Mitesco, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA MITESCO, INC. INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS PAGE 33 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB 6920 ) 35 CONSOLIDATED BALANCE SHEETS 36 CONSOLIDATED STATEMENTS OF OPERATIONS 37 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) 38 CONSOLIDATED STATEMENTS OF CASH FLOWS 40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 32 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Mitesco, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Mitesco, Inc. (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Derivatives As described in Note 10 and 12 to the Company’s consolidated financial statements, when the Company issues debt that contains a conversion feature, it first evaluates whether the conversion feature meets the requirements to be treated as a derivative. If the conversion feature within convertible debt meets the requirements to be treated as a derivative, the Company estimates and records the fair value of the derivative liability upon the date of issuance. The derivative liability is revalued at the end of each reporting period. 33 Table of Contents We identified the Company’s application of the accounting for convertible notes as a critical audit matter. The principal considerations for our determination of this critical audit matter related to the high degree of subjectivity in the Company’s judgments in determining the qualitative factors. Auditing these judgments and assumptions by the Company involves auditor judgment due to the nature and extent of audit evidence and effort required to address these matters. The primary procedures we performed to address these critical audit matters included the following: - We obtained debt and warrant related agreements and performed the following procedures: - Reviewed agreements for all relevant terms. - Tested management’s identification and treatment of agreement terms. - Recalculated management’s fair value of each conversion feature based on the terms in the agreements. - Assessed the terms and evaluated the appropriateness of management’s application of their accounting policies, along with their use of estimates, in the determination of the amortization of the debt discount. - Reviewed the Company’s specialist calculation of the fair value of the derivative liability, including the assumptions and inputs used, and engaged an independent specialist to assess the reasonableness of the Company’s calculation and provide an independent expectation of the fair value. Astra Audit & Advisory LLC We have served as the Company’s auditor since 2024. Tampa, Florida March 31, 2025 34 Table of Contents MITESCO, INC. CONSOLIDATED BALANCE SHEETS December 31, December 31, 2024 2023 ASSETS Current assets Cash and cash equivalents $ 3,402 $ 2,838 Accounts receivable 29,700 - Prepaid expenses and other current assets 4,968 - Total current assets 38,070 2,838 Intangible assets, net 151,771 - Total Assets $ 189,841 $ 2,838 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities Accounts payable and accrued liabilities $ 4,167,061 $ 7,838,112 Accrued interest 374,376 348,821 Accrued interest - related parties 22,547 61,792 Derivative liabilities 4,685,675 152,945 Royalty payable 150,000 - Lease liability - operating leases, current 99,477 99,477 Notes payable, net of discounts 548,137 945,429 Notes payable - related parties, net of discounts 64,044 300,012 SBA loan payable 393,761 421,788 Other current liabilities 96,136 121,136 Preferred stock dividends payable - 1,551,833 Preferred stock dividends payable - related parties 14,439 73,364 Legal settlements 2,666,675 2,219,886 Series A preferred stock liability, current 5,160,815 - Total current liabilities 18,443,143 14,134,595 Series A preferred stock liability, non-current 8,162,644 - Total liabilities 26,605,787 14,134,595 Commitments and contingencies (Note 17) Stockholders’ equity (deficit) Preferred stock, $0.01 par value, 100,000,000 shares authorized; 10,000,000 shares designated Series D; 10,000 shares designated as Series E; 140,000 shares designated as Series F; and 27,324 shares designated Series X: Preferred stock, Series D, $ 0.01 par value, 25,000 and 250,000 shares issued and outstanding as of December 31, 2024, and 2023 250 2,500 Preferred stock, Series E, $ 0.01 par value, no shares issued and outstanding as of December 31, 2024, and 2023 - - Preferred stock, Series F, $ 0.01 par value, 0 and 20,057 shares issued and outstanding as of December 31, 2024, and 2023 - 201 Preferred stock, Series X, $ 0.01 par value, 19,703 and 24,227 shares issued and outstanding at December 31, 2024, and 2023 197 242 Common stock, $ 0.01 par value, 500,000,000 shares authorized, 9,762,258 and 5,567,957 shares issued and outstanding as of December 31, 2024, and 2023, respectively 97,623 55,680 Additional paid-in capital 37,341,335 47,856,444 Accumulated deficit ( 63,855,351 ) ( 62,046,824 ) Total stockholders’ equity (deficit) ( 26,415,946 ) ( 14,131,757 ) Total liabilities and stockholders’ equity (deficit) $ 189,841 $ 2,838 The accompanying notes are an integral part of these audited consolidated financial statements. 35 Table of Contents MITESCO, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended December 31, 2024 2023 Revenue $ 43,700 $ - Operating expenses: Cost of operations 15,922 - General and administrative 1,191,319 2,454,668 Impairment of fixed assets - 132,000 Total operating expenses 1,207,241 2,586,668 Net Operating Loss ( 1,163,541 ) ( 2,586,668 ) Other income (expense): Interest expense ( 409,745 ) ( 1,615,591 ) Interest expense - related parties ( 28,474 ) ( 109,502 ) Equity investment incentives - ( 7,644,077 ) Financing costs - ( 18,617 ) Loss on legal settlement - ( 18,759 ) Loss on true-up shares - ( 119,370 ) (Loss) Gain on settlement of accounts payable 2,289,283 185,487 Gain on sale of assets - 8,876 Gain on conversion of notes into common stock 515,964 25,000 (Loss) on conversion of accrued salaries and Series D preferred stock into Series F preferred stock - ( 25,000 ) Gain on settlement of operating leases 869,690 - Other Income - 40,622 Loss on revaluation of derivative liabilities ( 4,585,124 ) ( 85,773 ) Total other income (expense) ( 1,348,406 ) ( 9,376,704 ) Loss before provision for income taxes ( 2,511,947 ) ( 11,963,372 ) Provision for income taxes - - Net loss from continuing operations $ ( 2,511,947 ) $ ( 11,963,372 ) Net loss from discontinued operations - ( 1,368,991 ) Net loss ( 2,511,947 ) ( 13,332,363 ) Preferred stock dividends ( 893,828 ) ( 1,600,241 ) Preferred stock dividends - related parties ( 139,901 ) ( 119,540 ) Deemed contribution 703,420 - Net loss available to common shareholders $ ( 2,842,256 ) $ ( 15,052,144 ) Net loss per share from continuing operations – basic $ ( 0.42 ) $ ( 2.64 ) Net loss per share from discontinued operations – basic 0.00 ( 0.26 ) Net loss per share - basic and diluted - basic ( 0.42 ) ( 2.91 ) Net loss per share from continuing operations – diluted $ ( 0.42 ) $ ( 2.64 ) Net loss per share from discontinued operations – diluted 0.00 ( 0.26 ) Net loss per share - basic and diluted - diluted ( 0.42 ) ( 2.91 ) Weighted average shares outstanding - basic 6,733,863 5,178,468 Weighted average shares outstanding - diluted 6,733,863 5,178,468 The accompanying notes are an integral part of these audited consolidated financial statements. 36 Table of Contents MITESCO, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY (DEFICIT) FOR THE YEAR ENDED DECEMBER 31, 2024 and 2023 Preferred Stock Series C Preferred Stock Series D Preferred Stock Series F Preferred Stock Series X Common Stock Additional Paid-in Common Stock Accumulated Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount capital Subscribed Deficit Total Balance, December 31, 2022 1,047,619 $ 10,476 3,100,000 $ 31,000 - $ - 24,227 $ 242 4,630,372 $ 46,305 $ 29,452,514 $ 36,575 $ ( 48,714,461 ) $ ( 19,137,349 ) Shares issued for conversion of note payable - - - - - - - - 57,138 571 82,885 - - 83,456 Shares issued as commission for fundraising - - - - - - - - 2,952 30 3,778 - - 3,808 Shares issued for true-up agreement - - - - - - - - 94,738 947 118,423 - - 119,370 Conversion of accrued salary, debt, and board fees to common stock by a related party - - - - - - - - 181,606 1,816 3,632 - - 5,448 Conversion of accounts payable to common stock - - - - - - - - 247,776 2,476 77,027 - - 79,503 Issuance of common stock to a service provider - - - - - - - - 300,000 3,000 894,000 - - 897,000 Shares issued pursuant to legal settlement - - - - - - - - 22,174 222 18,537 - - 18,759 Shares issued previously subscribed - - - - - - - - 2,926 30 36,545 ( 36,575 ) - - Vesting of stock options issued to employees - - - - - - - - - - 3,732 - - 3,732 Series A Dividends previously satisfied - - - - - - - - - - 10,967 - - 10,967 Shares issued for Series X dividends - - - - - - - - 28,275 283 60,281 - - 60,564 Shares issued for conversion of accounts payable - - - - 147 2 - - - - 146,212 - - 146,214 Shares sold for cash, net of costs - - - - 1,746 17 - - - - 1,583,483 - - 1,583,500 Conversion of Series C Preferred Stock to Series F Preferred Stock ( 1,047,619 ) ( 10,476 ) - - 2,289 22 - - - - 1,198,450 - - 1,187,996 Conversion of Series D Preferred Stock to Series F Preferred Stock - - ( 2,350,000 ) ( 23,500 ) 4,055 41 - - - - 1,610,965 - - 1,587,506 Conversion of Series D Preferred Stock and accrued salaries to Series F Preferred Stock by related party - - ( 500,000 ) ( 5,000 ) 655 7 - - - - 159,899 - - 154,906 Conversion of Debt to Series F Preferred Stock - - - - 9,027 90 - - - - 9,523,088 - - 9,523,178 Conversion of debt and accrued salaries to Series F Preferred Stock by related parties - - - - 2,138 22 - - - - 2,137,033 - - 2,137,055 Forgiveness of related party loans for sale of assets - - - - - - - - - - 2,454,774 2,454,774 Preferred stock dividends - - - - - - - - - - ( 1,719,781 ) - - ( 1,719,781 ) Net loss - - - - - - - - - - - - ( 13,332,363 ) ( 13,332,363 ) Balance, December 31, 2023 - $ - 250,000 $ 2,500 20,057 $ 201 24,227 $ 242 5,567,957 $ 55,680 $ 47,856,444 $ - $ ( 62,046,824 ) $ ( 14,131,757 ) Shares issued for compensation - - - - - - - - 1,575,000 15,750 506,266 - - 522,016 Series X shares issued as compensation - - - - - - 7,200 72 - - 179,928 - - 180,000 Conversion of accounts payable to common stock - - - - - - - - 237,349 2,373 59,955 - - 62,328 Conversion of debt to common stock by a related party - - - - - - - - 79,298 793 362,067 - - 362,860 Conversion of debt to common stock - - - - - - - - 154,107 1,541 40,067 - - 41,608 Conversion of Series F Preferred Stock and accrued dividends to common stock - - - - ( 8,333 ) ( 84 ) - - 1,889,835 18,899 968,676 - - 987,491 Conversion of Series D Preferred Stock and accrued dividends to common stock - - ( 100,000 ) ( 1,000 ) - - - - 30,802 308 100,857 - - 100,165 Conversion of Series X Preferred Stock to common stock - - - - - - ( 11,724 ) ( 117 ) 86,788 868 ( 751 ) - - - Exchange of Series D and Series F Preferred for Series A Preferred - - ( 125,000 ) ( 1,250 ) ( 11,724 ) ( 117 ) - - - - ( 11,853,882 ) - 703,420 ( 11,151,829 ) Preferred stock dividends - - - - - - - - - - ( 1,033,729 ) - - ( 1,033,729 ) Shares issued for Series X dividends - - - - - - - - 141,122 1,411 103,043 - - 104,454 Release of true-up obligation on commitment shares - - - - - - - - - - 152,945 - - 152,945 Establishment of derivative liability of conversion feature upon default - - - - - - - - - - ( 100,551 ) - - ( 100,551 ) Net income - - - - - - - - - - - - ( 2,511,947 ) ( 2,511,947 ) Balance, December 31, 2024 - $ - 25,000 $ 250 - $ - 19,703 $ 197 9,762,258 $ 97,623 $ 37,341,335 $ - $ ( 63,855,351 ) $ ( 26,415,946 ) The accompanying notes are an integral part of these audited consolidated financial statements. 37 Table of Contents MITESCO, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net loss from continuing operations $ ( 2,511,947 ) $ ( 11,963,372 ) Adjustments to reconcile net loss to net cash used in operating activities: Impairment of assets - 132,000 Amortization of intangible assets 3,229 - Penalties on notes payable - 1,027,778 Conversion fees on notes payable - 75,000 Equity investment incentives - 7,644,077 Gain on settlement of operating leases ( 869,690 ) - Loss on commitment shares - 119,370 Loss on conversion of accrued salary - 25,000 Gain on settlement of notes payable ( 515,964 ) ( 164,837 ) (Gain) loss on revaluation of derivative liabilities 4,585,124 85,773 (Gain) loss on settlement of accounts payable ( 2,289,283 ) 24,895 Loss on legal settlement - 18,759 Amortization of discount on notes payable - 32,011 Amortization of discount on notes payable - related parties - 19,587 Share-based compensation 702,016 904,540 Other income - ( 40,622 ) Changes in assets and liabilities: Accounts receivable ( 29,700 ) - Prepaid expenses and other current assets ( 4,968 ) 51,632 Accounts payable and accrued liabilities 195,578 1,491,390 Operating lease liability, net - ( 38,948 ) Other current liabilities - 25,000 Accrued interest 187,215 471,564 Accrued interest - related parties 33,981 ( 1,716 ) Net cash provided by operating activities – continuing operations ( 514,409 ) ( 61,119 ) Net cash used in operating activities – discontinued operations - ( 698,611 ) Net cash used in operating activities ( 514,409 ) ( 759,730 ) CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for acquisition of business ( 5,000 ) - Net cash used in investing activities ( 5,000 ) - CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sales of Series F Preferred Stock, net of fees - 738,500 Principal payments on SBA Loan ( 28,027 ) ( 11,555 ) Proceeds from notes payable, net of discounts 548,000 - Net cash provided by financing activities 519,973 726,945 Net change in cash and cash equivalents 564 ( 32,785 ) Cash and cash equivalents at beginning of period 2,838 35,623 Cash and cash equivalents at end of period $ 3,402 $ 2,838 The accompanying notes are an integral part of these audited consolidated financial statements. 38 Table of Contents MITESCO, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2024 2023 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ 4,128 $ - Income taxes paid $ - $ - NON-CASH INVESTING AND FINANCING ACTIVITIES: Stock issued for common stock subscribed $ - $ 36,575 Preferred stock dividend $ 1,033,729 $ 1,719,781 Conversion of accounts payable to Series F Preferred Stock $ - $ 146,214 Conversion of Series C Preferred Stock to Series F Preferred Stock $ - $ 1,198,472 Conversion of Series D Preferred Stock to Series F Preferred Stock $ - $ 1,611,006 Conversion of accounts payable to common stock $ 62,328 $ 79,503 Conversion of Series D Preferred Stock and accrued salaries to Series F Preferred Stock by related party $ - $ 159,906 Conversion of notes payable and accrued interest to Series F Preferred Stock $ - $ 9,523,178 Conversion of debt and accrued salaries to Series F Preferred Stock by related parties $ - $ 2,137,055 Conversion of accounts payable, accrued salaries, and board fees to common stock $ - $ 5,448 Conversion of notes payable and accrued interest to common stock $ 363,608 $ 83,456 Series A accrued dividends reclassified to APIC from prior transactions $ - $ 10,967 Shares issued for Series X dividends $ 104,454 $ 60,564 Forgiveness of notes for purchase of subsidiary assets $ - $ 2,454,774 Conversion of notes payable to common stock - related party $ 969,469 $ - (Decrease) Increase in capital expenditures included in accounts payable $ 987,575 $ - Conversion of Series D Preferred Stock and accrued dividends to common stock $ 101,165 $ - Conversion of Series X Preferred Stock and accrued dividends to common stock $ 117 $ - Conversion of Series F and Series D preferred stock to Series A preferred stock $ 12,774,079 $ - Conversion of Notes Payable and accrued interest to Series A preferred stock $ 580,132 $ - Royalty payable issued for purchase of business $ 150,000 $ - Release of true-up obligation on commitment shares $ 152,945 $ - Establishment of derivative liability of conversion feature upon default $ 100,551 $ - The accompanying notes are an integral part of these audited consolidated financial statements. 39 Table of Contents MITESCO, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1: Description of Business 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 completed a “spin out” of our former business line. On April 24, 2020, we changed our name to Mitesco, Inc. In October 2023, the Company completed a move of its corporate status to Nevada from Delaware in order to effect reduced costs. From 2020 through 2022, our operations were focused on establishing 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. We are a holding company seeking to provide products, services and technology. We have a number of near-term opportunities that we hope to pursue, assuming the capital markets make sufficient funding available at reasonable rates. During the first quarter of 2024 we recruited a number of individuals to a newly formed Advisory Board, who might assist the Company in determining the viability of certain ventures going forward. These individuals have a background in data center services, cyber and data security and software applications related to infrastructure design, implementation and management including geographical information systems (GIS). In June 2024 we announced the formation of two (2) new wholly owned business units, Centcore, LLC, who is providing data center services including cloud computing and application hosting, and Vero Technology Ventures, LLC, 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. The second focus involves hosting application software 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 hope to 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 “infrastructure” market doing design, engineering, construction and maintenance of significant assets. We desire to create “life cycle” relationships with both the design teams, and owners which may include private owners such as manufacturers and utilities, or publicly owned assets for municipalities, states or federal governments, domestically and internationally. We have retained proven 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. Note 2: Going Concern As of December 31, 2024, the Company had cash and cash equivalents of approximately $ 3 ,000, current liabilities of approximately $ 18.4 million, and has incurred significant losses from the previous clinic operations. As previously noted, we made a strategic decision to reduce our capital needs by closing our entire clinic operations in the fourth quarter of 2022 and releasing our entire staff, due to lack of profitability. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to execute its business plan. As a result of these factors, there is substantial doubt about the ability of the Company to continue as a going concern for one year from the date the financial statements are issued. The Company’s continuance is dependent on raising capital and generating revenues sufficient to sustain operations. However, as of the date of these consolidated financial statements, no formal agreement exists. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts classified as liabilities that might be necessary should the Company be forced to take any such actions. 40 Table of Contents The COVID-19 pandemic, decades-high inflation and concerns about an economic recession in the United States or other major markets has resulted in, among other things, volatility in the capital markets that may have the effect of reducing the Company’s ability to access capital, which could in the future negatively affect the Company’s liquidity. In addition, a recession or market correction due to these factors could materially affect the Company’s business and the value of its common stock. Note 3: Summary of Significant Accounting Policies Basis of Presentation – The consolidated financial statements are prepared in conformity with accounting principles accepted in the United States of America (“GAAP”). Principles of Consolidation – The accompanying consolidated financial statements include the accounts of Mitesco, Inc., and its wholly owned subsidiaries Mitesco NA, LLC, The Good Clinic, LLC, Vero Technology Ventures, LLC, and Centcore, LLC. In addition, we relied on the operating activities of certain legal entities in which we did not maintain a controlling ownership interest, but over which we had indirect influence and of which we were considered the primary beneficiary. These entities are typically subject to nominee ownership and transfer restriction agreements that effectively transfer the majority of the economic risks and rewards of their ownership to the Company. The Company’s management, restrictions and other agreements concerning such nominee-owned entities typically include both financial terms and protective and participating rights to the entities’ operating, strategic and non-clinical governance decisions which transfer substantial powers over and economic responsibility for these entities to the Company. As such, the Company applies the guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 – Consolidation (“ASC 810”), to determine when an entity that is insufficiently capitalized or not controlled through its voting interests, referred to as a variable interest entity should be consolidated. All intercompany balances and transactions have been eliminated. Use of Estimates - The preparation of these financial statements requires our management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and related notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Cash - The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Property and Equipment - Property and equipment is recorded at the lower of cost or estimated net recoverable amount and is depreciated using the straight-line method over its estimated useful life. Property acquired in a business combination is recorded at estimated initial fair value. Property and equipment are depreciated using the straight-line method based on the lesser of the estimated useful lives of the assets or the lease term based upon the following life expectancy: Years Office equipment 3 to 5 Furniture & fixtures 3 to 7 Machinery & equipment 3 to 10 Leasehold improvements Term of lease Revenue Recognition – The Company recognizes revenue in accordance with ASC 606 when it has satisfied the performance obligations under an arrangement with the customer reflecting the terms and conditions under which products or services will be provided, the fee is fixed or determinable, and collection of any related receivable is probable. ASC Topic 606, “Revenue from Contracts with Customers” establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to performance obligations in the contract; and 5) recognize revenue as the performance obligation is satisfied. Our revenues generally relate to data center services. Revenues are recorded during the period our obligations to provide services are satisfied. The Company’s performance obligation for its revenue stream is to provide the access to its data centers to the customer, and revenues associated with completed sales are recognized at a point in time when they are provided to the customer. There is no significant financing component to the Company’s sales. Stock-Based Compensation - We recognize 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. 41 Table of Contents Equity instruments issued to those other than employees are recognized pursuant to FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This ASU relates to the accounting for non-employee share-based payments. The amendment in this update expands the scope of Topic 718 to include all share-based payment transactions in which a grantor acquired goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The ASU excludes share-based payment awards that relate to: (1) financing to the issuer; or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts from Customers. The share-based payments are to be measured at grant-date fair value of the equity instruments that the entity is obligated to issue when the goods or service has been delivered or rendered and all other conditions necessary to earn the right to benefit from the equity instruments have been satisfied. Convertible Instruments - The Company reviews the terms of convertible debt and equity instruments to determine whether there are conversion features or embedded derivative instruments including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. In circumstances where the convertible instrument contains more than one embedded derivative instrument, including conversion options that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single compound instrument. Also, in connection with the sale of convertible debt and equity instruments, the Company may issue free standing warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. When convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for separately, the total proceeds allocated to the convertible host instruments are first allocated to the fair value of the bifurcated derivative instrument. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, usually resulting in those instruments being recorded at a discount from their face amount. When the Company issues debt securities, which bear interest at rates that are lower than market rates, the Company recognizes a discount, which is offset against the carrying value of the debt. Such a discount from the face value of the debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income. In addition, certain conversion features are recognized as beneficial conversion features to the extent the conversion price as defined in the convertible note is less than the closing stock price on the issuance of the convertible notes. Derivative Financial Instruments - Derivatives are recorded on the consolidated balance sheet at fair value. The conversion features of the convertible notes are embedded derivatives and are separately valued and accounted for on the consolidated balance sheet with changes in fair value recognized during the period of change as a separate component of other income/expense. Fair values for exchange-traded securities and derivatives are based on quoted market prices. The pricing model the Company uses for determining the fair value of its derivatives is the Monte Carlo Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Common Stock Purchase Warrants - The Company accounts for common stock purchase warrants in accordance with the FASB ASC Topic 815, Accounting for Derivative Instruments and Hedging Activities. As is consistent with its handling of stock compensation and embedded derivative instruments, the Company’s cost for stock warrants is estimated at the grant date based on each warrant’s fair-value as calculated by the BSM option-pricing model value method for valuing the impact of the expense associated with these warrants. Per Share Data - Basic income (loss) per share is computed by dividing net loss by the weighted average number of common shares outstanding for the year. Diluted loss per share is computed by dividing net loss by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to warrants, options, and convertible instruments. As of December 31, 2024, and 2023 the effect of 1,252 shares issuable upon conversions of the Series D preferred shares, 11,969,780 shares issuable upon the conversion of convertible notes, and 54,434 shares issuable upon exercise of the outstanding warrant and common stock options were anti-dilutive and not included in the computation of dilutive earnings per share. Income Taxes - The Company accounts for income taxes under the asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. In estimating future tax consequences, the Company considers all expected future events other than enactments of changes in the tax laws or rates. 42 Table of Contents Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. The Company has determined that a valuation allowance is needed due to recent taxable net operating losses and the limited taxable income in the carryback periods. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and certain tax loss carryforwards, less any valuation allowance. The Company accounts for uncertain tax positions as required in that a position taken or expected to be taken in a tax return is recognized in the consolidated financial statements when it is more likely than not (i.e., a likelihood of more than 50%) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than 50% of being realized upon ultimate settlement. The Company does not have any material unrecognized tax benefits. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as components of interest expense and other expense, respectively, in arrival at pretax income or loss. The Company does not have any interest and penalties accrued. The Company is no longer subject to U.S. federal, state, and local income tax examinations for the years before 2012. Long-lived Assets The Company amortizes acquired definite-lived intangible assets over their estimated useful lives. Other indefinite-lived intangible assets are not amortized but subject to annual impairment tests. In accordance with ASC 360 “Property Plant and Equipment,” the Company reviews the carrying value of intangibles subject to amortization and long-lived assets for impairment throughout the year or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. 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. Financial Instruments and Fair Values - The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument. In determining fair value, we use various valuation methodologies and prioritize the use of observable inputs. We assess the inputs used to measure fair value using a three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market: Level 1 – inputs include exchange quoted prices for identical instruments and are the most observable. Level 2 – inputs include brokered and/or quoted prices for similar assets and observable inputs such as interest rates. Level 3 – inputs include data not observable in the market and reflect management judgment about the assumptions market participants would use in pricing the asset or liability. The use of observable and unobservable inputs and their significance in measuring fair value are reflected in our hierarchy assessment. The carrying amount of cash, prepaid assets, accounts payable and accrued liabilities approximate fair value due to the short-term maturities of these instruments. Because cash and cash equivalents are readily liquidated, management classifies these values as Level 1. The fair value of the derivative liabilities approximates their book value as the instruments are short-term in nature and contain market rates of interest. Because there is no ready market or observable transactions, management classifies the derivative liabilities as Level 3. Segments The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer. The CODM allocates resources and evaluates the performance of the Company at the consolidated level using information about its revenues, gross profit, and income from operations. All significant operating decisions are based upon an analysis of the Company as one operating segment, which is the same as its reporting segment. 43 Table of Contents Recent Accounting Standards In December 2023, the FASB issued ASU 2023-09 , Income Taxes ( Topic 740 ) : Improvements to Income Tax Disclosures, which expands the disclosures required for income taxes. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures. There are various other updates recently issued, most of which represent technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows. Note 4: Discontinued Operations 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. On December 8, 2023, the Company sold the remaining assets of The Good Clinic, LLC to Leading Primary Care LLC, a company organized by Michael C. Howe, the former CEO of The Good Clinic, LLC for total consideration of approximately $ 2.5 million. ASC 360-10-45-9 requires that a long-lived asset (disposal group) to be sold shall be classified as held for sale in the period in which a set of criteria have been met, including criteria that the sale of the asset (disposal group) is probable and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. This criterion was achieved on December 8, 2023. Additionally, the discontinued operations are comprised of the entirety of The Good Clinic, LLC. For comparability purposes certain prior period line items relating to the assets held for sale have been reclassified and presented as discontinued operations for all periods presented in the accompanying consolidated statements of net loss and comprehensive loss and the consolidated balance sheets. The Company had no assets or liabilities classified that were classified as part of discontinued operations as of December 31, 2024, or 2023. The following information presents the major classes of line items constituting the after-tax loss from discontinued operations in the consolidated statements of operations: Year Ended December 31, December 31, 2024 2023 Revenue $ - $ 181,012 Cost of goods sold - - Gross margin - 181,012 Selling, general, and administrative expenses - ( 1,166,120 ) Impairment of assets - ( 2,211,462 ) Other (income) expense: Interest expense - ( 306,032 ) Gain on sale of assets - 11,268 Gain on settlement of accounts payable - 81,263 Gain on settlement of operating lease - 2,041,080 Loss from discontinued operations, net of tax $ - $ ( 1,368,991 ) The following information presents the major classes of line items constituting significant operating and investing cash flow activities in the consolidated statements of cash flows relating to discontinued operations: Year Ended December 31, December 31, 2024 2023 Depreciation expense $ - $ 81,765 Cash used for construction in progress and fixed assets $ - $ - Impairment of RTU assets $ - $ 544,063 Impairment of property and equipment $ - $ 1,667,399 44 Table of Contents Note 5: Business Acquisition On December 6, 2024, the Company entered into an Exclusive Source Code License agreement (the “License Agreement”) between AgingTopic, LLC (“AgingTopic”) and the Company where the Company has acquired, subject to certain payment milestones, the source code and business activities of AgingTopic, which constitutes substantially all of AgingTopic’s assets utilized in the creation of advertising revenue from blog postings. The entity that owns the business and source code is controlled by Ms. Amy Lance, the wife of Mack Leath. The agreement calls for a $ 5,000 cash payment upon execution, and certain royalty payments up to a maximum of $ 150,000 , at which time it becomes a fully paid-up license. The royalty payments are to be repaid at 30% of net collection up to the first $50,000 has been repaid, after which the remaining $100,000 will be repaid based on 15% of net collections. After the payment of the $150,000 license fee, the Company will then pay a commission of 2.5% of net collections until 36 months after the date of the agreement. This acquisition closed on December 6, 2024. The acquisition of AgingTopic is being accounted for as a business combination under ASC 805. The Company is continuing to gather evidence to evaluate what identifiable intangible assets were acquired, such as a customer list, and the fair value of each, and expects to finalize the fair value of the acquired assets within one year of the acquisition date. The Company assigned the preliminary fair value of the consideration paid of $ 155,000 to domain name intangible assets that are amortized over an estimated useful life of four years . AgingTopic had not yet generated revenues prior to the time of acquisition. Note 6: Intangible assets The following table represents the balances of intangible assets as of December 31, 2024, and 2023; December 31, 2024 December 31, 2023 Website Domains $ 155,000 $ - Total Intangible assets 155,000 - Accumulated Amortization – website domains ( 3,229 ) - Net intangible assets $ 151,771 $ - On December 6, 2024, the Company closed on its acquisition of the AgingTopic Business and allocated the entire $ 155,000 purchase price to domain name assets with an estimated life of 4 years. The following is an amortization analysis of the annual amortization of intangible assets on a fiscal year basis as of December 31, 2024: For the year ended December 31, Amount 2025 $ 38,750 2026 38,750 2027 38,750 2028 35,521 2029 and Thereafter - Total remaining intangibles amortization 151,771 Note 7: Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consisted of the following at December 31, 2024, and 2023: December 31, December 31, 2024 2023 Trade accounts payable $ 3,677,455 $ 7,094,334 Accrued payroll and payroll taxes 489,606 743,778 Total accounts payable and accrued liabilities $ 4,167,061 $ 7,838,112 Note 8: Right to Use Assets and Lease Liabilities – Operating Leases The Company had operating leases for its clinics for which the Company is currently in negotiations with the Lessors to settle the remaining amounts owed after closing the clinic facilities. The Company’s lease expense was entirely comprised of operating leases and is reported as a component of discontinued operations as a result of the closing of the clinics and the subsequent sale of the assets. During the year ended December 31, 2023, the Company recognized an impairment in the amount of $ 0.5 million in connection with its remaining leased properties. Operating lease liabilities are summarized below: December 31, 2024 December 31, 2023 Lease liability $ 99,477 $ 99,477 Less: current portion ( 99,477 ) ( 99,477 ) Lease liability, non-current $ - $ - 45 Table of Contents As a result of closing the facilities, the Company has made no further lease payments during the year ending December 31, 2024, and 2023. As of December 31, 2024, the Company has either settled amounts owed or entered into default judgements for all leases except for the office lease. For all leases for which a legal settlement has been entered into, all amounts have been reclassified to legal settlements as of December 31, 2024. As of December 31, 2024, the Company has entered into settlement agreements for certain of our lease in the amount of $ 2,219,886 which is recorded as Legal Settlements in the accompanying balance sheet. During the year ended December 31, 2024, the Company recorded a gain of $ 869,690 as a result of a final settlement in addition to reclassifying certain accounts payable related to the leases to legal settlements. As of December 31, 2024, the Company has total legal settlement agreements and related accrued interest in the amount of $ 2,666,675 which is recorded as Legal Settlements in the accompanying balance sheet. Note 9: SBA Loan Payable PPP Loan Conversion to 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. 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 restructuring of debt in the amount of $ 40,622 was recorded on this transaction during the year ended December 31, 2023, and the balance of the loan was recorded at the amount of $ 433,343 representing the net cash flows discounted at 1 %. During the years ended December 31, 2024, and 2023, the Company made principal payments of $ 28,027 and $ 11,555 on this loan and recorded interest in the amount of $ 4,128 and $ 5,719 , respectively. The balance as of December 31, 2024, was $ 393,761 . Note 10: Notes Payable The following table summarizes the outstanding notes payable as of December 31, 2024, and 2023, respectively: December 31, 2024 December 31, 2023 Kishon Note $ 431,666 $ 431,666 Finnegan Note 1 51,765 51,765 Finnegan Note 2 32,353 32,353 Schrier Note - 25,882 Nommsen Note - 64,705 Caplan Note - 64,705 Finnegan Note 3 32,353 32,353 Lightmas Note - 66,000 Lewis Note - 33,000 Goff Note - 33,000 Hagan Note - 110,000 Total Notes Payable 548,137 945,429 Current Portion 548,137 945,429 Long-term portion $ - $ - Kishon Note On May 10, 2022, the Company entered into a Securities Purchase Agreement (the “Kishon Agreement”) with Kishon Investments, LLC (“Kishon”) with respect to the sale and issuance to Kishon of: (i) an initial commitment fee in the amount of $ 159,259 in the form of 12,741 shares (the “Kishon Commitment Fee Shares”) of the Company’s Common Stock, (ii) a promissory note in the aggregate principal amount of $277,777 (the “Kishon Note”), and (iii) Common Stock Purchase Warrants to purchase 5,556 shares of the Company’s common stock (the “Kishon Warrants”). Should Kishon receive net proceeds of less than $159,259 from the sale of the Kishon Commitment Fee Shares, the Company will issue additional shares to Kishon or pay the shortfall amount to Kishon in cash. The terms of the Kishon Agreement resulted in the Company recording a derivative liability in the initial amount of $ 27,793 . 46 Table of Contents The Kishon Note was issued in the principal amount of $ 277,777 for a purchase price of $ 250,000 resulting in an original issue discount of $ 27,777 . The Kishon Note has a due date of November 10, 2022 , and bears interest at the rate of 10 % per year for the first six months and 12 % thereafter. In the event of default as defined in the Kishon Note this rate will increase to 18 %, and the Kishon Note will become convertible at a price per share equal to the lowest trading price during the previous twenty trading days prior to the conversion date. The Kishon Note entered default status on November 11, 2022. The Kishon Commitment Fee Shares and Kishon Warrants resulted in a discount to the Kishon Note in the amount of $ 138,492 . During the year ended December 31, 2023, a default penalty in the amount of $ 138,889 and an additional fee in the amount of $ 15,000 were added to the principal amount of the Kishon Note. During the year ended December 31, 2024, as a result of the variable price of the conversion feature, the Company recorded an initial derivative liability of $ 100,551 upon bifurcating the conversion feature pursuant to ASC815. See Note 12 to these financials for further discussion. At December 31, 2023, principal and interest in the amount of $ 431,666 and $ 88,909 , respectively, were due on the Kishon Note. At December 31, 2024, principal and interest in the amount of $ 431,666 and $ 166,823 , respectively, were due on the Kishon Note. This note was in default at December 31, 2024. Finnegan Note 1 On May 23, 2022, the Company issued a 10 % Promissory Note in the principal amount of $ 47,059 to Jessica Finnegan (the “Finnegan Note 1”). Finnegan Note 1 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 20, 2022 , as extended, or (ii) five (5) business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of Finnegan Note 1 was $ 40,000 ; the amount payable at maturity will be $47,059 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Finnegan Note 1, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18 %. Finnegan Note 1 entered default status on November 21, 2022, and the interest rate increased to 18%. The Finnegan Note 1 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Ms. Finnegan reasonably believes contains a term that is more favorable than those in the Finnegan Note 1, the Company shall notify Ms. Finnegan of such term, and such term, at the option of Ms. Finnegan, shall become a part of the Finnegan Note 1. In addition, Ms. Finnegan received five-year warrants to purchase 386 shares of common stock at a price of $ 25.00 per share with a fair value of $ 2,000 at the date of issuance, and 1,930 shares of common stock with a value of $ 3,240 ; these amounts were recorded as discounts to Finnegan Note 1. Principal and accrued interest in the amount of $ 51,765 and $ 11,889 , respectively, were due on this note at December 31, 2023. At December 31, 2024, principal and interest in the amount of $ 51,765 and $ 20,537 , respectively, were due on the Finnegan Note. This note was in default at December 31, 2024. Finnegan Note 2 On May 26, 2022, the Company issued a 10 % Promissory Note in the principal amount of $ 29,412 to Jessica Finnegan (the “Finnegan Note 2”). Finnegan Note 2 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022 , or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Finnegan Note 2 was $ 25,000 ; the amount payable at maturity will be $29,412 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Finnegan Note 2, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18 %. Finnegan Note 2 entered default status on December 1, 2022, and the interest rate increased to 18%. The Finnegan Note 2 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Ms. Finnegan reasonably believes contains a term that is more favorable than those in the Finnegan Note 2, the Company shall notify Ms. Finnegan of such term, and such term, at the option of Ms. Finnegan, shall become a part of the Finnegan Note 2. In addition, Ms. Finnegan received five-year warrants to purchase 242 shares of common stock at a price of $ 25.00 per share with a fair value of $ 1,250 at the date of issuance, and 242 shares of common stock with a value of $ 2,025 ; these amounts were recorded as discounts to the Finnegan Note 2. At December 31, 2023, principal and accrued interest in the amount of $ 32,353 and $ 7,341 , respectively, were due on this note. At December 31, 2024, principal and interest in the amount of $ 32,353 and $ 12,705 , respectively, were due on the Finnegan Note. This note was in default at December 31, 2024. Schrier Note On July 7, 2022, the Company issued a 10 % Promissory Note in the principal amount of $ 23,259 to Charles Schrier (the “Schrier Note”). The Schrier Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) January 8, 2023 , or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Schrier Note was $ 20,000 ; the amount payable at maturity will be $23,529 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Schrier Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18 %. The Schrier Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Schrier reasonably believes contains a term that is more favorable than those in the Schrier Note, the Company shall notify Mr. Schrier of such term, and such term, at the option of Mr. Schrier, shall become a part of the Schrier Note. In addition, Mr. Schrier received five-year warrants to purchase 193 shares of common stock at a price of $ 25.00 per share with a fair value of $ 820 at the date of issuance, and 193 shares of common stock with a value of $ 1,000 ; these amounts were recorded as discounts to the Schrier Note. 47 Table of Contents At December 31, 2023, principal and accrued interest in the amount of $ 25,882 and $ 5,383 , respectively, were due on this note. During the year ended December 31, 2024, the Company entered into a settlement agreement with the lender to settle the note and all accrued interest in full in exchange for 8,614 shares of common stock at a price of $ 4 per share. The Company recorded the shares at the closing price on the date of issuance, which resulted in a gain on the transaction of $ 32,133 . Nommsen Note On July 26, 2022, the Company issued a 10 % Promissory Note in the principal amount of $ 58,823 to Eric S. Nommsen (the “Nommsen Note”). The Nommsen Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022 , as extended, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Nommsen Note was $ 50,000 ; the amount payable at maturity will be $58,823 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Nommsen Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Nommsen Note entered default status on December 1, 2022, and the interest rate increased to 18 %. The Nommsen Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Nommsen reasonably believes contains a term that is more favorable than those in the Nommsen Note, the Company shall notify Mr. Nommsen of such term, and such term, at the option of Mr. Nommsen, shall become a part of the Nommsen Note. In addition, Mr. Nommsen received five-year warrants to purchase 483 shares of common stock at a price of $ 25.00 per share with a fair value of $ 1,850 at the date of issuance, and 483 shares of common stock with a value of $ 2,350 ; these amounts were recorded as discounts to the Nommsen Note. At December 31, 2023, principal and accrued interest in the amount of $ 64,705 and $ 13,685 , respectively, were due on this note. During the year ended December 31, 2024, the Company entered into a settlement agreement with the lender to settle the note and all accrued interest in full in exchange for 22,565 shares of common stock at a price of $ 4 . The Company recorded the shares at the closing price on the date of issuance, which resulted in a gain on the transaction of $ 80,282 . Caplan Note On July 27, 2022, the Company issued a 10 % Promissory Note in the principal amount of $ 58,823 to James H. Caplan (the “Caplan Note”). The Caplan Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) January 21, 2023 , or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Caplan Note was $ 50,000 ; the amount payable at maturity will be $58,823 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Caplan Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18 %. The Caplan Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Caplan reasonably believes contains a term that is more favorable than those in the Caplan Note, the Company shall notify Mr. Caplan of such term, and such term, at the option of Mr. Caplan, shall become a part of the Caplan Note. In addition, Mr. Caplan received five-year warrants to purchase 483 shares of common stock at a price of $ 25.00 per share with a fair value of $ 1,850 at the date of issuance, and 483 shares of common stock with a value of $ 2,350 ; these amounts were recorded as discounts to the Caplan Note. At December 31, 2023, principal and accrued interest in the amount of $ 64,705 and $ 12,989 , respectively, were due on this note. During the year ended December 31, 2024, the Company entered into a settlement agreement with the lender to settle the note and all accrued interest in full in exchange for 37,283 shares of common stock at a price of $ 4 per share. The Company recorded the shares at the closing price on the date of issuance, which resulted in a gain on the transaction of $ 75,613 . Finnegan Note 3 On August 4, 2022, the Company issued a 10 % Promissory Note in the principal amount of $ 29,412 (the “Finnegan Note 3”) to Jessica, Kevin C., Brody, Isabella and Jack Finnegan (collectively, the “Finnegans”). Finnegan Note 3 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) February 3, 2023 , or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of Finnegan Note 3 was $ 25,000 ; the amount payable at maturity will be $29,412 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default as defined in Finnegan Note 3, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18 %. The Finnegan Note 3 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which The Finnegans reasonably believes contains a term that is more favorable than those in the Finnegan Note 3, the Company shall notify The Finnegans of such term, and such term, at the option of The Finnegans, shall become a part of the Finnegan Note 3. In addition, The Finnegans received five-year warrants to purchase 242 shares of common stock at a price of $ 25.00 per share with a fair value of $ 850 at the date of issuance, and 242 shares of common stock with a value of $ 1,100 ; these amounts were recorded as discounts to the Finnegan Note 3. 48 Table of Contents At December 31, 2023, principal and accrued interest in the amount of $ 32,353 and $ 6,350 , respectively, were due on this note. At December 31, 2024, principal and accrued interest in the amount of $ 32,353 and $ 11,714 , respectively, were due on this note. This note was in default at December 31, 2024. Lightmas Note On September 2, 2022, the Company issued a 10% Promissory Note in the principal amount of $ 60,000 to Frank Lightmas (the “Lightmas Note”). The Lightmas Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022 , or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Lightmas Note was $ 51,000 ; the amount payable at maturity will be $60,000 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Lightmas Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Lightmas Note entered default status on December 1, 2022, and the interest rate increased to 18 %. The Lightmas Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Lightmas reasonably believes contains a term that is more favorable than those in the Lightmas Note, the Company shall notify Mr. Lightmas of such term, and such term, at the option of Mr. Lightmas, shall become a part of the Lightmas Note. In addition, Mr. Lightmas received 492 shares of common stock with a value of $ 2,640 ; this amount was recorded as a discount to the Lightmas Note. At December 31, 2023, principal and accrued interest in the amount of $ 66,000 and $ 13,325 , respectively, were due on this note. During the year ended December 31, 2024, the Company entered into a settlement agreement with the lender to settle the note and all accrued interest in full in exchange for 22,850 shares of common stock at a price of $ 4 per share. The Company recorded the shares at the closing price on the date of issuance, which resulted in a gain on the transaction of $ 81,301 . Lewis Note On September 2, 2022, the Company issued a 10 % Promissory Note in the principal amount of $ 30,000 to Lisa Lewis (the “Lewis Note”). The Lewis Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022 , or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Lewis Note was $ 25,500 ; the amount payable at maturity will be $30,000 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Lewis Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Lewis Note entered default status on December 1, 2022, and the interest rate increased to 18 %. The Lewis Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Ms. Lewis reasonably believes contains a term that is more favorable than those in the Lewis Note, the Company shall notify Ms. Lewis of such term, and such term, at the option of Ms. Lewis, shall become a part of the Lewis Note. In addition, Ms. Lewis received 246 shares of common stock with a value of $ 1,320 ; this amount was recorded as a discount to the Lewis Note. At December 31, 2023, principal and accrued interest in the amount of $ 33,000 and $ 6,663 , respectively, were due on this note. During the year ended December 31, 2024, the Company entered into a settlement agreement with the lender to settle the note and all accrued interest in full in exchange for 12,409 shares of common stock at a price of $ 4 per share. The Company recorded the shares at the closing price on the date of issuance, which resulted in a gain on the transaction of $ 40,385 . Goff Note On September 2, 2022, the Company issued a 10 % Promissory Note in the principal amount of $ 30,000 to Sharon Goff (the “Goff Note”). The Goff Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022 , or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Goff Note was $ 25,500 ; the amount payable at maturity will be $30,000 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Goff Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Goff Note entered default status on December 1, 2022, and the interest rate increased to 18 %. The Goff Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Ms. Goff reasonably believes contains a term that is more favorable than those in the Goff Note, the Company shall notify Ms. Goff of such term, and such term, at the option of Ms. Goff, shall become a part of the Goff Note. In addition, Ms. Goff received 246 shares of common stock with a value of $ 1,320 ; this amount was recorded as a discount to the Goff Note. 49 Table of Contents At December 31, 2023, principal and accrued interest in the amount of $ 33,000 and $ 6,663 , respectively, were due on this note. During the year ended December 31, 2024, the Company entered into a settlement agreement with the lender to settle the note and all accrued interest in full in exchange for 12,409 shares of common stock at a price of $ 4 per share. The Company recorded the shares at the closing price on the date of issuance, which resulted in a gain on the transaction of $ 40,385 . Hagan Note On September 2, 2022, the Company issued a 10 % Promissory Note in the principal amount of $ 100,000 to Cliff Hagan (the “Hagan Note”). The Hagan Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) December 10, 2022 , or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Hagan Note was $ 85,000 ; the amount payable at maturity will be $100,000 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Hagan Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Hagan Note entered default status on December 11, 2022, and the interest rate increased to 18 %. The Hagan Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Hagan reasonably believes contains a term that is more favorable than those in the Hagan Note, the Company shall notify Mr. Hagan of such term, and such term, at the option of Mr. Hagan, shall become a part of the Hagan Note. In addition, Mr. Hagan received 820 shares of common stock with a value of $ 4,715 ; this amount was recorded as a discount to the Hagan Note. At December 31, 2023, principal and accrued interest in the amount of $ 110,000 and $ 21,793 , respectively, were due on this note. During the year ended December 31, 2024, the Company entered into a settlement agreement with the lender to settle the note and all accrued interest in full in exchange for 37,977 shares of common stock at a price of $ 4 per share. The Company recorded the shares at the closing price on the date of issuance, which resulted in a gain on the transaction of $ 135,114 . AJB Note On March 18, 2022, the Company entered into a Securities Purchase Agreement (the “AJB Agreement”) with AJB Capital Investments, LLC (“AJB”) with respect to the sale and issuance to AJB of: (i) an initial commitment fee in the amount of $ 430,000 in the form of 34,400 shares (the “AJB Commitment Fee Shares”) of the Company’s Common Stock, (ii) a promissory note in the aggregate principal amount of $ 750,000 (the “AJB Note”), and (iii) Common Stock Purchase Warrants to purchase 15,000 shares of the Company’s Common Stock (the “AJB Warrants”). The AJB Note and AJB Warrants were issued on March 17, 2022 and were held in escrow pending effectiveness of the AJB Agreement. Should AJB receive net proceeds of less than $430,000 from the sale of the AJB Commitment Fee Shares, the Company will issue additional shares to AJB or pay the shortfall amount to AJB in cash (the “AJB True-up Obligation”. The terms of the AJB Agreement resulted in the Company recording a derivative liability in the initial amount of $ 106,608 . On November 18, 2022, the Company issued 91,328 shares of common stock to AJB and recorded a loss in the amount of $ 9,007 in connection with the settlement of the AJB True-up Obligation. The AJB Note was issued in the principal amount of $750,000 for a purchase price of $ 675,000 , resulting in an original issue discount of $ 75,000 , and has a due date, as extended, of March 17, 2023 . The AJB Note bears interest at the rate of 10 % per year for the first six months and 12 % thereafter. In the event of default as defined in the AJB Note this rate will increase to 18 % and the AJB Note will become convertible at a price per share equal to the lowest trading price during the previous twenty trading days prior to the conversion date. The AJB Note entered default status on October 6, 2022. The AJB Commitment Fee Shares and AJB Warrants resulted in a discount to the AJB Note in the amount of $ 349,914 . During the year ended December 31, 2023, a default penalty in the amount of $ 375,000 and an additional fee in the amount of $ 15,000 were added to the principal amount of the AJB note. During the year ended December 31, 2023, interest in the amount of $ 69,167 was accrued on the AJB Note. On April 11, 2023, an equity investment incentive in the amount of $ 800,800 representing 65% of the total amount due under the AJB Note, along with original principal of $ 750,000 , the default penalty of $ 375,000 , the fee of $ 15,000 , and accrued interest of $ 92,000 (a total of $ 2,032,800 ) was converted to 2,033 shares of the Company’s Series F Preferred Stock. Other than the equity investment incentive of $800,800, there was no additional gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. At December 31, 2023, there were no amounts due under the AJB Note. 50 Table of Contents Anson Investments Note On April 6, 2022, the Company entered into a Securities Purchase Agreement (the “Anson Investments Agreement”) with Anson Investments Master Fund LP (“Anson Investments”) with respect to the sale and issuance to Anson Investments of: (i) an initial commitment fee in the amount of $ 322,500 in the form of 25,800 shares (the “Anson Investments Commitment Fee Shares”) of the Company’s Common Stock, (ii) a promissory note in the aggregate principal amount of $ 562,500 (the “Anson Investments Note”), and (iii) Common Stock Purchase Warrants to purchase 11,250 shares of the Common Stock (the “Anson Investments Warrants”). Should Anson Investments receive net proceeds of less than $322,500 from the sale of the Anson Investments Commitment Fee Shares, the Company will issue additional shares to Anson Investments or pay the shortfall amount to Anson Investments in cash. The terms of the Anson Investments Agreement resulted in the Company recording a derivative liability in the initial amount of $ 27,040 . The Anson Investments Note was issued in the principal amount of $562,500 for a purchase price of $ 506,250 resulting in an original issue discount of $ 56,250 . The Anson Investments Note has a due date of October 6, 2022 , and bears interest at the rate of 10 % per year for the first six months and 12 % thereafter. In the event of default as defined in the Anson Investments Note this rate will increase to 18 % and the Anson Investment Note will become convertible at a price per share equal to the lowest trading price during the previous twenty trading days prior to the conversion date. The Anson Investments Note entered default status on October 6, 2022. The Anson Investments Commitment Fee Shares and Anson Investments Warrants resulted in a discount to the Anson Investments Note in the amount of $ 416,375 . During the year ended December 31, 2023, a default penalty in the amount of $ 281,250 and an additional fee in the amount of $ 15,000 were added to the principal amount of the Anson Investments Note. During the year ended December 31, 2023, interest in the amount of $ $ 27,157 was accrued on the Anson Investments Note. On April 11, 2023, an equity investment incentive in the amount of $ 602,815 representing 65% of the total amount due under the Anson Investments Note, along with original principal of $ 562,500 , the default penalty of $ 281,250 , the fee of $ 15,000 , and accrued interest of $ 68,657 (a total of $ 1,530,222 ) was converted to 1,531 shares of the Company’s Series F Preferred Stock. Other than the equity investment incentive of $602,815, there was no gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. At December 31, 2023, there were no amounts due under the Anson Investments Note. Anson East Note On April 6, 2022, the Company entered into a Securities Purchase Agreement (the “Anson East Agreement”) with Anson East Master Fund LP (“Anson East”) with respect to the sale and issuance to Anson East of: (i) an initial commitment fee in the amount of $ 107,500 in the form of 8,600 shares (the “Anson East Commitment Fee Shares”) of the Company’s Common Stock, (ii) a promissory note in the aggregate principal amount of $ 187,500 (the “Anson East Note”), and (iii) Common Stock Purchase Warrants to purchase 3,750 shares of the Company’s common stock (the “Anson East Warrants”). Should Anson East receive net proceeds of less than $107,500 from the sale of the Anson East Commitment Fee Shares, the Company will issue additional shares to Anson East or pay the shortfall amount to Anson East in cash. The terms of the Anson East Agreement resulted in the Company recording a derivative liability in the initial amount of $ 9,014 . The Anson East Note was issued in the principal amount of $187,500 for a purchase price of $ 168,750 resulting in an original issue discount of $ 18,750 . The Anson East Note has a due date of October 6, 2022 , and bears interest at the rate of 10 % per year for the first six months and 12 % thereafter. In the event of default as defined in the Anson East Note this rate will increase to 18 %, and the Anson East Note will become convertible at a price per share equal to the lowest trading price during the previous twenty trading days prior to the conversion date. The Anson East Note entered default status on October 6, 2022. The Anson East Commitment Fee Shares and Anson East Warrants resulted in a discount to the Anson East Note in the amount of $ 147,290 . During the year ended December 31, 2023, a default penalty in the amount of $ 93,750 and an additional fee in the amount of $ 15,000 were added to the principal amount of the Anson East Note. During the year ended December 31, 2023, the amount of $ 9,552 was accrued on the Anson East Note. On April 11, 2023, an equity investment incentive in the amount of $ 207,763 representing 65% of the total amount due under the Anson East Note, along with original principal of $ 187,500 , the default penalty of $ 93,750 , the fee of $ 15,000 , and accrued interest of $ 23,385 (a total of $ 527,398 ) was converted to 528 shares of the Company’s Series F Preferred Stock. Other than the equity investment incentive of $207,763, there was no gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. At December 31, 2023, there were no amounts due under the Anson East Note. 51 Table of Contents GS Capital Note On April 18, 2022, the Company entered into a Securities Purchase Agreement (the “GS Capital Agreement”) with GS Capital Investments, LLC (“GS Capital”) with respect to the sale and issuance to GS Capital of: (i) an initial commitment fee in the amount of $ 159,259 in the form of 12,741 shares (the “GS Capital Commitment Fee Shares”) of the Company’s Common Stock, (ii) a promissory note in the aggregate principal amount of $ 277,777 (the “GS Capital Note”), and (iii) Common Stock Purchase Warrants to purchase 5,556 shares of the Company’s common stock (the “GS Capital Warrants”). Should GS Capital receive net proceeds of less than $159,259 from the sale of the GS Capital Commitment Fee Shares, the Company will issue additional shares to GS Capital or pay the shortfall amount to GS Capital in cash. The terms of the GS Capital Agreement resulted in the Company recording a derivative liability in the initial amount of $ 21,920 . The GS Capital Note was issued in the principal amount of $277,777 for a purchase price of $ 250,000 resulting in an original issue discount of $ 27,777 . The GS Capital Note has a due date of November 10, 2022 , and bears interest at the rate of 10 % per year for the first six months and 12 % thereafter. In the event of default as defined in the GS Capital Note this rate will increase to 18 %, and the GS Capital Note will become convertible at a price per share equal to the lowest trading price during the previous twenty trading days prior to the conversion date. The GS Capital Note entered default status on October 19, 2022. The GS Capital Commitment Fee Shares and GS Capital Warrants resulted in a discount to the GS Capital Note in the amount of $ 162,158 . During the year ended December 31, 2023, GS Capital converted an aggregate amount of $ 72,777 of principal and $ 8,679 of accrued interest in the GS Capital Note into an aggregate of 57,140 shares of the Company’s common stock at an average price of $ 1.46 per share. These conversions were made pursuant to the terms of the GS Capital Note, and no gain or loss was recorded on these transactions. During the year ended December 31, 2023, a default penalty in the amount of $ 138,889 and an additional fee in the amount of $ 15,000 were added to the principal amount of the GS Capital Note. During the year ended December 31, 2023, interest in the amount $ 13,965 was accrued on the GS Capital Note. On April 11, 2023, an equity investment incentive in the amount of $ 249,439 representing 65% of the total amount due under the GS Capital Note, along with the original principal of $ 205,000 , the default penalty of $ 138,889 , the fee of $ 15,000 , and accrued interest of $ 24,864 (a total of $ 633,192 ) was converted to 634 shares of the Company’s Series F Preferred Stock. Other than the equity investment incentive of $249,439, there was no gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. At December 31, 2023, there were no amounts due under the GS Capital Note. Bridge Notes During the year ended December 31, 2024, the Company issued various 10 % Promissory Notes (the “Bridge Notes”) with three institutional investors for an aggregate principal amount of $ 548,000 each with maturity date 1 year from the date of issuance. The Bridge Notes bore interest at the rate of 10 % per annum which will accrue monthly. During the year ended December 31, 2024, the Company recorded interest expense of 32,132 related to the Bridge Notes. On December 31, 2024, the Company and investors agreed to exchange the Bridge notes and accrued interest for its newly created Series A preferred stock. As a result of the exchange, the Company determined the Bridge Notes were extinguished and recorded a gain of $ 28,886 . See Note 11 for details of the Series A preferred stock. Aggregate interest expense on the above note’s payable was $ 195,838 and $ 1,615,591 for the years ended December 31, 2024, and 2023, respectively. Accrued interest on notes payable were $ 374,376 and $ 348,821 at December 31, 2024, and 2023, respectively. Note 11: Notes Payable – Related Parties The following table summarizes the outstanding related party notes payable as of December 31, 2024, and 2023, respectively; December 31, 2024 December 31, 2023 M Diamond Note - 64,706 Dobbertin Note - 19,412 Lindstrom Note 45,294 45,294 Mitchell Note - 78,100 Leath Note - 55,000 November 29, 2022, Notes 18,750 37,500 Notes Payable 64,044 300,012 Current Portion, net of discount $ 64,044 $ 300,012 Long-term portion, net of discount - - 52 Table of Contents Howe Note 1 On December 30, 2021, we issued a 10% Promissory Note in the principal amount of $ 1,000,000 in a related party transaction to the Michael C. Howe Living Trust (the “Howe Note 1”). Michael C. Howe was the Chief Executive Officer of The Good Clinic LLC, one of our subsidiaries. The Howe Note 1 bears interest at the rate of 10% interest rate per annum and has a maturity date that is the earlier of (i) November 30, 2022 , as extended, or (ii) five (5) business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Howe Note 1 was $ 850,000 ; the amount payable at maturity will be $1,000,000 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default, as defined in the Howe Note 1, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Howe Note 1 entered delinquent status on December 1, 2022, and the interest rate increased to 18 %. The Howe Note 1 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security, which Mr. Howe reasonably believes contains a term that is more favorable than those in the Howe Note 1, we shall notify Mr. Howe of such term, and such term, at the option of Mr. Howe, shall become a part of the Howe Note 1. In addition, Mr. Howe five-year warrants to purchase 42,000 shares of common stock at a price of $ 25.00 per share, and five-year warrants to purchase 42,000 shares of common stock at $ 37.50 per share with an aggregate fair value of $ 261,568 at the date of issuance, which was recorded as a discount to this note. Interest in the amount of $ 106,795 was accrued on the Howe Note 1 during the year ended December 31, 2022. Discounts in the amount of $ 511,568 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $ 0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $ 1,100,000 and $ 106,795 , respectively, were due on the Howe Note 1 at December 31, 2022. During the year ended December 31, 2023, interest in the amount of $ 168,761 , respectively, was accrued on the Howe Note 1; principal and accrued interest in the amount of $ 0 were due on this note at December 31, 2023. Howe Note 2 On June 9, 2022, the Company issued a 10% Promissory Note in the principal amount of $ 300,000 in a related party transaction to the Michael C. Howe Living Trust (the “Howe Note 2”). Michael C. Howe was the Chief Executive Officer of The Good Clinic LLC, one of our subsidiaries. The Howe Note 2 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022 , or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Howe Note 2 was $ 255,000 ; the amount payable at maturity will be $300,000 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Howe Note 2, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Howe Note 2 entered default status on December 1, 2022, and the interest rate increased to 18 %. The Howe Note 2 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Howe reasonably believes contains a term that is more favorable than those in the Howe Note 2, the Company shall notify Mr. Howe of such term, and such term, at the option of Mr. Howe, shall become a part of the Howe Note 2. In addition, Mr. Howe received five-year warrants to purchase 2,460 shares of common stock at a price of $ 25.00 per share with a fair value of $ 10,965 at the date of issuance, and 2,460 shares of common stock with a value of $ 22,440 ; these amounts were recorded as discounts to the Howe Note 2. Interest in the amount of $ 18,888 was accrued on the Howe Note 2 during the year ended December 31, 2022. Discounts in the amount of $ 108,405 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $ 0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $ 330,000 and $ 18,888 , respectively, were due on the Howe Note 2 at December 31, 2022. During the year ended December 31, 2023, interest in the amount of $ 50,362 was accrued on the Howe Note 2; principal and accrued interest in the amount of $ 0 were due on this note at December 31, 2023. Howe Note 3 On July 21, 2022, the Company issued a 10% Promissory Note in the principal amount of $ 300,000 in a related party transaction to the Michael C. Howe Living Trust (the “Howe Note 3”). Michael C. Howe was the Chief Executive Officer of The Good Clinic LLC, one of our subsidiaries. The Howe Note 3 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022 , as extended, or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Howe Note 3 was $ 255,000 ; the amount payable at maturity will be $300,000 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Howe Note 3, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Howe Note 3 entered default status on December 1, 2022, and the interest rate increased to 18 %. The Howe Note 3 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Howe reasonably believes contains a term that is more favorable than those in the Howe Note 3, the Company shall notify Mr. Howe of such term, and such term, at the option of Mr. Howe, shall become a part of the Howe Note 3. In addition, Mr. Howe received five-year warrants to purchase 2,460 shares of common stock at a price of $ 25.00 per share with a fair value of $ 9,945 at the date of issuance, and 2,460 shares of common stock with a value of $ 12,495 ; these amounts were recorded as discounts to the Howe Note 3. Interest in the amount of $ 15,436 was accrued on the Howe Note 3 during the year ended December 31, 2022. Discounts in the amount of $ 97,440 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $ 0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $ 330,000 and $ 15,436 , respectively, were due on the Howe Note 3 at December 31, 2022. 53 Table of Contents During the year ended December 31, 2023, interest in the amount of $ 50,314 , respectively, was accrued on the Howe Note 3; principal and accrued interest in the amount of $ 0 were due on this note at December 31, 2023. Howe Note 4 On August 18, 2022, the Company issued a 10% Promissory Note in the principal amount of $ 200,000 in a related party transaction to the Michael C. Howe Living Trust (the “Howe Note 4”). Michael C. Howe was the Chief Executive Officer of the Good Clinic LLC, one of our subsidiaries. The Howe Note 4 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022 , or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Howe Note 4 was $ 170,000 ; the amount payable at maturity will be $200,000 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Howe Note 4, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Howe Note 4 entered default status on December 1, 2022, and the interest rate increased to 18 %. The Howe Note 4 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Howe reasonably believes contains a term that is more favorable than those in the Howe Note 4, the Company shall notify Mr. Howe of such term, and such term, at the option of Mr. Howe, shall become a part of the Howe Note 4. In addition, Mr. Howe received 1,640 shares of common stock with a value of $ 10,775 ; this amount was recorded as a discount to the Howe Note 4. Interest in the amount of $ 8,756 was accrued on the Howe Note 4 during the year ended December 31, 2022. Discounts in the amount of $ 60,775 were amortized to interest expense during the year ended December 31, 2022, and total discounts in the amount of $ 0 remained outstanding at December 31, 2022. Principal and accrued interest in the amounts $ 220,000 and $ 8,756 , respectively, were due on the Howe Note 4 at December 31, 2022. During the year ended December 31, 2023, interest in the amount of 34,077 was accrued on the Howe Note 4; principal and accrued interest in the amount of $ 0 , respectively, were due on this note at December 31, 2023. Howe Debt Exchange Agreement On December 8, 2023, the Company sold the remaining assets of The Good Clinic, LLC to Leading Primary Care LLC, a company organized by Michael C. Howe, the former CEO of The Good Clinic, LLC. As consideration for the transaction, Mr. Howe cancelled the existing notes payable and accrued interest owed to Mr. Howe in the amount of $ 2,454,821 . M Diamond Note On May 26, 2022, the Company issued a 10% Promissory Note in the principal amount of $ 58,823 to Melissa Diamond (the “M Diamond Note”). Ms. Diamond is the daughter of Larry Diamond, former CEO. The M Diamond Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022 , or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the M Diamond Note was $ 50,000 ; the amount payable at maturity will be $58,823 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default as defined in the M Diamond Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18 %. The M Diamond Note entered default status on December 1, 2022, and the interest rate increased to 18%. The M Diamond Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Ms. Diamond reasonably believes contains a term that is more favorable than those in the M Diamond Note, the Company shall notify Ms. Diamond of such term, and such term, at the option of Ms. Diamond, shall become a part of the M Diamond Note. In addition, Ms. Diamond received five-year warrants to purchase 483 shares of common stock at a price of $ 25.00 per share with a fair value of $ 2,500 at the date of issuance, and 483 shares of common stock with a value of $ 4,050 ; these amounts were recorded as discounts to the M Diamond Note. At December 31, 2023, principal and accrued interest in the amount of $ 64,706 and $ 14,682 , respectively, were due on this note. During the year ended December 31, 2024, the Company entered into a settlement agreement with the lender to settle the note and all accrued interest in full in exchange for 20,966 shares of common stock. The amount was recorded as a contribution to capital as this is a related party note. 54 Table of Contents Dobbertin Note On May 26, 2022, the Company issued a 10% Promissory Note in the principal amount of $ 17,647 in a related party transaction to Alexander Dobbertin (the “Dobbertin Note”). Mr. Dobbertin is the spouse of Jenny Lindstrom, who was the Company’s Chief Legal Officer. The Dobbertin Note bears interest at the rate of 10 % per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022 , or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Dobbertin Note was $ 15,000 ; the amount payable at maturity will be $17,647 plus 10% of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Dobbertin Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Dobbertin Note entered default status on December 1, 2022, and the interest rate increased to 18 %. The Dobbertin Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Dobbertin reasonably believes contains a term that is more favorable than those in the Dobbertin Note, the Company shall notify Mr. Dobbertin of such term, and such term, at the option of Mr. Dobbertin, shall become a part of the Dobbertin Note. In addition, Mr. Dobbertin received five-year warrants to purchase 145 shares of common stock at a price of $ 25.00 per share with a fair value of $ 750 at the date of issuance, and 145 shares of common stock with a value of $ 1,215 ; these amounts were recorded as discounts to the Dobbertin Note. At December 31, 2023, principal and accrued interest in the amount of $ 19,412 and $ 4,405 , respectively, were due on this note. During the year ended December 31, 2024, the Company entered into a settlement agreement with the lender to settle the note and all accrued interest in full in exchange for 6,558 shares of common stock. The amount was recorded as a contribution to capital as this is a related party note. Lindstrom Note On May 26, 2022, the Company issued a 10% Promissory Note in the principal amount of $ 41,176 in a related party transaction to Jenny Lindstrom, who was the Company’s Chief Legal Officer (the “Lindstrom Note 1”). The Lindstrom Note 1 bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022 , or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Lindstrom Note 1 was $ 35,000 ; the amount payable at maturity will be $41,176 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Lindstrom Note 1, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Lindstrom Note 1 entered default status on December 1, 2022, and the interest rate increased to 18 %. The Lindstrom Note 1 contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Ms. Lindstrom reasonably believes contains a term that is more favorable than those in the Lindstrom Note 1, the Company shall notify Ms. Lindstrom of such term, and such term, at the option of Ms. Lindstrom, shall become a part of the Lindstrom Note 1. In addition, Ms. Lindstrom received five-year warrants to purchase 338 shares of common stock at a price of $ 25.00 per share with a fair value of $ 1,750 at the date of issuance, and 338 shares of common stock with a value of $ 2,835 ; these amounts were recorded as discounts to the Lindstrom Note 1. At December 31, 2023, principal and accrued interest in the amount of $ 45,294 and $ 10,277 , respectively, were due on this note. At December 31, 2024, principal and accrued interest in the amount of $ 45,294 and $ 17,709 , respectively, were due on this note. This note was in default at December 31, 2024. Mitchell Note On September 2, 2022, the Company issued a 10 % Promissory Note in the principal amount of $ 71,000 to John Mitchell (the “Mitchell Note”). The Mitchell Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) November 30, 2022 , or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Mitchell Note was $ 60,350 ; the amount payable at maturity will be $71,000 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Mitchell Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Mitchell Note entered default status on December 1, 2022, and the interest rate increased to 18 %. The Mitchell Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Mitchell reasonably believes contains a term that is more favorable than those in the Mitchell Note, the Company shall notify Mr. Mitchell of such term, and such term, at the option of Mr. Mitchell, shall become a part of the Mitchell Note. In addition, Mr. Mitchell received 582 shares of common stock with a value of $ 3,124 ; this amount was recorded as a discount to the Mitchell Note. At December 31, 2023, principal and accrued interest in the amount of $ 78,100 and $ 15,768 , respectively, were due on this note. During the year ended December 31, 2024, the Company entered into a settlement agreement with the lender to settle the note and all accrued interest in full in exchange for 27,040 shares of common stock. The amount was recorded as a contribution to capital as this is a related party note. Leath Note On September 15, 2022, the Company issued a 10 % Promissory Note in the principal amount of $ 50,000 to Mack Leath (the “Leath Note”). The Leath Note bears interest at the rate of 10% per annum accrued monthly and has a maturity date that is the earlier of (i) December 15, 2022 , or (ii) five business days after the date on which the Company successfully lists its shares of common stock on Nasdaq or NYSE. The purchase price of the Leath Note was $ 42,500 ; the amount payable at maturity will be $50,000 plus 10 % of that amount plus any accrued and unpaid interest. Following an event of default as defined in the Leath Note, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18%. The Leath Note entered default status on December 16, 2022, and the interest rate increased to 18 %. The Leath Note contains a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which Mr. Leath reasonably believes contains a term that is more favorable than those in the Leath Note, the Company shall notify Mr. Leath of such term, and such term, at the option of Mr. Leath, shall become a part of the Leath Note. In addition, Mr. Leath received 410 shares of common stock with a value of $ 2,868 ; this amount was recorded as a discount to the Leath Note. 55 Table of Contents At December 31, 2023, principal and accrued interest in the amount of $ 55,000 and $ 10,757 , respectively, were due on this note. During the year ended December 31, 2024, the Company entered into a settlement agreement with the lender to settle the note and all accrued interest in full in exchange for 18,052 shares of common stock. The amount was recorded as a contribution to capital as this is a related party note. November 29, 2022, Notes On November 29, 2022, the Company issued seven identical promissory notes (the “November 29 Notes”) in related party transactions to the following individuals: (1) Thomas Brodmerkel, who was the Company’s CFO and Board Member; (2) Lawrence Diamond, who was the Company’s Chief Executive Officer and Board Member; (3) Sheila Schweitzer, who was a Board Member; (4) Faraz Naqvi, a former Board Member; (5) Juan Carlos Iturregui, who was a Board Member; (6) Jenny Lindstrom, who was the Company’s former Vice President and Chief Legal Officer; and (7) Michael C. Howe, who was the Chief Executive Officer of The Good Clinic, one of our subsidiaries (collectively, the “November 29 Lenders”). The November 29 notes have due dates of May 28, 2023 . The November 29 Notes are subject to the Series E Exchange Agreement whereby each of the November 29 Lenders will exchange (a) amounts due under the November 29 Notes for a number of shares of the Company’s Series E Convertible Preferred Stock equal to 150% of the principal amount of each November 29 Note. See note 13. The November 29 Notes bear interest at the rate of 10% per annum which will accrue from the date of the note only if the November 29 Notes are not converted pursuant to the Series E Exchange Agreement by May 10, 2023. Following an event of default as defined in the November 29 Notes, the principal amount shall bear interest for each day until paid at a rate per annum equal to the lesser of the maximum interest permitted by applicable law and 18 %. The November 29 Notes contain a “most favored nations” clause that provides that, so long as the note is outstanding, if the Company issues any new security which November 29 Lender reasonably believes contains a term that is more favorable than those in the November 29 Note, the Company shall notify the November 29 Lenders of such term, and such term, at the option of the November 29 Lenders, shall become a part of the November 29 Note. In addition, each of the November 29 Lenders will receive five-year warrants to purchase 750 shares of the Company’s common stock at a price equal to the price of any warrant included in an offering in connection with listing at the Nasdaq Global Market. These warrants are not deemed issued at December 31, 2022, because the exercise price was not yet determined. Discounts in the amount of $ 667 were amortized to interest expense for each of the November 29 Notes during the year ended December 31, 2022, and discounts in the amount of $ 3,083 remained outstanding for each of the November 29 Notes at December 31, 2022. Principal and accrued interest in the amounts $ 18,750 and $ 164 , respectively, were due on each of the seven November 29 Note at December 31, 2022. Concurrent with the November 29 Notes, the Company entered into separate exchange agreements (the “November 29 Notes Exchange Agreements”). Pursuant to the November 29 Notes Exchange Agreements, amounts due under the November 29 Notes will be exchanged for a number Series E Convertible Preferred Stock equal to 150% of the principal amount of the Notes. No transactions occurred pursuant to the November 29 Notes Exchange Agreements during the year ended December 31, 2022. During the year ended December 31, 2023, interest in the amount of $ 11,967 was accrued on the November 29 Notes. On September 29, 2023, three of the November 29 Lenders (1) Thomas Brodmerkel, (2) Lawrence Diamond, and (3) Juan Carlos Iturregui converted their November 29 Notes into shares of the Company’s Series F Preferred Stock as follows: Each of the noteholders converted an equity investment incentive in the amount of $ 13,553 representing 65% of the total amount due under the November 29 Note , along with original principal of $ 18,750 and accrued interest of $ 2,101 (a total of $ 34,404 ) into 34 shares of the Company’s Series F Preferred Stock. Other than the equity investment incentives, there was no gain or loss recognized on this transaction as the Series F Preferred Stock was issued at its face value of $1,000 per share. In each case at the time of the issuance of the Series F Preferred shares there were also certain notes, accrued fees, accrued salaries or other amounts included in the total renumeration before the conversion into the Series F Preferred shares. On September 29, 2023, one of the November 29 Lenders, Sheila Schweitzer, converted her November 29 Note into shares of the Company’s restricted common stock as follows: principal of $ 18,750 and accrued interest of $ 2,101 were converted at a price of $ 0.80 per share into 26,064 shares of the Company’s common stock. On December 8, 2023, pursuant to the Howe debt exchange agreement, Mr. Howe exchanged his note in the principal amount of $ 18,750 and accrued interest of $ 2,682 for certain assets of the company. No amounts were due under the Howe note as of December 31, 2023. During the year ended December 31, 2024, the Company entered into a settlement agreement with Faraz Naqvi to settle the note and all accrued interest in full in exchange for 5,782 shares of common stock. The amount was recorded as a contribution to capital as this is a related party note. At December 31, 2023, there was principal and interest in the aggregate amount of $ 37,500 and $ 5,903 , respectively, due on the two November 29 Notes that are still outstanding. At December 31, 2024, there was principal and interest in the aggregate amount of $ 18,750 and $ 4,839 , respectively, due on the one remaining November 29 Notes still outstanding. Aggregate interest expense as described on the above notes payable – related parties was $ 33,980 for the year ended December 31, 2024. Accrued interest on notes payable – related parties were $ 22,547 and $ 61,792 at December 31, 2024, and 2023, respectively. 56 Table of Contents Note 12: Derivative Liabilities Certain of the Company’s convertible notes and warrants contain features that create derivative liabilities. The pricing model the Company uses for determining fair value of its derivatives is the Monte Carlo Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs involves management’s judgment and may impact net income. The derivative components of these notes are valued at issuance, at conversion, at restructuring, and at each period end. Derivative liability activity for the years ended December 31, 2024, and 2023, is summarized in the table below: December 31, 2022 $ 568,912 True-up features issued - Settled upon conversion or exercise ( 501,740 ) Loss on revaluation 85,773 December 31, 2023 $ 152,945 True-up features settled ( 152,945 ) Establishment upon default provisions 100,551 Loss on revaluation 4,585,124 December 31, 2024 $ 4,685,675 The Company uses a Monte Carlo model to value the true-up obligation features of its notes payable that create derivative liabilities. The following tables summarize the assumptions for the valuations: December 31, December 31, 2024 2023 Volatility - 475.7 % Stock Price $ - $ 0.0250 Risk-free interest rates - % 5.21 % Term (years) - 0.39 During the year ended December 31, 2023, certain of our notes payable contain a commitment fee obligation with a true-up feature. During the year ended December 31, 2024, the true-up period expired and all remaining amounts were reclassified to equity. The following assumptions were used for the valuation of the derivative liability associated with this obligation using a valuation based on the intrinsic conversion value: ● The stock price would fluctuate with the Company projected volatility. ● The projected volatility curve from an annualized analysis for each valuation date was based on the historical volatility of the Company and the term remaining for the True-Up obligation. ● The Company expected the note would be repaid 90% of the time by the maturity date, at which point the Company would redeem the 1,000,000 redeemable commitment fee shares for $1. ● In the event the Company did not repay the note in time, the shareholders would sell their shares subject to volume restrictions. ● Discount rates were based on risk-free rates in effect based on the remaining term. 50,000 simulations were run for each Monte Carlo simulation. Certain of our notes payable contain a provisions that in the event of default the note will become convertible at a price per share equal to the lowest trading price during the previous twenty trading days prior to the conversion date. The following assumptions were used for the valuation of the derivative liability associated with this obligation: ● The stock price on the date of valuation represents the fair market value of the stock ● The notes convert with variable conversion prices based on the percentages of the lowest trades over the prior 20 trading days ● The holder would automatically convert the note immediately (based on ownership or trading volume limitations) if the registration were effective and the Company was not in default Note 13: Series A preferred stock On October 28, 2024, the Company filed a Certificate of Designation, Preferences and Rights of the Series A Preferred Stock with the Nevada Secretary of State (the “Certificate of Designation”). The Company authorized 3,000,000 shares of Series A Preferred Stock, par value $ 0.01 per share. Each share of Series A Preferred Stock has a stated value equal to $ 25 . The Series A Shares may be converted into shares of common stock by dividing the stated value by $4.00 (the “Conversion Price”). The Series A Shares may be converted at the option of the holder at any time, or mandatorily by the Company if certain conditions set forth in the Certificate of Designation are met. Unless prior conversion has occurred, shares of Series A Preferred Stock will be redeemed by the Company, using Common Stock, or cash, 1/36 th of the remaining amounts monthly beginning in January 2025. The cash redemption shall be at 105% of the original price of Series A Preferred Stock (as adjusted) whereas Common Stock redemption shall be at a 10% discount to the average of the five lowest closing prices over a 30-trading day period. The Company intends to accrue the redemption shares monthly and issue any shares to be used thereunder quarterly to reduce its expense. 57 Table of Contents Holders of shares of the Series A Preferred Stock are not entitled to receive any dividends, and the security bears no interest. The Series A Preferred Stock will rank, with respect to rights to the payment of dividends and the distribution of assets in the event of any liquidation, dissolution or winding up of the Company, (i) senior to all classes or series of the Company’s Common Stock, and to all other equity securities issued by the Company; and (ii) effectively junior to all existing and future indebtedness (including indebtedness convertible into our Common Stock or preferred stock) of the Company and to any indebtedness and other liabilities of (as well as any preferred equity interest held by others in) existing subsidiaries of the Company. In addition to any other rights provided by law, except where the vote or written consent of the holders of a greater number of shares is required by law or by another provision of the Articles of Incorporation, without first obtaining the affirmative vote at a meeting duly called for such purpose or the written consent without a meeting of the majority of the outstanding Series A Preferred Stock, voting together as a single class, the Company shall not: (a) amend or repeal any provision of, or add any provision to, its Articles of Incorporation or bylaws, or file any certificate of designations or certificate of amendment, if such action would adversely alter or change in any respect the preferences, rights, privileges or powers, or restrictions provided for the benefit, of the Series A Preferred Stock, regardless of whether any such action shall be by means of amendment to the Articles of Incorporation or by merger, consolidation or otherwise; or (b) without limiting the provisions of the Certificate of Designation, circumvent a right of the Series A Preferred Stock. As a result of the mandatory redemption features requiring the Company to repay the Series A in either cash of shares of Common Stock of the Company, under ASC 480, the Company is required to record the full redemption value of the Series A preferred shares as a liability on the accompanying balance sheet. The Company has recorded the redemption value based on the 10 % premium required if the Company were to repay in shares of Common Stock due to the current expected cash flows of the Company. During the year ended December 31, 2024, the Company issued 23,206 shares of Series A preferred stock in exchange for the Bridge Notes as described in Note 8 above. Upon issuance, the Company recorded the Series A preferred stock based on the present value of the future expected cash flows using a discount rate of 10 %, which resulted in an initial liability of $ 551,246 . During the year ended December 31, 2024, the Company issued 539,792 shares of Series A preferred stock in exchange for the settlement of 125,000 shares of Series D preferred stock and 11,724 shares of Series F preferred stock as described in Note 12 below. Upon issuance, the Company recorded the Series A preferred stock based on the present value of the future expected cash flows using a discount rate of 10 %, which resulted in an initial liability of $ 12,778,960 . The following table provides the maturities of Series A preferred stock redemptions at December 31, 2024: Series A Preferred Stock 2025 $ 5,160,815 2026 5,160,815 2027 5,160,815 2028 - 2029 and thereafter - Total future undiscounted redemption payments 15,482,445 Less: Interest ( 2,158,986 ) Present value of redemption payments 13,323,459 Current portion ( 5,160,815 ) Long term portion $ 8,162,644 Note 14: Stockholders ’ Equity (Deficit) Common Stock The Company has authorized 500,000,000 shares of common stock, par value $ 0.01 ; 9,762,258 were issued and outstanding at December 31, 2024. Common Stock Transactions During the Year Ended December 31, 2024 During the year ended December 31, 2024, the Company issued 141,122 shares of common stock for dividends payable on its Series X Preferred Stock as discussed in further detail below. The price per share used in determining the number of shares issued was $ .80 through September 30, 2024, and not the lower price that is called for in the certificate of designation, and then the Company used the stock price on the 15 th day of each month to determine the number of shares issuable for the final three months of 2024. 58 Table of Contents During the year ended December 31, 2024, the Company issued 525,000 shares of common stock in aggregate to its advisory board consisting of seven (7) individuals, with 75,000 shares issued to each. The Company recorded a compensation expense of $ 212,513 based on the closing stock price on the date of issuance. During the year ended December 31, 2024, the Company issued 750,000 shares of common stock in aggregate to its board of directors consisting of three (3) individuals, with 250,000 shares issued to each. The Company recorded a compensation expense of $ 228,000 based on the closing stock price on the date of issuance. During the year ended December 31, 2024, the Company issued 300,000 shares of common stock to outside consultants for services performed. The Company recorded a compensation expense of $ 94,000 based on the closing stock price on the date of issuance. During the year ended December 31, 2024, the Company issued 237,349 shares of common stock for the settlement of outstanding payables with unrelated third parties. The Company valued the shares based on the closing stock price on the date of issuance and recorded a gain on settlement of $ 1,040,863 . During the year ended December 31, 2024, the Company issued 154,107 shares of common stock for the settlement of outstanding notes payables and accrued interest with unrelated third parties. The Company valued the shares based on the closing stock price on the date of issuance and recorded a gain on settlement of $ 485,212 . During the year ended December 31, 2024, the Company issued 79,298 shares of common stock for the settlement of outstanding notes payables and accrued interest with related parties. The Company recorded the settlement as contributions of capital and no gain or loss was recorded. During the year ended December 31, 2024, the Company issued 2,007,425 shares of common stock for the conversion of Series D, Series F, and Series X preferred shares along with associated accrued dividends. The Company recorded the settlement as contributions of capital and no gain or loss was recorded. Common Stock Transactions During the Year Ended December 31, 2023 During the year ended December 31, 2023, the Company issued 28,275 shares of common stock for dividends payable on its Series X Preferred Stock as discussed in further detail below. The price per share used in determining the number of shares issued was $ .80 , and not the lower price that is called for in the certificate of designation. During the year ended December 31, 2023, the Company issued 300,000 shares of common stock to an outside consultant for services performed. The Company recorded a compensation expense of $ 897,000 based on the closing stock price on the date of issuance. During the year ended December 31, 2023, the Company issued 57,138 shares of common stock for the conversion of principal and accrued interest on a convertible note payable. These conversions were made pursuant to the terms of the convertible note agreement and no gain or loss was recognized on these transactions. During the year ended December 31, 2023, the Company issued 247,776 shares of common stock at a price of $ 0.80 per share for accounts payable in the amount of $ 105,089 . The Company valued the shares based on the closing stock price on the date of issuance and recorded a gain on settlement of 185,487 . Effective June 30, 2023, the Company issued 2,926 shares of common stock at a price of $ 12.50 to a previous board member for the conversion of accounts payable in the amount of $ 36,575 . These shares had been carried on the Company balance sheet as Common Stock Subscribed. On May 5, 2023, the Company issued 2,552 shares of common stock to a vendor at a price of $ 0.85 per share, and on May 9, 2023, the Company issued 19,622 shares of common stock at a price of $ 0.85 per share to the Michael C. Howe Living Trust (the “Howe Trust”), an entity controlled by a related party. These shares were issued in satisfaction of a vendor dispute. The shares issued to the Howe Trust were reimbursement for shares previously issued to the vendor by the Howe Trust with regard to this dispute. There was no gain or loss recorded on these transactions. Effective September 29, 2023, the Company’s now former Chief Operating Officer and now former board member converted a note in the amount of $ 18,750 , accrued interest of $ 2,101 , accrued salary of $ 64,434 , and board of director fees of $ 60,000 (a total of $ 145,285 ) at a price of $ 0.80 per share into 181,606 shares of the Company’s common stock. A gain in the amount of $ 138,531 was recorded on this transaction. 59 Table of Contents Preferred Stock We have authorized to issue 100,000,000 shares of Preferred Stock with such rights designations and preferences as determined by our Board of Directors. We have designated 3,000,000 shares of series A stock, 3,000,000 shares of Series C Preferred, 10,000,000 shares of Series D Preferred, 10,000 shares of Series E Preferred, 140,000 shares of Series F Preferred, and 31,427 shares as Series X Preferred Stock. Series C Preferred Stock The Series C Preferred Stock has a par value of $ 0.01 per share, no stated maturity, a liquidation preference of 100% of the stated value plus accrued but unpaid dividends, accrued dividends at the rate of 6 % on $ 1.05 per share, and converts into common shares at a rate of $ 0.25 per share. The Series C ranks senior to all other preferred stock of the Company except in relation to the Series X Cumulative Redeemable Perpetual Preferred Stock, which ranks Pari passu to the Series C Preferred Stock. Each holder of our Series C Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series C preferred Stock held by such a holder. The Company had no shares of Series C Preferred Stock outstanding at December 31, 2024, and the Series C were extinguished. The Company accrued dividends in the amount of $ 17,603 on the Series C Preferred Stock during the year ended December 31, 2023. On April 11, 2023, a total of 1,047,619 shares of Series C Preferred Stock with a stated value of $ 1,100,000 , accrued dividends in the amount $ 171,109 , and equity investment incentives in the amount of $ 1,016,888 were exchanged for 2,289 shares of Series F Preferred Stock. Series D Preferred Stock The Series D Preferred Stock has a par value of $ 0.01 per share, no stated maturity, a liquidation preference of 100% of the stated value plus accrued but unpaid dividends, accrued dividends at the rate of 6 % on $ 1.05 per share, and converts into common shares at a rate of $ 0.25 per share. The Series D ranks senior to all other preferred stock of the Company except in relation to the Series X Cumulative Redeemable Perpetual Preferred Stock, which ranks Pari passu to the Series C Preferred Stock. Each holder of our Series D Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series D preferred Stock held by such holder. The Company had 25,000 shares of Series D Preferred Stock outstanding at December 31, 2024. Series D Preferred Stock Transactions During the Year Ended December 31, 2024 During the year ended December 31, 2024, a holder of 100,000 shares of Series D preferred shares along with $ 18,175 of accrued dividends agreed to convert the shares into 30,802 common shares at a conversion rate of $ 4 per common share. The Company recorded the settlement as contributions of capital and no gain or loss was recorded. The Company accrued dividends in the amount of $ 14,172 on the Series D Preferred Stock for the year ended December 31, 2024. As of December 31, 2024, the Company had $ 5,049 in accrued dividends on the Series D Preferred Stock. Series D Preferred Stock Transactions During the Year Ended December 31, 2023 The Company accrued dividends in the amount of $ 85,541 on the Series D Preferred Stock. On April 11, 2023, a total of 2,350,000 shares of Series D Preferred Stock with a stated value of $ 2,467,500 , accrued dividends in the amount $ 215,659 , and equity investment incentives in the amount of $ 1,371,846 were exchanged for 4,055 shares of Series F Preferred Stock. There was no gain or loss recorded in connection with these transactions. On December 8, 2023, Mr. Howe exchanged (i) 500,000 shares of Series D Preferred Stock with a stated value of approximately $ 0.5 million and accrued dividends of approximately $ 67,000 , and (ii) accrued salary owed to Mr. Howe in the amount of approximately $ 38,000 plus a conversion incentive of 65% or approximately $ 25,000 for 655 shares of the Company’s Series F Preferred Stock with a liquidation value of approximately $ 0.6 million. Other than the conversion of incentive of $ 25,000 , there was no gain or loss recorded on this transaction. Series F Preferred Stock On March 23, 2023, the Company filed a Certificate of Designations, Preferences and Rights of Series F 12% PIK $ 0.01 par value Convertible Perpetual Preferred Stock with the Delaware Secretary of State. The number of shares of Series F Preferred Stock designated is 140,000 and each share of Series F Preferred Stock has a liquidation preference of $ 1,000 . The Series F Preferred Stock will rank senior to the Corporation’s Common Stock and on parity with all Preferred Stock of the Corporation with terms specifically providing that such Preferred Stock rank on parity with the Series F Preferred Stock with respect to rights to the distribution of assets upon any liquidation, dissolution or winding up of the Corporation; and (iii) junior to all Preferred Stock of the Corporation with terms specifically providing that such Preferred Stock rank senior to the Series F Preferred Stock with respect to rights to the distribution of assets upon any liquidation, dissolution or winding up of the Company. Holders of shares of the Series F Preferred Stock are entitled to receive payment-in-kind dividends payable only in additional shares of Series F Preferred Stock (“PIK Dividends”) at rate of 12% per annum. 60 Table of Contents The Series F Preferred Stock will be convertible into common stock of the Company upon the listing of the Company’s stock on any of the following trading markets: the NYSE, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, or the Nasdaq Global Select Market. The conversion price will be calculated as 65% of the volume-weighted average price of the Company’s common stock on the conversion date. The number of shares issuable upon conversion will be calculated as the liquidation preference of the Series F Preferred stock plus any accrued but unpaid dividends divided by the conversion price. There are no shares of Series F Preferred Stock outstanding at December 31, 2024. Series F Preferred Stock Transactions During the Year Ended December 31, 2024 On May 17, 2024, the holders of approximately 54.90 % of the Series F Preferred shares, having met in person on May 8, 2024, have granted consent to the following modification to the terms of the Series F Preferred, effective May 15, 2024 all dividends, and any obligation to pay dividends shall cease. Any dividends accrued until May 15, 2024, shall be issued as noted in the original certificate of designation. During the year ended December 31, 2024, holders of 8,333 shares of Series F preferred shares along with $ 899,607 of accrued dividends and 87,884 of accrued compensation, agreed to convert the shares into 1,889,835 common shares at a conversion rate of $ 4 per common share. The Company recorded the settlement as contributions of capital and no gain or loss was recorded. The Company accrued dividends in the amount of $ 941,713 on the Series F Preferred Stock for the year ended December 31, 2024. As of December 31, 2024, the Company had $ 0 in accrued dividends on the Series F Preferred Stock. Series F Preferred Stock Transactions During the Year Ended December 31, 2023 On April 11, 2023, the Company issued a total of 8,116 shares of Series F Preferred Stock at its liquidation value of $ 1,000 per share to nine investors upon the conversion of notes payable. The total amount converted was $ 8,111,334 , consisting of principal $ 3,602,059 , default penalties of $ 888,889 , fees of $ 60,000 , accrued interest of $ 365,012 , and equity investment incentives of $ 3,195,374 . Other than the equity investment incentive, there were no gains or losses recorded in connection with these transactions. See note 10. On April 11, 2023, the Company issued a total of 2,289 shares of Series F Preferred Stock at its liquidation value of $ 1,000 per share to two investors upon the conversion of Series C Preferred Stock. The total amount converted was $ 2,287,997 , consisting of the Series C Preferred Stock stated value of $ 1,100,000 , accrued dividends of $ 171,109 , and equity investment incentives of $ 1,016,888 . Other than the equity investment incentive, there were no gains or losses recorded in connection with these transactions. On April 11, 2023, the Company issued a total of 4,055 shares of Series F Preferred Stock to two investors at its liquidation value of $ 1,000 per share upon the conversion of Series D Preferred Stock. The total amount converted was $ 4,055,005 consisting of the Series D Preferred Stock stated value of $ 2,467,500 , accrued dividends of $ 215,659 , and equity investment incentives of $ 1,371,846 . Other than the equity investment incentive, there were no gains or losses recorded in connection with these transactions. On April 11, 2023, the Company sold a total of 1,746 shares of Series F Preferred Stock to three investors at its liquidation value of $ 1,000 per share for cash. The total value of Series F Preferred Stock of issued was $ 1,745,000 consisting of cash proceeds of $ 900,000 and an equity investment incentive of $ 845,000 , less costs of $ 161,500 . Other than the equity investment incentive, there were no gains or losses recorded in connection with these transactions. On June 29, 2023, the Company issued a total of 147 shares of Series F Preferred Stock at its liquidation value of $ 1,000 per share to two service providers for accounts payable in the amount of $ 146,214 . There was no gain or loss recorded on these transactions. On September 29, 2023, the Company issued a total of 2,138 shares of Series F Preferred Stock to three related parties at its liquidation value of $ 1,000 per share upon the conversion of notes payable in the amount of $ 601,839 , premium on notes payable of $ 78,087 , accrued interest of $ 124,777 , accrued salary of $ 376,625 , accrued board fees of $ 112,500 , and equity investment incentives of $ 843,228 . Other than the equity investment incentives, there were no gains or losses recorded in connection with these transactions. On September 29, 2023, the Company issued a total of 911 shares of Series F Preferred Stock to two investors at its liquidation value of $1,000 per share upon the conversion of notes payable in the aggregate amount of $ 414,118 , premium on notes payable in the aggregate amount of $ 41,412 , accrued interest in the aggregate amount of $ 84,187 , and fees of $ 10,000 , and equity investment incentive of $ 360,385 . Other than the equity investment incentive, there were no gains or losses recorded in connection with these transactions. 61 Table of Contents Series X Preferred Stock The Company has 19,703 and 24,227 shares of its 10% Series X Cumulative Redeemable Perpetual Preferred Stock (the “Series X Preferred Stock”) outstanding as of December 31, 2024, and December 31, 2023. The Series X Preferred Stock has a par value of $ 0.01 per share, no stated maturity, a liquidation preference of $ 25.00 per share, and will not be subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless the Company decides to redeem or otherwise repurchase the Series X Preferred Stock; the Series X Preferred Stock is not redeemable prior to November 4, 2020. The Series X Preferred Stock will rank senior to all classes of the Company’s common and preferred stock and accrues dividends at the rate of 10% on $25.00 per share. The Company reserves the right to pay the dividends in shares of the Company’s common stock at a price equal to the average closing price over the five days prior to the date of the dividend declaration. Beginning in July 2023, the Company elected to use a price per share of $ .80 , a 20 % discount to the average price of its common stock of $ 1.00 , before the trading of its common stock was moved to the OTC Expert Market system. This policy continued through September 30, 2024. During the last quarter of 2024, the Company returned to using the closing stock price on the 15 th of each month. Each one share of the Series X Preferred Stock is entitled to 400 votes on all matters submitted to a vote of our shareholders. During the year ended December 31, 2024, the Company issued 7,200 shares of Series X Preferred Stock to the officers and directors of the Company for compensation in lieu of services in the amount of $ 180,000 in aggregate, or $ 60,000 for each of the three (3) directors. During the year ended December 31, 2024, the Company issued 141,122 shares of restricted common stock for the payment of dividends due for its Series X Preferred stock as noted above. During the year ended December 31, 2024, holders of 11,724 shares of Series X preferred shares agreed to convert the shares into 86,788 common shares at a conversion rate of $ 4 per common share. The Company recorded the settlement as contributions of capital and no gain or loss was recorded. The Company accrued dividends in the amount of $ 71,240 on the Series X Preferred Stock for the year ended December 31, 2024. As of December 31, 2024, the Company had $ 0 in accrued dividends on the Series X Preferred Stock. During the year ended December 31, 2023, the Company accrued dividends on its Series X Preferred Stock in the total amount of $ 60,564 . During the year ended December 31, 2023, the Company issued a total of 28,275 shares of common stock for accrued dividends on its Series X Preferred Stock. Of this amount, a total of 3,739 shares were issued to officers and directors, 14,586 were issued to a related party shareholder, and 9,950 were issued to non-related parties. Stock Options On January 21, 2021, the Company filed a Form S-8 containing the Mitesco Omnibus Securities and Incentive Plan (“the Plan”) with the SEC. In Sections 4.2 and 4.3 of the Plan it is noted that the Board of Directors has the authority for the administration of the Plan. On January 7, 2024, the Board of Directors voted to a) cancel, revoke and terminate any previously issued options that have not already been exercised. For a number of technical reasons, the Plan is no longer valid, and in addition to cancellation of any outstanding options, the Board has voted to formally terminate the Plan as of January 7, 2024. 62 Table of Contents The following table summarizes the transactions involving options to purchase shares of the Company’s common stock: Shares Weighted- Average Exercise Price ($) Outstanding at December 31, 2022 310,692 $ 10.01 Granted - - Cancelled/Expired ( 209,758 ) $ 10.00 Exercised - - Outstanding at December 31, 2023 100,934 $ 10.05 Granted - - Cancelled/Expired ( 100,934 ) $ 10.05 Exercised - - Outstanding at December 31, 2024 - $ - Options vested and exercisable - $ - Warrants The Company has announced that it intends to cancel all outstanding warrants, and certain language to complete this has been added to all documents related to the conversion of outstanding debts, notes, accounts payable and other senior securities. The following table summarizes the warrants outstanding on December 31, 2024, and the related prices for the warrants to purchase shares of the Company’s common stock: Weighted Weighted Weighted average average average exercise exercise Range of Number of remaining price of Number of price of exercise warrants contractual outstanding warrants exercisable prices outstanding life (years) warrants exercisable warrants $ 25.00 7,717 2.04 25.00 7,717 25.00 37.50 33,050 1.93 37.50 33,050 37.50 40,767 1.95 $ 31.26 40,767 $ 31.26 The following table summarizes the transactions involving options to purchase shares of the Company’s common stock: Shares Weighted- Average Exercise Price ($) Outstanding at December 31, 2022 672,334 $ 30.68 Granted 874 $ 2.50 Exercised - $ - Outstanding at December 31, 2023 673,208 $ 30.64 Granted - $ - Cancelled ( 632,441 ) $ (29,87 ) Exercised - $ - Outstanding at December 31, 2024 40,767 $ 35.13 During the year end December 31, 2024, in connection with the settlements of debt, Series D preferred and Series F preferred, the investors also agreed to cancel their outstanding warrants in connections with the settlement transactions. At December 31, 2024, there was no intrinsic value on the issued or vested warrants. Note 15: Fair Value of Financial Instruments The following summarizes the Company’s derivative financial liabilities that are recorded at fair value on a recurring basis at December 31, 2024, and 2023. December 31, 2024 Level 1 Level 2 Level 3 Total Liabilities Derivative liabilities $ - $ - $ 4,685,675 $ 4,685,675 December 31, 2023 Level 1 Level 2 Level 3 Total Liabilities Derivative liabilities $ - $ - $ 152,945 $ 152,945 63 Table of Contents Note 16: Income Taxes Deferred income taxes result from the temporary differences primarily attributable to amortization of intangible assets and debt discount and an accumulation of net operating loss carryforwards for income tax purposes with a valuation allowance against the carryforwards for book purposes. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Included in deferred tax assets are Federal and State net operating loss carryforwards of approximately $ 60.7 million and $ 13.6 million, respectively, which will expire through 2040. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Due to significant changes in the Company’s ownership, the Company’s future use of its existing net operating losses may be limited. For the years ended December 31, 2024, and 2023, the expected tax expense (benefit) based on the U. S. federal statutory rate is reconciled with the actual tax provision (benefit) as follows: For the Years Ended December 31, 2024 2023 Expected tax at statutory rates $ ( 528,000 ) 21 % $ ( 3,463,000 ) 21 % Permanent Differences ( 4,000 ) 0 % 7,000 0 % State Income Tax, Net of Federal benefit 1,019,000 ( 62 )% ( 418,000 ) 1 % Other 1,564,000 ( 41 )% ( 95,000 ) 2 % Current Year Change in Valuation Allowance ( 2,051,000 ) 82 % 3,969,000 ( 24 )% Prior Year True-Ups - 0 % - 0 % Income tax expense $ - 0 % $ - 0 % Deferred income taxes reflect the tax impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. Deferred income taxes include the net tax effects of net operating loss (NOL) carryforwards and the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. As of December 31, 2024, and 2023, significant components of the Company’s deferred tax assets are as follows: As of December 31, 2024 December 31, 2023 Deferred Tax Assets (Liabilities): Accrued payroll $ 141,000 $ 141,000 ASC842-ROU Asset - - ASC842-ROU (Liability) 822,000 822,000 Loss from derivatives ( 869,000 ) ( 16,000 ) Waiver and commitment fee shares - - Stock based compensation ( 304,000 ) ( 171,000 ) Depreciation 3,000 3,000 Net operating loss 12,462,000 13,529,000 Net deferred tax assets (liabilities) 12,255,000 14,308,000 Valuation allowance ( 12,255,000 ) ( 14,308,000 ) Net deferred tax assets (liabilities) $ - $ - Note 17: Commitments and Contingencies Legal From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. 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. 64 Table of Contents The Company has a number of legal situations involved with the winding down of its clinic’s 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. Vikings 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. St. Paul Clinic a.k.a. The Grove 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. St. 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. TP Elevate 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 for the amounts owed and is in the process of settling the remaining amounts owed. Maple Grove Clinic a.k.a. Arbor Lakes 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 released the property back to the leaseholder. Radiant Clinic a.k.a. LMC Welton 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. 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 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. 65 Table of Contents 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: 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 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 received any claims as to the obligations under this sublease agreement and the business from which we were renting has not responded to communications from our attorneys who have attempted to establish a formal settlement agreement since we have abandoned the location more than a year ago. During the year ending December 31, 2024, the Company recorded interest expense of $ 213,907 related to the above settlements based on the statutory rates of the courts in the respective locations. Note 18: Subsequent Events During January 2025 we issued 12,074 shares of restricted common stock in payment of dividends for the Series X preferred shares to four (4) holders. During January 2025 we received $ 100,000 of funding from three (3) institutional investors and issued 4,000 shares of Series A Preferred shares in consideration of this funding. 66 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE On February 27, 2024, the Board of Directors approved the engagement of Accell Audit & Compliance, P.A. (“Accell”) as the Company’s independent registered public accounting firm for the year ending December 31, 2023. On June 12, 2024, the Company was informed that Accell was ceasing to provide PCAOB audit services. It is our understanding that certain of the audit principals of Accell are now a part of Astra Audit and Advisory, LLP (“Astra”), and as such we appointed Astra Audit as the Company’s independent registered public accounting firm for the year ending December 31, 2024.