LifeMD, Inc. (LFMD) FY 2022 MD&A

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information
necessary to understand our audited consolidated financial statements for the period ended December 31, 2022 and highlight certain other
information which, in the opinion of management, will enhance a reader’s understanding of our financial condition, changes in financial
condition and results of operations. In particular, the discussion is intended to provide an analysis of significant trends and material
changes in our financial position and the operating results of our business during the fiscal year ended December 31, 2022, as compared
to the fiscal year ended December 31, 2021. This discussion should be read in conjunction with our consolidated financial statements
for the two-year period ended December 31, 2022 and related notes included elsewhere in this Annual Report on Form 10-K. These historical
financial statements may not be indicative of our future performance. This Management’s Discussion and Analysis of Financial Condition
and Results of Operations contains numerous forward-looking statements, all of which are based on our current expectations and could
be affected by the uncertainties and risks described throughout this filing, particularly in “Item 1A. Risk Factors.”

Overview

LifeMD,
Inc. is a diversified online direct-to-patient marketing and telehealth company with a portfolio of health and wellness brands. Our products
are marketed and sold directly to consumers through advertisements on Facebook, Google, Amazon, and other social media and e-commerce
platforms. Secondarily, we also sell our products through third party partner channels. We market branded and generic prescription drugs
that are then sold and shipped online directly to consumers in all 50 states and the District of Columbia and Puerto Rico. We have also
established a 50-state affiliated medical group that provides virtual consultations to our patients. Since inception, we have treated
approximately 680,000 customers and patients nationwide. We operate our business using a proprietary telehealth technology platform that
facilitates a compliant relationship between the patient, provider, us and pharmacy.

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.

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Developments
in 2022

Key
developments in our business during 2022 are described below:

Cleared
Acquisition

On
January 18, 2022, the Company acquired Cleared, a nationwide allergy telehealth platform that provides personalized treatments for allergy,
asthma, and immunology. The purchase price was approximately $9.1 million, including cash paid upfront of approximately $1.0 million
and payable in the future of approximately $3.0 million, and contingent consideration of $5.1 million.

On
February 4, 2023, the Company entered into the First Amendment to the Stock Purchase Agreement (the “First Amendment”) between
the Company and the sellers of Cleared. The First Amendment was amended to, among other things: (i) reduce the total purchase price by
$250 thousand to a total of $3.67 million; (ii) change the timing of the payment of the purchase price to $460 thousand paid at closing
(which has already been paid by the Company), with the remaining amount to be paid in five quarterly installments beginning on or before
February 6, 2023 and ending January 15, 2024; (iii) removing all “earn-out” payments payable by the Company to the sellers;
and (iv) removing certain representations and warranties of the Company and sellers in connection with the transaction (See Note 3—Acquisitions
to our consolidated financial statements included in this report).

ResumeBuild
Asset Purchase Agreement

In
February 2022, our majority-owned subsidiary 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.
WorkSimpli paid to the Seller a purchase price $4.0 million. 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 $62,500, for a two-year period
ending on the two-year anniversary of the closing of the acquisition. 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.

WorkSimpli
Software Capitalization Update

On
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 pursuant to certain option agreements between
Conversion Labs PR and each of Sean Fitzpatrick and Varun Pathak. Following the exercise of such option agreements, Conversion Labs PR
decreased its ownership interest in WorkSimpli from 85.58% to 73.64%.

Manufacturing
and Supply Chain

We
have not experienced any material adverse effect on our business as a result of shortages of raw materials or packaging materials used
in the manufacturing of our products. An unexpected interruption or a shortage in supply could adversely affect our business derived
from these products. We are not substantially dependent on any raw material supplier or packaging supplier since alternative sources
of materials, with equal quality, could be quickly obtained if any of our current suppliers cease to supply us adequately.

Among
other things, our supply chain is subject to the effects of natural disasters and other events beyond our control, such as raw material,
component, and labor shortages; global and regional shipping and logistics constraints; work stoppages; power outages; and the physical
effects of climate change, including changes in weather patterns. In addition, human rights concerns, including forced labor and human
trafficking, in foreign countries and associated governmental responses have the potential to disrupt our supply chain, and our operations
could be adversely impacted. Although we do not believe that raw materials used in the products we sell are sourced from regions with
forced labor concerns, any delays or other supply chain disruption resulting from these concerns, associated governmental responses,
or a desire to source products, components, or materials from other manufacturers or regions could result in shipping delays, cancellations,
penalty payments, or loss of revenue and market share, any of which could have a material adverse effect on our business, results of
operations, cash flows, and financial condition.

In
connection with these potential impacts on our supply chain, we are, as a general matter, seeing a trend of modest increases in (i) pricing
on air and ocean freight, as well as for component and product parts, (ii) the overall time to receive shipments, and (iii) the overall
time for shipment and delivery to our customers from third-party shippers.

2020
Equity Incentive Plan

On
January 8, 2021, the Company approved the 2020 Plan. The 2020 Plan is administered by the Compensation Committee of 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 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.

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On
June 24, 2021, at the Annual Meeting of Stockholders, the stockholders of the Company approved an 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.

On
June 16, 2022, at the Annual Meeting of Stockholders, the stockholders of the Company approved an 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 an additional 1,500,000
shares. As of December 31, 2022, the Plan provided for the issuance of up to 4,800,000 shares of Common Stock. Remaining authorization
under the 2020 Plan was 1,732,163 shares as of December 31, 2022.

Results
of Operations

Comparison
of the Year Ended December 31, 2022 to the Year Ended December 31, 2021

Our
financial results for the year ended December 31, 2022 are summarized as follows in comparison to the year ended December 31, 2021:

Total
revenue, net. Total revenue for the year ended December 31, 2022 was approximately $119.0 million, an increase of 28% compared to approximately
$92.9 million for the year ended December 31, 2021. The increase in revenues was attributable to both the increase in telehealth revenue
of 21% and an increase in WorkSimpli revenue of 47%. Telehealth revenue accounts for 69% of total revenue and has increased in the year
ended December 31, 2022 due to an increase in online sales demand, with the majority of the growth of our telehealth brands, RexMD and
ShapiroMD. WorkSimpli revenue accounts for 31% of total revenue and has steadily increased year over year due to a combination of higher
demand, increased market awareness, enhanced digital capabilities, continued marketing campaign expansion and the addition of the ResumeBuild
brand in the first quarter of 2022. While a portion of our growth could be attributable to the COVID-19 pandemic, management strongly
believes our growth is primarily a result of the strength of our healthcare brands.

Total
cost of revenue. Total cost of revenue consists of the cost of (1) telehealth revenues, which primarily include product costs, pharmacy
fulfillment costs, physician consult fees, and shipping costs directly attributable to our prescription and OTC products and (2) the
cost of WorkSimpli revenue consisting primarily of information technology fees related to providing the services made available on our
online platform. Total cost of revenue increased by approximately 4% to approximately $18.7 million for the year ended December 31, 2022
compared to approximately $18.0 million for the year ended December 31, 2021. The increased combined cost of revenue was due to increased
sales volume when compared to the year ended December 31, 2021. Telehealth costs decreased to 22% of associated telehealth revenues experienced
during the year ended December 31, 2022, from 26% of associated telehealth revenues during the year ended December 31, 2021. WorkSimpli
costs were 2% of associated WorkSimpli revenues for both the years ended December 31, 2022 and 2021.

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Gross
profit. Gross profit increased by approximately 34% to approximately $100.4 million for the year ended December 31, 2022 compared to
approximately $74.9 million for the year ended December 31, 2021. Gross profit as a percentage of revenues was 84% for the year ended
December 31, 2022 compared to 81% for the year ended December 31, 2021. Gross profit as a percentage of revenues for telehealth was 78%
for the year ended December 31, 2022 compared to 74% for the year ended December 31, 2021, and for WorkSimpli was 98% for both the years
ended December 31, 2022 and 2021. The increase in sales volume for both telehealth and WorkSimpli and improved pricing have contributed
to the increase in gross profit.

Total
expenses. Operating expenses for the year ended December 31, 2022 were approximately $143.8 million, as compared to approximately $129.2
million for the year ended December 31, 2021. This represents an increase of 11%, or $14.6 million. The increase is primarily attributable
to:

These
increases in operating expenses were partially offset by a decrease in selling and marketing expenses which consist of online marketing
and advertising expenses. During the year ended December 31, 2022, the Company had a decrease of approximately $4.2 million in selling
and marketing costs resulting from a Company-wide strategic reduction in costs and alignment of sales and marketing initiatives to drive
the Company’s recurring revenue subscription-based sales model.

Other
Expenses, net

Other
expenses, net for the year ended December 31, 2022, consists of interest expensed on the Company’s notes payable and Series B
Convertible Preferred Stock partially offset by the gain on debt forgiveness of Paycheck Protection Program loans. Other expenses for the year ended December
31, 2021, consists of interest expense and amortization of debt discount recorded related to the June 1, 2021 Purchase Agreement and
loss on debt extinguishment which is attributable to the extinguishment of the June 1, 2021 Purchase Agreement of $4,180,473 in
October 2021 partially offset by the gain on debt forgiveness of Paycheck Protection Program loans of $184,914 recorded during the
year ended December 31, 2021.

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Working
Capital

Working
capital decreased by approximately $42.2 million during the year ended December 31, 2022. The decrease in current assets is primarily
attributable to a decrease in cash of approximately $37.4 million, partially offset by an increase in inventory of $2.1 million due to
timing of purchases and an increase in accounts receivable of approximately $1.9 million. Current liabilities increased by $8.5 million,
which was primarily attributable to an increase in deferred revenue of approximately $4.0 million due to increased sales for products
which the customer has not yet obtained control due to delivery not commensurate upon shipment of the product, an increase in notes payable
of $2.7 million, an increase in accounts payable and accrued expenses of $1.6 million as a result of the Company extending payables and
credit terms with vendors and accrual of the noncontingent milestone payments related to the Cleared acquisition of $2.6 million due
in 2023.

Liquidity
and Capital Resources

Since
inception, the Company has funded operations through the collections from revenues provided by the sales of its products, issuances of
common and preferred stock, receipt of loans and advances from officers and directors, and the issuance of convertible notes to third-party
investors. Rising interest rates and inflation may increase the cost of capital and make it more difficult for us to access capital markets.

Net
cash used in operating activities was approximately $23.0 million for the year ended December 31, 2022, as compared with approximately
$33.1 million for the year ended December 31, 2021. The significant factors contributing to the net cash used in operations during the
year ended December 31, 2022, include the net loss of approximately $45.0 million inclusive of the following: (1) $13.7 million in non-cash
stock-based compensation charges, (2) $8.9 million in non-cash goodwill and intangible asset impairment charges related to a decline
in the estimated fair value of Cleared as a result of a decline in the Cleared financial projections and (3) $3.8 million in non-cash
depreciation and amortization, partially offset by a $5.1 million reduction to the Cleared contingent consideration as a result of the
remeasurement of the fair value. Additionally, an increase in inventory of $2.2 million due to the timing of purchases, an increase in
accounts receivable of $2.2 million and a decrease in accrued expenses and other operating activities of $2.2 million excluding noncontingent
payments to Cleared contributed to net cash used in operations for the year ended December 31, 2022. These factors contributing to net
cash used in operations were partially offset by an increase in deferred revenue of $4.0 million due to increased sales for products
which the customer has not yet obtained control due to delivery not commensurate upon shipment of the product and accounts payable of
$1.3 million as a result of the Company extending payables and credit terms with vendors.

Net
cash used in investing activities for the year ended December 31, 2022 was approximately $13.9 million, as compared with net cash used
in investing activities of $3.4 million for the year ended December 31, 2021. Net cash used in investing activities was primarily due
to cash paid for capitalized software costs of approximately $8.5 million, cash paid for the purchase of the ResumeBuild brand of approximately
$4.0 million, cash paid for the Cleared acquisition of approximately $1.0 million and cash paid for the purchase of equipment of $367
thousand. Net cash used in investing activities for the year ended December 31, 2021 was primarily due to cash paid for capitalized software
costs of approximately $3.1 million, the purchase of equipment of approximately $247 thousand and the purchase of an intangible asset
of approximately $22 thousand.

Net
cash used in financing activities for the year ended December 31, 2022 was approximately $528 thousand as compared with net cash provided
by financing activities of approximately $68.6 million for the year ended December 31, 2021. During the year ended December 31, 2022,
net cash used in financing activities consisted of preferred stock dividends of $3.1 million, repayment of notes payable of $169 thousand,
contingent consideration payments made related to the ResumeBuild brand acquisition of $156 thousand and distributions to non-controlling
interest of $144 thousand. These decreases were partially offset by proceeds from notes payable of $2.9 million, proceeds from the exercise
of options and warrants of $129 thousand and proceeds received from the sale of a portion of the Company’s membership interest
in WorkSimpli of $12 thousand. Net cash provided by financing activities for the year ended December 31, 2021, consisted of (1) net proceeds
of $14.9 million from the private placement, pursuant to the June 1, 2021 Purchase Agreement, (2) net proceeds of $13.5 million from
the private placement pursuant to the February 2021 Purchase Agreement, (3) net proceeds from the exercise of options and warrants during
the period of approximately $1.2 million, (4) net proceeds from the sale of common stock under the ATM Sales Agreement of approximately
$0.5 million, in connection with our filed shelf registration and launch of an at-the-market program on June 8, 2021, (5) our entry into
a merchant funding agreement, and (6) the October 4, 2021 Offerings whereby the Company received total net proceeds of $55.3 million.
These increases in net cash from financing activities were partially offset by the repayment of $15.0 million outstanding on the June
1, 2021 Purchase Agreement, repayment of notes payable, and the purchase of the additional membership interest of WorkSimpli.

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Liquidity
and Capital Resources Outlook

As
of December 31, 2022, the Company has an accumulated deficit approximating $190.6 million and has experienced significant losses from
its operations. To date, the Company has been funding operations primarily through the sales of its products, issuance of common and
preferred stock and through loans and advances from officers and directors. Our primary short-term and long-term requirements for liquidity
and capital are for customer acquisitions, fund business acquisitions and investments we may make from time to time, working capital
including our noncancelable operating lease obligations, noncontingent consideration, capital expenditures and general corporate purposes.
The Company has a current cash balance of approximately $14.6 million as of the filing date.

On
June 8, 2021, the Company filed a shelf registration statement on Form S-3 under the Securities Act, which was declared effective on
June 22, 2021 (the “2021 Shelf”). Under the 2021 Shelf at the time of effectiveness, the Company had the ability to raise
up to $150 million by selling common stock, preferred stock, debt securities, warrants, and units. In conjunction with the 2021 Shelf,
the Company also entered into an At Market Issuance Sales Agreement (the “ATM Sales Agreement”) with B. Riley Securities,
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 having an aggregate offering price
of up to $60 million, through or to the Agents, acting as agent or principal. Sales of common stock, if any, will be made by any method
permitted that is deemed an “at the market offering” as defined in Rule 415 under the Securities Act. As of December 31,
2022, the Company has $59.5 million available under the ATM Sales Agreement and $32 million available under the 2021 Shelf.

In
October 2022, the Company received proceeds of $976,000 under a 12-month working capital loan with Amazon pursuant to the Amazon Lending
Agreement. The terms of the loan include interest in the amount of $62,157. The total outstanding balance of $976,000, is included in
notes payable, net, on the accompanying consolidated balance sheet as of December 31, 2022.

In
November 2022, the Company received proceeds of $1,930,000 under two 10-month working capital loans with Balanced Management pursuant
to the Business Loan and Security Agreement. The terms of the loans include loan origination fees in the amount of $60,000 and total
interest of $840,000. The total outstanding balance of $1,821,250, is included in notes payable, net on the accompanying consolidated
balance sheet as of December 31, 2022.

During
the year ended December 31, 2022, we issued an aggregate of 90,400 shares of common stock for the exercise of stock options for cash
proceeds of $90,400.

During
the year ended December 31, 2022, we issued an aggregate of 22,000 shares of common stock for the exercise of warrants for cash proceeds
of $38,500.

The
Company’s continued operations are dependent upon obtaining an increase in its sales volumes which the Company has been successful
in achieving to date. However, there can be no assurances that we will continue to be successful in increasing revenues, improving operational
efficiencies or that financing will be available or, if available, that such financing will be available under favorable terms.

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. The Company’s continuance as a going concern is highly dependent on its future profitability and on the on-going support
of its stockholders, affiliates, and creditors. Based on these circumstances, management has determined that these conditions raise substantial
doubt about the Company’s ability to continue as a going concern.

The
Company has begun to implement strategies to strengthen revenues and improve operational efficiencies across the business and is significantly
curtailing expenses, however, these strategies do not mitigate the substantial doubt about the Company’s ability to continue as
a going concern. Management believes that the overall market value of the telehealth industry is positive and that it will continue to
drive interest in the Company.

Critical
Accounting Policies and Estimates

Our
significant accounting policies are more fully described in Note 2—Summary of Significant Accounting Policies to our consolidated
financial statements included in this report. We believe that the accounting policies below are critical for one to fully understand
and evaluate our financial condition and results of operations.

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Revenue
Recognition

The
Company records revenue under the adoption of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, by analyzing exchanges with its
customers using a five-step analysis:

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 some cases, the customer does not obtain control until the product reaches the customer’s delivery
site; in these cases, recognition of revenue is deferred until that time. 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.

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. Customer discounts, returns
and rebates on product revenues approximated $5.2 million and $4.7 million, respectively, during the years ended December 31, 2022 and
2021.

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 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 customers subscription will not be renewed for the following month or year depending on the original
subscription. The Company records the revenue over the customers subscription period for monthly and yearly subscribers or at the end
of the initial 14-day service period for customers who purchased the initial subscription, as the circumstances dictate. The Company
offers a discount for the monthly or yearly subscriptions being purchased, which is deducted at the time of payment at the initiation
of the contract term; therefore the Contract price is fixed and determinable at the contract initiation. Monthly and annual subscriptions
for the service are recorded net of the Company’s known discount rates. Customer discounts and allowances on WorkSimpli revenues
approximated $2.5 million and $1.8 million, respectively, during the years ended December 31, 2022 and 2021.

As
of December 31, 2022 and 2021, the Company has accrued contract liabilities, as deferred revenue, of approximately $5.5 million and $1.5
million respectively, which represent the following: (1) obligations for products which the customer has not yet obtained control due
to delivery not commensurate upon shipment of the product, (2) obligations on WorkSimpli in-process monthly or yearly contracts with
customers and (3) a portion attributable to the yet to be recognized WorkSimpli initial 14-day trial period collections.

Capitalized
Software Costs

The
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 December 31, 2022 and
2021, the Company capitalized $12.1 million and $3.6 million, respectively, related to internally developed software costs which is amortized
over the useful life and included in development costs on our statement of operations. The increase in capitalized software costs of
$8.5 million or 236%, is primarily attributable to costs incurred related to development efforts of our LifeMD PC platform.

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Goodwill
and Intangible Assets

Goodwill
represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination.
Goodwill is not amortized but is tested for impairment annually or more frequently, if events or changes in circumstances indicate that
the asset may be impaired. Goodwill in the amount of $8.0 million was recognized in conjunction with the Cleared acquisition during the
three months ended March 31, 2022 (see Note 3—Acquisitions to our consolidated financial statements included in this report). The
Company recorded an $8.0 million goodwill impairment charge and an $827 thousand intangible asset impairment charge during the year ended
December 31, 2022 related to a decline in the estimated fair value of Cleared as a result of a decline in the Cleared financial projections.

Other
intangible assets are comprised of: (1) a customer relationship asset, (2) the Cleared trade name, (3) Cleared developed technology, (4)
a purchased license and (5) a purchased domain name. During the year ended December 31, 2022, the
Company recorded an $827 thousand impairment loss related to a decline in the estimated fair value of the Cleared customer
relationship intangible asset with an original cost of $919 thousand and accumulated amortization of $92 thousand. Other intangible
assets are amortized over their estimated lives using the straight-line method. Costs incurred to renew or extend the term of
recognized intangible assets are capitalized and amortized over the useful life of the asset.

Impairment
of Long-Lived Assets

Long-lived
assets include equipment and capitalized software. Long-lived assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, an impairment is
recognized as the amount by which the carrying amount of the assets exceeds the estimated fair values of the assets. As of December 31,
2022 and 2021, the Company determined that no events or changes in circumstances existed that would indicate any impairment of its long-lived
assets.

Recently
Issued Accounting Standards

In
October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.
2021-08, Business Combinations (Topic 805); Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.
This new guidance affects all entities that enter into a business combination within the scope of ASC 805-10. Under this new guidance,
the acquirer should determine what contract assets and/or liabilities it would have recorded under ASC 606, Revenue from Contracts
with Customers, as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the
same terms as the acquirer. Under current U.S. GAAP, contract assets and contract liabilities acquired in a business combination are
recorded by the acquirer at fair value. This update is effective for fiscal years beginning after December 15, 2022. Early adoption is
permitted. The Company is currently evaluating the effects that the adoption of this guidance will have on our consolidated financial
statements and related disclosures.

Application
of New or Revised Accounting Standards—Not Yet Adopted

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 consolidated financial statements upon adoption.