What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-05-08 compared with 2023-11-08 · 398 added, 692 removed, 145 unchanged (88% of the section changed)

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

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

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

United States (“U.S.

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

We believe that

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

estimates, judgments and assumptions are made.

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

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

during the periods presented.

Our condensed consolidated financial statements would be affected to the extent there are material differences

between these estimates and actual results.

The following discussion should be read in conjunction with our financial statements and

notes thereto appearing elsewhere in this report.

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

the time that these estimates, judgments and assumptions are made.

These estimates, judgments and assumptions can affect the reported

amounts of assets and liabilities as of the date of the unaudited condensed consolidated financial statements as well as the reported

amounts of revenues and expenses during the periods presented.

Our unaudited condensed consolidated financial statements would be affected

to the extent there are material differences between these estimates and actual results.

The following discussion should be read in conjunction

with our financial statements and notes thereto appearing elsewhere in this report.

factors include, by way of example and without limitation:

changes in the market acceptance

of our products;

increased levels of competition;

changes in political, economic,

or regulatory conditions generally and in the markets in which we operate;

our ability to successfully

commercialize our products on a large enough scale to generate profitable operations;

our ability to maintain

and develop relationships with customers and suppliers;

our ability to respond

to new technological developments quickly and effectively;

our ability to protect

our trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent others

from infringing on our proprietary rights;

our ability to successfully

integrate acquired businesses or new brands;

the impact of competitive

products and pricing;

supply constraints or difficulties;

general economic and business

conditions, including inflation, slower growth or recession;

business interruptions

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

current and potential material

weaknesses in our internal control over financial reporting;

our ability to continue

as a going concern;

our need to raise additional

funds in the future;

our ability to successfully

recruit and retain qualified personnel;

our ability to successfully

implement our business plan;

our ability to successfully

acquire, develop or commercialize new products and equipment;

being able to scale our

telehealth platform built to improve the experience and medical care provided to patients across the country;

intellectual property claims

brought by third parties;

the impact of any industry

in the market acceptance of our products;

impact of competitive products and pricing;

ability to successfully commercialize our products on a large enough scale to generate profitable operations;

ability to maintain and develop relationships with customers and suppliers;

ability to respond to new technological developments quickly and effectively, including applications and risks of artificial intelligence

ability to prevent, detect and remediate cybersecurity incidents;

ability to protect our trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others

and prevent others from infringing on our proprietary rights;

ability to successfully acquire, develop or commercialize new products and equipment;

ability to collaborate successfully with other businesses and to integrate acquired businesses or new brands;

chain constraints or difficulties;

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

need to raise additional funds in the future;

ability to successfully recruit and retain qualified personnel;

impact of industry regulation, including regulation of privacy and digital healthcare;

economic and business conditions, including inflation, slower growth or recession;

in the political or regulatory conditions in the markets in which we operate;

interruptions resulting from geo-political actions, including war, and terrorism or disease outbreaks.

we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels

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differ materially from our assumptions.

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

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

United States (“U.S.

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

We believe that

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

estimates, judgments and assumptions are made.

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

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

during the periods presented.

Our condensed consolidated financial statements would be affected to the extent there are material differences

between these estimates and actual results.

The following discussion should be read in conjunction with our financial statements and

notes thereto appearing elsewhere in this report.

These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the unaudited

condensed consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented.

unaudited condensed consolidated financial statements would be affected to the extent there are material differences between these estimates

and actual results.

The following discussion should be read in conjunction with our financial statements and notes thereto appearing

elsewhere in this report.

used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms “Company,” “we,” “us,”

28 unchanged sentences

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

are a direct-to-patient telehealth company providing patients a high-quality, cost-effective, and convenient way of accessing comprehensive,

virtual healthcare.

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

are a direct-to-patient telehealth company providing a high-quality, cost-effective, and convenient way to access comprehensive, virtual

and in-home healthcare.

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

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

medical care.

LifeMD is positioned to elevate the healthcare experience through telehealth with our proprietary technology platform,

affiliated provider network, broad treatment capabilities, and unique ability to nurture patient relationships.

LifeMD telehealth platform seamlessly integrates a clinician-centric electronic medical record (“EMR”) system, proprietary

algorithms for case-load balancing and scheduling, customer relationship management (“CRM”) functionality, remote and in-home

lab testing, and digital prescription capabilities, patient-provider audio/video interfacing, cloud pharmacy fulfillment, and more.

proprietary technology platform, combined with our 50-state affiliated provider network, enables the management of virtual treatment

offerings and complex patient journeys for hundreds of conditions spanning men’s and women’s health, dermatology, urgent,

and primary care, chronic care management and more.

Our telehealth offerings in general seek to connect patients to licensed providers

for diagnoses, virtual care, and prescription medications when appropriate.

We also offer over-the-counter (“OTC”) products

that are complementary to the conditions we treat.

LifeMD is improving the delivery of healthcare experience through telehealth with our proprietary technology platform,

affiliated and dedicated provider network, broad and expanding treatment capabilities, and unique ability to nurture patient relationships.

LifeMD telehealth platform integrates best-in-class capabilities including a 50-state medical group, a nationwide pharmacy network, nationwide

laboratory and diagnostic testing capabilities, a fully integrated electronic medical records (“EMR”) system and an internal

patient care and service call center.

These capabilities are integrated by an industry-leading, proprietary telehealth technology that

supports a broad range of primary care, chronic disease and lifestyle healthcare needs.

Currently, LifeMD treats over 235,000 active

patient subscribers across a range of their medical needs including primary care, men’s sexual health, weight management, sleep,

hair loss and hormonal therapy by providing telehealth clinical services and prescription and over-the-counter (“OTC”) treatments,

as medically appropriate.

Our virtual primary care services are primarily offered on a subscription basis.

Since inception, we have helped

approximately 918,000 customers and patients by providing them greater access to high-quality, convenient, and affordable care.

mission is to empower people to live healthier lives by increasing access to high-quality and affordable virtual and in-home healthcare.

We believe our success has and will continue to be attributable to an amazing patient experience, retaining the highest-quality providers

in the industry, and our end-to-end technology platform.

We plan to build a diverse portfolio of differentiated telehealth service offerings

that meet the needs of a growing and diversified patient base.

inception, we have helped approximately 803,000 customers and patients, providing them greater access to high-quality, convenient, and

affordable care in all 50 states.

Total revenue from recurring subscriptions is approximately 93%.

In addition to our telehealth business,

we own 73.32% of WorkSimpli, which operates PDFSimpli, a rapidly growing software as a service platform for converting, signing, editing,

and sharing PDF documents.

This business has seen 65% year-over-year revenue growth, with recurring revenue of 100%, due to a combination

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

of the ResumeBuild brand in the first quarter of 2022.

We believe our success has been, and will continue to be, attributable to an amazing patient experience, made possible by attracting

and retaining the highest-quality providers in the country, and our proprietary end-to-end technology platform.

As we continue to pursue

long-term growth, we plan to continue to introduce new telehealth product and service offerings that complement our already expansive

treatment areas.

During April 2023, we launched a highly successful and differentiated GLP-1 Weight Management offering driven by our

existing primary care capabilities that already had more than 42,000 patient subscribers as of March 31, 2024.

Patients receive a range

of weight loss services including prescriptions for GLP-1 medications, as medically appropriate, lab work services, general primary care

and holistic healthcare and coaching.

The GLP-1 medically supported weight loss market is rapidly growing and is projected to increase

from over $13 billion to over $100 billion by 2030, according to J.P.

Morgan Research.

telehealth revenue increased 53% for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

revenue from recurring subscriptions is approximately 97%.

In addition to our telehealth business, we own 73.32% of WorkSimpli, which

operates PDFSimpli, a rapidly growing software as a service platform for converting, signing, editing, and sharing PDF documents.

business experienced 3% year-over-year revenue growth, with recurring revenue of 100%, due to a combination of higher demand, increased

market awareness, enhanced digital capabilities, continued marketing campaign expansion and the addition of the ResumeBuild brand in

the first quarter of 2022.

Platform and Business Strategy

are a patient-centric telehealth company dedicated to delivering seamless end-to-end virtual healthcare to consumers.

Our mission is

facilitated by our robust technology platform that is purpose-built to seamlessly connect the touchpoints involved in delivering complex

care, including scheduling for a national provider network, EMR capabilities, secure synchronous and asynchronous communication, digital

prescriptions, cloud pharmacy, and more.

Our platform enables us to deliver modern personalized health experiences and offerings through

our websites and mobile applications, spanning customer discovery, purchase, and connection with licensed providers, to pharmacy and

OTC order fulfillment, through ongoing care.

We believe that our seamless approach significantly reduces the complication, cost and time

burden of healthcare, incentivizing consumers to stick with our brands.

proprietary platform also facilitates and accelerates the development and launch of novel offerings throughout clinical protocol establishment,

marketing, and fulfillment.

Our offerings are sold to consumers on a subscription basis thus creating convenience and discounted pricing

opportunities for patients and recurring revenue streams for the Company.

Our offerings range from prescription medication fulfilled

on a recurring basis, to complementary OTC products, to ongoing care from a team of medical providers.

In general, our offerings seek

to serve a patient from beginning to end, starting from brand or offering discovery to the medical intake and product selection process,

after which a licensed U.S.

physician conducts a virtual consultation and determines a treatment plan.

are a patient-centric telehealth company dedicated to delivering seamless end-to-end virtual healthcare directly to consumers and through

select enterprise (“B2B”) partnerships.

Our mission is facilitated by our robust technology platform that is purpose-built

to seamlessly connect the various touchpoints involved in delivering complex care, including scheduling for a national provider network,

EMR capabilities, secure synchronous and asynchronous communication, digital prescriptions, cloud pharmacy and more.

Our platform enables

us to deliver modern personalized health experiences and offerings through our websites and mobile applications, spanning customer discovery,

purchase and connection with licensed providers, to pharmacy and OTC order fulfillment, through ongoing care.

We believe that our seamless

approach significantly reduces the complication, cost and time burden of healthcare, incentivizing consumers to stick with our brands.

offerings are sold to consumers on a subscription basis thus creating a relationship-driven patient experience to bolster retention rates

and recurring revenue.

Our offerings range from prescription medication and OTC products fulfilled on a recurring basis, to primary care

and weight management clinical services and ongoing care from a team of dedicated medical providers.

In general, our offerings seek to

serve a patient throughout the lifecycle of both their general and chronic healthcare needs.

As appropriate, prescription medications

and OTC products are filled by pharmacy fulfillment partners, and if preferred, shipped directly to the patient.

The number of patients

and customers we serve across the nation continues to increase at a robust pace, with approximately 803,000 individuals having purchased

our products and services to date.

as a robust CRM system, and with built in analytics and integrations with best-in-class performance marketing platforms, our platform

also enhances our ability to effectively and efficiently acquire new patients and customers and drive brand visibility through strategic

media placements, influencer partnerships, and direct response advertising methods across highly scalable marketing channels ( i.e .,

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

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

The number of patients and customers

we serve across the nation continues to increase at a robust pace, with approximately 918,000 individuals having purchased our products

and services to date.

platform also includes a robust customer relationship management (“CRM”) system, and performance marketing platform that

enables us to acquire and retain new patients and customers at scale by driving brand visibility through strategic media placements,

influencer partnerships, and direct response advertising methods across highly visible marketing channels ( i.e ., national TV,

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

leverage our telehealth technology platform and services across the three core areas described below:

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This offering provides

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

LifeMD’s virtual primary care offering is a mobile-first full-service destination that provides seamless access to high-quality

clinical care including virtual consultations and treatment, prescription medications, diagnostics, and imaging, wellness coaching and

This offering is also supported by robust partnerships that provide our patients benefits such as substantial discounts on lab

work and a prescription discount card that can be presented at over 60,000 pharmacies to save up to 92% on their prescription medication.

patients with 24/7 access to an affiliated high-quality provider for their primary care, urgent care, and chronic care needs.

virtual primary care offering is a mobile-first full-service destination that provides seamless access to high-quality clinical care

including virtual consultations and treatment, prescription medications, diagnostics and imaging, wellness coaching and more.

This offering

is also supported by robust partnerships that provide our patients benefits such as substantial discounts on lab work and a prescription

discount card that can be presented at over 60,000 pharmacies to save up to 92% on their prescription medication.

April 2023, we launched our rapidly growing GLP-1 Weight Management program providing primary care, weight loss, holistic healthcare,

lab work and prescription services, as appropriate, to patients seeking to access a medically supported weight loss solution.

Since inception,

our Weight Management program has grown exponentially to over 42,000 patient subscribers as of March 31, 2024.

We remain at the forefront

of the rapidly growing GLP-1 weight loss market, which is expected to exceed $100 billion by 2030, with our highly differentiated and

comprehensive offering.

Direct-to-Patient

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destinations in their respective treatment verticals of men’s health, hair loss, dermatology, and immunology.

RexMD is a men’s

telehealth platform brand that offers access to virtual medical treatment for a variety of men’s health needs.

After treatment

from an affiliated licensed physician, if appropriate, one of our partner pharmacies will dispense and ship prescription medications

and OTC products directly to the customer.

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

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

a leading men’s telehealth platform across the U.S.

and has served more than 474,000 customers and patients since inception

with a 4.6-star Trustpilot rating.

ShapiroMD offers

access to virtual medical treatment, prescription medications, patented doctor formulated OTC products, topical compounded medications,

and Food and Drug Administration (“FDA”) approved medical devices treating male and female hair loss through our telehealth

ShapiroMD has emerged as a leading destination for hair loss treatment across the U.S.

and has served more than 265,000

customers and patients since inception with a 4.9-star Trustpilot rating.

NavaMD is a female-oriented,

tele-dermatology brand that offers access to virtual medical treatment from dermatologists and other providers, and, if appropriate,

prescription oral and compounded topical medications to treat dermatological conditions such as aging and acne.

In addition to the

brand’s telehealth offerings, NavaMD’s proprietary products leverage intellectual property and proprietary formulations

licensed from Restorsea, a leading medical grade skincare technology platform.

Cleared is a telehealth

brand that provides personalized treatments for allergy, asthma, and immunology.

Offerings include in-home tests for both environmental

and food allergies, prescriptions for allergies and asthma, and FDA-approved immunotherapies for treating chronic allergies.

leverages a network of affiliated medical professionals and providers in all 50 states, various pharmaceutical partners, and treatments

and tests that cost up to 50 percent less than the brand-name competition.

is a men’s telehealth platform brand that offers access to virtual medical treatment for a variety of men’s health

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

prescription medications and OTC products directly to the customer.

Since RexMD’s initial launch in the erectile dysfunction

treatment market, it has expanded into additional indications including but not limited to, premature ejaculation, hormone therapy

and hair loss.

RexMD has served approximately 522,000 customers and patients since inception with a 4.6-star Trustpilot rating.

offers access to virtual medical treatment, prescription medications, patented doctor formulated OTC products, topical compounded

medications and Food and Drug Administration (“FDA”) approved medical devices treating male and female hair loss through

our telehealth platform.

ShapiroMD has emerged as a leading destination for hair loss treatment across the United States (“U.S.”)

and has served approximately 265,000 customers and patients since inception with a 4.9-star Trustpilot rating.

is a female-oriented, tele-dermatology brand that offers access to virtual medical treatment from dermatologists and other providers,

and, if appropriate, prescription oral and compounded topical medications to treat dermatological conditions such as aging and acne.

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

formulations licensed from Restorsea, a leading medical-grade skincare technology platform.

is a telehealth brand that provides personalized treatments for allergy, asthma and immunology.

Offerings include in-home tests

for both environmental and food allergies, prescriptions for allergies and asthma and FDA-approved immunotherapies for treating chronic

Cleared leverages a 50-state network of affiliated medical professionals and providers, various pharmaceutical partners

and treatments and tests that cost up to 50% less than the brand-name competition.

The offerings include free consultations, prescription

medication, complementary OTC products and ongoing care from U.S.-licensed allergists and nurses.

Telehealth Offerings

Telehealth Partnerships

Organizations

commercializing healthcare products face a challenging commercial landscape.

Increased competition, shrinking market sizes and challenges

reaching patients via the traditional brick and mortar doctor are forcing pharmaceutical, medical device and diagnostic companies to

rethink their commercial strategies and focus more on digital patient awareness and engagement initiatives.

Spending on digital solutions

to facilitate greater access to their end markets accounts for one-third of their collective $30 billion commercial spend in the U.S.

We believe LifeMD’s unique telehealth technology platform and virtual clinical expertise is well-positioned to address the unmet

needs of healthcare product companies as they relate to digital patient awareness, access to care, adherence and compliance.

selling healthcare products face a challenging commercial landscape.

Increased competition, shrinking market sizes and challenges reaching

patients via the traditional brick-and-mortar physician offices are forcing pharmaceutical, medical device and diagnostic companies to

rethink their commercial strategies and increase their focus on digital patient awareness and engagement initiatives.

It is estimated

that spending on digital solutions to facilitate greater access to end markets accounts for one-third of the collective $30 billion commercial

spend by these companies in the U.S.

We believe LifeMD’s unique telehealth technology platform and virtual care expertise is well-positioned

to address the unmet needs of healthcare product companies as they relate to digital patient awareness, access to care, adherence and

To date, LifeMD has executed the following enterprise commercial agreements providing access to our industry leading telehealth

platform capabilities.

September 2023, LifeMD executed a partnership agreement with ASCEND Therapeutics, LLC (“ASCEND”), a subsidiary of Besins

Healthcare, and a specialty pharmaceutical company concentrating on women’s health, to provide integrated telehealth services

to improve access to EstroGel®.

Under the terms of the agreement, LifeMD receives fees related to certain corporate services

provided to ASCEND while having our telehealth services featured on the www.estrogel.com website.

December 11, 2023, the Company entered into a collaboration with Medifast, Inc.

through and with certain of its wholly-owned subsidiaries

(“Medifast”).

Medifast will utilize the Company’s virtual care technology platform to provide its clients access

to a clinically supported weight management program, including GLP-1 medications, which are a class of medications that mainly help

manage blood sugar (glucose) levels in people with Type 2 diabetes but can also treat obesity.

Pursuant to certain agreements between

the parties, Medifast has agreed to pay to the Company the amount of $10 million to support the collaboration, funding enhancements

to the Company platform, operations and supporting infrastructure, of which $5 million was paid at the closing on December 12, 2023,

$2.5 million was paid during the three months ended March 31, 2024, and the remainder $2.5 million is to be paid by June 30, 2024

(or earlier upon the Company’s achievement of certain program milestones) (the “Medifast Collaboration”).

addition, in connection with the Medifast Collaboration, the Company entered into a stock purchase agreement and registration rights

agreement with Medifast’s wholly-owned subsidiary, Jason Pharmaceuticals, Inc., whereby the Company issued 1,224,425 shares

of its common stock in a private placement (the “Medifast Private Placement”) at a purchase price of $8.1671 per share,

for aggregate proceeds of approximately $10 million.

The Company granted Jason Pharmaceuticals the right, for a period contemporaneous

with the ongoing collaboration, to appoint one non-voting observer to the Board of Directors of the Company, entitled to attend Board

Owned Subsidiary:

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

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

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

In addition to WorkSimpli’s growth business model, this

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

On January 22, 2021, the Company

consummated a transaction and increased its ownership of WorkSimpli to 85.58%.

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

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%.

Developments During the Three Months Ended September 30, 2023

to Cleared Stock Purchase Agreement

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

the Company and the sellers of Cleared.

The First Amendment was amended to, among other things:

(i) reduce the total purchase price by

$250 thousand to a total of $3.67 million;

(ii) change the timing of the payment of the purchase price to $460 thousand paid at closing

(which has already been paid by the Company), with the remaining amount to be paid in five quarterly installments beginning on or before

February 6, 2023 and ending January 15, 2024;

(iii) remove all “earn-out” payments payable by the Company to the sellers;

and (iv) removing certain representations and warranties of the Company and sellers in connection with the transaction.

On February 6,

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

of Cleared under the First Amendment.

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

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

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

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

Amendment to Avenue Credit Agreement

March 21, 2023, the Company entered into and closed on a loan and security agreement (the “Credit Agreement”), and a supplement

to the Credit Agreement (the “Supplement”), with Avenue Venture Opportunities Fund II, L.P.

and Avenue Venture Opportunities

(collectively, “Avenue”).

On September 26, 2023, the Company entered into the First Amendment to the Credit Agreement

(the “Avenue First Amendment”) whereby the Company received an additional $5 million in committed term loans.

received gross and net proceeds of $5.0 million on September 26, 2023.

Credit Agreement provides for a convertible senior secured credit facility of up to an aggregate amount of $40 million, comprised of

the following:

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

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

to as the “Avenue Facility”.

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 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.

As of the date of filing, there is $20 million outstanding

under the Avenue Facility and the Company is in compliance with the Avenue Facility terms.

B Preferred Stock Conversion

July 10, 2023 and August 14, 2023, PA001 Holdings, LLC (“PA001 Holdings”), 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.

In connection with the Securities Purchase Agreement, the Company and PA001 Holdings entered into a Registration

Rights Agreement pursuant to which the Company agreed to register the shares of the Company’s common stock underlying the Series

B Preferred Stock in the following circumstances:

(i) demand registration rights, providing that PA001 Holdings may demand that the Company

file registration statements, at any time, and (ii) piggyback registration rights, providing that PA001 Holdings be given notice of any

proposed registration of securities by the Company, and requiring that the Company register all or any portion of the registrable securities

that PA001 Holdings requests to be registered, in each case, subject to the terms and conditions of the registration rights agreement.

is a leading provider of workplace and document services for consumers, gig workers and small businesses.

WorkSimpli operates the following

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

(2) ResumeBuild, a leading provider of digital resume and cover letter services, (3) SignSimpli, a digital signature platform and (4)

LegalSimpli, a provider of legal forms for consumers and small businesses.

We acquired WorkSimpli through the purchase of 51% of the

membership interests of WorkSimpli Software LLC, a Puerto Rico limited liability company, which operates a marketing-driven software

solutions business.

On January 22, 2021, LifeMD consummated a transaction and increased its ownership of WorkSimpli to 85.6%.

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 73.6%.

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 74.1%.

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 73.3%.

was ranked in the top 25,000 websites globally, with more than 56 million registrants.

Since its launch, WorkSimpli has converted or

edited over 276 terabytes of documents for customers from the legal, financial, real-estate and academic sectors.

WorkSimpli had over

166,000 active subscriptions as of March 31, 2024.

of Operations

of the Three Months Ended September 30, 2023 to the Three Months Ended September 30, 2022

financial results for the three months ended September 30, 2023 are summarized as follows in comparison to the three months ended September

September 30, 2023

September 30, 2022

financial results for the three months ended March 31, 2024 are summarized as follows in comparison to the three months ended March 31,

March 31, 2024

March 31, 2023

Telehealth revenue, net

7 unchanged sentences

Other operating expenses

Customer service expenses

Development costs

Change in fair value of contingent consideration

Total expenses

Operating loss

Interest expense, net

Net income attributable to non-controlling interest

Net loss attributable to LifeMD, Inc.

Preferred stock dividends

Net loss attributable to common shareholders

$ (6,898,998 )

$ (8,058,236 )

revenue, net.

Revenues for the three months ended September 30, 2023 were approximately $38.6 million, an increase of 23% compared to

approximately $31.4 million for the three months ended September 30, 2022.

The increase in revenues was attributable to an increase in

WorkSimpli revenue of 42% and an increase in telehealth revenue of 14%.

Telehealth revenue accounts for 63% of total revenue and has

increased during the three months ended September 30, 2023 due to an increase in online sales demand and a decrease in product refunds

WorkSimpli revenue accounts for 37% of total revenue and has steadily increased year over year due to a combination of higher

demand, increased market awareness, enhanced digital capabilities, continued marketing campaign expansion and the addition of the ResumeBuild

brand in the first quarter of 2022.

cost of revenue.

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

fulfillment costs, physician consult fees, and shipping costs directly attributable to our prescription and OTC products and (2) the

cost of WorkSimpli revenue consisting primarily of information technology fees related to providing the services made available on our

online platform.

Total cost of revenue increased by approximately 1% to approximately $4.8 million for the three months ended September

30, 2023 compared to approximately $4.7 million for the three months ended September 30, 2022.

The combined cost of revenue increase

was due to increased WorkSimpli costs during the three months ended September 30, 2023 when compared to the three months ended September

30, 2022, partially offset by decreased telehealth costs during the three months ended September 30, 2023 when compared to the three

months ended September 30, 2022.

Telehealth costs decreased to 18% of associated telehealth revenues experienced during the three months

ended September 30, 2023, from 21% of associated telehealth revenues during the three months ended September 30, 2022 primarily due to

improved pricing.

WorkSimpli costs were 2% of associated WorkSimpli revenues for both the three months ended September 30, 2023 and 2022.

Gross profit increased by approximately 27% to approximately $33.8 million for the three months ended September 30, 2023 compared

to approximately $26.7 million for the three months ended September 30, 2022, as a result of increased combined sales.

Gross profit as

a percentage of revenues was 88% for the three months ended September 30, 2023 as compared to 85% for the three months ended September

Gross profit as a percentage of revenues for telehealth was 82% for the three months ended September 30, 2023 compared to 79%

for the three months ended September 30, 2022, and for WorkSimpli was 98% for both the three months ended September 30, 2023 and 2022.

The increase in sales volume for telehealth and WorkSimpli and improved pricing for telehealth have contributed to the increase in gross

Operating expenses for the three months ended September 30, 2023 were approximately $38.4 million, as compared to approximately

$33.8 million for the three months ended September 30, 2022.

This represents an increase of 14%, or $4.6 million.

The increase is primarily

attributable to:

Selling and marketing expenses:

This mainly consists of online marketing and advertising expenses.

During the three months ended September 30, 2023, the Company

had an increase of approximately $2.6 million, or 15% in selling and marketing costs as a result of additional sales and marketing

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

General and administrative expenses:

This mainly consists of stock-based

compensation expense, merchant processing fees, payroll expenses for corporate employees, taxes and licenses, amortization expense and

legal and professional fees.

During the three months ended September 30, 2023, the Company had an increase of approximately $1.0 million

in general and administrative expenses, primarily related to an increase due to WorkSimpli dividends paid during the nine months ended

September 30, 2023.

Stock-based compensation was $3.3 million during both the three months ended September 30, 2023 and 2022, with the

majority related to stock compensation expense attributable to service-based stock options and restricted stock units.

Other operating expenses:

This consists of rent and lease expense, insurance, office supplies and software subscriptions, royalty expense and bank charges.

During the three months ended September 30, 2023, the Company had an increase of approximately $5 thousand, or 0.3%.

Customer service expenses

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

in South Carolina and Puerto Rico.

During the three months ended September 30, 2023, the Company had an increase of approximately

$618 thousand, or 42%, primarily related to increases in headcount in the Company’s customer service department.

Development costs:

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

During the three months ended

September 30, 2023, the Company had an increase of approximately $677 thousand, or 82%, primarily resulting from technology platform

improvements and amortization expense.

increases in operating expenses were partially offset by a decrease in the following:

Change in fair value of

contingent consideration:

During the three months ended September 30, 2022, the Company recorded

an increase of $248 thousand to the Cleared contingent consideration as a result of the remeasurement of the fair value.

expense, net.

Interest expense, net consists of interest expense related to the Avenue Facility, notes payable and the Series B Preferred

Stock for the three months ended September 30, 2023 and interest accrued on the Series B Preferred Stock for the three months ended September

Interest expense increased by approximately $582 thousand during the three months ended September 30, 2023 as compared to the

three months ended September 30, 2022.

of the Nine Months Ended September 30, 2023 to the Nine Months Ended September 30, 2022

financial results for the nine months ended September 30, 2023 are summarized as follows in comparison to the nine months ended September

September 30, 2023

September 30, 2022

Telehealth revenue, net

WorkSimpli revenue, net

Total revenue, net

Cost of telehealth revenue

Cost of WorkSimpli revenue

Total cost of revenue

Selling and marketing expenses

General and administrative expenses

Other operating expenses

Customer service expenses

Development costs

Goodwill impairment charge

Change in fair value of contingent consideration

Total expenses

Operating loss

(12,317,737 )

(33,076,840 )

Interest expense, net

(Loss) gain on debt extinguishment

(14,616,836 )

(33,445,845 )

Loss on debt extinguishment

Net income attributable to non-controlling interest

Net loss attributable to LifeMD, Inc.

(16,863,891 )

(33,600,309 )

Preferred stock dividends

3 unchanged sentences

revenue, net.

Revenues for the nine months ended September 30, 2023 were approximately $107.7 million, an increase of 18% compared to

approximately $90.9 million for the nine months ended September 30, 2022.

The increase in revenues was attributable to an increase in

WorkSimpli revenue of 65% and an increase in telehealth revenue of 1%.

Telehealth revenue accounts for 62% of total revenue and has increased

during the nine months ended September 30, 2023 due to a decrease in product refunds partially offset by a decrease in online sales demand.

WorkSimpli revenue accounts for 38% of total revenue and has steadily increased year over year due to a combination of higher demand,

increased market awareness, enhanced digital capabilities, continued marketing campaign expansion and the addition of the ResumeBuild

brand in the first quarter of 2022.

Revenues for the three months ended March 31, 2024 were approximately $44.1 million, an increase of 33% compared to approximately

$33.1 million for the three months ended March 31, 2023.

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

revenue of 53% and an increase in WorkSimpli revenue of 3%.

Telehealth revenue accounts for 70% of total revenue and has increased during

the three months ended March 31, 2024 due to an increase in online sales demand primarily for LifeMD primary care which experienced an

increase of approximately $7.3 million during the three months ended March 31, 2024 compared to the three months ended March 31, 2023

and Medifast Collaboration revenue.

WorkSimpli revenue accounts for 30% of total revenue and has steadily increased year over year due

to a combination of higher demand, increased market awareness, enhanced digital capabilities, continued marketing campaign expansion

and the addition of the ResumeBuild brand in the first quarter of 2022.

cost of revenue.

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

fulfillment costs, physician consult fees, and shipping costs directly attributable to our prescription and OTC products and (2) the

cost of WorkSimpli revenue consisting primarily of information technology fees related to providing the services made available on our

online platform.

Total cost of revenue decreased by approximately 7% to approximately $13.5 million for the nine months ended September

30, 2023 compared to approximately $14.6 million for the nine months ended September 30, 2022.

The combined cost of revenue decrease

was due to improved pricing and a decrease in telehealth sales volume partially offset by an increase in WorkSimpli sales volume during

the nine months ended September 30, 2023 when compared to the nine months ended September 30, 2022.

Telehealth costs decreased to 19%

of associated telehealth revenues experienced during the nine months ended September 30, 2023, from 21% of associated telehealth revenues

during the nine months ended September 30, 2022 primarily due to lower sales volume and improved pricing.

WorkSimpli costs were 2% of

associated WorkSimpli revenues for the nine months ended September 30, 2023 and 2022.

Gross profit increased by approximately 23% to approximately $94.1 million for the nine months ended September 30, 2023 compared

to approximately $76.3 million for the nine months ended September 30, 2022, as a result of increased combined sales.

Gross profit as

a percentage of revenues was 87% for the nine months ended September 30, 2023 as compared to 84% for the nine months ended September

Gross profit as a percentage of revenues for telehealth was 81% for the nine months ended September 30, 2023 compared to 79%

for the nine months ended September 30, 2022, and for WorkSimpli was 98% for both the nine months ended September 30, 2023 and 2022.

The increase in sales volume for WorkSimpli and improved pricing for Telehealth have contributed to the increase in gross profit.

Operating expenses for the nine months ended September 30, 2023 were approximately $106.4 million, as compared to approximately

$109.4 million for the nine months ended September 30, 2022.

This represents a decrease of 3%, or $3.0 million.

The decrease is primarily

attributable to:

Selling and marketing expenses:

fulfillment costs, physician consult fees, and shipping costs directly attributable to our prescription and OTC products and (2) WorkSimpli

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

Total cost of revenue increased by approximately 9% to approximately $4.6 million for the three months ended March 31, 2024 compared

to approximately $4.2 million for the three months ended March 31, 2023.

The combined cost of revenue increase was due to increased sales

volume during the three months ended March 31, 2024 when compared to the three months ended March 31, 2023.

Telehealth costs decreased

to 14% of associated telehealth revenues experienced during the three months ended March 31, 2024, from 19% of associated telehealth

revenues during the three months ended March 31, 2023.

WorkSimpli costs increased to 3% of associated WorkSimpli revenues for the three

months ended March 31, 2024 as compared to 2% of associated WorkSimpli revenues for the three months ended March 31, 2023.

Gross profit increased by approximately 37% to approximately $39.5 million for the three months ended March 31, 2024 compared

to approximately $28.9 million for the three months ended March 31, 2023.

Gross profit as a percentage of revenues was approximately

90% for the three months ended March 31, 2024 as compared to approximately 87% for the three months ended March 31, 2023.

as a percentage of revenues for telehealth was 86% for the three months ended March 31, 2024 compared to 81% for the three months ended

March 31, 2023, and for WorkSimpli was 97% for the three months ended March 31, 2024 compared to 98% for the three months ended March

The increase in sales volume and demand for LifeMD primary care, Medifast Collaboration revenue, and improved pricing have

contributed to the increase in gross profit.

Operating expenses for the three months ended March 31, 2024 were approximately $45.7 million, as compared to approximately

$31.8 million for the three months ended March 31, 2023.

This represents an increase of 44%, or approximately $14.0 million.

is primarily attributable to:

and marketing expenses:

This mainly consists of online marketing and advertising expenses.

During the nine months ended September 30, 2023, the Company had

a decrease of approximately $4.9 million, or 8% in selling and marketing costs as a result of a Company-wide strategic reduction

in costs and alignment of sales and marketing initiatives to drive the Company’s recurring revenue subscription-based sales

General and administrative

During the nine months ended September 30, 2023, stock-based compensation was $8.8 million, with the majority related to

stock compensation expense attributable to service-based stock options and restricted stock units, as compared to stock-based compensation

expense of $11.9 million for the nine months ended September 30, 2022.

This category also consists of merchant processing fees, payroll

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

During the nine months

ended September 30, 2023, the Company had a decrease of approximately $1.6 million in general and administrative expenses, primarily

related to the decrease in stock-based compensation costs referenced above and a Company-wide strategic reduction in costs partially

offset by an increase due to WorkSimpli dividends paid during the nine months ended September 30, 2023.

Other operating expenses:

This consists of rent and lease expense, insurance, office supplies and software subscriptions, royalty expense and bank charges.

During the nine months ended September 30, 2023, the Company had a decrease of approximately $436 thousand, or 9%, primarily related

to decreases in office supplies and software subscriptions.

Goodwill impairment charge:

During the nine months ended September 30, 2022, the Company recorded a $2.7 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.

decreases in operating expenses were partially offset by increases in the following:

Customer service expenses:

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

in South Carolina and Puerto Rico.

During the nine months ended September 30, 2023, the Company had an increase of approximately

$2.1 million, or 63%, primarily related to increases in headcount in the Company’s customer service department.

Development costs:

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

During the nine months ended

September 30, 2023, the Company had an increase of approximately $2.1 million, or 108%, primarily resulting from technology platform

improvements and amortization expense.

Change in fair value of

contingent consideration:

During the nine months ended September 30, 2022, the Company recorded

a $2.5 million reduction to the Cleared contingent consideration as a result of the remeasurement of the fair value.

During the three months ended March 31,

2024, the Company had an increase of approximately $7.5 million, or 45% in selling and marketing costs resulting from additional

sales and marketing initiatives to drive the current period’s sales growth primarily for LifeMD primary care.

is expected to both increase and maintain sustained revenue growth in future years, based on the Company’s recurring revenue

subscription-based sales model.

and administrative expenses:

During the three months ended March 31, 2024, stock-based compensation was $2.5 million, with the majority

related to stock compensation expense attributable to service-based stock options and restricted stock units, as compared to stock-based

compensation expense of $2.7 million for the three months ended March 31, 2023.

This category also consists of merchant processing

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

the three months ended March 31, 2024, the Company had an increase of approximately $4.7 million in general and administrative expenses,

primarily related to increases in compensation costs of $1.9 million and legal and professional fees of $1.6 million.

operating expenses:

This consists of rent and lease expense, insurance, office supplies and software subscriptions, royalty expense

and bank charges.

During the three months ended March 31, 2024, the Company had an increase of approximately $596 thousand, or 35%,

primarily related to rent and lease expenses, office supplies and software subscriptions.

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

During the three

months ended March 31, 2024, the Company had an increase of approximately $904 thousand, or 76%, primarily resulting from technology

platform improvements and amortization expenses.

service expenses:

This consists of rent, insurance, payroll and benefit expenses related to the Company’s customer service

department located in South Carolina and Puerto Rico.

During the three months ended March 31, 2024, the Company had an increase of

approximately $293 thousand, or 19%, primarily related to increases in infrastructure costs and headcount in the Company’s

customer service department.

expense, net.

Interest expense, net consists of interest expense related to the Avenue Facility, notes payable and the Series B Preferred

Stock for the nine months ended September 30, 2023 and interest accrued on the Series B Preferred Stock for the nine months ended September

Interest expense increased by approximately $1.5 million during the nine months ended September 30, 2023 as compared to the

nine months ended September 30, 2022.

gain on debt extinguishment.

The Company recorded a $325 thousand loss on debt extinguishment related to the repayment of the CRG Financial

loan during the nine months ended September 30, 2023 due to a prepayment penalty and various fees associated with the CRG Financial loan.

The Company recorded a $63 thousand gain on debt forgiveness of Paycheck Protection Program (“PPP”) loans during the nine

months ended September 30, 2022.

September 30, 2023

Interest expense, net consists of interest expense related to the Avenue Facility and notes payable, partially offset by

interest income on the Company’s cash account balances for the three months ended March 31, 2024 and interest expense related to

the Avenue Facility, notes payable and interest accrued on the Company’s Series B Convertible Preferred Stock for the three months

ended March 31, 2023.

Interest expense increased by approximately $213 thousand during the three months ended March 31, 2024 as compared

to the three months ended March 31, 2023, primarily due to an increase in interest expensed on the Avenue Facility during the three months

ended March 31, 2024.

March 31, 2024

December 31, 2023

2 unchanged sentences

Working capital

$ (7,635,641 )

$ (20,062,794 )

capital increased by approximately $12.4 million during the nine months ended September 30, 2023.

capital decreased by approximately $8.1 million during the three months ended March 31, 2024.

The increase in current assets is primarily

attributable to an increase in cash of approximately $11.3 million as a result of the Avenue Facility, an increase in accounts receivable

of $1.6 million and an increase in other current assets of $617 thousand.

Current liabilities increased by $1.1 million, which was primarily

attributable to an increase in accounts payable and accrued expenses of $2.9 million and an increase in deferred revenue of $692 thousand,

partially offset by a decrease in notes payable of $2.4 million.

attributable to an increase in cash of approximately $2 million.

Current liabilities increased by approximately $9.9 million, which was

primarily attributable to an increase in deferred revenue of $4.4 million, an increase in current portion of long-term debt of $4.0 million,

and in accounts payable and accrued expenses of $1.9 million as a result of the Company extending payables and credit terms with vendors.

and Capital Resources

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash provided by (used in) operating activities

1 unchanged sentence

Net cash used in investing activities

(12,134,718 )

Net cash provided by (used in) financing activities

Net increase (decrease) in cash

(35,491,216 )

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

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

Rising interest rates and inflation may increase the cost of capital and make it more difficult for us to access capital markets.

cash provided by operating activities increased by $24.1 million to $3.1 million for the nine months ended September 30, 2023, as compared

with net cash used in operating activities of approximately $21.0 million for the nine months ended September 30, 2022.

in net cash provided by operating activities was primarily related to the decrease in the Company’s net loss of $18.8 million to

$14.6 million for the nine months ended September 30, 2023, as compared with $33.4 million for the nine months ended September 30, 2022.

Other significant factors contributing to net cash provided by operating activities during the nine months ended September 30, 2023,

include $8.8 million in non-cash stock-based compensation charges, $5.4 million in non-cash depreciation and amortization, a net increase

in accounts payable, accrued expenses and other operating activities of $4.6 million, a $325 thousand loss on debt extinguishment and

an increase in deferred revenue of $692 thousand.

Net cash used in operating activities for the nine months ended September 30, 2022,

was driven primarily by the net loss of approximately $33.4 million (inclusive of $11.9 million in non-cash, stock-based compensation

charges), an increase in inventory of $2.1 million due to timing of purchases, an increase in accounts receivable of $1.6 million and

reduction in accrued expenses of $2.3 million excluding the $1.6 million accrual for the first noncontingent milestone payment related

to the Cleared acquisition due on the first anniversary of the acquisition.

These decreases were partially offset by an increase in accounts

payable of $1.8 million as a result of the Company extending payables and credit terms with vendors.

cash used in investing activities for the nine months ended September 30, 2023 was approximately $6.5 million, as compared with approximately

$12.1 million for the nine months ended September 30, 2022.

Net cash used in investing activities for the nine months ended September

30, 2023, was due to cash paid for capitalized software costs of approximately $6.3 million, cash paid for the purchase of intangible

assets of approximately $149 thousand and cash paid for the purchase of equipment of approximately $94 thousand.

Net cash used in investing

activities for the nine months ended September 30, 2022, was due to cash paid for capitalized software costs of approximately $6.7 million,

cash paid for the purchase of the ResumeBuild brand of approximately $4.0 million, cash paid for the Cleared acquisition of approximately

$1.0 million and cash paid for the purchase of equipment of $379 thousand.

cash provided by financing activities for the nine months ended September 30, 2023 was approximately $14.7 million as compared with net

cash used in financing activities of approximately $2.4 million for the nine months ended September 30, 2022.

During the nine months

ended September 30, 2023, net cash provided by financing activities consisted of:

(1) $19.5 million in net proceeds received from the

Avenue Facility, (2) $2.3 million in proceeds received from notes payable and (3) $900 thousand in net proceeds received for the sale

of common stock under the ATM Sales Agreement (as defined below).

These factors contributing to net cash provided by financing activities

were partially offset by repayments of notes payable of approximately $5.0 million net of a $325 thousand loss on debt extinguishment

on the CRG Financial loan, preferred stock dividends of approximately $2.3 million, net payments made related to adjustments in the membership

interest units of WorkSimpli of approximately $306 thousand, contingent consideration payments made related to the ResumeBuild brand

acquisition of approximately $188 thousand and distributions to non-controlling interest of $108 thousand.

Net cash used in financing

activities for the nine months ended September 30, 2022, consisted of preferred stock dividends of $2.3 million, distributions to non-controlling

interest of $108 thousand and contingent consideration payments made related to the ResumeBuild acquisition of $94 thousand, partially

offset by proceeds from the exercise of options and warrants of $129 thousand and proceeds received from the sale of a portion of the

Company’s membership interest in WorkSimpli of $12 thousand.

Net cash (used in) provided by financing activities

Net increase in cash

cash provided by operating activities was approximately $5.2 million for the three months ended March 31, 2024, as compared with approximately

$2.6 million net cash used in operating activities for the three months ended March 31, 2023.

The significant factors contributing to

the net cash provided by operations during the three months ended March 31, 2024, include:

(1) an increase in deferred revenue of $4.4

million, (2) an increase in accounts payable and accrued expenses of $2.6 million, (3) $2.5 million in non-cash stock-based compensation

charges and (4) $2.2 million in non-cash depreciation and amortization, partially offset by the Company’s net loss of $6.6 million

for the three months ended March 31, 2024.

Net cash used in operating activities for the three months ended March 31, 2023, was driven

primarily by the net loss of approximately $3.4 million inclusive of the following:

(1) $2.7 million in non-cash stock-based compensation

charges, (2) $1.5 million in non-cash depreciation and amortization and (3) a $325 thousand loss on debt extinguishment.

Additionally,

a decrease in accounts payable and other operating activities of $3.8 million contributed to net cash used in operations for the three

months ended March 31, 2023.

These factors contributing to net cash used in operations were partially offset by an increase in deferred

revenue of $348 thousand and an increase in inventory of $321 thousand due to the timing of purchases.

cash used in investing activities for the three months ended March 31, 2024 was approximately $2.2 million, as compared with approximately

$1.8 million for the three months ended March 31, 2023.

Net cash used in investing activities for the three months ended March 31, 2024,

was due to cash paid for capitalized software costs of approximately $2.0 million, and cash paid for the purchase of equipment of approximately

$176 thousand.

Net cash used in investing activities for the three months ended March 31, 2023, was due to cash paid for capitalized

software costs of approximately $1.8 million and cash paid for the purchase of equipment of approximately $32 thousand.

cash used in financing activities for the three months ended March 31, 2024 was approximately $1.0 million as compared with approximately

$12.0 million in net cash provided by financing activities for the three months ended March 31, 2023.

Net cash used in financing activities

for the three months ended March 31, 2024, consisted of:

(1) preferred stock dividends of $777 thousand, (2) repayments of notes payable

of approximately $212 thousand, (3) distributions to non-controlling interest of $36 thousand, and (4) the final contingent consideration

payment made related to the ResumeBuild acquisition of approximately $31 thousand, partially offset by proceeds from the exercise of

options of approximately $8 thousand.

Net cash provided by financing activities for the three months ended March 31, 2023, consisted

(1) $14.5 million in net proceeds received from the Avenue Facility and (2) $2.0 million in proceeds received from the CRG Financial

These factors contributing to net cash provided by financing activities were partially offset by repayments of notes payable of

approximately $3.3 million net of a $325 thousand loss on debt extinguishment on the CRG Financial loan, preferred stock dividends of

approximately $777 thousand, payments made to redeem 500 WorkSimpli membership interest units of approximately $307 thousand, contingent

consideration payments made related to the ResumeBuild brand acquisition of approximately $63 thousand and distributions to non-controlling

interest of $36 thousand.

and Capital Resources Outlook

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, issuance of common and

preferred stock and through loans and advances from officers and directors.

Our primary short-term and long-term requirements for liquidity

and capital are for customer acquisitions, funding business acquisitions and investments we may make from time to time, working capital

including our noncancelable operating lease obligations, noncontingent consideration, capital expenditures and general corporate purposes.

The Company has a current cash balance of approximately $12.9 million as of the filing date.

date, the Company has been funding operations primarily through the sales of its products, issuance of common and preferred stock, and

through loans and advances.

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

the issuance of additional shares of common stock.

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

customer acquisitions, funding business acquisitions and investments we may make from time to time, working capital including our noncancelable

operating lease obligations, noncontingent consideration, capital expenditures and general corporate purposes.

For more information on

our operating lease obligations, see Note 9—Leases to our unaudited condensed consolidated financial statements included in this

There can be no assurances that we will be successful in increasing revenues and improving operational efficiencies.

December 11, 2023, the Company entered into a collaboration with Medifast.

Pursuant to certain agreements between the parties, Medifast

has agreed to pay to the Company the amount of $10 million to support the collaboration, funding enhancements to the Company platform,

operations and supporting infrastructure, of which $5 million was paid at the closing on December 12, 2023, $2.5 million was paid during

the three months ended March 31, 2024, and the remainder $2.5 million is to be paid by June 30, 2024 (or earlier upon the Company’s

achievement of certain program milestones).

addition, in connection with the Medifast Collaboration, on December 11, 2023, the Company entered into a stock purchase agreement with

Medifast’s wholly-owned subsidiary, Jason Pharmaceuticals, Inc., whereby the Company issued 1,224,425 shares of its common stock

in the Medifast Private Placement, at a purchase price of $8.1671 per share, for aggregate proceeds of approximately $10 million.

March 21, 2023, the Company entered into and closed on a Credit Agreement, and a supplement to the Credit Agreement with Avenue.

12 unchanged sentences

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

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.

The loan facility includes interest of 12%.

The Company repaid the $2 million outstanding loan balance

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

a prepayment penalty and various fees associated with the CRG Financial loan.

As of both September 30, 2023 and December 31, 2022, the

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

the nine months ended September 30, 2023, the Company received proceeds of $348 thousand under a 10-month financing agreement with Arthur

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.

October 2022, the Company received proceeds of $976 thousand under a 12-month working capital loan with Amazon.

The terms of the loan

include interest in the amount of $62 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

November 2022, the Company received proceeds of $1.9 million under two 10-month working capital loans with Balanced Management.

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

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.

November 15, 2023, Avenue converted $1 million of the principal amount of the outstanding term loans into shares of the Company’s

common stock.

This resulted in 672,042 shares of common stock issued to Avenue.

Additionally on November 15, 2023, Avenue exercised 96,773

of the Avenue Warrants on a cashless basis resulting in 79,330 shares of the Company’s common stock issued.

June 8, 2021, the Company filed a shelf registration statement on Form S-3 under the Securities Act, which was declared effective 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”)

Riley Securities, Inc.

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,

and Cantor Fitzgerald & Co.

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,

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

As a result, the Company is no longer subject to

the baby shelf limitations.

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

September 30, 2023, the Company has $58.6 million available under the ATM Sales Agreement.

October and November 2023, the Company sold 82 9,8 86 shares of common stock under the

ATM Sales Agreement and net proceeds received were $5.3 million.

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

in achieving to date.

However, there can be no assurances that we will continue to 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.

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 having an aggregate offering price

of up to $60 million, 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.

As of March 31, 2024,

the Company had $53.3 million available under the ATM Sales Agreement and $32.0 million available under the 2021 Shelf.

The Company expects

to file a new shelf registration statement in 2024 (the “2024 Shelf”).

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

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.

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

curtailing expenses, however, these strategies do not mitigate the substantial doubt about the Company’s ability to continue as

a going concern.

Management believes that the overall market value of the telehealth industry is positive and that it will continue to

drive interest in the Company.

Accounting Policies and Estimates

significant accounting policies are more fully described in the notes to our unaudited condensed consolidated financial statements.

believe that the accounting policies below are critical for one to fully understand and evaluate our financial condition and results

of operations.

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

customers using a five-step analysis:

Identify the contract

Identify performance obligations

Determine the transaction 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

is the delivery of the product;

this performance obligation is transferred at a discrete point in time.

The Company generally records

sales of finished products once the customer places and pays for the order, with the product being simultaneously shipped by a third-party

fulfillment service provider.

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

rebates, and other adjustments for its product shipments and are reflected as contra revenues in arriving at reported net revenues.

Company’s discounts and customer rebates are known at the time of sale;

correspondingly, the Company reduces gross product sales

for such discounts and customer rebates.

The Company estimates customer returns and allowances based on information derived from historical

transaction detail and accounts for such provisions, as contra revenue, during the same period in which the related revenues are earned.

The Company has determined that the population of its product-based contracts with customers are homogenous, supporting the ability to

record estimates for returns and allowances to be applied to the entire product-based portfolio population.

Customer discounts, returns

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

to its subscribers, principally on a monthly subscription basis.

The software suite allows the subscriber/user to convert almost any

type of document to another electronic form of editable document, providing ease of editing.

For these subscription-based contracts with

customers, the Company offers an initial 14-day trial period which is billed at $1.95, followed by a monthly subscription, or a yearly

subscription to the Company’s software suite dependent on the subscriber’s enrollment selection.

The Company has estimated

that there is one product and one performance obligation that is delivered over time, as the Company allows the subscriber to access

the suite of services for the time period of the subscription purchased.

The Company allows the customer to cancel at any point during

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

original subscription.

The Company records the revenue over the 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 $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.

of September 30, 2023 and December 31, 2022, the Company has accrued contract liabilities, as deferred revenue, of approximately $6.2

million and $5.5 million, respectively, which represent the following:

(1) obligations for products which the customer has not yet obtained

control due to delivery not commensurate upon shipment of the product, (2) obligations on WorkSimpli in-process monthly or yearly contracts

with customers and (3) a portion attributable to the yet to be recognized WorkSimpli initial 14-day trial period collections.

Software Costs

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

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

The Company does not sell

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

Certain development costs not meeting the criteria

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

As of 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.

in capitalized software costs of $2.5 million or 28%, is primarily attributable to costs incurred related to development efforts of our

LifeMD PC platform.

and Intangible Assets

represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination.

Goodwill is not amortized but is tested for impairment annually or more frequently, if events or changes in circumstances indicate that

the asset may be impaired.

Goodwill in the amount of $8.0 million was recognized in conjunction with the Cleared acquisition.

recorded an $8.0 million goodwill impairment charge and an $827 thousand intangible asset impairment charge during the year ended December

31, 2022 related to a decline in the estimated fair value of Cleared as a result of a decline in the Cleared financial projections (see

intangible assets are comprised of:

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

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

During the year ended December 31, 2022, the Company

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

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

Other intangible assets are amortized over

their estimated lives using the straight-line method.

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

capitalized and amortized over the useful life of the asset.

of Long-Lived Assets

assets include equipment and capitalized software.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances

indicate that the carrying amount of an asset may not be recoverable.

If such assets are considered to be impaired, an impairment is

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

Adopted Accounting Standards

June 2016, the Financial Accounting Standards Board

(“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, Financial

Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments , which requires an entity to utilize

the current expected credit loss (“CECL”) impairment model to estimate its lifetime “expected credit loss” and

record an allowance that is deducted from the amortized cost basis of the financial assets and certain other instruments, including but

not limited to available-for-sale debt securities.

Credit losses relating to available-for-sale debt securities are recorded through

an allowance for credit losses.

ASU 2016-13 requires a cumulative effect adjustment to the balance sheet as of the beginning of the first

reporting period in which the guidance is effective.

In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit

Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842):

Effective Dates , which defers the effective date

of ASU 2016-13 to fiscal years beginning after December 15, 2022 for all entities except SEC reporting companies that are not smaller

reporting companies.

The Company adopted ASU 2016-13 as of January 1, 2023.

The adoption did not have a material impact on the

Company’s financial statements.

October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805);

Accounting for Contract Assets and Contract Liabilities

from Contracts with Customers .

This new guidance affects all entities that enter into a business combination within the scope of

Under this new guidance, the acquirer should determine what contract assets and/or liabilities it would have recorded under

ASC 606, Revenue from Contracts with Customers , as of the acquisition date, as if the acquirer had entered into the original contract

at the same date and on the same terms as the acquirer.

Under current U.S.

GAAP, contract assets and contract liabilities acquired in

a business combination are recorded by the acquirer at fair value.

The Company adopted ASU 2021-08 as of January 1, 2023.

did not have a material impact on the Company’s financial statements.

Positive indicators that lead to the Company’s expectation that it will have sufficient cash over the next 12 months following

the date of this report include:

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

efficiencies across the business, (2) the expected improvement in its cash burn rate over the next 12 months and positive operating cash

flows during the quarter ended March 31, 2024, (3) cash on hand of $35.1 million as of March 31, 2024, (4) $53.3 million available under

the ATM Sales Agreement and $32.0 million available under the 2021 Shelf, with the expectation of continued availability under the 2024

Shelf, (5) management’s ability to curtail expenses, if necessary, and (6) the overall market value of the telehealth industry,

which it believes will continue to drive interest in the Company already evidenced by the Medifast Collaboration and Medifast Private

Placement noted above.

Accounting Estimates

prepare our unaudited condensed consolidated financial statements in accordance with U.S.

generally accepted accounting principles, which

require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets

and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods.

the extent that there are material differences between these estimates and actual results, our financial condition or results of operations

would be affected.

We base our estimates on our own historical experience and other assumptions that we believe are reasonable after

taking into account our circumstances and expectations for the future based on available information.

We evaluate these estimates on

an ongoing basis.

consider an accounting estimate to be critical if:

(i) the accounting estimate requires us to make assumptions about matters that were

highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from

period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact

on our financial condition or results of operations.

There are items within our financial statements that require estimation but are

not deemed critical, as defined above.

significant accounting policies are more fully described in Note 2—Basis of Presentation and Summary of Significant Accounting

Policies to our unaudited condensed consolidated financial statements included in this report.

We believe that these accounting policies

are critical for one to fully understand and evaluate our financial condition and results of operations.

Accounting Pronouncements

November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) .

The amendments in this update improve reportable segment

disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 will become effective

for the Company’s annual period beginning on January 1, 2024 and interim periods within beginning after January 1, 2025.

does not expect the application of ASU 2023-07 to have a material impact to its consolidated financial statements and related disclosures.

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , to improve its income

tax disclosure requirements.

Under ASU 2023-09, entities must annually:

(1) disclose specific categories in the rate reconciliation and

(2) provide additional information for reconciling items that meet a quantitative threshold.

ASU 2023-09 will become effective for the

Company beginning on January 1, 2025.

The Company does not expect the application of ASU 2023-09 to have a material impact to its consolidated

financial statements and related disclosures.

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

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

Quantitative and Qualitative Disclosures about Market Risk

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Item 2. Management’s Discussion and Analysis