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Item 1. Financial Statements

2025-05-06 compared with 2024-11-07 · 1016 added, 1200 removed, 266 unchanged (89% of the section changed)

Financial Statements

CONSOLIDATED BALANCE SHEETS

September 30, 2024

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2025

December 31, 2024

11 unchanged sentences

Total Non-current Assets

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ (DEFICIT) EQUITY

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT

Current Liabilities

1 unchanged sentence

Accrued expenses

Notes payable, net

Current operating lease liabilities

12 unchanged sentences

Series B Convertible Preferred Stock, $ 0.0001 par value;

5,000 shares authorized, zero shares issued and outstanding, liquidation value, $ 0 per share as of September 30, 2024 and December 31, 2023

Stockholders’ (Deficit) Equity

5,000 shares authorized, zero shares issued and outstanding, liquidation value, $ 0 per share as of March 31, 2025 and December 31, 2024

Stockholders’ Deficit

Series A Preferred Stock, $ 0.0001 par value;

1,610,000 shares authorized, 1,400,000 shares issued and outstanding, liquidation value approximately, $ 25.55 per share as of September 30, 2024 and December 31, 2023

1,610,000 shares authorized, 1,400,000 shares issued and outstanding, liquidation value approximately, $ 25.55 per share as of March 31, 2025 and December 31, 2024

Common Stock, $ 0.01 par value;

100,000,000 shares authorized, 41,909,572 and 38,358,641 shares issued, 41,806,532 and 38,255,601 outstanding as of September 30, 2024 and December 31, 2023, respectively

100,000,000 shares authorized, 43,632,700 and 42,293,907 shares issued, 43,529,660 and 42,190,867 outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

2 unchanged sentences

( 236,253,218 )

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

Treasury stock, 103,040 , at cost, as of March 31, 2025 and December 31, 2024

Total LifeMD, Inc.

Stockholders’ (Deficit) Equity

Stockholders’ Deficit

( 2,328,732 )

( 5,485,501 )

Non-controlling interest

Total Stockholders’ (Deficit) Equity

Total Stockholders’ Deficit

( 4,045,368 )

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

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

Total Liabilities, Mezzanine Equity and Stockholders’ Deficit

The accompanying notes are an integral part of these

unaudited condensed consolidated financial statements.

Consolidated STATEMENTS OF OPERATIONS

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Telehealth revenue, net

$ 108,549,257

WorkSimpli revenue, net

7 unchanged sentences

Customer service expenses

Other operating expenses

Development costs

Other operating expenses

Total expenses

Operating loss

( 4,686,112 )

( 4,569,381 )

( 17,162,923 )

Operating income (loss)

( 6,171,245 )

Interest expense, net

( 1,567,743 )

( 1,973,901 )

Loss on debt extinguishment

Net loss before income taxes

Income tax expense

( 5,477,232 )

( 5,283,147 )

( 18,963,189 )

( 14,616,836 )

Net (loss) income attributable to non-controlling interest

Net loss attributable to LifeMD, Inc.

( 5,131,465 )

( 6,122,435 )

Net income (loss)

( 6,648,923 )

Net income attributable to non-controlling interest

Net income (loss) attributable to LifeMD, Inc.

( 6,768,355 )

Preferred stock dividends

( 2,329,688 )

Net loss attributable to LifeMD, Inc.

Net income (loss) attributable to LifeMD, Inc.

common stockholders

$ ( 7,544,918 )

$ ( 6,898,998 )

$ ( 21,105,148 )

$ ( 19,193,579 )

Basic loss per share attributable to LifeMD, Inc.

Basic earnings (loss) per share attributable to LifeMD, Inc.

common stockholders

Diluted loss per share attributable to LifeMD, Inc.

Diluted earnings (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’ (DEFICIT) EQUITY

Series A Preferred

Additional Paid-in

Balance, January 1, 2023

$ 179,015,250

$ ( 190,562,994 )

$ ( 163,701 )

$ ( 11,395,777

$ ( 475,548 )

$ ( 11,871,325 )

Stock compensation expense

Stock issued for noncontingent consideration payment

Warrants issued for debt instruments

Series A Preferred Stock Dividend

Distribution to non-controlling interest

Adjustment of membership interest in WorkSimpli

Net (loss) income

( 4,008,456 )

( 3,442,473 )

Balance, March 31, 2023

$ 183,183,652

$ ( 195,348,013 )

$ ( 163,701 )

$ ( 12,007,521

$ ( 12,039,018 )

Stock compensation expense

Stock issued for noncontingent consideration payment

Cashless exercise of stock options

Series A Preferred Stock Dividend

Distribution to non-controlling interest

Adjustment of membership interest in WorkSimpli

Net (loss) income

( 6,733,000 )

( 5,891,216 )

Balance, June 30, 2023

$ 186,673,930

$ ( 202,857,575 )

$ ( 163,701 )

$ ( 16,021,557

$ ( 15,237,938 )

Stock compensation expense

Stock issued for noncontingent consideration payment

Stock issued for legal settlement

Cashless exercise of stock options

Sale of common stock under ATM, net

Series B Preferred Stock conversion

Warrants issued for debt instruments fair value adjustment

Series A Preferred Stock Dividend

Distribution to non-controlling interest

Net (loss) income

( 6,122,435 )

( 5,283,147 )

Balance, September 30, 2023

$ 196,901,377

$ ( 209,756,573 )

$ ( 163,701 )

$ ( 12,671,164

$ ( 11,084,257 )

The accompanying notes are an integral part of these

unaudited condensed consolidated financial statements.

Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ EQUITY (Deficit)

Series A Preferred

20 unchanged sentences

$ ( 845,303 )

Stock compensation expense

Exercise of stock options

Cashless exercise of stock options

Cashless exercise of warrants

Series A Preferred Stock Dividend

Distribution to non-controlling interest

Net (loss) income

( 6,875,640 )

( 6,837,034 )

Balance, June 30, 2024

Series A Preferred

Additional Paid-in

Balance, January 1, 2025

$ 230,508,339

9 unchanged sentences

Stock compensation expense

Cashless exercise of options

Series A Preferred Stock Dividend

Distribution to non-controlling interest

( 5,131,465 )

( 5,477,232 )

Net (loss) income

( 5,131,465 )

( 5,477,232 )

Balance, September 30, 2024

Net income (loss)

Balance, March 31, 2025

$ 233,043,479

8 unchanged sentences

$ ( 392,754 )

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

The accompanying notes are an integral part of these

unaudited condensed consolidated financial statements.

Consolidated STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

$ ( 18,963,189 )

Net income (loss)

$ ( 6,648,923 )

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

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

Amortization of debt discount

3 unchanged sentences

Depreciation of fixed assets

Loss on debt extinguishment

Operating lease payments

Stock issued for legal settlement

Noncash operating lease expense

Stock compensation expense

4 unchanged sentences

Other current assets

( 1,303,495 )

Operating lease liabilities

2 unchanged sentences

Accrued expenses

Other operating activity

( 2,308,383 )

Net cash provided by operating activities

4 unchanged sentences

Purchase of equipment

( 1,265,447 )

Purchase of intangible assets

Net cash used in investing activities

2 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term debt, net

Proceeds from notes payable

Repayment of notes payable, net of prepayment penalty

( 5,043,916 )

Cash proceeds from exercise of options

Sale of common stock under ATM, net

Preferred stock dividends

( 2,329,688 )

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

Net cash used in financing activities

( 1,047,690 )

Net increase in cash

Net (decrease) increase in cash

Cash at beginning of period

6 unchanged sentences

Stock issued for noncontingent consideration payment

Series B Preferred Stock conversion

Warrants issued for debt instruments

Right of use asset

Right of use assets

Operating lease liabilities

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

TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 – NATURE OF THE ORGANIZATION AND BUSINESS

was formed in the State of Delaware on May 24, 1994, under its prior name, Immudyne, Inc.

The Company changed its name to Conversion

on June 22, 2018 and then subsequently, on February 22, 2021, it changed its name to LifeMD, Inc.

Effective February 22, 2021,

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

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

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

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

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

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

On February 22, 2021, concurrent with the name of the

parent company to LifeMD, Inc., Conversion Labs PR was renamed to LifeMD PR, LLC.

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

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

In addition to LegalSimpli Software, LLC’s growth

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

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

Effective January 22, 2021,

the Company consummated a transaction to restructure the ownership of WorkSimpli and concurrently increased its ownership interest in

WorkSimpli to 85.6 %.

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 December 15, 2022, LifeMD PR, LLC merged

into WorkSimpli, with WorkSimpli being the surviving entity.

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

in WorkSimpli increased to 74.1 %.

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

of WorkSimpli.

As a result, the Company’s ownership interest in WorkSimpli decreased to 73.3 %.

See Note 8 for additional information.

January 18, 2022, the Company acquired Cleared Technologies, PBC, a Delaware public benefit corporation (“Cleared”), a nationwide

allergy telehealth platform that provides personalized treatments for allergy, asthma, and immunology (See Note 3).

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

virtual and in-home healthcare.

The Company believes the traditional model of visiting a doctor’s office, traveling to a retail

pharmacy, and returning for follow up care or prescription refills is complex, inefficient, and costly, and discourages many individuals

from seeking medical care.

The Company is improving the delivery of healthcare through telehealth with our proprietary technology platform,

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

Direct-to-patient telehealth technology companies, like the Company, connect consumers to affiliated, licensed, healthcare professionals

for care across numerous indications, including urgent and primary care, weight management, sleep, hair loss, men’s and women’s

health, hormonal therapy and dermatology, chronic care management and more.

Company’s telehealth platform helps patients access their licensed providers for diagnoses, virtual care, and prescription medications,

often delivered on a recurring basis.

In addition to its telehealth prescription offerings, the Company sells over-the-counter (“OTC”)

All products are available on a subscription or membership basis, where a patient can subscribe to receive regular shipments

of prescribed medications or products.

This creates convenience and often discounted pricing opportunities for patients and recurring

revenue streams for the Company.

its first brand, ShapiroMD, the Company has built a full line of proprietary OTC products for male and female hair loss—including

Food and Drug Administration (“FDA”) approved OTC minoxidil and an FDA-cleared medical device—and now a personalized

telehealth platform offering that gives consumers access to virtual medical treatment from their providers and, when appropriate, a full

line of oral and topical prescription medications for hair loss.

The Company’s men’s brand, RexMD, currently offers access

to provider-based treatment for erectile dysfunction, as well as treatment for other common men’s health issues, including premature

ejaculation and hair loss.

In the first quarter of 2021, the Company launched NavaMD, a tele-dermatology and skincare brand for women.

The Company has built a platform that allows it to efficiently launch telehealth and wellness product lines wherever it determines there

is a market need.

the first quarter of 2022, we launched our virtual primary care offering under the LifeMD brand, LifeMD Primary Care.

This offering provides

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

April 2023, we launched our GLP-1 Weight Management program providing primary care, weight loss, holistic healthcare, lab work and prescription

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS

Corporate History

was formed in the

State of Delaware on May 24, 1994, under its prior name, Immudyne, Inc.

The Company changed its name to Conversion Labs, Inc.

22, 2018 and then subsequently, on February 22, 2021, it changed its name to LifeMD, Inc.

Effective February 22, 2021, the trading symbol

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

On April 1, 2016, the original

operating agreement of Immudyne PR LLC (“Immudyne PR”), a joint venture to market the Company’s skincare products, was

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

Concurrent with the name change

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

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

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

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

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

In June 2018, the Company closed

the strategic acquisition of 51 % of LegalSimpli Software, LLC, which operates a software as a service application for converting, editing,

signing, and sharing PDF documents called PDFSimpli.

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

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

On July 15, 2021, LegalSimpli Software, LLC,

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

As a result of a series of restructuring transactions, the Company’s

ownership interest in WorkSimpli is 73.3 %.

Unless otherwise indicated, the

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

known as Conversion Labs, Inc.), LifeMD Pharmacy Holdings LLC, an affiliated limited liability company, (“LifeMD Pharmacy”)

and our majority-owned subsidiary, WorkSimpli.

The affiliated network of medical Professional Corporations and medical Professional Associations

administratively led by LifeMD Southern Patient Medical Care, P.C.

(“LifeMD PC”) is the Company’s affiliated, variable

interest entity in which we hold a controlling financial interest.

Unless otherwise specified, all dollar amounts are expressed in United

States dollars.

Nature of Business

The Company is a direct-to-patient

telehealth company providing a high-quality, cost-effective, and convenient way to access comprehensive, virtual and in-home healthcare.

The Company believes 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 medical care.

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.

Direct-to-patient

telehealth technology companies, like the Company, connect consumers to affiliated, licensed, healthcare professionals for care across

numerous indications, including virtual medical care, weight loss, sexual health, hormone replacement therapy, hair loss and other conditions.

The Company’s telehealth

platform helps patients access their licensed providers for diagnoses, virtual care, and prescription medications, often delivered on

a recurring basis.

In addition to its telehealth prescription offerings, the Company sells over-the-counter (“OTC”) products.

All products are available on a subscription or membership basis, where a patient can subscribe to receive regular shipments of prescribed

medications or products.

This creates convenience and often discounted pricing opportunities for patients and recurring revenue streams

for the Company.

With its first brand, ShapiroMD,

the Company has built a full line of proprietary OTC products for male and female hair loss including Food and Drug Administration (“FDA”)

approved OTC minoxidil and an FDA-cleared medical device and a personalized telehealth platform offering that gives consumers access to

virtual medical treatment from their providers and, when appropriate, a full line of oral and topical prescription medications for hair

The Company’s men’s brand, RexMD, currently offers access to virtual medical treatment for a variety of men’s

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

In the first quarter of 2022,

the Company launched our virtual primary care offering under the LifeMD brand, LifeMD Primary Care.

This offering provides patients with

access to affiliated high-quality providers for their urgent care and chronic care needs.

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.

In September 2024, we expanded our

Weight Management program with an alternative designed for patients who are unable or unwilling to use GLP-1 medications.

This treatment

plan consists of three oral medications – metformin, bupropion, and topiramate.

and Subsidiary History

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

As a result of various ownership restructurings, the Company’s

ownership interest in WorkSimpli is 73.3 % as of December 31, 2023.

See Note 8 for additional information.

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

asthma, and immunology.

Under the terms of the agreement, the Company acquired all outstanding shares of Cleared at closing in exchange

for a $ 460 thousand upfront cash payment, and two non-contingent milestone payments for a total of $ 3.46 million ($ 1.73 million each

on or before the first and second anniversaries of the closing date).

The Company purchased a convertible note from a strategic pharmaceutical

investor for $ 507 thousand which was converted upon closing of the Cleared acquisition.

The Company also agreed to a performance-based

earnout based on Cleared’s future net sales, payable in cash or shares at the Company’s discretion.

On February 4, 2023,

the Company entered into the First Amendment (the “Cleared First Amendment”) to the Stock Purchase Agreement, dated January

11, 2022, between the Company and the sellers of Cleared (the “Cleared Stock Purchase Agreement”).

The Cleared Stock Purchase

Agreement was amended to, among other things:

(i) reduce the total purchase price by $ 250 thousand to a total of $ 3.67 million;

change the timing of the payment of the purchase price to $ 460 thousand paid at closing (which has already been paid by the Company),

with the remaining amount to be paid in five quarterly installments beginning on or before February 6, 2023 and ending January 15, 2024;

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

and (iv) remove certain representations and warranties

of the Company and sellers in connection with the transaction (See Note 3).

The Company issued the following shares of common stock to

the sellers of Cleared under the Cleared First Amendment:

(1) 337,895 shares on February 6, 2023, (2) 455,319 shares on April 17, 2023,

(3) 158,129 shares on July 17, 2023, (4) 117,583 shares on October 17, 2023 and (5) 95,821 shares on January 16, 2024.

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

corporation (the “Seller”), whereby WorkSimpli acquired substantially all of the assets associated with the Seller’s

business, offering subscription-based resume building software through software as a service online platforms (the “Acquisition”).

WorkSimpli paid $ 4.0 million to the Seller upon closing.

The Seller is also entitled to a minimum of $ 500 thousand to be paid out in

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 September 30, 2024, WorkSimpli has paid

the Seller $ 500 thousand in accordance with the ResumeBuild APA.

WorkSimpli borrowed the purchase price from the Company pursuant to

a promissory note with the obligation secured by an equity purchase guarantee agreement and a stock option pledge agreement from Fitzpatrick

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

As of September 30,

2024, there is no remaining balance outstanding related to the promissory note.

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

refer to LifeMD, Inc.

(formerly known as Conversion Labs, Inc.), Cleared, a Delaware public benefit corporation and our majority-owned

subsidiary, WorkSimpli.

The affiliated network of medical Professional Corporations and medical Professional Associations administratively

led by LifeMD Southern Patient Medical Care, P.C.

(“LifeMD PC”) is the Company’s affiliated, variable interest entity

in which we hold a controlling financial interest.

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

of September 30, 2024, the Company has an accumulated deficit of approximately $ 235 million and has experienced significant losses from

its operations.

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

Additionally, the Company expects its burn rate of cash to continue to improve and to maintain positive operating cash flows for

the next 12 months following the date of this report.

To date, the Company has been funding operations primarily through the sales of

its products, issuance of common and preferred stock, and through loans and advances.

The Company’s continued operations are dependent

upon obtaining an increase in its sale volumes or the issuance of additional shares of common stock.

There can be no assurances that

we will be successful in increasing revenues and improving operational efficiencies.

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 provides for a convertible senior

secured credit facility of up to an aggregate amount of $ 40 million, comprised of the following:

(1) $ 15 million in term loans funded

at closing, (2) $ 5 million of additional committed term loans which the Company received on September 26, 2023 under the 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 Avenue Facility matures on October 1, 2026 .

The Company issued Avenue warrants

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

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

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

Proceeds from the

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

for general corporate purposes.

The Company is subject to certain affirmative and negative covenants under the Avenue Facility, including

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

month, and beginning on the period ended September 30, 2023, and at the end of each quarter thereafter, a trailing six-month cash flow,

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

As of September 30, 2024, there was

$ 19 million outstanding under the Avenue Facility, and the Company was in compliance with the Avenue Facility covenants.

the Avenue Facility accrue interest at a variable rate per annum equal to the greater of (i) the sum of 4.75% plus the Prime Rate (as

defined in the Avenue Supplement) and (ii) 12.50%.

Payments are interest only for up to 24 months and then fully amortized thereafter.

Weight Management Program with a personalized, non-GLP-1 treatment plan consisting of three oral medications – metformin, bupropion,

and topiramate.

Liquidity Evaluation

As of March 31, 2025, the Company

has an accumulated deficit approximating $ 235.6 million and has experienced significant losses from its operations.

The Company is showing

significant positive revenue trends and expects its burn rate of cash to continue to improve and to maintain positive operating cash flows

for the next 12 months following the date of this report.

To date, the Company has been funding operations primarily through the sales

of its products, issuance of common and preferred stock, and through loans and advances.

The Company’s continued operations are

dependent upon obtaining an increase in its sale volumes or the issuance of additional shares of common stock.

There can be no assurances

that we will be successful in increasing revenues and improving operational efficiencies.

On 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.

and Avenue Venture Opportunities Fund, L.P.

(collectively,

The Avenue Credit Agreement provides for a convertible senior secured credit facility of up to an aggregate amount

of $ 40 million, comprised of the following:

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

loans which the Company received on September 26, 2023 under the 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 (the “Avenue Warrants”).

In addition, Avenue may convert up to $ 2 million of the $ 15 million in term loans

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

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

and are expected to be used for general corporate purposes.

The Company is subject to certain affirmative and negative covenants under

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

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

trailing six-month cash flow, subject to certain adjustments as provided by the Avenue Credit Agreement, of at least $2 million.

March 31, 2025, there was $ 19 million outstanding under the Avenue Facility, and the Company was in compliance with the Avenue Facility

Loans under the Avenue Facility accrue interest at a variable rate per annum equal to the greater of (i) the sum of 4.75% plus

the Prime Rate (as defined in the Avenue Supplement) and (ii) 12.50%.

Payments are interest only for up to 24 months and then fully amortized

The Avenue Facility matures on October 1, 2026 .

The Company may prepay the loans, subject to a prepayment penalty of 1.00 % to 3.00 % of

the principal amount prepaid, depending on the timing of the prepayment.

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

through and with certain of its wholly-owned subsidiaries

(“Medifast”).

Pursuant to certain agreements between the parties, Medifast has agreed to pay to the Company the amount of

$ 10 million to support the collaboration, funding enhancements to the Company platform, operations and supporting infrastructure, of

which $ 5 million was paid at the closing on December 12, 2023, $ 2.5 million was paid during the three months ended March 31, 2024, and

the 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., 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.

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

The Company may prepay the loans, subject to a prepayment penalty of 1.00 %

to 3.00 % of the principal amount prepaid, depending on the timing of the prepayment.

The Company entered into an At

Market Issuance Sales Agreement (the “ATM Sales Agreement”) with B.

Riley Securities, Inc.

Cantor Fitzgerald & Co.

and Cantor Fitzgerald & Co.

relating to the sale of its common stock.

In accordance with the terms of the ATM Sales Agreement, the Company

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

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 September 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 $ 32.6 million as of the filing date.

In accordance with the terms of the ATM Sales Agreement, the Company may, but is not obligated

to, offer and sell, from time to time, shares of common stock, through or to the Agents, acting as agent or principal.

Sales of common

stock, if any, will be made by any method permitted that is deemed an “at the market offering” as defined in Rule 415 under

the Securities Act.

On 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 March 31, 2025, 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.

May 5, 2025, the Company has a current cash balance of approximately $ 24.5 million.

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.

Positive indicators that lead

to the Company’s expectation that it will have sufficient cash over the next 12 months following the date of this report include:

(1) the Company’s continued strengthening of 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 nine months ended

September 30, 2024, (3) cash on hand of $ 37.6 million as of September 30, 2024, (4) $ 53.3 million available under the ATM Sales Agreement,

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.

Positive indicators that lead to

the Company’s expectation that it will have sufficient cash over the next 12 months following the date of this report include:

the Company’s continued strengthening of its revenues, reduction in losses 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 three

months ended March 31, 2025, (3) cash on hand of $ 34.4 million as of March 31, 2025, (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 evidenced by the Medifast Collaboration and Medifast Private Placement noted above.

2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally

accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article

8 of Regulation S-X.

Accordingly, they do not include all of the information and note disclosures required by accounting principles generally

accepted in the United States (“U.S.

and (6) the overall market value of the telehealth industry, which the Company believes will continue to drive interest in the Company

as evidenced by the collaboration with Medifast, Inc.

(“Medifast”) during the year ended December 31, 2024.

The Company received

$ 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”).

also entered into a stock purchase agreement and registration rights agreement with Medifast’s wholly-owned subsidiary, Jason Pharmaceuticals,

Inc., whereby the Company issued 1,224,425 shares of its common stock in a private placement (the “Medifast Private Placement”)

at a purchase price of $ 8.1671 per share, for aggregate proceeds of approximately $ 10 million, which was paid at the closing on December 12, 2023.

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed

consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States

of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X.

they do not include all of the information and note disclosures required by accounting principles generally accepted in the United States

GAAP”) for complete audited financial statements.

The accompanying unaudited financial

information should be read in conjunction with the audited consolidated financial statements, including the notes thereto, as of and

for the year ended December 31, 2023, included in our 2023 Annual Report on Form 10-K filed with the SEC.

The information furnished in

this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary

for a fair presentation of our financial position, results of operations and cash flows for each period presented.

The results of operations

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

2024 or for any future period.

of Consolidation

Company evaluates the need to consolidate affiliates based on standards set forth in Accounting Standards Codification (“ASC”)

810, Consolidation .

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

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

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

See Note 8 for additional information.

significant intercompany transactions and balances have been eliminated in consolidation.

and Cash Equivalents

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

As of September 30,

2024 and December 31, 2023, there were no cash equivalents.

The Company maintains deposits in financial institutions in excess of amounts

guaranteed by the Federal Deposit Insurance Corporation.

Cash and cash equivalents are maintained at financial institutions, and at times,

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.

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 interest.

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

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

Professional Associations administratively led by LifeMD Southern Patient Medical Care, P.C., is a VIE and subject to consolidation.

LifeMD PC and the Company do not have any stockholders in common.

LifeMD PC is owned by licensed physicians, and the Company maintains

a managed service agreement with LifeMD PC whereby we provide all non-clinical services to LifeMD PC.

The Company determined that it

is the primary beneficiary of LifeMD PC and must consolidate, as we have both the power to direct the activities of LifeMD PC that most

significantly impact the economic performance of the entity and we have the obligation to absorb the losses.

As a result, 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 $ 20.0 million and $ 1.9 million for the three months ended September 30, 2024 and 2023, respectively,

and $ 41.5 million and $ 2.7 million for the nine months ended September 30, 2024 and 2023, respectively.

Total net income for LifeMD PC

was approximately $ 6.2 million and $ 440 thousand for the three months ended September 30, 2024 and 2023, respectively.

Total net income

for LifeMD PC was approximately $ 3.4 million for the nine months ended September 30, 2024 and net loss for LifeMD PC was approximately

$ 1.1 million for the nine months ended September 30, 2023.

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

in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets

and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Some of the more significant estimates required to be made by management include returns and allowances, stockholders’ equity-based

transactions, the capitalization and impairment of capitalized software and impairment of other long-lived assets, estimates to cash

flow projections, and liquidity assessment.

The accompanying unaudited financial information should be read in

conjunction with the audited consolidated financial statements, including the notes thereto, as of and for the year ended December 31,

2024, included in our 2024 Annual Report on Form 10-K filed with the SEC.

The information furnished in this report reflects all adjustments

(consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial

position, results of operations and cash flows for each period presented.

The results of operations for the three months ended March 31,

2025 are not necessarily indicative of the results for the year ending December 31, 2025 or for any future period.

Principles of Consolidation

The Company evaluates the need

to consolidate affiliates based on standards set forth in Accounting Standards Codification (“ASC”) 810, Consolidation .

The unaudited condensed consolidated

financial statements include the accounts of the Company, LifeMD Pharmacy, its majority owned subsidiary, WorkSimpli, and LifeMD PC, the

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

All significant intercompany transactions

and balances have been eliminated in consolidation.

The Company maintains deposits

in financial institutions that may, at times, exceed amounts guaranteed by the Federal Deposit Insurance Corporation.

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.

Variable Interest Entities

In 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

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.

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.

The Company determined that the

LifeMD PC entity, the Company’s affiliated network of medical Professional Corporations and medical Professional Associations administratively

led by LifeMD Southern Patient Medical Care, P.C., is a VIE and subject to consolidation.

LifeMD PC and the Company do not have any stockholders

LifeMD PC is owned by licensed physicians, and the Company maintains a managed service agreement with LifeMD PC whereby we

provide all non-clinical services to LifeMD PC.

The Company determined that it is the primary beneficiary of LifeMD PC and must consolidate,

as we have both the power to direct the activities of LifeMD PC that most significantly impact the economic performance of the entity

and we have the obligation to absorb the losses.

As a result, 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.

Total net loss for LifeMD PC was

approximately $ 3.3 million and $ 2.4 million for the three months ended March 31, 2025 and 2024, respectively.

Total assets and liabilities

for the LifeMD PC were approximately $ 7 thousand and $ 201 thousand, respectively, as of March 31, 2025 and $ 8 thousand and $ 380 thousand,

respectively, as of December 31, 2024.

Use of Estimates

prepares its unaudited condensed consolidated financial statements in conformity with U.S.

GAAP which requires management to make

estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the

reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

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

customers using a five-step analysis:

performance obligations

the transaction price

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

is the delivery of the product;

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

The Company generally records

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

fulfillment service provider.

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

commensurate upon shipment of the product.

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

revenue is deferred until that time.

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

based on the recurring shipment of products.

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

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

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

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

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

correspondingly, the Company reduces gross product sales

for such discounts and customer rebates.

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

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

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

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

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

The Company offers monthly and multi-month subscriptions dependent upon the subscriber’s enrollment selection.

The Company has

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

platform for the time period of the subscription purchased.

Revenue Recognition

The Company records revenue under

the adoption of ASC 606, Revenue from Contracts with Customers , by analyzing exchanges with its customers using a five-step analysis:

Identify the contract

Identify performance obligations

Determine the transaction price

Allocate the transaction price

Recognize revenue

For the Company’s product-based

contracts with customers, the Company has determined that there is one performance obligation, which is the delivery of the product;

performance obligation is transferred at a discrete point in time.

The Company generally records sales of finished products once the customer

places and pays for the order, with the product being simultaneously shipped by a third-party fulfillment service provider.

In all cases,

delivery is considered to have occurred when the customer obtains control, which is usually commensurate upon shipment of the product.

In the case where product is not simultaneously shipped when the customer places and pays for the order, recognition of revenue is deferred

until time of shipment.

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

recurring shipment of products.

The Company records the related revenue at the time it fulfills the shipment obligation to the customer.

For its product-based contracts

with customers, the Company records an estimate for provisions of discounts, returns, allowances, customer rebates, and other adjustments

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

The Company’s discounts and

customer rebates are known at the time of sale;

correspondingly, the Company reduces gross product sales for such discounts and customer

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

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

The Company has determined that

the population of its product-based contracts with customers are homogenous, supporting the ability to record estimates for returns and

allowances to be applied to the entire product-based portfolio population.

For its telehealth contracts with

customers, the Company offers one-time and subscription-based access to the Company’s telehealth platform.

The Company offers monthly

and multi-month subscriptions dependent upon the subscriber’s enrollment selection.

The Company has determined that there is one

performance obligation that is delivered over time, as the Company allows the subscriber to access the telehealth platform for the time

period of the subscription purchased.

The majority of the Company’s subscriptions are recognized over time using the input method

in which revenue is recognized on the basis of efforts or inputs toward satisfying a performance obligation relative to the total expected

inputs to satisfy the performance obligation.

The Company uses time elapsed as the input.

The measure used provides a faithful depiction

of the transfer of goods or services to the subscribers.

The Company records the revenue over the customer’s subscription period

for monthly and multi-month subscribers.

discounts, returns and rebates on telehealth revenues approximated $ 1.7 million and $ 696 thousand during the three months ended September

The Company also offers bundled arrangements in which a subscriber receives subscription-based

access to the Company’s telehealth platform as well as prescribed medication.

The Company has determined that there are two performance

obligations related to these bundles:

(i) one performance obligation for the subscription-based service that is delivered over time and

(ii) one performance obligation for the prescribed medication that is delivered as of a point in time.

For contracts with multiple performance

obligations, the transaction price is allocated to each performance obligation based on a relative stand-alone selling price basis.

stand-alone selling price is based on the prices at which the Company separately sells the products and services.

Revenue related to contracts

with multiple performance obligations was $ 3.9 million for the three months ended March 31, 2025.

Additionally, to fulfill its promise

to customers for contracts that include the sale of prescription products, the Company maintains relationships with certain third-party

pharmacies, which are licensed mail order pharmacies providing prescription fulfillment to the Company’s customers.

The third-party

pharmacies fill prescription orders for customers who have received a prescription from a LifeMD PC provider.

The Company may account

for prescription product revenue as the principal or agent in the arrangement with its customers depending on the agreement with the related

third-party pharmacy.

The following factors are evaluated to determine if the Company acts as principal or agent in the arrangement:

whether the Company has sole discretion in determining which pharmacy fills a customer’s prescription;

(ii) whether the Company

obtains control of the product;

(iii) whether the Company is primarily responsible to the customer for the satisfactory fulfillment and

acceptability of the order;

(iv) whether the Company is responsible for refunds of the prescription medication after transfer of control

to the customer;

and (v) whether the Company sets all listed prices for the prescription products.

Based on evaluation of these factors,

the Company accounts for prescription product revenue as the agent in the arrangement with its largest third-party pharmacy provider.

Customer discounts, returns and

rebates on telehealth product revenues approximated $ 776 thousand and $ 991 thousand, respectively, during the three months ended March

31, 2025 and 2024, respectively.

Customer discounts, returns and rebates on telehealth revenues approximated $ 4.5 million and $ 1.5 million

during the nine months ended September 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

to its subscribers, principally on a monthly subscription basis.

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

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

For these subscription-based contracts with

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

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

The Company has estimated

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

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

The Company allows the customer to cancel at any point during

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

original subscription.

The Company records the revenue over the customer’s subscription period for monthly and yearly subscribers

or at the end of the initial 14-day service period for customers who purchased the initial subscription.

The Company offers a discount

for the monthly or yearly subscriptions being purchased, which is deducted at the time of payment at the initiation of the contract term;

therefore the Contract price is fixed and determinable at the contract initiation.

Monthly and annual subscriptions for the service are

recorded net of the Company’s known discount rates.

Customer discounts and allowances on WorkSimpli revenues approximated $ 1.1

million and $ 865 thousand during the three months ended September 30, 2024 and 2023, respectively.

Customer discounts and allowances

on WorkSimpli revenues approximated $ 2.5 million and $ 2.6 million during the nine months ended September 30, 2024 and 2023, respectively.

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

The Company, through its majority-owned

subsidiary WorkSimpli, offers a subscription-based service providing a suite of software applications to its subscribers, principally

on a monthly subscription basis.

The software suite allows the subscriber/user to convert almost any type of document to another electronic

form of editable document, providing ease of editing.

For these subscription-based contracts with customers, the Company offers an initial

14-day trial period which is billed at $ 1.95 , followed by a monthly subscription, or a multi-month subscription to the Company’s

software suite dependent on the subscriber’s enrollment selection.

The Company has determined that there is one product and one

performance obligation that is delivered over time, as the Company allows the subscriber to access the suite of services for the time

period of the subscription purchased.

The Company allows the customer to cancel at any point during the billing cycle, in which case the

customer’s subscription will not be renewed for the following month or year depending on the original subscription.

records the revenue over the customer’s subscription period for monthly and multi-month subscribers or at the end of the initial

14-day service period for customers who purchased the initial subscription.

The Company offers a discount for the monthly or multi-month

subscriptions being purchased, which is deducted at the time of payment at the initiation of the contract term;

therefore the contract

price is fixed and determinable at the contract initiation.

Monthly and multi-month subscriptions for the service are recorded net of

the Company’s known discount rates.

Customer discounts and allowances on WorkSimpli revenues approximated $ 1.1 million and $ 766

thousand, respectively, during the three months ended March 31, 2025 and 2024, respectively.

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

Pursuant to certain agreements between the parties,

2 unchanged sentences

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

determined the transaction price totaled $ 10 million, which was fully collected as of September 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.

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

The Company determined the transaction

price totaled $ 10 million, which was fully collected as of December 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 as of December 31, 2023, 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 nine months ended September 30, 2024 and 2023, the Company had the following disaggregated revenue:

For the three months ended March

31, 2025 and 2024, the Company had the following disaggregated revenue:

SCHEDULE OF DISAGGREGATED REVENUE

Three Months Ended September 30,

Nine Months Ended September 30,

Telehealth product and subscription revenue

LifeMD PC subscription revenue

Three Months Ended March 31,

Telehealth subscription revenue

Telehealth product revenue

WorkSimpli revenue

Medifast collaboration revenue

Total net revenue

$ 148,199,266

$ 107,687,158

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

As of September 30, 2024 and

December 31, 2023, the Company has accrued contract liabilities, as deferred revenue, of approximately $ 16.4 million and $ 8.8 million,

respectively, which represent the following:

(1) $ 12.3 million and $ 4.2 million as of September 30, 2024 and December 31, 2023, respectively,

related to obligations on telehealth in-process monthly or yearly contracts with customers, (2) $ 1.6 million and $ 2.1 million as of September

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 September 30, 2024 and December 31, 2023, respectively,

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

revenue increased by $ 7.6 million to $ 16.4 million as of September 30, 2024 compared to $ 8.8 million as of December 31, 2023.

is primarily due to the increase in monthly and multi-month subscription revenue related to LifeMD PC of approximately $ 38.8 million

during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

The amount of revenue recognized

during the three months ended September 30, 2024, that was included in the deferred revenue balance at the beginning of the period, was

$ 11.2 million.

The amount of revenue recognized during the nine months ended September 30, 2024, that was included in the deferred revenue

balance at the beginning of the period, was $ 7.4 million.

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

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

following table summarizes deferred revenue activities for the periods presented:

Total revenues, net

Deferred Revenues

The Company records deferred revenues

when cash payments are received or due in advance of its performance.

As of March 31, 2025 and December 31, 2024, the Company has accrued

contract liabilities, as deferred revenue, of approximately $ 14.6 million and $ 14.5 million, respectively, which represent the following:

(1) $ 10.1 million and $ 10.1 million as of March 31, 2025 and December 31, 2024, respectively, related to obligations on telehealth in-process

monthly or multi-month contracts with customers, (2) $ 2.0 million and $ 1.9 million as of March 31, 2025 and December 31, 2024, 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, 2025 and December 31, 2024, respectively, related to obligations on WorkSimpli in-process

monthly or multi-month contracts with customers.

Deferred revenue was $ 14.6 million

as of March 31, 2025 compared to $ 14.5 million as of December 31, 2024.

The amount of revenue recognized during the three months ended

March 31, 2025, that was included in the deferred revenue balance as of December 31, 2024, was $ 12.7 million.

The Company expects to recognize

all of the deferred revenue related to future performance obligations that are unsatisfied or partially unsatisfied as of March 31, 2025

as revenue by March 31, 2026.

The following table summarizes deferred revenue activities

for the periods presented:

SCHEDULE OF CONTRACT WITH CUSTOMER LIABILITY

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Beginning of period

2 unchanged sentences

( 13,399,214 )

( 137,417,788 )

( 102,609,266 )

End of period

Company determines if an arrangement is a lease at inception.

Operating lease right-of-use (“ROU”) assets are included in

right-of-use assets on the unaudited condensed consolidated balance sheets.

The current and long-term components of operating lease liabilities

are included in the current operating lease liabilities and noncurrent operating lease liabilities, respectively, on the unaudited condensed

consolidated balance sheets.

lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over

the lease term.

As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate

based on the information available at the commencement date in determining the present value of future payments.

Certain leases may include

options to extend or terminate the lease.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease

Leases with an initial term of 12 months or less are not recorded in the balance sheet.

Receivable, net

receivable principally consist of amounts due from third-party merchant processors, who process our subscription revenues;

accounts balance receivable represents the charges processed by the merchants that have not yet been deposited with the Company.

unsettled merchant receivable amount normally represents processed sale transactions from the final one to three days of the month, with

collections being made by the Company within the first week of the following month.

Management determines the need, if any, for an allowance

for future credits to be granted to customers, by regularly evaluating aggregate customer refund activity, coupled with the consideration

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

As of September 30, 2024 and December

31, 2023, the reserve for sales returns and allowances was approximately $ 930 thousand and $ 528 thousand, respectively.

For all periods

presented, as noted above, the sales returns and allowances were recorded in accrued expenses on the unaudited condensed consolidated

balance sheets.

of September 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.

Management compares the cost of

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

As of September

30, 2024 and December 31, 2023, the Company recorded an inventory reserve of approximately $ 265 thousand and $ 356 thousand, respectively.

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

The Company determines if an arrangement

is a lease at inception.

Operating lease right-of-use (“ROU”) assets are included in right-of-use assets on the unaudited

condensed consolidated balance sheets.

The current and long-term components of operating lease liabilities are included in the current

operating lease liabilities and noncurrent operating lease liabilities, respectively, on the unaudited condensed consolidated balance

Operating lease ROU assets and

operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term.

of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information

available at the commencement date in determining the present value of future payments.

Certain leases may include options to extend or

terminate the lease.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

an initial term of 12 months or less are not recorded in the balance sheet.

Accounts Receivable, net

Accounts receivable principally

consist of amounts due from third-party merchant processors, who process our subscription revenues;

the merchant accounts balance receivable

represents the charges processed by the merchants that have not yet been deposited with the Company.

The unsettled merchant receivable

amount normally represents processed sale transactions from the final one to three days of the month, with collections being made by the

Company within the first week of the following month.

Management determines the need, if any, for an allowance for future credits to be

granted to customers, by regularly evaluating aggregate customer refund activity, coupled with the consideration and current economic

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

As of March 31, 2025 and December 31, 2024, the reserve

for sales returns and allowances was approximately $ 832 thousand and $ 894 thousand, respectively.

For all periods presented, as noted

above, the sales returns and allowances were recorded in accrued expenses on the unaudited condensed consolidated balance sheets.

The Company’s accounts receivable

balances are as follows for each of the periods presented:

OF ACCOUNTS RECEIVABLE

Beginning of period

End of period

As of March 31, 2025 and December

31, 2024, 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.

Inventory is valued at the lower

of cost or net realizable value with cost determined on an average cost basis.

Management compares the cost of inventory with the net

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

As of March 31, 2025 and December 31,

2024, the Company recorded an inventory reserve of approximately $ 153 thousand and $ 263 thousand, respectively.

As of March 31, 2025 and December

31, 2024, the Company’s inventory consisted of the following:

SUMMARY OF INVENTORY

September 30,

Finished goods

2 unchanged sentences

Total inventory, net

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

These deposits typically range from

10 % to 33 % of the total purchased amount.

Our vendors include a credit memo within their final invoice, recognizing the deposit amount

previously paid.

As of September 30, 2024 and December 31, 2023, the Company has approximately $ 137 thousand and $ 486 thousand, respectively,

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

The Company’s history of product

deposits with its inventory vendors, creates an implicit purchase commitment equaling the total expected product acceptance cost in excess

of the product deposit.

As of September 30, 2024, the Company approximates its implicit purchase commitments to be $ 1.1 million, of which

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

Software Costs

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

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

The Company does not sell

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

Certain development costs not meeting the criteria

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

As of September 30, 2024 and

December 31, 2023, the Company capitalized a net amount of $ 13.5 million and $ 11.8 million, respectively, related to internally developed

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

Product Deposit

Many of our vendors require deposits

when a purchase order is placed for goods or fulfillment services.

These deposits typically range from 10 % to 33 % of the total purchased

Our vendors include a credit memo within their final invoice, recognizing the deposit amount previously paid.

As of March 31,

2025 and December 31, 2024, the Company has approximately $ 192 thousand and $ 41 thousand, respectively, of product deposits with multiple

vendors for the purchase of raw materials or finished goods.

The Company’s history of product deposits with its inventory vendors,

creates an implicit purchase commitment equaling the total expected product acceptance cost in excess of the product deposit.

31, 2025, the Company approximates its implicit purchase commitments to be $ 279 thousand, of which the vast majority are with two vendors

that manufacture the Company’s finished goods inventory for its RexMD product line.

Capitalized Software Costs

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

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

The Company does not sell internally developed

software other than through the use of subscription service.

Certain development costs not meeting the criteria for capitalization, in

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

As of March 31, 2025 and December 31, 2024, the Company

capitalized a net amount of $ 14.3 million and $ 13.8 million, respectively, related to internally developed software costs which are amortized

over the useful life and included in development costs on our unaudited condensed consolidated statement of operations.

Intangible Assets

assets are comprised of:

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

technology, (5) a purchased license and (6) four 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

(1) the ResumeBuild brand, (2) a customer relationship asset, (3) the Cleared Technologies, PBC

(“Cleared”) trade name, (4) Cleared developed technology, (5) a purchased license and (6) four 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 which typically range from one

Impairment of Long-Lived Assets

assets include equipment and capitalized software.

1 unchanged sentence

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

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

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

As of September

30, 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.

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

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

As of March 31, 2025 and December

31, 2024, the Company determined that no events or changes in circumstances existed that would indicate any impairment of its long-lived

The Company files corporate federal,

state, and local tax returns.

WorkSimpli files a tax return in Puerto Rico.

The Company records current

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

This ASC requires recognition of deferred tax assets

and liabilities for temporary differences between tax basis of assets and liabilities and the amounts at which they are carried in the

financial statements, based upon the enacted rates in effect for the year in which the differences are expected to reverse.

establishes a valuation allowance, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company periodically

assesses the value of its deferred tax asset, a majority of which has been generated by a history of net operating losses and management

determines the necessity for a valuation allowance.

ASC 740 also provides a recognition threshold and measurement attribute for the financial

statement recognition of a tax position taken or expected to be taken in a tax return.

Using this guidance, a company may recognize the

tax benefit from an uncertain tax position in its financial statements only if it is more likely-than-not (i.e., a likelihood of more

than 50%) that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The Company’s tax returns for all years since December 31, 2020, remain open to audit by all related taxing authorities.

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.

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

period that approximates the expected life of the options.

The Company records current and deferred taxes in accordance

with ASC 740, Accounting for Income Taxes.

This ASC requires recognition of deferred tax assets and liabilities for temporary differences

between tax basis of assets and liabilities and the amounts at which they are carried in the financial statements, based upon the enacted

rates in effect for the year in which the differences are expected to reverse.

The Company establishes a valuation allowance when necessary

to reduce deferred tax assets to the amount expected to be realized.

The Company periodically assesses the value of its deferred tax asset,

a majority of which has been generated by a history of net operating losses and management determines the necessity for a valuation allowance.

ASC 740 also provides a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken

or expected to be taken in a tax return.

Using this guidance, a company may recognize the tax benefit from an uncertain tax position in

its financial statements only if it is more likely-than-not (i.e., a likelihood of more than 50%) that the tax position will be sustained

on examination by the taxing authorities, based on the technical merits of the position.

The Company’s tax returns for all years

since December 31, 2021, remain open to audit by all related taxing authorities.

The Company has net operating loss carryforwards for federal income tax reporting purposes that may be applied against

current and future taxable income.

All remaining net operating loss carryforwards were generated after 2017 and can be carried forward

indefinitely.

The Company has fully reserved the deferred tax asset resulting from available net operating loss carryforwards.

Stock-Based Compensation

The 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.

The expected volatility is based upon historical

volatility of the Company’s common shares using daily price observations over an observation period that approximates the expected

life of the options.

The risk-free interest rate approximates the U.S.

Treasury yield curve rate

in effect at the time of grant for periods similar to the expected option life.

Due to limited history of forfeitures, the Company has

elected to account for forfeitures as they occur.

Many of the assumptions require significant judgment and any changes could have a material

impact in the determination of stock-based compensation expense.

(Loss) Per Share

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

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

included in our calculation of basic weighted average shares outstanding.

Convertible securities, warrants and options to purchase common

stock are included as common stock equivalents only when dilutive.

Potential common stock equivalents are excluded from dilutive earnings

per share when the effects would be antidilutive.

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

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

the diluted per share calculation because the effect of including these potential shares was antidilutive even though the exercise price

could be less than the average market price of the common shares:

SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

Three Months Ended September 30,

Nine Months Ended September 30,

Series B Preferred Stock

RSUs and RSAs

Stock options

Convertible long-term debt

Potentially dilutive securities

portfolio of brands are included within two operating segments:

Treasury yield curve rate in effect at the time of grant for periods

similar to the expected option life.

Due to limited history of forfeitures, the Company has elected to account for forfeitures as they

Our portfolio of brands are included

within two operating segments:

Telehealth and WorkSimpli.

We believe our current segments and brands

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

The Company’s Chief Executive Officer is the

chief operating decision maker and is responsible for reviewing segment operating results to make determinations about resources to be

allocated and to assess performance.

Other factors, including type of business, revenue recognition and operating results are reviewed

in determining the Company’s operating segments.

Value of Financial Instruments

fair value of a financial instrument is based on the price that would be received to sell an asset or paid to transfer a liability in

an orderly transaction between market participants at the measurement date.

Assets and liabilities subject to ongoing fair value measurement

are categorized and disclosed into one of the three categories depending on observable or unobservable inputs employed in the measurement.

Hierarchical levels, which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets

or liabilities, are as follows:

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

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

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

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

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

at the measurement date.

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

those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input

that is significant to the fair value measurement.

carrying value of the Company’s financial instruments, including cash, accounts receivable, accounts payable, accrued expenses,

and the face amount of notes payable and convertible long term debt approximate fair value for all periods presented.

Concentrations

Company monitors its positions with, and the credit quality of, the financial institutions with which it invests.

The Company, at times,

maintains balances in various operating accounts in excess of federally insured limits.

We are dependent on certain third-party manufacturers

and pharmacies, although we believe that other contract manufacturers or third-party pharmacies could be quickly secured if any of our

current manufacturers or pharmacies cease to perform adequately.

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

services, fifteen (15) suppliers for manufacturing finished goods, eight (8) suppliers for packaging, bottling, and labeling, and eight

(8) suppliers for prescription medications.

As of December 31, 2023, we utilized three (3) suppliers for fulfillment services, nine (9)

suppliers for manufacturing finished goods, seven (7) suppliers for packaging, bottling, and labeling, and five (5) suppliers for prescription

Accounting Pronouncements

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

The amendments in this update improve reportable segment

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

ASU 2023-07 will become effective

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

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

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

Improvements to Income Tax Disclosures , to improve its income

tax disclosure requirements.

We believe our current segments and brands within our segments complement one

another and position us well for future growth.

The Company’s Chief Executive Officer is the chief operating decision maker (“CODM”)

and is responsible for reviewing segment operating results to make determinations about resources to be allocated and to assess performance.

Other factors, including type of business, revenue recognition and operating results are reviewed in determining the Company’s operating

Fair Value of Financial Instruments

The fair value of a financial

instrument is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date.

Assets and liabilities subject to ongoing fair value measurement are categorized and disclosed

into one of the three categories depending on observable or unobservable inputs employed in the measurement.

Hierarchical levels, which

are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities, are as

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

Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

In some circumstances, the inputs

used to measure fair value might be categorized within different levels of the fair value hierarchy.

In those instances, the fair value

measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair

value measurement.

The carrying value of the Company’s

financial instruments, including cash, accounts receivable, accounts payable, accrued expenses, and the face amount of notes payable and

convertible long term debt approximate fair value for all periods presented.

Concentrations of Risk

We are dependent on certain third-party

manufacturers and pharmacies for fulfillment services, prescription medications, packaging, and finished goods.

We believe that other

contract manufacturers or third-party pharmacies could be quickly secured if any of our current manufacturers or pharmacies cease to perform

As of March 31, 2025, one of our vendors supplied 65 % of the Company’s total fulfillment services and one of our vendors

supplied 20 % of the Company’s total prescription medications.

As of December 31, 2024, one of our vendors supplied 80 % of the Company’s

total fulfillment services.

Recent Accounting Pronouncements

In December 2023, the Financial

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

Improvements to Income Tax Disclosures,

to improve its income tax disclosure requirements.

Under ASU 2023-09, entities must annually:

(1) disclose specific categories in the rate reconciliation and

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

ASU 2023-09 will become effective for the

Company beginning on January 1, 2025.

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

financial statements and related disclosures.

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

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

3 – ACQUISITIONS

January 18, 2022, the Company completed the acquisition of Cleared.

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.

Fair values were determined

using income approaches.

The results of Cleared are included within the consolidated financial statements commencing on the acquisition

February 4, 2023, the Company entered into the Cleared First Amendment.

The Cleared Stock Purchase Agreement was amended to, among other

(i) reduce the total purchase price by $ 250 thousand to a total of $ 3.67 million;

(ii) change the timing of the payment of the

purchase price to $ 460 thousand paid at closing (which has already been paid by the Company), with the remaining amount to be paid in

five quarterly installments beginning on or before February 6, 2023 and ending January 15, 2024;

(iii) remove all “earn-out”

payments payable by the Company to the sellers;

and (iv) remove certain representations and warranties of the Company and sellers in

connection with the transaction.

The Company issued the following shares of common stock to the sellers of Cleared under the Cleared

First Amendment:

(1) 337,895 shares on February 6, 2023, (2) 455,319 shares on April 17, 2023, (3) 158,129 shares on July 17, 2023, (4)

117,583 shares on October 17, 2023 and (5) 95,821 shares on January 16, 2024.

February 2022, WorkSimpli closed on the ResumeBuild APA to purchase the related intangible assets associated with the ResumeBuild brand,

a subscription-based resume building software.

The acquisition further adds to the capabilities of the WorkSimpli software as a service

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

(1) disclose specific categories in the

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

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 consolidated financial statements and related disclosures.

In 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 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 consolidated financial statements.

All 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 unaudited condensed consolidated financial statements upon adoption.

NOTE 3 – INTANGIBLE ASSETS

As of March 31, 2025 and December

31, 2024, the Company has the following amounts related to amortizable intangible assets:

OF INTANGIBLE ASSETS

September 30,

Amortizable Intangible Assets:

10 unchanged sentences

Total intangible assets, net

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

$ 246 thousand.

The aggregate amortization expense of the Company’s intangible assets for the nine months ended September 30, 2024

and 2023 was $ 738 thousand and $ 726 thousand, respectively.

Total amortization expense for the remainder of 2024 is approximately $ 245

thousand, $ 978 thousand for 2025, $ 940 thousand for 2026, and approximately $ 113 thousand for 2027.

5 – ACCRUED EXPENSES

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

The aggregate amortization expense

of the Company’s intangible assets for the three months ended March 31, 2025 and 2024 was $ 245 thousand and $ 246 thousand, respectively.

Total amortization expense for the remainder of 2025 is approximately $ 733 thousand, $ 940 thousand for 2026, and approximately $ 113 thousand

NOTE 4 – ACCRUED EXPENSES

As of March 31, 2025 and December

31, 2024, the Company has the following amounts related to accrued expenses:

OF ACCRUED EXPENSES

September 30,

Accrued selling and marketing expenses

2 unchanged sentences

Accrued dividends payable

Purchase price payable

Other accrued expenses

Total accrued expenses

6 – NOTES PAYABLE

Capital Loans

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

The terms of the loan

include interest in the amount of $ 62 thousand.

As of September 30, 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.

January and February 2023, the Company received proceeds of $ 2 million under a $ 2.5 million loan facility with CRG Financial, maturing

on December 15, 2023 .

The loan facility includes interest of 12 %.

The Company repaid the $ 2 million outstanding loan balance on March

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

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

As of both September 30, 2024 and December 31, 2023,

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

the year ended December 31, 2023, the Company financed a $ 348 thousand prepaid insurance policy under a 10-month financing agreement

with Arthur J.

Gallagher Risk Management Services, LLC.

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

As of September 30, 2024 and December 31, 2023, the outstanding balance was $ 0 and $ 217 thousand, respectively, and is included in notes

payable, net, on the accompanying consolidated balance sheet.

interest expense on notes payable amounted to $ 0 and $ 216 thousand for the three months ended September 30, 2024 and 2023, respectively.

Total interest expense on notes payable amounted to $ 7 thousand and $ 250 thousand for the nine months ended September 30, 2024 and 2023,

respectively.

7 – LONG-TERM DEBT

Capital Credit Facility

noted in Note 1 above, on March 21, 2023, the Company entered into the Avenue Credit Agreement and the Avenue Supplement.

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

the following:

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

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

to as the “Avenue Facility”.

The Company issued Avenue Warrants to purchase $ 1.2 million of the Company’s common stock

at an exercise price of $ 1.24 , subject to adjustments.

NOTE 5 – LONG-TERM DEBT

Avenue Capital Credit

As noted in Note 1 above, on March

21, 2023, the Company entered into the Avenue Credit Agreement and the Avenue Supplement.

The Avenue Credit Agreement provides for a convertible

senior secured credit facility of up to an aggregate amount of $ 40 million, comprised of the following:

(1) $ 15 million in term loans

funded at closing, (2) $ 5 million of additional committed term loans received on September 26, 2023 in conjunction with the Avenue First

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

Company issued Avenue Warrants to purchase $ 1.2 million of the Company’s common stock at an exercise price of $ 1.24 , subject to

The Avenue Warrants have a term of five years.

The relative fair value of the

Avenue Warrants upon closing was $ 873 thousand.

In addition, Avenue may convert up to $ 2 million of the $ 15 million in term loans funded

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

As of September 30, 2024, there is $ 1 million in term loans remaining to be converted.

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 September 30, 2024.

The Company incurred other fees associated with the Avenue Facility including:

(1) a $300 thousand financing

fee, (2) a $200 thousand upfront commitment fee of 1% of the total $20 million in committed capital and (3) $27 thousand in legal fees.

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

Total amortization of debt discount

was $ 100 thousand and $ 80 thousand for the three months ended September 30, 2024 and 2023, respectively, and $ 301 thousand and $ 234 thousand

for the nine months ended September 30, 2024 and 2023, respectively.

The Company received gross proceeds of $ 15.0 million at closing

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

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

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

plus 4.75% and (2) 12.5%.

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

As of September 30, 2024, interest only payments were

extended until May 2025.

The Company may prepay the loans, subject to a prepayment penalty of 1.00 % to 3.00 % of the principal amount

prepaid, depending on the timing of the prepayment.

Proceeds from the Avenue Facility were used to repay the Company’s outstanding

notes payable balances with CRG Financial and are expected to be utilized for general corporate purposes.

of September 30, 2024, the Company will pay $ 8.4 million in 2025 and $ 10.6 million in 2026 in principal payments under the Avenue Facility.

The relative fair value of the Avenue Warrants upon closing was $ 873 thousand.

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

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

As of March 31, 2025, there is $ 1 million

in term loans remaining to be converted.

The relative fair value of the Avenue Warrants was recorded as a debt discount and is included

as a reduction to long-term debt on the unaudited condensed consolidated balance sheet as of March 31, 2025.

The Company incurred other

fees associated with the Avenue Facility including:

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

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

The total debt discount recorded of $1.4 million will

be amortized over a forty-two-month period.

Total amortization of debt discount was $ 100 thousand for both the three months ended March

31, 2025 and 2024.

The Company received gross proceeds of $ 15.0 million at closing (net proceeds of $ 12.3 million after repayment of the

$ 2 million outstanding CRG loan balance and various fees).

The Avenue Facility matures on

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

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

of March 31, 2025, the interest rate was 12.5%.

Interest only payments were extended until May 2025.

The Company may prepay the loans,

subject to a prepayment penalty of 1.00 % to 3.00 % of the principal amount prepaid, depending on the timing of the prepayment.

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

to be utilized for general corporate purposes.

As of March 31, 2025, the Company

will pay $ 8.4 million in 2025 and $ 10.6 million in 2026 in principal payments under the Avenue Facility.

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

2 unchanged sentences

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

As of September 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 $ 681 thousand and $ 594 thousand for the

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

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

debt discounts, amounted to $ 2.0 million and $ 1.3 million for the nine months ended September 30, 2024 and 2023, respectively.

8 – STOCKHOLDERS’ EQUITY

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

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

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

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

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

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

exercise of warrants.

the nine months ended September 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 Nine Months Ended September 30, 2024

the nine months ended September 30, 2024, the Company issued an aggregate of 1,235,625 shares of common stock for service, including

vested restricted stock.

February 4, 2023, the Company entered into the Cleared First Amendment between the Company and the sellers of Cleared.

The Cleared Stock

Purchase Agreement was amended to, among other things change the timing of the payment of the purchase price to $ 460 thousand paid at

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

or before February 6, 2023 and ending January 15, 2024.

The Company issued the following shares of common stock to the sellers of Cleared

under the Cleared First Amendment:

(1) 337,895 shares on February 6, 2023, (2) 455,319 shares on April 17, 2023, (3) 158,129 shares on

July 17, 2023, (4) 117,583 shares on October 17, 2023 and (5) 95,821 shares on January 16, 2024.

The fair value of the stock issuances

under the Cleared First Amendment was $ 3.2 million.

Noncontrolling

loss attributed to the non-controlling interest amounted to $ 346 thousand for the three months ended September 30, 2024 compared to net

income of $ 839 thousand for the three months ended September 30, 2023.

During both the three months ended September 30, 2024 and 2023,

the Company paid distributions to non-controlling shareholders of $ 36 thousand.

Net loss attributed to the non-controlling interest amounted

to $ 188 thousand for the nine months ended September 30, 2024 compared to net income of $ 2.2 million for the nine

months ended September 30, 2023.

During both the nine months ended September 30,

2024 and 2023, the Company paid distributions to non-controlling shareholders of $ 108 thousand.

Software Capitalization Update

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

respectively, of WorkSimpli for an exercise price of $ 1.00 per membership interest unit under the Option Agreements.

Following the exercise

of the Option Agreements, Conversion Labs PR decreased its ownership interest in WorkSimpli from 85.6 % to 73.6 %.

Effective March 31,

2023, the Company redeemed 500 membership interest units in WorkSimpli.

Following the retirement, Conversion Labs PR’s ownership

interest in WorkSimpli increased to 74.1 %.

On June 30, 2023, WorkSimpli’s Chief Operating Officer, exercised her option agreement

(the “WorkSimpli COO Option Agreement”) to purchase 889 membership interest units of WorkSimpli for an exercise price of

$ 1.00 per membership interest unit.

Following the exercise of the WorkSimpli COO Option Agreement, Conversion Labs PR decreased its ownership

interest in WorkSimpli from 74.1 % to 73.3 %.

March 31, 2024, WorkSimpli declared a cash dividend in the amount of $ 11.20 per membership interest unit to all unit holders of record

as of March 31, 2024 and was paid on April 10, 2024 .

The total dividends declared to noncontrolling interest holders was $ 267 thousand

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 $ 0 and

$ 495 thousand for the three and nine months ended September 30, 2024, respectively, and is included in general and administrative expenses for the three and nine months ended September 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 .

On July 31, 2023,

WorkSimpli declared a cash dividend in the amount of $ 11.20 per membership interest unit to all unit holders of record as of July 28,

2023 and was paid on August 1, 2023.

On August 31, 2023, WorkSimpli declared a cash dividend in the amount of $ 16.80 per membership interest

unit to all unit holders of record as of August 30, 2023 and was paid on September 1, 2023.

On September 30, 2023, WorkSimpli declared

a cash dividend in the amount of $ 14.00 per membership interest unit to all unit holders of record as of September 30, 2023 and was paid

on October 5, 2023.

The total dividends declared to noncontrolling interest holders was $ 1.0 million and $ 1.5 million for the three and

nine months ended September 30, 2023, respectively, and is included in general and administrative expenses for the three and nine

months ended September 30, 2023.

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

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

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

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

Dividends declared and paid on the Series A Preferred Stock

during the nine months ended September 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, (2) quarterly dividend declared on June 25, 2024 to holders of record as of July

5, 2024 which was paid on July 15, 2024, and (3) quarterly dividend declared on September 24, 2024 to holders of record as of October

4, 2024 which was paid on October 15, 2024.

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

September 30, 2023 are as follows:

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

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

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

The dividends are included in the Company’s results of operations for the three and nine months ended September 30, 2024

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

Approval of the

2020 Plan was included as Proposal 1 in the Company’s definitive proxy statement for its Special Meeting of Stockholders filed

with the Securities and Exchange Commission on December 7, 2020.

The 2020 Plan is administered by the Compensation Committee of the Board

of Directors (the “Board”) and initially provided for the issuance of up to 1,500,000 shares of Common Stock.

of shares of Common Stock available for issuance under the 2020 Plan automatically increases by 150,000 shares of Common Stock on January

1st of each year, for a period of not more than ten years, commencing on January 1, 2021 and ending on (and including) January 1, 2030.

Awards under the 2020 Plan can be granted in the form of stock options, non-qualified and incentive options, stock appreciation rights,

restricted stock, and restricted stock units.

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.

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 September 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 2,753,276 shares as of September 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)

of Non-Qualified Option Agreement (Employee Awards);

of Restricted Stock Award Agreement.

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

The following

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

OF OPTION ACTIVITY

Exercise Price

Balance, December 31, 2023

Balance at September 30, 2024

Exercisable at December 31, 2023

Exercisable at September 30, 2024

compensation expense under the Amended 2020 Plan options above was $ 109 thousand and $ 1.2 million for the three months ended September

30, 2024 and 2023, respectively, with unamortized expense remaining of $ 59 thousand as of September 30, 2024.

Total compensation expense

under the Amended 2020 Plan options above was $ 1.2 million and $ 3.5 million for the nine months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024, 172,222 options were exercised on a cashless basis, which resulted in 62,781 shares

As of September 30, 2024, aggregate intrinsic value of vested service-based options outstanding was $ 237 thousand.

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

the nine months ended September 30, 2024:

On November 15, 2023, Avenue converted

$ 1 million of the principal amount of the outstanding term loans into shares of the Company’s common stock.

This resulted in 672,042

shares of common stock issued to Avenue.

Additionally on November 15, 2023, Avenue exercised 96,773 of the Avenue Warrants on a cashless

basis resulting in 79,330 shares of the Company’s common stock issued.

As of March 31, 2025, there was $ 19 million outstanding under

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

Total interest expense on long-term

debt, inclusive of amortization of debt discounts, amounted to approximately $ 632 thousand and $ 679 thousand for the three months ended

March 31, 2025 and 2024, respectively.

NOTE 6 – STOCKHOLDERS’ EQUITY (DEFICIT)

The Company has authorized the

issuance of up to 100,000,000 shares of common stock, $ 0.01 par value, and 5,000,000 shares of preferred stock, $ 0.0001 par value, of

which 5,000 shares are designated as Series B Convertible Preferred Stock, 1,610,000 are designated as Series A Preferred Stock and 3,385,000

shares of preferred stock remain undesignated.

The Company entered into the ATM

Sales Agreement whereby the Company may offer and sell, from time to time, shares of common stock.

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 March 31, 2025, 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 three months ended March 31, 2025, the Company issued an aggregate of 56,139 shares of common stock related to the cashless exercise

Common Stock Transactions During the Three Months

Ended March 31, 2025

the three months ended March 31, 2025, the Company issued an aggregate of 1,282,654 shares of common stock for service, including vested

restricted stock.

Non-controlling Interest

Net income attributed to non-controlling

interest amounted to approximately $ 532 thousand and $ 119 thousand for the three months ended March 31, 2025 and 2024, respectively.

the three months ended March 31, 2025 and 2024, the Company paid distributions to non-controlling interest holders of $ 36 thousand and

$ 36 thousand, respectively.

The Company pays cumulative dividends

on its Series A Preferred Stock, in the amount of $ 2.21875 per share each year, which is equivalent to 8.875 % of the $ 25.00 liquidation

preference per share.

Dividends on the Series A Preferred Stock are payable quarterly in arrears, on or about the 15th day of January,

April, July, and October of each year.

During the three months ended March 31, 2025, the Company declared the dividend on March 25, 2025

to holders of record as of April 4, 2025 which was paid on April 15, 2025.

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.

The dividends are included in

the Company’s results of operations for the three months ended March 31, 2025 and 2024.

Stock Options

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

Approval of the 2020 Plan

was included as Proposal 1 in the Company’s definitive proxy statement for its Special Meeting of Stockholders filed with the Securities

and Exchange Commission on December 7, 2020.

The 2020 Plan is administered by the Compensation Committee of the Board of Directors (the

“Board”) and initially provided for the issuance of up to 1,500,000 shares of Common Stock.

The number of shares of Common

Stock available for issuance under the 2020 Plan automatically increases by 150,000 shares of Common Stock on January 1st of each year,

for a period of not more than ten years, commencing on January 1, 2021 and ending on (and including) January 1, 2030.

Awards under the

2020 Plan can be granted in the form of stock options, non-qualified and incentive options, stock appreciation rights, restricted stock,

and restricted stock units.

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

On June 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.

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.

March 31, 2025, the Amended 2020 Plan provided for the issuance of up to 8,250,000 shares of Common Stock.

Remaining authorization under

the Amended 2020 Plan was 1,585,844 shares as of March 31, 2025.

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:

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

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

Form of Restricted Stock Award Agreement.

Previously, 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 three months ended March 31, 2025:

OF OPTION ACTIVITY

Outstanding Number of Shares

Price per Share

Average Remaining Contractual Life

Average Exercise Price per Share

December 31, 2024

Cancelled/Forfeited/Expired

at September 30, 2024

December 31, 2023

at September 30, 2024

compensation expense under the above service-based option plan was $ 25 thousand and $ 367 thousand for the three months ended September

30, 2024 and 2023, respectively, with unamortized expense remaining of $ 25 thousand as of September 30, 2024.

Total compensation expense

under the above service-based option plan was $ 266 thousand and $ 1.5 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, aggregate intrinsic value of vested service-based options outstanding was $ 1.4 million.

Of the total service-based

options exercised during the nine months ended September 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 nine months ended September 30, 2024:

at March 31, 2025

at December 31, 2024

at March 31, 2025

Total compensation expense under

the Amended 2020 Plan options above was approximately $ 7 thousand and $ 669 thousand for the three months ended March 31, 2025 and 2024,

respectively, with unamortized expense remaining of $ 22 thousand as of March 31, 2025.

As of March 31, 2025, aggregate intrinsic value

of vested service-based options outstanding was $ 265 thousand.

The following is a summary of

outstanding service-based options activity (prior to the establishment of our Amended 2020 Plan above) for the three months ended March

OF OPTION ACTIVITY

Exercise Price

Options Outstanding Number of Shares

Exercise Price per Share

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price per Share

Balance, December 31, 2024

$ 1.00 – 11.98

Cancelled/Forfeited/Expired

Balance at March 31, 2025

$ 1.00 – 11.98

Exercisable December 31, 2024

$ 1.00 – 11.98

Exercisable at March 31, 2025

$ 1.00 – 11.98

The total fair value of the options

granted during the three months ended March 31, 2025 was $ 163 thousand, which was determined using the Black-Scholes Pricing Model with

the following assumptions:

dividend yield of 0 %, expected term of 5 years, volatility of 108.5 %, and risk-free rate of 4.34 %.Total compensation

expense under the above service-based option plan was approximately $ 145 thousand and $ 192 thousand for the three months ended March 31,

2025 and 2024, respectively, with $ 0 unamortized expense remaining as of March 31, 2025.

During the three months ended March 31, 2025,

95,000 options were exercised on a cashless basis, which resulted in 56,139 shares issued.

As of March 31, 2025, aggregate intrinsic value

of vested service-based options outstanding was $ 1.1 million.

The following is a summary of

outstanding performance-based options activity for the three months ended March 31, 2025:

OF OPTION ACTIVITY

Options Outstanding Number of Shares

Exercise Price per Share

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price per Share

Balance at December 31, 2024

Balance at September 30, 2024

$ 1.25 – 2.50

Cancelled/Forfeited/Expired

Balance at March 31, 2025

$ 1.25 – 1.75

Exercisable December 31, 2024

Exercisable at September 30, 2024

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

the performance terms have not been met or are not probable.

As of September 30, 2024, the aggregate intrinsic value of vested performance

options outstanding was $ 80 thousand.

Of the total performance-based options exercised during the nine months ended September 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 nine months ended September 30, 2024:

Exercisable at March 31, 2025

No compensation expense was recognized

on the performance-based options above for the three months ended March 31, 2025 and 2024, as the performance terms have not been met

or are not probable.

As of March 31, 2025, aggregate intrinsic value of vested performance options outstanding was $ 55 thousand.

RSUs and RSAs (under our Amended 2020 Plan)

The following is a summary of

outstanding RSUs and RSAs activity under our Amended 2020 Plan for the three months ended March 31, 2025:

OF RESTRICTED STOCK UNIT ACTIVITY

4 unchanged sentences

Cancelled/Forfeited

Balance at September 30, 2024

total fair value of the 908,335 RSUs and RSAs granted was $ 6.9 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 $ 2.1 million and $ 1.6 million

for the three months ended September 30, 2024 and 2023, respectively, with unamortized expense remaining of $ 4.1 million as of September

Total compensation expense under the Amended 2020 Plan RSUs and RSAs above was $ 6.9 million and $ 3.1 million for the nine months

ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024, 1,285,210 RSUs and RSAs vested, of

which 1,110,625 shares were issued.

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 nine months ended September 30,

Balance at March 31, 2025

The total fair value of the 725,000

RSUs and RSAs granted was $ 3.8 million which was determined using the fair value of the quoted market price on the date of grant.

compensation expense under the Amended 2020 Plan RSUs and RSAs above was approximately $ 2.4 million and $ 1.4 million for the three months

ended March 31, 2025 and 2024, respectively, with unamortized expense remaining of approximately $ 7.8 million as of March 31, 2025.

the three months ended March 31, 2025, 1,213,166 RSUs and RSAs vested, of which 1,120,154 RSUs and RSAs were issued.

RSUs and RSAs (outside of our Amended 2020 Plan)

The following is a summary of

outstanding RSUs and RSAs activity (outside of our Amended 2020 Plan) for the three months ended March 31, 2025:

OF RESTRICTED STOCK UNIT ACTIVITY

2 unchanged sentences

Balance at December 31, 2024

Balance at September 30, 2024

compensation expense for RSUs and RSAs outside of the Amended 2020 Plan was $ 202 thousand and $ 139 thousand for the three months ended

September 30, 2024 and 2023, respectively, with unamortized expense remaining of $ 97 thousand as of September 30, 2024.

Total compensation

expense for RSUs and RSAs outside of the Amended 2020 Plan was $ 712 thousand and $ 728 thousand for the nine months ended September 30,

2024 and 2023, respectively.

During the nine months ended September 30, 2024, 187,500 RSUs and RSAs vested, of which 125,000 shares were

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

Balance at March 31, 2025

No compensation expense for RSUs

and RSAs outside of the Amended 2020 Plan was recognized for the three months ended March 31, 2025 compared to $ 255 thousand for the three

months ended March 31, 2024, with no unamortized expense remaining as of March 31, 2025.

During the three months ended March 31, 2025,

162,500 RSUs and RSAs were issued, which included 100,000 RSUs and RSAs that vested during the three months ended March 31, 2025 and 62,500

RSUs and RSAs that vested previously.

The following is a summary of

outstanding and exercisable warrants activity during the three months ended March 31, 2025:

OF WARRANT OUTSTANDING AND EXERCISABLE

Exercise Price

Warrants Outstanding Number of Shares

Exercise Price

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Balance at December 31, 2024

$ 1.24 – 12.00

Balance at September 30, 2024

Cancelled/Forfeited/Expired

Balance at March 31, 2025

$ 1.24 – 12.00

Exercisable December 31, 2024

Exercisable September 30, 2024

compensation expense on the above warrants was $ 0 thousand for both the three months ended September 30, 2024 and 2023, with no unamortized

expense remaining as of September 30, 2024.

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

ended September 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 $ 2.4 million and $ 3.3 million for the three months ended September 30, 2024

and 2023, respectively.

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 $ 9.1 million and $ 8.8 million for the nine months ended September

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 $ 4.3 million as of September 30, 2024, which is expected to be recognized through 2026.

Company leases office space domestically under operating leases including:

(1) the Company’s headquarters in New York, New York

for which the lease expires in 2028, (2) a marketing and sales center in Huntington Beach, California for which the lease expires in

2027, (3) a patient care center in Greenville, South Carolina for which the lease expires in 2031, with an additional five year option

to extend, for which the Company expects to utilize, (4) warehouse and fulfillment centers in Columbia, Pennsylvania and Lancaster, Pennsylvania

for which the leases expired in 2024 and (5) a warehouse and pharmacy operations center in Lancaster, Pennsylvania for which the lease

expires in 2029, with an additional five year option to extend, for which the Company expects to utilize.

WorkSimpli leases two office

spaces in Puerto Rico for which the leases expire in 2026.

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

$ 1.24 – 12.00

Exercisable March 31, 2025

$ 1.24 – 12.00

Total compensation expense on

the above warrants for services was approximately $ 0 for both the three months ended March 31, 2025 and 2024, with no unamortized expense

remaining as of March 31, 2025.

Stock-based Compensation

The total stock-based compensation

expense related to common stock issued for services, service-based stock options, performance-based stock options, warrants, RSUs and

RSAs amounted to approximately $ 2.5 million for both the three months ended March 31, 2025 and 2024.

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 $ 7.8 million as of March 31, 2025,

which is expected to be recognized through 2028.

NOTE 7 – EARNINGS PER SHARE

Basic earnings (loss) per common

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

unissued vested restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) are included in our calculation

of basic weighted average common shares outstanding.

Unvested RSUs and RSAs, convertible securities, warrants and options to purchase

common stock are included as common stock equivalents only when dilutive.

Potential common stock equivalents are excluded from diluted

earnings per share when the effects would be antidilutive.

The 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 convertible

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.

The following table sets forth

the computation of basic and diluted earnings (loss) per share:

SCHEDULE OF BASIC AND

DILUTED EARNINGS (LOSS) PER SHARE

Three Months Ended March 31,

Net income (loss) attributable to LifeMD, Inc.

common stockholders - basic

$ ( 7,544,918 )

Net income (loss) attributable to LifeMD, Inc.

common stockholders - diluted

$ ( 7,544,918 )

Weighted average number of common shares outstanding - basic

Adjustment for the potential dilutive common shares

Weighted average number of common shares outstanding - diluted

Basic earnings (loss) per share of common stock

Diluted earnings (loss) per share of common stock

Basic net income (loss) per share

is the same as diluted net income (loss) per share attributable to common stockholders for the three months ended March 31, 2024, because

the inclusion of potential shares of common stock would have been anti-dilutive.

The following table

discloses the securities that were not included in the computation of diluted net earnings (loss) per share as their inclusion would have

been anti-dilutive:

SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

Three Months Ended March 31,

RSUs and RSAs

Stock options

Convertible long-term debt

NOTE 8 – LEASES

The Company leases office space

domestically under operating leases including:

(1) the Company’s headquarters in New York, New York for which the lease expires

in 2028, (2) a marketing and sales center in Huntington Beach, California for which the lease expires in 2027, (3) a patient care center

in Greenville, South Carolina for which the lease expires in 2032, with an additional five year option to extend, for which the Company

expects to utilize, and (4) a warehouse and pharmacy operations center in Lancaster, Pennsylvania for which the lease expires in 2029,

with an additional five year option to extend, for which the Company expects to utilize.

WorkSimpli leases two office spaces in Puerto

Rico for which the leases expire in 2026.

following is a summary of the Company’s operating right-of-use assets and operating lease liabilities as of March 31, 2025:

OF OPERATING RIGHT OF USE OF ASSETS

Operating right-of-use

Operating lease liabilities

accumulated amortization of the Company’s operating right-of-use assets was $ 2.7 million and $ 1.9 million as of September 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 September 30, 2024:

Right-of-use assets

Current operating lease liabilities

Noncurrent operating lease liabilities

The 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, 2025:

OF MATURITY OF OPERATING LEASE LIABILITIES

7 unchanged sentences

Present value of operating lease liabilities

lease expenses were $ 289 thousand and $ 214 thousand for the three months ended September 30, 2024 and 2023, respectively, and $ 747 thousand

and $ 643 thousand for the nine months ended 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:

Operating lease expenses were

approximately $ 411 thousand and $ 226 thousand for the three months ended March 31, 2025 and 2024, respectively, and were included in other

operating expenses in our unaudited condensed consolidated statement of operations.

Supplemental cash flow information

related to operating lease liabilities consisted of the following:

OF CASH FLOW INFORMATION RELATED TO OPERATING LEASE LIABILITIES

September 30,

Cash paid for operating lease liabilities

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

September 30, 2024

Supplemental balance sheet information

related to operating lease liabilities consisted of the following:

March 31, 2025

December 31, 2024

1 unchanged sentence

Weighted average discount rate

have elected to apply the short-term lease exception to the warehouse and fulfillment center spaces we lease in Columbia, Pennsylvania

and Lancaster, Pennsylvania.

These leases have a term of less than 12 months and are not recognized on the balance sheet, but rather

expensed on a straight-line basis over the lease term.

Straight-line lease payments are approximately $ 2 thousand and $ 3 thousand per

month, for Columbia, Pennsylvania and Lancaster, Pennsylvania, respectively.

Additionally, Conversion Labs PR utilizes office space in

Puerto Rico on a month-to-month basis incurring rental expense of approximately $ 3 thousand per month.

10 - COMMITMENTS AND CONTINGENCIES

2016, Conversion Labs PR entered into a sole and exclusive license, royalty and advisory agreement with Pilaris Laboratories, LLC (“Pilaris”)

relating to Pilaris’ PilarisMax shampoo formulation and conditioner.

The term of the agreement will be the life of the US Patent

held by Pilaris, ten years .

As consideration for granting Conversion Labs PR this license, Pilaris will receive on quarterly basis, 10 %

of the net income collected by the licensed products based on the following formula:

Net Income = total income – cost of goods

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

As of September 30, 2024

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

The Company paid Pilaris $ 5 thousand and $ 138 thousand during the nine months ended September 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”),

pursuant to which Alphabet agreed to license its PURPUREX business which consists of methods and compositions developed by Alphabet for

the treatment of purpura, bruising, post-procedural bruising, and traumatic bruising (the “Product Line”).

Pursuant to the

license granted under the Alphabet Agreement, Conversion Labs PR obtains an exclusive license to incorporate (i) any intellectual property

rights related to the Product Line and (ii) all designs, drawings, formulas, chemical compositions and specifications used or useable

in the Product Line into one or more products manufactured, sold, and/or distributed by Alphabet for the treatment of purpura, bruising,

post-procedural bruising and traumatic bruising and for all other fields of use or purposes (the “Licensed Product(s)”),

and to make, have made, advertise, promote, market, sell, import, export, use, offer to sell, and distribute the Licensed Product(s)

throughout the world with the exception of China, Hong Kong, Japan, and Australia (the “License”).

The Company shall pay

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 September 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

stock at an exercise price of $ 2.50 .

Further, if Licensed Products have gross receipts of $ 7.5 million in any calendar year, the Company

will grant Alphabet an option to purchase 20,000 shares of the Company’s common stock at an exercise price of $ 2.50 ;

(ii) if Licensed

Products have gross receipts of $ 10.0 million in any calendar year, the Company will grant Alphabet an additional option to purchase

20,000 shares of the Company’s common stock at an exercise price of $ 2.50 and (iii) if Licensed Products have gross receipts of

$ 20.0 million in any calendar year, the Company will grant Alphabet an option to purchase 40,000 shares of the Company’s common

stock at an exercise price of $ 3.75 .

The likelihood of meeting these performance goals for the licensed products are remote and, therefore,

the Company has not recognized any compensation.

of the Company’s vendors require product deposits when a purchase order is placed for goods or fulfillment services related to

inventory requirements.

The Company’s history of product deposits with its inventory vendors, creates an implicit purchase commitment

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

As of September 30, 2024, the Company approximates

its implicit purchase commitments to be $ 1.1 million.

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

As of September 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.

Additionally, the Company utilizes

office space in Puerto Rico on a month-to-month basis incurring rental expense of approximately $ 3 thousand per month.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

Purchase Commitments

Many of the Company’s vendors

require product deposits when a purchase order is placed for goods or fulfillment services related to inventory requirements.

The Company’s

history of product deposits with its inventory vendors, creates an implicit purchase commitment equaling the total expected product acceptance

cost in excess of the product deposit.

As of March 31, 2025, the Company approximates its implicit purchase commitments to be $ 279 thousand.

Legal Matters

In the normal course of business

operations, the Company may become involved in various legal matters.

As of March 31, 2025, 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

The Marden Complaint alleges, inter alia , unauthorized disclosure of certain information of class members to third

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.

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

The Marden Complaint alleges, inter alia, unauthorized disclosure of certain information of class members to third parties.

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.

The results of legal proceedings are inherently

uncertain, and the best estimate of cost is reflected in the Company’s financial results.

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

asserted an income tax deficiency of approximately $ 1.9 million for the Company’s tax year ending December 31, 2019.

timely filed a petition in the United States Tax Court disputing all of the proposed tax deficiency.

The case remains in its earliest

The Company should be served with the IRS’s answer to the Company’s petition in the near future.

The Company filed

an amended return well before the notice of deficiency was issued that the Company believes will resolve all or substantially all of

the issues in the case.

The Company intends to vigorously defend this case.

11 – RELATED PARTY TRANSACTIONS

January and February 2023, the Company received proceeds of $ 2 million under a $ 2.5 million loan facility with CRG Financial, maturing

on December 15, 2023 .

The loan facility includes interest of 12 %.

The Company repaid the $ 2 million outstanding loan balance on March

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

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

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

related to the CRG Financial loan.

Bhatia, a member of the Board of the Company, is a 3% owner and also serves on the Board of Directors

of CRG Financial.

the nine months ended September 30, 2024 and 2023, the Company utilized CloudBoson Technologies Pvt.

(“CloudBoson”),

formerly LegalSubmit Pvt.

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

software development services.

The Company paid CloudBoson a total of $ 838 thousand and $ 611 thousand during the three months ended September

30, 2024 and 2023, respectively, and $ 2.7 million and $ 1.8 million during the nine months ended September 30, 2024 and 2023, respectively,

for these services.

The Company owed CloudBoson $ 50 thousand as of September 30, 2024 and $ 226 thousand as of December 31, 2023.

the nine months ended September 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 approximately $ 140 thousand and $ 0 during

the three months ended September 30, 2024 and 2023, respectively, and $ 591 thousand and $ 0 during the nine months ended September 30,

2024 and 2023, respectively, for these services.

The Company owed King & Spalding $ 98 thousand as of September 30, 2024 and $ 48 thousand

On November 1, 2024, the plaintiffs filed a notice of voluntary

dismissal of the Southern District of New York case.

On November 25, 2024, the plaintiffs refiled the case via a new complaint captioned

& Matthew Marden v.

LifeMD, Inc., Case No.

A-24-906800-C, in the District Court of Clark County, Nevada.

The results of legal

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

On September 5, 2023, the Internal

Revenue Service (the “IRS”) issued a notice of deficiency to the Company in which the IRS asserted an income tax deficiency

of approximately $ 1.9 million for the Company’s tax year ending December 31, 2019.

The Company timely filed a petition in the United

States Tax Court disputing all of the proposed tax deficiency.

The case was subsequently transferred to the Appeals Division of the IRS.

Upon review of the amended return, IRS Appeals agreed to accept the amended return as filed.

On April 1, 2025, the United States Tax Court

issued a decision that there was no deficiency in federal income tax due for the tax year ending December 31, 2019.

All of the issues

in the case were resolved in the Company’s favor.

NOTE 10 – RELATED PARTY TRANSACTIONS

WorkSimpli Software

the three months ended March 31, 2025 and 2024, the Company utilized CloudBoson Technologies Pvt.

(“CloudBoson”), formerly

LegalSubmit Pvt.

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

development services.

The Company paid CloudBoson a total of approximately $ 878 thousand and $ 1.1 million during the three months ended

March 31, 2025 and 2024, respectively, for these services.

The Company owed CloudBoson $ 58 thousand as of March 31, 2025 and $ 56 thousand

as of December 31, 2024.

Legal Services

the three months ended March 31, 2025 and 2024, the Company utilized King & Spalding LLP (“King & Spalding”), a large

international law firm, for which an immediate family member of Robert Jindal, one of the Company’s former directors, is the Company’s

relationship partner, to provide legal services.

The Company paid King & Spalding a total of approximately $ 0 and $ 317 thousand during

the three months ended March 31, 2025 and 2024, respectively.

The Company owed King & Spalding $ 0 as of both March 31, 2025 and December

Consulting Agreements

May 30, 2023, Will Febbo, a member of the Board of the Company, entered into a consulting services agreement with the Company, pursuant

to which he provides certain investor relations and strategic business development services, in consideration for 375,000 restricted

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

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

June 14, 2023, Robert Jindal, a member of the Board of the Company, entered into a consulting services agreement (the “Jindal Consulting

Agreement”) with the Company, pursuant to which Mr.

Jindal provides certain investor relations and strategic business development

services, in consideration for 225,000 restricted shares of the Company’s common stock, which will vest in six-month installments

from June 14, 2023 through December 31, 2024.

On July 17, 2024, Mr.

Jindal entered into the First Amendment to the Jindal Consulting

Services Agreement with the Company (the “Jindal First Amendment”), pursuant to which the Company shall issue 24,835 restricted

shares of the Company’s common stock, all of which vested on September 14, 2024.

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

Bhatia provides certain investor relations and strategic business development services, in consideration for 225,000 restricted

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

On May 30, 2023, Will Febbo, a

member of the Board of the Company, entered into a consulting services agreement with the Company, pursuant to which he provides certain

investor relations and strategic business development services, in consideration for 375,000 restricted shares of the Company’s

common stock, which vested in quarterly installments from August 30, 2023 through November 30, 2024.

The Company issued 62,500 restricted

shares of common stock, with a fair value of $ 131 thousand, related to this agreement during the three months ended March 31, 2025.

On June 14, 2023, Naveen Bhatia,

a former member of the Board of the Company, entered into a consulting services agreement with the Company, pursuant to which Mr.

provided certain investor relations and strategic business development services, in consideration for 225,000 restricted shares of the

Company’s common stock, which vested in six-month installments from June 14, 2023 through December 31, 2024.

The Company issued

56,250 restricted shares of common stock, with a fair value of $ 168 thousand, related to this agreement during the three months ended

March 31, 2025.

On January 24, 2025, Mr.

a former member of the Board of Directors, entered into a third consulting services agreement with the Company, pursuant to which Mr.

Bhatia provides certain strategic business development services, in consideration for 100,000 restricted shares of the Company’s

common stock, of which 50,000 restricted shares vested on the execution of the agreement and 50,000 restricted shares will vest on the

one-year anniversary of the agreement.

The Company issued 50,000 restricted shares of common stock, with a fair value of $ 257 thousand,

related to this agreement during the three months ended March 31, 2025.

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.

Effective May 1, 2024, Brian Schreiber,

Logistics & Fulfillment Advisor, and a relative of the Company’s Chief Executive Officer, entered into an amended employment

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

portfolio of brands are included within two operating segments:

The compensation

adjustment, approved by the Compensation Committee of the Board, includes an annual base salary increase to $ 240 thousand.

three months ended March 31, 2025 and 2024, the Company paid Mr.

Schreiber approximately $ 55 thousand and $ 28 thousand, respectively,

in connection with his employment.

NOTE 11 – SEGMENT DATA

Our portfolio

of brands are included within two operating segments:

Telehealth and WorkSimpli.

We believe our current segments and brands

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

Relevant segment data for the three and nine months

ended September 30, 2024 and 2023 is as follows:

Our CODM is our Chief Executive Officer.

The CODM uses

segment operating income or loss to determine segment profitability in order to assess performance and allocate resources for the Company’s

operating segments based on monitoring of budgeted versus actual results.

segment data for the three months ended March 31, 2025 and 2024 is as follows:

SCHEDULE OF RELEVANT SEGMENT DATA

Three Months Ended September 30,

Nine Months Ended September 30,

$ 108,549,257

Operating loss

$ ( 3,624,659 )

$ ( 7,716,355 )

$ ( 16,695,105 )

$ ( 20,859,582 )

Operating (loss) income

$ ( 1,061,453 )

$ ( 467,818 )

$ 148,199,266

$ 107,687,158

Operating loss

$ ( 4,686,112 )

$ ( 4,569,381 )

$ ( 17,162,923 )

$ ( 12,317,737 )

income (loss)

Three Months Ended March 31, 2025

Cost of revenue

Significant Segment Expenses:

Selling and marketing expenses

Payroll expenses

Merchant processing fees

Other general and administrative expenses

Other segment items (1)

Segment operating income

Interest expense, net

Net (loss) income

Three Months Ended March 31, 2024

Cost of revenue

Significant Segment Expenses:

Selling and marketing expenses

Payroll expenses

Merchant processing fees

Other general and administrative expenses

Other segment items (1)

Segment operating (loss) income

$ ( 6,619,763 )

$ ( 6,171,245 )

Interest expense, net

Net (loss) income

$ ( 7,096,570 )

$ ( 6,648,923 )

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

September 30, 2024

Other segment items include stock-based compensation and depreciation and amortization.

Stock-based compensation expense for our Telehealth segment was $ 2.5 million for both the three months ended March 31, 2025 and 2024.

Depreciation and amortization for our Telehealth segment was $ 1.7 million and $ 1.3 million for the three months ended March 31, 2025 and 2024, respectively, and for our WorkSimpli segment was $ 966 thousand and $ 750 thousand for the three months ended March 31, 2025 and 2024, respectively.

March 31, 2025

December 31, 2024

13 – SUBSEQUENT EVENTS

Issued for Service

October 2024, the Company issued 318,085 shares of common stock related to vested restricted stock with a total fair value of $ 950 thousand.

Option Exercise

In October 2024, the Company issued an aggregate of 10,000 shares of common

stock related to the exercise of options for total proceeds of approximately $ 13 thousand.

Total expenditures for purchases

of capitalized software, equipment, and intangible assets, which are reported on the Company’s unaudited condensed consolidated

statements of cash flows totaled $ 2.0 million and $ 1.4 million for our Telehealth segment during the three months ended March 31, 2025

and 2024, respectively, and $ 863 thousand and $ 802 thousand for our WorkSimpli segment during the three months ended March 31, 2025 and

2024, respectively.

International net revenues totaled

$ 4.1 million and $ 3.5 million for the three months ending March 31, 2025 and 2024, respectively, and relate to our WorkSimpli segment.

NOTE 12 – SUBSEQUENT EVENTS

Stock Issued for Service

2025, the Company issued 335,750 shares of common stock related to vested restricted stock with a total fair value of $ 1.9 million.

OHHMD Asset Purchase Agreement

25, 2025, the Company, entered into and closed on an Asset Purchase Agreement (the “OHHMD Purchase Agreement”), by and among

OHHMD, PLLC (the “Seller”), a North Carolina professional limited liability company;

Doug Lucas, DO, the sole

member of OHHMD;

and LifeMD PC.

to the OHHMD Purchase Agreement, the Company acquired key assets from Optimal Human Health MD, a nationwide women’s health virtual

care provider, that are used in the operation of, or related to, a virtual clinical practice focusing on women’s health and hormone

replacement therapies (the “OHHMD Business”).

The Company acquired the assets in exchange for 100,000 shares of the Company’s

common stock, with 50,000 of those shares issued at closing, and 50,000 of those shares issued on the first anniversary of closing, and

other nominal consideration.

pursuant to the OHHMD Purchase Agreement, the Company agreed to make payments to Seller, contingent upon the achievement of certain milestones

through the second anniversary of closing, if and when the OHHMD Business reaches and maintains certain levels of active patients with

accompanying quarterly revenue (the “OHHMD Earn Out Consideration”).

The OHHMD Earn Out Consideration would consist of 100,000

shares of the Company’s common stock, issued on the second anniversary of closing, if the OHHMD Business reaches 2,500 active patients

with an accompanying quarterly revenue of at least $2.5 million and maintains this level for at least six full and consecutive calendar

months on or prior to the eighteen-month anniversary of closing;

and (ii) 100,000 shares of the Company’s common stock, issued on

the second anniversary of closing if the OHHMD Business reaches 5,000 active patients with an accompanying quarterly revenue of at least

$4.5 million and maintains this level for at least six full and consecutive calendar months on or prior to the second anniversary of closing.

connection with the OHHMD Purchase Agreement, LifeMD PC entered into a three-year employment agreement with Dr.

Lucas, who will

serve as the Company’s Vice President, Female Health & Clinical Operations, with the third year of employment on an

“at-will” basis.

Employment offers were also accepted by at least 75% of Seller’s employees and independent

In April 2025, the Company issued 50,000

shares of common stock in connection with the OHHMD Purchase Agreement with a total fair value of $ 305

The Company expects to complete our valuation of OHHMD acquired assets, assumed liabilities and valuation of the purchase

consideration in the second quarter of 2025.

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