Item 1.01.
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Entry into a Material Definitive Agreement.
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Issuance of Promissory Note to Lawrence Diamond
Mitesco, Inc. (the “Company”) issued a 10% Promissory Note due June 30, 2022 or earlier as described below (the “Diamond Note”), dated April 27, 2022, 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) June 30, 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 $600,000. 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. In addition, the Lender will be issued (1) 96,471 five-year warrants (the “April 27 Diamond 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 and (2) 96,471 shares of Common Stock as commitment shares.
The April 27 Diamond Warrants filed hereto as Exhibit 4.2 hereto combines the April 27 Diamond Warrants with the 96,471 warrants that were issued pursuant to the Diamond Note dated March 18, 2022 and disclosed on the Company’s 8-K filed on March 24, 2022 and the 367,500 warrants that were issued pursuant to the Diamond Note dated February 14, 2022 and disclosed on the Company’s 8-K filed on February 17, 2022.
This summary is not a complete description of all of the terms of the Diamond Note and the April 27 Diamond Warrants and is qualified in its entirety by reference to the full text of the Diamond Note and the April 27 Diamond Warrants filed as Exhibits 4.1 and 4.2 respectively hereto, which is incorporated by reference into this Item 1.01.
Amendment of Promissory Note to Lawrence Diamond issued on March 18, 2022
On March 18, 2022, the Company issued a 10% Promissory Note to the Lender (the “March Note”), the details of which were disclosed in a Form 8-K filed with the SEC on March 24, 2022. The March Note stated that the Lender will be issued 200,000 5-year warrants, however, the March Note was amended to issue 96,471 warrants.