Note 2 – Financial position, going concern and management plans – InsuranceNewsNet

On November 19, 2021, the Company closed a bridge financing round totaling $3.1
million of a Series D preferred stock sold to investors in a private placement.
Each Series D Unit will have a purchase price of $1.00 per Unit, with each Unit
consisting of (a) one share of a newly formed Series D Convertible Preferred
Stock, par value $0.01 per share (the "Series D Preferred Stock"), (b) one
warrant (the "Series A Warrants") to purchase 2.1 shares of the Company's Common
Stock at a purchase price of $0.50 per whole share of Common Stock, and (c) one
warrant (the "Series B Warrants" and together with the Series A Warrants, the
"Warrants") to purchase 2.1 shares of Common Stock at a purchase price of $0.75
per whole share.



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 10,000,000 shares of the Company's preferred stock that have been
designated as the Series D Preferred Stock and each share of the Series D
Preferred Stock is convertible at the option of the holder thereof, or
automatically upon the request of the Company's underwriters that the Series D
Preferred Stock convert to shares of Common Stock or upon listing of the
Company's Common Stock on a national securities exchange. The number of shares
of Common Stock issuable upon the conversion of each share of Series D Preferred
Stock is calculated by dividing the Conversion Amount (defined in the COD as the
Stated Value, $1.05 per share, plus accrued and unpaid dividends) by the $0.25
conversion price (the "Conversion Price").



On November 11, 2021the Company has filed a registration statement on Form S/1 in
connection with a planned list to a national exchange.


As of the date of this filing the Company has closed on $3,100,000 of its Series
D Preferred stock. To achieve our growth strategy, it is anticipated the Company
will need to raise additional financing prior to up listing on Nasdaq. We will
not proceed with this offering in the event our Common Stock is not approved for
listing on the Nasdaq Capital Market though we will continue to seek financing
for our expansion and operating needs in the debt or equity markets.



The Company) issued a 10% Promissory Note due June 30, 2022, dated December 30,
2021, to the Michael C. Howe Living Trust (the "Lender"). Michael C. Howe is the
Chief Executive Officer of the Good Clinic LLC, one of our subsidiaries. The
principal amount of the Note is $1,000,000, carries a 10% interest rate per
annum, payable in monthly installments, and has a maturity date that is the
earlier of (i) six (6) months from the date of execution, or (ii) the date on
which the Company successfully lists its shares of common stock on Nasdaq or
NYSE. The purchase price of the Note payable to the Company for the Note was
$850,000 and was funded on December 30, 2021. The amount payable at maturity
will be $1,000,000 plus 10% of that amount plus any accrued and unpaid interest.
Following an event of default, as defined in the Note, the principal amount
shall bear interest for each day until paid, at a rate per annum equal to the
lesser of the maximum interest permitted by applicable law and 18%. The Note
contains a "most favored nations" clause that provides that, so long as the Note
is outstanding, if the Company issues any new security, which the Lender
believes contains a term that is more favorable than those in the Note, the
Company shall notify the Lender of such term, and such term, at the option of
the Lender, shall become a part of the Note.



                                       9

————————————————– ——————————

Contents


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 settles for certain accounts payable amounts owed by the Company
to the Creditor (the "Accounts Payable Amount") as well as upcoming amounts that
will become due between the date of the Agreement and April 1, 2022. The
Agreement also settles 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 is $500,000, the Additional Costs is $294,912.56 and the
conversion price is $0.25. As a result, 3,179,650 Restricted Shares were
authorized to be issued. The Company's Board of Directors approved the Agreement
on January 5, 2022.



As of March 31, 2022, the Company had cash and cash equivalents of $0.3 million,
current liabilities of $7.7 million, and has incurred a loss from operations.
The Company intends to a) develop and own primary care clinics operated by nurse
practitioners, b) develop and acquire telemedical technologies, and c) evaluate
other healthcare related opportunities. The Company's activities are subject to
significant risks and uncertainties, including failing to secure additional
funding to execute its business plan.



As a result of these factors, there is substantial doubt about the ability of
the Company to continue as a going concern for one year from the date the
financial statements are issued. The Company's continuance is dependent on
raising capital and generating revenues sufficient to sustain operations. 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 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 $460,000, and the Company received the full
amount of the loan proceeds on May 4, 2020. The current balance is $460,406 and
the Company is currently in discussions for a) a partial forgiveness and b) the
conversion of any remaining balance into a term note.



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.



                                       10

————————————————– ——————————

Contents

Note 3 – Summary of main accounting methods


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 $0.3 million as of March 31, 2022, and $1.2 million
as of December 31, 2021.



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. Property,
plant, and equipment are depreciated using the straight-line method based on the
lesser of the estimated useful lives of the assets or the lease term based upon
the following life expectancy:



                              Years
Office equipment              3 to 5
Furniture & fixtures          3 to 7
Machinery & equipment         3 to 10
Leasehold improvements     Term of lease




Revenue Recognition - 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) and therefore
included as a reduction to net operating revenues in 2018. 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.



                                       11

————————————————– ——————————

Contents


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 – data includes quoted prices on exchanges for identical instruments and
are the most observable.

Level 2 – data includes traded and/or quoted prices for similar assets and
observable data such as interest rates.

Level 3 – inputs include unobservable market inputs and reflect
management’s judgment about the assumptions that market participants would use to
price of the asset or the liability.

                                       12

————————————————– ——————————

Contents


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 us on January 1, 2024, 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 shareholders


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 presents the calculation of the loss per share for the three
months ended March 31, 2022and 2021, respectively:

                                               For the Three Months Ended
                                                        March 31,
                                                 2022              2021
Numerator:

Net loss applicable to common shareholders ($3,724,886) ($2,754,952)

Denominator:

Weighted average common shares outstanding     213,703,195       187,152,300

Net loss per share:
Basic and diluted                            $       (0.02 )   $       (0.01 )




                                       13

————————————————– ——————————

Contents

The Company has excluded all equivalent common shares outstanding for warrants,
options and convertible instruments to purchase common shares of the
calculation of the diluted net loss per share because all these securities are
antidilutive for the periods presented. From March 31, 2022and 2021, the
following shares could be issued and excluded from the calculation of diluted earnings
loss:

                                         For the Three Months Ended
                                                  March 31,
                                            2022              2021
Common stock options                       18,671,211       10,967,879
Common stock purchase warrants             31,405,000       12,600,000

Convertible Preferred Shares Series C 4,362,575 12,600,000
Convertible Preferred Shares Series D 13,020,000

                -
Accrued interest on Preferred Stock         1,230,858           72,657
Potentially dilutive securities            68,689,644       36,240,536




Note 5 – Transactions with related parties

For the three months ended March 31, 2022:


Mitesco, Inc. (the "Company") issued a 10% Promissory Note due August 14, 2022,
dated February 14, 2022, 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 Note is $175,000, carries a 10% interest rate per
annum, payable in monthly installments, and has a maturity date that is the
earlier of (i) six (6) months from the date of execution, or (ii) the date on
which the Company successfully lists its shares of common stock on Nasdaq or
NYSE. The purchase price of the Note payable to the Company for the Note was
$148,750 and was funded on February 14, 2022. The amount payable at maturity
will be $175,000 plus 10% of that amount plus accrued and unpaid interest.
Following an event of default, as defined in the Note, the principal amount
shall bear interest for each day until paid, at a rate per annum equal to the
lesser of the maximum interest permitted by applicable law and 18%. The Note
contains a "most favored nations" clause that provides that, so long as the Note
is outstanding, if the Company issues any new security, which the Lender
reasonably believes contains a term that is more favorable than those in the
Note, the Company shall notify the Lender of such term, and such term, at the
option of the Lender, shall become a part of the Note. In addition to the Note
and Lender will be issued 367,500 5-year warrants that may be exercised at $.50
per share and 367,500 5-year warrants that may be exercised at $.75 per share.
These warrants have all of the same terms as those previously issued in
conjunction with the Company's Series C Preferred shares and its Series D
Preferred shares.



Mitesco, Inc.has issued a promissory note payable to the order of Lawrence Diamond

(the “Lender” and collectively with the Borrower, the “Parties”) on the
Termination Date (as defined below), the Principal Amount of $235,294 (the
“Principal Amount”) plus an amount equal to ten percent of that principal
Rising. The purchase price for this promissory note (this “Note”) will be
$200,000 (the “Purchase Price”) and will be payable by the Lender on
the borrower on the date of issue.


As further consideration for the Purchase Price payable hereunder, promptly
following the Issue Date, the Borrower shall issue to the Lender a common stock
purchase warrants, entitling the Lender to purchase 200,000 shares of the
Borrower's common stock on substantially the same terms as the Series A warrant
issued in connection with the Borrower's Series D Convertible Preferred Stock.
(b) As further consideration for the Purchase Price payable hereunder, promptly
following the Issue Date, the Borrower shall also issue to the Lender 192,000
restricted shares.  The Company shall instruct its transfer agent to issue one
(1) certificate or book entry statement representing 192,000 shares promptly
following the execution hereof.



Note 6 – Accounts payable and accrued liabilities


Accounts payable and accrued liabilities consisted of the following at March 31,
2022 and 2021:



                                                  March 31,       December 31,
                                                    2022              2021
Trade accounts payable                             4,890,066          3,933,305
Accrued payroll and payroll taxes                     96,641             

23,554

Other                                                 17,928             

19,205

Total accounts payable and accrued liabilities 5,004,635 3,976,064



                                       14

————————————————– ——————————

Contents

Note 7 – Right of use of assets and rental obligations – Operating leases


The Company has operating leases for its clinic with a remaining lease term of
approximately 7.3 years. The Company's lease expense was entirely comprised of
operating leases. Lease expense for the three months ended March 31, 2022 and
2021 amounted to $230,973 and $10,642, respectively. The Company's ROU asset
amortization for the three months ended March 31, 2022 and 2021 was $267,463 and
$4,318, respectively. The difference between the lease expense and the
associated ROU asset amortization consists of interest at a rate of 12% per
annum.



From March 31, 2022the Company had total operating lease debts of
approximately $4.1 million and usage rights of approximately $3.6
million
which appeared in the condensed consolidated balance sheet.

Right of use assets – operating leases are summarized below:

                            March 31,       December 31,
                              2022              2021
Right to use assets, net   $ 3,619,403     $    3,886,866



Operating lease liabilities are summarized below:

                                March 31,       December 31,
                                  2022              2021
Lease liability                $ 4,146,960     $    4,134,802
Less: current portion             (276,639 )         (161,838 )

Lease liabilities, non-current $3,870,321 $3,972,964

The analysis of the maturities under these leases is as follows:

For the twelve months ended March 31, 2023 $763,580
For the twelve months ended March 31, 2024 874 687
For the twelve months ended March 31, 2025 827 773
For the twelve months ended March 31, 2026 846 523
For the twelve months ended March 31, 2027 865 517
After

                                      2,251,381
Total                                        $  6,429,461
Less: Present value discount                   (2,282,501 )
Lease liability                              $  4,146,960




Note 8 - Debt



Howe Note



Mitesco, Inc. (the "Company") issued a 10% Promissory Note due June 30, 2022,
dated December 30, 2021, to the Michael C. Howe Living Trust (the "Lender").
Michael C. Howe is the Chief Executive Officer of the Good Clinic LLC, one of
our subsidiaries. The principal amount of the Note is $1,000,000, carries a 10%
interest rate per annum, payable in monthly installments, and has a maturity
date that is the earlier of (i) six (6) months from the date of execution, or
(ii) the date on which the Company successfully lists its shares of common stock
on Nasdaq or NYSE. The purchase price of the Note payable to the Company for the
Note was $850,000 and was funded on December 30, 2021.  An original issue
discount  in the amount of $150,000 was recorded. The amount payable at maturity
will be $1,000,000 plus 10% of that amount plus any accrued and unpaid interest.
Following an event of default, as defined in the Note, the principal amount
shall bear interest for each day until paid, at a rate per annum equal to the
lesser of the maximum interest permitted by applicable law and 18%. The Note
contains a "most favored nations" clause that provides that, so long as the Note
is outstanding, if the Company issues any new security, which the Lender
reasonably believes contains a term that is more favorable than those in the
Note, the Company shall notify the Lender of such term, and such term, at the
option of the Lender, shall become a part of the Note.  At March 31, 2022, the
principal balance of this note was $1,000,000; $74,176 of the original issue
discount was amortized to interest expense during the three months ended March
31, 2022, and the remaining original issue discount at March 31, 2022 was
$75,824.



                                       15

————————————————– ——————————

Contents


Warrants. As further consideration for the Purchase Price payable hereunder,
promptly following the Issue Date, the Borrower shall issue to the Lender two
common stock purchase warrants, entitling the Lender to purchase (i) 2,100,000
shares of the Borrower's common stock on substantially the same terms as the
Series A warrant issued in connection with the Borrower's Series D Convertible
Preferred Stock, and (ii) 2,100,000 shares of the Borrower's common stock on
substantially the same terms as the Series B warrant issued in connection with
the Borrower's Series D Convertible Preferred Stock. one warrant (the "Series A
Warrants") to purchase 2.1 shares of the Company's common stock, par value $0.01
per share (the "Common Stock") at a purchase price of $0.50 per whole share of
Common Stock, and one warrant (the "Series B Warrants" and together with the
Series A Warrants, the "Warrants") to purchase 2.1 shares of Common Stock at a
purchase price of $0.75 per whole share. Given the current stock price is less
than the exercise price of the warrants, the warrants have no value.



Diamond Note 1



The Company issued a 10% Promissory Note due August 14, 2022, dated February 14,
2022, 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 Note is $175,000, carries a 10% interest rate per annum, payable
in monthly installments, and has a maturity date that is the earlier of (i) six
(6) months from the date of execution, or (ii) the date on which the Company
successfully lists its shares of common stock on Nasdaq or NYSE. The purchase
price of the Note payable to the Company for the Note was $148,750 and was
funded on February 14, 2022. The amount payable at maturity will be $175,000
plus 10% of that amount plus accrued and unpaid interest. Following an event of
default, as defined in the Note, the principal amount shall bear interest for
each day until paid, at a rate per annum equal to the lesser of the maximum
interest permitted by applicable law and 18%. The Note contains a "most favored
nations" clause that provides that, so long as the Note is outstanding, if the
Company issues any new security, which the Lender believes contains a term that
is more favorable than those in the Note, the Company shall notify the Lender of
such term, and such term, at the option of the Lender, shall become a part of
the Note. In addition to the Note and Lender will be issued 367,500 5-year
warrants that may be exercised at $.50 per share and 367,500 5-year warrants
that may be exercised at $.75 per share. These warrants have all of the same
terms as those previously issued in conjunction with the Company's Series C
Preferred shares and its Series D Preferred shares.  The warrants have an
aggregate commitment date fair value of $2,914.



Diamond Note 2



The Company issued a 10% Promissory Note due June 18, 2022 (the "Diamond Note"),
dated March 18, 2022, to Lawrence Diamond (the "Lender"), which was subsequently
amended. Lawrence Diamond is the Chief Executive Officer of the Company. The
principal amount of the Diamond Note is $235,294.00, carries a 10% interest rate
per annum, payable in monthly installments, and has a maturity date that is the
earlier of (i) April 4, 2022, (ii) the date on which the Company successfully
lists its shares of common stock on Nasdaq or NYSE, or (iii) the date of receipt
of the Company of the next round of debt or equity financing in an amount of at
least $1,000,000. The purchase price of the Diamond Note payable to the Company
for the Diamond Note was $200,000 and was funded on March 18, 2022. The amount
payable at maturity will be $235,294 plus 10% of that amount plus any accrued
and unpaid interest. Following an event of default, as defined in the Diamond
Note, the principal amount shall bear interest for each day until paid, at a
rate per annum equal to the lesser of the maximum interest permitted by
applicable law and 18%. The Diamond Note contains a "most favored nations"
clause that provides that, so long as the Note is outstanding, if the Company
issues any new security, which the Lender reasonably believes contains a term
that is more favorable than those in the Diamond Note, the Company shall notify
the Lender of such term, and such term, at the option of the Lender, shall
become a part of the Note. In addition, the Lender will be issued 200,000 5-year
warrants that may be exercised on substantially the same terms as the Series A
warrant issued in connection with the Company's Series D Convertible Preferred
Stock. The warrants have an aggregate commitment date fair value of $2,213.



AJB Capital Note



On March 18, 2022, the Company entered into a Securities Purchase Agreement (the
"Purchase Agreement") with AJB Capital Investments, LLC (the "Investor") with
respect to the sale and issuance to the Investor of: (i) an initial commitment
fee in the amount of $430,000 in the form of 1,720,000 shares (the "Commitment
Fee Shares") of the Company's common stock (the "Common Stock"), which
Commitment Fee Shares can be decreased to 720,000 shares ($180,000) if the
Company repays the Note on or prior its maturity (the "True-Up Provision"), (ii)
a promissory note in the aggregate principal amount of $750,000, and (iii)
Common Stock Purchase Warrants to purchase up to an aggregate of 750,000 shares
of the Common Stock (the "Warrants"). The Note and Warrants were issued on March
17, 2022 (the "Original Issue Date") and were held in escrow pending
effectiveness of the Purchase Agreement. Pursuant to the terms of the Purchase
Agreement, the initial Commitment Fee Shares were issued at a value of $430,000,
the Note was issued in a principal amount of $750,000 for a purchase price of
$675,000, resulting in an original issue discount of $75,000; and the Warrants
were issued, with an initial exercise price of $0.50 per share, subject to
adjustment as described herein. The aggregate cash subscription amount received
by the Company from the Investor for the issuance of the Commitment Fee Shares,
Note and Warrants was $616,250, due to a reduction in the $675,000 purchase
price as a result of broker, legal, and transaction fees.  The warrants have a
commitment date fair value of $24,952.



                                       16

————————————————– ——————————

  Table of Contents



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 $460,000, and the Company received the full
amount of the loan proceeds on May 4, 2020. The current balance is $460,406 and
the Company is currently in discussions for a) a partial forgiveness and b) the
conversion of any remaining balance into a term note.

These amounts are reflected in the table below:

Notes Payable Table 1:



                                      March 31,       December 31,
                                        2022              2021
Notes Payable                        $ 2,160,294     $    1,000,000
PPP Loan                             $   460,406     $      460,406
                                     $ 2,620,700     $    1,460,406
Less: Discount                          (671,973 )         (411,568 )

Notes payable – net of discount $1,948,727 $1,048,838

Current portion, net of discount $1,948,727 $1,048,838
Long-term portion, net of discount $ – $

            -




Note 9 – Equity (Deficit)

Common Stock


The Company has authorized 500,000,000 ordinary shares, par value $0.01;
219,756,894 shares were issued and outstanding on March 31, 2022.

Ordinary share transactions during the three months ended March 31, 2022


On January 12, 2022, the Company entered into a settlement agreement with an
ex-employee. Pursuant to the terms of this agreement, the Company agreed to pay
the amount of $19,032 for accrued salary, and the employee returned to the
Company for cancellation 400,000 shares of common stock previously issued as
compensation. These shares were valued at par value of $0.01 or a total value of
$4,000; the Company recorded a gain on cancellation of these shares in the
amount of $15,032.



The Company has entered into a debt-for-equity swap agreement with Gardner
Builders Holdings, LLC
(“Gardner”) on January 7, 2022 (the “debt for equity
Under the debt-for-equity arrangement, the Company issued
common stock restricted to Gardner in exchange for the company’s debt
Obligations, as defined below.


The Agreement settled for certain accounts payable amounts owed by the Company
to the Creditor (the "Accounts Payable Amount") as well as upcoming amounts that
will become due between the date of the Agreement and April 1, 2022. The
Agreement also settled accrued interest and penalties on the amounts due through
January 5, 2022, as well as future interest payments on amounts to be accrued 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 $0.25. As a result, 3,179,650 Restricted Shares were
authorized to be issued. The Company's Board of Directors approved the Agreement
on January 5, 2022.



On March 22, 2022 and March 31, 2022, the Company issued an aggregate 1,541,721
shares of common stock as waiver fees to holders of the Series C and Series D
Preferred Stock for their waivers of certain covenants as set forth and defined
in the Series C and Series D Certificates of Designations. The Company valued
these shares at their contractual price of $0.25 per share and recorded the
amount of $385,431 as waiver fees during the three months ended March 31, 2022.
The Company recorded an aggregate gain upon issuance of these shares in the
amount of $198,273 based on the market price of the Company's common stock on
the date of issuance.



                                       17

————————————————– ——————————

Contents


On March 31, 2022, the Company issued 1,720,000 Commitment Fee Shares to AJB
Capital Investors, LLC; see note 8.. A Monte Carlo model was used to value the
warrants and call features, and a probability weighted expected return model was
used to value the True-Up Provision. The contractual price of the common stock
$0.25 per share; valuation purposes, the common stock was valued at the market
price on the date of the transaction of $0.12695 per share. The derivative
liability was valued at $106,608 on the date of the transaction, and was
revalued at $26,771 on March 31, 2022. The discount on the notes due to the
Commitment Fee Shares and warrants was valued at $349,914. The Company recorded
the amount of $226,106 to additional paid-in capital pursuant to this
transaction.



On March 31, 2022the Company issued 382,353 common shares at a price
of $0.25 per share that were previously subscribed for the conversion of
accounts payable in the amount of $95,558.

Ordinary share transactions during the three months ended March 31, 2021


On January 4, 2021, the Company issued 4,123,750 shares of common stock at a
price of $0.012 per share pursuant to the conversion of $45,000 of principal and
$4,485 of accrued interest in Eagle Equities Note 4.



On January 6, 2021, the Company issued 3,505,964 shares of common stock at a
price of $0.01224 per share pursuant to the conversion of $39,000 of principal
and $3,913 of accrued interest in Eagle Equities Note 4.



On January 11, 2021, the Company issued 4,463,507 shares of common stock at a
price of $0.01224 per share pursuant to the conversion of $50,000 of principal
and $4,633 of accrued interest in Eagle Equities Note 5.



On January 14, 2021, the Company issued 4,319,378 shares of common stock at a
price of $0.01266 per share pursuant to the conversion of $50,000 of principal
and $4,683 of accrued interest in Eagle Equities Note 5.



On January 21, 2021, the Company issued 6,449,610 shares of common stock at a
price of $0.0154 per share pursuant to the conversion of $93,000 of principal
and $6,324 of accrued interest in Eagle Equities Note 6.



On January 28, 2021, the Company issued 7,285,062 shares of common stock at a
price of $0.01575 per share pursuant to the conversion of $107,200 of principal
and $7,540 of accrued interest in Eagle Equities Note 6.



On February 1, 2021, the Company issued 6,672,000 shares of common stock in a
private placement (the "2021 Private Placement") at a price of $0.25 per share
for cash proceeds of $1,668,000.



On February 5, 2021, the Company entered into a settlement agreement with the
holders of the Eagle Equities Note 7 whereby the Company issued 1,184,148 shares
of common stock at a price of $0.24984 per share in satisfaction of $200,200 of
principal and all accrued interest and prepayment penalties due under this note.



On February 5, 2021, the Company entered into a settlement agreement with the
holders of the Eagle Equities Note 8 whereby the Company issued 639,593 shares
of common stock at a price of $0.23851 per share in satisfaction of $114,400 of
principal and all accrued interest and prepayment penalties due under this note.



On February 5, 2021, the Company entered into a settlement agreement with the
holders of the Eagle Equities Note 9 whereby the Company issued 605,177 shares
of common stock at a price of $0.24984 per share in satisfaction of $114,400 of
principal and all accrued interest and prepayment penalties due under this note.



On February 5, 2021the Company has entered into a settlement agreement with the
holders of the Eagle Equities Note 10 by which the Company issued 1,095,131
ordinary shares at a price of $0.23748 per action in satisfaction of
$200,200 principal and all accrued interest and prepayment penalties due
under this note.

On February 22, 2021the Company issued 336,000 common shares for the
exercise of options at the price of $0.03 per share.


On March 11, 2021, the Company issued 600,000 shares of common stock to four
officers of The Good Clinic in exchange for 4,800 shares of Series A Preferred
Stock. The 4,800 shares of Series A Preferred Stock were cancelled.



On March 17, 2021the Company issued 300,000 common shares at a price
of $0.31 per share to a service provider.

On March 23, 2021the Company issued 461,358 common shares at a price
of $0.26 per share to subscribers to the 2021 Private Placement.

                                       18

————————————————– ——————————

  Table of Contents



Preferred Stock



We have authorized to issue 100,000,000 shares of Preferred Stock with such
rights designations and preferences as determined by our Board of Directors. We
have designated 500,000 shares of series A stock, 3,000,000 shares of Series C
Preferred, 10,000,000 shares of Series D Preferred and we have designated
400,000 shares as Series X Preferred Stock.



Series A Preferred Share Trading During the Three Months Ended March, 31st,
2022


None.



Series A Preferred Share Trading During the Three Months Ended March, 31st,
2021


During the three months ended March 31, 2021, the Company accrued dividends in
the amount of $1,000 on the Series A Preferred Stock. On March 11, 2021, the
Company issued 600,000 shares of common stock to the four officers of The Good
Clinic in exchange for the previously issued Series A Preferred Stock and
accrued dividends. The Series A preferred stock was canceled. The Preferred
Stock was valued at cost of $71,558, and the common stock was valued at the
market price of $0.463 per share or a total value of $277,800. This transaction
resulted in a deemed dividend to the Preferred A shareholders in the amount of
$206,242.



Series C Preferred Stock


Series C Preferred Share Trading During the Three Months Ended March, 31st,
2022


None.



Series C Preferred Share Trading During the Three Months Ended March, 31st,
2021


On March 25, 2021, the Company sold 3,000,000 shares of its Series C Preferred
Stock along with (i) five-year warrants to purchase 6,300,000 shares of the
Company's common stock at a price of $0.50 per share, and (ii) five-year
warrants to purchase 6,300,000 shares of the Company's common stock at a price
of $0.75 per share for proceeds of $3,000,000.



The Series C Preferred Shares have the following terms:


Ranking. The Series C Preferred Stock and the Series D Preferred, discussed
below, ranks senior to all other preferred stock of the Company except in
relation to the Series X Cumulative Redeemable Perpetual Preferred Stock, which
ranks Pari passu to the Series C Preferred Stock, with respect to the
preferences as to dividends, distributions and payments upon the liquidation,
dissolution and winding up of the Company.



Voting Rights. Holders of the Series C Preferred Stock have the right to vote on
any matter presented to holders of our Common Stock for their action or
consideration at any meeting of the stockholders (or by written consent of
stockholders in lieu of meeting), each holder of our Series C Preferred Stock
shall be entitled to cast the number of votes equal to the number of whole
shares of Common Stock into which the shares of Series C preferred Stock held by
such holder, as described below, are convertible as of the record date for
determining stockholders entitled to vote on (or consent to) such matter, voting
with the Common Stock as a single class.



Conversion. Each holder of our Series C Preferred Stock is entitled to convert
their shares of Series C Preferred Stock, in whole or in part, at the Conversion
Rate, which is determined by dividing the Conversion Amount (the Stated Value of
$1.05, plus any accrued but unpaid dividends) by the Conversion Price ($0.25 per
share). In addition, upon certain triggering events, the holders of our Series C
Preferred Stock have the right to convert their Series C Preferred Stock at the
lesser of the Conversion Price or 75% of the average VWAP for the five trading
days prior to the date of the notice of conversion. The Conversion Price is
subject to adjustment upon certain stock splits and recapitalization as well as
upon the sale of Common Stock or Common Stock Equivalents. Each share of the
Series C Preferred Stock is convertible at the option of the holder thereof, or
automatically or upon the closing of an underwritten offering of at least $10
million of the Company's securities or upon listing of the Company's Common
Stock on a national securities exchange.



Dividends. Each share of Series C Preferred Stock accrues dividends on a
quarterly basis in arrears, at the rate of 6% per annum of the Stated Value
($1.05 per share plus any accrued but unpaid dividends) and is to be paid within
15 days after the end of each of our fiscal quarters. Each holder of the Series
C Preferred Stock is entitled to receive dividends or distributions on each
share of the Series C Preferred Stock on an as converted into Common Stock basis
when and if dividends are declared on the Common Stock by our Board of
Directors.



                                       19

————————————————– ——————————

Contents


Liquidation Rights. The holders of our Series C Preferred stock are entitled to
receive in cash out of our assets, whether from capital or from earnings
available for distribution to our stockholders (the "Liquidation Funds"), before
any amount shall be paid to the holders of any of shares of capital stock that
rank junior to the Series C Preferred Stock, but Pari passu with any shares of
capital stock that have a parity ranking with the Series C Preferred stock
("Parity Stock") then outstanding, an amount per share of Series C Preferred
Stock equal to the greater of (A) the Conversion Amount on the date of such
payment or (B) the amount per share such holder of the Series C Preferred Stock
would receive if such holder converted their Series C Preferred Stock into
Common Stock immediately prior to the date of such payment, provided that if the
Liquidation Funds are insufficient to pay the full amount due to the holders of
the Series C Preferred Stock and holders of shares of Parity Stock, then each
holder Series C Preferred Stock and each holder of Parity Stock shall receive a
percentage of the Liquidation Funds equal to the full amount of Liquidation
Funds payable to such holder and such holder of Parity Stock as a liquidation
preference, in accordance with their respective certificate of designations (or
equivalent), as a percentage of the full amount of Liquidation Funds payable to
all holders of Series C Preferred Stock and all holders of shares of Parity
Stock. All such amounts shall be paid or set apart for payment before the
payment or setting apart for payment of any amount for, or the distribution of
any Liquidation Funds of the Corporation to the holders of shares of capital
stock that may rank junior to that of the Series C Preferred Stock Junior Stock.



Rights and Preferences. The rights, preferences, and privileges of holders of
our Series C Preferred Stock are subject to, and may be adversely affected by,
the rights of holders of shares of any series of Preferred Stock that we may
designate and issue in the future that may rank senior to the Series C Preferred
Stock.



Redemption Rights. Upon receipt of a conversion notice, we have the right (but
not the obligation) to redeem all or part of the Series C Preferred Stock (which
the applicable holder of the Series C Preferred Stock is seeking to convert) at
a price per share equal to the product of 125% of the (1) Stated Value plus (2)
the Additional Amount (the "Redemption Price"). If we decide to exercise the
redemption right, within one trading day, we shall deliver written notice to
such holder(s) of Series C Preferred Stock that the Series C Preferred Stock
will be redeemed (the "Redemption Notice") on the date that is three trading
days following the date of the Redemption Notice (such date, the "Redemption
Date"). On the Redemption Date, we shall redeem the shares of Series C Preferred
Stock specified in such request by paying in cash therefor a sum per share equal
to the Redemption Price. In no event shall a Redemption Notice be given if we
may not lawfully redeem our capital stock. On or before the Redemption Date, the
Redemption Price for such shares shall be paid by wire transfer of immediately
available funds to an account designated in writing by the applicable holder.



Price Adjustments Protection. The conversion price is subject to appropriate
adjustment in the event of share dividends, share splits, reorganizations or
similar events affecting our shares of Common Stock. Other than for certain
exempt issuances, in the event we issue or sell any securities, including
options or convertible securities, or amend outstanding securities, at an
effective price, with an exercise price or at a conversion price less than the
Conversion Price, then the Conversion Price shall be reduced to such lower
price.



Preemptive or Similar Rights Additionally, except for a public offering or
certain exempt issuances of our securities, holders of the Series C Preferred
Stock shall have the right to participate in any offering of our Common Stock or
Common Stock Equivalents (as defined in the COD) in a transaction exempt from
registration under the Securities Act in an amount equal to an aggregate of 30%
of the financing on the same terms, conditions and price provided to investors
in such an offering, such right shall expire on the 15 month anniversary of the
issuance date of the Series C Preferred Stock. Further, until the earlier of 18
months from the issuance date of the Series C Preferred Stock and the date that
there are less than 20% of the shares of Series C Preferred Stock outstanding,
the Investors have most favored nations protection in the event we issue or sell
Common Stock or Common Stock Equivalents that the Investors believe are more
favorable than the terms and conditions under the Private Placement.



Fully paid and not assessable. All of our issued and outstanding Series C shares
Preferred shares are fully paid and non-assessable.

Series X Preferred Stock



The Company has 24,227 shares of its 10% Series X Cumulative Redeemable
Perpetual Preferred Stock (the "Series X Preferred Stock") outstanding as of
March 31, 2022 and December 31, 2021. The Series X Preferred Stock has a par
value of $0.01 per share, no stated maturity, a liquidation preference of $25.00
per share, and will not be subject to any sinking fund or mandatory redemption
and will remain outstanding indefinitely unless the Company decides to redeem or
otherwise repurchase the Series X Preferred Stock; the Series X Preferred Stock
is not redeemable prior to November 4, 2020. The Series X Preferred Stock will
rank senior to all classes of the Company's common and preferred stock and
accrues dividends at the rate of 10% on $25.00 per share. The Company reserves
the right to pay the dividends in shares of the Company's common stock at a
price equal to the average closing price over the five days prior to the date of
the dividend declaration. Each one share of the Series X Preferred Stock is
entitled to 20,000 votes on all matters submitted to a vote of our shareholders.



                                       20

————————————————– ——————————

Contents

Series X Preferred Share Transactions During the Quarter Ended March, 31st,
2022

In the three months ended March 31, 2022the Company accrued dividends in
the amount of approximately $97,675 on the Series X Preferred Shares.

Transactions in Series X Preferred Shares during the three months ended March, 31st,
2021


During the three months ended March 31, 2021, the Company accrued dividends in
the amount of approximately $16,392 on the Series X Preferred Stock. On March
31, 2021, dividend payable on the Series X Preferred Stock was $16,392.



Stock Options



The following table summarizes the options outstanding at March 31, 2022 and the
related prices for the options 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          options         contractual       outstanding        options         exercisable
     prices         outstanding      life (years)         options        exercisable         options
  $  0.03- 0.39       18,671,211              8.85     $        0.20        6,636,628     $        0.14
                      18,671,211              8.85     $        0.20        6,636,628     $        0.14



Transactions involving stock options are summarized as follows:


                                                       Weighted- Average
                                      Shares         Exercise Price ($) (A)
Outstanding at December 31, 2021     18,746,211     $                   0.20
Granted                                       -     $                      -
Expired                                 (75,000 )                       0.03
Outstanding at March 31, 2022        18,671,211     $                   

0.20

Options vested and exercisable        6,636,628     $                   0.14



In the three months ended March 31, 2022 and 2021, the Company invoiced
number of $167,015 and $5,942respectively, for the acquisition of stock options.

To March 31, 2022the total cost of stock-based compensation related to the
awards not yet recognized was $2,635,359.


The Company did not value any stock options during the three months ended March
31, 2022.  The Company valued stock options during the three months ended March
31,  2021 using the Black-Scholes valuation model utilizing the following
variables:



                            March 31,          March 31,
                              2022               2021
Volatility                           - %     169.3% to 183.5 %
Dividends                  $         -     $               -
Risk-free interest rates             - %       0.82% to 1.69 %
Term (years)                         -         2.50 to 10.00




                                       21

————————————————– ——————————

  Table of Contents



Warrants



The following table summarizes the warrants outstanding on March 31, 2022, and
the related prices for the warrants to purchase shares of the Company's common
stock:



                                                     Weighted- Average
                                      Shares        Exercise Price ($)

Outstanding on December 31, 2021     29,820,000     $             0.625
Granted                               1,585,000     $             0.558
Exercised                                     -     $                 -
Outstanding on March 31, 2022        31,405,000     $             0.622




The Company valued warrants options during the three months ended March 31,
2022 and 2021 using the Black-Scholes valuation model utilizing the following
variables:



                              March 31,             March 31,
                                 2022                 2021
Volatility                   147.8 to 150.7 %     171.6% to 183.5 %
Dividends                  $              -     $               -

Risk-free interest rate 0.76% to 0.83% 1.15% to 1.63%
Duration (years)

                           0.25          5.00 to 6.50




Note 10 – Commitments and contingencies

Legal


There is no legal action pending or planned at this time.

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 $460,000, and the Company received the full
amount of the loan proceeds on May 4, 2020. The current balance is $460,406 and
the Company is currently in discussions for a) a partial forgiveness and b) the
conversion of any remaining balance into a term note.



Note 11 – Subsequent events

On April 1, 2022the Company issued 168,221 ordinary shares to larry
Diamonds
it is the managing director, in compensation for the renunciation of
certain commitments as stated and defined in diamond ticket 1.


On April 18, 2022, the Company entered into a Securities Purchase Agreement (the
"Purchase Agreement") with GS Capital Partners (the "Investor") with respect to
the sale and issuance to the Investor of: (i) an initial commitment fee in the
amount of $159,259 in the form of 637,036 shares (the "Commitment Fee Shares")
of the Company's common stock (the "Common Stock"), which Commitment Fee Shares
can be decreased to 266,280 shares ($66,570) if the Company repays the Note on
or prior to their maturity, (ii) promissory note in the principal amount of
$277,777, and (iii) Common Stock Purchase Warrants to purchase up to 277,777
shares of the Common Stock (the "Warrants"). The Note and Warrants were issued
on April 18, 2022 (the "Original Issue Date") and were held in escrow pending
effectiveness of the Purchase Agreement.



Pursuant to the terms of the Purchase Agreement, the initial Commitment Fee
Shares were issued at a value of $159,259, the Note was issued in the principal
amount of $277,777 for a purchase price of $250,000, resulting in the original
issue discount of $27,777; and the Warrants were issued, with an initial
exercise price of $0.50 per share, subject to adjustment.



                                       22

————————————————– ——————————

Contents


On April 6, 2022, the Company entered into separate Securities Purchase
Agreement with each of Anson East Master Fund LP and Anson Investments Master
Fund LP with respect to the sale and issuance to AEMF and AIMF of: (i) an
aggregate initial commitment fee in the amount of $430,000 in the form of
1,720,000 shares (the "Commitment Fee Shares") of the Company's common stock
(the "Common Stock"), which Commitment Fee Shares can be decreased to 722,400
shares ($180,000) if the Company repays the Notes on or prior their maturity,
(ii) promissory notes in the aggregate principal amount of $750,000 (the
"Notes"), and (iii) Common Stock Purchase Warrants to purchase up to an
aggregate of 750,000 shares of the Common Stock (the "Warrants"). The Notes and
Warrants were issued on April 6, 2022 (the "Original Issue Date") and were held
in escrow pending effectiveness of the Purchase Agreements.



On April 27, 2022the Company issued 720,000 shares for Cavalry fund 1
LP as compensation for the waiver of certain covenants as set forth in the
Series C Designation Certificate.


On April 27, 2022, the Company issued 96,471 shares of common stock to Larry
Diamonds, it's Chief Executive Officer, as compensation for the waiver of
certain covenants as set forth and defined in Diamond Note 2. The Company also
issued five year warrants to purchase 92,942 shares of common stock at a price
of $0.50 to Mr. Diamond pursuant to a promissory note.



On April 27, 2022, the Company issued a 10% Promissory Note due June 30, 2022
(the "Diamond Note") to Lawrence Diamond (the "Lender"). Lawrence Diamond is the
Chief Executive Officer of the Company. The principal amount of the Diamond Note
is $235,294.00, carries a 10% interest rate per annum, payable in monthly
installments, and has a maturity date that is the earlier of (i) April 4, 2022,
(ii) the date on which the Company successfully lists its shares of common stock
on Nasdaq or NYSE, or (iii) the date of receipt of the Company of the next round
of debt or equity financing in an amount of at least $1,000,000. The purchase
price of the Diamond Note payable to the Company for the Diamond Note was
$200,000 and was funded on April 27, 2022. The amount payable at maturity will
be $235,294 plus 10% of that amount plus any accrued and unpaid interest.
Following an event of default, as defined in the Diamond Note, the principal
amount shall bear interest for each day until paid, at a rate per annum equal to
the lesser of the maximum interest permitted by applicable law and 18%. The
Diamond Note contains a "most favored nations" clause that provides that, so
long as the Note is outstanding, if the Company issues any new security, which
the Lender reasonably believes contains a term that is more favorable than those
in the Diamond Note, the Company shall notify the Lender of such term, and such
term, at the option of the Lender, shall become a part of the Note.



On May 10, 2022, the Company entered into a Securities Purchase Agreement (the
"Purchase Agreement") with Kishon Investments, LLC (the "Investor") with respect
to the sale and issuance to the Investor of: (i) an initial commitment fee in
the amount of $159,259 in the form of 637,036 shares (the "Commitment Fee
Shares") of the Company's common stock (the "Common Stock"), (ii) promissory
note in the principal amount of $277,777 due on November 10, 2022, and (iii)
Common Stock Purchase Warrants to purchase up to 277,777 shares of the Common
Stock (the "Warrants"). The Note and Warrants were issued on May 10, 2022 (the
"Original Issue Date") and were held in escrow pending effectiveness of the
Purchase Agreement.



Pursuant to the terms of the Purchase Agreement, the initial Commitment Fee
Shares were issued at a value of $159,259, the Note was issued in the principal
amount of $277,777 for a purchase price of $250,000, resulting in the original
issue discount of $27,777; and the Warrants were issued, with an initial
exercise price of $0.50 per share, subject to adjustment.





                                       23

————————————————– ——————————

Contents

ITEM 2. MANAGEMENT REPORT AND ANALYSIS OF THE FINANCIAL SITUATION AND RESULTS
OPERATIONS

The following discussion and analysis should be read in conjunction with the
financial statements and accompanying notes appearing elsewhere in this document.


We are working to open primary care clinics around the US that are in
residential centers and leverage the expertise, training, and license of Nurse
Practitioners. We are focusing on wellness as a core of the practice. Mitesco's
mission is to increase convenience and access to care, improve the quality of
care, and reduce its cost.



We opened our first primary care clinic "The Good Clinic" in Northeast
Minneapolis, Minnesota in February 2021, and have added five additional
operating clinics as of the date of this filing for a total of six clinics open
and operating at March 31, 2022. We announced leases for two new clinics in the
greater Denver, Colorado area. These new locations are expected to open in the
second quarter of 2022. We plan to open clinics in residential concentrations of
population to enhance the convenience, especially timely due to the changes in
community travel patterns resulting from the pandemic. Our clinicians use both
telehealth (virtual) and in-person visits to treat and coach the clients along
their journey to better health and quality of life. Our clinics are led by Nurse
Practitioners that use their license, extensive training, expertise, and empathy
to help people remain stable or improve their health. We emphasize wellness,
beginning with a clients' co-developed plan that identifies from where a person
is starting and constructs a plan for how they can achieve their goals. The
practice uses an integrated health approach that includes an assessment of both
the individual's behavioral and physical health and combines this with their
activation level and their goals. The clinic offers wellness coaching,
behavioral health care, episodic care, dermatologic services, and supplements.
We seek to care for the whole person's needs.



Like the first clinic, we seek to locate clinics convenient to residential
centers. In pursuit of this approach, we intend to continue to expand our
relationship with Lennar Corporation and other large-scale developers. While we
have no formal relationship with these developers other than as a tenant, we
believe such relationships give us an advantage in recruiting and retaining
clients in close proximity to our locations.



Results of Operations



The following period-to-period comparisons of our financial results are not
necessarily indicative of results for the current period of any future periods.
Further, as a result of any acquisitions of other businesses, we may experience
large expenditures specific to the transactions that are not incident to our
operations.


Comparison of the three months ended March 31, 2022 and 2021

Revenue



The Company recognized revenue of approximately $120,000 for the three months
ended March 31, 2022, compared to $3,000 for the three months ended March 31,
2021. The increase in revenue is the result of the service and product revenue
from The Good Clinic's six locations.



Cost of Sales



The Company incurred approximately $0.6 million of cost of goods sold for the
three months ended March 31, 2022, compared to $1,700 for the three months ended
March 31, 2021. During the first quarter of 2021 there were only a few direct
clinical services performed due to the lack of in force payer contracts and the
newness of the clinic. As such, the allocation of the expenses related to
clinical staff were attributed to operating expenses and not cost of sales. The
increase in cost of goods sold is the result of the opening and operating of The
Good Clinic's six locations and having in force payer relationships.



Gross Profit/(Loss)



Our gross loss was approximately $0.5 million for the three months ended March
31, 2022, compared to gross profit of $1,300 for the three months ended March
31, 2021.



                                       24

————————————————– ——————————

  Table of Contents



Operating Expenses



Our total operating expenses for the three months ended March 31, 2022, were
approximately $2.6 million. For the comparable period in 2021, the operating
expenses were approximately $1.0 million.



Operating expenses for the three months ended March 31, 2022, were comprised
primarily of $0.8 million of payroll and payroll taxes; $0.3 million in legal
and professional fees; $0.1 million in marketing; $0.9 million in other
operation costs and $0.1 million in consulting fees.



Operating expenses for the three months ended March 31, 2021 were understood
mainly from $0.1 million in payroll and social charges, $0.4 million in legal
and professional fees and $0.1 million in consultation fees.

Other Income and Expenses


Interest expense was approximately $0.8 million for the three months ended March
July 31, 2022
against approximately $1.0 million for the three months ended
March 31, 2021.

In the three months ended March 31, 2022we recorded a gain on opportunity costs
shares of approximately $0.2 million.

In the three months ended March 31, 2022we recorded a settlement gain
of accumulated salary of approximately $15,000.


During the three months ended March 31, 2022, we recorded a loss on settlement
of accounts payable of $0.3 million as compared to a gain on settlement of
accounts payable of approximately $6,000 for the three months ended March 31,
2021.


In the three months ended March 31, 2022we recorded a gain on
settlement of notes payable of approximately $0.2 millioncompared to a gain of
approximately $1,800 for the three months ended March 31, 2021.

In the three months ended March 31, 2022we recorded a gain on
revaluation of derivative liabilities of approximately $79,800compared to a
loss of about $0.5 million for the three months ended March 31, 2021.


During the three months ended March 31, 2022, the Company declared Preferred
Stock dividends of approximately $80,000 compared to approximately $20,000 for
the three months ended March 31, 2021.



In the three months ended March 31, 2021the Company has registered preferred shares
Shares deemed to have dividends of approximately $0.3 million.


For the three months ended March 31, 2022, we had a net loss available to common
shareholders of approximately $3.7 million, or a net loss per share, basic and
diluted of ($0.02) compared to a net loss available to common shareholders of
approximately $2.8 million, or a net loss per share, basic and diluted of
($0.01), for the three months ended March 31, 2021.



Cash 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 March 31, 2022, we had cash of
approximately $0.3 million compared to cash of approximately $1.2 million as of
December 31, 2021.



Net cash used in operating activities was approximately $1.5 million for the
three months ended March 31, 2022. This is the result of our business
development efforts pertaining to the start-up of the first three clinics. Cash
used in operations for the three months ended March 31, 2021, was approximately
$1.1 million.



Net cash used in investing activities was approximately $0.4 million for the
three months ended March 31, 2022. The amounts relate to the purchase of fixed
assets and leasehold improvement on our clinics. Net cash used for investing
activities for the three months ended March 31, 2021 was $0.5 million.



Net cash provided by financing activities for the three months ended March 31,
2022, was approximately $1.0 million, consisting of proceeds from convertible
notes payable. Net cash provided by financing activities for the three months
ended March 31, 2021, was $4.3 million consisting of proceeds from a private
placement offering of common stock of $1.7 million and $2.8 million from the
sale of Series C Preferred Stock and warrants. Partially offsetting the proceeds
was approximately $0.2 million of payment on notes payable.



                                       25

————————————————– ——————————

Contents

Comments are closed.