NAKA 10-Q Quarter ended June 30, 2025

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 Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (the “SEC”). These interim unaudited condensed financial statements should be read in conjunction with those audited 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 of normal recurring accruals, have been made. Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the entire year.

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 earned $ 231,726 in reimbursements from insurance payers during the three months ended June 30, 2025, representing a 153.1 % increase from the $ 91,553 in reimbursements from insurance payers earned during the three months ended June 30, 2024. The Company earned $ 316,999 in reimbursements from insurance payers during the six months ended June 30, 2025, representing a 150.9 % increase from the $ 126,325 in reimbursements from insurance payers earned during the six months ended June 30, 2024.

NOTE 3— DIGITAL ASSETS

During the three and six months ended June 30, 2025, the Company recognized an unrealized loss from remeasurement of digital assets of $ 39,019 .

NOTE 4— PROPERTY AND EQUIPMENT

Depreciation expense for the three months ended June 30, 2025 and 2024, was $ 14,692 and $ 25,733 , respectively. Depreciation expense for the six months ended June 30, 2025 and 2024, was $ 32,463 and $ 50,634 , respectively.

NOTE 5— CAPITALIZED SOFTWARE

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.

During the three and six months ended June 30, 2025, the Company capitalized software costs of $ 58,075 and $ 231,523 , respectively. There was no capitalized software during the three and six months ended June 30, 2024.

NOTE 6— LEASES

Operating Leases

Cash payments included in the measurement of our operating lease liabilities were $ 50,032 and $ 36,164 for the three months ended June 30, 2025 and 2024, respectively. Cash payments included in the measurement of our operating lease liabilities were $ 102,358 and $ 72,125 for the six months ended June 30, 2025 and 2024, respectively.

Finance Leases

NOTE 7— PROMISSORY NOTE

On May 11, 2025, the Company entered into a non-interest bearing promissory note with BTC, Inc. with a principal amount up to $ 1,750,000 . Pursuant to the terms of the Note, the Company may draw down financing proceeds in principal amounts up to $ 350,000 each month, from time to time prior to September 30, 2025. The Note has a maturity date of November 14, 2025. As of June 30, 2025, the Company has not drawn any proceeds against this promissory note.

NOTE 8— STOCKHOLDERS’ EQUITY

Preferred Stock

As of June 30, 2025 and December 31, 2024, the Company was authorized to issue 10,000,000 preferred shares. As of June 30, 2025 and December 31, 2024, the Company had no preferred shares issued and outstanding.

Common Stock

As of June 30, 2025 and December 31, 2024, the Company was authorized to issue 100,000,000 common shares. As of June 30, 2025, the Company had 7,576,321 common shares issued and outstanding. As of December 31, 2024, the Company had 6,050,148 and 6,029,648 common shares issued and outstanding, respectively.

Effective April 1, 2025, the Company issued 28,780 shares of common stock for compensation to employees valued at $ 45,760 .

Effective April 1, 2025, the Company issued an aggregate of 14,091 shares of common stock for services valued at $ 22,403 .

During the six months ended June 30, 2025, the Company issued an aggregate of 1,455,990 shares of common stock, with a fair value of $ 6.33 per share, to various warrant holders, due to the exercise of warrants for cash proceeds of $ 9,216,420 .

On May 14, 2025, the Company issued an aggregate of 55,312 shares of common stock, with a fair value $ 6.33 per share, to various warrant holders, due to the cashless exercise of warrants.

Potential Common Stock Equivalents

As of June 30, 2025, there were an aggregate of 861,660 potential common share equivalents from stock options, restricted stock awards, and warrants excluded from the diluted loss per share calculations as their effect is anti-dilutive.

Treasury Stock

During the six months ended June 30, 2025, the Company repurchased 7,500 shares in treasury at a cost of $ 9,557 .

On April 22, 2025, the Company formally retired and cancelled the outstanding 28,000 shares of treasury stock. The repurchase cost of $ 31,702 was less than the original issuance price of the shares, resulting in a reduction to additional paid-in capital of $ 31,674 .

Stock Options

The Company accounts for its stock-based compensation in accordance with the fair value recognition of ASC 718.

On May 12, 2025, the Company granted stock options to purchase an aggregate of 161,473 shares of common stock to 15 employees, directors, and consultants. The stock options have exercise prices ranging from $ 3.90 to $ 5.50 per share, and vesting terms ranging from immediate to one year. The total estimated fair market value of these stock options of $ 2,180,363 , was calculated using the Black-Scholes pricing model.

On May 12, 2025, the Company granted stock options to purchase an aggregate of 6,000 shares of common stock to three directors. The stock options have an exercise price of $ 3.90 per share, and vest upon the closing of the merger between the Company and Nakamoto Holdings, Inc. (“Nakamoto”). See Note 10 for additional information. The total estimated fair market value of these stock options of $ 81,978 , was calculated using the Black-Scholes pricing model.

During the three months ended June 30, 2025 and 2024, the Company recorded $ 544,556 and $ 7,884 , respectively, in stock-based compensation expense related to stock options. During the six months ended June 30, 2025 and 2024, the Company recorded $ 552,864 and $ 15,500 , respectively, in stock-based compensation expense related to stock options.

As of June 30, 2025, the remaining unrecognized compensation cost related to non-vested stock options is $ 1,768,268 . The outstanding stock options have a weighted-average remaining contractual life of 8.16 years and a total intrinsic value of $ 3,206,695 .

Restricted Stock Awards

Effective May 1, 2025, the Company granted an aggregate of 30,000 shares of restricted stock to two individuals. The restricted stock vest upon the closing of the merger between the Company and Nakamoto. The Company determined the grant date fair value of the restricted stock award to be $ 56,400 , based on the closing stock price on the grant date (intrinsic value method).

During the three and six months ended June 30, 2025, the Company recorded $ 22,486 in stock-based compensation expense related to restricted stock awards.

As of June 30, 2025, the remaining unrecognized compensation cost related to non-vested restricted stock awards is $ 33,914 , which is expected to be recognized over the remaining estimated vesting period of 0.25 years. As of June 30, 2025, the outstanding restricted stock awards have total intrinsic value of $ 358,950 .

Warrants

As of June 30, 2025, the outstanding warrants have a weighted-average remaining contractual life of 3.93 years and a total intrinsic value of $ 3,909,239 .

NOTE 9— COMMITMENTS AND CONTINGENCIES

Advisory Agreement

On May 10, 2025, the Company entered into an advisory agreement with a financial advisory firm (the “Representative”), relating to advisory services previously provided by the Representative, including work associated with the Company’s Initial Public Offering in 2024 and advisory support in connection with other business transactions. Per the Agreement, the Company has an obligation to pay the Representative an advisory fee totaling $ 450,000 for these services. The advisory fee is payable as follows: (i) $15,000 upon the execution of the Agreement, (ii) $40,000 per month, payable by the 10th of each month beginning June 10, 2025, for a total of four months, and (iii) $275,000 payable upon the closing of the Company’s pending merger between the Company and Nakamoto. As of June 30, 2025, the Company has paid $ 55,000 under the advisory agreement.

NOTE 10— SUBSEQUENT EVENTS

Nakamoto Holdings Inc. Merger Agreement

On May 12, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, the Company’s newly formed, wholly-owned subsidiary Kindly Holdco Corp., a Delaware corporation (“Merger Sub”), Nakamoto Holdings Inc., a Delaware corporation (“Merger Partner” or “Nakamoto”), and Wade Rivers, LLC, a Wyoming limited liability company (“Wade Rivers”).

Pursuant to the Merger Agreement, Merger Sub will be merged with and into Nakamoto, with Nakamoto surviving as a wholly owned subsidiary (the “Surviving Corporation”) of KindlyMD (the “Merger”). Upon consummation of the Merger on the terms and subject to the conditions set forth in the Merger Agreement, the holders of Nakamoto Class A and Class B common stock (other than shares held in treasury or by dissenting stockholders) will receive an aggregate 22.3 million shares of the outstanding common stock, par value $ 0.001 per share (the “Company Common Stock”), based on a price per share of $ 1.12 . Shares of Merger Sub’s common stock will be converted into shares of common stock of the Surviving Corporation. No fractional shares will be issued; instead, cash will be paid in lieu of fractional shares.

Concurrently with the execution of the Merger Agreement, the Company entered into subscription agreements (collectively, the “Initial Subscription Agreements”) with certain investors (the “Initial Subscribers”) in an aggregate amount of approximately $ 511.7 million, pursuant to which the Company agreed to issue, and the Subscribers agreed to purchase, shares of Company Common Stock at a purchase price of $ 1.12 per share and/or pre-funded warrants to purchase shares of Company Common Stock (the “Pre-Funded Warrants”), in a private placement (the “Initial PIPE Financing”). The PIPE Financing will be issued in a private placement in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. Additionally, the Company entered into a Secured Convertible Debenture Purchase Agreement (the “Debenture Purchase Agreement”) with YA II PN, Ltd., an investment fund managed by Yorkville Advisors (the “Convert Investor”), under which the Company agreed to sell and issue to the Convert Investor a secured convertible debenture (the “Convertible Debenture”) in aggregate principal amount of $ 200.0 million (the “Principal Amount”) in exchange for cash or bitcoin equal to 96% of the Principal Amount (the “Debt Financing”). The Company expects to close the Debt Financing in connection with the Merger, subject to customary closing conditions. The Convertible Debenture will be issued in a private placement in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

Additionally, on June 19, 2025, the Company subsequently entered into additional subscription agreements, (the “Additional Subscription Agreements” and, together with the Initial Subscription Agreements, the “Subscription Agreements”), with certain new and/or existing investors (the “Additional Subscribers” and, together with the Initial Subscribers, the “Subscribers”) in an aggregate amount of $ 51.5 million. Under these Additional Subscription Agreements, the Company agreed to issue and sell to the Additional Subscribers shares of Company Common Stock at a purchase price of $ 5.00 per share in a private placement on substantially similar terms as the Initial Subscription Agreements (the “Additional PIPE Financing” and, together with the Initial PIPE Financing, the “PIPE Financings”). The Additional PIPE Financing will each be issued in a private placement in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

The Merger Agreement and the transactions contemplated by the Merger Agreement, along with the PIPE Financing and the Debt Financing, are collectively referred to herein as the “Transactions”. The board of directors of the Company (the “Board”) on May 12, 2025, has unanimously (i) determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are fair to and in the best interests of the Company and its stockholders, (ii) determined that the PIPE Financing and the Debt Financing are fair to and in the best interests of the Company and its stockholders (iii) approved and declared advisable the Merger Agreement and the Transactions, including the Merger, (iii) authorized and approved the execution, delivery and performance by the Company of the Merger Agreement, the Subscription Agreements and the Debenture Purchase Agreement and the consummation of the Transactions, including the Merger, the PIPE Financing and the Debt Financing, upon the terms and subject to the conditions set forth in the Merger Agreement, the Subscription Agreements and the Debenture Purchase Agreement, respectively, (iv) recommended the adoption of the Merger Agreement by the stockholders of the Company, (v) recommended the adoption of the issuance of the Company Common Stock pursuant to the Subscription Agreements and Debenture Purchase Agreement by the stockholders of the Company and (vi) recommended each of the adoption of the Governance Proposal, The New Equity Incentive Plan Proposal, the Convertible Share Issuance Proposal and the Marketing Agreement Share Issuance Proposal (each as defined herein). On May 18, 2025, holders of a majority of the issued and outstanding shares of Company Common Stock delivered to the Company a written shareholder consent in connection with the Merger Agreement, in accordance with Section 16-10a-704 of the Utah Revised Business Corporations Act and the Company’s Amended and Restated Articles of Incorporation and Amended and Restated Bylaws, to adopt and approve the following Proposals:

(1) The Merger Proposal — to approve and adopt the Merger Agreement and the transactions contemplated thereby, pursuant to which Merger Sub will merge with and into Nakamoto, with Nakamoto continuing as the surviving entity and a wholly-owned subsidiary of the Company (the “Merger Proposal”);

(2) The PIPE Proposal — to approve and adopt the Subscription Agreements with the Subscribers in an aggregate amount of approximately $ 511.7 million, pursuant to which the Company agreed to (A) issue, and such Subscribers agreed to purchase, shares of Company Common Stock at a purchase price of $ 1.12 per share and/or pre-funded warrants to purchase shares of Company Common Stock, in a private placement (the “PIPE Shares”) and (B) use commercially reasonable efforts to register the resale of PIPE Shares with the Securities and Exchange Commission (the “SEC”) within 30 days after closing of the Merger Agreement, seek effectiveness as soon as practicable, and maintain effectiveness until the earlier of (i) the Subscribers no longer holding the PIPE Shares, (ii) all PIPE Shares being freely tradable, or (iii) three years from effectiveness (the “PIPE Proposal”);

(3) The Share Issuance Proposal — to approve and adopt the issuance of an aggregate of 477,678,286 shares of Company Common Stock at a price per share of $ 1.12 per share of Company Common Stock, of which 22,321,143 shares of Company Common Stock will be issued to the stockholders of Nakamoto and 455,357,143 shares of Company Common Stock will be issued to the Subscribers to comply with: (A) Section 5635(a) of the Nasdaq Rules; (B) Section 5635(b) of the Nasdaq Rules; and (C) Section 5635(d) of the Nasdaq Rules (the “Share Issuance Proposal”);

(4) The Governance Proposal — to approve and adopt (A) the Second Amended and Restated Articles of Incorporation of the Company (the “Amended Articles”) to, among other things, (i) increase the number of authorized shares of Company Common Stock to 10,000,000,000, (ii) classify the Board so that there are three classes of directors, designated as Class I, Class II, and Class III, with each class consisting, as nearly as may be practicable, of one-third of the total members of the Board, with each class serving staggered 3-year terms, (iii) prohibit actions by written consent of the shareholders of the Company, (iv) permit the Board to change the name of the Company in its sole discretion, and (v) provide that the sole and exclusive forum for certain actions relating to the Company shall be the United States District Court for the District of Utah and any Utah State court sitting in Salt Lake County, State of Utah of the United States of America and (B) the Second Amended and Restated Corporate Bylaws of the Company (the “Amended Bylaws”) to, among other things, (i) remove the provisions prohibiting classes of directors with staggered terms, (ii) state that directors will be elected to serve three-year terms, (iii) impose a minimum and maximum number of directors who may serve on the Board, (iv) establish advance notice requirements relating to business to be brought before the annual meeting of the shareholders of the Company, including director nominees, (v) establish requirements relating to calling special meetings and the conduct at such special meetings by the shareholders of the Company, and (vi) prohibit actions by written consent of the shareholders of the Company (the “Governance Proposal”);

(5) The New Equity Incentive Plan Proposal — to approve and adopt the Company’s 2025 Equity Incentive Plan and the material terms thereunder (the “New Equity Incentive Plan”) that will be go into effect immediately prior to the closing of the Merger Agreement and related transactions to comply with Section 5635(c) of the Nasdaq Rules, which requires stockholder approval for the issuance of securities when a stock option or purchase plan is to be established, pursuant to which stock may be acquired by officers, directors, employees, or consultants (the “New Equity Incentive Plan Proposal”);

(6) The Convertible Debt Issuance Proposal — to approve and adopt the issuance of shares of Company Common Stock to YA II PN, Ltd., a Cayman Islands exempted limited company (the “Convert Investor”) pursuant to the terms of that certain Debenture Purchase Agreement, to comply with Nasdaq Rule 5635(d) (the “Convertible Debt Issuance Proposal”); and

(7) The Marketing Agreement Share Issuance Proposal — to approve and adopt the issuance of up to an aggregate of 600,000,000 shares of Company Common Stock at a price per share of $ 1.12 per share of Company Common Stock, in accordance with the Master Marketing Services Agreement, dated May 12, 2025 (the “Marketing Agreement”) by and between Nakamoto and BTC, Inc., a Delaware corporation (“BTC Inc”), which will be assigned to and assumed by KindlyMD from Nakamoto at the closing of the Merger Agreement pursuant to the Assignment and Assumption Agreement with Novation by and between KindlyMD, Nakamoto, and BTC (the “Assignment Agreement”), to comply with Nasdaq Rules 5635(a), 5635(b), and 5635(d) (the “Marketing Agreement Share Issuance Proposal”).

The Board on June 19, 2025, unanimously (i) determined that the Additional PIPE Financing is fair to and in the best interests of the Company and its stockholders, (ii) approved and declared advisable the Additional PIPE Financing, (iii) authorized and approved the execution, delivery and performance by the Company of the Additional Subscription Agreements, upon the terms and subject to the conditions set forth in the Additional Subscription Agreements, and (iv) recommended the adoption of the issuance of the Company Common Stock pursuant to the Additional Subscription Agreements. On June 19, 2025, holders of a majority of the issued and outstanding shares of Company Common Stock delivered to the Company a written shareholder consent, in accordance with Section 16-10a-704 of the Utah Revised Business Corporations Act and the Company’s Amended and Restated Articles of Incorporation and Amended and Restated Bylaws, to adopt and approve the following proposals (the “June Proposals”):

(1) The Additional PIPE Proposal — to approve and adopt the Additional Subscription Agreements with the Additional Subscribers in an aggregate amount of approximately $ 51.5 million, pursuant to which the Company agreed to (A) issue, and such Additional Subscribers agreed to purchase, shares of Company Common Stock at a purchase price of $ 5.00 per share in a private placement (the “Additional PIPE Shares”) and (B) use commercially reasonable efforts to register the resale of Additional PIPE Shares with the SEC within 30 days after closing of the Merger Agreement, seek effectiveness as soon as practicable, and maintain effectiveness until the earlier of (i) the Additional Subscribers no longer holding the Additional PIPE Shares, (ii) all additional PIPE Shares being freely tradable, or (iii) three years from effectiveness (the “Additional PIPE Proposal”); and

(2) The Additional Share Issuance Proposal — to approve and adopt the issuance of an aggregate of 10,300,000 shares of Company Common Stock at a price per share of $ 5.00 per share of Company Common Stock to the Additional Subscribers to comply with: (A) Section 5635(a) of The Nasdaq Stock Market’s Listing Rules (the “Nasdaq Rules”); (B) Section 5635(b) of the Nasdaq Rules, as applicable ; and (C) Section 5635(d) of the Nasdaq Rules (the “Additional Share Issuance Proposal”).

The adoption of the May Proposals and approval of the Merger and related Transactions by the Company’s stockholders required the affirmative vote or consent by the holders of a majority of the voting power of the outstanding shares of Company Common Stock entitled to vote thereon. On May 18, 2025, holders of approximately 50.76 % of the outstanding voting power of the Company, which collectively on May 18, 2025 held of record and beneficially owned 3,708,163 shares of Company Common Stock (the “May 18 Majority Stockholders”), delivered a written consent approving and adopting in all respects the Proposals (the “Written Consent”). As a result, no further action by any stockholder of the Company is required under applicable law or the Merger Agreement (or otherwise) to adopt the Merger Agreement or approve the Merger and related Transactions, or adopt and approve any of the Proposals, and the Company will not be soliciting your vote for or consent to the Proposals and will not call a stockholders’ meeting for purposes of voting on the adoption of the Proposals, including the Merger Agreement and the approval of the transactions contemplated by the Merger Agreement.

The adoption of the June Proposals and approval of the Additional PIPE Issuance and related transactions by the Company’s stockholders required the affirmative vote or consent by the holders of a majority of the voting power of the outstanding shares of Company Common Stock entitled to vote thereon. On June 19, 2025, stockholders which collectively on June 19, 2025 held of record and beneficially owned 3,813,927 shares of Company Common Stock representing approximately 50.14 % of the aggregate voting power of the then-issued and outstanding shares of Company Common Stock (the “June 19 Majority Stockholders”), delivered a written consent approving and adopting in all respects the June Proposals (the “June Written Consent”).

The Merger Agreement contains certain termination rights for the parties, including (i) by mutual written consent; (ii) by either party if the Merger shall not have been consummated by November 14, 2025; (iii) by either party if a permanent injunction has been issued or other law has been enacted prohibiting or making illegal the Merger; (iv) by either party if the required Kindly stockholder approval is not obtained within seven business days after signing; (v) by Kindly if (A) Nakamoto has breached its representations or covenants in a way that causes a condition to closing to fail or, (B) if prior to receipt of Nakamoto stockholder approval, Nakamoto effected a Merger Partner Board Recommendation Change; (vi) by Nakamoto if (A) Kindly has breached its representations or covenants in a way that causes a condition to closing to fail or, (B) if prior to receipt of Kindly stockholder approval, Kindly effected a Public Company Board Recommendation Change; (vii) by either party upon certain material breaches of the other party; (viii) by either party upon receipt of a Superior Proposal prior to receipt of the applicable stockholder approval and subject to certain obligations; and (ix) by Nakamoto if Kindly enters into bankruptcy, receivership or other similar proceedings. The Merger Agreement further provides that, upon termination of the Merger Agreement under certain circumstances, Kindly may be required to pay Nakamoto a termination fee of $ 2.5 million, plus the aggregate amount of proceeds received by Kindly in respect of any exercises of any Public Company Warrants. Nakamoto may be required to pay Kindly a termination fee of $ 2.5 million.

On July 22, 2025, the Company has filed a Notice of Stockholder Action by Written Consent and Information Statement on Schedule 14C (the “Information Statement”) with the Securities and Exchange Commission that contains more detailed information on the proposed Merger, the Merger Agreement and the Ancillary Agreements. The foregoing description of the Merger Agreement, as well as the Initial Subscription Agreements, Additional Subscription Agreements, Debenture Purchase Agreement, and other Ancillary Agreements, do not purport to be complete and are qualified in their entirety by reference to the full text of the agreements, copies of which are filed as Annexes to the Information Statement that has been mailed to all shareholders of record.

Amended and Restated Engagement Agreement

On January 16, 2025, the Company entered into an Engagement Agreement (the “Agreement”) with an financial advisory firm (the “Representative”) to provide various advisory services in connection with the pending merger between the Company and Nakamoto. On May 11, 2025, the parties executed an amended and restated Engagement Agreement (the “Amended and Restated Agreement”). Pursuant to the terms of the Amended and Restated Agreement, the Company, in consideration for advisory services, will pay the Representative a fee (the “Advisory Fee”) of $ 500,000 . The Advisory Fee is to be paid as 30,000 restricted shares of the Company’s common stock to be issued upon the execution of the Amended and Restated Agreement. Upon the later of (i) the six month anniversary of the issuance of the restricted shares or (ii) the day following the Closing of the Merger the Company will calculate the then-market value of the restricted stock based on a 5-day VWAP (the “Value Calculation”). If the Value Calculation of the restricted shares is less than $ 500,000 , then the Company shall pay to the Representative within one business day thereafter the difference between $ 500,000 and the Value Calculation. If the Value Calculation is equal to or greater than $ 500,000 , then no further payments are required. If the Merger does not close by November 14, 2025, the Amended and Restated Agreement will be terminated.

Warrant Exercises

Since May 12, 2025 through the close of business on August 4, 2025, the Company has issued 1,511,320 shares of its common stock pursuant to the exercise of warrants by warrant holders (with 18 of those shares being issued after July 1, 2025). Through the close of business on August 4, 2025, the Company has received a total of $ 9,216,534 from the exercise of these warrants.