What changed in this filing

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Item 1. Financial Statements

2021-08-13 compared with 2021-05-14 · 950 added, 1226 removed, 439 unchanged (83% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

March 31, 2021

June 30, 2021

December 31, 2020

6 unchanged sentences

Non-current Assets

Equipment, net

Right of use asset, net

9 unchanged sentences

Long-term Liabilities

Long-term debt

Lease liability

1 unchanged sentence

Total Liabilities

and contingencies (see Note 8)

Mezzanine Equity

2 unchanged sentences

Series B Preferred Stock, $ 0.0001 per value;

5,000 shares authorized, 3,500 and

3,500 shares issued and outstanding, liquidation value approximately, $1,079 and $1,045 per share as of March 31, 2021 and

December 31, 2020, respectively

Stockholders’

5,000 shares authorized, 3,500 and 3,500 shares issued and outstanding, liquidation value approximately, $ 1,109 and $ 1,045 per share as of June 30, 2021 and December 31, 2020, respectively

Preferred Stock Value

Stockholders’ Deficit

Common stock, $ 0.01 par value;

100,000,000 shares authorized, 25,885,014 and 23,433,663 shares issued, 25,781,974 and 23,330,623 outstanding as of March 31, 2021 and December 31, 2020, respectively

100,000,000 shares authorized, 26,635,840 and 23,433,663 shares issued, 26,532,800 and 23,330,623 outstanding as of June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

4 unchanged sentences

Total LifeMD, Inc.

Stockholders’

Stockholders’ Deficit

( 7,031,472 )

( 2,301,899 )

Non-controlling interest

Total Stockholders’

Total Liabilities, Mezzanine Equity and Stockholders’

( 1,001,869 )

( 2,175,687 )

Total Stockholders’ Deficit

( 8,033,341 )

( 4,477,586 )

Total Liabilities, Mezzanine Equity and Stockholders’ Deficit

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

Consolidated STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Product revenues, net

2 unchanged sentences

Total revenues, net

Cost of revenues

Cost of product revenue

Cost of software revenue

Cost of revenues

Selling & marketing expenses

Total cost of revenues

Selling and marketing expenses

General and administrative expenses

Other operating expenses

Operating expenses

Customer service expenses

3 unchanged sentences

( 16,126,763 )

Other Income (Expenses)

Interest expense, net

Gain on debt forgiveness

Net Loss before provision for income taxes

( 3,218,372 )

Provision for income taxes

( 28,045,100 )

( 4,958,877 )

Other income (expenses), net

( 1,021,914 )

Loss from operations before income taxes

( 17,028,673 )

( 3,447,247 )

( 28,901,559 )

( 5,980,791 )

Income tax provision (benefit)

( 17,028,673 )

( 3,447,247 )

( 28,901,559 )

( 5,980,791 )

Net loss attributable to noncontrolling interests

Net loss attributable to LifeMD, Inc.

common stockholders

$ ( 16,830,700 )

$ ( 3,379,116 )

$ ( 28,433,083 )

$ ( 5,773,844 )

Basic loss per share attributable to LifeMD, Inc.

common stockholders

from operations

Diluted loss per share attributable to LifeMD, Inc.

common stockholders

from operations

Weighted average number of common shares outstanding

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

Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’

Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ DEFICIT

Noncontrolling

2 unchanged sentences

$ ( 163,701 )

$ ( 988,187 )

$ ( 141,056 )

$ ( 1,129,243 )

Stock compensation

Stock issued for services

Stock issued for services, Shares

Purchase of common stock

Purchase of common stock, Shares

Shares issued for share liability

Shares issued for share liability, Shares

Cashless exercise of stock options

Cashless exercise of stock options, Shares

Exercise of stock options

Exercise of stock options, Shares

Sale of stock in private placement, net

Sale of stock in private placement, net, Shares

Purchase of additional membership interest of LSS

Adjustment of noncontrolling Interest for additional investment

Exercise of warrants

Exercise of warrants, Shares

Deemed distribution from down-round provision in common stock shares yet to be issued

Cashless exercise of warrants

1 unchanged sentence

Deemed dividend from warrant price adjustments

( 1,142,385 )

issued for debt instruments

Distributions to non-controlling interest

Balance, March 31, 2020

( 2,394,728 )

1 unchanged sentence

( 2,533,544 )

March 31, 2020

( 20,238,551 )

( 3,393,534 )

( 3,709,406 )

Stock issued for services

Stock compensation

Cashless exercise of warrants

Purchase of common stock

Shares issued for share liability

Distributions to non-controlling interest

Deemed distribution from down-round provision in common stock shares yet to be issued

( 3,379,116 )

( 3,447,247 )

June 30, 2020

$ ( 23,705,170 )

$ ( 163,701 )

$ ( 4,410,378 )

$ ( 469,226 )

$ ( 4,879,604 )

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

Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ DEFICIT

Noncontrolling

Balance, Janauary 1, 2021

Balance, January 1, 2021

$ ( 80,151,905 )

2 unchanged sentences

$ ( 2,175,687 )

Stock compensation

$ ( 4,477,586 )

Stock issued for services

Cashless exercise of stock options

2 unchanged sentences

Distribution to non-controlling interest

Purchase of addititional

membership interest of LSS

Adjustment of noncontrolling

Interest for additional investment

Purchase of additional membership interest of LSS

Adjustment of noncontrolling Interest for additional investment

( 1,636,875 )

1 unchanged sentence

( 11,602,383 )

( 11,872,886 )

Balance, March 31, 2021

( 91,754,288 )

Stock issued for services

Exercise of stock options

Cashless exercise of stock options

Exercise of warrants

issued for debt instruments

Distribution to non-controlling interest

( 16,830,700 )

( 17,028,673 )

Balance, June 30, 2021

$ 101,450,858

$ ( 108,584,988 )

$ ( 163,701 )

$ ( 7,031,472 )

$ ( 1,001,869 )

$ ( 8,033,341 )

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

Consolidated STATEMENTS OF CASH FLOWS

Months Ended March 31,

FLOWS FROM OPERATING ACTIVITIES

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

$ ( 28,901,559 )

$ ( 5,980,791 )

Adjustments to reconcile

net loss to net cash (used in) provided by operating activities:

of debt discount

of capitalized software

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

Amortization of debt discount

Amortization of capitalized software

Amortization of intangibles

of debt discount

on forgiveness of debt

lease payments

compensation expense

to issue shares for services

Changes in Assets and

current assets

payable and accrued expenses

cash (used in) provided by operating activities

FLOWS FROM INVESTING ACTIVITIES

Cash paid for capitalized

software costs

to seller for contingent consideration

cash used in investing activities

FLOWS FROM FINANCING ACTIVITIES

Cash proceeds from

private placement offering, net

Cash proceeds from

exercise of options

Purchase of membership

interest of LSS

Distributions to non-controlling

Proceeds from note

Repayment of notes

issuance costs

cash provided by (used in) financing activities

Net increase (decrease)

at beginning of period

at end of period

paid for interest

paid during the period for interest

investing and financing activitites:

exercise of warrants

of Paycheck protection Program loans forgiven

purchase of membership interest in LSS issued in performance options

dividend from warrant price adjustments

yet to be issued for capitalized costs

distribution from down-round provision on unissued shares

Write-down of inventory

Acceleration of debt discount

Gain on forgiveness of debt

Operating lease payments

Stock compensation expense

Stock issued for services

Liability to issue shares for services

Changes in assets and liabilities

Accounts receivable

Product deposit

Other current assets

Change in operating lease liability

Deferred revenue

Accounts payable and accrued expenses

Net cash used in operating activities

( 19,840,409 )

( 1,097,281 )

CASH FLOWS FROM INVESTING ACTIVITIES

Cash paid for capitalized software costs

Purchase of equipment

Payment to seller for contingent consideration

Contingent consideration on business combination paid

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Cash proceeds from private placement offering, net

Proceeds from issuance of debt instruments

Cash proceeds from exercise of options

Cash proceeds from exercise of warrants

Shares issued for cash

Cash receipts from investors for unissued shares

Purchase of membership interest of LSS

Distributions to non-controlling interest

Proceeds from notes payable

Repayment of notes payable

( 1,119,950 )

( 2,498,808 )

Debt issuance costs

Net cash provided by financing activities

Net increase (decrease) in cash

Cash at beginning of period

Cash at end of period

Cash paid for interest

Cash paid during the period for interest

Non-cash investing and financing activities

Principal of Paycheck Protection Program loans forgiven

Additional purchase of membership interest in LSS issued in performance options

Warrants issued for debt instruments

Deemed distribution from down-round provision

Stock yet to be issued for capitalized costs

Deemed distribution from down-round provision on unissued shares

Shares issued for share liability

$ ( 1,726,000 )

Debt issuance costs for liability to issues shares

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

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 – NATURE OF THE ORGANIZATION AND BUSINESS

1 unchanged sentence

The Company changed its name to Conversion

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

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

Effective February 22, 2021,

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

to “LFMD”.

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

Company’s skincare products, was amended and restated and the Company increased its ownership and voting interest in Immudyne

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

Conversion Labs PR LLC.

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

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

On February 22, 2021, concurrent

with the name of the parent company to LifeMD, Inc., Conversion Labs PR LLC was renamed to LifeMD PR, LLC.

June 2018, the Company closed the strategic acquisition of 51% of LegalSimpli Software, LLC (“LegalSimpli”), a software as

a service (SaaS) application for converting, editing, signing and sharing PDF documents.

In addition to LegalSimpli Software’s

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

January 22, 2021, the Company consummated a transaction to restructure the ownership of LegalSimpli (the “LSS Restructuring”)

(See Note 5).

Company is a direct-to-patient telehealth company that provides a smarter, cost-effective and convenient way of accessing healthcare.

The Company believes that the traditional model of visiting a doctor’s office, receiving a physical prescription, visiting a local

pharmacy, and returning to see a doctor for follow up care or prescription refills is inefficient, costly to patients, and discourages

many patients from seeking much needed medical care.

healthcare system is undergoing a paradigm shift, thanks to new technologies

and the emergence of direct-to-patient healthcare.

Direct-to-patient telemedicine companies, like the Company, connect consumers to licensed

healthcare professionals for care across numerous indications, including concierge care, men’s sexual health and dermatology, among

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

often delivered on a recurring basis.

In addition to its telemedicine offerings, it sells nutritional supplements and other over-the-counter

Many of its products are available on a subscription or membership basis, where a patient can subscribe to receive regular

shipments of prescribed medications or products.

This creates convenience and often discounted pricing opportunities for patients and

recurring revenue streams for the Company.

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

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

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

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

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

and voting interest in Conversion Labs PR to 100 %.

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

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

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

of LegalSimpli Software, LLC (“LegalSimpli”), which operates a software as a service (SaaS) application for converting, editing,

signing and sharing PDF documents called PDFSimpli.

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

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

Effective January 22, 2021, the Company consummated

a transaction to restructure the ownership of LegalSimpli (the “LSS Restructuring”) (See Note 7) and concurrently

increased its ownership stake in LegalSimpli to 85.6 %.

Company is a direct-to-patient telehealth technology company that provides a smarter, cost-effective and convenient way for

a provider’s patients to access healthcare.

The Company believes that the traditional model of visiting a doctor’s office,

receiving a physical prescription, visiting a local pharmacy, and returning to see a doctor for follow up care or prescription refills

is inefficient, costly to patients, and discourages many patients from seeking much needed medical care.

healthcare system is

undergoing a paradigm shift, thanks to new technologies and the emergence of direct-to-patient healthcare.

Direct-to-patient telehealth

technology companies, like the Company, connect consumers to licensed healthcare professionals for care across numerous indications,

including concierge care, men’s sexual health and dermatology, among others.

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

medications, often delivered on a recurring basis.

In addition to its telehealth technology offerings, it sells nutritional supplements

and other over-the-counter products.

Many of its products are available on a subscription or membership basis, where a patient can subscribe

to receive regular shipments of prescribed medications or products.

This creates convenience and often discounted pricing opportunities

for patients and recurring revenue streams for the Company.

Company believes that brand innovation, customer acquisition and service excellence form the heart of its business.

As is exemplified

with its first brand, Shapiro MD, it has built a full line of proprietary over-the-counter (“OTC”) products for male and

female hair loss, FDA approved OTC minoxidil, an FDA-cleared medical device, and now a personalized telemedicine offering that gives

consumers access to virtual medical treatment and, when appropriate, a full line of oral and topical prescription medications for hair

The Company’s men’s telemedicine brand, Rex MD, currently offers treatment for erectile dysfunction, and will soon

offer treatments for additional indications present in men’s health.

The Company has built a platform that allows it to efficiently

launch telehealth and wellness product lines wherever it determines there is a market need.

with its first brand, Shapiro MD, it has built a full line of proprietary over-the-counter (“OTC”) products for male and

female hair loss, FDA approved OTC minoxidil, an FDA-cleared medical device, and now a personalized telehealth platform offering

that gives consumers access to virtual medical treatment from their providers and, when appropriate, a full line of oral and topical

prescription medications for hair loss.

The Company’s men’s brand, Rex MD, currently offers access to provider-based

treatment for erectile dysfunction, as well as treatment for other common men’s health issues including premature ejaculation and

In the first quarter of 2021, the Company launched its newest brand, Nava MD, a tele-dermatology and skincare brand for women.

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

is a market need.

and Subsidiary History

June 2018, Conversion Labs closed the strategic acquisition of 51% of LegalSimpli Software, LLC (“LegalSimpli”), a software

as a service (SaaS) application for converting, editing, signing and sharing PDF documents.

In addition to LegalSimpli’s growth

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

June 2018, Conversion Labs closed the strategic acquisition of 51% of LegalSimpli Software, LLC (“LegalSimpli”), which operates

a software as a service (SaaS) application for converting, editing, signing and sharing PDF documents called PDFSimpli.

In addition to

LegalSimpli’s growth business model, this acquisition added deep search engine optimization and search engine marketing expertise

to the Company.

The Company subsequently increased its ownership stake in LegalSimpli to its current 85.6%.

early 2019, the Company had launched a service-based business under the name Conversion Labs Media LLC, which was to be used to run e-commerce

2 unchanged sentences

its core business as well as the expansion of our telehealth opportunities.

June 2019, a strategic joint venture with GoGoMeds.com (GoGoMeds) was formed in order to help facilitate the launch of our telemedicine

GoGoMeds is a nationwide pharmacy licensed to dispense prescription medications directly to consumers in all 50 states and

the District of Columbia.

However, on August 7, 2020, the Company terminated its Strategic Partnership Agreement with GoGoMeds.

venture with GoGoMeds had not initiated activities, and its termination did not have an impact on the Company’s operations.

Labs Rx, LLC (“CVLB Rx”), a Puerto Rico limited liability company, had no activity during the year ended December 31, 2020

In June 2019, a strategic joint venture with GoGoMeds.com

(GoGoMeds) was formed in order to help facilitate the launch of our telehealth business.

GoGoMeds is a nationwide pharmacy licensed to

dispense prescription medications directly to consumers in all 50 states and the District of Columbia.

However, on August 7, 2020, the

Company terminated its Strategic Partnership Agreement with GoGoMeds.

The joint venture with GoGoMeds had not initiated activities, and

its termination did not have an impact on the Company’s operations.

Labs Rx, LLC (“CVLB Rx”), a Puerto Rico limited liability company, had no activity during the year ended December 31, 2020

and was dissolved during the period.

otherwise indicated, the terms “LifeMD,”

“Company,”

“we,”

“us,”

and “our”

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

refer to LifeMD, Inc.

(formerly known as Conversion Labs, Inc.), our wholly subsidiary LifeMD PR, LLC (formerly Immudyne

PR LLC, and “Conversion Labs PR”), a Puerto Rico limited liability company (“Conversion Labs PR”,

or “CLPR”) and our majority-owned subsidiaries LegalSimpli Software, LLC, a Puerto Rico limited liability company

(“LegalSimpli”).

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

(formerly known as Conversion Labs, Inc.), our wholly subsidiary LifeMD PR, LLC (formerly Immudyne PR LLC, and

“Conversion Labs PR”), a Puerto Rico limited liability company (“Conversion Labs PR”, or “CLPR”)

and our majority-owned subsidiaries LegalSimpli Software, LLC, a Puerto Rico limited liability company (“LegalSimpli”).

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

October 9, 2020, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Delaware

(the “Amendment”) in order to effectuate a 1-for-5 reverse stock split of the Company’s issued and outstanding shares

of common stock (the “Reverse Split”

or “Split”).

(the “Amendment”) in order to effectuate a 1-for-5 reverse stock split of the Company’s issued and outstanding shares

of common stock (the “Reverse Split” or “Split”).

The Reverse Split was approved by the Financial Industry Regulatory

Authority (FINRA) and became effective in the market on October 14, 2020 (the “Effective Date”).

Authority (FINRA) and became effective in the market on October 14, 2020.

All references to common

shares and common share data in these financial statements and elsewhere in this Form 10-Q as of March 31, 2021 and 2020, and for the

three months then ended, reflect the Reverse Stock Split.

Company has funded operations in the past through the sales of its products, issuance of common stock and through loans and advances

from officers and directors.

The Company’s continued operations are dependent upon obtaining an increase in its sale volumes and

the continued financial support from officers and directors, obtaining funding from third-party sources or the issuance of additional

shares of common stock.

February 11, 2021, the Company consummated the closing of a private placement offering (the “February 2021 Offering”), whereby

pursuant to the securities purchase agreement (the “February 2021 Purchase Agreement”) entered into by the Company and certain

accredited investors on February 11, 2021 the Investors purchased 608,696 shares of the Company’s common stock par value $0.01

per share at a purchase price of $23.00 per share for aggregate gross proceeds of approximately $14.0 million (the “Purchase Price”).

Purchase Price was funded on the closing date and resulted in net proceeds to the Company of approximately $13.5 million after deducting

shares and common share data in these financial statements and elsewhere in this Form 10-Q as of June 30, 2021 and 2020, and for the

three and six months then ended, reflect the Reverse Stock Split.

Company has funded operations in the past through the sales of its products, issuance of common and preferred stock and through loans

and advances.

The Company’s continued operations are dependent upon obtaining an increase in its sale volumes and obtaining funding

from third-party sources or the issuance of additional shares of common stock.

February 11, 2021, the Company consummated the closing of a private placement offering (the “February 2021 Offering”), whereby

pursuant to the securities purchase agreement (the “February 2021 Purchase Agreement”) entered into by the Company and certain

accredited investors on February 11, 2021 the Investors purchased 608,696 shares of the Company’s common stock par value $ 0.01

per share at a purchase price of $ 23.00 per share for aggregate gross proceeds of approximately $ 14.0 million (the “Purchase Price”).

The Purchase Price was funded on the closing date and resulted in net proceeds to the Company of approximately $ 13.5 million after deducting

fees payable to the placement agent and other estimated offering expenses payable by the Company.

Company intends to use the net proceeds to fund growth initiatives, as well as for general corporate purposes.

The Company intends to use the net

proceeds to fund growth initiatives, as well as for general corporate purposes.

June 1, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional investor

(the “Purchaser”), pursuant to which the Company sold and issued:

(i) a senior secured redeemable debenture (the “Debenture”)

in the aggregate principal amount of $ 15.0

million (the “Aggregate Principal Amount”),

and (ii) warrants to purchase up to an aggregate of 1,500,000

shares of the Company’s common stock at

an exercise price of $ 12.00

per share (the “Warrant”) of which

warrants were issued to the Purchaser upon closing with the remaining 1,000,000 warrants only issued to the Purchaser in increments of

500,000 if the Debenture remains outstanding for twelve and twenty four months, respectively, following the closing date of the Purchase

The Warrant has a term of three

years , and the Debenture has a maturity date

of three years .

The Debenture may be paid fully or in part by the Company at any time prior to maturity without penalty to

The Company received gross proceeds of $ 15.0

million and intends to use such proceeds for

working capital, growth investment and general corporate purposes.

June 8, 2021, the Company filed a shelf registration statement on Form S-3 under the Securities Act of 1933, or “Securities

Act”, which was declared effective on June 22, 2021 (the “2021 Shelf”).

Under the 2021 Shelf at the time of effectiveness,

the Company had the ability to raise up to $150 million by selling common stock, preferred stock, debt securities, warrants and units.

In conjunction with the 2021 Shelf, the Company also entered into an At Market Issuance Sales Agreement (the “Sales Agreement”)

Riley Securities, Inc.

Riley”) and Cantor Fitzgerald & Co.

(“Cantor”, and collectively the “Agents”)

relating to the sale of its common stock.

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

to, offer and sell, from time to time, shares of common stock having an aggregate offering price of up to $ 60

million, through or to the Agents, acting as

agent or principal.

Sales of common stock, if any, will be made by any method permitted that is deemed an “at the market offering”

as defined in Rule 415 under the Securities Act.

The Company intends to use any net proceeds from the sale of securities for our

operations and for other general corporate purposes, including, but not limited to, capital expenditures, general working capital and

possible future acquisitions.

There were no sales of shares of common stock under the 2021 Shelf or the Sales Agreement as of

June 30, 2021.

The Company had the full availability of the Sales Agreement and $90 million available under the 2021 Shelf as of June

Concern Evaluation

1 unchanged sentence

a going concern, which assumes the realization of assets and the satisfaction of liabilities in the normal course of business.

March 31, 2021, the Company has an accumulated deficit approximating $90.2 million and has experienced significant losses from its operations.

Although the Company is showing significant positive revenue trends, the Company expects to incur further losses through the end of 2021.

Additionally, the Company expects its burn rate of cash to continue through the second quarter of 2021;

however, the Company expects

this burn rate to improve in future quarters.

To date, the Company has been funding operations primarily through the sale of equity in

private placements.

Management is unable to predict if and when the Company will be able to generate significant positive cash flow or

achieve profitability.

There can be no assurances that we will be successful in increasing revenues, improving operational efficiencies

or that financing will be available or, if available, that such financing will be available under favorable terms.

Company has a current cash balance of approximately $13.4 million as of the filing date, which includes the $13.5 million of net proceeds

from the February 2021 Offering noted above.

Based on the Company’s projected cash requirements, management estimates that it will

utilize approximately $8.4 million through the next 12 months from the filing date of this report.

Company reviewed its forecasted operating results and sources and uses of cash used in management’s assessment, which included

the available financing, consideration of positive and negative evidence impacting management’s forecasts, market and industry

Positive indicators that lead to its conclusion that the Company will have sufficient cash over the next 12 months following

the date of this report include (1) its continued strengthening of the Company’s revenues and improvement of operational efficiencies

across the business, (2) the expected improvement in its cash burn rate in the second quarter of 2021 and over the next 12 months, (3)

overall investor interest in its equity securities which it believes will enable it to successfully complete future capital raises and

(4) the overall market value of the telemedicine industry and how it believes that will continue to drive interest in the Company.

June 30, 2021, the Company has an accumulated deficit approximating $ 108.6

million and has experienced significant losses

from its operations.

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

through the end of 2021.

Additionally, the Company expects its burn rate of cash to continue through the second half of 2021;

the Company expects this burn rate to improve in future quarters.

To date, the Company has been funding operations primarily through

the sale of equity in private placements and securities purchased with an institutional investor.

Management is unable to predict if

and when the Company will be able to generate significant positive cash flow or achieve profitability.

There can be no assurances that

we will be successful in increasing revenues, improving operational efficiencies or that financing will be available or, if available,

that such financing will be available under favorable terms.

Company has a current cash balance of approximately $ 12.5

million as of the filing date, which includes the $ 13.5

million of net proceeds from the February 2021

Offering and the $ 14.9

million of net proceeds from the June 2021 Purchase

Based on the Company’s projected cash requirements, management estimates that it will utilize approximately $ 15.3

million through the next 12 months from the filing

date of this report.

The Company reviewed its forecasted operating results and sources and uses of cash used in management’s assessment,

which included the available financing, consideration of positive and negative evidence impacting management’s forecasts, market

and industry factors.

Positive indicators that lead to its conclusion that the Company will have sufficient cash over the next 12 months

following the date of this report include (1) its continued strengthening of the Company’s revenues and improvement of operational

efficiencies across the business, (2) the expected improvement in its cash burn rate in the second half of 2021 and over the next 12

months, (3) overall investor interest in its equity securities which it believes will enable it to successfully complete future capital

raises, (4) full availability of the Sales Agreement and $90 million available under the 2021 Shelf, (5) management’s ability

to curtail expenses if necessary and (6) the overall market value of the telehealth industry and how it believes that will

continue to drive interest in the Company.

2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

5 unchanged sentences

generally accepted accounting

principles (“U.S.

GAAP”) for complete audited financial statements.

principles (“U.S.

GAAP”) for complete audited financial statements.

The accompanying unaudited financial information should

4 unchanged sentences

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

The results of operations for the three months

ended March 31, 2021 are not necessarily indicative of the results for the year ending December 31, 2021 or for any future period.

The results of operations for the three and

six months ended June 30, 2021 are not necessarily indicative of the results for the year ending December 31, 2021 or for any future

of Consolidation

Company evaluates the need to consolidate affiliates based on standards set forth in ASC 810 Consolidation (“ASC 810”).

unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, CLPR and its

majority owned subsidiary, LegalSimpli.

The non-controlling interest in LegalSimpli represents the 49% equity interest held by other

members of the subsidiary as of December 31, 2020.

During the three months ended March 31, 2021, the Company purchased an additional

36% of LegalSimpli for a total equity interest of approximately 85% (see Note 5).

The non-controlling interest in LegalSimpli represents the 49 %

equity interest held by other members of the subsidiary as of December 31, 2020.

During the six months ended June 30, 2021, the Company

purchased an additional 36 %

of LegalSimpli for a total equity interest of approximately 85 %

(see Note 7).

significant intercompany transactions and balances have been eliminated in consolidation.

and Cash Equivalents

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

As of June 30, 2021

and December 31, 2020, there were no cash equivalents.

The Company maintains deposits in financial institutions in excess of amounts

guaranteed by the Federal Deposit Insurance Corporation.

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

balances may exceed federally insured limits.

We have never experienced any losses related to these balances.

Interest Entities

Company follows ASC 810-10-15 guidance with respect to accounting for variable interest entities (each, a “VIE”).

These entities

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A variable interest is an investment or

other interest that will absorb portions of a VIE’s expected losses or receive portions of its expected residual returns and are

contractual, ownership, or pecuniary in nature and that change with changes in the fair value of the entity’s net assets.

other interest that will absorb portions of a VIE’s expected losses or receive portions of its expected residual returns and are

contractual, ownership, or pecuniary in nature and that change with changes in the fair value of the entity’s net assets.

entity is the primary beneficiary of a VIE and must consolidate it when that party has a variable interest, or combination of variable

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The Company conducts an assessment on an ongoing basis for each VIE including

(1) the power to direct activities of the VIE that most significantly impact the VIE’s economic performance, and (2) the obligation

to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE.

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determined that three (3) entities were VIEs and subject to consolidation.

Labs Media, LLC (“CVLB Media”), a Puerto Rico limited liability company,

Labs Rx, LLC (“CVLB Rx”), a Puerto Rico limited liability company (dissolved in 2020), and

Labs Asia Limited, a Hong Kong company (“Conversion Labs Asia”).

Media, CVLB Rx and Conversion Labs Asia are all considered immaterial as of March 31, 2021 and December 31, 2020.

Labs Media, LLC (“CVLB Media”), a Puerto Rico limited liability company,

Labs Rx, LLC (“CVLB Rx”), a Puerto Rico limited liability company (dissolved in 2020), and

Labs Asia Limited, a Hong Kong company (“Conversion Labs Asia”).

Media, CVLB Rx and Conversion Labs Asia are all considered immaterial as of June 30, 2021 and December 31, 2020.

CVLB Rx had no activity

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Some of the more significant estimates required to be made by management include the determination of reserves for accounts receivable,

returns and allowances, the valuation of inventory and stockholders’

equity-based transactions.

Actual results could differ from

those estimates.

continuing impact on business activity brought about by the Coronavirus pandemic (“COVID-19”) continues to evolve, globally

returns and allowances, the valuation of inventory, stockholders’ equity-based transactions, estimates to cash flow projections

and going concern assessment.

Actual results could differ from those estimates.

continuing impact on business activity brought about by the Coronavirus pandemic (“COVID-19”) continues to evolve, globally

in macro terms, and in micro terms, as such affects the Company.

As a result, many of our estimates and assumptions for the period ended

March 31, 2021 were subject to an increased level of judgment and may carry a higher degree of variability and volatility.

periods, subsequent to March 31, 2021, when additional information becomes available, which may differ from our current assumptions,

may subject our estimates to material change in future periods.

June 30, 2021 were subject to an increased level of judgment and may carry a higher degree of variability and volatility.

In future periods,

subsequent to June 30, 2021, when additional information becomes available, which may differ from our current assumptions, may subject

our estimates to material change in future periods.

Reclassifications

reclassifications have been made to conform the prior year’s data to the current presentation.

These reclassifications have no

effect on previously reported operating loss, stockholders’

deficit or cash flows.

Given the increase in the Company’s software

business and to conform the Company’s presentation of operating results to industry standards, the Company has changed their categories

effect on previously reported operating loss, stockholders’ deficit or cash flows.

Given the increase in the Company’s software

business and to conform the Company’s presentation of operating results to industry standards, the Company has changed their categories

for reporting operations, as result the Company has made reclassifications to the prior year presentation in order to conform it to the

current periods’

presentation.

The reclassification includes $421,998 of merchant processing fees reclassified from cost of revenues

to general and administrative expenses for the three months ended March 31, 2020.

current periods’ presentation.

The reclassification includes $ 495,787 and $ 917,785 of merchant processing fees reclassified from

cost of revenues to general and administrative expenses for the three and six months ended June 30, 2020, respectively.

Company records revenue under the adoption of ASC 606 by analyzing exchanges with its customers using a five-step analysis:

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the transaction price

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

is the delivery of the product;

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fulfillment service provider;

in limited cases, title does not pass until the product reaches the customer’s delivery site, in

these limited cases, recognition of revenue should be deferred until that time, however the Company does not have a process to properly

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

Company’s discounts and customer rebates are known at the time of sale, correspondingly, the Company reduces gross product sales

for such discounts and customer rebates.

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Customer discounts, returns

and rebates on product revenues approximated $1,222,000 and $314,000, respectively, during the three months ended March 31, 2021 and

and rebates on product revenues approximated $ 1,362,000 and $ 857,000 for the three months ended June 30, 2021 and 2020, respectively.

Customer discounts, returns and rebates on product revenues approximated $ 2,584,000 and $ 1,334,000 for the six months ended June 30,

2021 and 2020, respectively.

Company, through its majority-owned subsidiary LegalSimpli, offers a subscription-based service providing a suite of software applications

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For these subscription-based contracts with

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

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

The Company has estimated

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

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

The Company allows the customer to cancel at any point during

the billing cycle, in which case the customers subscription will not be renewed for the following month or year depending on the original

subscription.

The Company records the revenue over the customers subscription period for monthly and yearly subscribers or at the end

of the initial 14-day service period for customers who purchased the initial subscription, as the circumstances dictate.

offers a discount for the monthly or yearly subscriptions being purchased, which is deducted at the time of payment at the initiation

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

Monthly and annual subscriptions

for the service are recorded net of the Company’s known discount rates.

As of March 31, 2021 and December 31, 2020, the Company

has accrued contract liabilities, as deferred revenue, of approximately $1.339.000 and $917,000, respectively, which represent obligations

on in-process monthly or yearly contracts with customers and a portion attributable to the yet to be recognized initial 14-day trial

period collections.

Customer discounts and allowances on software revenues approximated $554,000 and $163,000, respectively, during the

three months ended March 31, 2021 and 2020.

the three months ended March 31, 2021 and 2020, the Company had the following disaggregated revenue:

Three Months Ended March 31,

customers, the Company offers an initial 14-day trial period which is billed at $ 1.95 ,

followed by a monthly subscription, or a yearly subscription to the Company’s software suite dependent on the subscriber’s

enrollment selection.

The Company has estimated that there is one product and one performance obligation that is delivered over time,

as the Company allows the subscriber to access the suite of services for the time period of the subscription purchased.

The Company allows

the customer to cancel at any point during the billing cycle, in which case the customers subscription will not be renewed for the following

month or year depending on the original subscription.

The Company records the revenue over the customers’ subscription period

for monthly and yearly subscribers or at the end of the initial 14-day service period for customers who purchased the initial subscription,

as the circumstances dictate.

The Company offers a discount for the monthly or yearly subscriptions being purchased, which is deducted

at the time of payment at the initiation of the contract term, therefore the Contract price is fixed and determinable at the contract

Monthly and annual subscriptions for the service are recorded net of the Company’s known discount rates.

30, 2021 and December 31, 2020, the Company has accrued contract liabilities, as deferred revenue, of approximately $ 1,382,000

and $ 917,000 ,

respectively, which represent obligations on in-process monthly or yearly contracts with customers and a portion attributable to the

yet to be recognized initial 14-day trial period collections.

Customer discounts and allowances on software revenues approximated $ 668,000

and $ 107,000

for the three months ended June 30, 2021 and

2020, respectively.

Customer discounts and allowances on software revenues approximated $ 1,222,000

and $ 270,000

for the six months ended June 30, 2021 and 2020,

respectively.

the three and six months ended June 30, 2021 and 2020, the Company had the following disaggregated revenue:

SCHEDULE OF DISAGGREGATED REVENUE

Three Months Ended June 30,

Six Months Ended June 30,

Product revenues by Brand for Conversion Labs PR:

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Total net revenue

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

The Company’s deferred

revenues relate to payments received for the in-process

monthly or yearly contracts with customers and a portion attributable to the yet to be recognized initial 14-day trial period collections.

SCHEDULE OF CONTRACT WITH CUSTOMER LIABILITY

Three Months Ended June 30,

Six Months Ended June 30,

Beginning of period

Revenue recognized

End of period

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

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

As of March 31, 2021 and December

As of both June 30, 2021 and December

31, 2020, the Company had an allowance for bad debt, attributable to the single agent relationship amounting to approximately $ 133,000 .

and $133,000, respectively.

As of March 31, 2021 and December 31, 2020, the reserve for sales returns and allowances was approximately

$356,000 and $349,000, respectively.

For all periods presented, as noted above, the sales returns and allowances were recorded

as contra assets in arriving at presented accounts receivable, net.

of March 31, 2021 and December 31, 2020, inventory primarily consisted of finished goods related to the Company’s brands included

As of June 30, 2021 and December 31, 2020, the reserve for sales returns and allowances was approximately $ 470,000 and $ 349,000 , respectively.

For all periods presented, as noted above, the sales returns and allowances were recorded as contra assets in arriving at presented accounts

receivable, net.

of June 30, 2021 and December 31, 2020, inventory primarily consisted of finished goods related to the Company’s brands included

in the product revenue section of the table above.

Inventory is maintained at the Company’s third-party warehouse location in Wyoming

and at the Amazon fulfillment center.

The Company also maintains inventory at a related-party warehouse in Pennsylvania.

is valued at the lower of cost or net realizable value with cost determined on a first-in, first-out (“FIFO”) basis.

compares the cost of inventory with the net realizable value and an allowance is made for writing down inventory to net realizable, if

As of March 31, 2021 and December 31, 2020, the Company recorded an inventory reserve in the amount of $57,481 and $57,481, respectively.

of March 31, 2021 and December 31, 2020, the Company’s inventory consisted of the following:

As of June 30, 2021, the Company did not record an inventory reserve.

As of December 31, 2020, the Company recorded an inventory

reserve in the amount of $ 57,481 .

of June 30, 2021 and December 31, 2020, the Company’s inventory consisted of the following:

SUMMARY OF INVENTORY

Finished Goods - Products

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These deposits typically range from

10% to 33% of the total purchased amount.

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

previously paid.

As of March 31, 2021 and December 31, 2020, the Company has approximately $1,300,243 and $816,765, respectively, of

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

The Company’s history of product deposits

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

the product deposit.

As of March 31, 2021 and December 31, 2020, the Company approximates its implicit purchase commitments to be $2.6

million and $1.6 million, respectively.

As of March 31, 2021 and December 31, 2020, the vast majority of these product deposits are

with one vendor that manufacturers the Company’s finished goods inventory for its Shapiro hair care product line.

of the total purchased amount.

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

As of June 30, 2021 and December 31, 2020, the Company has $ 1,391,764

and $ 816,765 ,

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

The Company’s history

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

cost in excess of the product deposit.

As of June 30, 2021 and December 31, 2020, the Company approximates its implicit purchase commitments

to be $ 2.6 million

and $ 1.6 million,

respectively.

As of June 30, 2021 and December 31, 2020, the vast majority of these product deposits are with one vendor that manufacturers

the Company’s finished goods inventory for its Shapiro hair care product line.

Software Costs

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Certain development costs not meeting the criteria

for capitalization, in accordance with Accounting Standards Codification (“ASC”) ASC 350-40 Internal-Use Software ,

are expensed as incurred.

As of March 31, 2021 and December 31, 2020, the Company capitalized $491,385 and $438,136, respectively, related

As of June 30, 2021 and December 31, 2020, the Company capitalized $ 1,390,483 and $ 438,136 , respectively, related

to internally developed software costs which are amortized over the useful life and included in development costs on our statement of

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lives using the straight-line method.

Costs incurred to renew or extend the term of recognized intangible assets are capitalized and

amortized over the useful life of the asset.

Both intangible assets are fully amortized as of June 30, 2021.

Costs incurred to renew or extend

the term of recognized intangible assets are capitalized and amortized over the useful life of the asset.

of Long-Lived Assets

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the year ended December 31, 2020, the Company received aggregate loan proceeds in the amount of approximately $ 249,000 under the Paycheck

Protection Program (“PPP”).

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

Protection Program (“PPP”).

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

The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible

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cause the Company to be ineligible for forgiveness of the loan, in whole or in part.

the three months ended March 31, 2021, the Company had a total of $184,914 of its PPP loans forgiven by the SBA (see Note 4).

As of March 31, 2021 and December 31, 2020, the PPP loan balance was $74,269 and $259,183, respectively, and is reflected on the

Company’s consolidated balance sheet as current liabilities, within notes payable, net.

the six months ended June 30, 2021, the Company had a total of $ 184,914

of its PPP loans forgiven by the SBA (see Note

As of June 30, 2021 and December 31, 2020, the PPP loan balance was $ 74,269

and $ 259,183 ,

respectively, and is reflected on the Company’s consolidated balance sheet as current liabilities, within notes payable, net.

Company files corporate federal, state and local tax returns.

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are limited liability companies and file separate tax returns with any tax liabilities or benefits passing through to its members.

Company records current and deferred taxes in accordance with Accounting Standards Codification (“ASC”) 740, “Accounting

for Income Taxes.”

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

Company records current and deferred taxes in accordance with Accounting Standards Codification (“ASC”) 740, “Accounting

for Income Taxes.” This ASC requires recognition of deferred tax assets and liabilities for temporary differences between tax basis

of assets and liabilities and the amounts at which they are carried in the financial statements, based upon the enacted rates in effect

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

The Company’s tax returns for all years

since December 31, 2017, remain open to audit by all related taxing authorities.

Company follows the provisions of ASC 718, “Share-Based Payment”.

Under this guidance compensation cost generally is recognized

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based upon historical exercise patterns and represents the period of time that options granted are expected to be outstanding.

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

period that approximates the expected life of the options.

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stock equivalents are excluded from dilutive earnings per share when the effects would be antidilutive.

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

In computing diluted EPS, basic EPS is adjusted

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The dilutive effect of call options, warrants and share-based payment

awards is calculated using the “treasury stock method,”

which assumes that the “proceeds”

from the exercise of

awards is calculated using the “treasury stock method,” which assumes that the “proceeds” from the exercise of

these instruments are used to purchase common shares at the average market price for the period.

The dilutive effect of traditional convertible

debt and preferred stock is calculated using the “if-converted method.”

Under the if-converted method, securities are assumed

debt and preferred stock is calculated using the “if-converted method.” Under the if-converted method, securities are assumed

to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the diluted EPS calculation

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

SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

Series B Preferred Stock

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Value of Financial Instruments

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

and the face amount of notes payable approximate fair value for all periods presented.

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any of our current manufacturers cease to perform adequately.

As of March 31, 2021 and December 31, 2020, we utilized two (2) suppliers

As of June 30, 2021 and December 31, 2020, we utilized two (2) suppliers

for fulfillment services, two (2) suppliers for manufacturing finished goods, one (1) supplier for packaging and bottles and one (1)

supplier for labeling.

For the three months ended March 31, 2021 and 2020, we purchased 100% of our finished goods from two (2) manufacturers.

For the three and six months ended June 30, 2021 and 2020, we purchased 100 % of our finished goods from two (2)

manufacturers.

Adopted Accounting Pronouncements

August 2020, the FASB issued ASU 2020-06, “

Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging –

Contracts in Entity's Own Equity (Subtopic 815-40);

Accounting for Convertible Instruments and Contracts in an Entity's

Own Equity ("ASU 2020-06")”, which addresses issues identified as a result of the complexities associated with applying

August 2020, the FASB issued ASU 2020-06, “ Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40);

Accounting for Convertible Instruments and Contracts in

an Entity’s Own Equity (“ASU 2020-06”)”, which addresses issues identified as a result of the complexities

associated with applying U.S.

GAAP for certain financial instruments with characteristics of liabilities and equity.

This update addresses, among other things,

the number of accounting models for convertible debt instruments and convertible preferred stock, targeted improvements to the disclosures

for convertible instruments and earnings-per-share ("EPS") guidance and amendments to the guidance for the derivatives scope

exception for contracts in an entity's own equity, as well as the related EPS guidance.

This update applies to all entities that issue

convertible instruments and/or contracts in an entity's own equity.

This guidance is effective for financial statements issued for fiscal

years beginning after December 15, 2021, and interim periods within those fiscal years.

Early adoption is permitted, but no earlier than

for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

FASB specified that an entity

should adopt the guidance as of the beginning of its annual fiscal year, or January 1, 2021, should the Company elect to early adopt.

This standard was adopted on January 1, 2021 and did not have a material impact on the Company’s financial position, results of

operations or cash flows.

This update addresses,

among other things, the number of accounting models for convertible debt instruments and convertible preferred stock, targeted improvements

to the disclosures for convertible instruments and earnings-per-share (“EPS”) guidance and amendments to the guidance for

the derivatives scope exception for contracts in an entity’s own equity, as well as the related EPS guidance.

This update applies

to all entities that issue convertible instruments and/or contracts in an entity’s own equity.

This guidance is effective for financial

statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

Early adoption is

permitted, but no earlier than for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

FASB specified that an entity should adopt the guidance as of the beginning of its annual fiscal year, or January 1, 2021, should the

Company elect to early adopt.

This standard was adopted on January 1, 2021 and did not have a material impact on the Company’s

financial position, results of operations or cash flows.

Recent Accounting Pronouncements

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3 – INTANGIBLE ASSETS

of March 31, 2021 and December 31, 2020, the Company has the following amounts related to intangible assets:

of June 30, 2021 and December 31, 2020, the Company has the following amounts related to intangible assets:

SCHEDULE OF INTANGIBLE ASSETS

Intangible Assets as at:

Amortizable Intangible Assets

Amortizable Intangible

Customer relationship asset

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accumulated amortization

( 1,206,840 )

Total net amortizable intangible assets

aggregate amortization expense of the Company’s intangible assets for the three months ended March 31, 2021 and 2020 was approximately

aggregate amortization expense of the Company’s intangible assets for the six months ended June 30, 2021 and 2020 was approximately

$ 339,840 and $ 167,806 , respectively.

Total amortization expense for the remainder of 2021 is $70,936.

Total amortization expense for 2022

through 2025 is $20,000 per year and $105,001, thereafter.

There is no intangible asset amortization expense to be recognized in future periods as of June

NOTE 4 – ACCOUNTS PAYABLE AND ACCRUED

As of June 30, 2021 and December

31, 2020, the Company has the following amounts related to accounts payable and accrued expenses:

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED

Accounts payable

Accrued compensation

Accrued selling and marketing expenses

Accrued legal and professional fees

Sales tax payable

Other accrued expenses

Total accounts payable and accrued expenses

5 – NOTES PAYABLE

Loan and Forgiveness

June 2020, the Company and its subsidiaries received three loans in the aggregate amount of approximately $259,183 (the “PPP

Loan”) under the Paycheck Protection Program legislation administered by the U.S.

June 2020, the Company and its subsidiaries received three loans in the aggregate amount of approximately $ 259,183 (the “PPP Loan”)

under the Paycheck Protection Program legislation administered by the U.S.

Small Business Administration.

These loans bear

interest at one percent per annum (1.0%) and mature five years from the date of the first disbursement.

The proceeds of the PPP Loan

must be used for payroll costs, lease payments on agreements entered into before February 15, 2020 and utility payments under lease agreements

entered into before February 1, 2020.

At least 60% of the proceeds must be used for payroll costs and certain other expenses and no more

than 40% may be used on non-payroll expenses.

Proceeds from the PPP Loan used by the Company for the approved expense categories may

be fully forgiven by the Small Business Administration if the Company satisfies applicable employee headcount and compensation requirements.

The Company currently believes that a majority of the PPP Loan proceeds will qualify for debt forgiveness;

These loans bear interest at

one percent per annum ( 1.0 %) and mature five years from the date of the first disbursement.

The proceeds of the PPP Loan must be used

for payroll costs, lease payments on agreements entered into before February 15, 2020 and utility payments under lease agreements entered

into before February 1, 2020.

At least 60% of the proceeds must be used for payroll costs and certain other expenses and no more than

40% may be used on non-payroll expenses.

Proceeds from the PPP Loan used by the Company for the approved expense categories may be fully

forgiven by the Small Business Administration if the Company satisfies applicable employee headcount and compensation requirements.

Company currently believes that a majority of the PPP Loan proceeds will qualify for debt forgiveness;

however, there can be no assurance

that the Company will qualify for forgiveness from the Small Business Administration until it occurs.

During the three months ended March

During the six months ended June

30, 2021, the Company had a total of $ 184,914 of its PPP loans forgiven by the SBA which is included in gain on debt forgiveness on the

accompanying unaudited condensed consolidated statement of operations.

As of March 31, 2021 and December 31, 2020, the PPP loan balance

was $74,269 and $259,183, respectively, and is reflected on the Company’s unaudited condensed consolidated balance sheet

as current liabilities, within notes payable, net.

As of June 30, 2021 and December 31, 2020, the PPP loan balance

was $ 74,269 and $ 259,183 , respectively, and is reflected on the Company’s unaudited condensed consolidated balance sheet as current

liabilities, within notes payable, net.

December 2020, the Company received proceeds of $ 500,000 under a short-term working capital loan with Chase Bank.

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Funding Agreement

March 17, 2021, the Company entered into a Merchant Funding Agreement with MO Technologies USA, LLC (“MO Tech”), which provides

cash advances to the Company based on the Company’s accounts receivable for a total cash advance of $600,000.

March 17, 2021, the Company entered into a Merchant Funding Agreement with MO Technologies USA, LLC (“MO Tech”), which provides

cash advances to the Company based on the Company’s accounts receivable for a total cash advance of $ 600,000 .

The terms of the

funding agreement include a service charge of 3.99 % on cash advances from MO Tech.

The total balance owed under this agreement was $600,000

as of March 31, 2021.

interest expense on notes payable, inclusive of amortization of debt discounts, amounted to $17,271 and $793,039 for the three months

ended March 31, 2021 and 2020, respectively.

STOCKHOLDERS’

The total balance owed under this agreement was repaid

in full in May 2021.

June 23, 2021, the Company entered into a Merchant Funding Agreement with MO Tech, which provides cash advances to the Company based

on the Company’s accounts receivable for a total cash advance of $ 350,000 .

The terms of the funding agreement include a service

charge of 3.99 % on cash advances from MO Tech.

The total balance owed under this agreement is $ 363,965 as of June 30, 2021 and is included

in notes payable, net.

interest expense on notes payable, inclusive of amortization of debt discounts, amounted to $ 229,351

and $ 228,875

for the three months ended June 30, 2021

and 2020, respectively.

Total interest expense on notes payable, inclusive of amortization of debt discounts, amounted to $ 368,814 and $ 1,021,914

for the six months ended June 30, 2021 and 2020,

respectively.

NOTE 6 – LONG-TERM DEBT

Securities Purchase Agreement

As noted above, on June

1, 2021, the Company entered into the Purchase Agreement with the Purchaser, pursuant to which the Company sold and issued:

(i) the Debenture

in the aggregate principal amount of $ 15.0 million and (ii) warrants to purchase up to an aggregate of 1,500,000 shares of the Company’s

common stock at an exercise price of $ 12.00 per share of which 500,000 warrants were issued to the Purchaser upon closing with the remaining

1,000,000 warrants only issued to the Purchaser in increments of 500,000 if the Debenture remains outstanding for twelve and twenty four

months, respectively, following the closing date of the Purchase Agreement.

The total fair value of the 500,000 warrants issued to the

Purchaser upon closing was $ 6,270,710 .

The total fair value was recorded to debt discount and was included as a reduction to long-term debt on the unaudited condensed consolidated balance sheet as of June 30, 2021.

The debt discount will be amortized over a twelve-month

Total amortization of debt discount was $ 522,559 for the three months ended June 30, 2021.

The Warrant has a term of three years .

The Aggregate Principal Amount of the Debenture, together with interest, is due and payable on

June 1, 2024.

The Debenture bears interest as follows:

(i) for the period beginning on June 1, 2021 and ending on the date that is six

(6) months thereafter (the “Initial Interest Rate Period”) shall be six percent (6%), (ii) for the period beginning the date

following the Initial Interest Rate Period and ending on the date that is three (3) months thereafter (the “Second Interest Rate

Period”), nine percent (9%), and (iii) for the period beginning the date following the Second Interest Rate Period and ending on

June 1, 2024, twelve percent (12%).

Until such time as the obligations shall have been paid in full, the Company shall apply thirty-five

percent (35%) of the gross proceeds received by the Company from At-The-Market offerings of its Common Stock to partial redemptions of

each Debenture on a pro rata basis.

The Company received gross proceeds of $ 15.0 million (net proceeds of $ 14.9 million) and intends

to use such proceeds for working capital and general corporate purposes.

Total interest expense on

long-term debt, inclusive of amortization of debt discounts, amounted to $ 672,559 and $ 0 for the three months ended June 30, 2021 and

2020, respectively.

Total interest expense on long-term debt, inclusive of amortization of debt discounts, amounted to $ 672,559 and $ 0

for the six months ended June 30, 2021 and 2020, respectively.

7 – STOCKHOLDERS’ EQUITY

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

1 unchanged sentence

remain undesignated.

October 9, 2020, the Company effectuated a 1-for-5 reverse stock split (the “Stock Split”) of the Company’s issued

and outstanding shares of common stock that became effective in the market on October 14, 2020 (see Note 1).

1 unchanged sentence

Split, the Company issued approximately 632 shares for rounding.

the three months ended March 31, 2021, the Company issued an aggregate of 608,905 shares

of common stock related to cashless exercise of options.

the three months ended March 31, 2021, the Company issued an aggregate of 30,000 shares of common stock related to the

exercise of warrants for gross proceeds of $24,000.

the six months ended June 30, 2021, the Company issued an aggregate of 873,047

shares of common stock related to cashless exercise

During the six months ended June 30, 2021, the Company issued an aggregate of 421,000

shares of common stock related to the exercise

of options for gross proceeds of $ 766,750.

the six months ended June 30, 2021, the Company issued an aggregate of 65,684 shares of common stock related to the exercise of warrants

for gross proceeds of $ 311,999 .

Interest Purchase Agreement

July 31, 2019 the Company entered into a certain membership interest purchase agreement (the “MIPA”) by and between the Company,

Conversion Labs PR, LLC (“CVLB PR”), a majority owned subsidiary, Taggart International Trust, an entity controlled by the

Company’s Chief Executive Officer, Mr.

Justin Schreiber, and American Nutra Tech LLC, a company controlled by its Chief Technology

and Operating Officer, Mr.

Stefan Galluppi (“Mr.

July 31, 2019 the Company entered into a certain membership interest purchase agreement (the “MIPA”) by and between the Company,

Conversion Labs PR, a majority owned subsidiary, Taggart International Trust, an entity controlled by the Company’s Chief Executive

Justin Schreiber, and American Nutra Tech LLC, a company controlled by its Chief Technology and Operating Officer, Mr.

Galluppi (Mr.

Schreiber, Taggart International Trust, Mr.

Galluppi and American Nutra Tech LLC

each a “Related Party”

and collectively, the “Related Parties”).

Galluppi and American Nutra Tech LLC each a “Related Party” and

collectively, the “Related Parties”).

Pursuant to the MIPA, the Company purchased 21.83333 %

21.83333% of the membership interests (the “Remaining Interests”) of CVLB PR from the Related Parties, bringing the Company’s

ownership of CVLB PR to 100%.

consideration for the Company’s purchase of the Remaining Interests from the Related Parties, Mr.

of the membership interests (the “Remaining Interests”) of Conversion Labs PR from the Related Parties, bringing the

Company’s ownership of Conversion Labs PR to 100 %.

consideration for the Company’s purchase of the Remaining Interests from the Related Parties, Mr.

Schreiber and Mr.

1 unchanged sentence

to cancel all potential issuances of restricted stock and or options related to their employment with the Company, in exchange for the

immediate issuance of 500,000 shares of the Company’s restricted common stock to each of Mr.

Schreiber and Mr.

Galluppi (the “Initial

Issuances”) (equal to 1,000,000 shares in the aggregate).

Galluppi (the “Initial

Issuances”) (equal to 1,000,000 shares in the aggregate).

Schreiber and Mr.

1 unchanged sentence

pursuant to certain milestones as follows:

(i) 500,000 shares of the Company’s Common Stock to each of Mr.

Schreiber and Mr.

(1,000,000 shares in the aggregate) on the business day following a consecutive ninety (90) day period, during which the Company’s

Common Stock shall have traded at an average price per share equal to or higher than $2.50 (the “First Milestone”), and (ii)

an additional 500,000 shares of the Company’s Common Stock to each of Mr.

(1,000,000 shares in the aggregate) on the business day following a consecutive ninety (90) day period, during which the Company’s

Common Stock shall have traded at an average price per share equal to or higher than $ 2.50 (the “First Milestone”), and (ii)

an additional 500,000 shares of the Company’s Common Stock to each of Mr.

Schreiber and Mr.

1 unchanged sentence

following a consecutive ninety (90) day period during which the Common Stock shall have traded at an average price per share equal to

or higher than $3.75 (the “Second Milestone”

and, together with the First Milestones, the “Milestones”).

achieved the Milestones, the Company, on December 9, 2020, issued an aggregate of 1,000,000 shares of the Company’s Common Stock

or higher than $ 3.75 (the “Second Milestone” and, together with the First Milestones, the “Milestones”).

achieved the Milestones, the Company, on December 9, 2020, issued an aggregate of 1,000,000 shares of the Company’s Common Stock

to each of Mr.

Schreiber and Mr.

Galluppi (the “Milestone Shares”) (2,000,000 shares in the aggregate).

The Milestone Shares

2 unchanged sentences

Galluppi signed on November 3, 2020.

Company recorded an aggregate expense of $18,060,000 reflected in general and administrative expenses during the three months

ended September 30, 2020 for the issuance of these 2,000,000 shares, of which 1,200,000 shares were issued during the three months ended

March 31, 2021.

Stock Transactions During the Three Months Ended March 31, 2021:

February 11, 2021, the Company consummated the closing of a private placement offering (the “February 2021 Offering”), whereby

pursuant to the securities purchase agreement (the “February 2021 Purchase Agreement”) entered into by the Company and certain

accredited investors on February 11, 2021 the investors purchased 608,696 shares of the Company’s common stock par value $0.01

per share at a purchase price of $23.00 per share for aggregate gross proceeds of approximately 14.0 million (the “Purchase Price”).

Company recorded an aggregate expense of $ 18,060,000

reflected in general and administrative expenses

during the three months ended September 30, 2020 for the issuance of these 2,000,000

shares, of which 1,200,000

shares were issued during the six months ended

June 30, 2020.

Stock Transactions During the Six Months Ended June 30, 2021:

February 11, 2021, the Company consummated the closing of the February 2021 Offering, whereby

pursuant to the February 2021 Purchase Agreement entered into by the Company and certain

accredited investors on February 11, 2021 the investors purchased 608,696 shares of the Company’s common stock par value $ 0.01

per share at a purchase price of $ 23.00 per share for aggregate gross proceeds of approximately $ 14.0 million.

Purchase Price was funded on the closing date and resulted in net proceeds to the Company of approximately $ 13.5 million after deducting

fees payable to the placement agent and other estimated offering expenses payable by the Company.

the three months ended March 31, 2021, the Company issued an aggregate of 1,203,750 shares

of common stock for services expensed in prior periods.

the six months ended June 30, 2021, the Company issued an aggregate of 1,233,750 shares of common stock for services expensed in prior

Noncontrolling

the three months ended March 31, 2021 and 2020, the net loss attributed to the non-controlling interest amounted to $270,503 and

the three months ended June 30, 2021 and 2020, the net loss attributed to the non-controlling interest amounted to $ 197,973

and $ 68,131 ,

respectively.

During the three months ended March 31, 2021 and 2020, the Company paid distributions to non-controlling shareholders

of $36,000 and $36,000, respectively.

During the three months ended June 30, 2021 and 2020, the Company paid distributions to non-controlling stockholders

of $ 36,000 and

respectively.

For the six months ended June 30, 2021 and 2020, the net loss attributed to the non-controlling interest amounted to $ 468,476

and $ 206,947 ,

respectively.

During the six months ended June 30, 2021 and 2020, the Company paid distributions to non-controlling stockholders

of $ 72,000 and

respectively.

Software Restructuring Transaction

January 22, 2021 (the “LSS Effective Date”), the Company consummated a transaction to restructure the ownership of LegalSimpli

Software, LLC, a Puerto Rico limited liability company (“LSS”), a majority-owned subsidiary of the Company (the “LSS

Restructuring”).

To effect the LSS Restructuring the Company’s wholly-owned subsidiary Conversion Labs PR LLC, a Puerto Rico

limited liability company (“CVLB PR”) entered into a series of membership interest exchange agreements, pursuant to which,

CVLB PR exchanged that certain a promissory note, dated May 8, 2019 with an outstanding balance of $375,823 (the “CVLBPR Note”),

issued by LSS in favor of CVLB PR, for 37,531 newly issued membership interests of LSS (the “Exchange”).

Upon consummation

of the Exchange the CVLBPR Note was extinguished.

January 22, 2021 (the “LSS Effective Date”), the Company consummated a transaction to restructure the ownership of LegalSimpli

Software, LLC, a Puerto Rico limited liability company (“LSS”), a majority-owned subsidiary of the Company (the “LSS

Restructuring”).

To effect the LSS Restructuring the Company’s wholly-owned subsidiary Conversion Labs PR, entered

into a series of membership interest exchange agreements, pursuant to which, Conversion Labs PR exchanged that certain promissory

note, dated May 8, 2019 with an outstanding balance of $ 375,823

(the “CVLBPR Note”), issued by LSS

in favor of Conversion Labs PR, for 37,531

newly issued membership interests of LSS (the

Upon consummation of the Exchange the CVLBPR Note was extinguished.

Concurrently,

in furtherance of the LSS Restructuring, CVLB PR entered into two Membership Interest Purchase Agreements (the “Founding Members

MIPAs”) with two founding members of LSS (the “Founding Members”) whereby CVLB PR purchased from the Founding Members

an aggregate of 2,183 membership interests of LSS for an aggregate purchase price of $225,000, paid in December 2020.

furtherance of the LSS Restructuring, CVLB PR entered into a Membership Interest Purchase Agreement with LSS, (the “CVLB PR MIPA”),

pursuant to which CVLB PR purchased 12,000 membership interests of LSS for an aggregate purchase price of $300,000.

The CVLB PR MIPA

provides that the transaction may be completed in three (3) tranches with a purchase price of $100,000 per tranche to be made at the

sole discretion of CVLB PR.

Payment for the first tranche of $100,000 was made upon execution of the CVLB PR MIPA in January 2021.

Payments for the second and third tranches are due on the 60-day anniversary and the 120-day anniversary of the LSS Effective Date

and are reflected in accounts payable and accrued expenses as of March 31, 2021.

the consummation of the LSS Restructuring, CVLB PR increased its ownership of LSS from 51% to approximately 85.58% on a fully diluted

LSS entered into an amendment to its operating agreement (the “LSS Operating Agreement Amendment”) to reflect the

change in ownership.

with the LSS Restructuring, CVLB PR entered into option agreements with Sean Fitzpatrick (the “Fitzpatrick Option Agreement”)

and Varun Pathak (the “Pathak Option Agreement”

together with Fitzpatrick Option Agreement the “Option Agreements”),

pursuant to which CVLB PR granted options to purchase membership interest units of LSS.

Upon vesting, the Fitzpatrick Options and the

Pathak Options provide for the potential re-purchase of up to an additional 13.25% of LSS by Fitzpatrick and Pathak in the aggregate

with CVLB PR ownership ratably reduced to approximately 72.98%.

Fitzpatrick Option Agreement grants Sean Fitzpatrick the option to purchase 10,300 membership interest units of LSS for an exercise

price of $1.00 per membership interest unit.

The Fitzpatrick Options vest in accordance with the following (i) 3,434 membership

interests upon LSS achieving $2,500,000 of gross sales in any fiscal quarter (ii) 3,434 membership interests upon LSS achieving

$4,000,000 of gross sales in any fiscal quarter and (iii) 3,434 membership interests upon LSS achieving $8,000,000 of gross sales

with a ten percent (10%) net profit margin in any fiscal quarter.

Pathak Options shall vest in accordance with the following (i) 700 membership interests upon LSS achieving $2,500,000 of gross

sales in any fiscal quarter (ii) 700 membership interests upon LSS achieving $4,000,000 of gross sales in any fiscal quarter and

(iii) 700 membership interests upon LSS achieving $8,000,000 of gross sales with a ten percent (10%) net profit margin in any

fiscal quarter.

first two tranches of performance options granted to Sean Fitzpatrick and Varun Pathak vested immediately after the consummation

of the restructuring transaction and therefore have been recorded as part of the acquisition through equity.

The third tranche

is not deemed probable and therefore has not been recognized to date.

Equity Incentive Plan (the “2020 Plan”)

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

in furtherance of the LSS Restructuring, Conversion Labs PR entered into two Membership Interest Purchase Agreements (the “Founding

Members MIPAs”) with two founding members of LSS (the “Founding Members”) whereby Conversion Labs PR purchased

from the Founding Members an aggregate of 2,183

membership interests of LSS for an aggregate

purchase price of $ 225,000 ,

paid in December 2020.

furtherance of the LSS Restructuring, Conversion Labs PR entered into a Membership Interest Purchase Agreement with LSS, (the

“CVLB PR MIPA”), pursuant to which Conversion Labs PR purchased 12,000

membership interests of LSS for an aggregate

purchase price of $ 300,000 .

CVLB PR MIPA provides that the transaction may be completed in three (3) tranches with a purchase price of $100,000 per tranche to be

made at the sole discretion of Conversion Labs PR.

Payment for the first tranche of $100,000 was made upon execution of the CVLB

PR MIPA in January 2021.

Payments for the second and third tranches were made on the 60-day anniversary and the 120-day anniversary of

the LSS Effective Date.

the consummation of the LSS Restructuring, Conversion Labs PR increased its ownership of LSS from 51% to approximately 85.58%

on a fully diluted basis.

LSS entered into an amendment to its operating agreement (the “LSS Operating Agreement Amendment”)

to reflect the change in ownership.

with the LSS Restructuring, Conversion Labs PR entered into option agreements with Sean Fitzpatrick (the “Fitzpatrick Option

Agreement”) and Varun Pathak (the “Pathak Option Agreement” together with Fitzpatrick Option Agreement the “Option

Agreements”), pursuant to which Conversion Labs PR granted options to purchase membership interest units of LSS.

Upon vesting,

the Fitzpatrick Options and the Pathak Options provide for the potential re-purchase of up to an additional 13.25% of LSS by Fitzpatrick

and Pathak in the aggregate with Conversion Labs PR ownership ratably reduced to approximately 72.98% .

Fitzpatrick Option Agreement grants Sean Fitzpatrick the option to purchase 10,300 membership interest units of LSS for an exercise price

of $ 1.00 per membership interest unit.

The Fitzpatrick Options vest in accordance with the following (i) 3,434 membership interests upon

LSS achieving $2,500,000 of gross sales in any fiscal quarter (ii) 3,434 membership interests upon LSS achieving $4,000,000 of gross

sales in any fiscal quarter and (iii) 3,434 membership interests upon LSS achieving $8,000,000 of gross sales with a ten percent (10%)

net profit margin in any fiscal quarter.

Pathak Options shall vest in accordance with the following (i) 700 membership interests upon LSS achieving $2,500,000 of gross sales

in any fiscal quarter (ii) 700 membership interests upon LSS achieving $4,000,000 of gross sales in any fiscal quarter and (iii) 700

membership interests upon LSS achieving $8,000,000 of gross sales with a ten percent (10%) net profit margin in any fiscal quarter.

first two tranches of performance options granted to Sean Fitzpatrick and Varun Pathak vested immediately after the consummation of the

restructuring transaction and therefore have been recorded as part of the acquisition through equity.

The third tranche is not deemed

probable and therefore has not been recognized to date.

Equity Incentive Plan (the “2020 Plan”)

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

Approval of the 2020

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

the Securities and Exchange Commission on December 7, 2020.

The 2020 Plan is administered by the Compensation Committee and initially

provided for the issuance of up to 1,500,000 shares of Common Stock.

The number of shares of Common Stock available for issuance under

the Plan automatically increases by 150,000 shares of Common Stock on January 1st of each year, for a period of not more than ten years,

commencing on January 1, 2021.

As of January 1, 2021, Plan provided for the issuance of up to 1,650,000 shares of Common Stock.

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

stock, and restricted stock units.

The 2020 Plan will be administered by the Compensation Committee of the Company’s Board of Directors.

affirmative vote of the holders of shares of common stock representing a majority of the shares of Common Stock cast at the Annual Meeting

of Stockholders to be held June 24, 2021 is required for the approval of the proposed amendment to the 2020 Plan to increase the maximum

number of shares of the Company’s common stock available for issuance under the 2020 Plan by 1,500,000 shares.

forms of award agreements to be used in connection with awards made under the 2020 Plan to the Company’s executive officers and

provided for the issuance of up to 1,500,000

shares of Common Stock.

The number of shares

of Common Stock available for issuance under the Plan automatically increases by 150,000

shares of Common Stock on January 1st of each

year, for a period of not more than ten years, commencing on January 1, 2021.

As of January 1, 2021, the 2020 Plan provided for

the issuance of up to 1,650,000

shares of Common Stock.

Awards under the 2020

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

restricted stock units.

The 2020 Plan will be administered by the Compensation Committee of the Company’s Board of Directors.

June 24, 2021, at the Annual Meeting of Stockholders, the stockholders of the Company approved an amendment to the 2020

Plan to increase the maximum number of shares of the Company’s common stock available for issuance under the 2020 Plan by 1,500,000

As of June 30, 2021, total authorization under the 2020 Plan was 3,150,000 shares.

forms of award agreements to be used in connection with awards made under the 2020 Plan to the Company’s executive officers and

non-employee directors are:

3 unchanged sentences

the Company had granted service-based stock options and performance-based stock options separate from this plan.

January 20, 2020, the Company approved the transition of its Chief Acquisition Officer, to the role of President of LegalSimpli (“President”).

In connection with this change in role, the Company amended that certain services agreement entered into on July 23, 2018, by and between

the Company and its President, to (i) decrease the number of options to purchase the Company’s common stock previously granted

from 1,000,000 options to 500,000 options, 130,000 of which are fully vested as of the effective date and (ii) amend the vesting schedule

1 unchanged sentence

As a result of amendment, the Company cancelled 500,000 service-based options with an exercise price of $ 1.50 .

the three months ended March 31, 2021, the Company issued an aggregate of 905,000 stock options to employees and advisory board members.

the six months ended June 30, 2021, the Company issued an aggregate of 1,368,000 stock options to employees and advisory board members.

These stock options have a contractual term of 10 years and vest in increments which fully vest the options over a two-to-three-year

period, dependent on the specific agreements’

following is a summary of outstanding options activity under our 2020 Plan for the three months ended March 31, 2021:

period, dependent on the specific agreements’ terms.

following is a summary of outstanding options activity under our 2020 Plan for the six months ended June 30, 2021:

SCHEDULE OF OPTION ACTIVITY

Number of Shares

2 unchanged sentences

Balance, December 31, 2020

$ 5.80 –

Cancelled/Forfeited/Expired

Balance at March 31, 2021

$ 5.80 –

Balance at June 30, 2021

Exercisable at December 31, 2020

$ 5.80 –

Exercisable at March 31, 2021

$ 5.80 –

total fair value of the options granted was approximately $7,975,592, which was determined by the Black-Scholes Pricing Model with the

following assumptions:

dividend yield of 0%, term of 10 years, volatility of 179.17 –

180.24%, and risk-free rate of 0.66%–1.28%.

Total compensation expense under the 2020 Plan options above was approximately $1,240,117 and $0 for the three months

ended March 31, 2021 and 2020, respectively, with unamortized expense remaining of approximately $12,678,337 as of March 31, 2021.

Exercisable at June 30, 2021

total fair value of the options granted was approximately $ 16,502,680 ,

which was determined by the Black-Scholes Pricing Model with the following assumptions:

dividend yield of 0 %,

expected term of 6.5

years, volatility of 169.00 %

and risk-free rate of 0.66 %– 1.26 %.

Total compensation expense under the 2020 Plan options above was approximately $ 1,200,387

for the three months ended June 30, 2021 and

2020, respectively, with unamortized expense remaining of approximately $ 13,848,417

as of June 30, 2021.

Total compensation expense

under the 2020 Plan options above was approximately $ 2,434,254

for the six months ended June 30, 2021 and 2020,

respectively.

Stock Units (RSU)

following is a summary of outstanding and exercisable RSU activity under our 2020 Plan during the three months ended March 31, 2021:

RSU Outstanding Number of Shares

Exercise Price per Share

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price per Share

following is a summary of outstanding RSU activity under our 2020 Plan during the six months ended June 30, 2021:

SCHEDULE OF WARRANT AND RESTRICTED STOCK OUTSTANDING AND EXERCISABLE

Outstanding Number of Shares

Balance at December 31, 2020

$ 6.03 –

Exercised/Expired

Balance at March 31, 2021

$ 6.03 –

Exercisable December 31, 2020

$ 6.03 –

Exercisable March 31, 2021

$ 6.03 –

total fair value of the RSUs granted was approximately $681,025 which was determined using the fair value of the quoted market

price on the date of grant.

Total compensation expense under the above 2020 Plan RSUs above was approximately $132,763 and $0

for the three months ended March 31, 2021 and 2020, respectively, with unamortized expense remaining of approximately $548,262

as of March 31, 2021.

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

months ended March 31, 2021:

Options Outstanding Number of Shares

Exercise Price per Share

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price per Share

Balance, December 31, 2020

$ 0.80 - 7.50

Cancelled/Forfeited/Expired

Balance at March 31, 2021

$ 0.80 - 7.50

Exercisable December 31, 2020

$ 1.00 –

Exercisable at March 31, 2021

$ 1.00 –

compensation expense under the above service-based option plan was approximately $347,922 and $95,900 for the three months ended March

31, 2021 and 2020, respectively, with unamortized expense remaining of approximately $3,291,992 as of March 31, 2021.

following is a summary of outstanding performance-based options activity for the three months ended March 31, 2021:

Options Outstanding Number of Shares

Exercise Price per Share

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price per Share

Balance at December 31, 2020

$ 1.25 –

Balance at June 30, 2021

total fair value of the 356,250 RSUs granted was approximately $ 4,496,950

which was determined using the fair value of

the quoted market price on the date of grant.

Total compensation expense under the above 2020 Plan RSUs above was approximately $ 357,163

for both the three and six months ended June

30, 2021 and 2020, respectively, with unamortized expense remaining of approximately $ 4,139,787

as of June 30, 2021.

During the six months

ended June 30, 2021, 26,875

RSUs vested, of which 20,000

RSUs were issued.

Company granted 300,000 RSUs

outside of the 2020 Plan during the six months ended June 30, 2021.

The total fair value of these RSUs was approximately $ 4,212,000 and

no compensation expense was recorded as the performance terms were not met.

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

months ended June 30, 2021:

SCHEDULE OF OPTION ACTIVITY

Outstanding Number of Shares

Price per Share

Average Remaining Contractual Life

Average Exercise Price per Share

December 31, 2020

Cancelled/Forfeited/Expired

at June 30, 2021

December 31, 2020

at June 30, 2021

compensation expense under the above service-based option plan was approximately $ 470,896 and $ 255,153 for the three months ended June

30, 2021 and 2020, respectively, with unamortized expense remaining of approximately $ 5,234,815 as of June 30, 2021.

Total compensation

expense under the above service-based option plan was approximately $ 819,269 and $ 260,677 for the six months ended June 30, 2021 and

2020, respectively.

following is a summary of outstanding performance-based options activity for the six months ended June 30, 2021:

SCHEDULE OF OPTION ACTIVITY

Outstanding Number of Shares

Price per Share

Average Remaining Contractual Life

Average Exercise Price per Share

at December 31, 2020

Cancelled/Expired

Balance at March 31, 2021

$ 1.25 –

Exercisable December 31, 2020

$ 1.25 –

Exercisable at March 31, 2021

$ 1.25 –

compensation expense was recognized on the performance-based options above for the three months ended March 31, 2021 and 2020, as the

performance terms have not been met or are not probable.

All performance options exercised this quarter had been previously expensed.

following is a summary of outstanding and exercisable warrants activity during the three months ended March 31, 2021:

Warrants Outstanding Number of Shares

Exercise Price per Share

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price per Share

Balance at December 31, 2020

$ 1.40 –

at June 30, 2021

December 31, 2020

at June 30, 2021

compensation expense was recognized on the performance-based

options above for the three and six months ended June 30, 2021 and 2020, as the performance terms have not been met or are not probable.

All performance options exercised during the six months ended June 30, 2021 had been previously expensed.

following is a summary of outstanding and exercisable warrants activity during the six months ended June 30, 2021:

SCHEDULE OF WARRANT AND RESTRICTED STOCK OUTSTANDING AND EXERCISABLE

Outstanding Number of Shares

Price per Share

Average Remaining Contractual Life

Average Exercise Price per Share

at December 31, 2020

Exercised/Expired

Balance at March 31, 2021

$ 1.40 –

Exercisable December 31, 2020

$ 1.40 –

Exercisable March 31, 2021

$ 1.40 –

compensation expense on the above warrants for services was approximately $604,974 and $0 for

the three months ended March 31, 2021 and 2020.

at June 30, 2021

December 31, 2020

June 30, 2021

compensation expense on the above warrants for services was approximately $ 604,974

and $ 147,424

for the three months ended June 30, 2021 and

2020, respectively, and $ 1,209,948

and $ 159,411

for the six months ended June 30, 2021 and 2020,

respectively.

total stock-based compensation expense related to common stock issued for services, service-based stock options, performance-based stock

options, warrants and RSUs amounted to approximately $2,325,775 and $95,900 for the three months ended March 31, 2021 and 2020,

options, warrants and RSUs amounted to approximately $ 2,547,300

and $ 439,000

for the three months ended June 30, 2021 and

2020, respectively, and approximately $ 4,873,075

and $ 535,000

for the six months ended June 30, 2021 and 2020,

respectively.

1 unchanged sentence

8 - COMMITMENTS AND CONTINGENCIES

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

relating to Pilaris’

PilarisMax shampoo formulation and conditioner.

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

relating to Pilaris’ PilarisMax shampoo formulation and conditioner.

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

2 unchanged sentences

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

Net Income = total income –

cost of goods

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

As of March 31, 2021 and

December 31, 2020, $0 and $0, respectively was included in accounts payable and accrued expenses in regard to this agreement, as no sales

2018, the Company entered into a license agreement (the “Alphabet Agreement”) with M.ALPHABET, LLC (“Alphabet”),

Net Income = total income – cost of goods

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

As of both June 30, 2021

and December 31, 2020, no amount was included in accounts payable and accrued expenses in regard to this agreement, as no sales occurred.

2018, the Company entered into a license agreement (the “Alphabet Agreement”) with M.ALPHABET, LLC (“Alphabet”),

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

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

Pursuant to the

2 unchanged sentences

in the Product Line into one or more products manufactured, sold, and/or distributed by Alphabet for the treatment of purpura, bruising,

post-procedural bruising and traumatic bruising and for all other fields of use or purposes (the “Licensed Product(s)”),

and to make, have made, advertise, promote, market, sell, import, export, use, offer to sell and distribute the Licensed Product(s) throughout

the world with the exception of China, Hong Kong, Japan, and Australia (the “License”).

The Company shall pay Alphabet a

1 unchanged sentence

No amounts were earned

or owed as of March 31, 2021.

execution of the Alphabet Agreement, Alphabet was granted a 10-year stock option to purchase 20,000 shares of the Company’s common

stock at an exercise price of $2.50.

Further, if Licensed Products have gross receipts of $7,500,000 in any calendar year, the Company

will grant Alphabet an option to purchase 20,000 shares of the Company’s common stock at an exercise price of $2.50;

(ii) if Licensed

Products have gross receipts of $10,000,000 in any calendar year, the Company will grant Alphabet an additional option to purchase 20,000

shares of the Company’s common stock at an exercise price of $2.50 and (iii) If Licensed Products have gross receipts of $20,000,000

in any calendar year, the Company will grant Alphabet an option to purchase 40,000 shares of the Company’s common stock at an exercise

price of $3.75.

The likelihood of meeting these performance goals for the licensed products are remote and, therefore, the Company has

not recognized any compensation.

of the Company’s vendors require product deposits when a purchase order is placed for goods or fulfillment services related to

or owed as of June 30, 2021.

execution of the Alphabet Agreement, Alphabet was granted a 10 -year

stock option to purchase 20,000

shares of the Company’s common stock at

an exercise price of $ 2.50 .

Further, if Licensed Products have gross receipts of $ 7,500,000

in any calendar year, the Company will grant

Alphabet an option to purchase 20,000

shares of the Company’s common stock at

an exercise price of $ 2.50 ;

(ii) if Licensed Products have gross receipts of $ 10,000,000

in any calendar year, the Company will grant

Alphabet an additional option to purchase 20,000

shares of the Company’s common stock at

an exercise price of $ 2.50

and (iii) if Licensed Products have gross

receipts of $ 20,000,000

in any calendar year, the Company will grant

Alphabet an option to purchase 40,000

shares of the Company’s common stock at

an exercise price of $ 3.75 .

The likelihood of meeting these performance goals for the licensed products are remote and, therefore, the Company has not recognized

any compensation.

of the Company’s vendors require product deposits when a purchase order is placed for goods or fulfillment services related to

inventory requirements.

The Company’s history of product deposits with its inventory vendors, creates an implicit purchase commitment

The Company’s history of product deposits with its inventory vendors creates an implicit purchase commitment

equaling the total expected product acceptance cost in excess of the product deposit.

As of March 31, 2021 and December 31, 2020, the

Company approximates its implicit purchase commitments to be $2.6 million and $1.6 million, respectively.

As of June 30, 2021 and December 31, 2020, the

Company approximates its implicit purchase commitments to be $ 2.6

million and $ 1.6

million, respectively.

the normal course of business operations, the Company may become involved in various legal matters.

As of March 31, 2021, other than

as set forth below, the Company’s management does not believe that there are any potential legal matters that could have an adverse

effect on the Company’s consolidated financial position.

As of June 30, 2021, other than as

set forth below, the Company’s management does not believe that there are any potential legal matters that could have an adverse

effect on the Company’s consolidated financial position.

April 16, 2021, a purported securities class action lawsuit, captioned David L.

was filed in the United States District Court for the Southern District of New York against the Company, Justin Schreiber (LifeMD’s

Chairman of the Board and Chief Executive Officer), Juan Pinero Dagnery (LifeMD’s former Chief Financial Officer), and Marc Benathen

(LifeMD’s current Chief Financial Officer) (the “Owens, Sr.

Lawsuit”).

was filed in the United States District Court for the Southern District of New York against the Company, Justin Schreiber (LifeMD’s

Chairman of the Board and Chief Executive Officer), Juan Pinero Dagnery (LifeMD’s former Chief Financial Officer), and Marc Benathen

(LifeMD’s current Chief Financial Officer) (the “Owens, Sr.

The Owens, Sr.

1 unchanged sentence

things, that the defendants made false or misleading statements about, and allegedly failed to disclose material adverse facts concerning,

the Company’s business, operations, and prospects, and asserts claims under Sections 10(b) and 20(a) of the Securities Exchange

Act of 1934 and Rule 10b-5 promulgated thereunder.

The Complaint does not quantify damages but seeks to recover damages on behalf of

investors who purchased or otherwise acquired LifeMD’s common stock between January 19, 2021 and April 13, 2021.

On May 18, 2021,

the class action lawsuit filed against the Company was voluntarily dismissed.

on May 5, 2021, a second purported securities class action lawsuit, captioned Cho v.

was filed in the United States District Court for the Southern District of New York against the same aforementioned parties (the “Cho

Lawsuit”).

was filed in the United States District Court for the Southern District of New York against the same aforementioned parties (the “Cho

The Cho Complaint makes the same claims as found in the Owens, Sr.

Lawsuit, and, similarly, does not quantify damages

and seeks to recover damages on behalf of investors who purchased or otherwise acquired LifeMD’s common stock during the same,

aforementioned time period between January 19, 2021 and April 13, 2021.

On May 19, 2021, the class action lawsuit filed against the Company

was voluntarily dismissed.

June 7, 2021, a purported Americans with Disabilities class action lawsuit, captioned Sosa v.

was filed in the United States District Court for the Southern District of New York.

The Sosa Complaint alleges, inter alia, that the

defendants’ www.rexmd.com has barriers making it inaccessible to the visually impaired needing the assistance of screen-reading

software, and therefore, allegedly violates:

(i) the Americans with Disabilities Act, 42 U.S.C.

§ 12181 et seq.;

(ii) the New York

State Human Rights Law (NYSHRL), N.Y.

Law §§ 292 and 296;

and (iii) the New York City Human Rights Law (NYCHRL), §§

8-102 and 8-107.

The Complaint does not quantify damages but seeks to recover compensatory damages, civil penalties, and attorneys’

fees and costs under the NYSHRL and NYCHRL, as well as punitive damages under the NYCHRL.

The Complaint also seeks preliminary and permanent

injunctive relief.

The Company’s response to the Complaint is currently due on September 6, 2021.

9 – RELATED PARTY TRANSACTIONS

1 unchanged sentence

Labs PR utilizes office space in Puerto Rico, which is subleased from the President and CEO, and incurs expense of approximately $ 7,500

a month for this office space for which the Company and the CEO do not have a written lease agreement.

Payments to JLS Ventures, an entity

wholly owned by our CEO, for rent on Conversion Labs PR’s Puerto Rico office space amounted to $22,500 and $15,000 for the three

months ended March 31, 2021 and 2020, respectively.

Labs PR utilizes BV Global Fulfillment, owned by a related person of the Company’s CEO to warehouse a portion of the Company’s

a month for this office space for which the Company

and the CEO do not have a written lease agreement.

Payments to JLS Ventures, an entity wholly owned by our CEO, for rent on Conversion

Labs PR’s Puerto Rico office space amounted to $ 22,500

for the three months ended June 30, 2021 and

2020, respectively, and $ 45,000 and $ 30,000 for the six months ended June 30, 2021 and 2020, respectively.

Labs PR utilizes BV Global Fulfillment, owned by a related person of the Company’s CEO to warehouse a portion of the Company’s

finished goods inventory and for fulfillment services.

The Company pays a monthly fee of $13,000 to $16,000 for fulfillment services

and reimburses BV Global Fulfillment for their direct costs associated with shipping the Company’s products.

The Company reimbursed

BV Global Fulfillment a total of $99,082 and $79,192 during the three months ended March 31, 2021 and 2020, respectively.

31, 2021 and December 31, 2020, the Company owed BV Global Fulfillment $0 and $58,943, respectively, which are included in

accounts payable and accrued liabilities on the accompanying consolidated balance sheets.

The Company pays a monthly fee of $ 13,000

for fulfillment services and reimburses BV Global

Fulfillment for their direct costs associated with shipping the Company’s products.

The Company reimbursed BV Global Fulfillment

a total of $ 418,526

and $ 316,804

during the six months ended June 30, 2021 and

2020, respectively.

As of June 30, 2021 and December 31, 2020, the Company owed BV Global Fulfillment $ 90,047

and $ 58,943 ,

respectively, which are included in accounts payable and accrued liabilities on the accompanying unaudited condensed consolidated

balance sheets.

Agreement with Chief Operating Officer

November 27, 2020 , the Company entered into a consulting

agreement (the “Consulting Agreement”) with JDM Investments, LLC (“JDM”), an entity solely owned by our COO,

whereby JDM will provide consulting services in support of the Company’s day-to-day call center operations.

agreement (the “Consulting Agreement”) with JDM Investments, LLC (“JDM”), an entity solely owned by our COO,

whereby JDM will provide consulting services in support of the Company’s day-to-day call center operations.

The Consulting Agreement

3 unchanged sentences

the Company and JDM.

The Company paid a total of $51,000 under this agreement, with no bonus earned or accrued, for the three months

ended March 31, 2021.

The Company paid a total of $ 102,000 under this agreement, with no bonus earned or accrued, for the six months ended

June 30, 2021.

June 15, 2021, the Company and Brad Roberts, our COO, restructured Mr.

Roberts’s compensation arrangements.

The Company and JDM

mutually terminated Mr.

Roberts’s Consulting Agreement and Mr.

Roberts waived all consulting fees due for the remainder of the

term of the Consulting Agreement.

In place of the Consulting Agreement, Mr.

Roberts and the Company amended his Amended and Restated

Employment Agreement dated December 21, 2020 (the “Amendment”) to increase his base salary to $ 475,000

per calendar year and to update the terms of

his annual bonus, providing for a target amount of $ 200,000 ,

with any actual bonus to be awarded in the sole discretion of the Board of Directors.

On June 29, 2021, the Company and Mr.

entered into a Second Amendment (the “Second Amendment”) to the Amended and Restated Employment Agreement dated December

21, 2020 to provide that Mr.

Roberts is eligible to receive up to 300,000 restricted stock units of the Company’s common stock,

par value $ 0.01 (the “RSUs”), which will vest subject to the Company’s Telemedicine Brands (as defined in the Second

Amendment) achieving certain revenue milestones.

The RSUs will also vest upon a Change of Control (as defined in the Second Amendment).

of Chief Financial Officer

February 4, 2021, the Board appointed Mr.

Marc Benathen as the Company’s Chief Financial Officer.

In connection with the Appointment,

2 unchanged sentences

Benathen to enter into the Employment Agreement, Mr.

Benathen was granted a signing bonus of 15,000 restricted stock units of the Company’s common stock (the “RSUs”).

RSU’s vest in accordance with the following:

(i) 3,750 of the RSUs vesting on the Effective Date (ii) 3,750 RSUs on February

4, 2022 (iii) 3,750 RSU’s on February 4, 2023 and (iv) 3,750 RSU’s on February 4, 2024.

In addition to the RSU’s, Mr.

Benathen received stock options to purchase up to 200,000 shares of the Company’s common stock.

The Stock Options shall vest in

equal monthly tranches, based on the passage of time, over the 36 months.

March 18, 2021, we issued 3,750 common shares under this Employment Agreement.

Benathen was granted a signing bonus of 15,000

restricted stock units of the Company’s

common stock (the “RSUs”).

The RSU’s vest in accordance with the following:

of the RSUs vesting on February 4, 2021

RSUs on February

4, 2022 (iii) 3,750

RSU’s on February

4, 2023 and (iv) 3,750

RSU’s on February

In addition to the RSU’s, Mr.

Benathen received stock options to purchase up to 200,000

shares of the Company’s common stock.

Stock Options shall vest in equal monthly tranches, based on the passage of time, over the 36

On March 18, 2021, we issued 3,750

common shares under this Employment Agreement.

June 10, 2021, the Board appointed Mr.

Alex Mironov as the Company’s President.

In connection with the appointment, Mr.

Mironov entered into an Employment Agreement with the Company.

To induce Mr.

Mironov to enter into the Employment Agreement, Mr.

was granted an equity award with a grant date of June 10, 2021 outside of the Company’s 2020 Equity and Incentive Plan.

Mironov received options to purchase an aggregate of 200,000

shares of LifeMD, Inc.

common stock.

have an exercise price of $ 14.04 ,

which is equal to the closing price of LifeMD.

common stock on June 10, 2021.

options will vest ratably, with 1/36th of the shares fully vested on June 10, 2021, and the remainder of the shares vesting ratably each

month over a 35-month period that commences on the date of grant, subject to, the employee’s continued employment with LifeMD,

on such vesting dates.

The options have a

Additionally, Mr.

Mironov received a performance-based

grant of up to 300,000

restricted shares of LifeMD, Inc.

common stock,

subject to, the employee’s sourcing, and material contribution to the consummation of pharmaceutical deals, as set forth in more

detail in the employment agreement.

10 – SUBSEQUENT EVENTS

Company has evaluated subsequent events through the date these consolidated financial statements were issued and has identified the following:

Option Exercise

April 2021, the Company issued an aggregate of approximately 264,142 shares of common stock pursuant to the cashless

exercise of an outstanding stock options.

of Chief Revenue Officer

April 2, 2021, Mr.

Juan Manuel Piñeiro Dagnery submitted to the board of directors of the Company his resignation from his position,

effective immediately.

Dagnery did not resign as a result of any disagreement with the Company on any matter relating to the Company’s

operations, policies or practices.

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

Regarding Forward-Looking Statements

following discussion should be read in conjunction with the financial statements and related notes contained elsewhere in this Quarterly

Report on Form 10-Q.

Certain statements made in this discussion are “forward-looking statements”

within the meaning of 27A

of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934,

These statements are based upon beliefs of, and information currently available to, the Company’s management as well

as estimates and assumptions made by the Company’s management.

Readers are cautioned not to place undue reliance on these forward-looking

statements, which are only predictions and speak only as of the date hereof.

When used herein, the words “anticipate,”

“believe,”

“estimate,”

“expect,”

“forecast,”

“future,”

“intend,”

“plan,”

“predict,”

“project,”

“target,”

“potential,”

“will,”

“would,”

“could,”

“should,”

“continue”

or the negative of these terms and similar expressions as they relate

to the Company or the Company’s management identify forward-looking statements.

Such statements reflect the current view of the

Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating

to the Company’s business, industry, and the Company’s operations and results of operations.

Should one or more of these

risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from

those anticipated, believed, estimated, expected, intended, or planned.

the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future

results, levels of activity, performance, or achievements.

Except as required by applicable law, including the securities laws of the

United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States

(“GAAP”).

These accounting principles require us to make certain estimates, judgments and assumptions.

We believe that the

estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these

estimates, judgments and assumptions are made.

These estimates, judgments and assumptions can affect the reported amounts of assets and

liabilities as of the date of the condensed consolidated financial statements as well as the reported amounts of revenues and expenses

during the periods presented.

Our condensed consolidated financial statements would be affected to the extent there are material differences

between these estimates and actual results.

The following discussion should be read in conjunction with our financial statements and

notes thereto appearing elsewhere in this report.

forward-looking statements made in this report are based only on events or information as of the date on which the statements are made

in this report.

Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether

as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence

of unanticipated events.

You should read this report and the documents we refer to in this report and have filed as exhibits to this

report completely and with the understanding that our actual future results may be materially different from what we expect.

include, by way of example and without limitation:

ability to successfully commercialize our products on a large enough scale to generate profitable operations;

ability to maintain and develop relationships with customers and suppliers;

ability to successfully integrate acquired businesses or new brands;

impact of competitive products and pricing;

constraints or difficulties;

economic and business conditions;

interruptions resulting from geo-political actions, including war, and terrorism or disease outbreaks (such as COVID-19);

ability to continue as a going concern;

need to raise additional funds in the future;

ability to successfully recruit and retain qualified personnel;

ability to successfully implement our business plan;

ability to successfully acquire, develop or commercialize new products and equipment;

able to scale our telehealth platform built to improve the experience and medical care provided to patients across the country;

property claims brought by third parties;

impact of any industry regulation.

we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels

of activity, or performance.

Readers are urged to carefully review and consider the various disclosures made by us in this report and

in our other reports filed with the Securities and Exchange Commission (“SEC”).

We undertake no obligation to update or revise

forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating

results over time except as required by law.

We believe that our assumptions are based upon reasonable data derived from and known about

our business and operations.

No assurances are made that actual results of operations or the results of our future activities will not

differ materially from our assumptions.

used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms “Company,”

“we,”

“us,”

and “our”

refer to LifeMD, Inc.

(formerly known as Conversion Labs, Inc.), our wholly-owned subsidiary

LifeMD PR, LLC (formerly Immudyne PR LLC, and Conversion Labs PR), a Puerto Rico limited liability

company (“Conversion Labs PR”, or “CLPR”) and our majority-owned subsidiary LegalSimpli Software, LLC,

a Puerto Rico limited liability company (“LegalSimpli”).

Unless otherwise specified, all dollar amounts are expressed

in United States dollars.

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

We changed our name to Conversion Labs, Inc.

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

Further, in connection with changing

our name, we changed our trading symbol to LFMD.

In June 2018, the Company closed the strategic acquisition of 51% of LegalSimpli Software,

LLC (“LegalSimpli”), a software as a service (SaaS) application for converting, editing, signing and sharing PDF documents.

In addition to LegalSimpli Software’s growth business model, this acquisition added deep search engine optimization and search

engine marketing expertise to the Company.

Effective January 22, 2021, we consummated a transaction to restructure the ownership of LegalSimpli

through a series of agreements as further described below.

Overview and Strategy

are a direct-to-patient telehealth company that provides a smarter, cost-effective and convenient way of accessing healthcare.

the traditional model of visiting a doctor’s office, receiving a physical prescription, visiting a local pharmacy, and returning

to see a doctor for follow up care or prescription refills is inefficient, costly to patients, and discourages many patients from seeking

much needed medical care.

healthcare system is undergoing a paradigm shift, thanks to new technologies and the emergence of

direct-to-patient healthcare.

Direct-to-patient telemedicine companies, like our company, connect consumers to licensed healthcare professionals

for care across numerous indications, including concierge care, men’s sexual health and dermatology, among others.

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

on a recurring basis.

In addition to our telemedicine offerings, we sell nutritional supplements and other over-the-counter products.

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

of prescribed medications or products.

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

revenue streams for us.

Our patient acquisition strategy combines strategic brand-building media placements and direct response advertising

methods across highly scalable marketing channels (i.e.

national TV, streaming TV, streaming audio, podcast, print, magazines, online

search, social media, and digital).

inception, we have helped more than 300,000 customers and patients, providing them greater access to high-quality, convenient, and affordable

care in all 50 states.

people can relate to the hassle and inconvenience of seeking medical care.

We believe that telemedicine platforms like ours will fundamentally

shift how patients access healthcare in the United States, by necessity and by preference.

With the average wait time to see a physician

in the United States now at greater than 29 days, according to a 2018 Merritt Hawkins Survey, and the United States projected to have

a significant shortfall of licensed physicians by 2030, we believe the U.S.

healthcare infrastructure must change to accommodate patients.

Timely and convenient access to healthcare and prescription medications is a critical factor in improving quality of care and patient

Our mission is to radically change healthcare with our portfolio of direct-to-patient telehealth brands that encompass on-demand

medical treatment, online pharmacy and over-the-counter products.

We want our brands to be top-of-mind for consumers considering telehealth.

the United States, healthcare spending is currently $4.0 trillion and is expected to grow to $6.2 trillion by 2028, according to the

Centers for Medicare and Medicaid Services.

Physician services and prescription medications account for approximately 30% of healthcare

spending, or over $1 trillion annually, and we believe that we have the infrastructure, medical expertise, and technical know-how to

shift a substantial portion of this market to an online, virtual format.

Our platforms are fast and convenient, and we believe the adoption

of our services has increased rapidly because of these features, including lower out-of-pocket costs for patients and the satisfaction

of a simple healthcare process.

We believe the opportunities are immense and that we are well positioned to capitalize on these large-scale

economic shifts in healthcare.

believe that brand innovation, customer acquisition and service excellence form the heart of our business.

As is exemplified with our

first brand, Shapiro MD, we have built a full line of proprietary over-the-counter (“OTC”) products for male and female hair

loss, FDA approved OTC minoxidil, an FDA-cleared medical device, and now a personalized telemedicine offering that gives consumers access

to virtual medical treatment and, when appropriate, a full line of oral and topical prescription medications for hair loss.

Our men’s

telemedicine brand, RexMD, currently offers treatment for erectile dysfunction, and will soon offer treatments for additional indications

present in men’s health.

We have built a platform that allows us to efficiently launch telehealth and wellness product lines wherever

we determine there is a market need.

Our platform is supported by a driven team of digital marketing and branding experts, data analysts,

designers, and engineers focused on building enduring brands.

addition to our telehealth business, we own 85.6% of PDFSimpli, a rapidly growing SaaS platform for converting, signing, editing and

sharing PDF documents.

Brand Portfolio

have built a strategic portfolio of wholly-owned telehealth brands that address large unmet needs in men’s health, hair loss and

We also are preparing to launch a concierge care offering under the LifeMD brand.

We continue to scale our offerings in

a calculated manner, ensuring that each brand or indication we launch will enhance current and future patients’

experiences with

our platform.

process across each brand and condition that we treat is to guide the patient through a medical intake process and product selection,

after which a licensed U.S.

physician within our network conducts a virtual consultation and, if appropriate, prescribes necessary prescription

medications and/or recommends over-the-counter products.

Prescription and over-the-counter products are filled by pharmacy fulfillment

partners and shipped directly to the patient.

The number of patients and customers we serve across the nation continues to increase at

a robust pace, with more than 300,000 individuals having purchased our products and services to date.

in 2017, ShapiroMD offers virtual medical treatment, prescription medications, patented over-the-counter products, and an FDA approved

medical device for male and female hair loss.

ShapiroMD has emerged as a leading destination for hair loss treatment across the United

States and has had more than 200,000 customers and patients since inception.

In Q1 2021, ShapiroMD greatly enhanced its telemedicine

offering for female hair loss with the addition of topical compounded medications to its product portfolio.

February 21, 2020, ConsumersAdvocate.org ranked ShapiroMD as the third best hair loss treatment provider in the United States, ahead

of other household brands such as Bosley, Keeps and Rogaine.

in 2019, RexMD is a men’s telehealth brand offering virtual medical treatment from licensed providers for a variety of men’s

health needs.

After consulting with a physician, if appropriate, we dispense and ship prescription medications and over-the-counter products

directly to patients.

We initially launched in the erectile dysfunction treatment market.

We intend to expand beyond the sexual health

market and launch additional treatment areas in men’s health in the first half of 2021.

Our vision for RexMD is to become a leading

telehealth destination for men.

in the first quarter of 2021, Nava MD is a female-oriented tele-dermatology and skincare brand that will offer virtual medical treatment

from dermatologists and other providers, and, if appropriate, prescription oral and compounded topical medications to treat many common

dermatological conditions.

In addition to the brand’s telemedicine offerings, NavaMD’s proprietary products leverage intellectual

property and proprietary formulations licensed from Restorsea, a leading medical grade skincare technology platform.

Restorsea’s

clinically proven skincare technology platform is the result of more than $50 million invested in R&D and intellectual property development,

and Restorsea has received 35 patents along with broad industry and academic acclaim, with its breakthrough clinical results having been

published in the peer-reviewed Journal of Drugs in Dermatology and Journal of Clinical and Aesthetic Dermatology.

Nava MD will be one

the first direct-to-consumer product lines to offer this advanced skincare technology.

Nava MD will be positioned as an online skincare

and telehealth brand that will offer tele-dermatology services to patients in 47 states.

iNR Wellness MD

in 2018, iNR Wellness MD is a supplement for immune and digestive support.

The iNR Wellness product line is a daily nutritional supplement

that contains yeast, oat, and mushroom beta glucans.

Owned Subsidiary:

is an online software-as-a-service (SAAS) platform that allows users to create, edit, convert, sign and share PDF documents.

was acquired through the purchase of 51% of the membership interests of LegalSimpli Software, LLC, a Puerto Rico limited liability company,

which operates a marketing-driven software solutions business.

As of the end of 2020, PDFSimpli was ranked in the top 4,339 websites

globally, in which it was also ranked in the top 1,200 for specific countries with more than 9.5 million registrants globally.

its launch, PDFSimpli has converted or edited over 9 terabytes of documents for customers from the legal, financial, real-estate and

academic sectors.

PDFSimpli had over 62,600 active subscriptions as of the end of 2020.

Developments During the Quarter

and Resignations of Officers

Digital Officer

January 5, 2021, our board of directors appointed Mr.

Bryant Hussey as the Company’s Chief Digital Officer.

Bryant Hussey, age

45, combines over 20 years senior and executive level management with both direct-to-consumer and traditional e-commerce companies.

2018 to 2020, he was the Chief Digital Officer for AVS Products, LLC., a direct response nutraceutical company acting as Playboy’s

global licensee for sexual wellness supplements.

From 2009 to 2018 he was the Vice President of Marketing for Atlantic Coast Brands,

an omni-channel international beauty company which has serviced more than 10 million customers.

Bryant’s undergraduate studies

were in Economics at St.

Peters University and he also attended New York University completing professional studies programs in Integrated

Medical Officer

January 11, 2021, our board of directors appointed Dr.

Anthony Puopolo as the Company’s Chief Medical Officer (the “Appointment”).

Anthony Puopolo, age 49, combines over 20 years of experience in medicine and wellness.

In 2018 he founded Alpha Medical Group, where

he serves as president to present.

From September 2019 to December 2020, he served as a staff physician at Teledoc.

From July 2017 to

December 2020, he served as a regional medical director at Swift MD.

In January 2014 he founded the Integrative Wellness Medical Group,

where he remained until May 2017.

From August 2010 to May 2017, he served as a partner staff physician at Sharp-Rees Stealy Medical Group

(“Sharp-Rees”).

From September 2008 to July 2010, he served as afloat physician at Sharp-Rees.

From September 2005 to August

2008, he served at the mental health clinic of the 121 st General Hospital in South Korea, first as a chief of outpatient and

medical director of alcohol treatment center, then as chief of inpatient at the psychiatric ward.

From September 2004 to August 2005,

he served as a staff physician and chief of outpatient at the mental health clinic at the U.S.

military base of Camp Casey in South Korea.

He has an undergraduate degree from Tufts University and a Medical Degree from Boston University School of Medicine.

Business Officer

February 3, 2021, our board of directors appointed Corey Deutsch as our Chief Business Officer.

Corey Deutsch, age 27, has over 5 years

of experience in various healthcare finance roles.

In May 2020, Mr.

Deutsch founded a long only hedge fund focused exclusively on the

healthcare end-market.

From June 2019 through June 2020, Mr.

Deutsch served as an investment professional at Amulet Capital Partners,

a healthcare focused private equity firm.

From November 2018 to June 2019, Mr.

Deutsch was an investment professional for Arsenal Capital

Partners, a middle-market healthcare private equity firm.

From June 2016 to November 2018, Mr.

Deutsch was an investment banker at MTS

Health Partners, a boutique investment bank focused on the healthcare sector.

Deutsch is also currently an advisor for Heat Biologics,

an oncology focused pharmaceutical Company.

He received his undergraduate degree from the University of Pennsylvania, graduating Summa

Cum Laude with a B.A.

in economics.

Financial Officer

February 4, 2021, Mr.

Juan Manuel Piñeiro Dagnery submitted to the board of directors his resignation from his position as Chief

Financial Officer of the Company (the “Resignation”).

Dagnery did not resign as a result of any disagreement with the

Company on any matter relating to the Company’s operations, policies or practices.

Dagnery will continue to serve as an executive

of the Company, assuming the role of Chief Revenue Officer, effective on the date of the Resignation.

Dagnery resigned from his

position as Chief Revenue Officer on April 2, 2021.

the date of, and in connection with, the Resignation, the board of directors appointed Mr.

Marc Benathen as the Company’s Chief

Financial Officer.

Marc Benathen combines over 18 years of experience in financial, operational and consumer products/services senior

Previously, he had been involved in 6 companies in the consumer, technology and media industries holding positions including

Chief Financial Officer, Vice President and Director.

From 2017 through January 2021, Mr.

Benathen was the Chief Financial Officer for

Blink Holdings, Inc.

(dba Blink Fitness), a national fitness company.

From 2014 to 2017, he was Vice President of Finance for Blink Fitness.

From December 2010 to January 2014, he was Senior Manager of Corporate Finance of ANN, Inc., a NYSE-listed retail company that focused

on women’s fashion.

Benathen is also currently a director of Baruch College Alumni Association and past Trustee of the Baruch

College Fund, a charitable and alumni arm of Baruch College.

He has an undergraduate degree from Baruch College with Honors.

Software Restructuring Transaction

January 22, 2021, we consummated a transaction to restructure the ownership of LegalSimpli (the “LSS Restructuring”).

the consummation of the LSS Restructuring, CLPR will increase its ownership of LegalSimpli from 51% to approximately 85.58% on a fully

diluted basis.

Concurrently,

in furtherance of the LSS Restructuring, CVLB PR entered into two Membership Interest Purchase Agreements (the “Founding Members

MIPAs”) with two founding members of LSS (the “Founding Members”) whereby CVLB PR purchased from the Founding Members

an aggregate of 2,183 membership interests of LSS for an aggregate purchase price of $225,000, paid in December 2020.

furtherance of the LSS Restructuring, CVLB PR entered into a Membership Interest Purchase Agreement with LSS, (the “CVLB PR MIPA”),

pursuant to which CVLB PR purchased 12,000 membership interests of LSS for an aggregate purchase price of $300,000.

The CVLB PR MIPA

provides that the transaction may be completed in three (3) tranches with a purchase price of $100,000 per tranche to be made at the

sole discretion of CVLB PR.

Payment for the first tranche of $100,000 was made upon execution of the CVLB PR MIPA.

Payments for the second

and third tranches are due on the 60-day anniversary and the 120-day anniversary of the LSS Effective Date.

the consummation of the LSS Restructuring, CVLB PR increased its ownership of LSS from 51% to approximately 85.58% on a fully diluted

LSS entered into an amendment to its operating agreement (the “LSS Operating Agreement Amendment”) to reflect the

change in ownership.

with the LSS Restructuring, CVLB PR entered into option agreements with Sean Fitzpatrick (the “Fitzpatrick Option Agreement”)

and Varun Pathak (the “Pathak Option Agreement”

together with Fitzpatrick Option Agreement the “Option Agreements”),

pursuant to which CVLB PR granted options to purchase membership interest units of LSS.

Upon vesting, the Fitzpatrick Options and the

Pathak Options provide for the potential re-purchase of up to an additional 13.25%% of LSS by Fitzpatrick and Pathak in the aggregate

with CVLB PR ownership ratably reduced to approximately 72.98%.

Fitzpatrick Option Agreement grants Sean Fitzpatrick the option to purchase 10,300 membership interest units of LSS for an exercise price

of $1.00 per membership interest unit.

The Fitzpatrick Options vest in accordance with the following (i) 3,434 membership interests upon

LSS achieving $2,500,000 of gross sales in any fiscal quarter (ii) 3,434 membership interests upon LSS achieving $4,000,000 of gross

sales in any fiscal quarter and (iii) 3,434 membership interests upon LSS achieving $8,000,000 of gross sales with a ten percent (10%)

net profit margin in any fiscal quarter.

Pathak Options shall vest in accordance with the following (i) 700 membership interests upon LSS achieving $2,500,000 of gross sales

in any fiscal quarter (ii) 700 membership interests upon LSS achieving $,4,000,000 of gross sales in any fiscal quarter and (iii) 700

membership interests upon LSS achieving $8,000,000 of gross sales with a ten percent (10%) net profit margin in any fiscal quarter.

The first two tranches

of performance options granted to Sean Fitzpatrick and Varun Pathak vested immediately after the consummation of the restructuring

transaction and therefore have been recorded as part of the acquisition through equity.

The third tranche is not deemed probable

and therefore has not been recognized to date.

of Operations

financial results for the three months ended March 31, 2021 are summarized as follows in comparison to the three months ended March 31,

March 31, 2021

March 31, 2020

Product revenues, net

Software revenues, net

Service revenues, net

Total revenues, net

Cost of product revenue

Cost of software revenue

Total cost of revenue

Selling & marketing expenses

General and administrative expenses

Other operating expenses

Customer service expenses

Development costs

Total expenses

Operating loss

$ (11,918,337 )

$ (1,740,505 )

Other income, net

Net loss before provision for income taxes

$ (11,872,886 )

$ (2,533,544 )

Provision for Income taxes

Net loss attributable to noncontrolling interests

Net loss attributable to LifeMD, Inc.

$ (11,602,383 )

$ (2,394,728 )

for the three months ended March 31, 2021 were approximately $18.2 million, an increase of 323% compared to approximately $4.3 million

for the three months ended March 31, 2020.

The increase in revenues was attributable to both the increase in product revenue of 349%

and an increase in software revenue of 264%.

Product revenue accounts for 73% of total revenue and has increased in the three months

ended March 31, 2021 due to an increase in online sales demand, with the majority of the growth of our telemedicine brands, RexMD and

Software revenue accounts for 27% of total revenue and has steadily increased quarter over quarter due to a combination of

higher demand, increased market awareness, enhanced digital capabilities and continued marketing campaign expansion.

While a portion

of our growth could be attributable to the COVID-19 pandemic, management strongly believes our growth is primarily a result of the strength

of our healthcare brands.

cost of revenues consists of the cost of (1) product revenues, which primarily include product material costs and fulfillment costs directly

attributable to the production of our products held for sale and (2) the cost of software revenue consisting primarily of information

technology fees related to providing the services made available on our online platform.

Total cost of revenue increased by approximately

144% to approximately $3.3 million for the three months ended March 31, 2021 compared to approximately $1.3 million for the three months

ended March 31, 2020.

The combined cost of revenue increase was due to increased costs related to our increased sale volumes when compared

to the prior period ended March 31, 2020.

profit increased by approximately 403% to approximately $14.9 million for the three months ended March 31, 2021 compared to approximately

$3.0 million for the three months ended March 31, 2020, as a result of increased combined sales, and a percentage decrease in costs to

produce product revenues.

Product costs decreased to 17% of associated product revenues during the three months ended March 31, 2021,

from 29% of associated product revenues during the three months ended March 31, 2020.

Gross profit as a percentage of revenues was 82%

for the three months ended March 31, 2021 compared to 69% for the three months ended March 31, 2020.

The increase of 13% in gross profit

was principally attributable to lower product costs and more stringent inventory management during the three months ended March 31, 2021.

During the three months ended March 31, 2020, product costs from the use of new suppliers, at higher costs, resulted from the impact

of COVID-19 related disruptions to product supply chain.

This increase has been contained and reduced for 2021, thus far.

Three Months Ended March 31,

Selling & marketing expenses

General and administrative expenses

Other operating expenses

Customer service expenses

Development costs

Total expenses

expenses for the three months ended March 31, 2021 were approximately $26.8 million, as compared to approximately $4.7 million for the

three months ended March 31, 2020.

This represents an increase of 470%, or $22.1 million.

The increase is primarily attributable to:

and marketing expenses:

This mainly consists of online marketing and advertising expenses.

During the three months ended March 31,

2021, the Company had an increase of approximately $15.9 million, or 579% in selling and marketing costs resulting from additional

sales and marketing initiatives to drive the current period’s sales growth reported.

This ramp up is expected to both increase

and maintain sustained revenue growth in future years, based on the Company’s recurring revenue subscription-based sales model.

and administrative expenses:

During the period ended March 31, 2021, stock-based compensation was $2.3 million, with the majority

related to stock compensation expense attributable to the attainment of a performance threshold in the period.

This category also

consists of merchant processing fees, payroll expenses for executive management, amortization expense and legal and professional

During the three months ended March 31, 2021, the Company has had an increase of approximately $5.3 million in general and

administrative expenses, primarily related to the increase in stock-based compensation costs referenced above, and other increases

in infrastructure expenses incurred to support the sales volume increases.

operating expenses:

This consists of rent, insurance, royalty expense, bank charges and IT services for our online products.

the three months ended March 31, 2021, the Company had an increase of approximately $737K, or 592%, primarily related to increases

in the general cost environment necessary to support the Company’s sales growth.

service expenses:

This consists of payroll and benefit expenses related to the Company’s customer service department located

in Puerto Rico and South Carolina.

During the three months ended March 31, 2021, the Company had an increase of approximately $127K,

primarily related to increases in headcount in the Company’s customer service department.

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

During the three

months ended March 31, 2021, the Company had an increase of approximately $114K, primarily resulting from technology platform improvements

and amortization expense.

(Expenses) / Income

Three Months Ended March 31,

Interest (expense), net

Gain on debt forgiveness

expense, which consists of interest expense and gain on debt forgiveness of PPP loans decreased by approximately $838K and is

included in other income for the period ended March 31, 2021.

For the period ended March 31, 2020 the balance consisted of interest expense

primarily and loss on debt settlement attributable to the increased use of debt during 2020 and the acceleration of debt discount.

March 31, 2021

December 31, 2020

Current assets

Current liabilities

Working capital

$ (1,426,701 )

capital increased by approximately $3.8 million during the period ended March 31, 2021.

The increase in current assets is primarily

attributable to an increase in cash of approximately $4.2 million, an increase in accounts receivable of approximately $0.7 million,

and inventory and product deposits (combined increase of approximately $0.9 million).

Current liabilities increased by $1.9 million,

which was primarily attributable to an increase in accounts payable and accrued liabilities of $1.6 million as a result of the

Company extending payables and credit terms with vendors and an increased in deferred revenue of $0.4 million during the period ended

March 31, 2021.

and Capital Resources

Three Months Ended March 31,

$ (11,872,886 )

$ (2,533,544 )

Net cash (used in) provided by operating activities

Net cash (used in) investing activities

Net cash provided by (used in) financing activities

Net increase (decrease) in cash

inception, the Company has funded operations through the collections from revenues provided by the sales of its products, issuances of

common and preferred stock, receipt of loans and advances from officers and directors and the issuance of convertible notes to third-party

cash used in operating activities was approximately $9.1 million for the three months ended March 31, 2021, as compared with net

cash provided by operating activities of approximately $661K three months ended March 31, 2020.

The significant factors contributing

to the cash used in operations during the three months ended March 31, 2021, include the net loss of approximately $11.8 million

(inclusive of $2.3 million in non-cash, stock-based compensation charges), principally offset by the Company’s increase in accounts

payable of approximately $1.6 million.

cash used in investing activities for the three months ended March 31, 2021 was approximately $49K, as compared with net cash used in

investing activities of $468K for the three months ended March 31, 2020.

Net cash used in investing activities was due to cash paid for

capitalized software costs of approximately $49K.

cash provided by financing activities for the three months ended March 31, 2021 was approximately $13.4 million as compared with

net cash used in financing activities of approximately $942K for the three months ended March 31, 2021.

During the three months ended

March 31, 2021, financing activities consisted of net proceeds from private placement of $13.5 million, investors purchased 608,696,

at a purchase price of $23.00 per share for aggregate gross proceeds of $14 million offset by the purchase of additional membership

interest of LegalSimpli.

and Capital Resources Outlook

Company has funded operations in the past through the sales of its products, issuance of common stock and through loans and advances

from officers and directors.

The Company’s continued operations are dependent upon obtaining an increase in its sale volumes which

the company has been successful in achieving to date.

See Note 5 for a further discussion of a private placement offering, which closed

on February 11, 2021, yielding $14 million in gross proceeds to the Company before deduction of placement fees and other offering expenses,

resulting in $13.5 million in net proceeds.

The Company intends to use the net proceeds for customer acquisition, as well as for general

corporate purposes.

Accounting Policies and Estimates

significant accounting policies are more fully described in the notes to our unaudited condensed consolidated financial statements.

believe that the accounting policies below are critical for one to fully understand and evaluate our financial condition and results

of operations.

Company records revenue under the adoption of ASC 606 by analyzing exchanges with its customers using a five-step analysis:

performance obligations

the transaction price

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

is the delivery of the product;

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

The Company generally records

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

fulfillment service provider;

in limited cases, title does not pass until the product reaches the customer’s delivery site, in

these limited cases, recognition of revenue should be deferred until that time, however the Company does not have a process to properly

record the recognition of revenue if orders are not immediately shipped, and deems the impact to be immaterial.

In all cases, delivery

is considered to have occurred when title and risk of loss have transferred to the customer, which is usually commensurate upon shipment

of the product.

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

shipment of products and records the related revenue under the subscription agreements subsequent to receiving the monthly product order,

recording the revenue at the time it fulfills the shipment obligation to the customer.

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

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

Company’s discounts and customer rebates are known at the time of sale, correspondingly, the Company reduces gross product sales

for such discounts and customer rebates.

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

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

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

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

Company, through its majority-owned subsidiary LegalSimpli, offers a subscription-based service providing a suite of software applications

to its subscribers, principally on a monthly subscription basis.

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

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

For these subscription-based contracts with

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

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

The Company has estimated

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

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

The Company allows the customer to cancel at any point during

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

original subscription.

The Company records the revenue over the customers subscription period for monthly and yearly subscribers or at

the end of the initial 14-day service period for customers who purchased the initial subscription, as the circumstances dictate.

Company offers a discount for the monthly or yearly subscriptions being purchased, which is deducted at the time of payment at the initiation

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

Monthly and annual subscriptions

for the service are recorded net of the Company’s known discount rates.

As of March 31, 2021 and March 31, 2020, the Company has

accrued contract liabilities, as deferred revenue, of approximately $1,339,000 and $302,960, respectively, which represent obligations

on in-process monthly or yearly contracts with customers.

discounts, returns and rebates on product revenues during the three months ended March 31, 2021 and 2020 approximated $1,222,000 and

$314,000, respectively.

Customer discounts and allowances on software revenues during the three months ended March 31, 2021 and 2020

approximated $554,000 and $163,000, respectively.

Software Costs

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

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

The Company does not sell

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

Certain development costs not meeting the criteria

for capitalization, in accordance with Accounting Standards Codification (“ASC”) ASC 350-40 Internal-Use Software ,

are expensed as incurred.

As of March 31, 2021 and December 31, 2020, the Company capitalized $491,386 and $438,136, respectively, related

to internally developed software costs which is amortized over the useful life and included in development costs on our statement of

assets are comprised of a customer relationship asset and purchased license with an estimated useful life of three years and ten years,

respectively.

Intangible assets are amortized over their estimated lives using the straight-line method.

Costs incurred to renew or extend

the term of recognized intangible assets are capitalized and amortized over the useful life of the asset.

Company files corporate federal and state tax returns.

Conversion Labs PR and LegalSimpli file tax returns in Puerto Rico, both are limited

liability companies and file separate tax returns with any tax liabilities or benefits passing through to its members.

Company records current and deferred taxes in accordance with Accounting Standards Codification (“ASC”) 740, “Accounting

for Income Taxes.”

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

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

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

The Company establishes a valuation allowance, when necessary,

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

The Company periodically assesses the value of its deferred tax

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

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

taken or expected to be taken in a tax return.

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

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

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

The Company’s tax returns for all years

since December 31, 2016, remain open to audit by all related taxing authorities.

Company follows the provisions of ASC 718, “Share-Based Payment”.

Under this guidance compensation cost generally is recognized

at fair value on the date of the grant and amortized over the respective vesting or service period.

The fair value of options at the

date of grant is estimated using the Black-Scholes option pricing model.

The expected option life is derived from assumed exercise rates

based upon historical exercise patterns and represents the period of time that options granted are expected to be outstanding.

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

period that approximates the expected life of the options.

The risk-free rate approximates the U.S.

Treasury yield curve rate in effect

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

Due to limited history of forfeitures, the Company has elected

to account for forfeitures as they occur.

of the assumptions require significant judgment and any changes could have a material impact in the determination of stock-based compensation

of New or Revised Accounting Standards—Not Yet Adopted

August 2020, the FASB issued ASU 2020-06, “

Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging –

Contracts in Entity’s Own Equity (Subtopic 815-40);

Accounting for Convertible Instruments and Contracts in

an Entity’s Own Equity (“ASU 2020-06”)”, which addresses issues identified as a result of the complexities

associated with applying U.S.

GAAP for certain financial instruments with characteristics of liabilities and equity.

This update addresses,

among other things, the number of accounting models for convertible debt instruments and convertible preferred stock, targeted improvements

to the disclosures for convertible instruments and earnings-per-share (“EPS”) guidance and amendments to the guidance for

the derivatives scope exception for contracts in an entity’s own equity, as well as the related EPS guidance.

This update applies

to all entities that issue convertible instruments and/or contracts in an entity’s own equity.

This guidance is effective for financial

statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

Early adoption is

permitted, but no earlier than for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

FASB specified that an entity should adopt the guidance as of the beginning of its annual fiscal year, or January 1, 2021, should the

Company elect to early adopt.

The Company is currently evaluating the impact the adoption of ASU 2020-06 could have on the Company’s

financial statements and disclosures.

Sheet Arrangements

have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,

changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that

is material to stockholders.

Quantitative and Qualitative Disclosures about Market Risk

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

Company has evaluated subsequent events through the date these unaudited condensed consolidated financial statements were issued

and has identified the following:

Diagnostics and Axle Health

July 13, 2021, the Company, on behalf of its customers, entered

into an agreement to engage Quest Diagnostics Incorporated (“Quest Diagnostics”) as the Company’s laboratory services

provider to perform certain clinical laboratory diagnostic services based on orders submitted to Quest Diagnostics by licensed health

care providers who are under contract with the Company and are authorized under U.S.

federal or state law to order laboratory tests.

Patients of LifeMD Inc.’s affiliated providers gain access to more than 150 of the most ordered laboratory tests at substantially

discounted prices, and which can be completed in the comfort, safety, and convenience of their home or office.

addition, on July 14, 2021, the Company entered into an agreement to engage Axle Health Inc.

(“Axle Health”)

to assist the Company in establishing a platform to enable patients of the Company’s medical practice clients (“MP Clients”)

to schedule certain nursing services, including blood draws, injections, and other basic healthcare services, and to furnish operational

support services to medical practices using the platform.

In connection therewith, Axle Health granted the Company a revocable, nontransferable,

non-exclusive right and license, with the right to grant sublicenses, to install and use the software and other technology relating to

the platform developed, owned, or with the right to grant sublicenses to install and use the software and/or other technology developed,

owned, or licensed by Axle Health, including the platform, to facilitate the scheduling and provision of certain nursing services to

patients of MP Clients.

Stock Issuance

July 2021, the Company issued an aggregate of approximately 30,000 shares of common stock pursuant to the vesting of restricted stock.

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

What changed 10-Q

Item 1. Financial Statements