UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For the quarter ended
OR
For the transition period from to
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(Exact Name of Registrant as Specified in its Charter)
| (State Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
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Indicate by check mark whether the registrant
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of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large, accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large, accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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No
As of May 15, 2025 the registrant had
Table of Contents
| Page | ||
| PART I – FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements (Unaudited) | |
| Consolidated Balance Sheets as of March 31, 2025, and December 31, 2024 | 4 | |
| Consolidated Statements of Operations for the three months ended March 31, 2025, and 2024 | 5 | |
| Consolidated Stockholder’s Deficit for the three months ended March 31, 2025, and 2024 | 6 | |
| Consolidated Statements of Cash Flows for the three months ended March 31, 2025, and 2024 | 7 | |
| Notes to Consolidated Financial Statements | 8 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 21 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 25 |
| Item 4. | Controls and Procedures. | 25 |
| PART II – OTHER INFORMATION | ||
| Item 1. | Legal Proceedings. | 26 |
| Item 1A. | Risk Factors. | 27 |
| Item 2. | Sale of Unregistered Securities. | 27 |
| Item 3. | Defaults Upon Senior Secured Securities. | 27 |
| Item 4. | Mine Safety Disclosures. | 27 |
| Item 5. | Other Information. | 27 |
| Item 6. | Exhibits. | 28 |
| Signatures | 29 | |
MITESCO, INC.
CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | (Unaudited) | |||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Intangible assets, net | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Accrued interest | ||||||||
| Accrued interest - related parties | ||||||||
| Derivative liabilities | ||||||||
| Royalty payable | ||||||||
| Lease liability - operating leases, current | ||||||||
| Notes payable, net of discounts | ||||||||
| Notes payable - related parties, net of discounts | ||||||||
| SBA loan payable | ||||||||
| Other current liabilities | ||||||||
| Preferred stock dividends payable - related parties | ||||||||
| Legal settlements | ||||||||
| Series A preferred stock liability, current | ||||||||
| Total current liabilities | ||||||||
| Series A preferred stock liability, non-current | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 15) | ||||||||
| 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 31,427 shares designated Series X: | ||||||||
| Preferred stock, Series D, $ | ||||||||
| Preferred stock, Series E, $ | ||||||||
| Preferred stock, Series F, $ | ||||||||
| Preferred stock, Series X, $ | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
See accompanying notes to these unaudited consolidated financial statements.
4
MITESCO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Operating expenses: | ||||||||
| Cost of operations | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Net Operating Loss | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Interest expense - related parties | ( | ) | ( | ) | ||||
| Gain on settlement of operating leases | ||||||||
| Loss on revaluation of Series A preferred shares | ( | ) | ||||||
| Gain on revaluation of derivative liabilities | ||||||||
| Total other income | ||||||||
| Income before provision for income taxes | ||||||||
| Provision for income taxes | ||||||||
| Net income | $ | $ | ||||||
| Preferred stock dividends | ( | ) | ( | ) | ||||
| Preferred stock dividends - related parties | ( | ) | ( | ) | ||||
| Net income (loss) available to common shareholders | $ | $ | ( | ) | ||||
| Net income (loss) per share - basic | $ | $ | ( | ) | ||||
| Net loss per share - diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average shares outstanding – basic | ||||||||
| Weighted average shares outstanding – diluted | ||||||||
See accompanying notes to these unaudited consolidated financial statements.
5
MITESCO, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 2025 and 2024
(UNAUDITED)
| Preferred
Stock Series D | Preferred Stock Series F | Preferred Stock Series X | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Shares issued for Series A redemptions | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||
| Shares issued for Series X dividends | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
| Preferred stock dividends | - | - | - | - | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Shares issued for Series X dividends | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | - | - | - | - | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
See accompanying notes to these unaudited consolidated financial statements.
6
MITESCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Three Months Ended | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Amortization of intangible assets | ||||||||
| Stock-based compensation | ||||||||
| Accretion of Series A preferred recorded as interest expense | ||||||||
| Loss on revaluation of Series A preferred | ||||||||
| Gain on lease terminations | ( | ) | ||||||
| Gain on revaluation of derivative liabilities | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Other current liabilities | ( | ) | ||||||
| Accrued interest | ||||||||
| Accrued interest - related parties | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Principal payments on SBA Loan | ( | ) | ( | ) | ||||
| Proceeds from sale of Series A preferred stock | ||||||||
| Proceeds from notes payable | ||||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Supplemental disclosure of financing cash flow information: | ||||||||
| Preferred stock dividends | $ | $ | ||||||
| Shares issued for Series X dividends | $ | $ | ||||||
| Shares issued for redemption of Series A preferred stock | $ | $ | ||||||
See accompanying notes to these unaudited consolidated financial statements.
7
MITESCO, INC.
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2025
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 shut down our former business line. On April 24, 2020, we changed our name to Mitesco, Inc. In October 2023, the Company changed its domicile from Delaware to Nevada in order to effect reduced costs.
We are a holding company seeking to provide products, services and technology.
In June 2024 we announced the formation of two (2) new wholly owned business units, Centcore, LLC (“Centcore”) that is providing datacenter services including cloud computing and application hosting, and Vero Technology Ventures, LLC (“VTV”), whose aim is to seek investment and acquisition opportunities, generally in the areas of cloud computing and datacenter related applications.
Centcore has two (2) areas of focus. The first, generic datacenter 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 datacenter where we maintain the computing, communications and backup environment. We currently offer services through a “co-location” agreement with a datacenter based in Melbourne, Florida, which has relationships with eight (8) other datacenters worldwide. Using this approach, we have an ability to rapidly expand the size of our computing resources quickly, at minimal expense. Over time we expect to create similar situations with other datacenters worldwide based on our clients’ specific needs.
The
second focus involves hosting software applications developed by software vendors, from which they will sell the use of the software
by their end user clients on a “cloud” basis. By taking this approach, we gain the business of the vendor, and potentially
their clients, 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 datacenters. If we are successful helping the vendor grow his
business, we will have provided a “value added service”, and benefit from increased utilization of our computing resources
by not only the vendor, but also his new end user clients. Our initial focus for this area is on software providers who serve the “technology
infrastructure” market doing design, engineering, construction and maintenance of significant systems. We desire to create “life
cycle” relationships as the design, construction and operational life of these systems includes document management and performance
modelling over years, often from
We have retained experienced professionals in the datacenter, cyber security and infrastructure services areas to support our needs on a per hour basis, which we believe will allow us to control our costs relative to business activity, without significant staffing internally. We have also formed an “Advisory Board” where individuals with experience in business areas where we have interest have agreed to assist us, receiving a nominal issuance of restricted common stock, in consideration of their advice.
The Vero Technology Ventures arm is actively reviewing potential early-stage cloud computing solution vendors and is developing its own artificial intelligence (A.I.) based application set. (VTV) is currently involved with the formation of a new software development project aimed at applying artificial intelligence (A.I.) to the sales process for various businesses including residential real estate using cloud computing-based software. It is currently in development of a new sales automation tool set deemed the ‘Robo Agent’ application. This software is intended to utilize A.I. to promote more efficient sales and marketing within certain direct to consumer (D2C) markets, and with highly targeted market research. This initial effort dubbed “Robo Agent”, is expected to be available for initial users in Q3 of FY2025. Later versions may include similar functionality focused on other markets, generally in a “business to consumer” (B2C) selling situation.
Note 2: Going Concern
As of March 31, 2025, the Company had cash and cash
equivalents of approximately $
8
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.
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”).
The consolidated financial statements and related disclosures as of March 31, 2025, are unaudited, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. In our opinion, these unaudited financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for the fair statement of the results for the interim periods. These unaudited financial statements should be read in conjunction with the audited financial statements of the Company for the years ended December 31, 2024, and 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 31, 2025. The results of operations for the three months ended March 31, 2025, are not necessarily indicative of the results to be expected for the full year ended December 31, 2025.
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 includes 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.
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.
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.
The following table presents the effect of potential dilutive issuances for the three months ended March 31, 2025 and 2024:
| Three Months Ended | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Net income (loss) attributable to common stockholders | $ | $ | ( | ) | ||||
| Preferred stock dividends | - | |||||||
| Derivative gain | ( | ) | - | |||||
| Interest expense associated with convertible debt | - | |||||||
| Net loss for dilutive calculation | ( | ) | ( | ) | ||||
| Weighted average shares outstanding | ||||||||
| Dilutive effect of preferred stock | - | |||||||
| Dilutive effect of convertible debt | - | |||||||
| Dilutive effect of common stock warrants | - | |||||||
| Weighted average shares outstanding for diluted net income (loss) per share | ||||||||
During the three months ended March 31, 2025 the
effect of
9
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.
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: 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 $
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
Note 5: Intangible assets
The following table represents the balances of intangible assets as of March 31, 2025 and December 31, 2024;
| March 31, 2025 | December 31, 2024 | |||||||
| Website Domains | $ | $ | ||||||
| Total Intangible assets | ||||||||
| Accumulated Amortization – website domains | ( | ) | ( | ) | ||||
| Net intangible assets | $ | $ | ||||||
10
On
December 6, 2024, the Company closed on its acquisition of the AgingTopic Business and allocated the entire $
The following is an amortization analysis of the annual amortization of intangible assets on a fiscal year basis as of March 31, 2025:
| For the year ended December 31, | Amount | |||
| 2025 (9 months remaining) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 and Thereafter | ||||
| Total remaining intangibles amortization | ||||
Note 6: Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consisted of the following at March 31, 2025, and December 31, 2024:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Trade accounts payable | $ | $ | ||||||
| Accrued payroll and payroll taxes | ||||||||
| Total accounts payable and accrued liabilities | $ | $ | ||||||
Note 7: 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. As of March 31,2025 the Company had impaired all balances of the related right to use assets.
Operating lease liabilities are summarized below:
| March 31, 2025 | December 31, 2024 | |||||||
| Lease liability | $ | $ | ||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Lease liability, non-current | $ | $ | ||||||
As a result of closing the facilities, the Company has made no further lease payments during the year ending December 31, 2024, or the three months ending March 31, 2025. As of March 31, 2025, the Company has either settled amounts owed or entered into default judgements for all leases except for the office lease, which we believe is nominal. For all leases for which a legal settlement has been entered into, all amounts have been reclassified to legal settlements as of March 31, 2025. See Note 15 for further details.
Note 8: 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 $
On July 12, 2023, the Company received confirmation
of a payment plan arrangement from the SBA for total principal and interest due on the loan of $
11
Note 9: Notes Payable
The following table summarizes the outstanding notes payable as of March 31, 2025 and December 31, 2024, respectively:
| March 31, 2025 | December 31, 2024 | |||||||
| Kishon Note | $ | $ | ||||||
| Finnegan Note 1 | ||||||||
| Finnegan Note 2 | ||||||||
| Finnegan Note 3 | ||||||||
| Total Notes Payable | ||||||||
| Current Portion | ||||||||
| 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 $
The
Kishon Note was issued in the principal amount of $
During
the year ended December 31, 2023, a default penalty in the amount of $
At
March 31, 2025, principal and interest in the amount of $
Finnegan Note 1
On
May 23, 2022, the Company issued a
12
Principal and accrued interest in the amount of $
Finnegan Note 2
On
May 26, 2022, the Company issued a
At
March 31, 2025, principal and accrued interest in the amount of $
Finnegan Note 3
On
August 4, 2022, the Company issued a
At
March 31, 2025, principal and accrued interest in the amount of $
Aggregate
interest expense as described on the above notes payable was $
Note 10: Notes Payable – Related Parties
The following table summarizes the outstanding related party notes payable as of March 31, 2025 and December 31, 2024, respectively;
| March 31, 2025 | December 31, 2024 | |||||||
| Lindstrom Note | ||||||||
| Lindstrom Note 2 | ||||||||
| Notes Payable | ||||||||
| Current Portion, net of discount | $ | $ | ||||||
| Long-term portion, net of discount | ||||||||
13
Lindstrom Note
On
May 26, 2022, the Company issued a 10% Promissory Note in the principal amount of $
At March 31, 2025, principal
and accrued interest in the amount of $
Lindstrom Note 2
On
November 29, 2022, the Company issued a promissory notes (the “Lindstrom Note 2”) in a related party transactions to Jenny
Lindstrom, who was the Company’s former Vice President and Chief Legal Officer. The Lindstrom Note 2 has a due date of May 28,
2023 and bears interest at the rate of 10% per annum which will accrue from the date of the note. Following an event of default as defined,
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 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. Lindstrom reasonably believes contains a term that is more favorable
than those in the Lindstrom Note 2, 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 2. In addition, Lindstrom received a five-year warrants to purchase
At
March 31, 2025, there was principal and interest in the amount of $
Aggregate interest expense as described
on the above notes payable – related parties was $
Note 11: Derivative Liabilities
Certain of the Company’s convertible notes and warrants contain features that create derivative liabilities. The derivative components of these notes are valued at issuance, at conversion, at restructuring, and at each period end.
Derivative liability activity for the three months ended March 31, 2025, is summarized in the table below:
| December 31, 2024 | $ | |||
| Gain on revaluation | ( | ) | ||
| March 31, 2025 | $ |
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 12: 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
Holders of shares of the Series A Preferred Stock are not entitled to receive any dividends, and the security bears no interest.
14
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 or 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
During the three months ended March 31, 2025, the
Company issued
During the three months ended March 31, 2025, the
Company redeemed
The following table provides the maturities of Series A preferred stock redemptions at March 31, 2025:
| Series A | ||||
| Preferred Stock | ||||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 and thereafter | ||||
| Total future undiscounted redemption payments | ||||
| Less: Interest | ( | ) | ||
| Present value of redemption payments | ||||
| Current portion | ( | ) | ||
| Long term portion | $ | |||
Note 13: Stockholders’ Equity (Deficit)
Common Stock
The
Company has authorized
Issuance of Restricted Common Stock for Series X Preferred Stock Dividends
During
the three months ended March 31, 2025, the Company issued
Issuance of Restricted Common Stock for the Redemption of Series A Preferred Stock
During the three months ended March 31, 2025, the Company issued 1,366,394 shares of its restricted common stock for the redemption of Series A shares as discussed in further detail above in Note 12.
During the three months ended March 31, 2025, the Company recorded stock-based compensation of $
15
Preferred Stock
We have authorized to issue
Series D Preferred Stock
The
Series D Preferred Stock has a par value of $
The Company accrued dividends in the amount of $
Series E Preferred Stock
The number of shares of Series E designated is
As long as any shares of Series E are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series E, (a) alter or change the preferences, rights, privileges or powers given to the Series E or alter or amend the Certificate of Incorporation or bylaws, (b) increase or decrease (other than by conversion) the number of authorized shares of Series E, or (c) create or authorize any new class of shares that has a preference over Series E.
Series F Preferred Stock
The number of shares of Series F Preferred Stock
designated is
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.
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 shares outstanding as of December 31, 2024 or March 31, 2025.
Series X Preferred Stock
The Company has
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The
Company accrued dividends in the amount of $
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 March 31, 2025, 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 | |||||||||||||||||
| $ | ||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||
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, 2024 | $ | |||||||
| Granted | $ | |||||||
| Cancelled | $ | |||||||
| Exercised | $ | |||||||
| Outstanding at March 31, 2025 | $ | |||||||
At March 31, 2025, there was no intrinsic value on the issued or vested warrants.
Note 14: 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 March 31, 2025 and December 31, 2024.
| March 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities | ||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
| December 31, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities | ||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
Note 15: 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 $
17
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
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
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
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
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
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
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
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
18
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
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 | $ | $ | $ | CASH PAYMENT OBLIGATION | |||||||||||||||||||||
| EAGAN, MN | VIKINGS | $ | $ | % | $ | $ | DEFAULT JUDGEMENT | |||||||||||||||||||
| ST. LOUIS PARK, MN | EXCELSIOR | $ | $ | % | $ | $ | DEFAULT JUDGEMENT | |||||||||||||||||||
| ST. PAUL, MN | CONTINENTAL 560 | $ | $ | % | $ | $ | DEFAULT JUDGEMENT | |||||||||||||||||||
| MAPLE GROVE, MN | BUTTNICK | $ | $ | % | $ | $ | SETTLEMENT AGREEMENT | |||||||||||||||||||
| DENVER, CO | RADIANT | $ | $ | $ | DISMISSED | |||||||||||||||||||||
| DENVER, CO | QUINCY | $ | $ | % | $ | DEFAULT JUDGEMENT | ||||||||||||||||||||
| TOTAL | $ | $ | $ | $ | ||||||||||||||||||||||
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 .
Fixed rent payments under the initial term are approximately $
During the
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 $
For the three months ended March 31, 2025, 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 Three Months Ended March 31, | ||||||||
| 2025 | ||||||||
| Expected tax at statutory rates | $ | % | ||||||
| Permanent Differences | % | |||||||
| State Income Tax, Net of Federal benefit | ( | ) | ( | )% | ||||
| Other | ( | ) | ( | )% | ||||
| Current Year Change in Valuation Allowance | % | |||||||
| Prior Year True-Ups | % | |||||||
| Income tax expense | $ | % | ||||||
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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 | ||||||||
| March 31, 2025 | December 31, 2024 | |||||||
| Deferred Tax Assets (Liabilities): | ||||||||
| Accrued payroll | $ | $ | ||||||
| ASC842-ROU Asset | ||||||||
| ASC842-ROU (Liability) | ||||||||
| Loss from derivatives | ( | ) | ( | ) | ||||
| Waiver and commitment fee shares | ||||||||
| Stock based compensation | ( | ) | ( | ) | ||||
| Depreciation | ||||||||
| Net operating loss | ||||||||
| Net deferred tax assets (liabilities) | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets (liabilities) | $ | $ | ||||||
Note 17: Subsequent Events
Issuance of Restricted Common Stock for Series X Preferred Stock Dividends
Subsequent
to March 31, 2025, the holders of the Series X preferred stock have earned an additional $
Issuance of Restricted Common Stock for the Redemption of Series A Preferred Stock
Subsequent
to March 31, 2025, the holders of the Series A preferred stock have earned
Issuance of Restricted Common Stock for the settlement of outstanding liabilities
On
April 24, 2025, the Company entered into Obligation Exchange Agreements with
Issuance of Short Term Notes Payable
On May 6, 2025, the Company entered into a short term note payable
agreement with one of its investors and received cash proceeds of $
20
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References to the “Company,” “Mitesco, Inc.,” “our,” “us” or “we” refer to Mitesco, Inc. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
Company Overview
Mitesco, Inc. (the “Company,” “we,” “us,” or “our”) was formed in the state of Delaware on January 18, 2012. On December 9, 2015, we restructured our operations and acquired Newco4pharmacy, LLC, a development stage company which sought to acquire compounding pharmacy businesses. As a part of the restructuring, we shut down our former business line. On April 24, 2020, we changed our name to Mitesco, Inc. In October 2023, the Company changed its domicile from Delaware to Nevada in order to effect reduced costs.
Current Business Operations
We are a holding company seeking to provide products, services and technology.
In June 2024 we announced the formation of two (2) new wholly owned business units, Centcore, LLC (“Centcore”) that is providing data center services including cloud computing and application hosting, and Vero Technology Ventures, LLC (“VTV”), whose aim is to seek investment and acquisition opportunities, generally in the areas of cloud computing and data center related applications.
Centcore has two (2) areas of focus. The first, generic data center services, is aimed at hosting applications for a specific user, sometimes referred to as “managed services offerings” or MSO, where the client moves the software licensed from various vendors, or internally developed, into our data center where we maintain the computing, communications and backup environment. We currently offer services through a “co-location” agreement with a data center based in Melbourne, Florida, which has relationships with eight (8) other data centers worldwide. Using this approach, we have an ability to rapidly expand the size of our computing resources quickly, at minimal expense. Over time we expect to create similar situations with other data centers worldwide based on our clients’ specific needs.
The second focus involves hosting software applications developed by software vendors, from which they will sell the use of the software by their end user clients on a “cloud” basis. By taking this approach, we gain the business of the vendor, and their clients, perhaps allowing us to grow at a faster rate with lower cost of sales. We have developed the “Centcore Partner Program” where we will help promote the software vendors who are hosting in our data centers. If we are successful helping the vendor grow his business, we will have provided a “value added service”, and benefit from increased utilization of our computing resources by not only the vendor, but also his new end user clients. Our initial focus for this area is on software providers who serve the “technology infrastructure” market doing design, engineering, construction and maintenance of significant systems. We desire to create “life cycle” relationships as the design, construction and operational life of these systems includes document management and performance modeling over years, often from 5 to 20 years.
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We have retained experienced professionals in the data center, cyber security and infrastructure services areas to support our needs on a per hour basis, which we believe will allow us to control our costs relative to business activity, without significant staffing internally. We have also formed an “Advisory Board” where individuals with experience in business areas where we have interest have agreed to assist us, receiving a nominal issuance of restricted common stock, in consideration of their advice.
The Vero Technology Ventures arm is actively reviewing potential early-stage cloud computing solution vendors and is developing its own artificial intelligence (A.I.) based application set (VTV) is currently involved with the formation of a new software development project aimed at applying artificial intelligence (A.I.) to the sales process for various businesses including residential real estate using cloud computing based software. This initial effort dubbed “Robo Agent”, is expected to be available for initial users in Q3 of FY2025. Later versions may include similar functionality focused on other markets, generally in a “business to consumer” (B2C) selling situation.
There are several other projects in evaluation, generally aimed at software that would operate on a cloud computing platform such as that which the Company has in its Centcore Data Center.
FY2024 Debt Restructuring
From FY2021 until late FY2022 the Company invested in an operating subsidiary, The Good Clinic, which was developing a series of primary care healthcare facilities. In late FY2022, as a result of a lack of adequate revenues and limited funding, it ceased operations. As of June 30, 2024, the Company had over $30 million in senior securities, notes and accounts payable related to that discontinued operation. In order to clear those obligations management began a restructuring which involved negotiations to reduce the overall debt, converting certain accredited institutional investors into a newly created Series A Amortizing Preferred stock (“Series A Preferred”), and all others into restricted common stock using a price per share of $4.00.
As of the date of this filing it has converted over $25 million of its obligations, representing over $20 million of its senior securities, and over $2 million of notes and accounts payable, into 2,478,179 of restricted Common Stock, and 566,085 shares of Series A Preferred stock. The Series A Preferred stock is held by six (6) accredited institutional investors, while over 40 holders of obligations of the Company elected to receive common stock using the $4 per share valuation.
Included in the above totals, effective December 31, 2024, the Company has entered into Obligation Exchange Agreements pursuant to which it has converted $580,132, including $32,132 of principal and interest, of its 2024 Bridge Notes into Series A Preferred shares, which resulted in the issuance of 23,206 shares of Series A Preferred shares to three (3) of its institutional investor. This extinguishes $580,132 of its short-term debt. As of the date of this filing all FY2024 bridge notes have been extinguished. Further, during January 2025 the Company issued 4,000 shares of its Series A Preferred shares in consideration of an investment of $100,000 by three (3) of its institutional investors.
As part of the restructuring, the Company agreed to register shares of Common Stock issued and to be issued to Series A Preferred Stockholders.
Advisory Board
The Board of Directors authorized the creation of a new Advisory Board whose participants shall include subject matter experts in certain business areas under consideration by the Company. These positions are “non-executive” and as such are not governed by Section 16 of the Securities Act. The members of the advisory board do not have the authority to vote on matters brought to the Board of Directors and may only attend a meeting of the board of directors if they are invited. Also, the members of the advisory board are not bound by fiduciary duties and are not entitled to indemnification.
The compensation for the participants shall be $60,000 per year, paid through the issuance of restricted common stock. The per share valuation to be used shall be determined by the Board of Directors based on the market of the Company’s common stock at the time of the appointment. For all appointments in FY2024 the valuation used was $.80 per share, resulting in the issuance of 75,000 shares of restricted common stock to each participant. The members of the advisory board do not have the authority to vote on matters brought to the board of directors and may only attend a meeting of the board of directors if they are invited. Also, the members of the advisory board are not bound by fiduciary duties and are not entitled to indemnification.
The members of the Advisory Board are executives whose careers have focused on infrastructure related technology, cybersecurity, data center business development and data center systems software, and digital marketing as noted here:
| 1) | Kristen Plybon is a cybersecurity professional with a strong background in data privacy with CIPP/US and CIPP/E certifications. She is a licensed attorney with a deep understanding of state, federal, and global data protection laws and regulations. |
| 2) | Nathaniel Wade is a professional specializing in cybersecurity and enterprise IT operations for a number of well-known Fortune 1,000, Department of Defense (DoD), and Federal Civilian (FedCiv) agencies specializing in design and implementation of cybersecurity programs for public safety, national defense, and intelligence communication systems; |
22
| 3) | Tom Simon, the owner of Synthos LLC, a Seattle-based provider of development and support services specializing in GIS. Synthos’ services include data procurement and analysis, and spatial and statistical analysis using industry leading applications such as ESRI’s Arc-Info and Trimble Navigation. |
| 4) | Chris McLoughlin has spent his career in software and systems development and is an owner of Accucom Consulting, Inc., which specializes in network infrastructure, and Sentry RMS, which provides software to the public safety sector including various state and municipal law enforcement and fire agencies. |
| 5) | Gabriel Crawford has over 20 years of experience in data center development from location selection through power distribution engineering and financial structuring including co-location, data center design, key account recruitment and multi-site data distribution. |
| 6) | Jim Clifton is a seasoned Software Field Sales Director with over 20 years of experience in driving business growth through innovative go-to-market sales strategies focused on systems software, modern infrastructure, and data analytics and innovative implementation to improve productivity across corporations and workforces worldwide. |
| 7) | Mr. Marty Valania is a senior executive whose career has focused on the use of digital marketing in support of the newspaper industry, for both businesses (B2B), and direct to consumer selling. He is focused on assisting the Company establish a digital marketing operation in support of both their internal needs, and as a service to third parties. |
Comparison of the Three Months Ended March 31, 2025, and 2024.
Revenues
We had revenues of $17,000 for the three months ended March 31, 2025, compared to $0 in the comparable period. The revenues were related to our newly formed subsidiary Centcore, LLC.
Operating Expenses
Our total operating expenses for the three months ended March 31, 2025, were $283,986. For the comparable period in 2024, the operating expenses were $135,476. The increase is the result of the Company’s focus on establishing the operations of its newly formed subsidiaries.
Other Income and Expenses
Interest expense was $392,049 for the three months ended March 31, 2025, compared to $46,130 for the comparable period in 2024. The increase was a result of the Series A preferred shares accretion.
Interest expense – related parties was $2,297 for the three months ended March 31, 2025, compared to $5,075 in the prior period. The decrease was a result of reduced debt balances in the current period.
During the three months ended March 31, 2024, we recorded a gain on termination of operating lease of $233,205. There were no comparable transactions in the current period.
During the three months ended March 31, 2025, we recorded a loss on revaluation of derivative liabilities of $4,362,645. There were no comparable transactions in the prior period.
Liquidity and Capital Resources
To date, we have not generated sufficient revenue from operations to support our operations. We have financed our operations through the sale of equity securities and short-term borrowings. As of May 15, 2025, we had cash of approximately $1,100 compared to cash of approximately $200 as of March 31, 2025. Our Company’s recurring losses from operations and negative cash flows from operations and our need to raise additional funding to finance our operations raise substantial doubt about our ability to continue as a going concern.
23
Net cash used in operating activities was $97,413 for the three months ended March 31, 2025. This is the result of establishing the operations of the Company’s newly formed subsidiaries. Cash used in operations for the three months ended March 31, 2024, was $154,267.
The Company had no investing activities for the three months ended March 31, 2024 and 2025.
Net cash provided by financing activities for the three months ended March 31, 2025, was $94,200, compared to $192,214 for the three months ended March 31, 2024. Cash provided by financing activities was the result of cash proceeds from sales of Series A preferred shares of $100,000, offset by the repayment of principal on the SBA loan in the amount of $5,800.
At March 31, 2025, we had the following current liabilities which are payable in cash: Accounts payable and accrued liabilities of $4.3 million; notes payable of $0.5 million; notes payable to related parties of $0.06 million; SBA Loan Payable of $0.4 million; legal settlements of $2.7 million; accrued interest payable of $0.4 million; accrued interest payable to related parties of $0.02 million; and other current liabilities of $0.1 million. We also have the following liabilities which are payable in stock: derivative liabilities of $0.3 million, Series A Preferred Stock liability of $5.9 million and preferred stock dividends payable to related parties of $0.01 million.
The Company has relationships with a number of consultants who are assisting in the creation of the new business units. It is anticipated that this approach will continue indefinitely as it does not desire to create the overhead associated with a large employment force.
The following table summarizes the status of our property-related settlements as noted above and the total settlement amounts as of the date of the filing:
| LOCATION | PROPERTY NAME | ORIGINAL OBLIGATION | SETTLEMENT AMOUNT | DATE OF AWARD | INTEREST RATE | INTEREST ACCRUED ON SETTLEMENT | TOTAL SETTLEMENT OBLIGATION | TYPE OF SETTLEMENT | ||||||||||||||||||
| WAYZETTA, MN | WAZETTA BAY | $ | 407,000 | $ | 25,000 | NA | - | - | $ | 25,000 | CASH PAYMENT OBLIGATION | |||||||||||||||
| EAGAN, MN | VIKINGS | $ | 767,000 | $ | 488,491 | 12/7/2023 | 10 | % | $ | 64,240 | $ | 552,731 | DEFAULT JUDGEMENT | |||||||||||||
| ST. LOUIS PARK, MN | EXCELSIOR | $ | 673,000 | $ | 425,350 | 5/22/2024 | 10 | % | $ | 36,475 | $ | 461,825 | DEFAULT JUDGEMENT | |||||||||||||
| ST. PAUL, MN | CONTINENTAL 560 | $ | 1,153,000 | $ | 415,606 | 1/22/2024 | 10 | % | $ | 49,417 | $ | 465,023 | DEFAULT JUDGEMENT | |||||||||||||
| MAPLE GROVE, MN | BUTTNICK | $ | 1,153,127 | $ | 219,000 | 10/3/2022 | 10 | % | $ | 54,600 | $ | 273,600 | SETTLEMENT AGREEMENT | |||||||||||||
| DENVER, CO | RADIANT | $ | 782,000 | $ | 530,557 | ` | - | - | $ | 530,557 | DISMISSED | |||||||||||||||
| DENVER, CO | QUINCY | $ | 1,079,000 | $ | 348,764 | 11/14/2023 | 12 | % | 57,675 | $ | 406,439 | DEFAULT JUDGEMENT | ||||||||||||||
| TOTAL | $ | 6,014,127 | $ | 2,452,768 | $ | 262,407 | $ | 2,715,175 | ||||||||||||||||||
Critical Accounting Estimates
Management uses various estimates and assumptions in preparing our financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Accounting estimates that are the most important to the presentation of our results of operations and financial condition, and which require the greatest use of judgment by management, are designated as our critical accounting estimates. We have the following critical accounting estimates:
| ● | Estimates and assumptions used in the valuation of derivative liabilities: Management utilizes a lattice model to estimate the fair value of derivative liabilities. The model includes subjective assumptions that can materially affect the fair value estimates. |
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on such an evaluation, the Company’s management has identified what it believes are material weaknesses in the Company’s disclosure controls and procedures and concluded that we did not have effective disclosure controls and procedures.
The deficiencies in our disclosure controls and procedures included (i) lack of segregation of duties and (ii) lack of sufficient resources to ensure that information required to be disclosed by the Company in the reports that the Company files or submits to the SEC are recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms.
The Company intends to take corrective action to ensure that information required to be disclosed by the Company pursuant to the reports that the Company files or submits to the SEC is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the three months ended March 31, 2025, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company has a number of legal situations involved with the winding down of its clinic business activities. These include claims regarding certain construction contracts and cancellation of leases as noted below:
| LOCATION | PROPERTY NAME | ORIGINAL OBLIGATION | SETTLEMENT AMOUNT | DATE
OF AWARD | INTEREST RATE | INTEREST ACCRUED ON SETTLEMENT | TOTAL SETTLEMENT OBLIGATION | TYPE
OF SETTLEMENT | ||||||||||||||||||||||
| WAYZETTA, MN | WAZETTA BAY | $ | 407,000 | $ | 25,000 | NA | - | - | $ | 25,000 | CASH PAYMENT OBLIGATION | |||||||||||||||||||
| EAGAN, MN | VIKINGS | $ | 767,000 | $ | 488,491 | 12/7/2023 | 10 | % | $ | 64,240 | $ | 552,731 | DEFAULT JUDGEMENT | |||||||||||||||||
| ST. LOUIS PARK, MN | EXCELSIOR | $ | 673,000 | $ | 425,350 | 5/22/2024 | 10 | % | $ | 36,475 | $ | 461,825 | DEFAULT JUDGEMENT | |||||||||||||||||
| ST. PAUL, MN | CONTINENTAL 560 | $ | 1,153,000 | $ | 415,606 | 1/22/2024 | 10 | % | $ | 49,417 | $ | 465,023 | DEFAULT JUDGEMENT | |||||||||||||||||
| MAPLE GROVE, MN | BUTTNICK | $ | 1,153,127 | $ | 219,000 | 10/3/2022 | 10 | % | $ | 54,600 | $ | 273,600 | SETTLEMENT AGREEMENT | |||||||||||||||||
| DENVER, CO | RADIANT | $ | 782,000 | $ | 530,557 | - | - | $ | 530,557 | DISMISSED | ||||||||||||||||||||
| DENVER, CO | QUINCY | $ | 1,079,000 | $ | 348,764 | 11/14/2023 | 12 | % | 57,675 | $ | 406,439 | DEFAULT JUDGEMENT | ||||||||||||||||||
| TOTAL | $ | 6,014,127 | $ | 2,452,768 | $ | 262,407 | $ | 2,715,175 | ||||||||||||||||||||||
Quincy Clinic a.k.a. 1776 Curtis
On September 28, 2021, we entered into an agreement to open a clinic in Denver, Colorado, which was expected to begin operation in the first quarter of 2023 but possession of which has been relinquished to the landlords. The initial lease term is 94 months. Fixed rent payments under the initial term are approximately $1,079,000. A Final Judgment was granted on November 14, 2023, in the amount of $348,764 including interest, fees and other costs. The Company has released the property back to the leaseholder. The owner of the property has filed before the same court, an action against the Company (Case No. 2022 CV 33173, Division: 409, Consolidated with 2022CV33653) seeking to modify the final settlement for an additional $900,000. We intend to vigorously defend the Company as our position is that there is no basis for this claim.
Administrative office
On June 24, 2021, we entered into an agreement to open an administrative office in St. Louis Park, Minnesota. The initial lease term is 2.5 years. Fixed rent payments under the initial term were approximately $244,000. We believe that there is no further obligation in this situation, but we do not have such documented in writing at this time.
Gardner Debt for Equity Agreement and other obligations
The Company entered into a debt-for-equity exchange agreement with Gardner Builders Holdings, LLC (the “Creditor”) on January 7, 2022 (the “Agreement”). Pursuant to the Agreement, the Company issued shares of restricted common stock, par value $0.01 per share, of MITI (the “Restricted Shares”) to the Creditor in exchange for the Company Debt Obligations, as defined below.
The Agreement settled certain accounts payable amounts owed by the Company to the Creditor (the “Accounts Payable Amount”) as well as then upcoming amounts that would become due between the date of the Agreement and April 1, 2022. The Agreement also settled incurred interest and penalties on the amounts due through January 5, 2022, as well as future interest payments on amounts to be incurred in the first quarter of 2022 (collectively, the “Additional Costs”, and combined with the Accounts Payable Amount, the “Company Debt Obligations”). The Accounts Payable Amount was $500,000, the Additional Costs were $294,912 and the conversion price was $12.50. As a result, 63,593 Restricted Shares were authorized to be issued. The Company’s Board of Directors approved the Agreement on January 5, 2022. Much of the amounts claimed by Gardner have been resolved by the settlements with the various leaseholders where Gardner had filed liens. During 2021 and through 2022 a total of $2,305,155 was paid by the Company directly to Gardner for their services. As of the date of this filing the Company is continuing an effort to negotiate a settlement of any remaining obligations to this vendor.
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ITEM 1A. RISK FACTORS
Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. In addition to the other information set forth in this quarterly report on Form 10-Q, you should carefully consider the factors described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission on March 31, 2025. There have been no material changes to the risk factors described in that report.
ITEM 2. SALE OF UNREGISTERED SECURITIES
During the period ending March 31, 2025 the Company made the following issuances of restricted common stock
Issuance of Restricted Common Stock for Series X Preferred Stock Dividends
During the three months ended March 31, 2025, the Company issued 28,359 shares of common stock for dividends payable on its Series X Preferred Stock
Issuance of Restricted Common Stock for the Redemption of Series A Preferred Stock
On March 31, 2025, the Company issued 1,366,394 shares of its restricted common stock in order to redeem $546,900 of its Series A Preferred stock, effective March 31, 2025.
ITEM 3. DEFAULTS ON SENIOR SECURED SECURITIES
Not Applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS
The following exhibits are included with this Quarterly Report on Form 10-Q.
| # | Management contract or compensatory plan or arrangement required to be identified pursuant to Item 15(a)(3) of this report. |
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q for the period ended March 31, 2025, to be signed on its behalf by the undersigned, thereunto duly authorized.
| MITESCO, INC. | ||
| Dated: May 15, 2025 | By: | /s/ Mack Leath |
| Mack Leath | ||
| Chief Executive Officer, Chief Financial Officer and Principal Financial Officer | ||
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