Syra Health (SYRA) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section details Syra Health Corp.'s unaudited financial statements and management's analysis of its financial condition and operations Item 1. Financial Statements This section presents Syra Health Corp.'s unaudited condensed financial statements and accompanying notes, highlighting key financial changes Condensed Balance Sheets This section presents the unaudited condensed balance sheets for Syra Health Corp. as of June 30, 2025, and December 31, 2024 Condensed Balance Sheet Highlights | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total assets | $3,471,462 | $3,679,332 | $(207,870) | -5.6% | | Total current liabilities | $1,057,299 | $613,549 | $443,750 | 72.3% | | Total liabilities | $1,057,299 | $800,761 | $256,538 | 32.0% | | Total stockholders' equity (deficit) | $2,414,163 | $2,878,571 | $(464,408) | -16.1% | Condensed Statements of Operations This section details the unaudited condensed statements of operations for the three and six months ended June 30, 2025 and 2024 Statements of Operations Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $1,946,199 | $1,969,681 | $(23,482) | -1.2% | | Gross profit | $752,895 | $350,007 | $402,888 | 115.1% | | Operating loss | $(63,158) | $(1,390,353) | $1,327,195 | -95.5% | | Net loss | $(63,596) | $(1,390,256) | $1,326,660 | -95.4% | | Net loss per common share - basic and diluted | $(0.01) | $(0.21) | $0.20 | -95.2% | Statements of Operations Highlights (Six Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $3,803,973 | $3,722,021 | $81,952 | 2.2% | | Gross profit | $1,342,051 | $529,294 | $812,757 | 153.5% | | Operating loss | $(536,492) | $(2,834,307) | $2,297,815 | -81.1% | | Net loss | $(535,861) | $(2,837,306) | $2,301,445 | -81.1% | | Net loss per common share - basic and diluted | $(0.05) | $(0.43) | $0.38 | -88.4% | Statements of Changes in Stockholders' Equity (Deficit) This section outlines the unaudited changes in stockholders' equity (deficit) for the three and six months ended June 30, 2025 and 2024 Changes in Stockholders' Equity (Deficit) (Six Months Ended June 30, 2025) | Item | December 31, 2024 | June 30, 2025 | | :--- | :--- | :--- | | Class A Common Stock Shares | 8,979,204 | 11,339,169 | | Convertible Class B Common Stock Shares | 833,334 | 600,000 | | Additional Paid-in Capital | $11,692,952 | $11,762,278 | | Accumulated Deficit | $(8,824,193) | $(9,360,054) | | Total Stockholders' Equity (Deficit) | $2,878,571 | $2,414,163 | - During the six months ended June 30, 2025, 23,125 warrants were exercised for cash, generating $14,800[18] - 233,334 shares of Class B Common Stock were converted into 2,333,340 shares of Class A common stock[18] Condensed Statements of Cash Flows This section presents the unaudited condensed statements of cash flows for the six months ended June 30, 2025 and 2024 Cash Flow Activities (Six Months Ended June 30) | Activity | 2025 | 2024 | Change ($) | | :--- | :--- | :--- | :--- | | Net cash provided by/(used in) operating activities | $85,754 | $(2,304,012) | $2,389,766 | | Net cash used in investing activities | $0 | $(11,111) | $11,111 | | Net cash provided by/(used in) financing activities | $(175,235) | $629,400 | $(804,635) | | Net change in cash and cash equivalents | $(89,481) | $(1,685,723) | $1,596,242 | | Cash and cash equivalents at end of period | $2,305,924 | $1,594,352 | $711,572 | - Operating activities shifted from a significant cash outflow in 2024 to a cash inflow in 2025, indicating improved operational efficiency[22] - Financing activities resulted in cash used in 2025, primarily due to lower proceeds from warrant exercises compared to 2024[22] Notes to the Condensed Financial Statements This section provides explanatory notes to the unaudited condensed financial statements, detailing accounting policies and significant events Note 1 – Nature of Business and Significant Accounting Policies This note describes Syra Health Corp.'s business operations, its single reportable segment, and key accounting policies - Syra Health Corp. provides workforce staffing solutions, health education, and healthcare research consulting services to mental health hospitals and organizations[24] - The interim financial statements are unaudited and prepared in accordance with U.S. GAAP, with certain disclosures omitted per SEC rules[25] - The Company operates as a single reportable operating segment: Healthcare services, deriving revenue primarily from state and federal health authorities[39] Disaggregated Net Revenues (Six Months Ended June 30) | Revenue Stream | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Healthcare workforce | $1,017,664 | $2,833,895 | $(1,816,231) | -64.1% | | Population health | $2,786,309 | $866,031 | $1,920,278 | 221.7% | | Behavioral and mental services | $0 | $22,095 | $(22,095) | -100.0% | | Total Net Revenues | $3,803,973 | $3,722,021 | $81,952 | 2.2% | - FSSA accounted for approximately 35% of revenues for the six months ended June 30, 2025, down from 64% in 2024[47] Note 2 – Going Concern This note addresses the Company's ability to continue as a going concern, citing cash balance and accumulated deficit - As of June 30, 2025, the Company had a cash balance of $2,305,924 and an accumulated deficit of $9,360,054[56] - These factors raise substantial doubt about the Company's ability to continue as a going concern for the next twelve months, necessitating additional capital or expense reduction[56] - The Company previously raised $1,455,000 from convertible notes in 2023, $5,332,283 net proceeds from its IPO in October 2023, and $1,619,021 from a public offering in September 2024[57][58] Note 3 – Related Party Transactions This note details transactions with related parties, including lease and service agreements - The Company leases its corporate headquarters from STVentures, LLC, an entity beneficially owned by principal owners and management[60] Related Party Expenses (Six Months Ended June 30) | Expense Category | 2025 | 2024 | | :--- | :--- | :--- | | Office Lease (STVentures, LLC) | $67,253 | $64,263 | | IT Services (RAD CUBE LLC) | $251,340 | $0 | | Recruitment/HR Services (NLogix IT Services, SKL Demand) | $212,352 | $297,313 | Note 4 – Basic and Diluted Earnings per Share This note explains the calculation of basic and diluted net loss per common share, including anti-dilutive securities - The Company uses the two-class method to compute net loss per common share due to Class A and convertible Class B common stock[64] - Potential dilutive securities (warrants and stock options) were anti-dilutive and excluded from diluted net loss per common share calculation[66] Anti-Dilutive Securities Excluded from EPS Calculation | Security Type | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Warrants | 8,172,842 | 1,629,561 | | Stock options | 271,245 | 160,750 | | Total | 8,444,087 | 1,790,311 | Note 5 – Other Current Assets This note provides a breakdown of other current assets, primarily prepaid expenses Other Current Assets | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prepaid expenses and other current assets | $242,444 | $276,563 | | Total other current assets | $242,444 | $276,563 | Note 6 – Property and Equipment This note details the Company's property and equipment, net of accumulated depreciation Property and Equipment, Net | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Office equipment | $86,958 | $86,958 | | Leasehold improvements | $60,783 | $60,783 | | Furniture and fixtures | $6,170 | $6,170 | | Less: Accumulated depreciation | $(139,339) | $(126,564) | | Total property and equipment, net | $14,572 | $27,347 | - Depreciation expense for the six months ended June 30, 2025, was $12,775, a 57.3% decrease from $29,919 in 2024[68] Note 7 – Accrued Expenses This note outlines the components of accrued expenses, including payroll and taxes Accrued Expenses | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accrued payroll and taxes | $88,733 | $202,038 | | Accrued expenses | $36,020 | $28,345 | | Total accrued expenses | $124,753 | $230,383 | - IRA contribution expenses for the six months ended June 30, 2025, were $35,665, a decrease from $52,676 in 2024[70] Note 8 – Lease This note describes the Company's operating lease for its corporate headquarters, including terms and costs - The Company leases its corporate headquarters from STVentures, a related party, with the lease amended in July 2025 to extend through June 30, 2027[71] Operating Lease Information | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Operating lease assets | $22,161 | $299,190 | | Total operating lease liability | $22,161 | $299,190 | | Weighted average remaining lease term | 0.50 years | 2.50 years | | Weighted average discount rate | 9.25% | 9.25% | Operating Lease Cost (Six Months Ended June 30) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Amortization of ROU asset | $64,477 | $63,199 | | Interest on lease liability | $2,776 | $1,064 | | Total operating lease cost | $67,253 | $64,263 | Note 9 – Notes Payable This note details the Company's notes payable, primarily related to insurance policy financing - The remaining balance on 2024 insurance notes payable was $19,005 as of June 30, 2025[73] - A new insurance policy financing arrangement in 2025 had a total principal of $123,866, with a remaining balance of $67,713 as of June 30, 2025[74] Interest Expense on Notes Payable (Six Months Ended June 30) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Interest expense on notes payable | $7,087 | $7,891 | Note 10 – Commitments and Contingencies This note addresses the Company's legal proceedings and other commitments, including a settled lawsuit - The Company is not currently a party to any material legal proceedings[76] - A wrongful termination lawsuit filed in January 2024 was settled for an immaterial amount in January 2025[77] Note 11 – Changes in Stockholders' Equity (Deficit) This note details changes in stockholders' equity, including common stock activity, warrants, and corporate events - As of June 30, 2025, there were 11,339,169 shares of Class A common stock issued and outstanding[78] - On January 15, 2025, 233,334 shares of Class B Common Stock converted into 2,333,340 shares of Class A common stock[79][86] - The Company voluntarily delisted its Class A common stock from the Nasdaq Capital Market on April 11, 2025[82] - The CEO's employment was terminated on June 13, 2025, and Priya Prasad was appointed interim CEO on June 16, 2025[82][83] Class A Common Stock Warrants Activity | Item | Number of Shares | Weighted Average Exercise Prices | | :--- | :--- | :--- | | Balance, December 31, 2024 | 8,195,967 | $1.78 | | Warrants exercised | (23,125) | $0.64 | | Balance, June 30, 2025 | 8,172,842 | $1.79 | - As of June 30, 2025, there were 600,000 shares of convertible Class B common stock issued and outstanding[85] Note 12 – Common Stock Options This note describes the Company's common stock option plan and related activity, including stock-based compensation - The 2022 Omnibus Equity Incentive Plan authorizes the issuance of up to 1,041,667 shares of Class A common stock[87] Stock Options Activity | Item | Number of Shares | Weighted Average Exercise Prices | | :--- | :--- | :--- | | Balance, December 31, 2024 | 223,599 | $1.32 | | Options granted | 57,646 | $0.74 | | Options forfeited | (10,000) | $1.28 | | Balance, June 30, 2025 | 271,245 | $1.04 | - Stock-based compensation expense for the six months ended June 30, 2025, was $30,254, compared to $28,486 in 2024[88] Note 13 – Subsequent Events This note discloses significant events occurring after the reporting period, such as consulting agreements and resignations - On July 1, 2025, the Company entered into a consulting agreement with a former Board member for strategic planning and CEO identification, including 25,000 Class A common stock options and 25,000 RSUs[91] - On July 28, 2025, Deepika Vuppalanchi resigned from the Board of Directors[92] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Syra Health Corp.'s financial condition and operational results, emphasizing revenue shifts, improved margins, and liquidity Overview This section provides a general overview of Syra Health Corp.'s business, strategic shifts, and recent corporate changes - Syra Health Corp. is a healthcare services company focused on preventative health, holistic wellness, health education, and equitable healthcare[96] - The Company reclassified its digital health and health education revenues into its population health division[96] - The Company voluntarily delisted its Class A common stock from the Nasdaq Capital Market on April 11, 2025[98] - Deepika Vuppalanchi's employment as CEO was terminated on June 13, 2025, and Priya Prasad was appointed interim CEO on June 16, 2025[98] Results of Operations for the Three Months Ended June 30, 2025 and 2024 This section analyzes the Company's operational performance for the three months ended June 30, 2025, compared to 2024 Net Revenues (Three Months Ended June 30) | Category | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Healthcare workforce | $362,447 | $1,416,234 | $(1,053,787) | -74.4% | | Population health | $1,583,752 | $533,025 | $1,050,727 | 197.1% | | Behavioral and mental health | $0 | $20,422 | $(20,422) | -100.0% | | Total Net Revenues | $1,946,199 | $1,969,681 | $(23,482) | -1.2% | - The decrease in healthcare workforce revenue was due to fewer new customer acquisitions and lower renewal value on the FSSA (NeuroDiagnostic Institute) contract[103] - Population health revenues increased due to additional services provided to state departments and other customers[103] Cost of Services and Gross Profit (Three Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cost of services | $1,193,304 | $1,619,674 | $(426,370) | -26.3% | | Gross profit | $752,895 | $350,007 | $402,888 | 115.1% | | Gross profit margin | 38.7% | 17.8% | 20.9 pp | 117.4% | - Cost of services decreased primarily due to a decrease in labor costs and a shift in service mix from healthcare workforce to project-based population health and digital health services that carry better margins[104] Operating Expenses (Three Months Ended June 30) | Expense Category | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Salaries and benefits | $326,354 | $847,064 | $(520,710) | -61.5% | | Professional fees | $164,939 | $141,456 | $23,483 | 16.6% | | Research and development | $29,712 | $277,894 | $(248,182) | -89.3% | | Selling, general and administrative | $289,070 | $456,572 | $(167,502) | -36.7% | | Depreciation | $5,978 | $17,374 | $(11,396) | -65.6% | | Total Operating Expenses | $816,053 | $1,740,360 | $(924,307) | -53.1% | - Net loss for the three months ended June 30, 2025, significantly decreased by $1,326,660 (95.4%) to $(63,596) from $(1,390,256) in the prior year[112] Results of Operations for the Six Months Ended June 30, 2025 and 2024 This section analyzes the Company's operational performance for the six months ended June 30, 2025, compared to 2024 Net Revenues (Six Months Ended June 30) | Category | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Healthcare workforce | $1,017,664 | $2,833,895 | $(1,816,231) | -64.1% | | Population health | $2,786,309 | $866,031 | $1,920,278 | 221.7% | | Behavioral and mental health | $0 | $22,095 | $(22,095) | -100.0% | | Total Net Revenues | $3,803,973 | $3,722,021 | $81,952 | 2.2% | - The overall revenue increase of 2% was driven by a substantial rise in population health revenue, offsetting a decline in healthcare workforce revenue[116] - Delays in new contract awards or cancellations of requests for proposals are expected due to federal government spending pauses or terminations[116] Cost of Services and Gross Profit (Six Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cost of services | $2,461,922 | $3,192,727 | $(730,805) | -22.9% | | Gross profit | $1,342,051 | $529,294 | $812,757 | 153.5% | | Gross profit margin | 35.3% | 14.2% | 21.1 pp | 148.6% | - Cost of services decreased due to lower labor and consulting costs, and a favorable shift in service mix towards higher-margin population health and digital health services[117] Operating Expenses (Six Months Ended June 30) | Expense Category | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Salaries and benefits | $833,561 | $1,583,367 | $(749,806) | -47.4% | | Professional fees | $388,965 | $336,036 | $52,929 | 15.7% | | Research and development | $66,885 | $555,442 | $(488,557) | -87.9% | | Selling, general and administrative | $576,357 | $858,837 | $(282,480) | -32.9% | | Depreciation | $12,775 | $29,919 | $(17,144) | -57.3% | | Total Operating Expenses | $1,878,543 | $3,363,601 | $(1,485,058) | -44.1% | - Net loss for the six months ended June 30, 2025, significantly decreased by $2,301,445 (81.1%) to $(535,861) from $(2,837,306) in the prior year[124] Liquidity and Capital Resources This section discusses the Company's liquidity position, capital resources, and ability to fund future operations - Existing liquidity sources are not expected to be sufficient to fund operations for the next twelve months, raising substantial doubt about the Company's ability to continue as a going concern[125] - The Company may require additional equity and/or debt financing if profitable operations are not achieved in the near term[125] Liquidity and Capital Resources (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Current Assets | $3,434,729 | $3,352,795 | $81,934 | 2.4% | | Current Liabilities | $1,057,299 | $613,549 | $443,750 | 72.3% | | Accumulated Deficit | $(9,360,054) | $(8,824,193) | $(535,861) | 6.1% | | Working Capital | $2,377,430 | $2,739,246 | $(361,816) | -13.2% | Cash Flow Activities (Six Months Ended June 30) | Activity | 2025 | 2024 | Change ($) | | :--- | :--- | :--- | :--- | | Net cash provided by/(used in) operating activities | $85,754 | $(2,304,012) | $2,389,766 | | Net cash used in investing activities | $0 | $(11,111) | $11,111 | | Net cash provided by/(used in) financing activities | $(175,235) | $629,400 | $(804,635) | - The improvement in operating cash activities is a result of efforts to reduce expenses and better working capital management[128] Critical Accounting Policies and Estimates This section outlines the Company's significant accounting policies and estimates that require management judgment - Accounts receivable are carried at estimated collectible amounts, with an allowance of $5,520 at June 30, 2025, and December 31, 2024[134] - Long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable[135] - The Company accounts for leases under ASC 842, recognizing right-of-use (ROU) assets and operating lease liabilities[136] - Revenue is recognized in accordance with ASC 606, based on five criteria for depicting the transfer of promised goods or services to customers[138] - The majority of accounts receivable and revenue contracts are with divisions within the Indiana Family and Social Services Administration (FSSA), which accounted for approximately 35% of revenues for the six months ended June 30, 2025[143] - As an 'emerging growth company' under the JOBS Act, the Company utilizes extended transition periods for complying with new or revised accounting standards, which may affect comparability[145] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a 'smaller reporting company,' Syra Health Corp. is not required to provide quantitative and qualitative disclosures about market risk in this report - The Company is a 'smaller reporting company' and is not required to provide quantitative and qualitative disclosures about market risk[147] Item 4. Controls and Procedures The principal executive and financial officers of Syra Health Corp. evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, concluding that they were effective. No material changes in internal control over financial reporting occurred during the quarter - The principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[148] - There were no changes in internal control over financial reporting during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[149] PART II. OTHER INFORMATION This section addresses legal proceedings, risk factors, equity sales, and other disclosures for Syra Health Corp. Item 1. Legal Proceedings Syra Health Corp. is not currently involved in any legal proceedings or claims that are expected to have a material adverse effect on its business, financial condition, or operating results - The Company is not aware of any legal proceedings or claims that will have a material adverse effect on its business, financial condition, or operating results[152] Item 1A. Risk Factors Readers are advised to carefully consider the risk factors detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, as these could significantly impact the business. The company also acknowledges the potential for additional, currently unknown or immaterial risks to emerge - Readers should carefully consider the risk factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[153] - Additional risks and uncertainties not currently known or deemed immaterial may also materially and adversely affect the business, financial condition, and/or operating results[153] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities There were no unregistered sales of equity securities, use of proceeds from such sales, or issuer purchases of equity securities to report during the period - None[155] Item 3. Defaults Upon Senior Securities Syra Health Corp. reported no defaults upon senior securities during the period covered by this report - None[156] Item 4. Mine Safety Disclosures This item is not applicable to Syra Health Corp.'s operations - Not applicable[157] Item 5. Other Information No other information is reported under this item for the current period - None[158] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including certifications and Inline XBRL documents for financial data tagging Exhibits Filed with Form 10-Q | Exhibit No. | Description | | :--- | :--- | | 31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 32.1** | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 32.2** | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 101.INS* | Inline XBRL Instance Document | | 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | | 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | | 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | 104* | Cover Page Interactive Data File - the cover page from the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 is formatted in Inline XBRL included in the Exhibit 101 Inline XBRL Document Set | Signatures This section contains the official signatures for the report, confirming its submission by authorized officers - The report was signed on August 12, 2025, by Priya Prasad as both Interim Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial and Accounting Officer) for Syra Health Corp[164]