UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal quarter ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission File Number: 001-42103

KINDLY MD, INC.

(Exact name of Registrant as specified in its charter)

Utah

84-3829824

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification Number)

5097 South 900 East Suite 100, Salt Lake City, UT 84117

(Address of Principal Executive Office and Zip Code)

(385) 388-8220

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	KDLY	The Nasdaq Stock Market LLC

Tradeable Warrants to purchase shares of Common Stock, par value $0.001 per share	KDLYW	The Nasdaq Stock Market LLC

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 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. Yes ☒ No ☐

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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	☐
Non-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 Act.) Yes ☐ No ☒

The number of shares of the registrant’s common stock outstanding as of August 9, 2024, was 5,947,169.

KINDLY, MD, INC.

2024 QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

Part I – Financial Information

Item 1 Financial Statements	3
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3 Quantitative and Qualitative Disclosures about Market Risk	18
Item 4 Controls and Procedures	18

Part II – Other Information

Item 1 Legal Proceedings	19
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3 Defaults Upon Senior Securities	19
Item 4 Mine Safety Disclosures	19
Item 5 Other Information	19
Item 6 Exhibits	20

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

KINDLY MD, INC.

UNAUDITED CONDENSED FINANCIAL STATEMENTS

	Page
Condensed Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023	4
Condensed Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	5
Condensed Statements of Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	6
Condensed Statements of Cash Flows for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	7
Notes to Condensed Financial Statements (Unaudited)	8

KINDLY MD, INC.

CONDENSED BALANCE SHEETS

	June 30, 2024			December 31, 2023
	(Unaudited)
ASSETS

Current Assets
Cash and cash equivalents	$	4,740,006		$	525,500
Accounts receivable		5,182			28,001
Inventories, net		3,825			63,202
Prepaid expenses and other current assets		305,655			225
Total Current Assets		5,054,668			616,928

Property and equipment, net		206,816			235,292
Operating lease right-of-use assets		184,177			235,706
Security deposits		11,276			11,276
TOTAL ASSETS	$	5,456,937		$	1,099,202

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current Liabilities
Accounts payable and accrued expenses	$	628,749		$	329,810
Customer deposits		4,150			3,425
Current portion of operating lease liabilities		79,973			94,696
Current portion of finance lease liabilities		2,010			-
Current portion of notes payable, net		228,061			148,517
Derivative liability		-			238,000
Total Current Liabilities		942,943			814,448

Operating lease liabilities, net of current portion		124,651			164,295
Finance lease liabilities, net of current portion		8,635
Notes payable, net of current portion		-			228,871
TOTAL LIABILITIES		1,076,229			1,207,614

Stockholders’ Equity (Deficit)
Preferred Stock, $0.001 par value, 10,000,000 shares authorized; none issued and outstanding as of June 30, 2024 and December 31, 2023		-			-
Common stock, $0.001 par value, 100,000,000 shares authorized; 5,939,516 and 4,617,798 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		5,940			4,618
Additional paid-in capital		10,134,801			4,045,024
Accumulated deficit		(5,760,033	)		(4,158,054	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		4,380,708			(108,412	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	5,456,937		$	1,099,202

The accompanying notes are an integral part of these condensed financial statements.

KINDLY MD, INC.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

	2024			2023			2024			2023
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2024			2023			2024			2023
Revenues	$	639,057		$	979,538		$	1,468,086		$	2,139,883

Operating Expenses
Cost of revenues		61,947			59,508			69,691			108,132
Salaries and wages		1,126,893			1,109,559			1,834,859			2,042,860
General and administrative		461,677			385,536			787,222			743,719
Depreciation		25,733			26,224			50,634			51,666
Total Operating Expenses		1,676,250			1,580,827			2,742,406			2,946,377

LOSS FROM OPERATIONS		(1,037,193	)		(601,289	)		(1,274,320	)		(806,494	)

Other Income (Expenses)
Other income		13,828			13,075			25,868			37,301
Interest expense		(318,450	)		(8,194	)		(375,689	)		(8,194	)
Loss on extinguishment of debt		(38,889	)		-			(38,889	)		-
Gain on change in fair value of derivative liability		61,051			-			61,051			-
Total Other Income (Expenses)		(282,460	)		4,881			(327,659	)		29,107

NET LOSS BEFORE INCOME TAXES		(1,319,653	)		(596,408	)		(1,601,979	)		(777,387	)
INCOME TAX EXPENSE		-			-			-			-
NET LOSS	$	(1,319,653	)	$	(596,408	)	$	(1,601,979	)	$	(777,387	)

LOSS PER COMMON SHARE – BASIC AND DILUTED	$	(0.26	)	$	(0.13	)	$	(0.33	)	$	(0.17	)

WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING – BASIC AND DILUTED		5,009,956			4,455,912			4,813,877			4,445,714

The accompanying notes are an integral part of these condensed financial statements.

KINDLY MD, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)

	Shares		Amount		Capital		Deficit			(Deficit)
	Common Stock				Additional Paid-In		Accumulated			Total Stockholders’ Equity
	Shares		Amount		Capital		Deficit			(Deficit)
Balance at December 31, 2023		4,617,798	$	4,618	$	4,045,024	$	(4,158,054	)	$	(108,412	)

Stock-based compensation		-		-		7,616		-			7,616
Net loss		-		-		-		(282,326	)		(282,326	)
Balance at March 31, 2024		4,617,798		4,618		4,052,640		(4,440,380	)		(383,122	)

Issuance of common shares and warrants in connection with a public offering		1,240,910		1,241		5,859,409		-			5,860,650
Issuance of common shares upon settlement of notes payable in connection with a public offering		80,808		81		214,868		-			214,949
Stock-based compensation		-		-		7,884		-			7,884
Net loss		-		-		-		(1,319,653	)		(1,319,653	)
Balance at June 30, 2024		5,939,516		5,940		10,134,801		(5,760,033	)		4,380,708

	Common Stock				Additional Paid-In		Accumulated			Total Stockholders’ Equity
	Shares		Amount		Capital		(Deficit)			(Deficit)
Balance at December 31, 2022		4,434,596	$	4,434	$	2,917,173	$	(2,540,593	)	$	381,014
				-		-		-			-
Issuance of common stock for compensation		842		1		3,976		-			3,977
Issuance of common stock for services		20,474		21		97,252		-			97,273
Net loss		-		-		-		(180,979	)		(180,979	)
Balance at March 31, 2023		4,455,912		4,456		3,018,401		(2,721,572	)		301,285
Balance		4,455,912		4,456		3,018,401		(2,721,572	)		301,285

Issuance of common stock for compensation		27,424		27		126,673		-			126,700
Issuance of common stock for services		23,824		25		110,046		-			110,071
Net loss		-		-		-		(596,408	)		(596,408	)
Balance at June 30, 2023		4,507,160		4,508		3,255,120		(3,317,980	)		(58,352	)
Balance		4,507,160		4,508		3,255,120		(3,317,980	)		(58,352	)

The accompanying notes are an integral part of these condensed financial statements.

KINDLY MD, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	2024			2023
	For the Six Months Ended June 30,
	2024			2023

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,601,979	)	$	(777,387	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		15,500			338,021
Depreciation expense		50,634			51,666
Loss on extinguishment of debt		38,889			-
Gain on change in fair value of derivative liability		(61,051	)		-
Amortization of debt discounts		357,439			876
Amortization of right-of-use assets		51,529			61,589
Changes in operating assets and liabilities:
Accounts receivable		22,819			4,161
Inventories		59,377			(9,822	)
Prepaid expenses and other current assets		(305,430	)		11,039
Security deposits		-			731
Accounts payable and accrued expenses		298,939			106,668
Customer deposits		725			300
Operating lease liabilities		(54,367	)		(62,806	)
Net cash used in operating activities		(1,126,976	)		(274,964	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(11,182	)		(14,420	)
Net cash used in investing activities		(11,182	)		(14,420	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of notes payable		45,000			-
Net proceeds from issuance of related party note payable		-			233,373
Net proceeds from issuance of common shares and warrants in connection with a public offering		5,860,650			-
Repayments of related party note payable		-			(20,282	)
Repayments of notes payable		(552,655	)		-
Repayments of finance lease liabilities		(331	)		-
Net cash provided by financing activities		5,352,664			213,091

NET CHANGE IN CASH AND CASH EQUIVALENTS		4,214,506			(76,293	)

CASH AND CASH EQUIVALENTS
Beginning of the period		525,500			186,918
End of the period	$	4,740,006		$	110,625

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$	19,089		$	-
Cash paid for income taxes	$	-		$	-

NON-CASH INVESTING AND FINANCING ACTIVITIES
Debt discounts on notes payable	$	10,556		$	-
Debt discount on related party note payable	$	-		$	16,627
Fair value of derivative liability recognized upon issuance of notes payable	$	38,000		$	-
Extinguishment of derivative liability upon settlement of notes payable	$	214,949		$	-
Finance purchases of property and equipment	$	10,976		$	-

The accompanying notes are an integral part of these condensed financial statements.

KINDLY MD, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

JUNE 30, 2024 (UNAUDITED)

NOTE 1— BASIS OF PRESENTATION AND OTHER INFORMATION

The accompanying unaudited condensed financial statements of Kindly MD, Inc. (the “Company,” “KindlyMD,” “we,” “us,” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all the information and footnotes required by GAAP for complete financial statements. The December 31, 2023 balance sheet data was derived from audited financial statements but do not include all disclosures required by GAAP. The interim unaudited condensed financial statements should be read in conjunction with those financial statements included in the Form S-1/A, as filed with the Securities and Exchange Commission on May 9, 2024. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, consisting solely of normal recurring adjustments, have been made. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Reclassifications

Certain reclassifications within operating expenses have been made to the prior period’s financial statements to conform to the current period financial statement presentation. There is no impact in total to the results of operations and cash flows in all periods presented.

Recently Issued Accounting Pronouncements

The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the FASB. The Company has evaluated all recent accounting pronouncements and determined that the adoption of pronouncements applicable to the Company has not had or is not expected to have a material impact on the Company’s financial statements.

NOTE 2—LIQUIDITY AND GOING CONCERN ASSESSMENT

Management assesses liquidity and going concern uncertainty in the Company’s condensed financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the financial statements are issued, which is referred to as the “look-forward period,” as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management considered various scenarios, forecasts, projections, estimates and made certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on this assessment, management made certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period.

As of June 30, 2024, we had cash and cash equivalents of $4,740,006 and total working capital of $4,111,725. For the six months ended June 30, 2024, the Company incurred an operating loss of $1,274,320, and used cash flows in operating activities of $1,126,976.

As further disclosed in Note 8, on June 3, 2024, the Company completed an initial public offering (“IPO”) through the issuance of common stock and warrants for total net proceeds of $5.86 million. The IPO provided the Company with adequate liquidity and cash reserves to meet its obligations for at least the 12-month period following the date of this report, and to assist us in implementing our strategic operational business plans to create sustained cash flow generation thereafter.

Management has prepared estimates of operations and believes that sufficient funds will be generated from operations to fund its operations, and to service its debt obligations for one year from the date of the filing of these financial statements. The accompanying condensed financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. Management believes that based on relevant conditions and events that are known and reasonably knowable that its forecasts, for one year from the date of the filing of these financial statements, indicate improved operations and the Company’s ability to continue operations as a going concern.

NOTE 3—DISAGGREGATION OF REVENUES

Our revenue is disaggregated based on revenue type, including (i) patient care services related to medical evaluation and treatment, and (ii) product retail sales.

The Company’s revenues for the three and six months ended June 30, 2024 and 2023 are disaggregated as follows:

SCHEDULE OF DISAGGREGATION OF REVENUES

	2024		2023		2024		2023
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2024		2023		2024		2023
Patient care services	$	608,925	$	891,350	$	1,394,768	$	1,959,305
Product retail sales		30,132		88,188		73,318		180,578
Total revenues	$	639,057	$	979,538	$	1,468,086	$	2,139,883

The Company earned $91,553 in reimbursements from insurance payers during the three months ending June 30, 2024, which is a 163.7% increase over the $34,722 earned for the three months ending March 31, 2024. The Company earned $126,325 in reimbursements from insurance payers during the six months ended June 30, 2024, and $0 during the three and six months ended June 30, 2023.

NOTE 4—INVENTORY

Inventory consisted of the following at June 30, 2024, and December 31, 2023:

SCHEDULE OF INVENTORY

	June 30, 2024		December 31, 2023
Finished goods	$	2,940	$	68,399
Raw materials		885		56,803
Total inventories		3,825		125,202
Less reserve for obsolescence		-		(62,000	)
Total inventories, net	$	3,825	$	63,202

NOTE 5—PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at June 30, 2024, and December 31, 2023:

SCHEDULE OF PROPERTY AND EQUIPMENT

	June 30, 2024			December 31, 2023
Leasehold improvements	$	132,027		$	132,027
Furniture		89,579			89,579
Computer software and equipment		178,466			167,284
Other equipment		21,389			10,413
Total property and equipment		421,461			399,303
Less accumulated depreciation		(214,645	)		(164,011	)
Total property and equipment, net	$	206,816		$	235,292

Depreciation expense for the three and six months ended June 30, 2024, was $25,733 and $50,634, respectively.

Depreciation expense for the three and six months ended June 30, 2023,was $26,224 and $51,666, respectively.

NOTE 6—LEASES

Operating Leases

The following was included in our balance sheets at June 30, 2024, and December 31, 2023:

	June 30, 2024			December 31, 2023
Operating lease right-of-use assets	$	184,177		$	235,706

Operating lease liabilities, current portion		79,973			94,696
Operating lease liabilities, long-term		124,651			164,295
Total operating lease liabilities	$	204,624		$	258,991

Weighted-average remaining lease term (years)		3.24			3.50
Weighted average discount rate		15.0	%		15.0	%

The components of net lease expense consisted of the following for the three and six months ended June 30, 2024 and 2023:

SCHEDULE OF NET LEASE EXPENSE

	2024		2023		2024		2023
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2024		2023		2024		2023
Operating lease expense	$	34,643	$	43,168	$	69,285	$	78,994
Variable lease expense		405		2,641		1,052		5,282
Total lease expense		35,048		45,809		70,337		84,276
Sublease (income)		-		-		-		(152	)
Total net lease expense	$	35,048	$	45,809	$	70,337	$	84,124

Cash payments included in the measurement of our operating lease liabilities were $36,164 and $72,125 for the three and six months ended June 30, 2024, respectively. Cash payments included in the measurement of our operating lease liabilities were $34,646 and $67,023 for the three and six months ended June 30, 2023, respectively.

Maturities of operating lease liabilities at June 30, 2024, were as follows:

Year Ending December 31,	Amount
2024 (remaining)	$	54,382
2025		96,655
2026		87,381
2027		7,294
Total		245,712
Less: imputed interest		(41,088	)
Total operating lease liabilities	$	204,624

Finance Leases

On April 22, 2024, the Company entered into an equipment financing lease to purchase equipment for $10,976, which matures in July 2029.

The following was included in our balance sheets at June 30, 2024, and December 31, 2023:

SCHEDULE OF FINANCE LEASES

	June 30, 2024			December 31, 2023
Leased equipment (property and equipment)	$	10,976		$	-
Less: accumulated depreciation		(453	)		-
Total leased equipment, net	$	10,523		$	-

Finance lease liabilities, current portion		2,010			-
Finance lease liabilities, long-term		8,635			-
Total finance lease liabilities	$	10,645		$	-

Weighted-average remaining lease term (years)		5.10			-
Weighted average discount rate		1.99	%		-

Maturities of finance lease liabilities at June 30, 2024, were as follows:

Year Ending December 31,	Amount
2024 (remaining)	$	1,102
2025		2,204
2026		2,204
2027		2,204
2028		2,204
Thereafter		1,285
Total		11,203
Less: amount representing interest		(558	)
Total finance lease liabilities	$	10,645

NOTE 7—NOTES PAYABLE

10% OID Promissory Notes

On January 24, 2024, the Company entered into a securities purchase agreement in a private placement transaction with a certain accredited investor, pursuant to which the Company issued and sold to the investor a 10% original issue discount (“OID”) promissory note in the principal amount of $55,556 for total cash proceeds of $45,000. The note bears interest at a rate of 10% per annum and matures on January 24, 2025. Should the Company undertake an IPO before the maturity date, the note holder is to receive (i) equity shares equal to the principal amount at the IPO share price, and (ii) repayment of the principal and accrued interest in cash. The note contains customary covenants and events of default for a loan of this type.

The Company evaluated whether this promissory note contains embedded features that qualify as derivatives pursuant to ASC 815. The Company determined that the notes embedded features, specifically should the Company undertake an IPO before the maturity date, the note holder will receive (i) equity shares equal to the principal amount at the IPO share price, and (ii) repayment of the principal and accrued interest in cash. These embedded features constitute deemed redemption features as a result of the substantial premium received by the note holder. The Company concluded that these redemption features require bifurcation from the note and subsequent accounting in the same manner as a freestanding derivative.

The fair value of the embedded redemption derivative liability within this promissory note was calculated using a Probability Weighted Expected Return valuation methodology, considering the likelihood of occurrence. The model used a discount rate of 15% and assumptions of an 80% probability related to likelihood of the Company undergoing an IPO. Subsequent changes in the fair value of the redemption features are measured at each reporting period and recognized in the statement of operations. The OID and issuance costs for the promissory note, along with the fair value of the embedded redemption derivative liability, were collectively recorded as a debt discount. This discount will be amortized to interest expense over the respective term of the convertible notes using the effective interest method.

As further disclosed in Note 8, the IPO was completed on June 3, 2024. In accordance with the terms of the 10% OID promissory note agreements, the Company repaid the outstanding notes totaling $463,534 (including both principal and accrued interest) and issued each note holder common stock equal to the principal amount of the notes at the IPO price of $5.50, totaling 80,808 shares of restricted common stock, with a fair value of $214,949 or $2.66 per share. Consequently, the corresponding derivative liability was extinguished and we recognized a loss on extinguishment of debt of $38,889.

Derivative Liabilities

The following table provides a roll-forward of the derivative liability for the six months ended June 30, 2024:

	Amount
Balance at December 31, 2023	$	238,000
Initial fair value of derivative liability upon issuance		38,000
Gain on change in fair value of derivative liability		(61,051	)
Extinguishment of derivative liability upon settlement of notes payable		(214,949	)
Balance at June 30, 2024	$	-

Estimated maturities of principal payments for notes payable at June 30, 2024, were as follows:

Year Ending December 31,	Amount
2024 (remaining)	$	60,924
2025		193,777
Total payments		254,701
Less debt discount		(26,640	)
Total notes payable, net	$	228,061

NOTE 8—STOCKHOLDERS’ DEFICIT

Preferred Stock

As of June 30, 2024, and December 31, 2023, the Company was authorized to issue 10,000,000 preferred shares. As of June 30, 2024, and December 31, 2023, the Company had no preferred shares issued and outstanding.

Common Stock

As of June 30, 2024, and December 31, 2023, the Company was authorized to issue 100,000,000 common shares. As of June 30, 2024, and December 31, 2023, the Company had 5,939,516 and 4,617,798 common shares issued and outstanding, respectively.

Initial Public Offering

On May 31, 2024, KindlyMD entered into an underwriting agreement with WallachBeth Capital, LLC, as representative (the “Representative”) of the underwriters in connection with the initial public offering for sale of an aggregate of 1,240,910 units at a price to the public of $5.50 per share. Each unit offered under the underwriting agreement consists of one share of common stock, one tradeable warrant to purchase one share of common stock with an exercise price of $6.33 and a five-year exercise term; and one non-tradeable warrant to purchase one-half of one share of common stock with an exercise price of $6.33 and a five-year exercise term.

The underwriting agreement also provides for the issuance of 83,639 warrants to the Representative with an exercise price of $6.33 and a five-year exercise term. In addition, the underwriters have a 45-day option to purchase, at the public offering price, up to an additional 186,136 shares of common stock and/or tradeable warrants, and/or non-tradeable warrants, or any combination thereof, less, in each case, underwriting discounts and commissions to cover over-allotments.

On June 3, 2024, the IPO was completed, resulting in the issuance of 1,240,910 units. In addition, the underwriters partially exercised its over-allotment option, resulting in the issuance of 76,538 tradeable warrants and 76,538 non-tradeable warrants. As a result of the IPO, the Company received gross proceeds of approximately $6.8 million before deducting underwriting discounts and offering expenses. After deducting these and other offering expenses, the Company received net proceeds of approximately $5.9 million.

As further disclosed in Note 7, the IPO was completed on June 3, 2024. In accordance with the terms of the 10% OID promissory note agreements, the Company repaid the outstanding notes and issued each note holder common stock equal to the principal amount of the notes at the IPO price of $5.50, totaling 80,808 shares of restricted common stock. These shares are subject to a 90-day lock-up agreement from the date of issuance. Consequently, the corresponding derivative liability was extinguished.

On June 3, 2024, the Company repaid all outstanding 10% OID promissory notes totaling $463,534 (including both principal and accrued interest) and issued each note holder common stock equal to the principal amount of the notes at the IPO price of $5.50 per share, totaling 80,808 shares of restricted common stock, with a fair value of $214,949 or $2.66 per share. These shares are subject to a 90-day lock-up agreement from the date of issuance.

The common stock and tradeable warrants are trading on the Nasdaq Capital Market, under the symbols “KDLY” and “KDLYW,” respectively.

Potential Common Stock Equivalents

As of June 30, 2024, there were 2,727,125 potential common share equivalents from stock options and warrants excluded from the diluted loss per share calculations as their effect is anti-dilutive.

Stock Options

On January 2, 2024, the Company granted options to purchase 5,590 shares of common stock to executives and employees. The stock options have an exercise price of $5.50 per share and vest on July 1, 2024. The Company has calculated the estimated fair market value of these options at $15,500 using the Black-Scholes pricing model.

Below is a table summarizing the changes in stock options outstanding during the six months ended June 30, 2024:

SCHEDULE OF ACTIVITY OF STOCK OPTIONS

	Stock Options		Weighted-Average Exercise Price
Outstanding at December 31, 2023		3,000	$	7.00
Granted		5,590		5.50
Forfeited		-		-
Outstanding at June 30, 2024		8,590	$	6.02
Exercisable at June 30, 2024		3,000	$	7.00

Stock-based compensation expense of $7,884 and $15,500 was recorded during the three and six months ended June 30, 2024, respectively. As of June 30, 2024, the remaining unrecognized compensation cost related to non-vested options is $0.

As of June 30, 2024, the outstanding stock options have a weighted average remaining contractual life of 7.14 years and a total intrinsic value of $0.

Warrants

As further disclosed above, on June 3, 2024, the IPO was completed, resulting in the issuance of 1,240,910 units. Each unit offered under the underwriting agreement consists of one share of common stock, one tradeable warrant to purchase one share of common stock with an exercise price of $6.33 and a five-year exercise term; and one non-tradeable warrant to purchase one-half of one share of common stock with an exercise price of $6.33 and a five-year exercise term.

The underwriting agreement also provides for the issuance of 83,639 warrants to the Representative with an exercise price of $6.33 and a five-year exercise term. In addition, the underwriters partially exercised its over-allotment option, resulting in the issuance of 76,538 tradeable warrants and 76,538 non-tradeable warrants with an exercise price of $6.33 and a five-year exercise term.

Below is a table summarizing the changes in warrants outstanding during the six months ended June 30, 2024:

SCHEDULE OF ACTIVITY OF WARRANTS

	Stock Options		Weighted-Average Exercise Price
Outstanding at December 31, 2023		-	$	-
Granted		2,718,535		6.33
Forfeited		-		-
Outstanding at June 30, 2024		2,718,535	$	6.33
Exercisable at June 30, 2024		2,634,896	$	6.33

As of June 30, 2024, the outstanding warrants have a weighted average remaining contractual life of 4.93 years and a total intrinsic value of $0.

NOTE 9—SUBSEQUENT EVENTS

On July 31, 2024, the Company issued 7,653 shares of restricted stock to employees and contractors per existing contracts, allowed for early vesting of 430 shares of options granted in January, 2024 at a strike price of $5.50, and issued a total of 73,571 stock options to various employees per the Company’s Incentive Stock Option Plan. These options will vest over the following 2 years.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis of financial condition and results of operations provides information that management believes is relevant to an assessment and understanding of our plans and financial condition. The following financial information is derived from our financial statements and should be read in conjunction with such financial statements and notes thereto set forth elsewhere herein.

Cautionary Note Regarding Forward Looking Statements

This report contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this report are forward-looking statements. The forward-looking statements in this report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. In some cases, you can identify these forward-looking statements by terms such as “anticipate,” “believe,” “continue,” “could,” “depends,” “estimate,” “expects,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms or other similar expressions, although not all forward-looking statements contain those words. We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short- and long-term business operations and objectives, and financial needs. These forward-looking statements include, but are not limited to, statements concerning the following:

●	our projected financial position and estimated cash burn rate;

●	our estimates regarding expenses, future revenues and capital requirements;

●	our ability to continue as a going concern;

●	our need to raise substantial additional capital to fund our operations;

●	our ability to obtain the necessary regulatory approvals to market and commercialize our products and planned future products;

●	the ultimate impact of the current coronavirus pandemic, or any other health epidemic, on our business, our customers, our competitors, healthcare systems or the global economy as a whole;

●	the results of market research conducted by us or others;

●	our ability to obtain and maintain intellectual property protection for our products and any planned future products;

●	our reliance on third-party suppliers;

●	our ability to expand our organization to accommodate potential growth and our ability to retain and attract key personnel;

●	our ability to operate our business effectively and manage patient needs; and

●	the successful development of our commercialization capabilities, including sales and marketing capabilities.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” included in our Registration Statement on Form S-1/A for the year ended December 31, 2023, as filed with the SEC on May 9, 2024. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable and the information included in this report is accurate, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to actual results or to changes in our expectations.

Overview

KindlyMD is a holistically-focused pain management clinic and healthcare data company formed in 2019. KindlyMD offers direct health care to patients integrating prescription medicine and behavioral health services to reduce opioid use in the chronic pain patient population. Its specialty outpatient clinical services are reimbursed by Medicare, Medicaid, and commercial insurance contracts as well as offered on a fee-for-service basis. The Company offers evaluation and management, including, but not limited to chronic pain, functional medicine, cognitive behavioral therapy, recovery support services, overdose education efforts, peer support, limited urgent care, preventative medicine, medically managed weight loss, and hormone therapy. KindlyMD believes these methods to be superior in managing the root cause of symptoms and improve outcomes while lowering dependency on opiates. Through its focus on an integrated model of prescriber and therapist teams, KindlyMD develops patient-specific care programs with a specific mission to reduce opioid use in the patient population while successfully treating patients with evidence based behavioral therapy and non-opioid alternatives.

Beyond its treatment of patients, KindlyMD collects data focused on why and how patients turn to alternative treatments to reduce prescription medication use and addiction. The Company captures all relevant datapoints to assist and appropriately treat each individual patient. This also results in valuable data for the Company and the Company’s investors. We strive to become a source for evidence-based guidelines, data, and education in the fight against the opioid crisis in America.

KindlyMD offers direct healthcare focused on what patients want and need, not what the doctor wants or needs. Its prescribers and therapists listen, use data and evidence, then help patients decide on a care plan. Through its focus on the de-stigmatization of behavioral healthcare, alternative therapies, and by taking a collaborative approach to counsel patients on every option available to them, KindlyMD is develops patient-specific care programs that embed behavioral therapy in every visit. KindlyMD providers are experts in de-prescribing and using alternatives to opioids, such as medical cannabis, Ketamine infusion therapy, and other prescription and non-prescription alternatives.

To further reduce inefficacious and opioid use we destigmatize behavioral health by embedding behavioral health into every program we offer. Sessions are reimbursed by insurance contracts or paid out of pocket. Additional work is done for addictions counseling, naloxone education, and risk mitigation strategies as part of our work on the Biden-Harris opioid initiative which places emphasis on decreasing overprescribing while improving access to addiction treatment and mental health initiatives. We offer naloxone to each chronic opioid patient as well as education and monitoring for addiction and recovery through the integrated model.

KindlyMD is most successful when patients report positive health outcomes as a result of our care. KindlyMD embeds prescribers with behavioral health consultants to develop person-specific care programs for patients. Its medical advisory committee evaluates the efficacy of those programs. Impact goals are set within individual programs and measured against national benchmarks and “Clinical Quality Measures.”

KindlyMD’s medical advisory committee is comprised of at least four individuals, including an MD, licensed behavioral health clinician, Advanced Practice Clinician, and a care coordinator. Individuals are appointed to the committee by the Board of Directors. The committee is responsible for reviewing Clinical Quality Measures for each calendar year, reviewing patient outcomes, and making recommendations for improvement in treatment protocols.

Recent Developments

Initial Public Offering

The common stock and tradeable warrants are trading on the Nasdaq Capital Market, under the symbols “KDLY” and “KDLYW,” respectively.

Results of Operations

Comparison of the Three Months Ended June 30, 2024 and 2023

The following table sets forth key components of our results of operations during the three months ended June 30, 2024 and 2023, both in dollars and as a percentage of our revenues:

	For the Three Months Ended June 30,
	2024						2023
	Amount			% of Revenues			Amount			% of Revenues

Revenues	$	639,057			100.0	%	$	979,538			100.0	%

Operating Expenses
Cost of revenues		61,947			9.7	%		59,508			6.1	%
Salaries and wages		1,126,893			176.3	%		1,109,559			113.3	%
General and administrative		461,677			72.2	%		385,536			39.4	%
Depreciation		25,733			4.0	%		26,224			2.7	%
Total Operating Expenses		1,676,250			262.3	%		1,580,827			161.4	%

Loss from Operations		(1,037,193	)		(162.3	)%		(601,289	)		(61.4	)%

Other Income (Expense)
Other income		13,828			2.2	%		13,075			1.3	%
Interest expense		(318,450	)		(49.8	)%		(8,194	)		(0.8	)%
Loss on extinguishment of debt		(38,889	)		(6.1	)%		-			-
Gain on change in fair value of derivative liability		61,051			9.6	%		-			-
Total Other Income (Expense)		(282,460	)		(44.2	)%		4,881			0.5	%

Net loss before income taxes		(1,319,653	)		(206.5	)%		(596,408	)		(60.9	)%
Income tax benefit		-			-			-			-
Net Loss	$	(1,319,653	)		(206.5	)%	$	(596,408	)		(60.9	)%

Revenues

The Company earned $91,553 in reimbursements from insurance payers during the three months ending June 30, 2024, which is a 163.7% increase over the $34,722 earned for the three months ending March 31, 2024. The Company earned $0 during the three and six months ended June 30, 2023.

Revenues decreased by $340,481, or 34.8%, to $639,057 for the three months ended June 30, 2024, from $979,538 for the three months ended June 30, 2023. The decrease in revenues is primarily attributed to a decrease in cash-pay patient care services as KindlyMD continues to shift toward insurance billing with commercial and governmental payers including Medicare, Medicaid, Select Health, Blue Cross Blue Shield, Cigna, and other commercial payers compared to the prior period.

Operating Expenses

Operating expenses increased by $95,423, or 6.0%, to $1,676,250 for the three months ended June 30, 2024, from $1,580,827 for the three months ended June 30, 2023. The increase in operating expenses is primarily attributable to the following:

	1.	Salaries and wages increased by $17,334, or 1.6%, to $1,126,893 for the three months ended June 30, 2024, from $1,109,559 for the three months ended June 30, 2023. The increase in salaries and wages is primarily attributed to additional staffing needs related to employee and contract labor for data lake implementation and increased compliance and billing and coding costs as KindlyMD shifts to insurance billing with commercial and governmental payers.
	2.	General and administrative expenses increased by $76,141, or 19.7%, to $461,677 for the three months ended June 30, 2024, from $385,536 for the three months ended June 30, 2023. The increase in general and administrative expenses is primarily attributed to investor relations and directors and officers insurance.
	3.	Cost of revenues increased by $2,439, or 4.1%, to $61,947 for the three months ended June 30, 2024, from $59,508 for the three months ended June 30, 2023. The increase in cost of revenues is primarily attributed to adjusted materials cost for retail sales along with a reduction to $0 of inventory reserve, which lowered the provisions previously set aside for potential inventory obsolescence.

Other Income (Expense)

Net other expenses increased by $287,341, or 5,886.9%, to $282,460 for the three months ended June 30, 2024, from net other income of $4,881 for the three months ended June 30, 2023. The increase in net other expenses is primarily attributable to the following:

	1.	Other income increased by $753, or 5.8%, to $13,828 for the three months ended June 30, 2024, from $13,075 for the three months ended June 30, 2023. This increase is primarily attributable to higher income from affiliate programs and educational partnerships during the period.
	2.	Interest expense increased by $310,256, or 3,786.4%, to $318,450 for the three months ended June 30, 2024, from $8,194 for the three months ended June 30, 2023. For the three months ended June 30, 2024, interest expense is primarily attributable to accrued interest of notes payable of $8,369 and amortization of debt discounts of $310,081. For the three months ended June 30, 2023, interest expense was primarily attributable to accrued interest of notes payable of $7,318 and amortization of debt discounts of $876.
	3.	As a result of the repayment and issuance of common shares upon settlement of notes payable in connection with a public offering IPO, during the three months ended June 30, 2024, the Company recorded a loss on extinguishment of debt of $38,889 and a gain on change in fair value of derivative liability of $61,051.

Net Loss

As a result of the cumulative effect of the factors described above, our net loss was $1,319,653 for the three months ended June 30, 2024, compared to $596,408 for the three months ended June 30, 2023.

Net loss per share decreased by $0.13, or 100.0%, to $(0.26) for the three months ended June 30, 2024, compared to $(0.13) for the three months ended June 30, 2023. KindlyMD management strives to look for opportunities to optimize revenue by increasing sales, acquiring additional clinics, improving margins, and controlling ongoing operating expenses.

Comparison of the Six Months Ended June 30, 2024 and 2023

The following table sets forth key components of our results of operations during the six months ended June 30, 2024 and 2023, both in dollars and as a percentage of our revenues:

	For the Six Months Ended June 30,
	2024						2023
	Amount			% of Revenues			Amount			% of Revenues

Revenues	$	1,468,086			100.0	%	$	2,139,883			100.0	%

Operating Expenses
Cost of revenues		69,691			4.7	%		108,132			5.1	%
Salaries and wages		1,834,859			125.0	%		2,042,860			95.5	%
General and administrative		787,222			53.6	%		743,719			34.8	%
Depreciation		50,634			3.4	%		51,666			2.4	%
Total Operating Expenses		2,742,406			186.8	%		2,946,377			137.7	%

Loss from Operations		(1,274,320	)		(86.8	)%		(806,494	)		(37.7	)%

Other Income (Expense)
Other income		25,868			1.8	%		37,301			1.7	%
Interest expense		(375,689	)		(25.6	)%		(8,194	)		(0.4	)%
Loss on extinguishment of debt		(38,889	)		(2.6	)%		-			-
Gain on change in fair value of derivative liability		61,051			4.2	%		-			-
Total Other Income (Expense)		(327,659	)		(22.3	)%		29,107			1.4	%

Net loss before income taxes		(1,601,979	)		(109.1	)%		(777,387	)		(36.3	)%
Income tax benefit		-			-			-			-
Net Loss	$	(1,601,979	)		(109.1	)%	$	(777,387	)		(36.3	)%

Revenues

Revenues decreased by $671,797, or 31.4%, to $1,468,086 for the six months ended June 30, 2024, from $2,139,883 for the six months ended June 30, 2023. The decrease in revenues is primarily attributed to a decrease in cash-pay patient care services as KindlyMD continues to shift toward insurance billing with commercial and governmental payers including Medicare, Medicaid, Select Health, Blue Cross Blue Shield, and other commercial payers compared to the prior period.

Operating Expenses

Operating expenses decreased by $203,971, or 6.9%, to $2,742,406 for the six months ended June 30, 2024, from $2,946,377 for the six months ended June 30, 2023. The decrease in operating expenses is primarily attributable to the following:

	1.	Salaries and wages decreased by $208,001, or 10.2%, to $1,834,859 for the six months ended June 30, 2024, from $2,042,860 for the six months ended June 30, 2023. The decrease in salaries and wages is primarily attributed to decreased employee costs related to efficiency in patient care services.
	2.	General and administrative expenses increased by $43,503, or 5.8%, to $787,222 for the six months ended June 30, 2024, from $743,719 for the six months ended June 30, 2023. The increase in general and administrative expenses is primarily attributed to investor relations and directors and officers insurance.
	3.	Cost of revenues decreased by $38,441, or 35.6%, to $69,691 for the six months ended June 30, 2024, from $108,132 for the six months ended June 30, 2023. The decrease in cost of revenues is primarily attributed to the corresponding decline in product revenues and a reduction in our inventory reserve, which lowered the provisions previously set aside for potential inventory obsolescence.

Other Income (Expense)

Net other expenses increased by $356,766, or 1,225.7%, to $327,659 for the six months ended June 30, 2024, from net other income of $29,107 for the six months ended June 30, 2023. The increase in net other expenses is primarily attributable to the following:

	1.	Other income decreased by $11,433, or 30.7%, to $25,868 for the six months ended June 30, 2024, from $37,301 for the six months ended June 30, 2023. This decrease is primarily attributable to lower income from affiliate programs and educational partnerships during the period.
	2.	Interest expense increased by $367,495, or 4,484.9%, to $375,689 for the six months ended June 30, 2024, from $8,194 for the six months ended June 30, 2023. For the six months ended June 30, 2024, interest expense is primarily attributable to accrued interest of notes payable of $18,250 and amortization of debt discounts of $357,439. For the six months ended June 30, 2023, interest expense is primarily attributable to accrued interest of notes payable of $7,318 and amortization of debt discounts of $876.
	3.	As a result of the repayment and issuance of common shares upon settlement of notes payable in connection with a public offering IPO, during the six months ended June 30, 2024, the Company recorded a loss on extinguishment of debt of $38,889 and a gain on change in fair value of derivative liability of $61,051.

Net Loss

As a result of the cumulative effect of the factors described above, our net loss was $1,601,979 for the six months ended June 30, 2024, compared to $777,387 for the six months ended June 30, 2023.

Net loss per share decreased by $0.16, or 94.1%, to $(0.33) for the six months ended June 30, 2024, compared to $(0.17) for the six months ended June 30, 2023. Management continues to look for opportunities to increase sales, acquire additional clinics, improve margins, and control ongoing operating expenses.

Liquidity and Capital Resources

To date, we have financed our operations primarily through revenues generated from operations and cash proceeds from financing activities. As discussed above, on June 3, 2024, we completed IPO through the issuance of common stock and warrants for total net proceeds of $6.02 million. The IPO provided the Company with adequate liquidity and cash reserves to meet our obligations for at least the 12-month period following the date of this report, and to facilitate our strategic operational business plans to create sustained cash flow generation.

Summary of Cash Flow

The following table provides detailed information about our net cash flows from operations for the periods indicated:

	For the Six Months Ended June 30,
	2024			2023
Net cash used in operating activities	$	(1,126,976	)	$	(274,964	)
Net cash used in investing activities		(11,182	)		(14,420	)
Net cash provided by financing activities		5,352,664			213,091
Net change in cash and cash equivalents		4,214,506			(76,293	)
Cash and cash equivalents at the beginning of period		525,500			186,918
Cash and cash equivalents at the end of period	$	4,740,006		$	110,625

Net cash used in operating activities was $1,126,976 for the six months ended June 30, 2024, as compared to $274,964 for the six months ended June 30, 2023. The decrease in net cash used in operating activities was primarily a result of the net loss during the period.

Net cash used in investing activities was $11,182 for the six months ended June 30, 2024, as compared to $14,420 for the six months ended June 30, 2023. The decrease in cash used in investing activities is primarily attributed to decreased capital expenditures during the period.

Net cash provided by financing activities was $5,352,664 for the six months ended June 30, 2024, as compared to $213,091 for the six months ended June 30, 2023. The increase in net cash provided by financing activities is primarily attributed to the $5.9 million of net proceeds received in the public offering, offset by repayments of notes payable.

As a result of these cash flow activities, our net cash increased by $4,214,506, or 802.0%, from $525,500 as of December 31, 2023, to $4,740,006 as of June 30, 2024.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates

The preparation of these condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities, at the date of and during the reported period of the financial statements. Actual results could differ from those estimates. We evaluate our estimates and assumptions on an ongoing basis.

For a description of the accounting policies that, in management’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies, Estimates and Assumptions” in our Annual Report on Form S-1/A for the fiscal year ended December 31, 2023 filed with the SEC on May 9, 2024.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, the Company is not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

The Company does not currently maintain sufficient controls and procedures designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified by the Commission’s rules and forms. Disclosure controls and procedures would include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2024, have been evaluated, and, based upon this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are not effective in providing reasonable assurance of compliance.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this report that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We know of no existing or pending legal proceedings against us, nor are we involved as a plaintiff in any proceeding or pending litigation. There are no proceedings in which any of our directors, officers or any of their respective affiliates, or any beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A. RISK FACTORS

As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, the Company is not required to provide information under this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the six months ended June 30, 2024, the Company did not issue any unregistered equity securities except as set forth below.

On January 24, 2024, the Company issued a promissory note to an accredited investor with a face value of $55,556. The note has a maturity date the earlier of one year from the date of issuance or the date of the Company’s IPO. These notes were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transactions did not involve a public offering.

On May 31, 2024, the Company entered into an underwriting agreement with WallachBeth Capital, LLC (“WallachBeth”), in connection with the initial public offering of the Company’s common stock and tradeable warrants (the “IPO”), pursuant to which the Company sold 1,240,910 units (the “Units”) at a price to the public of $5.50 per share. Each Unit offered under the Underwriting Agreement consisted of one share of Common Stock, par value $0.001 per share (the “Common Stock”), one tradeable warrant to purchase one share of Common Stock with an exercise price of $6.33 and a five-year exercise term (the “Tradeable Warrants”); and one non-tradeable warrant to purchase one-half of one share of Common Stock with an exercise price of $6.33 and a five-year exercise term (the “Non-tradeable Warrants”, together with the Tradeable Warrants, the “Warrants”) and the 1,861,365 shares of Common Stock underlying the Warrants (the “Warrant Shares”; and together with the Common Stock, the Warrants, and the Warrant Shares the “Underwritten Securities”). Additionally the Company issued WallachBeth 83,639 warrants to purchase shares of common stock, exercisable within five-years, and initially exercisable at $6.33 per share (the “WallachBeth Warrants”), and granted WallachBeth an option for a period of 45 days to purchase up to an additional 186,136 shares of Common Stock and/or 186,136 Tradeable Warrants, and/or 186,136 Non-Tradeable Warrants, or any combination thereof, at the public offering price per share of Common Stock and per Warrant, respectively, less, in each case, underwriting discounts and commissions to cover over-allotments. On June 3, 2024, WallachBeth Capital LLC partially exercised its over-allotment option with respect to 76,538 Non-Tradeable Warrants and 76,538 Tradeable Warrants. These warrant exercise shares were issued to WallachBeth pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) promulgated thereunder, as there was no general solicitation in the offering, the shareholder was accredited, and the transaction did not involve a public offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit
Number		Exhibit Description
3.1		Certificate of Organization of Utah Therapeutic Health Center, PLLC (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed on September 20, 2023).
3.2		Certificate of Conversion to Utah Therapeutic Health Center, LLC (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 filed on September 20, 2023).
3.3		Certificate of Conversion to Kindly MD, Inc. (incorporated by reference to Exhibit 3.3 to the Registration Statement on Form S-1 filed on September 20, 2023).
3.4		Amended and Restated Articles of Incorporation of Kindly MD, Inc. (incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-1 filed on September 20, 2023).
3.5		Bylaws (incorporated by reference to Exhibit 3.5 to the Registration Statement on Form S-1 filed on September 20, 2023).
3.6		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.6 to the Registration Statement on Form S-1 filed on September 20, 2023).
10.1		Incentive Stock Plan (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-1 filed on September 20, 2023).
10.2+		Employment Agreement by and between the Company and Timothy Pickett dated May 1, 2022 (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 filed on September 20, 2023).
10.3+		Consulting Agreement by and between the Company and Wade Rivers, LLC dated January 1, 2021 (incorporated by reference to Exhibit 10.3 to the Registration Statement on Form S-1 filed on September 20, 2023).
10.4+		Employment Agreement by and between the Company and Adam Cox dated May 1, 2022 (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-1 filed on September 20, 2023).
10.5+		Compensation Agreement by and between the Company and Jared Barrera dated September 28, 2022 (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-1 filed on September 20, 2023).
10.6		Securities Purchase Agreement and Note dated December 28, 2023, issued by the Registrant to Steel Anderson (incorporated by reference to Exhibit 10.7 to the Registration Statement on Form S-1 filed on March 12, 2024).
10.7		Securities Purchase Agreement and Note dated December 28, 2023, issued by the Registrant to Abdullah Rasool (incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-1 filed on March 12, 2024).
10.8		Securities Purchase Agreement and Note dated December 28, 2023, issued by the Registrant to Brianna Moylan (incorporated by reference to Exhibit 10.9 to the Registration Statement on Form S-1 filed on March 12, 2024).
10.9		Securities Purchase Agreement and Note dated December 28, 2023, issued by the Registrant to Jacob Dorfman (incorporated by reference to Exhibit 10.10 to the Registration Statement on Form S-1 filed on March 12, 2024).
10.10		Securities Purchase Agreement and Note dated January 24, 2024, issued by the Registrant to Nowell Sheinwald (incorporated by reference to Exhibit 10.11 to the Registration Statement on Form S-1 filed on March 12, 2024).
10.11		Loan Agreement dated December 26, 2023, between the Registrant and Square Financial Services, Inc. and Block Inc. (incorporated by reference to Exhibit 10.12 to the Registration Statement on Form S-1 filed on March 12, 2024).
31.1*		Certification of Principal Executive Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial and Accounting Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63
32.2*		Certification of Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63
101.INS**		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH**		Inline XBRL Taxonomy Extension Schema Document.
101.CAL**		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**		Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE**		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104**		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*	Filed herewith.
+	Executive compensation plan or arrangement.
**	XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	KINDLY MD, INC.
	(Registrant)

Date: August 13, 2024	By:	/s/ Tim Pickett
		Tim Pickett
		Chief Executive Officer

Date: August 13, 2024	By:	/s/ Jared Barrera
		Jared Barrera
		Chief Financial Officer

SEC Form 10-Q filed by Kindly MD Inc.