UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the fiscal quarter ended
or
For the transition period from ________ to _________
Commission
File Number:
| (Exact name of Registrant as specified in its charter) |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification Number) |
(Address of Principal Executive Office and Zip Code)
(Registrant’s Telephone Number, including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No
The number of shares of the registrant’s common stock outstanding as of May 8, 2025 was .
KINDLY MD, INC.
2025 QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
| 2 |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KINDLY MD, INC.
UNAUDITED CONDENSED FINANCIAL STATEMENTS
| 3 |
KINDLY MD, INC.
CONDENSED BALANCE SHEETS
| March 31, 2025 | December 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Capitalized software | ||||||||
| Operating lease right-of-use assets | ||||||||
| Security deposits | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Customer deposits | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Current portion of finance lease liabilities | ||||||||
| Current portion of notes payable, net | ||||||||
| Total Current Liabilities | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Finance lease liabilities, net of current portion | ||||||||
| TOTAL LIABILITIES | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred Stock, $ par value, shares authorized; issued and outstanding as of March 31, 2025 and December 31, 2024 | ||||||||
| Common stock, $ par value, shares authorized; shares issued as of March 31, 2025 and December 31, 2024, and and shares outstanding as of March 31, 2025 and December 31, 2024, respectively | ||||||||
| Treasury stock, at cost; and shares as of March 31, 2025 and December 31, 2024, respectively | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these condensed financial statements.
| 4 |
KINDLY MD, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For
the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net Revenues | $ | $ | ||||||
| Operating Expenses | ||||||||
| Cost of revenues | ||||||||
| Salaries and wages | ||||||||
| General and administrative | ||||||||
| Research and development | ||||||||
| Depreciation | ||||||||
| Total Operating Expenses | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| Other Income (Expense) | ||||||||
| Other income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total Other Income (Expense) | ( | ) | ||||||
| NET LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| LOSS PER COMMON SHARE – BASIC AND DILUTED | $ | ) | $ | ) | ||||
| WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING – BASIC AND DILUTED | ||||||||
The accompanying notes are an integral part of these condensed financial statements.
| 5 |
KINDLY MD, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
| Common Stock | Treasury | Additional
Paid-In | Accumulated | Total
Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Stock | Capital | Deficit | Equity | |||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Treasury stock repurchased | ) | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||
| Common Stock | Treasury | Additional
Paid-In | Accumulated | Total
Stockholders’ Equity | ||||||||||||||||||||
| Shares | Amount | Stock | Capital | Deficit | (Deficit) | |||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
The accompanying notes are an integral part of these condensed financial statements.
| 6 |
KINDLY MD, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For
the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Depreciation expense | ||||||||
| Bad debt expense | ||||||||
| Amortization of debt discounts | ||||||||
| Amortization of right-of-use assets | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Customer deposits | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property and equipment | ( | ) | ||||||
| Capitalized software additions | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Net proceeds from issuance of notes payable | ||||||||
| Repurchase of treasury stock | ( | ) | ||||||
| Repayments of notes payable | ( | ) | ( | ) | ||||
| Repayments of finance lease liabilities | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | ( | ) | ( | ) | ||||
| CASH AND CASH EQUIVALENTS | ||||||||
| Beginning of the period | ||||||||
| End of the period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Debt discounts on notes payable | $ | $ | ||||||
| Fair value of derivative liabilities recognized upon issuance of notes payable | $ | $ | ||||||
The accompanying notes are an integral part of these condensed financial statements.
| 7 |
KINDLY MD, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2025 (UNAUDITED)
NOTE 1— BASIS OF PRESENTATION AND OTHER INFORMATION
The accompanying unaudited condensed financial statements of Kindly MD, Inc. (the “Company,” “Kindly MD,” “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, 2024 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 10-K, as filed with the Securities and Exchange Commission on March 28, 2025. 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 months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.
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 Adopted Accounting Pronouncements
In August 2023, the FASB issued ASU 2023-05, “Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement,” which requires a newly-formed joint venture to apply a new basis of accounting to its contributed net assets, resulting in the joint venture initially measuring its contributed net assets at fair value on the formation date. ASU 2023-05 is effective for all joint venture formations with a formation date on or after January 1, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted for joint ventures formed before the effective date. The adoption of ASU 2023-05 did not have a material impact on the Company’s interim unaudited condensed financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted. The Company is currently evaluating the impact this standard will have on its financial statements.
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization included in each relevant expense caption presented on the statement of operations. The standard also requires disclosure of qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as the total amount of selling expenses and an entity’s definition of selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact this standard will have on its financial statements.
The Company currently believes there are no other issued and not yet effective accounting standards that are materially relevant to its interim unaudited condensed financial statements.
NOTE 2—DISAGGREGATION OF REVENUES
The Company’s revenues are disaggregated based on revenue type, including (i) patient care services related to medical evaluation and treatment, (ii) product retail sales, and (iii) service affiliate agreements.
The Company’s net revenues for the three months ended March 31, 2025 and 2024 are disaggregated as follows:
| For
the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Patient care services | $ | $ | ||||||
| Product retail sales | ||||||||
| Service affiliate agreements | ||||||||
| Total net revenues | $ | $ | ||||||
The
Company earned $
| 8 |
NOTE 3—PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at March 31, 2025 and December 31, 2024:
| March 31, 2025 | December 31, 2024 | |||||||
| Leasehold improvements | $ | $ | ||||||
| Furniture | ||||||||
| Computer software and equipment | ||||||||
| Medical equipment | ||||||||
| Total property and equipment | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation
expense for the three months ended March 31, 2025 and 2024, was $
NOTE 4—CAPITALIZED SOFTWARE
Capitalized software consisted of the following at March 31, 2025 and December 31, 2024:
| March 31, 2025 | December 31, 2024 | |||||||
| EDM software | $ | $ | ||||||
| Total capitalized software | ||||||||
| Less accumulated amortization | ||||||||
| Total capitalized software, net | $ | $ | ||||||
Capitalized costs for in-process internal-use software development primarily consist of direct and contracted labor and related expenses for developing internal systems and tools, and cloud-based solutions, including the Company’s Enterprise Data Management (“EDM”) system. These costs are not amortized until it is available for its intended use.
NOTE 5—LEASES
Operating Leases
The following was included in the condensed balance sheets at March 31, 2025 and December 31, 2024:
| March 31, 2025 | December 31, 2024 | |||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Operating lease liabilities, current portion | ||||||||
| Operating lease liabilities, long-term | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
| Weighted-average remaining lease term (years) | ||||||||
| Weighted-average discount rate | % | % | ||||||
The components of lease expense consisted of the following for the three months ended March 31, 2025 and 2024:
| For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating lease expense | $ | $ | ||||||
| Variable lease expense | ||||||||
| Total lease expense | $ | $ | ||||||
Cash
payments included in the measurement of operating lease liabilities were $
Estimated future minimum payments of operating leases for the next five years consists of the following as of March 31, 2025:
| Year Ending December 31, | Amount | |||
| 2025 (remaining) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | ||||
| Less: imputed interest | ( | ) | ||
| Total operating lease liabilities | $ | |||
| 9 |
Finance Leases
The following was included in the condensed balance sheets at March 31, 2025, and December 31, 2024:
| March 31, 2025 | December 31, 2024 | |||||||
| Leased equipment (property and equipment) | $ | $ | ||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total leased equipment, net | $ | $ | ||||||
| Finance lease liabilities, current portion | ||||||||
| Finance lease liabilities, long-term | ||||||||
| Total finance lease liabilities | $ | $ | ||||||
| Weighted-average remaining lease term (years) | ||||||||
| Weighted-average discount rate | % | % | ||||||
Estimated future minimum payments of finance leases for the next five years consists of the following as of March 31, 2025:
| Year Ending December 31, | Amount | |||
| 2025 (remaining) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total | ||||
| Less: amount representing interest | ( | ) | ||
| Total finance lease liabilities | $ | |||
NOTE 6—NOTES PAYABLE
Estimated future minimum principal payments of notes payable for the next five years consists of the following as of March 31, 2025:
| Year Ending December 31, | Amount | |||
| 2025 (remaining) | $ | |||
| Total payments | ||||
| Less debt discount | ( | ) | ||
| Total notes payable, net | $ | |||
| 10 |
NOTE 7—STOCKHOLDERS’ EQUITY
Preferred Stock
As of March 31, 2025 and December 31, 2024, the Company was authorized to issue preferred shares. As of March 31, 2025 and December 31, 2024, the Company had preferred shares issued and outstanding.
Common Stock
As of March 31, 2025 and December 31, 2024, the Company was authorized to issue common shares. As of March 31, 2025 and December 31, 2024, the Company had common shares issued. As of March 31, 2025 and December 31, 2024, the Company had and common shares outstanding, respectively.
Potential Common Stock Equivalents
As of March 31, 2025, there were potential common share equivalents from stock options and warrants excluded from the diluted loss per share calculations as their effect is anti-dilutive.
Treasury Stock
During
the three months ended March 31, 2025, the Company repurchased shares in treasury at a cost of $
Stock Options
| Stock Options | Weighted-Average
Exercise Price | |||||||
| Outstanding at December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited | ||||||||
| Outstanding at March 31, 2025 | $ | |||||||
| Exercisable at March 31, 2025 | $ | |||||||
| 11 |
Stock-based compensation expense of $ and $ was recorded during the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, the remaining unrecognized compensation cost related to non-vested options is $.
As of March 31, 2025, the outstanding stock options have a weighted-average remaining contractual life of years and a total intrinsic value of $.
Warrants
| Warrants | Weighted-Average
Exercise Price | |||||||
| Outstanding at December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited | ||||||||
| Outstanding at March 31, 2025 | $ | |||||||
| Exercisable at March 31, 2025 | $ | |||||||
As
of March 31, 2025, the outstanding warrants have a weighted-average remaining contractual life of
NOTE 8—SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date of this filing and has determined that there are no material subsequent events that require disclosure.
| 12 |
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 ability to raise capital is necessary to sustain our anticipated operations and implement our business plan, | |
| ● | Our ability to implement our business plan, | |
| ● | Our ability to generate sufficient cash to survive, | |
| ● | The degree and nature of our competition, | |
| ● | The lack of diversification of our business plan, | |
| ● | The general volatility of the capital markets and the establishment of a market for our shares, and | |
| ● | Disruption in the economic and financial conditions primarily from the impact of past terrorist attacks in the United States, threats of future attacks, police, and military activities overseas and other disruptive worldwide political and economic events and environmental weather conditions. |
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 28, 2025. 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.
| 13 |
Overview
Kindly MD is a patient-first healthcare and healthcare data company redefining value-based care and patient-centered medical services. Formed in 2019, Kindly MD leverages data analysis to deliver evidence-based, personalized solutions in order to reduce opioid use, improve health outcomes faster, and provide algorithmic guidance on the use of alternative medicine in healthcare.
We collect and analyze valuable data on alternative treatments as well as biopsychosocial factors to provide better health outcomes faster. This results in valuable data for patients, the company, and the company’s investors as we aim to become a leading source of evidence-based assessment and treatment data in the fight for patients against the opioid epidemic and as we strive to be a leader in redefined value-based care.
Kindly MD’s unique value proposition is to provide a patient-focused healthcare experience that integrates traditional medical evaluation and management with mental health integration and compliant alternative medicine education and inclusion. We focus on creating personalized care plans for each individual that get people back to work and life faster, reduce opioid use, and have high patient satisfaction. Kindly MD believes these methods to be superior in managing the root cause of symptoms and improving health outcomes faster. The company’s competitive advantage lies in its integrated approach to health care services combined with a deep commitment to capturing and utilizing patient data to drive informed, evidence-based care decisions to achieve better health outcomes.
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 outpatient and telemedicine evaluation and management of, but not limited to 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.
Kindly MD 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.
Kindly MD is most successful when patients report positive health outcomes and high satisfaction as a result of our care.
| 14 |
Recent Developments
[Currently no reportable recent developments to report, to update closer to filing]
Results of Operations
Comparison of the Three Months Ended March 31, 2025 and 2024
The following table sets forth key components of our results of operations during the three months ended March 31, 2025 and 2024, both in dollars and as a percentage of our revenues:
| For the Three Months Ended March 31, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| Amount | %
of Revenues | Amount | %
of Revenues | |||||||||||||
| Net Revenues | $ | 579,655 | 100.0 | % | $ | 829,029 | 100.0 | % | ||||||||
| Operating Expenses | ||||||||||||||||
| Cost of revenues | 7,914 | 1.4 | % | 7,744 | 0.9 | % | ||||||||||
| Salaries and wages | 1,003,177 | 173.1 | % | 707,966 | 85.4 | % | ||||||||||
| General and administrative | 592,437 | 102.2 | % | 290,128 | 35.0 | % | ||||||||||
| Research and development | 97 | 0.0 | % | 35,417 | 4.3 | % | ||||||||||
| Depreciation | 17,771 | 3.1 | % | 24,901 | 3.0 | % | ||||||||||
| Total Operating Expenses | 1,621,396 | 279.7 | % | 1,066,156 | 128.6 | % | ||||||||||
| Loss from Operations | (1,041,741 | ) | (179.7 | )% | (237,127 | ) | (28.6 | )% | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Other income | 10,060 | 1.7 | % | 12,040 | 1.5 | % | ||||||||||
| Interest expense | (6,330 | ) | (1.1 | )% | (57,239 | ) | (6.9 | )% | ||||||||
| Total Other Income (Expense) | 3,730 | 0.6 | % | (45,199 | ) | (5.5 | )% | |||||||||
| Net Loss before Income Taxes | (1,038,011 | ) | (179.1 | )% | (282,326 | ) | (34.1 | )% | ||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net Loss | $ | (1,038,011 | ) | (179.1 | )% | $ | (282,326 | ) | (34.1 | )% | ||||||
Revenues
The Company earned $85,273 in reimbursements from insurance payers during the three months ended March 31, 2025, representing a 145.6% increase compared to the $34,722 earned during the three months ended March 31, 2024.
Revenues decreased by $249,374, or 30.1%, to $579,655 for the three months ended March 31, 2025, from $829,029 for the three months ended March 31, 2024. The decrease in revenues is primarily attributed to a decrease in cash-pay patient care services. Kindly MD continues increase our medical services and shift toward insurance billing with commercial and governmental payers including Medicare, Medicaid, Select Health, Blue Cross Blue Shield, Cigna, and other commercial payers as we expand our service line.
| 15 |
Operating Expenses
Operating expenses increased by $555,240, or 52.1%, to $1,621,396 for the three months ended March 31, 2025, from $1,066,156 for the three months ended March 31, 2024. The increase in operating expenses is primarily attributable to the following:
| 1. | Salaries and wages increased by $295,211, or 41.7%, to $1,003,177 for the three months ended March 31, 2025, from $707,966 for the three months ended March 31, 2024. The increase in salaries and wages is primarily attributed to additional staffing labor as we expand our operations in medical services, additional support as a public company, and increased labor for marketing awareness as Kindly MD shifts to insurance billing with commercial and governmental payers. | |
| 2. | General and administrative expenses increased by $302,309, or 104.2%, to $592,437 for the three months ended March 31, 2025, from $290,128 for the three months ended March 31, 2024. The increase in general and administrative expenses is primarily attributed to increased professional fees such as legal and public relations, insurance for directors and officers as a publicly traded company and marketing and advertising. |
Other Income (Expense)
Net other income increased by $48,929, or 108.3%, to $3,730 for the three months ended March 31, 2025, from net other expense of $45,199 for the three months ended March 31, 2024. The increase in net other income is primarily attributable to the following:
| 1. | Other income decreased by $1,980, or 16.4%, to $10,060 for the three months ended March 31, 2025, from $12,040 for the three months ended March 31, 2024. This decrease is primarily attributable to marketing education income and participation declined during the period. | |
| 2. | Interest expense decreased by $50,909, or 88.9%, to $6,330 for the three months ended March 31, 2025 from $57,239 for the three months ended March 31, 2024. This decrease in interest expense is primarily attributed to a reduction of notes payable and amortization of debt discounts. |
Net Loss
As a result of the cumulative effect of the factors described above, our net loss was $1,038,011 for the three months ended March 31, 2025, compared to a net loss of $282,326 for the three months ended March 31, 2024.
Net loss per share increased by $0.11, or 183.3%, to $(0.17) for the three months ended March 31, 2025, compared to $(0.06) for the three months ended March 31, 2024. Kindly MD management strives to look for opportunities to optimize revenue by increasing sales, improving margins, and controlling ongoing operating expenses.
Liquidity and Capital Resources
As of March 31, 2025, we had cash and cash equivalents of $1,140,574 and total working capital of $732,210. For the three months ended March 31, 2025, the Company incurred an operating loss of $1,041,741 and used cash flows in operating activities of $865,083.
To date, we have financed our operations primarily through revenues generated from operations and cash proceeds from financing activities. On June 3, 2024, we completed an IPO through the issuance of common stock and warrants for total net proceeds of $5.86 million. The IPO provided us with liquidity and cash reserves to meet our 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 acknowledges the decrease in working capital and is focused on increasing cash reserves and liquidity in the near term through strategic transactions.
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Summary of Cash Flow
The following table sets forth key components of our results of cash flow activities during the three months ended March 31, 2025 and 2024:
| For
the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | (865,083 | ) | $ | (213,439 | ) | ||
| Net cash used in investing activities | (173,448 | ) | (11,182 | ) | ||||
| Net cash used in financing activities | (94,519 | ) | (13,496 | ) | ||||
| Net change in cash and cash equivalents | (1,133,050 | ) | (238,117 | ) | ||||
| Cash and cash equivalents at the beginning of period | 2,273,624 | 525,500 | ||||||
| Cash and cash equivalents at the end of period | $ | 1,140,574 | $ | 287,383 | ||||
Net cash used in operating activities was $865,083 for the three months ended March 31, 2025, as compared to $213,439 for the three months ended March 31, 2024. The increase in net cash used in operating activities was primarily a result of an increased net loss, accounts payable and accrued expenses compensation, and prepaid expenses during the period.
Net cash used in investing activities was $173,448 for the three months ended March 31, 2025, as compared to $11,182 for the three months ended March 31, 2024. The increase in cash used in investing activities is primarily attributed to EDM software capitalized during the period.
Net cash used in financing activities was $94,519 for the three months ended March 31, 2025, as compared to $13,496 for the three months ended March 31, 2024. The increase in net cash provided by financing activities is primarily attributed to the repayments of notes payable, repurchases of treasury stock, offset by funds received from the issuance of notes payable during the prior period.
As a result of these cash flow activities, our net cash decreased by $1,133,050, or 49.8%, from $2,273,624 as of December 31, 2024, to $1,140,547 as of March 31, 2025.
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 the unaudited condensed financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.
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” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 28, 2025.
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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
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions as appropriate to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in rule 13a-15(f) and 15d-15(f) under the Exchange Act. Management has evaluated the effectiveness of our internal control over financial reporting based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management has concluded that, as of December 31, 2024, our internal control over financial reporting was not effective due to the material weaknesses in internal control over financial reporting described below. As a smaller reporting company, we are not required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm in this report.
Internal control over financial reporting is a process designed by, or under the supervision of the CEO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal controls over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records which in reasonable detail accurately and fairly reflect the transactions and disposition of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made in accordance with authorizations of management and directors of the issuer; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.
Notwithstanding the material weakness, we believe that our financial statements contained in this report fairly present our financial position, results of operations and cash flows for the periods covered by this report in all material respects.
Our management, with the oversight of our audit committee, has initiated steps and plans to take additional measures to remediate the underlying causes of the material weakness.
Planned Remediation of Material Weaknesses
Our management has been actively engaged in developing and implementing remediation plans to address the material weaknesses described above. These remediation efforts are ongoing and include or are expected to include:
| ● | engaging internal control consultants to assist us in performing a financial reporting risk assessment as well as identifying and designing our system of internal controls necessary to mitigate the risks identified; | |
| ● | preparation of written documentation of our internal control policies and procedures; | |
| ● | until we have sufficient technical accounting resources, we have engaged external consultants to provide support and to assist us in our evaluation of more complex applications of GAAP. |
We continue to enhance corporate oversight over process-level controls and structures to ensure that there is appropriate assignment of authority, responsibility, and accountability to enable remediation of our material weaknesses. We believe that our remediation plan will be sufficient to remediate the identified material weaknesses and strengthen our internal control over financial reporting. As we continue to evaluate, and work to improve, our internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary.
Changes in Internal Control over Financial Reporting
Except as set forth above, there were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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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
In addition to other information set forth in this report, readers should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 28, 2025, before making an investment decision. Our business, financial condition, and results of operations can be affected by any of these factors, whether they are currently known or unknown, in whole or in part, could materially and adversely affect our business, financial condition, results of operations, and stock price.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
We have not sold any equity securities during the three months ended March 31, 2025.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
On October 15, 2024, the members of the Board of Directors of the Company approved the adoption of a Stock Repurchase Program through which the Company may purchase up to $500,000 worth of shares of its common stock from time to time, as market conditions warrant. The Company’s repurchases may be made in the open market, in privately negotiated transactions, pursuant to a Rule 10b5-1 trading plan or otherwise in accordance with applicable securities laws and other requirements. The amount and timing of any repurchases will be determined at management’s discretion and depend on a variety of factors, including business, economic and market conditions, regulatory requirements, prevailing stock prices and other considerations. The share repurchase program has no time limit, does not obligate the Company to repurchase any dollar amount or number of shares of common stock, and may be amended, suspended or discontinued at any time. To date, we have repurchased a total of 20,500 shares of our common stock, all during 2024. As of the May 8, 2025 the Company purchased 7,500 shares of common stock and retired 28,000 shares of common stock in Treasury in 2025.
| Period | Total Number of Shares Repurchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program | ||||||||||||
| January 1, 2025 - March 31, 2025 | 7,500 | $ | 1.27 | 28,000 | $ | 490,443 | ||||||||||
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
On May 6, 2025, the Company entered into the First Addendum to Warrant Agent Agreement with VStock Transfer, LLC (the “Warrant Agent”) through which it modified a sentence in Section 3.3.7(b) of the Warrant Agent Agreement to clarify an ambiguity in the language and to match the language included in the warrants for which the Warrant Agent serves as agent. The addendum confirms that the warrants shall be exercised for cash if an effective registration statement is in place.
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ITEM 6. EXHIBITS
| * | 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. |
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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: May 8, 2025 | By: | /s/ Tim Pickett |
| Tim Pickett | ||
| Chief Executive Officer | ||
| Date: May 8, 2025 | By: | /s/ Jared Barrera |
| Jared Barrera | ||
| Chief Financial Officer | ||
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