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~~ Quarterly Period Ended September 30, ~~2017~~2022

ORor

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

For the Transition Period from _________ to _________

Commission file number: ~~333-184487~~001-39785

~~IMMUDYNE,~~LIFEMD, INC.

(Exact name of registrant as specified in its charter)

Delaware

76-0238453

(State or other ~~jurisdiction~~ Jurisdiction

of
~~incorporation~~ Incorporation or ~~organization)~~Organization)

(~~IRS~~I.R.S. Employer

Identification No.)

~~1460 Broadway~~

236 Fifth Avenue, Suite 400

New York, New York

10001

~~New York, NY~~

~~10036~~

(Address of ~~principal executive offices)~~Principal Executive Offices)

(Zip Code)

~~(914) 244-1777~~(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 ~~checkmark~~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 ~~last~~past 90 days.

~~YES~~Yes ☒ NONo ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files).Yes ☒ No ☐

~~YES ☒ NO ☐~~

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

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☐☒	Smaller reporting company	☒
~~(do not check if a 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.~~Act: ☐

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

~~YES ☐ NO ☒~~

~~44,393,063~~ As of November 9, 2022, there were 31,449,735shares of the registrant’s common stock ~~outstanding as of November 14, 2017.~~outstanding.

~~Immudyne, Inc.~~

~~Table of Contents~~

LIFEMD, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

TABLE OF CONTENTS

		Page
~~Note about Forward-Looking Statements~~	1

PART I. FINANCIAL INFORMATION

~~Item~~ITEM 1.	Financial Statements (unaudited)	23
~~Item~~
	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations	4

	Condensed Consolidated Statements of Stockholders’ (Deficit) Equity	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	2426
~~Item~~
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	2837
~~Item~~
ITEM 4.	Controls and Procedures	2837

PART II. OTHER INFORMATION

~~Item~~ITEM 1.	Legal Proceedings	2938
~~Item 1A.~~	~~Risk Factors~~	29
~~Item~~ITEM 1A.	Risk Factors	38

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2938
~~Item~~
ITEM 3.	Defaults Upon Senior Securities	2938
~~Item~~
ITEM 4.	Mine Safety Disclosures	2938
~~Item 5.~~	~~Other Information~~	29
~~Item 6.~~ITEM 5.	~~Exhibits~~Other Information	2938

ITEM 6.	Exhibits	39

SIGNATURES		40


~~Signatures~~		30


~~Exhibit Index~~		31

~~NOTE ABOUT FORWARD-LOOKING STATEMENTS~~

This report contains forward-looking statements within the meaning of Section 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”) regarding our company that include, but are not limited to, projections of earnings, revenue or other financial items; statements of the plans, strategies and objectives of management for future operations; statements concerning proposed new products, services or developments; statements regarding future economic conditions or performance; statements of belief; and statements of assumptions underlying any of the foregoing. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by us. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “potential,” “believes,” “seeks,” “hopes,” “estimates,” “should,” “may,” “will,” “with a view to” and variations of these words or similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are set forth in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Our Business” and other sections in this report. Other sections of this report include additional factors that could adversely impact our business and financial performance.

Unless otherwise indicated, information in this report concerning economic conditions and our industry is based on information from independent industry analysts and publications, as well as our estimates. Except where otherwise noted, our estimates are derived from publicly available information released by third party sources, as well as data from our internal research, and are based on such data and our knowledge of our industry, which we believe to be reasonable. Unless otherwise indicated, none of the independent industry publication market data cited in this report was prepared on our or our affiliates’ behalf.

The forward-looking statements made in this report are based only on events or information as of the date on which the statements are made in this report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this report and the documents we refer to in this report and have filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect.

Additional information on the various risks and uncertainties potentially affecting our operating results are discussed in this report and other documents we file with the Securities and Exchange Commission (the “SEC”). We undertake no obligation to revise or update publicly any forward-looking statements for any reason, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements.

~~As used in this report, “Immudyne,” “Company,” “we,” “our” and similar terms refer to Immudyne, Inc., unless the context indicates otherwise.~~

PART I.I – FINANCIAL INFORMATION

~~Item 1.~~

~~Financial Statements~~

Item 1. Financial Statements

Immudyne, Inc.
Consolidated Balance Sheets

September 30, 2017 December 31, 2016
(unaudited)
ASSETS

Current Assets
Cash $ 562,760 $ 182,561
Trade accounts receivable, net 276,992 444,743
Other receivables - 2,250
Product deposit 119,899 -
Inventory, net 377,800 160,270
Total Current Assets $ 1,337,451 $ 789,824

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
Accounts payable and accrued expenses $ 699,651 $ 752,930
Derivative liabilities - 192,254
Convertible notes payable - 100,000
Notes payable, net of discount in 2016 77,333 106,365
Total Current Liabilities 776,984 1,151,549

Stockholders’ Equity (Deficit)
Common stock, $0.01 par value; 100,000,000 shares authorized, 44,257,342 and 35,570,157 shares issued, 43,742,142 and 35,245,157 outstanding as of September 30, 2017 and  December 31, 2016, respectively 442,573 355,701
Additional paid-in capital 11,218,988 9,070,064
Accumulated (deficit) (10,680,261 ) (9,693,882 )
981,300 (268,117 )
Treasury stock, 515,200 and 325,000 shares, at cost (163,701 ) (87,053 )
Total Immudyne, Inc. Stockholders’ (Deficit) 817,599 (355,170 )

Non-controlling interest (257,132 ) (6,555 )

Total Stockholders’ (Deficit) 560,467 (361,725 )

Total Liabilities and Stockholders’ (Deficit) $ 1,337,451 $ 789,824
LIFEMD, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2022 December 31, 2021

(Unaudited)

ASSETS
Current Assets
Cash $ 5,836,823 $ 41,328,039
Accounts receivable, net 2,538,118 980,055
Product deposit 108,051 203,556
Inventory, net 3,676,131 1,616,600
Other current assets 814,576 793,190
Total Current Assets 12,973,699 44,921,440
Non-current Assets
Equipment, net 533,561 233,805
Right of use asset, net 1,289,250 1,752,448
Capitalized software, net 7,991,836 2,995,789
Goodwill 5,654,665 -
Intangible assets, net 4,918,550 19,761
Total Non-current Assets 20,387,862 5,001,803
Total Assets $ 33,361,561 $ 49,923,243
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current Liabilities
Accounts payable $ 10,797,544 $ 9,059,214
Accrued expenses 11,082,354 11,595,605
Notes payable, net - 63,400
Current operating lease liabilities 702,237 607,490
Deferred revenue 2,353,152 1,499,880
Total Current Liabilities 24,935,287 22,825,589
Long-term Liabilities
Noncurrent operating lease liabilities 705,702 1,178,544
Contingent consideration 3,120,250 100,000
Purchase price payable 1,517,381 -
Total Liabilities 30,278,620 24,104,133
Commitments and Contingencies (Note 9) -
Mezzanine Equity
Preferred Stock, $0.0001 par value; 5,000,000 shares authorized
Series B Preferred Stock, $0.0001 par value; 5,000 shares authorized, 3,500 and 3,500 shares issued and outstanding, liquidation value approximately $1,272 and $1,175 per share as of September 30, 2022 and December 31, 2021, respectively 4,451,137 4,110,822
Stockholders’ (Deficit) Equity
Series A Preferred Stock, $0.0001 par value; 1,610,000 shares authorized, 1,400,000 shares issued and outstanding, liquidation value approximately, $27.27 and $25.62 per share as of September 30, 2022 and December 31, 2021, respectively 140 140
Common stock, $0.01 par value; 100,000,000 shares authorized, 31,457,775 and 30,704,434 shares issued, 31,354,735 and 30,601,394 outstanding as of September 30, 2022 and December 31, 2021, respectively 314,578 307,045
Additional paid-in capital 177,131,586 164,517,634
Accumulated deficit (177,851,083 ) (141,921,085 )
Treasury stock, 103,040 and 103,040 shares, at cost (163,701 ) (163,701 )
Total LifeMD, Inc. Stockholders’ (Deficit) Equity (568,480 ) 22,740,033
Non-controlling interest (799,716 ) (1,031,745 )
Total Stockholders’ (Deficit) Equity (1,368,196 ) 21,708,288
Total Liabilities, Mezzanine Equity and Stockholders’ (Deficit) Equity $ 33,361,561 $ 49,923,243
The accompanying notes are an integral part of these unaudited condensed consolidated financial ~~statements~~statements.

3
Immudyne, Inc.
Consolidated Statements of Operations
(unaudited)

Three Months Ended
Sept 30, Nine Months Ended
Sept 30,
2017 2016 2017 2016
Restated Restated
Net Sales $ 2,051,734 $ 1,384,429 $ 3,583,614 $ 4,252,704

Cost of Sales 535,572 388,202 1,068,174 1,268,320

Gross Profit 1,516,162 996,227 2,515,440 2,984,384

Operating expenses
Compensation and related expenses 529,361 361,829 1,131,805 1,077,340
Professional fees 99,964 82,608 321,548 277,282
Marketing expenses 882,845 554,536 1,182,715 1,713,337
General and administrative expenses 277,559 204,958 753,402 382,857
Total operating expenses 1,789,729 1,203,931 3,389,470 3,450,816

Operating (Loss) (273,567 ) (207,704 ) (874,030 ) (466,432 )

Change in fair value of derivative liability (377,213 ) - 496,617 -
Interest (expense) (1,111 ) (9,992 ) (650,718 ) (15,805 )

Net Income (Loss) (651,891 ) (217,696 ) (1,028,131 ) (482,237 )

Net (loss) income attributable to noncontrolling interests 27,172 8,955 (41,752 ) 6,439

Net Income (loss) attributable to Immudyne, Inc. $ (679,063 ) $ (226,651 ) $ (986,379 ) $ (488,676 )

Basic income (loss) per share attributable to Immudyne, Inc. $ (0.02 ) $ (0.01 ) $ (0.02 ) $ (0.02 )
Diluted income (loss) per share attributable to Immudyne, Inc. $ (0.02 ) $ (0.01 ) $ (0.02 ) $ (0.02 )

Average number of common shares outstanding
Basic 44,160,477 34,427,087 40,888,131 31,917,873
Diluted 44,160,477 34,427,087 40,888,131 31,917,873
LIFEMD, INC.
CONDENSED Consolidated STATEMENTS OF OPERATIONS
(Unaudited)
2022 2021 2022 2021
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Revenues
Telehealth revenue, net $ 21,365,178 $ 18,540,897 $ 66,231,202 $ 47,623,822
WorkSimpli revenue, net 10,047,291 6,406,302 24,682,602 17,835,100
Total revenues, net 31,412,469 24,947,199 90,913,804 65,458,922
Cost of revenues
Cost of telehealth revenue 4,502,919 4,969,306 14,042,112 12,113,336
Cost of WorkSimpli revenue 213,923 127,181 558,216 314,428
Total cost of revenues 4,716,842 5,096,487 14,600,328 12,427,764
Gross profit 26,695,627 19,850,712 76,313,476 53,031,158

Expenses
Selling and marketing expenses 17,200,859 20,293,935 60,928,649 61,372,815
General and administrative expenses 12,476,760 10,695,663 38,029,907 28,194,305
Goodwill impairment charge - - 2,735,000 -
Other operating expenses 1,525,645 818,404 4,804,623 2,264,257
Customer service expenses 1,488,428 505,880 3,428,098 1,274,392
Development costs 821,636 128,134 1,951,039 561,793
Total expenses 33,513,328 32,442,016 111,877,316 93,667,562
Operating loss (6,817,701 ) (12,591,304 ) (35,563,840 ) (40,636,404 )
Interest expense, net (132,235 ) (1,824,777 ) (432,405 ) (2,866,150 )
Change in fair value of contingent consideration (248,000 ) - 2,487,000 -
Gain on debt forgiveness - - 63,400 184,914
Net loss (7,197,936 ) (14,416,081 ) (33,445,845 ) (43,317,640 )
Net income (loss) attributable to non-controlling interest 83,737 (62,706 ) 154,464 (531,182 )
Net loss attributable to LifeMD, Inc. (7,281,673 ) (14,353,375 ) (33,600,309 ) (42,786,458 )
Preferred stock dividends (776,563 ) - (2,329,688 ) -
Net loss attributable to LifeMD, Inc. common stockholders $ (8,058,236 ) $ (14,353,375 ) $ (35,929,997 ) $ (42,786,458 )
Basic loss per share attributable to LifeMD, Inc. common stockholders $ (0.26 ) $ (0.54 ) $ (1.17 ) $ (1.66 )
Diluted loss per share attributable to LifeMD, Inc. common stockholders $ (0.26 ) $ (0.54 ) $ (1.17 ) $ (1.66 )
Weighted average number of common shares outstanding:
Basic 30,935,643 26,684,591 30,830,533 25,820,478
Diluted 30,935,643 26,684,591 30,830,533 25,820,478
The accompanying notes are an integral part of these unaudited condensed consolidated financial ~~statements~~statements.

4
Immudyne, Inc.
Consolidated Statement of Stockholders’ Equity (Deficit)
For the Nine Months Ended September 30, 2017
(unaudited)

Immudyne, Inc.
Additional
Common Stock Paid-in Accumulated Treasury Sub Noncontrolling
Shares Amount Capital (Deficit) Stock Total interest Total

Balance at December 31, 2016 35,570,157 $ 355,701 $ 9,070,064 $ (9,693,882 ) $ (87,053 ) $ (355,170 ) $ (6,555 ) $ (361,725 )

Issuance of common stock for services 1,175,000 11,750 487,181 - - 498,931 - 498,931
Sale of common stock and warrants 2,927,156 29,271 643,974 - - 673,245 - 673,245
Conversion of non-controlling interest equity for shares and warrants 1,183,490 11,835 260,368 - - 272,203 (272,203 ) -
Conversion of note payable 755,179 7,552 182,428 - - 189,980 - 189,980
Loss on settlement of notes and other payables - - 634,325 - - 634,325 - 634,325
Conversion of accrued expenses 217,390 2,174 50,038 - - 52,212 - 52,212
Issuance of common stock in relation to debt offering 217,391 2,174 54,348 - - 56,522 - 56,522
Cashless exercise of options 2,211,579 22,116 (22,116 ) - - - - -
Purchase of treasury stock - - - - (76,648 ) (76,648 ) - (76,648 )
Issuance of stock options for services - - 113,522 - - 113,522 - 113,522
Investment in subsidiary by noncontrolling interest, net of distributions - - - - - - 63,378 63,378
Reclassification of options, warrants and other contracts to derivative liabilities upon issuance - - (255,144 ) - - (255,144 ) - (255,144 )

Net (loss) - - - (986,379 ) - (986,379 ) (41,752 ) (1,028,131 )
Balance at September 30, 2017 44,257,342 $ 442,573 $ 11,218,988 $ (10,680,261 ) $ (163,701 ) $ 817,599 $ (257,132 ) $ 560,467
LIFEMD, INC.
CONDENSED Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY
(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, 2021      - $       - 23,433,663 $ 234,337 $ 77,779,370 $ (80,151,905 ) $ (163,701 ) $ (2,301,899 ) $ (2,175,687 ) $ (4,477,586 )
Stock compensation expense - - 1,203,750 12,038 2,313,737 - - 2,325,775 - 2,325,775
Cashless exercise of stock options - - 608,905 6,089 (6,089 ) - - - - -
Exercise of stock options - - 30,000 300 23,700 - - 24,000 - 24,000
Sale of stock in private placement, net - - 608,696 6,087 13,489,183 - - 13,495,270 - 13,495,270
Distribution to non-controlling interest - - - - - - - - (36,000 ) (36,000 )
Purchase of additional membership interest of WSS - - - - (377,419 ) - - (377,419 ) (66,603 ) (444,022 )
Adjustment of noncontrolling interest for additional investment - - - - (1,636,875 ) - - (1,636,875 ) 1,780,897 144,022
Net loss - - - - - (11,602,383 ) - (11,602,383 ) (270,503 ) (11,872,886 )
Balance, March 31, 2021 - $ - 25,885,014 $ 258,851 $ 91,585,607 $ (91,754,288 ) $ (163,701 ) $ (73,531 ) $ (767,896 ) $ (841,427 )

Stock compensation expense - - 30,000 300 2,547,000 - - 2,547,300 - 2,547,300
Exercise of stock options - - 391,000 3,910 738,840 - - 742,750 - 742,750
Cashless exercise of stock options - - 264,142 2,641 (2,641 ) - - - - -
Exercise of warrants - - 65,684 657 311,342 - - 311,999 - 311,999
Warrants issued for debt instruments - - - - 6,270,710 - - 6,270,710 - 6,270,710
Distribution to non-controlling interest - - - - - - - - (36,000 ) (36,000 )
Net loss - - - - - (16,830,700 ) - (16,830,700 ) (197,973 ) (17,028,673 )
Balance, June 30, 2021 - $ - 26,635,840 $ 266,359 $ 101,450,858 $ (108,584,988 ) $ (163,701 ) $ (7,031,472 ) $ (1,001,869 ) $ (8,033,341 )

Stock compensation expense - - 30,000 300 3,110,516 - - 3,110,816 - 3,110,816
Exercise of stock options - - 30,000 300 53,700 - - 54,000 - 54,000
Exercise of warrants - - 96,349 963 167,647 - - 168,610 - 168,610
Sale of common stock under ATM - - 70,786 708 492,773 - - 493,481 - 493,481
Distribution to non-controlling interest - - - - - - - - (36,000 ) (36,000 )
Net loss - - - - - (14,353,375 ) - (14,353,375 ) (62,706 ) (14,416,081 )
Balance, September 30, 2021 - $ - 26,862,975 $ 268,630 $ 105,275,494 $ (122,938,363 ) $ (163,701 ) $ (17,557,940 ) $ (1,100,575 ) $ (18,658,515 )
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 )
The accompanying notes are an integral part of these unaudited condensed consolidated financial ~~statements~~statements.

5
Immudyne, Inc.
Consolidated Statements of Cash Flows
(unaudited)

Nine Months Ended
September 30,
2017 2016

CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) attributable to Immudyne, Inc. $ (986,379 ) $ (488,676 )
Net (loss) attributable to noncontrolling interests (41,752 ) 6,439
Net (Loss) (1,028,131 ) (482,237 )
Adjustments to reconcile net (loss) to net cash (used) by operating activities
Change in fair value of derivative liability (496,617 ) -
Bad debt recovery (49,119 ) (43,558 )
Amortization of debt discount 81,558 5,990
Loss on settlement of notes and other payables 634,325 -
Stock compensation expense 162,741 493,218
Issuance of warrants for services - 20,585
Common stock issued for services 498,930 -
Changes in Assets and Liabilities
Trade accounts receivable 216,870 (276,930 )
Other receivables 2,250 -
Product deposit (119,899 ) -
Inventory (217,530 ) (69,479 )
Accounts payable and accrued expenses (1,067 ) 240,713
Net cash (used) by operating activities (315,689 ) (111,698 )

CASH FLOWS FROM FINANCING ACTIVITIES
Investment in subsidiary by noncontrolling interest, net 63,378 161,355
Proceeds from notes payable 386,376 150,000
Repayment of convertible note payable (100,000 ) -
Repayment of notes payable (250,463 ) -
Sale of common stock and warrants 673,245 46,000
Purchase of treasury stock (76,648 ) (4,720 )
Net cash provided by financing activities 695,888 352,635

Net increase in cash 380,199 240,937

Cash at beginning of the period 182,561 232,984

Cash at end of the period $ 562,760 $ 473,921

Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ 4,723 $ 8,563

Issuance of company stock for notes and other payables $ 242,192 $ -
Issuance of common stock for conversion of debt $ - $ -
Issuance of common stock in relation to debt offering $ - $ 41,875
Issuance of common stock for services - 581,093
Conversion of equity invested in subsidiary to common stock and warrants $ 272,203 $ -
Reclassification of options, warrants and other contracts to derivative liabilities upon issuance $ 255,144 $ -
LIFEMD, INC.
CONDENSED Consolidated STATEMENTS OF CASH FLOWS
(Unaudited)
2022 2021
Nine Months Ended September 30,
2022 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (33,445,845 ) $ (43,317,640 )
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount - 2,090,236
Amortization of capitalized software 1,746,899 177,926
Amortization of intangibles 666,782 340,457
Accretion of consideration payable 172,741 -
Depreciation of fixed assets 117,008 2,865
Gain on debt forgiveness (63,400 ) (184,914 )
Change in fair value of contingent consideration (2,487,000 ) -
Goodwill impairment charge 2,735,000 -
Operating lease payments 463,198 73,767
Stock issued for legal settlement 816,000 -
Stock compensation expense 11,850,000 7,983,891
Changes in Assets and Liabilities
Accounts receivable (1,558,063 ) (969,053 )
Product deposit 95,505 (95,183 )
Inventory (2,052,363 ) (322,836 )
Other current assets (21,386 ) (534,479 )
Change in operating lease liability (378,095 ) (68,085 )
Deferred revenue 853,272 519,101
Accounts payable 1,827,103 (1,150,858 )
Accrued expenses (2,303,466 ) 8,195,255
Net cash used in operating activities (20,966,110 ) (27,259,550 )
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for capitalized software costs (6,742,946 ) (1,731,507 )
Purchase of equipment (378,877 ) (70,105 )
Purchase of intangible assets (4,000,500 ) (22,231 )
Acquisition of business, net of cash acquired (1,012,395 ) -
Net cash used in investing activities (12,134,718 ) (1,823,843 )
CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from private placement offering, net - 13,495,270
Proceeds from issuance of debt instruments - 15,000,000
Cash proceeds from sale of common stock under ATM - 493,481
Cash proceeds from exercise of options 90,400 820,750
Cash proceeds from exercise of warrants 38,500 480,609
Preferred stock dividends (2,329,688 ) -
Adjustment of membership interest in WorkSimpli 12,150 -
Contingent consideration payment for ResumeBuild acquisition (93,750 ) -
Proceeds from notes payable - 963,965
Repayment of notes payable - (1,494,784 )
Purchase of membership interest of WSS - (300,000 )
Distributions to non-controlling interest (108,000 ) (108,000 )
Net cash (used in) provided by financing activities (2,390,388 ) 29,351,291
Net (decrease) increase in cash (35,491,216 ) 267,898
Cash at beginning of period 41,328,039 9,179,075
Cash at end of period $ 5,836,823 $ 9,446,973
Cash paid for interest
Cash paid during the period for interest $ - $ 120,062
Non-cash investing and financing activities
Cashless exercise of options $ 297 $ 8,730
Consideration payable for Cleared acquisition $ 8,079,367 $ -
Consideration payable for ResumeBuild acquisition $ 500,000 $ -
Warrants issued for debt instruments $ - $ 6,270,710
Principal of Paycheck protection Program loans forgiven $ 63,400 $ 184,914
Additional purchase of membership interest in WSS issued in performance options $ - $ 144,002
The accompanying notes are an integral part of these unaudited condensed consolidated financial ~~statements~~statements.

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
1. ~~Organization and Going Concern~~6
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”) is a Delaware corporation established~~The Company changed its name to ~~develop, manufacture~~Conversion Labs, Inc. on June 22, 2018 and ~~sell natural immune support products containing~~then subsequently, on February 22, 2021, it changed its name to LifeMD, Inc. Effective February 22, 2021, the trading symbol for the Company’s ~~proprietary yeast beta glucans, a group of beta glucans naturally occurring in~~common stock, par value $0.01 per share on The Nasdaq Stock Market LLC changed from “CVLB” to “LFMD”.
On April 1, 2016, the cell walls of yeast that have been shown through testing and analysis to support the immune system. The Company’s products include once a day oral intake tablets and topical creams and gels for skin application. The Company concentrates its sales and marketing efforts on healthcare professionals, distributors for its all-natural raw material ingredient products and direct-to-consumer sales.
In 2015, the Company formed a joint venture domiciled in Puerto Rico, Innate Skincare, LLC (“Innate”). Under the terms of the joint venture agreement, the Company held a 33.3% equity interest, and a 51% controlling voting interest, in Innate. On January 20, 2016, Innate amended its limited liability companyoriginal operating agreement ~~and changed its legal name to~~of Immudyne PR LLC (“Immudyne PR”), a joint venture to market the Company’s immune support, skincare, and hair loss 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. On April ~~1, 2016, Immudyne PR further amended its~~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 change of the parent company to LifeMD, Inc., Conversion Labs PR LLC 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”) (See Note 7) and concurrently increased its ownership interest in WorkSimpli to 85.6%. 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%. See Note 7 for additional information.
On January 18, 2022, the Company acquired Cleared Technologies, PBC, a Delaware public benefit corporation (“Cleared”), a rapidly growing nationwide allergy telehealth platform that provides personalized treatments for allergy, asthma, and immunology (See Note 3).
Nature of Business
The Company is a direct-to-patient telehealth technology company that provides a smarter, cost-effective, and convenient way for patients of its affiliated medical group to access healthcare. The Company believes that the traditional model of visiting a doctor’s office, receiving a physical prescription, visiting a local pharmacy, and returning to see a doctor for follow up care or prescription refills is inefficient, costly to patients, and discourages many patients from seeking much needed medical care. The U.S. healthcare system is undergoing a paradigm shift, due to new technologies and the emergence of direct-to-patient healthcare. Direct-to-patient telehealth technology companies, like the Company, connect consumers to affiliated, licensed, healthcare professionals for care across numerous indications, including primary care, men’s sexual health, and dermatology.
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.
The Company believes that brand innovation, customer acquisition, and service excellence form the heart of its business. As is exemplified with its first brand, ShapiroMD, it 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 its newest brand, 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 June 2018, Conversion Labs closed the strategic acquisition of 51% of WorkSimpli, which operates a software as a service application for converting, editing, signing, and sharing PDF documents called PDFSimpli. In addition to WorkSimpli’s growth business model, this acquisition added deep search engine optimization and search engine marketing expertise to the Company. The Company subsequently increased its ownership interest in WorkSimpli to its current 85.6%. 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%. See Note 7 for additional information.
7
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, which was to be used to run e-commerce marketing campaigns for other online businesses. However, this business initiative was terminated in early 2019 in order to focus on the core business, as well as on the expansion of telehealth opportunities. 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”). GoGoMeds is a nationwide pharmacy licensed to dispense prescription medications directly to consumers in all 50 states and the District of Columbia. However, since its inception, CVLB Rx did not conduct any business and CVLB Rx was dissolved on August 7, 2020. Additionally, Conversion Labs Asia Limited (“Conversion Labs Asia”), a Hong Kong company, had no activity during the three months and nine months ended September 30, 2022 and 2021.
On January 18, 2022, the Company acquired Cleared, a rapidly growing nationwide allergy telehealth platform that provides personalized treatments for allergy, asthma, and immunology. Under the terms of the agreement, the Company acquired all outstanding shares of Cleared at closing in exchange for a $460,000 upfront cash payment, and two non-contingent milestone payments for 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 $507,000 which was converted upon closing of the Cleared acquisition. The Company also agreed to a performance-based earnout based on Cleared’s future net sales, payable in cash or shares at the Company’s discretion (See Note 3).
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 $62,500, for a two-year period ending on the two-year anniversary of the closing of the Acquisition. WorkSimpli borrowed the purchase price from the Company pursuant to a promissory note with the obligation secured by an equity purchase guarantee agreement and a stock option pledge agreement from Fitzpatrick Consulting, LLC and its sole member Sean Fitzpatrick, who is Co-Founder and President of WorkSimpli (See Note 3).
Unless otherwise indicated, the terms “LifeMD,” “Company,” “we,” “us,” and “our” refer to LifeMD, Inc. (formerly known as Conversion Labs, Inc.), our wholly subsidiary LifeMD PR LLC (formerly Immudyne PR ~~increasing~~LLC, and “Conversion Labs PR”), a Puerto Rico limited liability company (“Conversion Labs PR”, or “CLPR”), 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.
Partnerships
On July 13, 2021, the Company, on behalf of its ~~ownership~~customers, entered into an agreement to ~~78.1667% resulting~~engage Quest Diagnostics Incorporated (“Quest Diagnostics”) as the Company’s laboratory services provider to perform certain clinical laboratory diagnostic services based on orders submitted to Quest Diagnostics by licensed health care providers who are under contract with the Company and are authorized under U.S. federal or state law to order laboratory tests. Patients of LifeMD Inc.’s affiliated providers gain access to more than 150 of the most ordered laboratory tests at preferential prices, and which can be completed in the comfort, safety, and convenience of their home or office, or at any one of Quest Diagnostics’ 2,000 facilities.
On August 4, 2021, the Company entered into a ~~charge~~partnership agreement with Particle Health, a state-of-the-art, digital health company with a HIPAA-compliant technology platform that converts electronic medical records data into a user-friendly, Fast Healthcare Interoperability Resource (“FHIR”) format. Particle Health enables healthcare companies by offering simple, secure access to ~~noncontrolling interest~~vital medical data. With Particle Health’s platform and ~~additional paid-in-capital~~patient consent, licensed affiliated medical providers on the LifeMD primary care platform gain instant access to comprehensive patient health records, therefore enabling best-in-class, personalized care through a deeper understanding of ~~$91,612. Immudyne PR was formed to launch a complete skin care regime formulated using strategic ingredients provided by the Company. In the second quarter of 2017, Immudyne PR expanded~~ their ~~product line and launched their in-licensed patented hair loss shampoo and conditioner.~~patients’ medical histories.
Liquidity
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 from officers and directors.~~advances. The Company’s continued operations are dependent upon obtaining an increase in its ~~sales volume~~sale volumes and ~~the continued financial support~~obtaining funding from ~~officers and directors~~third-party sources or the issuance of additional shares of common stock.
On February 11, 2021, the Company consummated the closing of a private placement offering (the “February 2021 Offering”), whereby pursuant to the securities purchase agreement (the “February 2021 Purchase Agreement”) entered into by the Company and certain accredited investors on February 11, 2021, the Investors purchased 608,696 shares of the Company’s common stock par value $0.01 per share at a purchase price of $23.00 per share for aggregate gross proceeds of approximately $14.0 million (the “Purchase Price”). The ~~accompanying financial statements have been prepared~~Purchase Price was funded on the ~~basis that~~closing date and resulted in net proceeds to the Company ~~will continue~~of approximately $13.5 million after deducting fees payable to the placement agent and other estimated offering expenses payable by the Company. The Company is using the net proceeds to fund growth initiatives, as well as for general corporate purposes.
8
On June 1, 2021, the Company entered into a ~~going concern,~~securities purchase agreement (the “June 1, 2021 Purchase Agreement”) with a financial institution (the “Purchaser”), pursuant to which ~~assumes~~ the ~~realization~~Company sold and issued: (i) a senior secured redeemable debenture (the “Debenture”) in the aggregate principal amount of ~~assets~~$15.0 million (the “Aggregate Principal Amount”), and (ii) warrants to purchase up to an aggregate of 1,500,000 shares of the Company’s common stock at an exercise price of $12.00 per share (the “Warrant”) of which 500,000 warrants were issued to the Purchaser upon closing with the remaining 1,000,000 warrants only issued to the Purchaser in increments of 500,000 if the Debenture remains outstanding for twelve and twenty four months, respectively, following the closing date of the June 1, 2021 Purchase Agreement. The Warrant has a term of three years, and the ~~satisfaction~~Debenture has a maturity date of ~~liabilities~~three years. The Company received gross proceeds of $15.0 million. In October 2021, the Company used a portion of the net proceeds from the October 4, 2021 Offerings noted below to pay the $15.0 million outstanding on the June 1, 2021 Purchase Agreement.
On June 8, 2021, the Company filed a shelf registration statement on Form S-3 under the Securities Act of 1933, as amended (the “Securities Act”), which was declared effective on June 22, 2021 (the “2021 Shelf”). Under the 2021 Shelf at the time of effectiveness, the Company had the ability to raise up to $150 million by selling common stock, preferred stock, debt securities, warrants, and units. In conjunction with the 2021 Shelf, the Company also entered into an At Market Issuance Sales Agreement (the “ATM Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley”) and Cantor Fitzgerald & Co. (“Cantor”, and collectively the “Agents”) relating to the sale of its common stock. In accordance with the terms of the ATM Sales Agreement, the Company may, but is not obligated to, offer and sell, from time to time, shares of common stock having an aggregate offering price of up to $60 million, through or to the Agents, acting as agent or principal. Sales of common stock, if any, will be made by any method permitted that is deemed an “at the market offering” as defined in Rule 415 under the Securities Act. The Company intends to use any net proceeds from the sale of securities for our operations and for other general corporate purposes, including, but not limited to, capital expenditures, general working capital, and possible future acquisitions. There were no shares of common stock sold under the ATM Sales Agreement during the three and nine months ended September 30, 2022. There were 70,786 shares of common stock sold under the ATM Sales Agreement during the three and nine months ended September 30, 2021 and net proceeds received were $493,481. As of September 30, 2022, the Company has utilized $58.5 million of the 2021 Shelf. The Company has approximately $59.5 million available under the ATM Sales Agreement and $32 million available under the 2021 Shelf as of September 30, 2022.
In September 2021, the Company entered into two underwriting agreements (the “Preferred Underwriting Agreement” and “the Common Underwriting Agreement”) with B. Riley. Pursuant to the Preferred Underwriting Agreement, the Company agreed to sell 1,400,000 shares of its 8.875% Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share, (the “Series A Preferred Stock”) at a public offering price of $25.00 per share, prior to deducting underwriting discounts and commissions and estimated offering expenses (the “Preferred Stock Offering”). In addition, the Company granted the underwriters an option to purchase up to an additional 210,000 shares of Series A Preferred Stock within 30 days. The option was not exercised. Under the Common Underwriting Agreement, the Company agreed to sell to B. Riley 3,833,334 shares of common stock (including 500,000 shares pursuant to B. Riley’s option) (the “Common Shares”), par value $0.01 per share, of the Company at a public offering price of $6.00 per share of common stock, prior to deducting underwriting discounts and commissions and estimated offering expenses (the “Common Stock Offering”). The Preferred Stock Offering and Common Stock Offering collectively referred to as the “October 4, 2021 Offerings”, closed on October 4, 2021. Net proceeds after deducting the underwriting discounts, and commissions, the structuring fee and estimated offering expenses payable by the Company, but before repayment of debt, from the Offerings was approximately $55.3 million. The Company used a portion of the net proceeds to pay the $15.0 million outstanding on the June 1, 2021 Purchase Agreement and is using the remaining net proceeds to fund the segregated dividend account, for working capital and general corporate purposes including, but not limited to, new patient customer acquisition expenses and capital expenditures.
The Company will pay cumulative distributions on the Series A Preferred Stock, from the date of original issuance, in the ~~normal course~~amount of ~~business. At~~$2.21875 per share each year, which is equivalent to 8.875% of the $25.00 liquidation preference per share. Dividends on the Series A Preferred Stock will be payable quarterly in arrears, on or about the 15th day of January, April, July, and October of each year. Dividends declared and paid on the Series A Preferred Stock during the nine months ended September 30, ~~2017,~~2022 are as follows: (1) the second quarterly dividend on the Series A Preferred Stock was declared on March 25, 2022 to holders of record as of April 5, 2022 and was paid on April 15, 2022, (2) the third quarterly dividend on the Series A Preferred Stock was declared on June 27, 2022 to holders of record as of July 5, 2022 and was paid on July 15, 2022, and (3) the fourth quarterly dividend on the Series A Preferred Stock was declared on September 27, 2022 to holders of record as of October 7, 2022 and was paid on October 17, 2022. The dividends are included in the Company’s results of operations for the three and nine months ended September 30, 2022.
Going Concern Evaluation
As of September 30, 2022, the Company has an accumulated deficit approximating ~~$10.7~~$178 million and has ~~incurred~~experienced significant losses from its operations. Although the Company is showing positive revenue trends, the Company expects to incur further losses through the fourth quarter of 2022. To date, the Company has been funding operations primarily through the sale of equity in private placements and securities purchased by a financial institution. 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.
9
The Company has a current cash balance of approximately $3.4 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 ~~cash flows from operations. These~~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~~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.
~~Based on~~In order to mitigate the ~~Company's cash balance at September 30, 2017,~~going concern issues, the Company has begun to implement strategies to strengthen revenues and ~~projected cash needs for 2017, management estimates~~improve operational efficiencies across the business and is significantly curtailing expenses. Additionally, the Company has $59.5 million available under the ATM Sales Agreement and $32 million available under the 2021 Shelf. Management believes that the overall market value of the telehealth industry is positive and that it will ~~need~~continue to ~~increase sales revenue and/or raise additional capital~~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 ~~cover operating~~Form 10-Q and ~~capital requirements~~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 ~~remainder~~year ended December 31, 2021, included in our 2021 Annual Report on Form 10-K filed with the SEC. The information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the ~~2017 year. Management will need to raise~~results for the ~~additional needed funds through increased sales volume, issuing additional shares of common stock~~year ending December 31, 2022 or other equity securities, or obtaining debt financing. Although management has been successful to date in raising necessary funding, there can be no assurance that sales revenue will substantially increase or thatfor any ~~required~~ future ~~financing can be successfully completed on a timely basis, or on terms acceptable to the Company.~~

~~Immudyne, Inc.~~period.
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
2. ~~Summary of Significant Accounting Policies~~
Principles of Consolidation
The Company evaluates the need to consolidate affiliates based on standards set forth in Accounting ~~Standard~~Standards Codification (“ASC”) 810, ~~Consolidation.~~Consolidation.
The consolidated financial statements include the accounts of the Company, and its wholly owned subsidiary, LifeMD PR, Cleared, its majority owned subsidiary, ~~Immudyne PR~~WorkSimpli, and LifeMD PC, the Company’s affiliated, variable interest ~~entities (VIE’s)~~entity in which we hold a controlling financial interest. During the year ended December 31, 2021, the Company ~~has been determined to be~~purchased an additional 34.6% of WorkSimpli for a total equity interest of approximately 85.6% as of December 31, 2021 (See Note 7). Effective September 30, 2022, two option agreements were exercised which further restructured the ~~primary beneficiary. The non-controlling~~ownership of WorkSimpli. As a result, the Company’s ownership interest in ~~Immudyne PR represents the 21.8333% equity interest held by other members of the joint venture.~~ WorkSimpli decreased to 73.64%. See Note 7 for additional information.
All significant ~~consolidated~~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, 2022 and December 31, 2021, there were no cash equivalents. The Company maintains deposits in financial institutions in excess of amounts guaranteed by the Federal Deposit Insurance Corporation. Cash and cash equivalents are maintained at financial institutions, and at times, balances may exceed federally insured limits. We have not experienced any losses related to these balances.
Variable Interest Entities
~~The~~In accordance with ASC 810, Consolidation, the Company ~~follows ASC 810-10-15 guidance with respect~~determines whether any legal entity in which the Company becomes involved is a variable interest entity (a “VIE”) and subject to ~~accounting for VIE’s. These entities do not have~~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. A variable~~ interest ~~is an investment or other~~and whether the interest ~~that~~ will absorb portions of a VIE’s expected losses or receive portions of its expected residual returns and are contractual, ownership, or pecuniary in nature and that change with changes in the fair value of the entity’s net assets. 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~~has the ability to direct the activities of the VIE that most significantly impact its economic ~~performance. The losses/benefits criterion is~~performance and has the obligation to absorb losses from, or right to receive benefits from, the VIE that could potentially be significant to the VIE.
10
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 ~~model requires an ongoing reconsideration of whether~~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 ~~reporting entity~~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 ~~VIE due to changes in facts and circumstances.~~
~~As of September 30, 2017 and December 31, 2016,~~result, the Company ~~consolidated nine VIEs.~~
~~Immudyne PR~~presents the financial position, results of operations, and cash flows of LifeMD PC as part of the primary beneficiary of Ace Account Management LLC, Innerwell Skincare LLC, MCD Merchants LLC, One Equity Research LLC, Inate Gems LLC, Retriever Health Products LLC, Spurs 5, LLC, Salus LLC and Huntley LLC which are qualified as VIEs. The assets and liabilities and revenues and expenses of these VIEs are included in theconsolidated financial statements of ~~Immudyne PR and further included in~~ the consolidated financial statements. As of September 30, 2017, the VIEs had assets of $3,096, liabilities of $10,146, revenues of $1,487, and operating expenses of $2,119. As of December 31, 2016, the VIEs had assets of $10,306, liabilities of $5,748. The assets and liabilities include balances due from and due to the subsidiaries of Immudyne PR. Any inter-company receivables and payables are eliminatedCompany. There is no non-controlling interest upon consolidation of LifeMD PC.
Total revenue and net loss for LifeMD PC was approximately $124 thousand and $1.0 million for the ~~VIEs with Immudyne PR and Immudyne, Inc. No assets were pledged or given as collateral against any borrowings.~~
The Company utilizes third party entities to provide and increase credit card processing capacity and optimize corresponding rates and fees. A majority of these entities provide this service as independent contractors in exchange for a one percent (1%) fee of the net revenues processed and collected by such contractors from sales initiated by the Company. The VIEs consolidated in the Company’s financial statements are primarily contracted to provide credit card processing through one or more merchant banks. Upon receipt of funds by each VIE, the collection of receipts less any returns, chargebacks and other fees charged by such merchant bank is transferred to Immudyne PR.

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
three months ended September 30, ~~2017~~2022, respectively, and $124 thousand and $3.9 million for the nine months ended September 30, 2022, respectively.
~~(unaudited)~~
2. ~~Summary of Significant Accounting Policies (continued)~~
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 (“U.S. GAAP”) 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 ~~accounting for derivatives, the~~ valuation of inventory, and stockholders’ ~~equity based~~equity-based transactions. Actual results could differ from those estimates.
~~Derivative Liabilities~~Reclassifications
~~Under ASC 815-40-05, Accounting for Derivative Financial Instruments Indexed~~Certain reclassifications have been made to ~~and Potentially Settled in a Company’s Own Stock,~~conform the prior year’s data to the current presentation. These reclassifications have no effect on previously reported operating loss, stockholders’ deficit, or cash flows. Given the increase in the ~~event~~Company’s software business and to conform the Company’s presentation of operating results to industry standards, the Company has changed their categories for reporting operations 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 ($3,026) and $126,437 of development services costs reclassified from other operating expenses to development costs, for the three and nine months ended September 30, 2021, 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 limited cases, the customer does not obtain control until the product reaches the customer’s delivery site; in these limited cases, recognition of revenue should be deferred until that time, however, the Company does not have a ~~sufficient number~~process to properly record the recognition of ~~authorized~~revenue if orders are not immediately shipped, and ~~unissued shares~~deems the impact to be immaterial. In all cases, delivery is considered to have occurred when the customer obtains control, which is usually commensurate upon shipment of ~~common stock~~the product. 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 ~~satisfy obligations~~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 ~~stock options, warrants~~provisions of discounts, returns, allowances, customer rebates, and other ~~instruments potentially convertible into common stock, the fair value of these instruments should be~~adjustments for its product shipments; this estimate is reflected as contra revenues in arriving at reported ~~as a derivative liability. Pursuant to the outstanding option, warrant~~net revenues. The Company’s discounts and ~~convertible debt agreements, there is currently no effective registration statement covering the shares of common stock underlying these agreements, which~~customer rebates are ~~currently subject to a cashless exercise whereby the holders,~~known at their option, may surrender their options and warrants to the company in exchange for shares of common stock. The number of shares of common stock into which an option or a warrant would be exchangeable in such a cashless exercise depends on both the exercise price of the options or warrant and the market price of the common stock, each at or near the time of ~~exercise. Because both of these factors~~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 ~~variable, it is possible~~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 $1.1 million and $871 thousand for the three months ended September 30, 2022 and 2021, respectively. Customer discounts, returns, and rebates on telehealth revenues approximated $4.2 million and $3.5 million for the nine months ended September 30, 2022 and 2021, respectively.
11
The Company, ~~could have insufficient authorized shares~~through its majority-owned subsidiary WorkSimpli, offers a subscription-based service providing a suite of software applications to ~~satisfy~~its subscribers, principally on a ~~cashless exercise. In this scenario, if~~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 ~~were unable~~offers an initial 14-day trial period which is billed at $1.95, followed by a monthly subscription, or a yearly subscription to ~~obtain shareholder approval to increase~~ the ~~number of authorized shares,~~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 ~~could be obligated~~allows the subscriber to ~~settle such a cashless exercise with cash rather than by issuing shares~~access the suite of ~~common stock. Further, ASC 815-40-05 requires that~~services for the ~~Company record~~time period of the ~~potential settlement obligation at each reporting date using the current estimated fair value of these contracts, with any changes in fair value being recorded through our statement of operations.~~subscription purchased. The Company ~~had reported~~allows the ~~potential settlement obligation~~customer to cancel at any point during the billing cycle, in which case the customers subscription will not be renewed for the following month or year depending on the original subscription. The Company records the revenue over the customers subscription period for monthly and yearly subscribers or at the end of the initial 14-day service period for customers who purchased the initial subscription, as the circumstances dictate. The Company offers a ~~derivative liability. In~~discount for the ~~third quarter~~monthly or yearly subscriptions being purchased, which is deducted at the time of ~~2017,~~payment at the ~~Company obtained a majority~~initiation of ~~shareholders’ approval and amended its Articles of Incorporation to increase~~ the ~~number of shares of its authorized common stock,~~contract term; therefore the ~~derivative liability~~Contract price is ~~no longer applicable.~~
~~Sequencing Policy~~
~~Under ASC 815-40-35,~~fixed and determinable at the contract initiation. Monthly and annual subscriptions for the service are recorded net of the Company’s known discount rates. As of September 30, 2022 and December 31, 2021, the Company has ~~adopted~~accrued contract liabilities, as deferred revenue, of approximately $2.4 million and $1.5 million, respectively, which represent obligations on in-process monthly or yearly contracts with customers and a ~~sequencing policy whereby,~~portion attributable to the yet to be recognized initial 14-day trial period collections. Customer discounts and allowances on WorkSimpli revenues approximated $710 thousand and $377 thousand for the three months ended September 30, 2022 and 2021, respectively. Customer discounts and allowances on WorkSimpli revenues approximated $1.7 million and $1.6 million for the nine months ended September 30, 2022 and 2021, respectively.
For the three and nine months ended September 30, 2022 and 2021, the Company had the following disaggregated revenue:
SCHEDULE OF DISAGGREGATED REVENUE
Three Months Ended September 30, Nine Months Ended September 30,
2022 % 2021 % 2022 % 2021 %
Telehealth revenue $ 21,365,178 68 % $ 18,540,897 74 % $ 66,231,202 73 % $ 47,623,822 73 %
WorkSimpli revenue 10,047,291 32 % 6,406,302 26 % 24,682,602 27 % 17,835,100 27 %
Total net revenue $ 31,412,469 100 % $ 24,947,199 100 % $ 90,913,804 100 % $ 65,458,922 100 %
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 payments received for the in-process monthly or yearly contracts with customers and a portion attributable to the yet to be recognized initial 14-day trial period collections.
SCHEDULE OF CONTRACT WITH CUSTOMER LIABILITY
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Beginning of period $ 1,992,502 $ 1,381,938 $ 1,499,880 $ 916,880
Additions 9,346,553 6,020,061 23,567,740 17,233,084
Revenue recognized (8,985,903 ) (5,966,018 ) (22,714,468 ) (16,713,983 )
End of period $ 2,353,152 $ 1,435,981 $ 2,353,152 $ 1,435,981
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 ~~event~~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
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 ~~reclassification~~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 ~~contracts from equity~~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 ~~assets or liabilities is necessary pursuant~~be granted to ~~ASC 815 due~~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, 2022 and December 31, 2021, the reserve for sales returns and allowances was approximately $344 thousand and $477 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, 2022 and December 31, 2021, inventory primarily consisted of finished goods related to the Company’s ~~inability to demonstrate it has sufficient authorized shares, shares will be allocated on~~OTC products included in the ~~basis~~telehealth revenue section of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of authorized but unissued shares, and all future instruments being classified as a derivative liability, with the exception of instruments related to share-based compensation issued to employees or directors.
~~Inventory~~
~~At September 30, 2017 and December 31, 2016, inventory consisted primarily of cosmetic and nutraceutical additives, and finished cosmetic products.~~table above. Inventory is maintained inat the Company’s ~~leased Kentucky~~third-party warehouse location in Wyoming and ~~third party warehouses~~at various Amazon fulfillment centers. The Company also maintains inventory at a company owned warehouse in ~~Pennsylvania and Louisiana.~~Pennsylvania.
Inventory is valued at the lower of cost or ~~market~~net realizable value, with cost determined on ~~a first-in, first-out (“FIFO”)~~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 ~~market value,~~net realizable, if lower. AtAs of September 30, ~~2017~~2022 and December 31, ~~2016,~~2021, the Company recorded an inventory reserve in the amount of ~~$20,000. Inventory consists~~$44 thousand and $57 thousand, respectively.
12
As of September 30, 2022 and December 31, 2021, the Company’s inventory consisted of the following:
September 30,
2017 December 31,
2016

Raw materials $ 68,852 $ 38,460
Finished products 308,948 121,810
$ 377,800 $ 160,270
8SUMMARY OF INVENTORY
September 30, December 31,
2022 2021
Finished Goods - Products $ 2,829,053 $ 1,592,654
Raw materials and packaging components 891,399 81,427
Inventory reserve (44,321 ) (57,481 )
Total Inventory - net $ 3,676,131 $ 1,616,600
~~Immudyne, Inc.~~Product Deposit
~~Notes~~Many of our vendors require deposits when a purchase order is placed for goods or fulfillment services. These deposits typically range from 10% to ~~Consolidated Financial Statements~~
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, ~~2017~~
~~(unaudited)~~
2. ~~Summary of Significant Accounting Policies (continued)~~
~~Revenue Recognition~~
2022 and December 31, 2021, the Company has approximately $108 thousand and $204 thousand, respectively, of product deposits with multiple vendors for the purchase of raw materials or finished goods. The Company’s ~~policy is~~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, 2022 and December 31, 2021, the Company approximates its implicit purchase commitments to ~~record revenue as earned when a firm commitment, indicating sales quantity~~be $582 thousand and ~~price exists, delivery has taken place~~$511 thousand, respectively. As of September 30, 2022 and ~~collectability is reasonably assured.~~ December 31, 2021, the vast majority of these product deposits are with two vendors that manufacture the Company’s finished goods inventory for its ShapiroMD and RexMD product lines.
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 records sales of nutraceutical and cosmetic additives once the product is shipped to the customer, and for sales of finished cosmetic products once the customer places the order and the product is simultaneously shipped, but in limited cases if titlethree years. The Company does not ~~pass until~~sell internally developed software other than through the ~~product reaches~~use of subscription service. Certain development costs not meeting the ~~customer’s delivery site, then recognition~~criteria for capitalization, in accordance with ASC 350-40, Internal-Use Software, are expensed as incurred. As of ~~revenue~~September 30, 2022 and December 31, 2021, the Company capitalized $10.3 million and $3.6 million, respectively, related to internally developed software costs which are amortized over the useful life and included in development costs on our statement of operations.
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 ~~deferred until~~not amortized but is tested for impairment annually or more frequently, if events or changes in circumstances indicate that ~~time. Delivery is considered to have occurred when title and risk~~the asset may be impaired. Goodwill in the amount of ~~loss have transferred to~~$8.4 million was acquired in conjunction with the ~~customer. Provisions for discounts, returns, allowances, customer rebates and other adjustments are netted with gross sales.~~Cleared acquisition during the three months ended March 31, 2022 (see Note 3). The Company ~~accounts for such provisions~~recorded a $2.7 million goodwill impairment charge during ~~the same period in which the related revenues are earned. Customer discounts, returns and rebates approximated $149,000 and $1,578,000 in~~ the nine months ended September 30, ~~2017 and 2016, respectively. Customer discounts, returns and rebates approximated $99,000 and $530,000~~2022 related to a decline in the ~~three months ended~~estimated fair value of Cleared as a result of a decline in the Cleared financial projections.
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, capitalized software, and intangible assets subject to amortization. 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, ~~2017~~2022 and ~~2016, respectively. There are~~December 31, 2021, the Company determined that no ~~formal sales incentives offered to~~events or changes in circumstances existed that would indicate any impairment of its long-lived assets.
Paycheck Protection Program
During the year ended December 31, 2020, the Company received aggregate loan proceeds in the amount of approximately $249,000 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the ~~Company’s customers. Volume discounts may~~Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent, and utilities and maintains its payroll levels. The amount of loan forgiveness will be ~~offered from time to time to customers purchasing large quantities on~~reduced if the borrower terminates employees or reduces salaries during the eight-week period. The unforgiven portion of the PPP loan is payable over two years at an interest rate of 1%, with a ~~per transaction basis.~~deferral of payments for the first six months. The Company used the proceeds for purposes consistent with the PPP.
13
~~Revenue for~~During the nine months ended September 30, ~~2017 consisted~~2022 and 2021, the Company had a total of ~~nutraceutical~~$63,400 and ~~cosmetic additives ($981,356) and finished cosmetic products ($2,602,258). Revenue for~~$184,914, respectively, of its PPP loans forgiven by the ~~nine months ended September 30, 2016 consists of nutraceutical and cosmetic additives ($757,961) and finished cosmetic products ($3,494,743)~~U.S. Small Business Administration (“SBA”) (See Note 6).
Revenue for the three months ended September 30, 2017 consisted of nutraceutical and cosmetic additives ($277,463) and finished cosmetic products ($1,774,271). Revenue for the three months ended September 30, 2016 consists of nutraceutical and cosmetic additives ($229,741) and finished cosmetic products ($1,154,688).
~~Accounts receivable~~
Accounts receivable are carried at original invoice amount less an estimate made for holdbacks and doubtful receivables based on a review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions and sets up an allowance for doubtful accounts when collection is uncertain. Customers’ accounts are written off when all attempts to collect have been exhausted. Recoveries of accounts receivable previously written off are recorded as income when received. At September 30, 2017 and December 31, 2016, the accounts receivable reserve was approximately $-0- and $37,800, respectively. As of September 30, ~~2017 and~~2022, the Company had no remaining PPP loan balance. As of December 31, ~~2016,~~2021, the ~~reserve for sales returns~~PPP loan balance was $63,400 and ~~allowances was approximately $26,000 and $50,500, respectively.~~

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
2. ~~Summary of Significant Accounting Policies (continued)~~
~~Segments~~
The guidance for disclosures about segments of an enterprise requires that a public business enterprise report financial and descriptive information about its operating segments. Generally, financial information is ~~required to be reported~~reflected on the basis used internally for evaluating segment performance and resource allocation. The Company manages its operations in two reportable segments for purposes of assessing performance and making operating decisions. Revenue is generated predominately in the United States, and all significant assets are held in the United States, or United States territories.Company’s unaudited condensed consolidated balance sheet as current liabilities, within notes payable, net.
The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. The Company allocates resources and evaluates the performance of segments based on income or loss from operations, excluding interest, corporate expenses and other income (expenses).
~~A summary of the company’s reportable segments is as follows:~~
Total assets: September 30,
2017 December 31,
2016
Nutraceutical and Cosmetic Additives $ 1,615,632 $ 556,234
Finished Cosmetic Products 763,609 422,288
Eliminations (1,041,790 ) (188,698 )
Total $ 1,337,451 $ 789,824
Three months ended Nine months ended
September 30, September 30, September 30, September 30,
2017 2016 2017 2016
Net sales by segment:
Nutraceutical and Cosmetic Additives $ 277,463 $ 229,741 $ 981,356 $ 780,961
Finished Cosmetic Products 1,774,271 1,154,688 2,602,258 3,494,743
Eliminations - - - (23,000 )
Total $ 2,051,734 $ 1,384,429 $ 3,583,614 $ 4,252,704
Three months ended Nine months ended
September 30, September 30, September 30, September 30,
Net (loss) income by segment: 2017 2016 2017 2016
Nutraceutical and Cosmetic Additives $ (1,244 ) $ 141 $ 180,388 $ 115,083
Finished Cosmetic Products 145,563 41,017 (170,119 ) 171,520

Other unallocated amounts:
Corporate expenses (417,886 ) (248,862 ) (884,299 ) (753,035 )
Other income (expense) (378,324 ) (9,992 ) (154,101 ) (15,805 )

Consolidated net income (loss) $ (651,891 ) $ (217,696 ) $ (1,028,131 ) $ (482,237 )

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
2. ~~Summary of Significant Accounting Policies (continued)~~
Income Taxes
The Company files ~~Corporate Federal~~corporate federal, state, and ~~State~~local tax returns. LifeMD PR and WorkSimpli file tax returns ~~while Immudyne PR, which was formed as a~~in Puerto Rico. Both are limited liability ~~corporation, files a~~companies and file separate tax ~~return~~returns with any tax liabilities or benefits passing through to its members.
The Company records current and deferred taxes in accordance with ~~Accounting Standards Codification (ASC)~~ASC 740, ~~“Accounting~~Accounting for Income ~~Taxes.”~~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.~~(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, ~~2013,~~2018, remain open to audit by all related taxing authorities.
Stock-Based Compensation
The Company follows the provisions of ASC 718, ~~“Share-Based Payment” and ASC 505-50 “Equity-Based Payments to Non-Employees”~~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 ~~periods.~~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 ~~estimated forfeiture rate included in the option valuation was zero.~~
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.

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
2. ~~Summary of Significant Accounting Policies (continued)~~
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. ~~The diluted~~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 ~~computation includes~~when the ~~effect, if any, of shares that~~effects would be ~~issuable upon~~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 ~~outstanding stock options, warrants, derivative liability and convertible debt, reduced by the number of~~these instruments are used to purchase common shares ~~which are assumed to be purchased by the Company from the resulting proceeds~~ at the average market price ~~during~~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, ~~when such amounts~~and the resulting common shares are ~~dilutive to~~included in the ~~earnings per share calculation.~~denominator of the diluted EPS calculation for the entire period being presented.
The ~~weighted average~~following table summarizes the number of shares of common stock ~~equivalents not included in~~issuable pursuant to our convertible securities that were excluded from the diluted ~~income per share, because the effects are anti-dilutive, was 4,907,700 for the three months ended September 30, 2017.~~
~~Common stock equivalents comprising shares underlying 9,335,800 options and warrants for the nine months ended September 30, 2017 have not been included in the loss~~ per share calculation asbecause the ~~effects are anti-dilutive. Common stock equivalents comprising~~effect of including these potential shares ~~underlying 12,950,273 options and warrants for~~was antidilutive, even though the ~~nine months ended September 30, 2016 have not been included in~~exercise price could be less than the ~~loss per share calculations as~~average market price of the ~~effects are anti-dilutive.~~common shares:
SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Three Months
Ended

Three Months
Ended

Nine Months
Ended

Nine Months
Ended

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Series B Preferred Stock 1,369,581 1,229,581 1,334,421 1,195,446
Restricted Stock Units (RSUs) 1,830,750 996,375 1,563,000 569,417
Stock options 4,007,698 4,170,900 4,214,609 4,193,100
Warrants 3,859,638 3,888,438 3,859,638 3,807,899
Potentially dilutive securities 11,067,667 10,285,294 10,971,668 9,765,862
14

~~Recent Accounting Pronouncements~~Segment Data
~~In May 2017,~~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 ~~FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope~~chief operating decision maker to make determinations about resources to be allocated and to assess performance. Other factors, including type of ~~Modification Accounting.~~ business, revenue recognition and operating results, are reviewed in determining the Company’s operating segments.
Fair Value of Financial Instruments
The new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This pronouncement is effective for annual reporting periods beginning after December 15, 2017 but early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing diversity in practice regarding how certain cash receipts and cash payments are presented in the statement of cash flows. The standard provides guidance on the classificationcarrying value of the ~~following items: (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon debt~~Company’s financial instruments, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance policies, (6) distributions received from equity method investments, (7) beneficial interests in securitization transactions, and (8) separately identifiableincluding cash, flows. The Company is required to adopt ASU 2016-15 for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017 on a retrospective basis. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of adoption of ASU 2016-15.
In February 2016, a pronouncement was issued that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation ofaccounts receivable, accounts payable, accrued expenses, and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the face amount ~~timing, and uncertainty~~ of ~~cash flows arising from leases. The new standard is effective~~notes payable approximate fair value for ~~annual reporting~~all periods beginning after December 15, 2018, including interim periods within that reporting period, with early application permitted. The new standard is to be applied using a modified retrospective approach. The Company is in the processpresented.
Concentrations of evaluating the impact of the new pronouncement on its consolidated financial statements. At this time, the adoption of this pronouncement is not expected to have a material impact on the Company’s consolidated financial statements or related disclosures.Risk

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
2. ~~Summary of Significant Accounting Policies (continued)~~
~~Recent Accounting Pronouncements (continued)~~
In May 2014, the Financial Accounting Standards Board ("FASB") issued accounting guidance, "Revenue from Contracts with Customers." The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and clarify guidance for multiple-element arrangements. The standard will be effective for fiscal years and interim periods within those years beginning after December 15, 2017. Accordingly, the Company will adopt this standard in the first quarter of fiscal year 2018. The Company does not expect it to have a material effect on the Company's consolidated financial condition, results of operations, and cash flows because the Company’s business focuses on e-commerce retail sales and commercial sales that do not use written contacts, rather the use of implied contracts recognizing the sale when goods are ordered on our e-commerce platform or invoiced, respectively.
All other accounting standards 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.
~~Noncontrolling Interests~~
The Company accounts for its less than 100% interest in Immudyne PR in accordance with ASC Topic 810, Consolidation, and accordingly the Company presents noncontrolling interests as a component of equity on its consolidated balance sheet and reports the noncontrolling interest’s share of the Immudyne PR net loss attributable to noncontrolling interests in the consolidated statement of operations.
13
~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
2. ~~Summary of Significant Accounting Policies (continued)~~
~~Concentration of Credit Risk~~
The Company grants credit in the normal course of business to its customers. The Company periodically performs credit analysis and monitors the financial condition of its customers to reduce credit risk.
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, 2022, we utilized four (4) suppliers for fulfillment services, seven (7) suppliers for manufacturing finished goods, four (4) suppliers for packaging, bottling, and labeling, and three (3) suppliers for prescription medications. As of December 31, 2021, we utilized four (4) suppliers for fulfillment services, six (6) suppliers for manufacturing finished goods and four (4) suppliers for packaging, bottling, and labeling.
~~One customer~~Recently Issued Accounting Pronouncements
In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-08, Business Combinations (Topic 805); Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This new guidance affects all entities that enter into a business combination within the scope of ASC 805-10. Under this new guidance, the acquirer should determine what contract assets and/or liabilities it would have recorded under ASC 606, Revenue from Contracts with Customers, as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquirer. Under current U.S. GAAP, contract assets and contract liabilities acquired in a business combination are recorded by the acquirer at fair value. This update is effective for fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and related disclosures.
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. Cleared is a transformational addition to the Company’s growing portfolio of telehealth capabilities which moves us beyond treating lifestyle conditions into chronic conditions with large addressable market demand. 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 ~~nutraceutical~~future of approximately $3.0 million, and ~~cosmetic additives division accounted~~contingent consideration of $5.1 million. The purchase agreement includes up to $72.8 million of potential earn-out payable in cash or stock upon achievement of revenue targets, which is recognized as contingent consideration. The Company, with the assistance of a third-party valuation expert, estimated the fair value of the acquired tangible and identifiable intangible assets using significant estimates such as revenue projections.
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:
Intangible assets 1,065,071
Inventory 7,168
Fixed assets 37,888
Accounts payable and other current liabilities (408,030 )
Goodwill $ 8,389,665
15
The purchase price and purchase price allocation for ~~13%~~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 $8.4 million, which is not expected to be deductible for income tax purposes. The amount allocated to goodwill and ~~13%~~intangible assets reflects the benefits the Company expects to realize from the growth of ~~consolidated sales~~the acquisition’s operations. The pro forma financial information, assuming the acquisition had taken place on January 1, 2021, 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.
During the ~~three-month periods~~three and nine months ended September 30, ~~2017~~2022, the Company recorded an increase of $248 thousand and ~~2016, respectively. This customer accounted for 25% and 2%~~a decrease of ~~consolidated sales for~~$2.5 million, respectively, 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 through the earnout period. During the nine ~~month periods~~months ended September 30, ~~2017~~ 2022, the Company also recorded a $2.7 million goodwill impairment charge based on the decline in the Cleared financial projections (See Note 4).
In February 2022, WorkSimpli closed on the ResumeBuild APA to purchase the related intangible assets associated with the ResumeBuild brand. The purchase price was $4.5 million, including cash paid upfront of $4.0 million and ~~2016, respectively. This customer also~~contingent consideration of $500 thousand. In accordance with ASC 805, Business Combinations, the Company accounted for ~~36% and 11%~~the ResumeBuild APA as an acquisition of assets as substantially all the fair value of the ~~consolidated accounts receivable at~~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 $62,500, for a two-year period ending on the two-year anniversary of the closing of the Acquisition. The Company estimated the fair value of the contingent consideration using the income approach and will remeasure the fair value quarterly with changes accounted for through earnings.
NOTE 4 – GOODWILL AND INTANGIBLE ASSETS
As of September 30, ~~2017~~2022 and December 31, ~~2016,~~2021, the Company’s goodwill balance related to the Cleared acquisition was $5.7 million and $0, respectively.
In During the ~~finished cosmetic products division, none of the credit card processors had a significant concentration of accounts receivable at~~nine months ended September 30, ~~2017. In~~2022, the ~~finished cosmetic products division, two credit card processors accounted for 35%~~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.
As of September 30, 2022 and ~~32% of the consolidated accounts receivable at~~ December 31, ~~2016.~~
3. ~~Notes Payable~~
~~In November 2015,~~2021, the Company ~~borrowed $100,000 from a commercial lender. The loan incurred interest at 11% and with a maturity date of November 1, 2016. Interest expense~~has the following amounts related to ~~this loan for the period ended March 31, 2016 amounted to $3,063. In October 2016, the Company repaid the entire principal balance.~~amortizable intangible assets:
SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS
September 30, December 31, Amortizable
2022 2021 Life
Amortizable Intangible Assets:
ResumeBuild brand 4,500,000 - 5 years
Customer relationship asset 1,006,840 1,006,840 3 years
Cleared trade name 133,339 - 5 years
Cleared developed technology 12,920 - 1 year
Cleared customer relationships 918,812 - 10 years
Purchased licenses 200,000 200,000 10 years
Website domain name 22,731 22,231 3 years
Less: accumulated amortization (1,876,092 ) (1,209,310 )
Total net amortizable intangible assets $ 4,918,550 $ 19,761
~~In the third quarter of 2016 the Company commenced an offering pursuant to which it offered 11% subordinated promissory notes in fifty thousand ($50,000) dollar increments combined with 62,500 shares~~The aggregate amortization expense of the Company’s ~~Common Stock~~intangible assets for ~~a maximum offering amount of $200,000 (the “Offering”). In August~~the three months ended September 30, 2022 and ~~September 2016, the Company sold promissory notes totaling $150,000 to three unrelated individuals. Two~~2021 was $325,495 and $617, respectively. The aggregate amortization expense of the promissory notes totaling $100,000 were payable in February 2017 and one promissory note for $50,000 was payable in March 2017. In October 2016, the Company sold promissory notes totaling $50,000 to two unrelated individuals. These promissory notes are payable in October 2017. In connection with these promissory notes sold, pursuant to the Offering, the Company issued 250,000 shares of common stock valued at $58,750 which was recorded as a debt discount and will be amortized over the term of these notes. Amortization of the debt discountsCompany’s intangible assets for the nine months ended September 30, ~~2017~~2022 and 2021 was ~~$25,035. There~~$666,782 and $340,457, respectively. Total amortization expense for the remainder of 2022 is $259,762. Total amortization expense for 2023 through 2026 is approximately $1.0 million per year, for 2027 is approximately $200,000 and for 2028 through 2031 is approximately $92,000 per year.
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NOTE 5 – ACCRUED EXPENSES
As of September 30, 2022 and December 31, 2021, the Company has the following amounts related to accrued expenses:
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES
September 30, December 31,
2022 2021
Accrued selling and marketing expenses $ 3,152,143 $ 4,981,453
Accrued compensation 1,437,560 1,657,843
Accrued dividends payable 776,563 871,476
Sales tax payable 2,401,583 2,000,000
Purchase price payable 1,674,469 -
Other accrued expenses 1,640,036 2,084,833
Total accrued expenses $ 11,082,354 $ 11,595,605
NOTE 6 – NOTES PAYABLE
PPP Loan and Forgiveness
In June 2020, the Company and its subsidiaries received three loans in the aggregate amount of approximately $249 thousand (the “PPP Loan”) under the Paycheck Protection Program legislation administered by the SBA. These loans bear interest at one percent per annum (1.0%) and mature five years from the date of the first disbursement. The proceeds of the PPP Loan must be used for payroll costs, lease payments on agreements entered into before February 15, 2020, and utility payments under lease agreements entered into before February 1, 2020. At least 60% of the proceeds must be used for payroll costs and certain other expenses, and no more than 40% may be used on non-payroll expenses. Proceeds from the PPP Loan used by the Company for the approved expense categories may be fully forgiven by the SBA, if the Company satisfies applicable employee headcount and compensation requirements. During the nine months ended September 30, 2022 and 2021, the Company had a total of $63,400 and $184,914, respectively, of its PPP loans forgiven by the SBA which is included in gain on debt forgiveness on the accompanying unaudited condensed consolidated statement of operations. As of September 30, 2022, the Company had no remaining PPP loan balance. As of December 31, 2021, the PPP loan balance was no$63,400 and is reflected on the Company’s condensed consolidated balance sheet as current liabilities, within notes payable, net.
Total interest expense on notes payable, inclusive of amortization of debt ~~discount during~~discounts, amounted to $0 for both the ~~third quarter~~three months ended September 30, 2022 and 2021, respectively. Total interest expense on notes payable, inclusive of ~~2017. During 2016, the Company repaid $68,600~~amortization of ~~the principal balance. Interest expense related~~debt discounts, amounted to ~~these notes~~$0 and $10,647 for the nine months ended ~~2017 amounted~~September 30, 2022 and 2021, respectively.
NOTE 7 – STOCKHOLDERS’ EQUITY
The Company has authorized the issuance of up to ~~$131,117. During 2017, the Company repaid $81,420 of the principal balance and converted the remaining balance of $49,980 into 196,000~~100,000,000 shares of common stock, $0.01 par value, and ~~98,000 warrants, which satisfied the note in full. The fair market~~5,000,000 shares of preferred stock, $0.0001 par value, of which 5,000 shares are designated as Series B Convertible Preferred Stock, 1,610,000 are designated as Series A Preferred Stock, and 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 had the ability to raise up to $150 million by selling common stock, preferred stock, debt securities, warrants, and units. In conjunction with the 2021 Shelf, the Company also entered into the ATM Sales Agreement whereby the Company may offer and sell, from time to time, shares of common stock having an aggregate offering price of up to $60 million. The Company has approximately $59.5 million available under the ATM Sales Agreement and ~~warrants issued upon conversion was determined to be $179,384,~~$32 million available under the 2021 Shelf as of ~~which $129,404 was included in interest expense as loss on settlement of notes payable.~~

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
September 30, ~~2017~~2022.
~~(unaudited)~~
3. ~~Notes Payable (continued)~~
Options and Warrants
~~In December 2016,~~
During the Company borrowed $100,000 from an officer and issued a convertible promissory note with a maturity date of February 28, 2017. The loan incurs no interest. This note is convertible if not repaid by the maturity date at a conversion price of $0.23 per Unit. Each Unit shall consist of one share of the Company’s common stock and one three-year common-stock warrant to purchase one-half of one share of the Company’s common stock with an exercise price of $0.40 per share. In March 2017, the Company repaid the entire outstanding balance of this note.
In January 2017, the Company borrowed $200,000 and issued a promissory note with a 5% original issue discount for a total principal amount of $210,000. The loan incurred 11% interest per annum and matured in various tranches from February 2017 through April 2017. In addition,nine months ended September 30, 2022, the Company issued ~~217,391~~an aggregate of 29,691 shares of common stock related to ~~this note. In February 2017,~~the cashless exercise of options.
During the nine months ended September 30, 2022, the Company ~~repaid $70,000~~issued an aggregate of ~~the principal balance of this note. In March 2017, the Company converted the remaining $140,000 of the principal balance of this note and accrued interest of $2,212 in exchange for 559,179~~90,400 shares of common stock and 304,348 warrants which satisfied the note in full. The fair market value of the shares and warrants issued upon conversion was determined to be $566,030, of which $423,818 was included in interest expense as loss on settlement of notes payable.
In February 2017, the Company borrowed $25,000 from an American Express working capital line with 60 days maturity. The interest for this loan is a flat fee of $250. On April 17, 2017, the Company repaid this loan. In June 2017, the Company borrowed $74,043 from an American Express working capital line with 90 days maturity. The interest for this loan is a flat fee of $1,111. On August 30, 2017, the Company repaid this loan. In September 2017, the Company borrowed $77,333 from an American Express working capital line with 90 days maturity. The interest for this loan is a flat fee of $1,160. As of September 30, 2017, there were approximately $60,000 available borrowings under the working capital line.
~~Interest expense~~ related to ~~loans from officers, directors and other related individuals amounted to $1,713 and $313~~the exercise of options for gross proceeds of $90,400.
During the nine ~~month periods ended September 30, 2017 and 2016, respectively. There was no interest expense for the three~~ months ended September 30, ~~2017 and 2016~~2022, the Company issued an aggregate of 22,000 shares of common stock related to ~~loans~~the exercise of warrants for gross proceeds of $38,500.
17
Membership Interest Purchase Agreement
On July 31, 2019, the Company entered into a certain membership interest purchase agreement (the “MIPA”) by and between the Company; Conversion Labs PR (now “LifeMD PR”), a majority owned subsidiary; Taggart International Trust, an entity controlled by the Company’s Chief Executive Officer, Mr. Justin Schreiber; and American Nutra Tech LLC, a company controlled by its Chief Innovation and Marketing Officer, Mr. Stefan Galluppi (Mr. Schreiber, Taggart International Trust, Mr. Galluppi, and American Nutra Tech LLC each a “Related Party” and collectively, the “Related Parties”). Pursuant to the MIPA, the Company purchased 21.83333% of the membership interests (the “Remaining Interests”) of Conversion Labs PR from ~~officers, directors~~the Related Parties, bringing the Company’s ownership of Conversion Labs PR to 100%.
As consideration for the Company’s purchase of the Remaining Interests from the Related Parties, Mr. Schreiber and ~~other~~Mr. Galluppi agreed to cancel all potential issuances of restricted stock and or options related ~~individuals~~to their employment with the Company, in exchange for the immediate issuance of 500,000 shares of the Company’s restricted common stock to each of Mr. Schreiber and Mr. Galluppi (the “Initial Issuances”) (equal to 1,000,000 shares in the aggregate). Mr. Schreiber and Mr. Galluppi were also entitled to additional issuances pursuant to certain milestones as ~~there were no loans outstanding~~follows: (i) 500,000 shares of the Company’s Common Stock to each of Mr. Schreiber and Mr. Galluppi (1,000,000 shares in the aggregate) on the business day following a consecutive ninety (90) day period, during which the Company’s Common Stock shall have traded at an average price per share equal to or higher than $2.50 (the “First Milestone”), and (ii) an additional 500,000 shares of the Company’s Common Stock to each of Mr. Schreiber and Mr. Galluppi (1,000,000 shares in the aggregate) following a consecutive ninety (90) day period during which the Common Stock shall have traded at an average price per share equal to or higher than $3.75 (the “Second Milestone” and, together with the First Milestones, the “Milestones”). Having achieved the Milestones, the Company, on December 9, 2020, issued an aggregate of 1,000,000 shares of the Company’s Common Stock to each of Mr. Schreiber and Mr. Galluppi (the “Milestone Shares”) (2,000,000 shares in the aggregate).
The Company recorded an aggregate expense of $18,060,000 reflected in general and administrative expenses during the three months ended September 30, ~~2017.~~2020 for the issuance of these 2,000,000 shares, of which 1,200,000 shares were issued during the three months ended March 31, 2021.
~~Total interest expense on notes payable amounted to $650,718 and $15,805 for~~Common Stock
Common Stock Transactions During the Nine Months Ended September 30, 2022
During the nine months ended September 30, ~~2017 and 2016, respectively. Total interest expense amounted to $1,111 and $9,992 for the three months ended September 30, 2017 and 2016, respectively.~~
4. ~~Income Taxes~~
The Company is not expected to have taxable income in 2017 and incurred a loss for the year ended December 31, 2016, and accordingly, no provision for federal income tax has been made in the accompanying financial statements. At September 30, 2017, the Company had available net operating loss carryforwards of approximately $5,032,100, expiring during various years through 2037.
~~A summary of the deferred tax asset using an approximate 34% tax rate is as follows:~~
Net operating loss $ 1,679,000
Accounts receivable reserves -
Inventory reserves 7,000
Stock compensation 389,000
Net deferred tax asset 2,084,000
Valuation allowance (2,084,000 )
Total $ -
~~The net operating loss carryforwards could be subject to limitation in any given year in the event of a change in ownership as defined by IRC Section 382.~~
The difference between the statutory and the effective tax rate is primarily due to a change in valuation allowance on deferred taxes, as well as a permanent difference from the change in derivative liability. The Company has fully reserved the deferred tax asset resulting from available net operating loss carryforwards.

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
5. ~~Stockholders’ Equity~~
~~Common Stock~~
On April 1, 2016, the Company entered into two agreements with two consultants to provide services over a nine-month period in exchange for 2,300,000 shares of common stock. The Company calculated a fair value of $690,000 based on the market price of the shares on the date of the agreements. During the third quarter of 2016, the Company and the consultants renegotiated the agreements by extending the service requirement to December 31, 2017. For the nine and three months ended September 30, 2017, the Company has recognized expense of $230,000 and $76,667, respectively, in connection with these agreements. For the nine and three months ended September 30, 2016, the Company has recognized expense of $230,000 and $76,667, respectively. As of September 30, 2017 and December 31, 2016, the unamortized portion of these service agreements are $76,667 and $306,667, respectively.
During 2016, the Company purchased 325,000 shares of outstanding Company common stock through an exchange for a price per share of $0.23 to $0.29. During 2017, the Company purchased an additional 190,200 shares of outstanding Company common stock for a price per share of $0.24 to $0.45. As of the September 30, 2017, a total of 515,200 shares are being held by the Company valued at cost is $163,701 and are included in treasury stock in the consolidated balance sheet.
~~In January 2017,~~2022, the Company issued ~~1,183,490 shares~~an aggregate of ~~common stock pursuant to a conversion of Immudyne PR equity contributions of $272,203 into equity of Immudyne, Inc. by the noncontrolling interest.~~
~~In January 2017, the Company issued 217,391 shares of common stock in relation to issuance of a $210,000 note payable.~~
In the first quarter of 2017, the Company commenced an offering to sell up to 4,000,000 shares of common stock at a price of $0.23 per share and warrants to purchase up to 2,000,000 shares of common stock excisable any time prior to the secondary anniversary of the issuance. The warrants are paired with the stock on the basis of one warrant for every two shares of stock purchased. During the first quarter of 2017, the Company received subscriptions in the amount of 2,817,156 shares and issued 1,408,578 warrants and proceeds in the amount of $647,944.
~~In March 2017, the Company issued 755,179~~211,250 shares of common stock for ~~the conversion of the outstanding balance of three notes payable totaling $499,802 (see Note 3).~~services expensed in prior periods.
On April 24, 2017, the Company, issued 217,390 shares of common stock pursuant to a stock subscription agreement and the Company issued 108,696 warrants with an exercise price of $0.40 per share for the stated consideration and satisfaction of obligation to pay $50,000 on the 180-day anniversary of the execution of the Sole and Exclusive License, Royalty, and Advisory Agreement dated September 1, 2016 with Pilaris Laboratories, LLC. The fair value of the shares and warrants issued were determined to be $131,103, of which $81,103 was included in general and administrative expense as loss on settlement of other payables.
~~During the second quarter of 2017 the Company received subscriptions in the amount of 110,000 shares and issued 55,000 warrants and proceeds in the amount of $25,300.~~
On June 1, 2017, the Company entered into an agreement with a consultant to provide services, with a six month term, and issued 125,000 shares of common stock as compensation. The shares were valued at $45,000 and the Company is recognizing the expense over the term of the agreement. For the three months ending September 30, 2017, $22,500 has been expensed and included in compensation and related expenses on the consolidated statement of operations.

In July 2017, the Company and JLS Ventures entered into a separate three year incentivized second amendment to a Service Agreement effective July 1, 2017. As compensation, the Company issued 900,000 shares of common stock valued at $270,000.
~~In July 2017, Mark McLaughlin, the Company’s President and Chief Executive Officer, exercised 1,500,000 warrants on a cashless basis and was issued 1,140,000 shares of common stock.~~
~~In July 2017, Mark McLaughlin exercised 1,000,000 options on a cashless basis and was issued 800,000 shares of common stock.~~

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
5. ~~Stockholders’ Equity (continued)~~
~~In July 2017, Mark McLaughlin exercised 339,473 options on a cashless basis and was issued 271,579 shares of common stock.~~
In August 2017, the Company issued 100,000 shares of common stock valued at $40,000 to Acorn Management Partners L.L.C. (“Acorn”) for financial advisory, strategic business planning and other investor relation services. The Company is recognizing the expense over the term of the agreement. For the three months ending September 30, 2017, $26,667 has been expensed and included in compensation and related expenses on the consolidated statement of operations.

~~In August 2017, the Company issued 50,000 shares of common stock valued at $20,000 to BV Global Fulfillment, LLC (“BV Global”) for fulfillment services.~~
Noncontrolling Interest
~~On April 1, 2016,~~For the three months ended September 30, 2022, net income attributed to the non-controlling interest amounted to $83,737 and for the three months ended September 30, 2021, net loss attributed to the non-controlling interest amounted to $62,706. During both the three months ended September 30, 2022 and 2021, the Company ~~increased its ownership in Immudyne PR~~paid distributions to ~~78.1667% decreasing the minority interest from 66.7% to 21.8333% resulting in a charge to noncontrolling interest and additional paid-in-capital~~non-controlling stockholders of ~~$91,612.~~
$36,000. For the nine months ended September 30, ~~2017, the~~2022, net ~~loss of Immudyne PR~~income attributed to the ~~noncontrolling~~non-controlling interest amounted to ~~$41,752. For the nine months ended September 30, 2016, the net income of Immudyne PR attributed to the noncontrolling interest amounted to $6,439.~~
For the three months ended September 30, 2017, the net income of Immudyne PR attributed to the noncontrolling interest amounted to $27,172. For the three months ended September 30, 2016, the net income of Immudyne PR attributed to the noncontrolling interest amounted to $8,955.
~~Service-Based Stock Options~~
~~In May 2016, the Company issued 175,000 service-based options valued at $40,829 to two consultants at exercise prices of $0.20 per share. The options are fully vested~~$154,464 and ~~expire in 10 years.~~
~~In July 2016, the Company issued 50,000 service-based options valued at $12,397 to a consultant with an exercise price of $0.20 per share. The options are fully vested and expire in 10 years.~~
~~In November 2016, the Company issued 50,000 service-based options valued at $9,980 to a consultant with an exercise price of $0.50 per share. The options are fully vested and expire in 2 years.~~
~~In February 2017, the Company issued 500,000 service-based options valued at $113,522 to a director with an exercise price of $0.20 per share. The options are fully vested and expire in 10 years.~~
In July 2017, the Company issued 75,000 service-based options valued at $30,438 to Brunilda McLaughlin as additional compensation in an employment agreement. These options have an exercise price of $0.35 per shares, are fully vested, and expire in 10 years.
In July 2017, the Company issued 300,000 service-based options valued at $121,753 to three directors with an exercise price of $0.35 per share. The options are fully vested and expire in 10 years. The Company is recognizing the expense over the term of the agreements. For the three months ending September 30, 2017, $10,146 has been expensed and included in compensation and related expenses on the consolidated statement of operations.
~~In July 2017, the Company issued 125,000 service-based options valued at $49,219 to a consultant with an exercise price of $0.40 per share. The options are fully vested and expire in 5 years.~~
In July 2017, the Company issued Mark McLaughlin a ten year option to buy 750,000 shares at $0.35 vesting one-third or 250,000 shares upon signing, and 250,000 shares on July 1, 2018 and 250,000 shares on July 1, 2019. Once the options are fully vested, they expire in 10 years. The options vested at September 30, 2017 are valued at $101,461.
~~Accordingly, stock based compensation expense~~ for the nine months ended September 30, ~~2017~~2021, net loss attributed to the non-controlling interest amounted to $531,182. During both the nine months ended September 30, 2022 and ~~2016~~2021, the Company paid distributions to non-controlling stockholders of $108,000.
WorkSimpli Software Restructuring Transaction
Effective January 22, 2021 (the “WSS Effective Date”), the Company consummated a transaction to restructure the ownership of WorkSimpli (the “WSS Restructuring”) and concurrently increased its ownership interest in WorkSimpli to 85.6%. To effect the WSS Restructuring the Company’s wholly-owned subsidiary Conversion Labs PR (now “LifeMD PR”), entered into a series of membership interest exchange agreements, pursuant to which, Conversion Labs PR exchanged that certain promissory note, dated May 8, 2019 with an outstanding balance of $375,823 (the “CVLB PR 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 CVLB PR 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 $300,000. The CVLB PR MIPA provides that the transaction may be completed in three (3) tranches, with a purchase price of $100,000 per tranche to be made at the sole discretion of Conversion Labs PR. Payment for the first tranche of $100,000 was made upon execution of the CVLB PR MIPA in January 2021. Payments for the second and third tranches were made on the 60-day anniversary and the 120-day anniversary of the WSS Effective Date.
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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” and 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 (i) 3,434 membership interests upon WSS achieving $2,500,000 of gross sales in any fiscal quarter (ii) 3,434 membership interests upon WSS achieving $4,000,000 of gross sales in any fiscal quarter, and (iii) 3,434 membership interests upon WSS achieving $8,000,000 of gross sales with a ten percent (10%) net profit margin in any fiscal quarter.
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 (i) 700 membership interests upon WSS achieving $2,500,000 of gross sales in any fiscal quarter (ii) 700 membership interests upon WSS achieving $4,000,000 of gross sales in any fiscal quarter, and (iii) 700 membership interests upon WSS achieving $8,000,000 of gross sales with a ten percent (10%) net profit margin in any fiscal quarter.
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%.
Stock Options
2020 Equity Incentive Plan (the “2020 Plan”)
On January 8, 2021, the Company approved the Company’s 2020 Plan. Approval of the 2020 Plan was included ~~$406,247~~as Proposal 1 in the Company’s definitive proxy statement for its Special Meeting of Stockholders filed with the Securities and ~~$40,829, respectively, related~~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 ~~such~~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. As of January 1, 2022, the Plan provided for the issuance of up to 3,300,000 shares of Common Stock.
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, 2022, the Plan provided for the issuance of up to 4,800,000 shares of Common Stock. Remaining authorization under the 2020 Plan was 1,265,885 shares as of September 30, 2022.
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. Stock based~~options and performance-based stock options separate from the 2020 Plan.
During the nine months ended September 30, 2022, the Company issued an aggregate of 332,000 stock options to employees under the 2020 Plan and the prior plan. These stock options have a contractual term of 4 to 5 years and vest in increments, which fully vest the options over a two to three-year period, dependent on the specific agreements’ terms.
19
The following is a summary of outstanding options activity under our 2020 Plan for the nine months ended September 30, 2022:
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, 2021 2,063,500 $ 4.57 – 21.02 8.04 years $ 9.41
Granted 132,000 2.52 – 13.74 3.98 years 7.20
Cancelled/Forfeited/Expired (162,135 ) 5.08 – 13.74 8.40 years 8.99
Balance at September 30, 2022 2,033,365 $ 2.52 – 21.02 7.06 years $ 9.30

Exercisable at December 31, 2021 636,229 $ 4.57 – 21.02 8.95 years $ 9.18
Exercisable at September 30, 2022 1,154,107 $ 2.52 – 21.02 7.97 years $ 9.41
The total fair value of the options granted was $833,030, which was determined by the Black-Scholes Pricing Model with the following assumptions: dividend yield of 0%, expected term of 4 years, volatility of 135.65% – 691.48%, and risk-free rate of 0.90%–3.60%. Total compensation expense under the 2020 Plan options above was $1,402,130 and $1,638,354 for the three months ended September 30, ~~2017~~2022 and ~~2016 included $292,725 and $40,829,~~2021, respectively, ~~related to such service-based stock options.~~

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
with unamortized expense remaining of $7,916,419 as of September 30, ~~2017~~
~~(unaudited)~~
5. ~~Stockholders’ Equity (continued)~~
~~A summary of~~2022. Total compensation expense under the ~~outstanding service-based~~2020 Plan options ~~are as follows:~~
~~Number of~~
~~Options~~
~~Balance at December 31, 2016~~ ~~10,700,273~~
~~Issued~~ ~~1,250,000~~
~~Exercised~~ ~~(1,339,473~~ )
~~Balance at September 30, 2017~~ ~~10,610,800~~
~~All outstanding options are exercisable~~above was $4,886,737 and ~~have a cashless exercise provision, and certain options provide~~$3,834,429 for ~~accelerated vesting provisions and modifications, as defined, if~~ the ~~Company is sold or acquired. The intrinsic value of service based options outstanding and exercisable at~~nine months ended September 30, ~~2017~~2022 and ~~December 31, 2016 amounted to $2,079,564 and $704,794,~~2021, respectively.
~~Service-Based Stock Options (continued)~~
~~The significant assumptions used to determine the fair values of options issued in 2017, using the Black-Scholes option-pricing model are as follows:~~
~~Significant assumptions:~~
~~Risk-free interest rate at grant date~~ ~~1.49% -1.55~~ %
~~Expected stock price volatility~~     ~~214% - 217~~ %
~~Expected dividend payout~~ —
~~Expected option life-years~~ ~~3 years~~
~~Weighted average grant date fair value~~ $ ~~0.23 - 0.43~~
~~Forfeiture rate~~ 0 %
The following is a summary of outstanding service-based options ~~at September 30, 2017:~~
Exercise Price Number of
Options Weighted Average Remaining Contractual Life

$0.10 40,800 1 year
$0.20 - $0.25 8,620,000 5 years
$.35 625,000 10 years
$0.40 1,325,000 4 years
Total 10,610,800
~~Performance-Based Stock Options~~
~~Vested~~
~~The Company granted performance-based options~~activity (prior to ~~purchase 2,925,000 shares~~the establishment of common stock at exercise prices of $0.40. The options expire at various dates between 2021 and 2026 and are exercisable upon the Company achieving annual sales revenue of $5,000,000. During the year ended December 31, 2016, the Company cancelled 287,500 of these service-based options issued to two consultants, valued at $12,457.
~~During 2016, the Company met the performance criteria and accordingly, recorded stock based compensation expense of $165,241 and $513,804~~our 2020 Plan above) for the ~~three and~~ nine months ended September 30, ~~2016, respectively.~~2022:
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, 2021 1,658,733 $ 1.00 – 19.61 5.85 years $ 5.45
Granted 50,000 4.12 4.26 years 4.12
Exercised (149,400 ) 1.00 – 2.00 0.19 years 1.23
Cancelled/Forfeited/Expired (120,000 ) 1.00 – 4.12 4.26 years 4.12
Balance at September 30, 2022 1,439,333 $ 1.00 – 19.61 5.88 years $ 6.11

Exercisable December 31, 2021 1,019,164 $ 1.00 – 19.61 5.21 years $ 3.60
Exercisable at September 30, 2022 1,087,719 $ 1.00 – 19.61 5.84 years $ 5.04
~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
5. ~~Stockholders’ Equity (continued)~~
~~Unvested~~
~~In February 2017,~~The total fair value of the ~~Company~~options granted ~~performance-based options to purchase 250,000 shares~~was $205,995, which was determined by the Black-Scholes Pricing Model with the following assumptions: dividend yield of ~~common stock at exercise prices~~0%, expected term of ~~$0.40. The options expire in 2027~~4 years, volatility of 420.16% and ~~are exercisable upon the Company achieving annual sales revenue~~risk-free rate of ~~$5,000,000. The options are valued at $55,439.~~
~~During 2017, the Company is expected to meet the performance criteria and accordingly, recorded stock based~~1.37%. Total compensation expense ~~of $27,719~~under the above service-based option plan was $493,097 and $635,220 for the three months ended September 30, 2022 and 2021, respectively, with unamortized expense remaining of $3,102,607 as of September 30, 2022. Total compensation expense under the above service-based option plan was $1,590,878 and $1,571,712 for the nine months ended September 30, ~~2017,~~2022 and 2021, respectively. Of the total service-based options exercised during the nine months ended September 30, 2022, 59,000 options were exercised on a cashless basis, which resulted in 29,691 shares issued and 90,400 options were exercised for cash.
The ~~Company granted~~following is a summary of outstanding performance-based options ~~to purchase 900,000 shares of common stock at exercise price of $0.80.~~ activity for the nine months ended September 30, 2022:
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, 2021 535,000 $ 1.25 – 2.50 5.59 years $ 1.60
Granted 150,000 4.12 3.26 years 4.12
Cancelled/Forfeited/Expired (150,000 ) 4.12 3.26 years 4.12
Balance at September 30, 2022 535,000 $ 1.25 – 2.50 4.84 years $ 1.60

Exercisable December 31, 2021 100,000 $ 1.75 – 2.50 1.96 years $ 2.01
Exercisable at September 30, 2022 100,000 $ 1.75 – 2.50 1.22 years $ 2.01
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The ~~options expire at various dates between 2021 and 2027 and are exercisable upon the Company achieving annual sales revenue of $10,000,000. During 2017, these unvested options were cancelled.~~
In July 2017, the Company granted performance-based options to purchase 6,000,000 shares of common stock with an exercise prices of $0.35 per share. The options expire in 10 years and are exercisable upon cash received by Immudyne, Inc. from Immudyne PR between $4,000,000 and $7,000,000. The aggregatetotal fair value of ~~these~~the options granted was $617,980, which was determined by the Black-Scholes Pricing Model with the following assumptions: dividend yield of 0%, expected term of 3.5 years, volatility of 444% and risk-free rate of 1.37%. Total compensation expense under the above performance-based ~~options~~option plan was $105,797 and $0 for the three months ended September 30, 2022 and 2021, respectively, with unamortized expense remaining of $105,797. Total compensation expense under the above performance-based option plan was $317,391 and $173,397 for the nine months ended September 30, 2022 and 2021, respectively.
Restricted Stock Units (RSUs) (under the 2020 Plan)
The following is ~~$2,446,739.~~a summary of outstanding RSU activity under our 2020 Plan for the nine months ended September 30, 2022:
SCHEDULE OF WARRANT AND RESTRICTED STOCK OUTSTANDING AND EXERCISABLE
RSUs Outstanding
Number of Shares
Balance at December 31, 2021 375,375
Granted 1,047,500
Vested (172,125 )
Balance at September 30, 2022 1,250,750
~~In the third quarter of 2017, the Company granted performance-based options to purchase 3,150,000 shares of common stock with an exercise prices of $0.25 per share.~~ The ~~options expire in 10 years and are exercisable upon the company achieving pre-tax earnings benchmarks between $4,000,000 and $7,000,000. The aggregate~~total fair value of ~~these performance-based options~~the 1,047,500 RSUs granted was $3,071,940 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 above was $702,598 and $232,268 for the three months ended September 30, 2022 and 2021, respectively, with unamortized expense remaining of $4,862,048 as of September 30, 2022. Total compensation expense under the 2020 Plan RSUs above was $2,273,756 and $589,431 for the nine months ended September 30, 2022 and 2021, respectively. During the nine months ended September 30, 2022, 172,125 RSUs vested, of which 111,250 RSUs were issued.
RSUs (outside of 2020 Plan)
The following is ~~$1,284,538.~~a summary of outstanding RSU activity outside of the 2020 Plan for the nine months ended September 30, 2022:
SCHEDULE OF WARRANT AND RESTRICTED STOCK OUTSTANDING AND EXERCISABLE
RSUs Outstanding
Number of Shares
Balance at December 31, 2021 600,000
Granted 60,000
Vested (80,000 )
Balance at September 30, 2022 580,000
The total fair value of the 60,000 RSUs granted was $215,400 which was determined using the fair value of the quoted market price on the date of grant. Total compensation expense for RSUs outside of the 2020 Plan was $225,279 and $0 for the three months ended September 30, 2022 and 2021, respectively, with unamortized expense remaining of $5,072,421 as of September 30, 2022. Total compensation expense for RSUs outside of the 2020 Plan was $1,163,978 and $0 for the nine months ended September 30, 2022 and 2021, respectively. During the nine months ended September 30, 2022, 80,000 RSUs vested, of which 50,000 were issued.
Warrants
The following is a summary of outstanding and exercisable ~~warrants:~~
Number of Shares Weighted Average
Exercise Price Year of
Expiration

Balance at December 31, 2016 1,954,891 $ 0.19 2017 - 2019
Issued 2,566,367          0.40 2019 - 2020

Exercised (1,500,000 ) 0.12
Balance at September 30, 2017 3,021,258 0.40 2017 - 2020
~~In September 2016, the Company issued 100,000~~ warrants ~~with an exercise price of $0.50 per share, in relation to a sale of common stock. These warrants are fully vested and expire in two years.~~
~~In September 2016, the Company issued 100,000 warrants with exercise prices between $0.20 and $0.50 per share, for consulting services. These warrants are fully vested and expire in three years.~~

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
5. ~~Stockholders’ Equity (continued)~~
~~In December 2016, the Company issued 37,500 warrants with an exercise price of $0.50 per share, in relation to a sale of common stock. These warrants are fully vested and expire in two years.~~
~~In December 2016, the Company issued 217,391 warrants with an exercise price of $0.40 per share, in relation to an issuance of common stock. These warrants are fully vested and expire in two years.~~
In January 2017, the Company issued 591,745 warrants with an exercise price of $0.40 per share, in relation to an issuance of common stock for the conversion of an equity contribution into Immudyne PR by the noncontrolling interest. These warrants are fully vested and expire in two years.
In March 2017, the Company issued 403,348 warrants with an exercise price of $0.40 per share, in relation to an issuance of common stock for the conversion of debt. These warrants are fully vested and expire in two years.
In the first quarter of 2017, the Company issued 1,408,578 warrants with an exercise price of $0.40 per share, in relation to a sale of common stock. These warrants are fully vested and expire in two years.
~~In April 2017, the Company issued 55,000 warrants with an exercise price of $0.40 per share, in relation to a sale of common stock. These warrants are fully vested and expire in two years.~~
In April 2017, the Company issued 108,696 warrants with an exercise price of $0.40 per share, in relation to an issuance of common stock for conversion of a payable. These warrants are fully vested and expire in three years.
~~The fair value of warrants granted~~activity during the ~~period~~nine months ended September 30, ~~2017, was estimated~~2022:
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, 2021 3,888,438 $ 1.40 – 12.00 5.85 years $ 5.59
Exercised (22,000 ) 1.75 - 1.75
Cancelled/Forfeited/Expired (6,800 ) 2.00 - 2.00
Balance at September 30, 2022 3,859,638 $ 1.40 – 12.00 5.15 years $ 5.61

Exercisable December 31, 2021 2,621,307 $ 1.40 – 12.00 6.36 years $ 5.98
Exercisable September 30, 2022 3,760,906 $ 1.40 – 12.00 5.17 years $ 5.66
21
Total compensation expense on the ~~date~~above warrants for services was $407,312 and $604,974 for the three months ended September 30, 2022 and 2021, respectively, with unamortized expense remaining of ~~grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:~~
~~Expected volatility~~ ~~125% - 214%~~
~~Risk free interest rate~~ ~~1.31% - 2.57%~~
~~Expected dividend yield~~ -
~~Expected term (in years)~~ ~~0.9 - 8.1~~
~~Weighted average grant date fair value~~ ~~$0.12 - 0.45~~
As$29,968 as of December 31, 2016, certain of the Company’s stock options, stock warrants and convertible debt instruments were accounted for as derivative liabilities due to insufficient authorized shares of common stock to settle outstanding contracts. At December 31, 2016, the Company estimated the fair value of these stock options, stock warrants and embedded conversion features using the Black-Scholes option pricing model (“Black-Scholes”) to be $192,254, based on Level 2 valuation inputs.
On September 21, 2017, the Company obtained majority shareholder approval and amended its Articles of Incorporation to increase the number of shares of its authorized common stock, therefore the derivative liability is no longer applicable.
~~Stock Based Compensation~~
~~The total stock based~~30, 2022. Total compensation expense ~~related Service-Based Stock Options~~on the above warrants for services was $1,617,260 and ~~Performance-Based Stock Options and Warrants amounted to $142,045 and $40,829~~$1,814,922 for the nine months ended September 30, ~~2017~~2022 and ~~2016,~~2021, respectively. ~~For~~
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 and RSUs amounted to $3,336,213 and $3,110,816 for the three months ended September 30, ~~2017~~2022 and ~~2016,~~2021, respectively. The total ~~stock based~~stock-based compensation ~~amounted~~expense related to ~~$28,523 and $40,829, respectively. Such amounts are included in compensation and related expenses in the accompanying statement of operations.~~
~~Common~~common stock issued for services, service-based stock options, performance-based stock options, warrants and RSUs amounted to ~~$319,313~~$11,850,000 and ~~$230,000~~$7,983,891 for the nine months ended September 30, ~~2017~~2022 and ~~2016,~~2021, respectively. ~~For~~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 and RSUs was $21,089,260 as of September 30, 2022.
NOTE 8 – 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 2023, a patient care center in Greenville, South Carolina for which the lease expires in 2024 and a warehouse and fulfillment center in Columbia, Pennsylvania for which the lease expires in 2023.
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 consolidated balance sheet as of September 30, 2022:
SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES

Remainder of fiscal year 2022 $ 225,519
Fiscal year 2023 732,409
Fiscal year 2024 484,580
Fiscal year 2025 68,850
Less: imputed interest (103,419 )
Present value of operating lease liabilities $ 1,407,939
Operating lease expenses were $199,584 and $95,791 for the three months ended September 30, ~~2017~~2022 and ~~2016, common stock issued~~2021, respectively, and $603,275 and $286,294 for ~~services amounted to $158,480 and $-0-, respectively. Such amounts are included in compensation and related expenses in~~ the ~~accompanying statement of operations.~~

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
6. ~~Royalties~~
~~The Company is subject to a royalty agreement based upon sales of certain hair care products. For the three and~~ nine months ended September 30, ~~2017, the Company recognized $53,206~~2022 and ~~$65,318,~~2021, respectively, and were included in ~~royalty expense~~other operating expenses in our consolidated statement of operations.
Supplemental cash flow information related to this agreement. As of September 30, 2017, the $65,318 was included in accounts payable and accrued expenses in regards to this agreement. In addition, the Company shall pay a performance fee in relation to this agreement. In April 2017, the Company issued 217,390 shares of common stock and 108,696 warrants, pursuant to a subscription agreement, for the stated consideration and satisfaction of obligation to pay $50,000operating lease liabilities consisted of the ~~performance fee (see Note 7).~~following:
SCHEDULE OF CASH FLOW RELATED TO OPERATING LEASE LIABILITIES
7. ~~Commitments and Contingencies~~
September 30,
2022 2021
Cash paid for operating lease liabilities $ 517,871 $ 269,806

~~Leases~~
~~The Company leases a plant in Kentucky under an~~Supplemental balance sheet information related to operating lease ~~which expired on May 31, 2016. Management is currently discussing renewal~~liabilities consisted of the following:
SCHEDULE OF BALANCE SHEETS RELATED TO OPERATING LEASE LIABILITIES
September 30, 2022 December 31, 2021
Weighted average remaining lease term in years 3.05 3.75
Weighted average discount rate 7.16 % 7.15 %
We have elected to apply the short-term lease ~~options for~~exception to the ~~Kentucky plant~~warehouse space we lease in Lancaster, Pennsylvania. This lease has a term of 12 months and is ~~operating~~not recognized on the balance sheet, but rather expensed on a ~~month-to-month~~straight-line basis over the lease ~~arrangement until a final agreement has been accepted. Monthly base rental~~term. Straight-line lease payments are ~~approximately $9,000. The Company’s principal executive offices are in office space provided to us by the Company’s President, Mr. McLaughlin, at the rate of $2,000~~$2,100 per ~~month, which includes rents, utilities and other office related expenditures. This arrangement commenced as of January 1, 2016. In addition, Immudyne~~month. Additionally, Conversion Labs PR utilizes office space in Puerto Rico, which is subleased from ~~Justin Schreiber (President of Immudyne PR) and incurs~~Fried LLC, on a month-to-month basis, incurring rental expense of approximately $4,000 a month for this office space. Rent expense for the nine month periods ended September 30, 2017 and 2016, was $120,161 and $71,606, respectively. Rent expense for the three month periods ended September 30, 2017 and 2016, was $46,061 and $27,706, respectively.$3,000 per month.
22
NOTE 9 - COMMITMENTS AND CONTINGENCIES
~~Employment and Consulting~~Royalty Agreements
The Company has entered into various agreements with officers, directors, employees and consultants that expire in one to five years. The agreements provide for annual compensation of up to $145,000 and the issuance of stock options, at exercise prices of $0.40 and $0.80, to purchase 4,400,000 shares of common stock issuable upon the Company’s revenue exceeding $5,000,000 and $10,000,000, as defined. In addition, the agreements provide for bonus compensation to these individuals aggregating up to 15% (with no individual having more than 5%) of the Company’s pretax income.
In August 2017, the Company entered into a Professional Service Agreement with Acorn Management Partners L.L.C. (“Acorn”) for financial advisory, strategic business planning and other investor relation services for a year of one year effective August 8, 2017. During the term of the Agreement, Acorn shall receive $7,500 cash monthly. As additional compensation, the Company shall issue within five (5) days of signing 100,000 shares of the Company’s common stock and upon each three (3) month period thereafter during the term of the Agreement an additional 100,000 shares of the Company’s common stock for a total of 400,000 shares of the Company’s common stock.
~~Restricted Stock and Options~~
The Company has entered into two agreements on April 1, 2016 with two consultants of Immudyne PR for business development, marketing and sales related services (the “Consultant Agreements”). The consultants are treated as employees for accounting purposes. Upon signing, each consultant was issued 1,000,000 restricted shares of Immudyne, Inc. common stock. In addition, each consultant shall receive an additional 150,000 restricted shares of Immudyne, Inc. common stock for each $500,000 distributed by Immudyne PR to the Company. For each consultant, the amount of shares to be issued by the Company to the consultants shall be capped at 1,500,000 restricted shares when Immudyne PR has transferred $5,000,000 to the Company, for a combined capped total of 3,000,000 restricted shares. For the three and nine months ended September 30, 2017, -0- restricted shares of common stock have been issued related to these agreements. During 2016, 2,300,000 restricted shares of common stock were issued related to these agreements. The Company valued the shares at their grant date for a value of $0.30 per share for a total of $690,000 to be expensed over the estimated service period ending December 31, 2017.
In addition, the Consulting Agreements provided that each consultant shall receive a bonus of an additional 750,000 restricted shares of Immudyne, Inc. common stock, plus an option to buy 1,000,000 shares of Immudyne, Inc. common stock at $0.20/share (including a cashless exercise feature) when Immudyne PR has transferred to the Company at each of the following three (3) thresholds: $1,250,000, $2,000,000 and $3,000,000 for a total of 2,250,000 of restricted shares of Immudyne, Inc. common stock and options to purchase up to 3,000,000 shares of Immudyne, Inc. common stock at $0.20/share. As of September 30, 2017, no bonus shares have been issued and no options have been granted under these agreements.

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
7. ~~Commitments and Contingencies (continued)~~
~~Sole and Exclusive License, Royalty, and Advisory Agreement~~
~~On September 1, 2016 Immudyne~~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.~~ Pilaris, ten years. As consideration for granting ~~Immudyne~~Conversion Labs PR this license, Pilaris will receive on quarterly basis, ~~10%~~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. In addition, Immudyne PR shall pay Pilaris a performance fee of $50,000 on the 180-day anniversary of the agreement and an additional $50,000 performance fee on the 365-day anniversary of the agreement. For the three and nine months ended September 30, 2017, the Company recognized expenses related to the performance fee in the amount of $16,667 and $100,000, respectively. In April 2017, the Company issued 217,390 shares of common stock and 108,696 warrants, pursuant to a subscription agreement, for the stated consideration and satisfaction of obligation to pay $50,000 on the 180-day anniversary of the execution of this agreement.products. As of September 30, ~~2017, the balance~~2022 and December 31, 2021, no amount was included in accounts payable and accrued expenses ~~is $0 expense~~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 ~~this agreement.~~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, 2022.
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 $7,500,000 in any calendar year, the Company will grant Alphabet an option to purchase 20,000 shares of the Company’s common stock at an exercise price of $2.50; (ii) if Licensed Products have gross receipts of $10,000,000 in any calendar year, the Company will grant Alphabet an additional option to purchase 20,000 shares of the Company’s common stock at an exercise price of $2.50 and (iii) if Licensed Products have gross receipts of $20,000,000 in any calendar year, the Company will grant Alphabet an option to purchase 40,000 shares of the Company’s common stock at an exercise price of $3.75. The likelihood of meeting these performance goals for the licensed products are remote and, therefore, the Company has not recognized any compensation.
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, 2022 and December 31, 2021, the Company approximates its implicit purchase commitments to be $582 thousand and $511 thousand, respectively.
Legal Matters
In the normal course of business operations, the Company may become involved in various legal matters. AtAs of September 30, ~~2017,~~2022, other than as set forth below, the Company’s management does not believe that there are any potential legal matters that could have an adverse effect on the Company’s consolidated financial position.
8. ~~Related Party Transactions~~
~~During 2016, legal~~On December 10, 2021, a purported breach of contract, breach of duty of good faith and ~~business advisory services were provided to~~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 ~~by one~~breached a Consulting Services Agreement dated as of ~~its directors. For the three~~June 5, 2019, and ~~nine months ended September 30, 2016 this director~~Harborside was ~~compensated $6,000 and $15,000, respectively. During 2017, legal and business advisory services were provided~~entitled to1 million shares (i.e., 200,000 shares post 5-for-1 reverse stock split) in the Company ~~by one~~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 ~~directors. For~~ownership interest in Conversion Labs Rx and that it was a breach of the ~~three~~duty of good faith and ~~nine months ended~~fair dealing and fraudulent for the Company to have dissolved Conversion Labs Rx. Consequently, alleges Harborside, the Company was unjustly enriched, and Harborside is entitled to recover from the Company for quantum meruit. The Harborside Complaint implies between $5,020,000 and $33,020,000 in alleged damages related to failure to award the aforementioned stock but only specifically states that “Harborside has incurred damages in excess of $75,000, with the exact amount to be determined with specificity at trial” for each of the 5 counts. On February 11, 2022, the Company filed a Motion to Dismiss the Harborside Complaint, which Harborside opposed. The Company replied on April 4, 2022 and 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 ~~30, 2016 this director was compensated $3,000 and $7,500, respectively.~~
~~During~~22, 2022, as a result of mediation, the ~~nine months ended September 30, 2017 and 2016,~~parties reached a settlement to resolve the ~~Company’s President received $18,000 and $20,000, respectively for reimbursement~~matters in these cases. The Company issued 400 thousand shares of ~~home office expenditures, including rent, utilities and other related expenses for two offices. During~~common stock during the three months ended September 30, ~~2017~~2022 and ~~2016,~~it is possible that the Company will issue 100 thousand additional shares of common stock in the future related to this settlement. The costs of this settlement are reflected in the Company’s ~~President received $6,000~~financial results.
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On December 10, 2021, a purported breach of contract, unjust enrichment, quantum meruit, and ~~$6,000, respectively~~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 ~~reimbursement~~the Southern District of ~~these expenses.~~
~~Immudyne, Inc. employs~~New York against the ~~wife~~Company. The GoGoMeds Complaint alleges, among other things, that Conversion Labs Rx breached a Strategic Partnership Agreement (dated May 27, 2019) (the “SPA”) by the Company not paying two invoices (#3269 and 3270) totaling $273,859, and, therefore, “LifeMD has been unjustly enriched in an amount in excess of $273,859, with the exact amount to be determined with specificity at trial.” Further, GoGoMeds alleges that “to the extent that the SPA is inapplicable, GoGoMeds is entitled to recover from LifeMD from quantum meruit” because “GoGoMeds conferred a benefit on LifeMD by fulfilling over 17,000 prescriptions and over the counter drug orders for LifeMD’s clients.” On February 11, 2022, the Company filed its Answer and Counterclaim to the GoGoMeds Complaint, pleading the affirmative defenses that the claims are barred, in whole or in part: (i) because they fail to state claims upon which relief can be granted; (ii) by breach of contract by plaintiff; (iii) by offset, recoupment, and/or unjust enrichment to plaintiff; (iv) by accord and satisfaction; (v) for failure of condition precedent; (vi) because adequate remedies at law exist; (vii) by failure to mitigate; (viii) by the doctrine of unclean hands; and (ix) by consent ratification, waiver, excuse, and/or estoppel, (x) as well as that attorney fees and costs, as well as special, indirect, incidental, and/or consequential damages are not recoverable. Further, the Company counterclaimed against GoGoMeds for: (a) breach of contract for failing to: (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 ~~President~~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 ~~Company as an accountant and incurs $3,000 per month, plus an annual incentive bonus award equal to 0.5%~~creation of the ~~Company’s pre-tax earnings.~~
~~Immudyne PR utilizes BV Global Fulfillment, owned~~GoGoCare telehealth company; (d) conversion by GoGoMeds by exercising unauthorized dominion and control over the ~~father~~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 ~~Immudyne PR’s President, and incurred $138,687 and $181,244 for~~mediation, the parties reached a settlement to resolve the matters in these cases. The Company issued 400 thousand shares of common stock during the three ~~and nine~~ months ended September 30, ~~2017, respectively,~~2022 and it is possible that the Company will issue 100 thousand additional shares of common stock in the future related to this settlement. 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 ~~these services. During~~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 ~~three~~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 ~~nine months ended September 30, 2016, Immudyne PR did not utilize BV Global Fulfillment.~~(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 $1,000,000 minimum fee in the engagement letter), as well as reasonable costs and expenses incurred in this action. The parties have exchanged written discovery requests and written responses. The Court ordered the completion of production of responsive documents by December 7, 2022 and scheduled a status hearing for December 14, 2022 to address discovery compliance and entry of a case management order. The Company intends to vigorously defend against this action. As this action is in its preliminary phase, a potential loss cannot yet be estimated.
~~Taggart International Trust (“Taggart”), a shareholder, provides credit card processing services through one or more merchant banks. Taggart did not receive any compensation for these services.~~NOTE 10 – RELATED PARTY TRANSACTIONS
~~JLS Ventures LLC, owned by a shareholder, provides credit card processing services through one or more merchant banks. JLS Ventures LLC did not receive any compensation for these services.~~Chief Executive Officer
~~JSDC, Inc., owned by a shareholder, provides credit card processing services through one or more merchant banks. JSDC, Inc. did not receive any compensation for these services.~~
~~Immudyne~~Conversion Labs PR utilizes office space in Puerto Rico, which is subleased from ~~the President of Immudyne PR~~Fried LLC, a third party, and incurs expense of approximately ~~$4,000~~$3,000 a month for this office space. The Company previously made payments to JLS Ventures, an entity wholly owned by our Chief Executive Officer (“CEO”), for rent on Conversion Labs PR’s Puerto Rico office space which was $0 and $15,000 for the three months ended September 30, 2022 and 2021, respectively, and $0 and $67,500 for the nine months ended September 30, 2022 and 2021, respectively.
Conversion Labs PR utilizes BV Global Fulfillment (“BV Global”), previously owned by a related person (the “Owner”) of the Company’s CEO, to warehouse a portion of the Company’s finished goods inventory and for fulfillment services. On December 31, 2021, the Company entered into an Asset Purchase Agreement (the “APA”) with BV Global and the Owner, whereby BV Global and the Owner agreed to sell to the Company certain purchased assets of BV Global in exchange for approximately $9 thousand. Prior to entering into the APA, the Company paid a monthly fee of $13,000 to $16,000 for fulfillment services and reimbursed BV Global for their direct costs associated with shipping the Company’s products.
9. ~~Subsequent Events~~24
The Company reimbursed BV Global a total of $660,877 and $1,079,403 during the three and nine months ended September 30, 2021, respectively. As of December 31, 2021, the Company owed BV Global $61,824, which is included in accounts payable on the accompanying unaudited condensed consolidated balance sheets.
WorkSimpli Software
During the nine months ended September 30, 2022 and 2021, WorkSimpli utilized LegalSubmit Pvt. Ltd. (“LegalSubmit”), a company owned by WorkSimpli’s Chief Software Engineer, to provide software development services. WorkSimpli paid LegalSubmit a total of $403,424 and $240,187 during the three months ended September 30, 2022 and 2021, respectively, and $1,054,747 and $599,527 during the nine months ended September 30, 2022 and 2021, respectively, for these services. There were no amounts owed to LegalSubmit as of both September 30, 2022 and December 31, 2021.
Amended Officer Employment Agreements
On April 1, 2022, Justin Schreiber, the Company’s CEO, entered into an Employment Agreement (the “Schreiber Employment Agreement”) with the Company. The Schreiber Employment Agreement is for an indefinite term and may be terminated with or without cause. Pursuant to the Schreiber Employment Agreement, Mr. Schreiber will receive an annual base salary of $300,000 and shall be eligible to earn a performance bonus in such amount, if any, as determined in the sole discretion of the Board, with a target amount of 75% of the base salary.
On January 27, 2022, the Company and Marc Benathen, our Chief Financial Officer (“CFO”), entered into the First Amendment to his employment agreement to provide that Mr. Benathen receive 75,000 RSUs, with 25,000 of the RSUs vesting on the grant date and the first and second anniversaries of the grant date. Additionally, the First Amendment to his employment agreement provided that Mr. Benathen is eligible to receive up to 250,000 Performance Stock Units (“PSUs”), which will vest subject to the Company achieving certain key revenue, EBITDA and share price appreciation milestones.
On January 27, 2022, the Company and Eric H. Yecies, our General Counsel (“GC”) and Chief Compliance Officer (“CCO”), entered into the First Amendment to his employment agreement to provide that our CCO receive 37,500 RSUs, with 12,500 of the RSUs vesting on the grant date and the first and second anniversaries of the grant date. Additionally, the First Amendment to his employment agreement provided that our CCO is eligible to receive up to 105,000 PSUs, which will vest subject to the Company achieving certain key revenue, EBITDA and share price appreciation milestones.
Officer Appointment
On February 4, 2022, Maria Stan was appointed as Controller and Principal Accounting Officer of the Company. In connection with her appointment as Principal Accounting Officer, Ms. Stan entered into an amendment to her employment agreement with the Company, whereby the Company granted her an additional long-term incentive award of 15,000 RSUs, with 5,000 units vesting on the grant date and the first and second anniversaries of the grant date, and 50,000 PSUs. The PSUs vest upon the achievement of certain key revenue, EBITDA and share price appreciation milestones.
Board of Director Appointment
On September 14, 2022, the Company appointed Robert Jindal as a member of the Board. In connection with the appointment to the Board, the Company and Mr. Jindal entered into a director agreement (the “Director Agreement”), whereby, as compensation for his services as a member of the Board, Mr. Jindal received: (i) a grant of 75,000 RSUs of the Company’s common stock, with 37,500 RSUs vesting immediately and 37,500 RSUs vesting on the two-year anniversary of the Director Agreement, and (ii) a stock option to purchase 37,500 shares of the Company’s common stock, vesting in four equal tranches on the 90, 180, 270 and 365-day anniversary of the Director Agreement. Additionally, Mr. Jindal shall be paid $6,000 per quarter, as compensation for his services as a member of the Board.
NOTE 11 – 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, 2022 and 2021 is as follows:
SCHEDULE OF RELEVANT SEGMENT DATA
2022 2021 2022 2021
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Telehealth
Revenue $ 21,365,178 $ 18,540,897 $ 66,231,202 $ 47,623,822
Gross margin 78.9 % 73.2 % 78.8 % 74.6 %
Operating loss $ (7,423,742 ) $ (12,150,140 ) $ (36,668,305 ) $ (37,047,599 )
WorkSimpli
Revenue $ 10,047,291 $ 6,406,302 $ 24,682,602 $ 17,835,100
Gross margin 97.9 % 98.0 % 97.7 % 98.2 %
Operating income (loss) $ 606,041 $ (441,164 ) $ 1,104,465 $ (3,588,805 )
Consolidated
Revenue $ 31,412,469 $ 24,947,199 $ 90,913,804 $ 65,458,922
Gross margin 85.0 % 79.6 % 83.9 % 81.0 %
Operating loss $ (6,817,701 ) $ (12,591,304 ) $ (35,563,840 ) $ (40,636,404 )
Relevant segment data as of September 30, 2022 and December 31, 2021 is as follows:
September 30, 2022 December 31, 2021
Total Assets
Telehealth $ 25,513,814 $ 48,056,920
WorkSimpli 7,847,747 1,866,323
Consolidated $ 33,361,561 $ 49,923,243
NOTE 12 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date these consolidated financial statements were ~~issued.~~
~~On October 2, 2017, Robert Kalkstein was appointed as~~issued and has identified the Chief Financial Officer of Immudyne, Inc. The Company entered into a consulting agreement with Mr. Kalkstein, which provides, among other things, for a fee of $2,750 per month through December 2017, $5,000 per month between January 2018 and March 2018 and $7,500 per month between April 2018 and September 2018. Additionally, Mr. Kalkstein was granted an option to purchase 500,000 shares of the Company’s common stock at $0.40 per share, subject to the approval of the board of directors of the Company and certain vesting requirements set forth in the consulting agreement.following:

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
9. ~~Subsequent Events (continued)~~

In ~~October 2017, the Company appointed Michael T. Bornstein, MD, PHD to the Board of Directors. As part of the compensation,~~November 2022, the Company issued ~~a ten year, fully vested option to purchase 100,000~~an aggregate of 95,000 shares of common stock ~~at an exercise price~~for services rendered.
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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 ~~$0.35 per share. In addition,~~27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. 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 ~~issued ten year options that vest upon~~or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company ~~achieving pre-tax earnings benchmarks between $4,000,000~~with respect to future events and ~~$7,000,000. The exercise price for~~are subject to risks, uncertainties, assumptions, and other factors, including the ~~options are $0.25~~risks relating to the Company’s business, industry, and ~~$0.35 per share.~~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.
~~In November 2017,~~Although the Company ~~issued 135,721 shares~~believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of ~~common stock~~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 ~~67,861 warrants pursuant~~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.
The forward-looking statements made in this report are based only on events or information as of the date on which the statements are made in this report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a ~~conversion~~result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this report and the documents we refer to in this report and have filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect. These risks 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.
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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.
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.), our wholly-owned subsidiary LifeMD PR LLC (formerly Immudyne PR ~~equity contributions~~LLC and Conversion Labs PR), a Puerto Rico limited liability company (“Conversion Labs PR”, or “CLPR”), 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 ~~$31,216 into equity~~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.
Corporate History
We were formed in the State of Delaware on May 24, 1994, under our prior name, Immudyne, Inc. byWe 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 ~~noncontrolling interest.~~
~~10.~~ ~~Restatement of Financial Statements~~
~~The~~Company closed the strategic acquisition of 51% of WorkSimpli, a company that provides a software as a service application 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 its ownership interest in WorkSimpli to 85.6%. Effective September 30, ~~2016 financial statements~~2022, two option agreements were ~~restated~~exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to ~~reclassify marketing expense~~73.64%. See Note 7 for additional information. On January 18, 2022, the Company acquired Cleared, a rapidly growing nationwide allergy telehealth platform that ~~was recorded in cost of goods sold to marketing expenses. There were no other changes to the financial statements. These reclassifications have no impact on previously reported net income.~~provides personalized treatments for allergy, asthma, and immunology.
~~The following table shows the changes made to the September 30, 2016 income statement.~~Business Overview and Strategy
Three Months Ended Nine Months Ended
September 30, 2016 September 30, 2016
As Reported Adjustment As Restated As Reported Adjustment As Restated
Net sales $ 1,384,429 $ $ 1,384,429 $ 4,252,704 $ $ 4,252,704

Cost of sales 942,738 (554,536 ) 388,202 2,981,657 (1,713,337 ) 1,268,320

Gross Profit 441,691 996,227 1,271,047 2,984,384

Operating expenses
Compensation and related expenses 361,829 361,829 1,077,340 1,077,340
Professional fees 82,608 82,608 277,282 277,282
Marketing expenses - 554,536 554,536 - 1,713,337 1,713,337
General and administrative expenses 204,958 204,958 382,857 382,857
Total operating expenses 649,395 1,203,931 1,737,479 3,450,816

Operating Income (Loss) (207,704 ) (207,704 ) (466,432 ) (466,432 )

Interest (expense) (9,992 ) (9,992 ) (15,805 ) (15,805 )

Net Income (Loss) Before Taxes (217,696 ) (217,696 ) (482,237 ) (482,237 )
Deferred income tax benefit - - �� - -

Net Income (Loss) (217,696 ) (217,696 ) (482,237 ) (482,237 )

Net income (loss) attributable to noncontrolling interests 8,955 8,955 6,439 6,439

Net Income (loss) attributable to Immudyne, Inc. $ (226,651 ) $ (226,651 ) $ (488,676 ) $ (488,676 )

Basic and diluted (loss) per share attributable to Immudyne, Inc. $ (0.01 ) $ (0.01 ) $ (0.02 ) $ (0.02 )

Average number of common shares outstanding
Basic 34,427,087 34,427,087 31,917,873 31,917,873
Diluted 34,427,087 34,427,087 31,917,873 31,917,873
~~* * * * *~~

~~Item 2.~~ ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~
~~Overview~~
We are a direct-to-patient telehealth technology company that provides a smarter, cost-effective, and convenient way for Americans to access healthcare. We believe the traditional model of visiting a doctor’s office, visiting a local pharmacy, and returning to see a doctor for follow up care or prescription refills is inefficient, costly, and slow, and discourages many individuals from seeking much needed medical care. The U.S. healthcare system is undergoing a paradigm shift, due to new technologies and the emergence of telehealth. Direct-to-patient telehealth companies, like LifeMD, Inc., are leading the shift by connecting consumers digitally to licensed healthcare professionals for care across various needs, such as virtual primary care, men’s sexual health and ~~wellness company~~dermatology.
Our telehealth platform provides patients with access to licensed providers for diagnoses, virtual care, and prescription medications, often delivered on a recurring basis. In addition to our telehealth offerings, we sell complementary nutritional supplements and over-the-counter (“OTC”) products. Many of our products are available on a subscription basis, where patients can subscribe to receive regular shipments of prescribed medications or products. This creates convenience and discounted pricing opportunities for patients and recurring revenue streams for us. Our customer acquisition strategy combines strategic brand-building 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).
Since inception, we have helped more than 650,000 customers and patients, providing them greater access to high-quality, convenient, and affordable care in all 50 states. Our telehealth revenue increased 39% for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021. Total revenue from recurring subscriptions is approximately 90%. In addition to our telehealth business, we own 73.64% 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 38% year over year revenue growth, with recurring revenue of 98%.
We believe that ~~develops, manufactures,~~telehealth platforms like ours will fundamentally shift how individuals perceive and ~~markets innovative consumer~~access healthcare in the United States, by necessity and by preference. With the average wait time to see a physician in the United States now greater than 29 days, according to a 2018 Merritt Hawkins Survey, and the United States’ projected significant shortfall of licensed physicians by 2030, we believe the U.S. healthcare infrastructure must change to accommodate patients. Timely and convenient access to healthcare and prescription medications is a critical factor in improving quality of care and patient outcomes. Our mission is to radically change healthcare with our portfolio of direct-to-patient telehealth brands that encompass on-demand medical treatment, online pharmacy, and OTC products. We ~~manufacture~~want our brands to be top-of-mind for consumers considering telehealth.
In the United States, healthcare spending is currently $4.0 trillion and is expected to grow to $6.2 trillion by 2028, according to the Centers for Medicare and Medicaid Services. Physician services and prescription medications account for approximately 30% of healthcare spending, or over $1 trillion annually, and we believe that we have the infrastructure, medical expertise, and technical know-how necessary to help shift a substantial portion of this market to an online, virtual format. We believe that we are well positioned to capitalize on this large-scale shift in healthcare.
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We believe that an amazing customer experience, incredible healthcare, and new customer acquisition form the heart of our business. As is exemplified with our first brand, ShapiroMD, we have built a full line of proprietary and patented OTC products for male and female hair loss, U.S. Food and Drug Administration (“FDA”) approved OTC minoxidil, and now a telehealth platform offering that gives consumers access to virtual medical treatment and, when appropriate, a full line of oral and topical prescription medications for hair loss. Our men’s brand, RexMD, currently offers access to provider-based treatment through telehealth for men’s health conditions, such as sexual health and hair loss. RexMD continues to expand its treatment offerings to address additional chronic indications present in men’s health. We have built a platform that allows us to efficiently launch telehealth brands and offerings wherever we identify a market need. Our platform is supported by a driven team of digital marketing and branding experts, data analysts, designers, and engineers focused on building enduring brands.
Our Brand Portfolio
We have built a strategic portfolio of wholly-owned telehealth platform brands supported by an affiliated, 50-state physician network and an integrated national network of third party pharmacies that address large unmet needs in men’s health, hair loss, virtual primary care, and dermatology. We continue to experience aggressive growth across our brands.
Our process across each brand is to guide consumers through a medical intake process and product selection, after which a licensed U.S. physician conducts a virtual consultation and, if appropriate, prescribes prescription medications and/or recommends OTC products. Prescription medications and OTC products are filled by pharmacy fulfillment partners and shipped directly to the patient. The number of patients and customers we serve across the nation continues to increase at a robust pace, with more than 650,000 individuals having purchased our products and services to date.
Hair Loss: ShapiroMD
Launched in 2017, ShapiroMD is a telehealth platform brand that offers access to virtual medical treatment, prescription medications, patented-doctor formulated OTC products, an FDA approved medical device for male and female hair loss, and female specific topical compounded medications for hair loss through our telehealth platform. ShapiroMD has emerged as a leading destination for hair loss treatment across the United States and has served more than 260,000 customers and patients since inception with a 4.9-star Trustpilot rating.
Men’s Health: RexMD
Launched in 2019, 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 a 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. Our vision for RexMD is to become a leading telehealth destination for men. RexMD has emerged as a leading men’s telehealth platform across the United States and has served more than 360,000 customers and patients since inception with a 4.3-star Trustpilot rating.
Variable Interest Entity: LifeMD Primary Care
Beta launched in the fourth quarter of 2021, LifeMD PC is a personalized, subscription-based virtual primary care platform. The LifeMD PC clinic provides patients in all 50 states with 24/7 access to a high-quality provider for their primary care, urgent care, and chronic care needs. LifeMD PC offers a mobile first platform that incorporates virtual consultations and treatment, prescription medications, diagnostics, and imaging. LifeMD PC capabilities are supported by robust partnerships as further discussed below. Total revenue and net loss for LifeMD PC was approximately $124 thousand and $1.0 million for the three months ended September 30, 2022, respectively, and $124 thousand and $3.9 million for the nine months ended September 30, 2022, respectively.
Dermatology: NavaMD
Launched in the first quarter of 2021, 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.
Restorsea’s clinically proven skincare technology platform is the result of more than $50 million invested in R&D and intellectual property development, and Restorsea has received at least 35 patents along with broad industry and academic acclaim, with its breakthrough clinical results having been published in the peer-reviewed Journal of Drugs in Dermatology and Journal of Clinical and Aesthetic Dermatology. NavaMD is one of the first direct-to-patient brands to offer this advanced skincare technology.
Allergy, Asthma & Immunology: Cleared
In January 2022, the Company acquired Cleared, a telehealth brand that provides personalized treatments for allergy, asthma, and immunology. Its 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 medical professionals and providers in all 50 states, a growing pipeline of pharmaceutical partners, and treatments and tests that cost up to 50 percent less than the brand-name competition. The offerings include free consultations and ongoing care from U.S.-licensed allergists and nurses.
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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 85.6%. 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%.
Significant Developments During the Three Months Ended September 30, 2022
WorkSimpli
As noted above, 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%.
Supply Chain
The ongoing impact on business activity brought about by COVID-19 continues to evolve, globally in macro terms, and in micro terms, as such affects the Company. Among other things, our supply chain is subject to the effects of COVID-19, as well as to natural disasters and other events beyond our control, such as raw material, component, and labor shortages; increased fuel and freight costs; global and regional shipping and logistics constraints; work stoppages; power outages; and the physical effects of climate change, including changes in weather patterns. In addition, human rights concerns, including forced labor, in foreign countries and associated governmental responses have the potential to disrupt our supply chain, and our operations could be adversely impacted. Although we do not believe that raw materials used in the products we sell are sourced from regions with forced labor concerns, any delays or other supply chain disruption resulting from these concerns, associated governmental responses, or a desire to source products, components, or materials from other manufacturers or regions could result in shipping delays, cancellations, penalty payments, or loss of revenue and market share, any of which could have a ~~proprietary~~material adverse effect on our business, results of operations, cash flows, and ~~patent protected Yeast Beta Glucan that~~financial condition.
In connection with these potential impacts on our supply chain, we are, as a general matter, seeing a trend of modest increases in (i) pricing on air and ocean freight, as well as for raw materials and finished goods, (ii) the overall time to receive shipments, and (iii) the overall time for shipment and delivery to our customers from third-party shippers. We are also seeing a trend of shortages for key raw materials.
Results of Operations
Comparison of the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021
Revenue
Our financial results for the three months ended September 30, 2022 are summarized as follows in comparison to the three months ended September 30, 2021:
September 30, 2022 September 30, 2021
% of % of
$ Sales $ Sales
Telehealth revenue, net $ 21,365,178 68.01 % $ 18,540,897 74.32 %
WorkSimpli revenue, net 10,047,291 31.99 % 6,406,302 25.68 %
Total revenue, net 31,412,469 100 % 24,947,199 100 %
Cost of telehealth revenue 4,502,919 14.34 % 4,969,306 19.92 %
Cost of WorkSimpli revenue 213,923 0.68 % 127,181 0.51 %
Total cost of revenue 4,716,842 15.02 % 5,096,487 20.43 %
Gross profit 26,695,627 84.98 % 19,850,712 79.57 %
Selling and marketing expenses 17,200,859 54.74 % 20,293,935 81.35 %
General and administrative expenses 12,476,760 39.72 % 10,695,663 42.87 %
Other operating expenses 1,525,645 4.86 % 818,404 3.28 %
Customer service expenses 1,488,428 4.74 % 505,880 2.03 %
Development costs 821,636 2.62 % 128,134 0.51 %
Total expenses 33,513,328 106.68 % 32,442,016 130.04 %
Operating loss (6,817,701 ) (21.70 )% (12,591,304 ) (50.47 )%
Other expenses (380,235 ) (1.21 )% (1,824,777 ) (7.32 )%
Net loss (7,197,936 ) (22.91 )% (14,416,081 ) (57.79 )%
Net income (loss) attributable to non-controlling interest 83,737 0.27 % (62,706 ) (0.25 )%
Net loss attributable to LifeMD, Inc. (7,281,673 ) (23.18 )% (14,353,375 ) (57.54 )%
Preferred stock dividends (776,563 ) (2.47 )% - - %
Net loss attributable to common shareholders $ (8,058,236 ) (25.65 )% $ (14,353,375 ) (57.54 )%
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Revenues for the three months ended September 30, 2022 were approximately $31.4 million, an increase of 26% compared to approximately $24.9 million for the three months ended September 30, 2021. The increase in revenues was attributable to both the increase in telehealth revenue of 15% and an increase in WorkSimpli revenue of 57%. Telehealth revenue accounts for 68% of total revenue and has ~~been shown~~increased during the three months ended September 30, 2022 due to an increase in ~~clinical studies~~online sales demand, with the majority of the growth of our telehealth brands, RexMD and ShapiroMD. WorkSimpli revenue accounts for 32% of total revenue and has steadily increased year over year due to ~~support~~a combination of higher demand, increased market awareness, enhanced digital capabilities, continued marketing campaign expansion and ~~regulate~~ the ~~human immune system. It has broad applications~~addition of the ResumeBuild brand in ~~skincare~~the first quarter of 2022. While a portion of our growth could be attributable to the COVID-19 pandemic, management strongly believes our growth is primarily a result of the strength of our healthcare brands.
Total cost of revenue consists of the cost of (1) 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 $4.7 million for the three months ended September 30, 2022 compared to approximately $5.1 million for the three months ended September 30, 2021. The combined cost of revenue decrease was due to improved pricing during the three months ended September 30, 2022 when compared to the three months ended September 30, 2021. Telehealth costs decreased to 21% of associated telehealth revenues experienced during the three months ended September 30, 2022, from 27% of associated telehealth revenues during the three months ended September 30, 2021. WorkSimpli costs were 2% of associated WorkSimpli revenues for the both the three months ended September 30, 2022 and 2021.
Gross profit increased by approximately 34% to approximately $26.7 million for the three months ended September 30, 2022 compared to approximately $19.9 million for the three months ended September 30, 2021, as a result of increased combined sales. Gross profit as a percentage of revenues increased to 85% during the three months ended September 30, 2022, from 80% for the three months ended September 30, 2021. Gross profit as a percentage of revenues for telehealth was 79% for the three months ended September 30, 2022 compared to 73% for the three months ended September 30, 2021, and for WorkSimpli was 98% for both the three months ended September 30, 2022 and 2021. The increase in revenues for both telehealth and WorkSimpli, improved pricing and favorable product mix in 2022 have contributed to the increase in gross profit.
Operating Expenses
Operating expenses for the three months ended September 30, 2022 were approximately $33.5 million, as compared to approximately $32.4 million for the three months ended September 30, 2021. This represents an ~~immune support supplement. Our majority owned subsidiary~~increase of 3%, or $1.1 million. The increase is ~~our digital~~primarily attributable to:
(i) General and administrative expenses: During the three months ended September 30, 2022, stock-based compensation was $3.3 million, with the majority related to stock compensation expense attributable to the service-based options and restricted stock units. 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 three months ended September 30, 2022, the Company has had an increase of approximately $1.8 million in general and administrative expenses, primarily related to increases in legal and professional fees and payroll related costs incurred to support the sales volume increases and growth of the Company, partially offset by a Company-wide strategic reduction in costs.
(ii) Other operating expenses: This consists of rent, insurance, royalty expense and bank charges. During the three months ended September 30, 2022, the Company had an increase of approximately $707 thousand, primarily related to increases in the general cost environment necessary to support the Company’s sales growth.
(iii) 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, 2022, the Company had an increase of approximately $983 thousand, primarily related to increases in headcount in the Company’s customer service department.
(iv) Development costs: This mainly relates to third-party technology services for developing and maintaining our online platforms and information technology services for our online products. During the three months ended September 30, 2022, the Company had an increase of approximately $694 thousand, primarily resulting from technology platform improvements and amortization expense.
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These increases in operating expenses were partially offset by a decrease in selling and marketing ~~arm~~expenses which consist of online marketing and ~~is currently focused on~~advertising expenses. During the three months ended September 30, 2022, the Company had a decrease of approximately $3.1 million, or 15% in selling and marketing ~~patented products for thicker~~costs resulting from a Company-wide strategic reduction in costs and ~~fuller hair and a skincare line containing our proprietary Yeast Beta Glucan ingredient.~~
~~We have performance based contracts with our~~alignment of sales and marketing ~~executives,~~initiatives to drive the Company’s recurring revenue subscription-based sales model.
Other Expenses
Three Months Ended September 30,
2022 2021
Interest expense, net $ (132,235 ) $ (1,824,777 )
Change in fair value of contingent consideration (248,000 ) -
Total $ (380,235 ) $ (1,824,777 )
Other expenses for the three months ended September 30, 2022, consists of interest accrued on the Series B Convertible Preferred Stock and an increase to the Cleared contingent consideration as a result of the remeasurement of the fair value. Other expenses for the three months ended September 30, 2021, consist of interest expense and amortization of debt discount recorded related to the June 1, 2021 Purchase Agreement. Interest expense decreased by approximately $1.7 million during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.
Comparison of the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021
Revenue
Our financial results for the nine months ended September 30, 2022 are summarized as follows in comparison to the nine months ended September 30, 2021:
September 30, 2022 September 30, 2021
% of % of
$ Sales $ Sales
Telehealth revenue, net $ 66,231,202 72.85 % $ 47,623,822 72.75 %
WorkSimpli revenue, net 24,682,602 27.15 % 17,835,100 27.25 %
Total revenue, net 90,913,804 100 % 65,458,922 100 %
Cost of telehealth revenue 14,042,112 15.45 % 12,113,336 18.51 %
Cost of WorkSimpli revenue 558,216 0.61 % 314,428 0.48 %
Total cost of revenue 14,600,328 16.06 % 12,427,764 18.99 %
Gross profit 76,313,476 83.94 % 53,031,158 81.01 %
Selling and marketing expenses 60,928,649 67.02 % 61,372,815 93.76 %
General and administrative expenses 38,029,907 41.83 % 28,194,305 43.07 %
Other operating expenses 4,804,623 5.28 % 2,264,257 3.46 %
Customer service expenses 3,428,098 3.77 % 1,274,392 1.95 %
Goodwill impairment charge 2,735,000 3.01 % - - %
Development costs 1,951,039 2.15 % 561,793 0.85 %
Total expenses 111,877,316 123.06 % 93,667,562 143.09 %
Operating loss (35,563,840 ) (39.12 )% (40,636,404 ) (62.08 )%
Other income (expenses), net 2,117,995 2.33 % (2,681,236 ) (4.10 )%
Net loss (33,445,845 ) (36.79 )% (43,317,640 ) (66.18 )%
Net income (loss) attributable to non-controlling interest 154,464 0.17 % (531,182 ) (0.82 )%
Net loss attributable to LifeMD, Inc. (33,600,309 ) (36.96 )% (42,786,458 ) (65.36 )%
Preferred stock dividends (2,329,688 ) (2.56 )% - - %
Net loss attributable to common shareholders $ (35,929,997 ) (39.52 )% $ (42,786,458 ) (65.36 )%
Revenues for the nine months ended September 30, 2022 were approximately $90.9 million, an increase of 39% compared to approximately $65.5 million for the nine months ended September 30, 2021. The increase in revenues was attributable to both the increase in telehealth revenue of 39% and an increase in WorkSimpli revenue of 38%. Telehealth revenue accounts for 73% of total revenue and has increased during the nine months ended September 30, 2022 due to an increase in online sales demand, with the majority of the growth of our telehealth brands, RexMD and ShapiroMD. WorkSimpli revenue accounts for 27% 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. While a portion of our growth could be attributable to the COVID-19 pandemic, management strongly believes our growth is primarily a result of the strength of our healthcare brands.
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Total cost of revenue consists of the cost of (1) telehealth revenues, which ~~allows us~~primarily include product costs, pharmacy fulfillment costs, physician consult fees, and shipping costs directly attributable to ~~continue to maintain a relatively low overhead. Our priority is to pursue opportunities to market~~ 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 17% to approximately $14.6 million for the nine months ended September 30, 2022 compared to approximately $12.4 million for the nine months ended September 30, 2021. The combined cost of revenue increase was due to increased sales volume during the nine months ended September 30, 2022 when compared to the nine months ended September 30, 2021. Telehealth costs decreased to 21% of associated telehealth revenues experienced during the nine months ended September 30, 2022, as compared to 25% of associated telehealth revenues during the nine months ended September 30, 2021. WorkSimpli costs were 2% of associated WorkSimpli revenues for both the nine months ended September 30, 2022 and 2021.
Gross profit increased by approximately 44% to approximately $76.3 million for the nine months ended September 30, 2022 compared to approximately $53.0 million for the nine months ended September 30, 2021, as a result of increased combined sales. ~~We expect that~~Gross profit as a ~~significant component~~percentage of revenues was 84% for the nine months ended September 30, 2022 compared to 81% for the nine months ended September 30, 2021. Gross profit as a percentage of revenues for telehealth was 79% for the nine months ended September 30, 2022 compared to 75% for the nine months ended September 30, 2021, and for WorkSimpli was 98% for both the nine months ended September 30, 2022 and 2021. The increase in revenues for both telehealth and WorkSimpli, improved pricing and favorable product mix in 2022 have contributed to the increase in gross profit.
Operating Expenses
Operating expenses for the nine months ended September 30, 2022 were approximately $111.9 million, as compared to approximately $93.7 million for the nine months ended September 30, 2021. This represents an increase of 19%, or $18.2 million. The increase is primarily attributable to:
(i) General and administrative expenses: During the nine months ended September 30, 2022, stock-based compensation was $11.9 million, with the majority related to stock compensation expense attributable to the service-based options and restricted stock units. 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, 2022, the Company has had an increase of approximately $9.8 million in general and administrative expenses, primarily related to the increase in stock-based compensation costs referenced above, and an increase in payroll and other infrastructure expenses incurred to support the sales volume increases and growth of the Company, partially offset by a Company-wide strategic reduction in costs.
(ii) Other operating expenses: This consists of rent, insurance, royalty expense and bank charges. During the nine months ended September 30, 2022, the Company had an increase of approximately $2.5 million, primarily related to increases in the general cost environment necessary to support the Company’s sales growth.
(iii) 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, 2022, the Company had an increase of approximately $2.2 million, primarily related to increases in headcount in the Company’s customer service department.
(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.
(v) Development costs: This mainly relates to third-party technology services for developing and maintaining our online platforms and information technology services for our online products. During the nine months ended September 30, 2022, the Company had an increase of approximately $1.4 million, primarily resulting from technology platform improvements and amortization expense.
These increases in operating expenses were partially offset by a decrease in selling ~~general~~ and ~~administration~~marketing expenses ~~going forward will~~which consist of ~~equipment leasing costs relating to improving our operating efficiencies, as well as conducting new studies which could open new markets. These aforementioned costs, along with~~online marketing and advertising expenses. During the ~~additional~~nine months ended September 30, 2022, the Company had a decrease of approximately $444 thousand in selling and marketing costs resulting from ~~our operations~~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.
Other Income (Expenses), net
Nine Months Ended September 30,
2022 2021
Interest expense, net $ (432,405 ) $ (2,866,150 )
Change in fair value of contingent consideration 2,487,000 -
Gain on debt forgiveness 63,400 184,914
Total $ 2,117,995 $ (2,681,236 )
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Other income, net for the nine months ended September 30, 2022, consists of a $2.5 million reduction to the Cleared contingent consideration as a ~~public reporting company, could adversely impact our future results~~result of ~~operations. Additional~~the remeasurement of the fair value, gain on debt forgiveness of PPP loans and interest accrued on the Series B Convertible Preferred Stock. Other expenses, net consist of interest expense and amortization of debt discount recorded related to the June 1, 2021 Purchase Agreement and gain on debt forgiveness of PPP loans for the nine months ended September 30, 2021. Interest expense decreased by approximately $2.4 million during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.
Working Capital
September 30, 2022 December 31, 2021
Current assets $ 12,973,699 $ 44,921,440
Current liabilities 24,935,287 22,825,589
Working capital $ (11,961,588 ) $ 22,095,851
Working capital decreased by approximately $34.1 million during the nine months ended September 30, 2022. The decrease in current assets is primarily attributable to a decrease in cash of approximately $35.5 million, partially offset by an increase in inventory of $2.1 million due to timing of purchases and an increase in accounts receivable of approximately $1.6 million. Current liabilities increased by $2.1 million, which was primarily attributable to an increase in accounts payable and accrued expenses of $1.2 million as a result of the Company extending payables and credit terms with vendors and accrual of the first noncontingent milestone payment related to the Cleared acquisition of $1.6 million due on the first anniversary of the acquisition and an increase in deferred revenue of approximately $853 thousand.
Liquidity and Capital Resources
Nine Months Ended September 30,
2022 2021
Net cash used in operating activities $ (20,966,110 ) $ (27,259,550 )
Net cash used in investing activities (12,134,718 ) (1,823,843 )
Net cash (used in) provided by financing activities (2,390,388 ) 29,351,291
Net (decrease) increase in cash (35,491,216 ) 267,898
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 used in operating activities was approximately $21.0 million for the nine months ended September 30, 2022, as compared with approximately $27.3 million for the nine months ended September 30, 2021. The significant factors ~~that we believe will affect our operating results going forward are: (i) protection~~contributing to the cash used in operations during the nine months ended September 30, 2022, include the net loss of ~~our intellectual property rights; (ii) imposition~~approximately $33.4 million (inclusive of ~~more stringent government regulations~~$11.9 million in non-cash, stock-based compensation charges), an increase in inventory of ~~our products;~~$2.1 million due to timing of purchases, an increase in accounts receivable of $1.6 million and ~~(iii) marketing expenses.~~
Inreduction in accrued expenses of $2.3 million excluding the ~~2016 fiscal year, we utilized third party entities~~$1.6 million accrual for the first noncontingent milestone payment related to provide and increase credit card processing capacity and optimize corresponding rates and fees through one or more merchant bank accounts held by such entities. A majority of these entities providing these services are consolidated as variable interest entities (“VIEs”) which received a one (1%) percent fee eliminated in consolidationthe Cleared acquisition due on the first anniversary of the ~~net revenues processed and collected~~acquisition. These decreases were partially offset by ~~such contractors from sales initiated by the Company. The remaining entities provided such services~~an increase in accounts payable of $1.8 million as ~~independent contractors, the majority~~a result of ~~which were considered related parties and no fee was paid. Upon receipt of funds by such contractors from their respective merchant banks,~~ the Company ~~required~~extending payables and credit terms with vendors.
Net cash used in investing activities for the ~~prompt transfer~~nine months ended September 30, 2022 was approximately $12.1 million, as compared with approximately $1.8 million for the nine months ended September 30, 2021. Net cash used in investing activities was due to cash paid for capitalized software costs of ~~funds~~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 used in financing activities for the nine months ended September 30, 2022 was approximately $2.4 million as compared with net cash provided by financing activities of approximately $29.4 million for the nine months ended September 30, 2021. During the nine months ended September 30, 2022, net cash used in financing activities consisted of preferred stock dividends of $2.3 million, distributions to ~~Company controlled accounts.~~ non-controlling interest of $108 thousand and contingent consideration payments made related to the ResumeBuild brand 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
The Company reimbursed and/or advanced funds to such contractors for any deficit or charge related to returns, chargeback and other fees charged by such merchant bank. Some of the entities contracted to provide these services have been determined to be variable interest entities and consolidated in the Company’s financial statements.
We historically have expended a significant amount of our funds on obtaining and protecting our patents, trade secrets and proprietary products. We rely on the patent and trademark protection laws in the U.S. to protect our intellectual property and maintain our competitive position in the marketplace. For several years, we were involved in complex litigation regarding patents and licenses critical to our products. In 2010, we prevailed on all major legal matters and reached favorable settlements. If additional litigation becomes necessary to protect our intellectual property rights, such litigation may be costly, divert our management’s attention away from our core business and have a negative impact on our operations. Furthermore, there is no guarantee that litigation would result in an outcome favorable to us. In addition, yeast beta glucans are designated as GRAS under current FDA regulations. Future government regulations may prevent or delay the introduction or require the reformulation of our products. Some agencies, such as the FDA, could require us to remove a particular product from the market, delay or prevent the import of raw materials for the manufacture of our products or otherwise disrupt the marketing of our products. Any such government actions could result in additional costs to us, reduced growth prospects, lost sales from products that we are required to remove from the market and potential product liability litigation.
~~We have historically operated with limited capital and have~~has funded operations in the past through the sales of ~~our~~its products, issuance of common and preferred stock and through loans and advances from ~~Mark McLaughlin, our President,~~officers and ~~other directors, as well as from debt~~directors. Our primary short-term and ~~equity financings. We plan on our operating~~long-term requirements for liquidity and capital are for customer acquisition, fund business ~~(in conjunction with proceeds from debt~~acquisitions and ~~equity financings completed in 2016 and early 2017) being able to fund our operations through 2017. However, if necessary,~~investments we may ~~raise additional~~make from time to time, working capital ~~through a private placement of common stock,~~including our noncancelable operating lease obligations, noncontingent consideration, capital expenditures and general corporate purposes.
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The Company’s continued operations are dependent upon obtaining ~~debt financing or from advances from our President and/or directors; however, no assurances~~an increase in its sales volumes which the Company has been successful in achieving to date. However, there can be ~~made~~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.
In order to mitigate the going concern issues, the Company has begun to implement strategies to strengthen revenues and improve operational efficiencies across the business and is significantly curtailing expenses. Additionally, the Company has $59.5 million available under the ATM Sales Agreement and $32 million available under the 2021 Shelf. 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 ~~endeavors~~unaudited condensed consolidated financial statements. We believe that the accounting policies below are critical for one to ~~raise additional capital.~~ fully understand and evaluate our financial condition and results of operations.
Revenue Recognition
The Company records revenue under the adoption of Accounting Standards Codification (“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 ~~additional information regarding~~the Company’s product-based contracts with customers, the Company has determined that there is one performance obligation, which is the delivery of the product; this performance obligation is transferred at a discrete point in time. The Company generally records sales of finished products once the customer places and pays for the order, with the product being simultaneously shipped by a third-party fulfillment service provider; in limited cases, the customer does not obtain control until the product reaches the customer’s delivery site, in these limited cases, recognition of revenue should be deferred until that time, however the Company does not have a process to properly record the recognition of revenue if orders are not immediately shipped, and deems the impact to be immaterial. In all cases, delivery is considered to have occurred when the customer obtains control, which is usually commensurate upon shipment of the product. In the case of its product-based contracts, the Company provides a subscription sensitive service based on the recurring shipment of products and records the related revenue under the subscription agreements subsequent to receiving the monthly product order, recording the revenue at the time it fulfills the shipment obligation to the customer.
For its product-based contracts with customers, the Company records an estimate for provisions of discounts, returns, allowances, customer rebates and other ~~risks please see “Risk Factors” contained~~adjustments for its product shipments, and are reflected as contra revenues in ~~our annual report~~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.
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 ~~fiscal~~time period of the subscription purchased. The Company allows the customer to cancel at any point during the billing cycle, in which case the customers subscription will not be renewed for the following month or year ~~ended~~depending on the original subscription. The Company records the revenue over the customers subscription period for monthly and yearly subscribers or at the end of the initial 14-day service period for customers who purchased the initial subscription, as the circumstances dictate. The Company offers a discount for the monthly or yearly subscriptions being purchased, which is deducted at the time of payment at the initiation of the contract term, therefore the Contract price is fixed and determinable at the contract initiation. Monthly and annual subscriptions for the service are recorded net of the Company’s known discount rates. As of September 30, 2022 and December 31, ~~2016.~~

~~Results~~2021, the Company has accrued contract liabilities, as deferred revenue, of ~~Operations~~
~~Three Months Ended September 30, 2017, compared~~approximately $2.4 million and $1.5 million, respectively, which represent obligations on in-process monthly or yearly contracts with customers and a portion attributable to the ~~Three Months Ended September 30~~,~~2016~~yet to be recognized initial 14-day trial period collections.
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~~The following table sets forth the results of our operations for the periods indicated as a percentage of net sales:~~
2017 2016
$ % of Sales $ % of Sales
Restated
Net Sales 2,051,734 1,384,429
Cost of sales 535,572 26 % 388,202 28 %
Gross profit 1,516,162 74 % 996,227 72 %
Operating expenses (1,789,729 ) (87 )% (1,203,931 ) (87 )%
Operating (Loss) (273,567 ) (13 )% (207,704 ) (15 )%
Change in fair value of derivative liability (377,213 ) (18 )% - - %
Interest (expense) (1,111 ) - % (9,992 ) (1 )%
Net Income (loss) (651,891 ) (32 )% (217,696 ) (16 )%
Net Income (loss) attributable to noncontrolling interests 27,172 1 % 8,955 (1 )%
Net Income (loss) attributable to Immudyne, Inc. (679,063 ) (33 )% (226,651 ) (16 )%
~~Net Sales~~
~~Sales were approximately $2.05~~Customer discounts, returns, and rebates on telehealth revenues approximated $1.1 million and $871 thousand for the three months ended September 30, ~~2017, compared to approximately $1.38~~2022 and 2021, respectively. Customer discounts, returns, and rebates on telehealth revenues approximated $4.2 million ~~for the three months ended September 30, 2016. The increase of 50% is attributed to resources we invested into the launch of our in-licensed patented hair loss shampoo, conditioner,~~ and ~~leave in foam during the first quarter of 2017.~~
Sales in our Nutraceutical and Cosmetic Additives segment were approximately $277,000 for the three months ended September 30, 2017, compared to approximately $230,000 for the three months ended September 30, 2016. The increase of 21.7% is attributed to increased demand from our existing customers.
Sales in our Finished Cosmetic Products segment were approximately $1.77 million for the three months ended September 30, 2017, compared to approximately $1.15 million for the three months ended September 30, 2016. The increase of 53.9% is attributed to increased direct marketing efforts.
~~Cost of Sales~~
Total cost of sales was approximately $536,000 for the three months ended September 30, 2017, compared to $388,000 for the three months ended September 30, 2016. The increase in our cost of sales was due to increased sales from our Finished Cosmetic Products business. Cost of sales consists primarily of material costs, labor costs, and related overhead directly attributable to the production of our products.
~~Gross Profit~~
Gross profit was approximately $1.52 million for the three months ended September 30, 2017, compared to approximately $996,000 for the three months ended September 30, 2016, an increase of 52.2%. The increase in our gross profit was a result of the success of our in-licensed patented hair loss shampoo conditioner and leave-in foam and the increased demand for our additives.
24
25
~~Operating Expenses~~
~~Total operating expenses increased 48.7% to approximately $1.80 million for the three months ended September 30, 2017, from approximately $1.20 million for the three months ended September 30, 2016.The increase in our operating expenses between the periods was mostly attributable to our increased marketing efforts for Finished Cosmetic Products.~~
~~Net Income~~
Net loss for the three months ended September 30, 2017 was approximately $652,000, compared to net loss of approximately $227,000 for the three months ended September 30, 2016. We consolidated the operations of our joint venture, Immudyne PR and reflected a non-controlling interest for 21.8333% of these operations. Net loss attributable to the Company as a percentage of sales was (33)% for the three months ended September 30, 2017, compared to net loss as a percentage of sales of (16)% for the three months ended September 30, 2016. Our net loss during the period was attributable to increasing in marketing efforts and the decrease in the fair value of our derivative liability, which we incurred in the first quarter of 2017 due to our having insufficient authorized shares to satisfy outstanding derivative securities issued by the Company.
~~Nine Months Ended September 30, 2017, Compared to the Nine Months Ended September 30, 2016~~
~~The following table sets forth the results of our operations for the periods indicated as a percentage of net sales:~~
2017 2016
$ % of Sales $ % of Sales
Restated
Net Sales 3,583,614 4,252,704
Cost of sales 1,068,174 30 % 1,268,320 30 %
Gross profit 2,515,440 70 % 2,984,384 70 %
Operating expenses (3,389,470 ) (95 )% (3,450,816 ) (81 )%
Operating (Loss) (874,030 ) (24 )% (466,432 ) (11 )%
Change in fair value of derivative liability 496,617 14 % - 0 %
Interest (expense) (650,718 ) (18 )% (15,805 ) 0 %
Net (loss) (1,028,131 ) (29 )% (482,237 ) (11 )%
Net (loss) attributable to noncontrolling interests (41,752 ) (1 )% 6,439 0 %
Net (loss) attributable to Immudyne, Inc. (986,379 ) (28 )% (488,676 ) (11 )%
Sales for the nine months ended September 30, 2017 were approximately $3.58 million, a decrease of 15.7% from approximately $4.25 million for the same period in 2016. Our decrease in sales was due to the fact that we invested considerable time and Company resources into the preparation for the launch of our in-licensed patented hair loss shampoo, conditioner, and leave in foam during the first quarter of 2017. This new product line has been successful to date, having been a meaningful contributor to our revenues in the third quarter of 2017.
Sales in our Nutraceutical and Cosmetic Additives segment were approximately $981,000 for the nine months ended September 30, 2017, compared to approximately $781,000 for the nine months ended September 30, 2016. The increase of 25.7% is attributed to increased demand from our existing customers.
~~Sales in our Finished Cosmetic Products segment were approximately $2.60~~$3.5 million for the nine months ended September 30, ~~2017, compared to approximately $3.47~~2022 and 2021, respectively.
Customer discounts and allowances on WorkSimpli revenues approximated $710 thousand and $377 thousand for the three months ended September 30, 2022 and 2021, respectively. Customer discounts and allowances on WorkSimpli revenues approximated $1.7 million and $1.6 million for the nine months ended September 30, ~~2016.~~ 2022 and 2021, respectively.
Capitalized Software Costs
The ~~decrease~~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 ~~25.1% is attributed to stopping sales~~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 ~~this area in early 2017 and re-launching different products late in the second quarter.~~
accordance with ASC 350-40, Internal-Use Software
26
~~Cost~~, are expensed as incurred. As of ~~Sales~~
~~Total cost of sales was approximately $1.07 million for the nine months ended~~ September 30, ~~2017, compared~~2022 and December 31, 2021, the Company capitalized $10.3 million and $3.6 million, respectively, related to ~~$1.27~~internally developed software costs which is amortized over the useful life and included in development costs on our statement of operations. The increase in capitalized software costs of $6.7 million ~~for the nine months ended September 30, 2016. The decrease in our cost of sales was due~~or 186%, is primarily attributable to ~~introducing products with lower cost of goods.~~
~~Gross Profit~~
~~Gross profit was approximately $2.52 million for the nine months ended September 30, 2017, compared~~costs incurred related to ~~approximately $2.98 million for the nine months ended September 30, 2016, a decrease of 15.4%. The decrease in our gross profit was a result of lower sales from our Finished Cosmetic Products segment.~~
~~Operating Expenses~~
~~Total operating expenses decreased 1.8% to approximately $3.39 million for the nine months ended September 30, 2017, from approximately $3.45 million for the nine months ended September 30, 2016.There was not a significant change in total operating expenses, however, the spending shifted from marketing to general and administrative costs, and professional fees.~~
~~Net Income~~

~~Net loss for the nine months ended September 30, 2017 was approximately $1.03 million, compared to net loss of $482,000 for the nine months ended September 30, 2016. We consolidated the operations~~development efforts of our ~~joint venture, Immudyne PR~~LifeMD PC platform.
Goodwill and ~~reflected a non-controlling interest for 21.8333% of these operations. Net loss attributable to~~Intangible Assets
Goodwill represents the Company as a percentage of sales was (27.5)% for the nine months ended September 30, 2017, compared to net loss as a percentage of sales of (11.5)% for the nine months ended September 30, 2016. Our net loss during the period was attributable to our increased operating expenses as we shifted to an internal marketing strategy and increased interest expense to service our debt incurred late in 2016 and early in 2017. We also experienced decreased sales during the first quarter of 2017 as we shifted company resources in efforts to launch our in-licensed patented hair loss shampoo, conditioner, and leave in foam, and to internal marketing strategies.
~~Liquidity and Capital Resources~~
Our principal demands for liquidity are to increase sales, purchase inventory and for sales distribution and general corporate purposes. We incurred negative operating cash flows to date in 2017 as well as in the 2016 and 2015 fiscal years. As a result, we have substantial doubt about our ability to continue as a going concern. Late in the 2016 fiscal year and early in 2017, the Company issued several 11% subordinated promissory notes to accredited investors for total borrowings of $200,000. Additionally, the Company borrowed $200,000 at 11% from an investor and borrowed $100,000 from an officerexcess of the ~~Company. Each of these borrowings have since been satisfied in full with a combination of repayment in cash and conversion of certain amounts outstanding to equity~~purchase price over the fair value of the ~~Company.~~
~~The Company also has access to~~net tangible and intangible assets acquired in a ~~working capital line provided by American Express, guaranteed by~~business combination. Goodwill is not amortized but is tested for impairment annually or more frequently, if events or changes in circumstances indicate that the ~~Company’s Chief Executive Officer,~~asset may be impaired. Goodwill in the amount of ~~$140,000~~$8.4 million was acquired in conjunction with ~~a term of 60 to 90 days and interest at a flat fee of 1.5%. Additionally, in~~ the ~~nine~~Cleared acquisition during the three months ended ~~September 30, 2017, the~~March 31, 2022 (see Note 3). The Company issued and sold 2,927,156 shares and 1,414,078 warrants to accredited investors in an offering pursuant to Regulation D and received proceeds in the amount of $673,245. We plan on our operating business (in conjunction with proceeds from debt and equity financings completed in 2016 and early 2017) being able to fund operations through 2017. However, if necessary, we may raise additional capital throughrecorded a private placement of common stock, obtaining debt financing or from advances from our President and/or directors; however, no assurances can be made that we will be successful in our endeavors to raise additional capital.
There can be no assurance that required future financing can be successfully completed on a timely basis, or on terms acceptable to us. Any future issuance of equity securities could cause dilution to our shareholders. Any incurrence of indebtedness would increase our debt service obligations and would cause us to be subject to restrictive operating and financial covenants.
We had positive net working capital of $560,467 at September 30, 2017, resulting in an increase in working capital from negative net working capital of $(361,725) at December 31, 2016. The ratio of current assets to current liabilities was 1.72 to 1 at September 30, 2017.
~~The following is a summary of cash provided by or used in each of the indicated types of activities~~$2.7 million goodwill impairment charge during the nine months ended September 30, ~~2017 and 2016:~~
2017 2016
Cash provided by (used in):
Operating activities $ (315,689 ) $ (111,698 )
Financing activities 695,888 352,635
~~Net cash used by operating activities was approximately $316,000 for the nine months ended September 30, 2017, compared~~2022 related to ~~net cash used in operating activities of approximately $112,000 for the same period in 2016. The increase~~a decline in the ~~amount~~estimated fair value of ~~cash used by our operating activities was due primarily to our overall net loss, product deposits and an increase in inventory.~~
Net cash flows provided by financing activities was approximately $696,000 for the nine months ended September 30, 2017, compared to net cash flows provided by financing activities of $353,000 for the same period in 2016. Our increase in net cash flows provided by financing activities was primarilyCleared as a result of a decline in the ~~sale~~Cleared financial projections.
Other intangible assets are amortized over their estimated lives using the straight-line method. Costs incurred to renew or extend the term of ~~our~~recognized intangible assets are capitalized and amortized over the useful life of the asset.
Impairment of Long-Lived Assets
Long-lived assets include equipment, capitalized software, and intangible assets subject to amortization. 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, 2022 and December 31, 2021, 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 and state tax returns. Conversion Labs PR and WorkSimpli file tax returns in Puerto Rico. Both are limited liability companies and file separate tax returns with any tax liabilities or benefits passing through to its members.
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 consolidated financial statements, based upon the enacted rates in effect for the year in which the differences are expected to reverse. The Company establishes a valuation allowance, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company periodically assesses the value of its deferred tax asset, a majority of which has been generated by a history of net operating losses and management determines the necessity for a valuation 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, 2018, remain open to audit by all related taxing authorities.
35
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 stock shares using weekly price observations over an observation period that approximates the expected life of the options. The risk-free rate approximates the U.S. Treasury yield curve rate in effect at the time of grant for periods similar to the expected option life. Due to limited history of forfeitures, the Company has elected to account for forfeitures as they occur.
Many of the assumptions require significant judgment and ~~warrants, and proceeds from notes payable~~any changes could have a material impact in the ~~first quarter~~determination of ~~2017.~~stock-based compensation expense.

~~Indebtedness~~
Recently Issued Accounting Standards
~~From time to time, our directors, officers~~
In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-08, Business Combinations (Topic 805); Accounting for Contract Assets and ~~other related individuals~~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 made short-term advances to us for our operating needs. Late in the 2016 fiscal year and early in 2017, the Company issued several 11% subordinated promissory notes to accredited investors for total borrowings of $200,000, borrowed $200,000 at 11%recorded under ASC 606, Revenue from ~~an investor and borrowed $100,000 from an officer~~Contracts with Customers, as of the ~~Company. Each of these borrowings have since been satisfied~~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 ~~full with~~ a business combination ~~of repayment in cash and conversion of certain amounts outstanding to equity of the Company. We also have access to a $140,000 working capital line through American Express, guaranteed~~are recorded by the ~~Company’s Chief Executive Officer,~~acquirer at ~~rates~~fair value. This update is effective for fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently evaluating the effects that ~~are more favorable than those that Company has been able achieve previously.~~the adoption of this guidance will have on our consolidated financial statements and related disclosures.
~~Off-Balance Sheet Arrangements~~Application of New or Revised Accounting Standards—Not Yet Adopted
~~There are no off-balance sheet arrangements between us and any~~All other ~~entity~~accounting standards updates that have been issued or proposed by the FASB that do not require adoption until a future date are ~~reasonably likely~~not expected to have a ~~current or future effect~~material impact on ~~our~~the consolidated financial ~~condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders.~~statements upon adoption.
36
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares
Item 3. Quantitative and ~~classified as stockholders’ equity or that~~Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not ~~reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred~~required to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or researchprovide the information required by this Item.
Item 4. Controls and ~~development services with us.~~Procedures
~~Critical Accounting Policies~~
Our significant accounting policies are described more fully in Note 2 to our financial statements, which we believe are the most critical to aid you in fully understanding and evaluating this management discussion and analysis.
~~Item 3.~~ ~~Quantitative and Qualitative Disclosures about Market Risk~~
~~Not applicable.~~
~~Item 4.~~ ~~Controls and Procedures~~
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer (“PEO”), and our Principal Financial Officer (“PFO”), of the design and effectiveness of our “disclosuremaintain disclosure controls and ~~procedures”~~procedures (as that term is defined ~~under~~in Rules 13a-15(e) and 15d-15(e) ofunder the Securities Exchange Act of ~~1934)~~1934, as ofamended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the ~~end of~~Exchange Act is recorded, processed, summarized and reported within the ~~period covered by this report. Based on this evaluation,~~time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our ~~PEO/PFO concluded that~~management, including our chief executive officer and chief financial officer, as ~~of the end of the period covered by this report, these~~appropriate, to allow timely decisions regarding required disclosures. In designing disclosure controls and procedures, ~~were not effective.~~our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The ~~conclusion that our~~design of any disclosure controls and procedures ~~were not effective was due to~~also is based in part upon certain assumptions about the ~~presence~~likelihood of ~~the following material weaknesses~~future events, and there can be no assurance that any design will succeed in disclosure controls and procedures which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment as the Company had only one officer; (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC Guidelines; and (iii) inadequate security and restricted access to computer systems including insufficient disaster recovery plans; and (iv) no written whistleblower policy. If and when sufficient funds are available, our PEO/PFO plans to implement appropriate disclosure controls and procedures to remediate these material weaknesses, including (i) appointing additional qualified personnel to address inadequate segregation of duties and ineffective risk management; (ii) adopt sufficient written policies and procedures for accounting and financial reporting and a whistle blower policy; and (iii) implement sufficient security and restricted access measures regarding our computer systems and implement a disaster recovery plan.
~~Changes in Internal Control over Financial Reporting~~
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended September 30, 2017, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. In designing and evaluating the disclosure controls and procedures, management recognizes that anyachieving 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. ~~In addition,~~
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 ~~must reflect~~as of the ~~fact~~end of the period covered by this report. Based upon that ~~there are resource constraints~~evaluation and subject to the foregoing, our chief executive officer and chief financial officer concluded that, ~~management is required to apply its judgment in evaluating the benefits of possible~~our disclosure controls and procedures ~~relative~~were not effective due to ~~their costs.~~the material weaknesses in internal control over financial reporting described below.

~~PART II. OTHER INFORMATION~~
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:
~~Item 1.~~(i) ~~Legal Proceedings~~inadequate segregation of duties consistent with control objectives;
(ii) insufficient written policies and procedures for accounting and financial reporting with respects to the requirements and application of both U.S. GAAP and SEC Guidelines; and
(iii) inadequate security and restricted access to computer systems including a disaster recovery plan.
~~We may become involved~~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 added a functioning audit committee and adopted written policies on related party transactions and whistleblower protection. Additionally, the Company has added qualified independent outside directors and hired additional qualified officers and skilled accounting personnel. The other remediation actions planned include:
(i) re-design of our accounting processes and control procedures;
(ii) further documentation and implementation of control procedures and the implementation of control monitoring; and
(iii) identify and remedy gaps in our security and restricted access policies to computer systems and implement a disaster recovery plan.
Changes in ~~various lawsuits~~Internal Control over Financial Reporting
As discussed above, we are implementing certain measures to remediate the material weaknesses identified in the design and ~~legal proceedings arising~~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, 2022, that materially affected, our internal control over financial reporting as of that date.
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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. ~~Litigation is subject~~Material proceedings are described under Note 9, “Commitments and Contingencies” to ~~inherent uncertainties and an adverse result~~the unaudited condensed consolidated financial statements included in ~~these or other matters may arise from time to time that may have an adverse effect~~this Quarterly Report on ~~our business, financial conditions or operating results. We are currently not aware of any such legal proceedings or claims that will have, individually or~~Form 10-Q.
ITEM 1A. RISK FACTORS
An investment in the ~~aggregate,~~Company’s common stock involves a ~~material adverse effect on our business, financial condition or operating results.~~
~~Item 1A.~~ ~~Risk Factors~~
number of very significant risks. You should carefully consider ~~carefully~~ the risk factors ~~discussed~~included in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 7, 2022, 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. Except as set forth below, 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, ~~2016.~~2021. The Company’s business, operating results and financial condition could be adversely affected due to any of those risks. In addition:
There is substantial doubt about our ability to continue as a going concern.
Our historical financial statements have been prepared under the assumption that we will continue as a going concern. As of September 30, 2022, the Company had an accumulated deficit of $178 million. We have limited financial resources, and as of September 30, 2022 we had a working capital deficit of $12.0 million and a cash balance of $5.8 million. We will need to raise additional capital or secure debt funding to support on-going operations. The sources of this capital are expected to be the sale of equity and debt, which may not be available on favorable terms, if at all, and may, if sold, cause significant dilution to existing stockholders. If we are unable to access additional capital moving forward, it may hurt our ability to grow and to generate future revenues, our financial position, and liquidity. These factors raise substantial doubt about the ability of the Company to continue as a going concern. Unless management is able to obtain additional financing, it is unlikely that the Company will be able to meet its funding requirements during the next 12 months. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The doubt regarding our potential ability to continue as a going concern may adversely affect our ability to obtain new financing on reasonable terms or at all. Additionally, if we are unable to continue as a going concern, our stockholders may lose some or all of their investment in the Company.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
None.
38

ITEM 6. EXHIBITS
~~Item 2.~~ ~~Unregistered Sales~~ Incorporated by Reference
Exhibit Number Exhibit Description Form Exhibit Filing Date/Period End Date
10.1# Director Agreement, dated September 14, 2022, between LifeMD, Inc. and Robert Jindal 8-K 10.1 09/20/2022
10.2# Restricted Stock Award Agreement, dated September 14, 2022, between LifeMD, Inc. and Robert Jindal 8-K 10.2 09/20/2022
10.3# Non-Qualified Stock Option Agreement, dated September 14, 2022, between LifeMD, Inc. and Robert Jindal 8-K 10.3 09/20/2022
31.1* Rule 13a-14(a) / 15d-14(a) Certification of ~~Equity Securities~~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 ~~Use of Proceeds~~contained in Exhibit 101.INS)
~~None.~~# Indicates management contract or compensatory plan, contract, or arrangement.
* Filed herewith.
**Furnished herewith

~~Item 3.~~ ~~Defaults Upon Senior Securities~~39
~~None.~~
~~Item 4.~~ ~~Mine Safety Disclosures~~
~~Not applicable.~~
~~Item 5.~~
~~Other Information~~
SIGNATURES
~~None.~~
~~Item 6.~~ ~~Exhibits~~
See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.

~~SIGNATURES~~
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the ~~Registrant~~registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
LIFEMD, INC.
By: ~~IMMUDYNE INC.~~/s/ Justin Schreiber
~~(Registrant)~~Justin Schreiber
~~Date: November 14, 2017~~ ~~By:~~ ~~/s/ Mark McLaughlin~~
~~Mark McLaughlin~~
Chief ~~Executive Officer~~
~~(Principal Executive Officer)~~
~~IMMUDYNEINC.~~
~~(Registrant)~~
~~Date: November 14, 2017~~ ~~By:~~ ~~/s/ Robert Kalkstein~~
~~Robert Kalkstein~~
~~Chief Financial Officer~~
~~(Principal Financial Officer)~~

~~EXHIBIT INDEX~~
~~Exhibit No.~~ ~~Document Description~~
~~31.1 †~~ ~~Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
~~32.1†~~ ~~Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
~~32.1 ‡~~ ~~Certifications of Principal~~ Executive Officer and ~~Principal~~Chairman of the Board of Directors
Date: November 10, 2022
By: /s/ Marc Benathen
Marc Benathen
Chief Financial Officer ~~pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
Date: November 10, 2022
~~101.INS†~~ ~~XBRL Instance Document~~
~~101.SCH†~~By: /s/ Maria Stan ~~XBRL Schema Document~~
~~101.CAL†~~ Maria Stan ~~XBRL Calculation Linkbase Document~~
~~101.DEF†~~ Principal Accounting Officer ~~XBRL Definition Linkbase Document~~
~~101.LAB†~~Date: November 10, 2022 ~~XBRL Label Linkbase Document~~
~~101.PRE†~~ ~~XBRL Presentation Linkbase Document~~
~~† Filed herewith~~
~~‡ Furnished herewith~~
31
40

Immudyne, Inc.
Consolidated Balance Sheets

	September 30, 2017			December 31, 2016
	(unaudited)
ASSETS

Current Assets
Cash	$	562,760		$	182,561
Trade accounts receivable, net		276,992			444,743
Other receivables		-			2,250
Product deposit		119,899			-
Inventory, net		377,800			160,270
Total Current Assets	$	1,337,451		$	789,824


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
Accounts payable and accrued expenses	$	699,651		$	752,930
Derivative liabilities		-			192,254
Convertible notes payable		-			100,000
Notes payable, net of discount in 2016		77,333			106,365
Total Current Liabilities		776,984			1,151,549


Stockholders’ Equity (Deficit)
Common stock, $0.01 par value; 100,000,000 shares authorized, 44,257,342 and 35,570,157 shares issued, 43,742,142 and 35,245,157 outstanding as of September 30, 2017 and December 31, 2016, respectively		442,573			355,701
Additional paid-in capital		11,218,988			9,070,064
Accumulated (deficit)		(10,680,261	)		(9,693,882	)
		981,300			(268,117	)
Treasury stock, 515,200 and 325,000 shares, at cost		(163,701	)		(87,053	)
Total Immudyne, Inc. Stockholders’ (Deficit)		817,599			(355,170	)

Non-controlling interest		(257,132	)		(6,555	)

Total Stockholders’ (Deficit)		560,467			(361,725	)

Total Liabilities and Stockholders’ (Deficit)	$	1,337,451		$	789,824

	September 30, 2022			December 31, 2021
		(Unaudited)
ASSETS
Current Assets
Cash	$	5,836,823		$	41,328,039
Accounts receivable, net		2,538,118			980,055
Product deposit		108,051			203,556
Inventory, net		3,676,131			1,616,600
Other current assets		814,576			793,190
Total Current Assets		12,973,699			44,921,440
Non-current Assets
Equipment, net		533,561			233,805
Right of use asset, net		1,289,250			1,752,448
Capitalized software, net		7,991,836			2,995,789
Goodwill		5,654,665			-
Intangible assets, net		4,918,550			19,761
Total Non-current Assets		20,387,862			5,001,803
Total Assets	$	33,361,561		$	49,923,243
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current Liabilities
Accounts payable	$	10,797,544		$	9,059,214
Accrued expenses		11,082,354			11,595,605
Notes payable, net		-			63,400
Current operating lease liabilities		702,237			607,490
Deferred revenue		2,353,152			1,499,880
Total Current Liabilities		24,935,287			22,825,589
Long-term Liabilities
Noncurrent operating lease liabilities		705,702			1,178,544
Contingent consideration		3,120,250			100,000
Purchase price payable		1,517,381			-
Total Liabilities		30,278,620			24,104,133
Commitments and Contingencies (Note 9)		-
Mezzanine Equity
Preferred Stock, $0.0001 par value; 5,000,000 shares authorized Series B Preferred Stock, $0.0001 par value; 5,000 shares authorized, 3,500 and 3,500 shares issued and outstanding, liquidation value approximately $1,272 and $1,175 per share as of September 30, 2022 and December 31, 2021, respectively		4,451,137			4,110,822
Stockholders’ (Deficit) Equity
Series A Preferred Stock, $0.0001 par value; 1,610,000 shares authorized, 1,400,000 shares issued and outstanding, liquidation value approximately, $27.27 and $25.62 per share as of September 30, 2022 and December 31, 2021, respectively		140			140
Common stock, $0.01 par value; 100,000,000 shares authorized, 31,457,775 and 30,704,434 shares issued, 31,354,735 and 30,601,394 outstanding as of September 30, 2022 and December 31, 2021, respectively		314,578			307,045
Additional paid-in capital		177,131,586			164,517,634
Accumulated deficit		(177,851,083	)		(141,921,085	)
Treasury stock, 103,040 and 103,040 shares, at cost		(163,701	)		(163,701	)
Total LifeMD, Inc. Stockholders’ (Deficit) Equity		(568,480	)		22,740,033
Non-controlling interest		(799,716	)		(1,031,745	)
Total Stockholders’ (Deficit) Equity		(1,368,196	)		21,708,288
Total Liabilities, Mezzanine Equity and Stockholders’ (Deficit) Equity	$	33,361,561		$	49,923,243

Immudyne, Inc.
Consolidated Statements of Operations
(unaudited)

	Three Months Ended Sept 30,						Nine Months Ended Sept 30,
	2017			2016			2017			2016
				Restated						Restated
Net Sales	$	2,051,734		$	1,384,429		$	3,583,614		$	4,252,704

Cost of Sales		535,572			388,202			1,068,174			1,268,320

Gross Profit		1,516,162			996,227			2,515,440			2,984,384

Operating expenses
Compensation and related expenses		529,361			361,829			1,131,805			1,077,340
Professional fees		99,964			82,608			321,548			277,282
Marketing expenses		882,845			554,536			1,182,715			1,713,337
General and administrative expenses		277,559			204,958			753,402			382,857
Total operating expenses		1,789,729			1,203,931			3,389,470			3,450,816

Operating (Loss)		(273,567	)		(207,704	)		(874,030	)		(466,432	)

Change in fair value of derivative liability		(377,213	)		-			496,617			-
Interest (expense)		(1,111	)		(9,992	)		(650,718	)		(15,805	)

Net Income (Loss)		(651,891	)		(217,696	)		(1,028,131	)		(482,237	)

Net (loss) income attributable to noncontrolling interests		27,172			8,955			(41,752	)		6,439

Net Income (loss) attributable to Immudyne, Inc.	$	(679,063	)	$	(226,651	)	$	(986,379	)	$	(488,676	)

Basic income (loss) per share attributable to Immudyne, Inc.	$	(0.02	)	$	(0.01	)	$	(0.02	)	$	(0.02	)
Diluted income (loss) per share attributable to Immudyne, Inc.	$	(0.02	)	$	(0.01	)	$	(0.02	)	$	(0.02	)

Average number of common shares outstanding
Basic		44,160,477			34,427,087			40,888,131			31,917,873
Diluted		44,160,477			34,427,087			40,888,131			31,917,873

	2022			2021			2022			2021
	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Revenues
Telehealth revenue, net	$	21,365,178		$	18,540,897		$	66,231,202		$	47,623,822
WorkSimpli revenue, net		10,047,291			6,406,302			24,682,602			17,835,100
Total revenues, net		31,412,469			24,947,199			90,913,804			65,458,922
Cost of revenues
Cost of telehealth revenue		4,502,919			4,969,306			14,042,112			12,113,336
Cost of WorkSimpli revenue		213,923			127,181			558,216			314,428
Total cost of revenues		4,716,842			5,096,487			14,600,328			12,427,764
Gross profit		26,695,627			19,850,712			76,313,476			53,031,158

Expenses
Selling and marketing expenses		17,200,859			20,293,935			60,928,649			61,372,815
General and administrative expenses		12,476,760			10,695,663			38,029,907			28,194,305
Goodwill impairment charge		-			-			2,735,000			-
Other operating expenses		1,525,645			818,404			4,804,623			2,264,257
Customer service expenses		1,488,428			505,880			3,428,098			1,274,392
Development costs		821,636			128,134			1,951,039			561,793
Total expenses		33,513,328			32,442,016			111,877,316			93,667,562
Operating loss		(6,817,701	)		(12,591,304	)		(35,563,840	)		(40,636,404	)
Interest expense, net		(132,235	)		(1,824,777	)		(432,405	)		(2,866,150	)
Change in fair value of contingent consideration		(248,000	)		-			2,487,000			-
Gain on debt forgiveness		-			-			63,400			184,914
Net loss		(7,197,936	)		(14,416,081	)		(33,445,845	)		(43,317,640	)
Net income (loss) attributable to non-controlling interest		83,737			(62,706	)		154,464			(531,182	)
Net loss attributable to LifeMD, Inc.		(7,281,673	)		(14,353,375	)		(33,600,309	)		(42,786,458	)
Preferred stock dividends		(776,563	)		-			(2,329,688	)		-
Net loss attributable to LifeMD, Inc. common stockholders	$	(8,058,236	)	$	(14,353,375	)	$	(35,929,997	)	$	(42,786,458	)
Basic loss per share attributable to LifeMD, Inc. common stockholders	$	(0.26	)	$	(0.54	)	$	(1.17	)	$	(1.66	)
Diluted loss per share attributable to LifeMD, Inc. common stockholders	$	(0.26	)	$	(0.54	)	$	(1.17	)	$	(1.66	)
Weighted average number of common shares outstanding:
Basic		30,935,643			26,684,591			30,830,533			25,820,478
Diluted		30,935,643			26,684,591			30,830,533			25,820,478

Immudyne, Inc.
Consolidated Statement of Stockholders’ Equity (Deficit)
For the Nine Months Ended September 30, 2017
(unaudited)

	Immudyne, Inc.
					Additional
	Common Stock				Paid-in			Accumulated			Treasury			Sub			Noncontrolling
	Shares		Amount		Capital			(Deficit)			Stock			Total			interest			Total

Balance at December 31, 2016		35,570,157	$	355,701	$	9,070,064		$	(9,693,882	)	$	(87,053	)	$	(355,170	)	$	(6,555	)	$	(361,725	)

Issuance of common stock for services		1,175,000		11,750		487,181			-			-			498,931			-			498,931
Sale of common stock and warrants		2,927,156		29,271		643,974			-			-			673,245			-			673,245
Conversion of non-controlling interest equity for shares and warrants		1,183,490		11,835		260,368			-			-			272,203			(272,203	)		-
Conversion of note payable		755,179		7,552		182,428			-			-			189,980			-			189,980
Loss on settlement of notes and other payables		-		-		634,325			-			-			634,325			-			634,325
Conversion of accrued expenses		217,390		2,174		50,038			-			-			52,212			-			52,212
Issuance of common stock in relation to debt offering		217,391		2,174		54,348			-			-			56,522			-			56,522
Cashless exercise of options		2,211,579		22,116		(22,116	)		-			-			-			-			-
Purchase of treasury stock		-		-		-			-			(76,648	)		(76,648	)		-			(76,648	)
Issuance of stock options for services		-		-		113,522			-			-			113,522			-			113,522
Investment in subsidiary by noncontrolling interest, net of distributions		-		-		-			-			-			-			63,378			63,378
Reclassification of options, warrants and other contracts to derivative liabilities upon issuance		-		-		(255,144	)		-			-			(255,144	)		-			(255,144	)

Net (loss)		-		-		-			(986,379	)		-			(986,379	)		(41,752	)		(1,028,131	)
Balance at September 30, 2017		44,257,342	$	442,573	$	11,218,988		$	(10,680,261	)	$	(163,701	)	$	817,599		$	(257,132	)	$	560,467

	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	)

Immudyne, Inc.
Consolidated Statements of Cash Flows
(unaudited)

	Nine Months Ended
	September 30,
	2017			2016

CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) attributable to Immudyne, Inc.	$	(986,379	)	$	(488,676	)
Net (loss) attributable to noncontrolling interests		(41,752	)		6,439
Net (Loss)		(1,028,131	)		(482,237	)
Adjustments to reconcile net (loss) to net cash (used) by operating activities
Change in fair value of derivative liability		(496,617	)		-
Bad debt recovery		(49,119	)		(43,558	)
Amortization of debt discount		81,558			5,990
Loss on settlement of notes and other payables		634,325			-
Stock compensation expense		162,741			493,218
Issuance of warrants for services		-			20,585
Common stock issued for services		498,930			-
Changes in Assets and Liabilities
Trade accounts receivable		216,870			(276,930	)
Other receivables		2,250			-
Product deposit		(119,899	)		-
Inventory		(217,530	)		(69,479	)
Accounts payable and accrued expenses		(1,067	)		240,713
Net cash (used) by operating activities		(315,689	)		(111,698	)

CASH FLOWS FROM FINANCING ACTIVITIES
Investment in subsidiary by noncontrolling interest, net		63,378			161,355
Proceeds from notes payable		386,376			150,000
Repayment of convertible note payable		(100,000	)		-
Repayment of notes payable		(250,463	)		-
Sale of common stock and warrants		673,245			46,000
Purchase of treasury stock		(76,648	)		(4,720	)
Net cash provided by financing activities		695,888			352,635

Net increase in cash		380,199			240,937

Cash at beginning of the period		182,561			232,984

Cash at end of the period	$	562,760		$	473,921

Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest	$	4,723		$	8,563

Issuance of company stock for notes and other payables	$	242,192		$	-
Issuance of common stock for conversion of debt	$	-		$	-
Issuance of common stock in relation to debt offering	$	-		$	41,875
Issuance of common stock for services		-			581,093
Conversion of equity invested in subsidiary to common stock and warrants	$	272,203		$	-
Reclassification of options, warrants and other contracts to derivative liabilities upon issuance	$	255,144		$	-

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

	September 30, 2017		December 31, 2016

Raw materials	$	68,852	$	38,460
Finished products		308,948		121,810
	$	377,800	$	160,270

	September 30,			December 31,
	2022			2021
Finished Goods - Products	$	2,829,053		$	1,592,654
Raw materials and packaging components		891,399			81,427
Inventory reserve		(44,321	)		(57,481	)
Total Inventory - net	$	3,676,131		$	1,616,600

Total assets:	September 30, 2017			December 31, 2016
Nutraceutical and Cosmetic Additives	$	1,615,632		$	556,234
Finished Cosmetic Products		763,609			422,288
Eliminations		(1,041,790	)		(188,698	)
Total	$	1,337,451		$	789,824

	Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,
	2017		2016		2017		2016
Net sales by segment:
Nutraceutical and Cosmetic Additives	$	277,463	$	229,741	$	981,356	$	780,961
Finished Cosmetic Products		1,774,271		1,154,688		2,602,258		3,494,743
Eliminations		-		-		-		(23,000	)
Total	$	2,051,734	$	1,384,429	$	3,583,614	$	4,252,704

	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021

Series B Preferred Stock		1,369,581		1,229,581		1,334,421		1,195,446
Restricted Stock Units (RSUs)		1,830,750		996,375		1,563,000		569,417
Stock options		4,007,698		4,170,900		4,214,609		4,193,100
Warrants		3,859,638		3,888,438		3,859,638		3,807,899
Potentially dilutive securities		11,067,667		10,285,294		10,971,668		9,765,862


Purchase price, net of cash acquired	$	9,091,762
Less:
Intangible assets		1,065,071
Inventory		7,168
Fixed assets		37,888
Accounts payable and other current liabilities		(408,030	)
Goodwill	$	8,389,665

	September 30,			December 31,			Amortizable
	2022			2021			Life
Amortizable Intangible Assets:
ResumeBuild brand		4,500,000			-			5 years
Customer relationship asset		1,006,840			1,006,840			3 years
Cleared trade name		133,339			-			5 years
Cleared developed technology		12,920			-			1 year
Cleared customer relationships		918,812			-			10 years
Purchased licenses		200,000			200,000			10 years
Website domain name		22,731			22,231			3 years
Less: accumulated amortization		(1,876,092	)		(1,209,310	)
Total net amortizable intangible assets	$	4,918,550		$	19,761

Net operating loss	$	1,679,000
Accounts receivable reserves		-
Inventory reserves		7,000
Stock compensation		389,000
Net deferred tax asset		2,084,000
Valuation allowance		(2,084,000	)
Total	$	-

●	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.

	Options Outstanding Number of Shares			Exercise Price per Share		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price per Share

Balance, December 31, 2021		2,063,500		$	4.57 – 21.02		8.04 years	$	9.41
Granted		132,000			2.52 – 13.74		3.98 years		7.20
Cancelled/Forfeited/Expired		(162,135	)		5.08 – 13.74		8.40 years		8.99
Balance at September 30, 2022		2,033,365		$	2.52 – 21.02		7.06 years	$	9.30

Exercisable at December 31, 2021		636,229		$	4.57 – 21.02		8.95 years	$	9.18
Exercisable at September 30, 2022		1,154,107		$	2.52 – 21.02		7.97 years	$	9.41

	~~Number of~~ ~~Options~~
~~Balance at December 31, 2016~~		~~10,700,273~~
~~Issued~~		~~1,250,000~~
~~Exercised~~		~~(1,339,473~~	)

~~Balance at September 30, 2017~~		~~10,610,800~~

~~Significant assumptions:~~
~~Risk-free interest rate at grant date~~		~~1.49% -1.55~~	%
~~Expected stock price volatility~~		~~214% - 217~~	%
~~Expected dividend payout~~		—
~~Expected option life-years~~		~~3 years~~
~~Weighted average grant date fair value~~	$	~~0.23 - 0.43~~
~~Forfeiture rate~~		0	%

Exercise Price	Number of Options		Weighted Average Remaining Contractual Life

$0.10		40,800	1 year
$0.20 - $0.25		8,620,000	5 years
$.35		625,000	10 years
$0.40		1,325,000	4 years
Total		10,610,800

	Options Outstanding Number of Shares			Exercise Price per Share		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price per Share

Balance, December 31, 2021		1,658,733		$	1.00 – 19.61		5.85 years	$	5.45
Granted		50,000			4.12		4.26 years		4.12
Exercised		(149,400	)		1.00 – 2.00		0.19 years		1.23
Cancelled/Forfeited/Expired		(120,000	)		1.00 – 4.12		4.26 years		4.12
Balance at September 30, 2022		1,439,333		$	1.00 – 19.61		5.88 years	$	6.11

Exercisable December 31, 2021		1,019,164		$	1.00 – 19.61		5.21 years	$	3.60
Exercisable at September 30, 2022		1,087,719		$	1.00 – 19.61		5.84 years	$	5.04

	RSUs Outstanding Number of Shares
Balance at December 31, 2021		375,375
Granted		1,047,500
Vested		(172,125	)
Balance at September 30, 2022		1,250,750

	RSUs Outstanding Number of Shares
Balance at December 31, 2021		600,000
Granted		60,000
Vested		(80,000	)
Balance at September 30, 2022		580,000

	Number of Shares			Weighted Average Exercise Price		Year of Expiration

Balance at December 31, 2016		1,954,891		$	0.19	2017 - 2019
Issued		2,566,367			0.40	2019 - 2020

Exercised		(1,500,000	)		0.12
Balance at September 30, 2017		3,021,258			0.40	2017 - 2020

	Warrants Outstanding Number of Shares			Exercise Price per Share		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price per Share
Balance at December 31, 2021		3,888,438		$	1.40 – 12.00		5.85 years	$	5.59
Exercised		(22,000	)		1.75		-		1.75
Cancelled/Forfeited/Expired		(6,800	)		2.00		-		2.00
Balance at September 30, 2022		3,859,638		$	1.40 – 12.00		5.15 years	$	5.61

Exercisable December 31, 2021		2,621,307		$	1.40 – 12.00		6.36 years	$	5.98
Exercisable September 30, 2022		3,760,906		$	1.40 – 12.00		5.17 years	$	5.66

	~~Expected volatility~~			~~125% - 214%~~
	~~Risk free interest rate~~			~~1.31% - 2.57%~~
	~~Expected dividend yield~~			-
	~~Expected term (in years)~~			~~0.9 - 8.1~~
	~~Weighted average grant date fair value~~			~~$0.12 - 0.45~~


Remainder of fiscal year 2022	$	225,519
Fiscal year 2023		732,409
Fiscal year 2024		484,580
Fiscal year 2025		68,850
Less: imputed interest		(103,419	)
Present value of operating lease liabilities	$	1,407,939

	September 30, 2022			December 31, 2021
Weighted average remaining lease term in years		3.05			3.75
Weighted average discount rate		7.16	%		7.15	%

●	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.