LFMDP LifeMD Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the Quarterly Period Ended September 30, 2023

 

or

 

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

 

For the Transition Period from _________ to _________

 

Commission file number: 001-39785

 

LIFEMD, INC.

(Exact name of registrant as specified in its charter)

 

Delaware		76-0238453
(State or other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

 

236 Fifth Avenue, Suite 400 New York, New York		10001
(Address of Principal Executive Offices)		(Zip Code)

 

(866) 351-5907

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading symbol(s)		Name of exchange on which registered
Common Stock, par value $.01 per share		LFMD		The Nasdaq Global Market
8.875% Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share		LFMDP		The Nasdaq Global Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” a “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☒		Smaller reporting company	☒
			Emerging growth company	☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of November 7, 2023, there were 37,978,804 shares of the registrant’s common stock outstanding.

 

 

 

LIFEMD, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023

 

TABLE OF CONTENTS

 

		Page
PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit)	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	41
ITEM 4.	Controls and Procedures	41
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	42
ITEM 1A.	Risk Factors	42
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
ITEM 3.	Defaults Upon Senior Securities	42
ITEM 4.	Mine Safety Disclosures	42
ITEM 5.	Other Information	42
ITEM 6.	Exhibits	43
SIGNATURES		44

 

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

 

LIFEMD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

		September 30, 2023				December 31, 2022
		(Unaudited)
ASSETS
Current Assets
Cash		$	15,288,330			$	3,958,957
Accounts receivable, net			4,418,582				2,834,750
Product deposit			84,768				127,265
Inventory, net			3,790,646				3,703,363
Other current assets			1,303,960				687,022
Total Current Assets			24,886,286				11,311,357
Non-current Assets
Equipment, net			424,637				476,441
Right of use asset			799,104				1,206,009
Capitalized software, net			11,325,766				8,840,187
Intangible assets, net			3,255,231				3,831,859
Total Non-current Assets			15,804,738				14,354,496
Total Assets		$	40,691,024			$	25,665,853
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable		$	9,637,390			$	10,106,793
Accrued expenses			15,493,128				12,166,509
Notes payable, net			426,223				2,797,250
Current operating lease liabilities			725,832				756,093
Deferred revenue			6,239,354				5,547,506
Total Current Liabilities			32,521,927				31,374,151
Long-term Liabilities
Long-term debt, net			18,827,283				-
Noncurrent operating lease liabilities			169,821				574,136
Contingent consideration			256,250				443,750
Purchase price payable			-				579,319
Total Liabilities			51,775,281				32,971,356
Commitments and Contingencies (Note 10)			-				-
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, zero and 3,500 shares issued and outstanding, liquidation value approximately, $0 and $1,305 per share as of September 30, 2023 and December 31, 2022, respectively			-				4,565,822
Stockholders’ Deficit
Series A Preferred Stock, $0.0001 par value; 1,610,000 shares authorized, 1,400,000 shares issued and outstanding, liquidation value approximately, $29.44 and $27.84 per share as of September 30, 2023 and December 31, 2022, respectively			140				140
Common stock, $0.01 par value; 100,000,000 shares authorized, 34,759,250 and 31,552,775 shares issued, 34,656,210 and 31,449,735 outstanding as of September 30, 2023 and December 31, 2022, respectively			347,593				315,528
Additional paid-in capital			196,901,377				179,015,250
Accumulated deficit			(209,756,573	)			(190,562,994	)
Treasury stock, 103,040 and 103,040 shares, at cost, as of September 30, 2023 and December 31, 2022, respectively			(163,701	)			(163,701	)
Total LifeMD, Inc. Stockholders’ Deficit			(12,671,164	)			(11,395,777	)
Non-controlling interest			1,586,907				(475,548	)
Total Stockholders’ Deficit			(11,084,257	)			(11,871,325	)
Total Liabilities, Mezzanine Equity and Stockholders’ Deficit		$	40,691,024			$	25,665,853

 

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

 

 

LIFEMD, INC.

CONDENSED Consolidated STATEMENTS OF OPERATIONS

(Unaudited)

 

		2023				2022				2023				2022
		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
Revenues
Telehealth revenue, net		$	24,342,789			$	21,365,178			$	66,896,719			$	66,231,202
WorkSimpli revenue, net			14,271,122				10,047,291				40,790,439				24,682,602
Total revenues, net			38,613,911				31,412,469				107,687,158				90,913,804
Cost of revenues
Cost of telehealth revenue			4,479,760				4,502,919				12,525,887				14,042,112
Cost of WorkSimpli revenue			301,746				213,923				1,019,018				558,216
Total cost of revenues			4,781,506				4,716,842				13,544,905				14,600,328
Gross profit			33,832,405				26,695,627				94,142,253				76,313,476
Expenses
Selling and marketing expenses			19,776,797				17,200,859				56,062,345				60,928,649
General and administrative expenses			13,398,387				12,385,030				36,120,723				37,757,710
Other operating expenses			1,622,137				1,617,375				4,640,690				5,076,820
Customer service expenses			2,106,252				1,488,428				5,573,734				3,428,098
Development costs			1,498,213				821,636				4,062,498				1,951,039
Goodwill impairment charge			-				-				-				2,735,000
Change in fair value of contingent consideration			-				248,000				-				(2,487,000	)
Total expenses			38,401,786				33,761,328				106,459,990				109,390,316
Operating loss			(4,569,381	)			(7,065,701	)			(12,317,737	)			(33,076,840	)
Interest expense, net			(713,766	)			(132,235	)			(1,973,901	)			(432,405	)
(Loss) gain on debt extinguishment			-				-				(325,198	)			63,400
Net loss			(5,283,147	)			(7,197,936	)			(14,616,836	)			(33,445,845	)
Net income attributable to non-controlling interest			839,288				83,737				2,247,055				154,464
Net loss attributable to LifeMD, Inc.			(6,122,435	)			(7,281,673	)			(16,863,891	)			(33,600,309	)
Preferred stock dividends			(776,563	)			(776,563	)			(2,329,688	)			(2,329,688	)
Net loss attributable to LifeMD, Inc. common stockholders		$	(6,898,998	)		$	(8,058,236	)		$	(19,193,579	)		$	(35,929,997	)
Basic loss per share attributable to LifeMD, Inc. common stockholders		$	(0.20	)		$	(0.26	)		$	(0.58	)		$	(1.17	)
Diluted loss per share attributable to LifeMD, Inc. common stockholders		$	(0.20	)		$	(0.26	)		$	(0.58	)		$	(1.17	)
Weighted average number of common shares outstanding:
Basic			34,472,904				30,935,643				32,959,665				30,830,533
Diluted			34,472,904				30,935,643				32,959,665				30,830,533

 

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

 

 

LIFEMD, INC.

CONDENSED Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

 

		Shares				Amount				Shares				Amount				Capital				Deficit				Stock				Total				Interest				Total
		LifeMD, Inc.
		Series A Preferred Stock								Common Stock								Additional Paid-in				Accumulated				Treasury								Non- controlling
		Shares				Amount				Shares				Amount				Capital				Deficit				Stock				Total				Interest				Total
Balance, January 1, 2022			1,400,000			$	140				30,704,434			$	307,045			$	164,517,634			$	(141,921,085	)		$	(163,701	)		$	22,740,033			$	(1,031,745	)		$	21,708,288
Stock compensation expense			-				-				147,500				1,475				4,471,306				-				-				4,472,781				-				4,472,781
Cashless exercise of stock options			-				-				25,535				255				(255	)			-				-				-				-				-
Exercise of warrants			-				-				22,000				220				38,280				-				-				38,500				-				38,500
Series A Preferred Stock dividend			-				-				-				-				-				(776,563	)			-				(776,563	)			-				(776,563	)
Distribution to non-controlling interest			-				-				-				-				-				-				-				-				(36,000	)			(36,000	)
Net (loss) income			-				-				-				-				-				(13,299,675	)			-				(13,299,675	)			24,726				(13,274,949	)
Balance, March 31, 2022			1,400,000			$	140				30,899,469			$	308,995			$	169,026,965			$	(155,997,323	)		$	(163,701	)		$	13,175,076			$	(1,043,019	)		$	12,132,057
Stock compensation expense			-				-				-				-				4,041,006				-				-				4,041,006				-				4,041,006
Exercise of stock options			-				-				90,400				904				89,496				-				-				90,400				-				90,400
Series A Preferred Stock dividend			-				-				-				-				-				(776,562	)			-				(776,562	)			-				(776,562	)
Distribution to non-controlling interest			-				-				-				-				-				-				-				-				(36,000	)			(36,000	)
Net (loss) income			-				-				-				-				-				(13,018,962	)			-				(13,018,962	)			46,001				(12,972,961	)
Balance, June 30, 2022			1,400,000			$	140				30,989,869			$	309,899			$	173,157,467			$	(169,792,847	)		$	(163,701	)		$	3,510,958			$	(1,033,018	)		$	2,477,940
Stock compensation expense			-				-				63,750				637				3,335,576				-				-				3,336,213				-				3,336,213
Stock issued for legal settlement											400,000				4,000				812,000				-				-				816,000				-				816,000
Cashless exercise of stock options			-				-				4,156				42				(42	)			-				-				-				-				-
Series A Preferred Stock dividend			-				-				-				-				-				(776,563	)			-				(776,563	)			-				(776,563	)
Adjustment of membership interest in WorkSimpli			-				-				-				-				(173,415	)			-				-				(173,415	)			185,565				12,150
Distribution to non-controlling interest			-				-				-				-				-				-				-				-				(36,000	)			(36,000	)
Net (loss) income			-				-				-				-				-				(7,281,673	)			-				(7,281,673	)			83,737				(7,197,936	)
Balance, September 30, 2022			1,400,000			$	140				31,457,775			$	314,578			$	177,131,586			$	(177,851,083	)		$	(163,701	)		$	(568,480	)		$	(799,716	)		$	(1,368,196	)

 

		LifeMD, Inc.
		Series A Preferred Stock								Common Stock								Additional Paid-in				Accumulated				Treasury								Non- controlling
		Shares				Amount				Shares				Amount				Capital				Deficit				Stock				Total				Interest				Total
Balance, January 1, 2023			1,400,000			$	140				31,552,775			$	315,528			$	179,015,250			$	(190,562,994	)		$	(163,701	)		$	(11,395,777	)		$	(475,548	)		$	(11,871,325	)
Stock compensation expense			-				-				149,375				1,494				2,662,020				-				-				2,663,514				-				2,663,514
Stock issued for noncontingent consideration payment			-				-				337,895				3,379				638,621				-				-				642,000				-				642,000
Warrants issued with debt instrument			-				-				-				-				1,088,343				-				-				1,088,343				-				1,088,343
Series A Preferred Stock dividend			-				-				-				-				-				(776,563	)			-				(776,563	)			-				(776,563	)
Distribution to non-controlling interest			-				-				-				-				-				-				-				-				(36,000	)			(36,000	)
Adjustment of membership interest in WorkSimpli			-				-				-				-				(220,582	)			-				-				(220,582	)			(85,932	)			(306,514	)
Net (loss) income			-				-				-				-				-				(4,008,456	)			-				(4,008,456	)			565,983				(3,442,473	)
Balance, March 31, 2023			1,400,000			$	140				32,040,045			$	320,401			$	183,183,652			$	(195,348,013	)		$	(163,701	)		$	(12,007,521	)		$	(31,497	)		$	(12,039,018	)
Stock compensation expense			-				-				53,000				530				2,861,439				-				-				2,861,969				-				2,861,969
Stock issued for noncontingent consideration payment			-				-				455,319				4,553				637,447				-				-				642,000				-				642,000
Cashless exercise of stock options			-				-				16,471				165				(165	)			-				-				-				-				-
Series A Preferred Stock dividend			-				-				-				-				-				(776,562	)			-				(776,562	)			-				(776,562	)
Distribution to non-controlling interest			-				-				-				-				-				-				-				-				(36,000	)			(36,000	)
Adjustment of membership interest in WorkSimpli			-				-				-				-				(8,443	)			-				-				(8,443	)			9,332				889
Net (loss) income			-				-				-				-				-				(6,733,000	)			-				(6,733,000	)			841,784				(5,891,216	)
Balance, June 30, 2023			1,400,000			$	140				32,564,835			$	325,649			$	186,673,930			$	(202,857,575	)		$	(163,701	)		$	(16,021,557	)		$	783,619			$	(15,237,938	)
Balance			1,400,000			$	140				32,564,835			$	325,649			$	186,673,930			$	(202,857,575	)		$	(163,701	)		$	(16,021,557	)		$	783,619			$	(15,237,938	)
Stock compensation expense			-				-				137,500				1,375				3,316,878				-				-				3,318,253				-				3,318,253
Stock issued for noncontingent consideration payment			-				-				158,129				1,581				640,419				-				-				642,000				-				642,000
Stock issued for legal settlement			-				-				100,000				1,000				531,000				-				-				532,000				-				532,000
Cashless exercise of stock options			-				-				57,901				579				(579	)			-				-				-				-				-
Sale of common stock under ATM, net			-				-				180,021				1,800				897,767				-				-				899,567				-				899,567
Series B Preferred Stock conversion			-				-				1,560,864				15,609				5,057,205				-				-				5,072,814				-				5,072,814
Warrants issued for debt instruments fair value adjustment			-				-				-				-				(215,243	)			-				-				(215,243	)			-				(215,243	)
Series A Preferred Stock dividend			-				-				-				-				-				(776,563	)			-				(776,563	)			-				(776,563	)
Distribution to non-controlling interest			-				-				-				-				-				-				-				-				(36,000	)			(36,000	)
Net (loss) income			-				-				-				-				-				(6,122,435	)			-				(6,122,435	)			839,288				(5,283,147	)
Balance, September 30, 2023			1,400,000			$	140				34,759,250			$	347,593			$	196,901,377			$	(209,756,573	)		$	(163,701	)		$	(12,671,164	)		$	1,586,907			$	(11,084,257	)
Balance			1,400,000			$	140				34,759,250			$	347,593			$	196,901,377			$	(209,756,573	)		$	(163,701	)		$	(12,671,164	)		$	1,586,907			$	(11,084,257	)

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

 

 

LIFEMD, INC.

CONDENSED Consolidated STATEMENTS OF CASH FLOWS

(Unaudited)

 

		2023				2022
		Nine Months Ended September 30,
		2023				2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(14,616,836	)		$	(33,445,845	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of debt discount			233,495				-
Amortization of capitalized software			3,787,716				1,746,899
Amortization of intangibles			725,496				666,782
Accretion of consideration payable			148,481				172,741
Depreciation of fixed assets			146,286				117,008
Loss (gain) on debt extinguishment			325,198				(63,400	)
Change in fair value of contingent consideration			-				(2,487,000	)
Goodwill impairment charge			-				2,735,000
Operating lease payments			562,073				463,198
Stock issued for legal settlement			532,000				816,000
Stock compensation expense			8,843,736				11,850,000
Changes in Assets and Liabilities
Accounts receivable			(1,583,832	)			(1,558,063	)
Product deposit			42,497				95,505
Inventory			(87,283	)			(2,052,363	)
Other current assets			(616,938	)			(21,386	)
Change in operating lease liability			(589,744	)			(378,095	)
Deferred revenue			691,848				853,272
Accounts payable			(469,403	)			1,827,103
Accrued expenses			5,611,131				(2,303,466	)
Other operating activity			(579,319	)			-
Net cash provided by (used in) operating activities			3,106,602				(20,966,110	)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for capitalized software costs			(6,273,295	)			(6,742,946	)
Purchase of equipment			(94,482	)			(378,877	)
Purchase of intangible assets			(148,868	)			(4,000,500	)
Acquisition of business, net of cash acquired			-				(1,012,395	)
Net cash used in investing activities			(6,516,645	)			(12,134,718	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net			19,466,887				-
Proceeds from notes payable			2,347,691				-
Repayment of notes payable, net of prepayment penalty			(5,043,916	)			-
Cash proceeds from exercise of options			-				90,400
Cash proceeds from exercise of warrants			-				38,500
Sale of common stock under ATM, net			899,567				-
Preferred stock dividends			(2,329,688	)			(2,329,688	)
Contingent consideration payment for ResumeBuild acquisition			(187,500	)			(93,750	)
Net payments for membership interest in WorkSimpli			(305,625	)			12,150
Distributions to non-controlling interest			(108,000	)			(108,000	)
Net cash provided by (used in) financing activities			14,739,416				(2,390,388	)
Net increase (decrease) in cash			11,329,373				(35,491,216	)
Cash at beginning of period			3,958,957				41,328,039
Cash at end of period		$	15,288,330			$	5,836,823
Cash paid for interest
Cash paid during the period for interest		$	1,485,242			$	-
Non-cash investing and financing activities
Warrants issued for debt instruments		$	873,100			$	-
Cashless exercise of options		$	744			$	297
Consideration payable for Cleared acquisition		$	-			$	8,079,367
Consideration payable for ResumeBuild acquisition		$	-			$	500,000
Stock issued for noncontingent consideration payment		$	1,926,000			$	-
Series B Preferred Stock conversion		$	5,072,814			$	-
Principal of Paycheck Protection Program loans forgiven		$	-			$	63,400
Right of use asset		$	155,168			$	-
Right of use lease liability		$	155,168			$	-

 

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

 

 

LIFEMD, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS

 

Corporate History

 

LifeMD, Inc. was formed in the State of Delaware on May 24, 1994, under its prior name, Immudyne, Inc. The Company changed its name to Conversion Labs, Inc. on June 22, 2018 and then subsequently, on February 22, 2021, it changed its name to LifeMD, Inc. Effective February 22, 2021, the trading symbol for the Company’s common stock, par value $0.01 per share on The Nasdaq Stock Market LLC changed from “CVLB” to “LFMD”.

 

On April 1, 2016, the original operating agreement of Immudyne PR LLC (“Immudyne PR”), a joint venture to market the Company’s skincare products, was amended and restated and the Company increased its ownership and voting interest in Immudyne PR to 78.2%. Concurrent with the name change of the parent company to Conversion Labs, Inc., Immudyne PR was renamed to Conversion Labs PR LLC (“Conversion Labs PR”). On April 25, 2019, the operating agreement of Conversion Labs PR was amended and restated in its entirety to increase the Company’s ownership and voting interest in Conversion Labs PR to 100%. On February 22, 2021, concurrent with the name of the parent company to LifeMD, Inc., Conversion Labs PR was renamed to LifeMD PR, LLC.

 

In June 2018, the Company closed the strategic acquisition of 51% of LegalSimpli Software, LLC, which operates a software as a service application for converting, editing, signing, and sharing PDF documents called PDFSimpli. In addition to LegalSimpli Software, LLC’s growth business model, this acquisition added deep search engine optimization and search engine marketing expertise to the Company. On July 15, 2021, LegalSimpli Software, LLC, changed its name to WorkSimpli Software LLC, (“WorkSimpli”). Effective January 22, 2021, the Company consummated a transaction to restructure the ownership of WorkSimpli (the “WSS Restructuring”) concurrently increased its ownership interest in WorkSimpli to 85.58%. Effective September 30, 2022, two option agreements were exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.64%. Effective December 15, 2022, LifeMD PR, LLC merged into WorkSimpli, with WorkSimpli being the surviving entity.

 

Effective March 31, 2023, the Company redeemed 500 membership interest units in WorkSimpli and, as a result, the Company’s ownership interest in WorkSimpli increased to 74.06%. Effective June 30, 2023, an option agreement was exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.32%. See Note 8 for additional information.

 

On January 18, 2022, the Company acquired Cleared Technologies, PBC, a Delaware public benefit corporation (“Cleared”), a nationwide allergy telehealth platform that provides personalized treatments for allergy, asthma, and immunology (See Note 3).

 

Nature of Business

 

The Company is a direct-to-patient telehealth company providing patients a high-quality, cost-effective, and convenient way of accessing comprehensive, virtual healthcare. The Company believes the traditional model of visiting a doctor’s office, traveling to a local pharmacy, and returning for follow up care or prescription refills is complex, inefficient, and costly, and discourages many individuals from seeking much needed medical care. The Company is positioned to elevate the healthcare experience through telehealth with our proprietary technology platform, affiliated provider network, broad treatment capabilities, and unique ability to nurture patient relationships. Direct-to-patient telehealth technology companies, like the Company, connect consumers to affiliated, licensed, healthcare professionals for care across numerous indications, including urgent and primary care, men’s and women’s health, and dermatology, chronic care management and more.

 

The 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 (“OTC”) 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.

 

With its first brand, ShapiroMD, the Company has built a full line of proprietary OTC products for male and female hair loss—including Food and Drug Administration (“FDA”) approved OTC minoxidil and 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, 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. In the first quarter of 2021, the Company launched NavaMD, a tele-dermatology and skincare brand for women. The Company has built a platform that allows it to efficiently launch telehealth and wellness product lines wherever it determines there is a market need.

 

7

 

 

Business and Subsidiary History

 

In early 2019, the Company launched a service-based business under the name Conversion Labs Media LLC (“CVLB Media”), a Puerto Rico limited liability company. However, this business initiative was terminated in early 2019. In May 2019, Conversion Labs Rx, LLC (“CVLB Rx”), a Puerto Rico limited liability company, signed a strategic partnership agreement with Specialty Medical Drugstore, Inc. (doing business as “GoGoMeds”). 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 and nine months ended September 30, 2023 and 2022.

 

On January 18, 2022, the Company acquired Cleared, a 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 thousand upfront cash payment, and two non-contingent milestone payments for a 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 thousand 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. On February 4, 2023, the Company entered into the First Amendment to the Stock Purchase Agreement (the “First Amendment”) between the Company and the sellers of Cleared. The First Amendment was amended to, among other things: (i) reduce the total purchase price by $250 thousand to a total of $3.67 million; (ii) change the timing of the payment of the purchase price to $460 thousand paid at closing (which has already been paid by the Company), with the remaining amount to be paid in five quarterly installments beginning on or before February 6, 2023 and ending January 15, 2024; (iii) removing all “earn-out” payments payable by the Company to the sellers; and (iv) remove certain representations and warranties of the Company and sellers in connection with the transaction (See Note 3). On February 6, 2023, the Company issued 337,895 shares of common stock related to the first of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On April 17, 2023, the Company issued 455,319 shares of common stock related to the second of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On July 17, 2023, the Company issued 158,129 shares of common stock related to the third of five quarterly installment payments due to the sellers of Cleared under the First Amendment.

 

In 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 software as a service online platforms (the “Acquisition”). WorkSimpli paid $4.0 million to the Seller upon closing. 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 approximately $63 thousand, for a two-year period ending on the two-year anniversary of the closing of the Acquisition. As of September 30, 2023, WorkSimpli has paid the Seller approximately $344 thousand in accordance with the ResumeBuild APA. 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).

 

Unless otherwise indicated, the terms “LifeMD,” “Company,” “we,” “us,” and “our” refer to LifeMD, Inc. (formerly known as Conversion Labs, Inc.), 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., (“LifeMD PC”) is the Company’s affiliated, variable interest entity in which we hold a controlling financial interest. Unless otherwise specified, all dollar amounts are expressed in United States dollars.

 

Liquidity & Going Concern Evaluation

 

The Company has funded operations in the past through the sales of its products, issuance of common and preferred stock, and through loans and advances. The Company’s continued operations are dependent upon obtaining an increase in its sale volumes and obtaining funding from third-party sources or the issuance of additional shares of common stock.

 

8

 

 

On March 21, 2023, the Company entered into and closed on a loan and security agreement (the “Credit Agreement”), and a supplement to the Credit Agreement (the “Supplement”), with Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P. (collectively, “Avenue”). The Credit Agreement provides for a convertible senior secured credit facility of up to an aggregate amount of $40 million, comprised of the following: (1) $15 million in term loans funded at closing, (2) $5 million of additional committed term loans which the Company received on September 26, 2023 under the First Amendment to the Credit Agreement (the “Avenue First Amendment”) and (3) $20 million of additional uncommitted term loans, collectively referred to as the “Avenue Facility”. The Avenue Facility matures on October 1, 2026. The Company issued Avenue warrants to purchase $1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments (the “Warrants”). In addition, Avenue may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share equal to $1.49. Proceeds from the Avenue Facility were used to repay the Company’s outstanding notes payable balances with CRG Financial and are expected to be used for general corporate purposes. The Company is subject to certain affirmative and negative covenants under the Avenue Facility, including the requirement, beginning on the closing date, to maintain at least $5 million of unrestricted cash to be tested at the end of each month, and beginning on the period ended September 30, 2023, and at the end of each quarter thereafter, a trailing six-month cash flow, subject to certain adjustments as provided by the Credit Agreement, of at least $2 million.

 

As of September 30, 2023, the Company has an accumulated deficit approximating $209.8 million and has experienced significant losses from its operations. To date, the Company has been funding operations primarily through the sales of its products, sale of equity in private placements and securities purchased by a financial institution. 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 Company has a current cash balance of approximately $12.9 million as of the filing date. The Company reviewed its forecasted operating results and sources and uses of cash used in management’s assessment, which included the available financing and consideration of positive and negative evidence impacting management’s forecasts, market, and industry factors. The Company’s continuance as a going concern is highly dependent on its future profitability and on the on-going support of its stockholders, affiliates, and creditors. Based on these circumstances, management has determined that these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

The Company has begun to implement strategies to strengthen revenues and improve operational efficiencies across the business and is significantly curtailing expenses, however, these strategies do not mitigate the substantial doubt about the Company’s ability to continue as a going concern.

 

Additionally, on June 8, 2021, the Company filed a shelf registration statement on Form S-3 under the Securities Act, which was declared effective on June 22, 2021 (the “2021 Shelf”). Under the 2021 Shelf at the time of effectiveness, the Company originally had the ability to raise up to $150 million by selling common stock, preferred stock, debt securities, warrants, and units. In conjunction with the 2021 Shelf, the Company also entered into an At Market Issuance Sales Agreement (the “ATM Sales Agreement”) with B. Riley Securities, Inc. and Cantor Fitzgerald & Co. relating to the sale of its common stock. In accordance with the terms of the ATM Sales Agreement, the Company may, but is not obligated to, offer and sell, from time to time, shares of common stock, through or to the Agents, acting as agent or principal. Sales of common stock, if any, will be made by any method permitted that is deemed an “at the market offering” as defined in Rule 415 under the Securities Act. On March 22, 2023, the date the Company filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, the Company became subject to the offering limits in General Instruction I.B.6 of Form S-3 (i.e., the “baby shelf limitations”). As a result of the baby shelf limitations, the Company was only able to offer and sell shares of common stock having an aggregate offering price of up to $18.435 million pursuant to the ATM Sales Agreement, and it filed a prospectus supplement with the SEC to that effect on March 27, 2023. In June 2023, the Company’s public float increased above $75.0 million. As a result, the Company is no longer subject to the baby shelf limitations. The Company filed another prospectus supplement with the SEC to that effect on June 29, 2023. As of September 30, 2023, the Company has $58.6 million available under the ATM Sales Agreement.

 

Management believes that the overall market value of the telehealth industry is positive and that it will continue to drive interest in the Company.

 

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. 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, 2022, included in our 2022 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, 2023 are not necessarily indicative of the results for the year ending December 31, 2023 or for any future period.

 

9

 

 

Principles of Consolidation

 

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

 

The consolidated financial statements include the accounts of the Company, Cleared, its majority owned subsidiary, WorkSimpli, and LifeMD PC, the Company’s affiliated, 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 85.58% as of December 31, 2021. Effective September 30, 2022, two option agreements were exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.64%. Effective March 31, 2023, the Company redeemed 500 membership interest units in WorkSimpli and, as a result, the Company’s ownership interest in WorkSimpli increased to 74.06%. Effective June 30, 2023, an option agreement was exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.32%. See Note 8 for additional information.

 

All significant intercompany transactions and balances have been eliminated in consolidation.

 

Cash and Cash Equivalents

 

Highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. As of September 30, 2023 and December 31, 2022, there were no cash equivalents. The Company maintains deposits in financial institutions in excess of amounts guaranteed by the Federal Deposit Insurance Corporation. Cash and cash equivalents are maintained at financial institutions, and at times, balances may exceed federally insured limits. These balances could be impacted if one or more of the financial institutions in which we deposit monies fails or is subject to other adverse conditions in the financial or credit markets. We have never experienced any losses related to these balances.

 

Variable Interest Entities

 

In 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 interest. A party is deemed to have a controlling financial interest if it meets both of the power and losses/benefits criteria. The power criterion is the ability to direct the activities of the VIE that most significantly impact its economic performance. The losses/benefits criterion is the obligation to absorb losses from, or right to receive benefits from, the VIE that could potentially be significant to the VIE.

 

The Company determined that the LifeMD PC entity, the Company’s affiliated network of medical Professional Corporations and medical Professional Associations administratively led by LifeMD Southern Patient Medical Care, P.C., is a VIE and subject to consolidation. LifeMD PC and the Company do not have any stockholders in common. LifeMD PC is owned by licensed physicians, and the Company maintains a managed 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.

 

Total revenue for LifeMD PC was approximately $1.9 million and $124 thousand for the three months ended September 30, 2023 and 2022, respectively, and $2.7 million and $124 thousand for the nine months ended September 30, 2023 and 2022, respectively. Total net income for LifeMD PC was approximately $440 thousand for the three months ended September 30, 2023 and net loss for LifeMD PC was approximately $1.0 million for the three months ended September 30, 2022. Total net loss for LifeMD PC was approximately $1.1 million and $3.9 million for the nine months ended September 30, 2023 and 2022, respectively.

 

Use of Estimates

 

The Company prepares its unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates required to be made by management include the determination of reserves for accounts receivable, returns and allowances, the valuation of inventory and stockholders’ equity-based transactions and the capitalization and impairment of capitalized software and impairment of other long-lived assets. Actual results could differ from those estimates.

 

10

 

 

Reclassifications

 

Certain reclassifications have been made to conform the prior year’s data to the current presentation. These reclassifications have no effect on previously reported operating loss, stockholders’ deficit or cash flows. 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 $92 thousand and $272 thousand of lease expenses reclassified from general and administrative expenses to other operating expenses for the three and nine months ended September 30, 2022, respectively.

 

Revenue Recognition

 

The 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:

 

1.	Identify the contract
2.	Identify performance obligations
3.	Determine the transaction price
4.	Allocate the transaction price
5.	Recognize revenue

 

For the Company’s product-based contracts with customers, the Company has determined that there is one performance obligation, which is the delivery of the product; this performance obligation is transferred at a discrete point in time. The Company generally records sales of finished products once the customer places and pays for the order, with the product being simultaneously shipped by a third-party fulfillment service provider. In all cases, delivery is considered to have occurred when the customer obtains control, which is usually commensurate upon shipment of the product. In the case where delivery is not commensurate upon shipment of the product, recognition of revenue is deferred until that time. In the case of its product-based contracts, the Company provides a subscription sensitive service based on the recurring shipment of products. The Company records the related revenue under the subscription agreements subsequent to receiving the monthly product order, recording the revenue at the time it fulfills the shipment obligation to the customer.

 

For its product-based contracts with customers, the Company records an estimate for provisions of discounts, returns, allowances, customer rebates, and other adjustments for its product shipments and are reflected as contra revenues in arriving at reported net revenues. The Company’s discounts and customer rebates are known at the time of sale; correspondingly, the Company reduces gross product sales for such discounts and customer rebates. The Company estimates customer returns and allowances based on information derived from historical transaction detail and accounts for such provisions, as contra revenue, during the same period in which the related revenues are earned. The Company has determined that the population of its product-based contracts with customers are homogenous, supporting the ability to record estimates for returns and allowances to be applied to the entire product-based portfolio population. Customer discounts, returns and rebates on telehealth revenues approximated $696 thousand and $1.1 million during the three months ended September 30, 2023 and 2022, respectively. Customer discounts, returns and rebates on telehealth revenues approximated $1.5 million and $4.2 million during the nine months ended September 30, 2023 and 2022, respectively.

 

The Company, through its majority-owned subsidiary, WorkSimpli, offers a subscription-based service providing a suite of software applications to its subscribers, principally on a monthly subscription basis. The software suite allows the subscriber/user to convert almost any type of document to another electronic form of editable document, providing ease of editing. For these subscription-based contracts with customers, the Company offers an initial 14-day trial period which is billed at $1.95, followed by a monthly subscription, or a yearly subscription to the Company’s software suite dependent on the subscriber’s enrollment selection. The Company has estimated that there is one product and one performance obligation that is delivered over time, as the Company allows the subscriber to access the suite of services for the time period of the subscription purchased. The Company allows the customer to cancel at any point during the billing cycle, in which case the customer’s subscription will not be renewed for the following month or year depending on the original subscription. The Company records the revenue over the customer’s subscription period for monthly and yearly subscribers or at the end of the initial 14-day service period for customers who purchased the initial subscription, as the circumstances dictate. The Company offers a discount for the monthly or yearly subscriptions being purchased, which is deducted at the time of payment at the initiation of the contract term; therefore the Contract price is fixed and determinable at the contract initiation. Monthly and annual subscriptions for the service are recorded net of the Company’s known discount rates. Customer discounts and allowances on WorkSimpli revenues approximated $865 thousand and $710 thousand during the three months ended September 30, 2023 and 2022, respectively. Customer discounts and allowances on WorkSimpli revenues approximated $2.6 million and $1.7 million during the nine months ended September 30, 2023 and 2022, respectively.

 

11

 

 

For the three and nine months ended September 30, 2023 and 2022, the Company had the following disaggregated revenue:

 

SCHEDULE OF DISAGGREGATED REVENUE 

		Three Months Ended September 30,																Nine Months Ended September 30,
		2023				%				2022				%				2023				%				2022				%
Telehealth revenue		$	24,342,789				63	%		$	21,365,178				68	%		$	66,896,719				62	%		$	66,231,202				73	%
WorkSimpli revenue			14,271,122				37	%			10,047,291				32	%			40,790,439				38	%			24,682,602				27	%
Total net revenue		$	38,613,911				100	%		$	31,412,469				100	%		$	107,687,158				100	%		$	90,913,804				100	%

 

Deferred Revenues

 

The Company records deferred revenues when cash payments are received or due in advance of its performance. The Company’s deferred revenues relate to the following: (1) obligations for products which the customer has not yet obtained control due to delivery not commensurate upon shipment of the product, (2) obligations on WorkSimpli in-process monthly or yearly contracts with customers and (3) a portion attributable to the yet to be recognized WorkSimpli initial 14-day trial period collections.

 

SCHEDULE OF CONTRACT WITH CUSTOMER LIABILITY

		2023				2022				2023				2022
		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
Beginning of period		$	5,668,210			$	1,992,502			$	5,547,506			$	1,499,880
Additions			14,767,411				9,346,553				42,325,069				23,567,740
Revenue recognized			(14,196,267	)			(8,985,903	)			(41,633,221	)			(22,714,468	)
End of period		$	6,239,354			$	2,353,152			$	6,239,354			$	2,353,152

 

Leases

 

The Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets are included in right-of-use assets, net on the unaudited condensed consolidated balance sheets. The current and long-term components of operating lease liabilities are included in the current operating lease liabilities and noncurrent operating lease liabilities, respectively, on the unaudited condensed consolidated balance sheets.

 

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Certain leases may include options to extend or terminate the lease. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded in the balance sheet.

 

Accounts Receivable, net

 

Accounts receivable principally consist of amounts due from third-party merchant processors, who process our subscription revenues; the merchant accounts balance receivable represents the charges processed by the merchants that have not yet been deposited with the Company. The unsettled merchant receivable amount normally represents processed sale transactions from the final one to three days of the month, with collections being made by the Company within the first week of the following month. Management determines the need, if any, for an allowance for future credits to be granted to customers, by regularly evaluating aggregate customer refund activity, coupled with the consideration and current economic conditions in its evaluation of an allowance for future refunds and chargebacks. As of September 30, 2023 and December 31, 2022, the reserve for sales returns and allowances was approximately $570 thousand and $815 thousand, respectively. For all periods presented, as noted above, the sales returns and allowances were recorded in accrued expenses on the unaudited condensed consolidated balance sheets.

 

Inventory

 

As of September 30, 2023 and December 31, 2022, inventory primarily consisted of finished goods, raw materials and packaging 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 various Amazon fulfillment centers. The Company also maintains inventory at a company owned warehouse in Pennsylvania.

 

Inventory 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 September 30, 2023 and December 31, 2022, the Company recorded an inventory reserve of approximately $99 thousand and $161 thousand, respectively.

 

12

 

 

As of September 30, 2023 and December 31, 2022, the Company’s inventory consisted of the following:

 

SUMMARY OF INVENTORY

		September 30,				December 31,
		2023				2022
Finished goods - products		$	2,428,471			$	2,587,370
Raw materials and packaging components			1,461,576				1,276,891
Inventory reserve			(99,401	)			(160,898	)
Total Inventory - net		$	3,790,646			$	3,703,363

 

Product Deposit

 

Many 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 September 30, 2023 and December 31, 2022, the Company has approximately $85 thousand and $127 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 September 30, 2023, the Company approximates its implicit purchase commitments to be $596 thousand, of which the vast majority are with two vendors that manufacture the Company’s finished goods inventory for its RexMD product line.

 

Capitalized Software Costs

 

The Company capitalizes certain internal payroll costs and third-party costs related to internally developed software and amortizes these costs using the straight-line method over the estimated useful life of the software, generally three years. The Company does not sell internally developed software other than through the use of subscription service. Certain development costs not meeting the criteria for capitalization, in accordance with ASC 350-40, Internal-Use Software, are expensed as incurred. As of September 30, 2023 and December 31, 2022, the Company capitalized a net amount of $11.3 million and $8.8 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.

 

Goodwill and Intangible Assets

 

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

 

Other intangible assets are comprised of: (1) the ResumeBuild brand, (2) a customer relationship asset, (3) the Cleared trade name, (4) Cleared developed technology, (5) a purchased license and (6) two purchased domain names. During the year ended December 31, 2022, the Company recorded an $827 thousand impairment loss related to a decline in the estimated fair value of the Cleared customer relationship intangible asset with an original cost of $919 thousand and accumulated amortization of $92 thousand. Other intangible assets are amortized over their estimated lives using the straight-line method. Costs incurred to renew or extend the term of recognized intangible assets are capitalized and amortized over the useful life of the asset.

 

Impairment of Long-Lived Assets

 

Long-lived assets include equipment and capitalized software. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, an impairment is recognized as the amount by which the carrying amount of the assets exceeds the estimated fair values of the assets. As of September 30, 2023 and December 31, 2022, the Company determined that no events or changes in circumstances existed that would indicate any impairment of its long-lived assets.

 

Income Taxes

 

The Company files corporate federal, state and local tax returns. WorkSimpli files a tax return in Puerto Rico; WorkSimpli is a limited liability company and files tax returns with any tax liabilities or benefits passing through to its members.

 

13

 

 

The 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 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. ASC 740 also provides a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken in a tax return. Using this guidance, a company may recognize the tax benefit from an uncertain tax position in its financial statements only if it is more likely-than-not (i.e., a likelihood of more than 50%) that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company’s tax returns for all years since December 31, 2019, remain open to audit by all related taxing authorities.

 

Stock-based Compensation

 

The Company follows the provisions of ASC 718, Share-Based Payment. Under this guidance compensation cost generally is recognized at fair value on the date of the grant and amortized over the respective vesting or service period. The fair value of options at the date of grant is estimated using the Black-Scholes option pricing model. The expected option life is derived from assumed exercise rates based upon historical exercise patterns and represents the period of time that options granted are expected to be outstanding. The expected volatility is based upon historical volatility of the Company’s common shares using weekly price observations over an observation period that approximates the expected life of the options. The risk-free interest rate approximates the U.S. Treasury yield curve rate in effect at the time of grant for periods similar to the expected option life. Due to limited history of forfeitures, the Company has elected to account for forfeitures as they occur. Many of the assumptions require significant judgment and any changes could have a material impact in the determination of stock-based compensation expense.

 

Earnings (Loss) Per Share

 

Basic earnings (loss) per common share (“EPS”) is based on the weighted average number of shares outstanding during each period presented. Shares of unissued vested restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) are included in our calculation of basic weighted average shares outstanding. 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.

 

The 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. The dilutive effect of traditional convertible debt and preferred stock is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the diluted EPS calculation for the entire period being presented.

 

The following table summarizes the number of shares of common stock issuable pursuant to our convertible securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive even though the exercise price could be less than the average market price of the common shares:

 

SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

		2023				2022				2023				2022
		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
Series B Preferred Stock			-				1,369,581				995,994				1,334,421
RSUs and RSAs			2,954,750				1,830,750				2,545,875				1,563,000
Stock options			2,616,722				4,007,698				3,316,909				4,214,609
Warrants			4,827,380				3,859,638				4,827,380				3,859,638
Convertible long-term debt			1,342,282				-				1,342,282				-
Potentially dilutive securities			11,741,134				11,067,667				13,028,440				10,971,668

 

Segment Data

 

Our portfolio of brands are included within two operating segments: Telehealth and WorkSimpli. We believe our current segments and brands within our segments complement one another and position us well for future growth. 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.

 

14

 

 

Fair Value of Financial Instruments

 

The fair value of a financial instrument is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities subject to ongoing fair value measurement are categorized and disclosed into one of the three categories depending on observable or unobservable inputs employed in the measurement. Hierarchical levels, which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities, are as follows:

 

	1.	Level 1: Inputs that are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
	2.	Level 2: Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
	3.	Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

 

In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

 

The carrying value of the Company’s financial instruments, including cash, accounts receivable, accounts payable, accrued expenses, the face amount of notes payable and convertible long-term debt approximate fair value for all periods presented.

 

Concentrations of Risk

 

The Company monitors its positions with, and the credit quality of, the financial institutions with which it invests. The Company, at times, maintains balances in various operating accounts in excess of federally insured limits. 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 September 30, 2023, we utilized three suppliers for fulfillment services, six suppliers for manufacturing finished goods, six suppliers for packaging, bottling, and labeling, and four suppliers for prescription medications. As of December 31, 2022, we utilized four suppliers for fulfillment services, six suppliers for manufacturing finished goods, five suppliers for packaging, bottling, and labeling, and three suppliers for prescription medications.

 

Recently Adopted Accounting Pronouncements

 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments, which requires an entity to utilize the current expected credit loss (“CECL”) impairment model to estimate its lifetime “expected credit loss” and record an allowance that is deducted from the amortized cost basis of the financial assets and certain other instruments, including but not limited to available-for-sale debt securities. Credit losses relating to available-for-sale debt securities are recorded through an allowance for credit losses. ASU 2016-13 requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates, which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022 for all entities except SEC reporting companies that are not smaller reporting companies. The Company adopted ASU 2016-13 as of January 1, 2023. The adoption did not have a material impact on the Company’s financial statements.

 

In October 2021, the FASB issued 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. The Company adopted ASU 2021-08 as of January 1, 2023. The adoption did not have a material impact on the Company’s financial statements.

 

15

 

 

Other Recent Accounting Pronouncements

 

All other accounting standards updates that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

 

NOTE 3 – ACQUISITIONS

 

On January 18, 2022, the Company completed the acquisition of Cleared. The acquisition adds to the Company’s growing portfolio of telehealth capabilities. The Company 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. The results of Cleared are included within the consolidated financial statements commencing on the acquisition date.

 

The purchase price was approximately $9.1 million, including cash paid upfront of approximately $1.0 million and payable in the future of approximately $3.0 million, and contingent consideration of $5.1 million. The purchase agreement included up to $72.8 million of potential earn-out payable in cash or stock upon achievement of revenue targets, which was originally recognized as contingent consideration. The Company, with the assistance of a third-party valuation expert, estimated the fair value of the acquired tangible and identifiable intangible assets using significant estimates such as revenue projections. The fair value of the identified intangible assets was based primarily on significant unobservable inputs and thus represent a Level 3 measurement as defined in ASC 820, Fair Value Measurement. The fair value of the trade name and developed technology were determined using the relief-from-royalty method under the income approach. The royalty rates used to determine the fair value of the trade name and developed technology were 0.10% and 1.0%, respectively. The fair value of the customer relationships was determined using the multi-period excess earnings method which involves forecasting the net earnings expected to be generated. The customer attrition rate used to determine the fair value of the customer relationships was 10.0%. The discount rate used to determine the fair value of the trade name, developed technology and customer relationships was 70.5%.

 

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

 

SCHEDULE OF FAIR VALUE OF ASSETS AND LIABILITIES 

Purchase price, net of cash acquired		$	9,091,762
Less:
Customer relationship intangible asset			918,812
Trade name intangible asset			133,339
Developed technology intangible asset			12,920
Inventory			7,168
Fixed assets			37,888
Deferred taxes			354,000
Accounts payable and other current liabilities			(408,030	)
Goodwill		$	8,035,665

 

The purchase price and purchase price allocation for Cleared was finalized as of September 30, 2022 with no significant changes to preliminary amounts. Based on the final purchase price allocation, the aggregate goodwill recognized was $8.0 million, which is not expected to be deductible for income tax purposes. The amount allocated to goodwill and intangible assets reflected the benefits the Company expected to realize from the growth of the acquisition’s operations.

 

On February 4, 2023, the Company entered into the First Amendment to the Stock Purchase Agreement (the “First Amendment”) between the Company and the sellers of Cleared. The First Amendment was amended to, among other things: (i) reduce the total purchase price by $250 thousand to a total of $3.67 million; (ii) change the timing of the payment of the purchase price to $460 thousand paid at closing (which has already been paid by the Company), with the remaining amount to be paid in five quarterly installments beginning on or before February 6, 2023 and ending January 15, 2024; (iii) remove all “earn-out” payments payable by the Company to the sellers; and (iv) removing certain representations and warranties of the Company and sellers in connection with the transaction. On February 6, 2023, the Company issued 337,895 shares of common stock related to the first of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On April 17, 2023, the Company issued 455,319 shares of common stock related to the second of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On July 17, 2023, the Company issued 158,129 shares of common stock related to the third of five quarterly installment payments due to the sellers of Cleared under the First Amendment.

 

16

 

 

During the year ended December 31, 2022, the Company recorded a decrease of $5.1 million to the Cleared contingent consideration as a result of the remeasurement of the fair value. The decline in the estimated fair value of the Cleared contingent consideration is a result of a decline in the Cleared financial projections and the removal of all earn-out payments payable by the Company from the terms of the First Amendment. During the year ended December 31, 2022, the Company also recorded an $8.0 million goodwill impairment charge and an $827 thousand intangible asset impairment charge based on the decline in the Cleared financial projections (See Note 4).

 

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.

 

In February 2022, WorkSimpli closed on the ResumeBuild APA to purchase the related intangible assets associated with the ResumeBuild brand, a subscription-based resume building software. The acquisition further adds to the capabilities of the WorkSimpli software as a service application. The purchase price was $4.5 million, including cash paid upfront of $4.0 million 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 assets. 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 approximately $63 thousand, for a two-year period ending on the two-year anniversary of the closing of the Acquisition. As of September 30, 2023, WorkSimpli has paid the Seller approximately $344 thousand in accordance with the ResumeBuild APA. 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.

 

NOTE 4 – GOODWILL AND INTANGIBLE ASSETS

 

The Company’s goodwill balance related to the Cleared acquisition was $0 as of both September 30, 2023 and December 31, 2022. During the year ended December 31, 2022, the Company recorded an $8.0 million goodwill impairment charge related to a decline in the estimated fair value of Cleared as a result of a decline in the Cleared financial projections.

 

As of September 30, 2023 and December 31, 2022, the Company has the following amounts related to amortizable intangible assets:

 

SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS 

		September 30,				December 31,				Amortizable
		2023				2022				Life
Amortizable Intangible Assets:
ResumeBuild brand		$	4,500,000			$	4,500,000			5 years
Customer relationship asset			1,006,840				1,006,840			3 years
Cleared trade name			133,339				133,339			5 years
Cleared developed technology			12,920				12,920			1 year
Purchased licenses			200,000				200,000			10 years
Website domain names			171,599				22,731			3 years
Amortizable intangible assets			171,599				22,731			3 years
Less: accumulated amortization			(2,769,467	)			(2,043,971	)
Total net amortizable intangible assets		$	3,255,231			$	3,831,859

 

During the year ended December 31, 2022, the Company recorded an $827 thousand impairment charge related to a decline in the estimated fair value of the Cleared customer relationship intangible asset with an original cost of $919 thousand and accumulated amortization of $92 thousand. The aggregate amortization expense of the Company’s intangible assets for the three months ended September 30, 2023 and 2022 was $246 thousand and $326 thousand, respectively. The aggregate amortization expense of the Company’s intangible assets for the nine months ended September 30, 2023 and 2022 was $726 thousand and $667 thousand, respectively. Total amortization expense for the remainder of 2023 is approximately $246 thousand, 2024 through 2025 is approximately $980 thousand per year, 2026 is approximately $940 thousand and 2027 is approximately $113 thousand.

 

17

 

 

NOTE 5 – ACCRUED EXPENSES

 

As of September 30, 2023 and December 31, 2022, the Company has the following amounts related to accrued expenses:

 

SCHEDULE OF ACCRUED EXPENSES

		September 30,				December 31,
		2023				2022
Accrued selling and marketing expenses		$	6,872,464			$	3,508,883
Sales tax payable			2,501,035				2,501,035
Purchase price payable			1,264,301				2,463,002
Accrued dividends payable			776,563				776,563
Accrued compensation			2,074,074				576,027
Accrued interest			-				448,718
Other accrued expenses			2,004,691				1,892,281
Total accrued expenses		$	15,493,128			$	12,166,509

 

NOTE 6 – NOTES PAYABLE

 

Working Capital Loans

 

In October 2022, the Company received proceeds of $976 thousand under a 12-month working capital loan with Amazon. The terms of the loan include interest in the amount of $62 thousand. As of September 30, 2023 and December 31, 2022, the outstanding balance was $111 thousand and $976 thousand, respectively, and is included in notes payable, net, on the accompanying unaudited condensed consolidated balance sheet.

 

In November 2022, the Company received proceeds of $1.9 million under two 10-month working capital loans with Balanced Management. The terms of the loans include loan origination fees in the amount of $60 thousand and total interest of $840 thousand. As of September 30, 2023 and December 31, 2022, the outstanding balance was $0 and $1.821 million, respectively, and is included in notes payable, net, on the accompanying unaudited condensed consolidated balance sheet.

 

During the nine months ended September 30, 2023, the Company received proceeds of $2 million under a $2.5 million loan facility with CRG Financial, maturing on December 15, 2023. The loan facility includes interest of 12%. The Company repaid the $2 million outstanding loan balance on March 21, 2023 with the proceeds received from the Avenue Facility and recorded a $325 thousand loss on debt extinguishment related to the repayment of the CRG Financial loan due to a prepayment penalty and various fees. As of both September 30, 2023 and December 31, 2022, the outstanding balance was $0 related to the CRG Financial loan.

 

During the nine months ended September 30, 2023, the Company financed a $348 thousand prepaid insurance policy under a 10-month financing agreement with Arthur J. Gallagher Risk Management Services, LLC. The terms of the agreement include finance fees in the amount of $13 thousand. As of September 30, 2023 and December 31, 2022, the outstanding balance was $315 thousand and $0, respectively, and is included in notes payable, net, on the accompanying unaudited condensed consolidated balance sheet.

 

Total interest expense on notes payable amounted to $216 thousand and $0 for the three months ended September 30, 2023 and 2022, respectively. Total interest expense on notes payable amounted to $250 thousand and $0 for the nine months ended September 30, 2023 and 2022, respectively.

 

NOTE 7 – LONG-TERM DEBT

 

Avenue Capital Credit Facility

 

As noted in Note 1 above, on March 21, 2023, the Company entered into and closed on a Credit Agreement, and a Supplement to the Credit Agreement with Avenue. The Credit Agreement provides for a convertible senior secured credit facility of up to an aggregate amount of $40 million, comprised of the following: (1) $15 million in term loans funded at closing, (2) $5 million of additional committed term loans received on September 26, 2023 in conjunction with the Avenue First Amendment and (3) $20 million of additional uncommitted term loans, collectively referred to as the “Avenue Facility”. The Company issued Avenue warrants to purchase $1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments. The Warrants have a term of five years. The relative fair value of the Warrants issued to Avenue upon closing was $873 thousand. In addition, Avenue may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share equal to $1.49. The relative fair value was recorded to debt discount and is included as a reduction to long-term debt on the unaudited condensed consolidated balance sheet as of September 30, 2023. The Company incurred other fees associated with the Avenue Facility including: (1) a $300 thousand financing fee, (2) a $200 thousand upfront commitment fee of 1% of the total $20 million in committed capital and (3) $27 thousand in legal fees. The total debt discount recorded of $1.4 million will be amortized over a forty-two-month period. Total amortization of debt discount was $80 thousand and $234 thousand for the three and nine months ended September 30, 2023, respectively. The Company received gross proceeds of $15.0 million at closing (net proceeds of $12.3 million after repayment of the $2 million outstanding CRG loan balance and various fees).

 

As noted in Note 1 above, the Company entered into the Avenue First Amendment to the Credit Agreement whereby the Company received an additional $5 million in committed term loans on September 26, 2023. The Company received gross and net proceeds of $5.0 million.

 

The Avenue Facility matures on October 1, 2026 and interest is based on the greater of: (1) the Prime Rate (as defined in the Supplement) plus 4.75% and (2) 12.5%. At September 30, 2023, the interest rate was 13.25%. Payments are interest only until November 2024. Proceeds from the Avenue Facility were used to repay the Company’s outstanding notes payable balances with CRG Financial and are expected to be utilized for general corporate purposes.

 

18

 

 

The Company is subject to certain affirmative and negative covenants under the Avenue Facility, including the requirement, beginning on the closing date, to maintain at least $5 million of unrestricted cash to be tested at the end of each month, and beginning on the period ended September 30, 2023, and at the end of each quarter thereafter, a trailing six-month cash flow, subject to certain adjustments as provided by the Credit Agreement, of at least $2 million. As of the date of filing, there is $20 million outstanding under the Avenue Facility and the Company is in compliance with the Avenue Facility terms.

 

Total interest expense on long-term debt, inclusive of amortization of debt discounts, amounted to $594 thousand and $0 for the three months ended September 30, 2023 and 2022, respectively. Total interest expense on long-term debt, inclusive of amortization of debt discounts, amounted to $1.3 million and $0 for the nine months ended September 30, 2023 and 2022, respectively.

 

NOTE 8 – STOCKHOLDERS’ EQUITY

 

The Company has authorized the issuance of up to 100,000,000 shares of common stock, $0.01 par value, and 5,000,000 shares of preferred stock, $0.0001 par value, of which 5,000 shares are designated as Series B Preferred Stock, 1,610,000 are designated as Series A Preferred Stock and 3,385,000 shares of preferred stock remain undesignated.

 

On June 8, 2021, the Company filed the 2021 Shelf. Under the 2021 Shelf at the time of effectiveness, the Company originally had the ability to raise up to $150 million by selling common stock, preferred stock, debt securities, warrants and units. In conjunction with the 2021 Shelf, the Company also entered into the ATM Sales Agreement whereby the Company may offer and sell, from time to time, shares of common stock. On March 22, 2023, the date the Company filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, the Company became subject to the offering limits in General Instruction I.B.6 of Form S-3 (i.e., the “baby shelf limitations”). As a result of the baby shelf limitations, the Company may only offer and sell shares of common stock having an aggregate offering price of up to $18.435 million pursuant to the ATM Sales Agreement, and it filed a prospectus supplement with the SEC to that effect on March 27, 2023. In June 2023, the Company’s public float increased above $75.0 million. As a result, the Company is no longer subject to the baby shelf limitations. The Company filed another prospectus supplement with the SEC to that effect on June 29, 2023. As of September 30, 2023, the Company has $58.6 million available under the ATM Sales Agreement.

 

Options

 

During the nine months ended September 30, 2023, the Company issued an aggregate of 74,372 shares of common stock related to the cashless exercise of options.

 

Common Stock

 

Common Stock Transactions During the Nine Months Ended September 30, 2023

 

During the nine months ended September 30, 2023, the Company issued an aggregate of 339,875 shares of common stock for service, including vested restricted stock units.

 

On February 4, 2023, the Company entered into the First Amendment to the Stock Purchase Agreement (the “First Amendment”) between the Company and the sellers of Cleared. The First Amendment was amended to, among other things change the timing of the payment of the purchase price to $460 thousand paid at closing (which has already been paid by the Company), with the remaining amount to be paid in five quarterly installments beginning on or before February 6, 2023 and ending January 15, 2024. On February 6, 2023, the Company issued 337,895 shares of common stock related to the first of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On April 17, 2023, the Company issued 455,319 shares of common stock related to the second of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On July 17, 2023, the Company issued 158,129 shares of common stock related to the third of five quarterly installment payments due to the sellers of Cleared under the First Amendment.

 

During the nine months ended September 30, 2023, the Company sold 180,021 shares of common stock under the ATM Sales Agreement and net proceeds received were $900 thousand.

 

During the nine months ended September 30, 2023, the Company issued 100,000 shares of common stock related to the settlement of the Harborside Advisors LLC v. LifeMD, Inc., Case No. 21-cv-10593, and the Specialty Medical Drugstore, LLC D/B/A GoGoMeds v. LifeMD, Inc., Case No. 21-cv-10599, matters. The shares issued were valued based on the closing price of the Company’s stock, or $5.32, on the date of settlement, July 10, 2023.

 

19

 

 

On July 10, 2023, and August 14, 2023, PA001 Holdings, LLC, the holder of the Company’s Series B Preferred Stock, elected to convert 2,275 and 1,225 shares, respectively, of the Company’s Series B Preferred Stock, at a price of $3.25 per share of Series B Preferred Stock, pursuant to the terms of the Securities Purchase Agreement dated August 28, 2020. The conversion was calculated based on the original issuance price of the Series B Preferred Stock plus all accrued dividends to date. The conversion resulted in 1,010,170 and 550,694 shares of the Company’s common stock issued to PA001 Holdings, on July 12, 2023 and August 15, 2023, respectively.

 

On March 21, 2023, in connection with the Company’s closing of a Credit Agreement with Avenue, the Company issued Avenue warrants to purchase $1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments. In addition, Avenue may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share equal to $1.49.

 

Noncontrolling Interest

 

Net income attributed to the non-controlling interest amounted to $839 thousand and $84 thousand for the three months ended September 30, 2023 and 2022, respectively. During both the three months ended September 30, 2023 and 2022, the Company paid distributions to non-controlling shareholders of $36 thousand. Net income attributed to the non-controlling interest amounted to $2.2 million and $155 thousand for the nine months ended September 30, 2023 and 2022, respectively. During both the nine months ended September 30, 2023 and 2022, the Company paid distributions to non-controlling shareholders of $108 thousand.

 

WorkSimpli Software Restructuring Transaction

 

Effective January 22, 2021 (the “WSS Effective Date”), the Company consummated the WSS Restructuring, which is described in Note 1. 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 $376 thousand (the “CVLBPR Note”), issued by WSS in favor of Conversion Labs PR, for 37,531 newly issued membership interests of WSS (the “Exchange”). Upon consummation of the Exchange the CVLBPR Note was extinguished.

 

Concurrently, in furtherance of the WSS Restructuring, Conversion Labs PR entered into two Membership Interest Purchase Agreements (the “Founding Members MIPAs”) with two founding members of WSS (the “Founding Members”) whereby Conversion Labs PR purchased from the Founding Members an aggregate of 2,183 membership interests of WSS for an aggregate purchase price of $225,000, paid in December 2020.

 

In furtherance of the WSS Restructuring, Conversion Labs PR entered into a Membership Interest Purchase Agreement with WSS, (the “CVLB PR MIPA”), pursuant to which Conversion Labs PR purchased 12,000 membership interests of WSS for an aggregate purchase price of $300 thousand. The CVLB PR MIPA provides that the transaction may be completed in three (3) tranches with a purchase price of $100 thousand per tranche to be made at the sole discretion of Conversion Labs PR. Payment for the first tranche of $100 thousand was made upon execution of the CVLB PR MIPA in January 2021. Payments for the second and third tranches were made on the 60-day anniversary and the 120-day anniversary of the WSS Effective Date.

 

Following the consummation of the WSS Restructuring, Conversion Labs PR increased its ownership of WSS from 51% to approximately 85.58% on a fully diluted basis. WSS entered into an amendment to its operating agreement (the “WSS Operating Agreement Amendment”) to reflect the change in ownership.

 

Concurrently with the WSS Restructuring, Conversion Labs PR entered into option agreements with Sean Fitzpatrick (the “Fitzpatrick Option Agreement”) and Varun Pathak (the “Pathak Option Agreement” together with Fitzpatrick Option Agreement the “Option Agreements”), pursuant to which Conversion Labs PR granted options to purchase membership interest units of WSS. Upon vesting, the Fitzpatrick Options and the Pathak Options provide for the potential re-purchase of up to an additional 13.25% of WSS by Fitzpatrick and Pathak in the aggregate with Conversion Labs PR ownership ratably reduced to approximately 72.98%.

 

The Fitzpatrick Option Agreement grants Sean Fitzpatrick the option to purchase 10,300 membership interest units of WSS for an exercise price of $1.00 per membership interest unit. The Fitzpatrick Options vest in accordance with the following milestones (i) 3,434 membership interests upon WSS achieving $2.5 million of gross sales in any fiscal quarter (ii) 3,434 membership interests upon WSS achieving $4.0 million of gross sales in any fiscal quarter, and (iii) 3,434 membership interests upon WSS achieving $8.0 million of gross sales with a ten percent (10%) net profit margin in any fiscal quarter.

 

The Pathak Option Agreement grants Varun Pathak the option to purchase 2,100 membership interest units of WSS for an exercise price of $1.00 per membership interest unit. The Pathak Options vest in accordance with the following milestones (i) 700 membership interests upon WSS achieving $2.5 million of gross sales in any fiscal quarter (ii) 700 membership interests upon WSS achieving $4.0 million of gross sales in any fiscal quarter, and (iii) 700 membership interests upon WSS achieving $8.0 million of gross sales with a ten percent (10%) net profit margin in any fiscal quarter.

 

20

 

 

On September 30, 2022, Sean Fitzpatrick and Varun Pathak exercised their options to purchase 10,300 and 2,100 membership interest units, respectively, of WorkSimpli for an exercise price of $1.00 per membership interest unit under the Option Agreements. Following the exercise of the Option Agreements, Conversion Labs PR decreased its ownership interest in WorkSimpli from 85.58% to 73.64%. Effective March 31, 2023, the Company redeemed 500 membership interest units in WorkSimpli. Following the retirement, Conversion Labs PR’s ownership interest in WorkSimpli increased to 74.06%. On June 30, 2023, Lisa Bowlin, WorkSimpli’s Chief Operating Officer, exercised her option agreement (the “Bowlin Option Agreement”) to purchase 889 membership interest units of WorkSimpli for an exercise price of $1.00 per membership interest unit. Following the exercise of the Bowlin Option Agreement, Conversion Labs PR decreased its ownership interest in WorkSimpli from 74.06% to 73.32%.

 

On June 30, 2023, WorkSimpli declared a cash dividend in the amount of $22.40 per membership interest unit to all unit holders of record as of June 30, 2023 and was paid on July 3, 2023. On July 31, 2023, WorkSimpli declared a cash dividend in the amount of $11.20 per membership interest unit to all unit holders of record as of July 28, 2023 and was paid on August 1, 2023. On August 31, 2023, WorkSimpli declared a cash dividend in the amount of $16.80 per membership interest unit to all unit holders of record as of August 30, 2023 and was paid on September 1, 2023. On September 30, 2023, WorkSimpli declared a cash dividend in the amount of $14.00 per membership interest unit to all unit holders of record as of September 30, 2023 and was paid on October 5, 2023. The total dividends declared to noncontrolling interest holders was $1.0 million and $1.5 million for the three and nine months ended September 30, 2023, respectively, and is included in the Company’s results of operations for the three and nine months ended September 30, 2023.

 

Dividends

 

The Company pays cumulative dividends on its Series A Preferred Stock, 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 are payable quarterly in arrears, on or about the 15th day of January, April, July, and October of each year. Dividends declared and paid on the Series A Preferred Stock during the nine months ended September 30, 2023 are as follows: (1) quarterly dividend declared on March 28, 2023 to holders of record as of April 7, 2023 and was paid on April 17, 2023, (2) quarterly dividend declared on June 27, 2023 to holders of record as of July 7, 2023 and was paid on July 17, 2023 and (3) quarterly dividend declared on September 26, 2023 to holders of record as of October 6, 2023 and was paid on October 16, 2023. The dividends are included in the Company’s results of operations for the three and nine months ended September 30, 2023.

 

Stock Options

 

On January 8, 2021, the Company approved the Company’s 2020 Equity and 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 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.

 

On June 24, 2021, at the Annual Meeting of Stockholders, the stockholders of the Company approved an amendment to the 2020 Plan to increase the maximum number of shares of the Company’s common stock available for issuance under the 2020 Plan by 1,500,000 shares.

 

On June 16, 2022, at the Annual Meeting of Stockholders, the stockholders of the Company approved an amendment to the 2020 Plan to increase the maximum number of shares of the Company’s common stock available for issuance under the 2020 Plan by 1,500,000 shares. As of September 30, 2023, the 2020 Plan, as amended, provided for the issuance of up to 4,950,000 shares of Common Stock. Remaining authorization under the 2020 Plan, as amended, was 441,611 shares as of September 30, 2023.

 

The forms of award agreements to be used in connection with awards made under the 2020 Plan to the Company’s executive officers and non-employee directors are:

 

●	Form of Non-Qualified Option Agreement (Non-Employee Director Awards)
●	Form of Non-Qualified Option Agreement (Employee Awards); and
●	Form of Restricted Stock Award Agreement.

 

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

 

21

 

 

During the nine months ended September 30, 2023, the Company issued an aggregate of 234,500 stock options to employees under the 2020 Plan and the prior plan. These stock options have a contractual term of 4 to 6.5 years and vest in increments which fully vest the options over a two to three-year period, dependent on the specific agreements’ terms.

 

The following is a summary of outstanding options activity under our 2020 Plan for the nine months ended September 30, 2023:

 

SCHEDULE OF OPTION ACTIVITY

		Options Outstanding Number of Shares				Exercise Price per Share				Weighted Average Remaining Contractual Life		Weighted Average Exercise Price per Share
Balance, December 31, 2022			1,784,587			$	2.30 – 21.02			6.95 years		$	9.54
Granted			94,500				1.84 – 7.44			4.27 years			3.30
Cancelled/Forfeited/Expired			(1,006,698	)			2.30 – 21.02						10.01
Balance at September 30, 2023			872,389			$	1.84 – 13.74			5.34 years		$	8.32
Exercisable at December 31, 2022			1,185,153			$	2.30 – 21.02			7.64 years		$	9.62
Exercisable at September 30, 2023			677,625			$	1.84 – 13.74			6.42 years		$	8.58

 

The total fair value of the options granted was $265 thousand, which was determined by the Black-Scholes Pricing Model with the following assumptions: dividend yield of 0%, expected term of 4 years, volatility of 119.16% – 133.67% and risk-free rate of 0.82% – 3.96%. Total compensation expense under the 2020 Plan options above was $1.2 million and $1.4 million for the three months ended September 30, 2023 and 2022, respectively, with unamortized expense remaining of $2.1 million as of September 30, 2023. Total compensation expense under the 2020 Plan options above was $3.5 million and $4.9 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, aggregate intrinsic value of vested service-based options outstanding was $550 thousand.

 

The 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, 2023:

 

SCHEDULE OF OPTION ACTIVITY

		Options Outstanding Number of Shares				Exercise Price per Share				Weighted Average Remaining Contractual Life		Weighted Average Exercise Price per Share
Balance, December 31, 2022			1,439,333			$	1.00 – 19.61			5.63 years		$	6.11
Granted			140,000				1.00 – 2.00			2.19 years			1.71
Exercised			(120,000	)			1.00 – 1.50			4.59 years			1.33
Cancelled/Forfeited/Expired			(200,000	)			14.04						14.04
Balance at September 30, 2023			1,259,333			$	1.00 – 19.61			4.96 years		$	4.82
Exercisable December 31, 2022			1,158,764			$	1.00 – 19.61			5.63 years		$	5.25
Exercisable at September 30, 2023			1,198,208			$	1.00 – 19.61			4.94 years		$	4.65

 

The total fair value of the options granted was $142 thousand, which was determined by the Black-Scholes Pricing Model with the following assumptions: dividend yield of 0%, expected term of 6.5 years, volatility of 187.76% – 195.58% and risk-free rate of 1.21% – 2.26%. Total compensation expense under the above service-based option plan was $367 thousand and $493 thousand for the three months ended September 30, 2023 and 2022, respectively, with unamortized expense remaining of $525 thousand as of September 30, 2023. Total compensation expense under the above service-based option plan was $1.5 million and $1.6 million for the nine months ended September 30, 2023 and 2022, respectively. Of the total service-based options exercised during the nine months ended September 30, 2023, 120,000 options were exercised on a cashless basis, which resulted in 74,372 shares issued. As of September 30, 2023, aggregate intrinsic value of vested service-based options outstanding was $3.3 million.

 

22

 

 

The following is a summary of outstanding performance-based options activity (separate from the 2020 Plan) for the nine months ended September 30, 2023:

 

SCHEDULE OF OPTION ACTIVITY

		Options Outstanding Number of Shares				Exercise Price per Share				Weighted Average Remaining Contractual Life		Weighted Average Exercise Price per Share
Balance at December 31, 2022			535,000			$	1.25 – 2.50			4.59 years		$	1.60
Cancelled/Forfeited/Expired			(50,000	)			2.00						2.00
Balance at September 30, 2023			485,000			$	1.25 – 2.50			4.38 years		$	1.56
Exercisable December 31, 2022			470,000			$	1.50 – 2.50			4.58 years		$	1.61
Exercisable at September 30, 2023			420,000			$	1.50 – 2.50			4.45 years		$	1.56

 

No compensation expense was recognized on the performance-based options above for the three and nine months ended September 30, 2023, as the performance terms have not been met or are not probable. Total compensation expense under the above performance-based options was $106 thousand and $317 thousand for the three and nine months ended September 30, 2022, respectively. As of September 30, 2023, aggregate intrinsic value of vested performance options outstanding was $2.0 million.

 

RSUs and RSAs

 

The following is a summary of outstanding RSUs and RSAs activity under our 2020 Plan for the nine months ended September 30, 2023:

 

SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY

		RSU Outstanding Number of Shares
Balance at December 31, 2022			1,028,250
Granted			3,082,750
Vested			(474,625	)
Cancelled/Forfeited			(730,000	)
Balance at September 30, 2023			2,906,375

 

The total fair value of the 3,082,750 RSUs and RSAs granted was $10.5 million which was determined using the fair value of the quoted market price on the date of grant. Total compensation expense under the 2020 Plan RSUs and RSAs above was $1.6 million and $703 thousand for the three months ended September 30, 2023 and 2022, respectively, with unamortized expense remaining of $5.7 million as of September 30, 2023. Total compensation expense under the 2020 Plan RSUs and RSAs above was $3.1 million and $2.3 million for the nine months ended September 30, 2023 and 2022, respectively. During the nine months ended September 30, 2023, 474,625 RSUs and RSAs vested, of which 139,875 RSUs and RSAs were issued. During the nine months ended September 30, 2023, 655,000 RSUs and 809,000 service-based stock options were cancelled and replaced with 1,830,750 RSAs for four executives and two employees. Incremental compensation cost resulting from the modifications was immaterial to the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023.

 

The following is a summary of outstanding RSUs and RSAs activity (outside of our 2020 Plan) for the nine months ended September 30, 2023:

 

SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY

		RSU Outstanding Number of Shares
Balance at December 31, 2022			715,000
Granted			725,000
Vested			(327,500	)
Cancelled/Forfeited			(500,000	)
Balance at September 30, 2023			612,500

 

The total fair value of the 725,000 RSUs and RSAs granted was $2.0 million which was determined using the fair value of the quoted market price on the date of grant. Total compensation expense for RSUs and RSAs outside of the 2020 Plan was $139 thousand and $225 thousand for the three months ended September 30, 2023 and 2022, respectively, with unamortized expense remaining of $1.3 million as of September 30, 2023. Total compensation expense for RSUs and RSAs outside of the 2020 Plan was $728 thousand and $1.2 million for the nine months ended September 30, 2023 and 2022, respectively. During the nine months ended September 30, 2023, 327,500 RSUs and RSAs vested, of which 200,000 RSUs and RSAs were issued. During the nine months ended September 30, 2023, 300,000 RSUs were cancelled and replaced with 300,000 RSAs for one executive. Incremental compensation cost resulting from the modification was immaterial to the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023.

 

23

 

 

Warrants

 

The following is a summary of outstanding and exercisable warrants activity during the nine months ended September 30, 2023:

 

SCHEDULE OF WARRANT OUTSTANDING AND EXERCISABLE

		Warrants Outstanding Number of Shares				Exercise Price per Share				Weighted Average Remaining Contractual Life				Weighted Average Exercise Price per Share
Balance at December 31, 2022			3,859,638				$1.40 – 12.00				5.85 years			$	5.59
Granted			967,742				1.24				4.47 years				1.24
Balance at September 30, 2023			4,827,380				$1.24 – 12.00				4.21 years			$	4.74
Exercisable December 31, 2022			3,836,993				$1.40 – 12.00				4.88 years			$	5.63
Exercisable September 30, 2023			4,827,380				$1.24 – 12.00				4.21 years			$	4.73

 

The total fair value of the warrants granted during the nine months ended September 30, 2023, was $895 thousand, which was determined by the Black-Scholes Pricing Model with the following assumptions: dividend yield of 0%, expected term of 4 years, volatility of 122.6% and risk-free rate of 3.73%. No stock-based compensation expense on the warrants granted during the nine months ended September 30, 2023 was recorded as the warrants are amortized through debt discount (see Note 7).

 

Total compensation expense for warrants granted prior to the nine months ended September 30, 2023 was $0 and $407 thousand for the three months ended September 30, 2023 and 2022, respectively, with no unamortized expense remaining as of September 30, 2023. Total compensation expense for warrants granted prior to the nine months ended September 30, 2023 was $18 thousand and $1.6 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, aggregate intrinsic value of vested warrants outstanding was $10.2 million.

 

Stock-based Compensation

 

The total stock-based compensation expense related to common stock issued for services, service-based stock options, performance-based stock options, warrants, RSUs and RSAs amounted to $3.3 million for both the three months ended September 30, 2023 and 2022. The total stock-based compensation expense related to common stock issued for services, service-based stock options, performance-based stock options, warrants RSUs and RSAs amounted to $8.8 million and $11.9 million for the nine months ended September 30, 2023 and 2022, respectively. Such amounts are included in general and administrative expenses in the unaudited condensed consolidated statement of operations. Unamortized expense remaining related to service-based stock options, performance-based stock options, warrants, RSUs and RSAs was $9.6 million as of September 30, 2023, which is expected to be recognized through 2026.

 

NOTE 9 – LEASES

 

The 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 2024, 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 2024. WorkSimpli leases two office spaces in Puerto Rico for which the leases expire in 2024.

 

The following is a summary of the Company’s operating right-of-use assets and operating lease liabilities as of September 30, 2023:

 

SCHEDULE OF OPERATING RIGHT OF USE OF ASSETS 

Operating right-of-use assets		$	799,104
Operating lease liabilities - current		$	725,832
Operating lease liabilities - noncurrent		$	169,821

 

Total accumulated amortization of the Company’s operating right-of-use assets was $1.9 million as of September 30, 2023.

 

24

 

 

The table below reconciles the undiscounted future minimum lease payments under the above noted operating leases to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of September 30, 2023:

 

SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES

Fiscal year 2023		$	256,581
Fiscal year 2024			604,987
Fiscal year 2025			68,850
Less: imputed interest			(34,765	)
Present value of operating lease liabilities		$	895,653

 

Operating lease expenses were $214 thousand and $200 thousand for the three months ended September 30, 2023 and 2022, respectively, and $643 thousand and $603 thousand for the nine months ended September 30, 2023 and 2022, respectively, and were included in other operating expenses in our unaudited condensed consolidated statement of operations.

 

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

 

SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE LIABILITIES

		September 30,
		2023				2022
Cash paid for operating lease liabilities		$	665,129			$	517,871

 

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

 

		September 30, 2023				December 31, 2022
Weighted average remaining lease term in years			2.13				2.82
Weighted average discount rate			7.15	%			7.15	%

 

We 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 $3 thousand per month. Additionally, Conversion Labs PR utilizes office space in Puerto Rico on a month-to-month basis incurring rental expense of approximately $3 thousand per month.

 

NOTE 10 - COMMITMENTS AND CONTINGENCIES

 

Royalty Agreements

 

During 2016, Conversion Labs PR entered into a sole and exclusive license, royalty and advisory agreement with Pilaris Laboratories, LLC (“Pilaris”) relating to Pilaris’ PilarisMax shampoo formulation and conditioner. The term of the agreement will be the life of the US Patent held by Pilaris, ten years. As consideration for granting Conversion Labs PR this license, Pilaris will receive on quarterly basis, 10% of the net income collected by the licensed products based on the following formula: Net Income = total income – cost of goods sold – advertising and operating expenses directly related to the marketing of the licensed products. As of September 30, 2023 and December 31, 2022, $0 and approximately $138 thousand, respectively, were included in accrued expenses in regard to this agreement.

 

During 2018, the Company entered into a license agreement (the “Alphabet Agreement”) with M.ALPHABET, LLC (“Alphabet”), pursuant to which Alphabet agreed to license its PURPUREX business which consists of methods and compositions developed by Alphabet for the treatment of purpura, bruising, post-procedural bruising, and traumatic bruising (the “Product Line”). Pursuant to the license granted under the Alphabet Agreement, Conversion Labs PR obtains an exclusive license to incorporate (i) any intellectual property rights related to the Product Line and (ii) all designs, drawings, formulas, chemical compositions and specifications used or useable in the Product Line into one or more products manufactured, sold, and/or distributed by Alphabet for the treatment of purpura, bruising, post-procedural bruising and traumatic bruising and for all other fields of use or purposes (the “Licensed Product(s)”), and to make, have made, advertise, promote, market, sell, import, export, use, offer to sell, and distribute the Licensed Product(s) throughout the world with the exception of China, Hong Kong, Japan, and Australia (the “License”). The Company shall pay Alphabet a 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, 2023.

 

Upon execution of the Alphabet Agreement, Alphabet was granted a 10-year stock option to purchase 20,000 shares of the Company’s common stock at an exercise price of $2.50. Further, if Licensed Products have gross receipts of $7.5 million in any calendar year, the Company will grant Alphabet an option to purchase 20,000 shares of the Company’s common stock at an exercise price of $2.50; (ii) if Licensed Products have gross receipts of $10.0 million in any calendar year, the Company will grant Alphabet an additional option to purchase 20,000 shares of the Company’s common stock at an exercise price of $2.50 and (iii) if Licensed Products have gross receipts of $20.0 million in any calendar year, the Company will grant Alphabet an option to purchase 40,000 shares of the Company’s common stock at an exercise price of $3.75. The likelihood of meeting these performance goals for the licensed products are remote and, therefore, the Company has not recognized any compensation.

 

25

 

 

Purchase Commitments

 

Many of the Company’s vendors require product deposits when a purchase order is placed for goods or fulfillment services related to inventory requirements. The Company’s history of product deposits with its inventory vendors, creates an implicit purchase commitment equaling the total expected product acceptance cost in excess of the product deposit. As of September 30, 2023, the Company approximates its implicit purchase commitments to be $596 thousand.

 

Legal Matters

 

In the normal course of business operations, the Company may become involved in various legal matters. As of September 30, 2023, other than as set forth below, the Company’s management does not believe that there are any potential legal matters that could have a material effect on the Company’s consolidated financial position.

 

On 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. LifeMD, Inc., Case No. 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 5 million shares (i.e., 1,000,000 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 $5.0 million and $33.0 million in alleged damages related to failure to award the aforementioned stock but only specifically states that “Harborside has incurred damages in excess of $75 thousand, 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 was awaiting a decision from the Court on whether the case will be fully or partially dismissed. In the meantime, the parties agreed to mediate both cases (Harborside Advisors LLC v. LifeMD, Inc., Case No. 21-cv-10593, and Specialty Medical Drugstore, LLC D/B/A GoGoMeds v. LifeMD, Inc., Case No. 21-cv-10599, noted below) together. On September 22, 2022, as a result of mediation, the parties reached a settlement to resolve the matters in these cases. The Company issued 400,000 shares of common stock during the year ended December 31, 2022 and 100,000 additional shares of common stock on July 10, 2023 related to this settlement. The costs of this settlement are reflected in the Company’s financial results.

 

On 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. LifeMD, Inc., Case No. 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 $274 thousand, and, therefore, “LifeMD has been unjustly enriched in an amount in excess of $274 thousand, 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: (i) provide 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; (c) 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; (e) detinue; and (f) an accounting. GoGoMeds’ responded to the counterclaims on March 4, 2022 and the parties had commenced fact discovery. In the meantime, the parties agreed to mediate both cases (Harborside Advisors LLC v. LifeMD, Inc., Case No. 21-cv-10593, and Specialty Medical Drugstore, LLC D/B/A GoGoMeds v. LifeMD, Inc., Case No. 21-cv-10599) together. The court granted a 60-day stay in the Specialty Medical Drugstore, LLC D/B/A GoGoMeds v. LifeMD, Inc., Case No. 21-cv-10599, and the parties were amenable in the Harborside Advisors LLC v. LifeMD, Inc., Case No. 21-cv-10593, to the court foregoing any decision on our motion to dismiss until after mediation. On September 22, 2022, as a result of mediation, the parties reached a settlement to resolve the matters in these cases. As noted above, the Company issued 400,000 shares of common stock during the year ended December 31, 2022 and 100,000 additional shares of common stock on July 10, 2023 related to this settlement. The shares issued were valued based on the closing price of the Company’s stock, or $5.32, on the date of settlement, July 10, 2023. The costs of this settlement are reflected in the Company’s financial results.

 

26

 

 

On 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. LifeMD, Inc., Case No. 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 (i.e., which implicitly meets or exceeds the purported $1.0 million minimum fee in the engagement letter), as well as reasonable costs and expenses incurred in this action. On May 22, 2022, the Company filed its answer, affirmative defenses, and counterclaim, denying the alleged breaches of its obligations under the engagement letter agreement. Further, the Company asserted the following affirmative defenses: (1) failure to state a claim on which relief can be granted; (2) laches; (3) breach of the engagement letter agreement; (4) unclean hands; (5) failure to mitigate; (6) the doctrines of waiver, accord, and satisfaction, and res judicata; (7) estoppel; and (8) repudiation/anticipatory breach. The Company also counterclaimed for a declaratory judgment that: (i) Plaintiff breached, repudiated and/or anticipatorily breached the engagement letter agreement; (ii) as a result, the Company was not bound by the terms of the engagement letter agreement from that time forward; (iii) Plaintiff is not owed any amounts under the engagement letter agreement; and (iv) and an award to the Company of any further relief that the Court deems just and proper.

 

The Court conducted virtual case management conferences on June 30, 2022 and August 3, 2022, and fact discovery (i.e., written discovery requests and responses) commenced thereafter. On August 29, 2022, the plaintiff subpoenaed B. Riley Financial, Inc. for documents. The Court subsequently held several case management and status conferences, beginning in October 2022 and continuing through March 2023. On April 5, 2023, the court granted the plaintiff’s motion to compel certain discovery and ordered the Company to conduct certain additional searches for documents and to produce responsive documents by April 26, 2023, which the Company did in compliance with the order. A further case management conference was held on May 17, 2023. In June 2023, the parties attended a mediation resulting in a settlement that fully resolved the matters in this case. The costs of this settlement are reflected in the Company’s financial results.

 

NOTE 11 – RELATED PARTY TRANSACTIONS

 

Working Capital Loan

 

During the nine months ended September 30, 2023, the Company received proceeds of $2 million under a $2.5 million loan facility with CRG Financial, maturing on December 15, 2023. The loan facility includes interest of 12%. The Company repaid the $2 million outstanding loan balance on March 21, 2023 with the proceeds received from the Avenue Facility and recorded a $325 thousand loss on debt extinguishment related to the repayment of the CRG Financial loan (see Note 6). As of both September 30, 2023 and December 31, 2022, the outstanding balance was $0 related to the CRG Financial loan. Mr. Bhatia, a member of the Board of the Company, also serves on the Board of Directors of CRG Financial.

 

WorkSimpli Software

 

During the nine months ended September 30, 2023 and 2022, WorkSimpli utilized CloudBoson Technologies Pvt. Ltd. (“CloudBoson”), formerly LegalSubmit Pvt. Ltd., a company owned by WorkSimpli’s Chief Software Engineer, to provide software development services. WorkSimpli paid CloudBoson a total of $611 thousand and $403 thousand during the three months ended September 30, 2023 and 2022, respectively, and $1.8 million and $1.1 million during the nine months ended September 30, 2023 and 2022, respectively, for these services. WorkSimpli owed CloudBoson $208 thousand as of September 30, 2023. There were no amounts owed to CloudBoson as of December 31, 2022.

 

27

 

 

NOTE 12 – SEGMENT DATA

 

Our portfolio of brands are included within two operating segments: Telehealth and WorkSimpli. We believe our current segments and brands within our segments complement one another and position us well for future growth. Relevant segment data for the three and nine months ended September 30, 2023 and 2022 is as follows:

 

SCHEDULE OF RELEVANT SEGMENT DATA

		2023				2022				2023				2022
		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
Telehealth
Revenue		$	24,342,789			$	21,365,178			$	66,896,719			$	66,231,202
Gross margin			81.6	%			78.9	%			81.3	%			78.8	%
Operating loss		$	(7,716,355	)		$	(7,671,742	)		$	(20,859,582	)		$	(34,181,305	)
WorkSimpli
Revenue		$	14,271,122			$	10,047,291			$	40,790,439			$	24,682,602
Gross margin			97.9	%			97.9	%			97.5	%			97.7	%
Operating income		$	3,146,974			$	606,041			$	8,541,845			$	1,104,465
Consolidated
Revenue		$	38,613,911			$	31,412,469			$	107,687,158			$	90,913,804
Gross margin			87.6	%			85.0	%			87.4	%			83.9	%
Operating loss		$	(4,569,381	)		$	(7,065,701	)		$	(12,317,737	)		$	(33,076,840	)

 

Relevant segment data as of September 30, 2023 and December 31, 2022 is as follows:

 

		September 30, 2023				December 31, 2022
Total Assets
Telehealth		$	30,616,898			$	18,163,464
WorkSimpli			10,074,126				7,502,389
Consolidated		$	40,691,024			$	25,665,853

 

NOTE 13 – SUBSEQUENT EVENTS

 

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

 

Stock Issued for Service

 

In October 2023, the Company issued 326,875 shares of common stock related to vested RSUs and RSAs with a total fair value of $1.1 million.

 

ATM Sales Agreement

 

In October and November 2023, the Company sold 829,886 shares of common stock under the ATM Sales Agreement and net proceeds received were $5.3 million.

 

Stock Issued for Noncontingent Consideration Payment

 

On October 17, 2023, the Company issued 117,583 shares of common stock related to the fourth of five quarterly installment payments due to the sellers of Cleared under the First Amendment.

 

 

 

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

 

Note Regarding Forward-Looking Statements

 

The following discussion should be read in conjunction with the financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q. Certain statements made in this discussion are “forward-looking statements” within the meaning of 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by the Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company’s business, industry, and the Company’s operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

 

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our condensed consolidated financial statements would be affected to the extent there are material differences between these estimates and actual results. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.

 

Risk factors include, by way of example and without limitation:

 

●	changes in the market acceptance of our products;
●	increased levels of competition;
●	changes in political, economic, or regulatory conditions generally and in the markets in which we operate;
●	our ability to successfully commercialize our products on a large enough scale to generate profitable operations;
●	our ability to maintain and develop relationships with customers and suppliers;
●	our ability to respond to new technological developments quickly and effectively;
●	our ability to protect our trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent others from infringing on our proprietary rights;
●	our ability to successfully integrate acquired businesses or new brands;
●	the impact of competitive products and pricing;
●	supply constraints or difficulties;
●	general economic and business conditions, including inflation, slower growth or recession;
●	business interruptions resulting from geo-political actions, including war, and terrorism or disease outbreaks (such as COVID-19);
●	current and potential material weaknesses in our internal control over financial reporting;
●	our ability to continue as a going concern;
●	our need to raise additional funds in the future;
●	our ability to successfully recruit and retain qualified personnel;
●	our ability to successfully implement our business plan;
●	our ability to successfully acquire, develop or commercialize new products and equipment;
●	being able to scale our telehealth platform built to improve the experience and medical care provided to patients across the country;
●	intellectual property claims brought by third parties; and
●	the impact of any industry regulation.

 

 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or performance. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission (“SEC”). We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time except as required by law. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions.

 

Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our condensed consolidated financial statements would be affected to the extent there are material differences between these estimates and actual results. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.

 

As used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms “Company,” “we,” “us,” and “our” refer to LifeMD, Inc. (formerly known as Conversion Labs, Inc.), Cleared Technologies PBC, a Delaware public benefit corporation (“Cleared”) and our majority-owned subsidiary WorkSimpli Software, LLC (formerly known as LegalSimpli Software, LLC), a Puerto Rico limited liability company (“WorkSimpli”). The affiliated network of medical Professional Corporations and medical Professional Associations administratively led by LifeMD Southern Patient Medical Care, P.C., (“LifeMD PC”) is the Company’s variable interest entity in which we hold a controlling financial interest. Unless otherwise specified, all dollar amounts are expressed in United States (“U.S.”) dollars.

 

Corporate History

 

We were formed in the State of Delaware on May 24, 1994, under our prior name, Immudyne, Inc. We changed our name to Conversion Labs, Inc. on June 22, 2018 and then subsequently, on February 22, 2021, we changed our name to LifeMD, Inc. Further, in connection with our name change, we changed our trading symbol to LFMD. In June 2018, the Company closed the strategic acquisition of 51% of WorkSimpli, a company that provides a software as a service for converting, editing, signing and sharing PDF documents called PDFSimpli. Effective January 22, 2021, we consummated a transaction to restructure the ownership of WorkSimpli through a series of agreements and concurrently increased our ownership stake in WorkSimpli to 85.58%. Effective September 30, 2022, two option agreements were exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.64%. Effective March 31, 2023, the Company redeemed 500 membership interest units in WorkSimpli and, as a result, the Company’s ownership interest in WorkSimpli increased to 74.06%. Effective June 30, 2023, an option agreement was exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.32%. On January 18, 2022, the Company acquired Cleared, a nationwide allergy telehealth platform that provides personalized treatments for allergy, asthma, and immunology.

 

Business Overview

 

We are a direct-to-patient telehealth company providing patients a high-quality, cost-effective, and convenient way of accessing comprehensive, virtual healthcare. We believe the traditional model of visiting a doctor’s office, traveling to a local pharmacy, and returning for follow up care or prescription refills is complex, inefficient, and costly, and discourages many individuals from seeking much needed medical care. LifeMD is positioned to elevate the healthcare experience through telehealth with our proprietary technology platform, affiliated provider network, broad treatment capabilities, and unique ability to nurture patient relationships.

 

The LifeMD telehealth platform seamlessly integrates a clinician-centric electronic medical record (“EMR”) system, proprietary algorithms for case-load balancing and scheduling, customer relationship management (“CRM”) functionality, remote and in-home lab testing, and digital prescription capabilities, patient-provider audio/video interfacing, cloud pharmacy fulfillment, and more. Our proprietary technology platform, combined with our 50-state affiliated provider network, enables the management of virtual treatment offerings and complex patient journeys for hundreds of conditions spanning men’s and women’s health, dermatology, urgent, and primary care, chronic care management and more. Our telehealth offerings in general seek to connect patients to licensed providers for diagnoses, virtual care, and prescription medications when appropriate. We also offer over-the-counter (“OTC”) products that are complementary to the conditions we treat. Our virtual primary care services are primarily offered on a subscription basis.

 

Our mission is to empower people to live healthier lives by increasing access to high quality and affordable virtual and in-home healthcare. We believe our success has and will continue to be attributable to an amazing patient experience, retaining the highest-quality providers in the industry, and our end-to-end technology platform. We plan to build a diverse portfolio of differentiated telehealth service offerings that meet the needs of a growing and diversified patient base.

 

 

Since inception, we have helped approximately 803,000 customers and patients, providing them greater access to high-quality, convenient, and affordable care in all 50 states. Total revenue from recurring subscriptions is approximately 93%. In addition to our telehealth business, we own 73.32% of WorkSimpli, which operates PDFSimpli, a rapidly growing software as a service platform for converting, signing, editing, and sharing PDF documents. This business has seen 65% year-over-year revenue growth, with recurring revenue of 100%, due to a combination of higher demand, increased market awareness, enhanced digital capabilities, continued marketing campaign expansion and the addition of the ResumeBuild brand in the first quarter of 2022.

 

Our Platform and Business Strategy

 

We are a patient-centric telehealth company dedicated to delivering seamless end-to-end virtual healthcare to consumers. Our mission is facilitated by our robust technology platform that is purpose-built to seamlessly connect the touchpoints involved in delivering complex care, including scheduling for a national provider network, EMR capabilities, secure synchronous and asynchronous communication, digital prescriptions, cloud pharmacy, and more. Our platform enables us to deliver modern personalized health experiences and offerings through our websites and mobile applications, spanning customer discovery, purchase, and connection with licensed providers, to pharmacy and OTC order fulfillment, through ongoing care. We believe that our seamless approach significantly reduces the complication, cost and time burden of healthcare, incentivizing consumers to stick with our brands.

 

Our proprietary platform also facilitates and accelerates the development and launch of novel offerings throughout clinical protocol establishment, marketing, and fulfillment. Our offerings are sold to consumers on a subscription basis thus creating convenience and discounted pricing opportunities for patients and recurring revenue streams for the Company. Our offerings range from prescription medication fulfilled on a recurring basis, to complementary OTC products, to ongoing care from a team of medical providers. In general, our offerings seek to serve a patient from beginning to end, starting from brand or offering discovery to the medical intake and product selection process, after which a licensed U.S. physician conducts a virtual consultation and determines a treatment plan. As appropriate, prescription medications and OTC products are filled by pharmacy fulfillment partners, and if preferred, shipped directly to the patient. The number of patients and customers we serve across the nation continues to increase at a robust pace, with approximately 803,000 individuals having purchased our products and services to date.

 

Serving as a robust CRM system, and with built in analytics and integrations with best-in-class performance marketing platforms, our platform also enhances our ability to effectively and efficiently acquire new patients and customers and drive brand visibility through strategic media placements, influencer partnerships, and direct response advertising methods across highly scalable marketing channels (i.e., national TV, streaming TV, streaming audio, YouTube, podcasts, Out of Home, print, magazines, online search, social media, and digital).

 

We leverage our telehealth technology platform and services across the three core areas described below:

 

Direct-to-Consumer Virtual Primary Care

 

In the first quarter of 2022, we launched our flagship virtual primary care offering under the LifeMD brand, LifeMD PC. This offering provides patients in all 50 states with 24/7 access to an affiliated high-quality provider for their primary care, urgent care, and chronic care needs. LifeMD’s virtual primary care offering is a mobile-first full-service destination that provides seamless access to high-quality clinical care including virtual consultations and treatment, prescription medications, diagnostics, and imaging, wellness coaching and more. This offering is also supported by robust partnerships that provide our patients benefits such as substantial discounts on lab work and a prescription discount card that can be presented at over 60,000 pharmacies to save up to 92% on their prescription medication.

 

Direct-to-Patient Telehealth

 

We also leverage our telehealth platform’s provider network, cloud pharmacy, and EMR capabilities across our direct-to-patient telehealth brands. Our telehealth brands RexMD, ShapiroMD, NavaMD, and Cleared address largely unaddressed or underserved needs and are leading destinations in their respective treatment verticals of men’s health, hair loss, dermatology, and immunology.

 

	○	RexMD is a men’s telehealth platform brand that offers access to virtual medical treatment for a variety of men’s health needs. After treatment from an affiliated licensed physician, if appropriate, one of our partner pharmacies will dispense and ship prescription medications and OTC products directly to the customer. Since RexMD’s initial launch in the erectile dysfunction treatment market, it has expanded into additional indications, including but not limited to, premature ejaculation, testosterone, and hair loss. RexMD is a leading men’s telehealth platform across the U.S. and has served more than 474,000 customers and patients since inception with a 4.6-star Trustpilot rating.
	○	ShapiroMD offers access to virtual medical treatment, prescription medications, patented doctor formulated OTC products, topical compounded medications, and Food and Drug Administration (“FDA”) approved medical devices treating male and female hair loss through our telehealth platform. ShapiroMD has emerged as a leading destination for hair loss treatment across the U.S. and has served more than 265,000 customers and patients since inception with a 4.9-star Trustpilot rating.

 

 

	○	NavaMD is a female-oriented, tele-dermatology brand that offers access to virtual medical treatment from dermatologists and other providers, and, if appropriate, prescription oral and compounded topical medications to treat dermatological conditions such as aging and acne. In addition to the brand’s telehealth offerings, NavaMD’s proprietary products leverage intellectual property and proprietary formulations licensed from Restorsea, a leading medical grade skincare technology platform.
	○	Cleared is a telehealth brand that provides personalized treatments for allergy, asthma, and immunology. Offerings include in-home tests for both environmental and food allergies, prescriptions for allergies and asthma, and FDA-approved immunotherapies for treating chronic allergies. Cleared leverages a network of affiliated medical professionals and providers in all 50 states, various pharmaceutical partners, and treatments and tests that cost up to 50 percent less than the brand-name competition. The offerings include free consultations, prescription medication, complementary OTC products, and ongoing care from U.S.-licensed allergists and nurses.

 

Enterprise Telehealth Offerings

 

Organizations commercializing healthcare products face a challenging commercial landscape. Increased competition, shrinking market sizes and challenges reaching patients via the traditional brick and mortar doctor are forcing pharmaceutical, medical device and diagnostic companies to rethink their commercial strategies and focus more on digital patient awareness and engagement initiatives. Spending on digital solutions to facilitate greater access to their end markets accounts for one-third of their collective $30 billion commercial spend in the U.S. We believe LifeMD’s unique telehealth technology platform and virtual clinical expertise is well-positioned to address the unmet needs of healthcare product companies as they relate to digital patient awareness, access to care, adherence and compliance.

 

Majority Owned Subsidiary: WorkSimpli

 

WorkSimpli operates PDFSimpli, an online software as a service platform that allows users to create, edit, convert, sign, and share PDF documents. WorkSimpli was acquired through the purchase of 51% of the membership interests of WorkSimpli Software LLC, a Puerto Rico limited liability company, which operates a marketing-driven software solutions business. In addition to WorkSimpli’s growth business model, this acquisition added deep search engine optimization and search engine marketing expertise to the Company. On January 22, 2021, the Company consummated a transaction and increased its ownership of WorkSimpli to 85.58%. Effective September 30, 2022, two option agreements were exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.64%. Effective March 31, 2023, the Company redeemed 500 membership interest units in WorkSimpli and, as a result, the Company’s ownership interest in WorkSimpli increased to 74.06%. Effective June 30, 2023, an option agreement was exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.32%.

 

Significant Developments During the Three Months Ended September 30, 2023

 

Amendment to Cleared Stock Purchase Agreement

 

On February 4, 2023, the Company entered into the First Amendment to the Stock Purchase Agreement (the “First Amendment”) between the Company and the sellers of Cleared. The First Amendment was amended to, among other things: (i) reduce the total purchase price by $250 thousand to a total of $3.67 million; (ii) change the timing of the payment of the purchase price to $460 thousand paid at closing (which has already been paid by the Company), with the remaining amount to be paid in five quarterly installments beginning on or before February 6, 2023 and ending January 15, 2024; (iii) remove all “earn-out” payments payable by the Company to the sellers; and (iv) removing certain representations and warranties of the Company and sellers in connection with the transaction. On February 6, 2023, the Company issued 337,895 shares of common stock related to the first of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On April 17, 2023, the Company issued 455,319 shares of common stock related to the second of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On July 17, 2023, the Company issued 158,129 shares of common stock related to the third of five quarterly installment payments due to the sellers of Cleared under the First Amendment.

 

First Amendment to Avenue Credit Agreement

 

On March 21, 2023, the Company entered into and closed on a loan and security agreement (the “Credit Agreement”), and a supplement to the Credit Agreement (the “Supplement”), with Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P. (collectively, “Avenue”). On September 26, 2023, the Company entered into the First Amendment to the Credit Agreement (the “Avenue First Amendment”) whereby the Company received an additional $5 million in committed term loans. The Company received gross and net proceeds of $5.0 million on September 26, 2023.

 

 

The Credit Agreement provides for a convertible senior secured credit facility of up to an aggregate amount of $40 million, comprised of the following: (1) $15 million in term loans funded at closing, (2) $5 million of additional committed term loans which the Company received on September 26, 2023 under the Avenue First Amendment and (3) $20 million of additional uncommitted term loans, collectively referred to as the “Avenue Facility”. The Avenue Facility matures on October 1, 2026. The Company issued Avenue warrants to purchase $1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments (the “Warrants”). In addition, Avenue may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share equal to $1.49. Proceeds from the Avenue Facility were used to repay the Company’s outstanding notes payable balances with CRG Financial and are expected to be used for general corporate purposes. The Company is subject to certain affirmative and negative covenants under the Avenue Facility, including the requirement, beginning on the closing date, to maintain at least $5 million of unrestricted cash to be tested at the end of each month, and beginning on the period ended September 30, 2023, and at the end of each quarter thereafter, a trailing six-month cash flow, subject to certain adjustments as provided by the Credit Agreement, of at least $2 million. As of the date of filing, there is $20 million outstanding under the Avenue Facility and the Company is in compliance with the Avenue Facility terms.

 

Series B Preferred Stock Conversion

 

On July 10, 2023 and August 14, 2023, PA001 Holdings, LLC (“PA001 Holdings”), the holder of the Company’s Series B Preferred Stock, elected to convert 2,275 and 1,225 shares, respectively, of the Company’s Series B Preferred Stock, at a price of $3.25 per share of Series B Preferred Stock, pursuant to the terms of the Securities Purchase Agreement dated August 28, 2020. The conversion was calculated based on the original issuance price of the Series B Preferred Stock plus all accrued dividends to date. The conversion resulted in 1,010,170 and 550,694 shares of the Company’s common stock issued to PA001 Holdings, on July 12, 2023 and August 15, 2023, respectively. In connection with the Securities Purchase Agreement, the Company and PA001 Holdings entered into a Registration Rights Agreement pursuant to which the Company agreed to register the shares of the Company’s common stock underlying the Series B Preferred Stock in the following circumstances: (i) demand registration rights, providing that PA001 Holdings may demand that the Company file registration statements, at any time, and (ii) piggyback registration rights, providing that PA001 Holdings be given notice of any proposed registration of securities by the Company, and requiring that the Company register all or any portion of the registrable securities that PA001 Holdings requests to be registered, in each case, subject to the terms and conditions of the registration rights agreement.

 

Results of Operations

 

Comparison of the Three Months Ended September 30, 2023 to the Three Months Ended September 30, 2022

 

Our financial results for the three months ended September 30, 2023 are summarized as follows in comparison to the three months ended September 30, 2022:

 

		September 30, 2023								September 30, 2022
						% of								% of
		$				Sales				$				Sales
Telehealth revenue, net		$	24,342,789				63.04	%		$	21,365,178				68.01	%
WorkSimpli revenue, net			14,271,122				36.96	%			10,047,291				31.99	%
Total revenue, net			38,613,911				100	%			31,412,469				100	%
Cost of telehealth revenue			4,479,760				11.60	%			4,502,919				14.34	%
Cost of WorkSimpli revenue			301,746				0.78	%			213,923				0.68	%
Total cost of revenue			4,781,506				12.38	%			4,716,842				15.02	%
Gross profit			33,832,405				87.62	%			26,695,627				84.98	%
Selling and marketing expenses			19,776,797				51.22	%			17,200,859				54.75	%
General and administrative expenses			13,398,387				34.70	%			12,385,030				39.42	%
Other operating expenses			1,622,137				4.20	%			1,617,375				5.15	%
Customer service expenses			2,106,252				5.45	%			1,488,428				4.74	%
Development costs			1,498,213				3.88	%			821,636				2.62	%
Change in fair value of contingent consideration			-				-	%			248,000				0.79	%
Total expenses			38,401,786				99.45	%			33,761,328				107.47	%
Operating loss			(4,569,381	)			(11.83	)%			(7,065,701	)			(22.49	)%
Interest expense, net			(713,766	)			(1.85	)%			(132,235	)			(0.42	)%
Net loss			(5,283,147	)			(13.68	)%			(7,197,936	)			(22.91	)%
Net income attributable to non-controlling interest			839,288				2.18	%			83,737				0.27	%
Net loss attributable to LifeMD, Inc.			(6,122,435	)			(15.86	)%			(7,281,673	)			(23.18	)%
Preferred stock dividends			(776,563	)			(2.01	)%			(776,563	)			(2.47	)%
Net loss attributable to common shareholders		$	(6,898,998	)			(17.87	)%		$	(8,058,236	)			(25.65	)%

 

 

Total revenue, net. Revenues for the three months ended September 30, 2023 were approximately $38.6 million, an increase of 23% compared to approximately $31.4 million for the three months ended September 30, 2022. The increase in revenues was attributable to an increase in WorkSimpli revenue of 42% and an increase in telehealth revenue of 14%. Telehealth revenue accounts for 63% of total revenue and has increased during the three months ended September 30, 2023 due to an increase in online sales demand and a decrease in product refunds and rebates. WorkSimpli revenue accounts for 37% of total revenue and has steadily increased year over year due to a combination of higher demand, increased market awareness, enhanced digital capabilities, continued marketing campaign expansion and the addition of the ResumeBuild brand in the first quarter of 2022.

 

Total cost of revenue. Total cost of revenue consists of (1) the cost of telehealth revenues, which primarily include product costs, pharmacy fulfillment costs, physician consult fees, and shipping costs directly attributable to our prescription and OTC products and (2) the cost of WorkSimpli revenue consisting primarily of information technology fees related to providing the services made available on our online platform. Total cost of revenue increased by approximately 1% to approximately $4.8 million for the three months ended September 30, 2023 compared to approximately $4.7 million for the three months ended September 30, 2022. The combined cost of revenue increase was due to increased WorkSimpli costs during the three months ended September 30, 2023 when compared to the three months ended September 30, 2022, partially offset by decreased telehealth costs during the three months ended September 30, 2023 when compared to the three months ended September 30, 2022. Telehealth costs decreased to 18% of associated telehealth revenues experienced during the three months ended September 30, 2023, from 21% of associated telehealth revenues during the three months ended September 30, 2022 primarily due to improved pricing. WorkSimpli costs were 2% of associated WorkSimpli revenues for both the three months ended September 30, 2023 and 2022.

 

Gross profit. Gross profit increased by approximately 27% to approximately $33.8 million for the three months ended September 30, 2023 compared to approximately $26.7 million for the three months ended September 30, 2022, as a result of increased combined sales. Gross profit as a percentage of revenues was 88% for the three months ended September 30, 2023 as compared to 85% for the three months ended September 30, 2022. Gross profit as a percentage of revenues for telehealth was 82% for the three months ended September 30, 2023 compared to 79% for the three months ended September 30, 2022, and for WorkSimpli was 98% for both the three months ended September 30, 2023 and 2022. The increase in sales volume for telehealth and WorkSimpli and improved pricing for telehealth have contributed to the increase in gross profit.

 

Total expenses. Operating expenses for the three months ended September 30, 2023 were approximately $38.4 million, as compared to approximately $33.8 million for the three months ended September 30, 2022. This represents an increase of 14%, or $4.6 million. The increase is primarily attributable to:

 

(i)

Selling and marketing expenses: This mainly consists of online marketing and advertising expenses. During the three months ended September 30, 2023, the Company had an increase of approximately $2.6 million, or 15% in selling and marketing costs as a result of additional sales and marketing initiatives to drive the current period’s sales growth reported.

 

(ii)	General and administrative expenses: This mainly consists of stock-based compensation expense, merchant processing fees, payroll expenses for corporate employees, taxes and licenses, amortization expense and legal and professional fees. During the three months ended September 30, 2023, the Company had an increase of approximately $1.0 million in general and administrative expenses, primarily related to an increase due to WorkSimpli dividends paid during the nine months ended September 30, 2023. Stock-based compensation was $3.3 million during both the three months ended September 30, 2023 and 2022, with the majority related to stock compensation expense attributable to service-based stock options and restricted stock units.
(iii)	Other operating expenses: This consists of rent and lease expense, insurance, office supplies and software subscriptions, royalty expense and bank charges. During the three months ended September 30, 2023, the Company had an increase of approximately $5 thousand, or 0.3%.

 

(iv)	Customer service expenses: This consists of rent, insurance, payroll and benefit expenses related to the Company’s customer service department located in South Carolina and Puerto Rico. During the three months ended September 30, 2023, the Company had an increase of approximately $618 thousand, or 42%, primarily related to increases in headcount in the Company’s customer service department.
(v)	Development costs: This mainly relates to third-party technology services for developing and maintaining our online platforms. During the three months ended September 30, 2023, the Company had an increase of approximately $677 thousand, or 82%, primarily resulting from technology platform improvements and amortization expense.

 

These increases in operating expenses were partially offset by a decrease in the following:

 

(i)	Change in fair value of contingent consideration: During the three months ended September 30, 2022, the Company recorded an increase of $248 thousand to the Cleared contingent consideration as a result of the remeasurement of the fair value.

 

Interest expense, net. Interest expense, net consists of interest expense related to the Avenue Facility, notes payable and the Series B Preferred Stock for the three months ended September 30, 2023 and interest accrued on the Series B Preferred Stock for the three months ended September 30, 2022. Interest expense increased by approximately $582 thousand during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

 

 

Comparison of the Nine Months Ended September 30, 2023 to the Nine Months Ended September 30, 2022

 

Our financial results for the nine months ended September 30, 2023 are summarized as follows in comparison to the nine months ended September 30, 2022:

 

		September 30, 2023								September 30, 2022
						% of								% of
		$				Sales				$				Sales
Telehealth revenue, net		$	66,896,719				62.12	%		$	66,231,202				72.85	%
WorkSimpli revenue, net			40,790,439				37.88	%			24,682,602				27.15	%
Total revenue, net			107,687,158				100	%			90,913,804				100	%
Cost of telehealth revenue			12,525,887				11.63	%			14,042,112				15.45	%
Cost of WorkSimpli revenue			1,019,018				0.95	%			558,216				0.61	%
Total cost of revenue			13,544,905				12.58	%			14,600,328				16.06	%
Gross profit			94,142,253				87.42	%			76,313,476				83.94	%
Selling and marketing expenses			56,062,345				52.06	%			60,928,649				67.02	%
General and administrative expenses			36,120,723				33.54	%			37,757,710				41.53	%
Other operating expenses			4,640,690				4.31	%			5,076,820				5.58	%
Customer service expenses			5,573,734				5.18	%			3,428,098				3.77	%
Development costs			4,062,498				3.77	%			1,951,039				2.15	%
Goodwill impairment charge			-				-	%			2,735,000				3.01	%
Change in fair value of contingent consideration			-				-	%			(2,487,000	)			(2.74	)%
Total expenses			106,459,990				98.86	%			109,390,316				120.32	%
Operating loss			(12,317,737	)			(11.44	)%			(33,076,840	)			(36.38	)%
Interest expense, net			(1,973,901	)			(1.83	)%			(432,405	)			(0.48	)%
(Loss) gain on debt extinguishment			(325,198	)			(0.30	)%			63,400				0.07	%
Net loss			(14,616,836	)			(13.57	)%			(33,445,845	)			(36.79	)%
Net income attributable to non-controlling interest			2,247,055				2.09	%			154,464				0.17	%
Net loss attributable to LifeMD, Inc.			(16,863,891	)			(15.66	)%			(33,600,309	)			(36.96	)%
Preferred stock dividends			(2,329,688	)			(2.16	)%			(2,329,688	)			(2.56	)%
Net loss attributable to common shareholders		$	(19,193,579	)			(17.82	)%		$	(35,929,997	)			(39.52	)%

 

Total revenue, net. Revenues for the nine months ended September 30, 2023 were approximately $107.7 million, an increase of 18% compared to approximately $90.9 million for the nine months ended September 30, 2022. The increase in revenues was attributable to an increase in WorkSimpli revenue of 65% and an increase in telehealth revenue of 1%. Telehealth revenue accounts for 62% of total revenue and has increased during the nine months ended September 30, 2023 due to a decrease in product refunds partially offset by a decrease in online sales demand. WorkSimpli revenue accounts for 38% of total revenue and has steadily increased year over year due to a combination of higher demand, increased market awareness, enhanced digital capabilities, continued marketing campaign expansion and the addition of the ResumeBuild brand in the first quarter of 2022.

 

Total cost of revenue. Total cost of revenue consists of (1) the cost of telehealth revenues, which primarily include product costs, pharmacy fulfillment costs, physician consult fees, and shipping costs directly attributable to our prescription and OTC products and (2) the cost of WorkSimpli revenue consisting primarily of information technology fees related to providing the services made available on our online platform. Total cost of revenue decreased by approximately 7% to approximately $13.5 million for the nine months ended September 30, 2023 compared to approximately $14.6 million for the nine months ended September 30, 2022. The combined cost of revenue decrease was due to improved pricing and a decrease in telehealth sales volume partially offset by an increase in WorkSimpli sales volume during the nine months ended September 30, 2023 when compared to the nine months ended September 30, 2022. Telehealth costs decreased to 19% of associated telehealth revenues experienced during the nine months ended September 30, 2023, from 21% of associated telehealth revenues during the nine months ended September 30, 2022 primarily due to lower sales volume and improved pricing. WorkSimpli costs were 2% of associated WorkSimpli revenues for the nine months ended September 30, 2023 and 2022.

 

 

Gross profit. Gross profit increased by approximately 23% to approximately $94.1 million for the nine months ended September 30, 2023 compared to approximately $76.3 million for the nine months ended September 30, 2022, as a result of increased combined sales. Gross profit as a percentage of revenues was 87% for the nine months ended September 30, 2023 as compared to 84% for the nine months ended September 30, 2022. Gross profit as a percentage of revenues for telehealth was 81% for the nine months ended September 30, 2023 compared to 79% for the nine months ended September 30, 2022, and for WorkSimpli was 98% for both the nine months ended September 30, 2023 and 2022. The increase in sales volume for WorkSimpli and improved pricing for Telehealth have contributed to the increase in gross profit.

 

Total expenses. Operating expenses for the nine months ended September 30, 2023 were approximately $106.4 million, as compared to approximately $109.4 million for the nine months ended September 30, 2022. This represents a decrease of 3%, or $3.0 million. The decrease is primarily attributable to:

 

(i)

Selling and marketing expenses: This mainly consists of online marketing and advertising expenses. During the nine months ended September 30, 2023, the Company had a decrease of approximately $4.9 million, or 8% in selling and marketing costs as a result of a Company-wide strategic reduction in costs and alignment of sales and marketing initiatives to drive the Company’s recurring revenue subscription-based sales model.

 

(ii)

General and administrative expenses: During the nine months ended September 30, 2023, stock-based compensation was $8.8 million, with the majority related to stock compensation expense attributable to service-based stock options and restricted stock units, as compared to stock-based compensation expense of $11.9 million for the nine months ended September 30, 2022. This category also consists of merchant processing fees, payroll expenses for corporate employees, taxes and licenses, amortization expense and legal and professional fees. During the nine months ended September 30, 2023, the Company had a decrease of approximately $1.6 million in general and administrative expenses, primarily related to the decrease in stock-based compensation costs referenced above and a Company-wide strategic reduction in costs partially offset by an increase due to WorkSimpli dividends paid during the nine months ended September 30, 2023.

 

(iii)	Other operating expenses: This consists of rent and lease expense, insurance, office supplies and software subscriptions, royalty expense and bank charges. During the nine months ended September 30, 2023, the Company had a decrease of approximately $436 thousand, or 9%, primarily related to decreases in office supplies and software subscriptions.
(iv)	Goodwill impairment charge: During the nine months ended September 30, 2022, the Company recorded a $2.7 million goodwill impairment charge related to a decline in the estimated fair value of Cleared as a result of a decline in the Cleared financial projections.

 

These decreases in operating expenses were partially offset by increases in the following:

 

(i)	Customer service expenses: This consists of rent, insurance, payroll and benefit expenses related to the Company’s customer service department located in South Carolina and Puerto Rico. During the nine months ended September 30, 2023, the Company had an increase of approximately $2.1 million, or 63%, primarily related to increases in headcount in the Company’s customer service department.
(ii)	Development costs: This mainly relates to third-party technology services for developing and maintaining our online platforms. During the nine months ended September 30, 2023, the Company had an increase of approximately $2.1 million, or 108%, primarily resulting from technology platform improvements and amortization expense.
(iii)	Change in fair value of contingent consideration: During the nine months ended September 30, 2022, the Company recorded a $2.5 million reduction to the Cleared contingent consideration as a result of the remeasurement of the fair value.

 

Interest expense, net. Interest expense, net consists of interest expense related to the Avenue Facility, notes payable and the Series B Preferred Stock for the nine months ended September 30, 2023 and interest accrued on the Series B Preferred Stock for the nine months ended September 30, 2022. Interest expense increased by approximately $1.5 million during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

 

(Loss) gain on debt extinguishment. The Company recorded a $325 thousand loss on debt extinguishment related to the repayment of the CRG Financial loan during the nine months ended September 30, 2023 due to a prepayment penalty and various fees associated with the CRG Financial loan. The Company recorded a $63 thousand gain on debt forgiveness of Paycheck Protection Program (“PPP”) loans during the nine months ended September 30, 2022.

 

 

Working Capital

 

		September 30, 2023				December 31, 2022
Current assets		$	24,886,286			$	11,311,357
Current liabilities			32,521,927				31,374,151
Working capital		$	(7,635,641	)		$	(20,062,794	)

 

Working capital increased by approximately $12.4 million during the nine months ended September 30, 2023. The increase in current assets is primarily attributable to an increase in cash of approximately $11.3 million as a result of the Avenue Facility, an increase in accounts receivable of $1.6 million and an increase in other current assets of $617 thousand. Current liabilities increased by $1.1 million, which was primarily attributable to an increase in accounts payable and accrued expenses of $2.9 million and an increase in deferred revenue of $692 thousand, partially offset by a decrease in notes payable of $2.4 million.

 

Liquidity and Capital Resources

 

		Nine Months Ended September 30,
		2023				2022
Net cash provided by (used in) operating activities		$	3,106,602			$	(20,966,110	)
Net cash used in investing activities			(6,516,645	)			(12,134,718	)
Net cash provided by (used in) financing activities			14,739,416				(2,390,388	)
Net increase (decrease) in cash			11,329,373				(35,491,216	)

 

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

 

Net cash provided by operating activities increased by $24.1 million to $3.1 million for the nine months ended September 30, 2023, as compared with net cash used in operating activities of approximately $21.0 million for the nine months ended September 30, 2022. The increase in net cash provided by operating activities was primarily related to the decrease in the Company’s net loss of $18.8 million to $14.6 million for the nine months ended September 30, 2023, as compared with $33.4 million for the nine months ended September 30, 2022. Other significant factors contributing to net cash provided by operating activities during the nine months ended September 30, 2023, include $8.8 million in non-cash stock-based compensation charges, $5.4 million in non-cash depreciation and amortization, a net increase in accounts payable, accrued expenses and other operating activities of $4.6 million, a $325 thousand loss on debt extinguishment and an increase in deferred revenue of $692 thousand. Net cash used in operating activities for the nine months ended September 30, 2022, was driven primarily by the net loss of approximately $33.4 million (inclusive of $11.9 million in non-cash, stock-based compensation charges), an increase in inventory of $2.1 million due to timing of purchases, an increase in accounts receivable of $1.6 million and reduction in accrued expenses of $2.3 million excluding the $1.6 million accrual for the first noncontingent milestone payment related to the Cleared acquisition due on the first anniversary of the acquisition. These decreases were partially offset by an increase in accounts payable of $1.8 million as a result of the Company extending payables and credit terms with vendors.

 

Net cash used in investing activities for the nine months ended September 30, 2023 was approximately $6.5 million, as compared with approximately $12.1 million for the nine months ended September 30, 2022. Net cash used in investing activities for the nine months ended September 30, 2023, was due to cash paid for capitalized software costs of approximately $6.3 million, cash paid for the purchase of intangible assets of approximately $149 thousand and cash paid for the purchase of equipment of approximately $94 thousand. Net cash used in investing activities for the nine months ended September 30, 2022, was due to cash paid for capitalized software costs of approximately $6.7 million, cash paid for the purchase of the ResumeBuild brand of approximately $4.0 million, cash paid for the Cleared acquisition of approximately $1.0 million and cash paid for the purchase of equipment of $379 thousand.

 

Net cash provided by financing activities for the nine months ended September 30, 2023 was approximately $14.7 million as compared with net cash used in financing activities of approximately $2.4 million for the nine months ended September 30, 2022. During the nine months ended September 30, 2023, net cash provided by financing activities consisted of: (1) $19.5 million in net proceeds received from the Avenue Facility, (2) $2.3 million in proceeds received from notes payable and (3) $900 thousand in net proceeds received for the sale of common stock under the ATM Sales Agreement (as defined below). These factors contributing to net cash provided by financing activities were partially offset by repayments of notes payable of approximately $5.0 million net of a $325 thousand loss on debt extinguishment on the CRG Financial loan, preferred stock dividends of approximately $2.3 million, net payments made related to adjustments in the membership interest units of WorkSimpli of approximately $306 thousand, contingent consideration payments made related to the ResumeBuild brand acquisition of approximately $188 thousand and distributions to non-controlling interest of $108 thousand. Net cash used in financing activities for the nine months ended September 30, 2022, consisted of preferred stock dividends of $2.3 million, distributions to non-controlling interest of $108 thousand and contingent consideration payments made related to the ResumeBuild acquisition of $94 thousand, partially offset by proceeds from the exercise of options and warrants of $129 thousand and proceeds received from the sale of a portion of the Company’s membership interest in WorkSimpli of $12 thousand.

 

 

Liquidity and Capital Resources Outlook

 

As of September 30, 2023, the Company has an accumulated deficit approximating $209.8 million and has experienced significant losses from its operations. To date, the Company has been funding operations primarily through the sales of its products, issuance of common and preferred stock and through loans and advances from officers and directors. Our primary short-term and long-term requirements for liquidity and capital are for customer acquisitions, funding business acquisitions and investments we may make from time to time, working capital including our noncancelable operating lease obligations, noncontingent consideration, capital expenditures and general corporate purposes. The Company has a current cash balance of approximately $12.9 million as of the filing date.

 

On March 21, 2023, the Company entered into and closed on a Credit Agreement, and a supplement to the Credit Agreement with Avenue. The Credit Agreement provides for a convertible senior secured credit facility of up to an aggregate amount of $40 million, comprised of the following: (1) $15 million in term loans funded at closing, (2) $5 million of additional committed term loans which the Company received on September 26, 2023 under the Avenue First Amendment and (3) $20 million of additional uncommitted term loans, collectively referred to as the “Avenue Facility”. The Avenue Facility matures on October 1, 2026. The Company issued Avenue warrants to purchase $1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments. In addition, Avenue may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share equal to $1.49. Proceeds from the Avenue Facility were used to repay the Company’s outstanding notes payable balances with CRG Financial and are expected to be used for general corporate purposes.

 

During the nine months ended September 30, 2023, the Company received proceeds of $2 million under a $2.5 million loan facility with CRG Financial, maturing on December 15, 2023. The loan facility includes interest of 12%. The Company repaid the $2 million outstanding loan balance on March 21, 2023 with the proceeds received from the Avenue Facility and recorded a $325 thousand loss on debt extinguishment due to a prepayment penalty and various fees associated with the CRG Financial loan. As of both September 30, 2023 and December 31, 2022, the outstanding balance was $0 related to the CRG Financial loan.

 

During the nine months ended September 30, 2023, the Company received proceeds of $348 thousand under a 10-month financing agreement with Arthur J. Gallagher Risk Management Services, LLC. The terms of the agreement include finance fees in the amount of $13 thousand. As of September 30, 2023 and December 31, 2022, the outstanding balance was $315 thousand and $0, respectively, and is included in notes payable, net, on the accompanying unaudited condensed consolidated balance sheet.

 

In October 2022, the Company received proceeds of $976 thousand under a 12-month working capital loan with Amazon. The terms of the loan include interest in the amount of $62 thousand. As of September 30, 2023 and December 31, 2022, the outstanding balance was $111 thousand and $976 thousand, respectively, and is included in notes payable, net, on the accompanying unaudited condensed consolidated balance sheet.

 

In November 2022, the Company received proceeds of $1.9 million under two 10-month working capital loans with Balanced Management. The terms of the loans include loan origination fees in the amount of $60 thousand and total interest of $840 thousand. As of September 30, 2023 and December 31, 2022, the outstanding balance was $0 and $1.821 million, respectively, and is included in notes payable, net, on the accompanying unaudited condensed consolidated balance sheet.

 

On June 8, 2021, the Company filed a shelf registration statement on Form S-3 under the Securities Act, which was declared effective on June 22, 2021 (the “2021 Shelf”). Under the 2021 Shelf at the time of effectiveness, the Company originally had the ability to raise up to $150 million by selling common stock, preferred stock, debt securities, warrants, and units. In conjunction with the 2021 Shelf, the Company also entered into an At Market Issuance Sales Agreement (the “ATM Sales Agreement”) with B. Riley Securities, Inc. and Cantor Fitzgerald & Co. relating to the sale of its common stock. In accordance with the terms of the ATM Sales Agreement, the Company may, but is not obligated to, offer and sell, from time to time, shares of common stock, through or to the Agents, acting as agent or principal. Sales of common stock, if any, will be made by any method permitted that is deemed an “at the market offering” as defined in Rule 415 under the Securities Act. On March 22, 2023, the date the Company filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, the Company became subject to the offering limits in General Instruction I.B.6 of Form S-3 (i.e., the “baby shelf limitations”). As a result of the baby shelf limitations, the Company was only able to offer and sell shares of common stock having an aggregate offering price of up to $18.435 million pursuant to the ATM Sales Agreement, and it filed a prospectus supplement with the SEC to that effect on March 27, 2023. In June 2023, the Company’s public float increased above $75.0 million. As a result, the Company is no longer subject to the baby shelf limitations. The Company filed another prospectus supplement with the SEC to that effect on June 29, 2023. As of September 30, 2023, the Company has $58.6 million available under the ATM Sales Agreement. In October and November 2023, the Company sold 829,886 shares of common stock under the ATM Sales Agreement and net proceeds received were $5.3 million.

 

 

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

 

The Company reviewed its forecasted operating results and sources and uses of cash used in management’s assessment, which included the available financing and consideration of positive and negative evidence impacting management’s forecasts, market, and industry factors. The Company’s continuance as a going concern is highly dependent on its future profitability and on the on-going support of its stockholders, affiliates, and creditors. Based on these circumstances, management has determined that these conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

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

 

Critical Accounting Policies and Estimates

 

Our significant accounting policies are more fully described in the notes to our unaudited condensed consolidated financial statements. We believe that the accounting policies below are critical for one to fully understand and evaluate our financial condition and results of operations.

 

Revenue Recognition

 

The 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:

 

1.	Identify the contract
2.	Identify performance obligations
3.	Determine the transaction price
4.	Allocate the transaction price
5.	Recognize revenue

 

For the Company’s product-based contracts with customers, the Company has determined that there is one performance obligation, which is the delivery of the product; this performance obligation is transferred at a discrete point in time. The Company generally records sales of finished products once the customer places and pays for the order, with the product being simultaneously shipped by a third-party fulfillment service provider. In all cases, delivery is considered to have occurred when the customer obtains control, which is usually commensurate upon shipment of the product. In the case where delivery is not commensurate upon shipment of the product, recognition of revenue is deferred until that time. In the case of its product-based contracts, the Company provides a subscription sensitive service based on the recurring shipment of products. The Company records the related revenue under the subscription agreements subsequent to receiving the monthly product order, recording the revenue at the time it fulfills the shipment obligation to the customer.

 

For its product-based contracts with customers, the Company records an estimate for provisions of discounts, returns, allowances, customer rebates, and other adjustments for its product shipments and are reflected as contra revenues in arriving at reported net revenues. The Company’s discounts and customer rebates are known at the time of sale; correspondingly, the Company reduces gross product sales for such discounts and customer rebates. The Company estimates customer returns and allowances based on information derived from historical transaction detail and accounts for such provisions, as contra revenue, during the same period in which the related revenues are earned. The Company has determined that the population of its product-based contracts with customers are homogenous, supporting the ability to record estimates for returns and allowances to be applied to the entire product-based portfolio population. Customer discounts, returns and rebates on telehealth revenues approximated $696 thousand and $1.1 million during the three months ended September 30, 2023 and 2022, respectively. Customer discounts, returns and rebates on telehealth revenues approximated $1.5 million and $4.2 million during the nine months ended September 30, 2023 and 2022, respectively.

 

 

The Company, through its majority-owned subsidiary WorkSimpli, offers a subscription-based service providing a suite of software applications to its subscribers, principally on a monthly subscription basis. The software suite allows the subscriber/user to convert almost any type of document to another electronic form of editable document, providing ease of editing. For these subscription-based contracts with customers, the Company offers an initial 14-day trial period which is billed at $1.95, followed by a monthly subscription, or a yearly subscription to the Company’s software suite dependent on the subscriber’s enrollment selection. The Company has estimated that there is one product and one performance obligation that is delivered over time, as the Company allows the subscriber to access the suite of services for the time period of the subscription purchased. The Company allows the customer to cancel at any point during the billing cycle, in which case the customer’s subscription will not be renewed for the following month or year depending on the original subscription. The Company records the revenue over the customer’s subscription period for monthly and yearly subscribers or at the end of the initial 14-day service period for customers who purchased the initial subscription, as the circumstances dictate. The Company offers a discount for the monthly or yearly subscriptions being purchased, which is deducted at the time of payment at the initiation of the contract term; therefore the Contract price is fixed and determinable at the contract initiation. Monthly and annual subscriptions for the service are recorded net of the Company’s known discount rates. Customer discounts and allowances on WorkSimpli revenues approximated $865 thousand and $710 thousand during the three months ended September 30, 2023 and 2022, respectively. Customer discounts and allowances on WorkSimpli revenues approximated $2.6 million and $1.7 million during the nine months ended September 30, 2023 and 2022, respectively.

 

As of September 30, 2023 and December 31, 2022, the Company has accrued contract liabilities, as deferred revenue, of approximately $6.2 million and $5.5 million, respectively, which represent the following: (1) obligations for products which the customer has not yet obtained control due to delivery not commensurate upon shipment of the product, (2) obligations on WorkSimpli in-process monthly or yearly contracts with customers and (3) a portion attributable to the yet to be recognized WorkSimpli initial 14-day trial period collections.

 

Capitalized Software Costs

 

The Company capitalizes certain internal payroll costs and third-party costs related to internally developed software and amortizes these costs using the straight-line method over the estimated useful life of the software, generally three years. The Company does not sell internally developed software other than through the use of subscription service. Certain development costs not meeting the criteria for capitalization, in accordance with ASC 350-40, Internal-Use Software, are expensed as incurred. As of September 30, 2023 and December 31, 2022, the Company capitalized a net amount of $11.3 million and $8.8 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. The increase in capitalized software costs of $2.5 million or 28%, is primarily attributable to costs incurred related to development efforts of our LifeMD PC platform.

 

Goodwill and Intangible Assets

 

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

 

Other intangible assets are comprised of: (1) the ResumeBuild brand, (2) a customer relationship asset, (3) the Cleared trade name, (4) Cleared developed technology, (5) a purchased license and (6) two purchased domain names. During the year ended December 31, 2022, the Company recorded an $827 thousand impairment loss related to a decline in the estimated fair value of the Cleared customer relationship intangible asset with an original cost of $919 thousand and accumulated amortization of $92 thousand. Other intangible assets are amortized over their estimated lives using the straight-line method. Costs incurred to renew or extend the term of recognized intangible assets are capitalized and amortized over the useful life of the asset.

 

Impairment of Long-Lived Assets

 

Long-lived assets include equipment and capitalized software. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, an impairment is recognized as the amount by which the carrying amount of the assets exceeds the estimated fair values of the assets. As of September 30, 2023 and December 31, 2022, the Company determined that no events or changes in circumstances existed that would indicate any impairment of its long-lived assets.

 

Recently Adopted Accounting Standards

 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments, which requires an entity to utilize the current expected credit loss (“CECL”) impairment model to estimate its lifetime “expected credit loss” and record an allowance that is deducted from the amortized cost basis of the financial assets and certain other instruments, including but not limited to available-for-sale debt securities. Credit losses relating to available-for-sale debt securities are recorded through an allowance for credit losses. ASU 2016-13 requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates, which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022 for all entities except SEC reporting companies that are not smaller reporting companies. The Company adopted ASU 2016-13 as of January 1, 2023. The adoption did not have a material impact on the Company’s financial statements.

 

 

In October 2021, the FASB issued 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. The Company adopted ASU 2021-08 as of January 1, 2023. The adoption did not have a material impact on the Company’s financial statements.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.

 

Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation and subject to the foregoing, our chief executive officer and chief financial officer concluded that, our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting described below.

 

The ineffectiveness of the Company’s internal control over financial reporting was due to the following material weaknesses which are indicative of many small companies with small number of staff:

 

(i)	inadequate segregation of duties consistent with control objectives;
(ii)	inadequate controls related to revenue recognition;
(iii)	insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both U.S. GAAP and SEC Guidelines; and
(iv)	inadequate information technology general controls specifically related to security, segregation of duties, user access, restricted access and change management.

 

Management’s Plan to Remediate the Material Weakness

 

Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated, such that these controls are designed, implemented, and operating effectively. The Company has formally documented its procedures for many of the significant accounting and financial reporting processes, in addition to, identifying and remediating design deficiencies in its processes. The other remediation actions planned include:

 

(i)	implementation of controls to ensure revenue is recognized upon shipment;
(ii)	further documentation and implementation of control procedures and the implementation of control monitoring; and
(iii)	identify and remedy gaps in our information technology general controls specifically related to the areas of security, segregation of duties, user access, restricted access and change management.

 

Changes in Internal Control over Financial Reporting

 

As discussed above, we are implementing certain measures to remediate the material weaknesses identified in the design and operation of our internal control over financial reporting. Other than those measures, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended September 30, 2023, that materially affected, our internal control over financial reporting as of that date.

 

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

In the ordinary course of our operations, we become involved in ordinary routine litigation incidental to the business. Material proceedings are described under Note 10, “Commitments and Contingencies” to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

 

ITEM 1A. RISK FACTORS

 

An investment in the Company’s common stock involves a number of very significant risks. You should carefully consider the risk factors included in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 22, 2023, in addition to other information contained in our reports and in this quarterly report in evaluating the Company and its business before purchasing shares of our common stock. There have been no material changes to our risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2022. The Company’s business, operating results and financial condition could be adversely affected due to any of those risks.

 

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

 

The following disclosures set forth certain information with respect to all securities sold by the Company during the three months ended September 30, 2023 without registration under the Securities Act:

 

On July 10, 2023, July 14, 2023, August 7, 2023 and August 29, 2023, the Company issued 12,500, 25,000, 75,000 and 25,000 shares, respectively, of common stock for services, including vested restricted stock units, to employees and consultants.

 

On July 10, 2023, the Company issued 100,000 shares of common stock related to the settlement of the Harborside Advisors LLC v. LifeMD, Inc., Case No. 21-cv-10593, and the Specialty Medical Drugstore, LLC D/B/A GoGoMeds v. LifeMD, Inc., Case No. 21-cv-10599, matters. The shares issued were valued based on the closing price of the Company’s stock, or $5.32, on the date of settlement, July 10, 2023.

 

On February 4, 2023, the Company entered into the First Amendment to the Stock Purchase Agreement (the “First Amendment”) between the Company and the sellers of Cleared. The First Amendment was amended to, among other things change the timing of the payment of the purchase price to $460 thousand paid at closing (which has already been paid by the Company), with the remaining amount to be paid in five quarterly installments beginning on or before February 6, 2023 and ending January 15, 2024. On July 17, 2023, the Company issued 158,129 shares of common stock related to the third of five quarterly installment payments due to the sellers of Cleared under the First Amendment.

 

On July 10, 2023 and August 14, 2023, PA001 Holdings, the holder of the Company’s Series B Preferred Stock elected to convert 2,275 and 1,225 shares, respectively, of the Company’s Series B Preferred Stock at a price of $3.25 per share of Series B Preferred Stock, pursuant to the terms of the Securities Purchase Agreement dated August 28, 2020. The conversion was calculated based on the original issuance price of the Series B Preferred Stock plus all accrued dividends to date. The conversion resulted in 1,010,170 and 550,694 shares of the Company’s common stock issued to PA001 Holdings on July 12, 2023 and August 15, 2023, respectively. The Company issued the shares of common stock pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act because of the limited number of purchasers, size of the offering, manner of the offering and number of securities offered. In addition, PA001 Holdings had the necessary investment intent as required by Section 4(a)(2) of the Securities Act since PA001 Holdings agreed to, and received, the securities bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering.”

 

On September 28, 2023, the Company issued an aggregate of 57,901 shares of common stock related to the cashless exercise of options held by Kevin Veal, an employee of the Company, at an exercise price of $1.50 per share.

 

The above transactions did not involve any underwriters, underwriting discounts or commissions, or any public offering. The Company relied upon the exemption from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof and/or Regulation D promulgated by the SEC under the Securities Act.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not Applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

 

ITEM 6. EXHIBITS

 

				Incorporated by Reference
Exhibit Number		Exhibit Description		Form		Exhibit		Filing Date/Period End Date
1.1*		First Amendment dated September 26, 2023 to the Credit Agreement among Avenue Venture Opportunities Fund II, L.P., Avenue Venture Opportunities Fund, L.P. and LifeMD, Inc.
10.1#		Second Amendment dated July 11, 2023 to the Employment Agreement between Marc Benathen and LifeMD, Inc.		8-K		10.3		7/14/2023
10.2#		Restricted Stock Award Agreement dated July 11, 2023 between Marc Benathen and LifeMD, Inc		8-K		10.4		7/14/2023
10.3#*		Amended and Restated First Amendment dated July 26, 2023 to the Amended and Restated Employment Agreement between Nicholas Alvarez and LifeMD, Inc.
10.4#*		Restricted Stock Award Agreement dated July 26, 2023 between Nicholas Alvarez and LifeMD, Inc
31.1*		Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.
31.2*		Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.
32.1**		Section 1350 Certification of Chief Executive Officer.
32.2**		Section 1350 Certification of Chief Financial Officer.
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.INS)

 

# Indicates management contract or compensatory plan, contract or arrangement.

* Filed herewith.

** Furnished herewith

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

LIFEMD, INC.

 

By:	/s/ Justin Schreiber
	Justin Schreiber
	Chief Executive Officer and Chairman of the Board of Directors
Date:	November 8, 2023
By:	/s/ Marc Benathen
	Marc Benathen
	Chief Financial Officer
Date:	November 8, 2023
By:	/s/ Maria Stan
	Maria Stan
	Principal Accounting Officer
Date:	November 8, 2023

 

 

 

Exhibit 1.1

 

FIRST AMENDMENT TO

LOAN AND SECURITY AGREEMENT AND SUPPLEMENT

 

This First Amendment to Loan and Security Agreement and Supplement (this “Amendment”) is dated as of September 26, 2023, and is entered into by and among LIFEMD, Inc., a Delaware corporation (the “Borrower”) and AVENUE VENTURE OPPORTUNITIES FUND II, L.P., (“Avenue 2”), as a lender, and AVENUE VENTURE OPPORTUNITIES FUND, L.P. (as administrative agent and collateral agent, (in such capacity, “Agent”), and as a lender (in such capacity, together with Avenue 2, a “Lender” and collectively, “Lenders”). Capitalized terms used herein without definition shall have the same meanings given them in the Loan Agreement (defined herein).

 

Recitals

 

A. Borrower, Agent and Lenders have entered into that certain Loan and Security Agreement (the “LSA”) dated as of March 21, 2023, as supplemented by that certain Supplement to the Loan and Security Agreement (the “Supplement”) dated as of March 21, 2023 among Borrower, Agent and Lenders (as may be further amended, restated, or otherwise modified from time to time, hereinafter collectively referred to as the “Loan Agreement”).

 

B. Borrower has requested revisions to certain terms of the Loan Agreement, and Lenders and Agent are amenable to Borrower’s request.

 

C. Borrower, Lenders and Agent have agreed to amend the Loan Agreement upon the terms and conditions more fully set forth in this Amendment. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed in the Loan Agreement.

 

Agreement

 

NOW, THEREFORE, in consideration of the foregoing Recitals and intending to be presently legally bound as of the date hereof, the parties hereto agree as follows:

 

1. Amended Definitions. The following definitions in Part 1 of the Supplement are hereby amended and restated in their entirety, as set forth below:

 

“Cash Flow” means normal course cash flow from operating activities excluding interest expense, preferred stock dividends and, in Lenders’ reasonable discretion, any other extraordinary expense, plus cash flow from investing activities, as shown in Borrower’s filings with the Securities and Exchange Commission, or, in connection with a Tranche 1B Loan Borrowing Request delivered by Borrower prior to September 30, 2023, as shown in pro forma projections as of the last day of the quarter ending September 30, 2023 submitted with a Compliance Certificate signed by an authorized officer of Borrower as of the date of such Borrowing Request.

 

“Tranche 1B Start Date” means September 26, 2023, so long as Borrower achieves the requirements set forth in Part 2, Section 8 of the Supplement as of such date.

 

2. Amendments.

 

2.1 Section 5.2(c) of the LSA is hereby amended and restated in its entirety, as set forth below:

 

5.2(c) Compliance Certificates. Simultaneously with the delivery of each set of financial statements referred to in paragraphs (a) and (b) above, a certificate of the chief financial officer of Borrower (or other executive officer) substantially in the form of Exhibit “C” to the Supplement (a “Compliance Certificate”) stating, among other things, whether any Default or Event of Default exists on the date of such certificate, and if so, setting forth the details thereof and the action which Borrower is taking or proposes to take with respect thereto. If requested by any Lender, a Compliance Certificate also shall be delivered to Lenders on the Closing Date and on the date of any request for a Loan.

 

 

2.2 Section 8(b) of Part 2 of the Supplement is hereby amended and restated in its entirety, as set forth below:

 

8(b) Cash Flow. Commencing on the earlier of the Tranche 1B Start Date and September 30, 2023, and as of the last day of each quarter thereafter, Borrower shall not incur a trailing six (6) month Cash Flow of less than Two Million Dollars ($2,000,000).

 

3. Borrower’s Representations And Warranties. Borrower represents and warrants that:

 

	a.	Immediately upon giving effect to this Amendment (i) the representations and warranties contained in the Loan Agreement are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct in all material respects as of such date), and (ii) no Event of Default has occurred and is continuing.
	b.	Borrower has the organizational power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment.
	c.	The certificate of incorporation, bylaws and other organizational documents of Borrower delivered to Agent on the Closing Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect.
	d.	The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized by all necessary company action on the part of Borrower.
	e.	This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights; and
	f.	As of the date hereof, it has no defenses against the obligations to pay any amounts arising under the Loan and Security Agreement. Borrower acknowledges that Lenders and Agent have acted in good faith and has conducted in a commercially reasonable manner its relationships with Borrower in connection with this Amendment and in connection with the Loan Documents.

 

 

Borrower understands and acknowledges that Lenders and Agent are entering into this Amendment in reliance upon, and in partial consideration for, the above representations and warranties, and agrees that such reliance is reasonable and appropriate.

 

4. Limitation. The amendments set forth in this Amendment shall be limited precisely as written and shall not be deemed (a) to be a waiver or modification of any other term or condition of the Loan Agreement or of any other instrument or agreement referred to therein or to prejudice any right or remedy which Agent or Lenders may now have or may have in the future under or in connection with the Loan Agreement (as amended hereby) or any instrument or agreement referred to therein; or (b) to be a consent to any future amendment or modification or waiver to any instrument or agreement the execution and delivery of which is consented to hereby, or to any waiver of any of the provisions thereof. Except as expressly amended hereby, the Loan Agreement shall continue in full force and effect.

 

5. Effectiveness. This Amendment shall become effective upon Agent’s receipt of the following:

 

5.1 this Amendment, duly executed by Borrower;

 

5.2 a Borrowing Request and current Compliance Certificate, duly executed by Borrower;

 

5.3 Notes in the form of Exhibits A and B attached hereto, each duly executed by Borrower; and

 

5.4 reimbursement of Agent’s and Lenders’ fees and expenses, including all reasonable documented attorneys’ fees, expenses and disbursements, incurred through the date of this Amendment.

 

6. Counterparts. This Amendment may be signed in any number of counterparts, and by different parties hereto in separate counterparts, with the same effect as if the signatures to each such counterpart were upon a single instrument. All counterparts shall be deemed an original of this Amendment. This Amendment may be executed by facsimile, portable document format (.pdf) or similar technology signature, and such signature shall constitute an original for all purposes.

 

7. Incorporation By Reference. The provisions of Section 9.11 and 9.13 of the Loan Agreement shall be deemed incorporated herein by reference, mutatis mutandis.

 

8. Electronic Signatures. This Amendment may be executed by electronic signatures. Borrower, Agent and Lenders expressly agree to conduct the transactions contemplated by this Amendment and the other Loan Documents by electronic means (including, without limitation, with respect to the execution, delivery, storage and transfer of this Amendment and each of the other Loan Documents by electronic means and to the enforceability of electronic Loan Documents). Delivery of an executed signature page to this Amendment and each of the other Loan Documents by facsimile or other electronic mail transmission (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) shall be effective as delivery of a manually executed counterpart hereof and thereof, as applicable. The words “execution,” “signed,” “signature” and words of like import herein shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act.

 

 

[Signature page to Amendment]

 

In Witness Whereof, the parties have duly authorized and caused this Amendment to be executed as of the date first written above.

 

BORROWER:
LIFEMD, INC.
By:	/s/ Marc Benathen
Name:	Marc Benathen
Title:	Chief Financial Officer
AGENT:
AVENUE VENTURE OPPORTUNITIES FUND, L.P.
By:	Avenue Venture Opportunities Partners, LLC
Its:	General Partner
By:	/s/ Sonia Gardner
Name:	Sonia Gardner
Title:	Member
LENDERS:
AVENUE VENTURE OPPORTUNITIES FUND, L.P.
By:	Avenue Venture Opportunities Partners, LLC
Its:	General Partner
By:	/s/ Sonia Gardner
Name:	Sonia Gardner
Title:	Member
AVENUE VENTURE OPPORTUNITIES FUND II, L.P.
By:	Avenue Venture Opportunities Partners II, LLC
Its:	General Partner
By:	/s/ Sonia Gardner
Name:	Sonia Gardner
Title:	Member

 

 

Exhibit A

 

PROMISSORY NOTE

 

[Note No. _____]

 

$3,250,000.00

September 26, 2023

 

The undersigned (“Borrower”) promises to pay to the order of Avenue Venture Opportunities Fund, L.P. (“Lender”), at such place as Lender may designate in writing, in lawful money of the United States of America, the principal sum of Three Million Two Hundred Fifty Thousand Dollars ($3,250,000.00), with interest thereon from the date hereof until maturity, whether scheduled or accelerated, at a variable rate per annum equal to the sum of to the greater of (i) the sum of four and three-quarters percent (4.75%) plus the Prime Rate, and (ii) twelve and one-half percent (12.50%) (the “Designated Rate”), according to the payment schedule described herein, except as otherwise provided herein. In addition, on the Maturity Date, the Borrower promises to pay to the order of Lender (i) all principal and accrued interest then remaining unpaid and (ii) the Final Payment (as defined in the Supplement to the Loan Agreement (as defined herein)).

 

This Note is one of the Notes referred to in, and is entitled to all the benefits of, a Loan and Security Agreement, dated as of March 21, 2023, among Borrower, Lender, the other lender party thereto and Agent (as the same may be amended, restated or supplemented from time to time, the “Loan Agreement”). Each capitalized term not otherwise defined herein shall have the meaning set forth in the Loan Agreement. The Loan Agreement contains provisions for the acceleration of the maturity of this Note upon the happening of certain stated events.

 

Principal of and interest on this Note shall be payable as provided under Section 2 of Part 2 of the Supplement to the Loan Agreement.

 

This Note may be prepaid only as permitted under Section 2 of Part 2 of the Supplement to the Loan Agreement.

 

Any unpaid payments of principal or interest on this Note shall bear interest from their respective maturities, whether scheduled or accelerated, at a rate per annum equal to the Default Rate, compounded monthly. Borrower shall pay such interest on demand.

 

Interest, charges and fees shall be calculated for actual days elapsed on the basis of a 360-day year, which results in higher interest, charge or fee payments than if a 365-day year were used. In no event shall Borrower be obligated to pay interest, charges or fees at a rate in excess of the highest rate permitted by applicable law from time to time in effect.

 

 

If Borrower is late in making any scheduled payment under this Note by more than five (5) days, Borrower agrees to pay a “late charge” of five percent (5%) of the installment due, but not less than fifty dollars ($50) for any one such delinquent payment. This late charge may be charged by Lender for the purpose of defraying the expenses incidental to the handling of such delinquent amounts. Borrower acknowledges that such late charge represents a reasonable sum considering all of the circumstances existing on the date of this Note and represents a fair and reasonable estimate of the costs that will be sustained by Lender due to the failure of Borrower to make timely payments. Borrower further agrees that proof of actual damages would be costly and inconvenient. Such late charge shall be paid without prejudice to the right of Lender to collect any other amounts provided to be paid or to declare a default under this Note or any of the other Loan Documents or from exercising any other rights and remedies of Lender.

 

This Note shall be governed by, and construed in accordance with, the laws of the State of California, excluding those laws that direct the application of the laws of another jurisdiction.

 

Borrower’s execution and delivery of this Note via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) shall constitute effective execution and delivery of this Note and agreement to and acceptance of the terms hereof for all purposes. The fact that this Note is executed, signed, stored or delivered electronically shall not prevent the assignment or transfer by Lender of this Note pursuant to the terms of the Loan Agreement or the enforcement of the terms hereof. Physical possession of the original of this Note or any paper copy thereof shall confer no special status to the bearer thereof. In no event shall an original ink-signed paper copy of this Note be required for any exercise of Lender’s rights hereunder.

 

	LIFEMD, INC.
	By:	/s/ Marc Benathen
	Name:	Marc Benathen
	Its:	Chief Financial Officer

 

 

Exhibit B

 

PROMISSORY NOTE

 

[Note No. _____]

 

$1,750,000.00

September 26, 2023

 

The undersigned (“Borrower”) promises to pay to the order of Avenue Venture Opportunities Fund II, L.P. (“Lender”), at such place as Lender may designate in writing, in lawful money of the United States of America, the principal sum of One Million Severn Hundred Fifty Thousand Dollars ($1,750,000.00), with interest thereon from the date hereof until maturity, whether scheduled or accelerated, at a variable rate per annum equal to the sum of to the greater of (i) the sum of four and three-quarters percent (4.75%) plus the Prime Rate, and (ii) twelve and one-half percent (12.50%) (the “Designated Rate”), according to the payment schedule described herein, except as otherwise provided herein. In addition, on the Maturity Date, the Borrower promises to pay to the order of Lender (i) all principal and accrued interest then remaining unpaid and (ii) the Final Payment (as defined in the Supplement to the Loan Agreement (as defined herein)).

 

This Note is one of the Notes referred to in, and is entitled to all the benefits of, a Loan and Security Agreement, dated as of March 21, 2023, among Borrower, Lender, the other lender party thereto and Agent (as the same may be amended, restated or supplemented from time to time, the “Loan Agreement”). Each capitalized term not otherwise defined herein shall have the meaning set forth in the Loan Agreement. The Loan Agreement contains provisions for the acceleration of the maturity of this Note upon the happening of certain stated events.

 

Principal of and interest on this Note shall be payable as provided under Section 2 of Part 2 of the Supplement to the Loan Agreement.

 

This Note may be prepaid only as permitted under Section 2 of Part 2 of the Supplement to the Loan Agreement.

 

Any unpaid payments of principal or interest on this Note shall bear interest from their respective maturities, whether scheduled or accelerated, at a rate per annum equal to the Default Rate, compounded monthly. Borrower shall pay such interest on demand.

 

Interest, charges and fees shall be calculated for actual days elapsed on the basis of a 360-day year, which results in higher interest, charge or fee payments than if a 365-day year were used. In no event shall Borrower be obligated to pay interest, charges or fees at a rate in excess of the highest rate permitted by applicable law from time to time in effect.

 

 

If Borrower is late in making any scheduled payment under this Note by more than five (5) days, Borrower agrees to pay a “late charge” of five percent (5%) of the installment due, but not less than fifty dollars ($50) for any one such delinquent payment. This late charge may be charged by Lender for the purpose of defraying the expenses incidental to the handling of such delinquent amounts. Borrower acknowledges that such late charge represents a reasonable sum considering all of the circumstances existing on the date of this Note and represents a fair and reasonable estimate of the costs that will be sustained by Lender due to the failure of Borrower to make timely payments. Borrower further agrees that proof of actual damages would be costly and inconvenient. Such late charge shall be paid without prejudice to the right of Lender to collect any other amounts provided to be paid or to declare a default under this Note or any of the other Loan Documents or from exercising any other rights and remedies of Lender.

 

This Note shall be governed by, and construed in accordance with, the laws of the State of California, excluding those laws that direct the application of the laws of another jurisdiction.

 

Borrower’s execution and delivery of this Note via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) shall constitute effective execution and delivery of this Note and agreement to and acceptance of the terms hereof for all purposes. The fact that this Note is executed, signed, stored or delivered electronically shall not prevent the assignment or transfer by Lender of this Note pursuant to the terms of the Loan Agreement or the enforcement of the terms hereof. Physical possession of the original of this Note or any paper copy thereof shall confer no special status to the bearer thereof. In no event shall an original ink-signed paper copy of this Note be required for any exercise of Lender’s rights hereunder.

 

	LIFEMD, INC.
	By:	/s/ Marc Benathen
	Name:	Marc Benathen
	Its:	Chief Financial Officer

 

 

Exhibit 10.3

 

AMENDED AND RESTATED FIRST AMENDMENT TO THE AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED FIRST AMENDMENT TO THE AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Amended and Restated First Amendment”) is entered into as of July 26, 2023 (the “Amended and Restated First Amendment Effective Date”) by and between Nicholas Alvarez, an individual and resident of the State of New York, (the “Employee”) and LifeMD, Inc. (formerly known as Conversion Labs, Inc.), (the “Company”), a Delaware Corporation. The Employee and the Company are also each hereinafter referred to individually as a “Party” and together as the “Parties”.

 

RECITALS

 

WHEREAS, on December 8, 2020 (“Effective Date”), the Company and the Employee entered into an Amended and Restated Employment Agreement (the “Amended and Restated Employment Agreement”) whereby Employee was hired to serve the Company in the capacity as Chief Acquisition Officer, with a base salary of $172,400, an equity grant of 200,000 options subject to monthly vesting over a period of 36 months, and a grant of 300,000 performance-based restricted shares subject to vesting upon the achievement of certain milestones as described in more detail therein;

 

WHEREAS, on or about March 2, 2022, the Company changed Employee’s base salary to $300,000.

 

WHEREAS, for avoidance of doubt, other than the amendments set forth below in this Amended and Restated First Amendment, all other provisions of the Amended and Restated Employment Agreement remain in effect today and moving further, unless and until amended in the future.

 

WHEREAS, the Parties desire to further amend the Amended and Restated Employment Agreement to: (i) cancel the 200,000 stock options previously awarded under Section 4(f) [sic] of the Amended and Restated Employment Agreement (all of which carry a $7.92 exercise price and are underwater); (ii) restructure the milestones and vesting for the 300,000 restricted shares previously awarded under Section 4(e) [sic] of the Amended and Restated Employment Amendment (none of which have become earned and vested); (iii) replace the cancelled awards with a new grant of 300,000 shares of restricted stock subject to vesting and other terms as described below; (iv) add an express indemnification provision and agreement; and (v) add an express percentage for the target amount of the Performance Bonus.

 

WHEREAS, for the avoidance of doubt, the mention above and the amendments set forth further below concerning the restructure of the milestones and vesting for the 300,000 restricted shares previously awarded under Section 4(e) [sic] of the Amended and Restated Employment Amendment supersede and void any references and amendments set forth in the July 12, 2023 First Amendment to the Amended and Restated Employment concerning these specific 300,000 restricted shares (i.e., (a) the WHEREAS clause sub-paragraph (ii); (b) the Paragraph 1(a) reference to 300,000 restricted shares; and (c) the Paragraph 2 reference to 300,000 restricted shares and three bulleted references to 100,000 restricted shares, therein).

 

 

NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the Parties hereby agree as follows:

 

1. Preamble.

 

a.

The 200,000 stock options previously awarded under Section 4(f) [sic] of the Amended and Restated Employment Agreement are hereby cancelled.

 

2. Amendments. The Amended and Restated Employment Agreement shall be further amended as follows, in accordance with the terms and conditions of Section 8 thereof:

 

a.

Section 4(e) of the Amended and Restated Employment Agreement is hereby added (i.e., to supersede and replace previously existing Sections 4(f) and 4(e) [sic]):

 

4(e) Replacement of Stock Option and Restructure of Long-Term Equity Incentive. In exchange for the cancellation of the 200,000 stock options previously granted under Section 4(f) [sic], pursuant to the Company’s 2020 Equity and Incentive Plan (the “Plan”) and any amendments thereto, Employee has received, upon the July 12, 2023 First Amendment Effective Date, an award of 300,000 restricted shares of the Company’s common stock (“Restricted Shares”), with

 

(i) 300,000 restricted shares vesting as follows:

 

	●	25,000 restricted shares vesting immediately upon the First Amendment Effective Date;
	●	50,000 restricted shares vest on January 1, 2024 (or, if earlier, vesting immediately upon the resignation or removal of Justin Schreiber as CEO of the Company or as Chairman of the Board of the Company); and
	●	75,000 restricted shares vest on January 1, 2025 (or, if earlier, vesting immediately upon the resignation or removal of Justin Schreiber as CEO of the Company or as Chairman of the Board of the Company);
	●	75,000 restricted shares vest on 3/1/24 based on the performance of Employee in the 2023 calendar year, at the discretion of the CEO and approval by the Board of Directors; and
	●	75,000 restricted shares vest on 3/1/25 based on the performance of Employee in the 2024 calendar year, at the discretion of the CEO and approval by the Board of Directors.

 

The three hundred thousand (300,000) restricted shares—as originally described in the December 8, 2020 First Amended and Restated Employment Agreement—are now subject to the following restructured milestones and vesting:

 

	●	100,000 restricted shares vest upon the healthcare business achieving $100,000,000 in net revenue (defined as gross healthcare sales minus healthcare-related refunds and returns) with a 5% adjusted EBITDA margin, on or before December 31, 2025;
	●	100,000 restricted shares vest upon the healthcare business achieving $150,000,000 in net revenue with a 10% adjusted EBITDA margin, on or before December 31, 2026; and
	●	100,000 restricted shares vest upon the healthcare business achieving $200,000,000 in net revenue with a 10% adjusted EBITDA margin, on or before December 31, 2027.

 

 

Except as otherwise set forth herein or in the associated Restricted Stock Agreement, vesting of the Restricted Shares will cease upon the termination of Employee’s employment with the Company subject to the terms of the Amended and Restated Employment Agreement and any amendments thereto. All Restricted Shares vest immediately and become exercisable in full upon a Change in Control, regardless of whether or not any performance milestone has been met at the time of the Change in Control. As used herein, “Change of Control” means (i) a bona fide transfer or series of related transfers of Shares to any person or Group in which, or as a result of which, such person or Group obtains the direct or indirect right to elect a majority of the board of directors of the Company; or (ii) a sale of all or substantially all of the assets of the Company. As used herein, “Group” means any group or syndicate that would be considered a “person” for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended. The foregoing grant of Restricted Shares shall be made on the Company’s customary form of restricted stock award for employees. All applicable awards under this Amended and Restated First Amendment shall be subject to forfeiture or other penalties under any clawback or recoupment policy of the Company in effect from time to time.

 

b.

Paragraph 17 of the Amended and Restated Employment Agreement, “Indemnification”, was added on July 12, 2023 pursuant to the First Amendment Effective Date:

 

17. The Company agrees to indemnify the Employee for his activities as an Officer of the Company, as set forth in the Director and Officer Indemnification Agreement attached hereto as Exhibit A. In addition, the Company shall exercise its best efforts to increase the coverage limit of its directors’ and officers’ liability insurance policy (and not otherwise diminish the scope or value of such coverage) based on market conditions and advice received from the Audit Committee of the Board of Directors and shall thereafter maintain in effect such coverage with a coverage limit of at least that amount and containing not materially less favorable provisions.

 

c.

Section 4(b)(iii) is added:

 

4(b)(iii) There is a target amount of 40% of Employee’s Base Salary for the Performance Bonus.

 

3. Governing Law; Jurisdiction. This Amended and Restated First Amendment shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction). Any legal proceeding arising out of or based upon this Amended and Restated First Amendment shall be instituted in the federal courts or the courts of the State of New York and each party irrevocably submits to the exclusive jurisdiction of such courts in any such proceeding.

 

4. Counterparts. This Amended and Restated First Amendment may be executed in several counterparts, each of which shall be deemed to be an original copy and all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all the parties shall not have signed the same counterpart.

 

[signature on next page]

 

 

IN WITNESS WHEREOF, each of the undersigned hereby (a) executes this Amended and Restated First Amendment to the Amended and Restated Employment Agreement; (b) confirms its agreement with the provisions and covenants herein provided; and (c) agrees to be bound by this Amended and Restated First Amendment to the Amended and Restated Employment Agreement.

 

EXECUTED as of the Amended and Restated First Amendment Effective Date, as set forth above.

 

LIFEMD, INC.
	/s/ Justin Schreiber
By:	Justin Schreiber, Chairman & CEO
EMPLOYEE
	/s/ Nicholas Alvarez
By:	Nicholas Alvarez, Chief Acquisition Officer

 

 

Exhibit 10.4

 

LIFEMD, INC. AMENDED AND RESTATED

RESTRICTED STOCK AWARD AGREEMENT

 

THIS AMENDED AND RESTATED AGREEMENT (this “Amended Agreement”) is made effective as of July 26, 2023 (the “Grant Date”) between LifeMD, Inc. (the “Company”) and Nicholas Alvarez (the “Employee”).

 

WHEREAS, the Company desires to grant the Employee, shares of the Company’s Common Stock, $0.01 par value (“Shares”), subject to certain restrictions as set forth in this Amended Agreement (this “Restricted Stock Award”), pursuant to the LifeMD, Inc. 2020 Equity Incentive Plan (the “Plan”) and any Amendments thereto (capitalized terms not otherwise defined herein shall have the same meanings as in the Plan);

 

WHEREAS, the Board of Directors (the “Board”) has determined that it would be to the advantage and best interest of the Company and its stockholders to grant the Shares herein to the Employee;

 

WHEREAS, for the avoidance of doubt, the grant set forth further below concerning the three hundred thousand (300,000) restricted shares—as originally described in the December 8, 2020 First Amended and Restated Employment Agreement supersedes and voids any grant set forth in the July 12, 2023 LifeMD, Inc. Restricted Stock Award Agreement (i.e., the three bulleted “100,000 restricted shares…” provisions in Paragraph 2 therein) concerning these specific 300,000 restricted shares.

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. Grant of Restricted Shares. Subject to the terms and conditions of the Plan and the additional terms and conditions set forth in this Amended Agreement, the Company hereby grants to the Employee a new award of 300,000 restricted shares and restructures the milestones and vesting for the 300,000 restricted shares previously awarded under Section 4(e) [sic] of the Amended and Restated Employment Amendment (none of which have become earned and vested) (collectively, the “Restricted Shares”). The Restricted Shares shall vest in accordance with Section 2 hereof.

 

2. Vesting. The Restricted Shares shall vest as follows:

 

The new award of 300,000 restricted shares shall vest as follows:

 

	●	25,000 restricted shares immediately vest on the First Amendment Effective Date;
	●	50,000 restricted shares vest on January 1, 2024 (or, if earlier, vesting immediately upon the resignation or removal of Justin Schreiber as CEO of the Company or as Chairman of the Board of the Company);
	●	75,000 restricted shares vest on January 1, 2025 (or, if earlier, vesting immediately upon the resignation or removal of Justin Schreiber as CEO of the Company or as Chairman of the Board of the Company);
	●	75,000 restricted shares vest on 3/1/24 based on the performance of Employee in the 2023 calendar year, at the discretion of the CEO and approval by the Board of Directors; and
	●	75,000 restricted shares vest on 3/1/25 based on the performance of Employee in the 2024 calendar year, at the discretion of the CEO and approval by the Board of Directors.

 

 

The three hundred thousand (300,000) restricted shares—as originally described in the December 8, 2020 First Amended and Restated Employment Agreement—are now subject to the following restructured milestones and vesting:

 

	●	100,000 restricted shares vest upon the healthcare business achieving $100,000,000 in net revenue (defined as gross healthcare sales minus healthcare-related refunds and returns) with a 5% adjusted EBITDA margin, on or before December 31, 2025;
	●	100,000 restricted shares vest upon the healthcare business achieving $150,000,000 in net revenue with a 10% adjusted EBITDA margin, on or before December 31, 2026; and
	●	100,000 restricted shares vest upon the healthcare business achieving $200,000,000 in net revenue with a 10% adjusted EBITDA margin, on or before December 31, 2027.

 

(a) To the extent it is then unvested, the Restricted Shares shall vest upon the termination of the Employee’s employment with the Company without Cause (if termination is by the Company) or for Good Reason (if termination is by Employee), as such terms are defined in the employment agreement of such Employee or if such term or terms is not defined in the employment agreement or there is not an employment agreement, as defined by the Plan. If applicable, in lieu of fractional vesting, the number of Restricted Shares shall be rounded up each time until fractional Restricted Shares are eliminated.

 

(b) However, notwithstanding any other provisions of this Amended Agreement, at the option of the Board in its sole and absolute discretion, all Restricted Shares shall be immediately forfeited in the event any of the following events occur:

 

(i) The Employee purchases or sells securities of the Company without written authorization in accordance with the Company’s insider trading policy then in effect, if any;

 

(ii) The Employee (A) discloses, publishes, or authorizes anyone else to use, disclose, or publish, without the prior written consent of the Company, any proprietary or confidential information of the Company, including, without limitation, any information relating to existing or potential customers, business methods, financial information, trade or industry practices, sales and marketing strategies, employee information, vendor lists, business strategies, intellectual property, trade secrets, or any other proprietary or confidential information or (B) directly or indirectly uses any such proprietary or confidential information for the individual benefit of the Employee or the benefit of a third party;

 

(iii) During the term of employment and for a period of two (2) years thereafter, the Employee disrupts or damages, impairs, or interferes with the business of the Company or its Affiliates by recruiting, soliciting, or otherwise inducing any of their respective employees to enter into employment or other relationship with any other business entity, or terminate or materially diminish their relationship with the Company or its Affiliates, as applicable;

 

 

(iv) During the term of employment and for a period of one (1) year thereafter, the Employee solicits or directs business of any person or entity who is (A) a customer of the Company or its Affiliates at any time or (B) solicited to be a “prospective customer” of the Company or its Affiliates, in any case either for such Employee or for any other person or entity. For purposes of this clause (v), “prospective customer” means a person or entity who contacted, or is contacted by, the Company or its Affiliates regarding the provision of services to or on behalf of such person or entity; provided that the Employee has actual knowledge of such prospective customer;

 

(v) The Employee fails to reasonably cooperate to effect a smooth transition of the Employee’s duties and to ensure that the Company is apprised of the status of all matters the Employee is handling or is unavailable for consultation after termination of employment of the Employee, if such availability is a condition of any agreement to which the Company and the Employee are parties;

 

(vi) The Employee fails to assign all of such Employee’s rights, title, and interest in and to any and all ideas, inventions, formulas, source codes, techniques, processes, concepts, systems, programs, software, computer data bases, trademarks, service marks, brand names, trade names, compilations, documents, data, notes, designs, drawings, technical data, and/or training materials, including improvements thereto or derivatives therefrom, whether or not patentable or subject to copyright or trademark or trade secret protection, developed and produced by the Employee used or intended for use by or on behalf of the Company or the Company’s clients;

 

(vii) The Employee acts in a disloyal manner to the Company, such as making comments, whether oral or in writing, that tend to disparage or injure: (i) the reputation or business of the Company or its Affiliates, or is likely to result in discredit to, or loss of, business reputation or goodwill of the Company or its Affiliates or (ii) its directors, officers, or stockholders; or

 

(viii) A finding by the Board that the Employee has acted against the interests of the Company or in a manner that has or may have a detrimental effect on the Company.

 

In addition, all of the Restricted Shares shall, to the extent it is then unvested, vest immediately prior to the closing for any Change of Control. As used herein, “Change of Control” means: (i) a bona fide transfer or series of related transfers of Shares to any person or Group in which, or as a result of which, such person or Group obtains the direct or indirect right to elect a majority of the board of directors of the Company; or (ii) a sale of all or substantially all of the assets of the Company. As used herein, “Group” means any group or syndicate that would be considered a “person” for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended.

 

(c) For purposes of this Amended Agreement, “Affiliate” means with respect to a person or entity, any other person or entity controlled by, in control of, or under common control with such person or entity, and “controlled,” “controlled by,” and “under common control with” shall mean direct or indirect possession of the power to direct or cause the direction of management policies (whether through ownership of voting securities, by contract, or otherwise, of a person or entity.

 

 

3. Representations and Warranties; Acknowledgements. In connection with the grant of the Restricted Shares hereunder, Employee represents and warrants to the Company that:

 

(a) Employee is acquiring Restricted Shares for Employee’s own account, not as a nominee or agent, for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof.

 

(b) Employee understands that: (a) the Restricted Shares have not been registered under the Securities Act of 1933 as amended (the “Securities Act”), or any state securities laws, and may not be offered for sale, sold, assigned, or transferred unless (A) subsequently registered thereunder or (B) sold in reliance on an exemption therefrom; and (b) neither the Company nor any other person is under any obligation to register such securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. In this regard, Employee represents that Employee is familiar with SEC Rule 144, and understands the resale limitations imposed thereby and by the Securities Act.

 

(c) Employee is able to bear the economic risk of Employee’s investment in the Shares for an indefinite period of time because the Restricted Shares have not been registered under the Securities Act and, therefore, cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available.

 

(d) Employee and Employee’s advisers have had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the Shares as Employee and Employee’s advisers have requested and have had full and free access and opportunity to inspect, review, examine, and inquire about such other information concerning the Company and its Affiliates as they have requested. Employee and Employee’s advisers have also been provided an opportunity to review and ask questions about the Plan.

 

(e) Employee has had an opportunity to consult with independent legal counsel regarding Employee’s rights and obligations under this Amended Agreement and the Plan, and fully understands the terms and conditions contained herein. Employee is not relying on the Company or any of its employees, agents, or representatives with respect to the legal, tax, economic, and related considerations of an investment in the Shares. Employee understands that in the future the Shares may significantly increase or decrease in value, and the Company has not made any representation to the Employee about the potential future value of the Restricted Shares.

 

(f) Employee understands and agrees that the investment in the Company involves a high degree of risk and that no guarantees have been made or can be made with respect to the future value of the Restricted Shares or the future profitability or success of the Company.

 

 

4. Termination of Relationship. Subject to Paragraph 2(a), upon the termination of employment, all unvested Shares of Restricted Shares shall be automatically and irrefutably forfeited. If such forfeiture occurs, Employee shall execute and deliver to the Company any and all further documents (including an Assignment Separate From Certificate) as the Company reasonably requests to further document the forfeiture. As used in this Amended Agreement, “employment”, “employ”, and like terms shall be construed to include any employment or consulting relationship with the Company or its Affiliates. For purposes of this Amended Agreement, a change from such an employment relationship to such a consulting relationship or a relationship as a member of the Board or vice versa shall not be treated as a termination of employment.

 

5. Redemption. If any of the events specified in Section 2(b) of this Amended Agreement occur within the time periods set forth therein, and subject to the option of the Board in its sole and absolute discretion to enforce any such event as a breach of this Amended Agreement, all Restricted Shares that vested during the applicable timer periods shall be forfeited and forthwith, as necessary, surrendered by the Employee to the Company within ten (10) days after the Employee receives written demand from the Company for such Restricted Shares.

 

6. Certificates. Certificates—which may be in electronic book entry format or other format used by the Company in ordinary course of doing business—evidencing the Restricted Shares shall be issued by the Company and shall be registered in the Employee’s name promptly after the date the shares are vested. No certificates shall be issued for fractional shares, but rather rounded up to the next whole share.

 

7. Rights as a Stockholder. Neither the Employee, the Employee’s estate, nor the Transferee have any rights as a shareholder with respect to any Common Stock covered by the Restricted Shares unless and until such Restricted Shares have vested. “Transferee” shall mean an individual to whom such Employee’s vested Restricted Shares are transferred by will or by the laws of descent and distribution.

 

8. Legend on Certificates. The Certificates representing the vested Restricted Shares delivered to the Employee as contemplated by Section 6 shall bear such legends, and be subject to such stop transfer orders, as the Company may deem advisable to give notice of restrictions imposed by this Amended Agreement, the Plan, the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares are listed, or any applicable law. The Company may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

 

9. Transferability. To the extent that the Restricted Shares are then unvested, Employee shall not transfer, sell, assign, pledge, hypothecate, or otherwise dispose of the Restricted Shares.

 

10. Employment by the Company. Nothing contained in this Amended Agreement or in any other agreement entered into by the Company and the Employee contemporaneously with the execution of this Amended Agreement (i) shall be deemed to obligate the Company or any of its Affiliates to employ the Employee in any capacity whatsoever, or (ii) shall prohibit or restrict the Company or any of its Affiliates from terminating the employment, if any, of the Employee at any time or for any reason whatsoever, and the Employee hereby acknowledges and agrees that neither the Company nor any other Person has made any representations or promises whatsoever to the Employee concerning the Employee’s employment or continued employment by the Company.

 

 

11. Sale of Shares Acquired. Any shares of the Company’s Common Stock acquired pursuant to Restricted Stock Awards granted hereunder cannot be sold by the Employee, subject to registration or an exemption from registration such as to Rule 144 promulgated under the Securities Act, until at least six (6) months elapse from the date of grant of this Restricted Stock Award, except in the case of death or disability or if the grant was exempt from the short-swing profit provisions of Section 16(b).

 

12. Withholding. The Employee acknowledges that the Employee is responsible for all liability for applicable tax related to the issuance or vesting of this Restricted Stock Award. Unless Employee uses a designated broker to sell Shares with an aggregate fair market value sufficient to cover the amount required to be withheld by the Company, or the Employee delivers in cash or certified check the amount required to be withheld by the Company, the Company will issue the number of Shares owed to the Employee under this Restricted Stock Award less a number of Shares equal to, in the aggregate, the amount of applicable tax related to the delivery of such Shares.

 

13. Adjustments. The Restricted Shares under this Amended Agreement shall be subject to the terms of the Plan, including but not limited to Section 3(b) (Changes in Stock) and 3(c) (Sale Events) of the Plan.

 

14. Limitation on Obligations. The Company’s obligation with respect to the Restricted Shares granted hereunder is limited solely to the delivery to the Employee of Shares on the date when such Shares are due to be delivered hereunder, and in no way shall the Company become obligated to pay cash in respect of such obligation. This Restricted Stock Award shall not be secured by any specific assets of the Company, nor shall any assets of the Company be designated as attributable or allocated to the satisfaction of the Company’s obligations under this Amended Agreement. In addition, the Company shall not be liable to the Employee for damages relating to any delays in issuing the share certificates to him/her (or his/her designated entities), any loss of the certificates, or any mistakes or errors in the issuance of the certificates or in the certificates themselves.

 

15. Securities Laws. Upon the vesting of any Restricted Shares, the Company may require the Employee to make or enter into such written representations, warranties, and agreements as the Committee may reasonably request in order to comply with applicable securities laws or with this Amended Agreement. The granting of the Restricted Shares hereunder shall be subject to all applicable laws, rules, and regulations and to such approvals of any governmental agencies as may be required.

 

16. Arbitration. Any controversy, dispute or claim arising out of or relating to this Amended Agreement, or its interpretation, application, implementation, breach, or enforcement which the parties hereto are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim, or dispute to binding arbitration in New York County, New York (unless the parties agree in writing to a different location), before a single arbitrator in accordance with the rules of the American Arbitration Association then in effect. The decision and award made by the arbitrator shall be final, binding, and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.

 

 

17. Governing Law. This Amended Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided herein or performance, shall be governed or interpreted according to the laws of the State of Delaware without regard to choice of law considerations.

 

18. Restricted Stock Award Subject to Plan. This Restricted Stock Award shall be subject to the terms and provisions of the Plan. In the event of any conflict between this Amended Agreement and the Plan, the terms of this Amended Agreement shall control.

 

19. Signature in Counterparts. This Amended Agreement may be signed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be deemed one and the same instrument.

 

20. Copy of Plan. By execution of this Amended Agreement, Employee acknowledges receipt of a copy of the Plan.

 

21. New Shares.

 

(a) Any shares of capital stock of the Company or any successor thereto (“New Shares”) issued by the Company from time to time (including without limitation in any stock split or stock dividend) with respect to Restricted Shares (“Old Shares”) shall also be treated as Restricted Shares for all purposes of this Amended Agreement.

 

(b) The New Shares so issued shall at all times be vested in the same proportion as the Old Shares are vested. For example: (i) if none of the Old Shares are vested as of the date that the New Shares are issued, then none of the New Shares will be vested when issued, (ii) if, from time to time, 25% of the Old Shares become vested at any later date, then 25% of the New Shares shall also become vested on that date; and (ii) if all of the Old Shares are vested on a date, then all of the New Shares shall be vested on that date.

 

(c) The New Shares shall be subject to this Amended Agreement, including without limitation Section 3 thereof, to the same extent as the Old Shares.

 

[signature on next page]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Restricted Stock Award Agreement as of the date first above written.

 

	COMPANY:
	LIFEMD, INC.
	/s/ Justin Schreiber
	Justin Schreiber
	Chief Executive Officer & Chairman of the Board
	EMPLOYEE:
	/s/ Nicholas Alvarez
	Nicholas Alvarez
	Personal Email: nick@rebirthenterprises.com
	Address: 7 West 21st Street, Apt. 9G, New York, NY 10010

 

 

 

Exhibit 31.1

 

LIFEMD, INC.

CEO CERTIFICATE

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Justin Schreiber, certify that:

 

1.	I have reviewed this Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2023;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

 

	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

 

5.	The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

 

	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 

Date:	November 8, 2023
By:	/s/ Justin Schreiber
Name:	Justin Schreiber
Title:	Chief Executive Officer (Principal Executive Officer)

 

 

Exhibit 31.2

 

LIFEMD, INC.

CFO CERTIFICATE

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Marc Benathen, certify that:

 

1.	I have reviewed this Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2023;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

 

	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

 

5.	The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

 

	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 

Date:	November 8, 2023
By:	/s/ Marc Benathen
Name:	Marc Benathen
Title:	Chief Financial Officer (Principal Financial Officer)

 

 

Exhibit 32.1

 

LIFEMD, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with this Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

 

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

 

Date:	November 8, 2023
By:	/s/ Justin Schreiber
Name:	Justin Schreiber
Title:	Chief Executive Officer (Principal Executive Officer)

 

 

Exhibit 32.2

 

LIFEMD, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with this Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

 

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

 

Date:	November 8, 2023
By:	/s/ Marc Benathen
Name:	Marc Benathen
Title:	Chief Financial Officer (Principal Financial Officer)

 

v3.23.3

Cover - shares	9 Months Ended
	Sep. 30, 2023	Nov. 07, 2023
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2023
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	001-39785
Entity Registrant Name	LIFEMD, INC.
Entity Central Index Key	0000948320
Entity Tax Identification Number	76-0238453
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	236 Fifth Avenue
Entity Address, Address Line Two	Suite 400
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10001
City Area Code	(866)
Local Phone Number	351-5907
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		37,978,804
Common Stock, Par Value $.01 Per Share [Member]
Title of 12(b) Security	Common Stock, par value $.01 per share
Trading Symbol	LFMD
Security Exchange Name	NASDAQ
8.875% Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share [Member]
Title of 12(b) Security	8.875% Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share
Trading Symbol	LFMDP
Security Exchange Name	NASDAQ

v3.23.3

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Current Assets
Cash	$ 15,288,330	$ 3,958,957
Accounts receivable, net	4,418,582	2,834,750
Product deposit	84,768	127,265
Inventory, net	3,790,646	3,703,363
Other current assets	1,303,960	687,022
Total Current Assets	24,886,286	11,311,357
Non-current Assets
Equipment, net	424,637	476,441
Right of use asset	799,104	1,206,009
Capitalized software, net	11,325,766	8,840,187
Intangible assets, net	3,255,231	3,831,859
Total Non-current Assets	15,804,738	14,354,496
Total Assets	40,691,024	25,665,853
Current Liabilities
Accounts payable	9,637,390	10,106,793
Accrued expenses	15,493,128	12,166,509
Notes payable, net	426,223	2,797,250
Current operating lease liabilities	725,832	756,093
Deferred revenue	6,239,354	5,547,506
Total Current Liabilities	32,521,927	31,374,151
Long-term Liabilities
Long-term debt, net	18,827,283
Noncurrent operating lease liabilities	169,821	574,136
Contingent consideration	256,250	443,750
Purchase price payable		579,319
Total Liabilities	51,775,281	32,971,356
Commitments and Contingencies (Note 10)
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, zero and 3,500 shares issued and outstanding, liquidation value approximately, $0 and $1,305 per share as of September 30, 2023 and December 31, 2022, respectively		4,565,822
Stockholders’ Deficit
Series A Preferred Stock, $0.0001 par value; 1,610,000 shares authorized, 1,400,000 shares issued and outstanding, liquidation value approximately, $29.44 and $27.84 per share as of September 30, 2023 and December 31, 2022, respectively	140	140
Common stock, $0.01 par value; 100,000,000 shares authorized, 34,759,250 and 31,552,775 shares issued, 34,656,210 and 31,449,735 outstanding as of September 30, 2023 and December 31, 2022, respectively	347,593	315,528
Additional paid-in capital	196,901,377	179,015,250
Accumulated deficit	(209,756,573)	(190,562,994)
Treasury stock, 103,040 and 103,040 shares, at cost, as of September 30, 2023 and December 31, 2022, respectively	(163,701)	(163,701)
Total LifeMD, Inc. Stockholders’ Deficit	(12,671,164)	(11,395,777)
Non-controlling interest	1,586,907	(475,548)
Total Stockholders’ Deficit	(11,084,257)	(11,871,325)
Total Liabilities, Mezzanine Equity and Stockholders’ Deficit	$ 40,691,024	$ 25,665,853

v3.23.3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Temporary equity, par value	$ 0.0001	$ 0.0001
Temporary equity, shares authorized	5,000,000	5,000,000
Series A preferred stock, par value	$ 0.0001
Series A preferred stock, shares authorized	5,000,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	34,759,250	31,552,775
Common stock, shares outstanding	34,656,210	31,449,735
Treasury stock, shares	103,040	103,040
Series B Preferred Stock [Member]
Temporary equity, par value	$ 0.0001	$ 0.0001
Temporary equity, shares authorized	5,000	5,000
Temporary equity, shares issued	0	3,500
Temporary equity, shares outstanding	0	3,500
Temporary equity, liquidation value	$ 0	$ 1,305
Series A Preferred Stock [Member]
Series A preferred stock, par value	$ 0.0001	$ 0.0001
Series A preferred stock, shares authorized	1,610,000	1,610,000
Series A preferred stock, shares issued	1,400,000	1,400,000
Series A preferred stock, shares outstanding	1,400,000	1,400,000
Series A preferred stock, liquidation value	$ 29.44	$ 27.84

v3.23.3

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenues
Total revenues, net	$ 38,613,911	$ 31,412,469	$ 107,687,158	$ 90,913,804
Cost of revenues
Total cost of revenues	4,781,506	4,716,842	13,544,905	14,600,328
Gross profit	33,832,405	26,695,627	94,142,253	76,313,476
Expenses
Selling and marketing expenses	19,776,797	17,200,859	56,062,345	60,928,649
General and administrative expenses	13,398,387	12,385,030	36,120,723	37,757,710
Other operating expenses	1,622,137	1,617,375	4,640,690	5,076,820
Customer service expenses	2,106,252	1,488,428	5,573,734	3,428,098
Development costs	1,498,213	821,636	4,062,498	1,951,039
Goodwill impairment charge				2,735,000
Change in fair value of contingent consideration		248,000		(2,487,000)
Total expenses	38,401,786	33,761,328	106,459,990	109,390,316
Operating loss	(4,569,381)	(7,065,701)	(12,317,737)	(33,076,840)
Interest expense, net	(713,766)	(132,235)	(1,973,901)	(432,405)
(Loss) gain on debt extinguishment			(325,198)	63,400
Net loss	(5,283,147)	(7,197,936)	(14,616,836)	(33,445,845)
Net income attributable to non-controlling interest	839,288	83,737	2,247,055	154,464
Net loss attributable to LifeMD, Inc.	(6,122,435)	(7,281,673)	(16,863,891)	(33,600,309)
Preferred stock dividends	(776,563)	(776,563)	(2,329,688)	(2,329,688)
Net loss attributable to LifeMD, Inc. common stockholders	$ (6,898,998)	$ (8,058,236)	$ (19,193,579)	$ (35,929,997)
Basic loss per share attributable to LifeMD, Inc. common stockholders	$ (0.20)	$ (0.26)	$ (0.58)	$ (1.17)
Diluted loss per share attributable to LifeMD, Inc. common stockholders	$ (0.20)	$ (0.26)	$ (0.58)	$ (1.17)
Weighted average number of common shares outstanding:
Basic	34,472,904	30,935,643	32,959,665	30,830,533
Diluted	34,472,904	30,935,643	32,959,665	30,830,533
Telehealth Revenue [Member]
Revenues
Total revenues, net	$ 24,342,789	$ 21,365,178	$ 66,896,719	$ 66,231,202
Cost of revenues
Total cost of revenues	4,479,760	4,502,919	12,525,887	14,042,112
WorkSimpli Revenue [Member]
Revenues
Total revenues, net	14,271,122	10,047,291	40,790,439	24,682,602
Cost of revenues
Total cost of revenues	$ 301,746	$ 213,923	$ 1,019,018	$ 558,216

v3.23.3

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited) - USD ($)	Preferred Stock [Member] Series A Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Shares [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total
Balance at Dec. 31, 2021	$ 140	$ 307,045	$ 164,517,634	$ (141,921,085)	$ (163,701)	$ 22,740,033	$ (1,031,745)	$ 21,708,288
Balance, shares at Dec. 31, 2021	1,400,000	30,704,434
Stock compensation expense		$ 1,475	4,471,306			4,472,781		4,472,781
Stock compensation expense, shares		147,500
Cashless exercise of stock options		$ 255	(255)
Cashless exercise of stock options, shares		25,535
Exercise of warrants		$ 220	38,280			38,500		38,500
Exercise of warrants, shares		22,000
Series A Preferred Stock dividend				(776,563)		(776,563)		(776,563)
Distribution to non-controlling interest							(36,000)	(36,000)
Net (loss) income				(13,299,675)		(13,299,675)	24,726	(13,274,949)
Balance at Mar. 31, 2022	$ 140	$ 308,995	169,026,965	(155,997,323)	(163,701)	13,175,076	(1,043,019)	12,132,057
Balance, shares at Mar. 31, 2022	1,400,000	30,899,469
Balance at Dec. 31, 2021	$ 140	$ 307,045	164,517,634	(141,921,085)	(163,701)	22,740,033	(1,031,745)	21,708,288
Balance, shares at Dec. 31, 2021	1,400,000	30,704,434
Distribution to non-controlling interest								(108,000)
Net (loss) income								(33,445,845)
Balance at Sep. 30, 2022	$ 140	$ 314,578	177,131,586	(177,851,083)	(163,701)	(568,480)	(799,716)	(1,368,196)
Balance, shares at Sep. 30, 2022	1,400,000	31,457,775
Balance at Mar. 31, 2022	$ 140	$ 308,995	169,026,965	(155,997,323)	(163,701)	13,175,076	(1,043,019)	12,132,057
Balance, shares at Mar. 31, 2022	1,400,000	30,899,469
Stock compensation expense			4,041,006			4,041,006		4,041,006
Series A Preferred Stock dividend				(776,562)		(776,562)		(776,562)
Distribution to non-controlling interest							(36,000)	(36,000)
Net (loss) income				(13,018,962)		(13,018,962)	46,001	(12,972,961)
Exercise of stock options		$ 904	89,496			90,400		90,400
Exercise of stock options, shares		90,400
Balance at Jun. 30, 2022	$ 140	$ 309,899	173,157,467	(169,792,847)	(163,701)	3,510,958	(1,033,018)	2,477,940
Balance, shares at Jun. 30, 2022	1,400,000	30,989,869
Stock compensation expense		$ 637	3,335,576			3,336,213		3,336,213
Stock compensation expense, shares		63,750
Cashless exercise of stock options		$ 42	(42)
Cashless exercise of stock options, shares		4,156
Series A Preferred Stock dividend				(776,563)		(776,563)		(776,563)
Distribution to non-controlling interest							(36,000)	(36,000)
Net (loss) income				(7,281,673)		(7,281,673)	83,737	(7,197,936)
Stock issued for legal settlement		$ 4,000	812,000			816,000		816,000
Stock issued for legal settlement, shares		400,000
Adjustment of membership interest in WorkSimpli			(173,415)			(173,415)	185,565	12,150
Balance at Sep. 30, 2022	$ 140	$ 314,578	177,131,586	(177,851,083)	(163,701)	(568,480)	(799,716)	(1,368,196)
Balance, shares at Sep. 30, 2022	1,400,000	31,457,775
Balance at Dec. 31, 2022	$ 140	$ 315,528	179,015,250	(190,562,994)	(163,701)	(11,395,777)	(475,548)	(11,871,325)
Balance, shares at Dec. 31, 2022	1,400,000	31,552,775
Stock compensation expense		$ 1,494	2,662,020			2,663,514		2,663,514
Stock compensation expense, shares		149,375
Series A Preferred Stock dividend				(776,563)		(776,563)		(776,563)
Distribution to non-controlling interest							(36,000)	(36,000)
Net (loss) income				(4,008,456)		(4,008,456)	565,983	(3,442,473)
Adjustment of membership interest in WorkSimpli			(220,582)			(220,582)	(85,932)	(306,514)
Stock issued for noncontingent consideration payment		$ 3,379	638,621			642,000		642,000
Stock issued for noncontingent consideration payment, shares		337,895
Warrants issued with debt instrument			1,088,343			1,088,343		1,088,343
Balance at Mar. 31, 2023	$ 140	$ 320,401	183,183,652	(195,348,013)	(163,701)	(12,007,521)	(31,497)	(12,039,018)
Balance, shares at Mar. 31, 2023	1,400,000	32,040,045
Balance at Dec. 31, 2022	$ 140	$ 315,528	179,015,250	(190,562,994)	(163,701)	(11,395,777)	(475,548)	(11,871,325)
Balance, shares at Dec. 31, 2022	1,400,000	31,552,775
Distribution to non-controlling interest								(108,000)
Net (loss) income								$ (14,616,836)
Exercise of stock options, shares								74,372
Balance at Sep. 30, 2023	$ 140	$ 347,593	196,901,377	(209,756,573)	(163,701)	(12,671,164)	1,586,907	$ (11,084,257)
Balance, shares at Sep. 30, 2023	1,400,000	34,759,250
Balance at Mar. 31, 2023	$ 140	$ 320,401	183,183,652	(195,348,013)	(163,701)	(12,007,521)	(31,497)	(12,039,018)
Balance, shares at Mar. 31, 2023	1,400,000	32,040,045
Stock compensation expense		$ 530	2,861,439			2,861,969		2,861,969
Stock compensation expense, shares		53,000
Cashless exercise of stock options		$ 165	(165)
Cashless exercise of stock options, shares		16,471
Series A Preferred Stock dividend				(776,562)		(776,562)		(776,562)
Distribution to non-controlling interest							(36,000)	(36,000)
Net (loss) income				(6,733,000)		(6,733,000)	841,784	(5,891,216)
Adjustment of membership interest in WorkSimpli			(8,443)			(8,443)	9,332	889
Stock issued for noncontingent consideration payment		$ 4,553	637,447			642,000		642,000
Stock issued for noncontingent consideration payment, shares		455,319
Balance at Jun. 30, 2023	$ 140	$ 325,649	186,673,930	(202,857,575)	(163,701)	(16,021,557)	783,619	(15,237,938)
Balance, shares at Jun. 30, 2023	1,400,000	32,564,835
Stock compensation expense		$ 1,375	3,316,878			3,318,253		3,318,253
Stock compensation expense, shares		137,500
Cashless exercise of stock options		$ 579	(579)
Cashless exercise of stock options, shares		57,901
Series A Preferred Stock dividend				(776,563)		(776,563)		(776,563)
Distribution to non-controlling interest							(36,000)	(36,000)
Net (loss) income				(6,122,435)		(6,122,435)	839,288	(5,283,147)
Stock issued for legal settlement		$ 1,000	531,000			532,000		532,000
Stock issued for legal settlement, shares		100,000
Stock issued for noncontingent consideration payment		$ 1,581	640,419			642,000		642,000
Stock issued for noncontingent consideration payment, shares		158,129
Sale of common stock under ATM, net		$ 1,800	897,767			899,567		899,567
Sale of common stock under ATM, net, shares		180,021
Series B Preferred Stock conversion		$ 15,609	5,057,205			5,072,814		5,072,814
Series B Preferred Stock conversion, shares		1,560,864
Warrants issued for debt instruments fair value adjustment			(215,243)			(215,243)		(215,243)
Balance at Sep. 30, 2023	$ 140	$ 347,593	$ 196,901,377	$ (209,756,573)	$ (163,701)	$ (12,671,164)	$ 1,586,907	$ (11,084,257)
Balance, shares at Sep. 30, 2023	1,400,000	34,759,250

v3.23.3

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended				9 Months Ended		12 Months Ended
	Sep. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (5,283,147)	$ (3,442,473)	$ (7,197,936)	$ (13,274,949)	$ (14,616,836)	$ (33,445,845)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of debt discount	80,000				233,495
Amortization of capitalized software					3,787,716	1,746,899
Amortization of intangibles	246,000		326,000		725,496	666,782
Accretion of consideration payable					148,481	172,741
Depreciation of fixed assets					146,286	117,008
Loss (gain) on debt extinguishment					325,198	(63,400)
Change in fair value of contingent consideration						(2,487,000)
Goodwill impairment charge						2,735,000	$ 8,000,000.0
Operating lease payments					562,073	463,198
Stock issued for legal settlement					532,000	816,000
Stock compensation expense					8,843,736	11,850,000
Changes in Assets and Liabilities
Accounts receivable					(1,583,832)	(1,558,063)
Product deposit					42,497	95,505
Inventory					(87,283)	(2,052,363)
Other current assets					(616,938)	(21,386)
Change in operating lease liability					(589,744)	(378,095)
Deferred revenue					691,848	853,272
Accounts payable					(469,403)	1,827,103
Accrued expenses					5,611,131	(2,303,466)
Other operating activity					(579,319)
Net cash provided by (used in) operating activities					3,106,602	(20,966,110)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for capitalized software costs					(6,273,295)	(6,742,946)
Purchase of equipment					(94,482)	(378,877)
Purchase of intangible assets					(148,868)	(4,000,500)
Acquisition of business, net of cash acquired						(1,012,395)
Net cash used in investing activities					(6,516,645)	(12,134,718)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net					19,466,887
Proceeds from notes payable					2,347,691
Repayment of notes payable, net of prepayment penalty					(5,043,916)
Cash proceeds from exercise of options						90,400
Cash proceeds from exercise of warrants						38,500
Sale of common stock under ATM, net					899,567
Preferred stock dividends					(2,329,688)	(2,329,688)
Contingent consideration payment for ResumeBuild acquisition					(187,500)	(93,750)
Net payments for membership interest in WorkSimpli					(305,625)	12,150
Distributions to non-controlling interest					(108,000)	(108,000)
Net cash provided by (used in) financing activities					14,739,416	(2,390,388)
Net increase (decrease) in cash					11,329,373	(35,491,216)
Cash at beginning of period		$ 3,958,957		$ 41,328,039	3,958,957	41,328,039	41,328,039
Cash at end of period	$ 15,288,330		$ 5,836,823		15,288,330	5,836,823	$ 3,958,957
Cash paid for interest
Cash paid during the period for interest					1,485,242
Non-cash investing and financing activities
Warrants issued for debt instruments					873,100
Cashless exercise of options					744	297
Consideration payable for Cleared acquisition						8,079,367
Consideration payable for ResumeBuild acquisition						500,000
Stock issued for noncontingent consideration payment					1,926,000
Series B Preferred Stock conversion					5,072,814
Principal of Paycheck Protection Program loans forgiven						63,400
Right of use asset					155,168
Right of use lease liability					$ 155,168

v3.23.3

NATURE OF THE ORGANIZATION AND BUSINESS	9 Months Ended
	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
NATURE OF THE ORGANIZATION AND BUSINESS	NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS   Corporate History   LifeMD, Inc. was formed in the State of Delaware on May 24, 1994, under its prior name, Immudyne, Inc. The Company changed its name to Conversion Labs, Inc. on June 22, 2018 and then subsequently, on February 22, 2021, it changed its name to LifeMD, Inc. Effective February 22, 2021, the trading symbol for the Company’s common stock, par value $0.01 per share on The Nasdaq Stock Market LLC changed from “CVLB” to “LFMD”.   On April 1, 2016, the original operating agreement of Immudyne PR LLC (“Immudyne PR”), a joint venture to market the Company’s skincare products, was amended and restated and the Company increased its ownership and voting interest in Immudyne PR to 78.2%. Concurrent with the name change of the parent company to Conversion Labs, Inc., Immudyne PR was renamed to Conversion Labs PR LLC (“Conversion Labs PR”). On April 25, 2019, the operating agreement of Conversion Labs PR was amended and restated in its entirety to increase the Company’s ownership and voting interest in Conversion Labs PR to 100%. On February 22, 2021, concurrent with the name of the parent company to LifeMD, Inc., Conversion Labs PR was renamed to LifeMD PR, LLC.   In June 2018, the Company closed the strategic acquisition of 51% of LegalSimpli Software, LLC, which operates a software as a service application for converting, editing, signing, and sharing PDF documents called PDFSimpli. In addition to LegalSimpli Software, LLC’s growth business model, this acquisition added deep search engine optimization and search engine marketing expertise to the Company. On July 15, 2021, LegalSimpli Software, LLC, changed its name to WorkSimpli Software LLC, (“WorkSimpli”). Effective January 22, 2021, the Company consummated a transaction to restructure the ownership of WorkSimpli (the “WSS Restructuring”) concurrently increased its ownership interest in WorkSimpli to 85.58%. Effective September 30, 2022, two option agreements were exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.64%. Effective December 15, 2022, LifeMD PR, LLC merged into WorkSimpli, with WorkSimpli being the surviving entity.   Effective March 31, 2023, the Company redeemed 500 membership interest units in WorkSimpli and, as a result, the Company’s ownership interest in WorkSimpli increased to 74.06%. Effective June 30, 2023, an option agreement was exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.32%. See Note 8 for additional information.   On January 18, 2022, the Company acquired Cleared Technologies, PBC, a Delaware public benefit corporation (“Cleared”), a nationwide allergy telehealth platform that provides personalized treatments for allergy, asthma, and immunology (See Note 3).   Nature of Business   The Company is a direct-to-patient telehealth company providing patients a high-quality, cost-effective, and convenient way of accessing comprehensive, virtual healthcare. The Company believes the traditional model of visiting a doctor’s office, traveling to a local pharmacy, and returning for follow up care or prescription refills is complex, inefficient, and costly, and discourages many individuals from seeking much needed medical care. The Company is positioned to elevate the healthcare experience through telehealth with our proprietary technology platform, affiliated provider network, broad treatment capabilities, and unique ability to nurture patient relationships. Direct-to-patient telehealth technology companies, like the Company, connect consumers to affiliated, licensed, healthcare professionals for care across numerous indications, including urgent and primary care, men’s and women’s health, and dermatology, chronic care management and more.   The 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 (“OTC”) 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.   With its first brand, ShapiroMD, the Company has built a full line of proprietary OTC products for male and female hair loss—including Food and Drug Administration (“FDA”) approved OTC minoxidil and 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, 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. In the first quarter of 2021, the Company launched NavaMD, a tele-dermatology and skincare brand for women. The Company has built a platform that allows it to efficiently launch telehealth and wellness product lines wherever it determines there is a market need.     Business and Subsidiary History   In early 2019, the Company launched a service-based business under the name Conversion Labs Media LLC (“CVLB Media”), a Puerto Rico limited liability company. However, this business initiative was terminated in early 2019. In May 2019, Conversion Labs Rx, LLC (“CVLB Rx”), a Puerto Rico limited liability company, signed a strategic partnership agreement with Specialty Medical Drugstore, Inc. (doing business as “GoGoMeds”). 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 and nine months ended September 30, 2023 and 2022.   On January 18, 2022, the Company acquired Cleared, a 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 thousand upfront cash payment, and two non-contingent milestone payments for a 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 thousand 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. On February 4, 2023, the Company entered into the First Amendment to the Stock Purchase Agreement (the “First Amendment”) between the Company and the sellers of Cleared. The First Amendment was amended to, among other things: (i) reduce the total purchase price by $250 thousand to a total of $3.67 million; (ii) change the timing of the payment of the purchase price to $460 thousand paid at closing (which has already been paid by the Company), with the remaining amount to be paid in five quarterly installments beginning on or before February 6, 2023 and ending January 15, 2024; (iii) removing all “earn-out” payments payable by the Company to the sellers; and (iv) remove certain representations and warranties of the Company and sellers in connection with the transaction (See Note 3). On February 6, 2023, the Company issued 337,895 shares of common stock related to the first of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On April 17, 2023, the Company issued 455,319 shares of common stock related to the second of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On July 17, 2023, the Company issued 158,129 shares of common stock related to the third of five quarterly installment payments due to the sellers of Cleared under the First Amendment.   In 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 software as a service online platforms (the “Acquisition”). WorkSimpli paid $4.0 million to the Seller upon closing. 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 approximately $63 thousand, for a two-year period ending on the two-year anniversary of the closing of the Acquisition. As of September 30, 2023, WorkSimpli has paid the Seller approximately $344 thousand in accordance with the ResumeBuild APA. 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).   Unless otherwise indicated, the terms “LifeMD,” “Company,” “we,” “us,” and “our” refer to LifeMD, Inc. (formerly known as Conversion Labs, Inc.), 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., (“LifeMD PC”) is the Company’s affiliated, variable interest entity in which we hold a controlling financial interest. Unless otherwise specified, all dollar amounts are expressed in United States dollars.   Liquidity & Going Concern Evaluation   The Company has funded operations in the past through the sales of its products, issuance of common and preferred stock, and through loans and advances. The Company’s continued operations are dependent upon obtaining an increase in its sale volumes and obtaining funding from third-party sources or the issuance of additional shares of common stock.     On March 21, 2023, the Company entered into and closed on a loan and security agreement (the “Credit Agreement”), and a supplement to the Credit Agreement (the “Supplement”), with Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P. (collectively, “Avenue”). The Credit Agreement provides for a convertible senior secured credit facility of up to an aggregate amount of $40 million, comprised of the following: (1) $15 million in term loans funded at closing, (2) $5 million of additional committed term loans which the Company received on September 26, 2023 under the First Amendment to the Credit Agreement (the “Avenue First Amendment”) and (3) $20 million of additional uncommitted term loans, collectively referred to as the “Avenue Facility”. The Avenue Facility matures on October 1, 2026. The Company issued Avenue warrants to purchase $1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments (the “Warrants”). In addition, Avenue may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share equal to $1.49. Proceeds from the Avenue Facility were used to repay the Company’s outstanding notes payable balances with CRG Financial and are expected to be used for general corporate purposes. The Company is subject to certain affirmative and negative covenants under the Avenue Facility, including the requirement, beginning on the closing date, to maintain at least $5 million of unrestricted cash to be tested at the end of each month, and beginning on the period ended September 30, 2023, and at the end of each quarter thereafter, a trailing six-month cash flow, subject to certain adjustments as provided by the Credit Agreement, of at least $2 million.   As of September 30, 2023, the Company has an accumulated deficit approximating $209.8 million and has experienced significant losses from its operations. To date, the Company has been funding operations primarily through the sales of its products, sale of equity in private placements and securities purchased by a financial institution. 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 Company has a current cash balance of approximately $12.9 million as of the filing date. The Company reviewed its forecasted operating results and sources and uses of cash used in management’s assessment, which included the available financing and consideration of positive and negative evidence impacting management’s forecasts, market, and industry factors. The Company’s continuance as a going concern is highly dependent on its future profitability and on the on-going support of its stockholders, affiliates, and creditors. Based on these circumstances, management has determined that these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.   The Company has begun to implement strategies to strengthen revenues and improve operational efficiencies across the business and is significantly curtailing expenses, however, these strategies do not mitigate the substantial doubt about the Company’s ability to continue as a going concern.   Additionally, on June 8, 2021, the Company filed a shelf registration statement on Form S-3 under the Securities Act, which was declared effective on June 22, 2021 (the “2021 Shelf”). Under the 2021 Shelf at the time of effectiveness, the Company originally had the ability to raise up to $150 million by selling common stock, preferred stock, debt securities, warrants, and units. In conjunction with the 2021 Shelf, the Company also entered into an At Market Issuance Sales Agreement (the “ATM Sales Agreement”) with B. Riley Securities, Inc. and Cantor Fitzgerald & Co. relating to the sale of its common stock. In accordance with the terms of the ATM Sales Agreement, the Company may, but is not obligated to, offer and sell, from time to time, shares of common stock, through or to the Agents, acting as agent or principal. Sales of common stock, if any, will be made by any method permitted that is deemed an “at the market offering” as defined in Rule 415 under the Securities Act. On March 22, 2023, the date the Company filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, the Company became subject to the offering limits in General Instruction I.B.6 of Form S-3 (i.e., the “baby shelf limitations”). As a result of the baby shelf limitations, the Company was only able to offer and sell shares of common stock having an aggregate offering price of up to $18.435 million pursuant to the ATM Sales Agreement, and it filed a prospectus supplement with the SEC to that effect on March 27, 2023. In June 2023, the Company’s public float increased above $75.0 million. As a result, the Company is no longer subject to the baby shelf limitations. The Company filed another prospectus supplement with the SEC to that effect on June 29, 2023. As of September 30, 2023, the Company has $58.6 million available under the ATM Sales Agreement.   Management believes that the overall market value of the telehealth industry is positive and that it will continue to drive interest in the Company.

v3.23.3

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   Basis of Presentation   The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. 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, 2022, included in our 2022 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, 2023 are not necessarily indicative of the results for the year ending December 31, 2023 or for any future period.     Principles of Consolidation   The Company evaluates the need to consolidate affiliates based on standards set forth in Accounting Standards Codification (“ASC”) 810, Consolidation.   The consolidated financial statements include the accounts of the Company, Cleared, its majority owned subsidiary, WorkSimpli, and LifeMD PC, the Company’s affiliated, 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 85.58% as of December 31, 2021. Effective September 30, 2022, two option agreements were exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.64%. Effective March 31, 2023, the Company redeemed 500 membership interest units in WorkSimpli and, as a result, the Company’s ownership interest in WorkSimpli increased to 74.06%. Effective June 30, 2023, an option agreement was exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.32%. See Note 8 for additional information.   All significant intercompany transactions and balances have been eliminated in consolidation.   Cash and Cash Equivalents   Highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. As of September 30, 2023 and December 31, 2022, there were no cash equivalents. The Company maintains deposits in financial institutions in excess of amounts guaranteed by the Federal Deposit Insurance Corporation. Cash and cash equivalents are maintained at financial institutions, and at times, balances may exceed federally insured limits. These balances could be impacted if one or more of the financial institutions in which we deposit monies fails or is subject to other adverse conditions in the financial or credit markets. We have never experienced any losses related to these balances.   Variable Interest Entities   In 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 interest. A party is deemed to have a controlling financial interest if it meets both of the power and losses/benefits criteria. The power criterion is the ability to direct the activities of the VIE that most significantly impact its economic performance. The losses/benefits criterion is the obligation to absorb losses from, or right to receive benefits from, the VIE that could potentially be significant to the VIE.   The Company determined that the LifeMD PC entity, the Company’s affiliated network of medical Professional Corporations and medical Professional Associations administratively led by LifeMD Southern Patient Medical Care, P.C., is a VIE and subject to consolidation. LifeMD PC and the Company do not have any stockholders in common. LifeMD PC is owned by licensed physicians, and the Company maintains a managed 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.   Total revenue for LifeMD PC was approximately $1.9 million and $124 thousand for the three months ended September 30, 2023 and 2022, respectively, and $2.7 million and $124 thousand for the nine months ended September 30, 2023 and 2022, respectively. Total net income for LifeMD PC was approximately $440 thousand for the three months ended September 30, 2023 and net loss for LifeMD PC was approximately $1.0 million for the three months ended September 30, 2022. Total net loss for LifeMD PC was approximately $1.1 million and $3.9 million for the nine months ended September 30, 2023 and 2022, respectively.   Use of Estimates   The Company prepares its unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates required to be made by management include the determination of reserves for accounts receivable, returns and allowances, the valuation of inventory and stockholders’ equity-based transactions and the capitalization and impairment of capitalized software and impairment of other long-lived assets. Actual results could differ from those estimates.     Reclassifications   Certain reclassifications have been made to conform the prior year’s data to the current presentation. These reclassifications have no effect on previously reported operating loss, stockholders’ deficit or cash flows. 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 $92 thousand and $272 thousand of lease expenses reclassified from general and administrative expenses to other operating expenses for the three and nine months ended September 30, 2022, respectively.   Revenue Recognition   The 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:   1. Identify the contract 2. Identify performance obligations 3. Determine the transaction price 4. Allocate the transaction price 5. Recognize revenue   For the Company’s product-based contracts with customers, the Company has determined that there is one performance obligation, which is the delivery of the product; this performance obligation is transferred at a discrete point in time. The Company generally records sales of finished products once the customer places and pays for the order, with the product being simultaneously shipped by a third-party fulfillment service provider. In all cases, delivery is considered to have occurred when the customer obtains control, which is usually commensurate upon shipment of the product. In the case where delivery is not commensurate upon shipment of the product, recognition of revenue is deferred until that time. In the case of its product-based contracts, the Company provides a subscription sensitive service based on the recurring shipment of products. The Company records the related revenue under the subscription agreements subsequent to receiving the monthly product order, recording the revenue at the time it fulfills the shipment obligation to the customer.   For its product-based contracts with customers, the Company records an estimate for provisions of discounts, returns, allowances, customer rebates, and other adjustments for its product shipments and are reflected as contra revenues in arriving at reported net revenues. The Company’s discounts and customer rebates are known at the time of sale; correspondingly, the Company reduces gross product sales for such discounts and customer rebates. The Company estimates customer returns and allowances based on information derived from historical transaction detail and accounts for such provisions, as contra revenue, during the same period in which the related revenues are earned. The Company has determined that the population of its product-based contracts with customers are homogenous, supporting the ability to record estimates for returns and allowances to be applied to the entire product-based portfolio population. Customer discounts, returns and rebates on telehealth revenues approximated $696 thousand and $1.1 million during the three months ended September 30, 2023 and 2022, respectively. Customer discounts, returns and rebates on telehealth revenues approximated $1.5 million and $4.2 million during the nine months ended September 30, 2023 and 2022, respectively.   The Company, through its majority-owned subsidiary, WorkSimpli, offers a subscription-based service providing a suite of software applications to its subscribers, principally on a monthly subscription basis. The software suite allows the subscriber/user to convert almost any type of document to another electronic form of editable document, providing ease of editing. For these subscription-based contracts with customers, the Company offers an initial 14-day trial period which is billed at $1.95, followed by a monthly subscription, or a yearly subscription to the Company’s software suite dependent on the subscriber’s enrollment selection. The Company has estimated that there is one product and one performance obligation that is delivered over time, as the Company allows the subscriber to access the suite of services for the time period of the subscription purchased. The Company allows the customer to cancel at any point during the billing cycle, in which case the customer’s subscription will not be renewed for the following month or year depending on the original subscription. The Company records the revenue over the customer’s subscription period for monthly and yearly subscribers or at the end of the initial 14-day service period for customers who purchased the initial subscription, as the circumstances dictate. The Company offers a discount for the monthly or yearly subscriptions being purchased, which is deducted at the time of payment at the initiation of the contract term; therefore the Contract price is fixed and determinable at the contract initiation. Monthly and annual subscriptions for the service are recorded net of the Company’s known discount rates. Customer discounts and allowances on WorkSimpli revenues approximated $865 thousand and $710 thousand during the three months ended September 30, 2023 and 2022, respectively. Customer discounts and allowances on WorkSimpli revenues approximated $2.6 million and $1.7 million during the nine months ended September 30, 2023 and 2022, respectively.     For the three and nine months ended September 30, 2023 and 2022, the Company had the following disaggregated revenue:   SCHEDULE OF DISAGGREGATED REVENUE      Three Months Ended September 30,     Nine Months Ended September 30,       2023     %     2022     %     2023     %     2022     %   Telehealth revenue   $ 24,342,789       63 %   $ 21,365,178       68 %   $ 66,896,719       62 %   $ 66,231,202       73 % WorkSimpli revenue     14,271,122       37 %     10,047,291       32 %     40,790,439       38 %     24,682,602       27 % Total net revenue   $ 38,613,911       100 %   $ 31,412,469       100 %   $ 107,687,158       100 %   $ 90,913,804       100 %   Deferred Revenues   The Company records deferred revenues when cash payments are received or due in advance of its performance. The Company’s deferred revenues relate to the following: (1) obligations for products which the customer has not yet obtained control due to delivery not commensurate upon shipment of the product, (2) obligations on WorkSimpli in-process monthly or yearly contracts with customers and (3) a portion attributable to the yet to be recognized WorkSimpli initial 14-day trial period collections.   SCHEDULE OF CONTRACT WITH CUSTOMER LIABILITY     2023     2022     2023     2022       Three Months Ended September 30,     Nine Months Ended September 30,       2023     2022     2023     2022   Beginning of period   $ 5,668,210     $ 1,992,502     $ 5,547,506     $ 1,499,880   Additions     14,767,411       9,346,553       42,325,069       23,567,740   Revenue recognized     (14,196,267 )     (8,985,903 )     (41,633,221 )     (22,714,468 ) End of period   $ 6,239,354     $ 2,353,152     $ 6,239,354     $ 2,353,152     Leases   The Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets are included in right-of-use assets, net on the unaudited condensed consolidated balance sheets. The current and long-term components of operating lease liabilities are included in the current operating lease liabilities and noncurrent operating lease liabilities, respectively, on the unaudited condensed consolidated balance sheets.   Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Certain leases may include options to extend or terminate the lease. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded in the balance sheet.   Accounts Receivable, net   Accounts receivable principally consist of amounts due from third-party merchant processors, who process our subscription revenues; the merchant accounts balance receivable represents the charges processed by the merchants that have not yet been deposited with the Company. The unsettled merchant receivable amount normally represents processed sale transactions from the final one to three days of the month, with collections being made by the Company within the first week of the following month. Management determines the need, if any, for an allowance for future credits to be granted to customers, by regularly evaluating aggregate customer refund activity, coupled with the consideration and current economic conditions in its evaluation of an allowance for future refunds and chargebacks. As of September 30, 2023 and December 31, 2022, the reserve for sales returns and allowances was approximately $570 thousand and $815 thousand, respectively. For all periods presented, as noted above, the sales returns and allowances were recorded in accrued expenses on the unaudited condensed consolidated balance sheets.   Inventory   As of September 30, 2023 and December 31, 2022, inventory primarily consisted of finished goods, raw materials and packaging 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 various Amazon fulfillment centers. The Company also maintains inventory at a company owned warehouse in Pennsylvania.   Inventory 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 September 30, 2023 and December 31, 2022, the Company recorded an inventory reserve of approximately $99 thousand and $161 thousand, respectively.     As of September 30, 2023 and December 31, 2022, the Company’s inventory consisted of the following:   SUMMARY OF INVENTORY     September 30,     December 31,       2023     2022                 Finished goods - products   $ 2,428,471     $ 2,587,370   Raw materials and packaging components     1,461,576       1,276,891   Inventory reserve     (99,401 )     (160,898 ) Total Inventory - net   $ 3,790,646     $ 3,703,363     Product Deposit   Many 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 September 30, 2023 and December 31, 2022, the Company has approximately $85 thousand and $127 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 September 30, 2023, the Company approximates its implicit purchase commitments to be $596 thousand, of which the vast majority are with two vendors that manufacture the Company’s finished goods inventory for its RexMD product line.   Capitalized Software Costs   The Company capitalizes certain internal payroll costs and third-party costs related to internally developed software and amortizes these costs using the straight-line method over the estimated useful life of the software, generally three years. The Company does not sell internally developed software other than through the use of subscription service. Certain development costs not meeting the criteria for capitalization, in accordance with ASC 350-40, Internal-Use Software, are expensed as incurred. As of September 30, 2023 and December 31, 2022, the Company capitalized a net amount of $11.3 million and $8.8 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.   Goodwill and Intangible Assets   Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill is not amortized but is tested for impairment annually or more frequently, if events or changes in circumstances indicate that the asset may be impaired. Goodwill in the amount of $8.0 million was recognized in conjunction with the Cleared acquisition. The Company recorded an $8.0 million goodwill impairment charge and an $827 thousand intangible asset impairment charge during the year ended December 31, 2022 related to a decline in the estimated fair value of Cleared as a result of a decline in the Cleared financial projections (see Note 3).   Other intangible assets are comprised of: (1) the ResumeBuild brand, (2) a customer relationship asset, (3) the Cleared trade name, (4) Cleared developed technology, (5) a purchased license and (6) two purchased domain names. During the year ended December 31, 2022, the Company recorded an $827 thousand impairment loss related to a decline in the estimated fair value of the Cleared customer relationship intangible asset with an original cost of $919 thousand and accumulated amortization of $92 thousand. Other intangible assets are amortized over their estimated lives using the straight-line method. Costs incurred to renew or extend the term of recognized intangible assets are capitalized and amortized over the useful life of the asset.   Impairment of Long-Lived Assets   Long-lived assets include equipment and capitalized software. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, an impairment is recognized as the amount by which the carrying amount of the assets exceeds the estimated fair values of the assets. As of September 30, 2023 and December 31, 2022, the Company determined that no events or changes in circumstances existed that would indicate any impairment of its long-lived assets.   Income Taxes   The Company files corporate federal, state and local tax returns. WorkSimpli files a tax return in Puerto Rico; WorkSimpli is a limited liability company and files tax returns with any tax liabilities or benefits passing through to its members.     The 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 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. ASC 740 also provides a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken in a tax return. Using this guidance, a company may recognize the tax benefit from an uncertain tax position in its financial statements only if it is more likely-than-not (i.e., a likelihood of more than 50%) that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company’s tax returns for all years since December 31, 2019, remain open to audit by all related taxing authorities.   Stock-based Compensation   The Company follows the provisions of ASC 718, Share-Based Payment. Under this guidance compensation cost generally is recognized at fair value on the date of the grant and amortized over the respective vesting or service period. The fair value of options at the date of grant is estimated using the Black-Scholes option pricing model. The expected option life is derived from assumed exercise rates based upon historical exercise patterns and represents the period of time that options granted are expected to be outstanding. The expected volatility is based upon historical volatility of the Company’s common shares using weekly price observations over an observation period that approximates the expected life of the options. The risk-free interest rate approximates the U.S. Treasury yield curve rate in effect at the time of grant for periods similar to the expected option life. Due to limited history of forfeitures, the Company has elected to account for forfeitures as they occur. Many of the assumptions require significant judgment and any changes could have a material impact in the determination of stock-based compensation expense.   Earnings (Loss) Per Share   Basic earnings (loss) per common share (“EPS”) is based on the weighted average number of shares outstanding during each period presented. Shares of unissued vested restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) are included in our calculation of basic weighted average shares outstanding. 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.   The 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. The dilutive effect of traditional convertible debt and preferred stock is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the diluted EPS calculation for the entire period being presented.   The following table summarizes the number of shares of common stock issuable pursuant to our convertible securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive even though the exercise price could be less than the average market price of the common shares:   SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES     2023     2022     2023     2022       Three Months Ended September 30,     Nine Months Ended September 30,       2023     2022     2023     2022                             Series B Preferred Stock     -       1,369,581       995,994       1,334,421   RSUs and RSAs     2,954,750       1,830,750       2,545,875       1,563,000   Stock options     2,616,722       4,007,698       3,316,909       4,214,609   Warrants     4,827,380       3,859,638       4,827,380       3,859,638   Convertible long-term debt     1,342,282       -       1,342,282       -   Potentially dilutive securities     11,741,134       11,067,667       13,028,440       10,971,668     Segment Data   Our portfolio of brands are included within two operating segments: Telehealth and WorkSimpli. We believe our current segments and brands within our segments complement one another and position us well for future growth. 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.     Fair Value of Financial Instruments   The fair value of a financial instrument is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities subject to ongoing fair value measurement are categorized and disclosed into one of the three categories depending on observable or unobservable inputs employed in the measurement. Hierarchical levels, which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities, are as follows:     1. Level 1: Inputs that are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.   2. Level 2: Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.   3. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.   In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.   The carrying value of the Company’s financial instruments, including cash, accounts receivable, accounts payable, accrued expenses, the face amount of notes payable and convertible long-term debt approximate fair value for all periods presented.   Concentrations of Risk   The Company monitors its positions with, and the credit quality of, the financial institutions with which it invests. The Company, at times, maintains balances in various operating accounts in excess of federally insured limits. 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 September 30, 2023, we utilized three suppliers for fulfillment services, six suppliers for manufacturing finished goods, six suppliers for packaging, bottling, and labeling, and four suppliers for prescription medications. As of December 31, 2022, we utilized four suppliers for fulfillment services, six suppliers for manufacturing finished goods, five suppliers for packaging, bottling, and labeling, and three suppliers for prescription medications.   Recently Adopted Accounting Pronouncements   In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments, which requires an entity to utilize the current expected credit loss (“CECL”) impairment model to estimate its lifetime “expected credit loss” and record an allowance that is deducted from the amortized cost basis of the financial assets and certain other instruments, including but not limited to available-for-sale debt securities. Credit losses relating to available-for-sale debt securities are recorded through an allowance for credit losses. ASU 2016-13 requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates, which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022 for all entities except SEC reporting companies that are not smaller reporting companies. The Company adopted ASU 2016-13 as of January 1, 2023. The adoption did not have a material impact on the Company’s financial statements.   In October 2021, the FASB issued 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. The Company adopted ASU 2021-08 as of January 1, 2023. The adoption did not have a material impact on the Company’s financial statements.     Other Recent Accounting Pronouncements   All other accounting standards updates that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

v3.23.3

ACQUISITIONS	9 Months Ended
	Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]
ACQUISITIONS	NOTE 3 – ACQUISITIONS   On January 18, 2022, the Company completed the acquisition of Cleared. The acquisition adds to the Company’s growing portfolio of telehealth capabilities. The Company 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. The results of Cleared are included within the consolidated financial statements commencing on the acquisition date.   The purchase price was approximately $9.1 million, including cash paid upfront of approximately $1.0 million and payable in the future of approximately $3.0 million, and contingent consideration of $5.1 million. The purchase agreement included up to $72.8 million of potential earn-out payable in cash or stock upon achievement of revenue targets, which was originally recognized as contingent consideration. The Company, with the assistance of a third-party valuation expert, estimated the fair value of the acquired tangible and identifiable intangible assets using significant estimates such as revenue projections. The fair value of the identified intangible assets was based primarily on significant unobservable inputs and thus represent a Level 3 measurement as defined in ASC 820, Fair Value Measurement. The fair value of the trade name and developed technology were determined using the relief-from-royalty method under the income approach. The royalty rates used to determine the fair value of the trade name and developed technology were 0.10% and 1.0%, respectively. The fair value of the customer relationships was determined using the multi-period excess earnings method which involves forecasting the net earnings expected to be generated. The customer attrition rate used to determine the fair value of the customer relationships was 10.0%. The discount rate used to determine the fair value of the trade name, developed technology and customer relationships was 70.5%.   The following table summarizes the acquisition date fair values of assets acquired and liabilities assumed:   SCHEDULE OF FAIR VALUE OF ASSETS AND LIABILITIES            Purchase price, net of cash acquired   $ 9,091,762   Less:         Customer relationship intangible asset     918,812   Trade name intangible asset     133,339   Developed technology intangible asset     12,920   Inventory     7,168   Fixed assets     37,888   Deferred taxes     354,000   Accounts payable and other current liabilities     (408,030 ) Goodwill   $ 8,035,665     The purchase price and purchase price allocation for Cleared was finalized as of September 30, 2022 with no significant changes to preliminary amounts. Based on the final purchase price allocation, the aggregate goodwill recognized was $8.0 million, which is not expected to be deductible for income tax purposes. The amount allocated to goodwill and intangible assets reflected the benefits the Company expected to realize from the growth of the acquisition’s operations.   On February 4, 2023, the Company entered into the First Amendment to the Stock Purchase Agreement (the “First Amendment”) between the Company and the sellers of Cleared. The First Amendment was amended to, among other things: (i) reduce the total purchase price by $250 thousand to a total of $3.67 million; (ii) change the timing of the payment of the purchase price to $460 thousand paid at closing (which has already been paid by the Company), with the remaining amount to be paid in five quarterly installments beginning on or before February 6, 2023 and ending January 15, 2024; (iii) remove all “earn-out” payments payable by the Company to the sellers; and (iv) removing certain representations and warranties of the Company and sellers in connection with the transaction. On February 6, 2023, the Company issued 337,895 shares of common stock related to the first of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On April 17, 2023, the Company issued 455,319 shares of common stock related to the second of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On July 17, 2023, the Company issued 158,129 shares of common stock related to the third of five quarterly installment payments due to the sellers of Cleared under the First Amendment.     During the year ended December 31, 2022, the Company recorded a decrease of $5.1 million to the Cleared contingent consideration as a result of the remeasurement of the fair value. The decline in the estimated fair value of the Cleared contingent consideration is a result of a decline in the Cleared financial projections and the removal of all earn-out payments payable by the Company from the terms of the First Amendment. During the year ended December 31, 2022, the Company also recorded an $8.0 million goodwill impairment charge and an $827 thousand intangible asset impairment charge based on the decline in the Cleared financial projections (See Note 4).   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.   In February 2022, WorkSimpli closed on the ResumeBuild APA to purchase the related intangible assets associated with the ResumeBuild brand, a subscription-based resume building software. The acquisition further adds to the capabilities of the WorkSimpli software as a service application. The purchase price was $4.5 million, including cash paid upfront of $4.0 million 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 assets. 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 approximately $63 thousand, for a two-year period ending on the two-year anniversary of the closing of the Acquisition. As of September 30, 2023, WorkSimpli has paid the Seller approximately $344 thousand in accordance with the ResumeBuild APA. 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.

v3.23.3

GOODWILL AND INTANGIBLE ASSETS	9 Months Ended
	Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
GOODWILL AND INTANGIBLE ASSETS	NOTE 4 – GOODWILL AND INTANGIBLE ASSETS   The Company’s goodwill balance related to the Cleared acquisition was $0 as of both September 30, 2023 and December 31, 2022. During the year ended December 31, 2022, the Company recorded an $8.0 million goodwill impairment charge related to a decline in the estimated fair value of Cleared as a result of a decline in the Cleared financial projections.   As of September 30, 2023 and December 31, 2022, the Company has the following amounts related to amortizable intangible assets:   SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS      September 30,     December 31,     Amortizable     2023     2022     Life Amortizable Intangible Assets:                     ResumeBuild brand   $ 4,500,000     $ 4,500,000     5 years Customer relationship asset     1,006,840       1,006,840     3 years Cleared trade name     133,339       133,339     5 years Cleared developed technology     12,920       12,920     1 year Purchased licenses     200,000       200,000     10 years Website domain names     171,599       22,731     3 years Amortizable intangible assets     171,599       22,731     3 years Less: accumulated amortization     (2,769,467 )     (2,043,971 )     Total net amortizable intangible assets   $ 3,255,231     $ 3,831,859         During the year ended December 31, 2022, the Company recorded an $827 thousand impairment charge related to a decline in the estimated fair value of the Cleared customer relationship intangible asset with an original cost of $919 thousand and accumulated amortization of $92 thousand. The aggregate amortization expense of the Company’s intangible assets for the three months ended September 30, 2023 and 2022 was $246 thousand and $326 thousand, respectively. The aggregate amortization expense of the Company’s intangible assets for the nine months ended September 30, 2023 and 2022 was $726 thousand and $667 thousand, respectively. Total amortization expense for the remainder of 2023 is approximately $246 thousand, 2024 through 2025 is approximately $980 thousand per year, 2026 is approximately $940 thousand and 2027 is approximately $113 thousand.

v3.23.3

ACCRUED EXPENSES	9 Months Ended
	Sep. 30, 2023
Payables and Accruals [Abstract]
ACCRUED EXPENSES	NOTE 5 – ACCRUED EXPENSES   As of September 30, 2023 and December 31, 2022, the Company has the following amounts related to accrued expenses:   SCHEDULE OF ACCRUED EXPENSES     September 30,     December 31,       2023     2022   Accrued selling and marketing expenses   $ 6,872,464     $ 3,508,883   Sales tax payable     2,501,035       2,501,035   Purchase price payable     1,264,301       2,463,002   Accrued dividends payable     776,563       776,563   Accrued compensation     2,074,074       576,027   Accrued interest     -       448,718   Other accrued expenses     2,004,691       1,892,281   Total accrued expenses   $ 15,493,128     $ 12,166,509

v3.23.3

NOTES PAYABLE	9 Months Ended
	Sep. 30, 2023
Debt Disclosure [Abstract]
NOTES PAYABLE	NOTE 6 – NOTES PAYABLE   Working Capital Loans   In October 2022, the Company received proceeds of $976 thousand under a 12-month working capital loan with Amazon. The terms of the loan include interest in the amount of $62 thousand. As of September 30, 2023 and December 31, 2022, the outstanding balance was $111 thousand and $976 thousand, respectively, and is included in notes payable, net, on the accompanying unaudited condensed consolidated balance sheet.   In November 2022, the Company received proceeds of $1.9 million under two 10-month working capital loans with Balanced Management. The terms of the loans include loan origination fees in the amount of $60 thousand and total interest of $840 thousand. As of September 30, 2023 and December 31, 2022, the outstanding balance was $0 and $1.821 million, respectively, and is included in notes payable, net, on the accompanying unaudited condensed consolidated balance sheet.   During the nine months ended September 30, 2023, the Company received proceeds of $2 million under a $2.5 million loan facility with CRG Financial, maturing on December 15, 2023. The loan facility includes interest of 12%. The Company repaid the $2 million outstanding loan balance on March 21, 2023 with the proceeds received from the Avenue Facility and recorded a $325 thousand loss on debt extinguishment related to the repayment of the CRG Financial loan due to a prepayment penalty and various fees. As of both September 30, 2023 and December 31, 2022, the outstanding balance was $0 related to the CRG Financial loan.   During the nine months ended September 30, 2023, the Company financed a $348 thousand prepaid insurance policy under a 10-month financing agreement with Arthur J. Gallagher Risk Management Services, LLC. The terms of the agreement include finance fees in the amount of $13 thousand. As of September 30, 2023 and December 31, 2022, the outstanding balance was $315 thousand and $0, respectively, and is included in notes payable, net, on the accompanying unaudited condensed consolidated balance sheet.   Total interest expense on notes payable amounted to $216 thousand and $0 for the three months ended September 30, 2023 and 2022, respectively. Total interest expense on notes payable amounted to $250 thousand and $0 for the nine months ended September 30, 2023 and 2022, respectively.

v3.23.3

LONG-TERM DEBT	9 Months Ended
	Sep. 30, 2023
Debt Disclosure [Abstract]
LONG-TERM DEBT	NOTE 7 – LONG-TERM DEBT   Avenue Capital Credit Facility   As noted in Note 1 above, on March 21, 2023, the Company entered into and closed on a Credit Agreement, and a Supplement to the Credit Agreement with Avenue. The Credit Agreement provides for a convertible senior secured credit facility of up to an aggregate amount of $40 million, comprised of the following: (1) $15 million in term loans funded at closing, (2) $5 million of additional committed term loans received on September 26, 2023 in conjunction with the Avenue First Amendment and (3) $20 million of additional uncommitted term loans, collectively referred to as the “Avenue Facility”. The Company issued Avenue warrants to purchase $1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments. The Warrants have a term of five years. The relative fair value of the Warrants issued to Avenue upon closing was $873 thousand. In addition, Avenue may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share equal to $1.49. The relative fair value was recorded to debt discount and is included as a reduction to long-term debt on the unaudited condensed consolidated balance sheet as of September 30, 2023. The Company incurred other fees associated with the Avenue Facility including: (1) a $300 thousand financing fee, (2) a $200 thousand upfront commitment fee of 1% of the total $20 million in committed capital and (3) $27 thousand in legal fees. The total debt discount recorded of $1.4 million will be amortized over a forty-two-month period. Total amortization of debt discount was $80 thousand and $234 thousand for the three and nine months ended September 30, 2023, respectively. The Company received gross proceeds of $15.0 million at closing (net proceeds of $12.3 million after repayment of the $2 million outstanding CRG loan balance and various fees).   As noted in Note 1 above, the Company entered into the Avenue First Amendment to the Credit Agreement whereby the Company received an additional $5 million in committed term loans on September 26, 2023. The Company received gross and net proceeds of $5.0 million.   The Avenue Facility matures on October 1, 2026 and interest is based on the greater of: (1) the Prime Rate (as defined in the Supplement) plus 4.75% and (2) 12.5%. At September 30, 2023, the interest rate was 13.25%. Payments are interest only until November 2024. Proceeds from the Avenue Facility were used to repay the Company’s outstanding notes payable balances with CRG Financial and are expected to be utilized for general corporate purposes.     The Company is subject to certain affirmative and negative covenants under the Avenue Facility, including the requirement, beginning on the closing date, to maintain at least $5 million of unrestricted cash to be tested at the end of each month, and beginning on the period ended September 30, 2023, and at the end of each quarter thereafter, a trailing six-month cash flow, subject to certain adjustments as provided by the Credit Agreement, of at least $2 million. As of the date of filing, there is $20 million outstanding under the Avenue Facility and the Company is in compliance with the Avenue Facility terms.   Total interest expense on long-term debt, inclusive of amortization of debt discounts, amounted to $594 thousand and $0 for the three months ended September 30, 2023 and 2022, respectively. Total interest expense on long-term debt, inclusive of amortization of debt discounts, amounted to $1.3 million and $0 for the nine months ended September 30, 2023 and 2022, respectively.

v3.23.3

STOCKHOLDERS’ EQUITY	9 Months Ended
	Sep. 30, 2023
Equity [Abstract]
STOCKHOLDERS’ EQUITY	NOTE 8 – STOCKHOLDERS’ EQUITY   The Company has authorized the issuance of up to 100,000,000 shares of common stock, $0.01 par value, and 5,000,000 shares of preferred stock, $0.0001 par value, of which 5,000 shares are designated as Series B Preferred Stock, 1,610,000 are designated as Series A Preferred Stock and 3,385,000 shares of preferred stock remain undesignated.   On June 8, 2021, the Company filed the 2021 Shelf. Under the 2021 Shelf at the time of effectiveness, the Company originally had the ability to raise up to $150 million by selling common stock, preferred stock, debt securities, warrants and units. In conjunction with the 2021 Shelf, the Company also entered into the ATM Sales Agreement whereby the Company may offer and sell, from time to time, shares of common stock. On March 22, 2023, the date the Company filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, the Company became subject to the offering limits in General Instruction I.B.6 of Form S-3 (i.e., the “baby shelf limitations”). As a result of the baby shelf limitations, the Company may only offer and sell shares of common stock having an aggregate offering price of up to $18.435 million pursuant to the ATM Sales Agreement, and it filed a prospectus supplement with the SEC to that effect on March 27, 2023. In June 2023, the Company’s public float increased above $75.0 million. As a result, the Company is no longer subject to the baby shelf limitations. The Company filed another prospectus supplement with the SEC to that effect on June 29, 2023. As of September 30, 2023, the Company has $58.6 million available under the ATM Sales Agreement.   Options   During the nine months ended September 30, 2023, the Company issued an aggregate of 74,372 shares of common stock related to the cashless exercise of options.   Common Stock   Common Stock Transactions During the Nine Months Ended September 30, 2023   During the nine months ended September 30, 2023, the Company issued an aggregate of 339,875 shares of common stock for service, including vested restricted stock units.   On February 4, 2023, the Company entered into the First Amendment to the Stock Purchase Agreement (the “First Amendment”) between the Company and the sellers of Cleared. The First Amendment was amended to, among other things change the timing of the payment of the purchase price to $460 thousand paid at closing (which has already been paid by the Company), with the remaining amount to be paid in five quarterly installments beginning on or before February 6, 2023 and ending January 15, 2024. On February 6, 2023, the Company issued 337,895 shares of common stock related to the first of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On April 17, 2023, the Company issued 455,319 shares of common stock related to the second of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On July 17, 2023, the Company issued 158,129 shares of common stock related to the third of five quarterly installment payments due to the sellers of Cleared under the First Amendment.   During the nine months ended September 30, 2023, the Company sold 180,021 shares of common stock under the ATM Sales Agreement and net proceeds received were $900 thousand.   During the nine months ended September 30, 2023, the Company issued 100,000 shares of common stock related to the settlement of the Harborside Advisors LLC v. LifeMD, Inc., Case No. 21-cv-10593, and the Specialty Medical Drugstore, LLC D/B/A GoGoMeds v. LifeMD, Inc., Case No. 21-cv-10599, matters. The shares issued were valued based on the closing price of the Company’s stock, or $5.32, on the date of settlement, July 10, 2023.     On July 10, 2023, and August 14, 2023, PA001 Holdings, LLC, the holder of the Company’s Series B Preferred Stock, elected to convert 2,275 and 1,225 shares, respectively, of the Company’s Series B Preferred Stock, at a price of $3.25 per share of Series B Preferred Stock, pursuant to the terms of the Securities Purchase Agreement dated August 28, 2020. The conversion was calculated based on the original issuance price of the Series B Preferred Stock plus all accrued dividends to date. The conversion resulted in 1,010,170 and 550,694 shares of the Company’s common stock issued to PA001 Holdings, on July 12, 2023 and August 15, 2023, respectively.   On March 21, 2023, in connection with the Company’s closing of a Credit Agreement with Avenue, the Company issued Avenue warrants to purchase $1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments. In addition, Avenue may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share equal to $1.49.   Noncontrolling Interest   Net income attributed to the non-controlling interest amounted to $839 thousand and $84 thousand for the three months ended September 30, 2023 and 2022, respectively. During both the three months ended September 30, 2023 and 2022, the Company paid distributions to non-controlling shareholders of $36 thousand. Net income attributed to the non-controlling interest amounted to $2.2 million and $155 thousand for the nine months ended September 30, 2023 and 2022, respectively. During both the nine months ended September 30, 2023 and 2022, the Company paid distributions to non-controlling shareholders of $108 thousand.   WorkSimpli Software Restructuring Transaction   Effective January 22, 2021 (the “WSS Effective Date”), the Company consummated the WSS Restructuring, which is described in Note 1. 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 $376 thousand (the “CVLBPR Note”), issued by WSS in favor of Conversion Labs PR, for 37,531 newly issued membership interests of WSS (the “Exchange”). Upon consummation of the Exchange the CVLBPR Note was extinguished.   Concurrently, in furtherance of the WSS Restructuring, Conversion Labs PR entered into two Membership Interest Purchase Agreements (the “Founding Members MIPAs”) with two founding members of WSS (the “Founding Members”) whereby Conversion Labs PR purchased from the Founding Members an aggregate of 2,183 membership interests of WSS for an aggregate purchase price of $225,000, paid in December 2020.   In furtherance of the WSS Restructuring, Conversion Labs PR entered into a Membership Interest Purchase Agreement with WSS, (the “CVLB PR MIPA”), pursuant to which Conversion Labs PR purchased 12,000 membership interests of WSS for an aggregate purchase price of $300 thousand. The CVLB PR MIPA provides that the transaction may be completed in three (3) tranches with a purchase price of $100 thousand per tranche to be made at the sole discretion of Conversion Labs PR. Payment for the first tranche of $100 thousand was made upon execution of the CVLB PR MIPA in January 2021. Payments for the second and third tranches were made on the 60-day anniversary and the 120-day anniversary of the WSS Effective Date.   Following the consummation of the WSS Restructuring, Conversion Labs PR increased its ownership of WSS from 51% to approximately 85.58% on a fully diluted basis. WSS entered into an amendment to its operating agreement (the “WSS Operating Agreement Amendment”) to reflect the change in ownership.   Concurrently with the WSS Restructuring, Conversion Labs PR entered into option agreements with Sean Fitzpatrick (the “Fitzpatrick Option Agreement”) and Varun Pathak (the “Pathak Option Agreement” together with Fitzpatrick Option Agreement the “Option Agreements”), pursuant to which Conversion Labs PR granted options to purchase membership interest units of WSS. Upon vesting, the Fitzpatrick Options and the Pathak Options provide for the potential re-purchase of up to an additional 13.25% of WSS by Fitzpatrick and Pathak in the aggregate with Conversion Labs PR ownership ratably reduced to approximately 72.98%.   The Fitzpatrick Option Agreement grants Sean Fitzpatrick the option to purchase 10,300 membership interest units of WSS for an exercise price of $1.00 per membership interest unit. The Fitzpatrick Options vest in accordance with the following milestones (i) 3,434 membership interests upon WSS achieving $2.5 million of gross sales in any fiscal quarter (ii) 3,434 membership interests upon WSS achieving $4.0 million of gross sales in any fiscal quarter, and (iii) 3,434 membership interests upon WSS achieving $8.0 million of gross sales with a ten percent (10%) net profit margin in any fiscal quarter.   The Pathak Option Agreement grants Varun Pathak the option to purchase 2,100 membership interest units of WSS for an exercise price of $1.00 per membership interest unit. The Pathak Options vest in accordance with the following milestones (i) 700 membership interests upon WSS achieving $2.5 million of gross sales in any fiscal quarter (ii) 700 membership interests upon WSS achieving $4.0 million of gross sales in any fiscal quarter, and (iii) 700 membership interests upon WSS achieving $8.0 million of gross sales with a ten percent (10%) net profit margin in any fiscal quarter.     On September 30, 2022, Sean Fitzpatrick and Varun Pathak exercised their options to purchase 10,300 and 2,100 membership interest units, respectively, of WorkSimpli for an exercise price of $1.00 per membership interest unit under the Option Agreements. Following the exercise of the Option Agreements, Conversion Labs PR decreased its ownership interest in WorkSimpli from 85.58% to 73.64%. Effective March 31, 2023, the Company redeemed 500 membership interest units in WorkSimpli. Following the retirement, Conversion Labs PR’s ownership interest in WorkSimpli increased to 74.06%. On June 30, 2023, Lisa Bowlin, WorkSimpli’s Chief Operating Officer, exercised her option agreement (the “Bowlin Option Agreement”) to purchase 889 membership interest units of WorkSimpli for an exercise price of $1.00 per membership interest unit. Following the exercise of the Bowlin Option Agreement, Conversion Labs PR decreased its ownership interest in WorkSimpli from 74.06% to 73.32%.   On June 30, 2023, WorkSimpli declared a cash dividend in the amount of $22.40 per membership interest unit to all unit holders of record as of June 30, 2023 and was paid on July 3, 2023. On July 31, 2023, WorkSimpli declared a cash dividend in the amount of $11.20 per membership interest unit to all unit holders of record as of July 28, 2023 and was paid on August 1, 2023. On August 31, 2023, WorkSimpli declared a cash dividend in the amount of $16.80 per membership interest unit to all unit holders of record as of August 30, 2023 and was paid on September 1, 2023. On September 30, 2023, WorkSimpli declared a cash dividend in the amount of $14.00 per membership interest unit to all unit holders of record as of September 30, 2023 and was paid on October 5, 2023. The total dividends declared to noncontrolling interest holders was $1.0 million and $1.5 million for the three and nine months ended September 30, 2023, respectively, and is included in the Company’s results of operations for the three and nine months ended September 30, 2023.   Dividends   The Company pays cumulative dividends on its Series A Preferred Stock, 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 are payable quarterly in arrears, on or about the 15th day of January, April, July, and October of each year. Dividends declared and paid on the Series A Preferred Stock during the nine months ended September 30, 2023 are as follows: (1) quarterly dividend declared on March 28, 2023 to holders of record as of April 7, 2023 and was paid on April 17, 2023, (2) quarterly dividend declared on June 27, 2023 to holders of record as of July 7, 2023 and was paid on July 17, 2023 and (3) quarterly dividend declared on September 26, 2023 to holders of record as of October 6, 2023 and was paid on October 16, 2023. The dividends are included in the Company’s results of operations for the three and nine months ended September 30, 2023.   Stock Options   On January 8, 2021, the Company approved the Company’s 2020 Equity and 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 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.   On June 24, 2021, at the Annual Meeting of Stockholders, the stockholders of the Company approved an amendment to the 2020 Plan to increase the maximum number of shares of the Company’s common stock available for issuance under the 2020 Plan by 1,500,000 shares.   On June 16, 2022, at the Annual Meeting of Stockholders, the stockholders of the Company approved an amendment to the 2020 Plan to increase the maximum number of shares of the Company’s common stock available for issuance under the 2020 Plan by 1,500,000 shares. As of September 30, 2023, the 2020 Plan, as amended, provided for the issuance of up to 4,950,000 shares of Common Stock. Remaining authorization under the 2020 Plan, as amended, was 441,611 shares as of September 30, 2023.   The forms of award agreements to be used in connection with awards made under the 2020 Plan to the Company’s executive officers and non-employee directors are:   ● Form of Non-Qualified Option Agreement (Non-Employee Director Awards) ● Form of Non-Qualified Option Agreement (Employee Awards); and ● Form of Restricted Stock Award Agreement.   Previously, the Company had granted service-based stock options and performance-based stock options separate from the 2020 Plan.     During the nine months ended September 30, 2023, the Company issued an aggregate of 234,500 stock options to employees under the 2020 Plan and the prior plan. These stock options have a contractual term of 4 to 6.5 years and vest in increments which fully vest the options over a two to three-year period, dependent on the specific agreements’ terms.   The following is a summary of outstanding options activity under our 2020 Plan for the nine months ended September 30, 2023:   SCHEDULE OF OPTION ACTIVITY     Options Outstanding Number of Shares     Exercise Price per Share     Weighted Average Remaining Contractual Life   Weighted Average Exercise Price per Share                           Balance, December 31, 2022     1,784,587     $ 2.30 – 21.02     6.95 years   $ 9.54   Granted     94,500       1.84 – 7.44     4.27 years     3.30   Cancelled/Forfeited/Expired     (1,006,698 )     2.30 – 21.02           10.01   Balance at September 30, 2023     872,389     $ 1.84 – 13.74     5.34 years   $ 8.32                                 Exercisable at December 31, 2022     1,185,153     $ 2.30 – 21.02     7.64 years   $ 9.62   Exercisable at September 30, 2023     677,625     $ 1.84 – 13.74     6.42 years   $ 8.58     The total fair value of the options granted was $265 thousand, which was determined by the Black-Scholes Pricing Model with the following assumptions: dividend yield of 0%, expected term of 4 years, volatility of 119.16% – 133.67% and risk-free rate of 0.82% – 3.96%. Total compensation expense under the 2020 Plan options above was $1.2 million and $1.4 million for the three months ended September 30, 2023 and 2022, respectively, with unamortized expense remaining of $2.1 million as of September 30, 2023. Total compensation expense under the 2020 Plan options above was $3.5 million and $4.9 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, aggregate intrinsic value of vested service-based options outstanding was $550 thousand.   The 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, 2023:   SCHEDULE OF OPTION ACTIVITY     Options Outstanding Number of Shares     Exercise Price per Share     Weighted Average Remaining Contractual Life   Weighted Average Exercise Price per Share                           Balance, December 31, 2022     1,439,333     $ 1.00 – 19.61     5.63 years   $ 6.11   Granted     140,000       1.00 – 2.00     2.19 years     1.71   Exercised     (120,000 )     1.00 – 1.50     4.59 years     1.33   Cancelled/Forfeited/Expired     (200,000 )     14.04           14.04   Balance at September 30, 2023     1,259,333     $ 1.00 – 19.61     4.96 years   $ 4.82                                 Exercisable December 31, 2022     1,158,764     $ 1.00 – 19.61     5.63 years   $ 5.25   Exercisable at September 30, 2023     1,198,208     $ 1.00 – 19.61     4.94 years   $ 4.65     The total fair value of the options granted was $142 thousand, which was determined by the Black-Scholes Pricing Model with the following assumptions: dividend yield of 0%, expected term of 6.5 years, volatility of 187.76% – 195.58% and risk-free rate of 1.21% – 2.26%. Total compensation expense under the above service-based option plan was $367 thousand and $493 thousand for the three months ended September 30, 2023 and 2022, respectively, with unamortized expense remaining of $525 thousand as of September 30, 2023. Total compensation expense under the above service-based option plan was $1.5 million and $1.6 million for the nine months ended September 30, 2023 and 2022, respectively. Of the total service-based options exercised during the nine months ended September 30, 2023, 120,000 options were exercised on a cashless basis, which resulted in 74,372 shares issued. As of September 30, 2023, aggregate intrinsic value of vested service-based options outstanding was $3.3 million.     The following is a summary of outstanding performance-based options activity (separate from the 2020 Plan) for the nine months ended September 30, 2023:   SCHEDULE OF OPTION ACTIVITY     Options Outstanding Number of Shares     Exercise Price per Share     Weighted Average Remaining Contractual Life   Weighted Average Exercise Price per Share                           Balance at December 31, 2022     535,000     $ 1.25 – 2.50     4.59 years   $ 1.60   Cancelled/Forfeited/Expired     (50,000 )     2.00           2.00   Balance at September 30, 2023     485,000     $ 1.25 – 2.50     4.38 years   $ 1.56                                 Exercisable December 31, 2022     470,000     $ 1.50 – 2.50     4.58 years   $ 1.61   Exercisable at September 30, 2023     420,000     $ 1.50 – 2.50     4.45 years   $ 1.56     No compensation expense was recognized on the performance-based options above for the three and nine months ended September 30, 2023, as the performance terms have not been met or are not probable. Total compensation expense under the above performance-based options was $106 thousand and $317 thousand for the three and nine months ended September 30, 2022, respectively. As of September 30, 2023, aggregate intrinsic value of vested performance options outstanding was $2.0 million.   RSUs and RSAs   The following is a summary of outstanding RSUs and RSAs activity under our 2020 Plan for the nine months ended September 30, 2023:   SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY     RSU Outstanding Number of Shares   Balance at December 31, 2022     1,028,250   Granted     3,082,750   Vested     (474,625 ) Cancelled/Forfeited     (730,000 ) Balance at September 30, 2023     2,906,375     The total fair value of the 3,082,750 RSUs and RSAs granted was $10.5 million which was determined using the fair value of the quoted market price on the date of grant. Total compensation expense under the 2020 Plan RSUs and RSAs above was $1.6 million and $703 thousand for the three months ended September 30, 2023 and 2022, respectively, with unamortized expense remaining of $5.7 million as of September 30, 2023. Total compensation expense under the 2020 Plan RSUs and RSAs above was $3.1 million and $2.3 million for the nine months ended September 30, 2023 and 2022, respectively. During the nine months ended September 30, 2023, 474,625 RSUs and RSAs vested, of which 139,875 RSUs and RSAs were issued. During the nine months ended September 30, 2023, 655,000 RSUs and 809,000 service-based stock options were cancelled and replaced with 1,830,750 RSAs for four executives and two employees. Incremental compensation cost resulting from the modifications was immaterial to the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023.   The following is a summary of outstanding RSUs and RSAs activity (outside of our 2020 Plan) for the nine months ended September 30, 2023:   SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY     RSU Outstanding Number of Shares   Balance at December 31, 2022     715,000   Granted     725,000   Vested     (327,500 ) Cancelled/Forfeited     (500,000 ) Balance at September 30, 2023     612,500     The total fair value of the 725,000 RSUs and RSAs granted was $2.0 million which was determined using the fair value of the quoted market price on the date of grant. Total compensation expense for RSUs and RSAs outside of the 2020 Plan was $139 thousand and $225 thousand for the three months ended September 30, 2023 and 2022, respectively, with unamortized expense remaining of $1.3 million as of September 30, 2023. Total compensation expense for RSUs and RSAs outside of the 2020 Plan was $728 thousand and $1.2 million for the nine months ended September 30, 2023 and 2022, respectively. During the nine months ended September 30, 2023, 327,500 RSUs and RSAs vested, of which 200,000 RSUs and RSAs were issued. During the nine months ended September 30, 2023, 300,000 RSUs were cancelled and replaced with 300,000 RSAs for one executive. Incremental compensation cost resulting from the modification was immaterial to the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023.     Warrants   The following is a summary of outstanding and exercisable warrants activity during the nine months ended September 30, 2023:   SCHEDULE OF WARRANT OUTSTANDING AND EXERCISABLE     Warrants Outstanding Number of Shares     Exercise Price per Share     Weighted Average Remaining Contractual Life     Weighted Average Exercise Price per Share   Balance at December 31, 2022     3,859,638       $1.40 – 12.00       5.85 years     $ 5.59   Granted     967,742       1.24       4.47 years       1.24   Balance at September 30, 2023     4,827,380       $1.24 – 12.00       4.21 years     $ 4.74                                     Exercisable December 31, 2022     3,836,993       $1.40 – 12.00       4.88 years     $ 5.63   Exercisable September 30, 2023     4,827,380       $1.24 – 12.00       4.21 years     $ 4.73     The total fair value of the warrants granted during the nine months ended September 30, 2023, was $895 thousand, which was determined by the Black-Scholes Pricing Model with the following assumptions: dividend yield of 0%, expected term of 4 years, volatility of 122.6% and risk-free rate of 3.73%. No stock-based compensation expense on the warrants granted during the nine months ended September 30, 2023 was recorded as the warrants are amortized through debt discount (see Note 7).   Total compensation expense for warrants granted prior to the nine months ended September 30, 2023 was $0 and $407 thousand for the three months ended September 30, 2023 and 2022, respectively, with no unamortized expense remaining as of September 30, 2023. Total compensation expense for warrants granted prior to the nine months ended September 30, 2023 was $18 thousand and $1.6 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, aggregate intrinsic value of vested warrants outstanding was $10.2 million.   Stock-based Compensation   The total stock-based compensation expense related to common stock issued for services, service-based stock options, performance-based stock options, warrants, RSUs and RSAs amounted to $3.3 million for both the three months ended September 30, 2023 and 2022. The total stock-based compensation expense related to common stock issued for services, service-based stock options, performance-based stock options, warrants RSUs and RSAs amounted to $8.8 million and $11.9 million for the nine months ended September 30, 2023 and 2022, respectively. Such amounts are included in general and administrative expenses in the unaudited condensed consolidated statement of operations. Unamortized expense remaining related to service-based stock options, performance-based stock options, warrants, RSUs and RSAs was $9.6 million as of September 30, 2023, which is expected to be recognized through 2026.

v3.23.3

LEASES	9 Months Ended
	Sep. 30, 2023
Leases
LEASES	NOTE 9 – LEASES   The 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 2024, 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 2024. WorkSimpli leases two office spaces in Puerto Rico for which the leases expire in 2024.   The following is a summary of the Company’s operating right-of-use assets and operating lease liabilities as of September 30, 2023:   SCHEDULE OF OPERATING RIGHT OF USE OF ASSETS            Operating right-of-use assets   $ 799,104   Operating lease liabilities - current   $ 725,832   Operating lease liabilities - noncurrent   $ 169,821     Total accumulated amortization of the Company’s operating right-of-use assets was $1.9 million as of September 30, 2023.     The table below reconciles the undiscounted future minimum lease payments under the above noted operating leases to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of September 30, 2023:   SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES           Fiscal year 2023   $ 256,581   Fiscal year 2024     604,987   Fiscal year 2025     68,850   Less: imputed interest     (34,765 ) Present value of operating lease liabilities   $ 895,653     Operating lease expenses were $214 thousand and $200 thousand for the three months ended September 30, 2023 and 2022, respectively, and $643 thousand and $603 thousand for the nine months ended September 30, 2023 and 2022, respectively, and were included in other operating expenses in our unaudited condensed consolidated statement of operations.   Supplemental cash flow information related to operating lease liabilities consisted of the following:   SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE LIABILITIES     September 30,       2023     2022   Cash paid for operating lease liabilities   $ 665,129     $ 517,871     Supplemental balance sheet information related to operating lease liabilities consisted of the following:       September 30, 2023     December 31, 2022   Weighted average remaining lease term in years     2.13       2.82   Weighted average discount rate     7.15 %     7.15 %   We 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 $3 thousand per month. Additionally, Conversion Labs PR utilizes office space in Puerto Rico on a month-to-month basis incurring rental expense of approximately $3 thousand per month.

v3.23.3

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	NOTE 10 - COMMITMENTS AND CONTINGENCIES   Royalty Agreements   During 2016, Conversion Labs PR entered into a sole and exclusive license, royalty and advisory agreement with Pilaris Laboratories, LLC (“Pilaris”) relating to Pilaris’ PilarisMax shampoo formulation and conditioner. The term of the agreement will be the life of the US Patent held by Pilaris, ten years. As consideration for granting Conversion Labs PR this license, Pilaris will receive on quarterly basis, 10% of the net income collected by the licensed products based on the following formula: Net Income = total income – cost of goods sold – advertising and operating expenses directly related to the marketing of the licensed products. As of September 30, 2023 and December 31, 2022, $0 and approximately $138 thousand, respectively, were included in accrued expenses in regard to this agreement.   During 2018, the Company entered into a license agreement (the “Alphabet Agreement”) with M.ALPHABET, LLC (“Alphabet”), pursuant to which Alphabet agreed to license its PURPUREX business which consists of methods and compositions developed by Alphabet for the treatment of purpura, bruising, post-procedural bruising, and traumatic bruising (the “Product Line”). Pursuant to the license granted under the Alphabet Agreement, Conversion Labs PR obtains an exclusive license to incorporate (i) any intellectual property rights related to the Product Line and (ii) all designs, drawings, formulas, chemical compositions and specifications used or useable in the Product Line into one or more products manufactured, sold, and/or distributed by Alphabet for the treatment of purpura, bruising, post-procedural bruising and traumatic bruising and for all other fields of use or purposes (the “Licensed Product(s)”), and to make, have made, advertise, promote, market, sell, import, export, use, offer to sell, and distribute the Licensed Product(s) throughout the world with the exception of China, Hong Kong, Japan, and Australia (the “License”). The Company shall pay Alphabet a 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, 2023.   Upon execution of the Alphabet Agreement, Alphabet was granted a 10-year stock option to purchase 20,000 shares of the Company’s common stock at an exercise price of $2.50. Further, if Licensed Products have gross receipts of $7.5 million in any calendar year, the Company will grant Alphabet an option to purchase 20,000 shares of the Company’s common stock at an exercise price of $2.50; (ii) if Licensed Products have gross receipts of $10.0 million in any calendar year, the Company will grant Alphabet an additional option to purchase 20,000 shares of the Company’s common stock at an exercise price of $2.50 and (iii) if Licensed Products have gross receipts of $20.0 million in any calendar year, the Company will grant Alphabet an option to purchase 40,000 shares of the Company’s common stock at an exercise price of $3.75. The likelihood of meeting these performance goals for the licensed products are remote and, therefore, the Company has not recognized any compensation.     Purchase Commitments   Many of the Company’s vendors require product deposits when a purchase order is placed for goods or fulfillment services related to inventory requirements. The Company’s history of product deposits with its inventory vendors, creates an implicit purchase commitment equaling the total expected product acceptance cost in excess of the product deposit. As of September 30, 2023, the Company approximates its implicit purchase commitments to be $596 thousand.   Legal Matters   In the normal course of business operations, the Company may become involved in various legal matters. As of September 30, 2023, other than as set forth below, the Company’s management does not believe that there are any potential legal matters that could have a material effect on the Company’s consolidated financial position.   On 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. LifeMD, Inc., Case No. 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 5 million shares (i.e., 1,000,000 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 $5.0 million and $33.0 million in alleged damages related to failure to award the aforementioned stock but only specifically states that “Harborside has incurred damages in excess of $75 thousand, 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 was awaiting a decision from the Court on whether the case will be fully or partially dismissed. In the meantime, the parties agreed to mediate both cases (Harborside Advisors LLC v. LifeMD, Inc., Case No. 21-cv-10593, and Specialty Medical Drugstore, LLC D/B/A GoGoMeds v. LifeMD, Inc., Case No. 21-cv-10599, noted below) together. On September 22, 2022, as a result of mediation, the parties reached a settlement to resolve the matters in these cases. The Company issued 400,000 shares of common stock during the year ended December 31, 2022 and 100,000 additional shares of common stock on July 10, 2023 related to this settlement. The costs of this settlement are reflected in the Company’s financial results.   On 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. LifeMD, Inc., Case No. 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 $274 thousand, and, therefore, “LifeMD has been unjustly enriched in an amount in excess of $274 thousand, 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: (i) provide 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; (c) 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; (e) detinue; and (f) an accounting. GoGoMeds’ responded to the counterclaims on March 4, 2022 and the parties had commenced fact discovery. In the meantime, the parties agreed to mediate both cases (Harborside Advisors LLC v. LifeMD, Inc., Case No. 21-cv-10593, and Specialty Medical Drugstore, LLC D/B/A GoGoMeds v. LifeMD, Inc., Case No. 21-cv-10599) together. The court granted a 60-day stay in the Specialty Medical Drugstore, LLC D/B/A GoGoMeds v. LifeMD, Inc., Case No. 21-cv-10599, and the parties were amenable in the Harborside Advisors LLC v. LifeMD, Inc., Case No. 21-cv-10593, to the court foregoing any decision on our motion to dismiss until after mediation. On September 22, 2022, as a result of mediation, the parties reached a settlement to resolve the matters in these cases. As noted above, the Company issued 400,000 shares of common stock during the year ended December 31, 2022 and 100,000 additional shares of common stock on July 10, 2023 related to this settlement. The shares issued were valued based on the closing price of the Company’s stock, or $5.32, on the date of settlement, July 10, 2023. The costs of this settlement are reflected in the Company’s financial results.     On 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. LifeMD, Inc., Case No. 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 (i.e., which implicitly meets or exceeds the purported $1.0 million minimum fee in the engagement letter), as well as reasonable costs and expenses incurred in this action. On May 22, 2022, the Company filed its answer, affirmative defenses, and counterclaim, denying the alleged breaches of its obligations under the engagement letter agreement. Further, the Company asserted the following affirmative defenses: (1) failure to state a claim on which relief can be granted; (2) laches; (3) breach of the engagement letter agreement; (4) unclean hands; (5) failure to mitigate; (6) the doctrines of waiver, accord, and satisfaction, and res judicata; (7) estoppel; and (8) repudiation/anticipatory breach. The Company also counterclaimed for a declaratory judgment that: (i) Plaintiff breached, repudiated and/or anticipatorily breached the engagement letter agreement; (ii) as a result, the Company was not bound by the terms of the engagement letter agreement from that time forward; (iii) Plaintiff is not owed any amounts under the engagement letter agreement; and (iv) and an award to the Company of any further relief that the Court deems just and proper.   The Court conducted virtual case management conferences on June 30, 2022 and August 3, 2022, and fact discovery (i.e., written discovery requests and responses) commenced thereafter. On August 29, 2022, the plaintiff subpoenaed B. Riley Financial, Inc. for documents. The Court subsequently held several case management and status conferences, beginning in October 2022 and continuing through March 2023. On April 5, 2023, the court granted the plaintiff’s motion to compel certain discovery and ordered the Company to conduct certain additional searches for documents and to produce responsive documents by April 26, 2023, which the Company did in compliance with the order. A further case management conference was held on May 17, 2023. In June 2023, the parties attended a mediation resulting in a settlement that fully resolved the matters in this case. The costs of this settlement are reflected in the Company’s financial results.

v3.23.3

RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2023
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	NOTE 11 – RELATED PARTY TRANSACTIONS   Working Capital Loan   During the nine months ended September 30, 2023, the Company received proceeds of $2 million under a $2.5 million loan facility with CRG Financial, maturing on December 15, 2023. The loan facility includes interest of 12%. The Company repaid the $2 million outstanding loan balance on March 21, 2023 with the proceeds received from the Avenue Facility and recorded a $325 thousand loss on debt extinguishment related to the repayment of the CRG Financial loan (see Note 6). As of both September 30, 2023 and December 31, 2022, the outstanding balance was $0 related to the CRG Financial loan. Mr. Bhatia, a member of the Board of the Company, also serves on the Board of Directors of CRG Financial.   WorkSimpli Software   During the nine months ended September 30, 2023 and 2022, WorkSimpli utilized CloudBoson Technologies Pvt. Ltd. (“CloudBoson”), formerly LegalSubmit Pvt. Ltd., a company owned by WorkSimpli’s Chief Software Engineer, to provide software development services. WorkSimpli paid CloudBoson a total of $611 thousand and $403 thousand during the three months ended September 30, 2023 and 2022, respectively, and $1.8 million and $1.1 million during the nine months ended September 30, 2023 and 2022, respectively, for these services. WorkSimpli owed CloudBoson $208 thousand as of September 30, 2023. There were no amounts owed to CloudBoson as of December 31, 2022.

v3.23.3

SEGMENT DATA	9 Months Ended
	Sep. 30, 2023
Segment Reporting [Abstract]
SEGMENT DATA	NOTE 12 – SEGMENT DATA   Our portfolio of brands are included within two operating segments: Telehealth and WorkSimpli. We believe our current segments and brands within our segments complement one another and position us well for future growth. Relevant segment data for the three and nine months ended September 30, 2023 and 2022 is as follows:   SCHEDULE OF RELEVANT SEGMENT DATA     2023     2022     2023     2022       Three Months Ended September 30,     Nine Months Ended September 30,       2023     2022     2023     2022   Telehealth                                 Revenue   $ 24,342,789     $ 21,365,178     $ 66,896,719     $ 66,231,202   Gross margin     81.6 %     78.9 %     81.3 %     78.8 % Operating loss   $ (7,716,355 )   $ (7,671,742 )   $ (20,859,582 )   $ (34,181,305 ) WorkSimpli                                 Revenue   $ 14,271,122     $ 10,047,291     $ 40,790,439     $ 24,682,602   Gross margin     97.9 %     97.9 %     97.5 %     97.7 % Operating income   $ 3,146,974     $ 606,041     $ 8,541,845     $ 1,104,465   Consolidated                                 Revenue   $ 38,613,911     $ 31,412,469     $ 107,687,158     $ 90,913,804   Gross margin     87.6 %     85.0 %     87.4 %     83.9 % Operating loss   $ (4,569,381 )   $ (7,065,701 )   $ (12,317,737 )   $ (33,076,840 )   Relevant segment data as of September 30, 2023 and December 31, 2022 is as follows:       September 30, 2023     December 31, 2022   Total Assets                 Telehealth   $ 30,616,898     $ 18,163,464   WorkSimpli     10,074,126       7,502,389   Consolidated   $ 40,691,024     $ 25,665,853

v3.23.3

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2023
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 13 – SUBSEQUENT EVENTS   The Company has evaluated subsequent events through the date these unaudited condensed consolidated financial statements were issued and has identified the following:   Stock Issued for Service   In October 2023, the Company issued 326,875 shares of common stock related to vested RSUs and RSAs with a total fair value of $1.1 million.   ATM Sales Agreement   In October and November 2023, the Company sold 829,886 shares of common stock under the ATM Sales Agreement and net proceeds received were $5.3 million.   Stock Issued for Noncontingent Consideration Payment   On October 17, 2023, the Company issued 117,583 shares of common stock related to the fourth of five quarterly installment payments due to the sellers of Cleared under the First Amendment.

v3.23.3

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation   The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. 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, 2022, included in our 2022 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, 2023 are not necessarily indicative of the results for the year ending December 31, 2023 or for any future period.
Principles of Consolidation	Principles of Consolidation   The Company evaluates the need to consolidate affiliates based on standards set forth in Accounting Standards Codification (“ASC”) 810, Consolidation.   The consolidated financial statements include the accounts of the Company, Cleared, its majority owned subsidiary, WorkSimpli, and LifeMD PC, the Company’s affiliated, 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 85.58% as of December 31, 2021. Effective September 30, 2022, two option agreements were exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.64%. Effective March 31, 2023, the Company redeemed 500 membership interest units in WorkSimpli and, as a result, the Company’s ownership interest in WorkSimpli increased to 74.06%. Effective June 30, 2023, an option agreement was exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.32%. See Note 8 for additional information.   All significant intercompany transactions and balances have been eliminated in consolidation.
Cash and Cash Equivalents	Cash and Cash Equivalents   Highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. As of September 30, 2023 and December 31, 2022, there were no cash equivalents. The Company maintains deposits in financial institutions in excess of amounts guaranteed by the Federal Deposit Insurance Corporation. Cash and cash equivalents are maintained at financial institutions, and at times, balances may exceed federally insured limits. These balances could be impacted if one or more of the financial institutions in which we deposit monies fails or is subject to other adverse conditions in the financial or credit markets. We have never experienced any losses related to these balances.
Variable Interest Entities	Variable Interest Entities   In 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 interest. A party is deemed to have a controlling financial interest if it meets both of the power and losses/benefits criteria. The power criterion is the ability to direct the activities of the VIE that most significantly impact its economic performance. The losses/benefits criterion is the obligation to absorb losses from, or right to receive benefits from, the VIE that could potentially be significant to the VIE.   The Company determined that the LifeMD PC entity, the Company’s affiliated network of medical Professional Corporations and medical Professional Associations administratively led by LifeMD Southern Patient Medical Care, P.C., is a VIE and subject to consolidation. LifeMD PC and the Company do not have any stockholders in common. LifeMD PC is owned by licensed physicians, and the Company maintains a managed 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.   Total revenue for LifeMD PC was approximately $1.9 million and $124 thousand for the three months ended September 30, 2023 and 2022, respectively, and $2.7 million and $124 thousand for the nine months ended September 30, 2023 and 2022, respectively. Total net income for LifeMD PC was approximately $440 thousand for the three months ended September 30, 2023 and net loss for LifeMD PC was approximately $1.0 million for the three months ended September 30, 2022. Total net loss for LifeMD PC was approximately $1.1 million and $3.9 million for the nine months ended September 30, 2023 and 2022, respectively.
Use of Estimates	Use of Estimates   The Company prepares its unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates required to be made by management include the determination of reserves for accounts receivable, returns and allowances, the valuation of inventory and stockholders’ equity-based transactions and the capitalization and impairment of capitalized software and impairment of other long-lived assets. Actual results could differ from those estimates.
Reclassifications	Reclassifications   Certain reclassifications have been made to conform the prior year’s data to the current presentation. These reclassifications have no effect on previously reported operating loss, stockholders’ deficit or cash flows. 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 $92 thousand and $272 thousand of lease expenses reclassified from general and administrative expenses to other operating expenses for the three and nine months ended September 30, 2022, respectively.
Revenue Recognition	Revenue Recognition   The 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:   1. Identify the contract 2. Identify performance obligations 3. Determine the transaction price 4. Allocate the transaction price 5. Recognize revenue   For the Company’s product-based contracts with customers, the Company has determined that there is one performance obligation, which is the delivery of the product; this performance obligation is transferred at a discrete point in time. The Company generally records sales of finished products once the customer places and pays for the order, with the product being simultaneously shipped by a third-party fulfillment service provider. In all cases, delivery is considered to have occurred when the customer obtains control, which is usually commensurate upon shipment of the product. In the case where delivery is not commensurate upon shipment of the product, recognition of revenue is deferred until that time. In the case of its product-based contracts, the Company provides a subscription sensitive service based on the recurring shipment of products. The Company records the related revenue under the subscription agreements subsequent to receiving the monthly product order, recording the revenue at the time it fulfills the shipment obligation to the customer.   For its product-based contracts with customers, the Company records an estimate for provisions of discounts, returns, allowances, customer rebates, and other adjustments for its product shipments and are reflected as contra revenues in arriving at reported net revenues. The Company’s discounts and customer rebates are known at the time of sale; correspondingly, the Company reduces gross product sales for such discounts and customer rebates. The Company estimates customer returns and allowances based on information derived from historical transaction detail and accounts for such provisions, as contra revenue, during the same period in which the related revenues are earned. The Company has determined that the population of its product-based contracts with customers are homogenous, supporting the ability to record estimates for returns and allowances to be applied to the entire product-based portfolio population. Customer discounts, returns and rebates on telehealth revenues approximated $696 thousand and $1.1 million during the three months ended September 30, 2023 and 2022, respectively. Customer discounts, returns and rebates on telehealth revenues approximated $1.5 million and $4.2 million during the nine months ended September 30, 2023 and 2022, respectively.   The Company, through its majority-owned subsidiary, WorkSimpli, offers a subscription-based service providing a suite of software applications to its subscribers, principally on a monthly subscription basis. The software suite allows the subscriber/user to convert almost any type of document to another electronic form of editable document, providing ease of editing. For these subscription-based contracts with customers, the Company offers an initial 14-day trial period which is billed at $1.95, followed by a monthly subscription, or a yearly subscription to the Company’s software suite dependent on the subscriber’s enrollment selection. The Company has estimated that there is one product and one performance obligation that is delivered over time, as the Company allows the subscriber to access the suite of services for the time period of the subscription purchased. The Company allows the customer to cancel at any point during the billing cycle, in which case the customer’s subscription will not be renewed for the following month or year depending on the original subscription. The Company records the revenue over the customer’s subscription period for monthly and yearly subscribers or at the end of the initial 14-day service period for customers who purchased the initial subscription, as the circumstances dictate. The Company offers a discount for the monthly or yearly subscriptions being purchased, which is deducted at the time of payment at the initiation of the contract term; therefore the Contract price is fixed and determinable at the contract initiation. Monthly and annual subscriptions for the service are recorded net of the Company’s known discount rates. Customer discounts and allowances on WorkSimpli revenues approximated $865 thousand and $710 thousand during the three months ended September 30, 2023 and 2022, respectively. Customer discounts and allowances on WorkSimpli revenues approximated $2.6 million and $1.7 million during the nine months ended September 30, 2023 and 2022, respectively.     For the three and nine months ended September 30, 2023 and 2022, the Company had the following disaggregated revenue:   SCHEDULE OF DISAGGREGATED REVENUE      Three Months Ended September 30,     Nine Months Ended September 30,       2023     %     2022     %     2023     %     2022     %   Telehealth revenue   $ 24,342,789       63 %   $ 21,365,178       68 %   $ 66,896,719       62 %   $ 66,231,202       73 % WorkSimpli revenue     14,271,122       37 %     10,047,291       32 %     40,790,439       38 %     24,682,602       27 % Total net revenue   $ 38,613,911       100 %   $ 31,412,469       100 %   $ 107,687,158       100 %   $ 90,913,804       100 %
Deferred Revenues	Deferred Revenues   The Company records deferred revenues when cash payments are received or due in advance of its performance. The Company’s deferred revenues relate to the following: (1) obligations for products which the customer has not yet obtained control due to delivery not commensurate upon shipment of the product, (2) obligations on WorkSimpli in-process monthly or yearly contracts with customers and (3) a portion attributable to the yet to be recognized WorkSimpli initial 14-day trial period collections.   SCHEDULE OF CONTRACT WITH CUSTOMER LIABILITY     2023     2022     2023     2022       Three Months Ended September 30,     Nine Months Ended September 30,       2023     2022     2023     2022   Beginning of period   $ 5,668,210     $ 1,992,502     $ 5,547,506     $ 1,499,880   Additions     14,767,411       9,346,553       42,325,069       23,567,740   Revenue recognized     (14,196,267 )     (8,985,903 )     (41,633,221 )     (22,714,468 ) End of period   $ 6,239,354     $ 2,353,152     $ 6,239,354     $ 2,353,152
Leases	Leases   The Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets are included in right-of-use assets, net on the unaudited condensed consolidated balance sheets. The current and long-term components of operating lease liabilities are included in the current operating lease liabilities and noncurrent operating lease liabilities, respectively, on the unaudited condensed consolidated balance sheets.   Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Certain leases may include options to extend or terminate the lease. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded in the balance sheet.
Accounts Receivable, net	Accounts Receivable, net   Accounts receivable principally consist of amounts due from third-party merchant processors, who process our subscription revenues; the merchant accounts balance receivable represents the charges processed by the merchants that have not yet been deposited with the Company. The unsettled merchant receivable amount normally represents processed sale transactions from the final one to three days of the month, with collections being made by the Company within the first week of the following month. Management determines the need, if any, for an allowance for future credits to be granted to customers, by regularly evaluating aggregate customer refund activity, coupled with the consideration and current economic conditions in its evaluation of an allowance for future refunds and chargebacks. As of September 30, 2023 and December 31, 2022, the reserve for sales returns and allowances was approximately $570 thousand and $815 thousand, respectively. For all periods presented, as noted above, the sales returns and allowances were recorded in accrued expenses on the unaudited condensed consolidated balance sheets.
Inventory	Inventory   As of September 30, 2023 and December 31, 2022, inventory primarily consisted of finished goods, raw materials and packaging 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 various Amazon fulfillment centers. The Company also maintains inventory at a company owned warehouse in Pennsylvania.   Inventory 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 September 30, 2023 and December 31, 2022, the Company recorded an inventory reserve of approximately $99 thousand and $161 thousand, respectively.     As of September 30, 2023 and December 31, 2022, the Company’s inventory consisted of the following:   SUMMARY OF INVENTORY     September 30,     December 31,       2023     2022                 Finished goods - products   $ 2,428,471     $ 2,587,370   Raw materials and packaging components     1,461,576       1,276,891   Inventory reserve     (99,401 )     (160,898 ) Total Inventory - net   $ 3,790,646     $ 3,703,363
Product Deposit	Product Deposit   Many 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 September 30, 2023 and December 31, 2022, the Company has approximately $85 thousand and $127 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 September 30, 2023, the Company approximates its implicit purchase commitments to be $596 thousand, of which the vast majority are with two vendors that manufacture the Company’s finished goods inventory for its RexMD product line.
Capitalized Software Costs	Capitalized Software Costs   The Company capitalizes certain internal payroll costs and third-party costs related to internally developed software and amortizes these costs using the straight-line method over the estimated useful life of the software, generally three years. The Company does not sell internally developed software other than through the use of subscription service. Certain development costs not meeting the criteria for capitalization, in accordance with ASC 350-40, Internal-Use Software, are expensed as incurred. As of September 30, 2023 and December 31, 2022, the Company capitalized a net amount of $11.3 million and $8.8 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.
Goodwill and Intangible Assets	Goodwill and Intangible Assets   Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill is not amortized but is tested for impairment annually or more frequently, if events or changes in circumstances indicate that the asset may be impaired. Goodwill in the amount of $8.0 million was recognized in conjunction with the Cleared acquisition. The Company recorded an $8.0 million goodwill impairment charge and an $827 thousand intangible asset impairment charge during the year ended December 31, 2022 related to a decline in the estimated fair value of Cleared as a result of a decline in the Cleared financial projections (see Note 3).   Other intangible assets are comprised of: (1) the ResumeBuild brand, (2) a customer relationship asset, (3) the Cleared trade name, (4) Cleared developed technology, (5) a purchased license and (6) two purchased domain names. During the year ended December 31, 2022, the Company recorded an $827 thousand impairment loss related to a decline in the estimated fair value of the Cleared customer relationship intangible asset with an original cost of $919 thousand and accumulated amortization of $92 thousand. Other intangible assets are amortized over their estimated lives using the straight-line method. Costs incurred to renew or extend the term of recognized intangible assets are capitalized and amortized over the useful life of the asset.
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets   Long-lived assets include equipment and capitalized software. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, an impairment is recognized as the amount by which the carrying amount of the assets exceeds the estimated fair values of the assets. As of September 30, 2023 and December 31, 2022, the Company determined that no events or changes in circumstances existed that would indicate any impairment of its long-lived assets.
Income Taxes	Income Taxes   The Company files corporate federal, state and local tax returns. WorkSimpli files a tax return in Puerto Rico; WorkSimpli is a limited liability company and files tax returns with any tax liabilities or benefits passing through to its members.     The 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 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. ASC 740 also provides a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken in a tax return. Using this guidance, a company may recognize the tax benefit from an uncertain tax position in its financial statements only if it is more likely-than-not (i.e., a likelihood of more than 50%) that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company’s tax returns for all years since December 31, 2019, remain open to audit by all related taxing authorities.
Stock-based Compensation	Stock-based Compensation   The Company follows the provisions of ASC 718, Share-Based Payment. Under this guidance compensation cost generally is recognized at fair value on the date of the grant and amortized over the respective vesting or service period. The fair value of options at the date of grant is estimated using the Black-Scholes option pricing model. The expected option life is derived from assumed exercise rates based upon historical exercise patterns and represents the period of time that options granted are expected to be outstanding. The expected volatility is based upon historical volatility of the Company’s common shares using weekly price observations over an observation period that approximates the expected life of the options. The risk-free interest rate approximates the U.S. Treasury yield curve rate in effect at the time of grant for periods similar to the expected option life. Due to limited history of forfeitures, the Company has elected to account for forfeitures as they occur. Many of the assumptions require significant judgment and any changes could have a material impact in the determination of stock-based compensation expense.
Earnings (Loss) Per Share	Earnings (Loss) Per Share   Basic earnings (loss) per common share (“EPS”) is based on the weighted average number of shares outstanding during each period presented. Shares of unissued vested restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) are included in our calculation of basic weighted average shares outstanding. 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.   The 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. The dilutive effect of traditional convertible debt and preferred stock is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the diluted EPS calculation for the entire period being presented.   The following table summarizes the number of shares of common stock issuable pursuant to our convertible securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive even though the exercise price could be less than the average market price of the common shares:   SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES     2023     2022     2023     2022       Three Months Ended September 30,     Nine Months Ended September 30,       2023     2022     2023     2022                             Series B Preferred Stock     -       1,369,581       995,994       1,334,421   RSUs and RSAs     2,954,750       1,830,750       2,545,875       1,563,000   Stock options     2,616,722       4,007,698       3,316,909       4,214,609   Warrants     4,827,380       3,859,638       4,827,380       3,859,638   Convertible long-term debt     1,342,282       -       1,342,282       -   Potentially dilutive securities     11,741,134       11,067,667       13,028,440       10,971,668
Segment Data	Segment Data   Our portfolio of brands are included within two operating segments: Telehealth and WorkSimpli. We believe our current segments and brands within our segments complement one another and position us well for future growth. 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.
Fair Value of Financial Instruments	Fair Value of Financial Instruments   The fair value of a financial instrument is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities subject to ongoing fair value measurement are categorized and disclosed into one of the three categories depending on observable or unobservable inputs employed in the measurement. Hierarchical levels, which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities, are as follows:     1. Level 1: Inputs that are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.   2. Level 2: Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.   3. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.   In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.   The carrying value of the Company’s financial instruments, including cash, accounts receivable, accounts payable, accrued expenses, the face amount of notes payable and convertible long-term debt approximate fair value for all periods presented.
Concentrations of Risk	Concentrations of Risk   The Company monitors its positions with, and the credit quality of, the financial institutions with which it invests. The Company, at times, maintains balances in various operating accounts in excess of federally insured limits. 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 September 30, 2023, we utilized three suppliers for fulfillment services, six suppliers for manufacturing finished goods, six suppliers for packaging, bottling, and labeling, and four suppliers for prescription medications. As of December 31, 2022, we utilized four suppliers for fulfillment services, six suppliers for manufacturing finished goods, five suppliers for packaging, bottling, and labeling, and three suppliers for prescription medications.
Recently Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements   In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments, which requires an entity to utilize the current expected credit loss (“CECL”) impairment model to estimate its lifetime “expected credit loss” and record an allowance that is deducted from the amortized cost basis of the financial assets and certain other instruments, including but not limited to available-for-sale debt securities. Credit losses relating to available-for-sale debt securities are recorded through an allowance for credit losses. ASU 2016-13 requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates, which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022 for all entities except SEC reporting companies that are not smaller reporting companies. The Company adopted ASU 2016-13 as of January 1, 2023. The adoption did not have a material impact on the Company’s financial statements.   In October 2021, the FASB issued 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. The Company adopted ASU 2021-08 as of January 1, 2023. The adoption did not have a material impact on the Company’s financial statements.

v3.23.3

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	9 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
SCHEDULE OF DISAGGREGATED REVENUE	For the three and nine months ended September 30, 2023 and 2022, the Company had the following disaggregated revenue:   SCHEDULE OF DISAGGREGATED REVENUE      Three Months Ended September 30,     Nine Months Ended September 30,       2023     %     2022     %     2023     %     2022     %   Telehealth revenue   $ 24,342,789       63 %   $ 21,365,178       68 %   $ 66,896,719       62 %   $ 66,231,202       73 % WorkSimpli revenue     14,271,122       37 %     10,047,291       32 %     40,790,439       38 %     24,682,602       27 % Total net revenue   $ 38,613,911       100 %   $ 31,412,469       100 %   $ 107,687,158       100 %   $ 90,913,804       100 %
SCHEDULE OF CONTRACT WITH CUSTOMER LIABILITY	The Company records deferred revenues when cash payments are received or due in advance of its performance. The Company’s deferred revenues relate to the following: (1) obligations for products which the customer has not yet obtained control due to delivery not commensurate upon shipment of the product, (2) obligations on WorkSimpli in-process monthly or yearly contracts with customers and (3) a portion attributable to the yet to be recognized WorkSimpli initial 14-day trial period collections.   SCHEDULE OF CONTRACT WITH CUSTOMER LIABILITY     2023     2022     2023     2022       Three Months Ended September 30,     Nine Months Ended September 30,       2023     2022     2023     2022   Beginning of period   $ 5,668,210     $ 1,992,502     $ 5,547,506     $ 1,499,880   Additions     14,767,411       9,346,553       42,325,069       23,567,740   Revenue recognized     (14,196,267 )     (8,985,903 )     (41,633,221 )     (22,714,468 ) End of period   $ 6,239,354     $ 2,353,152     $ 6,239,354     $ 2,353,152
SUMMARY OF INVENTORY	As of September 30, 2023 and December 31, 2022, the Company’s inventory consisted of the following:   SUMMARY OF INVENTORY     September 30,     December 31,       2023     2022                 Finished goods - products   $ 2,428,471     $ 2,587,370   Raw materials and packaging components     1,461,576       1,276,891   Inventory reserve     (99,401 )     (160,898 ) Total Inventory - net   $ 3,790,646     $ 3,703,363
SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES	The following table summarizes the number of shares of common stock issuable pursuant to our convertible securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive even though the exercise price could be less than the average market price of the common shares:   SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES     2023     2022     2023     2022       Three Months Ended September 30,     Nine Months Ended September 30,       2023     2022     2023     2022                             Series B Preferred Stock     -       1,369,581       995,994       1,334,421   RSUs and RSAs     2,954,750       1,830,750       2,545,875       1,563,000   Stock options     2,616,722       4,007,698       3,316,909       4,214,609   Warrants     4,827,380       3,859,638       4,827,380       3,859,638   Convertible long-term debt     1,342,282       -       1,342,282       -   Potentially dilutive securities     11,741,134       11,067,667       13,028,440       10,971,668

v3.23.3

ACQUISITIONS (Tables)	9 Months Ended
	Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]
SCHEDULE OF FAIR VALUE OF ASSETS AND LIABILITIES	The following table summarizes the acquisition date fair values of assets acquired and liabilities assumed:   SCHEDULE OF FAIR VALUE OF ASSETS AND LIABILITIES            Purchase price, net of cash acquired   $ 9,091,762   Less:         Customer relationship intangible asset     918,812   Trade name intangible asset     133,339   Developed technology intangible asset     12,920   Inventory     7,168   Fixed assets     37,888   Deferred taxes     354,000   Accounts payable and other current liabilities     (408,030 ) Goodwill   $ 8,035,665

v3.23.3

GOODWILL AND INTANGIBLE ASSETS (Tables)	9 Months Ended
	Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS	As of September 30, 2023 and December 31, 2022, the Company has the following amounts related to amortizable intangible assets:   SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS      September 30,     December 31,     Amortizable     2023     2022     Life Amortizable Intangible Assets:                     ResumeBuild brand   $ 4,500,000     $ 4,500,000     5 years Customer relationship asset     1,006,840       1,006,840     3 years Cleared trade name     133,339       133,339     5 years Cleared developed technology     12,920       12,920     1 year Purchased licenses     200,000       200,000     10 years Website domain names     171,599       22,731     3 years Amortizable intangible assets     171,599       22,731     3 years Less: accumulated amortization     (2,769,467 )     (2,043,971 )     Total net amortizable intangible assets   $ 3,255,231     $ 3,831,859

v3.23.3

ACCRUED EXPENSES (Tables)	9 Months Ended
	Sep. 30, 2023
Payables and Accruals [Abstract]
SCHEDULE OF ACCRUED EXPENSES	As of September 30, 2023 and December 31, 2022, the Company has the following amounts related to accrued expenses:   SCHEDULE OF ACCRUED EXPENSES     September 30,     December 31,       2023     2022   Accrued selling and marketing expenses   $ 6,872,464     $ 3,508,883   Sales tax payable     2,501,035       2,501,035   Purchase price payable     1,264,301       2,463,002   Accrued dividends payable     776,563       776,563   Accrued compensation     2,074,074       576,027   Accrued interest     -       448,718   Other accrued expenses     2,004,691       1,892,281   Total accrued expenses   $ 15,493,128     $ 12,166,509

v3.23.3

STOCKHOLDERS’ EQUITY (Tables)	9 Months Ended
	Sep. 30, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
SCHEDULE OF WARRANT OUTSTANDING AND EXERCISABLE	The following is a summary of outstanding and exercisable warrants activity during the nine months ended September 30, 2023:   SCHEDULE OF WARRANT OUTSTANDING AND EXERCISABLE     Warrants Outstanding Number of Shares     Exercise Price per Share     Weighted Average Remaining Contractual Life     Weighted Average Exercise Price per Share   Balance at December 31, 2022     3,859,638       $1.40 – 12.00       5.85 years     $ 5.59   Granted     967,742       1.24       4.47 years       1.24   Balance at September 30, 2023     4,827,380       $1.24 – 12.00       4.21 years     $ 4.74                                     Exercisable December 31, 2022     3,836,993       $1.40 – 12.00       4.88 years     $ 5.63   Exercisable September 30, 2023     4,827,380       $1.24 – 12.00       4.21 years     $ 4.73
Service-Based Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
SCHEDULE OF OPTION ACTIVITY	The 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, 2023:   SCHEDULE OF OPTION ACTIVITY     Options Outstanding Number of Shares     Exercise Price per Share     Weighted Average Remaining Contractual Life   Weighted Average Exercise Price per Share                           Balance, December 31, 2022     1,439,333     $ 1.00 – 19.61     5.63 years   $ 6.11   Granted     140,000       1.00 – 2.00     2.19 years     1.71   Exercised     (120,000 )     1.00 – 1.50     4.59 years     1.33   Cancelled/Forfeited/Expired     (200,000 )     14.04           14.04   Balance at September 30, 2023     1,259,333     $ 1.00 – 19.61     4.96 years   $ 4.82                                 Exercisable December 31, 2022     1,158,764     $ 1.00 – 19.61     5.63 years   $ 5.25   Exercisable at September 30, 2023     1,198,208     $ 1.00 – 19.61     4.94 years   $ 4.65
Performance Shares [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
SCHEDULE OF OPTION ACTIVITY	The following is a summary of outstanding performance-based options activity (separate from the 2020 Plan) for the nine months ended September 30, 2023:   SCHEDULE OF OPTION ACTIVITY     Options Outstanding Number of Shares     Exercise Price per Share     Weighted Average Remaining Contractual Life   Weighted Average Exercise Price per Share                           Balance at December 31, 2022     535,000     $ 1.25 – 2.50     4.59 years   $ 1.60   Cancelled/Forfeited/Expired     (50,000 )     2.00           2.00   Balance at September 30, 2023     485,000     $ 1.25 – 2.50     4.38 years   $ 1.56                                 Exercisable December 31, 2022     470,000     $ 1.50 – 2.50     4.58 years   $ 1.61   Exercisable at September 30, 2023     420,000     $ 1.50 – 2.50     4.45 years   $ 1.56
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY	The following is a summary of outstanding RSUs and RSAs activity (outside of our 2020 Plan) for the nine months ended September 30, 2023:   SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY     RSU Outstanding Number of Shares   Balance at December 31, 2022     715,000   Granted     725,000   Vested     (327,500 ) Cancelled/Forfeited     (500,000 ) Balance at September 30, 2023     612,500
Restricted Stock Units (RSUs) [Member] | 2020 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY	The following is a summary of outstanding RSUs and RSAs activity under our 2020 Plan for the nine months ended September 30, 2023:   SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY     RSU Outstanding Number of Shares   Balance at December 31, 2022     1,028,250   Granted     3,082,750   Vested     (474,625 ) Cancelled/Forfeited     (730,000 ) Balance at September 30, 2023     2,906,375
2020 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
SCHEDULE OF OPTION ACTIVITY	The following is a summary of outstanding options activity under our 2020 Plan for the nine months ended September 30, 2023:   SCHEDULE OF OPTION ACTIVITY     Options Outstanding Number of Shares     Exercise Price per Share     Weighted Average Remaining Contractual Life   Weighted Average Exercise Price per Share                           Balance, December 31, 2022     1,784,587     $ 2.30 – 21.02     6.95 years   $ 9.54   Granted     94,500       1.84 – 7.44     4.27 years     3.30   Cancelled/Forfeited/Expired     (1,006,698 )     2.30 – 21.02           10.01   Balance at September 30, 2023     872,389     $ 1.84 – 13.74     5.34 years   $ 8.32                                 Exercisable at December 31, 2022     1,185,153     $ 2.30 – 21.02     7.64 years   $ 9.62   Exercisable at September 30, 2023     677,625     $ 1.84 – 13.74     6.42 years   $ 8.58

v3.23.3

LEASES (Tables)	9 Months Ended
	Sep. 30, 2023
Leases
SCHEDULE OF OPERATING RIGHT OF USE OF ASSETS	The following is a summary of the Company’s operating right-of-use assets and operating lease liabilities as of September 30, 2023:   SCHEDULE OF OPERATING RIGHT OF USE OF ASSETS            Operating right-of-use assets   $ 799,104   Operating lease liabilities - current   $ 725,832   Operating lease liabilities - noncurrent   $ 169,821
SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES	The table below reconciles the undiscounted future minimum lease payments under the above noted operating leases to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of September 30, 2023:   SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES           Fiscal year 2023   $ 256,581   Fiscal year 2024     604,987   Fiscal year 2025     68,850   Less: imputed interest     (34,765 ) Present value of operating lease liabilities   $ 895,653
SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE LIABILITIES	Supplemental cash flow information related to operating lease liabilities consisted of the following:   SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE LIABILITIES     September 30,       2023     2022   Cash paid for operating lease liabilities   $ 665,129     $ 517,871     Supplemental balance sheet information related to operating lease liabilities consisted of the following:       September 30, 2023     December 31, 2022   Weighted average remaining lease term in years     2.13       2.82   Weighted average discount rate     7.15 %     7.15 %

v3.23.3

SEGMENT DATA (Tables)	9 Months Ended
	Sep. 30, 2023
Segment Reporting [Abstract]
SCHEDULE OF RELEVANT SEGMENT DATA	SCHEDULE OF RELEVANT SEGMENT DATA     2023     2022     2023     2022       Three Months Ended September 30,     Nine Months Ended September 30,       2023     2022     2023     2022   Telehealth                                 Revenue   $ 24,342,789     $ 21,365,178     $ 66,896,719     $ 66,231,202   Gross margin     81.6 %     78.9 %     81.3 %     78.8 % Operating loss   $ (7,716,355 )   $ (7,671,742 )   $ (20,859,582 )   $ (34,181,305 ) WorkSimpli                                 Revenue   $ 14,271,122     $ 10,047,291     $ 40,790,439     $ 24,682,602   Gross margin     97.9 %     97.9 %     97.5 %     97.7 % Operating income   $ 3,146,974     $ 606,041     $ 8,541,845     $ 1,104,465   Consolidated                                 Revenue   $ 38,613,911     $ 31,412,469     $ 107,687,158     $ 90,913,804   Gross margin     87.6 %     85.0 %     87.4 %     83.9 % Operating loss   $ (4,569,381 )   $ (7,065,701 )   $ (12,317,737 )   $ (33,076,840 )   Relevant segment data as of September 30, 2023 and December 31, 2022 is as follows:       September 30, 2023     December 31, 2022   Total Assets                 Telehealth   $ 30,616,898     $ 18,163,464   WorkSimpli     10,074,126       7,502,389   Consolidated   $ 40,691,024     $ 25,665,853

v3.23.3

NATURE OF THE ORGANIZATION AND BUSINESS (Details Narrative) - USD ($)										1 Months Ended		3 Months Ended	9 Months Ended		12 Months Ended
	Sep. 26, 2023	Jul. 17, 2023	Jul. 10, 2023	Apr. 17, 2023	Mar. 22, 2023	Mar. 21, 2023	Feb. 06, 2023	Feb. 04, 2023	Jan. 18, 2022	Jun. 30, 2023	Feb. 28, 2022	Mar. 31, 2023	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Jun. 08, 2021	Feb. 22, 2021	Jan. 22, 2021	Apr. 25, 2019	Jun. 30, 2018	Apr. 01, 2016
Common stock per share													$ 0.01		$ 0.01			$ 0.01
Payments to acquire businesses, net of cash acquired									$ 460,000					$ 1,012,395
Milestone payments									3,460,000
Conversion of stock converted									507,000
Stock issued during period shares new issues			100,000												400,000
Asset acquisition closing											$ 63,000
Accumulated deficit													209,756,573		$ 190,562,994
Cash													12,900,000
Shares and Securities [Member]
Raise up funds																	$ 150,000,000
Avenue [Member]
Warrants to purchase						$ 1,200,000
Warrants exercise price						$ 1.24
Debt conversion amount						$ 2,000,000
Conversion price						$ 1.49
Avenue Facility [Member]
Credit facility						$ 40,000,000							2,000,000
Proceeds from line of credit	$ 5,000,000					15,000,000
Uncommitted term loans						$ 20,000,000
Line of credit, expiration date						Oct. 01, 2026
Warrants to purchase						$ 1,200,000
Warrants exercise price						$ 1.24
Line of credit, description						The Company is subject to certain affirmative and negative covenants under the Avenue Facility, including the requirement, beginning on the closing date, to maintain at least $5 million of unrestricted cash to be tested at the end of each month, and beginning on the period ended September 30, 2023, and at the end of each quarter thereafter, a trailing six-month cash flow, subject to certain adjustments as provided by the Credit Agreement, of at least $2 million.
First of Five Quarterly Installment [Member]
Stock issued during period shares new issues							337,895
Second of Five Quarterly Installment [Member]
Stock issued during period shares new issues		158,129		455,319
Third of Five Quarterly Quarterly Installment [Member]
Stock issued during period shares new issues		158,129
First and Second Anniversaries [Member]
Milestone payments									$ 1,730,000
Stock Purchase Agreeement [Member]
Payments to acquire businesses, net of cash acquired								$ 250,000
Payments to acquire businesses, gross								460,000
Stock Purchase Agreeement [Member] | Minimum [Member]
Payments to acquire businesses, net of cash acquired								$ 3,670,000
Asset Purchase Agreement [Member]
Consideration paid											4,000,000.0		344,000
Business acquisition periodic payments											$ 500,000,000
Percentage of payment acquistion											15.00%
ATM Sales Agreement [Member]
Proceeds from sale of securities					$ 18,435,000								$ 58,600,000
Increase decrease in public float										$ 75,000,000.0
WorkSimpli Software LLC [Member]
Voting interests acquired																					51.00%
Immudyne PR LLC [Member]
Ownership interest																						78.20%
Conversion Labs PR [Member]
Ownership interest																				100.00%
WorkSimpli Software LLC [Member]
Ownership interest												74.06%	73.32%	73.64%		85.58%			85.58%
Number of membership interest units redeemed												500
Conversion Labs PR LLC [Member] | Option Agreement [Member]
Ownership interest													73.32%
Conversion Labs PR LLC [Member] | Option Agreement [Member] | Minimum [Member]
Ownership interest													74.06%	85.58%

v3.23.3

SCHEDULE OF DISAGGREGATED REVENUE (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Product Information [Line Items]
Total net revenue	$ 38,613,911	$ 31,412,469	$ 107,687,158	$ 90,913,804
Customer Concentration Risk [Member] | Revenue from Contract with Customer Benchmark [Member]
Product Information [Line Items]
Total net revenue, percent	100.00%	100.00%	100.00%	100.00%
Telehealth Revenue [Member]
Product Information [Line Items]
Total net revenue	$ 24,342,789	$ 21,365,178	$ 66,896,719	$ 66,231,202
Telehealth Revenue [Member] | Customer Concentration Risk [Member] | Revenue from Contract with Customer Benchmark [Member]
Product Information [Line Items]
Total net revenue, percent	63.00%	68.00%	62.00%	73.00%
WorkSimpli Revenue [Member]
Product Information [Line Items]
Total net revenue	$ 14,271,122	$ 10,047,291	$ 40,790,439	$ 24,682,602
WorkSimpli Revenue [Member] | Customer Concentration Risk [Member] | Revenue from Contract with Customer Benchmark [Member]
Product Information [Line Items]
Total net revenue, percent	37.00%	32.00%	38.00%	27.00%

v3.23.3

SCHEDULE OF CONTRACT WITH CUSTOMER LIABILITY (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Accounting Policies [Abstract]
Beginning of period	$ 5,668,210	$ 1,992,502	$ 5,547,506	$ 1,499,880
Additions	14,767,411	9,346,553	42,325,069	23,567,740
Revenue recognized	(14,196,267)	(8,985,903)	(41,633,221)	(22,714,468)
End of period	$ 6,239,354	$ 2,353,152	$ 6,239,354	$ 2,353,152

v3.23.3

SUMMARY OF INVENTORY (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Finished goods - products	$ 2,428,471	$ 2,587,370
Raw materials and packaging components	1,461,576	1,276,891
Inventory reserve	(99,401)	(160,898)
Total Inventory - net	$ 3,790,646	$ 3,703,363

v3.23.3

SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Potentially dilutive securities	11,741,134	11,067,667	13,028,440	10,971,668
Restricted Stock Units (RSUs) [Member]
Potentially dilutive securities	2,954,750	1,830,750	2,545,875	1,563,000
Share-Based Payment Arrangement, Option [Member]
Potentially dilutive securities	2,616,722	4,007,698	3,316,909	4,214,609
Warrant [Member]
Potentially dilutive securities	4,827,380	3,859,638	4,827,380	3,859,638
Convertible Long Term Debt [Member]
Potentially dilutive securities	1,342,282		1,342,282
Series B Preferred Stock [Member]
Potentially dilutive securities		1,369,581	995,994	1,334,421

v3.23.3

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended			9 Months Ended		12 Months Ended
	Sep. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Jan. 22, 2021
Net loss	$ (6,122,435)		$ (7,281,673)	$ (16,863,891)	$ (33,600,309)
Subscription price per share	$ 1.95			$ 1.95
Sales returns and allowances	$ 570,000			$ 570,000		$ 815,000
Inventory reserve	99,401			99,401		160,898
Deposits assets, current	84,768			84,768		127,265
Purchase obligation	596,000			596,000
Capitalized software costs	11,300,000			11,300,000		8,800,000
Goodwill	8,000,000.0			8,000,000.0
Goodwill impairment loss					2,735,000	8,000,000.0
Intangible asset impairment charge						827,000
Accumulated amortization	$ 2,769,467			$ 2,769,467		2,043,971
Cleared Customer Relationships [Member]
Goodwill impairment loss						827,000
Finite lived intangible assets						919,000
Accumulated amortization						$ 92,000
Minimum [Member]
Percentage of interest-bearing domestic deposits	10.00%			10.00%
Maximum [Member]
Percentage of interest-bearing domestic deposits	33.00%			33.00%
Product [Member]
Customer discounts and allowance	$ 696,000		1,100,000	$ 1,500,000	4,200,000
Software Revenue [Member]
Customer discounts and allowance	865,000		710,000	2,600,000	1,700,000
Other Operating Expense [Member]
Lease costs			92,000		272,000
LifeMD PC [Member]
Revenues	1,900,000		124,000	2,700,000	124,000
Net loss	$ 440,000		$ 1,000,000.0	$ 1,100,000	$ 3,900,000
WorkSimpli Software LLC [Member]
Ownership Interest	73.32%	74.06%	73.64%	73.32%	73.64%		85.58%	85.58%
Number of membership interest units redeemed		500
WorkSimpli Software LLC [Member]
Non-controlling interest rate							34.60%

v3.23.3

SCHEDULE OF FAIR VALUE OF ASSETS AND LIABILITIES (Details) - USD ($)	Sep. 30, 2023	Jan. 18, 2022
Business Combination and Asset Acquisition [Abstract]
Purchase price, net of cash acquired		$ 9,091,762
Customer relationship intangible asset		918,812
Trade name intangible asset		133,339
Developed technology intangible asset		12,920
Inventory		7,168
Fixed assets		37,888
Deferred taxes		354,000
Accounts payable and other current liabilities		(408,030)
Goodwill	$ 8,000,000.0	$ 8,035,665

v3.23.3

ACQUISITIONS (Details Narrative) - USD ($)							1 Months Ended	9 Months Ended		12 Months Ended
	Jul. 17, 2023	Jul. 10, 2023	Apr. 17, 2023	Feb. 06, 2023	Feb. 04, 2023	Jan. 18, 2022	Feb. 28, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Acquired Finite-Lived Intangible Assets [Line Items]
Business combination, consideration transferred						$ 9,100,000
Cash paid upfront						1,000,000.0
Future payable						3,000,000.0
Business combination, contingent consideration, asset						5,100,000
Potential earn out						72,800,000
Aggregate goodwill recognized						8,035,665		$ 8,000,000.0
Payments to acquire businesses, net of cash acquired						$ 460,000			$ 1,012,395
Stock issued during period shares new issues		100,000								400,000
Reduction of contingent consideration										$ 5,100,000
Goodwill, impairment loss									$ 2,735,000	8,000,000.0
Impairment of intangible assets finitelived										$ 827,000
Acquisition closing							$ 63,000
ResumeBuild [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Asset acquisition, price of acquisition, expected							4,500,000
First of Five Quarterly Installment [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Stock issued during period shares new issues				337,895
Second of Five Quarterly Installment [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Stock issued during period shares new issues	158,129		455,319
Third of Five Quarterly Quarterly Installment [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Stock issued during period shares new issues	158,129
Stock Purchase Agreeement [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Payments to acquire businesses, net of cash acquired					$ 250,000
Payments to acquire businesses, gross					460,000
Stock Purchase Agreeement [Member] | Minimum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Payments to acquire businesses, net of cash acquired					$ 3,670,000
Asset Purchase Agreement [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Consideration paid							$ 4,000,000.0	$ 344,000
Payment acquisition							15.00%
Telehealth [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Discount rate						70.50%
ResumeBuild [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Business combination, contingent consideration, asset							$ 500,000
Trade Names [Member] | Telehealth [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Royalty rates on fair value						0.10%
Developed Technology Rights [Member] | Telehealth [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Royalty rates on fair value						1.00%
Customer Relationships [Member] | Telehealth [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Royalty rates on fair value						10.00%

v3.23.3

SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Less: accumulated amortization	$ (2,769,467)	$ (2,043,971)
Total net amortizable intangible assets	3,255,231	3,831,859
ResumeBuild Brand [Member]
Finite-Lived Intangible Assets [Line Items]
Amortizable intangible assets	$ 4,500,000	4,500,000
Amortizable Life	5 years
Customer Relationship Asset [Member]
Finite-Lived Intangible Assets [Line Items]
Amortizable intangible assets	$ 1,006,840	1,006,840
Amortizable Life	3 years
Cleared Trade Name [Member]
Finite-Lived Intangible Assets [Line Items]
Amortizable intangible assets	$ 133,339	133,339
Amortizable Life	5 years
Cleared Developed Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Amortizable intangible assets	$ 12,920	12,920
Amortizable Life	1 year
Purchased Licenses [Member]
Finite-Lived Intangible Assets [Line Items]
Amortizable intangible assets	$ 200,000	200,000
Amortizable Life	10 years
Website Domain Name [Member]
Finite-Lived Intangible Assets [Line Items]
Amortizable intangible assets	$ 171,599	$ 22,731
Amortizable Life	3 years

v3.23.3

GOODWILL AND INTANGIBLE ASSETS (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 8,000,000.0		$ 8,000,000.0
Goodwill impairment loss				$ 2,735,000	$ 8,000,000.0
Intangible assets, accumulated amortization	2,769,467		2,769,467		2,043,971
Amortization	246,000	$ 326,000	725,496	$ 666,782
Remainder of 2023 [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization			246,000
2024 Through 2025 [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization			980,000
2024 Through 2026 [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization			940,000
2027 [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization			113,000
Cleared Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Goodwill impairment loss					827,000
Intangible assets, cost					919,000
Intangible assets, accumulated amortization					92,000
Cleared Acquisition [Member]
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 0		$ 0		$ 0

v3.23.3

SCHEDULE OF ACCRUED EXPENSES (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
Accrued selling and marketing expenses	$ 6,872,464	$ 3,508,883
Sales tax payable	2,501,035	2,501,035
Purchase price payable	1,264,301	2,463,002
Accrued dividends payable	776,563	776,563
Accrued compensation	2,074,074	576,027
Accrued interest		448,718
Other accrued expenses	2,004,691	1,892,281
Total accrued expenses	$ 15,493,128	$ 12,166,509

v3.23.3

NOTES PAYABLE (Details Narrative) - USD ($)		1 Months Ended		3 Months Ended		9 Months Ended
	Mar. 21, 2023	Nov. 30, 2022	Oct. 31, 2022	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Short-Term Debt [Line Items]
Interest expense				$ 713,766	$ 132,235	$ 1,973,901	$ 432,405
Notes payable				315,000,000		315,000,000		$ 0
Gains losses on extinguishment of debt						(325,198)	63,400
Ten Month Financing Agreement [Member]
Short-Term Debt [Line Items]
Loan origination fees						13,000
CRG Financial [Member]
Short-Term Debt [Line Items]
Proceeds from short term loan						2,000,000
Notes payable				0		0		0
Total loan facility						$ 2,500,000
Maturity date						Dec. 15, 2023
Loan facility interest						12.00%
Repayments of long term debt	$ 2,000,000
Gains losses on extinguishment of debt	$ 325,000
Prepaid insurance				348,000		$ 348,000
Working Capital Loan [Member]
Short-Term Debt [Line Items]
Interest expense				216,000	$ 0	250,000	$ 0
Working Capital Loan [Member] | Amazon [Member]
Short-Term Debt [Line Items]
Proceeds from short term loan			$ 976,000
Interest expense			$ 62,000
Notes payable				111,000		111,000		976,000
Working Capital Loan [Member] | Balanced Management [Member]
Short-Term Debt [Line Items]
Proceeds from short term loan		$ 1,900,000
Interest expense		840,000
Notes payable				$ 0		$ 0		$ 1,821,000
Loan origination fees		$ 60,000

v3.23.3

LONG-TERM DEBT (Details Narrative) - USD ($)				3 Months Ended		9 Months Ended
	Sep. 26, 2023	Jun. 30, 2023	Mar. 21, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Line of Credit Facility [Line Items]
Amortization of debt discount premium				$ 80,000		$ 233,495
Avenue [Member]
Line of Credit Facility [Line Items]
Warrant to purchase stock			$ 1,200,000
Exercise price			$ 1.24
Fair value of warrants		$ 873,000
Debt conversion amount			$ 2,000,000
Conversion price per share			$ 1.49
Avenue Facility [Member]
Line of Credit Facility [Line Items]
Credit facility			$ 40,000,000	2,000,000		2,000,000
Line of credit	$ 5,000,000		15,000,000
Line of credit			20,000,000
Warrant to purchase stock			$ 1,200,000
Exercise price			$ 1.24
Debt instrument description			The Company incurred other fees associated with the Avenue Facility including: (1) a $300 thousand financing fee, (2) a $200 thousand upfront commitment fee of 1% of the total $20 million in committed capital and (3) $27 thousand in legal fees. The total debt discount recorded of $1.4 million will be amortized over a forty-two-month period.
Proceeds from issuance costs						15,000,000.0
Proceeds from issuance costs						12,300,000
Repayments of Long-Term Debt						$ 2,000,000
Line of Credit Facility, Expiration Date			Oct. 01, 2026
Debt Instrument, Interest Rate Terms						interest is based on the greater of: (1) the Prime Rate (as defined in the Supplement) plus 4.75% and (2) 12.5%. At September 30, 2023, the interest rate was 13.25%. Payments are interest only until November 2024.
Debt instrument, face amount			$ 20,000,000
Interest expense, debt				$ 594	$ 0	$ 1,300,000	$ 0
Avenue Facility [Member] | Series B Preferred Stock [Member]
Line of Credit Facility [Line Items]
Liqudation value			$ 5,000,000
Avenue First Amendment Credit Agreement [Member]
Line of Credit Facility [Line Items]
Line of credit	$ 5,000,000
Proceeds from issuance costs						$ 5,000,000.0

v3.23.3

SCHEDULE OF OPTION ACTIVITY (Details) - USD ($)	3 Months Ended	9 Months Ended	12 Months Ended
	Jun. 30, 2022	Sep. 30, 2023	Dec. 31, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options Outstanding Number of Shares, Exercised	$ 90,400
Service-Based Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options Outstanding Number of Shares, Beginning		1,439,333
Options Outstanding Weighted Average Remaining Contractual Life, Beginning		5 years 7 months 17 days
Options Outstanding Weighted Average Exercise Price Per Share, Beginning		$ 6.11
Options Outstanding Number of Shares, Granted		140,000
Weighted Average Remaining Contractual Life, Granted		2 years 2 months 8 days
Options Outstanding Weighted Average Exercise Price Per Share, Granted		$ 1.71
Options Outstanding Number of Shares, Cancelled/Forfeited/Expired		(200,000)
Options Outstanding Exercise Price Per Share, Cancelled/Forfeited/Expired		$ 14.04
Weighted Average Exercise Price per Share Cancelled/Forfeited/Expired		$ 14.04
Options Outstanding Number of Shares, Ending		1,259,333	1,439,333
Options Outstanding Weighted Average Remaining Contractual Life, Ending		4 years 11 months 15 days
Options Outstanding Weighted Average Exercise Price Per Share, Ending		$ 4.82	$ 6.11
Options Exercisable Number of Shares, Ending		1,198,208	1,158,764
Options Exercisable Weighted Average Remaining Contractual Life, Ending		4 years 11 months 8 days	5 years 7 months 17 days
Options Exercisable Weighted Average Exercise Price Per Share, Ending		$ 4.65	$ 5.25
Options Outstanding Number of Shares, Exercised		$ (120,000)
Weighted Average Remaining Contractual Life, Exercised		4 years 7 months 2 days
Options Outstanding Weighted Average Exercise Price Per Share, Exercised		$ 1.33
Options Outstanding Number of Shares, Granted		(140,000)
Performance Shares [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options Outstanding Number of Shares, Beginning		535,000
Options Outstanding Weighted Average Remaining Contractual Life, Beginning		4 years 7 months 2 days
Options Outstanding Weighted Average Exercise Price Per Share, Beginning		$ 1.60
Options Outstanding Number of Shares, Granted		50,000
Weighted Average Exercise Price per Share Cancelled/Forfeited/Expired		$ 2.00
Options Outstanding Number of Shares, Ending		485,000	535,000
Options Outstanding Weighted Average Remaining Contractual Life, Ending		4 years 4 months 17 days
Options Outstanding Weighted Average Exercise Price Per Share, Ending		$ 1.56	$ 1.60
Options Exercisable Number of Shares, Ending		420,000	470,000
Options Exercisable Weighted Average Remaining Contractual Life, Ending		4 years 5 months 12 days	4 years 6 months 29 days
Options Exercisable Weighted Average Exercise Price Per Share, Ending		$ 1.56	$ 1.61
Options Outstanding Number of Shares, Granted		(50,000)
Exercise Price per Share Cancelled/Forfeited/Expired		$ 2.00
Minimum [Member] | Service-Based Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options Outstanding Exercise Price Per Share, Beginning		1.00
Options Outstanding Exercise Price Per Share, Granted		1.00
Options Outstanding Exercise Price Per Share, Ending		1.00	1.00
Options Exercisable Exercise Price Per Share, Ending		1.00	1.00
Options Outstanding Exercise Price Per Share, Exercised		1.00
Minimum [Member] | Performance Shares [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options Outstanding Exercise Price Per Share, Beginning		1.25
Options Outstanding Exercise Price Per Share, Ending		1.25	1.25
Options Exercisable Exercise Price Per Share, Ending		1.50	1.50
Maximum [Member] | Service-Based Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options Outstanding Exercise Price Per Share, Beginning		19.61
Options Outstanding Exercise Price Per Share, Granted		2.00
Options Outstanding Exercise Price Per Share, Ending		19.61	19.61
Options Exercisable Exercise Price Per Share, Ending		19.61	19.61
Options Outstanding Exercise Price Per Share, Exercised		1.50
Maximum [Member] | Performance Shares [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options Outstanding Exercise Price Per Share, Beginning		2.50
Options Outstanding Exercise Price Per Share, Ending		2.50	2.50
Options Exercisable Exercise Price Per Share, Ending		$ 2.50	$ 2.50
2020 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options Outstanding Number of Shares, Beginning		1,784,587
Options Outstanding Weighted Average Remaining Contractual Life, Beginning		6 years 11 months 12 days
Options Outstanding Weighted Average Exercise Price Per Share, Beginning		$ 9.54
Options Outstanding Number of Shares, Granted		94,500
Weighted Average Remaining Contractual Life, Granted		4 years 3 months 7 days
Options Outstanding Weighted Average Exercise Price Per Share, Granted		$ 3.30
Options Outstanding Number of Shares, Cancelled/Forfeited/Expired		(1,006,698)
Weighted Average Exercise Price per Share Cancelled/Forfeited/Expired		$ 10.01
Options Outstanding Number of Shares, Ending		872,389	1,784,587
Options Outstanding Weighted Average Remaining Contractual Life, Ending		5 years 4 months 2 days
Options Outstanding Weighted Average Exercise Price Per Share, Ending		$ 8.32	$ 9.54
Options Exercisable Number of Shares, Ending		677,625	1,185,153
Options Exercisable Weighted Average Remaining Contractual Life, Ending		6 years 5 months 1 day	7 years 7 months 20 days
Options Exercisable Weighted Average Exercise Price Per Share, Ending		$ 8.58	$ 9.62
Options Outstanding Number of Shares, Granted		(94,500)
2020 Plan [Member] | Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options Outstanding Exercise Price Per Share, Beginning		$ 2.30
Options Outstanding Exercise Price Per Share, Granted		1.84
Options Outstanding Exercise Price Per Share, Cancelled/Forfeited/Expired		2.30
Options Outstanding Exercise Price Per Share, Ending		1.84	2.30
Options Exercisable Exercise Price Per Share, Ending		1.84	2.30
2020 Plan [Member] | Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options Outstanding Exercise Price Per Share, Beginning		21.02
Options Outstanding Exercise Price Per Share, Granted		7.44
Options Outstanding Exercise Price Per Share, Cancelled/Forfeited/Expired		21.02
Options Outstanding Exercise Price Per Share, Ending		13.74	21.02
Options Exercisable Exercise Price Per Share, Ending		$ 13.74	$ 21.02

v3.23.3

SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY (Details) - Restricted Stock Units (RSUs) [Member]	9 Months Ended
	Sep. 30, 2023 shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
RSU Outstanding Number of Shares, Beginning	715,000
RSU Outstanding Number of Shares, Granted	725,000
RSU Outstanding Number of Shares, Vested	(327,500)
RSU Outstanding Number of Shares, Cancelled/Forfeited/Expired	(500,000)
RSU Outstanding Number of Shares, Ending	612,500
2020 Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
RSU Outstanding Number of Shares, Beginning	1,028,250
RSU Outstanding Number of Shares, Granted	3,082,750
RSU Outstanding Number of Shares, Vested	(474,625)
RSU Outstanding Number of Shares, Cancelled/Forfeited/Expired	(730,000)
RSU Outstanding Number of Shares, Ending	2,906,375

v3.23.3

SCHEDULE OF WARRANT OUTSTANDING AND EXERCISABLE (Details) - Warrant [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Accumulated Other Comprehensive Income (Loss) [Line Items]
Warrants Outstanding Number of Shares, Beginning	3,859,638
Warrants Outstanding Weighted Average Remaining Contractual Life, Beginning	5 years 10 months 6 days
Warrants Outstanding Weighted Average Exercise Price Per Share, Beginning	$ 5.59
Warrants Outstanding Number of Shares, Granted	967,742
Warrants Outstanding Exercise Price Per Share, Granted	$ 1.24
Warrants Outstanding Weighted Average Remaining Contractual Life, Granted	4 years 5 months 19 days
Warrants Outstanding Weighted Average Exercise Price Per Share, Granted	$ 1.24
Warrants Outstanding Number of Shares, Ending	4,827,380	3,859,638
Warrants Outstanding Weighted Average Remaining Contractual Life, ending	4 years 2 months 15 days
Options Outstanding Weighted Average Exercise Price Per Share, Ending	$ 4.74
Warrants Exercisable Number of Shares, Ending	4,827,380	3,836,993
Warrants Exercisable Weighted Average Remaining Contractual Life, Ending	4 years 2 months 15 days	4 years 10 months 17 days
Warrants Exercisable Weighted Average Exercise Price Per Share, Ending	$ 4.73	$ 5.63
Minimum [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Warrants Outstanding Exercise Price Per Share, Beginning	1.40
Warrants Outstanding Exercise Price Per Share, ending	1.24	1.40
Warrants Exercisable Exercise Price Per Share, Ending	1.24	1.40
Maximum [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Warrants Outstanding Exercise Price Per Share, Beginning	12.00
Warrants Outstanding Exercise Price Per Share, ending	12.00	12.00
Warrants Exercisable Exercise Price Per Share, Ending	$ 12.00	$ 12.00

v3.23.3

STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($)													1 Months Ended		3 Months Ended						6 Months Ended	9 Months Ended		12 Months Ended
	Sep. 26, 2023	Aug. 31, 2023	Jul. 28, 2023	Jul. 17, 2023	Jul. 10, 2023	Jun. 30, 2023	Apr. 17, 2023	Mar. 22, 2023	Mar. 21, 2023	Feb. 06, 2023	Feb. 04, 2023	Jan. 22, 2021	Jun. 30, 2023	Dec. 31, 2020	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Aug. 14, 2023	Jul. 31, 2023	Jun. 16, 2022	Dec. 31, 2021	Jun. 24, 2021	Jun. 08, 2021	Feb. 22, 2021	Jan. 08, 2021	Jan. 02, 2021
Class of Stock [Line Items]
Common stock, shares authorized															100,000,000							100,000,000		100,000,000
Common stock, par value															$ 0.01							$ 0.01		$ 0.01							$ 0.01
Preferred stock, shares authorized															5,000,000							5,000,000
Preferred stock, at par value															$ 0.0001							$ 0.0001
Undesignated preferred stock															3,385,000							3,385,000
Shares issued for cashless exercise of options																						74,372
Common stock share services																						339,875
Number of shares issued					100,000																			400,000
Share issue price per share															$ 5.32							$ 5.32
Non-controlling interest															$ 839,288			$ 83,737				$ 2,247,055	$ 154,464
Distribution to non-controlling interest															36,000	$ 36,000	$ 36,000	36,000	$ 36,000	$ 36,000		108,000	108,000
Notes payable															315,000,000							315,000,000		$ 0
Share based compensation															$ 3,300,000			3,300,000				$ 8,800,000	11,900,000
2020 Plan [Member]
Class of Stock [Line Items]
Issuance of share based compensation															4,950,000							4,950,000										1,500,000
Number of shares available for issuance																											1,500,000		1,500,000				150,000
Remaining authorization of shares															441,611							441,611
Fair value of options granted																						$ 265,000
Dividend yield																						0.00%
Expected term																						4 years
Volatility, minimum																						119.16%
Volatility, maximum																						133.67%
Risk-free rate, minimum																						0.82%
Risk-free rate, maximum																						3.96%
Share based compensation															$ 1,200,000			$ 1,400,000				$ 3,500,000	$ 4,900,000
Unamortized expense															2,100,000							2,100,000
Options outstanding intrinsic value															$ 550,000							$ 550,000
WorkSimpli Software LLC [Member]
Class of Stock [Line Items]
Re-purchase of additional stock options reduced												85.58%			73.32%		74.06%	73.64%				73.32%	73.64%					85.58%
Number of membership interest units redeemed																	500
Dividend payable		$ 16.80				$ 22.40							$ 22.40		$ 14.00	$ 22.40					$ 22.40	$ 14.00				$ 11.20
Dividend payable date		Sep. 01, 2023	Aug. 01, 2023																		Jul. 03, 2023	Oct. 05, 2023
Dividend declared to noncontrolling interest															$ 1,000,000.0							$ 1,500,000
Conversion Labs PR LLC [Member]
Class of Stock [Line Items]
Notes payable												$ 376,000
Debt conversion shares issued												37,531
Stock purchase price												$ 100,000
Conversion Labs PR LLC [Member] | Option Agreement [Member]
Class of Stock [Line Items]
Re-purchase of additional stock options reduced												72.98%
Conversion Labs PR LLC [Member] | Work Simpli Software [Member]
Class of Stock [Line Items]
Membership interests purchases												12,000
Stock purchase price												$ 300,000
Pathak option agreement description												The CVLB PR MIPA provides that the transaction may be completed in three (3) tranches with a purchase price of $100 thousand per tranche to be made at the sole discretion of Conversion Labs PR
Conversion Labs PR LLC [Member] | Founding Members MIPAs [Member] | Work Simpli Software [Member]
Class of Stock [Line Items]
Membership interests purchases												2,183
Stock purchase price														$ 225,000
Avenue Facility [Member]
Class of Stock [Line Items]
Warrant to purchase stock									$ 1,200,000
Exercise price									$ 1.24
Line of credit	$ 5,000,000								$ 15,000,000
Avenue [Member]
Class of Stock [Line Items]
Warrant to purchase stock									$ 1,200,000
Exercise price									$ 1.24
Debt conversion amount									$ 2,000,000
Conversion price per share									$ 1.49
Fair value of warrants						$ 873,000
Harborside Advisors LLC [Member]
Class of Stock [Line Items]
Common stock share services																						100,000
First of Five Quarterly Installment [Member]
Class of Stock [Line Items]
Number of shares issued										337,895
Second of Five Quarterly Installment [Member]
Class of Stock [Line Items]
Number of shares issued				158,129			455,319
Service-Based Stock Options [Member]
Class of Stock [Line Items]
Shares issued for cashless exercise of options																						120,000
Number of shares issued																						74,372
Fair value of options granted																						$ 142,000
Dividend yield																						0.00%
Expected term																						6 years 6 months
Volatility, minimum																						187.76%
Volatility, maximum																						195.58%
Risk-free rate, minimum																						1.21%
Risk-free rate, maximum																						2.26%
Share based compensation															367,000			$ 493,000				$ 1,500,000	$ 1,600,000
Unamortized expense															525,000							525,000
Options outstanding intrinsic value															3,300,000							3,300,000
Performance Shares [Member]
Class of Stock [Line Items]
Share based compensation															0			106,000				0	317,000
Options outstanding intrinsic value															2,000,000.0							2,000,000.0
Restricted Stock Units (RSUs) [Member]
Class of Stock [Line Items]
Share based compensation															139,000			$ 225,000				728,000	$ 1,200,000
Unamortized expense															$ 1,300,000							$ 1,300,000
Shares, granted																						725,000
Net of forfeitures																						$ 2,000,000.0
Shares vested																						327,500
Shares vested, issued																						200,000
Shares cancelled																						300,000
Shares replaced																						300,000
Service-based Stock Options, Performance-based Stock Options, Warrants, RSUs and RSA [Member]
Class of Stock [Line Items]
Unamortized expense																						$ 9,600,000
ATM Sales Agreement [Member]
Class of Stock [Line Items]
Offering price								$ 18,435,000														$ 58,600,000
Increase decrease in public float													$ 75,000,000.0
Number of common stock shares sold																						180,021
Proceeds from issuance of sale of equity																						$ 900,000
Stock Purchase Agreeement [Member]
Class of Stock [Line Items]
Payments to acquire businesses, gross											$ 460,000
Operating Agreement [Member] | Conversion Labs PR LLC [Member]
Class of Stock [Line Items]
Re-purchase of additional stock options reduced												51.00%
Operating Agreement [Member] | Conversion Labs PR LLC [Member] | Maximum [Member]
Class of Stock [Line Items]
Re-purchase of additional stock options reduced												85.58%
Option Agreement [Member]
Class of Stock [Line Items]
Pathak option agreement description												Concurrently with the WSS Restructuring, Conversion Labs PR entered into option agreements with Sean Fitzpatrick (the “Fitzpatrick Option Agreement”) and Varun Pathak (the “Pathak Option Agreement” together with Fitzpatrick Option Agreement the “Option Agreements”), pursuant to which Conversion Labs PR granted options to purchase membership interest units of WSS. Upon vesting, the Fitzpatrick Options and the Pathak Options provide for the potential re-purchase of up to an additional 13.25% of WSS by Fitzpatrick and Pathak in the aggregate with Conversion Labs PR ownership ratably reduced to approximately 72.98%
Re-purchase of additional stock options												13.25%
Tranchee shares membership interest															889							889
Purchase price per membership interest															$ 1.00			$ 1.00				$ 1.00	$ 1.00
Option Agreement [Member] | Maximum [Member]
Class of Stock [Line Items]
Tranchee shares membership interest																		2,100					2,100
Option Agreement [Member] | Minimum [Member]
Class of Stock [Line Items]
Tranchee shares membership interest																		10,300					10,300
Option Agreement [Member] | Conversion Labs PR LLC [Member]
Class of Stock [Line Items]
Re-purchase of additional stock options reduced															73.32%							73.32%
Option Agreement [Member] | Conversion Labs PR LLC [Member] | Maximum [Member]
Class of Stock [Line Items]
Re-purchase of additional stock options reduced															73.32%			73.64%				73.32%	73.64%
Option Agreement [Member] | Conversion Labs PR LLC [Member] | Minimum [Member]
Class of Stock [Line Items]
Re-purchase of additional stock options reduced															74.06%			85.58%				74.06%	85.58%
Fitzpatrick Option Agreement [Member]
Class of Stock [Line Items]
Pathak option agreement description												The Fitzpatrick Option Agreement grants Sean Fitzpatrick the option to purchase 10,300 membership interest units of WSS for an exercise price of $1.00 per membership interest unit. The Fitzpatrick Options vest in accordance with the following milestones (i) 3,434 membership interests upon WSS achieving $2.5 million of gross sales in any fiscal quarter (ii) 3,434 membership interests upon WSS achieving $4.0 million of gross sales in any fiscal quarter, and (iii) 3,434 membership interests upon WSS achieving $8.0 million of gross sales with a ten percent (10%) net profit margin in any fiscal quarter.
Tranchee shares membership interest												10,300
Purchase price per membership interest												$ 1.00
Fitzpatrick Option Agreement [Member] | Share-Based Payment Arrangement, Tranche One [Member]
Class of Stock [Line Items]
Gross sales												$ 2,500,000
Fitzpatrick Option Agreement [Member] | Share-Based Payment Arrangement, Tranche Two [Member]
Class of Stock [Line Items]
Gross sales												4,000,000.0
Fitzpatrick Option Agreement [Member] | Share-Based Payment Arrangement, Tranche Three [Member]
Class of Stock [Line Items]
Gross sales												$ 8,000,000.0
Pathak Option Agreement [Member]
Class of Stock [Line Items]
Pathak option agreement description												The Pathak Option Agreement grants Varun Pathak the option to purchase 2,100 membership interest units of WSS for an exercise price of $1.00 per membership interest unit. The Pathak Options vest in accordance with the following milestones (i) 700 membership interests upon WSS achieving $2.5 million of gross sales in any fiscal quarter (ii) 700 membership interests upon WSS achieving $4.0 million of gross sales in any fiscal quarter, and (iii) 700 membership interests upon WSS achieving $8.0 million of gross sales with a ten percent (10%) net profit margin in any fiscal quarter.
Tranchee shares membership interest												2,100
Purchase price per membership interest												$ 1.00
Pathak Option Agreement [Member] | Share-Based Payment Arrangement, Tranche One [Member]
Class of Stock [Line Items]
Gross sales												$ 2,500,000
Pathak Option Agreement [Member] | Share-Based Payment Arrangement, Tranche Two [Member]
Class of Stock [Line Items]
Gross sales												4,000,000.0
Pathak Option Agreement [Member] | Share-Based Payment Arrangement, Tranche Three [Member]
Class of Stock [Line Items]
Gross sales												$ 8,000,000.0
2020 Plan [Member] | Service-Based Stock Options [Member]
Class of Stock [Line Items]
Shares cancelled																						809,000
2020 Plan [Member] | Restricted Stock Units (RSUs) [Member]
Class of Stock [Line Items]
Share based compensation															$ 1,600,000			$ 703,000				$ 3,100,000	$ 2,300,000
Unamortized expense															5,700,000							$ 5,700,000
Shares, granted																						3,082,750
Net of forfeitures																						$ 10,500,000
Shares vested																						474,625
Shares vested, issued																						139,875
Shares cancelled																						655,000
Shares replaced																						1,830,750
Shares and Securities [Member]
Class of Stock [Line Items]
Raise up funds																														$ 150,000,000
Warrant [Member]
Class of Stock [Line Items]
Dividend yield																						0.00%
Share based compensation															0			$ 407,000				$ 18,000	$ 1,600,000
Fair value of warrants																						$ 895,000
Expected term																						4 years
Volatility																						122.60%
Risk free interest percentage																						3.73%
Unamortized expense																						$ 0
Warrants outstanding															$ 10,200,000							$ 10,200,000
Series B Convertible Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized															5,000							5,000
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized															1,610,000							1,610,000		1,610,000
Preferred stock, at par value															$ 0.0001							$ 0.0001		$ 0.0001
Cumulative Distributions on Preferred Stock																						$ 2.21875
Percentage of preferred stock liquidation preference																						8.875%
Preferred stock liquidation preference															$ 25.00							$ 25.00
Series B Preferred Stock [Member]
Class of Stock [Line Items]
Share issue price per share					$ 3.25																				$ 3.25
Preferred Stock Conversion					2,275																				1,225
Preferred Stock Conversion					1,010,170																				550,694

v3.23.3

SCHEDULE OF OPERATING RIGHT OF USE OF ASSETS (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Leases
Operating right-of-use assets	$ 799,104	$ 1,206,009
Operating lease liabilities - current	725,832	756,093
Operating lease liabilities - noncurrent	$ 169,821	$ 574,136

v3.23.3

SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES (Details)	Sep. 30, 2023 USD ($)
Leases
Fiscal year 2023	$ 256,581
Fiscal year 2024	604,987
Fiscal year 2025	68,850
Less: imputed interest	(34,765)
Present value of operating lease liabilities	$ 895,653

v3.23.3

SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE LIABILITIES (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Leases
Cash paid for operating lease liabilities	$ 665,129	$ 517,871
Weighted average remaining lease term in years	2 years 1 month 17 days		2 years 9 months 25 days
Weighted average discount rate	7.15%		7.15%

v3.23.3

LEASES (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Leases
Amortization of right of use of asset			$ 1,900
Operating lease expenses	$ 214	$ 200	$ 643	$ 603
Lessee, operating lease, term of contract	12 months		12 months
Short term lease payments			$ 3
Payments for rent			$ 3

v3.23.3

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)				12 Months Ended
	Jul. 10, 2023	Feb. 28, 2022	Dec. 10, 2021	Dec. 31, 2022	Dec. 31, 2018	Dec. 31, 2016	Sep. 30, 2023
Loss Contingencies [Line Items]
Purchase obligation							$ 596,000
Number of common stock issued	100,000			400,000
Harborside Advisors LLC [Member]
Loss Contingencies [Line Items]
Stock issued during period, shares, reverse stock splits			1,000,000
Stock issued during period, shares, stock splits			200,000
Stockholders' equity, reverse stock split			5-for-1
Revenue			$ 10,000,000
Shares issued			1,000,000
Incurred damages			$ 75,000
Harborside Advisors LLC [Member] | Maximum [Member]
Loss Contingencies [Line Items]
Loss contingency, damages sought, value			33,000,000.0
Harborside Advisors LLC [Member] | Minimum [Member]
Loss Contingencies [Line Items]
Loss contingency, damages sought, value			$ 5,000,000.0
Conversion Labs Rx Business [Member]
Loss Contingencies [Line Items]
Stock issued during period, shares, stock splits			200,000
Conversion Labs Rx Business [Member] | Maximum [Member]
Loss Contingencies [Line Items]
Stock issued during period, shares, stock splits			1,000,000
Pilaris Laboratories, LLC [Member]
Loss Contingencies [Line Items]
Finite-lived intangible asset, useful life						10 years
Intercompany agreements, description						As consideration for granting Conversion Labs PR this license, Pilaris will receive on quarterly basis, 10% of the net income collected by the licensed products based on the following formula: Net Income = total income – cost of goods sold – advertising and operating expenses directly related to the marketing of the licensed products.
Percentage of net income						10.00%
Accrued expenses				$ 138,000			$ 0
M.ALPHABET, LLC [Member]
Loss Contingencies [Line Items]
Intercompany agreements, description					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, 2023.
Share based compensation arrangement by share based payment award, expiration period					10 years
Stock option to purchase shares					20,000
Stock option exercise price					$ 2.50
M.ALPHABET, LLC [Member] | Common Stock One [Member]
Loss Contingencies [Line Items]
Stock option to purchase shares					20,000
Stock option exercise price					$ 2.50
Proceeds from issuance of common stock					$ 7,500,000
M.ALPHABET, LLC [Member] | Common Stock Two [Member]
Loss Contingencies [Line Items]
Stock option to purchase shares					20,000
Stock option exercise price					$ 2.50
Proceeds from issuance of common stock					$ 10,000,000.0
M.ALPHABET, LLC [Member] | Common Stock Three [Member]
Loss Contingencies [Line Items]
Stock option to purchase shares					40,000
Stock option exercise price					$ 3.75
Proceeds from issuance of common stock					$ 20,000,000.0
Conversion Labs Rx Business [Member]
Loss Contingencies [Line Items]
Contigency contract amount			$ 274,000
Conversion Labs Rx Business [Member] | Harborside Advisors LLC [Member]
Loss Contingencies [Line Items]
Stock issued in issuance costs			5,000,000
Conversion Labs Rx Business [Member] | Harborside Advisors LLC [Member] | Maximum [Member]
Loss Contingencies [Line Items]
Stock issued in issuance costs			$ 5,000,000
Blair LLC [Member]
Loss Contingencies [Line Items]
Contigency contract amount		$ 1,000,000.0

v3.23.3

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)		3 Months Ended		9 Months Ended
	Mar. 21, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Related Party Transaction [Line Items]
Gains losses on extinguishment of debt				$ (325,198)	$ 63,400
Notes payable		315,000,000		315,000,000		$ 0
Work Simpli Software [Member]
Related Party Transaction [Line Items]
Stock issued		208,000
Software Development Services [Member] | Work Simpli Software [Member]
Related Party Transaction [Line Items]
Stock issued		611,000	$ 403,000	1,800,000	$ 1,100,000
CRG Financial [Member]
Related Party Transaction [Line Items]
Proceeds from short term loan				2,000,000
Total loan facility				$ 2,500,000
Maturity date				Dec. 15, 2023
Loan facility interest				12.00%
Repayments of long term debt	$ 2,000,000
Gains losses on extinguishment of debt	$ 325,000
Notes payable		$ 0		$ 0		$ 0

v3.23.3

SCHEDULE OF RELEVANT SEGMENT DATA (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Segment Reporting Information [Line Items]
Revenue	$ 38,613,911	$ 31,412,469	$ 107,687,158	$ 90,913,804
Gross margin	87.60%	85.00%	87.40%	83.90%
Operating loss	$ (4,569,381)	$ (7,065,701)	$ (12,317,737)	$ (33,076,840)
Assets	40,691,024		40,691,024		$ 25,665,853
Telehealth [Member]
Segment Reporting Information [Line Items]
Revenue	$ 24,342,789	$ 21,365,178	$ 66,896,719	$ 66,231,202
Gross margin	81.60%	78.90%	81.30%	78.80%
Operating loss	$ (7,716,355)	$ (7,671,742)	$ (20,859,582)	$ (34,181,305)
Assets	30,616,898		30,616,898		18,163,464
WorkSimpli Software LLC [Member]
Segment Reporting Information [Line Items]
Revenue	$ 14,271,122	$ 10,047,291	$ 40,790,439	$ 24,682,602
Gross margin	97.90%	97.90%	97.50%	97.70%
Operating loss	$ 3,146,974	$ 606,041	$ 8,541,845	$ 1,104,465
Assets	$ 10,074,126		$ 10,074,126		$ 7,502,389

v3.23.3

SUBSEQUENT EVENTS (Details Narrative) - USD ($) $ in Millions			1 Months Ended		9 Months Ended	12 Months Ended
	Oct. 17, 2023	Jul. 10, 2023	Nov. 30, 2023	Oct. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Subsequent Event [Line Items]
Number of shares issued		100,000				400,000
ATM Sales Agreement [Member]
Subsequent Event [Line Items]
Sale of Stock, Number of Shares Issued in Transaction					180,021
Subsequent Event [Member]
Subsequent Event [Line Items]
Number of shares issued				326,875
Number of shares issued				$ 1.1
Subsequent Event [Member] | Fourth of Five Quarterly Installment [Member]
Subsequent Event [Line Items]
Number of shares issued	117,583
Subsequent Event [Member] | ATM Sales Agreement [Member]
Subsequent Event [Line Items]
Sale of Stock, Number of Shares Issued in Transaction			829,886	829,886
Proceeds from Issuance of Common Stock				$ 5.3

---