantial doubt about our ability to continue as a going concern. Net cash used in operating activities was $514,409 for the twelve months ended December 31, 2024. This is the result of the winding down of the Company’s clinic operations and establishing the operations of the new Centcore business, along with SEC compliance, accounting and audit-related expenses. Cash used in operations for the twelve months ended December 31, 2023, was $759,730, of which $698,611 was related to cash used in operating activities from discontinued operations. Net cash used in investing activities for the twelve months ended December 31, 2024, was $5,000 related to the purchase of the AgingTopic. During the twelve months ended December 31, 2023, the Company had no investing activities. Net cash provided by financing activities for the twelve months ended December 31, 2024, was $519,973, compared to $726,945 for the twelve months ended December 31, 2023. Cash provided by financing activities was the result of cash proceeds from promissory notes of $548,000, offset by the repayment of principal on the SBA loan in the amount of $28,027. At December 31, 2024, we had the following current liabilities which are payable in cash: Accounts payable and accrued liabilities of $4.4 million; notes payable of $.5 million; notes payable to related parties of $0.06 million; SBA Loan Payable of $0.4 million; property-related settlements of $2.7 million; accrued interest payable of $0.4 million; accrued interest payable to related parties of $0.02 million; and other current liabilities of $0.1 million. We also have the following liabilities which are payable in stock: derivative liabilities of $4.7 million, Series A Preferred Stock liability of $5.2 million, and preferred stock dividends payable to related parties of $0.01 million. We have agreements from four (4) of our institutional investors to provide interim funding so that the Company may stay current with its accounting and reporting requirements under the Securities Act of 1934, settle obligations from the prior healthcare clinic operations and find a new business area to engage within. Through December 31, 2024, the total amount loaned under 12-month, 10% interest simple notes were $548,000, with roughly $250,000 attributable to accounting and compliance, $50,000 generally related to settlements and legal related, with the remaining for general expenses including T&E and communications. All amounts loaned through December 31, 2024, were converted into Series A preferred stock. In May 2024 we reached an agreement with the holders of our Series F Preferred shares to waive all interest payments permanently beginning May 15, 2024. This creates a reduction in accrued interest of over $200,000 per month. Similar adjustments with other holders of debt and interest paying equity are expected. As of December 31, 2024, all shares of the Series F Preferred stock have been cancelled in exchange for either restricted common stock, or the newly created Series A Preferred stock. The Company has relationships with a number of consultants who are assisting in the creation of the new business units. It is anticipated that this approach will continue indefinitely as it does not desire to create the overhead associated with a large employment force. The following table summarizes the status of our property-related settlements as noted above and the total settlement amounts as of the date of the filing: 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 29 Table of Contents SBA Loan 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 (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 the 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. For the year ended December 31, 2024, the Company will have incurred $4,128 of interest for this loan and made payments of $28,027. Gardner Debt for Equity Agreement and other obligations from discontinued clinic operations 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. Based on our current discussions with Gardner we have an obligation of $2.2 million represented in the financial statements which yet to be resolved. We expect to ultimately resolve this through an equity issuance essentially in a form similar to others noted in our 2024 Restructuring Plan. Our financial statements as of December 31, 2024, reflect total liabilities of over $13.7 million, including certain reserves for potential liabilities related to ceased operations related largely to long term lease obligations and costs related to the construction of our facilities. A substantial amount of these liabilities may be reversed on negotiations, and it is our goal to settle the remaining amounts with non-cash consideration as noted above. There can be no assurance that all of these vendors will be willing to settle their obligations with the Company on the proposed terms, or in amounts acceptable to the Company. We remain undercapitalized and until we have resolved most of these obligations it is unlikely that we will be able to attract sufficient capital on reasonable terms to execute our business strategy. We remain committed to the resolution of these outstanding items in a fair and timely manner. Critical Accounting Policies We believe that the accounting policies described below are critical to understanding our business, results of operations and financial condition because they involve the use of more significant judgments and estimates in the preparation of our consolidated financial statements. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and any changes in the assumptions used in making the accounting estimates that are likely to occur could materially impact our consolidated financial statements. 30 Table of Contents Revenue Recognition The Company follows the guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (the “new revenue standard”) to all contracts using the modified retrospective method. Revenue is recognized based on the following five step model: - Identification of the contract with a customer - Identification of the performance obligations in the contract - Determination of the transaction price - Allocation of the transaction price to the performance obligations in the contract - Recognition of revenue when, or as, the Company satisfies a performance obligation The Company primarily earns revenue by providing generic data center services, which is aimed at hosting applications for a specific user, sometimes referred to as “managed services offerings” or MSO, where the client moves the software licensed from various vendors, or internally developed, into our data center where we maintain the computing, communications and backup environment. Data center service revenue is recognized on a monthly basis as the services are provided. Stock-Based Compensation We recognize compensation costs to employees under FASB ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). Under FASB ASC 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation cost for stock options is estimated at the grant date based on each option’s fair-value as calculated by the Black-Scholes-Merton (“BSM”) option-pricing model. Share-based compensation arrangements may include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. Equity instruments issued to other than employees are recorded pursuant to the guidance contained in ASU 2018-07 (“ASU 2018-07”), Improvements to Non-employee Share-Based Payment Accounting, which simplified the accounting for share-based payments granted to non-employees for goods and services. Under the ASU 2018-07, most of the guidance on such payments to non-employees would be aligned with the requirements for share-based payments granted to employees. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the consolidated balance sheet and reported at the lower of the carrying amount or fair value, less costs to sell and are no longer depreciated. The assets and liabilities of a disposal group classified as held-for-sale would be presented separately in the appropriate asset and liability sections of the consolidated balance sheet, if material. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.