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STOCKHOLDERS’ DEFICIT
 6 Months Ended
Jun. 30, 2024
Equity [Abstract]  
STOCKHOLDERS’ DEFICIT

NOTE 8—STOCKHOLDERS’ DEFICIT

 

Preferred Stock

 

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

 

Common Stock

 

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

 

Initial Public Offering

 

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

 

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

 

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

 

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

 

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

 

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

 

Potential Common Stock Equivalents

 

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

 

Stock Options

 

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

 

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

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

 

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

 

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

 

Warrants

 

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

 

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

 

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

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

 

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