# Nakamoto Inc.: Form 10-Q for the period ended Mar 31, 2024

- Company: [Nakamoto Inc.](/companies/naka.md) (CIK 1946573)
- Form: 10-Q
- Filed: 2024-06-27
- Accepted by EDGAR: Jun 27, 2024, 17:00 ET
- Period: 2024-03-31
- Accession: 0001493152-24-025464
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1946573/000149315224025464/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1946573/000149315224025464/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $829.0k | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Selling, general and administrative | 3 months, 2024-01-01 to 2024-03-31 | $325.5k | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | −$237.1k | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $57.2k | us-gaap:InterestExpense |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | −$282.3k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.06 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.06 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 4,617,798 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | −$213.4k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $11.2k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-03-31 | $287.4k | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $356.0k | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $799.3k | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $861.4k | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $1.2m | us-gaap:Liabilities |
| Long-term debt | at 2024-03-31 | $710.0k | us-gaap:LongTermDebt |
| Shareholders' equity | at 2024-03-31 | −$383.1k | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 20,779 characters.

*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 Annual Report 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

#### Bridge Financings

On January 24, 2024, we entered into a securities purchase agreement in a private placement transaction with a certain accredited investor (“Bridge Lender”), pursuant to which the Company issued and sold to the Bridge Lender a 10% 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. If an event of default occurs, then the interest rate will increase to 15%, or the maximum amount permitted by law. The note contains customary covenants and events of default for a loan of this type.

In connection with the issuance of the 10% OID promissory note, we entered into a separate securities purchase agreement with the Bridge Lender, which includes the registration rights for common shares to be issued to the Bridge Lender. 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.

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. These shares are subject to a 90-day lock-up agreement from the date of issuance. Consequently, the corresponding derivative liability was extinguished.

#### 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 $6.0 million.

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

### Results of Operations

#### Comparison of the Three Months Ended March 31, 2024 and 2023

The following table sets forth key components of our results of operations during the three months ended March 31, 2024 and 2023, both in dollars and as a percentage of our revenues:

|  | For the Three Months Ended March 31, 2024 Amount | % of Revenues | 2023 Amount | % of Revenues |
| --- | ---: | ---: | ---: | ---: |
| Revenues | $829,029 | 100.0% | $1,160,345 | 100.0% |
| Operating Expenses |  |  |  |  |
| Cost of revenues | 7,744 | 0.9% | 48,624 | 4.2% |
| Salaries and wages | 707,966 | 85.4% | 933,301 | 80.4% |
| General and administrative | 325,545 | 39.3% | 358,183 | 30.9% |
| Depreciation | 24,901 | 3.0% | 25,442 | 2.2% |
| Total Operating Expenses | 1,066,156 | 128.6% | 1,365,550 | 117.7% |
| Loss from Operations | (237,127) | (28.6)% | (205,205) | (17.7)% |
| Other Income (Expense) |  |  |  |  |
| Other income | 12,040 | 1.5% | 24,226 | 2.1% |
| Interest expense | (57,239) | (6.9)% | - | - |
| Total Other Income (Expense) | (45,199) | (5.5)% | 24,226 | 2.1% |
| Net loss before income taxes | (282,326) | (34.1)% | (180,979) | (15.6)% |
| Income tax benefit | - | - | - | - |
| Net Loss | $(282,326) | (34.1)% | $(180,979) | (15.6)% |

#### Revenues

Revenues decreased by $331,316, or 28.6%, to $829,029 for the three months ended March 31, 2024, from $1,160,345 for the three months ended March 31, 2023. The decrease in revenues is primarily attributed to a decrease in cash-pay patient care services as KindlyMD shifts to 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 $299,394, or 21.9%, to $1,066,156 for the three months ended March 31, 2024, from $1,365,550 for the three months ended March 31, 2023. The decrease in operating expenses is primarily attributable to the following:

1\. Salaries and wages decreased by $225,335, or 24.1%, to $707,966 for the three months ended March 31, 2024, from $933,301 for the three months ended March 31, 2023. The decrease in salaries and wages is primarily attributed to decreased need of employee and contract labor related to cash-pay patient care services as KindlyMD shifts to 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.

2\. General and administrative expenses decreased by $32,638, or 9.1%, to $325,545 for the three months ended March 31, 2024, from $358,183 for the three months ended March 31, 2023. The decrease in general and administrative expenses is primarily attributed to decreased marketing and advertising spending related to the Company’s cash-pay service line as well as retail sales.

3\. Cost of revenues decreased by $40,880, or 84.1%, to $7,744 for the three months ended March 31, 2024, from $48,624 for the three months ended March 31, 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

Other income decreased by $12,186, or 50.3%, to $12,040 for the three months ended March 31, 2024, from $24,226 for the three months ended March 31, 2023. This decrease is primarily attributable to lower income from affiliate programs and educational partnerships during the period.

#### Interest Expense

Interest expense was $57,239 for the three months ended March 31, 2024. Interest expense is primarily attributable to accrued interest of notes payable of $9,881 and amortization of debt discounts of $47,358. As of March 31, 2024, the remaining debt discount balance on notes payable totaled $336,721, which will be amortized to interest expense over the respective term of the notes using the effective interest method. As a result of the IPO on June 3, 2024, the majority of the remaining debt discount balance will be recognized to interest expense next quarter.

#### Net Loss

As a result of the cumulative effect of the factors described above, our net loss was $282,326 for the three months ended March 31, 2024, compared to $180,979 for the three months ended March 31, 2023.

Net loss per share decreased by $0.02, or 50%, to $(0.06) for the three months ended March 31, 2024, compared to $(0.04) for the three months ended March 31, 2023. Management continues to look for opportunities to increase sales, acquire additional clinics, improve margins, and control ongoing operating expenses.

### Liquidity and Capital Resources

As of March 31, 2024, we had cash and cash equivalents of $287,383 and total working capital deficit of $505,419. For the three months ended March 31, 2024, the Company incurred an operating loss of $237,127, and used cash flows in operating activities of $213,439.

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 assist us in implementing our strategic operational business plans to create sustained cash flow generation thereafter.

#### Summary of Cash Flow

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

|  | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash provided by (used in) operating activities | $(213,439) | $167,100 |
| Net cash used in investing activities | (11,182) | (12,695) |
| Net cash used in financing activities | (13,496) | (10,000) |
| Net change in cash and cash equivalents | (238,117) | 144,405 |
| Cash and cash equivalents at the beginning of period | 525,500 | 186,918 |
| Cash and cash equivalents at the end of period | $287,383 | $331,323 |

Net cash used in operating activities was $238,117 for the three months ended March 31, 2024, as compared to net cash provided by operating activities of $167,100 for the three months ended March 31, 2023. Significant factors affecting the decrease in net cash provided by operating activities were primarily a result of the net loss during the period and decreased accounts payable and accrued expenses, which was partially offset by decreased accounts receivable and inventory.

Net cash used in investing activities was $11,182 for the three months ended March 31, 2024, as compared to $12,695 for the three months ended March 31, 2023. The decrease in cash used in investing activities is primarily attributed to decreased capital expenditures during the period.

Net cash used in financing activities was $13,496 for the three months ended March 31, 2024, as compared to $10,000 for the three months ended March 31, 2023. The increase in cash used in financing activities is primarily attributed to increased repayments of notes payable, offset by the issuance of a 10% OID promissory note during the period.

As a result of these cash flow activities, our net cash decreased by $238,117, or 45.3%, from $525,500 as of December 31, 2023, to $287,383 as of March 31, 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.

## Market risk

As filed, 167 characters.

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.

## Controls and procedures

As filed, 1,680 characters.

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 March 31, 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.

## Risk factors

As filed, 163 characters.

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.

Filed Jun 27, 2024.
Source: SEC EDGAR, the filing index for accession 0001493152-24-025464. Last ingested by Listed: Oct 29, 2026, 16:11 ET. No prices; not investment advice.