10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2024

OR

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

For the transition period from _________to ___________

Commission File Number: 001-41822

SYRA HEALTH CORP.

(Exact Name of Registrant as Specified in its Charter)

Delaware	85-4027995
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1119 Keystone Way N. #201, Carmel, Indiana	46032
(Address of principal executive offices)	(Zip Code)

(463) 345-8950

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.001 par value	SYRA	The Nasdaq Stock Market LLC

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 ☒

The number of shares of registrant’s common stock outstanding as of August 8, 2024 was 6,612,421.

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	F-1
	Condensed Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023	F-1
	Condensed Statements of Operations for the Three and Six Months ended June 30, 2024 and 2023 (Unaudited)	F-2
	Statements of Changes in Stockholders’ Equity (Deficit) for the Six Months ended June 30, 2024 and 2023 (Unaudited)	F-3
	Condensed Statements of Cash Flows for the Six Months ended June 30, 2024 and 2023 (Unaudited)	F-4
	Notes to the Condensed Financial Statements (Unaudited)	F-5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	11
Item 4.	Controls and Procedures	11
PART II. OTHER INFORMATION		12
Item 1.	Legal Proceedings	12
Item 1A.	Risk Factors	12
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	12
Item 3.	Defaults Upon Senior Securities	12
Item 5.	Other Information	12
Item 6.	Exhibits	13
Signatures		14

-2-

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may be identified by such forward-looking terminology as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and involve substantial risks and uncertainty. We may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in these forward-looking statements. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our statements regarding:

● our projected financial position and estimated cash burn rate;

● our estimates regarding expenses, future revenues and capital requirements;

● our ability to continue as a going concern;

● our need to raise substantial additional capital to fund our operations;

● our ability to compete in the healthcare industry;

● the timing, cost and success or failure of new product and service introductions, development and product upgrade releases;

● competitive pressures including offerings and pricing;

● our ability to establish and maintain strategic relationships;

● undetected errors or similar problems in our software products;

● compliance with existing laws, regulations and industry initiatives and future changes in laws or regulations in the healthcare industry;

● the possibility of services-related liabilities;

● our ability to obtain, maintain and protect our intellectual property rights and the potential for us to incur substantial costs from lawsuits to enforce or protect our intellectual property rights;

● our reliance on third-party content providers;

● the success of competing products or services that are or become available;

● our ability to expand our organization to accommodate potential growth and our ability to retain and attract key personnel; and

● the successful development of our sales and marketing capabilities.

All of our forward-looking statements are as of the date of this Quarterly Report on Form 10-Q only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report on Form 10-Q or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”) could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report on Form 10-Q, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Quarterly Report on Form 10-Q that modify or impact any of the forward-looking statements contained in this Quarterly Report on Form 10-Q will be deemed to modify or supersede such statements in this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q may include market data and certain industry data and forecasts, which we may obtain from internal company surveys, market research, consultant surveys, publicly available information, reports of governmental agencies and industry publications, articles and surveys. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. While we believe that such studies and publications are reliable, we have not independently verified market and industry data from third-party sources.

-3-

ITEM 1. FINANCIAL STATEMENTS

SYRA HEALTH CORP.

CONDENSED BALANCE SHEETS

	June 30,			December 31,
	2024			2023
	(Unaudited)
ASSETS
Current assets:
Cash	$	1,594,352		$	3,280,075
Accounts receivable, net		790,095			1,060,634
Accounts receivable related party		51,411			50,614
Other current assets		391,019			389,787
Total current assets		2,826,877			4,781,110
Property and equipment, net		60,166			78,974
Right-of-use asset		351,193			63,199
Total assets	$	3,238,236		$	4,923,283
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	500,114		$	462,991
Accrued expenses		174,217			198,978
Deferred revenue		6,108			-
Current portion of operating lease liability, related party		106,458			63,199
Notes payable		114,334			184,904
Total current liabilities		901,231			910,072
Non-current portion of operating lease liability, related party		244,735			-
Total liabilities		1,145,966			910,072
Commitments and contingencies
Stockholders’ equity (deficit):
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares designated, issued and outstanding		-			-
Class A common stock, $0.001 par value, 100,000,000 shares authorized, 5,769,087 and 5,588,298 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		5,769			5,588
Convertible class B common stock, $0.001 par value, 5,000,000 shares authorized, 833,334 shares issued and outstanding		833			833
Additional paid-in capital		9,987,929			9,071,745
Accumulated deficit		(7,902,261	)		(5,064,955	)
Total stockholders’ equity (deficit)		2,092,270			4,013,211
Total liabilities and stockholders’ equity (deficit)	$	3,238,236		$	4,923,283

See accompanying notes to condensed unaudited financial statements.

F-1

SYRA HEALTH CORP.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	2024			2023			2024			2023
Net revenues	$	1,969,681		$	979,248		$	3,722,021		$	2,167,599
Cost of services		1,619,674			851,089			3,192,727			1,892,284
Gross profit		350,007			128,159			529,294			275,315
Operating expenses:
Salaries and benefits		847,064			562,619			1,583,367			1,020,364
Professional services		141,456			128,844			336,036			365,504
Research and development expenses		277,894			-			555,442			-
Selling, general and administrative expenses		456,572			208,357			858,837			423,820
Depreciation		17,374			12,293			29,919			24,056
Total operating expenses		1,740,360			912,113			3,363,601			1,833,744
Operating loss		(1,390,353	)		(783,954	)		(2,834,307	)		(1,558,429	)
Other income (expense):
Interest income		3,826			4			4,807			6
Interest expense		(3,729	)		(18,850	)		(7,806	)		(30,269	)
Total other income (expense)		97			(18,846	)		(2,999	)		(30,263	)
Net loss	$	(1,390,256	)	$	(802,800	)	$	(2,837,306	)	$	(1,588,692	)
Weighted average common shares outstanding - basic and diluted		6,602,421			4,378,751			6,548,817			4,390,363
Net loss per common share - basic and diluted	$	(0.21	)	$	(0.18	)	$	(0.43	)	$	(0.36	)

See accompanying notes to condensed unaudited financial statements.

F-2

SYRA HEALTH CORP.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

For the Periods Months Ended June 30, 2024 and 2023

					Class A				Convertible Class B				Additional					Total Stockholders’
	Preferred Stock				Common Stock				Common Stock				Paid-in		Accumulated			Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			(Deficit)
Balance, December 31, 2023		-	$	-		5,588,298	$	5,588		833,334	$	833	$	9,071,745	$	(5,064,955	)	$	4,013,211
Class A common stock issued for services		-		-		50,000		50		-		-		18,825		-			18,875
Warrants exercised for cash		-		-		130,789		131		-		-		849,998		-			850,129
Class A common stock options issued for services		-		-		-		-		-		-		14,140		-			14,140
Net loss		-		-		-		-		-		-		-		(1,447,050	)		(1,447,050	)
Balance, March 31, 2024		-	$	-		5,769,087	$	5,769		833,334	$	833	$	9,954,708	$	(6,512,005	)	$	3,449,305
Class A common stock issued for services														18,875					18,875
Class A common stock options issued for services		-		-		-		-		-		-		14,346		-			14,346
Net loss		-		-		-		-		-		-		-		(1,390,256	)		(1,390,256	)
Balance, June 30, 2024		-	$	-		5,769,087	$	5,769		833,334	$	833	$	9,987,929	$	(7,902,261	)	$	2,092,270

					Class A						Convertible Class B				Additional					Total Stockholders’
	Preferred Stock				Common Stock						Common Stock				Paid-in		Accumulated			Equity
	Shares		Amount		Shares			Amount			Shares		Amount		Capital		Deficit			(Deficit)
Balance, December 31, 2022		-	$	-		3,568,769		$	3,569			833,334	$	833	$	2,832,308	$	(2,126,612	)	$	710,098
Class A common stock options issued for services																1,367					1,367
Net loss																		(785,892	)		(785,892	)
Balance, March 31, 2023		-		-		3,568,769			3,569			833,334		833		2,833,675		(2,912,504	)		(74,427	)
Cancellation of Class A common stock		-		-		(41,667	)		(42	)		-		-		42		-			-
Class A common stock options issued for services		-		-		-			-			-		-		1,223		-			1,223
Net loss		-		-		-			-			-		-		-		(802,800	)		(802,800	)
Balance, June 30, 2023		-	$	-		3,527,102		$	3,527			833,334	$	833	$	2,834,940	$	(3,715,304	)	$	(876,004	)

See accompanying notes to condensed unaudited financial statements.

F-3

SYRA HEALTH CORP.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Six Months Ended
	June 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,837,306	)	$	(1,588,692	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		29,919			24,056
Bad debt expense		-			9,922
Common stock issued for services		37,750			-
Non-cash lease expense		63,199			59,676
Stock-based compensation, stock options		28,486			2,590
Changes in operating assets and liabilities:
Accounts receivable		270,539			778,146
Accounts receivable, related party		(797	)		-
Other current assets		148,927			24,513
Accounts payable		37,123			226,298
Accounts payable, related parties		-			(3,200	)
Deferred revenue		6,108			-
Accrued expenses		(24,761	)		(106,396	)
Operating lease liability		(63,199	)		(59,676	)
Net cash used in operating activities		(2,304,012	)		(632,763	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(11,111	)		(15,251	)
Net cash used in investing activities		(11,111	)		(15,251	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds received on exercise of warrants		850,129			-
Payment of deferred offering costs		-			(323,484	)
Proceeds received from line of credit		-			300,000
Repayments on line of credit		-			(750,397	)
Repayments on notes payable		(220,729	)		-
Proceeds received from convertible notes payable		-			1,455,000
Net cash provided by financing activities		629,400			681,119
NET CHANGE IN CASH AND CASH EQUIVALENTS		(1,685,723	)		33,105
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		3,280,075			3,344
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,594,352		$	36,449
SUPPLEMENTAL INFORMATION:
Interest paid	$	7,806		$	18,000
Income taxes paid	$	-		$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Initial recognition of right-of-use asset and lease liability	$	351,193		$	-
Prepaid asset financed with note payable	$	150,159		$	-

See accompanying notes to condensed unaudited financial statements.

F-4

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Nature of Business and Significant Accounting Policies

Nature of Business

Syra Health Corp. (“Syra” or the “Company”) was incorporated in the state of Indiana on November 20, 2020 to provide workforce staffing solutions, health education and healthcare research consulting services to mental health hospitals and organizations, including government agencies, integrated health networks, managed care entities and pharmaceutical manufacturers. On March 11, 2022, the Company redomiciled to Delaware. The Company’s corporate office is located in Carmel, Indiana.

Basis of Presentation

The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission (“SEC”) on March 25, 2024. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been omitted from this report on Form 10-Q pursuant to the rules and regulations of the SEC.

Results for the interim periods in this report are not necessarily indicative of future financial results and have not been audited by our independent registered public accounting firm. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary to present fairly our interim financial statements as of June 30, 2024, and for the three and six months ended June 30, 2024 and 2023. These adjustments are of a normal recurring nature and consistent with the adjustments recorded to prepare the annual audited financial statements as of December 31, 2023.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that may affect the 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 reporting period. Actual results could differ from these estimates.

Concentrations of Credit Risk

The Company maintains cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 under current regulations. The Company did not have any cash in excess of FDIC insured limits at June 30, 2024. The Company has not experienced any losses in such accounts.

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

- Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

- Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

- Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

F-5

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

The carrying value of the Company’s financial assets and liabilities, such as cash, accounts receivable and accounts payable are estimated by management to approximate fair value primarily due to the short-term nature of the instruments. The Company’s advances from related party approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at June 30, 2024 and December 31, 2023.

Cash and Cash Equivalents

Cash equivalents include money market accounts which have maturities of three months or less when acquired. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. Cash equivalents are stated at cost plus accrued interest, which approximates market value. There were no cash equivalents on hand at June 30, 2024 and December 31, 2023.

Accounts Receivable

Accounts receivable is carried at their estimated collectible amounts. Accounts receivable is periodically evaluated for collectability based on past credit history with customers and their current financial condition. The Company had an allowance of $5,520 at June 30, 2024 and December 31, 2023.

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation. The cost of office equipment is depreciated using the straight-line method based on a five-year life expectancy.

Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which extend the useful life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the cost and related accumulated depreciation are eliminated, and any resulting gain or loss is reflected in operations.

Impairment of Long-Lived Assets

In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as property and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.

Leases

The Company accounts for its leases under ASC 842 - Leases. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on the Company’s balance sheets.

F-6

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted by the deferred rent liabilities at the adoption date. As the Company’s lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.

Segment Reporting

ASC Topic 280, “Segment Reporting,” requires annual and interim reporting for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and expenses, and about which separate financial information is regularly evaluated by the chief operating decision maker in deciding how to allocate resources. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, the core principle of which 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 to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation.

The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered.

The Company has the following main forms of revenue:

– Healthcare Workforce;

– Population Health

– Digital Health

– Behavioral and Mental Health Services

– Health Education

The Company primarily provides its services to state health and social service agencies and universities. Healthcare Workforce, Health Education and Behavioral Mental Health Service contracts are primarily accounted for as a single performance obligation satisfied over time because the customer simultaneously receives and consumes the benefits of our medical staffing on an hourly or daily basis. Population Health and Digital Health contracts generally consist of multiple performance obligations that are distinct, such as to provide data analytics and reporting, training, or develop technology for implementation and maintenance with the customer. The Company allocates the transaction price across the performance obligations based on the estimated fair value of the distinct performance obligations. Depending on the performance obligation, revenue is recognized at a point in time when the customer obtains the benefit of the services are provide, or over time in the case of digital health revenue where the customer simultaneously receives and consumes benefits of the contract, such as ongoing performance of our technology product.

F-7

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

The contracts generally stipulate bi-weekly or monthly billing, and the Company has elected the “as invoiced” practical expedient to recognize revenue based on the hours incurred at the contractual rate as the Company has the right to payment in an amount that corresponds directly with the value of performance completed to date. The Company may also be subject to penalties for violations of certain ethical standards and non-performance measures within these state contracts. The Company recognizes revenue net of penalties.

Disaggregated revenue data

The Company’s revenue consists of the following revenue services within its industry:

	Six Months Ended
	June 30, 2024		June 30, 2023
Net revenues:
Healthcare workforce	$	2,833,895	$	1,966,405
Population health		681,531		194,026
Digital health		184,500		-
Behavioral and mental services		2,095		5,387
Health education		20,000		1,781
Net revenues	$	3,722,021	$	2,167,599

Cost of Services

The cost of services includes wages and related payroll taxes, employee benefits and certain other employee-related costs of the Company’s contract service employees, while the employees work on contract assignments.

Significant Concentrations

The majority of accounts receivable and revenue contracts are between the Company and different divisions within the Indiana Family and Social Services Administration (“FSSA”). Most contracts require monthly payments as the projects progress. The Company generally does not require collateral or advance payments. For the six months ended June 30, 2024 and 2023, FSSA accounted for approximately 64% and 95% of revenues, respectively, which was derived through a combination of divisions within the State of Indiana, including the FSSA-NeuroDiagnostic Institute, representing $2,225,628 and $2,122,653 of the Company’s Healthcare Workforce revenue for six months ended June 30, 2024 and 2023, respectively, and the FSSA-Division of Mental Health and Addiction, representing $172,000 of the Company’s Population Health revenues for each of the six months ended June 30, 2024 and 2023, respectively. In addition, the combined divisions of the FSSA (NeuroDiagnostic Institute and Division of Mental Health and Addiction), owed 54% and one other customer represented 15%, of the Company’s accounts receivable respectively, at June 30, 2024, and FSSA represented 30% of outstanding accounts receivable as of December 31, 2023.

Stock-Based Compensation

The Company accounts for equity instruments issued to employees and non-employees in accordance with the provisions of ASC 718 Stock Compensation (“ASC 718”). All transactions in which the consideration provided in exchange for the purchase of goods or services consists of the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

F-8

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Basic and Diluted Loss Per Share

Basic earnings per share (“EPS”) are computed by dividing net income (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Weighted average shares for basic EPS are calculated based on weighted average Class B shares outstanding. Diluted EPS is computed by dividing net income by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include stock options, warrants, conversion of Class B shares and restricted stock. The number of potential common shares outstanding relating to stock options, warrants, conversion of Class B shares and restricted stock is computed using the treasury stock method. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

Income Taxes

The Company accounts for income taxes under the Financial Accounting Standards Board (“FASB”) ASC 740 Income Taxes (“ASC 740”), which requires use of the liability method. FASB ASC 740-10-25 provides that 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 bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not, that such asset will not be recovered through future operations.

Uncertain Tax Positions

In accordance with ASC 740, the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

Various taxing authorities may periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities. The Company recognizes interest and penalties related to uncertain tax positions, if any, as an income tax expense.

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

Recent Accounting Standards

From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date.

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.

F-9

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 2 – Going Concern

As shown in the accompanying financial statements, as of June 30, 2024, the Company had a cash balance of $1,594,352, working capital of $1,925,646 and an accumulated deficit of $7,902,261 since inception. The Company is too early in its development stage to project revenue with a necessary level of certainty. Therefore, the Company may not have sufficient funds to sustain its operations for the next twelve months from the issuance date of these financial statements and may need to raise additional cash to fund its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company has commenced sales and continues to develop its operations. In the event sales do not materialize at the expected rates, management would seek additional financing or would attempt to conserve cash by further reducing expenses. There can be no assurance that the Company will be successful in achieving these objectives.

The Company continues to pursue sources of additional capital through debt and financing transactions or arrangements, including equity financing or other means. The Company may not be successful in identifying suitable funding transactions in a sufficient time period or at all, and may not obtain the required capital by other means. If the Company does not succeed in raising additional capital, resources may not be sufficient to fund its business. The Company’s ability to scale production and distribution capabilities and further increase the value of its brands, is largely dependent on its success in raising additional capital. From January through April of 2023, the Company raised a total of $1,455,000 of capital from the sale of convertible notes. On October 3, 2023 the Company completed IPO received net proceeds of approximately $5,332,283. In October 2023, the convertible notes were converted into Class A common stock in accordance with the terms of the convertible promissory notes as a result of the IPO.

The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. These financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 3 – Related Party Transactions

The Company pays for payroll and related costs for its employees that provide services to Sahasra Technologies Corp., doing business as STLogics to service contracts of STLogics, which is an entity beneficially owned by the principal owners and management team of Syra. During the six months ended June 30, 2024, the Company paid $101,411 of payroll and related costs for these employees, and had a receivable from STLogics of $51,411 and $50,614 for additional costs incurred as of June 30, 2024 and December 31, 2023, respectively.

Office Lease

The Company leases its current corporate headquarters under a three-year lease from STVentures, LLC (“STVentures”), an entity beneficially owned by the principal owners and the management team of Syra and their affiliates. The lease commenced on July 1, 2021 and as amended on May 1, 2022, provides for a base monthly rent of $10,711 over the three-year term of the lease. A total of $64,263 was included in selling, general and administrative expenses for the six months ended June 30, 2024 and 2023, respectively. The lease was further amended on June 26, 2024 and provides for a base monthly rent of $11,209 over the additional three-year term of the lease.

Information Technology (“IT”) Services

The Company incurred a total of $0 and $3,320 of services from RAD CUBE LLC, which is an entity beneficially owned by the principal owners and the management team of Syra and their affiliates, for outsourced IT services which have been presented within selling, general and administrative expenses in the statements of operations during the six months ended June 30, 2024 and 2023, respectively.

F-10

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Recruitment and Human Resource Services

The Company paid a total of $297,313 and $140,677or recruitment and human resource services from NLogix, which is an entity beneficially owned by the principal owners and the management team of Syra and their affiliates, which have been presented within cost of sales in the statements of operations during the six months ended June 30, 2024 and 2023, respectively.

Note 4 – Basic and Diluted Earnings per Share

During the three and six months ended June 30, 2024, the Company used the two-class method to compute net loss per common share because it had issued securities, other than a single class of common stock, that contractually entitled the holders to participate in dividends and earnings. These participating securities included the Company’s Class A common stock, which was authorized pursuant to the Company’s amendment to its Certificate of Incorporation on May 2, 2022, and convertible Class B common stock which are entitled to share equally, on a per share basis, in all assets of the Company of whatever kind available for distribution to the holders of common stock. The two-class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive distributed and undistributed earnings.

Under the two-class method, for periods with net income, basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of current period earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the period’s earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the participating securities have no obligation to fund losses.

The Company reports the more dilutive of the approaches (two-class or “if-converted”) as its diluted net income per share during the period. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

Common shares consisting of shares potentially dilutive that are excluded from the calculated of diluted earnings per share because they are anti-dilutive as of June 30, 2024 and 2023 are as follows:

	June 30, 2024		June 30, 2023
Warrants		1,629,561		-
Stock options		160,750		28,000
Total		1,790,311		28,000

F-11

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 5 – Other Current Assets

Other current assets included the following as of June 30, 2024 and December 31, 2023:

	June 30,		December 31,
	2024		2023
Federal and state income tax receivable (1) (2)	$	148,401	$	73,069
Prepaid expenses		242,618		316,718
Total other current assets	$	391,019	$	389,787

⁽¹⁾ Includes $50,000 for a federal refundable payroll tax credit, called the Employee Retention Tax Credit (“ERTC”) Tax Credit, which provides a credit to businesses who kept employees, or were negatively impacted, during the COVID-19 pandemic.

⁽²⁾ Includes $75,332 for a refundable corporate income tax credit from the State of Indiana, called the Economic Development for a Growing Economy (“EDGE”) Tax Credit, which provides an incentive to businesses to support jobs creation, capital investment and to improve the standard of living for Indiana residents.

Note 6 – Property and Equipment

Property and equipment at June 30, 2024 and December 31, 2023, consisted of the following:

	June 30,			December 31,
	2024			2023
Office equipment	$	153,912		$	142,800
Less: Accumulated depreciation		(93,746	)		(63,826	)
Total property and equipment, net	$	60,166		$	78,974

Depreciation of property and equipment was $29,919 and $24,056 for the six months ended June 30, 2024 and 2023, respectively.

Note 7 – Accrued Expenses

Accrued expenses at June 30, 2024 and December 31, 2023, consisted of the following:

	June 30,		December 31,
	2024		2023
Accrued payroll and taxes	$	156,163	$	148,924
Accrued expenses		18,054		50,054
Total accrued expenses	$	174,217	$	198,978

The Company provides postretirement benefits pursuant to IRS code section 401(k) for employees meeting specified criteria. The Company matches 100% of the employees’ contributions that are not in excess of 4% of the employee’s contributions. These matching contributions are fully vested and paid pursuant to the employees’ bi-weekly or semi-monthly pay periods. The Company does not prefund these benefits and has the right to modify or terminate certain of these benefits in the future. For the six months ended June 30, 2024 and 2023, the Company incurred $52,676 and $44,189, respectively, of IRA contribution expenses pursuant to the Company’s matching contributions, including $0, as accrued at June 30, 2024.

F-12

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 8 – Lease

The Company leases its current corporate headquarters under a three-year lease from STVentures, a related party. The lease, as amended on May 1, 2022 to expand its office space from 2,976 square feet to approximately 5,978 square feet, commenced on July 1, 2021, and provides for a base monthly rent of $10,711, as increased from $5,332 per month, over the three-year term of the lease. The lease was amended on June 26, 2024 and provides for a base monthly rent of $11,209 per month, over a three-year term of the lease commencing on July 1, 2024. The Company is occupying the space for executive and administrative offices. Rent expense for the six months ended June 30, 2024 and 2023 was $64,263, which is included in selling, general and administrative expenses within the statements of operations.

The components of lease expense were as follows:

	For the Six Months Ended
	June 30,
	2024		2023
Operating lease cost:
Amortization of ROU asset	$	63,199	$	121,089
Interest on lease liability		1,064		7,438
Total operating lease cost	$	64,263	$	128,527

Supplemental balance sheet information related to leases was as follows:

	June 30,			December 31,
	2024			2023
Operating lease:
Operating lease assets	$	351,193		$	63,199
Current portion of operating lease liability, related party	$	106,458			63,199
Noncurrent operating lease liability, related party		244,735			-
Total operating lease liability	$	351,193		$	63,199
Weighted average remaining lease term:
Operating leases		3.0 years			0.5 years
Weighted average discount rate:
Operating lease		9.25	%		5.75	%

The following payments are required under leases not yet commenced as of June 30, 2024:

				Remaining
				Term in
	Operating Lease			Years
2024		134,505
2025		134,505
2026		134,505
Total lease payments		403,515
Less: imputed interest		(52,322	)
Present value of lease liability		351,193			3.00

Note 9 – Notes Payable

In 2023, the Company entered into three insurance policy financing arrangements to purchase various insurance policies. The total principal of these arrangements was $370,596 with interest rates ranging from 10.38% through 14.05% and monthly payments totaling $32,328 are due through July 2024. The Company made principal repayments of $85,883 and incurred interest expense of $4,077 during the three months ended March 31, 2024. As of March 31, 2024 and December 31, 2023, the remaining balance was $99,021 and $184,904, respectively.

In 2024, the Company entered into one insurance policy financing arrangements to purchase an insurance policy. The principal of this arrangement was $150,159 with interest rate of 10.00% and monthly payment of $11,783 due through February 2025. As of June 30, 2024, the remaining balance was $90,701.

F-13

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 10 – Commitments and Contingencies

Legal Contingencies

From time to time, we may be involved in various disputes and litigation matters that arise in the ordinary course of business. The Company is currently not a party to any material legal proceedings.

In January 2024, a former employee filed a wrongful termination lawsuit against the Company in the U.S. District Court, Southern District of Indiana. The Company plans to vigorously defend itself against the claims, which it believes are without merit.

Note 11 – Changes in Stockholders’ Equity (Deficit)

Class A Common Stock

The Company has 100,000,000 authorized shares of $0.001 par value Class A common stock, and 5,769,087 shares were issued and outstanding as of June 30, 2024.

During the six months ended June 30, 2024, two investors exercised 130,789 warrants to purchase Class A Common stock pursuant to which the Company received cash proceeds of $850,129.

During the six months ended June 30, 2024, the Company issued 50,000 shares pursuant to the restricted stock award from November 2023. These shares vest quarterly over a one-year period. The Company recognized expense of $37,750 for these awards and expects to recognize an additional $29,628 through the end of the vesting period.

Convertible Class B Common Stock

The Company has 5,000,000 authorized shares of $0.001 par value convertible Class B common stock, and had 833,334 shares issued and outstanding as of June 30, 2024, as retrospectively applied, pursuant to the Company’s subsequent recapitalization in 2022 and effective as of May 3, 2022, whereby the founders exchanged their 83,334 Founders Shares for 833,334 shares of convertible Class B common stock.

Note 12 – Common Stock Options

Omnibus Equity Incentive Plan

On April 11, 2022, the Company’s board of directors adopted, and the Company’s stockholders approved, the Syra Health Corp. 2022 Omnibus Equity Incentive Plan, as amended on April 19, 2023 (as amended, the “2022 Plan”). No more than 1,041,667 shares of the Company’s Class A common stock shall be issued pursuant to the exercise of incentive stock options under the 2022 Plan.

Class A Common Stock Option Awards

During the six months ended June 30, 2024, the Company granted options to purchase an aggregate 32,000 shares of the Company’s Class A common stock at an exercise price of $1.88 and $1.39 per share for a term of 10 years under the 2022 Plan. These options will vest 25% on each anniversary until fully vested. The options had no intrinsic value. The aggregate estimated value using the Black-Scholes Pricing Model, based on an expected term of 6.25 years, a weighted average volatility rate ranging from 110% to 126%, a weighted average risk-free interest rate ranging from 4.16% to 4.63%, and a weighted average call option value ranging from $1.498 to $1.252, was $45,958. During the six months ended June 30, 2024 and 2023, the Company recognized expense of $28,486 and $2,590 related to common stock options. As of June 30, 2024, a total of $213,327 of unamortized expenses are expected to be expensed over the vesting period.

F-14

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

The following is a summary of activity of outstanding stock options:

				Weighted
				Average
	Number			Exercise
	of Shares			Prices
Balance, December 31, 2023		140,750		$	1.82
Options granted		32,000			1.76
Options cancelled		(12,000	)		-
Balance, June 30, 2024		160,750		$	1.85
Exercisable, June 30, 2024		-		$	-

The options had a weighted average remaining life of 9.24 years and no intrinsic value as of June 30, 2024.

Note 13 – Subsequent Events

The Company evaluates events that have occurred after the balance sheet date through the date these financial statements were issued.

In July 2024, the Company entered into an agreement with RADcube LLC, a related party, for IT architecture consulting services. The Company will pay $4,000 per month over the one year term of the agreement.

Effective July 1, 2024, the Company entered into an advisory board agreement with a new advisor. The advisor will receive common stock options to purchase 10,000 Class A common shares, vesting in four equal instalments over one year with an exercise price of $1.33.

F-15

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited interim condensed financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in this Quarterly Report on Form 10-Q, as may be amended, supplemented or superseded from time to time by other reports we file with the SEC. All amounts in this report are in U.S. dollars, unless otherwise noted.

Throughout this Quarterly Report on Form 10-Q, references to “we,” “our,” “us,” the “Company,” or “Syra,” refer to Syra Health Corp.

Overview

We are a healthcare services company promoting preventative health, holistic wellness, health education, and equitable healthcare for all patient demographics. We leverage deep scientific and healthcare expertise to create strategic frameworks and develop patient-centric solutions for the betterment of patient lives and health outcome linked to developing a healthier population. We are developing comprehensive end-to-end solutions in health education services, population health, behavioral and mental health, healthcare workforce and digital health.

Results of Operations for the Three Months Ended June 30, 2024 and 2023

The following table summarizes selected items from the statements of operations for the three months ended June 30, 2024 and 2023.

	For the Three Months
	Ended
	June 30,			June 30,			Increase /
	2024			2023			(Decrease)
Net revenues
Healthcare workforce	$	1,416,234		$	855,565		$	560,669
Population health		450,775			120,026			330,749
Digital health		92,250			-			92,250
Behavioral and mental health		422			3,657			(3,235	)
Health education		10,000			-			10,000
Net revenues		1,969,681			979,248			990,433
Cost of services		1,619,674			851,089			768,585
Gross profit		350,007			128,159			221,848
Operating expenses:
Salaries and benefits		847,064			562,619			284,445
Professional fees		141,456			128,844			12,612
Research and development expenses		277,894			-			277,894
Selling, general and administrative expenses		456,572			208,357			248,215
Depreciation		17,374			12,293			5,081
Total operating expenses:		1,740,360			912,113			828,247
Operating loss		(1,390,353	)		(783,954	)		(606,399	)
Total other income (expense)		97			(18,846	)		18,943
Net loss	$	(1,390,256	)	$	(802,800	)	$	(587,456	)

-4-

Net Revenues

Net revenue during the three months ended June 30, 2024 was comprised of $1,416,234 of healthcare workforce revenue, $450,775 of population health revenue, $422 of behavioral and mental health revenue and $92,250 of digital health services revenue and $10,000 of health education revenue, compared to net revenue during the three months ended June 30, 2023 of $855,565 of healthcare workforce revenue, $120,026 of population health revenue, $3,657 of behavioral and mental health revenue and $0 of health education revenue, an overall revenue increase of $990,433, or 101%. The increase in healthcare workforce revenue was driven by new customer acquisitions and additions to existing contracts. Population health revenues and digital health services increased in 2024 due to additional services provided to state departments and other customers.

Cost of Services

Our cost of services included wages and related payroll taxes, employee benefits and certain other employee-related costs of our contract service employees while they worked on contract assignments.

We incurred $1,619,674 of cost of services for the three months ended June 30, 2024, compared to $851,089 for the three months ended June 30, 2023, an increase of $768,858, or 90%. Our gross profit was approximately 18% for the three months ended June 30, 2024, compared to approximately 13% for the three months ended June 30, 2023, an increase of approximately 5%. Our cost of services increased primarily due to an increase in labor costs, and increased consulting costs associated with a slight change in service mix from healthcare workforce services to project-based population health and digital health services that carry better margins.

Operating Expenses

Salaries and Benefits

Our salaries and benefits include wages and related payroll taxes, employee benefits and certain other employee-related costs of our management and office personnel.

We incurred $847,064 of salaries and benefits during the three months ended June 30, 2024, compared to $562,619 for the three months ended June 30, 2023, an increase of $284,445, or 51%. Salaries and benefits increased in 2024 as we supported our increased operations and added office personnel following our IPO process.

In an effort to reduce its operating costs, the Company, effective August 1, 2024, instituted a 25% payroll reduction for its executive officers.

Professional Fees

Professional fees primarily consisted of expenses incurred from business development, accounting, legal fees, and consulting activities.

We incurred $141,456 of professional fees for the three months ended June 30, 2024, compared to $128,844 for the three months ended June 30, 2023, an increase of $12,612, or 10%. Professional fees increased in 2024 due to increased legal and other professional costs related to the Company’s regulatory filings.

Research and Development Expenses

Research and development expenses primarily consist of consulting expenses incurred to develop our technology-based solutions. We incurred $277,894 and $0 of research and development expenses for the three months ended June 30, 2024 and 2023, respectively.

Selling, General and Administrative Expenses

SG&A primarily consisted of marketing, rent, office, insurance, travel and repair and maintenance expenses incurred.

We incurred $456,572 of SG&A expenses during the three months ended June 30, 2024, compared to $208,357 for the three months ended June 30, 2024, an increase of $248,215, or 119%. Our SG&A expenses increased primarily due to our increased operations in 2024. SG&A included $32,132 of rent incurred in both periods from STVentures, LLC, an entity beneficially owned by our principal owners, our management team and their affiliates, $3,292 and $11,506 of office and computer supplies, $150,741 and $55,739 of insurance, $13,893 and $885 of advertising, and $26,462 and $30,236 of subscription and membership fees for the three months ended June 30, 2024 and 2023, respectively.

-5-

Depreciation

We incurred $17,374 of depreciation expense for the three months ended June 30, 2024, compared to $12,293 of depreciation expense for the three months ended June 30, 2023, an increase of $5,081, or 41%. Depreciation expense increased as we expanded our office space and placed additional office equipment into service during 2023.

Other Income (Expense)

Other expense, on a net basis, consisted of $3,729 of interest incurred on insurance finance charges, as partially offset by $3,826 of interest income, for the three months ended June 30, 2024. Other expense, on a net basis, consisted of $18,850 of interest incurred on a line of credit and convertible notes, as partially offset by $4 of interest income, for the three months ended June 30, 2023. Other expense, on a net basis, decreased by $18,943, or 101%, primarily due to decreased debt financing compared to the prior period.

Net Loss

Our net loss for the three months ended June 30, 2024 was $1,390,256, compared to a net loss of $802,800 for the three months ended June 30, 2023, an increase of $587,456.

Results of Operations for the Six Months Ended June 30, 2024 and 2023

	For the Six Months
	Ended
	June 30,			June 30,			Increase /
	2024			2023			(Decrease)
Net revenues
Healthcare workforce	$	2,833,895		$	1,966,405		$	867,490
Population health		681,531			194,026			487,505
Digital health		184,500			-			184,500
Behavioral and mental health		2,095			5,387			(3,292	)
Health education		20,000			1,781			18,219
Net revenues		3,722,021			2,167,599			1,554,422
Cost of services		3,192,727			1,892,284			1,300,443
Gross profit		529,294			275,315			253,979
Operating expenses:
Salaries and benefits		1,583,367			1,020,364			563,003
Professional fees		336,036			365,504			(29,468	)
Research and development expenses		555,442			-			555,442
Selling, general and administrative expenses		858,837			423,820			435,017
Depreciation		29,919			24,056			5,863
Total operating expenses:		3,363,601			1,833,744			1,529,857
Operating loss		(2,834,307	)		(1,558,429	)		(1,275,878	)
Total other income (expense)		(2,999	)		(30,269	)		27,264
Net loss	$	(2,837,306	)	$	(1,588,692	)	$	(1,248,614	)

-6-

Net Revenues

Net revenue during the six months ended June 30, 2024 was comprised of $2,833,895 of healthcare workforce revenue, $681,531 of population health revenue, $2,095 of behavioral and mental health revenue and $184,500 of digital health services revenue and $20,000 of health education revenue, compared to net revenue during the six months ended June 30, 2023 of $1,966,405 of healthcare workforce revenue, $194,026 of population health revenue, $5,387 of behavioral and mental health revenue and $1,781 of health education revenue, an overall revenue increase of $1,554,422, or 72%. The increase in healthcare workforce revenue was driven by new customer acquisitions and additions to existing contracts. Population health revenues and digital health services increased in 2024 due to additional services provided to state departments and other customers.

Cost of Services

We incurred $3,192,727 of cost of services for the six months ended June 30, 2024, compared to $1,892,284 for the six months ended June 30, 2023, an increase of $1,300,443, or 69%. Our gross profit was approximately 14% for the six months ended June 30, 2024, compared to approximately 13% for the six months ended June 30, 2023, an increase of approximately 1%. Our cost of services increased primarily due to an increase in labor costs, and increased consulting costs associated with a slight change in service mix from healthcare workforce services to project-based population health and digital health services that carry better margins.

Operating Expenses

Salaries and Benefits

We incurred $1,583,367 of salaries and benefits during the six months ended June 30, 2024, compared to $1,020,364 for the six months ended June 30, 2023, an increase of $563,003, or 55%. Salaries and benefits increased in 2024 as we supported our increased operations and added office personnel following our IPO process.

In an effort to reduce its operating costs, the Company, effective August 1, 2024, instituted a 25% payroll reduction for its executive officers.

Professional Fees

We incurred $336,036 of professional fees for the six months ended June 30, 2024, compared to $365,504 for the six months ended June 30, 2023, a decrease of $29,468, or 8%. Professional fees decreased in 2024 due to decreased legal and other professional costs as the Company completed its IPO process in the fourth quarter of 2023.

Research and Development Expenses

We incurred $555,442 and $0 of research and development expenses for the six months ended June 30, 2024 and 2023, respectively

Selling, General and Administrative Expenses

We incurred $858,837 of SG&A expenses during the six months ended June 30, 2024, compared to $423,820 for the six months ended June 30, 2023, an increase of $435,017, or 103%. Our SG&A expenses increased primarily due to our increased operations in 2024. SG&A included $64,263 of rent incurred in both periods from STVentures, LLC, an entity beneficially owned by our principal owners, our management team and their affiliates, $14,075 and $93,928 of office and computer supplies, $259,282 and $46,462 of insurance, $29,269 and $885 of advertising, and $64,208 and $30,236 of subscription and membership fees for the six months ended June 30, 2024 and 2023, respectively.

Depreciation

We incurred $29,919 of depreciation expense for the six months ended June 30, 2024, compared to $24,056 of depreciation expense for the six months ended June 30, 2023, an increase of $5,863, or 24%. Depreciation expense increased as we expanded our office space and placed additional office equipment into service during 2023.

Other Income (Expense)

Other expense, on a net basis, consisted of $7,806 of interest incurred on insurance finance charges, as partially offset by $4,807 of interest income, for the six months ended June 30, 2024. Other expense, on a net basis, consisted of $30,269 of interest incurred on a line of credit and convertible notes, as partially offset by $6 of interest income, for the six months ended June 30, 2023. Other expense, on a net basis, decreased by $27,264, or 90%, primarily due to decreased debt financing compared to the prior period.

-7-

Net Loss

Our net loss for the six months ended June 30, 2024 was $2,837,306, compared to a net loss of $1,588,692 for the six months ended June 30, 2023, an increase of $1,248,614.

Liquidity and Capital Resources

We believe that our existing sources of liquidity, along with cash expected to be generated from sales and services, will not be sufficient to fund our operations, anticipated capital expenditures, working capital and other financing requirements for at least the next twelve months from the issuance of the financial statements included elsewhere in this annual report. In the event we are unable to achieve profitable operations in the near term, we may require additional equity and/or debt financing; however, we cannot provide assurance that such financing will be available to us on favorable terms, or at all. We will continue to monitor our expenditures and cash flow position.

The following table summarizes total current assets, liabilities, accumulated deficit and working capital (deficit) at June 30, 2024 and December 31, 2023.

	June 30,			December 31,
	2024			2023
Current Assets	$	2,826,877		$	4,781,110
Current Liabilities	$	901,231		$	910,072
Accumulated Deficit	$	(7,902,261	)	$	(5,064,955	)
Working Capital	$	1,925,646		$	3,871,038

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. To date, we have funded our operations through equity and debt financings. Our primary uses of cash have been for the development of operations, compensation, and professional fees. All funds received have been expended in the furtherance of growing our business and establishing our services and solutions. The following trends are reasonably likely to result in a material decrease in our liquidity over the near to long term:

● A substantial increase in working capital requirements to finance our operations;

● Addition of administrative and professional personnel as our business continues to grow;

● The cost of being a public company; and

● Payments for seeking and securing quality staffing personnel.

Cash Flow Activities for the Six Months Ended June 30, 2024 and 2023

Net Cash Used in Operating Activities

Cash used in operating activities for the six months ended June 30, 2024 and 2023 was $2,304,012 and $632,763, respectively, which was primarily attributable to our net loss for the periods.

Net Cash Used in Investing Activities

Cash used in investing activities for the six months ended June 30, 2024 and 2023 was $11,111 and $15,251, respectively, which related entirely to the purchase of property and equipment during both periods.

-8-

Net Cash Provided by Financing Activities

Cash provided by financing activities for the six months ended June 30, 2024 was $629,400, which consisted of $850,129 of proceeds received from the exercise of Class A common stock warrants, partially offset by $220,729 of repayments on notes payable. Cash provided by financing activities for the six months ended June 30, 2023 was $681,119, which consisted of $300,000 of proceeds received from a line of credit, and $1,455,000 of proceeds received from the sale of convertible notes payable, as partially offset by $750,397 of repayments on the line of credit and payment off deferred financing costs of $323,484.

Critical Accounting Policies and Estimates

The preparation of the financial statements included elsewhere in this Quarterly Report on Form 10-Q requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.

The critical accounting estimates, assumptions and judgments that we believe have the most significant impact on our financial statements are described below.

Reverse Stock Split

On August 28, 2023, we effectuated a 1-for-1.2 reverse stock split of our issued and outstanding common stock and common stock equivalents. All issued and outstanding shares of common stock and common stock equivalents and per share data have been adjusted in this Quarterly Report on Form 10-Q, on a retrospective basis, to reflect the reverse stock split for all periods presented. Neither the authorized shares of common stock, nor the par value of the common stock were adjusted as a result of the reverse stock split.

Accounts Receivable

Accounts receivable is carried at their estimated collectible amounts. Accounts receivable is periodically evaluated for collectability based on past credit history with customers and their current financial condition. We had an allowance of $5,520 at June 30, 2024 and December 31, 2023, respectively.

Impairment of Long-Lived Assets

In accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 360, “Impairment or Disposal of Long-Lived Assets,” all long-lived assets such as property and equipment held and used by us are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.

Leases

We account for our leases under ASC 842 - Leases. We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on our balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted by the deferred rent liabilities at the adoption date. As our lease does not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.

-9-

Revenue Recognition

We recognize revenue in accordance with ASC 606, the core principle of which 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 to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as we satisfy a performance obligation.

We account for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered.

We have the following main forms of revenue:

– Healthcare Workforce Services

– Behavioral and Mental Health Services

– Digital Health

– Population Health

– Health Education

We primarily provide our services to state and local government health agencies, payers, and other private health organizations. Healthcare Workforce, Behavioral and Mental Health and Health Education contracts are accounted for as a single performance obligation satisfied over time because the customer simultaneously receives and consumes the benefits of our medical staffing on an hourly or daily basis. Population Health and Digital Health contracts generally consist of multiple performance obligations that are distinct, such as to provide data analytics and reporting, training, or develop technology for implementation and maintenance with the customer. We allocate the transaction price across the performance obligations based on the estimated fair value of the distinct performance obligations. Depending on the performance obligation, revenue is recognized at a point in time when the customer obtains the benefit of the services are provide, or over time in the case of digital health revenue where the customer simultaneously receives and consumes benefits of the contract, such as ongoing performance of our technology product.

The contracts generally stipulate bi-weekly or monthly billing, and we have elected the “as invoiced” practical expedient to recognize revenue based on the hours incurred at the contractual rate as we have the right to payment in an amount that corresponds directly with the value of performance completed to date. We may also be subject to penalties for violations of certain ethical standards and non-performance measures within these state contracts. We recognize revenue net of penalties.

JOBS Act

On April 5, 2012, the Jumpstart Our Business Startups Act (the “JOBS Act”) was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We have chosen to take advantage of the extended transition periods available to emerging growth companies under the JOBS Act for complying with new or revised accounting standards until those standards would otherwise apply to private companies provided under the JOBS Act. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates for complying with new or revised accounting standards.

Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions, including, without limitation, (i) providing an auditor’s attestation report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, and (ii) complying with the requirement adopted by the Public Company Accounting Oversight Board regarding the communication of critical audit matters in the auditor’s report on financial statements. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our IPO; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

-10-

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.

ITEM 4. CONTROLS AND PROCEDURES.

Our principal executive officer and principal financial officer evaluated the effectiveness of our “disclosure controls and procedures” as of June 30, 2024 the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported, within the time periods 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 by a company in the reports that it files under the Exchange Act is accumulated and communicated to a company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Based on the evaluation of our disclosure controls and procedures as of June 30, 2024, our Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective. Effective internal control contemplates an appropriate level of review to ensure timely preparation and completeness and accuracy of the financial statements and disclosures.

Changes in Internal Control

Except as set forth above, there were no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

-11-

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

In January 2024, a former employee filed a wrongful termination lawsuit against the Company in the U.S. District Court, Southern District of Indiana. The Company plans to vigorously defend itself against the claims, which it believes are without merit.

ITEM 1A. RISK FACTORS.

In addition to other information set forth in this report, readers should carefully consider the risk factors discussed in the Prospectus. Any of the risk factors disclosed in the Prospectus or our reports could materially affect our business, financial condition or future results. The risks described in the Prospectus are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

Our Executive Chairman, Sandeep Allam, is currently on a long-term medical leave.  Our CEO, Deepika Vuppalanchi, has taken over Mr. Allam’s responsibilities while he is on medical leave.

-12-

ITEM 6. EXHIBITS.

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 June 30, 2024 is formatted in Inline XBRL included in the Exhibit 101 Inline XBRL Document Set

*	Filed herewith.
**	Furnished herewith.

-13-

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.

	SYRA HEALTH CORP.
Date: August 8, 2024	By:	/s/ Deepika Vuppalanchi
		Deepika Vuppalanchi
		Chief Executive Officer
		(Principal Executive Officer)
Date: August 8, 2024	By:	/s/ Priya Prasad
		Priya Prasad
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

-14-

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer of Syra Health Corp.

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Deepika Vuppalanchi, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Syra Health Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2024	/s/ Deepika Vuppalanchi
	Deepika Vuppalanchi
	Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer of Syra Health Corp.

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Priya Prasad, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Syra Health Corp;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2024	/s/ Priya Prasad
	Priya Prasad
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Deepika Vuppalanchi, Chief Executive Officer of Syra Health Corp. (the “Company”), hereby certifies that based on the undersigned’s knowledge:

1.	The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2024 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8, 2024	/s/ Deepika Vuppalanchi
	Deepika Vuppalanchi
	Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Priya Prasad, Chief Financial Officer of Syra Health Corp. (the “Company”), hereby certifies that based on the undersigned’s knowledge:

1.	The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2024 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8, 2024	/s/ Priya Prasad
	Priya Prasad
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

XML

Cover - $ / shares	6 Months Ended
	Jun. 30, 2024	Aug. 08, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	001-41822
Entity Registrant Name	SYRA HEALTH CORP.
Entity Central Index Key	0001922335
Entity Tax Identification Number	85-4027995
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	1119 Keystone Way N. #201
Entity Address, City or Town	Carmel
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	46032
City Area Code	(463)
Local Phone Number	345-8950
Title of 12(b) Security	Class A Common Stock, $0.001 par value
Trading Symbol	SYRA
Security Exchange Name	NASDAQ
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		6,612,421
Entity Information, Former Legal or Registered Name	Not applicable
Entity Listing, Par Value Per Share	$ 0.001

XML

Condensed Balance Sheets - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash	$ 1,594,352	$ 3,280,075
Other current assets	391,019	389,787
Total current assets	2,826,877	4,781,110
Property and equipment, net	60,166	78,974
Right-of-use asset	351,193	63,199
Total assets	3,238,236	4,923,283
Current liabilities:
Accounts payable	500,114	462,991
Accrued expenses	174,217	198,978
Deferred revenue	6,108
Current portion of operating lease liability, related party	106,458	63,199
Notes payable	114,334	184,904
Total current liabilities	901,231	910,072
Non-current portion of operating lease liability, related party	244,735
Total liabilities	1,145,966	910,072
Commitments and contingencies
Stockholders’ equity (deficit):
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares designated, issued and outstanding
Additional paid-in capital	9,987,929	9,071,745
Accumulated deficit	(7,902,261)	(5,064,955)
Total stockholders’ equity (deficit)	2,092,270	4,013,211
Total liabilities and stockholders’ equity (deficit)	3,238,236	4,923,283
Common Class A [Member]
Stockholders’ equity (deficit):
Common stock, value	5,769	5,588
Convertible Class B Common Stock [Member]
Stockholders’ equity (deficit):
Common stock, value	833	833
Nonrelated Party [Member]
Current assets:
Accounts receivable	790,095	1,060,634
Related Party [Member]
Current assets:
Accounts receivable	$ 51,411	$ 50,614

XML

Condensed Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2024	Dec. 31, 2023
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares designated	0	0
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common Class A [Member]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	5,769,087	5,588,298
Common stock, shares outstanding	5,769,087	5,588,298
Convertible Class B Common Stock [Member]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	5,000,000	5,000,000
Common stock, shares issued	833,334	833,334
Common stock, shares outstanding	833,334	833,334

XML

Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Statement [Abstract]
Net revenues	$ 1,969,681	$ 979,248	$ 3,722,021	$ 2,167,599
Cost of services	1,619,674	851,089	3,192,727	1,892,284
Gross profit	350,007	128,159	529,294	275,315
Operating expenses:
Salaries and benefits	847,064	562,619	1,583,367	1,020,364
Professional services	141,456	128,844	336,036	365,504
Research and development expenses	277,894		555,442
Selling, general and administrative expenses	456,572	208,357	858,837	423,820
Depreciation	17,374	12,293	29,919	24,056
Total operating expenses	1,740,360	912,113	3,363,601	1,833,744
Operating loss	(1,390,353)	(783,954)	(2,834,307)	(1,558,429)
Other income (expense):
Interest income	3,826	4	4,807	6
Interest expense	(3,729)	(18,850)	(7,806)	(30,269)
Total other income (expense)	97	(18,846)	(2,999)	(30,263)
Net loss	$ (1,390,256)	$ (802,800)	$ (2,837,306)	$ (1,588,692)
Weighted average common shares outstanding - basic	6,602,421	4,378,751	6,548,817	4,390,363
Weighted average common shares outstanding - diluted	6,602,421	4,378,751	6,548,817	4,390,363
Net loss per common share - basic	$ (0.21)	$ (0.18)	$ (0.43)	$ (0.36)
Net loss per common share - diluted	$ (0.21)	$ (0.18)	$ (0.43)	$ (0.36)

XML

Statements of Changes in Stockholders' Equity (Deficit) (Unaudited) - USD ($)	Preferred Stock [Member]	Common Stock [Member] Common Class A [Member]	Common Stock [Member] Convertible Class B Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2022		$ 3,569	$ 833	$ 2,832,308	$ (2,126,612)	$ 710,098
Balance, shares at Dec. 31, 2022		3,568,769	833,334
Class A common stock options issued for services				1,367		1,367
Net loss					(785,892)	(785,892)
Balance at Mar. 31, 2023		$ 3,569	$ 833	2,833,675	(2,912,504)	(74,427)
Balance, shares at Mar. 31, 2023		3,568,769	833,334
Balance at Dec. 31, 2022		$ 3,569	$ 833	2,832,308	(2,126,612)	710,098
Balance, shares at Dec. 31, 2022		3,568,769	833,334
Net loss						(1,588,692)
Balance at Jun. 30, 2023		$ 3,527	$ 833	2,834,940	(3,715,304)	(876,004)
Balance, shares at Jun. 30, 2023		3,527,102	833,334
Balance at Mar. 31, 2023		$ 3,569	$ 833	2,833,675	(2,912,504)	(74,427)
Balance, shares at Mar. 31, 2023		3,568,769	833,334
Class A common stock options issued for services				1,223		1,223
Net loss					(802,800)	(802,800)
Cancellation of Class A common stock		$ (42)		42
Cancellation of Class A common stock, shares		(41,667)
Balance at Jun. 30, 2023		$ 3,527	$ 833	2,834,940	(3,715,304)	(876,004)
Balance, shares at Jun. 30, 2023		3,527,102	833,334
Balance at Dec. 31, 2023		$ 5,588	$ 833	9,071,745	(5,064,955)	4,013,211
Balance, shares at Dec. 31, 2023		5,588,298	833,334
Class A common stock issued for services		$ 50		18,825		18,875
Class A common stock issued for services, shares		50,000
Warrants exercised for cash		$ 131		849,998		850,129
Warrants exercised for cash, shares		130,789
Class A common stock options issued for services				14,140		14,140
Net loss					(1,447,050)	(1,447,050)
Balance at Mar. 31, 2024		$ 5,769	$ 833	9,954,708	(6,512,005)	3,449,305
Balance, shares at Mar. 31, 2024		5,769,087	833,334
Balance at Dec. 31, 2023		$ 5,588	$ 833	9,071,745	(5,064,955)	4,013,211
Balance, shares at Dec. 31, 2023		5,588,298	833,334
Net loss						(2,837,306)
Balance at Jun. 30, 2024		$ 5,769	$ 833	9,987,929	(7,902,261)	2,092,270
Balance, shares at Jun. 30, 2024		5,769,087	833,334
Balance at Mar. 31, 2024		$ 5,769	$ 833	9,954,708	(6,512,005)	3,449,305
Balance, shares at Mar. 31, 2024		5,769,087	833,334
Class A common stock issued for services				18,875		18,875
Class A common stock options issued for services				14,346		14,346
Net loss					(1,390,256)	(1,390,256)
Balance at Jun. 30, 2024		$ 5,769	$ 833	$ 9,987,929	$ (7,902,261)	$ 2,092,270
Balance, shares at Jun. 30, 2024		5,769,087	833,334

XML

Condensed Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (2,837,306)	$ (1,588,692)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	29,919	24,056
Bad debt expense		9,922
Common stock issued for services	37,750
Non-cash lease expense	63,199	59,676
Stock-based compensation, stock options	28,486	2,590
Changes in operating assets and liabilities:
Accounts receivable	270,539	778,146
Accounts receivable, related party	(797)
Other current assets	148,927	24,513
Accounts payable	37,123	226,298
Accounts payable, related parties		(3,200)
Deferred revenue	6,108
Accrued expenses	(24,761)	(106,396)
Operating lease liability	(63,199)	(59,676)
Net cash used in operating activities	(2,304,012)	(632,763)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(11,111)	(15,251)
Net cash used in investing activities	(11,111)	(15,251)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds received on exercise of warrants	850,129
Payment of deferred offering costs		(323,484)
Proceeds received from line of credit		300,000
Repayments on line of credit		(750,397)
Repayments on notes payable	(220,729)
Proceeds received from convertible notes payable		1,455,000
Net cash provided by financing activities	629,400	681,119
NET CHANGE IN CASH AND CASH EQUIVALENTS	(1,685,723)	33,105
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	3,280,075	3,344
CASH AND CASH EQUIVALENTS AT END OF PERIOD	1,594,352	36,449
SUPPLEMENTAL INFORMATION:
Interest paid	7,806	18,000
Income taxes paid
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Initial recognition of right-of-use asset and lease liability	351,193
Prepaid asset financed with note payable	$ 150,159

XML

Nature of Business and Significant Accounting Policies

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Nature of Business and Significant Accounting Policies

Note 1 – Nature of Business and Significant Accounting Policies

Nature of Business

Syra Health Corp. (“Syra” or the “Company”) was incorporated in the state of Indiana on November 20, 2020 to provide workforce staffing solutions, health education and healthcare research consulting services to mental health hospitals and organizations, including government agencies, integrated health networks, managed care entities and pharmaceutical manufacturers. On March 11, 2022, the Company redomiciled to Delaware. The Company’s corporate office is located in Carmel, Indiana.

Basis of Presentation

The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission (“SEC”) on March 25, 2024. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been omitted from this report on Form 10-Q pursuant to the rules and regulations of the SEC.

Results for the interim periods in this report are not necessarily indicative of future financial results and have not been audited by our independent registered public accounting firm. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary to present fairly our interim financial statements as of June 30, 2024, and for the three and six months ended June 30, 2024 and 2023. These adjustments are of a normal recurring nature and consistent with the adjustments recorded to prepare the annual audited financial statements as of December 31, 2023.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that may affect the 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 reporting period. Actual results could differ from these estimates.

Concentrations of Credit Risk

The Company maintains cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 under current regulations. The Company did not have any cash in excess of FDIC insured limits at June 30, 2024. The Company has not experienced any losses in such accounts.

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

- Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

- Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

- Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

The carrying value of the Company’s financial assets and liabilities, such as cash, accounts receivable and accounts payable are estimated by management to approximate fair value primarily due to the short-term nature of the instruments. The Company’s advances from related party approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at June 30, 2024 and December 31, 2023.

Cash and Cash Equivalents

Cash equivalents include money market accounts which have maturities of three months or less when acquired. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. Cash equivalents are stated at cost plus accrued interest, which approximates market value. There were no cash equivalents on hand at June 30, 2024 and December 31, 2023.

Accounts Receivable

Accounts receivable is carried at their estimated collectible amounts. Accounts receivable is periodically evaluated for collectability based on past credit history with customers and their current financial condition. The Company had an allowance of $5,520 at June 30, 2024 and December 31, 2023.

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation. The cost of office equipment is depreciated using the straight-line method based on a five-year life expectancy.

Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which extend the useful life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the cost and related accumulated depreciation are eliminated, and any resulting gain or loss is reflected in operations.

Impairment of Long-Lived Assets

In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as property and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.

Leases

The Company accounts for its leases under ASC 842 - Leases. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on the Company’s balance sheets.

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted by the deferred rent liabilities at the adoption date. As the Company’s lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.

Segment Reporting

ASC Topic 280, “Segment Reporting,” requires annual and interim reporting for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and expenses, and about which separate financial information is regularly evaluated by the chief operating decision maker in deciding how to allocate resources. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, the core principle of which 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 to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation.

The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered.

The Company has the following main forms of revenue:

– Healthcare Workforce;

– Population Health

– Digital Health

– Behavioral and Mental Health Services

– Health Education

The Company primarily provides its services to state health and social service agencies and universities. Healthcare Workforce, Health Education and Behavioral Mental Health Service contracts are primarily accounted for as a single performance obligation satisfied over time because the customer simultaneously receives and consumes the benefits of our medical staffing on an hourly or daily basis. Population Health and Digital Health contracts generally consist of multiple performance obligations that are distinct, such as to provide data analytics and reporting, training, or develop technology for implementation and maintenance with the customer. The Company allocates the transaction price across the performance obligations based on the estimated fair value of the distinct performance obligations. Depending on the performance obligation, revenue is recognized at a point in time when the customer obtains the benefit of the services are provide, or over time in the case of digital health revenue where the customer simultaneously receives and consumes benefits of the contract, such as ongoing performance of our technology product.

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

The contracts generally stipulate bi-weekly or monthly billing, and the Company has elected the “as invoiced” practical expedient to recognize revenue based on the hours incurred at the contractual rate as the Company has the right to payment in an amount that corresponds directly with the value of performance completed to date. The Company may also be subject to penalties for violations of certain ethical standards and non-performance measures within these state contracts. The Company recognizes revenue net of penalties.

Disaggregated revenue data

The Company’s revenue consists of the following revenue services within its industry:

	Six Months Ended
	June 30, 2024		June 30, 2023
Net revenues:
Healthcare workforce	$	2,833,895	$	1,966,405
Population health		681,531		194,026
Digital health		184,500		-
Behavioral and mental services		2,095		5,387
Health education		20,000		1,781
Net revenues	$	3,722,021	$	2,167,599

Cost of Services

The cost of services includes wages and related payroll taxes, employee benefits and certain other employee-related costs of the Company’s contract service employees, while the employees work on contract assignments.

Significant Concentrations

The majority of accounts receivable and revenue contracts are between the Company and different divisions within the Indiana Family and Social Services Administration (“FSSA”). Most contracts require monthly payments as the projects progress. The Company generally does not require collateral or advance payments. For the six months ended June 30, 2024 and 2023, FSSA accounted for approximately 64% and 95% of revenues, respectively, which was derived through a combination of divisions within the State of Indiana, including the FSSA-NeuroDiagnostic Institute, representing $2,225,628 and $2,122,653 of the Company’s Healthcare Workforce revenue for six months ended June 30, 2024 and 2023, respectively, and the FSSA-Division of Mental Health and Addiction, representing $172,000 of the Company’s Population Health revenues for each of the six months ended June 30, 2024 and 2023, respectively. In addition, the combined divisions of the FSSA (NeuroDiagnostic Institute and Division of Mental Health and Addiction), owed 54% and one other customer represented 15%, of the Company’s accounts receivable respectively, at June 30, 2024, and FSSA represented 30% of outstanding accounts receivable as of December 31, 2023.

Stock-Based Compensation

The Company accounts for equity instruments issued to employees and non-employees in accordance with the provisions of ASC 718 Stock Compensation (“ASC 718”). All transactions in which the consideration provided in exchange for the purchase of goods or services consists of the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Basic and Diluted Loss Per Share

Basic earnings per share (“EPS”) are computed by dividing net income (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Weighted average shares for basic EPS are calculated based on weighted average Class B shares outstanding. Diluted EPS is computed by dividing net income by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include stock options, warrants, conversion of Class B shares and restricted stock. The number of potential common shares outstanding relating to stock options, warrants, conversion of Class B shares and restricted stock is computed using the treasury stock method. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

Income Taxes

The Company accounts for income taxes under the Financial Accounting Standards Board (“FASB”) ASC 740 Income Taxes (“ASC 740”), which requires use of the liability method. FASB ASC 740-10-25 provides that 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 bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not, that such asset will not be recovered through future operations.

Uncertain Tax Positions

In accordance with ASC 740, the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

Various taxing authorities may periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities. The Company recognizes interest and penalties related to uncertain tax positions, if any, as an income tax expense.

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

Recent Accounting Standards

From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date.

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

XML

Going Concern

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Going Concern

Note 2 – Going Concern

As shown in the accompanying financial statements, as of June 30, 2024, the Company had a cash balance of $1,594,352, working capital of $1,925,646 and an accumulated deficit of $7,902,261 since inception. The Company is too early in its development stage to project revenue with a necessary level of certainty. Therefore, the Company may not have sufficient funds to sustain its operations for the next twelve months from the issuance date of these financial statements and may need to raise additional cash to fund its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company has commenced sales and continues to develop its operations. In the event sales do not materialize at the expected rates, management would seek additional financing or would attempt to conserve cash by further reducing expenses. There can be no assurance that the Company will be successful in achieving these objectives.

The Company continues to pursue sources of additional capital through debt and financing transactions or arrangements, including equity financing or other means. The Company may not be successful in identifying suitable funding transactions in a sufficient time period or at all, and may not obtain the required capital by other means. If the Company does not succeed in raising additional capital, resources may not be sufficient to fund its business. The Company’s ability to scale production and distribution capabilities and further increase the value of its brands, is largely dependent on its success in raising additional capital. From January through April of 2023, the Company raised a total of $1,455,000 of capital from the sale of convertible notes. On October 3, 2023 the Company completed IPO received net proceeds of approximately $5,332,283. In October 2023, the convertible notes were converted into Class A common stock in accordance with the terms of the convertible promissory notes as a result of the IPO.

The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. These financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

XML

Related Party Transactions

6 Months Ended

Jun. 30, 2024

Related Party Transactions [Abstract]

Related Party Transactions

Note 3 – Related Party Transactions

The Company pays for payroll and related costs for its employees that provide services to Sahasra Technologies Corp., doing business as STLogics to service contracts of STLogics, which is an entity beneficially owned by the principal owners and management team of Syra. During the six months ended June 30, 2024, the Company paid $101,411 of payroll and related costs for these employees, and had a receivable from STLogics of $51,411 and $50,614 for additional costs incurred as of June 30, 2024 and December 31, 2023, respectively.

Office Lease

The Company leases its current corporate headquarters under a three-year lease from STVentures, LLC (“STVentures”), an entity beneficially owned by the principal owners and the management team of Syra and their affiliates. The lease commenced on July 1, 2021 and as amended on May 1, 2022, provides for a base monthly rent of $10,711 over the three-year term of the lease. A total of $64,263 was included in selling, general and administrative expenses for the six months ended June 30, 2024 and 2023, respectively. The lease was further amended on June 26, 2024 and provides for a base monthly rent of $11,209 over the additional three-year term of the lease.

Information Technology (“IT”) Services

The Company incurred a total of $0 and $3,320 of services from RAD CUBE LLC, which is an entity beneficially owned by the principal owners and the management team of Syra and their affiliates, for outsourced IT services which have been presented within selling, general and administrative expenses in the statements of operations during the six months ended June 30, 2024 and 2023, respectively.

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Recruitment and Human Resource Services

The Company paid a total of $297,313 and $140,677or recruitment and human resource services from NLogix, which is an entity beneficially owned by the principal owners and the management team of Syra and their affiliates, which have been presented within cost of sales in the statements of operations during the six months ended June 30, 2024 and 2023, respectively.

XML

Basic and Diluted Earnings per Share

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Basic and Diluted Earnings per Share

Note 4 – Basic and Diluted Earnings per Share

During the three and six months ended June 30, 2024, the Company used the two-class method to compute net loss per common share because it had issued securities, other than a single class of common stock, that contractually entitled the holders to participate in dividends and earnings. These participating securities included the Company’s Class A common stock, which was authorized pursuant to the Company’s amendment to its Certificate of Incorporation on May 2, 2022, and convertible Class B common stock which are entitled to share equally, on a per share basis, in all assets of the Company of whatever kind available for distribution to the holders of common stock. The two-class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive distributed and undistributed earnings.

Under the two-class method, for periods with net income, basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of current period earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the period’s earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the participating securities have no obligation to fund losses.

The Company reports the more dilutive of the approaches (two-class or “if-converted”) as its diluted net income per share during the period. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

Common shares consisting of shares potentially dilutive that are excluded from the calculated of diluted earnings per share because they are anti-dilutive as of June 30, 2024 and 2023 are as follows:

	June 30, 2024		June 30, 2023
Warrants		1,629,561		-
Stock options		160,750		28,000
Total		1,790,311		28,000

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

XML

Other Current Assets

6 Months Ended

Jun. 30, 2024

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Current Assets

Note 5 – Other Current Assets

Other current assets included the following as of June 30, 2024 and December 31, 2023:

	June 30,		December 31,
	2024		2023
Federal and state income tax receivable (1) (2)	$	148,401	$	73,069
Prepaid expenses		242,618		316,718
Total other current assets	$	391,019	$	389,787

⁽¹⁾ Includes $50,000 for a federal refundable payroll tax credit, called the Employee Retention Tax Credit (“ERTC”) Tax Credit, which provides a credit to businesses who kept employees, or were negatively impacted, during the COVID-19 pandemic.

⁽²⁾ Includes $75,332 for a refundable corporate income tax credit from the State of Indiana, called the Economic Development for a Growing Economy (“EDGE”) Tax Credit, which provides an incentive to businesses to support jobs creation, capital investment and to improve the standard of living for Indiana residents.

XML

Property and Equipment

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

Property and Equipment

Note 6 – Property and Equipment

Property and equipment at June 30, 2024 and December 31, 2023, consisted of the following:

	June 30,			December 31,
	2024			2023
Office equipment	$	153,912		$	142,800
Less: Accumulated depreciation		(93,746	)		(63,826	)
Total property and equipment, net	$	60,166		$	78,974

Depreciation of property and equipment was $29,919 and $24,056 for the six months ended June 30, 2024 and 2023, respectively.

XML

Accrued Expenses

6 Months Ended

Jun. 30, 2024

Payables and Accruals [Abstract]

Accrued Expenses

Note 7 – Accrued Expenses

Accrued expenses at June 30, 2024 and December 31, 2023, consisted of the following:

	June 30,		December 31,
	2024		2023
Accrued payroll and taxes	$	156,163	$	148,924
Accrued expenses		18,054		50,054
Total accrued expenses	$	174,217	$	198,978

The Company provides postretirement benefits pursuant to IRS code section 401(k) for employees meeting specified criteria. The Company matches 100% of the employees’ contributions that are not in excess of 4% of the employee’s contributions. These matching contributions are fully vested and paid pursuant to the employees’ bi-weekly or semi-monthly pay periods. The Company does not prefund these benefits and has the right to modify or terminate certain of these benefits in the future. For the six months ended June 30, 2024 and 2023, the Company incurred $52,676 and $44,189, respectively, of IRA contribution expenses pursuant to the Company’s matching contributions, including $0, as accrued at June 30, 2024.

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

XML

Lease

6 Months Ended

Jun. 30, 2024

Lease

Lease

Note 8 – Lease

The Company leases its current corporate headquarters under a three-year lease from STVentures, a related party. The lease, as amended on May 1, 2022 to expand its office space from 2,976 square feet to approximately 5,978 square feet, commenced on July 1, 2021, and provides for a base monthly rent of $10,711, as increased from $5,332 per month, over the three-year term of the lease. The lease was amended on June 26, 2024 and provides for a base monthly rent of $11,209 per month, over a three-year term of the lease commencing on July 1, 2024. The Company is occupying the space for executive and administrative offices. Rent expense for the six months ended June 30, 2024 and 2023 was $64,263, which is included in selling, general and administrative expenses within the statements of operations.

The components of lease expense were as follows:

	For the Six Months Ended
	June 30,
	2024		2023
Operating lease cost:
Amortization of ROU asset	$	63,199	$	121,089
Interest on lease liability		1,064		7,438
Total operating lease cost	$	64,263	$	128,527

Supplemental balance sheet information related to leases was as follows:

	June 30,			December 31,
	2024			2023
Operating lease:
Operating lease assets	$	351,193		$	63,199
Current portion of operating lease liability, related party	$	106,458			63,199
Noncurrent operating lease liability, related party		244,735			-
Total operating lease liability	$	351,193		$	63,199
Weighted average remaining lease term:
Operating leases		3.0 years			0.5 years
Weighted average discount rate:
Operating lease		9.25	%		5.75	%

The following payments are required under leases not yet commenced as of June 30, 2024:

				Remaining
				Term in
	Operating Lease			Years
2024		134,505
2025		134,505
2026		134,505
Total lease payments		403,515
Less: imputed interest		(52,322	)
Present value of lease liability		351,193			3.00

XML

Notes Payable

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Notes Payable

Note 9 – Notes Payable

In 2023, the Company entered into three insurance policy financing arrangements to purchase various insurance policies. The total principal of these arrangements was $370,596 with interest rates ranging from 10.38% through 14.05% and monthly payments totaling $32,328 are due through July 2024. The Company made principal repayments of $85,883 and incurred interest expense of $4,077 during the three months ended March 31, 2024. As of March 31, 2024 and December 31, 2023, the remaining balance was $99,021 and $184,904, respectively.

In 2024, the Company entered into one insurance policy financing arrangements to purchase an insurance policy. The principal of this arrangement was $150,159 with interest rate of 10.00% and monthly payment of $11,783 due through February 2025. As of June 30, 2024, the remaining balance was $90,701.

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 10 – Commitments and Contingencies

Legal Contingencies

From time to time, we may be involved in various disputes and litigation matters that arise in the ordinary course of business. The Company is currently not a party to any material legal proceedings.

In January 2024, a former employee filed a wrongful termination lawsuit against the Company in the U.S. District Court, Southern District of Indiana. The Company plans to vigorously defend itself against the claims, which it believes are without merit.

XML

Changes in Stockholders’ Equity (Deficit)

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

Changes in Stockholders’ Equity (Deficit)

Note 11 – Changes in Stockholders’ Equity (Deficit)

Class A Common Stock

The Company has 100,000,000 authorized shares of $0.001 par value Class A common stock, and 5,769,087 shares were issued and outstanding as of June 30, 2024.

During the six months ended June 30, 2024, two investors exercised 130,789 warrants to purchase Class A Common stock pursuant to which the Company received cash proceeds of $850,129.

During the six months ended June 30, 2024, the Company issued 50,000 shares pursuant to the restricted stock award from November 2023. These shares vest quarterly over a one-year period. The Company recognized expense of $37,750 for these awards and expects to recognize an additional $29,628 through the end of the vesting period.

Convertible Class B Common Stock

The Company has 5,000,000 authorized shares of $0.001 par value convertible Class B common stock, and had 833,334 shares issued and outstanding as of June 30, 2024, as retrospectively applied, pursuant to the Company’s subsequent recapitalization in 2022 and effective as of May 3, 2022, whereby the founders exchanged their 83,334 Founders Shares for 833,334 shares of convertible Class B common stock.

XML

Common Stock Options

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

Common Stock Options

Note 12 – Common Stock Options

Omnibus Equity Incentive Plan

On April 11, 2022, the Company’s board of directors adopted, and the Company’s stockholders approved, the Syra Health Corp. 2022 Omnibus Equity Incentive Plan, as amended on April 19, 2023 (as amended, the “2022 Plan”). No more than 1,041,667 shares of the Company’s Class A common stock shall be issued pursuant to the exercise of incentive stock options under the 2022 Plan.

Class A Common Stock Option Awards

During the six months ended June 30, 2024, the Company granted options to purchase an aggregate 32,000 shares of the Company’s Class A common stock at an exercise price of $1.88 and $1.39 per share for a term of 10 years under the 2022 Plan. These options will vest 25% on each anniversary until fully vested. The options had no intrinsic value. The aggregate estimated value using the Black-Scholes Pricing Model, based on an expected term of 6.25 years, a weighted average volatility rate ranging from 110% to 126%, a weighted average risk-free interest rate ranging from 4.16% to 4.63%, and a weighted average call option value ranging from $1.498 to $1.252, was $45,958. During the six months ended June 30, 2024 and 2023, the Company recognized expense of $28,486 and $2,590 related to common stock options. As of June 30, 2024, a total of $213,327 of unamortized expenses are expected to be expensed over the vesting period.

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

The following is a summary of activity of outstanding stock options:

				Weighted
				Average
	Number			Exercise
	of Shares			Prices
Balance, December 31, 2023		140,750		$	1.82
Options granted		32,000			1.76
Options cancelled		(12,000	)		-
Balance, June 30, 2024		160,750		$	1.85
Exercisable, June 30, 2024		-		$	-

The options had a weighted average remaining life of 9.24 years and no intrinsic value as of June 30, 2024.

XML

Subsequent Events

6 Months Ended

Jun. 30, 2024

Subsequent Events [Abstract]

Subsequent Events

Note 13 – Subsequent Events

The Company evaluates events that have occurred after the balance sheet date through the date these financial statements were issued.

In July 2024, the Company entered into an agreement with RADcube LLC, a related party, for IT architecture consulting services. The Company will pay $4,000 per month over the one year term of the agreement.

Effective July 1, 2024, the Company entered into an advisory board agreement with a new advisor. The advisor will receive common stock options to purchase 10,000 Class A common shares, vesting in four equal instalments over one year with an exercise price of $1.33.

XML

Nature of Business and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission (“SEC”) on March 25, 2024. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been omitted from this report on Form 10-Q pursuant to the rules and regulations of the SEC.

Results for the interim periods in this report are not necessarily indicative of future financial results and have not been audited by our independent registered public accounting firm. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary to present fairly our interim financial statements as of June 30, 2024, and for the three and six months ended June 30, 2024 and 2023. These adjustments are of a normal recurring nature and consistent with the adjustments recorded to prepare the annual audited financial statements as of December 31, 2023.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that may affect the 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 reporting period. Actual results could differ from these estimates.

Concentrations of Credit Risk

Concentrations of Credit Risk

The Company maintains cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 under current regulations. The Company did not have any cash in excess of FDIC insured limits at June 30, 2024. The Company has not experienced any losses in such accounts.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

- Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

- Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

- Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

The carrying value of the Company’s financial assets and liabilities, such as cash, accounts receivable and accounts payable are estimated by management to approximate fair value primarily due to the short-term nature of the instruments. The Company’s advances from related party approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at June 30, 2024 and December 31, 2023.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash equivalents include money market accounts which have maturities of three months or less when acquired. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. Cash equivalents are stated at cost plus accrued interest, which approximates market value. There were no cash equivalents on hand at June 30, 2024 and December 31, 2023.

Accounts Receivable

Accounts Receivable

Accounts receivable is carried at their estimated collectible amounts. Accounts receivable is periodically evaluated for collectability based on past credit history with customers and their current financial condition. The Company had an allowance of $5,520 at June 30, 2024 and December 31, 2023.

Property and Equipment

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation. The cost of office equipment is depreciated using the straight-line method based on a five-year life expectancy.

Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which extend the useful life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the cost and related accumulated depreciation are eliminated, and any resulting gain or loss is reflected in operations.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as property and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.

Leases

Leases

The Company accounts for its leases under ASC 842 - Leases. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on the Company’s balance sheets.

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted by the deferred rent liabilities at the adoption date. As the Company’s lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.

Segment Reporting

Segment Reporting

ASC Topic 280, “Segment Reporting,” requires annual and interim reporting for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and expenses, and about which separate financial information is regularly evaluated by the chief operating decision maker in deciding how to allocate resources. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, the core principle of which 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 to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation.

The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered.

The Company has the following main forms of revenue:

– Healthcare Workforce;

– Population Health

– Digital Health

– Behavioral and Mental Health Services

– Health Education

The Company primarily provides its services to state health and social service agencies and universities. Healthcare Workforce, Health Education and Behavioral Mental Health Service contracts are primarily accounted for as a single performance obligation satisfied over time because the customer simultaneously receives and consumes the benefits of our medical staffing on an hourly or daily basis. Population Health and Digital Health contracts generally consist of multiple performance obligations that are distinct, such as to provide data analytics and reporting, training, or develop technology for implementation and maintenance with the customer. The Company allocates the transaction price across the performance obligations based on the estimated fair value of the distinct performance obligations. Depending on the performance obligation, revenue is recognized at a point in time when the customer obtains the benefit of the services are provide, or over time in the case of digital health revenue where the customer simultaneously receives and consumes benefits of the contract, such as ongoing performance of our technology product.

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

The contracts generally stipulate bi-weekly or monthly billing, and the Company has elected the “as invoiced” practical expedient to recognize revenue based on the hours incurred at the contractual rate as the Company has the right to payment in an amount that corresponds directly with the value of performance completed to date. The Company may also be subject to penalties for violations of certain ethical standards and non-performance measures within these state contracts. The Company recognizes revenue net of penalties.

Disaggregated revenue data

The Company’s revenue consists of the following revenue services within its industry:

	Six Months Ended
	June 30, 2024		June 30, 2023
Net revenues:
Healthcare workforce	$	2,833,895	$	1,966,405
Population health		681,531		194,026
Digital health		184,500		-
Behavioral and mental services		2,095		5,387
Health education		20,000		1,781
Net revenues	$	3,722,021	$	2,167,599

Cost of Services

Cost of Services

The cost of services includes wages and related payroll taxes, employee benefits and certain other employee-related costs of the Company’s contract service employees, while the employees work on contract assignments.

Significant Concentrations

Significant Concentrations

The majority of accounts receivable and revenue contracts are between the Company and different divisions within the Indiana Family and Social Services Administration (“FSSA”). Most contracts require monthly payments as the projects progress. The Company generally does not require collateral or advance payments. For the six months ended June 30, 2024 and 2023, FSSA accounted for approximately 64% and 95% of revenues, respectively, which was derived through a combination of divisions within the State of Indiana, including the FSSA-NeuroDiagnostic Institute, representing $2,225,628 and $2,122,653 of the Company’s Healthcare Workforce revenue for six months ended June 30, 2024 and 2023, respectively, and the FSSA-Division of Mental Health and Addiction, representing $172,000 of the Company’s Population Health revenues for each of the six months ended June 30, 2024 and 2023, respectively. In addition, the combined divisions of the FSSA (NeuroDiagnostic Institute and Division of Mental Health and Addiction), owed 54% and one other customer represented 15%, of the Company’s accounts receivable respectively, at June 30, 2024, and FSSA represented 30% of outstanding accounts receivable as of December 31, 2023.

Stock-Based Compensation

Stock-Based Compensation

The Company accounts for equity instruments issued to employees and non-employees in accordance with the provisions of ASC 718 Stock Compensation (“ASC 718”). All transactions in which the consideration provided in exchange for the purchase of goods or services consists of the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

SYRA HEALTH CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Basic and Diluted Loss Per Share

Basic and Diluted Loss Per Share

Basic earnings per share (“EPS”) are computed by dividing net income (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Weighted average shares for basic EPS are calculated based on weighted average Class B shares outstanding. Diluted EPS is computed by dividing net income by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include stock options, warrants, conversion of Class B shares and restricted stock. The number of potential common shares outstanding relating to stock options, warrants, conversion of Class B shares and restricted stock is computed using the treasury stock method. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

Income Taxes

Income Taxes

The Company accounts for income taxes under the Financial Accounting Standards Board (“FASB”) ASC 740 Income Taxes (“ASC 740”), which requires use of the liability method. FASB ASC 740-10-25 provides that 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 bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not, that such asset will not be recovered through future operations.

Uncertain Tax Positions

Uncertain Tax Positions

In accordance with ASC 740, the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

Various taxing authorities may periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities. The Company recognizes interest and penalties related to uncertain tax positions, if any, as an income tax expense.

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

Recent Accounting Standards

Recent Accounting Standards

From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date.

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.

XML

Nature of Business and Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Schedule of Disaggregation of Revenue

The Company’s revenue consists of the following revenue services within its industry:

	Six Months Ended
	June 30, 2024		June 30, 2023
Net revenues:
Healthcare workforce	$	2,833,895	$	1,966,405
Population health		681,531		194,026
Digital health		184,500		-
Behavioral and mental services		2,095		5,387
Health education		20,000		1,781
Net revenues	$	3,722,021	$	2,167,599

XML

Basic and Diluted Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Schedule of Diluted Earnings Per Share

Common shares consisting of shares potentially dilutive that are excluded from the calculated of diluted earnings per share because they are anti-dilutive as of June 30, 2024 and 2023 are as follows:

	June 30, 2024		June 30, 2023
Warrants		1,629,561		-
Stock options		160,750		28,000
Total		1,790,311		28,000

XML

Other Current Assets (Tables)

6 Months Ended

Jun. 30, 2024

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Other Current Assets

Other current assets included the following as of June 30, 2024 and December 31, 2023:

	June 30,		December 31,
	2024		2023
Federal and state income tax receivable (1) (2)	$	148,401	$	73,069
Prepaid expenses		242,618		316,718
Total other current assets	$	391,019	$	389,787

⁽¹⁾ Includes $50,000 for a federal refundable payroll tax credit, called the Employee Retention Tax Credit (“ERTC”) Tax Credit, which provides a credit to businesses who kept employees, or were negatively impacted, during the COVID-19 pandemic.

⁽²⁾ Includes $75,332 for a refundable corporate income tax credit from the State of Indiana, called the Economic Development for a Growing Economy (“EDGE”) Tax Credit, which provides an incentive to businesses to support jobs creation, capital investment and to improve the standard of living for Indiana residents.

XML

Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment at June 30, 2024 and December 31, 2023, consisted of the following:

	June 30,			December 31,
	2024			2023
Office equipment	$	153,912		$	142,800
Less: Accumulated depreciation		(93,746	)		(63,826	)
Total property and equipment, net	$	60,166		$	78,974

XML

Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2024

Payables and Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses at June 30, 2024 and December 31, 2023, consisted of the following:

	June 30,		December 31,
	2024		2023
Accrued payroll and taxes	$	156,163	$	148,924
Accrued expenses		18,054		50,054
Total accrued expenses	$	174,217	$	198,978

XML

Lease (Tables)

6 Months Ended

Jun. 30, 2024

Lease

Schedule of Lease Cost Expenses

The components of lease expense were as follows:

	For the Six Months Ended
	June 30,
	2024		2023
Operating lease cost:
Amortization of ROU asset	$	63,199	$	121,089
Interest on lease liability		1,064		7,438
Total operating lease cost	$	64,263	$	128,527

Schedule of Supplemental Balance Sheets Information

Supplemental balance sheet information related to leases was as follows:

	June 30,			December 31,
	2024			2023
Operating lease:
Operating lease assets	$	351,193		$	63,199
Current portion of operating lease liability, related party	$	106,458			63,199
Noncurrent operating lease liability, related party		244,735			-
Total operating lease liability	$	351,193		$	63,199
Weighted average remaining lease term:
Operating leases		3.0 years			0.5 years
Weighted average discount rate:
Operating lease		9.25	%		5.75	%

Schedule of Payments Under Leases

The following payments are required under leases not yet commenced as of June 30, 2024:

				Remaining
				Term in
	Operating Lease			Years
2024		134,505
2025		134,505
2026		134,505
Total lease payments		403,515
Less: imputed interest		(52,322	)
Present value of lease liability		351,193			3.00

XML

Common Stock Options (Tables)

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

Schedule of Share-Based Compensation, Stock Options Activity

The following is a summary of activity of outstanding stock options:

				Weighted
				Average
	Number			Exercise
	of Shares			Prices
Balance, December 31, 2023		140,750		$	1.82
Options granted		32,000			1.76
Options cancelled		(12,000	)		-
Balance, June 30, 2024		160,750		$	1.85
Exercisable, June 30, 2024		-		$	-

XML

Schedule of Disaggregation of Revenue (Details) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Product Information [Line Items]
Net revenues	$ 3,722,021	$ 2,167,599
Healthcare Workforce [Member]
Product Information [Line Items]
Net revenues	2,833,895	1,966,405
Population Health [Member]
Product Information [Line Items]
Net revenues	681,531	194,026
Digital Health [Member]
Product Information [Line Items]
Net revenues	184,500
Behavioral and Mental Services [Member]
Product Information [Line Items]
Net revenues	2,095	5,387
Health Education [Member]
Product Information [Line Items]
Net revenues	$ 20,000	$ 1,781

XML

Nature of Business and Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Product Information [Line Items]
FDIC insured amount	$ 250,000		$ 250,000
Cash equivalents	0		0		$ 0
Accounts receivable	$ 5,520		$ 5,520		$ 5,520
Property and equipment useful life	5 years		5 years
Revenues	$ 1,969,681	$ 979,248	$ 3,722,021	$ 2,167,599
FSSA – NeuroDiagnostic Institute [Member] | Healthcare Workforce [Member]
Product Information [Line Items]
Revenues			2,225,628	2,122,653
FSSA – Division of Mental Health and Addiction [Member] | Population Health [Member]
Product Information [Line Items]
Revenues			$ 172,000	$ 172,000
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Family and Social Services Administration (FSSA) [Member]
Product Information [Line Items]
Risk percentage			64.00%	95.00%
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Family and Social Services Administration (FSSA) [Member]
Product Information [Line Items]
Risk percentage			54.00%		30.00%
One Customer [Member] | Accounts Receivable [Member] | Family and Social Services Administration (FSSA) [Member]
Product Information [Line Items]
Risk percentage			15.00%

XML

Going Concern (Details Narrative) - USD ($)		4 Months Ended	6 Months Ended
	Oct. 03, 2023	Apr. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash			$ 1,594,352		$ 3,280,075
Working capital			1,925,646
Accumulated deficit			7,902,261		$ 5,064,955
Convertible notes payable		$ 1,455,000		$ 1,455,000
Proceeds from IPO	$ 5,332,283

XML

Related Party Transactions (Details Narrative) - USD ($)				3 Months Ended		6 Months Ended
	Jun. 26, 2024	Jul. 01, 2022	May 01, 2022	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023	Jul. 01, 2021
Related Party Transaction [Line Items]
Lease expense						$ 64,263	$ 128,527
Service cost				$ 1,619,674	$ 851,089	3,192,727	1,892,284
Sahasra Technologies Corp [Member]
Related Party Transaction [Line Items]
Advanced balance of loan						101,411
ST Logics [Member]
Related Party Transaction [Line Items]
Receivable from related party				$ 51,411		$ 51,411		$ 50,614
STVentures [Member]
Related Party Transaction [Line Items]
Lease term		3 years		3 years		3 years			3 years
Base monthly rent	$ 11,209	$ 10,711	$ 10,711
Lease expense						$ 64,263	64,263
RAD CUBE LLC [Member] | Information Technology Services [Member]
Related Party Transaction [Line Items]
Service cost						0	3,320
NLogix [Member] | Recruitment and Human Resource Services [Member]
Related Party Transaction [Line Items]
Service cost						$ 297,313	$ 140,677

XML

Schedule of Diluted Earnings Per Share (Details) - shares	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	1,790,311	28,000
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	1,629,561
Share-Based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	160,750	28,000

XML

Schedule of Other Current Assets (Details) - USD ($)		Jun. 30, 2024	Dec. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Federal and state income tax receivable	[1],[2]	$ 148,401	$ 73,069
Prepaid expenses		242,618	316,718
Total other current assets		$ 391,019	$ 389,787

[1] Includes $50,000 for a federal refundable payroll tax credit, called the Employee Retention Tax Credit (“ERTC”) Tax Credit, which provides a credit to businesses who kept employees, or were negatively impacted, during the COVID-19 pandemic.

[2] Includes $75,332 for a refundable corporate income tax credit from the State of Indiana, called the Economic Development for a Growing Economy (“EDGE”) Tax Credit, which provides an incentive to businesses to support jobs creation, capital investment and to improve the standard of living for Indiana residents.

XML

Schedule of Other Current Assets (Details) (Parenthetical)	6 Months Ended
	Jun. 30, 2024 USD ($)
Employee Retention Tax Credit [Member]
Tax Credit Carryforward [Line Items]
Tax credits	$ 50,000
Economic Development Growing Economy [Member]
Tax Credit Carryforward [Line Items]
Tax credits	$ 75,332

XML

Schedule of Property and Equipment (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Less: Accumulated depreciation	$ (93,746)	$ (63,826)
Total property and equipment, net	60,166	78,974
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Office equipment	$ 153,912	$ 142,800

XML

Property and Equipment (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Property, Plant and Equipment [Abstract]
Depreciation	$ 17,374	$ 12,293	$ 29,919	$ 24,056

XML

Schedule of Accrued Expenses (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Accrued payroll and taxes	$ 156,163	$ 148,924
Accrued expenses	18,054	50,054
Total accrued expenses	$ 174,217	$ 198,978

XML

Accrued Expenses (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Payables and Accruals [Abstract]
Employers contribution percentage match	100.00%
Employees contribution percentage	4.00%
Investment retirement account contribution expenses	$ 52,676	$ 44,189
Accrued retirement contributions	$ 0

XML

Schedule of Lease Cost Expenses (Details) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Lease
Amortization of ROU asset	$ 63,199	$ 121,089
Interest on lease liability	1,064	7,438
Total operating lease cost	$ 64,263	$ 128,527

XML

Schedule of Supplemental Balance Sheets Information (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Lease
Operating lease assets	$ 351,193	$ 63,199
Current portion of operating lease liability, related party	106,458	63,199
Noncurrent operating lease liability, related party	244,735
Total operating lease liability	$ 351,193	$ 63,199
Weighted-average remaining lease term (in years) (Year)	3 years	6 months
Weighted-average discount rate (Rate)	9.25%	5.75%

XML

Schedule of Payments Under Leases (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Lease
2024	$ 134,505
2025	134,505
2026	134,505
Total lease payments	403,515
Less: imputed interest	(52,322)
Present value of lease liability	$ 351,193	$ 63,199
Remaining Term in Years	3 years

XML

Lease (Details Narrative)					6 Months Ended
	Jun. 26, 2024 USD ($)	Jul. 01, 2022 USD ($)	May 01, 2022 USD ($) ft²	Jul. 01, 2021 USD ($) ft²	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Lease rent expense					$ 64,263	$ 128,527
STVentures [Member]
Defined Benefit Plan Disclosure [Line Items]
Lease term		3 years		3 years	3 years
Office space | ft²			2,976	5,978
Base monthly rent	$ 11,209	$ 10,711	$ 10,711
Increased base monthly rent				$ 5,332
Lease rent expense					$ 64,263	$ 64,263

XML

Notes Payable (Details Narrative) - USD ($)	3 Months Ended	6 Months Ended	12 Months Ended
	Mar. 31, 2024	Jun. 30, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Principal repayments	$ 85,883
Interest expense	4,077
Notes payable, current	$ 99,021	$ 114,334	$ 184,904
Insurance Policy Financing Arrangements [Member]
Debt Instrument [Line Items]
Principal amount		$ 150,159	370,596
Interest rate percentage		10.00%
Periodic interest payment		$ 11,783	$ 32,328
Notes payable, current		$ 90,701
Insurance Policy Financing Arrangements [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest rate percentage			10.38%
Insurance Policy Financing Arrangements [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest rate percentage			14.05%

XML

Changes in Stockholders’ Equity (Deficit) (Details Narrative) - USD ($)		6 Months Ended
	May 03, 2022	Jun. 30, 2024	Dec. 31, 2023
Class of Stock [Line Items]
Recognized expense		$ 37,750
Additional recognized expense at vesting period		$ 29,628
November 2023 [Member]
Class of Stock [Line Items]
Restricted stock awarded		50,000
Common Class A [Member]
Class of Stock [Line Items]
Common stock, shares authorized		100,000,000	100,000,000
Common stock, par value		$ 0.001	$ 0.001
Common stock, shares issued		5,769,087	5,588,298
Common stock, shares outstanding		5,769,087	5,588,298
Common Class A [Member] | Two Investors [Member]
Class of Stock [Line Items]
Warrants to purchase		130,789
Proceeds from issuance of warrants		$ 850,129
Convertible Common Stock B [Member]
Class of Stock [Line Items]
Common stock, shares authorized		5,000,000
Common stock, par value		$ 0.001
Common stock, shares issued		833,334
Common stock, shares outstanding		833,334
Convertible Class B Common Stock [Member]
Class of Stock [Line Items]
Common stock, shares authorized		5,000,000	5,000,000
Common stock, par value		$ 0.001	$ 0.001
Common stock, shares issued	83,334	833,334	833,334
Common stock, shares outstanding		833,334	833,334
Conversion of stock, shares converted	833,334

XML

Schedule of Share-Based Compensation, Stock Options Activity (Details)	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Equity [Abstract]
Number of options, beginning balance | shares	140,750
Weighted average exercise prices, ending balance | $ / shares	$ 1.82
Options granted | shares	32,000
Weighted average exercise price, granted | $ / shares	$ 1.76
Options cancelled | shares	(12,000)
Weighted average exercise price, cancelled | $ / shares
Number of options, ending balance | shares	160,750
Weighted average exercise prices, ending balance | $ / shares	$ 1.85
Exercisable ending balance | shares
Weighted average exercise price, exercisable | $ / shares

XML

Common Stock Options (Details Narrative) - USD ($)		3 Months Ended	6 Months Ended
	Apr. 11, 2022	Mar. 31, 2024	Jun. 30, 2024	Jun. 30, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares issued		$ 850,129
Number of options vested			25.00%
Expected term			6 years 3 months
Aggregate intrinsic value			$ 45,958
Stock-based compensation, stock options			28,486	$ 2,590
Unamortized expenses			$ 213,327
Remaining contractual life			9 years 2 months 26 days
Share-Based Payment Arrangement, Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock-based compensation, stock options			$ 28,486	$ 2,590
Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Weighted average volatility rate			126.00%
Weighted average risk free interest rate			4.63%
Weighted average call option value			$ 1.498
Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Weighted average volatility rate			110.00%
Weighted average risk free interest rate			4.16%
Weighted average call option value			$ 1.252
Omnibus Equity Incentive Plan [Member] | Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares issued	$ 1,041,667
2022 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Granted options			32,000
Granted options term			10 years
2022 Plan [Member] | Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Exercise price			$ 1.88
2022 Plan [Member] | Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Exercise price			$ 1.39

XML

Subsequent Events (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Jul. 31, 2024	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Jul. 01, 2024
Subsequent Event [Line Items]
Service fee per month		$ 141,456	$ 128,844	$ 336,036	$ 365,504
Subsequent Event [Member] | Common Class A [Member] | Advisory Board Agreement [Member]
Subsequent Event [Line Items]
Common stock options to purchase						10,000
Exercise price						$ 1.33
RAD CUBE LLC [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Service fee per month	$ 4,000
Lease term	1 year