What changed in this filing

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Item 1. Financial Statements

2023-11-08 compared with 2023-08-09 · 707 added, 544 removed, 1001 unchanged (56% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

Current Assets

receivable, net

current assets

September 30, 2023

December 31, 2022

Current Assets

Non-current Assets

software, net

Accounts receivable, net

Product deposit

Inventory, net

Other current assets

Total Current Assets

Non-current Assets

MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT

Current Liabilities

operating lease liabilities

Equipment, net

Right of use asset

Capitalized software, net

Intangible assets, net

Total Non-current Assets

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT

Current Liabilities

Accounts payable

Accrued expenses

Notes payable, net

Current operating lease liabilities

Deferred revenue

Total Current Liabilities

Long-term Liabilities

operating lease liabilities

consideration

price payable

Commitments and Contingencies

Long-term debt, net

Noncurrent operating lease liabilities

Contingent consideration

Purchase price payable

Total Liabilities

Commitments and Contingencies (Note 10)

Mezzanine Equity

Stock, $ 0.0001 par value;

Preferred 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, $ 1,438 and $ 1,305 per share as of June 30, 2023 and

December 31, 2022, respectively

5,000 shares authorized, zero and 3,500 shares issued and outstanding, liquidation value approximately, $ 0 and $ 1,305 per share as of September 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, $ 28.94

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

Series A Preferred Stock, $ 0.0001 par value;

1,610,000 shares authorized, 1,400,000 shares issued and outstanding, liquidation value approximately, $ 29.44 and $ 27.84 per share as of September 30, 2023 and December 31, 2022, respectively

Common stock, $ 0.01 par value;

100,000,000 shares authorized, 34,759,250 and 31,552,775 shares issued, 34,656,210 and 31,449,735 outstanding as of September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

Accumulated deficit

( 209,756,573 )

( 190,562,994 )

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

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

Total LifeMD, Inc.

Stockholders’ Deficit

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( 11,395,777 )

Non-controlling

Stockholders’ Deficit

Non-controlling interest

Total Stockholders’ Deficit

( 11,084,257 )

( 11,871,325 )

Liabilities, Mezzanine Equity and Stockholders’ Deficit

Total Liabilities, Mezzanine Equity and Stockholders’ Deficit

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

Consolidated STATEMENTS OF OPERATIONS

Months Ended June 30,

Telehealth revenue,

revenues, net

Three Months Ended September 30,

Nine Months Ended September 30,

Telehealth revenue, net

WorkSimpli revenue, net

Total revenues, net

Cost of revenues

Cost of telehealth revenue

of WorkSimpli revenue

cost of revenues

Cost of WorkSimpli revenue

Total cost of revenues

Selling and marketing expenses

General and administrative

General and administrative expenses

Other operating expenses

2 unchanged sentences

Goodwill impairment charge

in fair value of contingent consideration

( 2,735,000 )

Change in fair value of contingent consideration

( 2,487,000 )

Total expenses

Operating loss

( 4,569,381 )

4 unchanged sentences

( 1,973,901 )

(loss) on debt extinguishment

(Loss) gain on debt extinguishment

( 5,283,147 )

2 unchanged sentences

( 33,445,845 )

income attributable to non-controlling interest

attributable to LifeMD, Inc.

Net income attributable to non-controlling interest

Net loss attributable to LifeMD, Inc.

( 6,122,435 )

2 unchanged sentences

( 33,600,309 )

stock dividends

Preferred stock dividends

( 2,329,688 )

loss attributable to LifeMD, Inc.

Net loss attributable to LifeMD, Inc.

common stockholders

3 unchanged sentences

$ ( 35,929,997 )

loss per share attributable to LifeMD, Inc.

Basic loss per share attributable to LifeMD, Inc.

common stockholders

loss per share attributable to LifeMD, Inc.

Diluted loss per share attributable to LifeMD, Inc.

common stockholders

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Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

January 1, 2022

Series A Preferred

Additional Paid-in

Non- controlling

Balance, January 1, 2022

$ 164,517,634

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$ ( 1,031,745 )

compensation expense

Stock compensation expense

Cashless exercise of stock options

Exercise of warrants

Series A Preferred Stock dividend

Distribution to non-controlling interest

Net (loss) income

( 13,299,675 )

( 13,274,949 )

Balance, March 31, 2022

$ 169,026,965

$ ( 155,997,323 )

$ ( 163,701 )

$ ( 1,043,019 )

Stock compensation expense

Exercise of stock options

A Preferred Stock dvidend

to non-controlling interest

(loss) income

Series A Preferred Stock dividend

Distribution to non-controlling interest

Net (loss) income

( 13,018,962 )

1 unchanged sentence

( 12,972,961 )

March 31, 2022

Balance, June 30, 2022

$ 173,157,467

2 unchanged sentences

$ ( 1,033,018 )

compensation expense

of stock options

A Preferred Stock dividend

to non-controlling interest

(loss) income

Stock compensation expense

Stock issued for legal settlement

Cashless exercise of stock options

Series A Preferred Stock dividend

Adjustment of membership interest in WorkSimpli

Distribution to non-controlling interest

Net (loss) income

( 7,281,673 )

1 unchanged sentence

( 7,197,936 )

June 30, 2022

Balance, September 30, 2022

$ 177,131,586

2 unchanged sentences

$ ( 568,480 )

January 1, 2023

$ ( 799,716 )

$ ( 1,368,196 )

Series A Preferred

Additional Paid-in

Balance, January 1, 2023

$ 179,015,250

2 unchanged sentences

$ ( 11,395,777 )

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

$ ( 475,548 )

$ ( 11,871,325 )

Stock compensation expense

Stock issued for noncontingent consideration payment

Warrants issued with debt instrument

Series A Preferred Stock dividend

Distribution to non-controlling interest

Adjustment of membership interest in WorkSimpli

Net (loss) income

( 4,008,456 )

March 31, 2023

( 4,008,456 )

( 3,442,473 )

Balance, March 31, 2023

$ 183,183,652

3 unchanged sentences

$ ( 12,039,018 )

Stock compensation expense

Stock issued for noncontingent consideration payment

Cashless exercise of stock options

Series A Preferred Stock dividend

Distribution to non-controlling interest

Adjustment of membership interest in WorkSimpli

Net (loss) income

( 6,733,000 )

1 unchanged sentence

( 5,891,216 )

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

Balance, June 30, 2023

$ 186,673,930

1 unchanged sentence

$ ( 163,701 )

June 30, 2023

$ ( 16,021,557 )

5 unchanged sentences

$ ( 15,237,938 )

Stock compensation expense

Stock issued for noncontingent consideration payment

Stock issued for legal settlement

Cashless exercise of stock options

Sale of common stock under ATM, net

Series B Preferred Stock conversion

Warrants issued for debt instruments fair value adjustment

Series A Preferred Stock dividend

Distribution to non-controlling interest

Net (loss) income

( 6,122,435 )

1 unchanged sentence

( 5,283,147 )

Balance, September 30, 2023

$ 196,901,377

$ ( 209,756,573 )

$ ( 163,701 )

$ ( 12,671,164 )

$ ( 11,084,257 )

$ 196,901,377

$ ( 209,756,573 )

$ ( 163,701 )

$ ( 12,671,164 )

$ ( 11,084,257 )

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

Consolidated STATEMENTS OF CASH FLOWS

Months Ended June 30,

FROM OPERATING ACTIVITIES

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

$ ( 14,616,836 )

$ ( 33,445,845 )

Adjustments to reconcile net

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

of debt discount

of capitalized software

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

Amortization of debt discount

Amortization of capitalized software

Amortization of intangibles

of consideration payable

of fixed assets

on debt extinguishment

Accretion of consideration payable

Depreciation of fixed assets

Loss (gain) on debt extinguishment

Change in fair value of contingent consideration

1 unchanged sentence

Goodwill impairment charge

lease payments

compensation expense

Operating lease payments

Stock issued for legal settlement

Stock compensation expense

Changes in Assets and Liabilities

Accounts receivable

( 1,583,832 )

( 1,558,063 )

current assets

in operating lease liability

Product deposit

( 2,052,363 )

operating activity

cash provided by (used in) operating activities

Other current assets

Change in operating lease liability

Deferred revenue

Accounts payable

Accrued expenses

( 2,303,466 )

FROM INVESTING ACTIVITIES

Cash paid for capitalized

software costs

Other operating activity

Net cash provided by (used in) operating activities

( 20,966,110 )

CASH FLOWS FROM INVESTING ACTIVITIES

Cash paid for capitalized software costs

( 6,273,295 )

( 6,742,946 )

Purchase of equipment

1 unchanged sentence

( 4,000,500 )

of business, net of cash acquired

Acquisition of business, net of cash acquired

( 1,012,395 )

cash used in investing activities

Net cash used in investing activities

( 6,516,645 )

( 12,134,718 )

FROM FINANCING ACTIVITIES

Proceeds from long-term debt,

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term debt, net

Proceeds from notes payable

Repayment of notes payable,

net of prepayment penalty

Repayment of notes payable, net of prepayment penalty

( 5,043,916 )

Cash proceeds from exercise

Cash proceeds from exercise of options

Cash proceeds from exercise of warrants

Sale of common stock under ATM, net

Preferred stock dividends

1 unchanged sentence

( 2,329,688 )

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

Contingent consideration payment for ResumeBuild acquisition

Net payments for membership interest in WorkSimpli

Distributions to non-controlling interest

Net cash provided by (used in) financing activities

( 2,390,388 )

Net increase (decrease) in

Net increase (decrease) in cash

( 35,491,216 )

Cash at beginning of

Cash at beginning of period

Cash at end of period

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

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

Series B Preferred Stock conversion

Principal of Paycheck Protection Program loans forgiven

Right of use asset

Right 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 %.

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,

2023, the Company redeemed 500 membership interest units in WorkSimpli and, as a result, the Company’s ownership interest in WorkSimpli

increased to 74.06 %.

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

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 (“Conversion

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 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 %.

Effective December

15, 2022, LifeMD PR, LLC merged into WorkSimpli, with WorkSimpli being the surviving entity.

March 31, 2023, the Company redeemed 500 membership interest units in WorkSimpli and, as a result, the Company’s ownership interest

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

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

during the three and nine months ended September 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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a two-year period ending on the two-year anniversary of the closing of the Acquisition.

As of June 30, 2023, WorkSimpli has paid the

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

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 (See Note 3).

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.

As of September 30, 2023, WorkSimpli has paid

the Seller approximately $ 344 thousand in accordance with the ResumeBuild APA.

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 (See Note 3).

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:

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”.

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 which the Company received on September 26, 2023 under the First Amendment to the Credit Agreement (the

“Avenue First Amendment”) and (3) $ 20 million of additional uncommitted term loans, collectively referred to as the “Avenue

The Avenue Facility matures on October 1, 2026 .

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

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

and securities purchased by a financial institution.

There can be no assurances that we will be successful in increasing revenues, improving

operational efficiencies or that financing will be available or, if available, that such financing will be available under favorable

Company has a current cash balance of approximately $ 6.4 million as of the filing date.

The Company reviewed its forecasted operating

results and sources and uses of cash used in management’s assessment, which included the available financing and consideration

of positive and negative evidence impacting management’s forecasts, market, and industry factors.

The Company’s continuance

as a going concern is highly dependent on its future profitability and on the on-going support of its stockholders, affiliates, and creditors.

Based on these circumstances, management has determined that these conditions raise substantial doubt about the Company’s ability

to continue as a going concern.

The accompanying financial statements do not include any adjustments that might result from the outcome

of this uncertainty.

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

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 September 30, 2023, the Company has an accumulated deficit approximating $ 209.8 million and has experienced significant losses from

its operations.

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

placements and securities purchased by a financial institution.

There can be no assurances that we will be successful in increasing revenues,

improving operational efficiencies or that financing will be available or, if available, that such financing will be available under

favorable terms.

Company has a current cash balance of approximately $ 12.9

million as of the filing date.

The Company reviewed its forecasted operating results and sources and uses of cash used in

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

management’s forecasts, market, and industry factors.

The Company’s continuance as a going concern is highly dependent

on its future profitability and on the on-going support of its stockholders, affiliates, and creditors.

Based on these

circumstances, management has determined that these conditions raise substantial doubt about the Company’s ability to continue

as a going concern.

The accompanying financial statements do not include any adjustments that might result from the outcome of this

Company has begun to implement strategies to strengthen revenues and improve operational efficiencies across the business and is significantly

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on June 22, 2021 (the “2021 Shelf”).

Under the 2021 Shelf at the time of effectiveness, the Company originally had the ability

to raise up to $ 150 million by selling common stock, preferred stock, debt securities, warrants, and units.

In conjunction with the 2021

Shelf, the Company also entered into an At Market Issuance Sales Agreement (the “ATM Sales Agreement”) with B.

Under the 2021 Shelf at the time of effectiveness, the Company originally had the

ability to raise up to $ 150

million by selling common stock, preferred stock, debt securities, warrants, and units.

In conjunction with the 2021 Shelf, the

Company also entered into an At Market Issuance Sales Agreement (the “ATM Sales Agreement”) with B.

Riley Securities,

1 unchanged sentence

relating to the sale of its common stock.

In accordance with the terms of the ATM Sales Agreement,

the Company may, but is not obligated to, offer and sell, from time to time, shares of common stock, through or to the Agents, acting

as agent or principal.

Sales of common stock, if any, will be made by any method permitted that is deemed an “at the market offering”

as defined in Rule 415 under the Securities Act.

On March 22, 2023, the date the Company filed its Annual Report on Form 10-K for the

fiscal year ended December 31, 2022, the Company became subject to the offering limits in General Instruction I.B.6 of Form S-3 (i.e.,

the “baby shelf limitations”).

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.

In accordance with the terms of the ATM Sales

Agreement, the Company may, but is not obligated to, offer and sell, from time to time, shares of common stock, through or to the

Agents, acting as agent or principal.

Sales of common stock, if any, will be made by any method permitted that is deemed an

“at the market offering” as defined in Rule 415 under the Securities Act.

On March 22, 2023, the date the Company filed

its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, the Company became subject to the offering limits in

General Instruction I.B.6 of Form S-3 (i.e., the “baby shelf limitations”).

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.

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

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.

The Company filed another prospectus

supplement with the SEC to that effect on June 29, 2023.

As of September 30, 2023, the Company has $ 58.6 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 and six months ended June 30, 2023 are not necessarily indicative of the results for the year ending December 31, 2023

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

2023 or for any future period.

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810, Consolidation .

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

financial interest.

During the year ended December 31, 2021, the Company purchased an additional 34.6 % of WorkSimpli for a total equity

interest of approximately 85.58 % as of December 31, 2021.

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 %.

March 31, 2023, the Company redeemed 500 membership interest units in WorkSimpli and, as a result, the Company’s ownership interest

in WorkSimpli increased to 74.06 %.

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

of WorkSimpli.

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 financial interest.

During the year ended

December 31, 2021, the Company purchased an additional 34.6 % of WorkSimpli for a total equity interest of approximately 85.58 % as of

December 31, 2021.

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 %.

Effective March 31, 2023, the Company redeemed

500 membership interest units in WorkSimpli and, as a result, the Company’s ownership interest 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.

2 unchanged sentences

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

As of June 30, 2023

As of September 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 $ 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.

revenue for LifeMD PC was approximately $ 1.9 million and $ 124 thousand for the three months ended September 30, 2023 and 2022, respectively,

and $ 2.7 million and $ 124 thousand for the nine months ended September 30, 2023 and 2022, respectively.

Total net income for LifeMD PC

was approximately $ 440 thousand for the three months ended September 30, 2023 and net loss for LifeMD PC was approximately $ 1.0 million

for the three months ended September 30, 2022.

Total net loss for LifeMD PC was approximately $ 1.1 million and $ 3.9 million for the nine

months ended September 30, 2023 and 2022, respectively.

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

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Some of the more significant estimates required to be made by management include the determination of reserves for accounts receivable,

returns and allowances, the valuation of inventory and stockholders’ equity-based transactions.

Actual results could differ from

those estimates.

returns and allowances, the valuation of inventory and stockholders’ equity-based transactions and the capitalization and impairment

of capitalized software and impairment of other long-lived assets.

Actual results could differ from those estimates.

Reclassifications

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The reclassifications include $ 92 thousand and $ 272 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.

from general and administrative expenses to other operating expenses for the three and nine months ended September 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:

performance obligations

the transaction price

Identify the contract

Identify performance obligations

Determine the transaction price

Allocate the transaction price

Recognize revenue

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

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fulfillment service provider.

In some cases, the customer does not obtain control until the product reaches the customer’s delivery

in these cases, recognition of revenue is deferred until that time.

In all cases, delivery is considered to have occurred when

the customer obtains control, which is usually commensurate upon shipment of the product.

In the case where delivery is not commensurate

upon shipment of the product, recognition of revenue is deferred until that time.

In the case of its product-based contracts, the Company

provides a subscription sensitive service based on the recurring shipment of products.

The Company records the related revenue under

the subscription agreements subsequent to receiving the monthly product order, recording the revenue at the time it fulfills the shipment

obligation to the customer.

In all cases, delivery is considered to have occurred when the customer obtains control, which is usually

commensurate upon shipment of the product.

In the case where delivery is not commensurate upon shipment of the product, recognition of

revenue is deferred until that time.

In the case of its product-based contracts, the Company provides a subscription sensitive service

based on the recurring shipment of products.

The Company records the related revenue under the subscription agreements subsequent to

receiving the monthly product order, recording the revenue at the time it fulfills the shipment obligation to the customer.

its product-based contracts with customers, the Company records an estimate for provisions of discounts, returns, allowances, customer

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Customer discounts, returns

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.

and rebates on telehealth revenues approximated $ 696 thousand and $ 1.1 million during the three months ended September 30, 2023 and 2022,

respectively.

Customer discounts, returns and rebates on telehealth revenues approximated $ 1.5 million and $ 4.2 million during the nine

months ended September 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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The Company allows the customer to cancel at any point during

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;

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 customer’s 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.

The Company 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.

Monthly and annual subscriptions

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

Customer discounts and allowances on WorkSimpli revenues

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

Months Ended June 30,

Monthly and annual

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

Customer discounts and allowances on WorkSimpli

revenues approximated $ 865 thousand and $ 710 thousand during the three months ended September 30, 2023 and 2022, respectively.

discounts and allowances on WorkSimpli revenues approximated $ 2.6 million and $ 1.7 million during the nine months ended September 30,

2023 and 2022, respectively.

the three and nine months ended September 30, 2023 and 2022, the Company had the following disaggregated revenue:

OF DISAGGREGATED REVENUE

Three Months Ended September 30,

Nine Months Ended September 30,

Telehealth revenue

WorkSimpli revenue

Total net revenue

$ 107,687,158

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

Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Beginning of period

Revenue recognized

( 14,196,267 )

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

As of June 30, 2023 and December

As of September 30, 2023 and December

31, 2022, the reserve for sales returns and allowances was approximately $ 570 thousand and $ 815 thousand, respectively.

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balance sheets.

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.

of September 30, 2023 and December 31, 2022, inventory primarily consisted of finished goods, raw materials and packaging 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.

is valued at the lower of cost or net realizable value with cost determined on an average cost basis.

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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 June

As of September

30, 2023 and December 31, 2022, the Company recorded an inventory reserve of approximately $ 99 thousand and $ 161 thousand, respectively.

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

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

SUMMARY OF INVENTORY

Finished goods

Raw materials and packaging

Inventory - net

September 30,

Finished goods - products

Raw materials and packaging components

Inventory reserve

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

As of September 30, 2023 and December 31, 2022, the Company has approximately $ 85 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 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.

As of September 30, 2023, the Company approximates its implicit purchase commitments to be $ 596 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

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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.

As of September 30, 2023 and

December 31, 2022, the Company capitalized a net amount of $ 11.3 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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recognized as the amount by which the carrying amount of the assets exceeds the estimated fair values of the 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.

As of September

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.

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.

WorkSimpli 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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SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

Months Ended June 30,

Series B Preferred

Three Months Ended September 30,

Nine Months Ended September 30,

Series B Preferred Stock

RSUs and RSAs

Stock options

long-term debt

dilutive securities

Convertible long-term debt

Potentially 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 date.

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

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 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,

five suppliers for packaging, bottling, and labeling, and three suppliers for prescription medications.

As of September 30, 2023, we utilized three suppliers for fulfillment

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

prescription medications.

As of December 31, 2022, 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 medications.

Adopted Accounting Pronouncements

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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

relationship intangible asset

name intangible asset

technology intangible asset

payable and other current liabilities

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

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

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

$ 281 thousand in accordance with the ResumeBuild APA.

The Company estimated the fair value of the contingent consideration using the

income approach and will remeasure the fair value quarterly with changes accounted for through earnings.

As of September 30, 2023, WorkSimpli has paid the Seller

approximately $ 344 thousand in accordance with the ResumeBuild APA.

The Company estimated the fair value of the contingent consideration

using the income approach and will remeasure the fair value quarterly with changes accounted for through earnings.

4 – GOODWILL AND INTANGIBLE ASSETS

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

SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS

Intangible Assets:

relationship asset

developed technology

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

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

OF GOODWILL AND INTANGIBLE ASSETS

September 30,

Amortizable Intangible Assets:

ResumeBuild brand

Customer relationship asset

Cleared trade name

Cleared developed technology

Purchased licenses

Website domain names

intangible assets

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( 2,043,971 )

net amortizable intangible assets

Total 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 June 30, 2023 and 2022

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

2022 was $ 246 thousand and $ 326 thousand, respectively.

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.

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

the nine months ended September 30, 2023 and 2022 was $ 726 thousand and $ 667 thousand, respectively.

Total amortization expense for the

remainder of 2023 is approximately $ 246 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 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

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

OF ACCRUED EXPENSES

September 30,

Accrued selling and marketing expenses

Sales tax payable

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Accrued interest

accrued expenses

Other accrued expenses

Total accrued expenses

6 – NOTES PAYABLE

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include interest in the amount of $ 62 thousand.

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

As of September 30, 2023 and December 31, 2022, the outstanding balance was $ 111 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 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,

As of September 30, 2023

and December 31, 2022, the outstanding balance was $ 0 and $ 1.821 million, respectively, and is included in notes payable, net, on the

accompanying unaudited condensed consolidated balance sheet.

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

maturing on December 15, 2023 .

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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,

As of both September 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.

the nine months ended September 30, 2023, the Company financed a $ 348 thousand prepaid insurance policy under a 10-month financing agreement

with Arthur J.

Gallagher Risk Management Services, LLC.

The terms of the agreement include finance fees in the amount of $ 13 thousand.

As of September 30, 2023 and December 31, 2022, the outstanding balance was $ 315 thousand and $ 0 , respectively, and is included in notes

payable, net, on the accompanying unaudited condensed consolidated balance sheet.

interest expense on notes payable amounted to $ 216 thousand and $ 0 for the three months ended September 30, 2023 and 2022, respectively.

Total interest expense on notes payable amounted to $ 250 thousand and $ 0 for the nine months ended September 30, 2023 and 2022, respectively.

7 – LONG-TERM DEBT

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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

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.

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

on September 26, 2023 in conjunction with the Avenue First Amendment and (3) $ 20 million of additional uncommitted term loans, collectively

referred to as the “Avenue Facility”.

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 have a term of five years.

The relative fair value of the Warrants issued to Avenue upon

closing was $ 1.1 million.

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 .

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 June 30, 2023.

The Company incurred other fees associated with the Avenue

Facility including:

(1) a $300 thousand financing fee, (2) a $200 thousand upfront commitment fee of 1% of the total $20 million in committed

capital and (3) $27 thousand in legal fees.

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

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

The relative fair value of

the Warrants issued to Avenue upon closing was $ 873 thousand.

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 .

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 September 30, 2023.

The Company incurred

other fees associated with the Avenue Facility including:

(1) a $300 thousand financing fee, (2) a $200 thousand upfront commitment fee

of 1% of the total $20 million in committed capital and (3) $27 thousand in legal fees.

The total debt discount recorded of $1.4 million

will be amortized over a forty-two-month period.

Total amortization of debt discount was $ 80 thousand and $ 234 thousand for the three

and nine months ended September 30, 2023, respectively.

The Company received gross proceeds of $ 15.0 million at closing (net proceeds

of $ 12.3 million after repayment of the $ 2 million outstanding CRG loan balance and various fees).

noted in Note 1 above, the Company entered into the Avenue First Amendment to the Credit Agreement whereby the Company received an additional

$ 5 million in committed term loans on September 26, 2023.

The Company received gross and net proceeds of $ 5.0 million.

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

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plus 4.75% and (2) 12.5%.

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

At September 30, 2023, the interest rate was 13.25%.

Payments are interest only until November 2024.

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.

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.

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.

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 $ 20 million outstanding under the Avenue Facility and the Company is in compliance with the Avenue Facility

interest expense on long-term debt, inclusive of amortization of debt discounts, amounted to $ 594 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.

ended September 30, 2023 and 2022, respectively.

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

amounted to $ 1.3 million and $ 0 for the nine months ended September 30, 2023 and 2022, respectively.

8 – STOCKHOLDERS’ EQUITY

Company has authorized the issuance of up to 100,000,000 shares of common stock, $ 0.01 par value, and 5,000,000 shares of preferred stock,

$ 0.0001 par value, of which 5,000 shares are designated as Series B Convertible Preferred Stock, 1,610,000 are designated as Series A

Preferred Stock and 3,385,000 shares of preferred stock remain undesignated.

$ 0.0001 par value, of which 5,000 shares are designated as Series B Preferred Stock, 1,610,000 are designated as Series A Preferred Stock

and 3,385,000 shares of preferred stock remain undesignated.

June 8, 2021, the Company filed the 2021 Shelf.

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

As of September

30, 2023, the Company has $ 58.6 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

the nine months ended September 30, 2023, the Company issued an aggregate of 74,372 shares of common stock related to the cashless exercise

Stock Transactions During the Nine Months Ended September 30, 2023

the nine months ended September 30, 2023, the Company issued an aggregate of 339,875 shares of common stock for service, including vested

restricted stock units.

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

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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 nine months ended September 30, 2023, the Company sold 180,021 shares of common stock under the ATM Sales Agreement and net proceeds

received were $ 900 thousand.

the nine months ended September 30, 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.

21-cv-10599, matters.

The shares issued were valued based on the closing price of the Company’s stock, or $ 5.32 , on the

date of settlement, July 10, 2023.

July 10, 2023, and August 14, 2023, PA001 Holdings, LLC, the holder of the Company’s Series B Preferred Stock, elected to convert

2,275 and 1,225 shares, respectively, of the Company’s Series B Preferred Stock, at a price of $ 3.25 per share of Series B Preferred

Stock, pursuant to the terms of the Securities Purchase Agreement dated August 28, 2020.

The conversion was calculated based on the original

issuance price of the Series B Preferred Stock plus all accrued dividends to date.

The conversion resulted in 1,010,170 and 550,694 shares

of the Company’s common stock issued to PA001 Holdings, on July 12, 2023 and August 15, 2023, respectively.

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 $ 842 thousand and $ 46 thousand for the three months ended June 30, 2023

income attributed to the non-controlling interest amounted to $ 839 thousand and $ 84 thousand for the three months ended September 30,

2023 and 2022, respectively.

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

During both the three months ended September 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 $ 2.2 million and $ 155 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.

nine months ended September 30, 2023 and 2022, respectively.

During both the nine months ended September 30, 2023 and 2022, the Company

paid distributions to non-controlling shareholders of $ 108 thousand.

Software Restructuring Transaction

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of $ 1.00 per membership interest unit.

The Fitzpatrick Options vest in accordance with the following (i) 3,434 membership interests upon

WSS achieving $ 2.5 million of gross sales in any fiscal quarter (ii) 3,434 membership interests upon WSS achieving $ 4.0 million of gross

sales in any fiscal quarter, and (iii) 3,434 membership interests upon WSS achieving $ 8.0 million of gross sales with a ten percent (10%)

net profit margin in any fiscal quarter .

The Fitzpatrick Options vest in accordance with the following milestones (i) 3,434 membership

interests upon WSS achieving $ 2.5 million of gross sales in any fiscal quarter (ii) 3,434 membership interests upon WSS achieving $ 4.0

million of gross sales in any fiscal quarter, and (iii) 3,434 membership interests upon WSS achieving $ 8.0 million of gross sales with

a ten percent (10%) net profit margin in any fiscal quarter.

Pathak Option Agreement grants Varun Pathak the option to purchase 2,100 membership interest units of WSS for an exercise price of $ 1.00

per membership interest unit.

The Pathak Options vest in accordance with the following (i) 700 membership interests upon WSS achieving

$ 2.5 million of gross sales in any fiscal quarter (ii) 700 membership interests upon WSS achieving $ 4.0 million of gross sales in any

fiscal quarter, and (iii) 700 membership interests upon WSS achieving $ 8.0 million of gross sales with a ten percent (10%) net profit

margin in any fiscal quarter .

The Pathak Options vest in accordance with the following milestones (i) 700 membership interests upon WSS

achieving $ 2.5 million of gross sales in any fiscal quarter (ii) 700 membership interests upon WSS achieving $ 4.0 million of gross sales

in any fiscal quarter, and (iii) 700 membership interests upon WSS achieving $ 8.0 million of gross sales with a ten percent (10%) net

profit margin in any fiscal quarter.

September 30, 2022, Sean Fitzpatrick and Varun Pathak exercised their options to purchase 10,300 and 2,100 membership interest units,

11 unchanged sentences

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

On 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 .

On July 31, 2023, WorkSimpli declared a cash dividend in the amount of $ 11.20 per membership interest unit to all unit holders

of record as of July 28, 2023 and was paid on August 1, 2023 .

On August 31, 2023, WorkSimpli declared a cash dividend in the amount of

$ 16.80 per membership interest unit to all unit holders of record as of August 30, 2023 and was paid on September 1, 2023 .

30, 2023, WorkSimpli declared a cash dividend in the amount of $ 14.00 per membership interest unit to all unit holders of record as of

September 30, 2023 and was paid on October 5, 2023 .

The total dividends declared to noncontrolling interest holders was $ 1.0 million and

$ 1.5 million for the three and nine months ended September 30, 2023, respectively, and is included in the Company’s results of operations

for the three and nine months ended September 30, 2023.

Company pays cumulative dividends 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.

2 unchanged sentences

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.

during the nine months ended September 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, (2) quarterly dividend declared on June 27, 2023 to holders of record as of July

7, 2023 and was paid on July 17, 2023 and (3) quarterly dividend declared on September 26, 2023 to holders of record as of October 6,

2023 and was paid on October 16, 2023.

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

months ended September 30, 2023.

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

12 unchanged sentences

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

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

September 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 782,830 shares as of June 30, 2023.

under the 2020 Plan, as amended, was 441,611 shares as of September 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:

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

of Non-Qualified Option Agreement (Employee Awards);

of Restricted Stock Award Agreement.

Form of Non-Qualified Option Agreement (Non-Employee

Director Awards)

Form of Non-Qualified Option Agreement (Employee Awards);

Form of Restricted Stock Award Agreement.

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

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

the nine months ended September 30, 2023, the Company issued an aggregate of 234,500 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 nine months ended September 30, 2023:

OF OPTION ACTIVITY

Exercise Price

Balance, December 31, 2022

$ 2.30 – 21.02

Cancelled/Forfeited/Expired

at June 30, 2023

( 1,006,698 )

Balance at September 30, 2023

Exercisable at December 31, 2022

Exercisable at June 30, 2023

$ 2.30 – 21.02

Exercisable at September 30, 2023

total fair value of the options granted was $ 265 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 % – 133.67 % and risk-free rate of 0.82 % –

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

Total compensation expense under the 2020 Plan options above was $ 1.2 million and $ 1.4 million for the three months ended September

30, 2023 and 2022, respectively, with unamortized expense remaining of $ 2.1 million as of September 30, 2023.

Total compensation expense

under the 2020 Plan options above was $ 3.5 million and $ 4.9 million for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, aggregate intrinsic value of vested service-based options outstanding was $ 550 thousand.

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

months ended September 30, 2023:

OF OPTION ACTIVITY

Exercise Price

Balance, December 31, 2022

at June 30, 2023

$ 1.00 – 19.61

Cancelled/Forfeited/Expired

Balance at September 30, 2023

$ 1.00 – 19.61

Exercisable December 31, 2022

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

dividend yield of 0 %, expected term of 6.5 years, volatility of 187.76 % – 195.58 % and risk-free rate of 1.21 % –

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

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

$ 1.00 – 19.61

Exercisable at September 30, 2023

total fair value of the options granted was $ 142

thousand, which was determined by the Black-Scholes

Pricing Model with the following assumptions:

dividend yield of 0 %,

expected term of 6.5

years, volatility of 187.76 %

and risk-free rate of 1.21 %

Total compensation expense under the above service-based option plan was $ 367

thousand and $ 493

thousand for the three months ended September

30, 2023 and 2022, respectively, with unamortized expense remaining of $ 525

thousand as of September 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

December 31, 2022

at June 30, 2023

expense under the above service-based option plan was $ 1.5

million and $ 1.6

million for the nine months ended September 30,

2023 and 2022, respectively.

Of the total service-based options exercised during the nine months ended September 30, 2023, 120,000

options were exercised on a cashless basis, which

resulted in 74,372

shares issued.

As of September 30, 2023, aggregate

intrinsic value of vested service-based options outstanding was $ 3.3

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

OF OPTION ACTIVITY

Exercise Price

Balance at December 31, 2022

$ 1.25 – 2.50

Cancelled/Forfeited/Expired

Balance at September 30, 2023

$ 1.25 – 2.50

Exercisable December 31, 2022

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 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:

$ 1.50 – 2.50

Exercisable at September 30, 2023

compensation expense was recognized on the performance-based options above for the three and nine months ended September 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 and $ 317 thousand for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2023, aggregate

intrinsic value of vested performance options outstanding was $ 2.0 million.

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

OF RESTRICTED STOCK UNIT ACTIVITY

RSU Outstanding

Number of Shares

1 unchanged sentence

Cancelled/Forfeited

at June 30, 2023

Balance at September 30, 2023

total fair value of the 3,082,750 RSUs and RSAs granted was $ 10.5 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:

Total compensation expense under the 2020 Plan RSUs and RSAs above was $ 1.6 million and $ 703 thousand for

the three months ended September 30, 2023 and 2022, respectively, with unamortized expense remaining of $ 5.7 million as of September

Total compensation expense under the 2020 Plan RSUs and RSAs above was $ 3.1 million and $ 2.3 million for the nine months ended

September 30, 2023 and 2022, respectively.

During the nine months ended September 30, 2023, 474,625 RSUs and RSAs vested, of which 139,875

RSUs and RSAs were issued.

During the nine months ended September 30, 2023, 655,000 RSUs and 809,000 service-based stock options were

cancelled and replaced with 1,830,750 RSAs for four executives and two employees.

Incremental compensation cost resulting from the modifications

was immaterial to the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023.

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

OF RESTRICTED STOCK UNIT ACTIVITY

RSU Outstanding

Number of Shares

Balance at December 31, 2022

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

Cancelled/Forfeited

Balance at September 30, 2023

total fair value of the 725,000 RSUs and RSAs granted was $ 2.0 million 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 $ 139 thousand and $ 225 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:

for the three months ended September 30, 2023 and 2022, respectively, with unamortized expense remaining of $ 1.3 million as of September

Total compensation expense for RSUs and RSAs outside of the 2020 Plan was $ 728 thousand and $ 1.2 million for the nine months

ended September 30, 2023 and 2022, respectively.

During the nine months ended September 30, 2023, 327,500 RSUs and RSAs vested, of which

200,000 RSUs and RSAs were issued.

During the nine months ended September 30, 2023, 300,000 RSUs were cancelled and replaced with 300,000

RSAs for one executive.

Incremental compensation cost resulting from the modification was immaterial to the unaudited condensed consolidated

financial statements for the three and nine months ended September 30, 2023.

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

OF WARRANT OUTSTANDING AND EXERCISABLE

December 31, 2022

at June 30, 2023

Exercise Price

Balance at December 31, 2022

$ 1.40 – 12.00

Balance at September 30, 2023

$ 1.24 – 12.00

Exercisable December 31, 2022

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

dividend yield of 0 %, expected term of 4 years, volatility of 122.6 % and risk-free rate of 3.73 %.

$ 1.40 – 12.00

Exercisable September 30, 2023

$ 1.24 – 12.00

total fair value of the warrants granted during the nine months ended September 30, 2023, was $ 895 thousand, which was determined by

the Black-Scholes Pricing Model with the following assumptions:

dividend yield of 0 %, expected term of 4 years, volatility of 122.6 %

and risk-free rate of 3.73 %.

No stock-based compensation expense on the warrants granted during the nine months ended September 30, 2023

was recorded as the warrants are amortized through debt discount (see Note 7).

compensation expense for warrants granted prior to the nine months ended September 30, 2023 was $ 0 and $ 407 thousand for the three months

ended September 30, 2023 and 2022, respectively, with no unamortized expense remaining as of September 30, 2023.

Total compensation expense

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

for warrants granted prior to the nine months ended September 30, 2023 was $ 18 thousand and $ 1.6 million for the nine months ended September

30, 2023 and 2022, respectively.

As of September 30, 2023, aggregate intrinsic value of vested warrants outstanding was $ 10.2 million.

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 $ 3.3 million

for both the three months ended September 30, 2023 and 2022.

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

$ 8.8 million

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 $ 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, RSUs and RSAs was $ 15.0 million

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

and $ 11.9 million

for the nine months ended September 30, 2023 and 2022, respectively.

Such amounts are included in general and administrative

expenses in the unaudited condensed consolidated statement of operations.

Unamortized expense remaining related to service-based

stock options, performance-based stock options, warrants, RSUs and RSAs was $ 9.6 million

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

Company leases office space domestically under operating leases.

4 unchanged sentences

in Columbia, Pennsylvania for which the lease expires in 2024.

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 June 30, 2023:

WorkSimpli leases two office spaces in Puerto Rico for which the leases

expire in 2024.

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

OF OPERATING RIGHT OF USE OF ASSETS

Operating right-of-use

Operating lease liabilities

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

Operating right-of-use assets

Operating lease liabilities - current

Operating lease liabilities - noncurrent

accumulated amortization of the Company’s operating right-of-use assets was $ 1.9 million as of September 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 June 30, 2023:

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

OF MATURITY OF OPERATING LEASE LIABILITIES

3 unchanged sentences

imputed interest

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.

Present value of operating lease liabilities

lease expenses were $ 214 thousand and $ 200 thousand for the three months ended September 30, 2023 and 2022, respectively, and $ 643 thousand

and $ 603 thousand for the nine months ended September 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

September 30,

Cash paid for operating lease liabilities

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

Weighted average

remaining lease term in years

September 30, 2023

December 31, 2022

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 June 30, 2023 and December

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

As of September 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 June 30, 2023 .

were earned or owed as of September 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 June 30, 2023, the Company approximates its

implicit purchase commitments to be $ 168 thousand.

As of September 30, 2023, the Company approximates

its implicit purchase commitments to be $ 596 thousand.

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

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

As of September 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.

81 unchanged sentences

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

The shares issued were valued based

on the closing price of the Company’s stock, or $5.32, on the date of settlement, July 10, 2023.

The costs of this settlement are

58 unchanged sentences

11 – RELATED PARTY TRANSACTIONS

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

the nine months ended September 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 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 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.

As of both September 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 Financial.

the nine months ended September 30, 2023 and 2022, WorkSimpli utilized CloudBoson Technologies Pvt.

(“CloudBoson”),

formerly LegalSubmit Pvt.

Ltd., a company owned by WorkSimpli’s Chief Software Engineer, to provide software development services.

WorkSimpli paid CloudBoson a total of $ 611 thousand and $ 403 thousand during the three months ended September 30, 2023 and 2022, respectively,

and $ 1.8 million and $ 1.1 million during the nine months ended September 30, 2023 and 2022, respectively, for these services.

owed CloudBoson $ 208 thousand as of September 30, 2023.

There were no amounts owed to CloudBoson as of 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 and six months

ended June 30, 2023 and 2022 is as follows:

SCHEDULE OF RELEVANT SEGMENT DATA

Months Ended June 30,

Relevant segment data for the three and nine months

ended September 30, 2023 and 2022 is as follows:

OF RELEVANT SEGMENT DATA

Three Months Ended September 30,

Nine Months Ended September 30,

Operating loss

$ ( 7,716,355 )

2 unchanged sentences

$ ( 34,181,305 )

Operating income

$ 107,687,158

Operating loss

$ ( 4,569,381 )

1 unchanged sentence

$ ( 12,317,737 )

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

$ ( 33,076,840 )

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

September 30, 2023

December 31, 2022

13 – SUBSEQUENT EVENTS

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

Company has evaluated subsequent events through the date these unaudited condensed consolidated financial statements were issued and

has identified the following:

Issued for Service

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

related to vested RSUs and RSAs.

October 2023, the Company issued 326,875 shares of common stock related to vested RSUs and RSAs with a total fair value of $ 1.1 million.

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.

October and November 2023, the Company sold 829,886 shares of common stock under

the ATM Sales Agreement

and net proceeds received were $ 5.3

Issued for Noncontingent Consideration Payment

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.

October 17, 2023, the Company issued 117,583 shares of common stock related to the fourth 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