What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-08 · 501 added, 486 removed, 791 unchanged (56% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

March 31, 2024

December 31, 2023

receivable, net

current assets

Accounts receivable, net

Product deposit

Inventory, net

Other current assets

Total Current Assets

Current Assets

of use assets

software, net

Non-current Assets

Equipment, net

Right of use assets

Capitalized software, net

Intangible assets, net

Total Non-current Assets

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT)

MEZZANINE EQUITY AND STOCKHOLDERS’ (DEFICIT) EQUITY

operating lease liabilities

portion of long-term debt

Current Liabilities

Accounts payable

Accrued expenses

Notes payable, net

Current operating lease liabilities

Current portion of long-term debt

Deferred revenue

Total Current Liabilities

Long-term Liabilities

Long-term debt, net

Noncurrent operating lease liabilities

Contingent consideration

Total Liabilities

Commitments and contingencies (Note 10)

Mezzanine Equity

Preferred Stock, $ 0.0001 par value;

operating lease liabilities

consideration

and contingencies (Note 10)

Stock, $ 0.0001 par value;

5,000,000 shares authorized

Series B Convertible Preferred Stock, $ 0.0001 par value;

authorized, zero shares issued and outstanding, liquidation value, $ 0 per share as of March 31, 2024 and December 31, 2023

Stockholders’ Equity (Deficit)

Series A Preferred Stock, $ 0.0001 par value;

1,610,000 shares authorized, 1,400,000 shares issued and outstanding, liquidation value approximately, $ 25.55 per share as of March 31, 2024 and December 31, 2023

Common Stock, $ 0.01 par value;

100,000,000 shares authorized, 40,731,676 and 38,358,641 shares issued, 40,628,636 and 38,255,601 outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

Accumulated deficit

authorized, zero shares issued and outstanding, liquidation value, $ 0 per share as of June 30, 2024 and December 31, 2023

Stockholders’

(Deficit) Equity

A Preferred Stock, $ 0.0001 par value;

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

$ 25.55 per share as of June 30, 2024 and December 31, 2023

Stock, $ 0.01 par value;

100,000,000 shares authorized, 41,759,572 and 38,358,641 shares issued, 41,656,532 and 38,255,601 outstanding

as of June 30, 2024 and December 31, 2023, respectively

paid-in capital

( 229,462,356 )

( 214,265,236 )

Treasury stock, 103,040 , at cost, as of March 31, 2024 and December 31, 2023

Total LifeMD, Inc.

stock, 103,040 , at cost, as of June 30, 2024 and December 31, 2023

Stockholders’ (Deficit) Equity

Non-controlling interest

Total Stockholders’ Equity

Total Liabilities, Mezzanine Equity and Stockholders’ Equity (Deficit)

( 4,206,329 )

Non-controlling

Stockholders’ (Deficit) Equity

( 2,059,504 )

Liabilities, Mezzanine Equity and Stockholders’ (Deficit) Equity

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

Consolidated STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Telehealth revenue, net

WorkSimpli revenue, net

Total revenues, net

Months Ended June 30,

revenues, net

of telehealth revenue

of WorkSimpli revenue

cost of revenues

Cost of telehealth revenue

Cost of WorkSimpli revenue

Total cost of revenues

Selling and marketing expenses

General and administrative expenses

Other operating expenses

Development costs

Customer service expenses

Total expenses

Operating loss

( 6,171,245 )

( 2,852,810 )

Interest expense, net

Loss on debt extinguishment

( 6,648,923 )

( 3,442,473 )

Net income attributable to non-controlling interest

Net loss attributable to LifeMD, Inc.

( 6,768,355 )

( 4,008,456 )

Preferred stock dividends

Net loss attributable to LifeMD, Inc.

common stockholders

and marketing expenses

and administrative expenses

service expenses

operating expenses

( 6,305,566 )

( 4,895,546 )

Basic loss per share attributable to LifeMD, Inc.

common stockholders

Diluted loss per share attributable to LifeMD, Inc.

common stockholders

Weighted average number of common shares outstanding:

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

Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ EQUITY (Deficit)

Series A Preferred

Additional Paid-in

Balance, January 1, 2023

( 12,476,811 )

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( 1,260,135 )

on debt extinguishment

( 6,837,034 )

( 5,891,216 )

Stock compensation expense

Stock issued for noncontingent consideration payment

Warrants issued with convertible debt instrument

Series A Preferred Stock Dividend

Distribution to non-controlling interest

Adjustment of membership interest in WorkSimpli

Net (loss) income

( 13,485,957 )

( 9,333,689 )

income attributable to non-controlling interest

loss attributable to LifeMD, Inc.

( 6,875,640 )

Balance, March 31, 2023

( 6,733,000 )

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( 10,741,456 )

stock dividends

( 1,553,125 )

Series A Preferred

Additional Paid-in

Balance, January 1, 2024

loss attributable to LifeMD, Inc.

common stockholders

$ ( 7,652,202 )

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$ ( 12,294,581 )

loss per share attributable to LifeMD, Inc.

common stockholders

loss per share attributable to LifeMD, Inc.

common stockholders

average number of common shares outstanding:

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

Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY

January 1, 2023

( 190,562,994

compensation expense

issued for noncontingent consideration payment

issued for debt instruments

A Preferred Stock Dividend

to non-controlling interest

of membership interest in WorkSimpli

(loss) income

March 31, 2023

( 195,348,013

Stock compensation expense

Stock issued for noncontingent consideration payment

compensation expense

issued for noncontingent consideration payment

exercise of stock options

Cashless exercise of warrants

Cashless exercise of options

Series A Preferred Stock Dividend

Distribution to non-controlling interest

Net (loss) income

( 6,768,355 )

( 6,648,923 )

Balance, March 31, 2024

$ 220,721,095

A Preferred Stock Dividend

to non-controlling interest

of membership interest in WorkSimpli

(loss) income

June 30, 2023

( 202,857,575

( 16,021,557 )

January 1, 2024

( 214,265,236

compensation expense

issued for noncontingent consideration payment

of stock options

exercise of warrants

exercise of options

A Preferred Stock Dividend

to non-controlling interest

(loss) income

March 31, 2024

( 221,810,154

compensation expense

of stock options

exercise of stock options

exercise of warrants

A Preferred Stock Dividend

to non-controlling interest

(loss) income

June 30, 2024

( 229,462,356

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Consolidated STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

Months Ended June 30,

FLOWS FROM OPERATING ACTIVITIES

$ ( 13,485,957 )

$ ( 9,333,689 )

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

Amortization of debt discount

Amortization of capitalized software

Amortization of intangibles

Accretion of consideration payable

Depreciation of fixed assets

Loss on debt extinguishment

Operating lease payments

Stock compensation expense

Changes in Assets and Liabilities

Accounts receivable

Product deposit

Other current assets

Operating lease liabilities

Deferred revenue

Accounts payable

to reconcile net loss to net cash provided by operating activities:

of debt discount

of capitalized software

of intangibles

of consideration payable

of fixed assets

on debt extinguishment

lease payments

compensation expense

in Assets and Liabilities

current assets

lease liabilities

operating activity

cash provided by operating activities

FLOWS FROM INVESTING ACTIVITIES

paid for capitalized software costs

( 4,502,712 )

Accrued expenses

Other operating activity

Net cash provided by (used in) operating activities

( 3,899,852 )

CASH FLOWS FROM INVESTING ACTIVITIES

Cash paid for capitalized software costs

of intangible assets

cash used in investing activities

( 5,322,293 )

( 4,112,939 )

Purchase of equipment

Net cash used in investing activities

FLOWS FROM FINANCING ACTIVITIES

from long-term debt, net

from notes payable

of notes payable, net of prepayment penalty

( 4,386,915 )

proceeds from exercise of options

stock dividends

( 1,553,125 )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term debt, net

Proceeds from notes payable

Repayment of notes payable, net of prepayment penalty

( 1,553,125 )

Cash proceeds from exercise of options

Preferred stock dividends

Contingent consideration payments for ResumeBuild acquisition

Net payments for membership interest in WorkSimpli

Distributions to non-controlling interest

Net cash (used in) provided by financing activities

consideration payments for ResumeBuild acquisition

payments for membership interest in WorkSimpli

Distributions

to non-controlling interest

cash (used in) provided by financing activities

( 1,863,139 )

Net increase in cash

Cash at beginning of period

Cash at end of period

Cash paid for interest

Cash paid during the period for interest

Non-cash investing and financing activities

Cashless exercise of options

Cashless exercise of warrants

Stock issued for noncontingent consideration payment

Warrants issued for debt instruments

Right of use asset

Right of use lease liability

increase in cash

at beginning of period

at end of period

paid for interest

paid during the period for interest

investing and financing activities

exercise of options

exercise of warrants

issued for noncontingent consideration payment

issued for debt instruments

lease liabilities

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

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

As of March 31, 2024, WorkSimpli has paid the

As of June 30, 2024, WorkSimpli has paid the

Seller $ 500 thousand in accordance with the ResumeBuild APA.

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

As of March 31, 2024, there is

no remaining balance outstanding related to the promissory note.

As of June 30, 2024, there is no

remaining balance outstanding related to the promissory note.

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

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

of March 31, 2024, the Company has an accumulated deficit approximating $ 221.8 million and has experienced significant losses from its

of June 30, 2024, the Company has an accumulated deficit approximating $ 229.5 million and has experienced significant losses from its

Although the Company is showing significant positive revenue trends, the Company expects to incur further losses through

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subject to certain adjustments as provided by the Avenue Credit Agreement, of at least $2 million .

As of March 31, 2024, there was $ 19

As of June 30, 2024, there was $ 19

million outstanding under the Avenue Facility, and the Company was in compliance with the Avenue Facility covenants.

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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”).

the remainder $ 2.5 million was paid during the three months ended June 30, 2024 (the “Medifast Collaboration”).

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

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aggregate proceeds of approximately $ 10 million.

Additionally,

on 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”).

The Company expects to file a new shelf registration statement in 2024 (the “2024

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.

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

Riley Securities, Inc.

Fitzgerald & Co.

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.

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.

Company has a current cash balance of approximately $ 29.3

million as of the filing date.

The Company reviewed its forecasted

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

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

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 June 7, 2024, the Company filed a shelf registration statement on Form S-3 under

the Securities Act, which was declared effective on July 18, 2024 (the “2024 Shelf”).

Under the 2024 Shelf at the time of

effectiveness, the Company had the ability to raise up to $ 150.0 million by selling common stock, preferred stock, debt securities, warrants,

and units including $ 53.3 million of its common stock under the ATM Sales Agreement.

As of June 30, 2024, the Company had $ 53.3 million

available under the ATM Sales Agreement, which is part of the $ 150.0 million available under the 2024 Shelf.

Company has a current cash balance of approximately $ 29.1 million as of the filing date.

The Company reviewed its forecasted operating

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

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

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(1) the Company’s continued strengthening of its 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

million available under the 2021 Shelf, with

an expectation of continued availability under the 2024 Shelf, (5) management’s ability to curtail expenses, if necessary, and

the expected improvement in its cash burn rate over the next 12 months and positive operating cash flows during the six months ended

June 30, 2024, (3) cash on hand of $ 35.7 million as of June 30, 2024, (4) $ 53.3 million available under the ATM Sales Agreement, which

is part of the $ 150.0 million available 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 that will continue to drive interest in the Company as already

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The results of operations

for the three months ended March 31, 2024 are not necessarily indicative of the results for the year ending December 31, 2024 or for

any future period.

for the three and six months ended June 30, 2024 are not necessarily indicative of the results for the year ending December 31, 2024

or for any future period.

of Consolidation

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810, Consolidation .

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

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

During the year ended

December 31, 2021, the Company purchased an additional 34.6 % of WorkSimpli for a total equity interest of approximately 85.6 % as of December

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

unaudited condensed consolidated financial statements include the accounts of the Company, Cleared, its majority owned subsidiary, WorkSimpli,

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

year ended December 31, 2021, the Company purchased an additional 34.6 % of WorkSimpli for a total equity interest of approximately 85.6 %

as of December 31, 2021.

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

of WorkSimpli.

As a result, the Company’s ownership interest in WorkSimpli decreased to 73.6 %.

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 March 31, 2023, the Company

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

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 %.

the Company’s ownership interest in WorkSimpli decreased to 73.3 %.

See Note 8 for additional information.

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

As of March 31, 2024

As of June 30, 2024

and December 31, 2023, there were no cash equivalents.

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balances may exceed federally insured limits.

These balances could be impacted if one or more of

the financial institutions in which we deposit monies fails or is subject to other adverse conditions in the financial or credit markets.

We have never experienced any losses related to these balances.

These balances could be impacted if one or more of the financial institutions in which

we deposit monies fails or is subject to other adverse conditions in the financial or credit markets.

We have never experienced any losses

related to these balances.

Interest Entities

accordance with ASC 810, Consolidation , the Company determines whether any legal entity in which the Company becomes involved

is a variable interest entity (a “VIE”) and subject to consolidation.

This determination is based on whether an entity has

sufficient equity at risk to finance their activities without additional subordinated financial support from other parties or whose equity

investors lack any of the characteristics of a controlling financial interest and whether the interest will absorb portions of a VIE’s

expected losses or receive portions of its expected residual returns and are contractual, ownership, or pecuniary in nature and that

change with changes in the fair value of the entity’s net assets.

A reporting entity is the primary beneficiary of a VIE and must

consolidate it when that party has a variable interest, or combination of variable interests, that provides it with a controlling financial

accordance with ASC 810, Consolidation, the Company determines whether any legal entity in which the Company becomes involved is a variable

interest entity (a “VIE”) and subject to consolidation.

This determination is based on whether an entity has sufficient equity

at risk to finance their activities without additional subordinated financial support from other parties or whose equity investors lack

any of the characteristics of a controlling financial interest and whether the interest will absorb portions of a VIE’s expected

losses or receive portions of its expected residual returns and are contractual, ownership, or pecuniary in nature and that change with

changes in the fair value of the entity’s net assets.

A reporting entity is the primary beneficiary of a VIE and must consolidate

it when that party has a variable interest, or combination of variable interests, that provides it with a controlling financial interest.

A party is deemed to have a controlling financial interest if it meets both of the power and losses/benefits criteria.

power criterion is the ability to direct the activities of the VIE that most significantly impact its economic performance.

The losses/benefits

criterion is the obligation to absorb losses from, or right to receive benefits from, the VIE that could potentially be significant to

The power criterion

is the ability to direct the activities of the VIE that most significantly impact its economic performance.

The losses/benefits criterion

is the obligation to absorb losses from, or right to receive benefits from, the VIE that could potentially be significant to the VIE.

Company determined that the LifeMD PC entity, the Company’s affiliated network of medical Professional Corporations and medical

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As a result, the Company

presents the financial position, results of operations, and cash flows of LifeMD PC as part of the consolidated financial statements

of the Company.

presents the financial position, results of operations, and cash flows of LifeMD PC as part of the unaudited condensed consolidated financial

statements of the Company.

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

revenue for LifeMD PC was approximately $ 7.6 million and $ 358 thousand for the three months ended March 31, 2024 and 2023, respectively.

Total net income for LifeMD PC was approximately $ 5.2 million for the three months ended March 31, 2024 and net loss for LifeMD PC was

approximately $ 1.0 million for the three months ended March 31, 2023.

revenue for LifeMD PC was approximately $ 13.9 million and $ 436 thousand for the three months ended June 30, 2024 and 2023, respectively,

and $ 21.5 million and $ 794 thousand for the six months ended June 30, 2024 and 2023, respectively.

Total net loss for LifeMD PC was approximately

$ 10.2 million and $ 600 thousand for the three months ended June 30, 2024 and 2023, respectively, and $ 15.4 million and $ 1.6 million for

the six months ended June 30, 2024 and 2023, respectively.

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

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

Customer discounts, returns

and rebates on telehealth product revenues approximated $ 991 thousand and $ 331 thousand, respectively, during the three months ended

March 31, 2024 and 2023, respectively.

its LifeMD PC contracts with customers, the Company offers one-time and subscription-based access to the Company’s telehealth platform.

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monthly and yearly subscribers.

discounts, returns and rebates on telehealth revenues approximated $ 1.8 million and $ 497 thousand during the three months ended June

30, 2024 and 2023, respectively.

Customer discounts, returns and rebates on telehealth revenues approximated $ 2.8 million and $ 828 thousand

during the six months ended June 30, 2024 and 2023, respectively.

The increase in customer discounts, returns and rebates on telehealth

revenues is primarily due to the increase in sales volume.

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

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Customer discounts and allowances on WorkSimpli revenues approximated $ 676

thousand and $ 912 thousand, respectively, during the three months ended March 31, 2024 and 2023, respectively.

thousand and $ 788 thousand during the three months ended June 30, 2024 and 2023, respectively.

Customer discounts and allowances on WorkSimpli

revenues approximated $ 1.4 million and $ 1.7 million during the six months ended June 30, 2024 and 2023, respectively.

noted above, on December 11, 2023, the Company entered into the Medifast Collaboration.

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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 of $ 2.5 million is to be paid by June 30, 2024.

Company determined the transaction price totaled $ 10 million, of which $ 5 million was collected in December 2023 and $ 2.5 million was

collected during the three months ended March 31, 2024.

The Company has allocated the total $ 10 million initial transaction price to

three distinct performance obligations.

As the Company completed its first performance obligation related to this agreement, the $ 5 million

payment was fully recognized during the year ended December 31, 2023.

The Company recognized approximately $ 2 million related to the

second performance obligation during the three months ended March 31, 2024.

the three months ended March 31, 2024 and 2023, the Company had the following disaggregated revenue:

the three months ended March 31, 2024, and $ 2.5 million was paid during the three months ended June 30, 2024.

The Company determined

the transaction price totaled $ 10 million, which was fully collected as of June 30, 2024.

The Company has allocated the total $ 10 million

initial transaction price to three distinct performance obligations.

As the Company completed its first performance obligation related

to this agreement, the $ 5 million payment was fully recognized during the year ended December 31, 2023.

The Company recognized approximately

$ 2 million related to the second performance obligation during the three months ended March 31, 2024, and approximately $ 3 million related

to the second and third performance obligations during the three months ended June 30, 2024.

the three and six months ended June 30, 2024 and 2023, the Company had the following disaggregated revenue:

SCHEDULE OF DISAGGREGATED REVENUE

Three Months Ended March 31,

Telehealth product revenue

WorkSimpli revenue

Months Ended June 30,

Telehealth revenue

LifeMD PC subscription revenue

WorkSimpli revenue

Medifast collaboration revenue

Total revenues, net

Total net revenue

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

As of March 31, 2024 and December

As of June 30, 2024 and December

31, 2023, the Company has accrued contract liabilities, as deferred revenue, of approximately $ 15.2 million and $ 8.8 million, respectively,

which represent the following:

(1) $ 8.4 million and $ 4.2 million as of March 31, 2024 and December 31, 2023, respectively, related to

obligations on telehealth in-process monthly or yearly contracts with customers, (2) $ 2.3 million and $ 2.1 million as of March 31, 2024

(1) $ 11.0 million and $ 4.2 million as of June 30, 2024 and December 31, 2023, respectively, related to

obligations on telehealth in-process monthly or yearly contracts with customers, (2) $ 1.7 million and $ 2.1 million as of June 30, 2024

and December 31, 2023, respectively, related to obligations for telehealth products which the customer has not yet obtained control due

to non-shipment of the product and (3) $ 2.5 million and $ 2.5 million as of March 31, 2024 and December 31, 2023, respectively, related

to non-shipment of the product and (3) $ 2.5 million and $ 2.5 million as of June 30, 2024 and December 31, 2023, respectively, related

to obligations on WorkSimpli in-process monthly or yearly contracts with customers.

revenue increased by $ 4.4 million to $ 13.2 million as of March 31, 2024 compared to $ 8.8 million as of December 31, 2023.

revenue increased by $ 6.4 million to $ 15.2 million as of June 30, 2024 compared to $ 8.8 million as of December 31, 2023.

is primarily due to the increase in monthly and yearly subscription revenue related to LifeMD PC of approximately $ 20.7 million during

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

The amount of revenue recognized during the

three months ended March 31, 2024, that was included in the deferred revenue balance as of December 31, 2023, was $ 3.4 million.

the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

The amount of revenue recognized during the six months

ended June 30, 2024, that was included in the deferred revenue balance prior to June 30,2024, was $ 40.3 million.

Company expects to recognize all of the deferred revenue related to future performance obligations that are unsatisfied or partially

unsatisfied as of March 31, 2024 as revenue by March 31, 2025.

unsatisfied as of June 30, 2024 as revenue by June 30, 2025.

following table summarizes deferred revenue activities for the periods presented:

SCHEDULE OF CONTRACT WITH CUSTOMER LIABILITY

Three Months Ended March 31,

Months Ended June 30,

Beginning of period

Revenue recognized

( 48,490,126 )

( 33,987,762 )

( 88,709,454 )

( 64,845,113 )

End of period

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

As of March 31, 2024 and December

As of June 30, 2024 and December

31, 2023, the reserve for sales returns and allowances was approximately $ 772 thousand and $ 528 thousand, respectively.

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balance sheets.

of March 31, 2024 and December 31, 2023, inventory primarily consisted of finished goods, raw materials and packaging related to the

Company’s OTC products included in the telehealth revenue section of the table above.

Inventory is maintained at the Company’s

third-party warehouse location in Wyoming and at various Amazon fulfillment centers.

The Company also maintains inventory at a company

owned warehouse in Pennsylvania.

of June 30, 2024 and December 31, 2023, inventory primarily consisted of finished goods, raw materials and packaging related to the Company’s

OTC products included in the telehealth revenue section of the table above.

Inventory is maintained at the Company’s third-party

warehouse location in Wyoming and at various Amazon fulfillment centers.

The Company also maintains inventory at a company owned warehouse

in Pennsylvania.

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

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

As of both June

30, 2024 and December 31, 2023, the Company recorded an inventory reserve of approximately $ 341 thousand and $ 356 thousand, respectively.

of March 31, 2024 and December 31, 2023, the Company’s inventory consisted of the following:

of June 30, 2024 and December 31, 2023, the Company’s inventory consisted of the following:

SUMMARY OF INVENTORY

Raw materials and packaging components

Finished goods

Raw materials and packaging

Inventory reserve

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previously paid.

As of March 31, 2024 and December 31, 2023, the Company has approximately $ 289 thousand and $ 486 thousand, respectively,

As of June 30, 2024 and December 31, 2023, the Company has approximately $ 116 thousand and $ 486 thousand, respectively,

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

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of the product deposit.

As of March 31, 2024, the Company approximates its implicit purchase commitments to be $ 186 thousand, of which

As of June 30, 2024, the Company approximates its implicit purchase commitments to be $ 397 thousand, of which

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

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

As of March 31, 2024 and December

As of June 30, 2024 and December

31, 2023, the Company capitalized a net amount of $ 12.6 million and $ 11.8 million, respectively, related to internally developed software

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(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.

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.

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

Intangible assets are amortized over their estimated lives

using the straight-line method.

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

over the useful life of the asset.

of Long-Lived Assets

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

As of March 31,

2024 and December 31, 2023, the Company determined that no events or changes in circumstances existed that would indicate any impairment

of its long-lived assets.

As of June 30, 2024

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

its long-lived assets.

Company files corporate federal, state and local tax returns.

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

Under this guidance compensation cost generally is recognized

at fair value on the date of the grant and amortized over the respective vesting or service period.

The fair value of options at the

date of grant is estimated using the Black-Scholes option pricing model.

The expected option life is derived from assumed exercise rates

based upon historical exercise patterns and represents the period of time that options granted are expected to be outstanding.

Under this guidance compensation cost generally is recognized at fair

value on the date of the grant and amortized over the respective vesting or service period.

The fair value of options at the date of

grant is estimated using the Black-Scholes option pricing model.

The expected option life is derived from assumed exercise rates based

upon historical exercise patterns and represents the period of time that options granted are expected to be outstanding.

volatility is based upon historical volatility of the Company’s common shares using weekly price observations over an observation

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

In computing diluted EPS, basic EPS is adjusted for the

assumed issuance of all potentially dilutive securities.

The dilutive effect of call options, warrants and share-based payment awards

is calculated using the “treasury stock method,” which assumes that the “proceeds” from the exercise of these

instruments are used to purchase common shares at the average market price for the period.

The dilutive effect of traditional convertible

debt and preferred stock is calculated using the “if-converted method.” Under the if-converted method, securities are assumed

to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the diluted EPS calculation

for the entire period being presented.

In computing diluted EPS, basic EPS is adjusted for the assumed

issuance of all potentially dilutive securities.

The dilutive effect of call options, warrants and share-based payment awards is calculated

using the “treasury stock method,” which assumes that the “proceeds” from the exercise of these instruments are

used to purchase common shares at the average market price for the period.

The dilutive effect of traditional convertible debt and preferred

stock is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted

at the beginning of the period, and the resulting common shares are included in the denominator of the diluted EPS calculation for the

entire period being presented.

following table summarizes the number of shares of common stock issuable pursuant to our convertible securities that were excluded from

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SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

Three Months Ended March 31,

Series B Preferred Stock

Months Ended June 30,

Series B Preferred

RSUs and RSAs

Stock options

Convertible long-term debt

Potentially dilutive securities

long-term debt

dilutive securities

portfolio of brands are included within two operating segments:

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current manufacturers or pharmacies cease to perform adequately.

As of March 31, 2024, we utilized four (4) suppliers for fulfillment

services, nine (9) suppliers for manufacturing finished goods, seven (7) suppliers for packaging, bottling, and labeling, and six (6)

As of June 30, 2024, we utilized four (4) suppliers for fulfillment

services, ten (10) suppliers for manufacturing finished goods, seven (7) suppliers for packaging, bottling, and labeling, and seven (7)

suppliers for prescription medications.

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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 condensed consolidated financial statements upon adoption.

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

3 – ACQUISITIONS

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The Company accounted for the transaction using the acquisition method

in accordance with ASC 805, Business Combinations , with the purchase price being allocated to tangible and identifiable intangible

assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition date.

in accordance with ASC 805, Business Combinations, with the purchase price being allocated to tangible and identifiable intangible assets

acquired and liabilities assumed based on their respective estimated fair values on the acquisition date.

Fair values were determined

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The purchase price was $ 4.5 million, including cash paid upfront of $ 4.0 million and contingent consideration of $ 500 thousand.

In accordance with ASC 805, Business Combinations , the Company accounted for the ResumeBuild APA as an acquisition of assets as

substantially all the fair value of the gross assets acquired is concentrated in a group of similar assets.

The Company has elected to

group the complementary intangible assets acquired as a single brand intangible asset.

Additionally, the Seller is entitled to quarterly

payments equal to the greater of 15 % of net profits (as defined in the ResumeBuild APA) or approximately $ 63 thousand, for a two-year

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

As of March 31, 2024, WorkSimpli has paid the Seller $ 500

thousand in accordance with the ResumeBuild APA.

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

In accordance with ASC 805, Business Combinations, the Company accounted for the ResumeBuild APA as an acquisition of assets as substantially

all the fair value of the gross assets acquired is concentrated in a group of similar assets.

The Company has elected to group the complementary

intangible assets acquired as a single brand intangible asset.

Additionally, the Seller is entitled to quarterly payments equal to the

greater of 15 % of net profits (as defined in the ResumeBuild APA) or approximately $ 63 thousand, for a two-year period ending on the

two-year anniversary of the closing of the Acquisition.

As of June 30, 2024, WorkSimpli has paid the Seller $ 500 thousand in accordance

with the ResumeBuild APA.

The Company estimated the fair value of the contingent consideration using the income approach.

4 – INTANGIBLE ASSETS

of March 31, 2024 and December 31, 2023, the Company has the following amounts related to amortizable intangible assets:

of June 30, 2024 and December 31, 2023, the Company has the following amounts related to amortizable intangible assets:

OF INTANGIBLE ASSETS

Amortizable Intangible Assets:

ResumeBuild brand

Customer relationship asset

Cleared trade name

Cleared developed technology

Purchased licenses

Website domain names

Intangible Assets:

relationship asset

developed technology

intangible assets

accumulated amortization

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( 3,015,435 )

Total intangible assets, net

aggregate amortization expense of the Company’s intangible assets for the three months ended March 31, 2024 and 2023 was $ 246 thousand

and $ 234 thousand, respectively.

Total amortization expense for the remainder of 2024 is approximately $ 735 thousand, 2025 is approximately

$ 976 thousand, 2026 is approximately $ 939 thousand and for 2027 is approximately $ 113 thousand.

intangible assets, net

aggregate amortization expense of the Company’s intangible assets for both the three months ended June 30, 2024 and 2023 was $ 246

The aggregate amortization expense of the Company’s intangible assets for the six months ended June 30, 2024 and 2023

was $ 492 thousand and $ 480 thousand, respectively.

Total amortization expense for the remainder of 2024 is approximately $ 491 thousand,

$ 977 thousand for 2025, $ 939 thousand for 2026, and approximately $ 113 thousand for 2027.

5 – ACCRUED EXPENSES

of March 31, 2024 and December 31, 2023, the Company has the following amounts related to accrued expenses:

of June 30, 2024 and December 31, 2023, the Company has the following amounts related to accrued expenses:

OF ACCRUED EXPENSES

Accrued selling and marketing expenses

Accrued selling

and marketing expenses

Accrued compensation

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Other accrued expenses

Total accrued expenses

accrued expenses

6 – NOTES PAYABLE

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include interest in the amount of $ 62 thousand.

As of March 31, 2024 and December 31, 2023, the outstanding balance was $ 0 and $ 111 thousand,

As of June 30, 2024 and December 31, 2023, the outstanding balance was $ 0 and $ 111 thousand,

respectively, and is included in notes payable, net, on the accompanying unaudited condensed consolidated balance sheet.

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

As of both March 31, 2024 and December 31, 2023, the

As of both June 30, 2024 and December 31, 2023, the

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

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

As of March 31, 2024 and December 31, 2023, the outstanding balance was $ 116 thousand and $ 217 thousand, respectively, and is included

As of June 30, 2024 and December 31, 2023, the outstanding balance was $ 13 thousand and $ 217 thousand, respectively, and is included

in notes payable, net, on the accompanying consolidated balance sheet.

interest expense on notes payable amounted to $ 5 thousand and $ 21 thousand for the three months ended March 31, 2024 and 2023, respectively.

interest expense on notes payable amounted to $ 2

thousand and $ 13

thousand for the three months ended June 30, 2024 and 2023, respectively.

Total interest expense on notes payable amounted to $ 7

thousand and $ 34

thousand for the six months ended June 30, 2024 and 2023, respectively.

7 – LONG-TERM DEBT

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

on the unaudited condensed consolidated balance sheet as of March 31, 2024.

on the unaudited condensed consolidated balance sheet as of June 30, 2024.

The Company incurred other fees associated with the Avenue

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The total debt discount recorded of $1.4 million will be amortized over a forty-two-month

Total amortization of debt discount was $ 100 thousand for the three months ended March 31, 2024.

Total amortization of debt discount was $ 100 thousand and $ 115 thousand for the three months ended June 30, 2024 and 2023, respectively,

and $ 201 thousand and $ 154 thousand for the six months ended June 30, 2024 and 2023, respectively.

The Company received gross proceeds

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plus 4.75% and (2) 12.5%.

As of March 31, 2024, the interest rate was 13.25%.

As of June 30, 2024, the interest rate was 13.25%.

Payments are interest only until November 2024.

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and are expected to be utilized for general corporate purposes.

of March 31, 2024, the Company expects to pay $ 1.6 million in 2024, $ 9.5 million in 2025 and $ 7.9 million in 2026 in principal payments

of June 30, 2024, the Company expects to pay $ 1.6 million in 2024, $ 9.5 million in 2025 and $ 7.9 million in 2026 in principal payments

under the Avenue Facility.

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

of March 31, 2024, there was $ 19 million outstanding under the Avenue Facility and the Company was in compliance with the Avenue Facility

interest expense on long-term debt, inclusive of amortization of debt discounts, amounted to $ 679 and $ 96 thousand for the three months

ended March 31, 2024 and 2023, respectively.

As of June 30, 2024, there was $ 19 million outstanding under the Avenue

Facility and the Company was in compliance with the Avenue Facility covenants.

interest expense on long-term debt, inclusive of amortization of debt discounts, amounted to $ 674 thousand and $ 598 thousand for the

three months ended June 30, 2024 and 2023, respectively.

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

discounts, amounted to $ 1.4 million and $ 694 thousand for the six months ended June 30, 2024 and 2023, respectively.

8 – STOCKHOLDERS’ EQUITY

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

June 8, 2021, the Company filed 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 the ATM Sales Agreement whereby the Company may offer and sell, from time to time, shares of common

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”).

the three months ended March 31, 2024, the Company issued an aggregate of 64,113 shares of common stock related to the cashless exercise

the three months ended March 31, 2024, the Company issued an aggregate of 1,268,476 shares of common stock related to the cashless exercise

the three months ended March 31, 2024, the Company issued an aggregate of 1,250 shares of common stock related to the exercise of options

The Company entered into the ATM Sales Agreement whereby the Company may offer and sell, from time to time, shares of common

On June 7, 2024, the Company filed the 2024 Shelf.

Under the 2024 Shelf at the time of effectiveness, the Company had the ability

to raise up to $ 150.0 million by selling common stock, preferred stock, debt securities, warrants, and units including $ 53.3 million

of its common stock under the ATM Sales Agreement.

As of June 30, 2024, the Company had $ 53.3 million available under the ATM Sales Agreement,

which is part of the $ 150.0 million available under the 2024 Shelf.

the six months ended June 30, 2024, the Company issued an aggregate of 512,777 shares of common stock related to the cashless exercise

the six months ended June 30, 2024, the Company issued an aggregate of 1,630,458 shares of common stock related to the cashless exercise

the six months ended June 30, 2024, the Company issued an aggregate of 76,250 shares of common stock related to the exercise of options

for total proceeds of approximately $ 107 thousand.

Stock Transactions During the Three Months Ended March 31, 2024

the three months ended March 31, 2024, the Company issued an aggregate of 943,375 shares of common stock for service, including vested

Stock Transactions During the Six Months Ended June 30, 2024

the six months ended June 30, 2024, the Company issued an aggregate of 1,085,625 shares of common stock for service, including vested

restricted stock.

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Noncontrolling

income attributed to the non-controlling interest amounted to approximately $ 119 thousand and $ 566 thousand for the three months ended

March 31, 2024 and 2023, respectively.

During both the three months ended March 31, 2024 and 2023, the Company paid distributions to

non-controlling shareholders of $ 36 thousand.

income attributed to the non-controlling interest amounted to $ 39 thousand and $ 842 thousand for the three months ended June 30, 2024

and 2023, respectively.

During both the three months ended June 30, 2024 and 2023, the Company paid distributions to non-controlling

shareholders of $ 36 thousand.

Net income attributed to the non-controlling interest amounted to $ 158 thousand and $ 1.4 million for the

six months ended June 30, 2024 and 2023, respectively.

During both the six months ended June 30, 2024 and 2023, the Company paid distributions

to non-controlling shareholders of $ 72 thousand.

Software Capitalization Update

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for the three months ended March 31, 2024, and is included in the Company’s results of operations for the three months ended March

On July 1, 2024, WorkSimpli declared a cash dividend in the amount of $ 9.05 per membership interest unit to all unit holders

of record as of June 30, 2024 and was paid on July 1, 2024 .

The total dividends declared to noncontrolling interest holders was $ 228

thousand for the three months ended June 30, 2024 and $ 495 thousand for the six months ended June 30, 2024, and is included in the Company’s

results of operations for the three and six months ended June 30, 2024.

On June 30, 2023, WorkSimpli declared a cash dividend in the

amount of $ 22.40 per membership interest unit to all unit holders of record as of June 30, 2023 and was paid on July 3, 2023 .

dividend declared to noncontrolling interest holders was $ 534 thousand for the three and six months ended June 30, 2023 and is included

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

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

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

During the three months ended March 31, 2024, the Company

declared the dividend on March 26, 2024 to holders of record as of April 5, 2024 which was paid on April 15, 2024.

During the three months

ended March 31, 2023, the Company declared the dividend on March 28, 2023 to holders of record as of April 7, 2023 which was paid on

April 17, 2023.

The dividends are included in the Company’s results of operations for the three months ended March 31, 2024 and

Dividends declared and paid on the Series A Preferred Stock

during the six months ended June 30, 2024 are as follows:

(1) quarterly dividend declared on March 26, 2024 to holders of record as of

April 5, 2024, which was paid on April 15, 2024, and (2) quarterly dividend declared on June 25, 2024 to holders of record as of July

5, 2024 which was paid on July 15, 2024.

Dividends declared and paid on the Series A Preferred Stock during the six months ended June

30, 2023 are as follows:

(1) quarterly dividend declared on March 28, 2023 to holders of record as of April 7, 2023 and was paid on April

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

The dividends are included in the Company’s results of operations for the three and six months ended June 30, 2024 and 2023.

Stock Options

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

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restricted stock, and restricted stock units.

June 24, 2021, at the Annual Meeting of Stockholders, the stockholders of the Company approved the amendment and restatement to the 2020

June 24, 2021, at the Annual Meeting of Stockholders, the stockholders of the Company approved the amendment to the 2020 Plan to increase

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

16, 2022, at the Annual Meeting of Stockholders, the stockholders of the Company approved the second amendment and restatement of the

2020 Plan, which amended the 2020 Plan to increase the maximum number of shares of the Company’s common stock available for issuance

under the 2020 Plan by 1,500,000 shares.

June 16, 2022, at the Annual Meeting of Stockholders, the stockholders of the Company approved the second amendment and restatement of

the 2020 Plan (the “Amended 2020 Plan”), which amended the 2020 Plan to increase the maximum number of shares of the Company’s

common stock available for issuance under the 2020 Plan by 1,500,000 shares.

As of March 31, 2024, the Amended 2020 Plan provided for

the issuance of up to 5,100,000 shares of Common Stock.

Remaining authorization under the Amended 2020 Plan, as amended, was 661,611

shares as of March 31, 2024.

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

non-employee directors are:

On June 14, 2024, at the Annual Meeting of Stockholders, the stockholders of the Company approved

the third amendment and restatement to the 2020 Plan (the “Amended 2020 Plan”), which further amended the 2020 Plan by increasing

the maximum number of shares of the Company’s common stock available for issuance under the Amended 2020 Plan by 3,000,000 shares.

of June 30, 2024, the Amended 2020 Plan provided for the issuance of up to 8,100,000 shares of Common Stock.

Remaining authorization

under the Amended 2020 Plan was 3,133,111 shares as of June 30, 2024.

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

and non-employee directors are:

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

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of Restricted Stock Award Agreement.

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

The following is

a summary of outstanding options activity under our Amended 2020 Plan for the three months ended March 31, 2024:

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

The following

is a summary of outstanding options activity under our Amended 2020 Plan for the six months ended June 30, 2024:

OF OPTION ACTIVITY

Options Outstanding Number of Shares

Exercise Price

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Balance, December 31, 2023

$ 1.84 – 13.74

Balance at March 31, 2024

$ 1.84 – 13.74

Balance at June 30, 2024

Exercisable at December 31, 2023

$ 1.84 – 13.74

Exercisable at March 31, 2024

compensation expense under the Amended 2020 Plan options above was approximately $ 669 thousand and $ 1.2 million for the three months

ended March 31, 2024 and 2023, respectively, with unamortized expense remaining of $ 565 thousand as of March 31, 2024.

During the three

months ended March 31, 2024, 172,222 options were exercised on a cashless basis, which resulted in 62,781 shares issued.

31, 2024, aggregate intrinsic value of vested service-based options outstanding was $ 1.5 million.

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

months ended March 31, 2024:

Exercisable at June 30, 2024

compensation expense under the Amended 2020 Plan options above was $ 397 thousand and $ 1.2 million for the three months ended June 30,

2024 and 2023, respectively, with unamortized expense remaining of $ 169 thousand as of June 30, 2024.

Total compensation expense under

the Amended 2020 Plan options above was $ 1.1 million and $ 2.3 million for the six months ended June 30, 2024 and 2023, respectively.

During the six months ended June 30, 2024, 172,222 options were exercised on a cashless basis, which resulted in 62,781 shares issued.

As of June 30, 2024, aggregate intrinsic value of vested service-based options outstanding was $ 475 thousand.

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

the six months ended June 30, 2024:

OF OPTION ACTIVITY

Options Outstanding Number of Shares

Exercise Price

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Balance, December 31, 2023

$ 1.00 – 11.98

Balance at March 31, 2024

$ 1.00 – 11.98

Cancelled/Forfeited/Expired

Balance at June 30, 2024

Exercisable December 31, 2023

Exercisable at March 31, 2024

$ 1.00 – 11.98

compensation expense under the above service-based option plan was approximately $ 192 thousand and $ 643 thousand for the three months

ended March 31, 2024 and 2023, respectively, with unamortized expense remaining of $ 99 thousand as of March 31, 2024.

Exercisable at June 30, 2024

compensation expense under the above service-based option plan was $ 49 thousand and $ 505 thousand for the three months ended June 30,

2024 and 2023, respectively, with unamortized expense remaining of $ 50 thousand as of June 30, 2024.

Total compensation expense under

the above service-based option plan was $ 241 thousand and $ 1.1 million for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, aggregate intrinsic value of vested service-based options outstanding was $ 2.6 million.

Of the total service-based

options exercised during the three months ended March 31, 2024, 3,000 options were exercised on a cashless basis, which resulted in 1,332

shares issued.

As of March 31, 2024, aggregate intrinsic value of vested service-based options outstanding was $ 7.4 million.

following is a summary of outstanding performance-based options activity for the three months ended March 31, 2024:

options exercised during the six months ended June 30, 2024, 170,750 options were exercised on a cashless basis, which resulted in 134,302

shares issued and 51,250 options were exercised for cash.

following is a summary of outstanding performance-based options activity for the six months ended June 30, 2024:

OF OPTION ACTIVITY

Options Outstanding Number of Shares

Exercise Price

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Balance at December 31, 2023

$ 1.25 – 2.50

Balance at March 31, 2024

Balance at June 30, 2024

Exercisable December 31, 2023

$ 1.50 – 2.50

Exercisable at March 31, 2024

compensation expense was recognized on the performance-based options above for the three months ended March 31, 2024 and 2023, as the

performance terms have not been met or are not probable.

As of March 31, 2024, aggregate intrinsic value of vested performance options

outstanding was $ 3.7 million.

Exercisable at June 30, 2024

compensation expense was recognized on the performance-based options above for the three and six months ended June 30, 2024, as the performance

terms have not been met or are not probable.

As of June 30, 2024, aggregate intrinsic value of vested performance options outstanding

was $ 120 thousand.

Of the total performance-based options exercised during the six months ended June 30, 2024, 370,000 options were exercised

on a cashless basis, which resulted in 315,694 shares issued and 25,000 options were exercised for cash.

and RSAs (under our Amended 2020 Plan)

following is a summary of outstanding RSUs and RSAs activity under our Amended 2020 Plan for the three months ended March 31, 2024:

following is a summary of outstanding RSUs and RSAs activity under our Amended 2020 Plan for the six months ended June 30, 2024:

OF RESTRICTED STOCK UNIT ACTIVITY

RSU Outstanding

Number of Shares

Balance at December 31, 2023

RSU Outstanding Number of Shares, Beginning

RSU Outstanding Number of Shares, Granted

RSU Outstanding Number of Shares, Vested

( 1,107,875 )

Cancelled/Forfeited

RSU Outstanding Number of Shares, Forfeited

Balance at March 31, 2024

RSU Outstanding Number of Shares, Ending

compensation expense under the Amended 2020 Plan RSUs and RSAs above was approximately $ 1.4 million and $ 543 thousand for the three months

ended March 31, 2024 and 2023, respectively, with unamortized expense remaining of approximately $ 3.1 million as of March 31, 2024.

the three months ended March 31 2024, 880,875 RSUs and RSAs were issued, which included 834,125 RSUs and RSAs that vested during the

three months ended March 31, 2024 and 46,750 RSUs and RSAs that vested previously.

Balance at June 30, 2024

total fair value of the 528,500 RSUs and RSAs granted was $ 4.9 million which was determined using the fair value of the quoted market

price on the date of grant.

Total compensation expense under the Amended 2020 Plan RSUs and RSAs above was $ 3.5 million and $ 894 thousand

for the three months ended June 30, 2024 and 2023, respectively, with unamortized expense remaining of $ 4.5 million as of June 30, 2024.

Total compensation expense under the Amended 2020 Plan RSUs and RSAs above was $ 4.9 million and $ 1.4 million for the six months ended

June 30, 2024 and 2023, respectively.

During the six months ended June 30, 2024, 1,107,875 RSUs and RSAs vested, of which 960,625 shares

and RSAs (outside of our Amended 2020 Plan)

following is a summary of outstanding RSUs and RSAs activity (outside of our Amended 2020 Plan) for the three months ended March 31,

OF WARRANT AND RESTRICTED STOCK OUTSTANDING AND EXERCISABLE

RSU Outstanding

following is a summary of outstanding RSUs and RSAs activity (outside of our Amended 2020 Plan) for the six months ended June 30, 2024:

OF RESTRICTED STOCK UNIT ACTIVITY

Number of Shares

Balance at December 31, 2023

RSU Outstanding Number of Shares, Beginning

RSU Outstanding Number of Shares, Granted

RSU Outstanding Number of Shares, Vested

Balance at March 31, 2024

RSU Outstanding Number of Shares, Ending

compensation expense for RSUs and RSAs outside of the Amended 2020 Plan was approximately $ 255 thousand and $ 305 thousand for the three

months ended March 31, 2024 and 2023, respectively, with unamortized expense remaining of approximately $ 554 thousand as of March 31,

During the three months ended March 31, 2024, 62,500 RSUs and RSAs vested and were issued.

following is a summary of outstanding and exercisable warrants activity during the three months ended March 31, 2024:

Balance at June 30, 2024

compensation expense for RSUs and RSAs outside of the Amended 2020 Plan was $ 255 thousand and $ 285 thousand for the three months ended

June 30, 2024 and 2023, respectively, with unamortized expense remaining of $ 300 thousand as of June 30, 2024.

Total compensation expense

for RSUs and RSAs outside of the Amended 2020 Plan was $ 510 thousand and $ 589 thousand for the six months ended June 30, 2024 and 2023,

respectively.

During the six months ended June 30, 2024, 125,000 RSUs and RSAs vested, of which 125,000 shares were issued.

following is a summary of outstanding and exercisable warrants activity during the six months ended June 30, 2024:

OF WARRANT OUTSTANDING AND EXERCISABLE

Warrants Outstanding Number of Shares

Exercise Price

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Balance at December 31, 2023

( 2,986,877 )

( 2,337,500 )

Cancelled/Forfeited/Expired

Balance at March 31, 2024

Balance at June 30, 2024

Exercisable December 31, 2023

Exercisable March 31, 2024

compensation expense on the above warrants for services was approximately $ 0 and $ 12 thousand for the three months ended March 31, 2024

and 2023, respectively, with no unamortized expense remaining as of March 31, 2024.

Exercisable June 30, 2024

compensation expense on the above warrants was $ 0 and $ 6 thousand for the three months ended June 30, 2024 and 2023, respectively, with

no unamortized expense remaining as of June 30, 2024.

Total compensation expense on the above warrants was $ 0 and $ 18 thousand for the

six months ended June 30, 2024 and 2023, respectively.

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

options, warrants, RSUs and RSAs amounted to approximately $ 2.5 million and $ 2.7 million for the three months ended March 31, 2024 and

options, warrants, RSUs, and RSAs amounted to approximately $ 4.2 million and $ 2.9 million for the three months ended June 30, 2024 and

2023, respectively.

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

of operations.

Unamortized expense remaining related to service-based stock options, performance-based stock options, warrants, RSUs

and RSAs was approximately $ 4.3 million as of March 31, 2024, which is expected to be recognized through 2026.

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

performance-based stock options, warrants and RSUs, and RSAs amounted to $ 6.7 million and $ 5.5 million for the six months ended June

30, 2024 and 2023, respectively.

Such amounts are included in general and administrative expenses in the unaudited condensed consolidated

statement of operations.

Unamortized expense remaining related to service-based stock options, performance-based stock options, warrants,

RSUs, and RSAs was $ 5 million as of June 30, 2024, which is expected to be recognized through 2026.

Company leases office space domestically under operating leases including:

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WorkSimpli leases two office spaces in Puerto Rico for which the leases expire in 2024.

following is a summary of the Company’s operating right-of-use assets and operating lease liabilities as of March 31, 2024:

following is a summary of the Company’s operating right-of-use assets and operating lease liabilities as of June 30, 2024:

OF OPERATING RIGHT OF USE OF ASSETS

Operating right-of-use assets

Operating lease liabilities - current

Operating lease liabilities - noncurrent

accumulated amortization of the Company’s operating right-of-use assets was $ 2.3 million and $ 1.5 million as of the three months

ended March 31, 2024 and 2023, respectively.

Operating right-of-use

Operating lease liabilities

accumulated amortization of the Company’s operating right-of-use assets was $ 2.5 million and $ 1.7 million as of June 30, 2024 and

2023, respectively.

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

liabilities recognized on the unaudited condensed consolidated balance sheet as of March 31, 2024:

liabilities recognized on the unaudited condensed consolidated balance sheet as of June 30, 2024:

OF MATURITY OF OPERATING LEASE LIABILITIES

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( 1,314,278 )

Present value of operating lease liabilities

lease expenses were approximately $ 226 thousand and $ 223 thousand for the three months ended March 31, 2024 and 2023, respectively, and

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

Present value of operating

lease liabilities

lease expenses were $ 232 thousand and $ 206 thousand for the three months ended June 30, 2024 and 2023, respectively, and $ 458 thousand

and $ 429 thousand for the six months ended June 30, 2024 and 2023, respectively, and were included in other operating expenses in our

unaudited condensed consolidated statement of operations.

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

OF CASH FLOW INFORMATION RELATED TO OPERATING LEASE LIABILITIES

Cash paid for operating lease liabilities

Cash paid for

operating lease liabilities

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

March 31, 2024

December 31, 2023

Weighted average remaining lease term in years

Weighted average

remaining lease term in years

Weighted average discount rate

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

As of March 31, 2024 and

December 31, 2023, $ 0 and $ 5 thousand, respectively, was included in accrued expenses in regard to this agreement.

The Company paid Pilaris

approximately $ 5 thousand and $ 0 during the three months ended March 31, 2024 and 2023, respectively, in regard to this agreement.

As of June 30, 2024 and December

31, 2023, $ 0 and approximately $ 5 thousand, respectively, were included in accrued expenses in regard to this agreement.

paid Pilaris $ 5 thousand and $ 138 thousand during the six months ended June 30, 2024 and 2023, respectively, in regard to this agreement.

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

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

were earned or owed as of March 31, 2024.

were earned or owed as of June 30, 2024.

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

13 unchanged sentences

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

As of March 31, 2024, the Company approximates

its implicit purchase commitments to be $ 186 thousand.

As of June 30, 2024, the Company approximates its

implicit purchase commitments to be $ 397 thousand.

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

As of March 31, 2024, other than

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

As of June 30, 2024, other than as

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

effect on the Company’s consolidated financial position.

August 23, 2023, a purported putative class action complaint captioned Marden v.

LifeMD, Inc., Case No.

23-cv-07469, was

filed in the United States District Court for the Southern District of New York (the “Marden Complaint”) against

the Company’s RexMD brand.

The Marden Complaint alleges, inter alia , unauthorized disclosure of certain information

of class members to third parties.

On November 21, 2023, the plaintiffs amended the Marden Complaint.

On March 4, 2024, the Company moved

to dismiss the Marden Complaint, and that motion is pending.

On July 12, 2024, the parties attended a mediation.

of legal proceedings are inherently uncertain, and the best estimate of cost is reflected in the Company’s financial

September 5, 2023, the Internal Revenue Service (the “IRS”) issued a notice of deficiency to the Company in which the IRS

14 unchanged sentences

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

As of both March 31, 2024 and December 31, 2023, the outstanding balance was $ 0 related

As of both June 30, 2024 and December 31, 2023, the outstanding balance was $ 0 related

to the CRG Financial loan.

1 unchanged sentence

of CRG Financial.

the three months ended March 31, 2024 and 2023, the Company utilized CloudBoson Technologies Pvt.

the six months ended June 30, 2024 and 2023, the Company utilized CloudBoson Technologies Pvt.

(“CloudBoson”), formerly

LegalSubmit Pvt.

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

paid CloudBoson a total of approximately $ 1.1 million and $ 623 thousand during the three months ended March 31, 2024 and 2023, respectively,

(“LegalSubmit”), a company owned by WorkSimpli’s Chief Software Engineer, to provide software

development services.

The Company paid CloudBoson a total of $ 803 thousand and $ 570 thousand during the three months ended June 30, 2024

and 2023, respectively, and $ 1.9 million and $ 1.2 million during the six months ended June 30, 2024 and 2023, respectively, for these

The Company owed CloudBoson $ 56 thousand as of June 30, 2024 and $ 226 thousand as of December 31, 2023.

the six months ended June 30, 2024 and 2023, the Company utilized King & Spalding LLP (“King & Spalding”), a large

international law firm, for which one of the Company’s Board of Directors’ immediate family members is the Company’s

relationship partner, to provide legal services.

The Company paid King & Spalding a total of $ 135 thousand and $ 0 during the three

months ended June 30, 2024 and 2023, respectively, and $ 452 thousand and $ 0 during the six months ended June 30, 2024 and 2023, respectively,

for these services.

The Company owed CloudBoson $ 28 thousand as of March 31, 2024 and $ 226 thousand as of December 31, 2023.

The Company owed King & Spalding $ 92 thousand as of June 30, 2024 and $ 48 thousand as of December 31, 2023.

Consulting Agreements

2 unchanged sentences

shares of the Company’s common stock, which will vest in quarterly installments from August 30, 2023 through November 30, 2024.

The Company issued 62,500 restricted shares of common stock related to this agreement during the three months ended March 31, 2024.

The Company issued 125,000 restricted shares of common stock related to this agreement during the six months ended June 30, 2024.

June 14, 2023, Robert Jindal, a member of the Board of the Company, entered into a consulting services agreement with the Company, pursuant

4 unchanged sentences

shares of the Company’s common stock, which will vest in six-month installments from June 14, 2023 through December 31, 2024.

Employment Agreement

May 1, 2024, Brian Schreiber, Logistics & Fulfillment Advisor, and a relative of the Company’s Chief Executive Officer, entered

into an amended employment agreement.

Schreiber’s compensation package was adjusted to reflect the increased scope of his responsibilities.

The compensation adjustment, approved by the Compensation Committee of the Board, includes a base salary increase to $ 240 thousand.

12 – SEGMENT DATA

3 unchanged sentences

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

Relevant segment data for the three months ended March

31, 2024 and 2023 is as follows:

Relevant segment data for the three and six months

ended June 30, 2024 and 2023 is as follows:

SCHEDULE OF RELEVANT SEGMENT DATA

Three Months Ended March 31,

Operating loss

Months Ended June 30,

$ ( 6,450,682 )

$ ( 8,141,868 )

Operating income

Operating loss

$ ( 13,070,446 )

$ ( 13,143,226 )

segment data as of March 31, 2024 and December 31, 2023 is as follows:

March 31, 2024

December 31, 2023

$ ( 6,305,566 )

$ ( 4,895,546 )

$ ( 12,476,811 )

$ ( 7,748,356 )

income (loss)

$ ( 6,305,566 )

$ ( 4,895,546 )

$ ( 12,476,811 )

$ ( 7,748,356 )

segment data as of June 30, 2024 and December 31, 2023 is as follows:

13 – SUBSEQUENT EVENTS

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

has identified the following:

Issued for Service

April and May 2024, the Company issued 122,250

shares of common stock related to vested restricted stock with a total fair value of $ 601

Exercise of Options and Warrants

April and May 2024, the Company issued 285,554

shares of common stock related to the cashless exercise of warrants and 22,050

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

July 2024, the Company issued 100,000 shares of common stock related to vested restricted stock with a total fair value of $ 672 thousand.

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

What changed 10-Q

Item 1. Financial Statements