What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-13 compared with 2021-11-10 · 343 added, 481 removed, 213 unchanged (79% of the section changed)

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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 are based upon beliefs of, and information currently available to, the

Company’s management as well as estimates and assumptions made by the Company’s management.

Readers are cautioned not to

place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof.

herein, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,”

“future,” “intend,” “plan,” “predict,” “project,” “target,” “potential,”

“will,” “would,” “could,” “should,” “continue” or the negative of these terms

and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements.

Such statements

reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other

factors, including the risks relating to the Company’s business, industry, and the Company’s operations and results of operations.

Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results

may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

These statements are based upon beliefs of, and information currently available to, the Company’s management as well

as estimates and assumptions made by the Company’s management.

Readers are cautioned not to place undue reliance on these forward-looking

statements, which are only predictions and speak only as of the date hereof.

When used herein, the words “anticipate,” “believe,”

“estimate,” “expect,” “forecast,” “future,” “intend,” “plan,”

“predict,” “project,” “target,” “potential,” “will,” “would,”

“could,” “should,” “continue” or the negative of these terms and similar expressions as they relate

to the Company or the Company’s management identify forward-looking statements.

Such statements reflect the current view of the

Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating

to the Company’s business, industry, and the Company’s operations and results of operations.

Should one or more of these

risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from

those anticipated, believed, estimated, expected, intended, or planned.

the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future

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Except as required by applicable law, including the securities laws of the

United States, the Company does not have a duty to update any of the forward-looking statements to conform these statements to actual

United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States

These accounting principles require us to make certain estimates, judgments and assumptions.

We believe that the

estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these

We believe that

the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these

estimates, judgments and assumptions are made.

These estimates, judgments, and assumptions can affect the reported amounts of assets

and liabilities as of the date of the condensed consolidated financial statements as well as the reported amounts of revenues and expenses

These estimates, judgments and assumptions can affect the reported amounts of assets and

liabilities as of the date of the condensed consolidated financial statements as well as the reported amounts of revenues and expenses

during the periods presented.

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interruptions resulting from geo-political actions, including war, and terrorism or disease outbreaks (such as COVID-19);

and potential material weaknesses in our internal control over financial reporting;

ability to continue as a going concern;

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Immudyne PR LLC and Conversion Labs PR), a Puerto Rico limited liability company (“Conversion Labs PR”, or “CLPR”),

and our majority-owned subsidiary LegalSimpli Software, LLC, a Puerto Rico limited liability company.

On July 15, 2021, LegalSimpli Software,

LLC, changed its name to WorkSimpli Software, LLC (“WorkSimpli”).

Unless otherwise specified, all dollar amounts are expressed

in United States dollars.

our recent acquisition, Cleared Technologies PBC, a Delaware public benefit corporation (“Cleared”) and our majority-owned

subsidiary WorkSimpli Software, LLC (formerly known as LegalSimpli Software, LLC), a Puerto Rico limited liability company (“WorkSimpli”).

The affiliated network of medical Professional Corporations and medical Professional Associations administratively led by LifeMD Southern

Patient Medical Care, P.C., is the Company’s variable interest entity in which we hold a controlling financial interest (“LifeMD

Unless otherwise specified, all dollar amounts are expressed in United States dollars.

were formed in the State of Delaware on May 24, 1994, under our prior name, Immudyne, Inc.

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that provides a software as a service (“SaaS”) for converting, editing, signing and sharing PDF documents called PDFSimpli.

Effective January

22, 2021, we consummated a transaction to restructure the ownership of WorkSimpli through a series of agreements as further described

Effective January 22, 2021, we consummated a transaction to restructure the ownership of WorkSimpli through a series of agreements and

concurrently increased its ownership stake in WorkSimpli to 85.6%.

On January 18, 2022, the Company acquired Cleared, a rapidly growing

nationwide allergy telehealth platform that provides personalized treatments for allergy, asthma, and immunology.

Overview and Strategy

are a direct-to-patient telehealth technology company that provides a smarter, cost-effective and convenient way for a provider’s

patients to access healthcare.

We believe the traditional model of visiting a doctor’s office, visiting a local pharmacy, and returning

to see a doctor for follow up care or prescription refills is inefficient, costly to patients, and discourages many patients from seeking

much needed medical care.

healthcare system is undergoing a paradigm shift, thanks to new technologies and the emergence of

direct-to-patient telehealth.

Direct-to-patient telehealth companies, like LifeMD, Inc., connect consumers digitally to licensed healthcare

are a direct-to-patient telehealth technology company that provides a smarter, cost-effective, and convenient way for Americans to access

We believe the traditional model of visiting a doctor’s office, visiting a local pharmacy, and returning to see a doctor

for follow up care or prescription refills is inefficient, costly, and slow, and discourages many individuals from seeking much needed

medical care.

healthcare system is undergoing a paradigm shift, thanks to new technologies and the emergence of telehealth.

Direct-to-patient telehealth companies, like LifeMD, Inc., are leading the shift by connecting consumers digitally to licensed healthcare

professionals for care across various needs, such as virtual primary care, men’s sexual health, dermatology, and others.

telemedicine platform provides patients access to licensed providers for diagnoses, virtual care, and prescription medications, often

telehealth platform provides patients with access to licensed providers for diagnoses, virtual care, and prescription medications, often

delivered on a recurring basis.

In addition to our telemedicine technology offerings, we sell nutritional supplements and other over-the-counter

Many of our products are available on a subscription basis, where patients can subscribe to receive regular shipments of prescribed

medications or products.

This creates convenience and often discounted pricing opportunities for patients and recurring revenue streams

Our customer acquisition strategy combines strategic brand-building media placements, influencer partnerships, and direct response

advertising methods across highly scalable marketing channels (i.e.

national TV, streaming TV, streaming audio, YouTube, podcasts, Out

of Home, print, magazines, online search, social media, and digital).

In addition to our telehealth offerings, we sell complementary nutritional supplements and over-the-counter

(“OTC”) products.

Many of our products are available on a subscription basis, where patients can subscribe to receive regular

shipments of prescribed medications or products.

This creates convenience and discounted pricing opportunities for patients and recurring

revenue streams for us.

Our customer acquisition strategy combines strategic brand-building media placements, influencer partnerships,

and direct response advertising methods across highly scalable marketing channels (i.e., national TV, streaming TV, streaming audio,

YouTube, podcasts, Out of Home, print, magazines, online search, social media, and digital).

inception, we have helped more than 550,000 customers and patients, providing them greater access to high-quality, convenient, and affordable

care in all 50 states.

Our telehealth revenue increased 135% for the nine months ended September 30, 2021 as compared to the nine months

ended September 30, 2020.

Our telehealth revenue increased 70% for the three months ended March 31, 2022 as compared to the three months

ended March 31, 2021.

Total revenue from recurring subscriptions is approximately 91%.

In addition to our telehealth business, we

own 85.6% of WorkSimpli, which operates PDFSimpli, a rapidly growing SaaS platform for converting, signing, editing and sharing PDF documents.

This business has also seen 331% year over year revenue growth, with recurring revenue of 98%.

people can relate to the hassle and inconvenience of seeking medical care.

We believe that telehealth platforms like ours will fundamentally

shift how a provider’s patients perceive and access healthcare in the United States, by necessity and by preference.

With the average

wait time to see a physician in the United States now greater than 29 days and the United States projected significant shortfall of licensed

physicians by 2030, we believe the U.S.

In addition to our telehealth business,

we own 85.6% of WorkSimpli, which operates PDFSimpli, a rapidly growing SaaS platform for converting, signing, editing, and sharing PDF

This business has seen 31% year over year revenue growth, with recurring revenue of 98%.

believe that telehealth platforms like ours will fundamentally shift how individuals perceive and access healthcare in the United States,

by necessity and by preference.

With the average wait time to see a physician in the United States now greater than 29 days, according

to a 2018 Merritt Hawkins Survey, and the United States’ projected significant shortfall of licensed physicians by 2030, we believe

healthcare infrastructure must change to accommodate patients.

Timely and convenient access to

healthcare and prescription medications is a critical factor in improving quality of care and patient outcomes.

Our mission is to radically

change healthcare with our portfolio of direct-to-patient telehealth technology brands that encompass on-demand medical treatment, online

pharmacy and over-the-counter products.

We want our brands to be top-of-mind for consumers considering telehealth.

Timely and convenient access to healthcare and prescription medications

is a critical factor in improving quality of care and patient outcomes.

Our mission is to radically change healthcare with our portfolio

of direct-to-patient telehealth brands that encompass on-demand medical treatment, online pharmacy, and OTC products.

We want our brands

to be top-of-mind for consumers considering telehealth.

the United States, healthcare spending is currently $4.0 trillion and is expected to grow to $6.2 trillion by 2028, according to the

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Physician services and prescription medications account for approximately 30% of healthcare

spending, or over $1 trillion annually, and we believe that we have the infrastructure, medical expertise, and technical know-how to

shift a substantial portion of this market to an online, virtual format.

Our telemedicine platforms are fast and convenient, and we believe

the adoption of our services has increased rapidly because of these features, including lower out-of-pocket costs for a provider’s

patients and the satisfaction of a simple healthcare process.

We believe the opportunities are immense and that we are well positioned

to capitalize on these large-scale economic shifts in healthcare.

believe that brand innovation, customer acquisition and service excellence form the heart of our business.

As is exemplified with our

first brand, Shapiro MD, we have built a full line of proprietary over-the-counter (“OTC”) products for male and female hair

loss, FDA approved OTC minoxidil, an FDA-cleared medical device, and now a telehealth platform offering that gives consumers access to

virtual medical treatment from their providers and, when appropriate, a full line of oral and topical prescription medications for hair

spending, or over $1 trillion annually, and we believe that we have the infrastructure, medical expertise, and technical know-how necessary

to help shift a substantial portion of this market to an online, virtual format.

We believe that we are well positioned to capitalize

on this large-scale shift in healthcare.

believe that an amazing customer experience, incredible healthcare, and new customer acquisition form the heart of our business.

exemplified with our first brand, ShapiroMD, we have built a full line of proprietary and patented OTC products for male and female hair

Food and Drug Administration (“FDA”) approved OTC minoxidil, and now a telehealth platform offering that gives

consumers access to virtual medical treatment and, when appropriate, a full line of oral and topical prescription medications for hair

Our men’s brand, RexMD, currently offers access to provider-based treatment through telehealth for men’s health conditions,

currently providing prescription medications and OTC products for chronic conditions such as sexual health and hair loss.

recently expanded its services to provide access to primary care and will soon offer treatments for additional chronic indications present

such as sexual health and hair loss.

RexMD continues to expand its treatment offerings to address additional chronic indications present

in men’s health.

We have built a platform that allows us to efficiently launch telehealth brands and offerings wherever we determine

there is a market need.

Our platform is supported by a driven team of digital marketing and branding experts, data analysts, designers,

and engineers focused on building enduring brands.

addition to our telehealth business, we own 85.6% of WorkSimpli, which operates PDFSimpli, a rapidly growing SaaS platform for converting,

signing, editing and sharing PDF documents.

We have built a platform that allows us to efficiently launch telehealth brands and offerings wherever we identify

a market need.

Our platform is supported by a driven team of digital marketing and branding experts, data analysts, designers, and engineers

focused on building enduring brands.

Brand Portfolio

have built a strategic portfolio of wholly-owned telemedicine platform brands that address large unmet needs in men’s health, hair

loss and dermatology.

LifeMD is also preparing to offer administrative support to various professional entities that will provide a direct

concierge medicine offering to patients under the LifeMD brand.

We continue to scale our offerings in a calculated manner, ensuring that

each brand or indication we launch will enhance current and future patients’ experiences with our platform.

process across each brand and condition we treat is to guide the provider’s patient through a medical intake process and product

selection, after which a licensed U.S.

physician within our contracted network conducts a virtual consultation and, if appropriate, prescribes

necessary prescription medications and/or recommends over-the-counter products.

Prescription medications and over-the-counter products

are filled by pharmacy fulfillment partners and shipped directly to the patient.

The number of patients and customers we serve across

the nation continues to increase at a robust pace, with more than 420,000 individuals having purchased our products and services to date.

in 2017, ShapiroMD offers access to virtual medical treatment, prescription medications, patented doctor formulated over-the-counter

products, and an FDA approved medical device for male and female hair loss through our telemedicine platform.

ShapiroMD has emerged as

a leading destination for hair loss treatment across the United States and has served more than 200,000 customers and patients since

inception with a 4.9 star Trustpilot rating.

In Q1 2021, ShapiroMD greatly enhanced its offerings for female hair loss treatment with

the addition of topical compounded medications to its product portfolio.

in 2019, RexMD is a men’s telehealth platform brand offering access to virtual medical treatment for a variety of men’s health

After treatment from a licensed physician, if appropriate, we dispense and ship prescription medications and over-the-counter

products directly to a provider’s patients.

Since RexMD’s initial launch in the erectile dysfunction treatment market, it

has expanded into additional indications, including but not limited to, premature ejaculation and hair loss.

Our vision for RexMD is

to become a leading telehealth destination for men.

in the first quarter of 2021, Nava MD is a female-oriented tele-dermatology brand that offers access to virtual medical treatment from

have built a strategic portfolio of wholly-owned telehealth platform brands supported by an affiliated, 50-state physician network and

an integrated national network of third party pharmacies that address large unmet needs in men’s health, hair loss, virtual primary

care, and dermatology.

We continue to experience aggressive growth across our brands.

process across each brand is to guide consumers through a medical intake process and product selection, after which a licensed U.S.

conducts a virtual consultation and, if appropriate, prescribes prescription medications and/or recommends OTC products.

medications and OTC products are filled by pharmacy fulfillment partners and shipped directly to the patient.

The number of patients

and customers we serve across the nation continues to increase at a robust pace, with more than 550,000 individuals having purchased

our products and services to date.

in 2017, ShapiroMD is a telehealth platform brand that offers access to virtual medical treatment, prescription medications, patented-doctor

formulated OTC products, an FDA approved medical device for male and female hair loss, and female specific topical compounded medications

for hair loss through our telehealth platform.

ShapiroMD has emerged as a leading destination for hair loss treatment across the United

States and has served more than 250,000 customers and patients since inception with a 4.9-star Trustpilot rating.

in 2019, RexMD is a men’s telehealth platform brand that offers access to virtual medical treatment for a variety of men’s

health needs.

After treatment from a licensed physician, if appropriate, one of our partner pharmacies will dispense and ship prescription

medications and OTC products directly to the customer.

Since RexMD’s initial launch in the erectile dysfunction treatment market,

it has expanded into additional indications, including but not limited to, premature ejaculation, testosterone, and hair loss.

for RexMD is to become a leading telehealth destination for men.

RexMD has emerged as a leading men’s telehealth platform across

the United States and has served more than 300,000 customers and patients since inception with a 4.5-star Trustpilot rating.

Interest Entity:

LifeMD Primary Care

launched in the fourth quarter of 2021, LifeMD PC is a personalized, subscription-based virtual primary care platform.

The LifeMD PC

clinic provides patients in all 50 states with 24/7 access to a high-quality provider for their primary care, urgent care and chronic

LifeMD PC offers a mobile first platform that incorporates virtual consultations and treatment, prescription medications,

diagnostics, and imaging.

LifeMD PC capabilities are supported by robust partnerships as further discussed below.

No revenue was recorded

related to the LifeMD PC during the three months ended March 31, 2022.

in the first quarter of 2021, NavaMD is a female-oriented, tele-dermatology brand that offers access to virtual medical treatment from

dermatologists and other providers, and, if appropriate, prescription oral and compounded topical medications to treat dermatological

conditions such as anti-aging and acne.

conditions such as aging and acne.

In addition to the brand’s telehealth offerings, NavaMD’s proprietary products leverage

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clinically proven skincare technology platform is the result of more than $50 million invested in R&D and intellectual property development,

and Restorsea has received 35 patents along with broad industry and academic acclaim, with its breakthrough clinical results having been

published in the peer-reviewed Journal of Drugs in Dermatology and Journal of Clinical and Aesthetic Dermatology.

Nava MD is one of the

first direct-to-patient brands to offer this advanced skincare technology.

Nava MD offers access to tele-dermatology services to a provider’s

patients in all 50 states.

iNR Wellness MD

in 2018, iNR Wellness MD is a supplement for immune and digestive support.

The iNR Wellness product line is a daily nutritional supplement

that contains yeast, oat, and mushroom beta glucans.

and Restorsea has received at least 35 patents along with broad industry and academic acclaim, with its breakthrough clinical results

having been published in the peer-reviewed Journal of Drugs in Dermatology and Journal of Clinical and Aesthetic Dermatology.

is one of the first direct-to-patient brands to offer this advanced skincare technology.

Asthma & Immunology:

January 2022, the Company acquired Cleared, a telehealth brand that provides personalized treatments for allergy, asthma, and immunology.

Its offerings include in-home tests for both environmental and food allergies, prescriptions for allergies and asthma, and FDA-approved

immunotherapies for treating chronic allergies.

Cleared leverages a network of medical professionals and providers in all 50 states,

a growing pipeline of pharmaceutical partners, and treatments and tests that cost up to 50 percent less than the brand-name competition.

The offerings include free consultations and ongoing care from U.S.-licensed allergists and nurses.

Owned Subsidiary:

operates PDFSimpli, an online software-as-a-service (SAAS) platform that allows users to create, edit, convert, sign and share PDF documents.

WorkSimpli was acquired through the purchase of 51% of the membership interests of WorkSimpli Software, LLC, a Puerto Rico limited liability

company, which operates a marketing-driven software solutions business.

In addition to WorkSimpli’s growth business model, this

acquisition added deep search engine optimization and search engine marketing expertise to the Company.

On January 22, 2021, the Company

consummated a transaction and increased its ownership of WorkSimpli to 85.6%.

of September 30, 2021, WorkSimpli was ranked in the top 4,232 websites globally, in which it was also ranked in the top 563 for specific

countries with more than 14 million registrants globally.

Since its launch, WorkSimpli has converted or edited over 11 terabytes of documents

for customers from the legal, financial, real-estate and academic sectors.

WorkSimpli had over 139,200 active subscriptions as of September

Developments During the Three Months Ended September 30, 2021

July 13, 2021, the Company, on behalf of its customers, entered into an agreement to engage Quest Diagnostics Incorporated (“Quest

Diagnostics”) as the Company’s laboratory services provider to perform certain clinical laboratory diagnostic services based

on orders submitted to Quest Diagnostics by licensed health care providers who are under contract with the Company and are authorized

federal or state law to order laboratory tests.

Patients of LifeMD Inc.’s affiliated providers gain access to laboratory

tests which can be completed in their home or office or at any one of Quest Diagnostics’ 2,000 facilities.

July 14, 2021, the Company entered into an agreement to engage Axle Health Inc.

(“Axle Health”) to assist the Company in

establishing a platform to enable patients of the Company’s medical practice clients (“MP Clients”) to schedule certain

nursing services, including blood draws, injections, and other basic healthcare services, and to furnish operational support services

to medical practices using the platform.

In connection therewith, Axle Health granted the Company a revocable, nontransferable, non-exclusive

right and license, with the right to grant sublicenses, to install and use the software and other technology relating to the platform

developed, owned, or with the right to grant sublicenses to install and use the software and/or other technology developed, owned, or

licensed by Axle Health, including the platform, to facilitate the scheduling and provision of certain nursing services to patients of

August 4, 2021, the Company entered into a partnership agreement with Particle Health, a digital health company with a HIPAA-compliant

technology platform that converts electronic medical records data into a user-friendly Fast Healthcare Interoperability Resource (“FHIR”)

Particle Health offers healthcare companies secure access to vital medical data.

With Particle Health’s platform, and patient

consent, licensed medical providers on the upcoming LifeMD primary care platform gain access to comprehensive patient health records,

therefore enabling personalized care through a deeper understanding of their patients’ medical histories.

August 30, 2021, the Company entered into a strategic partnership with Prescryptive Health (“Prescryptive”), a healthcare

technology company empowering consumers by improving the way healthcare is delivered.

The partnership is expected to accelerate growth

for both companies by combining LifeMD’s expanding direct-to-patient telehealth brands and upcoming primary care platform with

Prescryptive’s best-in-class digital pharmacy fulfillment and e-prescribing technology platform.

continuing impact on business activity brought about by COVID-19 continues to evolve, globally in macro terms, and in micro terms, as

such affects the Company.

Among other things, our supply chain is subject to the effects of COVID-19, as well as to natural disasters

and other events beyond our control, such as raw material, component and labor shortages, global and regional shipping and logistics

constraints, work stoppages, power outages and the physical effects of climate change, including changes in weather patterns.

human rights concerns, including forced labor and human trafficking, in foreign countries and associated governmental responses have

the potential to disrupt our supply chain and our operations could be adversely impacted.

Although we do not believe that raw materials

used in the products we sell are sourced from regions with forced labor concerns, any delays or other supply chain disruption resulting

from these concerns, associated governmental responses, or a desire to source products, components or materials from other manufacturers

or regions could result in shipping delays, cancellations, penalty payments, or loss of revenue and market share, any of which could

have a material adverse effect on our business, results of operations, cash flows, and financial condition.

connection with these potential impacts on our supply chain, we are, as a general matter, seeing a trend of increases in (i) pricing

on air and ocean freight, as well as for component and product parts, and (ii) the overall time to receive shipments.

If these trends

continue, many of our estimates and assumptions for the period ended September 30, 2021 may be subject to a material change in future

Vaccine Mandate

are making preparations to comply with a rule issued by the Occupational Safety and Health Administration (“OSHA”) to ensure

that our employees are fully vaccinated against COVID-19 by January 4th or that they test negative for COVID-19 at least once per week.

Employees must receive time off to get vaccinated and sick leave to recover from any side effects.

Any unvaccinated employees must wear

face coverings while at work.

We are in the process of assessing the financial and staffing impact of these requirements.

operates PDFSimpli, an online SaaS platform that allows users to create, edit, convert, sign and share PDF documents.

WorkSimpli was

acquired through the purchase of 51% of the membership interests of WorkSimpli Software, LLC, a Puerto Rico limited liability company,

which operates a marketing-driven software solutions business.

In addition to WorkSimpli’s growth business model, this acquisition

added deep search engine optimization and search engine marketing expertise to the Company.

On January 22, 2021, the Company increased

its ownership of WorkSimpli to 85.6%.

Developments During the Three Months Ended March 31, 2022

January 18, 2022, the Company acquired Cleared, a rapidly growing nationwide allergy telehealth platform that provides personalized treatments

for allergy, asthma, and immunology.

The preliminary purchase price was approximately $9.1

million, including cash paid upfront of approximately $1.0 million and payable in the future of approximately $3.0 million, and

contingent consideration of $5.1 million.

Asset Purchase Agreement

February 2022, WorkSimpli closed on an Asset Purchase Agreement (the “ResumeBuild APA”) with East Fusion FZCO, a Dubai, UAE

corporation (the “Seller”), whereby WorkSimpli acquired substantially all of the assets associated with the Seller’s

business offering subscription-based resume building software through SaaS online platforms (the “Acquisition”).

paid to the Seller a purchase price $4,000,000.

The Seller is also entitled to a minimum of $500 thousand to be paid out in quarterly

payments equal to the greater of 15% of net profits (as defined in the ResumeBuild APA) or $62,500, for a two-year period ending on the

two-year anniversary of the closing of the Acquisition.

WorkSimpli borrowed the purchase price from the Company pursuant to a promissory

note with the obligation secured by an equity purchase guarantee agreement and a stock option pledge agreement from Fitzpatrick Consulting,

LLC and its sole member Sean Fitzpatrick, who is Co-Founder and President of WorkSimpli.

ongoing impact on business activity brought about by COVID-19 continues to evolve, globally in macro terms, and in micro terms, as such

affects the Company.

Among other things, our supply chain is subject to the effects of COVID-19, as well as to natural disasters and

other events beyond our control, such as raw material, component, and labor shortages;

global and regional shipping and logistics constraints;

work stoppages;

power outages;

and the physical effects of climate change, including changes in weather patterns.

In addition, human

rights concerns, including forced labor and human trafficking, in foreign countries and associated governmental responses have the potential

to disrupt our supply chain, and our operations could be adversely impacted.

Although we do not believe that raw materials used in the

products we sell are sourced from regions with forced labor concerns, any delays or other supply chain disruption resulting from these

concerns, associated governmental responses, or a desire to source products, components, or materials from other manufacturers or regions

could result in shipping delays, cancellations, penalty payments, or loss of revenue and market share, any of which could have a material

adverse effect on our business, results of operations, cash flows, and financial condition.

connection with these potential impacts on our supply chain, we are, as a general matter, seeing a trend of modest increases in (i) pricing

on air and ocean freight, as well as for component and product parts, (ii) the overall time to receive shipments, and (iii) the overall

time for shipment and delivery to our customers from third-party shippers.

of Operations

of the Three Months Ended September 30, 2021 to the Three Months Ended September 30, 2020

financial results for the three months ended September 30, 2021 are summarized as follows in comparison to the three months ended September

September 30, 2021

September 30, 2020

financial results for the three months ended March 31, 2022 are summarized as follows in comparison to the three months ended March 31,

March 31, 2022

March 31, 2021

Telehealth revenue, net

WorkSimpli revenue, net

Total revenues, net

Total revenue, net

Cost of telehealth revenue

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(11,918,337 )

Other income (expense), net

Net loss before provision for income taxes

Other (expenses) income, net

(13,274,949 )

(11,872,886 )

Provision for income taxes

Net loss attributable to noncontrolling interests

Net income (loss) attributable to non-controlling interest

Net loss attributable to LifeMD, Inc.

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(11,602,383 )

for the three months ended September 30, 2021 were approximately $24.9 million, an increase of 127% compared to approximately $11.0 million

for the three months ended September 30, 2020.

The increase in revenues was attributable to both the increase in telehealth revenue of

97% and an increase in revenue for WorkSimpli of 309%.

Telehealth revenue accounts for 74% of total revenue and has increased in the

three months ended September 30, 2021 due to an increase in online sales demand, with the majority of the growth of our telehealth brands,

RexMD and ShapiroMD.

Revenue for WorkSimpli accounts for 26% of total revenue and has steadily increased due to a combination of higher

demand, increased market awareness, enhanced digital capabilities and continued marketing campaign expansion.

cost of revenues consists of the cost of (1) telehealth revenues, which primarily include product costs, pharmacy fulfillment costs,

MD consult fees and shipping costs directly attributable to our prescription and OTC products and (2) the cost of WorkSimpli revenue

consisting primarily of information technology fees related to providing the services made available on our online platform.

of revenue increased by approximately 204% to approximately $5.1 million for the three months ended September 30, 2021 compared to approximately

$1.7 million for the three months ended September 30, 2020.

The combined cost of revenue increase was due to increased costs related

to our increased sale volumes when compared to the prior period ended September 30, 2020.

profit increased by approximately 113% to approximately $19.9 million for the three months ended September 30, 2021 compared to approximately

$9.3 million for the three months ended September 30, 2020, as a result of increased combined sales.

Telehealth costs increased to 27%

of associated telehealth revenues during the three months ended September 30, 2021, from 17% of associated telehealth revenues during

the three months ended September 30, 2020.

WorkSimpli costs decreased to 2% of associated WorkSimpli revenues during the three months

ended September 30, 2021, from 5% of associated WorkSimpli revenues during the three months ended September 30, 2020.

WorkSimpli revenues

as a percentage of total revenues increased to 26% during the three months ended September 30, 2021, from 14% during the three months

ended September 30, 2020.

Gross profit as a percentage of revenues was 80% for the three months ended September 30, 2021 as compared

to 85% for the three months ended September 30, 2020 primarily due to product sales mix and one-time costs associated with the

non-cash write-off of legacy product deposits.

Three Months Ended September 30,

Selling and marketing expenses

General and administrative expenses

Other operating expenses

Customer service expenses

Development costs

Total expenses

expenses for the three months ended September 30, 2021 were approximately $32.4 million, as compared to approximately $29.9 million for

the three months ended September 30, 2020.

This represents an increase of 9%, or $2.6 million.

The increase is primarily attributable

and marketing expenses:

This mainly consists of online marketing and advertising expenses.

During the three months ended September

30, 2021, the Company had an increase of approximately $9.8 million, or 93% in selling and marketing costs resulting from additional

sales and marketing initiatives to drive the current period’s sales growth reported.

This ramp up is expected to both increase

and maintain sustained revenue growth in future years, based on the Company’s recurring revenue subscription-based sales model.

Selling and marketing expenses as a percentage of revenue was 81.4% for the three months ended September 30, 2021, as compared to

95.7% for the three months ended September 30, 2020.

This represents a decrease of 14.3%.

and administrative expenses:

During the three months ended September 30, 2021, stock-based compensation expense was $3.1 million,

with the majority related to stock compensation expense attributable to service-based stock options, as compared to stock-based compensation

expense of $16.4 million for the three months ended September 30, 2020.

This category also consists of merchant processing fees,

payroll expenses for executive management, amortization expense and legal and professional fees.

During the three months ended September

30, 2021, the Company had a decrease of approximately $7.8 million in general and administrative expenses, primarily related to the

decrease in stock-based compensation costs referenced above partially offset by an increase in legal and professional fees and other

increases in infrastructure expenses incurred to support the sales volume increases.

operating expenses:

This consists of rent, insurance, royalty expense, bank charges and IT services.

During the three months ended

September 30, 2021, the Company had an increase of approximately $272 thousand, or 50%, primarily related to increases in the general

cost environment necessary to support the Company’s sales growth.

service expenses:

This consists of payroll and benefit expenses related to the Company’s customer service department located

in South Carolina and Puerto Rico.

During the three months ended September 30, 2021, the Company had an increase of approximately

$275 thousand, primarily related to increases in headcount in the Company’s customer service department.

This mainly relates to third-party technology services for developing and maintaining our online platforms.

During the three

months ended September 30, 2021, the Company had an increase of approximately $13 thousand, primarily resulting from technology platform

improvements and amortization expense.

(Expenses) / Income

Three Months Ended September 30,

Interest (expense), net

$ (1,824,777 )

Gain on debt forgiveness

$ (1,824,777 )

expense, which consists of interest expense increased by approximately $1.5 million due to interest expense and amortization of debt

discount recorded related to the June 1, 2021 Purchase Agreement for the three months ended September 30, 2021.

of the Nine Months Ended September 30, 2021 to the Nine Months Ended September 30, 2020

financial results for the nine months ended September 30, 2021 are summarized as follows in comparison to the nine months ended September

September 30, 2021

September 30, 2020

Telehealth revenues, net

WorkSimpli revenues, net

Total revenues, net

Cost of telehealth revenue

Cost of WorkSimpli revenue

Total cost of revenue

Selling and marketing expenses

General and administrative expenses

Other operating expenses

Customer service expenses

Development costs

Total expenses

Operating loss

(40,636,404 )

(25,491,384 )

Other income (expense), net

Net loss before provision for income taxes

(43,317,640 )

(26,804,394 )

Provision for income taxes

Net loss attributable to noncontrolling interests

Net loss attributable to LifeMD, Inc.

Preferred stock dividends

Net loss attributable to common shareholders

$ (14,076,238 )

$ (11,602,383 )

for the nine months ended September 30, 2021 were approximately $65.5 million, an increase of 168% compared to approximately $24.4 million

for the nine months ended September 30, 2020.

for the three months ended March 31, 2022 were approximately $29.0 million, an increase of 60% compared to approximately $18.2 million

for the three months ended March 31, 2021.

The increase in revenues was attributable to both the increase in telehealth revenue of 70%

and an increase in WorkSimpli revenue of 31%.

Telehealth revenue accounts for 73% of total revenue and has increased in the nine

months ended September 30, 2021 due to an increase in online sales demand, with the majority of the growth from our telehealth brands,

RexMD and ShapiroMD.

WorkSimpli revenue accounts for 27% of total revenue and has steadily increased quarter over quarter due to a combination

of higher demand, increased market awareness, enhanced digital capabilities and continued marketing campaign expansion.

Telehealth revenue accounts for 78% of total revenue and has increased during the three

months ended March 31, 2022 due to an increase in online sales demand, with the majority of the growth of our telehealth brands, RexMD

and ShapiroMD.

WorkSimpli revenue accounts for 22% of total revenue and has steadily increased year over year due to a combination of

higher demand, increased market awareness, enhanced digital capabilities, and continued marketing campaign expansion.

While a portion

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of our healthcare brands.

cost of revenues consists of the cost of (1) telehealth revenues, which primarily include product costs, pharmacy fulfillment costs,

MD consult fees and shipping costs directly attributable to our prescription and OTC products and (2) the cost of WorkSimpli revenue

consisting primarily of information technology fees related to providing the services made available on our online platform.

of revenue increased by approximately 152% to approximately $12.4 million for the nine months ended September 30, 2021 compared to approximately

$4.9 million for the nine months ended September 30, 2020.

The combined cost of revenue increase was due to increased costs related to

our increased sale volumes when compared to the prior period ended September 30, 2020.

profit increased by approximately 172% to approximately $53.0 million for the nine months ended September 30, 2021 compared to approximately

$19.5 million for the nine months ended September 30, 2020, as a result of increased combined sales.

Telehealth costs increased to 25%

of associated telehealth revenues during the nine months ended September 30, 2021, from 23% of associated telehealth revenues during

the nine months ended September 30, 2020.

WorkSimpli costs decreased to 2% of associated WorkSimpli revenues during the nine months ended

September 30, 2021, from 5% of associated WorkSimpli revenues during the nine months ended September 30, 2020.

WorkSimpli revenues as

a percentage of total revenues increased to 27% during the nine months ended September 30, 2021, from 17% during the nine months ended

September 30, 2020.

Gross profit as a percentage of revenues was 81% for the nine months ended September 30, 2021 compared to 80% for

the nine months ended September 30, 2020.

The increase of 1% in gross profit was principally attributable to higher WorkSimpli revenues

as a percentage of total revenues, partially offset by lower telehealth revenues as a percentage of total revenues.

Nine Months Ended September 30,

Selling and marketing expenses

General and administrative expenses

Other operating expenses

Customer service expenses

Development costs

Total expenses

expenses for the nine months ended September 30, 2021 were approximately $93.7 million, as compared to approximately $45.0 million for

the nine months ended September 30, 2020.

cost of revenue consists of the cost of (1) telehealth revenues, which primarily include product costs, pharmacy fulfillment costs, physician

consult fees, and shipping costs directly attributable to our prescription and OTC products and (2) the cost of WorkSimpli revenue consisting

primarily of information technology fees related to providing the services made available on our online platform.

Total cost of revenue

increased by approximately 63% to approximately $5.2 million for the three months ended March 31, 2022 compared to approximately $3.2

million for the three months ended March 31, 2021.

The combined cost of revenue increase was due to increased sales volume during the

three months ended March 31, 2022 when compared to the three months ended March 31, 2021.

Telehealth costs decreased to 23% of associated

telehealth revenues experienced during the three months ended March 31, 2022, from 24% of associated telehealth revenues during the three

months ended March 31, 2021.

WorkSimpli costs increased to 3% of associated WorkSimpli revenues for the three months ended March 31,

2022 as compared to 2% of associated WorkSimpli revenues for the three months ended March 31, 2021.

profit increased by approximately 59% to approximately $23.8 million for the three months ended March 31, 2022 compared to approximately

$15 million for the three months ended March 31, 2021, as a result of increased combined sales.

Gross profit as a percentage of revenues

was 82% for both the three months ended March 31, 2022 and March 31, 2021.

Gross profit as a percentage of revenues for telehealth was

78% for the three months ended March 31, 2022 compared to 77% for the three months ended March 31, 2021, and for WorkSimpli was 98% for

both the three months ended March 31, 2022 and March 31, 2021.

More stringent inventory management procedures implemented in 2021 have

contributed to the stabilization in gross profit.

expenses for the three months ended March 31, 2022 were approximately $36.9 million, as compared to approximately $26.9 million for the

three months ended March 31, 2021.

This represents an increase of 37%, or $10 million.

The increase is primarily attributable

The increase is primarily attributable to:

and marketing expenses:

This mainly consists of online marketing and advertising expenses.

During the nine months ended September

During the three months ended March 31,

2022, the Company had an increase of approximately $3.3 million, or 18% in selling and marketing costs resulting from additional

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and administrative expenses:

During the nine months ended September 30, 2021, stock-based compensation was approximately $8.0 million,

with the majority related to stock compensation expense attributable to service-based stock options, as compared to stock-based compensation

expense of $16.9 million for the nine months ended September 30, 2020.

This category also consists of merchant processing fees, payroll

expenses for corporate employees, amortization expense and legal and professional fees.

During the nine months ended September 30,

2021, the Company has had an increase of approximately $6.3 million in general and administrative expenses, primarily related to

increases in legal and professional fees and other increases in infrastructure expenses incurred to support the sales volume increases

partially offset by a decrease in stock-based compensation costs referenced above.

During the period ended March 31, 2022, stock-based compensation was $4.5 million, with the majority

related to stock compensation expense attributable to the service-based options.

This category also consists of merchant processing

fees, payroll expenses for corporate employees, amortization expense and legal and professional fees.

During the three months ended

March 31, 2022, the Company has had an increase of approximately $5.3 million in general and administrative expenses, primarily related

to the increase in stock-based compensation costs referenced above, and other increases in infrastructure expenses incurred to support

the sales volume increases.

operating expenses:

This consists of rent, insurance, royalty expense, bank charges and IT services for our online products.

the nine months ended September 30, 2021, the Company had an increase of approximately $1.7 million or 265%, primarily related to

increases in the general costs necessary to support the Company’s sales growth.

This consists of rent, insurance, royalty expense, bank charges and information technology services for our online

During the three months ended March 31, 2022, the Company had an increase of approximately $691 thousand, or 109%, primarily

related to increases in the general cost environment necessary to support the Company’s sales growth.

service expenses:

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in South Carolina and Puerto Rico.

During the nine months ended September 30, 2021, the Company had an increase of approximately

During the three months ended March 31, 2022, the Company had an increase of approximately $638

thousand, primarily related to increases in headcount in the Company’s customer service department.

This mainly relates to third-party technology services for developing and maintaining our online platforms.

During the nine

months ended September 30, 2021, the Company had an increase of approximately $147 thousand, primarily resulting from technology

platform improvements and amortization expense.

(Expenses) / Income

Nine Months Ended September 30,

During the three

months ended March 31, 2022, the Company had an increase of approximately $117 thousand, primarily resulting from technology platform

improvements and amortization expense.

Income (Expense)

Three Months Ended March 31,

Interest expense, net

$ (2,866,150 )

$ (1,313,010 )

Gain on debt forgiveness

$ (2,681,236 )

$ (1,313,010 )

expense, which consists of interest expense, amortization of debt discount recorded related to the June 1, 2021 Purchase Agreement and

gain on debt forgiveness of PPP loans increased by approximately $1.4 million and is included in other expense for the nine months ended

September 30, 2021.

For the nine months ended September 30, 2020, the balance consisted of interest expense.

September 30, 2021

income (expense) consists of interest expense for the three months ended March 31, 2022 primarily related to interest accrued on the

Series B Convertible Preferred Stock and interest expense and gain on debt forgiveness of Paycheck Protection Program loans for the three

months ended March 31, 2021.

Interest expense increased by approximately $28 thousand during the three months ended March 31, 2022 as

compared to the three months ended March 31, 2021.

March 31, 2022

December 31, 2021

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Working capital

$ (5,744,701 )

$ (1,426,701 )

capital decreased by approximately $4.3 million during the period ended September 30, 2021.

The increase in current assets is primarily

attributable to an increase in accounts receivable of approximately $0.9 million, other current assets of $0.5 million, inventory and

product deposits (combined increase of approximately $0.4 million) and an increase in cash of approximately $0.3 million.

Current liabilities

increased by $6.4 million, which was primarily attributable an increase in accounts payable and accrued liabilities of $6.6 million as

a result of the Company extending payables and credit terms with vendors and an increase in deferred revenue of $0.5 million during the

period ended September 30, 2021.

These increases were partially offset by a decrease in notes payable, net of $0.7 million due to repayments

exceeding proceeds received during the nine months ended September 30, 2021.

Working capital decreased by

approximately $18.1 million during the three months ended March 31, 2022.

The decrease in current assets is primarily attributable

to a decrease in cash of approximately $16.2 million, a decrease in inventory of $0.4 million partially offset by an increase in accounts

receivable of approximately $0.8 million.

Current liabilities increased by $2.8 million, which was primarily attributable to an

increase in accounts payable and accrued expenses of $2.6 million as a result of the Company extending payables and credit

terms with vendors and accrual of the first noncontingent milestone payment related to the Cleared acquisition of $1.5 million

due on the first anniversary of the acquisition.

and Capital Resources

Nine Months Ended September 30,

Three Months Ended March 31,

$ (13,274,949 )

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$ (7,378,189 )

Net cash provided by financing activities

Net increase (decrease) in cash

Net cash (used in) provided by financing activities

Net (decrease) increase in cash

$ (16,243,395 )

inception, the Company has funded operations through the collections from revenues provided by the sales of its products, issuances of

common and preferred stock, receipt of loans and advances from officers and directors and the issuance of convertible notes to third-party

cash used in operating activities was approximately $27.3 million for the nine months ended September 30, 2021, as compared with approximately

$5.6 million for the nine months ended September 30, 2020.

The significant factors contributing to the cash used in operations during

the nine months ended September 30, 2021, include the net loss of approximately $43.3 million (inclusive of approximately $8.0 million

in non-cash, stock-based compensation charges) further described above, partially offset by the Company’s increase in accounts

payable and accrued expenses of approximately $6.9 million and amortization of debt discount of $2.1 million.

cash used in investing activities for the nine months ended September 30, 2021 was approximately $1.8 million, as compared with net cash

used in investing activities of $731 thousand for the nine months ended September 30, 2020.

Net cash used in investing activities was

due to cash paid for capitalized software costs of approximately $1.7 million, the purchase of equipment of $70 thousand and the purchase

of an intangible asset of $22 thousand.

cash provided by financing activities for the nine months ended September 30, 2021 was approximately $29.4 million as compared with approximately

$6.1 million for the nine months ended September 30, 2020.

During the nine months ended September 30, 2021, financing activities consisted

(1) net proceeds of $14.9 million from the private placement whereby investors purchased (a) a senior secured redeemable debenture

in the aggregate principal amount of $15.0 million and (b) warrants to purchase up to an additional 1,500,000 shares of the Company’s

common stock at an exercise price of $12.00 per share, pursuant to the June 1, 2021 Purchase Agreement, (2) net proceeds of $13.5 million

from the private placement of 608,696 common shares, at a purchase price of $23.00 per share for aggregate gross proceeds of $14.0 million

pursuant to the February 2021 Purchase Agreement, (3) net proceeds from the exercise of options and warrants during the period of approximately

$1.3 million, (4) net proceeds from the sale of common stock under the ATM Sales Agreement of approximately $0.5 million, in connection

with our filed shelf registration and launch of an at-the-market program on June 8, 2021, and (5) our entry into a merchant funding agreement

pursuant to which we may obtain cash advances.

Subsequent to the quarter ended September 30, 2021, we closed on the October 4, 2021 Common

Stock and Preferred Stock Offerings whereby the Company received total net proceeds of $55.3 million.

These increases in net cash from

financing activities were partially offset by the repayment of notes payable and the purchase of the additional membership interest of

Notes 1, 5 and 6 to our unaudited condensed consolidated financial statements included in this report for further discussion of certain

of these financing activities.

cash used in operating activities was approximately $8.1 million for the three months ended March 31, 2022, as compared with approximately

$9.1 million three months ended March 31, 2021.

The significant factors contributing to the cash used in operations during the three

months ended March 31, 2022, include the net loss of approximately $13.3 million (inclusive of $4.5 million in non-cash, stock-based

compensation charges), principally offset by the Company’s increase in accounts payable of approximately $0.7 million, excluding

the $1.5 million accrual for the first noncontingent milestone payment related to the Cleared acquisition due on the first anniversary

of the acquisition.

cash used in investing activities for the three months ended March 31, 2022 was approximately $7.4 million, as compared with approximately

$49 thousand for the three months ended March 31, 2021.

Net cash used in investing activities was due to cash paid for capitalized software

costs of approximately $2.1 million, cash paid for the purchase of the ResumeBuild brand of approximately $4.0 million and cash paid

for the Cleared acquisition of approximately $1.0 million.

cash used in financing activities for the three months ended March 31, 2022 was approximately $774 thousand as compared with net cash

provided by financing activities of approximately $13.4 million for the three months ended March 31, 2021.

During the three months ended

March 31, 2022, financing activities consisted of preferred stock dividends of $777 thousand, distributions to non-controlling interest

of $36 thousand and proceeds from the exercise of warrants of $38 thousand.

and Capital Resources Outlook

Company has funded operations in the past through the sales of its products, issuance of common stock and through loans and advances

from officers and directors.

The Company’s continued operations are dependent upon obtaining an increase in its sale volumes which

the Company has been successful in achieving to date.

The Company intends to use the net proceeds of the financing activities described

above for customer acquisition, as well as for working capital, general corporate purposes and to repay existing indebtedness.

1 to our unaudited condensed consolidated financial statements included in this report for further liquidity evaluation.

Company has funded operations in the past through the sales of its products, issuance of common and preferred stock and through loans

and advances from officers and directors.

Our primary short-term and long-term requirements for liquidity and capital are for customer

acquisition, fund business acquisitions and investments we may make from time to time, working capital including our noncancelable operating

lease obligations, capital expenditures and general corporate purposes.

Company’s continued operations are dependent upon obtaining an increase in its sales volumes which the Company has been successful

in achieving to date.

The Company reviewed its forecasted operating results and sources and uses of cash used in management’s assessment,

which included the available financing, consideration of positive and negative evidence impacting management’s forecasts, and market

and industry factors.

Positive indicators that lead to its conclusion that the Company will have sufficient cash over the next 12 months

following the date of this report include:

(1) its continued strengthening of the Company’s revenues and improvement of operational

efficiencies across the business, (2) the expected improvement in its cash burn rate over the next 12 months, (3) the Company’s

ability to raise up to $150 million under the 2021 Shelf, with approximately $59.5 million available under the ATM Sales Agreement and

$32 million available under the 2021 Shelf as of March 31 2022, (4) management’s ability to curtail expenses if necessary, and

(5) the overall market value of the telehealth industry and how it believes that will continue to drive interest in the Company.

Accounting Policies and Estimates

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of operations.

Company records revenue under the adoption of ASC 606 by analyzing exchanges with its customers using a five-step analysis:

Company records revenue under the adoption of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with

Customers , by analyzing exchanges with its customers using a five-step analysis:

performance obligations

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in limited cases, title does not pass until the product reaches the customer’s delivery site, in

these limited cases, recognition of revenue should be deferred until that time;

however, the Company does not have a process to properly

these limited cases, recognition of revenue should be deferred until that time, however the Company does not have a process to properly

record the recognition of revenue if orders are not immediately shipped, and deems the impact to be immaterial.

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The Company allows the customer to cancel at any point during

the billing cycle, in which case the customer’s subscription will not be renewed for the following month or year depending on the

original subscription.

The Company records the revenue over the customers subscription period for monthly and yearly subscribers or at

the end of the initial 14-day service period for customers who purchased the initial subscription, as the circumstances dictate.

Company offers a discount for the monthly or yearly subscriptions being purchased, which is deducted at the time of payment at the initiation

the billing cycle, in which case the customers subscription will not be renewed for the following month or year depending on the original

subscription.

The Company records the revenue over the customers subscription period for monthly and yearly subscribers or at the end

of the initial 14-day service period for customers who purchased the initial subscription, as the circumstances dictate.

offers a discount for the monthly or yearly subscriptions being purchased, which is deducted at the time of payment at the initiation

of the contract term, therefore the Contract price is fixed and determinable at the contract initiation.

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for the service are recorded net of the Company’s known discount rates.

As of September 30, 2021 and December 31, 2020, the Company

has accrued contract liabilities, as deferred revenue, of approximately $1,436,000 and $917,000, respectively, which represent obligations

on in-process monthly or yearly contracts with customers.

discounts and allowances on WorkSimpli revenues approximated $377,000 and $275,000 for the three months ended September 30, 2021 and

2020, respectively, and approximated $1,599,000 and $545,000 for the nine months ended September 30, 2021 and 2020, respectively.

As of March 31, 2022 and December 31, 2021, the Company

has accrued contract liabilities, as deferred revenue, of approximately $1.8 million and $1.5 million, respectively, which represent

obligations on in-process monthly or yearly contracts with customers and a portion attributable to the yet to be recognized initial 14-day

trial period collections.

discounts, returns and rebates on telehealth revenues approximated $1.5 million and $1.2 million, respectively, during the three months

ended March 31, 2022 and 2021.

Customer discounts and allowances on WorkSimpli revenues approximated $448 thousand and $554 thousand,

respectively, during the three months ended March 31, 2022 and 2021.

Software Costs

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Certain development costs not meeting the criteria

for capitalization, in accordance with Accounting Standards Codification (“ASC”) ASC 350-40 Internal-Use Software ,

are expensed as incurred.

As of September 30, 2021 and December 31, 2020, the Company capitalized $2,169,644 and $438,136, respectively,

related to internally developed software costs which is amortized over the useful life and included in development costs on our statement

of operations.

assets are comprised of:

(1) a customer relationship asset (with original cost of approximately $1,007,000) with an estimated useful

life of three years, (2) a purchased license (with original cost of $200,000) with an estimated useful life of ten years and (3) a purchased

domain name (with an original cost of $22,231) with an estimated useful life of three years.

Intangible assets are amortized over their

estimated lives using the straight-line method.

Costs incurred to renew or extend the term of recognized intangible assets are capitalized

and amortized over the useful life of the asset.

for capitalization, in accordance with ASC 350-40, Internal-Use Software , are expensed as incurred.

As of March 31, 2022 and December

31, 2021, the Company capitalized $5.7 million and $3.6 million, respectively, related to internally developed software costs which is

amortized over the useful life and included in development costs on our statement of operations.

and Intangible Assets

and intangible assets include those acquired in conjunction with the Cleared acquisition for which the purchase accounting is preliminary

(see Note 3).

Other amortizable intangible assets include:

(1) intangible assets acquired related to the ResumeBuild brand (with original

cost of approximately $4.5 million) with an estimated useful life of five years, (2) a customer relationship asset (with original cost

of approximately $1,007,000) with an estimated useful life of three years, (3) a purchased license (with original cost of $200,000) with

an estimated useful life of ten years and (4) purchased domain names (with original costs of $22,731) with estimated useful lives of

Intangible assets are amortized over their estimated lives using the straight-line method.

Costs incurred to renew or extend

the term of recognized intangible assets are capitalized and amortized over the useful life of the asset.

Company files corporate federal and state tax returns.

Conversion Labs PR and WorkSimpli file tax returns in Puerto Rico, both are limited

Conversion Labs PR and WorkSimpli file tax returns in Puerto Rico.

Both are limited

liability companies and file separate tax returns with any tax liabilities or benefits passing through to its members.

Company records current and deferred taxes in accordance with Accounting Standards Codification (“ASC”) 740, “Accounting

for Income Taxes.” This ASC requires recognition of deferred tax assets and liabilities for temporary differences between tax basis

of assets and liabilities and the amounts at which they are carried in the consolidated financial statements, based upon the enacted

rates in effect for the year in which the differences are expected to reverse.

The Company establishes a valuation allowance, when necessary,

to reduce deferred tax assets to the amount expected to be realized.

The Company periodically assesses the value of its deferred tax

asset, a majority of which has been generated by a history of net operating losses and management determines the necessity for a valuation

ASC 740 also provides a recognition threshold and measurement attribute for the financial statement recognition of a tax position

taken or expected to be taken in a tax return.

Using this guidance, a company may recognize the tax benefit from an uncertain tax position

in its financial statements only if it is more likely-than-not (i.e., a likelihood of more than 50%) that the tax position will be sustained

on examination by the taxing authorities, based on the technical merits of the position.

The Company’s tax returns for all years

since December 31, 2017 remain open to audit by all related taxing authorities.

Company records current and deferred taxes in accordance with ASC 740, Accounting for Income Taxes .

This ASC requires recognition

of deferred tax assets and liabilities for temporary differences between tax basis of assets and liabilities and the amounts at which

they are carried in the consolidated financial statements, based upon the enacted rates in effect for the year in which the differences

are expected to reverse.

The Company establishes a valuation allowance, when necessary, to reduce deferred tax assets to the amount expected

to be realized.

The Company periodically assesses the value of its deferred tax asset, a majority of which has been generated by a history

of net operating losses and management determines the necessity for a valuation allowance.

ASC 740 also provides a recognition threshold

and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken in a tax return.

this guidance, a company may recognize the tax benefit from an uncertain tax position in its financial statements only if it is more

likely-than-not (i.e., a likelihood of more than 50%) that the tax position will be sustained on examination by the taxing authorities,

based on the technical merits of the position.

The Company’s tax returns for all years since December 31, 2018, remain open to

audit by all related taxing authorities.

Company follows the provisions of ASC 718, Share-Based Payment .

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of the assumptions require significant judgment and any changes could have a material impact in the determination of stock-based compensation

of New or Revised Accounting Standards—Not Yet Adopted

August 2020, the FASB issued ASU 2020-06, “ Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40);

Accounting for Convertible Instruments and Contracts in

an Entity’s Own Equity (“ASU 2020-06”)”, which addresses issues identified as a result of the complexities

associated with applying U.S.

GAAP for certain financial instruments with characteristics of liabilities and equity.

This update addresses,

among other things, the number of accounting models for convertible debt instruments and convertible preferred stock, targeted improvements

to the disclosures for convertible instruments and earnings-per-share (“EPS”) guidance and amendments to the guidance for

the derivatives scope exception for contracts in an entity’s own equity, as well as the related EPS guidance.

This update applies

to all entities that issue convertible instruments and/or contracts in an entity’s own equity.

This guidance is effective for financial

statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

Issued Accounting Standards

October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2021-08, Business Combinations (Topic 805);

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

This new guidance affects all entities that enter into a business combination within the scope of ASC 805-10.

Under this new guidance,

the acquirer should determine what contract assets and/or liabilities it would have recorded under ASC 606, Revenue from Contracts

with Customers , as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the

same terms as the acquirer.

Under current U.S.

GAAP, contract assets and contract liabilities acquired in a business combination are

recorded by the acquirer at fair value.

This update is effective for fiscal years beginning after December 15, 2022.

Early adoption is

permitted, but no earlier than for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

FASB specified that an entity should adopt the guidance as of the beginning of its annual fiscal year, or January 1, 2021, should the

Company elect to early adopt.

The Company is currently evaluating the impact the adoption of ASU 2020-06 could have on the Company’s

financial statements and disclosures.

Sheet Arrangements

have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,

changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that

is material to stockholders.

The Company is currently evaluating the effects that the adoption of this guidance will have on our consolidated financial

statements and related disclosures.

of New or Revised Accounting Standards—Not Yet Adopted

other accounting standards updates that have been issued or proposed by the FASB that do not require adoption until a future date are

not expected to have a material impact on the consolidated financial statements upon adoption.

Quantitative and Qualitative Disclosures about Market Risk

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis