What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-06 compared with 2025-11-17 · 387 added, 439 removed, 146 unchanged (85% 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.

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 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:

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differ materially from our assumptions.

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 which discourages many individuals from seeking much-needed

medical care.

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

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

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

wholly-owned affiliated commercial pharmacy, nationwide laboratory and diagnostic testing capabilities, a fully integrated electronic

medical records (“EMR”) system and a 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.

LifeMD treats approximately 311,000 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 1,293,000 customers and patients by providing them with 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 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 vertically integrated care 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

June 2024, the Company launched the acceptance of private health insurance for its virtual primary care services, including weight management

for medically qualified patients.

Initially available in select states, the Company plans to continue enrollments with private payors

to facilitate access to medically necessary services, ultimately having broad coverage options across all 50 states.

In April 2025, the

Company expanded acceptance of insurance to Medicare beneficiaries for qualifying care.

Initially available to more than 21 million Medicare

Part B beneficiaries in 26 states, the Company expects to expand access to medically necessary services for more than 60 million Medicare

beneficiaries nationwide, with access to qualifying services across 49 states.

telehealth revenue increased 34% for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

Total revenue from recurring subscriptions is approximately 95%.

In addition to our telehealth business, we owned 73.3% of WorkSimpli,

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

WorkSimpli revenue

from recurring subscriptions is 100%.

Platform and Business Strategy

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,

an EMR system, secure synchronous and asynchronous communication, prescriptions, pharmacy and laboratory integrations, and more.

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 fulfilment, through ongoing care.

that our seamless approach significantly reduces the complication, cost and time burden of healthcare, therefore incentivizing consumers

to stick with our brands.

offerings are sold to consumers on a primarily 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 delivered by a team of dedicated medical providers.

In general, our offerings

seek to serve a patient throughout the lifecycle of their urgent, chronic, and lifestyle healthcare needs.

As appropriate, prescription

medications and OTC products are filled by our in-house mail order pharmacy or third-party pharmacy fulfilment partners, and are shipped

directly to patients.

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 two core areas described below:

Direct-to-Patient

Telehealth Brands

leverage our telehealth platform’s affiliated provider network, pharmacy, and EMR capabilities across our direct-to-patient telehealth

Our core telehealth brands LifeMD and Rex MD target largely unaddressed or underserved healthcare needs and are leading destinations

in their respective treatment verticals of virtual primary care and men’s health.

is a telehealth brand that offers access to virtual primary care and telehealth services,

offering comprehensive healthcare solutions across more than 200 conditions.

This brand provides

patients with access to affiliated high-quality providers for their urgent care and chronic

LifeMD’s offering is a mobile-first full-service destination that provides

seamless access to comprehensive virtual medical care including on-demand consultations and

treatment, prescription medications, diagnostics and imaging, wellness coaching, integration

with in-home tools and more.

This offering is also supported by partnerships that provide

our patients with benefits such as substantial discounts on lab work and a prescription discount

LifeMD has served over 596,000 customers and patients to date.

April 2023, we launched our rapidly growing GLP-1 Weight Management Program providing primary care, metabolic coaching, 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 approximately 82,000 patient subscribers as of September 30, 2025, remaining

at the forefront of the rapidly growing GLP-1 weight loss market, with our highly differentiated and comprehensive offering.

2024, we expanded our Weight Management Program with a personalized, non-GLP-1 treatment plan consisting of three oral medications

– metformin, bupropion, and topiramate - which is expected to grow the program’s addressable market.

part of its commitment to increasing access to branded prescription GLP-1 medications, we have developed an electronic benefits verification

program that allows patients to check pharmacy benefits verification upon enrolling in a LifeMD virtual care program.

have partnered with an AI-powered platform that optimizes prior authorization submissions and aims to improve approval rates for

Thirdly, we are establishing direct integrations with branded manufacturers who are also committed to lower cost offerings.

These enhancements are designed to minimize delays in care, reduce barriers to accessing brand-name medications, and ensure that

a broader range of patients can benefit from LifeMD’s offerings.

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

needs, including erectile dysfunction, premature ejaculation and hair loss.

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 Rex MD’s initial launch, it has expanded into additional indications including weight management and testosterone replacement

Rex MD has served more than 668,000 customers and patients to date.

is a legacy brand offering 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 is a leading destination for hair loss treatment across the United States (“U.S.”)

and has served approximately 261,000 customers and patients to date.

is a patient-centric, direct-to-patient healthcare company providing a high-quality, cost-effective, and convenient way for patients

to access virtual medical care and pharmacy services.

We believe the traditional healthcare model requiring patients to visit a physician’s

office, travel to a retail pharmacy, and return for follow-up appointments or prescription refills is complex, inefficient, and costly

which can discourage individuals from seeking necessary medical care and medications.

At the same time, the United States (“U.S.”)

continues to experience shortages in primary care key specialty areas.

our vertically integrated care model, we combine proprietary technology, affiliated clinical services, pharmacy infrastructure, and artificial

intelligence (“AI”)-enabled operational systems to deliver longitudinal care at scale.

Our mission is to empower individuals

to live healthier lives by expanding access to high-quality virtual and in-home healthcare services.

We believe our success is driven

by an exceptional patient experience, our affiliated medical group comprised of high-quality and dedicated providers, and our vertically

integrated care platform.

of March 31, 2026, LifeMD served over 365,000 active patient subscribers across a range of healthcare needs, including primary care,

men’s and women’s health, hormone health, weight management, insomnia, dermatology and cardiology.

We provide virtual clinical

services as well as prescription and over-the-counter (“OTC”) treatments, when medically appropriate.

virtual primary care services are primarily offered through a subscription model.

Since inception, we have served approximately 1,492,000

patients and customers, expanding access to convenient, and high-quality healthcare.

End-to-End Telehealth Platform

has developed a proprietary, fully integrated telehealth and pharmacy platform designed to support diagnosis, treatment, prescription

fulfillment, and ongoing care management within a unified ecosystem.

We believe this vertical integration differentiates LifeMD from

point-solution telehealth providers and enables us to deliver more cohesive patient experiences for patients electing to utilize our

affiliated pharmacy while maintaining clinical rigor and operational efficiency.

telehealth technology platform is continually optimized to serve more patients, and this flexible infrastructure can be repurposed for

a variety of existing or future telehealth offerings.

Further, this platform allows for rapid development and the scale up of new telehealth

offerings as we identify attractive opportunities.

Our platform integrates core capabilities, including:

50-state affiliated provider network;

nationwide pharmacy network;

wholly-owned commercial pharmacy;

laboratory and diagnostic integrations;

fully integrated patient care center;

direct-to-patient marketing infrastructure for acquisition and retention;

clinical and operational technologies.

our desktop and mobile applications, patients move seamlessly from onboarding and consultation to prescription fulfillment and longitudinal

We continue to augment our platform with new features selected to better serve our patients.

June 2024, we began accepting commercial and government health insurance for our virtual primary care services, including obesity-related

care for medically qualified patients.

As of March 31, 2026, our network covered approximately 112 million lives, including approximately

30 million Medicare Fee-for-Service beneficiaries.

By June 1, 2026, we expect to expand coverage to approximately 230 million lives,

representing approximately 80% of commercially insured lives in the U.S., 70% of Medicare Advantage beneficiaries, and Medicare Fee-for-Service

beneficiaries.

Provider Network

delivery across the LifeMD platform is supported by an affiliated 50-state medical group composed of licensed physicians and nurse practitioners.

A significant portion of this network consists of full-time providers dedicated to LifeMD’s platform and clinical protocols.

providers deliver synchronous and asynchronous virtual consultations across primary care, chronic disease management, metabolic health,

hormone optimization, behavioral health, and other specialty programs.

Clinical workflows are supported by our integrated EMR system,

case-load balancing algorithms, secure communications infrastructure, and prescription management tools.

We believe that maintaining

a dedicated affiliated provider network, integrated directly into our proprietary systems, enables consistent clinical standards, operational

efficiency, and scalable care delivery across multiple specialty verticals.

have an internal patient care center staffed by LifeMD employees to support clinical coordination and customer experience functions.

The patient care center provides hands-on support throughout the patient journey, including care coordination, onboarding assistance,

follow-up communication, and general support services.

This infrastructure is designed to enhance accessibility, improve continuity of

care, and support retention within our subscription-based model.

We believe the integration of our patient care center with our technology

platform strengthens patient engagement, supports adherence to prescribed therapies, and contributes to sustained patient satisfaction

proprietary technology platform integrates:

across a national provider network;

patient-provider communications;

balancing algorithms;

documentation and EMR functionality;

features support longitudinal care relationships and subscription-based models.

and Fulfillment

support our telehealth brands, in November 2024 we announced the opening of a state-of-the-art wholly-owned affiliated commercial pharmacy,

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therapies designed to meet evolving patient needs while improving efficiency and reducing reliance on third-party providers.

and Data Infrastructure

have been an early adopter of AI and large language models (“LLMs”) to integrate and analyze data across the Company.

technologies support clinical operations, product development, customer service, and internal workflows.

We believe these capabilities

have the potential to significantly improve operational efficiency, reduce costs, and increase the agility of our technology, products,

operations, and medical teams, if we are able to mitigate accompanying risks addressed under “Risk Factors.”

Brands and Specialty Care Programs

operate three consumer healthcare brands focused on largely unaddressed or underserved healthcare needs.

LifeMD brand is our flagship virtual primary care and specialty platform, having served over 514,000 customers and patients to date.

This brand provides patients with access to affiliated high-quality providers for their urgent care and chronic care needs.

brand is a mobile-first full-service destination that provides seamless access to comprehensive virtual medical care including on-demand

consultations and treatment, prescription medications, diagnostics and imaging, wellness coaching, integration with in-home tools and

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

and direct integrations and collaborations with pharmaceutical manufacturers that offer patients convenient and affordable access to

important medications.

The LifeMD brand addresses high-growth and historically underserved healthcare verticals through defined specialty

care programs as noted below.

Weight Management Program, launched in April 2023 with a focus on GLP-1 medications, provides primary care, metabolic coaching, lab work

and prescription services (as appropriate) to patients seeking to access a medically supported weight loss solution.

In September 2024,

we expanded our Weight Management Program to offer personalized, non-GLP-1 treatment plan consisting of three oral medications –

metformin, bupropion, and topiramate – which is expected to grow the program’s addressable market.

Since inception, our Weight

Management Program has grown exponentially to over 98,000 patient subscribers as of March 31, 2026.

part of our commitment to increasing access to branded prescription GLP-1 medications, we have developed an electronic benefits verification

program that allows patients to check pharmacy benefits verification upon enrolling in a LifeMD virtual care program.

Secondly, we have

partnered with an AI-powered platform that optimizes prior authorization submissions and aims to improve approval rates for patients.

Thirdly, we have established direct integrations with branded manufacturers who are also committed to lower cost offerings.

These enhancements

are designed to minimize delays in care, reduce barriers to accessing brand-name medications, and ensure that a broader range of patients

can benefit from the LifeMD brand’s offerings.

women’s health platform with a focus on perimenopause and menopause, bone health, and hormone optimization.

Women’s health

conditions often require multi-year, longitudinal management.

Our platform is designed to provide continuous, coordinated care across

a woman’s lifespan, supported by:

specialized providers;

and remote diagnostics;

and compounded medications;

and lifestyle education and support;

we expand this platform and shape our strategy, we are engaging with renowned specialists in their field, including a focus on menopause

and osteoporosis.

We feel LifeMD is uniquely positioned to provide continuous support throughout a woman’s lifespan with our holistic,

personalized and accessible care philosophy.

behavioral health program provides teletherapy, psychiatry, and medication management for common mental health conditions.

health services are delivered through our affiliated provider network and are integrated into our longitudinal care framework.

focused on expanding insurance coverage across commercial and government payers to reduce financial barriers and improve access.

behavioral health represents a significant opportunity to drive improved patient outcomes and deepen engagement within our subscription-based

According to the National Institute of Mental Health, approximately 59.3 million adults in the U.S.

were living with a mental

illness in 2022, yet only 50.6% received treatment.

is our membership-based virtual primary care offering, providing 24/7 access to synchronous and asynchronous care for urgent care, urgent

prescriptions and refills, diagnostics and more.

LifeMD+ is designed to serve as an entry point into the LifeMD ecosystem, expanding

customer access through both cash-pay and insurance reimbursement models.

This membership forms the foundation of our subscription-based

model and supports cross-vertical expansion into our specialty care programs such as weight management.

MD is our men’s telehealth platform focused on conditions that are often underdiagnosed or undertreated due to stigma, inconvenience,

or limited access to specialized providers.

Since launch, Rex MD has served approximately 717,000 customers and patients.

delivers virtual diagnosis, treatment, and prescription medications for men’s health conditions including erectile dysfunction,

premature ejaculation, hair loss, insomnia, weight loss and performance anxiety.

Services are provided through our affiliated licensed

medical providers, and prescription therapies are dispensed either through our wholly owned pharmacy or through partner pharmacies, as

clinically appropriate.

Replacement Therapy (“TRT”)

represents a defined specialty care program within Rex MD and a growing focus area for the brand.

Low testosterone is associated with

a range of clinical symptoms, including fatigue, decreased libido, reduced muscle mass, and mood changes, and often requires longitudinal

evaluation and management.

Our TRT program is designed to provide comprehensive, ongoing care rather than episodic prescription access.

program includes:

clinical evaluation and laboratory testing;

and treatment planning by affiliated providers;

hormone monitoring and dosage management;

fulfillment and follow-up care.

TRT typically requires continuous monitoring and long-term management, the TRT program aligns with our subscription-based care model

and supports recurring patient engagement.

We believe the combination of diagnostic integration, prescription management, pharmacy infrastructure,

and longitudinal clinical oversight differentiates our approach from transactional telehealth offerings and positions Rex MD to address

a growing segment of men seeking accessible hormone health services.

is a legacy brand offering 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 is a leading destination for hair loss treatment across the U.S.

and has served over 261,000

customers and patients to date.

Telehealth Partnerships

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

the nine months ended September 30, 2025, LifeMD executed its integration with LillyDirect’s (“Lilly”) pharmacy provider,

Gifthealth, to offer streamlined access of single-dose vials of Lilly’s prescription obesity treatment Zepbound® (tirzepatide)

to the Company’s eligible patients.

LifeMD also announced plans to offer a simplified pathway for cash-pay patients to access all

FDA-approved dose strengths of Wegovy® directly within LifeMD’s virtual care platform and an additional offering through its

collaboration with Novo Nordisk that provides access to Ozempic® for patients with type 2 diabetes.

Owned Subsidiary:

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.

As a result of a series of restructuring transactions, the

Company’s ownership interest in WorkSimpli was 73.3%.

WorkSimpli had approximately 141,000 active subscriptions as of September

November 4, 2025, we sold our majority ownership interest in WorkSimpli to Lion Buyer, LLC.

The sale positions the Company as a pure-play

telehealth technology company focused on scaling its virtual care and pharmacy operations.

For a description of the transaction, see

Note 15—Subsequent Events.

executed its integration with LillyDirect’s (“Lilly”) pharmacy provider, Gifthealth, to provide eligible patients

with streamlined access to single-dose vials of Lilly’s prescription obesity treatment Zepbound® (tirzepatide).

This integration

enables a more direct pathway for patients prescribed Zepbound® through LifeMD’s virtual care platform.

LifeMD established

an integrated pathway within its virtual care platform to facilitate patient access to Wegovy® and Ozempic®.

As part of this

collaboration, LifeMD integrated with CenterWell Pharmacy, Novo Nordisk’s pharmacy partner, to support prescription fulfillment

for eligible patients prescribed Wegovy® for chronic weight management and Ozempic® for type 2 diabetes.

In January 2026,

the Company began offering Novo Nordisk’s Wegovy® (semaglutide) pill –an oral GLP-1 therapy for chronic weight management

and cardiovascular health.

May 2024, LifeMD executed a partnership agreement with Withings, Inc.

(“Withings”) designed to revolutionize weight management

patient care by providing LifeMD’s GLP-1 weight-loss patients with Withings advanced in-home health monitoring devices, including

the Body Pro 2 scale and the BPM Connect Pro blood pressure monitor.

With these devices, LifeMD is setting a new standard in virtual

care by providing clinicians with near real-time and actionable patient data that can drive compliance, enhance clinical decision-making,

encourage preventive healthcare and, most importantly, improve long-term outcomes.

May 2024, LifeMD launched a partnership with Ash Wellness, a leading at-home, self-collection laboratory health testing platform.

Ash Wellness offers a network of over ten Clinical Laboratory Improvement Amendments (“CLIA”) and College of American

Pathologists (“CAP”) certified labs, supporting over one hundred biomarkers and multiple collection methods.

program interface and a fully white labelled experience supports a streamlined and convenient patient experience.

Initially introduced

as part of our Weight Management Program to monitor and qualify patients for treatment, LifeMD plans to use at-home collection testing

across various clinical care scenarios, giving patients greater control over their health and making remote healthcare more inclusive.

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

through and with certain of its wholly-owned subsidiaries

(“Medifast”).

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

a clinically supported weight management program, including GLP-1 medications.

Pursuant to certain agreements between the parties,

Medifast paid 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 remaining $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

agreement with Medifast’s wholly-owned subsidiary, Jason Pharmaceuticals, Inc.

(“Jason Pharmaceuticals”), 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 meetings.

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.

of Operations

the three months ended September 30, 2025, the Company identified and corrected errors related to the recording of net revenue as agent

in certain arrangements with the Company’s third-party pharmacy providers as well as various

out-of-period amounts included in our previously issued financial statements that were deemed to be quantitatively and qualitatively

immaterial, individually and in the aggregate, to the financial statements in the periods recorded or to the relevant prior periods.

Information presented in the tables below for the three and nine months ended September 30, 2024 has been revised to reflect these corrections.

See Note 3—Revisions to Previously Issued Financial Statements.

of the Three Months Ended September 30, 2025 to the Three Months Ended September 30, 2024

financial results for the three months ended September 30, 2025 are summarized as follows in comparison to the three months ended September

in certain arrangements with the Company’s third-party pharmacy providers as well as various out-of-period amounts included in

our previously issued financial statements that were deemed to be quantitatively and qualitatively immaterial, individually and in the

aggregate, to the financial statements in the periods recorded or to the relevant prior periods.

Information presented in the tables

below for the three months ended March 31, 2025 has been revised to reflect these corrections.

See Note 3—Revisions to Previously

Issued Financial Statements for more details.

financial results for the three months ended March 31, 2026 are summarized as follows in comparison to the three months ended March 31,

March 31, 2026

March 31, 2025

Telehealth revenue, net

WorkSimpli revenue, net

Cost of telehealth revenue

Cost of WorkSimpli revenue

cost of revenue

Selling and marketing expenses

General and administrative expenses

Customer service expenses

Other operating expenses

Customer service expenses

Development costs

Operating loss

Interest expense, net

Loss on debt extinguishment

Net loss before income taxes

Income tax expense

income (loss) attributable to non-controlling interest

Total expenses

Operating loss from continuing operations

Interest income (expense), net

Loss from continuing operations before income taxes

Income tax provision

Net loss from continuing operations

Net income from discontinued operations

Net (loss) income

Net income attributable to non-controlling interest of discontinued operations

Net loss attributable to LifeMD, Inc.

Preferred stock dividends

Net loss attributable

to LifeMD, Inc.

common stockholders

$ (4,582,680 )

Net loss attributable to common stockholders

$ (9,649,159 )

revenue, net.

Revenues for the three months ended September 30, 2025 were approximately $60.2 million, an increase of 13% compared

to approximately $53.3 million for the three months ended September 30, 2024.

The increase in revenues was attributable to an

increase in telehealth subscription revenue, primarily for LifeMD primary care which experienced an increase of approximately $6.4

million during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily due to an

increase in online sales demand.

Telehealth revenue accounts for 79% of total revenue.

WorkSimpli revenue accounts for 21% of total

revenue and has decreased by approximately $225 thousand, or 2%, for the three months ended September 30, 2025 compared to the three

months ended September 30, 2024, primarily due to a decrease in online sales demand.

cost of revenue.

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

fulfilment 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 48% to approximately $7.4 million for the three months ended September 30, 2025 compared

to approximately $5.0 million for the three months ended September 30, 2024.

The combined cost of revenue increase was due to increased

sales volume during the three months ended September 30, 2025 when compared to the three months ended September 30, 2024.

costs increased to 14% of associated telehealth revenues experienced during the three months ended September 30, 2025, from 11% of associated

telehealth revenues during the three months ended September 30, 2024 due to increases in physician consult fees and product shipping

WorkSimpli costs stayed consistent at 5% of associated WorkSimpli revenues for both the three month periods ended September 30,

2025 and 2024.

Gross profit increased by 9% to approximately $52.8 million for the three months ended September 30, 2025 compared to approximately

$48.3 million for the three months ended September 30, 2024.

Telehealth revenues for the three months ended March 31, 2026 decreased by approximately 1% to approximately $50.2 million

compared to approximately $50.9 million for the three months ended March 31, 2025.

The decrease in revenues was attributable to a decrease

in telehealth product revenue of approximately $1.0 million due to a decrease in online sales demand partially offset by an increase

in telehealth subscription revenue which experienced an increase of approximately $280 thousand during the three months ended March 31,

2026 compared to the three months ended March 31, 2025 primarily due to an increase in online sales demand.

of telehealth revenue.

Cost of telehealth revenue, which primarily include product costs, pharmacy fulfilment costs, physician consult

fees, and shipping costs directly attributable to our prescription and OTC products decreased by approximately 27% to approximately $5.9

million for the three months ended March 31, 2026 compared to approximately $8.1 million for the three months ended March 31, 2025.

cost of telehealth revenue decrease was due to product mix, decreased telehealth product sales volume and decreased shipping costs during

the three months ended March 31, 2026 when compared to the three months ended March 31, 2025.

Telehealth costs were 12% of associated

telehealth revenues during the three months ended March 31, 2026 compared to 16% of associated telehealth revenues during the three months

ended March 31, 2025.

Gross profit increased by 3% to approximately $44.2 million for the three months ended March 31, 2026 compared to approximately

$42.8 million for the three months ended March 31, 2025.

Gross profit as a percentage of revenues was approximately 88% for the three

months ended September 30, 2025 as compared to approximately 91% for the three months ended September 30, 2024.

Gross profit as a percentage

of revenues for telehealth was 86% for the three months ended September 30, 2025 compared to 89% for the three months ended September

30, 2024, and for WorkSimpli was 95% for both the three month periods ended September 30, 2025 and 2024.

The increase in sales volume

and demand for telehealth subscriptions, partially offset by the increase in physician consult fees and product shipping costs contributed

to the increase in gross profit.

The increase in physician consult fees and product shipping costs also contributed to the decrease in

gross profit as a percentage of telehealth revenue.

Operating expenses for the three months ended September 30, 2025 were approximately $54.7 million, as compared to approximately

$52.3 million for the three months ended September 30, 2024.

months ended March 31, 2026 as compared to approximately 84% for the three months ended March 31, 2025.

The increase in gross profit

as a percentage of revenues was primarily due to product mix and decreased shipping costs on telehealth product revenues in the three

months ended March 31, 2026.

Operating expenses for the three months ended March 31, 2026 were approximately $53.2 million, as compared to approximately

$43.9 million for the three months ended March 31, 2025.

This represents an increase of 21%, or approximately $9.2 million.

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This mainly consists of online marketing and advertising expenses.

During the three months ended September

During the three months ended March 31,

2026, the Company had an increase of approximately $7.6 million, or 34% in selling and marketing costs resulting from additional

sales and marketing initiatives to drive the current period’s sales growth primarily for telehealth subscription revenue.

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

revenue subscription-based sales model.

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, 2025, the Company had an increase of approximately $927 thousand, or

44%, primarily related to increases in software subscriptions to support the Company’s growth and compliance initiatives.

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

During the three

months ended September 30, 2025, the Company had an increase of approximately $235 thousand, or 9%, primarily resulting from technology

platform improvements and amortization expenses.

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

sales and marketing initiatives to drive the current and future periods’ sales growth primarily for telehealth subscription

revenue and new telehealth offerings.

This ramp up is expected to both increase and maintain sustained revenue growth in future years,

based on the Company’s recurring revenue subscription-based sales model.

and administrative expenses:

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During the three months

ended September 30, 2025, the Company had a decrease of approximately $1.5 million in general and administrative expenses, primarily

related to a decrease in legal and professional fees of $1.2 million, a decrease in sales tax accruals of $793 thousand and a decrease

in payroll costs of $446 thousand, partially offset by an increase in stock-based compensation expense of $804 thousand.

service expenses:

This consists of rent, insurance, payroll and benefit expenses related to the Company’s patient care center

in South Carolina.

During the three months ended September 30, 2025, the Company had a decrease of approximately $20 thousand, or

expense, net.

Interest expense, net consists of interest expense related to the Avenue Facility, partially offset by interest income

on the Company’s cash account balances for the three months ended September 30, 2025 and 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

September 30, 2024.

Interest expense decreased by approximately $296 thousand during the three months ended September 30, 2025 as compared

to the three months ended September 30, 2024, primarily due to the repayment of the Avenue Facility on August 5, 2025.

on debt extinguishment.

The Company recorded a $1.2 million loss on debt extinguishment related to the repayment of the Avenue Facility

during the three months ended September 30, 2025 due to a prepayment penalty and various fees associated with the Avenue Facility.

of the Nine Months Ended September 30, 2025 to the Nine Months Ended September 30, 2024

financial results for the nine months ended September 30, 2025 are summarized as follows in comparison to the nine months ended September

Telehealth revenue, net

$ 147,186,714

$ 109,687,054

WorkSimpli revenue, net

Cost of telehealth revenue

Cost of WorkSimpli revenue

cost of revenue

Selling and marketing expenses

General and administrative expenses

Customer service expenses

Other operating expenses

Development costs

Operating loss

(14,433,048 )

Interest expense, net

Loss on debt extinguishment

Net loss before income taxes

(16,000,791 )

Income tax expense

(16,233,314 )

income (loss) attributable to non-controlling interest

Net loss attributable to LifeMD, Inc.

(16,470,351 )

Preferred stock dividends

Net loss attributable

to LifeMD, Inc.

common stockholders

$ (7,939,247 )

$ (18,800,039 )

revenue, net.

Revenues for the nine months ended September 30, 2025 were approximately $187.0 million, an increase of 25% compared to

approximately $149.3 million for the nine months ended September 30, 2024.

The increase in revenues was attributable to the increase

in telehealth revenue of 34%.

Telehealth revenue accounts for 79% of total revenue and has increased during the nine months ended September

30, 2025 due to an increase in telehealth subscription revenue, primarily for LifeMD primary care which experienced an increase of approximately

$41.2 million during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to increased demand.

WorkSimpli revenue accounts for 22% of total revenue and stayed consistent for both the nine month periods ended September 30, 2025 and

cost of revenue.

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

fulfilment 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 60% to approximately $23.5 million for the nine months ended September 30, 2025 compared

to approximately $14.6 million for the nine months ended September 30, 2024.

The combined cost of revenue increase was due to increased

sales volume during the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024.

Telehealth costs

increased to 15% of associated telehealth revenues experienced during the nine months ended September 30, 2025, from 12% of associated

telehealth revenues during the nine months ended September 30, 2024 primarily due to increases in physician consult fees and product

shipping costs.

WorkSimpli costs increased to 5% of associated WorkSimpli revenues for the nine months ended September 30, 2025 as compared

to 4% of associated WorkSimpli revenues for the nine months ended September 30, 2024.

Gross profit increased by approximately 21% to approximately $163.5 million for the nine months ended September 30, 2025 compared

to approximately $134.7 million for the nine months ended September 30, 2024.

Gross profit as a percentage of revenues was approximately

87% for the nine months ended September 30, 2025 as compared to approximately 90% for the nine months ended September 30, 2024.

profit as a percentage of revenues for telehealth was 85% for the nine months ended September 30, 2025 compared to 88% for the nine months

ended September 30, 2024, and for WorkSimpli was 95% for the nine months ended September 30, 2025 compared to 96% for the nine months

ended September 30, 2024.

The increase in sales volume and demand for telehealth subscriptions partially offset by an increase in physician

consult fees and product shipping costs, contributed to the increase in gross profit.

The increase in physician consult fees and product

shipping costs as well as the Medifast Collaboration revenue recognized during the nine months ended September 30, 2024 also contributed

to the decrease in gross profit as a percentage of telehealth revenue for the nine months ended September 30, 2025.

Operating expenses for the nine months ended September 30, 2025 were approximately $164.9 million, as compared to approximately

$149.1 million for the nine months ended September 30, 2024.

This represents an increase of 11%, or approximately $15.8 million.

increase is primarily attributable to:

and marketing expenses:

This mainly consists of online marketing and advertising expenses.

During the nine months ended September

30, 2025, the Company had an increase of approximately $10.6 million, or 14% in selling and marketing costs resulting from additional

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

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

revenue subscription-based sales model.

and administrative expenses:

This category 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 nine months

ended September 30, 2025, the Company had an increase of approximately $0.1 million in general and administrative expenses, primarily

related to an increase in merchant processing fees of $864 thousand and an increase in payroll costs of $837 thousand partially offset

by a decrease in stock-based compensation expense of $1.3 million and a decrease in legal and professional fees of $305 thousand.

service expenses:

This consists of rent, insurance, payroll and benefit expenses related to the Company’s patient care center

in South Carolina.

During the nine months ended September 30, 2025, the Company had an increase of approximately $1.7 million, or

23%, primarily related to increases in infrastructure costs and compensation costs due to increased headcount to support the Company’s

ended March 31, 2026, the Company had an increase of approximately $836 thousand in general and administrative expenses, primarily

related to an increase in compensation costs of $1.1 million, an accounts receivable reserve adjustment of $450 thousand recorded

during the three months ended March 31, 2026, and an increase in legal and professional fees of $200 thousand.

These increases were

partially offset by a decrease in stock-based compensation expense of $1.1 million.

operating expenses:

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and bank charges.

During the nine months ended September 30, 2025, the Company had an increase of approximately $2.3 million, or

36%, primarily related to increases in software subscriptions.

During the three months ended March 31, 2026, the Company had an increase of approximately $790 thousand, or 33%,

primarily related to increases in software subscriptions to support the Company’s growth and compliance initiatives and an

increase in depreciation expense.

service expenses:

This consists of rent, insurance, payroll and benefit expenses related to the Company’s patient care center

in South Carolina.

During the three months ended March 31, 2026, the Company had an increase of approximately $68 thousand, or 2%,

primarily related to increases in compensation costs.

above increases in expenses were partially offset by the following decrease in expenses:

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

During the nine

months ended September 30, 2025, the Company had an increase of approximately $1.2 million, or 16%, primarily resulting from technology

platform improvements and amortization expenses.

expense, net.

Interest expense, net consists of interest expense related to the Avenue Facility, partially offset by interest income

on the Company’s cash account balances for the nine months ended September 30, 2025 and interest expense related to the Avenue

Facility and notes payable, partially offset by interest income on the Company’s cash account balances for the nine months ended

September 30, 2024.

Interest expense stayed consistent for both the nine month periods ended September 30, 2025 and 2024.

on debt extinguishment.

The Company recorded a $1.2 million loss on debt extinguishment related to the repayment of the Avenue Facility

during the nine months ended September 30, 2025 due to a prepayment penalty and various fees associated with the Avenue Facility.

During the three

months ended March 31, 2026, the Company had a decrease of approximately $63 thousand, or 3%, primarily due to lower third-party

service provider costs.

income (expense), net.

Interest income (expense), net consists of interest income on the Company’s cash account balances for the

three months ended March 31, 2026 and interest expense on the Avenue Facility, partially offset by interest income on the Company’s

cash account balances for the three months ended March 31, 2025.

Interest income was approximately $56 thousand for the three months

ended March 31, 2026 compared to interest expense of $464 thousand for the three months ended March 31, 2025.

The Company extinguished

the Avenue Facility on August 5, 2025.

March 31, 2026

December 31, 2025

Current assets

1 unchanged sentence

Working capital

$ (15,577,948 )

$ (15,030,808 )

capital decreased by approximately $0.5 million during the nine months ended September 30, 2025.

capital decreased by approximately $8.1 million during the three months ended March 31, 2026.

The decrease in current assets is primarily

attributable to a decrease in cash of approximately $11.2 million due to the repayment of the Avenue Facility on August 5, 2025 and a

decrease in accounts receivable of approximately $1.6 million, partially offset by an increase in other current assets of approximately

$0.6 million.

Current liabilities decreased by approximately $10.7 million, which was primarily attributable to a decrease in current

portion of long-term debt of approximately $8.4 million due to the repayment of the Avenue Facility on August 5, 2025 and a decrease

in deferred revenue of $5.3 million, partially offset by an increase in accounts payable and accrued expenses of approximately $2.8 million.

attributable to a decrease in cash of $2.3 million, partially offset by an increase in other current assets of $1.2 million and an increase

in accounts receivable of $550 thousand.

Current liabilities increased by $8.0 million, which was primarily attributable to an increase

in accounts payable and accrued expenses of $6.8 million and an increase in deferred revenue of $1.2 million.

and Capital Resources

Months Ended September 30,

Net cash provided by operating

Three Months Ended March 31,

Net cash provided by operating activities

Net cash used in investing activities

(10,161,401 )

Net cash used in financing activities

(12,618,450 )

Net (decrease) increase in cash

(11,219,153 )

cash provided by operating activities was approximately $11.6 million for the nine months ended September 30, 2025, as compared with

approximately $16.4 million for the nine months ended September 30, 2024.

The significant factors contributing to the net cash provided

by operating activities during the nine months ended September 30, 2025, include:

(1) $8.7 million in non-cash depreciation and amortization,

(2) $7.8 million in non-cash stock-based compensation charges, (3) an increase in accounts payable and accrued expenses of $2.8 million

and (4) $1.2 million loss on debt extinguishment recorded related to the repayment of the Avenue Facility on August 5, 2025.

These increases

were partially offset by a decrease in deferred revenue of $5.3 million and the Company’s net loss of $4.3 million for the nine

months ended September 30, 2025.

The significant factors contributing to the net cash provided by operating activities during the nine

months ended September 30, 2024, include:

(1) an increase in accounts payable and accrued expenses of $12.4 million, (2) an increase

in deferred revenue of $10.9 million, (3) $9.1 million in non-cash stock-based compensation charges, and (4) $7.3 million in non-cash

depreciation and amortization.

Net decrease in cash

cash provided by operating activities was approximately $445 thousand for the three months ended March 31, 2026, as compared with approximately

$3.1 million for the three months ended March 31, 2025.

The significant factors contributing to the net cash provided by operating activities

during the three months ended March 31, 2026, include:

(1) an increase in accounts payable and accrued expenses of $6.8 million, (2)

$2.0 million in non-cash depreciation and amortization, (3) $1.4 million in non-cash stock-based compensation charges, and (3) an increase

in deferred revenue of $1.2 million.

These increases were partially offset by:

(1) the Company’s net loss of $16.2 million for the nine

months ended September 30, 2024, (2) an increase in accounts receivable of $5.2 million and (3) an increase in other current assets of

$2.3 million.

cash used in investing activities for the nine months ended September 30, 2025 was approximately $10.2 million, as compared with approximately

$8.8 million for the nine months ended September 30, 2024.

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

30, 2025, was due to cash paid for capitalized software costs of approximately $8.4 million, and cash paid for the purchase of equipment

of approximately $1.7 million.

Net cash used in investing activities for the nine months ended September 30, 2024, was due to cash paid

for capitalized software costs of approximately $7.5 million, and cash paid for the purchase of equipment of approximately $1.3 million.

cash used in financing activities for the nine months ended September 30, 2025 was approximately $12.6 million as compared with approximately

$3.2 million for the nine months ended September 30, 2024.

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

30, 2025, consisted of:

(1) the repayment of the Avenue Facility on August 5, 2025 of approximately $18.7 million, (2) preferred stock

dividends of $2.3 million, and (3) distributions to non-controlling interest of $762 thousand partially offset by $8.7 million net proceeds

received related to sales of common stock under the ATM Sales Agreement and $471 thousand of cash proceeds received from the exercise

of options and warrants.

Net cash used in financing activities for the nine months ended September 30, 2024, consisted of:

(1) preferred

stock dividends of $2.3 million, (2) distributions to non-controlling interest of $603 thousand, (3) repayments of notes payable of approximately

$328 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 $108 thousand.

(1) the Company’s net loss of $8.9 million for the

three months ended March 31, 2026, (2) an increase in other current assets of $1.2 million, and (3) an increase in accounts receivable

of $550 thousand.

The significant factors contributing to the net cash provided by operating activities during the three months ended

March 31, 2025, include:

(1) $2.5 million in non-cash stock-based compensation charges and (2) $1.8 million in non-cash depreciation

and amortization.

These increases were partially offset by:

(1) a decrease in accounts payable and accrued expenses of $2.3 million and

(2) the Company’s net loss of $1.6 million for the three months ended March 31, 2025.

Net cash provided by operating activities

of discontinued operations was $2.8 million for the three months ended March 31, 2025.

cash used in investing activities for the three months ended March 31, 2026 was approximately $2.1 million, as compared with approximately

$2.9 million for the three months ended March 31, 2025.

Net cash used in investing activities for the three months ended March 31, 2026,

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

$105 thousand.

Net cash used in investing activities for the three months ended March 31, 2025, was due to cash paid for capitalized software

costs of approximately $1.9 million, and cash paid for the purchase of equipment of approximately $118 thousand.

Net cash used in investing

activities of discontinued operations was $863 thousand for the three months ended March 31, 2025.

cash used in financing activities for the three months ended March 31, 2026 was approximately $696 thousand as compared with approximately

$813 thousand for the three months ended March 31, 2025.

Net cash used in financing activities for the three months ended March 31, 2026,

consisted of preferred stock dividends of $777 thousand partially offset by $81 thousand of cash proceeds received from the exercise

Net cash used in financing activities for the three months ended March 31, 2025, consisted of preferred stock dividends of

$777 thousand.

Net cash used in financing activities of discontinued operations was $36 thousand for the three months ended March 31,

and Capital Resources Outlook

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.

date, the Company has been funding operations primarily through cash generated from operating activities, issuance of common and preferred

stock, and through loans and advances.

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

2 unchanged sentences

For more information on our operating lease

obligations, see Note 10—Leases to our unaudited condensed consolidated financial statements included in this report.

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

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

Venture Opportunities Fund, L.P.

(collectively, “Avenue”).

The Avenue Credit Agreement provided 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 First Amendment

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

referred to as the “Avenue Facility”.

The Company issued Avenue warrants to purchase $1.2 million of the Company’s

common stock at an exercise price of $1.24, subject to adjustments, of which $660 thousand have been exercised (the “Avenue Warrants”).

In addition, Avenue converted $2 million of the $15 million in term loans funded at closing into shares of the Company’s common

stock 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.

On August 5, 2025, the Company paid the remaining $14.0 million in outstanding principal payments

on the Avenue Facility and the prepayment penalty as noted in the Avenue Credit Agreement.

As of September 30, 2025, there are no principal

payments remaining on the Avenue Facility.

The Company recorded a loss on debt extinguishment of $1.2 million within its unaudited condensed

consolidated financial statements for the three and nine months ended September 30, 2025.

obligations, see Note 11—Leases to our unaudited consolidated financial statements included in this report.

January 2, 2026, the Company entered into a Credit Agreement (the “Credit Agreement”) with Citizens Bank, N.A.

(“Citizens”),

which provides for a senior secured revolving credit facility in an aggregate outstanding amount not exceeding $30 million (the “Credit

Facility”) to support potential corporate development and/or shareholder value creation initiatives.

The Credit Facility may be

increased in the aggregate principal amount of up to $20 million on the terms and subject to the conditions described in the Credit Agreement.

In connection with the Credit Agreement, among other things, the Company issued a revolving loan note to Citizens for any loans that

may be made under the Credit Facility.

Additionally, among other things, the Company and its subsidiaries entered into a pledge and security

agreement and a guarantee agreement to provide credit support for the Credit Facility.

The Credit Facility requires the Company to maintain

(i) a Consolidated Leverage Ratio not to exceed 2.50 to 1.00 and (ii) a Consolidated Interest Coverage Ratio of at least 3.00 to 1.00.

As of March 31, 2026, the Company was in compliance with the Consolidated Leverage Ratio covenant and was out of compliance with the

Consolidated Interest Coverage Ratio covenant contained in the Credit Facility, which is the ratio of (a) the Consolidated EBIT of the

Company and its Subsidiaries for the most recently completed four consecutive fiscal quarters ended March 31, 2026, to (b) Consolidated

Interest Expense of the Company and its Subsidiaries for the most recently completed four consecutive fiscal quarters ended March 31,

2026, as those capitalized terms are defined in the Credit Agreement.

Compliance with the Consolidated

Interest Coverage Ratio was adversely impacted by an increase of approximately $7.6 million, or 34%, in selling and marketing costs

during the three months ended March 31, 2026, resulting from additional sales and marketing initiatives to drive the current and future

periods’ sales growth.

Among its remedies, Citizens could determine that there has been an Event of Default, deny access

to funds under the Credit Facility, and/or it could terminate the Credit Facility.

Discussions on the terms of an amendment to the Credit

Agreement or waiver of compliance with the covenant are ongoing.

As of March 31, 2026 and to date, the Company had not drawn any amounts

under the Credit Facility.

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

11 unchanged sentences

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

During the three months ended September 30, 2025,

the Company sold 762,990 shares of common stock under the ATM Sales Agreement and net proceeds received were $8.7 million.

As of September

30, 2025, the Company had $44.6 million available under the ATM Sales Agreement.

Company expects that its existing cash as of September 30, 2025 of $23.8 million will be sufficient to fund our planned operating expenses

and capital expenditure requirements for at least the next 12 months from the issuance date of these unaudited condensed consolidated

financial statements.

As of March 31, 2026, the Company had $44.6 million

available under the ATM Sales Agreement.

Company expects that its existing cash as of March 31, 2026 of $34.5 million and net proceeds from the sale of common stock under the

ATM Sales Agreement will be sufficient to fund our planned operating expenses and capital expenditure requirements for at least the next

12 months from the issuance date of these unaudited consolidated financial statements.

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.

prepare our unaudited 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.

To the extent that

there are material differences between these estimates and actual results, our financial condition or results of operations would be

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:

6 unchanged sentences

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.

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

Accounting Pronouncements

December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740):

to Income Tax Disclosures , to improve its income tax disclosure requirements.

Under ASU 2023-09, entities must annually:

specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative

The amendments in this update are effective for annual periods beginning after December 15, 2024.

The Company is currently

evaluating the impact that ASU 2023-09 will have to its financial disclosures.

November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures

(Subtopic 220-40) to improve the disclosures about a public business entity’s expenses and provide more detailed information

about the types of expenses included in certain expense captions in the consolidated financial statements.

The amendments in this update

are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December

Early adoption is permitted and the amendments in this update should be applied either prospectively or retrospectively.

Company is evaluating the impact this guidance will have on the disclosures in the consolidated financial statements.

November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03,

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) to improve the

disclosures about a public business entity’s expenses and provide more detailed information about the types of expenses included

in certain expense captions in the unaudited consolidated financial statements.

In January 2025, the FASB issued ASU 2025-01, which clarifies

the effective date of ASU 2024-03 for interim reporting periods.

The amendments in this update are effective for annual reporting periods

beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted and the

amendments in this update should be applied either prospectively or retrospectively.

The Company is evaluating the impact this guidance

will have on the disclosures in the unaudited consolidated financial statements.

September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

8 unchanged sentences

The Company is evaluating the impact this guidance will have on

the consolidated financial statements and related disclosures.

the unaudited 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

a smaller reporting company, we are not required to provide the information required by this Item.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis