What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-12 · 570 added, 452 removed, 975 unchanged (51% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

March 31, 2023

December 31, 2022

Current Assets

Accounts receivable, net

Product deposit

Inventory, net

Other current assets

Total Current Assets

receivable, net

current assets

Current Assets

Non-current Assets

Equipment, net

Right of use asset

Capitalized software, net

Intangible assets, net

Total Non-current Assets

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT

software, net

Non-current Assets

MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT

Current Liabilities

Accounts payable

Accrued expenses

Notes payable, net

Current operating lease liabilities

Deferred revenue

Total Current Liabilities

operating lease liabilities

Current Liabilities

Long-term Liabilities

Convertible long-term debt, net

Noncurrent operating lease liabilities

Contingent consideration

Purchase price payable

Total Liabilities

Commitments and Contingencies (Note 10)

operating lease liabilities

consideration

price payable

Commitments and Contingencies

Mezzanine Equity

Preferred Stock, $ 0.0001 par value;

Stock, $ 0.0001 par value;

5,000,000 shares authorized

Series B Preferred Stock, $ 0.0001 par value;

5,000 shares authorized, 3,500 and 3,500 shares issued and outstanding, liquidation value approximately, $ 1,337 and $ 1,305 per share as of March 31, 2023 and December 31, 2022, respectively

5,000 shares authorized,

3,500 and 3,500 shares issued and outstanding, liquidation value approximately, $ 1,438 and $ 1,305 per share as of June 30, 2023 and

December 31, 2022, respectively

Stockholders’ Deficit

Series A Preferred Stock, $ 0.0001 par value;

1,610,000 shares authorized, 1,400,000 shares issued and outstanding, liquidation value approximately, $ 28.39 and $ 27.84 per share as of March 31, 2023 and December 31, 2022, respectively

Common stock, $ 0.01 par value;

100,000,000 shares authorized, 32,040,045 and 31,552,775 shares issued, 31,937,005 and 31,449,735 outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital

Accumulated deficit

Series A Preferred Stock,

$ 0.0001 par value;

1,610,000 shares authorized, 1,400,000 shares issued and outstanding, liquidation value approximately, $ 28.94

and $ 27.84 per share as of June 30, 2023 and December 31, 2022, respectively

Common stock, $ 0.01 par

100,000,000 shares authorized, 32,564,835 and 31,552,775 shares issued, 32,461,795 and 31,449,735 outstanding as of June 30,

2023 and December 31, 2022, respectively

paid-in capital

( 202,857,575 )

( 190,562,994 )

Treasury stock, 103,040 and 103,040 shares, at cost, as of March 31, 2023 and December 31, 2022, respectively

Total LifeMD, Inc.

stock, 103,040 and 103,040 shares, at cost, as of June 30, 2023 and December 31, 2022, respectively

Stockholders’ Deficit

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( 11,395,777 )

Non-controlling interest

Total Stockholders’ Deficit

Non-controlling

Stockholders’ Deficit

( 15,237,938 )

( 11,871,325 )

Total Liabilities, Mezzanine Equity and Stockholders’ Deficit

Liabilities, Mezzanine Equity and Stockholders’ Deficit

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

Consolidated STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Telehealth revenue, net

WorkSimpli revenue, net

Total revenues, net

Months Ended June 30,

Telehealth revenue,

revenues, net

Cost of revenues

Cost of telehealth revenue

Cost of WorkSimpli revenue

Total cost of revenues

of WorkSimpli revenue

cost of revenues

Selling and marketing expenses

General and administrative expenses

General and administrative

Other operating expenses

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Development costs

Total expenses

Operating loss

Goodwill impairment charge

in fair value of contingent consideration

( 2,735,000 )

( 4,895,546 )

( 12,904,125 )

( 7,748,356 )

( 26,011,140 )

Interest expense, net

( 1,260,135 )

(loss) on debt extinguishment

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( 12,972,961 )

Net income attributable to non-controlling interest

Net loss attributable to LifeMD, Inc.

( 9,333,689 )

( 26,247,910 )

Preferred stock dividends

Net loss attributable to LifeMD, Inc.

income attributable to non-controlling interest

attributable to LifeMD, Inc.

( 6,733,000 )

( 13,018,962 )

( 10,741,456 )

( 26,318,637 )

stock dividends

( 1,553,125 )

loss attributable to LifeMD, Inc.

common stockholders

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$ ( 13,795,524 )

Basic loss per share attributable to LifeMD, Inc.

$ ( 12,294,581 )

$ ( 27,871,762 )

loss per share attributable to LifeMD, Inc.

common stockholders

Diluted loss per share attributable to LifeMD, Inc.

loss per share attributable to LifeMD, Inc.

common stockholders

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Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

Series A Preferred

Additional Paid-in

Balance, January 1, 2022

January 1, 2022

$ 164,517,634

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$ ( 1,031,745 )

Stock compensation expense

Cashless exercise of stock options

Exercise of warrants

Series A Preferred Stock Dividend

Distribution to non-controlling interest

Net (loss) income

compensation expense

exercise of stock options

A Preferred Stock dvidend

to non-controlling interest

(loss) income

( 13,299,675 )

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( 13,274,949 )

Balance, March 31, 2022

March 31, 2022

$ 169,026,965

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$ ( 1,043,019 )

Series A Preferred

Additional Paid-in

Balance, January 1, 2023

compensation expense

of stock options

A Preferred Stock dividend

to non-controlling interest

(loss) income

( 13,018,962 )

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( 12,972,961 )

June 30, 2022

$ 173,157,467

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$ ( 163,701 )

Stock compensation expense

Stock issued for noncontingent consideration payment

Warrants issued with convertible debt instrument

Series A Preferred Stock Dividend

Distribution to non-controlling interest

Adjustment of membership interest in WorkSimpli

Net (loss) income

$ ( 1,033,018 )

January 1, 2023

$ 179,015,250

$ ( 190,562,994 )

Balance, March 31, 2023

$ ( 163,701 )

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$ ( 11,871,325 )

compensation expense

issued for noncontingent consideration payment

issued with debt instrument

A Preferred Stock dividend

to non-controlling interest

of membership interest in WorkSimpli

(loss) income

( 4,008,456 )

( 3,442,473 )

March 31, 2023

$ 183,183,652

$ ( 195,348,013 )

$ ( 163,701 )

$ ( 12,007,521 )

$ ( 12,039,018 )

$ 183,183,652

$ ( 195,348,013 )

$ ( 163,701 )

$ ( 12,007,521 )

$ ( 12,039,018 )

compensation expense

issued for noncontingent consideration payment

exercise of stock options

A Preferred Stock dividend

to non-controlling interest

of membership interest in WorkSimpli

(loss) income

( 6,733,000 )

( 5,891,216 )

June 30, 2023

$ 186,673,930

$ ( 202,857,575 )

$ ( 163,701 )

$ ( 16,021,557 )

$ ( 15,237,938 )

$ 186,673,930

$ ( 202,857,575 )

$ ( 163,701 )

$ ( 16,021,557 )

$ ( 15,237,938 )

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

Consolidated STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

Months Ended June 30,

FROM OPERATING ACTIVITIES

$ ( 9,333,689 )

$ ( 26,247,910 )

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of debt discount

Amortization of capitalized software

Adjustments to reconcile net

loss to net cash provided by (used in) operating activities:

of debt discount

of capitalized software

Amortization of intangibles

Accretion of consideration payable

Depreciation of fixed assets

Loss on debt extinguishment

Operating lease payments

Stock compensation expense

of consideration payable

of fixed assets

on debt extinguishment

Change in fair value of contingent consideration

( 2,735,000 )

Goodwill impairment charge

lease payments

compensation expense

Changes in Assets and Liabilities

Accounts receivable

Product deposit

Other current assets

Change in operating lease liability

Deferred revenue

Accounts payable

( 1,533,572 )

Accrued expenses

( 1,341,474 )

Other operating activity

Net cash used in operating activities

current assets

in operating lease liability

( 2,152,511 )

operating activity

cash provided by (used in) operating activities

( 18,190,108 )

CASH FLOWS FROM INVESTING ACTIVITIES

Cash paid for capitalized software costs

FROM INVESTING ACTIVITIES

Cash paid for capitalized

software costs

( 3,899,852 )

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( 4,000,500 )

Acquisition of business, net of cash acquired

of business, net of cash acquired

( 1,012,395 )

Net cash used in investing activities

cash used in investing activities

( 4,112,939 )

( 9,893,154 )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from convertible long-term debt, net

FROM FINANCING ACTIVITIES

Proceeds from long-term debt,

Proceeds from notes payable

Repayment of notes payable, net of prepayment penalty

Repayment of notes payable,

net of prepayment penalty

( 4,386,915 )

Cash proceeds from exercise of warrants

Cash proceeds from exercise

Preferred stock dividends

Contingent consideration payment for ResumeBuild acquisition

Adjustment of membership interest of WorkSimpli

Distributions to non-controlling interest

Net cash provided by (used in) financing activities

Net increase (decrease) in cash

( 1,553,125 )

Cash at beginning of period

( 1,553,125 )

Contingent consideration payment

for ResumeBuild acquisition

Net payments for membership

interest in WorkSimpli

Distributions

to non-controlling interest

cash provided by (used in) financing activities

( 1,527,475 )

Net increase (decrease) in

( 29,610,737 )

Cash at beginning of

Cash at end of period

Cash paid for interest

Cash paid during the period for interest

Non-cash investing and financing activities

Warrants issued for debt instruments

Cashless exercise of options

Consideration payable for Cleared acquisition

Consideration payable for ResumeBuild acquisition

Stock issued for noncontingent consideration payment

Right of use asset

Right of use lease liability

paid for interest

paid during the period for interest

investing and financing activities

issued for debt instruments

Cashless exercise of

Consideration

payable for Cleared acquisition

Consideration

payable for ResumeBuild acquisition

issued for noncontingent consideration payment

of Paycheck Protection Program loans forgiven

of use lease liability

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

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the trading symbol for the Company’s common stock, par value $ 0.01 per share on The Nasdaq Stock Market LLC changed from “CVLB”

April 1, 2016, the original operating agreement of Immudyne PR LLC (“Immudyne PR”), a joint venture to market the Company’s

skincare products, was amended and restated and the Company increased its ownership and voting interest in Immudyne PR to 78.2 %.

with the name change of the parent company to Conversion Labs, Inc., Immudyne PR was renamed to Conversion Labs PR LLC.

2019, the operating agreement of Conversion Labs PR was amended and restated in its entirety to increase the Company’s ownership

and voting interest in Conversion Labs PR to 100 %.

On February 22, 2021, concurrent with the name of the parent company to LifeMD, Inc.,

Conversion Labs PR LLC was renamed to LifeMD PR, LLC.

June 2018, the Company closed the strategic acquisition of 51 % of LegalSimpli Software, LLC, which operates a software as a service application

for converting, editing, signing, and sharing PDF documents called PDFSimpli.

In addition to LegalSimpli Software, LLC’s growth

business model, this acquisition added deep search engine optimization and search engine marketing expertise to the Company.

15, 2021, LegalSimpli Software, LLC, changed its name to WorkSimpli Software LLC, (“WorkSimpli”).

Effective January 22, 2021,

the Company consummated a transaction to restructure the ownership of WorkSimpli (the “WSS Restructuring”) concurrently increased

its ownership interest in WorkSimpli to 85.58 %.

Effective September 30, 2022, two option agreements were exercised which further restructured

the ownership of WorkSimpli.

As a result, the Company’s ownership interest in WorkSimpli decreased to 73.64 %.

April 1, 2016, the original operating agreement of Immudyne PR LLC (“Immudyne PR”), a joint venture to market the

Company’s skincare products, was amended and restated and the Company increased its ownership and voting interest in Immudyne

PR to 78.2 %.

Concurrent with the name change of the parent company to Conversion Labs, Inc., Immudyne PR was renamed to Conversion Labs PR LLC (“Conversion Labs PR”).

On April 25, 2019, the operating agreement of Conversion Labs PR was amended and restated in its entirety to increase the

Company’s ownership and voting interest in Conversion Labs PR to 100 %.

On February 22, 2021, concurrent with the name of the parent company to LifeMD, Inc., Conversion Labs PR was renamed to LifeMD

June 2018, the Company closed the strategic acquisition of 51 %

of LegalSimpli Software, LLC, which operates a software as a service application for converting, editing, signing, and sharing PDF

documents called PDFSimpli.

In addition to LegalSimpli Software, LLC’s growth business model, this acquisition added deep

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

On July 15, 2021, LegalSimpli Software, LLC,

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

Effective January 22, 2021, the Company consummated a

transaction to restructure the ownership of WorkSimpli (the “WSS Restructuring”) concurrently increased its ownership

interest in WorkSimpli to 85.58 %.

Effective September 30, 2022, two option agreements were exercised which further restructured the ownership of WorkSimpli.

result, the Company’s ownership interest in WorkSimpli decreased to 73.64 %.

Effective December 15, 2022, LifeMD PR, LLC

merged into WorkSimpli, with WorkSimpli being the surviving entity.

Effective March 31,

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increased to 74.06 %.

Effective June 30, 2023, an option agreement was exercised which further restructured the ownership of WorkSimpli.

As a result, the Company’s ownership interest in WorkSimpli decreased to 73.32 %.

See Note 8 for additional information.

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Additionally, Conversion Labs Asia Limited (“Conversion Labs Asia”), a Hong Kong company, had no activity

during the three months ended March 31, 2023 and 2022.

during the three and six months ended June 30, 2023 and 2022.

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

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remove certain representations and warranties of the Company and sellers in connection with the transaction (See Note 3).

6, 2023, the Company issued 337,895 shares of common stock related to the first of five quarterly installment payments due to the sellers

of Cleared under the First Amendment.

On April 17, 2023, the Company issued 455,319 shares of common stock related to the second of five

quarterly installment payments due to the sellers of Cleared under the First Amendment.

On July 17, 2023, the Company issued 158,129

shares of common stock related to the third of five quarterly installment payments due to the sellers of Cleared under the First Amendment.

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

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a two-year period ending on the two-year anniversary of the closing of the Acquisition.

As of March 31, 2023, WorkSimpli has paid the

As of June 30, 2023, WorkSimpli has paid the

Seller approximately $ 281 thousand in accordance with the ResumeBuild APA.

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Consulting, LLC and its sole member Sean Fitzpatrick, who is Co-Founder and President of WorkSimpli (See Note 3).

otherwise indicated, the terms “LifeMD,” “Company,” “we,” “us,” and “our”

refer to LifeMD, Inc.

(formerly known as Conversion Labs, Inc.), our wholly subsidiary LifeMD PR, LLC (formerly Immudyne PR LLC, and

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

Cleared, a Delaware public benefit corporation and our majority-owned subsidiary, WorkSimpli.

The affiliated network of medical Professional

Corporations and medical Professional Associations administratively led by LifeMD Southern Patient Medical Care, P.C., (“LifeMD

PC”) is the Company’s affiliated, variable interest entity in which we hold a controlling financial interest.

Unless otherwise

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

otherwise indicated, the terms “LifeMD,” “Company,”

“we,” “us,” and “our” refer to LifeMD, Inc.

(formerly known as Conversion Labs, Inc.), Cleared, a

Delaware public benefit corporation and our majority-owned subsidiary, WorkSimpli.

The affiliated network of medical Professional Corporations

and medical Professional Associations administratively led by LifeMD Southern Patient Medical Care, P.C., (“LifeMD PC”) is

the Company’s affiliated, variable interest entity in which we hold a controlling financial interest.

Unless otherwise specified,

all dollar amounts are expressed in United States dollars.

& Going Concern Evaluation

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The Credit Agreement provides for a convertible senior secured credit facility of up

to an aggregate amount of $ 40 million, comprised of the following:

(1) $ 15 million in term loans funded at closing, (2) $ 5 million of

additional committed term loans available in the fourth quarter of 2023 and (3) $ 20 million of additional uncommitted term loans, collectively

referred to as the “Avenue Facility”.

to an aggregate amount of $ 40

million, comprised of the following:

million in term loans funded at closing, (2)

million of additional committed term loans available

in the fourth quarter of 2023 and (3) $ 20

million of additional uncommitted term loans,

collectively referred to as the “Avenue Facility”.

The Avenue Facility matures on October

The Company issued Avenue warrants

to purchase $ 1.2 million of the Company’s common stock at an exercise price of $ 1.24 , subject to adjustments (the “Warrants”).

In addition, Avenue may convert up to $ 2 million of the $ 15 million in term loans funded at closing into shares of the Company’s

common stock at any time while the loans are outstanding, at a price per share equal to $ 1.49 .

Proceeds from the Avenue Facility were

used to repay the Company’s outstanding notes payable balances with CRG Financial and are expected to be used for general corporate

purposes and at the Company’s election, re-financing up to $ 5 million liquidation value plus accrued interest on the Series B Preferred

The Company is subject to certain affirmative and negative covenants under the Avenue Facility, including the requirement, beginning on the closing date, to maintain at least $5 million of unrestricted cash to be tested at the end of each month, and beginning on the period ended September 30, 2023, and at the end of each quarter thereafter, a trailing six-month cash flow of at least $2 million.

of March 31, 2023, the Company has an accumulated deficit approximating $ 195.3 million and has experienced significant losses from its

to purchase $ 1.2

million of the

Company’s common stock at an exercise price of $ 1.24 ,

subject to adjustments (the “Warrants”).

In addition, Avenue may convert up to $ 2

million of the $ 15

million in term loans

funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share equal

Proceeds from the Avenue Facility were used to repay the Company’s outstanding notes payable balances with CRG Financial and are

expected to be used for general corporate purposes and at the Company’s election, re-financing up to $ 5 million liquidation value

plus accrued interest on the Series B Preferred Stock.

The Company is subject to certain affirmative and negative covenants under the

Avenue Facility, including the requirement, beginning on the closing date, to maintain at least $5 million of unrestricted cash to be

tested at the end of each month, and beginning on the period ended September 30, 2023, and at the end of each quarter thereafter, a trailing

six-month cash flow , subject to certain adjustments

as provided by the Credit Agreement, of at least $2 million.

of June 30, 2023, the Company has an accumulated deficit approximating $ 202.9 million and has experienced significant losses from its

To date, the Company has been funding operations primarily through the sales of its products, sale of equity in private placements

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the “baby shelf limitations”).

As a result of the baby shelf limitations, the Company may only offer and sell shares of common

stock having an aggregate offering price of up to $ 18.435 million pursuant to the ATM Sales Agreement, and it filed a prospectus supplement

with the SEC to that effect on March 27, 2023.

In the event that the Company’s public float increases above $ 75.0 million, the

Company will no longer be subject to the baby shelf limitations, in which case the Company will file another prospectus supplement with

the SEC prior to making sales pursuant to the ATM Sales Agreement in excess of $ 18.435 million.

As of March 31, 2023, the Company has

$ 18.435 million available under the ATM Sales Agreement.

As a result of the baby shelf limitations, the Company was only able to offer and sell shares

of common stock having an aggregate offering price of up to $ 18.435 million pursuant to the ATM Sales Agreement, and it filed a prospectus

supplement with the SEC to that effect on March 27, 2023.

In June 2023, the Company’s public float increased above $ 75.0 million.

As a result, the Company is no longer subject to the baby shelf limitations.

The Company filed another prospectus supplement with the

SEC to that effect on June 29, 2023.

As of June 30, 2023, the Company has $ 59.5 million available under the ATM Sales Agreement.

believes that the overall market value of the telehealth industry is positive and that it will continue to drive interest in the Company.

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The results of operations

for the three months ended March 31, 2023 are not necessarily indicative of the results for the year ending December 31, 2023 or for

any future period.

for the three and six months ended June 30, 2023 are not necessarily indicative of the results for the year ending December 31, 2023

or for any future period.

of Consolidation

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810, Consolidation .

consolidated financial statements include the accounts of the Company, and its wholly owned subsidiary, LifeMD PR, Cleared, its majority

consolidated financial statements include the accounts of the Company, Cleared, its majority

owned subsidiary, WorkSimpli, and LifeMD PC, the Company’s affiliated, variable interest entity in which we hold a controlling

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in WorkSimpli increased to 74.06 %.

Effective June 30, 2023, an option agreement was exercised which further restructured the ownership

of WorkSimpli.

As a result, the Company’s ownership interest in WorkSimpli decreased to 73.32 %.

See Note 8 for additional information.

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liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents.

As of March 31, 2023

As of June 30, 2023

and December 31, 2022, there were no cash equivalents.

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There is no non-controlling interest upon consolidation of LifeMD PC.

revenue for LifeMD PC was approximately $ 358 thousand and $ 0 for the three months ended March 31, 2023 and 2022, respectively.

net loss for LifeMD PC was approximately $ 1.0 million and $ 1.5 million for the three months ended March 31, 2023 and 2022, respectively.

revenue for LifeMD PC was approximately $ 436 thousand and $ 0 for the three months ended June 30, 2023 and 2022, respectively, and $ 794

thousand and $ 0 for the six months ended June 30, 2023 and 2022, respectively.

Total net loss for LifeMD PC was approximately $ 600 thousand

and $ 1.4 million for the three months ended June 30, 2023 and 2022, respectively, and $ 1.6 million and $ 2.9 million for the six months

ended June 30, 2023 and 2022, respectively.

Company prepares its unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted

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the current periods’ presentation.

The reclassifications include $ 90 thousand of lease expenses reclassified from general and administrative

expenses to other operating expenses for the three months ended March 31, 2022.

The reclassifications include $ 91 thousand and $ 181 thousand of lease expenses reclassified

from general and administrative expenses to other operating expenses for the three and six months ended June 30, 2022, respectively.

Company records revenue under the adoption of ASC 606, Revenue from Contracts with Customers , by analyzing exchanges with its

customers using a five-step analysis:

Identify the contract

Identify performance obligations

Determine the transaction

Allocate the transaction

Recognize revenue

performance obligations

the transaction price

the Company’s product-based contracts with customers, the Company has determined that there is one performance obligation, which

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Customer discounts, returns

and rebates on telehealth revenues approximated $ 331 thousand and $ 1.5 million, respectively, during the three months ended March 31,

and rebates on telehealth revenues approximated $ 497 thousand and $ 1.6 million, respectively, during the three months ended June 30,

2023 and 2022, respectively.

Customer discounts, returns and rebates on telehealth revenues approximated $ 828 thousand and $ 3.1 million,

respectively, during the six months ended June 30, 2023 and 2022, respectively.

Company, through its majority-owned subsidiary, WorkSimpli, offers a subscription-based service providing a suite of software applications

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Customer discounts and allowances on WorkSimpli revenues

approximated $ 912 thousand and $ 448 thousand, respectively, during the three months ended March 31, 2023 and 2022, respectively.

the three months ended March 31, 2023 and 2022, the Company had the following disaggregated revenue:

approximated $ 788 thousand and $ 580 thousand, respectively, during the three months ended June 30, 2023 and 2022, respectively.

discounts and allowances on WorkSimpli revenues approximated $ 1.7 million and $ 1.0 million, respectively, during the six months ended

June 30, 2023 and 2022, respectively.

the three and six months ended June 30, 2023 and 2022, the Company had the following disaggregated revenue:

SCHEDULE OF DISAGGREGATED REVENUE

Three Months Ended March 31,

Months Ended June 30,

Telehealth revenue

WorkSimpli revenue

Total net revenue

Company records deferred revenues when cash payments are received or due in advance of its performance.

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SCHEDULE OF CONTRACT WITH CUSTOMER LIABILITY

Three Months Ended March 31,

Months Ended June 30,

Beginning of period

Revenue recognized

( 14,546,402 )

( 7,649,269 )

( 27,436,954 )

( 13,728,565 )

End of period

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and current economic conditions in its evaluation of an allowance for future refunds and chargebacks.

As of March 31, 2023 and December

As of June 30, 2023 and December

31, 2022, the reserve for sales returns and allowances was approximately $ 424 thousand and $ 815 thousand, respectively.

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balance sheets.

of March 31, 2023 and December 31, 2022, inventory primarily consisted of finished goods related to the Company’s OTC products

included in the telehealth revenue section of the table above.

Inventory is maintained at the Company’s third-party warehouse location

in Wyoming and at various Amazon fulfillment centers.

of June 30, 2023 and December 31, 2022, inventory primarily consisted of finished goods related to the Company’s OTC products included

in the telehealth revenue section of the table above.

Inventory is maintained at the Company’s third-party warehouse location in

Wyoming and at various Amazon fulfillment centers.

The Company also maintains inventory at a company owned warehouse in Pennsylvania.

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inventory with the net realizable value and an allowance is made for writing down inventory to net realizable, if lower.

As of both March

As of both June

30, 2023 and December 31, 2022, the Company recorded an inventory reserve of approximately $ 100 thousand and $ 161 thousand, respectively.

of March 31, 2023 and December 31, 2022, the Company’s inventory consisted of the following:

of June 30, 2023 and December 31, 2022, the Company’s inventory consisted of the following:

SUMMARY OF INVENTORY

Finished goods - products

Raw materials and packaging components

Inventory reserve

Total Inventory - net

Finished goods

Raw materials and packaging

Inventory - net

of our vendors require deposits when a purchase order is placed for goods or fulfillment services.

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previously paid.

As of March 31, 2023 and December 31, 2022, the Company has approximately $ 246 thousand and $ 127 thousand, respectively,

As of June 30, 2023 and December 31, 2022, the Company has approximately $ 235 thousand and $ 127 thousand, respectively,

of product deposits with multiple vendors for the purchase of raw materials or finished goods.

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of the product deposit.

As of March 31, 2023, the Company approximates its implicit purchase commitments to be $ 586 thousand, of which

As of June 30, 2023, the Company approximates its implicit purchase commitments to be $ 168 thousand, of which

the vast majority are with two vendors that manufacture the Company’s finished goods inventory for its RexMD product line.

Software Costs

Company capitalizes certain internal payroll costs and third-party costs related to internally developed software and amortizes

these costs using the straight-line method over the estimated useful life of the software, generally three years.

The Company does

not sell internally developed software other than through the use of subscription service.

Certain development costs not meeting the

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

As of March 31,

2023 and December 31, 2022, the Company capitalized a net amount of $ 9.5

million and $ 8.8

million, respectively, related to internally developed software costs which are amortized over the useful life and included in

development costs on our statement of operations.

Company capitalizes certain internal payroll costs and third-party costs related to internally developed software and amortizes these

costs using the straight-line method over the estimated useful life of the software, generally three years.

The Company does not sell

internally developed software other than through the use of subscription service.

Certain development costs not meeting the criteria

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

As of June 30, 2023 and December

31, 2022, the Company capitalized a net amount of $ 10.4 million and $ 8.8 million, respectively, related to internally developed software

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

and Intangible Assets

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intangible assets are comprised of:

(1) a customer relationship asset, (2) the Cleared trade name, (3) Cleared developed technology,

(4) a purchased license and (5) a purchased domain name.

During the year ended December 31, 2022, the Company recorded an $ 827 thousand

impairment loss related to a decline in the estimated fair value of the Cleared customer relationship intangible asset with an original

cost of $ 919 thousand and accumulated amortization of $ 92 thousand.

Other 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.

(1) the ResumeBuild brand, (2) a customer relationship asset, (3) the Cleared trade name, (4) Cleared

developed technology, (5) a purchased license and (6) two purchased domain names.

During the year ended December 31, 2022, the Company

recorded an $ 827 thousand impairment loss related to a decline in the estimated fair value of the Cleared customer relationship intangible

asset with an original cost of $ 919 thousand and accumulated amortization of $ 92 thousand.

Other 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.

of Long-Lived Assets

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recognized as the amount by which the carrying amount of the assets exceeds the estimated fair values of the assets.

As of March 31,

2023 and December 31, 2022, the Company determined that no events or changes in circumstances existed that would indicate any impairment

of its long-lived assets.

As of June 30, 2023

and December 31, 2022, the Company determined that no events or changes in circumstances existed that would indicate any impairment of

its long-lived assets.

Company files corporate federal, state and local tax returns.

LifeMD 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.

files a tax return in Puerto Rico;

WorkSimpli is a limited liability company and files tax returns with any tax liabilities or benefits

passing through to its members.

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

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earnings (loss) per common share (“EPS”) is based on the weighted average number of shares outstanding during each period

Convertible securities, warrants and options to purchase common stock are included as common stock equivalents only when dilutive.

Potential common stock equivalents are excluded from dilutive earnings per share when the effects would be antidilutive.

Shares of unissued vested restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) are

included in our calculation of basic weighted average shares outstanding.

Convertible securities, warrants and options to purchase common

stock are included as common stock equivalents only when dilutive.

Potential common stock equivalents are excluded from dilutive earnings

per share when the effects would be antidilutive.

Company follows the provisions of ASC 260, Diluted Earnings per Share .

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SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

Three Months Ended March 31,

Series B Preferred Stock

Restricted stock units

Months Ended June 30,

Series B Preferred

RSUs and RSAs

Stock options

Convertible long-term debt

Potentially dilutive securities

long-term debt

dilutive securities

portfolio of brands are included within two operating segments:

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or liabilities, are as follows:

Inputs that are

unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Inputs (other

than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability through correlation

with market data at the measurement date and for the duration of the instrument’s anticipated life.

Unobservable inputs

that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and that

reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement

Inputs that are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability

through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets

or liabilities and that reflect management’s best estimate of what market participants would use in pricing the asset or liability

at the measurement date.

some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy.

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current manufacturers or pharmacies cease to perform adequately.

As of March 31, 2023, we utilized four suppliers for fulfillment services,

six suppliers for manufacturing finished goods, five suppliers for packaging, bottling, and labeling, and three suppliers for prescription

As of June 30, 2023, we utilized five suppliers for fulfillment services,

six suppliers for manufacturing finished goods, six suppliers for packaging, bottling, and labeling, and four suppliers for prescription

As of December 31, 2022, we utilized four suppliers for fulfillment services, six suppliers for manufacturing finished goods,

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assets using significant estimates such as revenue projections.

The fair value of the identified

intangible assets was based primarily on significant unobservable inputs and thus represent a Level 3 measurement as defined in ASC 820,

Fair Value Measurement .

The fair value of the trade name and developed technology were determined using the relief-from-royalty

method under the income approach.

The royalty rates used to determine the fair value of the trade name and developed technology were

0.10 % and 1.0 %, respectively.

The fair value of the customer relationships was determined using the multi-period excess earnings method

which involves forecasting the net earnings expected to be generated.

The customer attrition rate used to determine the fair value of

the customer relationships was 10.0 %.

The discount rate used to determine the fair value of the trade name, developed technology and

customer relationships was 70.5 %.

The fair value of the identified intangible assets was based primarily

on significant unobservable inputs and thus represent a Level 3 measurement as defined in ASC 820, Fair Value Measurement .

fair value of the trade name and developed technology were determined using the relief-from-royalty method under the income approach.

The royalty rates used to determine the fair value of the trade name and developed technology were 0.10 % and 1.0 %, respectively.

fair value of the customer relationships was determined using the multi-period excess earnings method which involves forecasting the

net earnings expected to be generated.

The customer attrition rate used to determine the fair value of the customer relationships was

The discount rate used to determine the fair value of the trade name, developed technology and customer relationships was 70.5 %.

following table summarizes the acquisition date fair values of assets acquired and liabilities assumed:

SCHEDULE OF FAIR VALUE OF ASSETS AND LIABILITIES

Purchase price, net of cash acquired

Customer relationship intangible asset

Trade name intangible asset

Developed technology intangible asset

Deferred taxes

Accounts payable and other current liabilities

Purchase price,

net of cash acquired

relationship intangible asset

name intangible asset

technology intangible asset

payable and other current liabilities

purchase price and purchase price allocation for Cleared was finalized as of September 30, 2022 with no significant changes to preliminary

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2023, the Company issued 337,895 shares of common stock related to the first of five quarterly installment payments due to the sellers

of Cleared under the First Amendment and on April 17, 2023, the Company issued 455,319 shares of common stock related to the second of

five quarterly installment payments due to the sellers of Cleared under the First Amendment.

of Cleared under the First Amendment.

On April 17, 2023, the Company issued 455,319 shares of common stock related to the second of five

quarterly installment payments due to the sellers of Cleared under the First Amendment.

On July 17, 2023, the Company issued 158,129

shares of common stock related to the third of five quarterly installment payments due to the sellers of Cleared under the First Amendment.

the year ended December 31, 2022, the Company recorded a decrease of $ 5.1 million to the Cleared contingent consideration as a result

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period ending on the two-year anniversary of the closing of the Acquisition.

As of March 31, 2023, WorkSimpli has paid the Seller approximately

As of June 30, 2023, WorkSimpli has paid the Seller approximately

$ 281 thousand in accordance with the ResumeBuild APA.

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4 – GOODWILL AND INTANGIBLE ASSETS

Company’s goodwill balance related to the Cleared acquisition was $ 0 as of both March 31, 2023 and December 31, 2022.

Company’s goodwill balance related to the Cleared acquisition was $ 0 as of both June 30, 2023 and December 31, 2022.

year ended December 31, 2022, the Company recorded an $ 8.0 million goodwill impairment charge related to a decline in the estimated fair

value of Cleared as a result of a decline in the Cleared financial projections.

of March 31, 2023 and December 31, 2022, the Company has the following amounts related to amortizable intangible assets:

of June 30, 2023 and December 31, 2022, the Company has the following amounts related to amortizable intangible assets:

SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS

Amortizable Intangible Assets:

ResumeBuild brand

Customer relationship asset

Cleared trade name

Cleared developed technology

Purchased licenses

Website domain name

Amortizable intangible assets

Intangible Assets:

relationship asset

developed technology

intangible assets

accumulated amortization

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( 2,043,971 )

Total net amortizable intangible assets

net amortizable intangible assets

the year ended December 31, 2022, the Company recorded an $ 827 thousand impairment charge related to a decline in the estimated fair

value of the Cleared customer relationship intangible asset with an original cost of $ 919 thousand and accumulated amortization of $ 92

The aggregate amortization expense of the Company’s intangible assets for the three months ended March 31, 2023 and 2022

The aggregate amortization expense of the Company’s intangible assets for the three months ended June 30, 2023 and 2022

was $ 246 thousand and $ 227 thousand, respectively.

Total amortization expense for the remainder of 2023 is approximately $ 700 thousand,

2024 through 2026 is approximately $ 930 thousand per year and for 2027 is approximately $ 113 thousand.

The aggregate amortization expense of the Company’s intangible assets for the

six months ended June 30, 2023 and 2022 was $ 480 thousand and $ 341 thousand, respectively.

Total amortization expense for the remainder

of 2023 is approximately $ 492 thousand, 2024 through 2025 is approximately $ 980 thousand per year, 2026 is approximately $ 940 thousand

and 2027 is approximately $ 113 thousand.

5 – ACCRUED EXPENSES

of March 31, 2023 and December 31, 2022, the Company has the following amounts related to accrued expenses:

of June 30, 2023 and December 31, 2022, the Company has the following amounts related to accrued expenses:

SCHEDULE OF ACCRUED EXPENSES

Accrued selling and marketing expenses

Accrued selling

and marketing expenses

Sales tax payable

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Accrued interest

Other accrued expenses

Total accrued expenses

accrued expenses

6 – NOTES PAYABLE

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include interest in the amount of $ 62 thousand.

As of March 31, 2023 and December 31, 2022, the outstanding balance was $ 765 thousand

As of June 30, 2023 and December 31, 2022, the outstanding balance was $ 442 thousand

and $ 976 thousand, respectively, and is included in notes payable, net, on the accompanying unaudited condensed consolidated balance

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of the loans include loan origination fees in the amount of $ 60 thousand and total interest of $ 840 thousand.

As of March 31, 2023 and

December 31, 2022, the outstanding balance was $ 1.058 million and $ 1.821 million, respectively, and is included in notes payable, net, on

the accompanying unaudited condensed consolidated balance sheet.

the three months ended March 31, 2023, the Company received proceeds of $ 2

million under a $ 2.5

million loan facility with CRG Financial, maturing on December

As of June 30, 2023 and

December 31, 2022, the outstanding balance was $ 294 thousand and $ 1.821 million, respectively, and is included in notes payable, net,

on the accompanying unaudited condensed consolidated balance sheet.

the six months ended June 30, 2023, the Company received proceeds of $ 2 million under a $ 2.5 million loan facility with CRG Financial,

maturing on December 15, 2023 .

The loan facility includes interest of 12 %.

The Company repaid the $ 2

million outstanding loan balance on March 21, 2023 with the proceeds received from the Avenue Facility and recorded a $ 325

thousand loss on debt extinguishment related to the repayment of the CRG Financial loan due to a prepayment penalty and various fees.

As of both March 31, 2023 and December 31, 2022, the outstanding balance was $ 0

related to the CRG Financial loan.

interest expense on notes payable amounted to $ 21 thousand and $ 0 for the three months ended March 31, 2023 and 2022, respectively.

7 – CONVERTIBLE LONG-TERM DEBT

The Company repaid the $ 2 million outstanding loan balance

on March 21, 2023 with the proceeds received from the Avenue Facility and recorded a $ 325 thousand loss on debt extinguishment related

to the repayment of the CRG Financial loan due to a prepayment penalty and various fees.

As of both June 30, 2023 and December 31, 2022,

the outstanding balance was $ 0 related to the CRG Financial loan.

interest expense on notes payable amounted to $ 13 thousand and $ 0 for the three months ended June 30, 2023 and 2022, respectively.

interest expense on notes payable amounted to $ 34 thousand and $ 0 for the six months ended June 30, 2023 and 2022, respectively.

7 – LONG-TERM DEBT

Capital Credit Facility

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The relative fair value was recorded to debt discount and is included as a reduction to long-term debt

on the unaudited condensed consolidated balance sheet as of March 31, 2023.

on the unaudited condensed consolidated balance sheet as of June 30, 2023.

The Company incurred other fees associated with the Avenue

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The total debt discount recorded of $1.6 million will be amortized over a forty-two-month

Total amortization of debt discount was $ 38 thousand for the three months ended March 31, 2023.

Avenue Facility matures on October

1, 2026 and interest

is based on the greater of:

(1) the Prime Rate (as defined in the Supplement) plus 4.75% and (2) 12.5%.

As of March 31, 2023, the interest

rate is 12.5%.

Total amortization of debt discount was $ 115 thousand and $ 154 thousand for the three and six months ended June 30, 2023, respectively.

Avenue Facility matures on October 1, 2026 and interest is based on the greater of:

(1) the Prime Rate (as defined in the Supplement)

plus 4.75% and (2) 12.5%.

At June 30, 2023, the interest rate was 12.75%.

Payments are interest only until November 2024 .

The Company received gross proceeds of $ 15.0

million (net proceeds of $ 12.3

million after repayment of the $ 2

million outstanding CRG loan balance and various

Proceeds from the Avenue Facility were used to repay the Company’s outstanding notes payable balances with CRG Financial

and are expected to be utilized for general corporate purposes and at the Company’s election, re-financing up to $ 5

million liquidation value plus accrued interest

of the Series B Preferred Stock.

received gross proceeds of $ 15.0 million (net proceeds of $ 12.3 million after repayment of the $ 2 million outstanding CRG loan balance

and various fees).

Proceeds from the Avenue Facility were used to repay the Company’s outstanding notes payable balances with CRG

Financial and are expected to be utilized for general corporate purposes and at the Company’s election, re-financing up to $ 5 million

liquidation value plus accrued interest of the Series B Preferred Stock.

Company is subject to certain affirmative and negative covenants under the Avenue Facility, including the requirement, beginning on the

closing date, to maintain at least $5 million of unrestricted cash to be tested at the end of each month, and beginning on the period

ended September 30, 2023, and at the end of each quarter thereafter, a trailing six-month cash flow , subject to certain adjustments

as provided by the Credit Agreement, of at least $2 million.

of the date of filing, there is $ 15 million outstanding under the Avenue Facility and the Company is in compliance with the Avenue Facility

interest expense on convertible long-term debt, inclusive of amortization of debt discounts, amounted to $ 96 thousand and $ 0 for the

three months ended March 31, 2023 and 2022, respectively.

interest expense on long-term debt, inclusive of amortization of debt discounts, amounted to $ 598 thousand and $ 0 for the three months

ended June 30, 2023 and 2022, respectively.

Total interest expense on long-term debt, inclusive of amortization of debt discounts, amounted

to $ 694 thousand and $ 0 for the six months ended June 30, 2023 and 2022, respectively.

8 – STOCKHOLDERS’ EQUITY

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of up to $ 18.435 million pursuant to the ATM Sales Agreement, and it filed a prospectus supplement with the SEC to that effect on March

In the event that the Company’s public float increases above $ 75.0 million, the Company will no longer be subject to

the baby shelf limitations, in which case the Company will file another prospectus supplement with the SEC prior to making sales pursuant

to the ATM Sales Agreement in excess of $ 18.435 million.

As of March 31, 2023, the Company has $ 18.435 million available under the ATM

Sales Agreement.

Stock Transactions During the Three Months Ended March 31, 2023

the three months ended March 31, 2023, the Company issued an aggregate of 149,375 shares of common stock for service, including vested

restricted stock units.

In June 2023, the Company’s public float increased above $ 75.0 million.

As a result, the Company is no longer subject

to the baby shelf limitations.

The Company filed another prospectus supplement with the SEC to that effect on June 29, 2023.

30, 2023, the Company has $ 59.5 million available under the ATM Sales Agreement.

the six months ended June 30, 2023, the Company issued an aggregate of 16,471 shares of common stock related to the cashless exercise

Stock Transactions During the Six Months Ended June 30, 2023

the six months ended June 30, 2023, the Company issued an aggregate of 202,375 shares of common stock for service, including vested restricted

February 4, 2023, the Company entered into the First Amendment to the Stock Purchase Agreement (the “First Amendment”) between

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337,895 shares of common stock related to the first of five quarterly installment payments due to the sellers of Cleared under the First

On April 17, 2023, the Company issued 455,319 shares of common stock related to the second of five quarterly installment payments

due to the sellers of Cleared under the First Amendment.

March 21, 2023, in connection with the Company’s closing of a Credit Agreement with Avenue, the Company issued Avenue warrants

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Noncontrolling

income attributed to the non-controlling interest amounted to $ 566 thousand and $ 25 thousand for the three months ended March 31, 2023

income attributed to the non-controlling interest amounted to $ 842 thousand and $ 46 thousand for the three months ended June 30, 2023

and 2022, respectively.

During both the three months ended March 31, 2023 and 2022, the Company paid distributions to non-controlling

During both the three months ended June 30, 2023 and 2022, the Company paid distributions to non-controlling

shareholders of $ 36 thousand.

Net income attributed to the non-controlling interest amounted to $ 1.4 million and $ 71 thousand for the

six months ended June 30, 2023 and 2022, respectively.

During both the six months ended June 30, 2023 and 2022, the Company paid distributions

to non-controlling shareholders of $ 72 thousand.

Software Restructuring Transaction

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interest in WorkSimpli increased to 74.06 %.

On June 30, 2023, Lisa Bowlin, WorkSimpli’s Chief Operating Officer, exercised her

option agreement (the “Bowlin Option Agreement”) to purchase 889 membership interest units of WorkSimpli for an exercise

price of $ 1.00 per membership interest unit.

Following the exercise of the Bowlin Option Agreement, Conversion Labs PR decreased its

ownership interest in WorkSimpli from 74.06 % to 73.32 %.

Company pays cumulative distributions on its Series A Preferred Stock, in the amount of $ 2.21875 per share each year, which is equivalent

to 8.875 % of the $ 25.00 liquidation preference per share.

Dividends on the Series A Preferred Stock are payable quarterly in arrears,

on or about the 15th day of January, April, July, and October of each year.

Dividends declared and paid on the Series A Preferred Stock

during the six months ended June 30, 2023 are as follows:

(1) quarterly dividend declared on March 28, 2023 to holders of record as of

April 7, 2023 and was paid on April 17, 2023 and (2) quarterly dividend declared on June 27, 2023 to holders of record as of July 7,

2023 and was paid on July 17, 2023.

The dividends are included in the Company’s results of operations for the three and six months

ended June 30, 2023.

June 30, 2023, WorkSimpli declared a cash dividend in the amount of $ 22.40 per membership interest unit to all unit holders of record

as of June 30, 2023 and was paid on July 3, 2023 .

The total dividend declared to noncontrolling interest holders was $ 534 thousand for

the three and six months ended June 30, 2023 and is included in the Company’s results of operations for the three and six months

ended June 30, 2023.

January 8, 2021, the Company approved the Company’s 2020 Equity and Incentive Plan (the “2020 Plan”).

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the maximum number of shares of the Company’s common stock available for issuance under the 2020 Plan by 1,500,000 shares.

March 31, 2023, the 2020 Plan, as amended, provided for the issuance of up to 4,950,000 shares of Common Stock.

June 30, 2023, the 2020 Plan, as amended, provided for the issuance of up to 4,950,000 shares of Common Stock.

Remaining authorization

under the 2020 Plan, as amended, was 1,573,830 shares as of March 31, 2023.

under the 2020 Plan, as amended, was 782,830 shares as of June 30, 2023.

forms of award agreements to be used in connection with awards made under the 2020 Plan to the Company’s executive officers and

non-employee directors are:

Form of Non-Qualified Option

Agreement (Non-Employee Director Awards)

Form of Non-Qualified Option

Agreement (Employee Awards);

Form of Restricted Stock

Award Agreement.

of Non-Qualified Option Agreement (Non-Employee Director Awards)

of Non-Qualified Option Agreement (Employee Awards);

of Restricted Stock Award Agreement.

the Company had granted service-based stock options and performance-based stock options separate from the 2020 Plan.

the three months ended March 31, 2023, the Company issued an aggregate of 180,500 stock options to employees under the 2020 Plan and

the prior plan.

These stock options have a contractual term of 4 to 6.5 years and vest in increments which fully vest the options over

a two to three-year period, dependent on the specific agreements’ terms.

following is a summary of outstanding options activity under our 2020 Plan for the three months ended March 31, 2023:

the six months ended June 30, 2023, the Company issued an aggregate of 218,000 stock options to employees under the 2020 Plan and the

These stock options have a contractual term of 4 to 6.5 years and vest in increments which fully vest the options over a

two to three-year period, dependent on the specific agreements’ terms.

following is a summary of outstanding options activity under our 2020 Plan for the six months ended June 30, 2023:

SCHEDULE OF OPTION ACTIVITY

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Cancelled/Forfeited/Expired

Balance at March 31,

at June 30, 2023

Exercisable at December 31,

Exercisable at March 31, 2023

Exercisable at June 30, 2023

total fair value of the options granted was $ 181 thousand, which was determined by the Black-Scholes Pricing Model with the following

dividend yield of 0 %, expected term of 4 years, volatility of 119.16 % – 123.8 % and risk-free rate of 3.58 % –

Total compensation expense under the 2020 Plan options above was $ 1.2 million and $ 1.6 million for the three months ended March

31, 2023 and 2022, respectively, with unamortized expense remaining of $ 4.4 million as of March 31, 2023.

following is a summary of outstanding service-based options activity (prior to the establishment of our 2020 Plan above) for the three

months ended March 31, 2023:

Total compensation expense under the 2020 Plan options above was $ 1.2 million and $ 1.8 million for the three months ended June

30, 2023 and 2022, respectively, with unamortized expense remaining of $ 3.2 million as of June 30, 2023.

Total compensation expense under

the 2020 Plan options above was $ 2.3 million and $ 3.5 million for the six months ended June 30, 2023 and 2022, respectively.

30, 2023, aggregate intrinsic value of vested service-based options outstanding was $ 206 thousand.

following is a summary of outstanding service-based options activity (prior to the establishment of our 2020 Plan above) for the six

months ended June 30, 2023:

SCHEDULE OF OPTION ACTIVITY

Exercise Price

Balance, December

Balance at March 31,

at June 30, 2023

Exercisable December 31, 2022

Exercisable at March 31, 2023

Exercisable at June 30, 2023

total fair value of the options granted was $ 142 thousand, which was determined by the Black-Scholes Pricing Model with the following

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Total compensation expense under the above service-based option plan was $ 505 thousand and $ 547 thousand for the three months

ended March 31, 2023 and 2022, respectively, with unamortized expense remaining of $ 2.1 million as of March 31, 2023.

following is a summary of outstanding performance-based options activity (separate from the 2020 Plan) for the three months ended March

ended June 30, 2023 and 2022, respectively, with unamortized expense remaining of $ 1.6 million as of June 30, 2023.

Total compensation

expense under the above service-based option plan was $ 1.1 million for both the six months ended June 30, 2023 and 2022.

service-based options exercised during the six months ended June 30, 2023, 40,000 options were exercised on a cashless basis, which resulted

in 16,471 shares issued.

As of June 30, 2023, aggregate intrinsic value of vested service-based options outstanding was $ 2.0 million.

following is a summary of outstanding performance-based options activity (separate from the 2020 Plan) for the six months ended June

SCHEDULE OF OPTION ACTIVITY

Exercise Price

Balance at December 31, 2022

Balance at March 31,

December 31, 2022

at June 30, 2023

Exercisable December 31,

Exercisable at March 31, 2023

compensation expense was recognized on the performance-based options above for the three months ended March 31, 2023, as the performance

Exercisable at June 30,

compensation expense was recognized on the performance-based options above for the three and six months ended June 30, 2023, as the performance

terms have not been met or are not probable.

Total compensation expense under the above performance-based options was $ 106 thousand for

the three months ended March 31, 2022.

Stock Units (RSUs)

following is a summary of outstanding RSU activity under our 2020 Plan for the three months ended March 31, 2023:

Total compensation expense under the above performance-based options was $ 106 thousand and

$ 212 thousand for the three and six months ended June 30, 2022, respectively.

As of June 30, 2023, aggregate intrinsic value of vested

performance options outstanding was $ 1.3 million.

following is a summary of outstanding RSUs and RSAs activity under our 2020 Plan for the six months ended June 30, 2023:

OF RESTRICTED STOCK UNIT ACTIVITY

RSU Outstanding

Number of Shares

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Cancelled/Forfeited

Balance at March 31, 2023

total fair value of the 412,000 RSUs granted was $ 809 thousand which was determined using the fair value of the quoted market price on

the date of grant.

Total compensation expense under the 2020 Plan RSUs above was $ 543 thousand and $ 976 thousand for the three months

ended March 31, 2023 and 2022, respectively, with unamortized expense remaining of $ 4.0 million as of March 31, 2023.

During the three

months ended March 31 2023, 120,375 RSUs vested, of which 49,375 RSUs were issued.

following is a summary of outstanding RSU activity (outside of our 2020 Plan) for the three months ended March 31, 2023:

at June 30, 2023

total fair value of the 1,974,500 RSUs and RSAs granted was $ 5.6 million which was determined using the fair value of the quoted market

price on the date of grant.

Total compensation expense under the 2020 Plan RSUs and RSAs above was $ 894 thousand and $ 595 thousand for

the three months ended June 30, 2023 and 2022, respectively, with unamortized expense remaining of $ 4.8 million as of June 30, 2023.

Total compensation expense under the 2020 Plan RSUs and RSAs above was $ 1.4 million and $ 1.6 million for the six months ended June 30,

2023 and 2022, respectively.

During the six months ended June 30, 2023, 322,625 RSUs and RSAs vested, of which 52,375 RSUs and RSAs were

During the six months ended June 30, 2023, 405,000 RSUs and 400,000 service-based stock options were cancelled and replaced with

962,500 RSAs for two executives.

Incremental compensation cost resulting from the modifications was immaterial to the unaudited condensed

consolidated financial statements for the three and six months ended June 30, 2023.

following is a summary of outstanding RSUs and RSAs activity (outside of our 2020 Plan) for the six months ended June 30, 2023:

OF RESTRICTED STOCK UNIT ACTIVITY

RSU Outstanding

Number of Shares

Balance at December

Balance at March 31, 2023

total fair value of the 50,000 RSUs granted was $ 73 thousand which was determined using the fair value of the quoted market price on

the date of grant.

Total compensation expense for RSUs outside of the 2020 Plan was $ 305 thousand and $ 591 thousand for the three months

ended March 31, 2023 and 2022, respectively, with unamortized expense remaining of $ 4.9 million as of March 31, 2023.

During the three

months ended March 31, 2023, 115,000 RSUs vested, of which 100,000 RSUs were issued.

following is a summary of outstanding and exercisable warrants activity during the three months ended March 31, 2023:

at June 30, 2023

total fair value of the 425,000 RSUs and RSAs granted was $ 860 thousand which was determined using the fair value of the quoted market

price on the date of grant.

Total compensation expense for RSUs and RSAs outside of the 2020 Plan was $ 285 thousand and $ 348 thousand

for the three months ended June 30, 2023 and 2022, respectively, with unamortized expense remaining of $ 5.4 million as of June 30, 2023.

Total compensation expense for RSUs and RSAs outside of the 2020 Plan was $ 589 thousand and $ 939 thousand for the six months ended June

30, 2023 and 2022, respectively.

During the six months ended June 30, 2023, 165,000 RSUs and RSAs vested, of which 150,000 RSUs and RSAs

following is a summary of outstanding and exercisable warrants activity during the six months ended June 30, 2023:

OF WARRANT OUTSTANDING AND EXERCISABLE

Exercise Price

Balance at December 31, 2022

Balance at March 31,

December 31, 2022

at June 30, 2023

Exercisable December 31,

Exercisable March 31, 2023

Exercisable June 30, 2023

total fair value of the warrants granted was $ 1.1 million, which was determined by the Black-Scholes Pricing Model with the following

1 unchanged sentence

Total compensation expense

on the above warrants was $ 12 thousand and $ 605 thousand for the three months ended March 31, 2023 and 2022, respectively, with unamortized

expense remaining of $ 6 thousand as of March 31, 2023.

on the above warrants was $ 6 thousand and $ 605 thousand for the three months ended June 30, 2023 and 2022, respectively, with no unamortized

expense remaining as of June 30, 2023.

Total compensation expense on the above warrants was $ 18 thousand and $ 1.2 million for the six

months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, aggregate intrinsic value of vested warrants outstanding was

$ 3.9 million.

total stock-based compensation expense related to common stock issued for services, service-based stock options, performance-based stock

options, warrants and RSUs amounted to $ 2.7 million and $ 4.5 million for the three months ended March 31, 2023 and 2022, respectively.

options, warrants, RSUs and RSAs amounted to $ 2.9 million and $ 4.0 million for the three months ended June 30, 2023 and 2022, respectively.

The total stock-based compensation expense related to common stock issued for services, service-based stock options, performance-based

stock options, warrants RSUs and RSAs amounted to $ 5.5 million and $ 8.5 million for the six months ended June 30, 2023 and 2022, respectively.

Such amounts are included in general and administrative expenses in the unaudited condensed consolidated statement of operations.

expense remaining related to service-based stock options, performance-based stock options, warrants and RSUs was $ 15.4 million as of

March 31, 2023, which is expected to be recognized through 2026.

expense remaining related to service-based stock options, performance-based stock options, warrants, RSUs and RSAs was $ 15.0 million

as of June 30, 2023, which is expected to be recognized through 2026.

Company leases office space domestically under operating leases.

5 unchanged sentences

WorkSimpli leases office space in Puerto Rico for which the lease expires

following is a summary of the Company’s operating right-of-use assets and operating lease liabilities as of March 31, 2023:

following is a summary of the Company’s operating right-of-use assets and operating lease liabilities as of June 30, 2023:

OF OPERATING RIGHT OF USE OF ASSETS

Operating right-of-use

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Operating lease liabilities

Total accumulated amortization of the Company’s operating right-of-use assets was $1.5 million as of March

accumulated amortization of the Company’s operating right-of-use assets was $ 1.7 million as of June 30, 2023.

table below reconciles the undiscounted future minimum lease payments under the above noted operating leases to the total operating lease

liabilities recognized on the unaudited condensed consolidated balance sheet as of March 31, 2023:

liabilities recognized on the unaudited condensed consolidated balance sheet as of June 30, 2023:

OF MATURITY OF OPERATING LEASE LIABILITIES

3 unchanged sentences

imputed interest

Present value of operating lease liabilities

lease expenses were $ 223 thousand and $ 202 thousand for the three months ended March 31, 2023 and 2022, respectively, and were included

in other operating expenses in our unaudited condensed consolidated statement of operations.

value of operating lease liabilities

lease expenses were $ 206 thousand and $ 201 thousand for the three months ended June 30, 2023 and 2022, respectively, and $ 429 thousand

and $ 404 thousand for the six months ended June 30, 2023 and 2022, respectively, and were included in other operating expenses in our

unaudited condensed consolidated statement of operations.

cash flow information related to operating lease liabilities consisted of the following:

OF OTHER INFORMATION RELATED TO OPERATING LEASE LIABILITIES

Cash paid for operating lease liabilities

Cash paid for

operating lease liabilities

balance sheet information related to operating lease liabilities consisted of the following:

March 31, 2023

December 31, 2022

Weighted average remaining lease term in years

Weighted average

remaining lease term in years

Weighted average discount rate

15 unchanged sentences

sold – advertising and operating expenses directly related to the marketing of the licensed products.

As of March 31, 2023 and

December 31, 2022, $ 0 and approximately $ 138 thousand, respectively, were included in accrued expenses in regard to this agreement.

As of June 30, 2023 and December

31, 2022, $ 0 and approximately $ 138 thousand, respectively, were included in accrued expenses in regard to this agreement.

2018, the Company entered into a license agreement (the “Alphabet Agreement”) with M.ALPHABET, LLC (“Alphabet”),

10 unchanged sentences

Alphabet a royalty equal to 13% of Gross Receipts (as defined in the Agreement) realized from the sales of Licensed Products.

were earned or owed as of March 31, 2023 .

were earned or owed as of June 30, 2023 .

execution of the Alphabet Agreement, Alphabet was granted a 10 -year stock option to purchase 20,000 shares of the Company’s common

13 unchanged sentences

equaling the total expected product acceptance cost in excess of the product deposit.

As of March 31, 2023, the Company approximates

its implicit purchase commitments to be $ 586 thousand.

As of June 30, 2023, the Company approximates its

implicit purchase commitments to be $ 168 thousand.

the normal course of business operations, the Company may become involved in various legal matters.

As of March 31, 2023, other than

as set forth below, the Company’s management does not believe that there are any potential legal matters that could have a material

As of June 30, 2023, other than as

set forth below, the Company’s management does not believe that there are any potential legal matters that could have a material

effect on the Company’s consolidated financial position.

26 unchanged sentences

On September 22, 2022, as a result of mediation, the parties reached a settlement to resolve the matters in these cases.

issued 400,000 shares of common stock during the year ended December 31, 2022 and it is possible that the Company will issue 100,000

additional shares of common stock in the future related to this settlement.

The costs of this settlement are reflected in the Company’s

financial results.

issued 400,000 shares of common stock during the year ended December 31, 2022 and 100,000 additional shares of common stock on July 10,

2023 related to this settlement.

The costs of this settlement are reflected in the Company’s financial results.

December 10, 2021, a purported breach of contract, unjust enrichment, quantum meruit, and account stated lawsuit, captioned Specialty

49 unchanged sentences

As noted above, the Company issued 400,000 shares of common stock during the year ended December

31, 2022 and it is possible that the Company will issue 100,000 additional shares of common stock in the future related to this settlement.

The costs of this settlement are reflected in the Company’s financial results.

31, 2022 and 100,000 additional shares of common stock on July 10, 2023 related to this settlement.

The costs of this settlement are

reflected in the Company’s financial results.

February 28, 2022, a purported breach of contract lawsuit (with six counts of alleged breach, and indemnity reliance concerning reasonable

47 unchanged sentences

for documents.

Court subsequently conducted several case management and status conferences, beginning in October 2022 and continuing through March 2023.

On April 5, 2023, the court granted the plaintiff’s motion to compel and ordered the Company to conduct certain additional searches

for documents and to produce responsive documents by April 26, 2023.

The Court further set a case management conference for May 17, 2023,

which will address a schedule for remaining discovery.

The Company intends to vigorously defend against this action.

As this action is

in its preliminary phase, a potential loss cannot yet be estimated.

Court subsequently held several case management and status conferences, beginning in October 2022 and continuing through March 2023.

On April 5, 2023, the court granted the plaintiff’s motion to compel certain discovery and ordered the Company to conduct certain

additional searches for documents and to produce responsive documents by April 26, 202 3, which

the Company did in compliance with the order.

A further case management conference was held on May 17, 2023.

In June 2023, the

parties attended a mediation resulting in a settlement that fully resolved the matters in

The costs of this settlement are reflected in the Company’s financial results.

11 – RELATED PARTY TRANSACTIONS

the three months ended March 31, 2023, the Company received proceeds of $ 2 million under a $ 2.5 million loan facility with CRG Financial,

the six months ended June 30, 2023, the Company received proceeds of $ 2 million under a $ 2.5 million loan facility with CRG Financial,

maturing on December 15, 2023 .

3 unchanged sentences

to the repayment of the CRG Financial loan (see Note 6).

As of both March 31, 2023 and December 31, 2022, the outstanding balance was

As of both June 30, 2023 and December 31, 2022, the outstanding balance was

$ 0 related to the CRG Financial loan.

Bhatia, a member of the Board of the Company, also serves on the Board of Directors of CRG

the three months ended March 31, 2023 and 2022, WorkSimpli utilized LegalSubmit Pvt.

(“LegalSubmit”), a company owned

by WorkSimpli’s Chief Software Engineer, to provide software development services.

WorkSimpli paid LegalSubmit a total of $ 623

thousand and $ 299 thousand during the three months ended March 31, 2023 and 2022, respectively, for these services.

There were no amounts

owed to LegalSubmit as of both March 31, 2023 and December 31, 2022.

the six months ended June 30, 2023 and 2022, WorkSimpli utilized LegalSubmit Pvt.

(“LegalSubmit”), a company owned by

WorkSimpli’s Chief Software Engineer, to provide software development services.

WorkSimpli paid LegalSubmit a total of $ 570 thousand

and $ 352 thousand during the three months ended June 30, 2023 and 2022, respectively, and $ 1.2 million and $ 651 thousand during the six

months ended June 30, 2023 and 2022, respectively, for these services.

There were no amounts owed to LegalSubmit as of both June 30,

2023 and December 31, 2022.

12 – SEGMENT DATA

3 unchanged sentences

within our segments complement one another and position us well for future growth.

Relevant segment data for the three months ended March

31, 2023 and 2022 is as follows:

Relevant segment data for the three and six months

ended June 30, 2023 and 2022 is as follows:

SCHEDULE OF RELEVANT SEGMENT DATA

Three Months Ended March 31,

Operating loss

Months Ended June 30,

$ ( 8,141,868 )

$ ( 13,210,799 )

Operating income

Operating loss

( 13,143,226 )

$ ( 26,482,656 )

segment data as of March 31, 2023 and December 31, 2022 is as follows:

March 31, 2023

December 31, 2022

$ ( 4,895,546 )

$ ( 12,904,125 )

$ ( 7,748,356 )

$ ( 26,011,140 )

segment data as of June 30, 2023 and December 31, 2022 is as follows:

13 – SUBSEQUENT EVENTS

Company has evaluated subsequent events through the date these consolidated financial statements were issued and has identified the following:

Option Exercise

April 10, 2023, the Company issued 16,471

shares of common stock related to a cashless exercise of options.

Issued for Service

July and August 2023, the Company issued 112,500 shares of common stock

related to vested RSUs and RSAs.

Sales Agreement

July 2023, the Company sold 88,021 shares of common stock under the ATM Sales Agreement and net proceeds received were $ 410 thousand.

Issued for Legal Settlement

July 10, 2023, the Company issued 100,000 shares of common stock related to the settlement of the Harborside

Advisors LLC v.

21-cv-10593, and the Specialty Medical Drugstore, LLC D/B/A GoGoMeds v.

B Preferred Stock Conversion

July 12, 2023, the holder of the Company’s Series B Preferred Stock elected to convert 2,275 shares of the Company’s Series

B Preferred Stock.

The conversion resulted in 1,010,170 shares of the Company’s common stock issued to the holder of the Company’s

Series B Preferred Stock.

Issued for Noncontingent Consideration Payment

April 17, 2023, the Company issued 455,319 shares of common stock related to the second of five quarterly installment payments due to

the sellers of Cleared under the First Amendment.

Stock Issued for Service

On May 1, 2023, the Company issued

3,000 shares of common stock related to vested restricted stock units.

April 2023, the parties in the case of LifeMD, Inc.

Lamarco, et al, Case No.

reached a settlement agreement and submitted a stipulation to the court.

The stipulation was so ordered on April 6, 2023,

and the case was closed.

July 17, 2023, the Company issued 158,129 shares of common stock related to the third of five quarterly installment payments due to the

sellers of Cleared under the First Amendment.

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 1. Financial Statements