What changed in this filing

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Item 1. Financial Statements

2022-05-13 compared with 2021-11-10 · 804 added, 827 removed, 559 unchanged (74% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

September 30, 2021

March 31, 2022

December 31, 2021

9 unchanged sentences

Capitalized software, net

Intangible assets, net

Goodwill and intangible assets, net

Total Non-current Assets

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

Current Liabilities

Accounts payable and accrued expenses

Accounts payable

Accrued expenses

Notes payable, net

Current operating lease liabilities

Deferred revenue

1 unchanged sentence

Long-term Liabilities

Long-term debt, net

Lease liability

Contingent consideration on purchase of WorkSimpli

Noncurrent operating lease liabilities

Contingent consideration

Purchase price payable

Total Liabilities

Commitments and contingencies (see Note 8)

Commitments and Contingencies (Note 9)

Mezzanine Equity

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

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, $ 1,207 and $ 1,175 per share as of March 31, 2022 and December 31, 2021, respectively

Stockholders’ Equity

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

1,610,000 shares authorized, 1,400,000 shares issued and outstanding, liquidation value approximately, $ 26.17 and $ 25.62 per share as of March 31, 2022 and December 31, 2021, respectively

Common stock, $ 0.01 par value;

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

100,000,000 shares authorized, 30,899,469 and 30,704,434 shares issued, 30,796,429 and 30,601,394 outstanding as of March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

4 unchanged sentences

Total LifeMD, Inc.

Stockholders’ Deficit

( 17,557,940 )

( 2,301,899 )

Stockholders’ Equity

Non-controlling interest

1 unchanged sentence

( 1,031,745 )

Total Stockholders’ Deficit

( 18,658,515 )

( 4,477,586 )

Total Liabilities, Mezzanine Equity and Stockholders’ Deficit

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

Total Stockholders’ Equity

Total Liabilities, Mezzanine Equity and Stockholders’ Equity

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

Consolidated STATEMENTS OF OPERATIONS

Three Months Ended September 30,

Months Ended September 30,

Three Months Ended March 31,

Telehealth revenue, net

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General and administrative expenses

Operating expenses

Other operating expenses

Customer service expenses

4 unchanged sentences

( 11,918,337 )

( 40,636,404 )

( 25,491,384 )

Other income (expenses), net

( 1,824,777 )

( 2,681,236 )

( 1,313,010 )

Loss from operations before income taxes

( 14,416,081 )

( 20,823,603 )

( 43,317,640 )

( 26,804,394 )

Income tax provision (benefit)

( 14,416,081 )

( 20,823,603 )

Interest expense, net

Gain on debt forgiveness

( 13,274,949 )

( 11,872,886 )

Net loss attributable to noncontrolling interests

Net income (loss) attributable to non-controlling interest

Net loss attributable to LifeMD, Inc.

1 unchanged sentence

( 11,602,383 )

( 42,786,458 )

( 26,396,214 )

Deemed distribution to holders of common and Series B Preferred stock

( 3,573,636 )

( 4,716,021 )

Preferred stock dividends

Net loss attributable to LifeMD, Inc.

2 unchanged sentences

$ ( 11,602,383 )

$ ( 42,786,458 )

$ ( 31,112,235 )

Basic loss per share attributable to LifeMD, Inc.

from operations

common stockholders

Diluted loss per share attributable to LifeMD, Inc.

from operations

common stockholders

Weighted average number of common shares outstanding:

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

Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ DEFICIT

Noncontrolling

Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ EQUITY

Non-controlling

January 1, 2021

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 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

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.

Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ DEFICIT

Noncontrolling

Balance, January 1, 2021

$ ( 80,151,905 )

3 unchanged sentences

$ ( 4,477,586 )

Stock issued for services

Cashless exercise of stock options

exercise of stock options

Sale of stock in private placement, net

Distribution to non-controlling interest

Purchase of additional membership interest of WorkSimpli

Adjustment of noncontrolling Interest for additional investment

of stock options

of stock in private placement, net

to non-controlling interest

of additional membership interest of WSS

of noncontrolling interest for additional investment

( 1,636,875 )

3 unchanged sentences

( 11,872,886 )

Balance, March 31, 2021

March 31, 2021

$ ( 91,754,288 )

Stock issued for services

Exercise of stock options

Cashless exercise of stock options

Exercise of warrants

Warrants issued for debt instruments

Distribution to non-controlling interest

$ ( 163,701 )

1 unchanged sentence

$ ( 841,427 )

Balance, June 30, 2021

Non-controlling

January 1, 2022

$ 164,517,634

2 unchanged sentences

$ ( 1,031,745 )

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 )

A Preferred Stock Dividend

to non-controlling interest

(loss) income

( 13,299,675 )

Balance, September 30, 2021

( 13,299,675 )

( 13,274,949 )

March 31, 2022

$ 169,026,965

4 unchanged sentences

Consolidated STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

5 unchanged sentences

Amortization of intangibles

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

Liability to issue shares for services

Stock issued for services

Stock compensation expense

5 unchanged sentences

Deferred revenue

Accounts payable and accrued expenses

Accounts payable

Accrued expenses

Net cash used in operating activities

6 unchanged sentences

Purchase of intangible assets

Payment to seller for contingent consideration

( 4,000,500 )

Acquisition of business, net of cash acquired

( 1,012,395 )

Net cash used in investing activities

2 unchanged sentences

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 sale of common stock under ATM

Cash proceeds from exercise of warrants

Cash proceeds from exercise of options

Cash proceeds from sale of warrants

Purchase of membership interest of WorkSimpli

Cash proceeds from exercise of warrants

Preferred stock dividends

Purchase of membership interest of WSS

Distributions to non-controlling interest

Proceeds from notes payable

Repayment of notes payable

( 1,494,784 )

Net cash (used in) provided by financing activities

Net (decrease) increase in cash

( 16,243,395 )

Debt issuance costs

Net cash provided by financing activities

Net increase (decrease) in cash

Cash at beginning of period

3 unchanged sentences

Non-cash investing and financing activities

Cashless exercise of options

Cashless exercise of warrants

Cashless exercise of options

Consideration payable for Cleared acquisition

Consideration payable for ResumeBuild acquisition

Principal of Paycheck protection Program loans forgiven

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

Stock yet to be issued for capitalized costs

Deemed distribution from down-round provision on unissued 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

Additional purchase of membership interest in WSS issued in performance options

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

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The Company changed its name to Conversion

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

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

Effective February 22, 2021,

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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.

January 18, 2022, the Company acquired Cleared Technologies, PBC, a Delaware public benefit corporation (“Cleared”), a rapidly

growing nationwide allergy telehealth platform that provides personalized treatments for allergy, asthma, and immunology (See Note 3).

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

of its affiliated medical group 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 affiliated, 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.

In addition to its telehealth prescription offerings, the Company sells over-the-counter (“OTC”)

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.

As is exemplified

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

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

with its first brand, Shapiro MD, it has built a full line of proprietary OTC products for male and female hair loss, Food and Drug Administration

(“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

The Company’s men’s brand, RexMD, 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.

quarter of 2021, the Company launched its newest brand, NavaMD, a tele-dermatology and skincare brand for women.

The Company has built

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and Subsidiary History

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%.

June 2018, Conversion Labs closed the strategic acquisition of 51 % of WorkSimpli, which operates a 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

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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.

In May 2019, Conversion Labs RX, LLC (“CVLB Rx”), a Puerto Rico limited liability company, signed a strategic

partnership agreement with GoGoMeds.com (“GoGoMeds”).

GoGoMeds is a nationwide pharmacy licensed to dispense prescription

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

However, since its inception, CVLB Rx did not conduct

any business and CVLB Rx was dissolved on August 7, 2020.

Additionally, Conversion Labs Asia Limited (“Conversion Labs Asia”),

a Hong Kong company, had no activity during the three months ended March 31, 2022 and 2021.

January 18, 2022, the Company acquired Cleared, a rapidly growing nationwide allergy telehealth platform that provides personalized treatments

for allergy, asthma, and immunology.

Under the terms of the agreement, the Company acquired all outstanding shares of Cleared at closing

in exchange for a $ 460,000 upfront cash payment, and two non-contingent milestone payments for total of $ 3.46 million ($ 1.73 million

each on or before the first and second anniversaries of the closing date).

The Company purchased a convertible note from a strategic

pharmaceutical investor for $ 507,000 which was converted upon closing of the Cleared acquisition.

The Company also agreed to a performance-based

earnout based on Cleared’s future net sales, payable in cash or shares at the Company’s discretion.

February 2022, WorkSimpli closed on an Asset Purchase Agreement (the “ResumeBuild APA”) with East Fusion FZCO, a Dubai, UAE

corporation (the “Seller”), whereby WorkSimpli acquired substantially all of the assets associated with the Seller’s

business offering subscription-based resume building software through SaaS online platforms (the “Acquisition”).

paid to the Seller a purchase price $ 4,000,000 .

The Seller is also entitled to a minimum of $ 500 thousand to be paid out in quarterly

payments equal to the greater of 15 % of net profits (as defined in the ResumeBuild APA) or $ 62,500 , for a two-year period ending on the

two-year anniversary of the closing of the Acquisition.

WorkSimpli borrowed the purchase price from the Company pursuant to a promissory

note with the obligation secured by an equity purchase guarantee agreement and a stock option pledge agreement from Fitzpatrick Consulting,

LLC and its sole member Sean Fitzpatrick, who is Co-Founder and President of WorkSimpli.

(See Note 3).

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”),

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.

our recent acquisition, Cleared, a Delaware public benefit corporation and our majority-owned subsidiary, WorkSimpli.

The affiliated

network of medical Professional Corporations and medical Professional Associations administratively led by LifeMD Southern Patient Medical

Care, P.C., is the Company’s variable interest entity in which we hold a controlling financial interest (“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

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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 .

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

instant access to comprehensive patient health records, 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

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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

companies by combining LifeMD’s expanding direct-to-patient telehealth brands and 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

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

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

The Reverse Split was approved by the Financial Industry Regulatory

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

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

The Company intends to use the net

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

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

The Company is using the net proceeds

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

June 1, 2021, the Company entered into a securities purchase agreement (the “June 1, 2021 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 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 June 1, 2021 Purchase Agreement .

The Warrant has a term of three years , and the Debenture has a maturity

date of three years .

The Company received gross proceeds of $ 15.0 million.

In October 2021, the Company used a portion of the net proceeds

from the October 4, 2021 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, as amended (the “Securities

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

Under the 2021 Shelf at the time of effectiveness,

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

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

Riley Securities, Inc.

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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.

There were no shares of common stock sold under the ATM Sales Agreement during the

three months ended March 31, 2022 and 2021.

Under the 2021 Shelf, the Company had the ability to raise up to $ 150 million, of which $ 58.5

million was utilized as of March 31, 2022.

The Company has approximately $ 59.5 million available under the ATM Sales Agreement and $ 32

million available under the 2021 Shelf as of March 31, 2022.

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.

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.

The option was not exercised.

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 B.

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 “October 4, 2021 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.

The Company 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.

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 second quarterly dividend on the Series A Preferred Stock was declared on March 25, 2022 to

holders of record as of April 5, 2022 and was paid on April 15, 2022.

The dividend is included in the Company’s results

of operations for the three months ended March 31, 2022.

of March 31, 2022, the Company has an accumulated deficit approximating $ 156 million and has experienced significant losses from its

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.

the third quarter of 2022.

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

the Company expects this burn rate to improve and become cash flow positive by the fourth quarter of 2022.

To date, the Company has been

funding operations primarily through the sale of equity in private placements and securities purchased by a financial institution.

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

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 $ 20.1

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

million of net proceeds from the February 2021

Offering and the $ 55.3

million as of the filing date, which includes

the $ 13.5 million

of net proceeds from the February 2021 Offering and the $ 55.3

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:

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

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

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

and industry factors.

Positive indicators that lead to 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 over the next 12 months, (3) $ 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.

and $ 32 million

available under the 2021 Shelf, (4) management’s ability to curtail expenses, if necessary, and (5) 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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of Regulation S-X.

Accordingly, they do not include all of the information and note disclosures required by U.S.

generally accepted accounting

principles (“U.S.

Accordingly, they do not include all of the information and note disclosures required by accounting principles generally

accepted in the United States (“U.S.

GAAP”) for complete audited financial statements.

The accompanying unaudited financial information should

be read in conjunction with the audited consolidated financial statements, including the notes thereto, as of and for the year ended

December 31, 2020, included in our 2020 Annual Report on Form 10-K filed with the SEC.

The information furnished in this report reflects

all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation

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

The results of operations for the three and

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

The accompanying unaudited financial

information should be read in conjunction with the audited consolidated financial statements, including the notes thereto, as of and

for the year ended December 31, 2021, included in our 2021 Annual Report on Form 10-K filed with the SEC.

The information furnished in

this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary

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

The results of operations

for the three months ended March 31, 2022 are not necessarily indicative of the results for the year ending December 31, 2022 or for

any future period.

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, 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.

Company evaluates the need to consolidate affiliates based on standards set forth in Accounting Standards Codification (“ASC”)

810, Consolidation .

consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, CLPR, its recent acquisition,

Cleared, its majority owned subsidiary, WorkSimpli, in addition to LifeMD PC, the Company’s variable interest entity in which we

hold a controlling financial interest.

During the year ended December 31, 2021, the Company purchased an additional 34.6 % of WorkSimpli

for a total equity interest of approximately 85.6 % as of December 31, 2021 (see Note 7).

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 September 30,

As of March 31, 2022

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

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We have never experienced any losses related to these balances.

Interest Entities

accordance with ASC 810, Consolidation , the Company determines whether any legal entity in which the Company becomes involved

is a variable interest entity (a “VIE”) and subject to consolidation.

This determination is based on whether an entity has

sufficient equity at risk to finance their activities without additional subordinated financial support from other parties or whose equity

investors lack any of the characteristics of a controlling financial interest and whether the interest will absorb portions of a VIE’s

expected losses or receive portions of its expected residual returns and are contractual, ownership, or pecuniary in nature and that

change with changes in the fair value of the entity’s net assets.

A reporting entity is the primary beneficiary of a VIE and must

consolidate it when that party has a variable interest, or combination of variable interests, that provides it with a controlling financial

A party is deemed to have a controlling financial interest if it meets both of the power and losses/benefits criteria.

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

Company determined that the LifeMD PC entity, the Company’s affiliated medical professional corporation, is a VIE and subject to

consolidation.

LifeMD PC and the Company do not have any shareholders in common.

LifeMD PC is owned by licensed physicians, and the Company

maintains a service agreement with LifeMD PC whereby we provide all non-clinical services to LifeMD PC.

The Company determined that it

is the primary beneficiary of LifeMD PC and must consolidate, as we have both the power to direct the activities of LifeMD PC that most

significantly impact the economic performance of the entity and we have the obligation to absorb the losses.

As a result, the Company

presents the financial position, results of operations, and cash flows of LifeMD PC as part of the consolidated financial statements

of the Company.

There is no non-controlling interest upon consolidation of LifeMD PC.

net loss for LifeMD PC was approximately $ 1.5 million for the three months ended March 31, 2022.

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

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

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

and going concern assessment.

Actual results could differ from those estimates.

returns and allowances, the valuation of inventory and stockholders’ equity-based transactions.

Actual results could differ from

those estimates.

Reclassifications

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Given the increase in the Company’s software

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:

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

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

it to the current periods’ presentation.

The reclassifications include:

(1) $ 6,538 of reimbursable expenses reclassified from cost

of revenues to other operating expenses, (2) $ 157,662 of taxes and licensing fees reclassified from other operating expenses to general

and administrative expenses, (3) $ 45,659 of software development costs reclassified from cost of revenues to development costs and (4)

$ 73,170 of development services costs reclassified from other operating expenses to development costs for the three months ended March

Company records revenue under the adoption of ASC 606, Revenue from Contracts with Customers , by analyzing exchanges with its

customers using a five-step analysis:

performance obligations

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Customer discounts, returns

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.

and rebates on telehealth revenues approximated $1.5 million and $1.2 million, respectively, during the three months ended March 31,

2022 and 2021.

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

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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

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

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

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

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

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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 September 30,

Nine Months Ended September 30,

As of March 31, 2022 and December 31, 2021, the Company

has accrued contract liabilities, as deferred revenue, of approximately $ 1.8 million and $ 1.5 million, 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 $ 448 thousand and $ 554 thousand, respectively,

during the three months ended March 31, 2022 and 2021.

the three months ended March 31, 2022 and 2021, the Company had the following disaggregated revenue:

OF DISAGGREGATED REVENUE

Three Months Ended March 31,

Telehealth revenue

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The Company’s deferred

revenues relate to payments received for the in-process

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

SCHEDULE OF CONTRACT WITH CUSTOMER LIABILITY

Three Months Ended September 30,

Nine Months Ended September 30,

revenues relate to payments received for the in-process monthly or yearly contracts with customers and a portion attributable to the

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

OF CONTRACT WITH CUSTOMER LIABILITY

Three Months Ended March 31,

Beginning of period

Revenue recognized

( 6,079,295 )

( 4,602,437 )

End of period

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

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

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

As of March 31, 2022 and December

31, 2021, the reserve for sales returns and allowances was approximately $ 495 thousand and $ 477 thousand, respectively.

For all periods

presented, as noted above, the sales returns and allowances were recorded in accounts payable and accrued expenses on the unaudited condensed

consolidated balance sheets.

of March 31, 2022 and December 31, 2021, 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.

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

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

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

in Wyoming and at various Amazon fulfillment centers.

The Company also maintains inventory at a company owned warehouse in Pennsylvania.

is valued at the lower of cost or net realizable value with cost determined on an average cost basis.

Management compares the cost of

inventory with the net realizable value and an allowance is made for writing down inventory to net realizable, if lower.

As of both March

31, 2022 and December 31, 2021, the Company recorded an inventory reserve in the amount of $ 57,481 .

of March 31, 2022 and December 31, 2021, the Company’s inventory consisted of the following:

Finished Goods - Products

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Total Inventory - net

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.

of our 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 March 31, 2022 and December 31, 2021, the Company has approximately $ 615 thousand and $ 204 thousand, respectively,

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

The Company’s history of product

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

of the product deposit.

As of March 31, 2022 and December 31, 2021, the Company approximates its implicit purchase commitments to be

$ 1.3 million and $ 511 thousand, respectively.

As of March 31, 2022 and December 31, 2021, the vast majority of these product deposits

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

Software Costs

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Certain development costs not meeting the criteria

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

are expensed as incurred.

As of 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.

for capitalization, in accordance with ASC 350-40 , Internal-Use Software , are expensed as incurred.

As of March 31, 2022 and December

31, 2021, the Company capitalized $ 5.7 million and $ 3.6 million, respectively, related to internally developed software costs which are

amortized over the useful life and included in development costs on our statement of operations.

and Intangible Assets

and intangible assets include those acquired in conjunction with the Cleared acquisition for which the purchase accounting is preliminary

(see Note 3).

Other amortizable intangible assets include:

(1) intangible assets acquired related to the ResumeBuild brand (with original

cost of approximately $ 4.5 million) with an estimated useful life of five years , (2) a customer relationship asset (with original cost

of approximately $ 1,007,000 ) with an estimated useful life of three years , (3) a purchased license (with original cost of $ 200,000 ) with

an estimated useful life of ten years and (4) purchased domain names (with original costs of $ 22,731 ) with estimated useful lives 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 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.

the three months ended March 31, 2021, the Company had a total of $ 184,914 of its PPP loans forgiven by the U.S.

Small Business Administration

(“SBA”) (see Note 6).

As of both March 31, 2022 and December 31, 2021, the PPP loan balance was $ 63,400 and is reflected

on the Company’s unaudited condensed consolidated balance sheet as current liabilities, within notes payable, net.

Company files corporate federal, state and local tax returns.

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

Conversion Labs PR and WorkSimpli file tax returns in Puerto Rico.

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

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

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

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

for the year in which the differences are expected to reverse.

The Company establishes a valuation allowance, when necessary, to reduce

deferred tax assets to the amount expected to be realized.

The Company periodically assesses the value of its deferred tax asset, a majority

of which has been generated by a history of net operating losses and management determines the necessity for a valuation allowance.

740 also provides a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or

expected to be taken in a tax return.

Using this guidance, a company may recognize the tax benefit from an uncertain tax position in

its financial statements only if it is more likely-than-not (i.e., a likelihood of more than 50%) that the tax position will be sustained

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

The Company’s tax returns for all years

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

Company records current and deferred taxes in accordance with ASC 740, Accounting for Income Taxes .

This ASC requires recognition

of deferred tax assets and liabilities for temporary differences between tax basis of assets and liabilities and the amounts at which

they are carried in the financial statements, based upon the enacted rates in effect for the year in which the differences are expected

The Company establishes a valuation allowance, when necessary, to reduce deferred tax assets to the amount expected to be

The Company periodically assesses the value of its deferred tax asset, a majority of which has been generated by a history

of net operating losses and management determines the necessity for a valuation allowance.

ASC 740 also provides a recognition threshold

and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken in a tax return.

this guidance, a company may recognize the tax benefit from an uncertain tax position in its financial statements only if it is more

likely-than-not (i.e., a likelihood of more than 50%) that the tax position will be sustained on examination by the taxing authorities,

based on the technical merits of the position.

The Company’s tax returns for all years since December 31, 2018, remain open to

audit by all related taxing authorities.

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

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elected to account for forfeitures as they occur.

of the assumptions require significant judgment and any changes could have a material impact in the determination of stock-based compensation

Many of the assumptions require significant judgment and any changes could have a material

impact in the determination of stock-based compensation expense.

(Loss) Per Share

earnings (loss) per common share is based on the weighted average number of shares outstanding during each period presented.

securities, warrants and options to purchase common stock are included as common stock equivalents only when dilutive.

Potential common

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

earnings (loss) per common share (“EPS”) is based on the weighted average number of shares outstanding during each period

Convertible securities, warrants and options to purchase common stock are included as common stock equivalents only when dilutive.

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

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

In computing diluted EPS, basic EPS is adjusted

for the assumed issuance of all potentially dilutive securities.

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

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

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

In computing diluted EPS, basic EPS is adjusted for the

assumed issuance of all potentially dilutive securities.

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

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

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

The dilutive effect of traditional convertible

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

SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

Three Months Ended September 30,

Nine Months Ended September 30,

OF POTENTIALLY DILUTIVE SECURITIES

Three Months Ended March 31,

Series B Preferred Stock

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Potentially dilutive securities

portfolio of brands are included within two operating segments:

Telehealth and WorkSimpli.

We believe our current segments and brands

within our segments complement one another and position us well for future growth.

Segment operating results are reviewed by the chief

operating decision maker to make determinations about resources to be allocated and to assess performance.

Other factors, including type

of business, revenue recognition and operating results are reviewed in determining the Company’s operating segments.

Value of Financial Instruments

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

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.

We 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 March 31, 2022, we utilized four (4) suppliers for fulfillment

services, seven (7) suppliers for manufacturing finished goods, four (4) suppliers for packaging, bottling and labeling and two (2) suppliers

for prescription medications.

As of December 31, 2021, we utilized four (4) suppliers for fulfillment services, six (6) suppliers for

manufacturing finished goods and four (4) suppliers for packaging, bottling and labeling.

We purchased 100 % of our finished goods from

six (6) OTC manufacturers for both the three months ended March 31, 2022 and for the year ended December 31, 2021.

Adopted Accounting Pronouncements

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

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

Accounting for Convertible Instruments and Contracts in

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

associated with applying U.S.

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

This update addresses,

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

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

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

This update applies

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

This guidance is effective for financial

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

October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2021-08, Business Combinations (Topic 805);

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

This new guidance affects all entities that enter into a business combination within the scope of ASC 805-10.

Under this new guidance,

the acquirer should determine what contract assets and/or liabilities it would have recorded under ASC 606, Revenue from Contracts

with Customers , as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the

same terms as the acquirer.

Under current U.S.

GAAP, contract assets and contract liabilities acquired in a business combination are

recorded by the acquirer at fair value.

This update is effective for fiscal years beginning after December 15, 2022.

Early adoption is

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

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

Company elect to early adopt.

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

financial position, results of operations or cash flows.

The Company is currently evaluating the effects that the adoption of this guidance will have on our consolidated financial

statements and related disclosures.

Recent Accounting Pronouncements

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not expected to have a material impact on the consolidated financial statements upon adoption.

3 – 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:

September 30,

Amortizable Intangible Assets

3 – ACQUISITIONS

January 18, 2022, the Company completed the acquisition of Cleared and accounted for the transaction using the acquisition method in

accordance with ASC 805, Business Combinations , with the purchase price being allocated to tangible and identifiable intangible

assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition date.

Fair values were determined

using income approaches.

T he results of Cleared are included within the consolidated financial

statements commencing on the acquisition date.

preliminary purchase price was approximately $ 9.1 million, including cash paid upfront of approximately $ 1.0 million and payable

in the future of approximately $ 3.0 million, and contingent consideration of $ 5.1 million.

The purchase agreement includes up

to $ 72.8 million of potential earn-out payable in cash or stock upon achievement of revenue targets, which is recognized as contingent

consideration.

The Company, with the assistance of a

third-party valuation expert, estimated the preliminary fair value of the acquired tangible and identifiable intangible assets using

significant estimates such as revenue projections.

The allocation of the consideration transferred to the assets acquired and the liabilities

assumed is preliminary.

This can be revised as a result of additional information obtained due to the finalization of the valuation inputs

and assumptions as well as completing the assessment of the tax attributes of the business combination.

Additional adjustments that could

have a material impact on the Company’s results of operations and financial position may be recorded within the measurement period,

which will not exceed one year from the acquisition date.

following table summarizes the preliminary acquisition date fair values of assets acquired and liabilities assumed:

OF FAIR VALUE OF ASSETS AND LIABILITIES

Preliminary purchase price, net of cash acquired

Accounts payable and other current liabilities

Goodwill and intangible assets

amount allocated to goodwill and intangible assets reflects the benefits the Company expects to realize from the growth of the acquisition’s

The pro forma financial information, assuming the acquisition had taken place on January

1, 2022, as well as the revenue and earnings generated during the period after the acquisition date, were not material for separate disclosure

and, accordingly, have not been presented.

February 2022, WorkSimpli closed on the ResumeBuild APA to purchase the related intangible assets associated with the ResumeBuild brand.

WorkSimpli paid to the Seller a purchase price of $ 4,500,000 , including cash paid upfront and contingent

consideration of $ 500 thousand .

In accordance with ASC 805, Business Combinations , the Company accounted for the ResumeBuild

APA as an acquisition of assets as substantially all the fair value of the gross assets acquired is concentrated in a group of similar

The Company has elected to group the complementary intangible assets acquired as a single brand intangible asset.

Additionally,

the Seller is entitled to quarterly payments equal to the greater of 15 % of net profits (as defined in the ResumeBuild APA) or $ 62,500 ,

for a two-year period ending on the two-year anniversary of the closing of the Acquisition.

The Company estimated the fair value of the

contingent consideration using the income approach and will remeasure the fair value quarterly with changes accounted for through earnings.

4 – GOODWILL AND INTANGIBLE ASSETS

of March 31, 2022 and December 31, 2021, the Company has the following amounts related to goodwill and intangible assets:

OF GOODWILL AND INTANGIBLE ASSETS

Goodwill and Intangible Assets as at:

Preliminary Goodwill – Cleared Acquisition

Other Amortizable Intangible Assets:

ResumeBuild brand

Customer relationship asset

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( 1,323,704 )

Total net amortizable intangible assets

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

( 1,209,310 )

Total net goodwill and amortizable intangible assets

aggregate amortization expense of the Company’s intangible assets for the three months ended March 31, 2022 and 2021 was approximately

$ 114,394 and $ 83,903 , respectively.

Total amortization expense for the remainder of 2022 is $ 680,683 .

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

Accrued compensation

Total amortization expense for

2023 through 2026 is approximately $ 900,000 per year and $ 112,500 for 2027.

5 – ACCRUED EXPENSES

of March 31, 2022 and December 31, 2021, the Company has the following amounts related to accrued expenses:

OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accrued selling and marketing expenses

Accrued legal and professional fees

Accrued interest payable

Accrued compensation

Accrued dividends payable

Sales tax payable

Purchase price payable

Other accrued expenses

Total accounts payable and accrued expenses

Total accrued expenses

6 – NOTES PAYABLE

Loan and Forgiveness

June 2020, the Company and its subsidiaries received three loans in the aggregate amount of approximately $ 248,314 (the “PPP Loan”)

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

Small Business Administration.

These loans bear interest at

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

The proceeds of the PPP Loan must be used

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

into before February 1, 2020.

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

40% may be used on non-payroll expenses.

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

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

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

however, there can be no assurance

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

During the 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 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

liabilities, within notes payable, net.

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

The terms of the loan

include a service charge of $ 19,950 ( 3.99 %).

The total balance of $ 519,950 as of December 31, 2020, included in notes payable, net, on

the accompanying unaudited condensed consolidated balance sheet, and was repaid in full in January 2021.

Funding Agreement

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

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

The terms of the

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

The total balance owed under this agreement was repaid

in full in May 2021.

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

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

The terms of the funding agreement include a service

charge of 3.99 % on cash advances from MO Tech.

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

June 2020, the Company and its subsidiaries received three loans in the aggregate amount of approximately $ 249 thousand (the “PPP

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

These loans bear interest at one percent per

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

The proceeds of the PPP Loan must be used for payroll costs,

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

At least 60% of the proceeds must be used for payroll costs and certain other expenses and no more than 40% may be used on non-payroll

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

Company satisfies applicable employee headcount and compensation requirements.

The Company currently believes that a majority of the

PPP Loan proceeds will qualify for debt forgiveness;

however, there can be no assurance that the Company will qualify for forgiveness

from the SBA until it occurs.

During the three months ended March 31, 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 both March 31, 2022 and December 31, 2021, the PPP loan balance was $ 63,400 and is reflected on the Company’s unaudited condensed

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

interest expense on notes payable, inclusive of amortization of debt discounts, amounted to $ 0 and $ 17,271 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 .

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.

March 31, 2022 and 2021, respectively.

7 – STOCKHOLDERS’ EQUITY

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Preferred Stock and 3,385,000 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

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

In connection with the Stock

Split, the Company issued approximately 632 shares for rounding.

June 8, 2021, the Company filed the 2021 Shelf.

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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 .

Under the 2021 Shelf, the Company had the ability to raise up to $ 150 million .

The Company has approximately $ 59.5 million available under the ATM Sales Agreement and $ 32 million available under the 2021 Shelf as

of March 31, 2022.

the three months ended March 31, 2022, the Company issued an aggregate of 25,535 shares of common stock related to the cashless exercise

the three months ended March 31, 2022, the Company issued an aggregate of 22,000 shares of common stock related to the exercise of warrants

for gross proceeds of $ 38,500 .

Interest Purchase Agreement

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

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

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

Galluppi (“Mr.

Schreiber, Taggart International Trust, Mr.

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

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

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

and 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 % .

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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 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 .

30, 2020 for the issuance of these 2,000,000 shares, of which 1,200,000 shares were issued during the three months ended March 31, 2021.

Stock Transactions During the Three Months Ended March 31, 2022

the three months ended March 31, 2022, the Company issued an aggregate of 147,500 shares of common stock for services expensed in prior

Noncontrolling

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.

the three months ended March 31, 2022, net income attributed to the non-controlling interest amounted to $ 24,726 and for the three months

ended March 31, 2021, net loss attributed to the non-controlling interest amounted to $ 270,503 .

During both the three months ended March

31, 2022 and 2021, the Company paid distributions to non-controlling shareholders of $ 36,000 .

Software Restructuring Transaction

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.

January 22, 2021 (the “WSS Effective Date”), the Company consummated 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,

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Equity Incentive Plan (the “2020 Plan”)

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

Approval of the 2020

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

the Securities and Exchange Commission on December 7, 2020.

The 2020 Plan is administered by the Compensation Committee and initially

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

The number of shares of Common Stock available for issuance under

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

commencing on January 1, 2021.

As of January 1, 2021, 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”).

January 8, 2021, the Company approved the Company’s 2020 Plan.

Approval of the 2020 Plan was included as Proposal 1 in the Company’s

definitive proxy statement for its Special Meeting of Shareholders filed with the Securities and Exchange Commission on December 7, 2020.

The 2020 Plan is administered by the Compensation Committee of the Board of Directors (the “Board”) and initially provided

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

The number of shares of Common Stock available for issuance under the 2020

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

commencing on January 1, 2021 and ending on (and including) January 1, 2030.

Awards under the 2020 Plan can be granted in the form of

stock options, non-qualified and incentive options, stock appreciation rights, restricted stock, and restricted stock units.

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.

January 1, 2022, the Plan provided for the issuance of up to 3,300,000 shares of Common Stock.

Remaining authorization under the 2020

Plan was 276,052 shares as of March 31, 2022.

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

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of Restricted Stock Award Agreement.

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 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

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

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

for the remaining 370,000 performance options to include four performance metrics that, if met, each trigger the vesting of 92,500 options.

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

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 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

the Company had granted service-based stock options and performance-based stock options separate from the 2020 Plan.

the three months ended March 31, 2022, the Company issued an aggregate of 238,500 stock options to employees under the 2020 Plan and

the prior plan.

These stock options have a contractual term of 4 to 5 years and vest in increments which fully vest the options over

a three-year period, dependent on the specific agreements’ terms.

following is a summary of outstanding options activity under our 2020 Plan for the three months ended March 31, 2022:

OF OPTION ACTIVITY

Number of Shares

Exercise Price

Balance, December 31, 2021

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Cancelled/Forfeited/Expired

Balance at September 30, 2021

Balance at March 31, 2022

$ 3.28 – 21.02

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$ 4.57 – 21.02

Exercisable at September 30, 2021

Exercisable at March 31, 2022

$ 3.28 – 21.02

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dividend yield of 0 % , expected term of 4 years, volatility of 387.81 % – 465.55 % , and risk-free rate of 1.26 % – 1.62 % .

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:

Total compensation expense under the 2020 Plan options above was approximately $ 1,644,490 and $ 1,181,505 for the three months ended March

31, 2022 and 2021, respectively, with unamortized expense remaining of approximately $ 11,916,040 as of March 31, 2022.

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

months ended March 31, 2022:

SCHEDULE OF OPTION ACTIVITY

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Balance, December 31, 2021

$ 0.80 - 7.95

Cancelled/Forfeited/Expired

( 1,022,000 )

Balance at September 30, 2021

$ 1.00 – 19.61

Balance at March 31, 2022

Exercisable December 31, 2021

$ 1.00 – 7.50

Exercisable at September 30, 2021

$ 1.00 – 19.61

Exercisable at March 31, 2022

total fair value of the options granted was approximately $ 205,995 , 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

dividend yield of 0 % , expected term of 4 years, volatility of 420.16 % and risk-free rate of 1.37 % .

Total compensation

expense under the above service-based option plan was approximately $ 550,400 and $ 406,534 for the three months ended March 31, 2022 and

2021, respectively, with unamortized expense remaining of approximately $ 4,349,079 as of March 31, 2022.

All of the service-based options

exercised during the three months ended March 31, 2022, were exercised on a cashless basis which resulted in 25,535 shares issued.

following is a summary of outstanding performance-based options activity for the three months ended March 31, 2022:

OF OPTION ACTIVITY

Options Outstanding Number of Shares

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Balance at December 31, 2021

Cancelled/Expired

Balance at September 30, 2021

$ 1.25 – 7.50

Balance at March 31, 2022

Exercisable December 31, 2021

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 nine months ended September 30, 2021:

Exercisable at March 31, 2022

total fair value of the options granted was approximately $ 617,980 , which was determined by the Black-Scholes Pricing Model with the

following assumptions:

dividend yield of 0 % , expected term of 3.5 years, volatility of 444 % and risk-free rate of 1.37 % .

Total compensation

expense under the above performance-based option plan was approximately $ 105,797 for the three months ended March 31, 2022, with unamortized

expense remaining of approximately $ 317,391 .

No compensation expense was recognized on the performance-based option plan above for the

three months ended March 31, 2021 as the performance terms had not been met or were not probable.

Stock Units (RSUs) (under the 2020 Plan)

summary of outstanding RSU activity under our 2020 Plan is as follows:

SCHEDULE OF WARRANT AND RESTRICTED STOCK OUTSTANDING AND EXERCISABLE

RSUs Outstanding Number of Shares

RSU Outstanding

Number of Shares

Balance at December 31, 2021

Cancelled/Forfeited/Expired

Balance at September 30, 2021

Balance at March 31, 2022

total fair value of the 547,500 RSUs granted was approximately $ 1,713,025 which was determined using the fair value of the quoted market

price on the date of grant.

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

$ 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

Total compensation expense under the 2020 Plan RSUs above was approximately $ 976,120 and $ 12,163 for the

three months ended March 31, 2022 and 2021, respectively, with unamortized expense remaining of approximately $ 4,800,769 as of March

During the three months ended March 31 2022, 60,375 RSUs vested, of which 47,500 RSUs were issued.

(outside of 2020 Plan)

Company granted 620,000 RSUs outside of the 2020 Plan during the year ended December 31, 2021.

The total fair value of these RSUs was

approximately $ 6,867,600 .

Total compensation expense for RSUs outside of the 2020 Plan was $ 591,000 and $ 120,600 for the three months

ended March 31, 2022 and 2021, respectively, with unamortized expense remaining of approximately $ 5,430,000 as of March 31, 2022.

the three months ended March 31, 2022, 50,000 RSUs vested and were issued.

As of March 31, 2022, 550,000 RSUs outside of the 2020 Plan

remain outstanding.

following is a summary of outstanding and exercisable warrants activity during the three months ended March 31, 2022:

OF WARRANT AND RESTRICTED STOCK OUTSTANDING AND EXERCISABLE

Warrants Outstanding Number of Shares

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Balance at December 31, 2021

$ 1.40 – 5.75

Exercised/Expired

Balance at September 30, 2021

$ 1.40 – 12.00

Cancelled/Forfeited/Expired

Balance at March 31, 2022

Exercisable December 31, 2021

$ 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.

Exercisable March 31, 2022

compensation expense on the above warrants for services was approximately $ 604,974 for both the three months ended March 31, 2022 and

2021 with unamortized expense remaining of approximately $ 1,042,253 .

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 $ 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.

options, warrants and RSUs amounted to approximately $ 4,472,781 and $ 2,325,775 for the three months ended March 31, 2022 and 2021, respectively.

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

expense remaining related to service-based stock options, performance-based stock options, warrants and RSUs was approximately $ 27,855,532

as of March 31, 2022.

February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , which supersedes all existing guidance on accounting for leases

in ASC 840, Lease Accounting .

ASU 2016-02 is intended to provide enhanced transparency and comparability by requiring lessees

to record right-of-use assets and corresponding lease liabilities on the balance sheet.

ASU 2016-02 will continue to classify leases

as either finance or operating, with classification affecting the pattern of expense recognition in the statement of income.

Company leases office space domestically under operating leases.

The Company’s headquarters are located in New York, New York for

which the lease expires in 2025.

We operate a marketing and sales center in Huntington Beach, California for which the lease expires

in 2023, a patient care center in Greenville, South Carolina for which the lease expires in 2024 and a warehouse and fulfillment center

in Columbia, Pennsylvania for which the lease expires in 2023.

table below reconciles the undiscounted future minimum lease payments under the above noted operating leases to the total operating lease

liabilities recognized on the consolidated balance sheet as of March 31, 2022:

OF MATURITY OF OPERATING LEASE LIABILITIES

Remainder of fiscal year 2022

Fiscal year 2023

Fiscal year 2024

Fiscal year 2025

imputed interest

Present value of operating lease liabilities

lease expenses were $ 202,412 and $ 93,410 for the three months ended March 31, 2022 and 2021, respectively, and were included in other

operating expenses in our consolidated statement of operations.

cash flow information related to operating lease liabilities consisted of the following:

OF CASH FLOW RELATED TO OPERATING LEASE LIABILITIES

Cash paid for operating lease liabilities

balance sheet information related to operating lease liabilities consisted of the following:

OF BALANCE SHEETS RELATED TO OPERATING LEASE LIABILITIES

March 31, 2022

December 31, 2021

Weighted average remaining lease term in years

Weighted average discount rate

have elected to apply the short-term lease exception to the warehouse space we lease in Lancaster, Pennsylvania.

This lease has a term

of 12 months and is not recognized on the balance sheet, but rather expensed on a straight-line basis over the lease term.

Straight-line

lease payments are $ 2,100 per month.

Additionally, Conversion Labs PR utilizes office space in Puerto Rico, which is subleased from Fried

LLC, on a month-to-month basis, incurring rental expense of approximately $ 3,000 per month.

9 - COMMITMENTS AND CONTINGENCIES

7 unchanged sentences

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

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.

As of March 31, 2022 and

December 31, 2021, 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”),

6 unchanged sentences

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

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

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

The Company shall pay Alphabet a

royalty equal to 13% of Gross Receipts (as defined in the Agreement) realized from the sales of Licensed Products.

No amounts were earned

or owed as of September 30, 2021.

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

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

The Company shall pay

Alphabet a royalty equal to 13 % of Gross Receipts (as defined in the Agreement) realized from the sales of Licensed Products.

were earned or owed as of March 31, 2022 .

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

13 unchanged sentences

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

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 March 31, 2022 and December 31, 2021, the

Company approximates its implicit purchase commitments to be $ 1.3 million and $ 511 thousand, respectively.

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

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.

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

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

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

The Owens, Sr.

Complaint alleges, among other

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

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

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

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

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

On May 18, 2021,

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

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

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

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

Lawsuit, and, similarly, does not quantify damages

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

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

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

was voluntarily dismissed.

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

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

The Sosa Complaint alleges, inter alia, that the

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

software, and therefore, allegedly violates:

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

§ 12181 et seq.;

(ii) the New York

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

Law §§ 292 and 296;

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

As of March 31, 2022, 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.

December 10, 2021, a purported breach of contract, breach of duty of good faith and fair dealing, unjust enrichment, quantum meruit,

and fraud lawsuit, captioned Harborside Advisors LLC v.

21-cv-10593, was filed in the United States District

Court for the Southern District of New York against the Company.

The Harborside Complaint alleges, among other things, that the Company

breached a Consulting Services Agreement dated as of June 5, 2019, and Harborside was entitled to 1

million shares ( i.e ., 200,000

shares post 5-for-1

reverse stock split ) in the Company if the Conversion

Labs Rx business achieved a topline revenue of $ 10

million and an additional 1

million shares ( i.e ., 200,000

shares post 5-for-1

reverse stock split ) for each additional $ 5

million in topline revenue up to a maximum of

million shares ( i.e.

shares post 5-for-1

reverse stock split ).

The Complaint further alleges

that the Company fraudulently induced Harborside to give up its ownership interest in Conversion Labs Rx and that it was a breach of

the duty of good faith and fair dealing and fraudulent for the Company to have dissolved Conversion Labs Rx.

Consequently, alleges Harborside,

the Company was unjustly enriched, and Harborside is entitled to recover from the Company for quantum meruit.

The Harborside Complaint

implies between $ 5,020,000

and $ 33,020,000

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

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

The Complaint also seeks preliminary and permanent

injunctive relief.

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

in alleged damages related to failure to award

the aforementioned stock but only specifically states that “Harborside has incurred damages in excess of $ 75,000 ,

with the exact amount to be determined with specificity at trial” for each of the 5 counts.

On February 11, 2022, the Company filed

a Motion to Dismiss the Harborside Complaint, which Harborside opposed.

The Company replied on April 4, 2022 and is currently

awaiting a decision from the Court on whether the case will be fully or partially dismissed.

The Company intends to continue to vigorously

defend against this action.

As this action is in its preliminary phase, a potential loss cannot yet be estimated.

December 10, 2021, a purported breach of contract, unjust enrichment, quantum meruit, and account stated lawsuit, captioned Specialty

Medical Drugstore, LLC D/B/A GoGoMeds v.

21-cv-10599, was filed in the United States District Court for the

Southern District of New York against the Company.

The GoGoMeds Complaint alleges, among other things, that Conversion Labs Rx breached

a Strategic Partnership Agreement (dated May 27, 2019) (the “SPA”) by the Company not paying two invoices (#3269 and 3270)

totaling $ 273,859 , and, therefore, “LifeMD has been unjustly enriched in an amount in excess of $ 273,859 , with the exact amount

to be determined with specificity at trial.” Further, GoGoMeds alleges that “to the extent that the SPA is inapplicable,

GoGoMeds is entitled to recover from LifeMD from quantum meruit” because “GoGoMeds conferred a benefit on LifeMD by fulfilling

over 17,000 prescriptions and over the counter drug orders for LifeMD’s clients.” On February 11, 2022, the Company filed

its Answer and Counterclaim to the GoGoMeds Complaint, pleading the affirmative defenses that the claims are barred, in whole or in part:

(i) because they fail to state claims upon which relief can be granted;

(ii) by breach of contract by plaintiff;

(iii) by offset, recoupment,

and/or unjust enrichment to plaintiff;

(iv) by accord and satisfaction;

(v) for failure of condition precedent;

(vi) because adequate

remedies at law exist;

(vii) by failure to mitigate;

(viii) by the doctrine of unclean hands;

and (ix) by consent ratification, waiver,

excuse, and/or estoppel, (x) as well as that attorney fees and costs, as well as special, indirect, incidental, and/or consequential

damages are not recoverable.

Further, the Company counterclaimed against GoGoMeds for:

(a) breach of contract for failing to:

adequate customer service and related pharmacy services;

(ii) charge LifeMD actual costs for prescription and over the counter drugs

(including shipping), as was contractually required;

and (iii) provide regular reports and allow audits for review to establish adequate

service and accurate costs;

(b) trade secret misappropriation of the LifeMD Information, Data, and Materials, as defined therein;

unjust enrichment of GoGoMeds through its retention of such LifeMD Information, Data, and Materials, and for the benefit of the creation

of the GoGoCare telehealth company;

(d) conversion by GoGoMeds by exercising unauthorized dominion and control over the LifeMD Information,

Data, and Materials;

and (f) an accounting.

GoGoMeds’ responded to the counterclaims on March 4, 2022 and the parties

have commenced fact discovery.

The Company intends to continue to vigorously defend against this action.

As this action is in its preliminary

phase, a potential loss cannot yet be estimated.

February 28, 2022, a purported breach of contract lawsuit (with six counts of alleged breach, and indemnity reliance concerning reasonable

costs and expenses), captioned William Blair LLC v.

2022L001978, was filed in the Circuit Court of Cook

County, Illinois County Department, Law Division against the Company (the “Blair Complaint”).

The Blair Complaint alleges,

among other things, that LifeMD breached an engagement letter agreement entered into on January 7, 2021 with Blair that concerned potential

debt financing.

In particular, Blair alleges that the Company breached its obligations by, inter alia :

(i) failing to advise Blair

of, and ultimately completing, a debt financing transaction with a different investment banking firm on or about June 3, 2021;

(ii) reproducing

several pages from a Confidential Information Brochure used in the Company’s debt financing transaction with a different investment

banking firm;

(iii) failing to provide Blair with a right of first refusal to be its joint active bookrunning manager for a common stock

sales agreement that it executed on or about June 3, 2021, through a different investment banking firm;

(iv) failing to provide Blair

with a right of first refusal to be its joint active bookrunning manager for a common stock sales agreement that it executed on or about

September 28, 2021, through a different investment banking firm (despite the Company having formally terminated the engagement letter

with Blair on or about July 16, 2021);

(v) failing to provide Blair with a right of first refusal to be its joint active bookrunning

manager for a preferred stock offering that it executed on or about September 28, 2021, through two different investment banking firms

as bookrunning co-managers (despite the Company having formally terminated the engagement letter with Blair on or about July 16, 2021);

and (vi) purchasing a convertible note from a pharmaceutical investor in connection with its acquisition of all outstanding shares of

allergy telehealth platform, Cleared.

The Blair Complaint seeks damages adequate to compensate Blair for the aforementioned alleged breaches

, which implicitly meets or exceeds the purported $ 1,000,000 minimum fee in the engagement letter), as well as reasonable

costs and expenses incurred in this action.

The Company’s response to the Blair Complaint is due on May 20, 2022.

The Company intends

to vigorously defend against this action.

As this action is in its preliminary phase, a potential loss cannot yet be estimated.

10 – RELATED PARTY TRANSACTIONS

Executive Officer

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 $ 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 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

November 27, 2020 , the Company entered into a consulting

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

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

The Consulting Agreement

is for a term of thirty-six months and is renewable for additional twelve-month periods upon the mutual agreement of the Company and

As compensation for the services, JDM will receive a monthly fee of $ 17,000 and shall be eligible to receive a metric based performance

bonus for each calendar quarter during the term of the Consulting Agreement in accordance with metrics to be mutually agreed upon by

the Company and JDM.

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.

Roberts’s compensation arrangements.

The Company and JDM

mutually terminated Mr.

Roberts’s Consulting Agreement and Mr.

Roberts waived all consulting fees due for the remainder of the

term of the Consulting Agreement.

In place of the Consulting Agreement, Mr.

Roberts and the Company amended his Amended and Restated

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

and to update the terms of his annual bonus, providing for a target amount of $ 200,000 , with any actual bonus to be awarded in the sole

discretion of the Board.

On June 29, 2021, the Company and Mr.

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

February 4, 2021, the Board appointed Mr.

Marc Benathen as the Company’s Chief Financial Officer.

In connection with the Appointment,

Benathen entered into an Employment Agreement with the Company.

To induce Mr.

Benathen to enter into the Employment Agreement, Mr.

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

common shares under this Employment Agreement.

June 10, 2021, the Board appointed Mr.

Alex Mironov as the Company’s President.

In connection with the appointment, Mr.

entered into an Employment Agreement with the Company.

To induce Mr.

Mironov to enter into the Employment Agreement, Mr.

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.

The options have an exercise price of $ 14.04 , which

is equal to the closing price of LifeMD.

common stock on June 10, 2021.

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 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.

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

Labs PR utilizes office space in Puerto Rico, which is subleased from Fried LLC, and incurs expense of approximately $ 3,000 a month for

this office space.

The Company previously made payments to JLS Ventures, an entity wholly owned by our Chief Executive Officer (“CEO”),

for rent on Conversion Labs PR’s Puerto Rico office space which was $ 0 and $ 22,500 for the three months ended March 31, 2022 and

2021, respectively.

Labs PR utilizes BV Global Fulfillment (“BV Global”), previously 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.

On December 31, 2021, the Company entered

into an Asset Purchase Agreement (the “APA”) with BV Global and the owner (the “Owner”), whereby BV Global and

the Owner agreed to sell to the Company certain purchased assets of BV Global in exchange for approximately $ 9 thousand.

Prior to entering

into the APA, the Company paid a monthly fee of $ 13,000 to $ 16,000 for fulfillment services and reimbursed BV Global for their direct

costs associated with shipping the Company’s products.

The Company reimbursed BV Global a total of $ 99,082 during the three months

ended March 31, 2021.

As of December 31, 2021, the Company owed BV Global $ 61,824 , which is included in accounts payable and accrued

liabilities on the accompanying unaudited condensed consolidated balance sheets.

the three months ended March 31, 2022 and 2021, WorkSimpli utilized LegalSubmit Pvt.

(“LegalSubmit”), a company owned

by WorkSimpli’s Chief Software Engineer, to provide software development services.

WorkSimpli paid LegalSubmit a total of $ 299,370

and $ 172,837 during the three months ended March 31, 2022 and 2021, respectively, for these services.

There were no amounts owed to LegalSubmit

as of both March 31, 2022 and December 31, 2021.

Officer Employment Agreements

January 27, 2022, the Company and Marc Benathen, our Chief Financial Officer (“CFO”), entered into the First Amendment to

his employment agreement to provide that Mr.

Benathen receive 75,000 RSUs, with 25,000 of the RSUs vesting on the grant date and the

first and second anniversaries of the grant date.

Additionally, the First Amendment to his employment agreement provided that Mr.

is eligible to receive up to 250,000 Performance Stock Units (“PSUs”), which will vest subject to the Company achieving certain

key revenue, EBITDA and share price appreciation milestones.

January 27, 2022, the Company and our Chief Compliance Officer (“CCO”) entered into the First Amendment to his employment

agreement to provide that our CCO receive 37,500 RSUs, with 12,500 of the RSUs vesting on the grant date and the first and second anniversaries

of the grant date.

Additionally, the First Amendment to his employment agreement provided that our CCO is eligible to receive up to 105,000

PSUs, which will vest subject to the Company achieving certain key revenue, EBITDA and share price appreciation milestones.

February 4, 2022, Maria Stan was appointed as Controller and Principal Accounting Officer of the Company.

In connection with her appointment

as Principal Accounting Officer, Ms.

Stan entered into an amendment to her employment agreement with the Company, whereby the Company

granted her an additional long-term incentive award of 15,000 RSUs, with 5,000 units vesting on the grant date and the first and second

anniversaries of the grant date, and 50,000 PSUs.

The PSUs vest upon the achievement of certain key revenue, EBITDA and share price appreciation

11 – SEGMENT DATA

portfolio of brands are included within two operating segments:

Telehealth and WorkSimpli.

We believe our current segments and brands

within our segments complement one another and position us well for future growth.

Relevant segment data for the three months ended March

31, 2022 and 2021 is as follows:

OF RELEVANT SEGMENT DATA

Three Months Ended March 31,

Operating loss

$ ( 13,271,857 )

$ ( 10,114,985 )

Operating income (loss)

$ ( 1,803,352 )

Operating loss

$ ( 13,107,015 )

$ ( 11,918,337 )

segment data as of March 31, 2022 and December 31, 2021 is as follows:

March 31, 2022

December 31, 2021

12 – SUBSEQUENT EVENTS

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

April 1, 2022, Justin Schreiber, the Company’s CEO, entered into an Employment Agreement (the “Schreiber Employment Agreement”)

with the Company.

The Schreiber Employment Agreement is for an indefinite term and may be terminated with or without cause.

to the Schreiber Employment Agreement, Mr.

Schreiber will receive an annual base salary of $ 300,000 and shall be eligible to earn a performance

bonus in such amount, if any, as determined in the sole discretion of the Board, with a target amount of 75 % of the base salary.

April 25, 2022, the Board approved, subject to stockholder approval, an amendment to the 2020 Plan to increase the maximum number of

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

The amendment is being presented as Proposal 2

at the Annual Meeting of Stockholders, to be held on June 16, 2022.

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