UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _________ to _________

Commission file number: 001-39785

LIFEMD, INC.

(Exact name of registrant as specified in its charter)

Delaware

76-0238453

(State or other Jurisdiction

of Incorporation or Organization)

(I.R.S. Employer

Identification No.)

236 Fifth Avenue, Suite 400

New York, New York

10001

(Address of Principal Executive Offices)

(Zip Code)

(866) 351-5907

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of exchange on which registered
Common Stock, par value $.01 per share	LFMD	The Nasdaq Global Market
8.875% Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share	LFMDP	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” a “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 5, 2025, there were 45,447,604 shares of the registrant’s common stock outstanding.

LIFEMD, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025

TABLE OF CONTENTS

		Page

PART I. FINANCIAL INFORMATION

ITEM 1.	Financial Statements (unaudited)	3

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations	4

	Condensed Consolidated Statements of Stockholders’ Equity (Deficit)	5

	Condensed Consolidated Statements of Cash Flows	6

	Notes to Condensed Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	30

ITEM 4.	Controls and Procedures	31

PART II. OTHER INFORMATION

ITEM 1.	Legal Proceedings	33

ITEM 1A.	Risk Factors	33

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

ITEM 3.	Defaults Upon Senior Securities	33

ITEM 4.	Mine Safety Disclosures	33

ITEM 5.	Other Information	33

ITEM 6.	Exhibits	34

SIGNATURES		35

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

LIFEMD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2025			December 31, 2024
	(Unaudited)
ASSETS
Current Assets
Cash	$	34,393,410		$	35,004,924
Accounts receivable, net		10,192,774			8,217,813
Product deposit		191,840			40,763
Inventory, net		2,967,697			2,797,358
Other current assets		2,227,200			2,672,231
Total Current Assets		49,972,921			48,733,089
Non-current Assets
Equipment, net		1,438,829			1,479,184
Right of use assets		6,104,863			6,400,596
Capitalized software, net		14,311,592			13,816,501
Intangible assets, net		1,786,128			2,030,656
Total Non-current Assets		23,641,412			23,726,937
Total Assets	$	73,614,333		$	72,460,026
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable	$	15,679,028		$	16,009,484
Accrued expenses		18,503,380			20,811,763
Current operating lease liabilities		482,139			508,537
Current portion of long-term debt		11,611,111			8,444,444
Deferred revenue		14,625,902			14,480,917
Total Current Liabilities		60,901,560			60,255,145
Long-term Liabilities
Long-term debt, net		6,818,835			9,885,057
Noncurrent operating lease liabilities		6,186,692			6,265,192
Contingent consideration		100,000			100,000
Total Liabilities		74,007,087			76,505,394
Commitments and contingencies (Note 9)		-			-
Mezzanine Equity
Preferred Stock, $0.0001 par value; 5,000,000 shares authorized 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 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 March 31, 2025 and December 31, 2024		140			140
Common Stock, $0.01 par value; 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		436,327			422,939
Additional paid-in capital		233,043,479			230,508,339
Accumulated deficit		(235,644,977	)		(236,253,218	)
Treasury stock, 103,040, at cost, as of March 31, 2025 and December 31, 2024		(163,701	)		(163,701	)
Total LifeMD, Inc. Stockholders’ Deficit		(2,328,732	)		(5,485,501	)
Non-controlling interest		1,935,978			1,440,133
Total Stockholders’ Deficit		(392,754	)		(4,045,368	)
Total Liabilities, Mezzanine Equity and Stockholders’ Deficit	$	73,614,333		$	72,460,026

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

LIFEMD, INC.

CONDENSED Consolidated STATEMENTS OF OPERATIONS

(Unaudited)

	2025			2024
	Three Months Ended March 31,
	2025			2024
Revenues
Telehealth revenue, net	$	52,456,481		$	30,841,402
WorkSimpli revenue, net		13,241,275			13,302,862
Total revenues, net		65,697,756			44,144,264
Cost of revenues
Cost of telehealth revenue		8,136,462			4,194,595
Cost of WorkSimpli revenue		507,254			405,582
Total cost of revenues		8,643,716			4,600,177
Gross profit		57,054,040			39,544,087

Expenses
Selling and marketing expenses		29,194,061			24,173,880
General and administrative expenses		17,055,669			15,305,732
Customer service expenses		3,071,494			1,848,041
Development costs		2,675,134			2,087,232
Other operating expenses		2,514,758			2,300,447
Total expenses		54,511,116			45,715,332
Operating income (loss)		2,542,924			(6,171,245	)
Interest expense, net		(626,275	)		(477,678	)
Net income (loss)		1,916,649			(6,648,923	)
Net income attributable to non-controlling interest		531,845			119,432
Net income (loss) attributable to LifeMD, Inc.		1,384,804			(6,768,355	)
Preferred stock dividends		(776,563	)		(776,563	)
Net income (loss) attributable to LifeMD, Inc. common stockholders	$	608,241		$	(7,544,918	)
Basic earnings (loss) per share attributable to LifeMD, Inc. common stockholders	$	0.01		$	(0.19	)
Diluted earnings (loss) per share attributable to LifeMD, Inc. common stockholders	$	0.01		$	(0.19	)
Weighted average number of common shares outstanding:
Basic		43,135,778			39,242,237
Diluted		45,580,311			39,242,237

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

LIFEMD, INC.

CONDENSED Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ EQUITY (Deficit)

(Unaudited)

	Shares		Amount		Shares		Amount		Capital			Deficit			Stock			Total			Interest		Total
	LifeMD, Inc.
	Series A Preferred Stock				Common Stock				Additional Paid-in			Accumulated			Treasury						Non- controlling
	Shares		Amount		Shares		Amount		Capital			Deficit			Stock			Total			Interest		Total
Balance, January 1, 2024		1,400,000	$	140		38,358,641	$	383,586	$	217,550,583		$	(214,265,236	)	$	(163,701	)	$	3,505,372		$	2,060,787	$	5,566,159
Stock compensation expense		-		-		943,375		9,434		2,534,996			-			-			2,544,430			-		2,544,430
Stock issued for noncontingent consideration payment		-		-		95,821		958		641,042			-			-			642,000			-		642,000
Exercise of stock options		-		-		1,250		13		7,800			-			-			7,813					7,813
Cashless exercise of warrants		-		-		1,268,476		12,685		(12,685	)		-			-			-			-		-
Cashless exercise of options		-		-		64,113		641		(641	)		-			-			-			-		-
Series A Preferred Stock Dividend		-		-		-		-		-			(776,563	)		-			(776,563	)		-		(776,563	)
Distribution to non-controlling interest		-		-		-		-		-			-			-			-			(36,000		(36,000	)
Net (loss) income		-		-		-		-		-			(6,768,355	)		-			(6,768,355	)		119,432		(6,648,923	)
Balance, March 31, 2024		1,400,000	$	140		40,731,676	$	407,317	$	220,721,095		$	(221,810,154	)	$	(163,701	)	$	(845,303	)	$	2,144,219	$	1,298,916

	LifeMD, Inc.
	Series A Preferred Stock				Common Stock				Additional Paid-in			Accumulated			Treasury						Non- controlling
	Shares		Amount		Shares		Amount		Capital			Deficit			Stock			Total			Interest			Total
Balance, January 1, 2025		1,400,000	$	140		42,293,907	$	422,939	$	230,508,339		$	(236,253,218	)	$	(163,701	)	$	(5,485,501	)	$	1,440,133		$	(4,045,368	)
Balance		1,400,000	$	140		42,293,907	$	422,939	$	230,508,339		$	(236,253,218	)	$	(163,701	)	$	(5,485,501	)	$	1,440,133		$	(4,045,368	)
Stock compensation expense		-		-		1,282,654		12,827		2,535,701			-			-			2,548,528			-			2,548,528
Cashless exercise of options		-		-		56,139		561		(561	)		-			-			-			-			-
Series A Preferred Stock Dividend		-		-		-		-		-			(776,563	)		-			(776,563	)		-			(776,563	)
Distribution to non-controlling interest		-		-		-		-		-			-			-			-			(36,000	)		(36,000	)
Net income		-		-		-		-		-			1,384,804			-			1,384,804			531,845			1,916,649
Net income (loss)		-		-		-		-		-			1,384,804			-			1,384,804			531,845			1,916,649
Balance, March 31, 2025		1,400,000	$	140		43,632,700	$	436,327	$	233,043,479		$	(235,644,977	)	$	(163,701	)	$	(2,328,732	)	$	1,935,978		$	(392,754	)
Balance		1,400,000	$	140		43,632,700	$	436,327	$	233,043,479		$	(235,644,977	)	$	(163,701	)	$	(2,328,732	)	$	1,935,978		$	(392,754	)

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

LIFEMD, INC.

CONDENSED Consolidated STATEMENTS OF CASH FLOWS

(Unaudited)

	2025			2024
	Three Months Ended March 31,
	2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	1,916,649		$	(6,648,923	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of debt discount		100,444			100,444
Amortization of capitalized software		2,250,036			1,787,404
Amortization of intangibles		244,528			245,966
Accretion of consideration payable		-			13,644
Depreciation of fixed assets		162,566			65,915
Noncash operating lease expense		295,733			206,809
Stock compensation expense		2,548,528			2,544,430
Changes in Assets and Liabilities
Accounts receivable		(1,974,961	)		(59,241	)
Product deposit		(151,077	)		196,912
Inventory		(170,339	)		386,292
Other current assets		445,031			(364,227	)
Operating lease liabilities		(104,897	)		(203,944	)
Deferred revenue		144,985			4,374,159
Accounts payable		(330,456	)		1,310,177
Accrued expenses		(2,308,383	)		1,246,342
Net cash provided by operating activities		3,068,387			5,202,159
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for capitalized software costs		(2,745,127	)		(2,014,673	)
Purchase of equipment		(122,211	)		(175,592	)
Net cash used in investing activities		(2,867,338	)		(2,190,265	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable, net of prepayment penalty		-			(211,690	)
Cash proceeds from exercise of options		-			7,813
Preferred stock dividends		(776,563	)		(776,563	)
Contingent consideration payments for ResumeBuild acquisition		-			(31,250	)
Distributions to non-controlling interest		(36,000	)		(36,000	)
Net cash used in financing activities		(812,563	)		(1,047,690	)
Net (decrease) increase in cash		(611,514	)		1,964,204
Cash at beginning of period		35,004,924			33,146,725
Cash at end of period	$	34,393,410		$	35,110,929
Cash paid for interest
Cash paid during the period for interest	$	593,750		$	644,919
Non-cash investing and financing activities
Cashless exercise of options	$	561		$	641
Cashless exercise of warrants	$	-		$	12,685
Stock issued for noncontingent consideration payment	$	-		$	642,000
Right of use assets	$	-		$	1,285,926
Operating lease liabilities	$	-		$	1,285,926

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

LIFEMD, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS

Corporate History

LifeMD, Inc. 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. 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” 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. (formerly 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. The Company 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 loss. 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.

In April 2023, we launched our rapidly growing GLP-1 Weight Management Program providing primary care, metabolic coaching, lab work, and prescription services (as appropriate) to patients seeking to access a medically supported weight loss solution. In September 2024, we expanded our 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, “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 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 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 March 31, 2025, there was $19 million outstanding under the Avenue Facility, and the Company was in compliance with the Avenue Facility covenants. 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 thereafter. 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.

The Company entered into an At Market Issuance Sales Agreement (the “ATM Sales Agreement”) with B. Riley Securities, Inc. and Cantor Fitzgerald & Co. relating to the sale of its common stock. In accordance with the terms of the ATM Sales Agreement, the Company may, but is not obligated to, offer and sell, from time to time, shares of common stock, through or to the Agents, acting as agent or principal. Sales of common stock, if any, will be made by any method permitted that is deemed an “at the market offering” as defined in Rule 415 under the Securities Act. On 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.

As of 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, 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 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”).

The Company 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. Accordingly, they do not include all of the information and note disclosures required by accounting principles generally accepted in the United States (“U.S. 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, 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.

Cash

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

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 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.

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 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.

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

The Company 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.

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:

1.	Identify the contract
2.	Identify performance obligations
3.	Determine the transaction price
4.	Allocate the transaction price
5.	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; 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 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 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.

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. 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. The 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: (i) 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.

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. The Company 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.

As noted above, on December 11, 2023, the Company entered into the Medifast Collaboration. Pursuant to certain agreements between the parties, Medifast 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 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.

For the three months ended March 31, 2025 and 2024, the Company had the following disaggregated revenue:

SCHEDULE OF DISAGGREGATED REVENUE

	Three Months Ended March 31,
	2025		%			2024		%
Telehealth subscription revenue	$	30,089,964		46	%	$	7,607,788		17	%
Telehealth product revenue		22,366,517		34	%		21,264,864		48	%
WorkSimpli revenue		13,241,275		20	%		13,302,862

SEC Form 10-Q filed by LifeMD Inc.