Optimus Healthcare Services Inc.

09/12/2024 | Press release | Distributed by Public on 09/12/2024 06:31

Supplemental Prospectus - Form 424B3

Filed Pursuant to Rule 424(b)(3)
Registration No. 333-280575

Prospectus Supplement No. 1
(to prospectus dated August 8, 2024)

OPTIMUS HEALTHCARE SERVICES, INC.

Up to 3,632,859 Shares of Common Stock

This prospectus supplement is being filed to update and supplement the information contained in the prospectus dated August 8, 2024 (the "Prospectus"), which forms part of our registration statement on Form S-1 (No. 333-280575), as amended, with the information contained in our Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission (the "SEC") on August 9, 2024 (the "Quarterly Report"). Accordingly, we have attached the Quarterly Report to this prospectus supplement.

The Prospectus and this prospectus supplement relate to the disposition from time to time by the Selling Stockholders of up to 3,632,859 shares (the "Shares") of our Common Stock, which includes up to 1,927,859 shares of our Common Stock and up to 1,705,000 shares of our Common Stock issuable upon the exercise of outstanding warrants (the "Warrants").

This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement. Terms used in this prospectus supplement but not defined herein shall have the meanings given to such terms in the Prospectus. You should read the Prospectus, this prospectus supplement and any additional prospectus supplement or amendment carefully before you invest in our securities. Our common stock is listed on the Pink Open Market under the symbol "OHCS". On September 5, 2024, the closing price of our common stock was $0.0595 per share.

Investing in our common stock involves a high degree of risk. See the section titled "Risk Factors" beginning on page 14 of the Prospectus and in our other documents subsequently filed with the SEC.

Neither the SEC nor any other state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of the Prospectus or this prospectus supplement. Any representation to the contrary is a criminal offense.

The date of this prospectus supplement is September 12, 2024

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2024

OR

☐ 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: 333-261849

OPTIMUS HEALTHCARE SERVICES, INC.

(Exact Name of Registrant as Specified in its Charter)

Florida 65-0181535
(State or other jurisdiction of
incorporation or organization) 		(I.R.S. Employer
Identification No.)
1400 Old Country Road, Suite 306, Westbury, NY 11590
(Address of principal executive offices) (Zip Code)

(516) 806-4201

(Registrant's telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None.

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, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "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 ☒

Number of common shares outstanding as of August 2, 2024 was 47,906,664.

Page No.
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 1
Condensed Consolidated Statements of Operations for the Three and Six Months ended June 30, 2024 and 2023 3
Condensed Consolidated Statements of Changes in Stockholders' Deficit for the Three and Six Months ended June 30, 2024 and 2023 4
Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2024 and 2023 6
Notes to the Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 26
Item 3. Quantitative and Qualitative Disclosures About Market Risk 40
Item 4. Controls and Procedures 40
PART II. OTHER INFORMATION 41
Item 1. Legal Proceedings 41
Item 1A. Risk Factors 41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 41
Item 3. Defaults Upon Senior Securities 41
Item 4. Mine Safety Disclosure 41
Item 5. Other Information 41
Item 6. Exhibits 42
Signatures 43

i

OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30, December 31,
2024 2023
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 12,764 $ 100,319
Accounts receivable, net 602,353 572,707
Notes receivable - 100,000
Deposits and prepaid expenses 19,206 33,592
Total current assets 634,323 806,618
Right-of-use asset 196,519 224,316
Property, plant and equipment, net 32,225 39,164
Total Assets $ 863,067 $ 1,070,098
Liabilities & Stockholders' Deficit
Current liabilities
Accounts payable $ 1,341,129 $ 1,154,309
Accrued liabilities 1,429,264 1,043,270
Line of credit 133,925 135,744
Notes payable, related party 2,002,000 1,720,000
Convertible notes payable, net of discount 4,400,000 3,915,732
Paycheck protection program loan, current 4,810 5,304
Operating lease liability, current 61,378 59,765
Total current liabilities 9,372,506 8,034,124
Operating lease liability, non-current 146,119 175,344
Paycheck protection program loan - 1,592
Total Liabilities 9,518,625 8,211,060
Commitments and contingencies

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

1

OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30, December 31,
2024 2023
(Unaudited)
Stockholders' Deficit
Series A Preferred stock, $0.001 par value; 10,000,001 authorized: 1,102 shares issued and outstanding 2 2
Series B Preferred stock, $0.001 par value; 60,000,000 authorized: 8,105,724 shares issued and outstanding 8,106 8,106
Common stock, $0.001 par value; 130,000,000 shares authorized; 45,794,664 and 39,967,598 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 45,795 39,968
Common stock to be issued - 550
Additional paid in capital 23,302,390 22,947,709
Accumulated deficit (32,007,998 ) (30,133,916 )
Controlling interest (8,651,705 ) (7,137,581 )
Non-controlling interest (3,853 ) (3,381 )
Total Stockholders' Deficit (8,655,558 ) (7,140,962 )
Total Liabilities and Stockholders' Deficit $ 863,067 $ 1,070,098

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

2

OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

UNAUDITED

For the Three Months Ended
June 30, 		For the Six Months Ended
June 30,
2024 2023 2024 2023
Revenue $ 639,303 $ 322,414 $ 983,768 $ 594,056
Cost of sales 58,061 59,158 120,243 139,182
Gross profit 581,242 263,256 863,525 454,874
Operating expenses:
Stock based compensation 898,352 1,183,518 (233,715 ) 2,601,461
Personnel expenses 443,543 844,196 909,034 1,730,452
General and administrative expenses 437,375 600,536 787,107 1,027,089
Professional fees 51,392 62,200 138,024 203,479
Total operating expenses 1,830,662 2,690,450 1,600,450 5,562,481
Loss from operations (1,249,420 ) (2,427,194 ) (736,925 ) (5,107,607 )
Other income (expense):
Amortization of debt discount 0 (288,151 ) (484,268 ) (573,136 )
Interest expense (201,596 ) (114,796 ) (394,604 ) (218,584 )
Loss on extinguishment of debt 0 0 (263,857 ) 0
Net gain from investments 0 (32,211 ) 0 78,510
Interest income 942 4,000 6,076 8,000
Total other income (expense) (200,654 ) (431,158 ) (1,136,653 ) (705,210 )
Loss before income tax benefit (expense) (1,450,074 ) (2,858,352 ) (1,873,578 ) (5,812,817 )
Income tax benefit (expense) (993 ) (2,025 ) (976 ) (2,025 )
Net loss $ (1,451,067 ) $ (2,860,377 ) $ (1,874,554 ) $ (5,814,842 )
Net loss attributable:
Non-controlling interest (191 ) (474 ) (472 ) (893 )
Common stockholders (1,450,876 ) (2,859,903 ) (1,874,082 ) (5,813,949 )
Net loss $ (1,451,067 ) $ (2,860,377 ) $ (1,874,554 ) $ (5,814,842 )
Basic and diluted earnings per share on net loss $ (0.03 ) $ (0.07 ) $ (0.04 ) $ (0.15 )
Weighted average shares outstanding - basic and diluted 45,678,620 40,116,769 43,256,140 39,967,476

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

3

OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

(UNAUDITED)

Series A
Preferred Stock 		Series B
Preferred Stock 		Common Stock Common Stock
to be Issued 		Additional
Paid in 		Accumulated Non-Controlling
Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Interest Total
Balance December 31, 2023 1,102 $ 2 8,105,724 $ 8,106 39,967,598 $ 39,968 550,000 $ 550 $ 22,947,709 $ (30,133,916 ) $ (3,381 ) $ (7,140,962 )
Sale of common stock - - - - 550,000 550 (550,000 ) (550 ) - - - -
Restricted stock units - - - - - - - - (15,282 ) - - (15,282 )
Stock based compensation - - - - - - - - (1,116,786 ) - - (1,116,786 )
Stock issued for accrued interest - - - - 3,165,066 3,165 - - 408,294 - - 411,459
Warrant repricing - - - - - - - - 50,215 - - 50,215
Net loss - - - - - - - - - (423,206 ) (281 ) (423,487 )
Balance March 31, 2024 1,102 2 8,105,724 8,106 43,682,664 43,683 - - 22,274,150 (30,557,122 ) (3,662 ) (8,234,843 )
Stock based compensation - - - - - - - - 898,352 - - 898,352
Stock issued for accrued interest - - - - 2,112,000 2,112 - - 129,888 - - 132,000
Net loss - - - - - - - - - (1,450,876 ) (191 ) (1,451,067 )
Balance June 30, 2024 1,102 $ 2 8,105,724 $ 8,106 45,794,664 $ 45,795 - $ - $ 23,302,390 $ (32,007,998 ) $ (3,853 ) $ (8,655,558 )

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

4

OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023

UNAUDITED

Series A
Preferred Stock 		Series B
Preferred Stock 		Common Stock Common Stock
to be Issued 		Additional
Paid in 		Accumulated Non-Controlling
Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Interest Total
Balance December 31, 2022 1,102 2 8,105,724 8,106 38,286,598 38,287 1,206,000 1,206 17,343,671 (19,032,561 ) (1,233 ) (1,642,522 )
Issuance of common stock previously in common stock to be issued - - - - 1,206,000 1,206 (1,206,000 ) (1,206 ) - - - -
Sale of common stock - - - - 725,000 725 - - 724,275 - - 725,000
Restricted stock units - - - - - - - - 206,755 - - 206,755
Stock based compensation - - - - - - - - 1,211,188 - - 1,211,188
Net loss - - - - - - - - - (2,954,046 ) (419 ) (2,954,465 )
Balance March 31, 2023 1,102 2 8,105,724 8,106 40,217,598 40,218 - - 19,485,889 (21,986,607 ) (1,652 ) (2,454,044 )
Repurchase of stock - - - - (250,000 ) (250 ) - - (136,577 ) - - (136,827 )
Restricted stock units - - - - - - - - 188,795 - - 188,795
Stock based compensation - - - - - - - - 994,723 - - 994,723
Net loss - - - - - - - - - (2,859,903 ) (474 ) (2,860,377 )
Balance June 30, 2023 1,102 2 8,105,724 8,106 39,967,598 39,968 - - 20,532,830 (24,846,510 ) (2,126 ) (4,267,730 )

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

5

OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

UNAUDITED

2024 2023
Cash Flows from Operating Activities:
Net Loss $ (1,874,554 ) $ (5,814,842 )
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization 6,939 7,166
Stock-based compensation (233,715 ) 2,601,461
Net income from investments - (78,510 )
Loss on extinguishment of debt 263,857
Amortization of debt discount 484,268 573,136
Amortization of right-of-use asset 184 1,215
Changes in operating assets & liabilities
Accounts receivable and notes receivable 70,354 99,298
Deposits & prepaid expenses 14,386 (17,524 )
Accounts payable 186,820 375,043
Accrued liabilities 715,811 (36,675 )
Net cash used in operating activities (365,650 ) (2,290,232 )
Cash Flows from Investing Activities:
Sales of marketable securities - 936,330
Purchase of marketable securities - (713,622 )
Acquisition of fixed assets - (19,552 )
Net cash provided by investing activities - 203,156
Cash Flows from Financing Activities:
Sale of common stock - 725,000
Redemption of common stock - (136,827 )
Proceeds from notes payable 100,000 -
Proceeds from notes payable, related party 182,000 949,800
Payments of PPP loan (2,086 ) (2,479 )
Payments of line of credit (1,819 ) (2,314 )
Net cash provided by financing activities 278,095 1,533,180
Decrease in Cash (87,555 ) (553,896 )
Cash at beginning of period 100,319 751,017
Cash at end of period $ 12,764 $ 197,121

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

6

OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(UNAUDITED)

2024 2023
Supplemental Cash Flow Information
Cash paid for interest $ 0 $ 200,700
Cash paid for income taxes $ 976 $ -
Non-cash investing and financing activities:
Common stock issued to satisfy accrued interest $ 543,459 $ -

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

7

OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of operations

Optimus Healthcare Services, Inc. (formerly Between Dandelions, Inc., "Optimus", "Company") was initially organized under the laws of Florida on February 26, 1990, as Phoenix Management Associates, Inc. Over the ensuing years, the Company made a series of amendments to its Articles of Incorporation relating to authorization of various series of Preferred Shares and made a series of name changes. The current name of Optimus Healthcare Services, Inc. became effective with the State of Florida on January 24, 2021.

The Company is dedicated to advancing access to clinical trial research through its portfolio company Clinical Research Alliance, Inc. ("CRA"), and until December 2023 when it discontinued operations of its early stage pharmacy operation, through its portfolio company Worker's Health Rx (d/b/a "Vitality Rx").

2. Summary of significant accounting policies

Principles of Consolidation

The consolidated financial statements which include the accounts of the Company and its subsidiaries are prepared in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP). All significant intercompany balances and transactions have been eliminated. The consolidated financial statements and related condensed disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the annual financial statements reported in the latest Form 10-K filed for the year ended December 31, 2023. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these consolidated financial statements have been included. All adjustments are of a normal recurring nature. The results of operations of any interim period are not necessarily indicative of the results for the full year. The fiscal year end is December 31.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant assumptions and estimates relate to the valuation of equity issued for services, valuation of equity associated with convertible debt, the valuation of derivative liabilities, and the valuation of deferred tax assets. Actual results could differ from these estimates.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Update ("ASU") 2014-09, "Revenue from contracts with customers," (Topic 606). Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

8

The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. The Company's main revenue stream is from services. Generally, the Company's performance obligations are transferred to customers at a point in time, typically upon delivery. For services performed by CRA, the Company's performance obligations are generally met at the point in time the services are rendered.

Fair Value Measurements and Fair Value of Financial Instruments

Accounting Standard Codification ("ASC") Topic 820, Fair Value Measurements, clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2: Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3: Inputs are unobservable inputs which reflect the reporting entity's own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The estimated fair value of certain financial instruments, including all current liabilities are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

ASC subtopic 825-10, Financial Instruments ("ASC 825-10") requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.

The Company follows ASC subtopic 820-10, Fair Value Measurements and Disclosures ("ASC 820-10") and ASC 825-10, which permits entities to choose to measure many financial instruments and certain other items at fair value. As of June 30, 2024 and December 31, 2023, the Company does not have any assets and liabilities measured at fair value on a recurring basis.

9

Derivative Liability

The Company evaluates convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, "Derivatives and Hedging". The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. The Company currently has no derivative liability instruments.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, and accounts receivable. The Company places its cash equivalents with financial institutions and invests its excess cash primarily in certificates of deposit, deposit accounts or treasury bills. The Company has established guidelines relative to credit ratings and maturities that seek to maintain stability and liquidity.

Cash and Cash Equivalents

The Company had cash of $12,764 and $100,319 as of June 30, 2024 and December 31, 2023, respectively. The Company invests excess cash in certificates of deposit, deposit accounts or treasury bills, all with maturities of less than three months. There were no cash equivalents as of June 30, 2024 and December 31, 2023, respectively.

The Company places most of its temporary cash investments with financial institutions, which from time to time may exceed the Federal Deposit Insurance Corporation limit. The amount in excess of FDIC limits at June 30, 2024 and December 31, 2023 was $0.

Accounts Receivable

Trade accounts receivable are recorded at the net invoice value and are not interest bearing. The Company considers receivables past due based on the payment terms. The Company reviews its exposure to accounts receivable and reserves specific amounts if collectability is no longer reasonably assured. The Company also reserves a percentage of its trade receivable balance based on collection history and current economic trends that might impact the level of future credit losses. The Company re-evaluates such reserves on a regular basis and adjusts its reserves as needed. As of June 30, 2024, and December 31, 2023, there were no customers that exceeded 10% of accounts receivables.

Sales Concentrations

Revenue to a single customer in any one year can exceed 10% of our total sales. During the three and six months ended June 30, 2024, there were no customers exceeding 10% of our revenues. During the three months ended June 30, 2023 there was one customer representing 10.9% of revenues, and during the six months ended June 30, 2023 there were no customers exceeding 10% of our revenues. The Company believes that its relationships with these customers are positive and may provide it with continuous sustainability for years to come, however the loss of a large customer would have to be replaced by others, and the Company's inability to do so may have a material adverse effect on its business and financial condition.

10

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation is determined on a straight-line basis for Computer Equipment and Furniture and Fixtures over 5 to 7 years and are recorded in General and Administrative expenses.

Goodwill

We assess goodwill for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, by comparing its carrying value to the reporting unit's fair value. In December 2023, as a result of management's actions to close the operations of its early-stage Vitality RX operations, goodwill was determined to be impaired and recorded a loss on impairment of goodwill of $815,500 for the year ended December 31, 2023. As of June 30, 2024 there is no remaining goodwill.

Stock Based Compensation

The Company records stock-based compensation in accordance with the provisions of FASB ASC Topic 718, "Accounting for Stock Compensation," which establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. In accordance with guidance provided under ASC Topic 718, the Company recognizes an expense for the fair value of its stock awards at the time of grant and the fair value of its outstanding stock options as they vest, whether held by employees or others. The Company uses the Black-Scholes option-pricing model to compute the estimated fair value of option awards and includes assumptions regarding expected volatility, expected option term, dividend yields and risk-free interest rates. Stock compensation expense for the six months ended June 30, 2024, included stock option expense of $2,323,772 offset by a recovery of $2,557,487. Of the $2,557,487 in recovery, $15,282 was related to Restricted Stock Units ("RSUs"). For the six months ended June 30, 2023, the Company recorded $2,601,461, of which $395,550 related to Restricted Stock Units ("RSUs"). For the three months ended June 30, 2024 and 2023, the Company recorded $898,352 and $1,183,518 in stock compensation expense, respectively. Stock compensation expense for the three months ended June 30, 2024 and 2023, included an expense of $0 and $188,795 related to Restricted Stock Units ("RSUs"), respectively.

Convertible Debentures

The Company adopted the guidance in Accounting Standards Updated ("ASU") 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity on April 1, 2022. ASU 2020-06 simplifies an issuer's accounting for convertible instruments and its application of the derivatives scope exception for contracts in its own equity. Additionally, ASU 2020-06 removes the requirements for accounting for beneficial conversion features.

Advertising, Marketing and Public Relations

The Company follows the policy of charging the costs of advertising, marketing, and public relations to expense as incurred. For the three and six months ended June 30, 2024 and 2023, there were no advertising expenses.

11

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. CRA had elected Subchapter S corporation status for income tax purposes. As a result, items of profit and loss were taxed to the shareholders of CRA and no provision was made for federal or state income taxes. Effective upon being acquired by CRAAC on November 25, 2020, the Subchapter S election of CRA was automatically terminated.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses. Our federal tax return and any state tax returns are not currently under examination.

The Company has adopted FASB ASC 740-10, Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually from differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Net Income (Loss) Per Common Share

Basic income (loss) per share available to common stockholders is calculated using the weighted average number of common shares outstanding during the applicable period. Diluted net income (loss) per share available to common stockholders is calculated using the weighted average number of common shares outstanding plus the number of dilutive potential common shares outstanding during the applicable period. Dilutive potential common shares consist of the incremental common shares (i) issuable upon the vesting of outstanding restricted stock units and the exercise of outstanding stock options using the treasury stock method and (ii) issuable for non-participating preferred stock using the if-converted method. Our warrants and some of our preferred stock are considered participating securities pursuant to the two-class method. Dilutive potential common shares are excluded from the calculation of diluted net income (loss) per share available to common stockholders if their effect is antidilutive. The following potential common shares were excluded from the calculation of diluted net income (loss) per share available to common stockholders because their effect would have been antidilutive:

Six Months Ended
June 30,
2024 2023
Warrants 1,705,000 1,705,000
Stock options 3,285,000 2,078,750
Convertible notes payable 70,400,000 4,400,000
Preferred stock 406,664 406,664
Total 75,796,664 8,590,414

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

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3. Operating lease right-of-use asset and operating lease liability

The Company entered into a lease agreement commencing on December 1, 2020 through August 31, 2027, for 2,275 square feet of office space located at 1400 Old Country Road, Suite 304, Westbury, New York, 11590. The following table illustrates the base monthly rent amounts over the remaining term of the lease:

Base
Rent Periods Rent
January 1, 2024 to August 31, 2024 $ 5,739
September 1, 2024 to August 31, 2025 $ 5,891
September 1, 2025 to August 31, 2026 $ 6,048
September 1, 2026 to August 31, 2027 $ 6,210

The Company entered into a lease agreement commencing on July 1, 2023 through June 30, 2026 for 2,153 square feet of office space located at One Dupont Street, Suite 112, Plainview, New York, 11803. On April 5, 2024 the Company entered into a Settlement and release agreement in the amount of $6,100, in addition to the Landlord retaining the security deposit of $5,250.

The Company has an equipment lease commencing on December 1, 2023 through December 1, 2026. The contract requires payments of $158 per month. Operating lease right-of-use asset and liability are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value is our incremental borrowing rate, estimated to be 7.5%, as the interest rate implicit in most of our leases is not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term. Since the common area maintenance expenses are expenses that do not depend on an index or rate, they are excluded from the measurement of the lease liability and recognized in other general and administrative expenses on the statements of operations. During the six months ended June 30, 2024 and 2023, the Company recorded $47,912 and 61,726, respectively, in rent expense. During the three months ended June 30, 2024 and 2023, the Company recorded $24,041 and $30,835, respectively, in rent expense.

Operating lease right-of-use asset and liability are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value is our incremental borrowing rate, estimated to be 7.5% as the interest rate implicit in most of our leases is not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term. Since the common area maintenance expenses are expenses that do not depend on an index or rate, they are excluded from the measurement of the lease liability and recognized in other general and administrative expenses on the statements of operations.

Right-of-use asset is summarized below:

June 30, December 31,
2024 2023
Office lease $ 371,832 $ 371,832
Equipment lease 5,068 5,676
Less: accumulated amortization (180,381 ) (153,192 )
Right-of-use asset, net $ 196,519 $ 224,316

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Operating lease liability is summarized below:

June 30, December 31,
2024 2023
Office lease $ 203,196 $ 229,433
Equipment lease 4,301 5,676
Less: current portion (61,378 ) (59,765 )
Long term portion 146,119 175,344

Maturity of the lease liability is as follows:

June 30,
2024
Fiscal year ending December 31, 2024 $ 35,989
Fiscal year ending December 31, 2025 73,215
Fiscal year ending December 31, 2026 74,957
Fiscal year ending December 31, 2027 49,677
233,838
Present value discount (26,341 )
Lease liability $ 207,497

4. Going concern

The Company's consolidated financial statements are prepared using the GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. At June 30, 2024 and December 31, 2023, the Company had $12,764 and $100,319 in cash and $8,738,183 and $7,227,506 in working capital deficit at June 30, 2024 and December 31, 2023, respectively. For the six months ended June 30, 2024 and 2023, the Company had a net loss of $1,874,554 and $5,814,842 respectively. For the three months ended June 30, 2024 and 2023, the Company had a net loss of $1,451,067 and $2,860,377 respectively. Continued losses may adversely affect the liquidity of the Company in the future. At June 30, 2024 and December 31, 2023, the Company had accumulated deficits of $32,007,998 and $30,133,916, respectively.

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying consolidated balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations. These factors raise substantial doubt about the Company's ability to continue as a going concern within one year of the date these financial statements are issued. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company has operating costs and expenses at the present time for development of its business activities. The Company, however, will be required to raise additional capital over the next twelve months to meet its current administrative expenses, and it may do so in connection with or in anticipation of possible acquisition transactions. This financing may take the form of additional sales of its equity securities and/or convertible notes. There is no assurance that additional financing will be available, if required, or on terms favorable to the Company.

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5. Business acquisition

VitailityRx

On January 28, 2022, the Company entered into a stock purchase agreement with Worker's Health Rx, Inc. ("VitalityRx") and Marc Wiener, the sole shareholder, who was also our President, until his resignation on April 26, 2023, pursuant to which we acquired 100% of the outstanding equity interests of VitalityRx in exchange for the issuance of 250,000 shares of our common stock and $350,000. The cash portion of the purchase price has been paid.

Vitality Rx was an early stage pharmacy dedicated to serving the pharmacy needs of patients in the community and residing in Long-Term Care facilities in the tri-state area. In addition, Vitality Rx was exploring the possibility of providing Intravenous Immunoglobulin ("IVIG") to a number of physician offices in the community: including but not limited to: neurologists, Ob/Gyn & infectious disease. This offering was in a preliminary stage until the Company decided to discontinue its operations in December 2023.

Consideration
250,000 shares of common stock $ 467,500
Notes payable 350,000
Total consideration $ 817,500
Fair value of net identifiable assets (liabilities) acquired
Cash $ 9,000
Furniture and equipment 0
Capitalized start up costs 0
Intangible assets - website 1,750
Fair value of net identifiable assets (liabilities) acquired $ 10,750
Initial goodwill $ 806,750

The initial goodwill has been adjusted to $815,500 as a result of contractual adjustments.

During the year ended December 31, 2023, as a result of management's actions to close the operations of its early-stage Vitality RX operations, goodwill was determined to be impaired and resulted in an expense related to the full impairment of goodwill in the amount of $815,500 and a loss on disposition of long-term assets in the amount of $37,979.

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6. Disposition of wholly-owned subsidiary

On December 7, 2022, the Company entered into a stock acquisition agreement with its wholly-owned subsidiary Painscript and certain shareholders of Painscript pursuant to which the Company agreed to exchange 100% of the outstanding shares of Painscript for 2,000,000 shares of the Company's common stock. In connection with the agreement, the Company and Painscript agreed to: (i) the cancellation of 400,000 earnout shares that were issuable to the former shareholders of Painscript; (ii) the Company provided a loan in the aggregate principal amount of $200,000 to Painscript to cover employee liabilities and general working capital as well as an additional $100,000 to cover liabilities of Painscript; (iii) termination of all employment agreements entered into with the former Painscript shareholders; (iv) receipt of resignations and releases from all former Painscript and Optimus Health employees; and consultants and (v) termination of the Painscript's scientific advisory board.

The Company has accounted for the transaction as follows:

December 7,
2022
Common stock consideration $ 3,600,000
Reduced by cash paid to Painscript to cover liabilities (100,000 )
Net consideration 3,500,000
Net assets of Painscript on December 7, 2022 3,627,927
Loss on disposition of Painscript $ (127,927 )

7. Notes receivable

Notes receivable consisted of the following at June 30, 2024 and December 31, 2023:

June 30, December 31,
2024 2023
Notes receivable $ - $ 100,000

As mentioned above, the Company provided a loan in the aggregate principal amount of $200,000 to PainScript to cover employee liabilities and general working capital. During the year ended December 31, 2023, $100,000 of this loan was repaid. On December 15, 2023, the loan was amended to have an interest rate of 20% per annuum, and the remaining balance of $100,000 at December 31, 2023 had a maturity date of $50,000 on March 31, 2024 and $50,000 by June 30, 2024. The loan was secured by a pledge of a majority of the voting capital stock of PainScript held by certain PainScript shareholders. The Company also contributed $100,000 to PainScript in order to cover outstanding liabilities. As of May 1, 2024, the full amount of the loan and interest have been paid in full.

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8. Property, plant and equipment

Property, plant and equipment consisted of the following at June 30, 2024 and December 31, 2023:

June 30, December 31,
2024 2023
Furniture and fixtures $ 19,880 $ 19,880
Computer equipment 43,784 43,784
63,664 63,664
Less: Accumulated depreciation (31,439 ) (24,500 )
Property, plant and equipment - net $ 32,225 $ 39,164

Depreciation expense was $3,503 and $6,939 for the three and six months ended June 30, 2024, respectively, and $3,502 and $6,666 for the three and six months ended June, 30, 2023, respectively.

9. Line of credit

As of June 30, 2024 and December 31, 2023, the balance of the line of credit was $133,925 and $135,744, respectively. The Company has a line of credit with Chase Bank with a credit limit of $250,000, for which no additional borrowings are permitted. The line of credit has a variable interest rate equal to the sum of the prime rate plus 1.64%. During the six months ended June 30, 2024, the Company repaid $1,819 towards the line of credit balance.

10. Notes payable, related party

As of June 30, 2024 and December 31, 2023, the balance of the notes payable, related party was $2,002,000 and $1,720,000, respectively. The notes are outlined in the following table:

June 30, December 31,
2024 2023
Notes payable, related party
$282,000, issued, 12% coupon, due on demand $ 282,000 $ -
$1,720,000, issued, 12% coupon, due on demand 1,720,000 1,720,000
Total notes payable, related party $ 2,002,000 $ 1,720,000

During the year ended December 31, 2023, the Company received a related party loan from KORR Acquisitions Group, Inc. in the total amount of $1,720,000 (received in several tranches), with an interest rate of 12% per annum. This loan is subordinated to the Convertible Notes Payable (see Note 12).

During the six months ended June 30, 2024, the Company received a related party loan from KORR Acquisitions Group, Inc. in the total amount of $270,000, and a $12,000 related party loan from RUA Diagnostics Inc. Both loans are interest bearing and are subordinated to the Convertible Notes Payable (see Note 12).

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11. Paycheck protection program loan

PPP Loans

The Company received loan proceeds in the amount of approximately $145,683 on May 1, 2020. The Company received loan proceeds on the second advance under the PPP in February 2021 totaling $148,975. The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after twenty-four weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the period.

The Company was granted forgiveness of $126,546 on the original PPP loan. As a result, the Company recorded a gain on PPP forgiveness in the amount of $126,546 during the year ended December 31, 2020. The unforgiven portion of the PPP loan totaling $19,137 is payable over five years at an interest rate of 1%, with a deferral of payments for the first twelve months. As of June 30, 2024, the non-current portion is $0 and the current portion is $4,810.

In November 2021, the Company was granted forgiveness on the full $148,975 of the second advance under the PPP.

During the six months ended June 30, 2024, the Company repaid $2,086 on the PPP loan.

12. Convertible notes payable

The carrying value of convertible notes payable, net of discount, as of June 30, 2024 and December 31, 2023 was $4,400,000 and $3,915,732 respectively. As of June 30, 2024, the non-current portion is $0 and the current portion is $4,400,000.

May 2021 Financing $2,200,000 Face Value

On May 25, 2021, the Company entered into a securities purchase agreement with certain institutional investors (collectively, the "May 2021 Investors") pursuant to which the Company issued convertible notes in an aggregate principal amount of $2,200,000 for an aggregate purchase price of $2 million (collectively, the "May 2021 Notes"). In connection with the issuance of the May 2021 Notes, the Company issued to the May 2021 Investors warrants to purchase an aggregate of 165,000 shares of common stock (collectively, the "Warrants") and 1,727,859 shares of common stock. The May 2021 Notes accrue interest at a rate of 9% per annum, subject to increase to 20% per annum upon and during the occurrence of an event of default. Interest is payable in cash on a quarterly basis. The May 2021 Notes are convertible at any time, at the holder's option, into shares of the Company's common stock at a conversion price of $1.00 per share, subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%). The conversion price is also subject to adjustment due to certain events, including stock dividends and stock splits. On June 7, 2022, the Company entered into an amendment to modify the maturity date of the May 2021 Notes from May 25, 2023 to May 25, 2024. The Company tested the modification under ASC 470-50-40 to determine if the modification resulted in an extinguishment. It was determined the present value of the cash flows under the terms of the new debt instrument was not at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. As a result, the modification did not result in a loss on an extinguishment.

Each Warrant is exercisable for a period of five years from the date of issuance at an initial exercise price of $1.25 per share (which was subsequently amended to $.01 per share), subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%). The exercise price is also subject to adjustment due to certain events, including stock dividends, stock splits and in connection with the issuance by the Company of common stock or common stock equivalents at an effective price per share lower than the exercise price then in effect. The May 2021 Investors may exercise the Warrants on a cashless basis if the shares of common stock underlying the Warrants are not then registered pursuant to an effective registration statement. In the event the May 2021 Investors exercise the Warrants on a cashless basis, then we will not receive any proceeds.

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June 2022 Financing $2,200,000 Face Value

On June 7, 2022, the Company entered into a securities purchase agreement with certain institutional investors (collectively, the "June 2022 Investors") pursuant to which the Company issued convertible notes in an aggregate principal amount of $2,200,000 for an aggregate purchase price of $2 million (collectively, the "June 2022 Notes"). In connection with the issuance of the June 2022 Notes, the Company issued to the June 2022 Investors warrants to purchase an aggregate of 1,540,000 shares of common stock (collectively, the "Warrants") and 200,000 shares of common stock. The June 2022 Notes accrue interest at a rate of 9% per annum, subject to increase to 20% per annum upon and during the occurrence of an event of default. Interest is payable in cash on a quarterly basis. The June 2022 Notes are convertible at any time, at the holder's option, into shares of the Company's common stock at a conversion price of $1.00 per share, subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%). The conversion price is also subject to adjustment due to certain events, including stock dividends and stock splits. The June 2022 notes mature on June 7, 2024.

Each Warrant is exercisable for a period of five years from the date of issuance at an initial exercise price of $1.25 per share (which was subsequently amended to $.01 per share), subject to certain beneficial ownership limitations (with a maximum ownership limit of 9.99%). The exercise price is also subject to adjustment due to certain events, including stock dividends, stock splits and in connection with the issuance by the Company of common stock or common stock equivalents at an effective price per share lower than the exercise price then in effect. The June 2022 Investors may exercise the Warrants on a cashless basis if the shares of common stock underlying the Warrants are not then registered pursuant to an effective registration statement. In the event the June 2022 Investors exercise the Warrants on a cashless basis, then we will not receive any proceeds.

The Company has accounted for the May 2021 Notes and June 2022 Notes as a financing transaction, wherein the net proceeds that were received were allocated to the financial instrument issued. Prior to making the accounting allocation, the Company evaluated the notes under ASC 815 Derivatives and Hedging ("ASC 815"). ASC 815 generally requires the analysis of embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. There were no embedded instruments which required bifurcation.

We did analyze the detachable Warrants under ASC 480-10 and ASC 815. The Warrants did not fall under the guidance of ASC 480-10. After analyzing the Warrants under ASC 815, it was determined that the Warrants did meet all the requirements for equity classification under guidance of ASC 815-40-25-1 through 6.

Interest expense for the six months ended June 30, 2024 and 2023 was $394,604 and $218,584, respectively. Interest expense for the three months ended June 30, 2024 and 2023 was $201,596 and $114,796, respectively. Amortization of debt discount for the six months ended June 30, 2024 and 2023 was $484,268 and $573,136, respectively. Amortization of debt discount for the three months ended June 30, 2024 and 2023 was $0 and $288,151, respectively.

March 8, 2024 Modification

On March 8, 2024 (the "Effective Date"), Optimus Healthcare Services, Inc. (the "Company") entered into a forbearance agreement (the "Forbearance Agreement") by and among the Company and Arena Investors, LP, as agent ("Agent") for the purchasers of the Company's senior secured convertible notes (collectively, the "Purchasers") issued in May 2021 (the "May 2021 Notes") and June 2022 (the "June 2022 Notes" and collectively with the May 2021 Notes, the "Notes"), pursuant to which, among other things: (i) the Agent and the Purchasers agreed to forbear from exercising their rights and remedies with respect to the Specified Events of Default (as defined in the Forbearance Agreement) under the Notes until that date which is the earliest to occur of: (a) April 22, 2024; (b) the date on which any event of default under the Notes (other than the Specified Events of Default) occurs; and (c) the date on which the Company or any of its subsidiaries fails to comply with any term set forth in the Forbearance Agreement; (ii) the Company and its subsidiaries agreed it shall not allow acceleration or make any cash principal or interest payment on account of any indebtedness held by KORR Acquisition Group, Inc. ("Subordinated Lender"); (iii) the Company agreed it would use commercially reasonable best efforts to consummate a sale of some or all of the assets of its CRA business, a sale of some or all of the equity interests of the CRA business, or a merger of the CRA business, in each case, to an independent, non-affiliated third party in an arms' length transaction, subject to satisfaction of certain milestones; (iv) the Company agreed it would use commercially reasonable best efforts to consummate an equity financing that results in gross proceeds of at least $2,000,000 to the Company on or prior to February 28, 2025, subject to consent of the Purchasers, which consent will not be unreasonably withheld (a "Qualified Subsequent Financing"); (v) subject to approval by the Company's Board of Directors (the "Board") or appropriate committee thereunder, the Company agreed to promptly appoint to the Company's Board a nominee suggested by the Agent; and (vi) the Agent and the Purchasers provided their conditional consent to allow the Company to sell up to $350,000 of subordinated bridge notes, subject to certain conditions.

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In connection with the Forbearance Agreement, the Company acknowledged that accrued and unpaid interest through January 1, 2024, fees, costs, and other amounts due to the Agent and the Purchasers under the Notes and the other transaction documents entered into between the parties was equal to $197,817 (exclusive of liquidated damages under Section 4.24 of the Security Purchase Agreements (as defined in the Forbearance Agreement) (the "Owed Amount"). The Company agreed to issue to the Purchasers an aggregate of 3,165,066 shares of common stock in satisfaction of such Owed Amount. The securities issued and sold in this transaction were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act of 1933, as amended (the "Securities Act") and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The Purchasers are each an "accredited investor" as such term is defined in Regulation D promulgated under the Securities Act.

Subordination Agreement

In connection with the Forbearance Agreement, the Company, Agent and Subordinated Lender entered into a subordination agreement (the "Subordination Agreement") pursuant to which Subordinated Lender agreed to, among other things: (i) subordinate and make junior the payment of any and all of the principal amount or interest on, and any fees, costs, expenses, or any other payment in respect of the debt held by the Subordinated Lender (the "Subordinated Debt") until 91 days after the indefeasible payment of the Senior Debt or after the conversion in full of the Notes; and (ii) upon the consummation of a Qualified Subsequent Financing, the Subordinated Lender agreed to convert the entire Subordinated Debt into a junior class of preferred stock of the Company, which such class, among other limitations, is junior as to the liquidation rights of any more senior class of preferred stock, in such form and with such content as the Agent and the Company may agree.

Amended and Restated Notes

On the Effective Date, the Company entered into amended and restated Notes with the Purchasers (the "Amended Notes") pursuant to which, the Company agreed, among other things: (i) to pay interest to the Purchasers on the aggregate unconverted and then outstanding principal amount of this Note at the rate of twelve percent (12%) per annum beginning on or after May 2, 2023; (ii) commencing with the January 1, 2024 interest payment and thereafter, the Company, at its option may make interest payments and payment of other amounts due and payable under Amended Notes in shares of Common Stock of the Company at a price per share equal to the lesser of (a) $0.0625 or (b) 100% of the closing sale price on the day that is immediately prior to the applicable payment date or in cash; (iii) to allow the Amended Notes to be convertible into shares of Common Stock or, upon prior written notice, such number of shares of a to-be-issued class of preferred stock of the Company on the earliest of: (a) the occurrence and continuance of an Event of Default (as defined in the Amended Notes), (b) consummation of a Qualified Subsequent Financing, and (c) on or after the date on which such Conversion Shares are eligible to be sold under Rule 144 without the need for current public information; (iv) the conversion price in the Amended Notes shall now be equal to the lower of (a) $0.0625 or (b) the price of the securities issued in a Qualified Subsequent Financing completed within the one (1) year anniversary of the Current Issue Date, subject to adjustment; and (v) upon consummation of a Qualified Subsequent Financing, the outstanding principal amount of the Amended Notes plus all accrued but unpaid interest thereon and any other payment due thereunder, shall automatically, without any further action required by the Purchasers, be converted into shares of a class of the Company's, yet-to-be-issued senior convertible preferred stock, in a form reasonably acceptable to the Purchasers, at the conversion price then in effect.

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Amended and Restated Warrants

In connection with (i) the issuance of the May 2021 Notes, and (ii) the issuance of the June 2022 Notes, the Company issued the Purchasers: (i) warrants to purchase an aggregate of 165,000 shares of Common Stock with an exercise price of $1.25 per share (the "May 2021 Warrants"), and (ii) warrants to purchase an aggregate of 1,540,000 shares of Common Stock with an exercise price of $1.25 per share (the "June 2022 Warrants" and together with the May 2021 Warrants, the "Warrants"), respectively. In connection with the Forbearance Agreement, the Company and the Purchasers entered into amended and restated warrants (the "Amended Warrants") pursuant to which, among other things: (i) the exercise price of the Warrants was reduced to $0.01 per share and (ii) the term of the Warrants was changed from 5 years to 7 years.

Registration Rights Agreements

On the Effective Date, the Company entered into an Amended and Restated Registration Rights Agreement with the Purchasers related to the shares of common stock held by the Purchasers and the shares of common stock issuable upon exercise of the Amended Warrants pursuant to which we agreed to file a registration statement for such securities on the 30th calendar day following the date the Company's independent public accountants have completed their audit for the fiscal year ended December 31, 2023 and the Company has filed its Annual Report on Form 10-K including such financial statements, or if later, June 15, 2024. If the Company fails to have it filed by such date, declared effective 60 calendar days thereafter or if we fail to maintain the effectiveness of the registration statement until all of such securities have been sold or are otherwise able to be sold pursuant to Rule 144 under the Securities Act, without any volume or manner of sale restrictions, then we will be obligated to pay liquidated damages to the holders of such securities of $20,000, in addition to any other rights such holders may have, upon the occurrence of any such event and on each monthly anniversary thereafter until the event is cured.

On the Effective Date, the Company also entered into an Amended and Restated Registration Rights Agreement with the Purchasers related to the shares of common stock (or shares of a to-be-issued class of preferred stock) issuable upon conversion of the Notes pursuant to which we agreed to file a registration statement for such securities on the 30th calendar day following the earliest of: (i) the first anniversary of the Effective Date and no Qualified Subsequent Financing has been consummated; (ii) the consummation of a Qualified Subsequent Financing and the Company has filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, or if later, June 15, 2024; and (iii) the occurrence and continuance of an Event of Default (as defined under the Notes). If we fail to have it filed by such date, declared effective 45 calendar days thereafter or if we fail to maintain the effectiveness of the registration statement until all of such securities have been sold or are otherwise able to be sold pursuant to Rule 144 under the Securities Act, without any volume or manner of sale restrictions, then we will be obligated to pay liquidated damages to the holders of such securities of $20,000, in addition to any other rights such holders may have, upon the occurrence of any such event and on each monthly anniversary thereafter until the event is cured.

Side Letter

On the Effective Date, the Company and the Agent entered into a side letter pursuant to which the Agent acknowledged and agreed that any to-be-issued shares of preferred stock to be issued upon conversion of the Notes shall include the general parameters as set forth below, subject to execution of definitive documentation: (i) senior preferred will be first, prior to and superior to any other class of preferred stock or any other security, with a liquidation preference, which is to be paid in full before any other class of securities receives any distribution in liquidation or otherwise, (ii) no PIK or interest, no voting rights (except as required by law, no restrictions on future debt/equity raises (still have MFN for one year and the customary adjustment rights), (iii) convertible into shares of the common stock and (iv) non-redeemable.

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The Company tested the modification under ASC 470-50-40 to determine if the modification resulted in an extinguishment. It was determined the present value of the cash flows under the terms of the new debt instrument was at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. The difference between the reacquisition price of the debt in the amount of $4,861,674 and the carrying value of the original debt of $4,597,817 resulted in a loss on an extinguishment in the amount of $263,857 for the six months ended June 30, 2024.

On June 4, 2024, the Company entered into an amendment to the Forbearance Agreement and Registration Rights Agreements. The Forbearance Agreement was amended such that the Agent and the Purchasers agreed to forbear from exercising their rights and remedies with respect to the Specified Events of Default (as defined in the Amendment) under the Notes until that date which is the earliest to occur of: (a) August 30, 2024; (b) the date on which any event of default under the Notes (other than the Specified Events of Default) occurs; and (c) the date on which the Company or any of its subsidiaries fails to comply with any term set forth in the Forbearance Agreement; (ii) the definition of "Filing Date" in the Amended and Restated Registration Rights Agreements (as defined in the Amendment) was amended such that we agreed to file a registration statement for such securities on the 30th calendar day following the date the Company's independent public accountants have completed their audit for the fiscal year ended December 31, 2023 and the Company has filed its Annual Report on Form 10-K including such financial statements, or if later, June 30, 2024 and (iii) the parties agreed to issue new Amended Warrants (as defined in the Amendment) to reflect an erroneous change to the expiration date in the Amended Warrants from 7 years to 5 years.

In connection with the Amendment, the Company agreed to issue to the Purchasers such number of shares of a to-be-created class of preferred stock having a stated value equal to $100,000 in the same class and on the same terms and conditions as the preferred stock to be issued to such Purchasers upon consummation of a Qualified Subsequent Financing (as defined in the Notes). The securities to be issued and sold in this transaction will not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act of 1933, as amended (the "Securities Act") and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The Purchasers are each an "accredited investor" as such term is defined in Regulation D promulgated under the Securities Act.

13. Equity

Sale of Securities

In August 2021, the Company commenced an offering of up to 2 million shares of the Company's common stock at a price of $1 per share, and in June 2022 the Board authorized an increase of that offering to up to 5 million shares of the Company's common stock at a price of $1 per share. The Company has sold 4,341,000 shares of its common stock through this offering.

During 2023, the Company raised $1,275,000, and during the six months ended June 30, 2024 raised $0 pursuant to the above.

Preferred Stock

The Company has 70,000,001 shares of Preferred Stock authorized with a par value of $.001.

Series A -The Company has 1,102 shares of Series A Preferred outstanding as of June 30, 2024 and December 31, 2023, respectively. The Series A Preferred has the following designations:

● Convertible at option of holder with unanimous Board of Directors' approval.
● Convertible into 1.25 shares of common stock.
● Voting: The holders of this series of Preferred are entitled to 1.25 votes per share, and all such holders will vote together as a single class except as otherwise required by applicable law

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In connection with the December 28, 2020 merger with Optimus Healthcare Services, Inc., a Delaware corporation ("Optimus"), the Company issued 9,998,899 shares of its Series A convertible preferred stock. Simultaneously, the Company cancelled 9,998,889 shares previously held by its former CEO. In January 2022, all but 1,102 of the outstanding Series A Preferred shares were converted into 12,498,624 shares of common stock.

Series B - The Company has 8,105,724 shares of Series B Preferred outstanding as of June 30, 2024 and December 31, 2023. The Series B Preferred has the following designations:

● Convertible at option of holder with unanimous Board of Directors' approval.
● Convertible such that one share of common stock shall be issuable for each twenty (20) shares of Series B Preferred Stock then outstanding.
● Voting: The holders of this Series of Preferred are entitled to whole number of votes equal to the number of shares of common stock.

Stock Redemption

On May 5, 2023, the Company entered into an agreement with Marc Weiner where he agreed to return 250,000 shares of common stock in exchange for $136,827 to help offset the cost of a pharmacy initiative to allow it to move forward with its strategic plan.

2021 Omnibus Equity Incentive Plan

On May 25, 2021, our Board of Directors and a majority of our stockholders adopted the 2021 Omnibus Equity Incentive Plan (the "2021 Plan"). The 2021 Plan provides for the issuance of incentive stock options, non-statutory stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units ("RSUs"), and other stock-based awards up to 15,000,000 shares. Items described above in the Section called "Shares Available; Certain Limitations" are incorporated herein by reference.

Stock options

The Company selected the Black-Scholes-Merton ("BSM") valuation technique to calculate the grant date fair values for the stock options because it believes that this technique is reflective of all the inputs that market participants would likely consider in transactions involving warrants. The inputs include the strike price, underlying price, term to expiration, volatility, and risk-free interest rate.

During the six months ended June 30, 2024, the Company granted 2,000,000 options with an exercise price of $0.52.

The weighted average range of inputs to the Black-Scholes Model for the grants issued during the six months ended June 30, 2024 is as follows:

Stock Price $ 0.52
Exercise Price $ 0.52
Dividend yield 0 %
Expected volatility 254.49 %
Risk-Free interest rate 3.97 %
Expected life (in years) 5.25

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Stock option activity for the six months ended June 30, 2024 is summarized as follows:

Weighted Weighted
Average Average
Shares Exercise
Price 		Remaining
Term
Options outstanding January 1, 2024 9,882,500 $ 1.43 8.91 Years
Options granted 2,000,000 $ 0.52 10 Years
Options exercised - - -
Options cancelled (3,060,000 ) $ 1.58 -
Options outstanding at June 30, 2024 8,822,500 $ 1.15 8.93 Years
Options exercisable at June 30, 2024 3,222,500 $ 1.17 8.62 Years

During the six months ended June 30, 2024, the Company incurred new stock-based compensation expense of $2,323,772, which was offset by a reversal of $2,542,205 due to previously recorded stock option compensation reversed for stock cancellation that did not yet vest. During the six months ended June 30, 2023, the Company recorded $2,205,911 in stock-based compensation expense. During the three months ended June 30, 2024 and 2023, the Company incurred new stock-based compensation expense of $898,352 and $994,723, respectively. At June 30, 2024, there was $3,185,801 in unrecognized costs related to the stock options granted. As of June 30, 2024, the options outstanding and exercisable have no intrinsic value.

Restricted Stock Units

Restricted stock unit ("RSU") activity is summarized as follows:

Shares
RSUs outstanding at December 31, 2023 65,000
RSUs granted -
RSUs released -
RSUs forfeited (65,000 )
RSUs outstanding at June 30, 2024 0

The RSUs vest 25% on each of the first four annual anniversaries subject to certain performance criteria. However, if the performance criteria is not met, the RSUs vest at the earlier of: (a) a Qualifying Transaction, or (b) the fifth (5th) anniversary of the Vesting Commencement Date.

During the six months ended June 30, 2024, the remaining 65,000 RSUs were forfeited resulting in an expense recovery for the six months ended June 30, 2024 in the amount of $15,282. During the six months ended June 30, 2024 and 2023, the Company recorded $0 and $395,550 in expense related to the RSUs, respectively. During the three months ended June 30, 2024 and 2023, the Company recorded $0 and $188,795 in expense related to the RSUs, respectively.

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Warrants

Warrant activity is summarized as follows:

Weighted Weighted
Average Average
Shares Exercise
Price 		Remaining
Term
Warrants outstanding January 1, 2024 1,705,000 $ 1.25 3.34 Years
Issued -
Exercised - -
Expired - -
Warrants outstanding at June 30, 2024 1,705,000 $ 0.01 2.84 Years
Warrants exercisable at June 30, 2024 1,705,000 $ 0.01 2.84 Years

Effective March 8, 2024, the warrants exercise prices were amended to $.01 per warrant. See footnote 12.

14. Commitments and contingencies

During the normal course of business, the Company may be exposed to litigation. If the Company becomes aware of potential litigation, it will evaluate the merits of the case in accordance with FASB ASC 450-20-50, Contingencies. The Company will evaluate its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it will establish the necessary accruals. As of June 30, 2024 and December 31, 2023, the Company is not aware of any contingent liabilities that should be reflected in the consolidated financial statements.

15. Subsequent events

During the quarter ended September 30, 2024, the Company issued an additional 2,112,000 shares of its common stock for the payment of the interest accrued on the Arena Notes for the period ended June 30, 2024.

Subsequent to June 30, 2024, the Company received an additional $43,000 from KORR, which brings the total Bridge loan received from KORR to a total amount of $313,000.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion and analysis of our financial condition and plan of operations together with "Summary Financial Data" and our financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled "Risk Factors" included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2023. All amounts in this Quarterly Report on Form 10-Q are in U.S. dollars, unless otherwise noted.

Throughout this Quarterly Report on Form 10-Q, references to "we," "our," "us," "Company," "Optimus," or "Optimus Healthcare Services" refer to Optimus Healthcare Services, Inc., individually, or as the context requires, collectively with its subsidiaries.

Critical Accounting Policies and Significant Judgments and Estimates

This discussion and analysis of the Company's financial condition and results of operations is based on the Company's condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. In accordance with U.S. GAAP, the Company bases its estimates on historical experience and on various other assumptions the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

For information on the Company's significant accounting policies and estimates refer to Note 2 to the Company's consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 and to Note 2 "Summary of Significant Accounting Policies" in the unaudited condensed consolidated financial statements.

Overview

The Company is dedicated to advancing access to clinical trial research through its portfolio company Clinical Research Alliance, Inc. ("CRA"), and until December 2023 when it discontinued operations of its early stage pharmacy operation, through its portfolio company Worker's Health Rx (d/b/a "Vitality Rx").

Our vision for the Company is to continue to grow by acquiring controlling interests in healthcare-related businesses with strong leadership teams, innovative products and services, and proven technologies or processes that expand access to high quality healthcare and improve overall health outcomes and physical well-being. Our goal at Optimus is to empower physicians and patients with the information, guidance and tools needed to make informed health care choices. The Company seeks synergies among its portfolio companies and facilitates access to its management team which has extensive industry experience and its network of financial and business partners to help finance growth and accelerate business market trajectories.

Clinical Research Alliance

On December 28, 2020, the Company acquired 100% of the outstanding equity interests in Optimus Healthcare Services, Inc., a Delaware corporation ("Optimus"), in exchange for 9,998,899 shares of its Series A convertible preferred stock and 18,000,000 shares of its common stock. In connection with the transaction all prior officers and directors of the Company resigned (except for Michael Pruitt) and new officers and directors were appointed as officers and directors of the Company. On November 25, 2020, Clinical Research Alliance Acquisition Corp. ("CRAAC"), an entity 99% owned by Optimus, acquired 100% of the outstanding equity interests in CRA in exchange for 70 shares of its common stock.

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CRA provides services to a world-class team of dedicated oncologists across the Tri-State area that are united by a shared commitment to conduct clinical research. CRA provides independent, community-based oncology practices and hospitals in diverse communities with the necessary infrastructure and support to enroll their patients in cutting edge clinical trials without the patients having to leave their physicians' offices, hospitals or their local communities.

CRA currently supports a number of community-based oncology practices and has signed an agreement with its first acute care hospital in Brooklyn, New York. CRA's current focus is with oncologists in private practice, as well as rural and small hospitals in diverse communities.

CRA contracts with pharmaceutical companies and Contract Research Organizations ("CRO") to conduct clinical trials (Phases I-IV) for investigational new drugs, biologics and medical devices, and has worked with over 40 pharmaceutical companies since inception. CRA's customers consist primarily of large and mid-sized pharmaceutical and biotech companies. In the last 12 years, CRA has conducted approximately 180 clinical trials. As CRA was the highest enroller in many of these clinical trials, many of those clinical trials led to FDA approval for the trial compounds used to treat various cancers. Depending on the clinical trial design, CRA invoices the pharmaceutical manufacturer for some or all of the following services: startup fees, diagnostic tests, laboratory tests, patient stipends, pharmacy fees, patient visits, document storage and the reporting of serious adverse events.

CRA also contracts with independent community-based oncology practices and hospitals in diverse communities to assist in the conduct of the clinical trials. CRA's services to the community-based practices and hospitals in diverse communities include:

(1) maintaining the documentation necessary for the conduct of the clinical trial;
(2) obtaining Internal Review Board ("IRB") approval;
(3) collecting data required by the trial protocol;
(4) filing regulatory and compliance related documentation; and
(5) dispensing drugs necessary to conduct the clinical trial.

Our contracts with the community-based oncology practices and hospitals include specific budgets for particular services rendered. The contracts may range in duration from a few months to several years or longer depending on the nature of the work performed. In some cases, a portion of the contract fee is paid at the time the contract is executed with the balance of the contract fee payable either monthly or in installments upon the achievement of milestones over the study duration. Our contracts generally may be terminated or reduced in scope either immediately or upon short notice. Our contracts with our community-based oncology practices and hospitals result in the payment of fees for services rendered to the principal investigator that is conducting a particular clinical trial. The COVID-19 pandemic did not impact any open trials that were ongoing as CRA was able to conduct business remotely instead of through on-site visits. However, it did impact the number of new trials that were initiated in 2020 and 2021. The number of oncology trials rebounded in 2022 and 2023.

CRA employs experienced Clinical Research Coordinators that travel to the community-based oncology practices and hospitals for required study visits. Additionally, CRA's principal investigator for a specific clinical trial is in contact with the oncology practices and hospitals to provide the necessary oversight. Community-based oncology practices and hospitals choose CRA because we provide the opportunity to conduct and conveniently enroll their patients in important clinical trials often unavailable to those community-based oncology practices and hospitals. In addition, CRA is committed to increasing clinical trial access to patients from diverse and underserved communities that will better represent the real-world population. Although CRA's historical focus has been in the area of oncology, in the future we intend to expand our therapeutic reach into other therapeutic areas, including possibly gastroenterology, dermatology, cardiology, urology and ophthalmology. The National Institutes of Health estimate that there are currently 126,164 active clinical studies in these therapeutic areas.

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The clinical research industry is fragmented, consisting of many small, niche service providers, a number of medium-sized providers and a number of large CROs that are differentiated by the scale of their global operations, breadth of service portfolios and supporting technology infrastructure. Companies like CRA generally compete on the basis of previous product experience, the ability to recruit patients, the depth of therapeutic and scientific expertise, the strength of project teams, price and increasingly on the ability to apply new innovation that can drive significant time and cost savings throughout the development process.

Vitality Rx

On January 28, 2022, the Company entered into a stock purchase agreement with Worker's Health Rx, Inc., d/b/a Vitality Rx ("Vitality Rx") and Marc Wiener, the sole shareholder, who was also our President, until his resignation on April 26, 2023, pursuant to which we acquired 100% of the outstanding equity interests of Vitality Rx in exchange for the issuance of 250,000 shares of our common stock and $350,000. The cash portion of the purchase price has been paid in full.

Vitality Rx was an early-stage pharmacy dedicated to serving the pharmacy needs of patients in the community and residing in Assisted Living and Independent Living facilities throughout the tristate area. In addition, Vitality Rx was exploring the possibility of providing IVIG to a number of physician offices in the community: including but not limited to: neurologists, Ob/Gyn & infectious disease. This offering was in a preliminary stage until the Company decided to discontinue its operations in December 2023.

Recent Developments

On March 8, 2024 (the "Effective Date"), Optimus Healthcare Services, Inc. (the "Company") entered into a forbearance agreement (the "Forbearance Agreement") by and among the Company and Arena Investors, LP, as agent ("Agent") for the purchasers of the Company's senior secured convertible notes (collectively, the "Purchasers") issued in May 2021 (the "May 2021 Notes") and June 2022 (the "June 2022 Notes" and collectively with the May 2021 Notes, the "Notes"), pursuant to which, among other things: (i) the Agent and the Purchasers agreed to forbear from exercising their rights and remedies with respect to the Specified Events of Default (as defined in the Forbearance Agreement) under the Notes until that date which is the earliest to occur of: (a) April 22, 2024; (b) the date on which any event of default under the Notes (other than the Specified Events of Default) occurs; and (c) the date on which the Company or any of its subsidiaries fails to comply with any term set forth in the Forbearance Agreement; (ii) the Company and its subsidiaries agreed it shall not allow acceleration or make any cash principal or interest payment on account of any indebtedness held by KORR Acquisition Group, Inc. ("Subordinated Lender"); (iii) the Company agreed it would use commercially reasonable best efforts to consummate a sale of some or all of the assets of its CRA business, a sale of some or all of the equity interests of the CRA business, or a merger of the CRA business, in each case, to an independent, non-affiliated third party in an arms' length transaction, subject to satisfaction of certain milestones; (iv) the Company agreed it would use commercially reasonable best efforts to consummate an equity financing that results in gross proceeds of at least $2,000,000 to the Company on or prior to February 28, 2025, subject to consent of the Purchasers, which consent will not be unreasonably withheld (a "Qualified Subsequent Financing"); (v) subject to approval by the Company's Board of Directors (the "Board") or appropriate committee thereunder, the Company agreed to promptly appoint to the Company's Board a nominee suggested by the Agent; and (vi) the Agent and the Purchasers provided their conditional consent to allow the Company to sell up to $350,000 of subordinated bridge notes, subject to certain conditions.

In connection with the Forbearance Agreement, the Company acknowledged that accrued and unpaid interest through January 1, 2024, fees, costs, and other amounts due to the Agent and the Purchasers under the Notes and the other transaction documents entered into between the parties was equal to $197,816.64 (exclusive of liquidated damages under Section 4.24 of the Security Purchase Agreements (as defined in the Forbearance Agreement) (the "Owed Amount"). The Company agreed to issue to the Purchasers an aggregate of 3,165,066 shares of common stock in satisfaction of such Owed Amount. The securities issued and sold in this transaction were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act of 1933, as amended (the "Securities Act") and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The Purchasers are each an "accredited investor" as such term is defined in Regulation D promulgated under the Securities Act.

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Subordination Agreement

In connection with the Forbearance Agreement, the Company, Agent and Subordinated Lender entered into a subordination agreement (the "Subordination Agreement") pursuant to which Subordinated Lender agreed to, among other things: (i) subordinate and make junior the payment of any and all of the principal amount or interest on, and any fees, costs, expenses, or any other payment in respect of the debt held by the Subordinated Lender (the "Subordinated Debt") until 91 days after the indefeasible payment of the Senior Debt or after the conversion in full of the Notes; and (ii) upon the consummation of a Qualified Subsequent Financing, the Subordinated Lender agreed to convert the entire Subordinated Debt into a junior class of preferred stock of the Company, which such class, among other limitations, is junior as to the liquidation rights of any more senior class of preferred stock, in such form and with such content as the Agent and the Company may agree.

Amended and Restated Notes

On the Effective Date, the Company entered into amended and restated Notes with the Purchasers (the "Amended Notes") pursuant to which, the Company agreed, among other things: (i) to pay interest to the Purchasers on the aggregate unconverted and then outstanding principal amount of this Note at the rate of twelve percent (12%) per annum beginning on or after May 2, 2023; (ii) commencing with the January 1, 2024 interest payment and thereafter, the Company, at its option may make interest payments and payment of other amounts due and payable under Amended Notes in shares of Common Stock of the Company at a price per share equal to the lesser of (a) $0.0625 or (b) 100% of the closing sale price on the day that is immediately prior to the applicable payment date or in cash; (iii) to allow the Amended Notes to be convertible into shares of Common Stock or, upon prior written notice, such number of shares of a to-be-issued class of preferred stock of the Company on the earliest of: (a) the occurrence and continuance of an Event of Default (as defined in the Amended Notes), (b) consummation of a Qualified Subsequent Financing, and (c) on or after the date on which such Conversion Shares are eligible to be sold under Rule 144 without the need for current public information; (iv) the conversion price in the Amended Notes shall now be equal to the lower of (a) $0.0625 or (b) the price of the securities issued in a Qualified Subsequent Financing completed within the one (1) year anniversary of the Current Issue Date, subject to adjustment; and (v) upon consummation of a Qualified Subsequent Financing, the outstanding principal amount of the Amended Notes plus all accrued but unpaid interest thereon and any other payment due thereunder, shall automatically, without any further action required by the Purchasers, be converted into shares of a class of the Company's, yet-to-be-issued senior convertible preferred stock, in a form reasonably acceptable to the Purchasers, at the conversion price then in effect.

Amended and Restated Warrants

In connection with (i) the issuance of the May 2021 Notes, and (ii) the issuance of the June 2022 Notes, the Company issued the Purchasers: (i) warrants to purchase an aggregate of 165,000 shares of Common Stock with an exercise price of $1.25 per share (the "May 2021 Warrants"), and (ii) warrants to purchase an aggregate of 1,540,000 shares of Common Stock with an exercise price of $1.25 per share (the "June 2022 Warrants" and together with the May 2021 Warrants, the "Warrants"), respectively. In connection with the Forbearance Agreement, the Company and the Purchasers entered into amended and restated warrants (the "Amended Warrants") pursuant to which, among other things: (i) the exercise price of the Warrants was reduced to $0.01 per share and (ii) the term of the Warrants was changed from 5 years to 7 years.

Registration Rights Agreements

On the Effective Date, the Company entered into an Amended and Restated Registration Rights Agreement with the Purchasers related to the shares of common stock held by the Purchasers and the shares of common stock issuable upon exercise of the Amended Warrants pursuant to which we agreed to file a registration statement for such securities on the 30th calendar day following the date the Company's independent public accountants have completed their audit for the fiscal year ended December 31, 2023 and the Company has filed its Annual Report on Form 10-K including such financial statements, or if later, June 15, 2024. If the Company fails to have it filed by such date, declared effective 60 calendar days thereafter or if we fail to maintain the effectiveness of the registration statement until all of such securities have been sold or are otherwise able to be sold pursuant to Rule 144 under the Securities Act, without any volume or manner of sale restrictions, then we will be obligated to pay liquidated damages to the holders of such securities of $20,000, in addition to any other rights such holders may have, upon the occurrence of any such event and on each monthly anniversary thereafter until the event is cured.

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On the Effective Date, the Company also entered into an Amended and Restated Registration Rights Agreement with the Purchasers related to the shares of common stock (or shares of a to-be-issued class of preferred stock) issuable upon conversion of the Notes pursuant to which we agreed to file a registration statement for such securities on the 30th calendar day following the earliest of: (i) the first anniversary of the Effective Date and no Qualified Subsequent Financing has been consummated; (ii) the consummation of a Qualified Subsequent Financing and the Company has filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, or if later, June 15, 2024; and (iii) the occurrence and continuance of an Event of Default (as defined under the Notes). If we fail to have it filed by such date, declared effective 45 calendar days thereafter or if we fail to maintain the effectiveness of the registration statement until all of such securities have been sold or are otherwise able to be sold pursuant to Rule 144 under the Securities Act, without any volume or manner of sale restrictions, then we will be obligated to pay liquidated damages to the holders of such securities of $20,000, in addition to any other rights such holders may have, upon the occurrence of any such event and on each monthly anniversary thereafter until the event is cured.

Side Letter

On the Effective Date, the Company and the Agent entered into a side letter pursuant to which the Agent acknowledged and agreed that any to-be-issued shares of preferred stock to be issued upon conversion of the Notes shall include the general parameters as set forth below, subject to execution of definitive documentation: (i) senior preferred will be first, prior to and superior to any other class of preferred stock or any other security, with a liquidation preference, which is to be paid in full before any other class of securities receives any distribution in liquidation or otherwise, (ii) no PIK or interest, no voting rights (except as required by law, no restrictions on future debt/equity raises (still have MFN for one year and the customary adjustment rights), (iii) convertible into shares of the common stock and (iv) non-redeemable.

On June 4, 2024, the Company entered into an amendment to the Forbearance Agreement and Registration Rights Agreements. The Forbearance Agreement was amended such that the Agent and the Purchasers agreed to forbear from exercising their rights and remedies with respect to the Specified Events of Default (as defined in the Amendment) under the Notes until that date which is the earliest to occur of: (a) August 30, 2024; (b) the date on which any event of default under the Notes (other than the Specified Events of Default) occurs; and (c) the date on which the Company or any of its subsidiaries fails to comply with any term set forth in the Forbearance Agreement; (ii) the definition of "Filing Date" in the Amended and Restated Registration Rights Agreements (as defined in the Amendment) was amended such that we agreed to file a registration statement for such securities on the 30th calendar day following the date the Company's independent public accountants have completed their audit for the fiscal year ended December 31, 2023 and the Company has filed its Annual Report on Form 10-K including such financial statements, or if later, June 30, 2024 and (iii) the parties agreed to issue new Amended Warrants (as defined in the Amendment) to reflect an erroneous change to the expiration date in the Amended Warrants from 7 years to 5 years.

In connection with the Amendment, the Company agreed to issue to the Purchasers such number of shares of a to-be-created class of preferred stock having a stated value equal to $100,000 in the same class and on the same terms and conditions as the preferred stock to be issued to such Purchasers upon consummation of a Qualified Subsequent Financing (as defined in the Notes). The securities to be issued and sold in this transaction will not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act of 1933, as amended (the "Securities Act") and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The Purchasers are each an "accredited investor" as such term is defined in Regulation D promulgated under the Securities Act.

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OPTIMUS HEALTHCARE SERVICES, INC.

(FORMERLY BETWEEN DANDELIONS, INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

UNAUDITED

For the Three Months Ended
June 30, 		For the Six Months Ended
June 30,
2024 2023 2024 2023
Revenue $ 639,303 $ 322,414 $ 983,768 $ 594,056
Cost of sales 58,061 59,158 120,243 139,182
Gross profit 581,242 263,256 863,525 454,874
Operating expenses:
Stock based compensation 898,352 1,183,518 (233,715 ) 2,601,461
Personnel expenses 443,543 844,196 909,034 1,730,452
General and administrative expenses 437,375 600,536 787,107 1,027,089
Professional fees 51,392 62,200 138,024 203,479
Total operating expenses 1,830,662 2,690,450 1,600,450 5,562,481
Loss from operations (1,249,420 ) (2,427,194 ) (736,925 ) (5,107,607 )
Other income (expense):
Amortization of debt discount 0 (288,151 ) (484,268 ) (573,136 )
Interest expense (201,596 ) (114,796 ) (394,604 ) (218,584 )
Loss on extinguishment of debt 0 0 (263,857 ) 0
Net gain from investments 0 (32,211 ) 0 78,510
Interest income 942 4,000 6,076 8,000
Total other income (expense) (200,654 ) (431,158 ) (1,136,653 ) (705,210 )
Loss before income tax benefit (expense) (1,450,074 ) (2,858,352 ) (1,873,578 ) (5,812,817 )
Income tax benefit (expense) (993 ) (2,025 ) (976 ) (2,025 )
Net loss $ (1,451,067 ) $ (2,860,377 ) $ (1,874,554 ) $ (5,814,842 )

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Results of Operations

Comparison of the Quarter Ended June 30, 2024 and 2023

Net Revenues

Net Revenues were $639,303 for the quarter ended June 30, 2024 and $322,414 for the quarter ended June 30, 2023, an increase of $316,889. Revenues consist primarily of services to pharmaceutical companies for the execution of oncology clinical trials. The increase in revenues were primarily the result of adding new trials and timing of services provided.

Cost of Sales

Cost of Sales were $58,061 for the quarter ended June 30, 2024 and $59,158 for the quarter ended June 30, 2023, a decrease of $1,097. Cost of Sales consist primarily of outside physician services. The decrease in cost of sales was a result of the mix of revenue and related costs.

Gross Profit

Gross profit was $581,242 for the quarter ended June 30, 2024 and $263,256 for the quarter ended June 30, 2023, an increase of $317,986. The increase in gross profit was a result of increased sales in 2024 of $316,889, as well as the revenue mix.

Stock-Based Compensation

Stock based compensation was $898,352 for the quarter ended June 30, 2024 and $1,183,518 for the quarter ended June 30, 2023, a decrease of $285,166. Stock based compensation consists of stock options and RSU's issued to employees and consultants. The decrease was due primarily to terminated stock options and RSU's subsequent to June 30, 2023.

Personnel Expenses

Personnel expenses were $443,543 for the quarter ended June 30, 2024 and $844,196 for the quarter ended June 30, 2023, a decrease of $400,653. Personnel expenses consist primarily of executive employment agreements, and employee salaries and bonuses and payroll taxes related. The decrease was primarily related to the termination of its former CEO in July 2023 and the reduction in his related salary and bonus, as well as other personnel reductions.

General and Administrative Expenses

General and administrative expenses were $437,375 for the quarter ended June 30, 2024 and $600,536 for the quarter ended June 30, 2023, a decrease of $163,161. General and administrative expenses consist primarily of insurance, rent, study expenses and other corporate expenses to generally support the current and future anticipated operations. The decrease was primarily the result of decreased payroll and payroll related costs due to the discontinuance of its Vitality Rx early-stage pharmacy for which the operations were discontinued in December 2023, offset in part by $100,000 expense related to an amendment of its loan agreements in June 2024.

Professional Fees

Professional Fees were $51,392 for the quarter ended June 30, 2024 and $62,200 for the quarter ended June 30, 2023, a decrease of $10,808. Professional Fees consist primarily of legal and accounting fees related to services performed by outside vendors supporting the Company's filing requirements with the Securities and Exchange Commission related to its quarterly Form 10-Q, annual Form 10-K, registration statements and other reporting and filing requirements. Commencing in the second quarter of 2023 a portion of these services are now provided internally.

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Loss from Operations

The Company had a loss from operations of ($1,249,420) for the quarter ended June 30, 2024 and ($2,427,194) for the quarter ended June 30, 2023, a decreased loss of $1,177,774 as a result of the foregoing factors.

Amortization of Debt Discount

Amortization of Debt Discount was $0 for the quarter ended June 30, 2024 and $288,151 for the quarter ended June 30, 2023 as a result of the debt discount being fully amortized at June 30, 2024 as a result of the amendment of its loan agreements.

Interest Expense

Interest expense was $201,596 for the quarter ended June 30, 2024 and $114,796 for the quarter ended June 30, 2023, an increase of $86,800. Interest expense consists primarily of interest on convertible debt and its demand note. The increase was a result of higher interest rates on its convertible debt of $4.4 million (12% as compared to 9% in prior year quarter), as well as additional debt of $2.002 million as compared to $.950 million in the prior year quarter, and the resultant interest expense.

Net Gain (loss) from Investments

Net gain (loss) from investments was $0 for the quarter ended June 30, 2024 and ($32,211) for the quarter ended June 30, 2023, a decreased loss of $32,211 due to no investing activities during the quarter ended June 30, 2024, the result of the Company closing its investing account in April 2023. Net loss from investments consists of realized and unrealized gains from marketable securities purchased. For the quarter ended June 30, 2023, the net loss from investments consisted of $32,211 in realized losses.

Interest Income

Interest income was $942 for the quarter ended June 30, 2024 and $4,000 for the quarter ended June 30, 2023, a decrease of $3,058. Interest income consists primarily of interest on a short-term loan receivable which has been paid in full on May 1, 2024.

Income Taxes

The income tax expense was $993 for the quarter ended June 30, 2024 and $2,025 for the quarter ended June 30, 2023. Since 2022, we have provided a full valuation allowance against all of the net deferred tax assets. This was based on management's assessment, including its cumulative operating losses, that it is more likely than not that the net deferred tax assets may not be realized in the future. We continue to evaluate for potential utilization of our deferred tax asset, which has been fully reserved for, on a quarterly basis, reviewing our economic models, including projections and timing of orders, cost containment measures and other factors.

Net Loss

As a result of the foregoing factors, net loss was $1,451,067 for the quarter ended June 30, 2024 and $2,860,377 for the quarter ended June 30, 2023, a decreased loss of $1,409,310.

Comparison of the Six Months Ended June 30, 2024 and 2023

Net Revenues

Net Revenues were $983,768 for the six months ended June 30, 2024 and $594,056 for the six months ended June 30, 2023, an increase of $389,712. Revenues consist primarily of services to pharmaceutical companies for the execution of oncology clinical trials. The increase in revenues were primarily the result of adding new trials and timing of services provided.

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Cost of Sales

Cost of Sales were $120,243 for the six months ended June 30, 2024 and $139,182 for the six months ended June 30, 2023, a decrease of $18,939. Cost of Sales consist primarily of outside physician services. The decrease in cost of sales was a result of the mix of revenue and related costs.

Gross Profit

Gross profit was $863,525 for the six months ended June 30, 2024 and $454,874 for the six months ended June 30, 2023, an increase of $408,651. The increase in gross profit was a result of increased sales in 2024 of $389,712, as well as the revenue mix.

Stock-Based Compensation

Stock based compensation was ($233,715) for the six months ended June 30, 2024 and $2,601,461 for the six months ended June 30, 2023, a decrease of $2,835,176. Stock based compensation consists of stock options and RSU's issued to employees and consultants. The decrease was due primarily to terminated stock options and RSU's during the first six months of 2024 resulting in a recovery of $2,557,487.

Personnel Expenses

Personnel expenses were $909,034 for the six months ended June 30, 2024 and $1,730,452 for the six months ended June 30, 2023, a decrease of $821,418. Personnel expenses consist primarily of executive employment agreements, and employee salaries and bonuses and payroll taxes related. The decrease was primarily related to the termination of its former CEO in July 2023 and the reduction in his related salary and bonus, as well as other personnel reductions.

General and Administrative Expenses

General and administrative expenses were $787,107 for the six months ended June 30, 2024 and $1,027,089 for the six months ended June 30, 2023, a decrease of $239,982. General and administrative expenses consist primarily of insurance, rent, study expenses and other corporate expenses to generally support the current and future anticipated operations. The decrease was primarily the result of decreased payroll and payroll related costs due to the discontinuance of its Vitality Rx early-stage pharmacy for which the operations were discontinued in December 2023, offset in part by $100,000 expense related to an amendment of its loan agreements in June 2024.

Professional Fees

Professional Fees were $138,024 for the six months ended June 30, 2024 and $203,479 for the six months ended June 30, 2023, a decrease of $65,455. Professional Fees consist primarily of legal and accounting fees related to services performed by outside vendors supporting the Company's filing requirements with the Securities and Exchange Commission related to its quarterly Form 10-Q, annual Form 10-K, registration statements and other reporting and filing requirements. Commencing in the second quarter of 2023 a portion of these services are now provided internally.

Loss from Operations

The Company had a loss from operations of $736,925 for the six months ended June 30, 2024 and $5,107,607 for the six months ended June 30, 2023, a decrease of $4,370,682 as a result of the foregoing factors.

Amortization of Debt Discount

Amortization of Debt Discount was $484,268 for the six months ended June 30, 2024 and $573,136 for the six months ended June 30, 2023 as a result of the debt discount being fully amortized at June 30, 2024 as a result of the amendment of its loan agreements.

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Interest Expense

Interest expense was $394,604 for the six months ended June 30, 2024 and $218,584 for the six months ended June 30, 2023, an increase of $176,020. Interest expense consists primarily of interest on convertible debt and its demand note. The increase was a result of higher interest rates on its convertible debt of $4.4 million (12% as compared to 9% in prior year period), as well as additional debt of $2.002 million as compared to $.950 million in the prior year period, and the resultant interest expense.

Loss on extinguishment of debt

As a result of the amendment to the Company's convertible debt, it recorded a loss on extinguishment of debt in the amount of $263,857 for the six months ended June 30, 2024 as compared to none in the six months ended June 30, 2023.

Net Gain (loss) from Investments

Net gain (loss) from investments was $0 for the six months ended June 30, 2024 and $78,510 for the six months ended June 30, 2023, a decrease of $78,510 due to no investing activities during the six months ended June 30, 2024, the result of the Company closing its investing account in April 2023. Net gain from investments consists of realized and unrealized gains from marketable securities purchased. For the six months ended June 30, 2023, the net loss from investments consisted of $161,269 in unrealized gains and $82,759 of realized losses.

Interest Income

Interest income was $6,076 for the six months ended June 30, 2024 and $8,000 for the six months ended June 30, 2023, a decrease of $1,924. Interest income consists primarily of interest on a short-term loan receivable which has been paid in full on May 1, 2024.

Income Taxes

The income tax expense was $976 for the six months ended June 30, 2024 and $2,025 for the six months ended June 30, 2023. Since 2022, we have provided a full valuation allowance against all of the net deferred tax assets. This was based on management's assessment, including its cumulative operating losses, that it is more likely than not that the net deferred tax assets may not be realized in the future. We continue to evaluate for potential utilization of our deferred tax asset, which has been fully reserved for, on a quarterly basis, reviewing our economic models, including projections and timing of orders, cost containment measures and other factors.

Net Loss

As a result of the foregoing factors, net loss was $1,874,554 for the six months ended June 30, 2024 and $5,814,842 for the six months ended June 30, 2023, a decreased loss of $3,940,288.

Liquidity and Capital Resources

The Company's current operations have been focused on business planning and raising capital. The Company has sustained operating losses since inception and expects such losses to continue over the foreseeable future. In May 2021, the Company issued approximately $2.2 million aggregate principal amount of convertible notes and in June 2022, the Company issued an additional $2.2 million aggregate principal amount of convertible notes on the same terms as the Notes issued in May 2021. Any outstanding amounts of these convertible notes mature on May 25, 2024 and June 7, 2024, respectively. During the six months ended June 30, 2024, the Company received a related party bridge loan from KORR Acquisitions Group, Inc. ("KORR") in the total amount of $270,000 and a $12,000 related party loan from RUA Diagnostics Inc. Both loans are interest bearing and subject to the terms of the June 4, 2024 amendment with Arena Investors, LP. Subsequent to June 30, 2024, the Company received additional bridge loans from KORR, in the amount of $43,000 and outstanding bridge loans received from KORR now total $313,000, in addition to the existing $1,720,000 loans from KORR.

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Substantial additional financing will continue to be needed by the Company to fund its operations and to commercially develop its services. Management is currently evaluating different strategies to obtain the required funding for future operations. These strategies may include but are not limited to: private offerings of Common Stock, public offerings of equity and/or debt securities, payments from potential strategic research and development and licensing and/or marketing arrangements. Management believes that these ongoing and planned financing endeavors, if successful, may provide adequate financial resources to continue as a going concern for at least the next twelve months from the date the financial statements are issued; however, there can be no assurance in this regard. If the Company is unable to secure adequate additional funding, its business, operating results, financial condition and cash flows may be materially and adversely affected.

On March 8, 2024 (the "Effective Date"), Optimus Healthcare Services, Inc. (the "Company") entered into a forbearance agreement (the "Forbearance Agreement") by and among the Company and Arena Investors, LP, as agent ("Agent") for the purchasers of the Company's senior secured convertible notes (collectively, the "Purchasers") issued in May 2021 (the "May 2021 Notes") and June 2022 (the "June 2022 Notes" and collectively with the May 2021 Notes, the "Notes"), pursuant to which, among other things: (i) the Agent and the Purchasers agreed to forbear from exercising their rights and remedies with respect to the Specified Events of Default (as defined in the Forbearance Agreement) under the Notes until that date which is the earliest to occur of: (a) April 22, 2024; (b) the date on which any event of default under the Notes (other than the Specified Events of Default) occurs; and (c) the date on which the Company or any of its subsidiaries fails to comply with any term set forth in the Forbearance Agreement; (ii) the Company and its subsidiaries agreed it shall not allow acceleration or make any cash principal or interest payment on account of any indebtedness held by KORR Acquisition Group, Inc. ("Subordinated Lender"); (iii) the Company agreed it would use commercially reasonable best efforts to consummate a sale of some or all of the assets of its CRA business, a sale of some or all of the equity interests of the CRA business, or a merger of the CRA business, in each case, to an independent, non-affiliated third party in an arms' length transaction, subject to satisfaction of certain milestones; (iv) the Company agreed it would use commercially reasonable best efforts to consummate an equity financing that results in gross proceeds of at least $2,000,000 to the Company on or prior to February 28, 2025, subject to consent of the Purchasers, which consent will not be unreasonably withheld (a "Qualified Subsequent Financing"); (v) subject to approval by the Company's Board of Directors (the "Board") or appropriate committee thereunder, the Company agreed to promptly appoint to the Company's Board a nominee suggested by the Agent; and (vi) the Agent and the Purchasers provided their conditional consent to allow the Company to sell up to $350,000 of subordinated bridge notes, subject to certain conditions.

In connection with the Forbearance Agreement, the Company acknowledged that accrued and unpaid interest through January 1, 2024, fees, costs, and other amounts due to the Agent and the Purchasers under the Notes and the other transaction documents entered into between the parties was equal to $197,816.64 (exclusive of liquidated damages under Section 4.24 of the Security Purchase Agreements (as defined in the Forbearance Agreement) (the "Owed Amount"). The Company agreed to issue to the Purchasers an aggregate of 3,165,066 shares of common stock in satisfaction of such Owed Amount. The securities issued and sold in this transaction were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act of 1933, as amended (the "Securities Act") and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The Purchasers are each an "accredited investor" as such term is defined in Regulation D promulgated under the Securities Act.

Subordination Agreement

In connection with the Forbearance Agreement, the Company, Agent and Subordinated Lender entered into a subordination agreement (the "Subordination Agreement") pursuant to which Subordinated Lender agreed to, among other things: (i) subordinate and make junior the payment of any and all of the principal amount or interest on, and any fees, costs, expenses, or any other payment in respect of the debt held by the Subordinated Lender (the "Subordinated Debt") until 91 days after the indefeasible payment of the Senior Debt or after the conversion in full of the Notes; and (ii) upon the consummation of a Qualified Subsequent Financing, the Subordinated Lender agreed to convert the entire Subordinated Debt into a junior class of preferred stock of the Company, which such class, among other limitations, is junior as to the liquidation rights of any more senior class of preferred stock, in such form and with such content as the Agent and the Company may agree.

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Amended and Restated Notes

On the Effective Date, the Company entered into amended and restated Notes with the Purchasers (the "Amended Notes") pursuant to which, the Company agreed, among other things: (i) to pay interest to the Purchasers on the aggregate unconverted and then outstanding principal amount of this Note at the rate of twelve percent (12%) per annum beginning on or after May 2, 2023; (ii) commencing with the January 1, 2024 interest payment and thereafter, the Company, at its option may make interest payments and payment of other amounts due and payable under Amended Notes in shares of Common Stock of the Company at a price per share equal to the lesser of (a) $0.0625 or (b) 100% of the closing sale price on the day that is immediately prior to the applicable payment date or in cash; (iii) to allow the Amended Notes to be convertible into shares of Common Stock or, upon prior written notice, such number of shares of a to-be-issued class of preferred stock of the Company on the earliest of: (a) the occurrence and continuance of an Event of Default (as defined in the Amended Notes), (b) consummation of a Qualified Subsequent Financing, and (c) on or after the date on which such Conversion Shares are eligible to be sold under Rule 144 without the need for current public information; (iv) the conversion price in the Amended Notes shall now be equal to the lower of (a) $0.0625 or (b) the price of the securities issued in a Qualified Subsequent Financing completed within the one (1) year anniversary of the Current Issue Date, subject to adjustment; and (v) upon consummation of a Qualified Subsequent Financing, the outstanding principal amount of the Amended Notes plus all accrued but unpaid interest thereon and any other payment due thereunder, shall automatically, without any further action required by the Purchasers, be converted into shares of a class of the Company's, yet-to-be-issued senior convertible preferred stock, in a form reasonably acceptable to the Purchasers, at the conversion price then in effect.

Amended and Restated Warrants

In connection with (i) the issuance of the May 2021 Notes, and (ii) the issuance of the June 2022 Notes, the Company issued the Purchasers: (i) warrants to purchase an aggregate of 165,000 shares of Common Stock with an exercise price of $1.25 per share (the "May 2021 Warrants"), and (ii) warrants to purchase an aggregate of 1,540,000 shares of Common Stock with an exercise price of $1.25 per share (the "June 2022 Warrants" and together with the May 2021 Warrants, the "Warrants"), respectively. In connection with the Forbearance Agreement, the Company and the Purchasers entered into amended and restated warrants (the "Amended Warrants") pursuant to which, among other things: (i) the exercise price of the Warrants was reduced to $0.01 per share and (ii) the term of the Warrants was changed from 5 years to 7 years.

Registration Rights Agreements

On the Effective Date, the Company entered into an Amended and Restated Registration Rights Agreement with the Purchasers related to the shares of common stock held by the Purchasers and the shares of common stock issuable upon exercise of the Amended Warrants pursuant to which we agreed to file a registration statement for such securities on the 30th calendar day following the date the Company's independent public accountants have completed their audit for the fiscal year ended December 31, 2023 and the Company has filed its Annual Report on Form 10-K including such financial statements, or if later, June 15, 2024. If the Company fails to have it filed by such date, declared effective 60 calendar days thereafter or if we fail to maintain the effectiveness of the registration statement until all of such securities have been sold or are otherwise able to be sold pursuant to Rule 144 under the Securities Act, without any volume or manner of sale restrictions, then we will be obligated to pay liquidated damages to the holders of such securities of $20,000, in addition to any other rights such holders may have, upon the occurrence of any such event and on each monthly anniversary thereafter until the event is cured.

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On the Effective Date, the Company also entered into an Amended and Restated Registration Rights Agreement with the Purchasers related to the shares of common stock (or shares of a to-be-issued class of preferred stock) issuable upon conversion of the Notes pursuant to which we agreed to file a registration statement for such securities on the 30th calendar day following the earliest of: (i) the first anniversary of the Effective Date and no Qualified Subsequent Financing has been consummated; (ii) the consummation of a Qualified Subsequent Financing and the Company has filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, or if later, June 15, 2024; and (iii) the occurrence and continuance of an Event of Default (as defined under the Notes). If we fail to have it filed by such date, declared effective 45 calendar days thereafter or if we fail to maintain the effectiveness of the registration statement until all of such securities have been sold or are otherwise able to be sold pursuant to Rule 144 under the Securities Act, without any volume or manner of sale restrictions, then we will be obligated to pay liquidated damages to the holders of such securities of $20,000, in addition to any other rights such holders may have, upon the occurrence of any such event and on each monthly anniversary thereafter until the event is cured.

Side Letter

On the Effective Date, the Company and the Agent entered into a side letter pursuant to which the Agent acknowledged and agreed that any to-be-issued shares of preferred stock to be issued upon conversion of the Notes shall include the general parameters as set forth below, subject to execution of definitive documentation: (i) senior preferred will be first, prior to and superior to any other class of preferred stock or any other security, with a liquidation preference, which is to be paid in full before any other class of securities receives any distribution in liquidation or otherwise, (ii) no PIK or interest, no voting rights (except as required by law, no restrictions on future debt/equity raises (still have MFN for one year and the customary adjustment rights), (iii) convertible into shares of the common stock and (iv) non-redeemable.

On June 4, 2024, the Company entered into an amendment to the Forbearance Agreement and Registration Rights Agreements. The Forbearance Agreement was amended such that the Agent and the Purchasers agreed to forbear from exercising their rights and remedies with respect to the Specified Events of Default (as defined in the Amendment) under the Notes until that date which is the earliest to occur of: (a) August 30, 2024; (b) the date on which any event of default under the Notes (other than the Specified Events of Default) occurs; and (c) the date on which the Company or any of its subsidiaries fails to comply with any term set forth in the Forbearance Agreement; (ii) the definition of "Filing Date" in the Amended and Restated Registration Rights Agreements (as defined in the Amendment) was amended such that we agreed to file a registration statement for such securities on the 30th calendar day following the date the Company's independent public accountants have completed their audit for the fiscal year ended December 31, 2023 and the Company has filed its Annual Report on Form 10-K including such financial statements, or if later, June 30, 2024 and (iii) the parties agreed to issue new Amended Warrants (as defined in the Amendment) to reflect an erroneous change to the expiration date in the Amended Warrants from 7 years to 5 years.

In connection with the Amendment, the Company agreed to issue to the Purchasers such number of shares of a to-be-created class of preferred stock having a stated value equal to $100,000 in the same class and on the same terms and conditions as the preferred stock to be issued to such Purchasers upon consummation of a Qualified Subsequent Financing (as defined in the Notes). The securities to be issued and sold in this transaction will not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act of 1933, as amended (the "Securities Act") and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The Purchasers are each an "accredited investor" as such term is defined in Regulation D promulgated under the Securities Act.

The independent auditors' report accompanying our December 31, 2023 and 2022 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements of the Company have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the financial statements do not include any adjustments that might be necessary should the Company be unable to continue in existence. The Company has incurred substantial losses and negative cash flows from operations since its inception and has an accumulated deficit of $32,007,998 as of June 30, 2024. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales or revenue from its services. These factors raise substantial doubt about the Company's ability to continue as a going concern.

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As of June 30, 2024 and December 31, 2023, we had cash of $12,764 and $100,319, respectively. Our working capital (deficit) at June 30, 2024 was ($8,738,183). We will, however, in the future require additional cash resources to fund operating losses, due to changing business conditions, implementation of our strategy to expand our business, or other investments or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.

The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern. Management believes that actions presently being taken to obtain additional funding and implement its strategic plans for the Company's operating businesses provide the opportunity for the Company to continue as a going concern.

During the six months ended June 30, 2024, we had net cash flow used in operating activities of $365,650. The cash flow used in operating activities resulted primarily from the net loss and noncash stock based compensation for the period, as partially offset by amortization of debt discounts, increases in accounts payable and accrued liabilities and a decrease in accounts and notes receivable.

We had no net cash flow provided by investing activities as we had closed our investing account in April 2023 and also had no purchases of fixed assets.

We had net cash flow provided by financing activities of $278,095 for the six months ended June 30, 2024. The cash provided by financing activities was primarily the result of proceeds from bridge loans in the amount of $182,000, as well as the receipt of the final amounts due on our notes receivables of $100,000.

As a result of the foregoing, the Company had a net decrease in cash of $87,555 during the six months ended June 30, 2024.

Inflation

We believe that inflation has not had a material adverse impact on our business or operating results during the periods presented.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements as of the date of this Quarterly Report on Form 10-Q.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is not required to provide the information required by this Item as it is a "smaller reporting company," as defined in Rule 12b-2 of the Exchange Act.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our principal executive officer and principal financial officer evaluated the effectiveness of our "disclosure controls and procedures" as of June 30, 2024, the end of the period covered by this Quarterly Report on Form 10-Q. The term "disclosure controls and procedures" as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is accumulated and communicated to a company's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Based on the evaluation of our disclosure controls and procedures as of June 30, 2024, our Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control

There have been no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

ITEM 1A. RISK FACTORS.

Our business, financial condition, results of operations, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth in our other filings with the SEC, the occurrence of any one of which could have a material adverse effect on our actual results. There have been no material changes to the Risk Factors previously disclosed in our other filings with the SEC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

During the six months ended June 30, 2024, there were no sales of the Company's shares of common stock.

We deemed the issuances of the securities described above to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act, including Regulation D and Rule 506 promulgated thereunder, relative to transactions by an issuer not involving a public offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

During the six months ended June 30, 2024, the Company received a related party bridge loan from KORR Acquisitions Group, Inc. in the total amount of $270,000, in addition to prior loans of $1,720,000 outstanding. In addition the Company received a related party loan from RUA Diagnostics, Inc. in the amount of $12,000. These loans are subordinated to and subject to the terms of the Senior Note Holder.

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ITEM 6. EXHIBITS.

Exhibit No. Description
31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1** Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2** Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS* Inline XBRL Instance Document
101.SCH* Inline XBRL Taxonomy Extension Schema Document
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document
104* Cover Page Interactive Data File - the cover page from the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 is formatted in Inline XBRL
* Filed herewith.
** Furnished herewith
*** Certain personable identifiable information has been omitted pursuant to Item 601 (a) (6) of Regulation S-K. The Company hereby agrees to furnish the omitted information to the SEC upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

OPTIMUS HEALTHCARE SERVICES, INC.
Date: August 9, 2024 By: /s/ Cliff Saffron
Cliff Saffron
Interim Chief Executive Officer
(Principal Executive Officer)
Date: August 9, 2024 By: /s/ Thomas McNeill
Thomas McNeill
Senior Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)

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