UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For the quarter ended
OR
For the transition period from to
Commission File Number
(Exact Name of Registrant as Specified in its Charter)
| | |
(State Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices) (Zip code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|
|
|
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐
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 for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. YES ☐
As of November 11, 2022, the registrant had outstanding
Table of Contents
PART I – FINANCIAL INFORMATION |
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Item 1. |
5 |
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Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 |
5 |
||
6 |
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Condensed Consolidated Statements of Stockholder’s Deficit for the three and nine months ended September 30, 2022 and 2021 |
7 |
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9 |
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11 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
42 |
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Item 3. |
46 |
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Item 4. |
46 |
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PART II – OTHER INFORMATION |
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Item 1. |
47 |
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Item 1A. |
47 |
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Item 2. |
47 |
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Item 3. |
51 |
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Item 4. |
51 |
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Item 5. |
51 |
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Item 6. |
52 |
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54 |
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon our current assumptions, expectations, and beliefs concerning future developments and their potential effect on our business. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “approximately,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other comparable terminology, although the absence of these words does not necessarily mean that a statement is not forward-looking. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements.
Factors that may cause or contribute actual results to differ from these forward-looking statements include, but are not limited to:
● adverse economic conditions;
● the Company’s ability to raise capital to fund its operations
● industry competition
● the Company’s ability to integrate its acquisitions
● the Company’s ability to attract and retain qualified senior management and technical personnel;
● the continued effect of the Covid-19 pandemic on the Company’s operations; and
These forward-looking statements represent our intentions, plans, expectations, assumptions, and beliefs about future events and are subject to risks, uncertainties and other factors. Considering these risks, uncertainties, and assumptions, the events described in the forward-looking statements may not occur or may occur to a different extent or at a different time than we have described.
All forward-looking statements speak only as of the date of this Report. Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, or other information contained herein, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise. We caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MITESCO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, |
December 31, |
|||||||
ASSETS |
2022 |
2021 |
||||||
(unaudited) |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Accounts Receivable |
||||||||
Inventory |
||||||||
Prepaid expenses |
||||||||
Total current assets |
||||||||
Right to use operating leases, net |
||||||||
Construction in progress |
||||||||
Fixed assets, net of accumulated depreciation of $ |
||||||||
Total Assets |
$ | $ | ||||||
LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY |
||||||||
Current liabilities |
||||||||
Accounts payable and accrued liabilities |
$ | $ | ||||||
Accrued interest |
||||||||
Derivative liabilities |
||||||||
Lease liability - operating leases, current |
||||||||
Notes payable, net of discounts of $ |
||||||||
SBA Loan Payable |
||||||||
Other current liabilities |
||||||||
Preferred stock dividends payable |
||||||||
Total current liabilities |
||||||||
Lease Liability- operating leases, non-current |
||||||||
Total Liabilities |
||||||||
Commitments and contingencies |
- | |||||||
Stockholders' equity (deficit) |
||||||||
Preferred stock, $0.01 par value, 100,000,000 shares authorized; 500,000 shares designated Series A; 3,000,000 shares designated Series C; 10,000,000 shares designated Series D; and 400,000 shares designated Series X: |
- | - | ||||||
Preferred stock, Series A, $ |
||||||||
Preferred stock, Series C, $ |
||||||||
Preferred stock, Series D, $ |
||||||||
Preferred stock, Series X, $ |
||||||||
Common stock subscribed |
||||||||
Common stock, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
Total stockholders' equity (deficit) |
( |
) | ||||||
Total liabilities and stockholders' equity (deficit) |
$ | $ |
See accompanying notes to these unaudited condensed consolidated financial statements.
MITESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three |
For the Nine |
|||||||||||||||
Months Ended |
Months Ended |
|||||||||||||||
September 30, |
September 30, |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Revenue-services |
$ | $ | $ | $ | ||||||||||||
Revenue-products |
||||||||||||||||
Total revenue |
||||||||||||||||
Cost of goods sold-services |
$ | $ | $ | $ | ||||||||||||
Cost of goods sold-products |
||||||||||||||||
Total cost of goods sold |
||||||||||||||||
Gross (loss) profit |
( |
) |
( |
) |
||||||||||||
Operating expenses: |
||||||||||||||||
General and administrative |
$ | $ | $ | $ | ||||||||||||
Total operating expenses |
||||||||||||||||
Net Operating Loss |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
Other income (expense): |
||||||||||||||||
Interest expense |
( |
) |
( |
) |
( |
) |
||||||||||
Loss on legal settlement |
( |
) |
||||||||||||||
(Loss) Gain on waiver and commitment fee shares |
( |
) |
||||||||||||||
Gain on settlement of accrued salary |
||||||||||||||||
Loss (Gain) on settlement of accounts payable |
( |
) |
( |
) |
||||||||||||
Gain on settlement of notes payable |
||||||||||||||||
Grant income |
( |
) |
- | |||||||||||||
Loss on revaluation of derivative liabilities |
( |
) |
( |
) |
( |
) |
||||||||||
Total other expense |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
Loss before provision for income taxes |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
Provision for income taxes |
||||||||||||||||
Net loss |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
||||
Preferred stock dividends |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
Preferred stock deemed dividends |
( |
) |
||||||||||||||
Net loss available to common shareholders |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
||||
Net loss per share - basic and diluted |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
$ | ( |
) |
||||
Weighted average shares outstanding - basic and diluted |
See accompanying notes to these unaudited condensed consolidated financial statements.
MITESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 and 2021
(UNAUDITED)
Preferred Stock Series A |
Preferred Stock Series C |
Preferred Stock Series D |
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, June 30, 2022 |
- | $ | - | $ | $ | $ | $ | $ | $ | $ | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||
Vesting of common stock issued to employees |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for services |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Commitment fee shares |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued with notes payable - Insiders |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Series C Preferred Stock adjusted for prior conversions | - | - | - | - | - | - | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends |
- | - | - | - | - | - | - | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||||||||
Loss for the period ended September 30, 2022 |
- | - | - | - | - | - | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2022 |
- | $ | - | $ | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 |
- | $ | - | $ | $ | $ | $ | $ | $ | $ | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||
Vesting of common stock issued to employees |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Conversion of accounts payable to common stock |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Commitment fee shares |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Waiver fee shares |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for services |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued with note payable - Diamond 1 |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
Warrants issued with note payable - Diamond 2 |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
Gain on settlement of accrued payroll |
- | - | - | - | - | - | - | - | ( |
) | ( |
) | - | - | - | |||||||||||||||||||||||||||||||||||||||||
Series C Preferred Stock adjusted for prior conversions | - | - | - | - | - | - | ( |
) | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares previously subscribed for conversion of accounts payable |
- | - | - | - | - | - | - | - | ( |
) | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Warrants issued with notes payable - Insiders |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for Series X dividends |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends |
- | - | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||
Loss for the nine months ended September 30, 2022 |
- | - | - | - | - | - | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2022 |
- | $ | - | $ | $ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) |
MITESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 and 2021
(UNAUDITED)
Preferred Stock Series A |
Preferred Stock Series C |
Preferred Stock Series D |
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, June 30, 2021 |
- | $ | - | $ | - | $ | - | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||||||||||||||
Vesting of common stock issued to employees |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Stock options exercised for cash |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options by cashless conversion |
- | - | - | - | - | - | - | - | ( |
) | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
Cash paid for common stock subscribed |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Common stock subscribed for accounts payable and accrued liabilities |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Shares of common stock issued for conversion of Preferred Stock Series C |
- | - | ( |
) | ( |
) | - | - | - | - | ( |
) | - | - | - | |||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends |
- | - | - | - | - | - | - | - | - | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||||||
Loss for the period ended September 30, 2021 |
- | - | - | - | - | - | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2021 |
- | $ | - | $ | - | $ | - | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 |
$ | - | $ | - | - | $ | - | $ | $ | $ | $ | - | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||||||||||
Vesting of common stock issued to employees |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Vesting of stock options issued to employees |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Stock options exercised for cash |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Exercise of options by cashless conversion |
- | - | - | - | - | - | - | - | ( |
) | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
Shares issued for exercise of stock options |
- | - | - | - | - | - | - | - | ( |
) | - | |||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for services |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for conversion of notes payable and accrued interest |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Sale of common stock in private placement |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Sale of Preferred Stock Series C |
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
Warrants issued with Preferred Stock Series C |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Conversion of Preferred Stock Series A to common stock |
( |
) | ( |
) | - | - | - | - | - | - | ( |
) | - | - | - | |||||||||||||||||||||||||||||||||||||||||
Net shares issued in connection with settlement agreement |
- | - | - | - | - | - | ( |
) | ( |
) | ( |
) | ( |
) | - | - | ||||||||||||||||||||||||||||||||||||||||
Cash paid for common stock subscribed |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Common stock subscribed for accounts payable and accrued liabilities |
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Shares of common stock issued for conversion of Preferred Stock Series C |
- | - | ( |
) | ( |
) | - | - | - | - | ( |
) | - | - | - | |||||||||||||||||||||||||||||||||||||||||
Deemed dividend on conversion of Preferred Stock Series A to common stock |
- | - | - | - | - | - | - | - | - | - | - | ( |
) | - | ||||||||||||||||||||||||||||||||||||||||||
Deemed dividend on Preferred Stock Series C |
- | - | - | - | - | - | - | - | - | - | - | ( |
) | - | ||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends |
- | - | - | - | - | - | - | - | - | - | ( |
) | - | ( |
) | |||||||||||||||||||||||||||||||||||||||||
Loss for the period ended September 30, 2021 |
- | - | - | - | - | - | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2021 |
- | $ | - | $ | - | $ | - | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) |
See accompanying notes to these unaudited condensed consolidated financial statements.
MITESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Nine |
||||||||
Months Ended |
||||||||
September 30, |
||||||||
2022 |
2021 |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Depreciation |
||||||||
Amortization of right-to-use asset |
||||||||
Net gain on settlement of notes payable |
( |
) | ||||||
Financing cost - waiver fee shares |
||||||||
Gain on waiver fee shares |
( |
) | ||||||
Loss on commitment shares |
||||||||
Gain on conversion of accrued salary |
( |
) | ||||||
(Gain) loss on revaluation of derivative liabilities |
||||||||
Loss on settlement of accounts payable |
||||||||
Amortization of discount on notes payable |
||||||||
Share-based compensation |
||||||||
Changes in assets and liabilities: |
||||||||
Accounts receivables |
( |
) | ( |
) | ||||
Prepaid expenses |
( |
) | ||||||
Inventory |
( |
) | ( |
) | ||||
Accounts payable and accrued liabilities |
||||||||
Operating lease liability, net |
( |
) | ||||||
Other current liabilities |
( |
) | ||||||
Accrued interest |
||||||||
Net cash used in operating activities |
( |
) | ( |
) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
Cash paid for acquisition of fixed assets and construction in progress |
( |
) | ( |
) | ||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
Proceeds from private placement of common stock |
||||||||
Proceeds from sales of Series C Preferred Stock, net of fees |
||||||||
Proceeds from sale of common stock |
||||||||
Proceeds from notes payable - related parties, net of discounts |
||||||||
Proceeds from notes payable, net of discounts |
||||||||
Principal payments on notes payable related parties |
( |
) | ||||||
Principal payments on notes payable |
( |
) | ||||||
Net cash provided by financing activities |
||||||||
Net increase in cash and cash equivalents |
( |
) | ||||||
Cash and cash equivalents at beginning of period |
||||||||
Cash and cash equivalents at end of period |
$ | $ |
See accompanying notes to these unaudited condensed consolidated financial statements.
MITESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Nine |
||||||||
Months Ended |
||||||||
September 30, |
||||||||
2022 |
2021 |
|||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
||||||||
Interest paid |
$ | $ | ||||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
||||||||
Stock issued for conversion of debt and accrued interest |
$ | $ | ||||||
Settlement of derivative liabilities |
$ | $ | ( |
) | ||||
Discount on notes payable due to derivative liabilities |
$ | - | $ | - | ||||
Preferred stock dividend |
$ | $ | ||||||
Deemed dividends on Preferred Stock |
$ | $ | ||||||
Conversion of Series A Preferred stock to common stock |
$ | $ | ||||||
Conversion of Series C Preferred stock to common stock |
$ | $ | ||||||
Adjustment of Series C Preferred stock to common stock | $ | $ | - | |||||
Conversion of accounts payable to common stock |
$ | $ | ||||||
Conversion of accrued payroll to common stock |
$ | $ | ||||||
Conversion of accounts payable to common stock subscribed |
$ | $ | ||||||
Capital expenditures included in accounts payable |
$ | $ |
See accompanying notes to these unaudited condensed consolidated financial statements.
MITESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022 AND 2021
(Unaudited)
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, the Company restructured its operations and acquired Newco4pharmacy, LLC, a development stage company which sought to acquire compounding pharmacy businesses. As a part of the restructuring, the Company completed a “spin out” of its former business line. On April 24, 2020, the Company changed its name to Mitesco, Inc.
Since 2020, the Company’s operations have focused on establishing medical clinics utilizing nurse practitioners under The Good Clinic name and development and acquisition of telemedicine technology. In March of 2020, the Company formed a wholly owned subsidiary, The Good Clinic LLC, a Colorado limited liability company for its clinic business.
The Company opened its first The Good Clinic in Minneapolis, Minnesota in the first quarter of 2021 and have six operating at the time of this filing. The Company intends on opening up to 50 new clinics in the next three years, in addition to any existing sites it might acquire.
Note 2 - Financial Condition, Going Concern and Management Plans
On November 19, 2021, the Company closed a bridge financing round totaling $
Pursuant to the Certificate of Designations, Preferences and Rights of the Series D Convertible Preferred Stock of the Company, Inc., filed with the Secretary of State of the State of Delaware on October 18, 2021 (the “COD”), there are
On November 11, 2021, the Company filed a registration statement on form S-1 in connection with a planned up-list to a national exchange, and on August 3, 2022 the Company filed its fourth amendment to the S-1.
As of the date of this filing, the Company has closed on $
Between December 30, 2021 through the date of this filing, the Company has entered into a total $
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 $
The Agreement settled certain accounts payable amounts owed by the Company to the Creditor (the “Accounts Payable Amount”) as well as amounts that became 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 interest payments on amounts 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 $
As of September 30, 2022, the Company had cash and cash equivalents of $
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. The Company believes that the necessary capital will be raised and has entered discussions to do so with certain individuals and companies. However, as of the date of these condensed consolidated financial statements, no formal agreement exists.
The accompanying condensed 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.
PPP 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. On April 25, 2020, the Company entered an unsecured Promissory Note with Bank of America for a loan in the original principal amount of approximately $
COVID -19 Impact
The Company has had some impact on its operations because of the effects of the COVID-19 pandemic, primarily with accessibility to staffing, consultants and in the capital markets, and it is adjusting as needed within its available resources. The Company will continue to assess the effect of the pandemic on its operations. The extent to which the COVID-19 pandemic will continue to impact the Company’s business and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, the duration and effect of possible business disruptions and the short-term effects and ultimate effectiveness of the travel restrictions, quarantines, social distancing requirements and business closures in the United States and other countries to contain and treat the disease. While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, 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 resulting from the spread of COVID-19 could materially affect the Company’s business and the value of its securities.
Note 3 – Basis of Presentation and Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of such interim results.
The results for the condensed consolidated statement of operations are not necessarily indicative of results to be expected for the year ending December 31, 2022 or for any future interim period. The condensed consolidated balance sheet at September 30, 2022 has been derived from unaudited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2021 and notes thereto included in the Company’s annual report on Form 10-K filed on April 5, 2022.
Principles of Consolidation – The accompanying condensed consolidated financial statements include the accounts of Mitesco, Inc., and its wholly owned subsidiaries MitescoNA, LLC, The Good Clinic, LLC, and Acelerar Healthcare Holdings, LTD. In addition, we manage two entities under a variable interest entity arrangement and have control over the operating activities of these legal entities in which we do not maintain a controlling ownership interest but over which we will have direct influence over the operations and are the primary beneficiary. We expect that these entities will typically be 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, restriction 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.
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 maturities of three months or less to be cash equivalents. The Company had cash and cash equivalents of approximately $
Property, Plant, 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.
Years |
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Office equipment |
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Furniture & fixtures |
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Machinery & equipment |
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Leasehold improvements |
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Revenue Recognition – On January 1, 2018, the Company adopted the new revenue recognition accounting standard issued by the Financial Accounting Standards Board (“FASB”) and codified in the ASC as Topic 606 (“ASC 606”). The revenue recognition standard in ASC 606 outlines a single comprehensive model for recognizing revenue as performance obligations, defined in a contract with a customer as goods or services transferred to the customer in exchange for consideration, are satisfied. The standard also requires expanded disclosures regarding the Company’s revenue recognition policies and significant judgments employed in the determination of revenue.
The Company applied the modified retrospective approach to all contracts when adopting ASC 606. As a result, at the adoption of ASC 606 what was previously classified as the provision for bad debts in the statement of operations is now reflected as implicit price concessions (as defined in ASC 606). For changes in credit issues not assessed at the date of service, the Company will prospectively recognize those amounts in other operating expenses on the statement of operations. For periods prior to the adoption of ASC 606, the provision for bad debts has been presented consistent with the previous revenue recognition standards that required it to be presented separately as a component of net operating revenues.
Our revenues generally relate to net patient fees received from various payers and patients themselves under contracts in which our performance obligations are to provide services to the patients. Revenues are recorded during the period our obligations to provide services are satisfied. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges and generally provide for payments based upon predetermined rates for services or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals.
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.
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. This standard became effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. We adopted the provisions of this ASU on January 1, 2019. The adoption had no impact on our results of operations, cash flows, or financial condition.
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 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.
Common Stock Purchase Warrants-The Company accounts for common stock purchase warrants in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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 Black Sholes option-pricing model value method for valuing the impact of the expense associated with these warrants.
Stockholders’ Equity-Shares of common stock issued for other than cash have been assigned amounts equivalent to the fair value of the service or assets received in exchange.
Per Share Data-Basic 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.
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.
New Accounting Standards
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed, the Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact on its financial position or results of operations upon adoption.
Recent Accounting Standards Not Yet Adopted
In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)”. This ASU reduces the number of accounting models for convertible debt instruments and convertible Preferred Stock. As well as amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related EPS guidance. This standard is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Adoption is either a modified retrospective method or a fully retrospective method of transition. We are currently assessing the impact the new guidance will have on our condensed consolidated financial statements.
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 a have a material impact on the Company’s consolidated financial position, results of operations or cash flows.
Note 4 – Net Loss Per Share Applicable to Common Shareholders
Net Loss per Share Applicable to Common Stockholders
Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted loss per common share is computed similarly to basic loss per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock.
The following table sets forth the computation of loss per share for the three and nine months ended September 30, 2022, and 2021, respectively:
For the Three Months Ended |
For the Six Months Ended |
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September 30, |
September 30, |
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2022 |
2021 |
2022 |
2021 |
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Numerator: |
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Net loss applicable to common shareholders |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Denominator: |
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Weighted average common shares outstanding |
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Net loss per share: |
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Basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
The Company excluded all common equivalent shares outstanding for warrants, options, and convertible instruments to purchase common stock from the calculation of diluted net loss per share because all such securities are antidilutive for the periods presented. As of September 30, 2022, and 2021, the following shares were issuable and excluded from the calculation of diluted loss:
September 30, |
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2022 |
2021 |
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Common stock options |
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Common stock purchase warrants |
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Convertible Preferred Stock Series C |
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Convertible Preferred Stock Series D |
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Accrued interest on Preferred Stock |
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Potentially dilutive securities |
Note 5 – Related Party Transactions
For the nine months ended September 30, 2022:
Mitesco, Inc. (the “Company”) issued a 10% Promissory Note due, as extended, November 30, 2022, dated December 30, 2021, to the Michael C. Howe Living Trust (“Howe Note 1”) (the “Lender”). Michael C. Howe is the Chief Executive Officer of the Good Clinic LLC, one of our subsidiaries. The principal amount of the Howe Note 1 is $
The Company issued a 10% Promissory Note due, as extended, November 30, 2022, dated February 14, 2022 (the “Diamond Note 1”), to Lawrence Diamond (the “Lender”). Mr. Diamond is the Chief Executive Officer of the Company and a member of its Board of Directors. The principal amount of the Diamond Note 1 is $
The Company issued a 10% Promissory Note due, as amended, June 18, 2022 (the “Diamond Note 2”), dated March 18, 2022, to Lawrence Diamond (the “Lender”). Lawrence Diamond is the Chief Executive Officer of the Company. The principal amount of the Diamond Note 2 is $
On March 22, 2022, the Company issued
On April 27, 2022, the Company issued
On April 27, 2022, the Company issued a 10% Promissory Note due, as extended, November 30, 2022 (the “Diamond Note 3”) to Lawrence Diamond (the “Lender”). Lawrence Diamond is the Chief Executive Officer of the Company. The principal amount of the Diamond Note 3 is $
The Company issued a 10% Promissory Note due as described below (the “Diamond Note 4”), dated May 18, 2022, to Lawrence Diamond. The principal amount of the Diamond Note 4 is $
On May 23, 2022, the Company issued a 10% Promissory Note due as described below (the “Finnegan Note 1”) to Jessica Finnegan. Jessica Finnegan is VP of Human Resources of the Company. The principal amount of the Finnegan Note 1 is $
The Company issued five 10% Promissory Notes due as described below (collectively, the “May 26 Notes”), dated May 26, 2022, to Larry Diamond, Jenny Lindstrom, and other related parties (the “May 26 Lenders”), in respect of which we received proceeds of $
The May 26 Notes carry a
The Company issued a 10% Promissory Note due as described below (the “Howe Note 2”), dated June 9, 2022, to Michael C. Howe Living Trust and in respect of which we received proceeds of $255,000. Michael C. Howe is the Chief Executive Officer of the Good Clinic LLC, one of the Company’s subsidiaries.
The Howe Note 2 carries a
On June 13, 2022, the Company issued
On July 21, 2022, the Company issued a 10% Promissory Notes due to Michael C Howe Living Trust (the “Howe Note 3”) and in respect of which the Company received proceeds of $
On July 21, 2022, the Company issued a 10% Promissory Note due to Juan Carlos Iturregui (the “Iturregui Note”) and in respect of which the Company received proceeds of $