What changed in this filing

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Item 1. Financial Statements

2021-11-10 compared with 2021-08-13 · 695 added, 698 removed, 691 unchanged (67% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

June 30, 2021

September 30, 2021

December 31, 2020

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Long-term Liabilities

Long-term debt

Long-term debt, net

Lease liability

Contingent consideration on purchase of LegalSimpli

Contingent consideration on purchase of WorkSimpli

Total Liabilities

and contingencies (see Note 8)

Commitments and contingencies (see Note 8)

Mezzanine Equity

Preferred Stock, $ 0.0001 per value;

5,000,000 shares authorized

Series B Preferred Stock, $ 0.0001 per value;

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

Preferred Stock Value

Preferred Stock, $ 0.0001 par value;

5,000,000 shares authorized Series B Preferred

Stock, $ 0.0001 par value;

5,000 shares authorized, 3,500 and 3,500 shares issued and outstanding, liquidation value approximately,

$ 1,142 and $ 1,045 per share as of September 30, 2021 and December 31, 2020, respectively

Stockholders’ Deficit

Series A Preferred Stock, $ 0.0001 par value;

1,610,000 shares authorized, zero shares issued and outstanding as of September 30, 2021 and December 31, 2020

Common stock, $ 0.01 par value;

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

100,000,000 shares authorized, 26,862,975 and 23,433,663 shares issued, 26,759,935 and 23,330,623 outstanding as of September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

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Consolidated STATEMENTS OF OPERATIONS

Three Months Ended June 30,

Six Months Ended June 30,

Product revenues, net

Software revenues, net

Service revenues, net

Three Months Ended September 30,

Months Ended September 30,

Telehealth revenue, net

WorkSimpli revenue, net

Total revenues, net

Cost of revenues

Cost of product revenue

Cost of software revenue

Cost of telehealth revenue

Cost of WorkSimpli revenue

Total cost of revenues

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( 1,824,777 )

( 2,681,236 )

( 1,313,010 )

Loss from operations before income taxes

14 unchanged sentences

( 26,396,214 )

Deemed distribution to holders of common and Series B Preferred stock

( 3,573,636 )

( 4,716,021 )

Net loss attributable to LifeMD, Inc.

common stockholders

$ ( 14,353,375 )

$ ( 24,196,006 )

$ ( 42,786,458 )

$ ( 31,112,235 )

Basic loss per share attributable to LifeMD, Inc.

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Noncontrolling

Balance, January 1, 2020

$ ( 16,594,919 )

$ ( 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

January 1, 2020

exercise of warrants

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

dividend from warrant price adjustments

Distributions

to non-controlling interest

issued for services

issued for services , shares

of common stock

of common stock , shares

issued for share liability

issued for share liability , shares

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

of warrants , shares

of stock options

of stock options , shares

exercise of stock options

exercise of stock options , shares

issued for share liability (proceeds received for prior period)

issued for share liability (proceeds received for prior period) , shares

dividend from warrants issued and BCF with Series B Preferred Stock

Sale of stock in private placement, net

Sale of stock in private placement, net, shares

Purchase of additional membership interest of LSS

Purchase of additional membership interest of WorkSimpli

Adjustment of noncontrolling Interest for additional investment

Warrants issued for debt instruments

Sale of common stock under ATM

issued for services

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

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

Deemed dividend from warrant price adjustments

( 1,142,385 )

issued for debt instruments

Distributions to non-controlling interest

( 2,394,728 )

( 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 )

of common stock

issued for share liability

Distributions

to non-controlling interest

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

of stock options

exercise of stock options

issued for share liability (proceeds received for prior period)

dividend from warrant price adjustments

dividend from warrants issued and BCF with Series B Preferred Stock

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

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Distribution to non-controlling interest

Purchase of additional membership interest of LSS

Purchase of additional membership interest of WorkSimpli

Adjustment of noncontrolling Interest for additional investment

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Exercise of warrants

issued for debt instruments

Warrants issued for debt instruments

Distribution to non-controlling interest

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( 8,033,341 )

Stock issued for services

Exercise of stock options

Exercise of warrants

Sale of common stock under ATM

Distribution to non-controlling interest

( 14,353,375 )

( 14,416,081 )

Balance, September 30, 2021

$ 105,275,494

$ ( 122,938,363 )

$ ( 163,701 )

$ ( 17,557,940 )

$ ( 1,100,575 )

$ ( 18,658,515 )

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

Consolidated STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

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$ ( 26,804,394 )

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

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of debt discount

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Write-down of inventory

Depreciation of fixed assets

Acceleration of debt discount

Bad debt expense

Sales return and allowances

Inventory reserves

Gain on forgiveness of debt

Operating lease payments

Stock compensation expense

Stock issued for services

Liability to issue shares for services

Stock issued for services

Stock compensation expense

Changes in assets and liabilities

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Cash paid for capitalized software costs

( 1,731,507 )

Purchase of equipment

Purchase of intangible assets

Payment to seller for contingent consideration

Contingent consideration on business combination paid

Net cash used in investing activities

( 1,823,843 )

CASH FLOWS FROM FINANCING ACTIVITIES

Cash proceeds from private placement offering, net

Cash proceeds from Series B Preferred Stock

Proceeds from convertible notes payable

Proceeds from issuance of debt instruments

Cash proceeds from exercise of options

Cash proceeds from sale of common stock under ATM

Cash proceeds from exercise of warrants

Shares issued for cash

Cash receipts from investors for unissued shares

Purchase of membership interest of LSS

Cash proceeds from exercise of options

Cash proceeds from sale of warrants

Purchase of membership interest of WorkSimpli

Distributions to non-controlling interest

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Non-cash investing and financing activities

Cashless exercise of options

Cashless exercise of warrants

Principal of Paycheck Protection Program loans forgiven

Additional purchase of membership interest in LSS issued in performance options

Additional purchase of membership interest in WorkSimpli issued in performance options

Deemed dividend from warrant price adjustments

Deemed distribution from warrants issued with Series B Preferred Stock

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

Liability to issue common stock

Debt issuance costs for liability to issue shares

Conversion of convertible notes payable and interest for Series B Preferred Stock

Stock issued for capitalized costs

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

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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.

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

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

In addition to LegalSimpli Software, LLC’s

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

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

Effective January

22, 2021, the Company consummated a transaction to restructure the ownership of WorkSimpli (the “WSS Restructuring”) (See

Note 7) and concurrently increased its ownership stake in WorkSimpli 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 prescription offerings, the Company sells over-the-counter products.

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

medications or products.

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

for the Company.

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

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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.

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 hair loss.

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”), 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

marketing campaigns for other online businesses.

However, this business initiative was terminated in early 2019 in order to focus on

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

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.

June 2018, Conversion Labs closed the strategic acquisition of 51% of WorkSimpli, which operates a software as a service (SaaS) application

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

In addition to WorkSimpli’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 WorkSimpli to its current 85.6%.

early 2019, the Company had launched a service-based business under the name Conversion Labs Media LLC (“CVLB Media”), a

Puerto Rico limited liability company, which was to be used to run e-commerce marketing campaigns for other online businesses.

this business initiative was terminated in early 2019 in order to focus on its core business as well as the expansion of our telehealth

opportunities.

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

Labs Rx, LLC (“CVLB Rx”), a Puerto Rico limited liability company, and Conversion Labs Asia Limited (“Conversion Labs

Asia”), a Hong Kong company, had no activity during both the nine months ended September 30, 2021 and the year ended December 31,

CVLB Rx was dissolved during the year ended December 31, 2020.

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

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“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.

LifeMD Southern Patient Medical Care (“LifeMD PC”), the Company’s professional physician corporation and our majority-owned

subsidiary, WorkSimpli.

The Company facilitates the delivery of telehealth services to LifeMD PC’s patients via the upcoming LifeMD

primary care platform and holds a variable interest in LifeMD PC.

Unless otherwise specified, all dollar amounts are expressed in United

States dollars.

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

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 preferential prices, and which can be completed in the comfort, safety, and convenience of

their home or office or at any one of Quest Diagnostics’ 2,000 facilities .

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

August 4, 2021, the Company entered into a partnership agreement with Particle Health, a state-of-the-art, digital health company with

a HIPAA-compliant technology platform that converts electronic medical records data into a user-friendly Fast Healthcare Interoperability

Resource (“FHIR”) format.

Particle Health enables healthcare companies by offering simple, secure access to vital medical

With Particle Health’s platform, and patient consent, licensed medical providers on the upcoming LifeMD primary care platform

gain instant access to comprehensive patient health records from a database covering over 90% of the US population, therefore enabling

best-in-class, personalized care through a deeper understanding of their patients’ medical histories .

August 30, 2021, the Company signed a letter of intent with Prescryptive Health (“Prescryptive”), a healthcare technology

company empowering consumers by improving the way healthcare is delivered.

The partnership is expected to accelerate growth for both

companies by combining LifeMD’s expanding direct-to-patient telehealth brands and upcoming LifeMD primary care platform with Prescryptive’s

best-in-class digital pharmacy fulfillment and e-prescribing technology platform.

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

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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 June 30, 2021 and 2020, and for the

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

All references to common shares and common share data in these

financial statements and elsewhere in this Form 10-Q as of September 30, 2021 and 2020, and for the three and nine 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

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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

June 1, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with a financial institution

(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”)

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 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 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.

The Company received gross

proceeds of $ 15.0 million and intends to use such proceeds for working capital, growth investment and general corporate purposes.

October 2021, the Company used a portion of the net proceeds from the October 4, 2021 Preferred and Common Stock Offerings noted below

to pay the $ 15.0 million outstanding on the June 1, 2021 Purchase Agreement.

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.

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

Riley Securities, Inc.

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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

accompanying unaudited condensed consolidated financial statements have been prepared on the basis that the Company will continue as

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

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.

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

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

the Agents, acting as agent or principal.

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

the market offering” as defined in Rule 415 under the Securities Act.

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 70,786 shares of common stock sold under the ATM Sales Agreement as of September

30, 2021 and net proceeds received were $ 493,481 .

The Company had approximately $ 59.5 million available under the ATM Sales Agreement

and $ 90 million available under the 2021 Shelf as of September 30, 2021.

September 2021, the Company entered into two underwriting agreements (the “Preferred Underwriting Agreement” and “the

Common Underwriting Agreement”) with B.

Riley Securities, Inc.

Pursuant to the Preferred Underwriting

Agreement, the Company agreed to sell 1,400,000 shares of its 8.875 % Series A Cumulative Perpetual Preferred Stock, par value $ 0.0001

per share, (the “Series A Preferred Stock”) at a public offering price of $ 25.00 per share, prior to deducting underwriting

discounts and commissions and estimated offering expenses (the “Preferred Stock Offering”).

In addition, the company granted

the underwriters an option to purchase up to an additional 210,000 shares of Series A Preferred Stock within 30 days.

Under the Common

Underwriting Agreement, the Company agreed to sell to B.

Riley 3,833,334 shares of common stock (including 500,000 shares pursuant to

Riley’s option) (the “Common Shares”), par value $ 0.01 per share, of the Company at a public offering price of $ 6.00

per share of common stock, prior to deducting underwriting discounts and commissions and estimated offering expenses (the “Common

Stock Offering”).

The Preferred Stock Offering and Common Stock Offering collectively referred to as the “Offerings”,

closed on October 4, 2021.

Net proceeds after deducting the underwriting discounts and commissions, the structuring fee and estimated

offering expenses payable by the Company, but before repayment of debt, from the Offerings was approximately $ 55.3 million.

used a portion of the net proceeds to pay the $ 15.0 million outstanding on the June 1, 2021 Purchase Agreement and intends to use the

remaining net proceeds to fund the segregated dividend account, for working capital and general corporate purposes including, but not

limited to, new patient customer acquisition expenses and capital expenditures.

Company will pay cumulative distributions on the Series A Preferred Stock, from the date of original issuance, in the amount of $ 2.21875

per share each year, which is equivalent to 8.875 % of the $ 25.00 liquidation preference per share.

Dividends on the Series A Preferred

Stock will be payable quarterly in arrears, on or about the 15th day of January, April, July and October of each year.

The first dividend

on the Series A Preferred Stock sold in this offering will be paid on or about January 15, 2022.

of September 30, 2021, the Company has an accumulated deficit approximating $ 122.9 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 2022.

Additionally, the Company expects its burn rate of cash to continue through the end of 2022;

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 and securities purchased by a financial institution.

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 $ 41.4

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Offering and the $ 55.3

million of net proceeds from the June 2021 Purchase

million of net proceeds from the October 4, 2021

Based on the Company’s projected cash requirements, management estimates that it will utilize approximately $ 19

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.

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:

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 remainder of 2021 and over the next 12 months, (3) the Company’s October 4, 2021 Offerings

whereby the Company received total net proceeds of $ 55.3

million, (4) $ 59.5

million available under the ATM Sales Agreement

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

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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

nine months ended September 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 six months ended June 30, 2021, the Company

purchased an additional 36 %

of LegalSimpli for a total equity interest of approximately 85 %

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

majority owned subsidiary, WorkSimpli, in addition to LifeMD PC, the Company’s professional physician corporation.

The non-controlling

interest in WorkSimpli represents the 49 % equity interest held by other members of the subsidiary as of December 31, 2020.

nine months ended September 30, 2021, the Company purchased an additional 34.6 % of WorkSimpli for a total equity interest of approximately

85.6 % (see Note 7).

CVLB Media, CVLB Rx and Conversion Labs Asia had no activity during both the nine months ended September 30, 2021

and the year ended December 31, 2020.

CVLB Rx was dissolved during the year ended December 31, 2020.

significant intercompany transactions and balances have been eliminated in consolidation.

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

As of June 30, 2021

As of September 30,

2021 and December 31, 2020, there were no cash equivalents.

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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

do not have sufficient equity at risk to finance their activities without additional subordinated financial support from other parties

or whose equity investors lack any of the characteristics of a controlling financial interest.

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.

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

interests, that provides it with a controlling financial interest.

A party is deemed to have a controlling financial interest if it meets

both of the power and losses/benefits criteria.

The power criterion is the ability to direct the activities of the VIE that most significantly

impact its economic performance.

The losses/benefits criterion is the obligation to absorb losses from, or right to receive benefits

from, the VIE that could potentially be significant to the VIE.

The VIE model requires an ongoing reconsideration of whether a reporting

entity is the primary beneficiary of a VIE due to changes in facts and circumstances.

accordance with ASC 810-10-25-37 and as amended by ASU 2009-17, the Company determines whether any legal entity in which the Company

becomes involved is a VIE and subject to consolidation.

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.

As a result, the Company

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 June 30, 2021 and December 31, 2020.

CVLB Rx had no activity

and was dissolved during the year ended December 31, 2020.

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

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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

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

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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 $ 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.

business and to appropriately conform the Company’s presentation of operating results to industry and accounting standards, the

Company has changed their categories for reporting operations.

As a result, the Company has made reclassifications to the prior year

presentation in order to conform it to the current periods’ presentation.

These reclassifications include:

(1) $ 844,566 and $ 1,762,351

of merchant processing fees reclassified from cost of revenues to general and administrative expenses, (2) $ 214,788 and $ 48 of reimbursable

expenses reclassified from cost of revenues to operating expenses and (3) $ 7,824 and $ 8,853 of taxes and licensing fees reclassified

from operating expenses to general and administrative expenses for the three and nine months ended September 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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Customer discounts, returns

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

and rebates on product revenues approximated $ 871,000 and $ 823,000 for the three months ended September 30, 2021 and 2020, respectively,

and approximated $ 3,455,000 and $ 2,157,000 for the nine months ended September 30, 2021 and 2020, respectively.

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

to its subscribers, principally on a monthly subscription basis.

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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.

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:

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.

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 September 30, 2021 and December 31, 2020, the Company

has accrued contract liabilities, as deferred revenue, of approximately $ 1,436,000 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 WorkSimpli revenues approximated $ 377,000 and $ 275,000 for the three months

ended September 30, 2021 and 2020, respectively, and approximated $ 1,599,000 and $ 545,000 for the nine months ended September 30, 2021

and 2020, respectively.

the three and nine months ended September 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:

Total product revenue for Conversion Labs PR

Software revenue for LegalSimpli

Three Months Ended September 30,

Nine Months Ended September 30,

Telehealth revenue

WorkSimpli revenue

Total net revenue

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SCHEDULE OF CONTRACT WITH CUSTOMER LIABILITY

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Beginning of period

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

As of both June 30, 2021 and December

As of September 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

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.

and $ 133,000 , respectively.

As of September 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 September 30, 2021 and December 31, 2020, inventory primarily consisted of finished goods related to the Company’s OTC products

included in the telehealth revenue section of the table above.

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

in Wyoming and at the Amazon fulfillment center.

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

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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 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:

The Company recorded an inventory reserve in the amount of $ 57,481 as of September 30, 2021 and December 31, 2020.

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

SUMMARY OF INVENTORY

September 30, 2021

December 31, 2020

Finished goods - products

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Total Inventory - net

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

These deposits typically range from

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.

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

These deposits typically

range from 10 % to 33 % of the total purchased amount.

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

amount previously paid.

As of September 30, 2021 and December 31, 2020, the Company has $ 911,948 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

As of September 30, 2021 and December 31, 2020, the Company approximates its implicit purchase commitments to be $ 3.8 million

and $ 1.6 million, respectively.

As of September 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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are expensed as incurred.

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

assets are comprised of a customer relationship asset (with original cost of approximately $ 1,007,000 ) and a purchased license (with

a cost of $ 200,000 ) with an estimated useful life of three and ten years , respectively.

Intangible assets are amortized over their estimated

lives using the straight-line method.

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.

As of September 30, 2021 and December 31, 2020, the Company capitalized $ 2,169,644 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 operations.

assets are comprised of:

(1) a customer relationship asset (with original cost of approximately $ 1,007,000 ) with an estimated useful

life of three years, (2) a purchased license (with original cost of $ 200,000 ) with an estimated useful life of ten years and (3) a purchased

domain name (with an original cost of $ 22,231 ) with an estimated useful life of three years.

Intangible assets are amortized over their

estimated lives using the straight-line method.

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

and amortized over the useful life of the asset.

of Long-Lived Assets

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

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.

the nine months ended September 30, 2021, the Company had a total of $ 184,914 of its PPP loans forgiven by the SBA (see Note 5).

September 30, 2021 and December 31, 2020, the PPP loan balance was $ 63,400 and $ 248,314 , 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.

Conversion Labs PR and LegalSimpli file tax returns in Puerto Rico, both

Conversion Labs PR and WorkSimpli 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.

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SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

Three Months Ended September 30,

Nine Months Ended September 30,

Series B Preferred Stock

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Concentrations

Company grants credit in the normal course of business to its customers.

The Company periodically performs credit analysis and monitors

the financial condition of its customers to reduce credit risk.

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

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

are dependent on certain third-party manufacturers, although we believe that other contract manufacturers could be quickly secured if

any of our current manufacturers cease to perform adequately.

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

manufacturers.

are dependent on certain third-party manufacturers and pharmacies, although we believe that other contract manufacturers or third-party

pharmacies could be quickly secured if any of our current manufacturers or pharmacies cease to perform adequately.

As of September 30,

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 and nine months ended September 30, 2021

and 2020, we purchased 100 % of our finished goods from two (2) OTC manufacturers.

Adopted Accounting Pronouncements

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3 – INTANGIBLE ASSETS

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

of September 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

September 30,

Amortizable Intangible Assets

Customer relationship asset

Purchased licenses

Website domain name

accumulated amortization

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Total net amortizable intangible assets

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

aggregate amortization expense of the Company’s intangible assets for the nine months ended September 30, 2021 and 2020 was $ 340,457

and $ 251,709 , respectively.

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

Total amortization expense for the remainder of 2021 is $ 1,853 .

Total amortization expense for 2022 through

2023 is $ 7,410 per year and $ 4,941 for 2024.

There is no intangible asset amortization to be recognized thereafter.

4 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

of September 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 EXPENSES

September 30,

Accounts payable

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Accrued legal and professional fees

Accrued interest payable

Sales tax payable

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

During the six months ended June

During the nine months ended September

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

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

was $ 63,400 and $ 248,314 , respectively, and is reflected on the Company’s unaudited condensed consolidated balance sheet as current

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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 total balance owed under this agreement was repaid in full in August 2021.

interest expense on notes payable, inclusive of amortization of debt discounts, amounted to $ 0 and $ 291,096 for the three months ended

September 30, 2021 and 2020, respectively.

Total interest expense on notes payable, inclusive of amortization of debt discounts, amounted

to $ 120,612 and $ 1,313,010 for the nine months ended September 30, 2021 and 2020, respectively.

6 – LONG-TERM DEBT

Purchase Agreement

noted above, on June 1, 2021, the Company entered into the Purchase Agreement with the Purchaser, pursuant to which the Company sold

(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.

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 September 30, 2021.

debt discount will be amortized over a twelve-month period.

Total amortization of debt discount was $ 1,567,677 and $ 2,090,236 for the

three and nine months ended September 30, 2021, respectively.

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.

Aggregate Principal Amount of the Debenture, together with interest, is due and payable on June 1, 2024.

The Debenture bears interest

(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%).

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.

In October 2021, the Company used a portion of the net proceeds from the October 4, 2021 Offerings to

pay the $ 15.0 million outstanding on the June 1, 2021 Purchase Agreement.

interest expense on long-term debt, inclusive of amortization of debt discounts, amounted to $ 1,732,663 and $ 0 for the three months ended

September 30, 2021 and 2020, respectively.

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

to $ 2,405,222 and $ 0 for the nine months ended September 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,

$ 0.0001 par value, of which 5,000 shares are designated as Series B Convertible Preferred Stock and 4,996,500 shares of preferred stock

remain undesignated.

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

Preferred Stock and 4,996,500 shares of preferred stock remain undesignated.

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

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Split, the Company issued approximately 632 shares for rounding.

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 .

June 8, 2021, the Company filed 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 the ATM Sales Agreement whereby the Company may offer and sell, from time to time, shares of common stock

having an aggregate offering price of up to $ 60 million.

The Company had approximately $ 59.5 million available under the ATM Sales Agreement

and $ 90 million available under the 2021 Shelf as of September 30, 2021.

the nine months ended September 30, 2021, the Company issued an aggregate of 873,047 shares of common stock related to cashless exercise

During the nine months ended September 30, 2021, the Company issued an aggregate of 451,000 shares of common stock related

to the exercise of options for gross proceeds of $ 820,750 .

the nine months ended September 30, 2021, the Company issued an aggregate of 162,033 shares of common stock related to the exercise of

warrants for gross proceeds of $ 480,609 .

Interest Purchase Agreement

6 unchanged sentences

collectively, the “Related Parties”).

Pursuant to the MIPA, the Company purchased 21.83333 %

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 %.

Pursuant to the MIPA, the Company purchased 21.83333 % 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.

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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 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.

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 nine months ended September 30,

Stock Transactions During the Nine Months Ended September 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 six months ended June 30, 2021, the Company issued an aggregate of 1,233,750 shares of common stock for services expensed in prior

the nine months ended September 30, 2021, the Company issued an aggregate of 1,263,750 shares of common stock for services expensed in

prior periods.

the nine months ended September 30, 2021, the Company sold 70,786

shares of common stock under the ATM Sales

Agreement for net proceeds of $ 493,481 .

Noncontrolling

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 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

the three months ended September 30, 2021 and 2020, the net loss attributed to the non-controlling interest amounted to $ 62,706 and $ 201,233 ,

respectively.

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

of $ 36,000 and $ 0 , respectively.

For the nine months ended September 30, 2021 and 2020, the net loss attributed to the non-controlling

interest amounted to $ 531,182 and $ 408,180 , respectively.

During the nine months ended September 30, 2021 and 2020, the Company paid

distributions to non-controlling stockholders of $ 108,000 and $ 121,223 , 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, 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.

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

(the “WSS Restructuring”).

To effect the WSS 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 WSS in favor of Conversion

Labs PR, for 37,531 newly issued membership interests of WSS (the “Exchange”).

Upon consummation of the Exchange the CVLBPR

Note was extinguished.

Concurrently,

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

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

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

the Founding Members an aggregate of 2,183 membership interests of WSS for an aggregate purchase price of $ 225,000 , paid in December

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

PR MIPA”), pursuant to which Conversion Labs PR purchased 12,000 membership interests of WSS for an aggregate purchase price of

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 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 WSS Effective Date.

the consummation of the WSS Restructuring, Conversion Labs PR increased its ownership of WSS from 51% to approximately 85.58% on a fully

diluted basis.

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

the change in ownership.

with the WSS 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 WSS.

Upon vesting, the Fitzpatrick Options

and the Pathak Options provide for the potential re-purchase of up to an additional 13.25% of WSS 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 WSS 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%)

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

sales in any fiscal quarter and (iii) 3,434 membership interests upon WSS 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.

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

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

membership interests upon WSS 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

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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, 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.

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 (the “Board”).

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

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

September 30, 2021, total authorization under the 2020 Plan was 3,150,000 shares.

Additionally, authorization under the 2020 Plan will

automatically increase on January 1st of each year, for a period of not more than ten years, commencing on January 1, 2021 and ending

on (and including) January 1, 2030, in an amount equal to 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

4 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”).

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

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

3 unchanged sentences

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

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

the nine months ended September 30, 2021, the Company issued an aggregate of 1,686,500 stock options to employees and advisory board

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’ terms.

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

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

SCHEDULE OF OPTION ACTIVITY

Number of Shares

Exercise Price

Options Outstanding Number of Shares

Exercise Price per Share

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price per Share

Balance, December 31, 2020

$ 5.20 – 8.81

Cancelled/Forfeited/Expired

Balance at June 30, 2021

Balance at September 30, 2021

$ 5.20 – 21.02

Exercisable at December 31, 2020

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.

$ 5.20 – 8.81

Exercisable at September 30, 2021

$ 5.20 – 21.02

total fair value of the options granted was approximately $ 19,371,408 , 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 165.44 % – 180.12 %, and risk-free rate of

0.66 %– 1.26 %.

Total compensation expense under the 2020 Plan options above was approximately $ 1,566,010 and $ 0 for the three months

ended September 30, 2021 and 2020, respectively, with unamortized expense remaining of approximately $ 15,151,135 as of September 30,

Total compensation expense under the 2020 Plan options above was approximately $ 4,000,264 and $ 0 for the nine months ended September

30, 2021 and 2020, respectively.

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

months ended September 30, 2021:

SCHEDULE OF OPTION ACTIVITY

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 - 7.95

Cancelled/Forfeited/Expired

( 1,022,000 )

Balance at September 30, 2021

$ 1.00 – 19.61

Exercisable December 31, 2020

$ 1.00 – 7.50

Exercisable at September 30, 2021

$ 1.00 – 19.61

total fair value of the options granted was approximately $ 4,967,380 , which was determined by the Black-Scholes Pricing Model with the

following assumptions:

dividend yield of 0 %, expected term of 4 – 6.5 years, volatility of 133.37 % – 180.24 %, and risk-free

rate of 0.73 %– 1.30 %.

Total compensation expense under the above service-based option plan was approximately $ 565,741 and $ 84,924

for the three months ended September 30, 2021 and 2020, respectively, with unamortized expense remaining of approximately $ 4,720,399

as of September 30, 2021.

Total compensation expense under the above service-based option plan was approximately $ 1,385,008 and $ 387,988

for the nine months ended September 30, 2021 and 2020, respectively.

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

SCHEDULE OF OPTION ACTIVITY

Options Outstanding Number of Shares

Exercise Price per Share

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price per Share

Balance at December 31, 2020

Cancelled/Expired

Balance at September 30, 2021

$ 1.25 – 7.50

Exercisable December 31, 2020

Exercisable at September 30, 2021

$ 1.75 – 2.00

compensation expense under the above performance-based option plan was approximately $ 173,397 for both the three and nine months ended

September 30, 2021.

No compensation expense was recognized on the performance-based option plan above for the three and nine months ended

September 30, 2020 as the performance terms had not been met or were not probable.

Stock Units (RSU)

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

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

SCHEDULE OF WARRANT AND RESTRICTED STOCK OUTSTANDING AND EXERCISABLE

Outstanding Number of Shares

RSUs Outstanding Number of Shares

Balance at December 31, 2020

Cancelled/Forfeited/Expired

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.

Balance at September 30, 2021

total fair value of the 431,250 RSUs granted was approximately $ 4,732,500 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 $ 104,325 and $ 0 for the

three months ended September 30, 2021 and 2020, respectively.

Total compensation expense under the above 2020 Plan RSUs above was approximately

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

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:

$ 589,431 and $ 0 for the nine months ended September 30, 2021 and 2020, respectively, with unamortized expense remaining of approximately

$ 4,578,989 as of September 30, 2021.

During the nine months ended September 30, 2021, 69,875 RSUs vested, of which 50,000 RSUs were issued.

Company granted 600,000 RSUs outside of the 2020 Plan during the nine months ended September 30, 2021.

The total fair value of these

RSUs was approximately $ 6,612,000 and no compensation expense was recorded for both the three and nine months ended September 30, 2021,

as the performance terms had not been met or were not probable.

Total compensation expense for RSUs outside of the 2020 Plan was approximately

$ 15,900,000 and $ 15,972,000 for the three and nine months ended September 30, 2020, respectively.

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

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 – 5.75

Exercised/Expired

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.

Balance at September 30, 2021

$ 1.40 – 12.00

Exercisable December 31, 2020

$ 1.40 – 5.75

Exercisable September 30, 2021

$ 1.40 – 12.00

compensation expense on the above warrants for services was approximately $ 604,974 and $ 379,183 the three months ended September 30,

2021 and 2020, respectively, and $ 1,814,922 and $ 538,594 for the nine months ended September 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 $ 2,547,300

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.

Such amounts are included in general and administrative expenses in the consolidated statement of operations.

options, warrants and RSUs amounted to approximately $ 3,110,816 and $ 16,364,000 for the three months ended September 30, 2021 and 2020,

respectively, and approximately $ 7,983,891 and $ 16,899,000 for the nine months ended September 30, 2021 and 2020, respectively.

amounts are included in general and administrative expenses in the consolidated statement of operations.

8 - COMMITMENTS AND CONTINGENCIES

7 unchanged sentences

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.

As of both September 30,

2021 and December 31, 2020, no amount was included in accounts payable and accrued expenses in regard to this agreement.

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

11 unchanged sentences

No amounts were earned

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.

or owed as of September 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

2 unchanged sentences

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 September 30, 2021 and December 31, 2020,

the Company approximates its implicit purchase commitments to be $ 3.8 million and $ 1.6 million, respectively.

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

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.

As of September 30, 2021, other than

as set forth below, the Company’s management does not believe that there are any potentially material pending legal proceedings.

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

35 unchanged sentences

injunctive relief.

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

On September 20, 2021, the class action lawsuit filed against the Company was voluntarily dismissed.

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

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.

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 $ 15,000 for both the three months

ended September 30, 2021 and 2020, and $ 67,500 and $ 45,000 for the nine months ended September 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

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.

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 $ 1,079,403 and $ 642,544 during the nine months ended September 30, 2021 and 2020, respectively.

September 30, 2021 and December 31, 2020, the Company owed BV Global Fulfillment $ 58,296 and $ 58,943 , respectively, which are included

in accounts payable and accrued expenses on the accompanying unaudited condensed consolidated balance sheets.

Agreement with Chief Operating Officer

7 unchanged sentences

the Company and JDM.

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.

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

ended September 30, 2021.

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

7 unchanged sentences

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.

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.

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).

Roberts 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

5 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”).

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

Benathen was granted a signing bonus of 15,000 RSUs.

These RSUs vest in accordance with the following:

(i) 3,750 of the RSUs vesting

on February 4, 2021 (ii) 3,750 RSUs on February 4, 2022 (iii) 3,750 RSUs on February 4, 2023 and (iv) 3,750 RSUs on February 4, 2024 .

In addition to the RSUs, 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 months .

On March 18, 2021, we issued 3,750

3 unchanged sentences

In connection with the appointment, Mr.

Mironov entered into an Employment Agreement with the Company.

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.

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.

The options 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,

The 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, Inc.

on such vesting dates.

The options have a

The options have a five -year

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 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.

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.

of Director Appointment

September 8, 2021, the Company appointed Naveen Bhatia as a member of the Board.

In connection with the appointment to the Board, the

Company and Mr.

Bhatia entered into a director agreement (the “Director Agreement”), whereby, as compensation for his services

as a member of the Board, Mr.

Bhatia shall receive a one-time grant of eight thousand

restricted stock units of the Company, vesting quarterly beginning on September 30, 2021, pursuant to the Company’s Employee Stock

The Company and Mr.

Bhatia also entered into a consulting agreement (the “Bhatia Consulting Agreement”), whereby

Bhatia will assist the Company with its capital markets strategy, business development initiatives and growth strategy for a term

Pursuant to the Bhatia Consulting Agreement, Mr.

Bhatia will receive a stock option to purchase 100,000

shares of the Company’s common stock, par

per share, with an exercise price of $ 7.07

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