Quarterly Report (10-q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended October 31, 2022

 

Commission File Number 000-56003

 

KINDCARD, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		81-4520116
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

1001 Yamato Road, #100, Boca Raton, Florida, 33431

(Address of principal executive offices) (Zip Code)

 

[phone]

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		N/A		N/A

 

As of December 9, 2022, there were 86,945,000 shares of common stock issued and outstanding.

 

 

TABLE OF CONTENTS

 

PART I—FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements.		3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		4
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.		6
Item 4.	Controls and Procedures.		6
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings.		7
Item 1A.	Risk Factors.		7
Item 2.	Unregistered Sales of Securities and Use of Proceeds.		7
Item 3.	Defaults Upon Senior Securities.		7
Item 4.	Mining Safety Disclosures.		7
Item 5.	Other Information.		7
Item 6.	Exhibits.		8

 

2

Table of Contents

  

PART I—FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements.

 

Kindcard, Inc. and Subsidiaries

Consolidated Financial Statements

October 31, 2022

(Unaudited)

 

Table of Contents

 

Consolidated Balance Sheets as of October 31, 2022 (unaudited) and January 31, 2022		F-1
Consolidated Statements of Operations for the three and nine months ended October 31, 2022 and 2021 (unaudited)		F-2
Consolidated Statements of Changes in Stockholders’ Deficit for three and nine months ended October 31, 2022 and 2021 (unaudited)		F-3
Consolidated Statements of Cash Flows for the nine months ended October 31, 2022 and 2021 (unaudited)		F-4
Notes to Condensed Consolidated Financial Statements (unaudited)		F-5 - F-11

 

3

Table of Contents

  

Kindcard, Inc. and Subsidiaries

Consolidated Balance Sheets

 

		October 31, 2022				January 31, 2022
Assets		(unaudited)
Current Assets:
Cash		$	24,286			$	21,131
Accounts receivable, net			30,476				31,525
Total Current Assets			54,762			$	52,656
Property, plant and equipment, net			13,573				11,375
Intellectual property, net			185,538				95,040
Total Other Assets			199,111				106,415
Total Assets		$	253,873			$	159,071
Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable		$	136,984			$	106,395
Accrued payroll expenses			38,827				69,003
Due to related party			296,501				296,498
Notes payable			145,731				-
Current portion SBA loan			4,991				-
Total Current Liabilities			623,034				471,896
Long-term Liabilities
SBA loan and accrued interest			156,428				157,212
Total Long-term Liabilities			156,428				157,212
Total Liabilities			779,462				629,108
Commitments and Contingencies - See Note 9			-				-
Stockholders’ Deficit
Common Stock			86,945				83,825
Authorized 200,000,000 shares of common stock, $0.001 par value, Issued and outstanding 86,945,000 of common stock as of October 31, 2022 (January 31, 2022 – 83,825,000)
Additional Paid In Capital			108,395				(43,625	)
Accumulated Deficit			(720,929	)			(510,237	)
Total Stockholders’ Deficit			(525,589	)			(470,037	)
Total Liabilities and Stockholders’ Deficit		$	253,873			$	159,071

 

The accompanying notes are an integral part of these unaudited consolidated financial statements

 

F-1

Table of Contents

  

Kindcard, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

 

		For the three months ended October 31,								For the nine months ended October 31,
		2022				2021				2022				2021
Revenue		$	148,162			$	-			$	472,316			$	-
Cost of Sales			24,240				-				60,248				-
Gross Profit			123,922				-				412,068				-
Operating Expenses
General and Administrative Expenses			215,024				2,122				630,773				12,677
Depreciation and Amortization			23,356				-				40,955				-
Professional Fees			-				8,880				-				21,380
Total Operating Expenses			238,380				11,002				671,728				34,057
Net Loss from Operations			(114,458	)			(11,002	)			(259,660	)			(34,057	)
Other Income – Wholesale Payments-See Note 11			-				-				48,968				-
Net Loss		$	(114,458	)			(11,002	)		$	(210,692	)		$	(34,057	)
Net Loss Per Common Share – Basic and Diluted		$	-			$	-				-			$	-
Weighted Average Number of Common Shares Outstanding -
Basic and Diluted			86,945,000				79,390,217				82,734,927				77,026,465

 

The accompanying notes are an integral part of these unaudited consolidated financial statements

 

F-2

Table of Contents

  

Kindcard, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Deficit

 For the three and nine months ended October 31, 2022

(Unaudited)

 

		Common Stock								Additional
		Number of Shares				Amount				Paid-in Capital				Accumulated Deficit				Total
Balance, January 31, 2022			83,825,000				83,825				(43,625	)			(510,237	)			(470,037	)
Net income for period ended April 30, 2022			-				-				-				20,254				20,254
Shares issued in exchange for services			20,000				20				120								140
Balance, April 30, 2022			83,845,000				83,845				(43,505	)			(489,983	)			(449,643	)
Net loss for period ended July 31, 2022			-				-				-				(116,488	)			(116,488	)
Shares issued for cash			3,000,000				3,000				147,000				-				150,000
Shares issued with debt			100,000				100				4,900				-				5,000
Balance, July 31, 2022			86,945,000			$	86,945			$	108,395			$	(606,471	)		$	(411,131	)
Net loss for period ended October 31, 2022			-				-				-				(114,458	)			(114,458	)
Balance, October 31, 2022			86,945,000			$	86,945			$	108,395			$	(720,929	)		$	(525,589	)

 

For the three and nine months ended October 31, 2021

(Unaudited)

 

		Common Stock								Additional
		Number of Shares				Amount				Paid-in Capital				Accumulated Deficit				Total
Balance, January 31, 2021			75,825,000				75,825				(59,625	)			(113,119	)			(96,919	)
Net loss for period ended April 30, 2021			-				-				-				(9,063	)			(9,063	)
Balance, April 30, 2021			75,825,000			$	75,825			$	(59,625	)		$	(122,182	)		$	(105,982	)
Net loss for period ended July 31, 2021			-				-				-				(13,992	)			(13,992	)
Balance, July 31, 2021			75,825,000			$	75,825			$	(59,625	)		$	(136,174	)		$	(119,974	)
Shares issued for acquisition			8,000,000				8,000				14,240				-				22,240
Net loss for period ended October 31, 2021			-				-				-				(11,002	)			(11,002	)
Balance, October 31, 2021			83,825,000			$	83,825			$	(45,385	)		$	(147,176	)		$	(108,736	)

 

The accompanying notes are an integral part of these unaudited consolidated financial statements

 

F-3

Table of Contents

  

Kindcard, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

		For the nine months ended
		October 31,				October 31,
		2022				2021
Cash Flows from Operating Activities:
Net loss		$	(210,692	)		$	(34,057	)
Adjustments to reconcile net income to net cash used in operations
Stock issued for services			140				-
Shares issued with debt			5,000				-
Depreciation and amortization			40,955				-
			46,095				-
Decrease (increase) in operating assets/liabilities
Accounts receivable			1,052				-
Accounts payables			30,590				323
Accrued expenses			(25,969	)			-
Prepaid Expenses			-				(22,240	)
Total Adjustments to reconcile Net loss to Net Cash used in operations			51,768				(21,917	)
Net cash used in by operating activities		$	(158,924	)		$	(55,974	)
Cash flows from investing activities
Costs incurred to develop intellectual property			(133,652	)			-
Net cash used in investing activities			(133,652	)			-
Cash flows from financing activities
Shares issued for acquisition			-				22,240
Proceeds from related party loan			-				33,783
Proceeds from sale of shares for cash			150,000				-
Proceeds from notes payable, net			145,731				-
Net cash provided by financing activities		$	295,731			$	56,023
Net cash increase for the year			3,155				49
Cash at beginning of period		$	21,131			$	43
Cash at end of period		$	24,286			$	92
Supplemental disclosures:
Non-cash activities:
Common Stock issued in exchange for services		$	140			$	-
Shares issued with debt		$	5,000				-

 

The accompanying notes are an integral part of these unaudited consolidated financial statements

 

F-4

Table of Contents

  

Kindcard, Inc. and Subsidiaries

Condensed Notes to Consolidated Financial Statements (unaudited)

October 31, 2022

 

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

 

KindCard, Inc. (f/k/a MWF Global Inc.) (the “Company”) was incorporated in the State of Nevada on November 18, 2016, and established a fiscal year end of January 31. The Company was originally organized to sell unique country specific handcrafted natural products with a focus on sourcing these products from South-East Asia and offering these products for sale through the Company’s website and to establish other distribution channels. On June 1, 2021, RMR Management LLC (“RMR” and the “Majority Stockholder”) purchased 54,000,000 shares of common stock of the Company, representing the majority of the Company’s issued and outstanding shares, from William D Mejia in consideration of a purchase price of $150,000. RMR is owned and controlled by Michael Rosen, the Company’s sole officer and director. On June 7, 2021, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Kindcard, Inc., a Massachusetts corporation (“KindCard MA”) and Croesus Holdings Corp, a Massachusetts corporation (“Croesus” and together with Kindcard MA, the “Seller”), pursuant to which the Company acquired (i) all of the intellectual property and operational assets (collectively, the “Assets”) of the Tendercard Division of Croesus and (ii) 100% of the issued and outstanding shares of common stock of Kindcard MA in consideration of an aggregate of 8,000,000 shares of common stock of the Company. On June 16, 2021, Michael Rosen was appointed as a Director of the Company. On June 30, 2021, William D. Mejia resigned as a director and the sole officer of the Company and Michael Rosen was appointed as the sole officer of the Company. On July 9, 2021, the Company filed a Certificate of Amendment to Articles of Incorporation (the “Certificate”) with the State of Nevada effectuate a name change (the “Name Change”). As a result of the Name Change, the Company’s name changed from “MWF Global Inc.” to “Kindcard, Inc.”. The Certificate was approved by the Majority Stockholder and by the Board of Directors of the Company. The Purchase Agreement and the transactions contemplated therein closed on August 16, 2021 (the “Closing”). Subsequent to the Closing, the Company became aware that the Sellers failed to deliver certain of the Assets to the Company in material breach of the Purchase Agreement. A settlement arrangement is currently being negotiated between the Company and Sellers in connection with such matter. On August 26, 2021, Tendercard, Inc., a wholly owned subsidiary of the Company, was incorporated by the Company in the State of Nevada. In addition, on January 14, 2022, Deb, Inc., a wholly owned subsidiary of the Company, was incorporated by the Company in the State of Nevada. In connection with the Name Change, the Company filed an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority. The Name Change was implemented by FINRA on September 21, 2021. Our symbol on OTC Markets was KCRDD for 20 business days from September 21, 2021 (the “Notification Period”). Our new CUSIP number is 49452K105. As a result of the name change, our symbol was changed to “KCRD” following the Notification Period.

 

The Company, through its wholly owned operating subsidiaries, Deb, Inc. and Tendercard, Inc., is an innovative FinTech and PayTech company which provides alternative Closed-Loop payment solutions to consumers and businesses across a wide variety of verticals.

 

Going concern

 

These financial statements have been prepared assuming the Company will be able to continue as a going concern. To date, the Company has generated revenues from its business operations and has incurred accumulated operating losses of $720,929. At October 31, 2022, the Company has a working capital deficit of $568,272 and a net loss of $210,692 for the nine months ended October 31, 2022. The Company will require additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern from a period of one year from the issuance of these financial statements. The Company intends to continue to fund its business by way of private placements and advances from related parties as may be required. As of October 31, 2022, the Company has issued 86,945,000 shares of common stock issued and outstanding. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

  

Basis of Presentation

 

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-Q. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material changes in the information disclosed in the notes to the financial statements for the fiscal year ended January 31, 2022 included in the Company’s Form 10-K filed with the Securities and Exchange Commission. The unaudited financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the nine months ended October 31, 2022 are not necessarily indicative of the results that may be expected for the year ending January 31, 2023.

 

Use of Estimates and Assumptions

 

Preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Accordingly, actual results could differ from those estimates. These estimates include Allowance of doubtful accounts, and Impairment of long-lived assets.

 

Cash and Cash Equivalents

 

For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.

 

F-5

Table of Contents

  

Kindcard, Inc. and Subsidiaries

Condensed Notes to Consolidated Financial Statements (unaudited)

October 31, 2022

 

Revenue Recognition

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single model for revenue arising from contracts with customers and supersedes current revenue recognition guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

 

Revenue is recognized when all of the following criteria are met:

 

(i) Identification of the contract, or contracts, with a customer (ii) Identification of the performance obligations in the contract (iii) Determination of the transaction price (iv) Allocation of the transaction price to the performance obligations in the contract (v) Recognition of revenue when, or as, we satisfy performance obligation

 

We currently offer the following products and services:

 

Vault Program provides cash pick up services for retail & wholesale merchants the within North American retail market. Commission revenues are recorded over the life of these multiyear contracts.

 

Tendercard provides a stored value point of sale gift card processing solution to small and mid-sized businesses within North American retail market. The Company’s proprietary host-based program provides real time data and accurate records of all activity related to the gift card processing account and the related monthly reporting. Fixed monthly service fee revenues are recorded monthly over the life of these multiyear contracts. The fees are collected in arrears resulting in accounts receivable at the end of each month.

 

Fair Value of Financial Instruments

 

The Company measures its financial and non-financial assets and liabilities, as well as makes related disclosures, in accordance with FASB Accounting Standards Codification No. 820, Fair Value Measurement (“ASC 820”), which provides guidance with respect to valuation techniques to be utilized in the determination of fair value of assets and liabilities. Approaches include, (i) the market approach (comparable market prices), (ii) the income approach (present value of future income or cash flow), and (iii) the cost approach (cost to replace the service capacity of an asset or replacement cost). ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

 

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

 

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

 

Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one more significant inputs or significant value drivers are unobservable.

 

Loss per Common Share

 

The basic loss per share is calculated by dividing the Company’s net loss available to common shareholders by the weighted average number of common shares during the year. The diluted loss per share is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted loss per share is the same as basic loss per share due to the lack of dilutive instruments in the Company. There are no common stock equivalents at October 31, 2022.

 

Income Taxes

 

The Company follows the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances and tax loss carry-forwards. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.

 

F-6

Table of Contents

  

Kindcard, Inc. and Subsidiaries

Condensed Notes to Consolidated Financial Statements (unaudited)

October 31, 2022

 

NOTE 2 – BUSINESS ACQUISITION

 

On June 7, 2021, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Kindcard, Inc., a Massachusetts corporation (“KindCard MA”) and Croesus Holdings Corp., a Massachusetts corporation (“Croesus” and together with Kindcard MA, the “Seller”) pursuant to which the Company acquired 100% of the outstanding shares of common stock of Kindcard MA (the “Kindcard MA Shares”) and all of intellectual property and operational assets (collectively, the “Tendercard Assets”) of the Tendercard Division of Croesus in consideration of an aggregate of 8,000,000 shares of common stock of the Company issued to the owners of KindCard MA and Croesus at a per share price of $0.003 per share representing a total cash value of $24,000 based on the equitable market value on the date of purchase (see Note 1). In addition, the Company assumed a SBA Loan from Kindcard MA in the amount of $157,212 resulting in total consideration paid by the Company valued at $177,160. The Purchase Agreement and the transactions contemplated therein closed on August 16, 2021 (the “Closing”). Subsequent to the Closing, the Company became aware that the Sellers failed to deliver certain of the Assets to the Company in material breach of the Purchase Agreement. A settlement arrangement is currently being negotiated between the Company and Sellers in connection with such matter.

 

As a result, the goodwill from the acquisition of the Kindcard MA Shares was considered impaired and the Company recorded and impairment expense of $110,291 as of January 31, 2022. The other intangible assets recorded related to the acquisition of the Tendercard Assets from Croesus. In addition, the Purchase Agreement included certain contingent consideration for additional shares to be issued to Seller upon certain conditions being met related to the Company’s quoted common stock price. Given that the Seller failed to deliver certain of the Assets as noted, the Company did not issue any additional shares to Seller and therefore the contingent consideration was value at $0 initially. At October 31, 2022, the Company reevaluated the contingent consideration noting that it was still valued at $0.00.

 

On August 26, 2021, Tendercard, Inc., a wholly owned subsidiary of the Company, was incorporated by the Company in the State of Nevada. In addition, on January 14, 2022, Deb, Inc., a wholly owned subsidiary of the Company, was incorporated by the Company in the State of Nevada.

 

The Company, through its wholly owned operating subsidiaries, Deb, Inc. and Tendercard, Inc., is an innovative FinTech and PayTech company which provides alternative Closed-Loop payment solutions to consumers and businesses across a wide variety of verticals.

 

The Company recorded the above acquisition in accordance with ASC-805, pertaining to business combinations. The following table summarizes the consideration paid for the acquisition and the amounts of the assets acquired at fair market value assumed recognized at the acquisition date.

 

Purchase Price Considerations		Fair Value
Stock Consideration		$	24,000
SBA Loan			153,160
Total Purchase Consideration & Assumed Liabilities		$	177,160
Tangible Assets
Cash			19,048
Accounts Receivable			26,721
Intangible Assets
Customer Lists			9,900
Website			5,200
Trade Name			2,800
Technology			3,200
Goodwill			110,291
Total Assets		$	177,160

 

NOTE 3 – ACCOUNTS RECEIVABLE, Net

 

We estimate credit loss reserves for accounts receivable on an individual receivable basis. A specific allowance is established based on expected future cash flows and the financial condition of the debtor. We charge off customer balances in part or in full when it is more likely than not that we will not collect that amount of the balance due. We consider any balance unpaid after the contract payment period to be past due. There are $31,082 and $31,745 in accounts receivables net of $606 and $220 allowances at October 31, 2022 and January 31, 2022, respectively.

 

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Kindcard, Inc. and Subsidiaries

Condensed Notes to Consolidated Financial Statements (unaudited)

October 31, 2022

 

NOTE 4 – PROPERTY AND EQUIPMENT

 

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful life of the asset generally ranging from three to seven years.

 

Property and equipment consist of the following at:

 

		October 31,				January 31,
		2022				2022
Merchandise and equipment: Vault		$	10,000			$	10,000
Merchandise and equipment: Office Equipment			4,286				2,545
Merchandise and equipment: IT Equipment			4,945				-
Less: accumulated depreciation			(5,658	)			(1,170	)
Total		$	13,573			$	11,375

 

Depreciation expense amounted to approximately $1,819 and $NIL during the three months ended October 31, 2022 and October 31, 2021, respectively.

 

NOTE 5 – GOODWILL AND INTANGIBLE ASSETS

 

The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired and liabilities assumed, including related tax effects. Goodwill is not amortized; instead, goodwill is tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors such as macro-economic conditions, industry and market conditions, cost factors as well as other relevant events, to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company determines that the fair value is less than the carrying value, the Company will recognize an impairment charge based on the excess of a reporting unit’s carrying value over its fair value. The Company did not note any impairment as of October 31, 2022.

 

Goodwill

 

Goodwill recorded was $110,291 and related specifically to the acquisition of Kindcard with no other assets assumed on June 7, 2021 (see note 2). KindCard failed to deliver its registered trademark and failed to deliver the software that conforms to industry standards. As a result, the goodwill from the acquisition of Kindcard was considered impaired in full and the Company recorded and impairment expense of $110,291 during the year ended January 31, 2022.

 

Intangible assets

 

Intangible assets are comprised of customer relationships and brands acquired in a business combination specifically related to the Company’s Tendercard division (see note 2) and also comprised of development costs for its proprietary payment processing “DEB Platform” through the Company’s wholly owned subsidiary, Deb, Inc. The Company amortizes intangible assets with a definitive life over their respective useful lives of 3-5 years. Assets with indefinite lives are tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company did not note any impairment as of October 31, 2022.

 

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Kindcard, Inc. and Subsidiaries

Condensed Notes to Consolidated Financial Statements (unaudited)

October 31, 2022

 

NOTE 5 – GOODWILL AND INTANGIBLE ASSETS (continued)

 

Intangible assets (continued)

 

On December 21, 2021 the Company entered into a contract to develop its proprietary payment processing DEB Platform, a for a total cost of $150,000. On June 8, 2022, the Company entered into a contract to further customize the platform for an additional cost of $51,965 which has been paid as of October 31, 2022 for the work performed and completed. The platform is currently in testing, is anticipated to go into production in the fourth quarter of FY 2023 and will be depreciated over 3 - 5 years.

 

		October 31,  2022				January 31,  2022
Definite-lived intangible assets
Technology: DEB Platform		$	201,965			$	75,000
Technology: Tendercard Program			3,200				3,200
Customer Lists			9,900				9,900
Website		$	5,200			$	5,200
Trade Name			2,800				2,800
Less: accumulated amortization			(37,527	)			(1,060	)
Definite-lived intangible assets, net		$	185,538			$	95,040

 

The following is the future estimated amortization expense related to intangible assets as of October 31, 2022:

 

Year ending January 31,
2023 -			22,737
2024 -			72,235
2025 -			72,235
2026 -			17,802
2027 -			529
Total -		$	185,538

 

NOTE 6 – CURRENT LIABILITIES

 

Accounts Payable

 

Accounts Payable is comprised of Trade payables of $136,984 and $106,395 at October 31, 2022 and January 31, 2022, respectively.

 

 Accrued Payroll Expenses

 

Balance consists of Accrued Salaries & Wages $10,208 and $14,834, Accrued Payroll Tax $781 and $1,323 and Payroll Tax Payable of $27,838 and $52,846 at October 31, 2022 and January 31, 2022, respectively. 

 

NOTE 7 – DUE TO RELATED PARTY

 

Due to Related Party

 

The total amount owed to the Company’s CEO as of October 31, 2022 and January 31, 2022 were $296,501 and $296,498, respectively. The amounts due to related party are unsecured and non-interest bearing with no set terms of repayment.

 

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Kindcard, Inc. and Subsidiaries

Condensed Notes to Consolidated Financial Statements (unaudited)

October 31, 2022

 

NOTE 8 – Loans

 

SBA Loan

 

The balance consists of Small Business Administration Economic Disaster Injury Loan assumed in the acquisition of Kindcard on June 7, 2021, with a principal balance of $150,000 and $3,160 accrued interest for a total balance of $153,160. An additional $8,259 of interest was accrued for the seventeen months ended October 31, 2022 for a total balance of $161,419. The term of the note is 30 years with an interest rate of 3.75% per annum, Installment payments of $713 currently scheduled to begin April 14, 2023.

 

Year ending January 31,

 

2023:		$	6,417
2024:			8,556
2025:			8,556
2026:			8,556
2027:			8,556
Thereafter			120,778
Total future minimum loan payments		$	161,419
Less: current portion			(4,991	)
Long-term portion			156,428

 

Notes Payable

 

Loans payable consists of $142,192 and $0.00 in short term loans payable and accrued interest of $3,539 and $0.00 at October 31, 2022 and January 31, 2022, respectively. These loans with non-related parties are unsecured and have interest rates ranging from 7% to 12% per annum and maturity dates within one to twelve months.

 

NOTE 9 – COMMITMENTS AND CONTINGENCIES

 

The recent outbreak of the coronavirus COVID-19 has spread across the globe and is impacting worldwide economic activity. Conditions surrounding the coronavirus continue to rapidly evolve and government authorities have implemented emergency measures to mitigate the spread of the virus. The outbreak and the related mitigation measures have had and will continue to have a material adverse impact on global economic conditions as well as on the Company’s business activities. The extent to which COVID-19 may impact the Company’s business activities will depend on future developments, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. These events are highly uncertain and, as such, the Company cannot determine their financial impact at this time. No adjustments have been made to the amounts reported in these consolidated financial statements as a result of this matter.

 

On May 25, 2022, the Company entered into an Advisory Agreement related to the development, design and build of its compliance and state licensing program. The initial term of the agreement is six months at a rate of $5,000 per month ($30,000) with an option to renew on a month-to-month basis thereafter. The contract includes a stock grant allowing the Advisor the opportunity to earn up to a total of 1,000,000 shares of common stock (the “Shares”) of Company to be issued one year from the effective date of the Advisory Agreement subject to approval by the Company’s Board of Directors and the achievement of certain mutually agreed goals and objectives. As of October 31, 2022, no Shares have been issued.

 

On May 25, 2022, the Company entered into an Advisory Agreement for the oversight of all regulatory BSA/AML compliance matters and the drafting of the Company’s comprehensive BSA/AML compliance program policies and procedures. The initial term of the agreement is six months at a rate of $5,000 per month ($30,000) with an option to renew on a month-to-month basis thereafter. The contract includes a stock grant allowing the Advisor the opportunity to earn up to a total of 500,000 shares of common stock (the “Shares”) of Company subject to approval by the Company’s Board of Directors and the achievement of certain mutually agreed goals and objectives. As of October 31, 2022, no Shares have been issued.

 

NOTE 10 – COMMON STOCK

 

The Company is authorized to issue 200,000,000 common shares with a par value of $0.001 per share. No preferred shares have been authorized or issued.

 

On August 16, 2021, the Company issued an aggregate of 8,000,000 shares of common stock to KindCard, Inc. and Croesus Holdings Corp. at the closing of the business acquisition for a total value of $24,000 (see note 2).

 

On February 25, 2022, the Company issued 20,000 shares of common stock to Start Here, Inc. in exchange for rebranding services provided to the Company at $0.007 per share ($140) based on the current weighted average cost per share calculated using subsequent share prices issued for cash given the Company does not have an active trading market, with a par value of $0.001 per share.

 

On May 13, 2022, the Company issued 50,000 shares of common stock in connection with a promissory note. The $2,500 cost of the shares was allocated based on the relative fair value. Given the short term maturity of the note, the cost was expensed in full during the quarter.

 

On May 17, 2022, the Company entered into a subscription agreement with an accredited investor pursuant to which the Company issued 3,000,000 restricted shares of common stock at $0.05 per share for a total purchase price of $150,000 on May 23, 2022.

 

On June 12, 2022, the Company issued 50,000 shares of common stock in connection with a promissory note. The $2,500 cost of the shares was allocated based on the relative fair value. Given the short term maturity of the note, the cost was expensed in full during the quarter.

 

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Kindcard, Inc. and Subsidiaries

Condensed Notes to Consolidated Financial Statements (unaudited)

October 31, 2022

 

NOTE 11 – TERMINATION OF MATERIAL DEFINITIVE AGREEMENT

 

On January 1, 2022, the Company entered into an Asset Purchase Agreement (the “APA”) with Wholesale Payments LLC, a Wyoming limited liability company (“Seller”) pursuant to which the Company was to purchase 100% of the assets of Seller. On March 9, 2022, the Company and Seller agreed terminate the APA pursuant to Sections 206(b)(ii) and 206(b)(iii) of the APA and, accordingly, no assets of Seller were transferred to the Company. The Company received net proceeds of $48,968 from Seller related to a one-time commission that would not be considered revenue and was recorded as other income prior to the APA being terminated.

 

 NOTE 12 – SUBSEQUENT EVENTS

 

On November 1, 2022, the Company received a short-term loan from Voxel Supply, LLC in the amount of $5,400. The loan accrues interest at the rate of 7% per annum. Principal and interest are due on October 31, 2023. 

 

On December 12, 2022, the Company entered into a corporate advisory agreement with Brian Schultz (“Schultz”) pursuant to which Schultz provides certain business, operations, and financial advisory services to the Company (the “Services”).  In consideration of the Services, the Company issued to Schultz 6,500,000 restricted shares of common stock of the Company.

 

On December 12, 2022, the Company entered into a corporate advisory agreement with Nicholas Cardoso (“Cardoso”) pursuant to which Cardoso provides certain business, operations, and financial advisory services to the Company (the “Services”).  In consideration of the Services, the Company issued to Cardoso 3,500,000 restricted shares of common stock of the Company.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and notes thereto for the year ended January 31, 2022, included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022 filed on May 17, 2022 (the “Annual Report”) with the U.S. Securities and Exchange Commission (the “SEC”). This Quarterly Report on Form 10-Q contains forward looking statements, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) our plans, strategies, objectives, expectations and intentions are subject to change at any time at our discretion; (ii) our plans and results of operations will be affected by our ability to manage growth; and (iii) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission.

 

In some cases, you can identify forward-looking statements by terminology such as ‘may,’ ‘will,’ ‘should,’ ‘could,’ ‘expects,’ ‘plans,’ ‘intends,’ ‘anticipates,’ ‘believes,’ ‘estimates,’ ‘predicts,’ ‘potential,’ or ‘continue’ or the negative of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We are under no duty to update any of the forward-looking statements after the date of this report.

 

Unless otherwise indicated, references to the “Company,” “us” or “we” refer to Kindcard Inc. and its subsidiaries.

 

Company Overview

 

KindCard, Inc. (f/k/a MWF Global Inc.) (the “Company”) was incorporated in the State of Nevada on November 18, 2016, and established a fiscal year end of January 31. The Company was originally organized to sell unique country specific handcrafted natural products with a focus on sourcing these products from South-East Asia and offering these products for sale through the Company’s website and to establish other distribution channels. On June 1, 2021, RMR Management LLC (“RMR” and the “Majority Stockholder”) purchased 54,000,000 shares of common stock of the Company, representing the majority of the Company’s issued and outstanding shares, from William D Mejia in consideration of a purchase price of $150,000. RMR is owned and controlled by Michael Rosen, the Company’s sole officer and director. On June 7, 2021, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Kindcard, Inc., a Massachusetts corporation (“KindCard MA”) and Croesus Holdings Corp, a Massachusetts corporation (“Croesus” and together with Kindcard MA, the “Seller”), pursuant to which the Company acquired (i) all of the intellectual property and operational assets (collectively, the “Assets”) of the Tendercard Division of Croesus and (ii) 100% of the issued and outstanding shares of common stock of Kindcard MA in consideration of an aggregate of 8,000,000 shares of common stock of the Company. On June 16, 2021, Michael Rosen was appointed as a Director of the Company. On June 30, 2021, William D. Mejia resigned as a director and the sole officer of the Company and Michael Rosen was appointed as the sole officer of the Company. On July 9, 2021, the Company filed a Certificate of Amendment to Articles of Incorporation (the “Certificate”) with the State of Nevada effectuate a name change (the “Name Change”). As a result of the Name Change, the Company’s name changed from “MWF Global Inc.” to “Kindcard, Inc.”. The Certificate was approved by the Majority Stockholder and by the Board of Directors of the Company. The Purchase Agreement and the transactions contemplated therein closed on August 16, 2021 (the “Closing”). Subsequent to the Closing, the Company became aware that the Sellers failed to deliver certain of the Assets to the Company in material breach of the Purchase Agreement. A settlement arrangement is currently being negotiated between the Company and Sellers in connection with such matter. On August 26, 2021, Tendercard, Inc., a wholly owned subsidiary of the Company, was incorporated by the Company in the State of Nevada. In addition, on January 14, 2022, Deb, Inc., a wholly owned subsidiary of the Company, was incorporated by the Company in the State of Nevada. In connection with the Name Change, the Company filed an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority. The Name Change was implemented by FINRA on September 21, 2021. Our symbol on OTC Markets was KCRDD for 20 business days from September 21, 2021 (the “Notification Period”). Our new CUSIP number is 49452K105. As a result of the name change, our symbol was changed to “KCRD” following the Notification Period.

 

The Company, through its wholly owned operating subsidiaries, Deb, Inc. and Tendercard, Inc., is an innovative FinTech and PayTech company which provides alternative Closed-Loop payment solutions to consumers and businesses across a wide variety of verticals. The Company believes that mobile wallet technology will ultimately grow to become the preferred method for merchants and consumers to transact at the point of sale, and it is our goal to capture significant market share from the mobile wallet segment through our proprietary consumer app and merchant services platform, “Pay with Deb”.

 

Deb, Inc. targets the high-risk merchant market where businesses operating within innovative verticals and e-commerce are incurring higher transaction costs, utilizing a robust compliance policy for onboarding users and businesses in accordance with federal and state regulations. Pay with Deb operates on a closed loop system, whereby consumers can purchase “Deb Tokens” to store in their wallet and use them to make purchases with the Pay with Deb merchant network. Deb Tokens are not a crypto currency, stable coins, or tied to any exchange. Funds used to purchase Deb Tokens are kept in a custodial deposit account ensuring that Deb Tokens are valued 1:1 with the US dollar. By using Deb Tokens to transact with customers, suppliers, vendors, and employees, businesses can send and receive money without using traditional banking infrastructure or credit card rails. For businesses, Pay with Deb eliminates the transaction fees associated with traditional payment processors at the point of sale. For the consumer, Pay with Deb transactions at the point of sale only appear on the mobile wallet’s statement, not bank or credit card statements, offering additional privacy to the customer.

 

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Tendercard, Inc. provides independent merchants with a gift card and loyalty platform, allowing businesses to purchase their own proprietary gift card program to promote and sell to their own customers, where their customers can also earn points. Tendercard’s gift card and loyalty platform replaces paper gift certificates and all manual recordkeeping with an electronic accounting and reporting system hosted by Tendercard. Unlike other gift card providers, Tendercard settles gift card purchases directly to the merchant’s account, never taking control of the money. Tendercard processing is available through the Bridgepay payment gateway and can be used with a dedicated terminal, or with Pax, and Dejavoo terminals.

 

Kindcard is dedicated to providing universal access to digital payment tools for all entities, persons, and governments, who accept or pay with money. Each of our business units has a focused value proposition, delivering cutting-edge fintech and paytech solutions within their target markets. Combined with excellent customer service, Kindcard aims to grow its user base and merchant network exponentially over the next two years.

 

Results of Operations

 

For the three-month period ended October 31, 2022, we had revenues of $148,162 as compared to $NIL in revenues for the three-month period ended October 31, 2021. Total Cost of Sales for the three-month period ended October 31, 2022 was $24,240 resulting in a Gross Profit of $123,922 as compared to Total Cost of Sales for the three-month period ended October 31, 2021 of $NIL. Operating Expenses for the three-month period ended October 31, 2022 were $238,380 resulting in Net Loss from Operations of $114,458. The net loss for the three-month period ended October 31, 2022 is comprised of General and Administrative Expenses of $215,024, Depreciation and Amortization of $23,356 and Professional Fees of $NIL, as compared to the Net Loss for the three-month period ended October 31, 2021 of $11,002 which were comprised of General and Administrative Expenses of $2,122, Professional fees of $8,880, and Depreciation and Amortization of $NIL. The changes in results of operations for the three-month period ended October 31, 2022 as compared to the three-month period ended October 31, 2021 are as a result of the Tendercard division added in June of 2021.

 

For the nine-month period ended October 31, 2022, we had revenues of $472,316 as compared to $NIL in revenues for the nine-month period ended October 31, 2021. Total Cost of Sales for the nine-month period ended October 31, 2022 was $60,248, resulting in a Gross Profit of $ 412,068, as compared to Total Cost of Sales for the nine-month period ended October 31, 2021 of $NIL resulting in a Gross Profit for the nine-month period ended October 31, 2021 of $NIL. Operating Expenses for the nine-month period ended October 31, 2022 were $671,728 Other Income was $48,968 resulting in Net Loss from Operations of $210,692. The net loss for the nine-month period ended October 31, 2022 is comprised of General and Administrative Expenses of $630,773, Depreciation and Amortization of $40,955 and Professional Fees of $NIL, as compared to the Net Loss for the nine-month period ended October 31, 2021 of $34,057 which were comprised of General and Administrative Expenses of $12,677, Professional fees of $21,380, and Depreciation and Amortization of $NIL. The changes in results of operations for the nine-month period ended October 31, 2022 as compared to the nine-month period ended October 31, 2021 are as a result of the Tendercard division added in June of 2021.

 

Liquidity and Capital Resources

 

Although we have raised limited funds in the form of debt financing, we anticipate that until we generate more revenue, we will require additional financings in order to fully implement our plan of operations.

 

As of October 31, 2022 we had $24,286 in cash, $30,476 in Accounts Receivable and $296,501 due to related parties. Total liabilities as of October 31, 2022, were $779,462 compared to $629,108 in total liabilities at January 31, 2022. The funds available to the Company will not be sufficient to fund the planned operations of the Company and maintain a reporting status.

 

The total amount owed to the Company’s CEO as of October 31, 2022 was $296,501. The amounts due to related party are unsecured and non-interest bearing with no set terms of repayment

 

The balance consists of  the Small Business Administration Economic Disaster Injury Loan assumed in the acquisition of Kindcard on June 7, 2021, with a principal balance of $150,000 and $3,160 accrued interest for a total balance of $153,160. An additional $8,259 of interest was accrued for the seventeen months ended October 31, 2022 for a total balance of $161,419. The term of the note is 30 years with an interest rate of 3.75% per annum, Installment payments of $713 currently scheduled to begin April 14, 2023, Accounts Payable of $136,984, Accrued Payroll Expenses of $38,827 and Notes Payable of $145,731.

 

Off-balance sheet arrangements

 

Other than the situation described in the section titled Capital Recourses and Liquidity, the company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the company is a party, under which the company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets

 

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

Item 4. Controls and Procedures.

 

Disclosure Controls and Procedures

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management including our principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.

 

In connection with this quarterly report, as required by Rule 15d-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our company’s management, including our company’s principal executive officer and principal financial officer. Based upon that evaluation, our company’s principal executive officer and principal financial officer concluded that subject to the inherent limitations noted in this Part II, Item 9A(T) as of October 31, 2022, our disclosure controls and procedures were not effective due to the existence of material weaknesses in our internal controls over financial reporting.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)) during the quarter ended October 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

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PART II—OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

Currently we are not involved in any pending litigation or legal proceeding.

 

Item 1A. Risk Factors.

 

We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

Item 2. Unregistered Sales of Securities and Use of Proceeds.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

None.

 

Item 5. Other Information.

 

None.

 

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Item 6. Exhibits

 

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

 

EXHIBIT INDEX

 

10.1*		Corporate Advisory Agreement by and between Kindcard, Inc. and Brian Schultz dated December 12, 2022.
10.2*		Corporate Advisory Agreement by and between Kindcard, Inc. and Nicholas Cardoso dated December 12, 2022.
31.1*		Certification of Chief Executive Officer pursuant to Rule 13(a)-14(a)/15(d)-14(a) of the Securities Act of 1934
31.2+		Certification of Chief Financial Officer pursuant to Rule 13(a)-14(a)/15(d)-14(a) of the Securities Act of 1934
32.1*		Certification of Chief Executive Officer Executive Officer under Section 1350 as Adopted pursuant Section 906 of the Sarbanes-Oxley Act of 2002
32.2++		Certification of Chief Financial Officer under Section 1350 as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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 Labels Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

*	Filed herewith
#	Indicates management contract or compensatory plan.
+	Included in Exhibit 31.1
++	Included in Exhibit 32.1

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	Kindcard, Inc.
	(Registrant)
Date: December 14, 2022	By:	/s/ Michael Rosen
		Michael Rosen
		CEO, CFO, President, and Director
		(Principal Executive Officer,
		Principal Financial and Accounting Officer)

  

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