DEF 14C: Kindly MD Pivots to Bitcoin Treasury Strategy with Nakamoto Merger and $763M Capital Infusion

Kindly MD, Inc. is set to merge with Nakamoto Holdings Inc., fundamentally shifting its business focus from healthcare to a bitcoin treasury strategy, backed by over $763 million in new equity and debt financing.

Summary

• Kindly MD, Inc. (KindlyMD) will merge with Nakamoto Holdings Inc. (Nakamoto), with Nakamoto becoming a wholly-owned subsidiary of KindlyMD.
• Nakamoto Class A and Class B common stockholders will receive an aggregate of 22.3 million shares of KindlyMD Common Stock, valued at $1.12 per share.
• KindlyMD secured approximately $511.7 million in an initial Private Investment in Public Equity (PIPE) financing, issuing shares and/or pre-funded warrants at $1.12 per share.
• An additional PIPE financing raised $51.5 million by issuing shares at a higher price of $5.00 per share.
• A Secured Convertible Debenture Purchase Agreement with YA II PN, Ltd. (Yorkville Advisors) provides $200.0 million in debt financing, with the company receiving 96% of the principal amount in cash or bitcoin.
• The total capital raised from these financings amounts to approximately $763.2 million.
• More than $710 million of the proceeds from the PIPE and Debt Financings are earmarked for purchasing Bitcoin within the first 30 days post-merger.
• KindlyMD's Board of Directors unanimously approved the merger and associated financings, deeming them fair and in the best interests of stockholders.
• Majority stockholders of KindlyMD (50.76% on May 18, 2025, and 50.14% on June 19, 2025) approved the proposals via written consent, eliminating the need for a shareholder meeting.
• The combined entity will continue to trade on Nasdaq under the ticker symbol NAKA, and a name change is anticipated.
• KindlyMD currently holds 21 bitcoin, while Nakamoto holds none; the combined company aims to become one of the largest bitcoin holders among U.S. public companies.
• A non-interest-bearing promissory note of up to $1.75 million was entered into with BTC Inc. for KindlyMD's working capital needs, maturing by November 14, 2025, or the merger closing date.

Sentiment

Score: 3

Explanation: The sentiment is cautious due to the radical business model shift from healthcare to a highly volatile bitcoin treasury strategy, coupled with massive shareholder dilution. While the capital raise is substantial, the inherent risks of bitcoin and the untested nature of this strategy for a public company warrant a low-to-moderate sentiment.

Positives

• A substantial capital raise of approximately $763.2 million provides significant funding for the new strategic direction.
• The unanimous approval by KindlyMD's Board of Directors for the merger and financings signals strong internal alignment and confidence in the strategic shift.
• The strategic pivot to a bitcoin treasury strategy positions the company to capitalize on potential macroeconomic tailwinds favoring decentralized monetary assets and aims for long-term bitcoin accumulation.
• The appointment of David Bailey, co-founder of BTC Inc. (known for Bitcoin Magazine and Bitcoin Conferences), as the combined company's CEO brings recognized expertise and a successful track record in the bitcoin space.
• The convertible debenture features a 0% interest rate for the first two years, which will reduce initial debt servicing costs.
• The additional PIPE financing was secured at a significantly higher price ($5.00 per share) compared to the initial PIPE ($1.12 per share), potentially indicating increased investor interest or perceived value.

Negatives

• Existing KindlyMD shareholders will experience substantial dilution from the issuance of 22.3 million shares for the merger, 456.87 million shares for the initial PIPE, and 10.3 million shares for the additional PIPE, with further potential dilution from convertible debentures and future acquisitions.
• The new business strategy, heavily reliant on bitcoin holdings, introduces significant volatility and exposes the company to extreme price fluctuations inherent in digital assets.
• The fixed exchange ratio for the merger consideration means the value received by Nakamoto shareholders will not adjust for changes in KindlyMD's stock price between the signing of the agreement and the completion of the merger.
• There is uncertainty regarding the U.S. federal income tax consequences of the merger, as it may not qualify for tax-free treatment under Section 351(a) of the Code, potentially leading to a taxable exchange for Nakamoto stockholders.
• The company faces the risk of being classified as an investment company under the Investment Company Act of 1940 due to its concentration in bitcoin, which would subject it to extensive and potentially burdensome regulatory controls.
• The company will incur substantial transaction costs related to the merger, which may exceed initial anticipations and could adversely affect its financial condition.
• The merger agreement includes provisions that limit KindlyMD's ability to pursue alternative transactions and may require the payment of significant termination fees under certain circumstances.
• Nakamoto has a limited operating history (incorporated March 6, 2025) and reported a net loss of $2,048,233 for the period from inception to April 30, 2025, providing limited historical financial performance data for the new core business.
• The company has incurred significant indebtedness, including a $200 million convertible debenture and a $1.75 million promissory note, which could constrain future capital raising efforts or impact debt servicing capabilities.

Risks

• Bitcoin is a highly volatile asset, and fluctuations in its price are likely to influence the company's financial results and the market price of its listed securities.
• The company's assets will be concentrated in bitcoin, which limits risk mitigation that could otherwise be achieved by holding a more diversified portfolio of treasury assets.
• The ability to achieve the objectives of the bitcoin strategy depends significantly on the ability to obtain equity and debt financing, which may not be available on favorable terms or at all.
• The bitcoin strategy has not been tested over an extended period of time or under different market conditions, and its success is uncertain.
• The company is subject to counterparty risks, particularly relating to exchanges and custodians used for bitcoin transactions, and applicable insolvency law is not fully developed for digital assets.
• The broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of bitcoin.
• Bitcoin and other digital assets are novel assets, subject to significant legal, commercial, regulatory, and technical uncertainty, including evolving interpretations of securities laws.
• Regulatory actions by U.S. and foreign governments could adversely affect the price of bitcoin or the ability to own or transfer it.
• Engaging in a bitcoin strategy may lead to increased costs for director and officer liability insurance or the inability to obtain such coverage on acceptable terms.
• The liquidity of bitcoin may be reduced, and public perception damaged, if financial institutions limit banking services to bitcoin-related businesses.
• The availability of spot Exchange Traded Products (ETPs) for bitcoin and other digital assets could adversely affect the market price of the company's listed securities by offering alternative investment exposure.
• The bitcoin strategy subjects the company to enhanced regulatory oversight, including potential scrutiny from the SEC or other federal/state agencies.
• There is a risk of security breaches or cyberattacks leading to the loss of some or all of the company's bitcoin holdings if private keys are lost or destroyed.
• The company faces risks related to the use of third-party exchanges (e.g., Kraken, Anchorage, Coinbase) for bitcoin purchases.
• The company faces risks related to the custody of its bitcoin, including the potential for custodially-held bitcoin to be considered property of custodians' estates in bankruptcy.
• A regulatory determination that bitcoin is being offered and sold as a security could lead to the company's classification as an investment company under the Investment Company Act of 1940, imposing significant additional regulatory controls.
• The bitcoin strategy exposes the company to the risk of non-performance by counterparties.
• Future business strategy may include acquisitions and investments in companies with bitcoin strategies, which carry risks associated with integration and the ability to successfully acquire and integrate businesses.
• The company has incurred, and may in the future incur, significant indebtedness, which may impair its ability to raise further capital or impact its ability to service its debt.
• Because the exchange ratio of the merger consideration is fixed, the value of shares received by KindlyMD stockholders may be significantly different from the market value at the time the merger is completed.
• The company has broad discretion in the use of a portion of the net proceeds from the PIPE Financing, and these funds may not improve the business or could increase its risk profile.
• The merger agreement limits KindlyMD's ability to pursue alternatives to the merger and could require the payment of a termination fee.
• Completion of the merger may trigger change in control or other provisions in certain agreements to which KindlyMD is a party.
• KindlyMD is expected to incur significant transaction costs in connection with the merger, which may be in excess of those anticipated.
• Failure to successfully combine the businesses of KindlyMD and Nakamoto in the expected timeframe may adversely affect future results.
• The trading price and volume of the combined company's common stock may be volatile following the merger.
• The unaudited pro forma combined financial statements are based on preliminary estimates and assumptions, and actual results may differ materially.
• The opinion of KindlyMD's financial advisor will not reflect changes in circumstances between the signing of the merger agreement and the completion of the merger.
• The synergies attributable to the merger may vary from expectations.
• Shareholders will experience dilution from the issuance of common stock and pre-funded warrants, and convertible debentures, and may experience additional dilution from future equity issuances.
• The market price for the common stock of the combined company following the closing may be affected by factors different from those that historically affected KindlyMD common stock.
• The merger may be treated as a taxable exchange for U.S. federal income tax purposes.
• Unrealized fair value gains on the company's Bitcoin holdings may cause the company to become subject to the corporate alternative minimum tax under the Inflation Reduction Act of 2022.
• There is no guarantee that the combined company will acquire either BTC Inc. or UTXO at a future date, and any such acquisition could result in substantial dilution for existing shareholders.

Future Outlook

The combined company intends to implement a bitcoin treasury strategy, focusing on accumulating long-term bitcoin holdings and related business development, primarily using the proceeds from the recent PIPE and Debt Financings. It plans to explore raising additional capital and leveraging its bitcoin treasury to acquire and develop bitcoin companies in the finance, media, and advisory industries, with the ultimate goal of creating a diversified bitcoin ecosystem. The company will also evaluate potential bitcoin yield activities, such as reinvesting operating cash flows into bitcoin, raising strategic capital for additional bitcoin purchases, and deploying bitcoin into yield-generating opportunities like selling covered calls.

Management Comments

• The Board unanimously 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.
• The Board unanimously determined that the PIPE Financing and the Debt Financing are fair to and in the best interests of the Company and its stockholders.
• Nakamoto believes bitcoin is an attractive asset because it can serve as a store of value, supported by a robust and public open-source architecture, that is untethered to sovereign monetary policy.
• Due to its fixed supply, bitcoin offers the potential to serve as a hedge against inflation in the long-term and, if its adoption increases, the opportunity for appreciation in value.
• The Bitcoin network provides the infrastructure and opportunity for the development of financial and technological innovations.
• The company anticipates a ground swell of publicly traded companies seeking to allocate some or all of their treasuries into bitcoin.
• Nakamoto is committed to developing the blue-chip standard for bitcoin treasury portfolio construction.
• What differentiates Nakamoto from other bitcoin treasury strategies is, in addition to developing its own bitcoin treasury, its founder, David Bailey, has a successful track record of implementing this strategy in capital markets around the world.
• Management expects that the company will have access to funds from anticipated future debt or equity financing to meet its current obligations.
• Management believes that the net proceeds from the sale of equity and convertible debt will be sufficient to fund near-term operations for the next twelve months.

Industry Context

This announcement signifies a radical strategic pivot for KindlyMD from its established healthcare business to a bitcoin treasury and blockchain-focused enterprise. This move aligns with a broader, albeit niche, industry trend of publicly traded companies adopting bitcoin as a primary treasury reserve asset, as highlighted by Nakamoto's management. The combined company aims to differentiate itself from traditional bitcoin ETFs (which offer passive exposure) and mining companies by integrating direct bitcoin holdings with existing operating companies (KindlyMD's healthcare operations) and future acquisitions in the bitcoin ecosystem. The filing acknowledges the evolving regulatory landscape for digital assets, referencing recent SEC approvals of spot bitcoin and ether ETPs, which could intensify competition for investor capital seeking digital asset exposure.

Comparison to Industry Standards

• The combined company expects its estimated initial bitcoin treasury of over $710 million to reflect one of the largest bitcoin holdings by a U.S. public company, positioning it as a significant player in the corporate bitcoin adoption space.
• Nakamoto's management team, led by David Bailey (co-founder of BTC Inc., Bitcoin Magazine, and Bitcoin Conferences), is highlighted for its 'successful track record of implementing this strategy in capital markets around the world,' suggesting a competitive advantage through experienced leadership in the nascent bitcoin treasury sector.
• The company explicitly differentiates its business model from pure-play bitcoin ETFs and mining companies by combining direct bitcoin holdings with existing and future operating companies (including KindlyMD's healthcare business), aiming to offer a 'multifaceted exposure to the bitcoin ecosystem' not available through traditional investment vehicles.
• The Marketing Services Agreement with BTC Inc. includes a valuation mechanism for potential acquisition based on an 'industry standard multiple, not to be less than 10, of the earnings before interest, taxes, depreciation, and amortization (EBITDA) of BTC Inc. and its subsidiaries, with such EBITDA to equal or exceed $4,500,000,' indicating adherence to established valuation benchmarks for related industry acquisitions.

Management Changes

Corporate Governance

Legal Proceedings

• As of the filing of this information statement, the Company is not aware of any complaints filed or litigation pending related to the Merger.

Related Party Transactions

• Nakamoto's management team is led by David Bailey, who is also the co-founder and CEO of BTC Inc., the company providing marketing services and a potential acquisition target.
• Nakamoto entered into a Master Marketing Services Agreement with BTC Inc. on May 12, 2025, which KindlyMD will assume upon merger closing. This agreement includes a put/call option for KindlyMD to acquire BTC Inc. for up to 600,000,000 shares of KindlyMD Common Stock at $1.12 per share, contingent on BTC Inc.'s EBITDA meeting certain thresholds (>= $4,500,000) and an industry standard multiple (not less than 10).
• Nakamoto entered into a non-interest-bearing loan agreement with BTC Inc. on June 6, 2025, for up to $500,000, with $500,000 outstanding as of June 18, 2025.
• KindlyMD and its affiliates entered into a non-interest-bearing promissory note with BTC Inc. (Lender) on May 12, 2025, for up to $1.75 million, to be used for general corporate purposes and working capital.
• Tim Pickett, KindlyMD's CEO and Chairman, and his spouse serve as co-investment trustees of The Wade Rivers Trust, which is the sole Member of Wade Rivers, LLC. Wade Rivers, LLC is a significant stockholder of KindlyMD (38.11% beneficial ownership as of June 1, 2025) and is subject to indemnification obligations.
• Existing shareholders of Nakamoto, including David Bailey and certain other employees of Nakamoto who are also equity holders of BTC Inc., will beneficially own approximately 3.8% of KindlyMD's outstanding shares at closing (excluding any shares issued for the BTC Inc. acquisition).
• If the maximum 600,000,000 shares are issued for the BTC Inc. acquisition, the holders of BTC Inc. would beneficially own approximately 50.2% of the combined company (or 53.1% including shares held by Nakamoto shareholders who are also BTC Inc. equity holders), potentially constituting a change of control.
• David Bailey would beneficially own approximately 13.8% of the outstanding common stock of the combined company if the BTC Inc. acquisition occurs.

Stakeholder Impact

• Shareholders: Existing KindlyMD shareholders will experience significant dilution due to the large number of shares issued for the merger and financings. Their ownership percentage will decrease substantially. The strategic shift introduces high volatility and speculative risk to their investment. Changes in corporate governance, such as the classified board and prohibition of written consent, will alter their rights and influence. KindlyMD shareholders will not have appraisal rights in connection with the merger.
• Employees: The merger may create disruption and uncertainty regarding roles within the combined company. Retention of key management and other employees is crucial for the success of the new strategy. A new equity incentive plan is being established to incentivize personnel.
• Customers (KindlyMD's healthcare business): While KindlyMD states it will continue its medical business operations, the primary corporate focus will shift to bitcoin. This change in strategic priority could indirectly affect the long-term direction or investment in the healthcare services, though no direct impact on customer service quality is explicitly stated.
• Suppliers/Creditors: The company has incurred significant new debt, which could impact its financial stability and ability to meet obligations if the new bitcoin strategy does not generate expected returns. The promissory note is secured by all assets, potentially affecting other creditors.
• Nakamoto Stockholders: These stockholders will receive KindlyMD common stock, gaining exposure to a publicly traded company and the new bitcoin treasury strategy. Their investment is now tied to the performance and risks of the combined entity and the volatile digital asset market.

Next Steps

• Consummation of the Merger is expected promptly after all conditions are satisfied or waived, approximately 20 days following the mailing of the definitive information statement.
• The Debt Financing is expected to close in connection with the Merger, subject to customary closing conditions.
• More than $710 million of the proceeds from the PIPE and Debt Financings are intended to be used to acquire bitcoin within the first 30 days post-merger.
• The company will file a registration statement on Form S-8 to register shares reserved under the New Equity Incentive Plan as soon as reasonably practicable after becoming eligible.
• A registration statement will be filed to permit the public resale of the PIPE shares within 30 days after the merger closing, with efforts to achieve effectiveness as soon as practicable.
• KindlyMD will continue its medical business operations post-merger, alongside the new bitcoin treasury strategy.
• The combined company plans to evaluate potential bitcoin yield activities following the merger and implementation of its bitcoin treasury strategy.
• A current report on Form 8-K will be filed to publicly disclose all material terms of the transactions.
• The company will maintain the listing of its common stock on Nasdaq and seek approval for the listing of newly issued shares.
• A 280G analysis will be undertaken within 30 days from the agreement date.
• The outstanding balance of a loan agreement with Square Financial Services, Inc. and Block, Inc. will be repaid within three business days from the agreement date.

Key Dates

Recommendation

The filing outlines a radical and high-risk strategic pivot from a healthcare business to a bitcoin treasury company, which is inherently speculative due to the extreme volatility of digital assets. This shift is accompanied by massive shareholder dilution from the merger and multiple financing rounds, significantly reducing the ownership stake of existing shareholders. While the substantial capital raise provides liquidity for the new strategy, the untested nature of this business model for a public company, coupled with potential regulatory and tax uncertainties, introduces a high degree of investment risk. A seasoned investor would likely view this as a highly speculative venture rather than a stable investment, prompting a recommendation to sell existing holdings or avoid new positions given the dramatic increase in risk profile and the immediate, substantial dilution.

Keywords

Bitcoin, Cryptocurrency, Merger, PIPE Financing, Debt Financing, Treasury Strategy, Digital Assets, Nakamoto Holdings, Kindly MD, SEC Filing, Corporate Governance, Dilution, Risk Management, Nasdaq Listing, Blockchain Technology, Investment Company Act, Corporate Alternative Minimum Tax