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)
2023 2022
Six Months Ended June 30,
2023 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (9,333,689 ) $ (26,247,910 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of debt discount 153,842 -
Amortization of capitalized software 2,348,667 976,026
Amortization of intangibles 479,528 341,287
Accretion of consideration payable 114,216 135,368
Depreciation of fixed assets 96,434 73,247
Loss (gain) on debt extinguishment 325,198 (63,400 )
Change in fair value of contingent consideration - (2,735,000 )
Goodwill impairment charge - 2,735,000
Operating lease payments 370,428 290,362
Stock compensation expense 5,525,483 8,513,787
Changes in Assets and Liabilities
Accounts receivable (833,793 ) (1,533,572 )
Product deposit (107,850 ) (237,285 )
Inventory 5,061 (1,341,474 )
Other current assets 14,827 (80,015 )
Change in operating lease liability (388,077 ) (210,451 )
Deferred revenue 120,704 492,622
Accounts payable (513,414 ) 2,853,811
Accrued expenses 4,232,140 (2,152,511 )
Other operating activity (579,319 ) -
Net cash provided by (used in) operating activities 2,030,386 (18,190,108 )
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for capitalized software costs (3,899,852 ) (4,522,928 )
Purchase of equipment (64,219 ) (357,331 )
Purchase of intangible assets (148,868 ) (4,000,500 )
Acquisition of business, net of cash acquired - (1,012,395 )
Net cash used in investing activities (4,112,939 ) (9,893,154 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net 14,473,002 -
Proceeds from notes payable 2,000,000 -
Repayment of notes payable, net of prepayment penalty (4,386,915 ) -
Cash proceeds from exercise of options - 90,400
Cash proceeds from exercise of warrants - 38,500
Preferred stock dividends (1,553,125 ) (1,553,125 )
Contingent consideration payment for ResumeBuild acquisition (125,000 ) (31,250 )
Net payments for membership interest in WorkSimpli (305,625 ) -
Distributions to non-controlling interest (72,000 ) (72,000 )
Net cash provided by (used in) financing activities 10,030,337 (1,527,475 )
Net increase (decrease) in cash 7,947,784 (29,610,737 )
Cash at beginning of period 3,958,957 41,328,039
Cash at end of period $ 11,906,741 $ 11,717,302
Cash paid for interest
Cash paid during the period for interest $ 768,188 $ -
Non-cash investing and financing activities
Warrants issued for debt instruments $ 1,088,343 $ -
Cashless exercise of options $ 165 $ 255
Consideration payable for Cleared acquisition $ - $ 8,079,367
Consideration payable for ResumeBuild acquisition $ - $ 500,000
Stock issued for noncontingent consideration payment $ 1,284,000 $ -
Principal of Paycheck Protection Program loans forgiven $ - $ 63,400
Right of use asset $ 93,115 $ -
Right of use lease liability $ 93,115 $ -
The accompanying notes are an integral part of these unaudited condensed consolidated financial ~~statements~~statements.

6
~~Immudyne, Inc.~~

~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~LIFEMD, INC.
~~(unaudited)~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ~~Organization and Going Concern~~
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 skincare products, was amended and restated and the Company increased its ownership and voting interest in Immudyne PR to 78.2%. Concurrent with the name change of the parent company to Conversion Labs, Inc., Immudyne PR was renamed to Conversion Labs PR LLC (“Conversion Labs PR”). On April ~~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 ~~Immudyne~~Conversion Labs PR ~~increasing~~to 100%. On February 22, 2021, concurrent with the name of the parent company to LifeMD, Inc., Conversion Labs PR was renamed to LifeMD PR, LLC.
In June 2018, the Company closed the strategic acquisition of 51% of LegalSimpli Software, LLC, which operates a software as a service application for converting, editing, signing, and sharing PDF documents called PDFSimpli. In addition to LegalSimpli Software, LLC’s growth business model, this acquisition added deep search engine optimization and search engine marketing expertise to the Company. On July 15, 2021, LegalSimpli Software, LLC, changed its name to WorkSimpli Software LLC, (“WorkSimpli”). Effective January 22, 2021, the Company consummated a transaction to restructure the ownership of WorkSimpli (the “WSS Restructuring”) concurrently increased its ownership interest in WorkSimpli to ~~78.1667% resulting~~85.58%. Effective September 30, 2022, two option agreements were exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.64%. Effective December 15, 2022, LifeMD PR, LLC merged into WorkSimpli, with WorkSimpli being the surviving entity.
Effective March 31, 2023, the Company redeemed 500 membership interest units in WorkSimpli and, as a ~~charge~~result, the Company’s ownership interest in WorkSimpli increased to ~~noncontrolling~~74.06%. Effective June 30, 2023, an option agreement was exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.32%. See Note 8 for additional information.
On January 18, 2022, the Company acquired Cleared Technologies, PBC, a Delaware public benefit corporation (“Cleared”), a nationwide allergy telehealth platform that provides personalized treatments for allergy, asthma, and ~~additional paid-in-capital~~immunology (See Note 3).
Nature of ~~$91,612. Immudyne PR~~Business
The Company is a direct-to-patient telehealth company providing patients a high-quality, cost-effective, and convenient way of accessing comprehensive, virtual healthcare. The Company believes the traditional model of visiting a doctor’s office, traveling to a local pharmacy, and returning for follow up care or prescription refills is complex, inefficient, and costly, and discourages many individuals from seeking much needed medical care. The Company is positioned to elevate the healthcare experience through telehealth with our proprietary technology platform, affiliated provider network, broad treatment capabilities, and unique ability to nurture patient relationships. Direct-to-patient telehealth technology companies, like the Company, connect consumers to affiliated, licensed, healthcare professionals for care across numerous indications, including urgent and primary care, men’s and women’s health, and dermatology, chronic care management and more.
The Company’s telehealth platform helps patients access their licensed providers for diagnoses, virtual care, and prescription medications, often delivered on a recurring basis. In addition to its telehealth prescription offerings, the Company sells over-the-counter (“OTC”) products. All products are available on a subscription or membership basis, where a patient can subscribe to receive regular shipments of prescribed medications or products. This creates convenience and often discounted pricing opportunities for patients and recurring revenue streams for the Company.
With its first brand, ShapiroMD, the Company has built a full line of proprietary OTC products for male and female hair loss—including Food and Drug Administration (“FDA”) approved OTC minoxidil and an FDA-cleared medical device—and now a personalized telehealth platform offering that gives consumers access to virtual medical treatment from their providers and, when appropriate, a full line of oral and topical prescription medications for hair loss. The Company’s men’s brand, RexMD, currently offers access to provider-based treatment for erectile dysfunction, as well as treatment for other common men’s health issues, including premature ejaculation and hair loss. In the first quarter of 2021, the Company launched NavaMD, a tele-dermatology and skincare brand for women. The Company has built a platform that allows it to efficiently launch telehealth and wellness product lines wherever it determines there is a market need.
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Business and Subsidiary History
In early 2019, the Company launched a service-based business under the name Conversion Labs Media LLC (“CVLB Media”), a Puerto Rico limited liability company. However, this business initiative was ~~formed~~terminated in early 2019. In May 2019, Conversion Labs Rx, LLC (“CVLB Rx”), a Puerto Rico limited liability company, signed a strategic partnership agreement with Specialty Medical Drugstore, Inc. (doing business as “GoGoMeds”). However, since its inception, CVLB Rx did not conduct any business and CVLB Rx was dissolved on August 7, 2020. Additionally, Conversion Labs Asia Limited (“Conversion Labs Asia”), a Hong Kong company, had no activity during the three and six months ended June 30, 2023 and 2022.
On January 18, 2022, the Company acquired Cleared, a nationwide allergy telehealth platform that provides personalized treatments for allergy, asthma, and immunology. Under the terms of the agreement, the Company acquired all outstanding shares of Cleared at closing in exchange for a $460 thousand upfront cash payment, and two non-contingent milestone payments for a total of $3.46 million ($1.73 million each on or before the first and second anniversaries of the closing date). The Company purchased a convertible note from a strategic pharmaceutical investor for $507 thousand which was converted upon closing of the Cleared acquisition. The Company also agreed to ~~launch~~ a ~~complete skin care regime formulated using strategic ingredients provided~~performance-based earnout based on Cleared’s future net sales, payable in cash or shares at the Company’s discretion. On February 4, 2023, the Company entered into the First Amendment to the Stock Purchase Agreement (the “First Amendment”) between the Company and the sellers of Cleared. The First Amendment was amended to, among other things: (i) reduce the total purchase price by $250 thousand to a total of $3.67 million; (ii) change the timing of the payment of the purchase price to $460 thousand paid at closing (which has already been paid by the ~~Company. In~~Company), with the remaining amount to be paid in five quarterly installments beginning on or before February 6, 2023 and ending January 15, 2024; (iii) removing all “earn-out” payments payable by the Company to the sellers; and (iv) remove certain representations and warranties of the Company and sellers in connection with the transaction (See Note 3). On February 6, 2023, the Company issued 337,895 shares of common stock related to the first of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On April 17, 2023, the Company issued 455,319 shares of common stock related to the second ~~quarter~~ of ~~2017, Immudyne PR expanded their product line~~five quarterly installment payments due to the sellers of Cleared under the First Amendment. On July 17, 2023, the Company issued 158,129 shares of common stock related to the third of five quarterly installment payments due to the sellers of Cleared under the First Amendment.
In February 2022, WorkSimpli closed on an Asset Purchase Agreement (the “ResumeBuild APA”) with East Fusion FZCO, a Dubai, UAE corporation (the “Seller”), whereby WorkSimpli acquired substantially all of the assets associated with the Seller’s business, offering subscription-based resume building software through software as a service online platforms (the “Acquisition”). WorkSimpli paid $4.0 million to the Seller upon closing. The Seller is also entitled to a minimum of $500 thousand to be paid out in quarterly payments equal to the greater of 15% of net profits (as defined in the ResumeBuild APA) or approximately $63 thousand, for a two-year period ending on the two-year anniversary of the closing of the Acquisition. As of June 30, 2023, WorkSimpli has paid the Seller approximately $281 thousand in accordance with the ResumeBuild APA. WorkSimpli borrowed the purchase price from the Company pursuant to a promissory note with the obligation secured by an equity purchase guarantee agreement and ~~launched their in-licensed patented hair loss shampoo~~a stock option pledge agreement from Fitzpatrick Consulting, LLC and ~~conditioner.~~its sole member Sean Fitzpatrick, who is Co-Founder and President of WorkSimpli (See Note 3).
Unless otherwise indicated, the terms “LifeMD,” “Company,” “we,” “us,” and “our” refer to LifeMD, Inc. (formerly known as Conversion Labs, Inc.), Cleared, a Delaware public benefit corporation and our majority-owned subsidiary, WorkSimpli. The affiliated network of medical Professional Corporations and medical Professional Associations administratively led by LifeMD Southern Patient Medical Care, P.C., (“LifeMD PC”) is the Company’s affiliated, variable interest entity in which we hold a controlling financial interest. Unless otherwise specified, all dollar amounts are expressed in United States dollars.
Liquidity & Going Concern Evaluation
The Company has funded operations in the past through the sales of its products, issuance of common and preferred stock, and through loans and ~~advances 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 March 21, 2023, the Company entered into and closed on a loan and security agreement (the “Credit Agreement”), and a supplement to the Credit Agreement (the “Supplement”), with Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P. (collectively, “Avenue”). The ~~accompanying financial statements have been prepared~~Credit Agreement provides for a convertible senior secured credit facility of up to an aggregate amount of $40 million, comprised of the following: (1) $15 million in term loans funded at closing, (2) $5 million of additional committed term loans available in the fourth quarter of 2023 and (3) $20 million of additional uncommitted term loans, collectively referred to as the “Avenue Facility”. The Avenue Facility matures on October 1, 2026. The Company issued Avenue warrants to purchase $1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments (the “Warrants”). In addition, Avenue may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share equal to $1.49. Proceeds from the Avenue Facility were used to repay the Company’s outstanding notes payable balances with CRG Financial and are expected to be used for general corporate purposes and at the Company’s election, re-financing up to $5 million liquidation value plus accrued interest on the ~~basis that~~Series B Preferred Stock. The Company is subject to certain affirmative and negative covenants under the ~~Company will continue as a going concern, which assumes~~Avenue Facility, including the ~~realization~~requirement, beginning on the closing date, to maintain at least $5 million of ~~assets~~unrestricted cash to be tested at the end of each month, and beginning on the ~~satisfaction of liabilities in the normal course of business. At~~period ended September 30, ~~2017,~~2023, and at the end of each quarter thereafter, a trailing six-month cash flow, subject to certain adjustments as provided by the Credit Agreement, of at least $2 million.
8
As of June 30, 2023, the Company has an accumulated deficit approximating ~~$10.7~~$202.9 million and has ~~incurred~~experienced significant losses from its operations. To date, the Company has been funding operations primarily through the sales of its products, sale of equity in private placements and securities purchased by a financial institution. There can be no assurances that we will be successful in increasing revenues, improving operational efficiencies or that financing will be available or, if available, that such financing will be available under favorable terms.
The Company has a current cash balance of approximately $6.4 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~~The Company has begun to implement strategies to strengthen revenues and improve operational efficiencies across the business and is significantly curtailing expenses, however, these strategies do not mitigate the substantial doubt about the Company’s ability to continue as a going concern.
Additionally, on June 8, 2021, the ~~Company's cash balance~~Company filed a shelf registration statement on Form S-3 under the Securities Act, which was declared effective on June 22, 2021 (the “2021 Shelf”). Under the 2021 Shelf at ~~September 30, 2017,~~the time of effectiveness, the Company originally had the ability to raise up to $150 million by selling common stock, preferred stock, debt securities, warrants, and ~~projected cash needs for 2017, management estimates that it will need~~units. In conjunction with the 2021 Shelf, the Company also entered into an At Market Issuance Sales Agreement (the “ATM Sales Agreement”) with B. Riley Securities, Inc. and Cantor Fitzgerald & Co. relating to ~~increase sales revenue and/or raise additional capital to cover operating and capital requirements for~~ the ~~remainder~~sale of its common stock. In accordance with the terms of the ~~2017 year. Management will need~~ATM Sales Agreement, the Company may, but is not obligated to, ~~raise the additional needed funds through increased sales volume, issuing additional~~offer and sell, from time to time, shares of common stock, through 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 that any required future financing can be successfully completed on a timely basis, or on terms acceptable to the ~~Company.~~

~~Immudyne, Inc.~~Agents, acting as agent or principal. Sales of common stock, if any, will be made by any method permitted that is deemed an “at the market offering” as defined in Rule 415 under the Securities Act. On March 22, 2023, the date the Company filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, the Company became subject to the offering limits in General Instruction I.B.6 of Form S-3 (i.e., the “baby shelf limitations”). As a result of the baby shelf limitations, the Company was only able to offer and sell shares of common stock having an aggregate offering price of up to $18.435 million pursuant to the ATM Sales Agreement, and it filed a prospectus supplement with the SEC to that effect on March 27, 2023. In June 2023, the Company’s public float increased above $75.0 million. As a result, the Company is no longer subject to the baby shelf limitations. The Company filed another prospectus supplement with the SEC to that effect on June 29, 2023. As of June 30, 2023, the Company has $59.5 million available under the ATM Sales Agreement.
~~Notes~~Management believes that the overall market value of the telehealth industry is positive and that it will continue to ~~Consolidated Financial Statements~~drive interest in the Company.
~~September~~
NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete audited financial statements. The accompanying unaudited financial information should be read in conjunction with the audited consolidated financial statements, including the notes thereto, as of and for the year ended December 31, 2022, included in our 2022 Annual Report on Form 10-K filed with the SEC. The information furnished in this report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. The results of operations for the three and six months ended June 30, ~~2017~~2023 are not necessarily indicative of the results for the year ending December 31, 2023 or for any future period.
~~(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~~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 85.58% as of December 31, 2021. 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~~WorkSimpli decreased to 73.64%. Effective March 31, 2023, the ~~21.8333% equity~~Company redeemed 500 membership interest ~~held by other members~~units in WorkSimpli and, as a result, the Company’s ownership interest in WorkSimpli increased to 74.06%. Effective June 30, 2023, an option agreement was exercised which further restructured the ownership of WorkSimpli. As a result, the ~~joint venture.~~ Company’s ownership interest in WorkSimpli decreased to 73.32%. See Note 8 for additional information.
All significant ~~consolidated~~intercompany transactions and balances have been eliminated in consolidation.
9

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 June 30, 2023 and December 31, 2022, there were no cash equivalents. The Company maintains deposits in financial institutions in excess of amounts guaranteed by the Federal Deposit Insurance Corporation. Cash and cash equivalents are maintained at financial institutions, and at times, balances may exceed federally insured limits. These balances could be impacted if one or more of the financial institutions in which we deposit monies fails or is subject to other adverse conditions in the financial or credit markets. We have never experienced any losses related to these balances.
Variable Interest Entities
~~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 the ability to direct the activities of the VIE that most significantly impact its economic performance. The losses/benefits criterion is the obligation to absorb losses from, or right to receive benefits from, the VIE that could potentially be significant to the VIE.
The Company determined that the LifeMD PC entity, the Company’s affiliated network of medical Professional Corporations and medical Professional Associations administratively led by LifeMD Southern Patient Medical Care, P.C., is a VIE ~~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 for LifeMD PC was approximately $436 thousand and $0 for the ~~VIEs with Immudyne PR~~three months ended June 30, 2023 and ~~Immudyne, Inc. No assets were pledged or given as collateral against any borrowings.~~2022, respectively, and $794 thousand and $0 for the six months ended June 30, 2023 and 2022, respectively. Total net loss for LifeMD PC was approximately $600 thousand and $1.4 million for the three months ended June 30, 2023 and 2022, respectively, and $1.6 million and $2.9 million for the six months ended June 30, 2023 and 2022, respectively.
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~~
~~September 30, 2017~~
~~(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 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~~Certain reclassifications have been made to conform the prior year’s data to the current presentation. These reclassifications have no effect on previously reported operating loss, stockholders’ deficit or cash flows. The Company has changed their categories for ~~Derivative Financial Instruments Indexed to~~reporting operations and, ~~Potentially Settled in~~as a ~~Company’s Own Stock, in the event~~result, the Company has made reclassifications to the prior year presentation in order to conform it to the current periods’ presentation. The reclassifications include $91 thousand and $181 thousand of lease expenses reclassified from general and administrative expenses to other operating expenses for the three and six months ended June 30, 2022, respectively.
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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 some cases, the customer does not obtain control until the product reaches the customer’s delivery site; in these cases, recognition of revenue is deferred until that time. In all cases, delivery is considered to have occurred when the customer obtains control, which is usually commensurate upon shipment of the product. In the case where delivery is not commensurate upon shipment of the product, recognition of revenue is deferred until that time. In the case of its product-based contracts, the Company provides a ~~sufficient number~~subscription sensitive service based on the recurring shipment of ~~authorized and unissued shares~~products. The Company records the related revenue under the subscription agreements subsequent to receiving the monthly product order, recording the revenue at the time it fulfills the shipment obligation to the customer.
For its product-based contracts with customers, the Company records an estimate for provisions of ~~common stock to satisfy obligations for stock options, warrants~~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 and are 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 $497 thousand and $1.6 million, respectively, during the three months ended June 30, 2023 and 2022, respectively. Customer discounts, returns and rebates on telehealth revenues approximated $828 thousand and $3.1 million, respectively, during the six months ended June 30, 2023 and 2022, respectively.
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 to obtain shareholder approval to increase the number of authorized shares, the Company could be obligated to settle such~~offers an initial 14-day trial period which is billed at $1.95, followed by a cashless exercise with cash rather than by issuing shares of common stock. Further, ASC 815-40-05 requires that the Company record 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. The Company had reported the potential settlement obligation asmonthly subscription, or a derivative liability. In the third quarter of 2017, the Company obtained a majority of shareholders’ 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.
~~Sequencing Policy~~
~~Under ASC 815-40-35, the Company has adopted a sequencing policy whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due~~yearly subscription to the Company’s ~~inability to demonstrate it has sufficient authorized shares, shares will be allocated~~software suite dependent on the ~~basis~~subscriber’s enrollment selection. The Company has estimated that there is one product and one performance obligation that is delivered over time, as the Company allows the subscriber to access the suite of services for the time period of the ~~earliest issuance~~subscription purchased. The Company allows the customer to cancel at any point during the billing cycle, in which case the customers subscription will not be renewed for the following month or year depending on the original subscription. The Company records the revenue over the customers subscription period for monthly and yearly subscribers or at the end of the initial 14-day service period for customers who purchased the initial subscription, as the circumstances dictate. The Company offers a discount for the monthly or yearly subscriptions being purchased, which is deducted at the time of payment at the initiation of the contract term; therefore the Contract price is fixed and determinable at the contract initiation. Monthly and annual subscriptions for the service are recorded net of the Company’s known discount rates. Customer discounts and allowances on WorkSimpli revenues approximated $788 thousand and $580 thousand, respectively, during the three months ended June 30, 2023 and 2022, respectively. Customer discounts and allowances on WorkSimpli revenues approximated $1.7 million and $1.0 million, respectively, during the six months ended June 30, 2023 and 2022, respectively.
For the three and six months ended June 30, 2023 and 2022, the Company had the following disaggregated revenue:
SCHEDULE OF DISAGGREGATED REVENUE
Three Months Ended June 30, Six Months Ended June 30,
2023 % 2022 % 2023 % 2022 %
Telehealth revenue $ 22,351,128 62 % $ 22,267,963 73 % $ 42,553,931 62 % $ 44,866,024 75 %
WorkSimpli revenue 13,595,785 38 % 8,190,535 27 % 26,519,317 38 % 14,635,311 25 %
Total net revenue $ 35,946,913 100 % $ 30,458,498 100 % $ 69,073,248 100 % $ 59,501,335 100 %
11
Deferred Revenues
The Company records deferred revenues when cash payments are received or due in advance of its performance. The Company’s deferred revenues relate to the following: (1) obligations for products which the customer has not yet obtained control due to delivery not commensurate upon shipment of the product, (2) obligations on WorkSimpli in-process monthly or yearly contracts with customers and (3) a portion attributable to the yet to be recognized WorkSimpli initial 14-day trial period collections.
SCHEDULE OF CONTRACT WITH CUSTOMER LIABILITY
2023 2022 2023 2022
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Beginning of period $ 5,895,545 $ 1,788,555 $ 5,547,506 $ 1,499,880
Additions 14,319,067 7,853,216 27,557,658 14,221,187
Revenue recognized (14,546,402 ) (7,649,269 ) (27,436,954 ) (13,728,565 )
End of period $ 5,668,210 $ 1,992,502 $ 5,668,210 $ 1,992,502
Leases
The Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets are included in right-of-use assets, net on the unaudited condensed consolidated balance sheets. The current and long-term components of operating lease liabilities are included in the current operating lease liabilities and noncurrent operating lease liabilities, respectively, on the unaudited condensed consolidated balance sheets.
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of ~~potentially dilutive instruments,~~future payments. Certain leases may include options to extend or terminate the lease. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded in the balance sheet.
Accounts Receivable, net
Accounts receivable principally consist of amounts due from third-party merchant processors, who process our subscription revenues; the merchant accounts balance receivable represents the charges processed by the merchants that have not yet been deposited with the ~~earliest grants receiving~~Company. The unsettled merchant receivable amount normally represents processed sale transactions from the final one to three days of the month, with collections being made by the Company within the first ~~allocation~~week of ~~authorized but unissued shares, and all~~the following month. Management determines the need, if any, for an allowance for future ~~instruments being classified as a derivative liability,~~credits to be granted to customers, by regularly evaluating aggregate customer refund activity, coupled with the ~~exception~~consideration and current economic conditions in its evaluation of ~~instruments related to share-based compensation issued to employees or directors.~~
~~Inventory~~
~~At September~~an allowance for future refunds and chargebacks. As of June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, the reserve for sales returns and allowances was approximately $424 thousand and $815 thousand, respectively. For all periods presented, as noted above, the sales returns and allowances were recorded in accrued expenses on the unaudited condensed consolidated balance sheets.
Inventory
As of June 30, 2023 and December 31, 2022, inventory primarily consisted ~~primarily~~ of ~~cosmetic and nutraceutical additives, and~~ finished ~~cosmetic products.~~goods related to the Company’s OTC products included in the telehealth revenue section of the 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. ~~At September~~As of both June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, the Company recorded an inventory reserve of approximately $100 thousand and $161 thousand, respectively.
As of June 30, 2023 and December 31, 2022, the Company’s inventory consisted of the following:
SUMMARY OF INVENTORY
June 30, December 31,
2023 2022

Finished goods - products $ 2,380,392 $ 2,587,370
Raw materials and packaging components 1,417,623 1,276,891
Inventory reserve (99,713 ) (160,898 )
Total Inventory - net $ 3,698,302 $ 3,703,363
12
Product Deposit
Many of our vendors require deposits when a purchase order is placed for goods or fulfillment services. These deposits typically range from 10% to 33% of the total purchased amount. Our vendors include a credit memo within their final invoice, recognizing the deposit amount previously paid. As of June 30, 2023 and December 31, 2022, the Company has approximately $235 thousand and $127 thousand, respectively, of product deposits with multiple vendors for the purchase of raw materials or finished goods. The Company’s history of product deposits with its inventory vendors, creates an implicit purchase commitment equaling the total expected product acceptance cost in excess of the product deposit. As of June 30, 2023, the Company approximates its implicit purchase commitments to be $168 thousand, of which the vast majority are with two vendors that manufacture the Company’s finished goods inventory for its RexMD product line.
Capitalized Software Costs
The Company capitalizes certain internal payroll costs and third-party costs related to internally developed software and amortizes these costs using the straight-line method over the estimated useful life of the software, generally three years. The Company does not sell internally developed software other than through the use of subscription service. Certain development costs not meeting the criteria for capitalization, in accordance with ASC 350-40, Internal-Use Software, are expensed as incurred. As of June 30, 2023 and December 31, 2022, the Company capitalized a net amount of $10.4 million and $8.8 million, respectively, related to internally developed software costs which are amortized over the useful life and included in development costs on our statement of operations.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill is not amortized but is tested for impairment annually or more frequently, if events or changes in circumstances indicate that the asset may be impaired. Goodwill in the amount of ~~$20,000. Inventory consists~~$8.0 million was recognized in conjunction with the Cleared acquisition. The Company recorded an $8.0 million goodwill impairment charge and an $827 thousand intangible asset impairment charge during the year ended December 31, 2022 related to a decline in the estimated fair value of Cleared as a result of a decline in the Cleared financial projections (see Note 3).
Other intangible assets are comprised of: (1) the ResumeBuild brand, (2) a customer relationship asset, (3) the Cleared trade name, (4) Cleared developed technology, (5) a purchased license and (6) two purchased domain names. During the year ended December 31, 2022, the Company recorded an $827 thousand impairment loss related to a decline in the estimated fair value of the ~~following:~~Cleared customer relationship intangible asset with an original cost of $919 thousand and accumulated amortization of $92 thousand. Other intangible assets are amortized over their estimated lives using the straight-line method. Costs incurred to renew or extend the term of recognized intangible assets are capitalized and amortized over the useful life of the asset.
September 30,
2017 December 31,
2016

Raw materials $ 68,852 $ 38,460
Finished products 308,948 121,810
$ 377,800 $ 160,270
8
Impairment of Long-Lived Assets
~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
2. ~~Summary of Significant Accounting Policies (continued)~~
~~Revenue Recognition~~
~~The Company’s policy is to record revenue as earned when a firm commitment, indicating sales quantity~~Long-lived assets include equipment and ~~price exists, delivery has taken place and collectability is reasonably assured. The Company generally records sales~~capitalized software. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount 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 title doesan asset may not ~~pass until the product reaches the customer’s delivery site, then recognition of revenue is deferred until that time. Delivery is~~be recoverable. If such assets are considered to ~~have occurred when title and risk of loss have transferred to~~be impaired, an impairment is recognized as the ~~customer. Provisions for discounts, returns, allowances, customer rebates and other adjustments are netted with gross sales. The Company accounts for such provisions during the same period in~~amount by 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 in the three months ended September 30, 2017 and 2016, respectively. There are no formal sales incentives offered to anycarrying amount of the ~~Company’s customers. Volume discounts may be offered from time to time to customers purchasing large quantities on a per transaction basis.~~
~~Revenue for~~assets exceeds the ~~nine months ended September~~estimated fair values of the assets. As of June 30, 2017 consisted of nutraceutical and cosmetic additives ($981,356) and finished cosmetic products ($2,602,258). Revenue for the nine months ended September 30, 2016 consists of nutraceutical and cosmetic additives ($757,961) and finished cosmetic products ($3,494,743).
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, 20172023 and December 31, ~~2016,~~2022, the ~~accounts receivable reserve was approximately $-0- and $37,800, respectively. As~~Company determined that no events or changes in circumstances existed that would indicate any impairment of ~~September 30, 2017 and December 31, 2016, the reserve for sales returns and allowances was approximately $26,000 and $50,500, respectively.~~its long-lived assets.

~~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 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.
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, while Immudyne PR, which was formed as~~returns. WorkSimpli files a tax return in Puerto Rico; WorkSimpli is a limited liability ~~corporation,~~company and files ~~a 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., 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,~~2019, remain open to audit by all related taxing authorities.
13

~~Stock-Based Compensation~~
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~~Shares of unissued vested restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) are included in our calculation of basic weighted average shares outstanding. Convertible securities, warrants and options to purchase common stock are included as common stock equivalents only when dilutive. Potential common stock equivalents are excluded from dilutive earnings per share ~~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~~effect of including these potential shares was antidilutive even though the exercise price could be less than the average market price of the common shares:
SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES
2023 2022 2023 2022
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022

Series B Preferred Stock 1,548,594 1,334,293 1,493,991 1,316,841
RSUs and RSAs 2,788,000 1,445,750 2,341,438 1,429,125
Stock options 3,463,753 4,259,198 3,667,003 4,318,065
Warrants 4,827,380 3,859,638 4,827,380 3,859,638
Convertible long-term debt 1,342,282 - 1,342,282 -
Potentially dilutive securities 13,970,009 10,898,879 13,672,094 10,923,669
Segment Data
Our portfolio of brands are ~~anti-dilutive. Common stock equivalents comprising shares underlying 12,950,273 options~~included within two operating segments: Telehealth and ~~warrants~~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 ~~nine months ended September 30, 2016 have not been included~~chief operating decision maker to make determinations about resources to be allocated and to assess performance. Other factors, including type of business, revenue recognition and operating results are reviewed in determining the Company’s operating segments.
Fair Value of Financial Instruments
The fair value of a financial instrument is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities subject to ongoing fair value measurement are categorized and disclosed into one of the three categories depending on observable or unobservable inputs employed in the ~~loss per share calculations as the effects~~measurement. Hierarchical levels, which are ~~anti-dilutive.~~
~~Recent Accounting Pronouncements~~
In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. 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 classification of the following items: (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon debt 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 identifiable 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 sheetdirectly related to the ~~rights and obligations created by those leases, regardless~~amount of ~~whether they~~subjectivity associated with the inputs to the valuation of these assets or liabilities, are ~~classified~~ as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of 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 amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting 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 process 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.follows:

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
2. ~~Summary~~1. Level 1: Inputs that are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
2. Level 2: Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of ~~Significant Accounting Policies (continued)~~the instrument’s anticipated life.
3. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.
~~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
14

~~Immudyne, Inc.~~
~~Notes~~In some circumstances, the inputs used to ~~Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
2. ~~Summary of Significant Accounting Policies (continued)~~
~~Concentration~~measure fair value might be categorized within different levels of ~~Credit Risk~~
~~The Company grants credit~~the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the ~~normal course~~fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
The carrying value of ~~business to its customers. The Company periodically performs credit analysis~~the Company’s financial instruments, including cash, accounts receivable, accounts payable, accrued expenses, the face amount of notes payable and ~~monitors the financial condition~~convertible long-term debt approximate fair value for all periods presented.
Concentrations of ~~its customers to reduce credit risk.~~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 June 30, 2023, we utilized five suppliers for fulfillment services, six suppliers for manufacturing finished goods, six suppliers for packaging, bottling, and labeling, and four suppliers for prescription medications. As of December 31, 2022, we utilized four suppliers for fulfillment services, six suppliers for manufacturing finished goods, five suppliers for packaging, bottling, and labeling, and three suppliers for prescription medications.
~~One customer~~Recently Adopted Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments, which requires an entity to utilize the current expected credit loss (“CECL”) impairment model to estimate its lifetime “expected credit loss” and record an allowance that is deducted from the amortized cost basis of the financial assets and certain other instruments, including but not limited to available-for-sale debt securities. Credit losses relating to available-for-sale debt securities are recorded through an allowance for credit losses. ASU 2016-13 requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates, which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022 for all entities except SEC reporting companies that are not smaller reporting companies. The Company adopted ASU 2016-13 as of January 1, 2023. The adoption did not have a material impact on the Company’s financial statements.
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805); Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This new guidance affects all entities that enter into a business combination within the scope of ASC 805-10. Under this new guidance, the acquirer should determine what contract assets and/or liabilities it would have recorded under ASC 606, Revenue from Contracts with Customers, as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquirer. Under current U.S. GAAP, contract assets and contract liabilities acquired in a business combination are recorded by the acquirer at fair value. The Company adopted ASU 2021-08 as of January 1, 2023. The adoption did not have a material impact on the Company’s financial statements.
Other Recent Accounting Pronouncements
All other accounting standards updates that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.
NOTE 3 – ACQUISITIONS
On January 18, 2022, the Company completed the acquisition of Cleared. The acquisition adds to the Company’s growing portfolio of telehealth capabilities. The Company accounted for the transaction using the acquisition method in accordance with ASC 805, Business Combinations, with the purchase price being allocated to tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition date. Fair values were determined using income approaches. The results of Cleared are included within the consolidated financial statements commencing on the acquisition date.
The purchase price was approximately $9.1 million, including cash paid upfront of approximately $1.0 million and payable in the ~~nutraceutical~~future of approximately $3.0 million, and ~~cosmetic additives division accounted~~contingent consideration of $5.1 million. The purchase agreement included up to $72.8 million of potential earn-out payable in cash or stock upon achievement of revenue targets, which was originally recognized as contingent consideration. The Company, with the assistance of a third-party valuation expert, estimated the fair value of the acquired tangible and identifiable intangible assets using significant estimates such as revenue projections. The fair value of the identified intangible assets was based primarily on significant unobservable inputs and thus represent a Level 3 measurement as defined in ASC 820, Fair Value Measurement. The fair value of the trade name and developed technology were determined using the relief-from-royalty method under the income approach. The royalty rates used to determine the fair value of the trade name and developed technology were 0.10% and 1.0%, respectively. The fair value of the customer relationships was determined using the multi-period excess earnings method which involves forecasting the net earnings expected to be generated. The customer attrition rate used to determine the fair value of the customer relationships was 10.0%. The discount rate used to determine the fair value of the trade name, developed technology and customer relationships was 70.5%.
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The following table summarizes the acquisition date fair values of assets acquired and liabilities assumed:
SCHEDULE OF FAIR VALUE OF ASSETS AND LIABILITIES

Purchase price, net of cash acquired $ 9,091,762
Less:
Customer relationship intangible asset 918,812
Trade name intangible asset 133,339
Developed technology intangible asset 12,920
Inventory 7,168
Fixed assets 37,888
Deferred taxes 354,000
Accounts payable and other current liabilities (408,030 )
Goodwill $ 8,035,665
The purchase price and purchase price allocation for ~~13% and 13%~~Cleared was finalized as of ~~consolidated sales for the three-month periods ended~~ September 30, ~~2017~~2022 with no significant changes to preliminary amounts. Based on the final purchase price allocation, the aggregate goodwill recognized was $8.0 million, which is not expected to be deductible for income tax purposes. The amount allocated to goodwill and ~~2016, respectively. This customer accounted for 25% and 2% of consolidated sales for~~intangible assets reflected the ~~nine month periods ended September 30, 2017 and 2016, respectively. This customer also accounted for 36% and 11%~~benefits the Company expected to realize from the growth of the ~~consolidated accounts receivable at September 30, 2017~~acquisition’s operations.
On February 4, 2023, the Company entered into the First Amendment to the Stock Purchase Agreement (the “First Amendment”) between the Company and ~~December 31, 2016, respectively.~~
In the ~~finished cosmetic products division, none~~sellers of Cleared. The First Amendment was amended to, among other things: (i) reduce the total purchase price by $250 thousand to a total of $3.67 million; (ii) change the timing of the ~~credit card processors had a significant concentration of accounts receivable at September 30, 2017. In the finished cosmetic products division, two credit card processors accounted for 35% and 32%~~payment of the ~~consolidated accounts receivable~~purchase price to $460 thousand paid at ~~December 31, 2016.~~
3. ~~Notes Payable~~
~~In November 2015,~~closing (which has already been paid by the Company), with the remaining amount to be paid in five quarterly installments beginning on or before February 6, 2023 and ending January 15, 2024; (iii) remove all “earn-out” payments payable by the Company ~~borrowed $100,000 from a commercial lender. The loan incurred interest at 11%~~to the sellers; and ~~with a maturity date~~(iv) removing certain representations and warranties of ~~November 1, 2016. Interest expense 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.~~
~~In the third quarter of 2016 the Company commenced an offering pursuant to which it offered 11% subordinated promissory notes~~and sellers in fifty thousand ($50,000) dollar increments combined with 62,500 shares of the Company’s Common Stock for a maximum offering amount of $200,000 (the “Offering”). In August and September 2016, the Company sold promissory notes totaling $150,000 to three unrelated individuals. Two 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,~~transaction. On February 6, 2023, 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 discounts for the nine months ended September 30, 2017 was $25,035. There was no amortization of debt discount during the third quarter of 2017. During 2016, the Company repaid $68,600 of the principal balance. Interest expense related to these notes for the nine months ended 2017 amounted 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 shares of common stock and 98,000 warrants, which satisfied the note in full. The fair market value of the shares and warrants issued upon conversion was determined to be $179,384, 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~~
~~(unaudited)~~
3. ~~Notes Payable (continued)~~
In December 2016, 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, the Company issued 217,391337,895 shares of common stock related to ~~this note. In February 2017,~~the first of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On April 17, 2023, the Company repaid $70,000 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 559,179issued 455,319 shares of common stock ~~and 304,348 warrants which satisfied~~related to the ~~note~~second of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On July 17, 2023, the Company issued 158,129 shares of common stock related to the third of five quarterly installment payments due to the sellers of Cleared under the First Amendment.
During the year ended December 31, 2022, the Company recorded a decrease of $5.1 million to the Cleared contingent consideration as a result of the remeasurement of the fair value. The decline in ~~full. The~~the estimated fair ~~market~~ value of the ~~shares~~Cleared contingent consideration is a result of a decline in the Cleared financial projections and ~~warrants issued upon conversion was determined to be $566,030,~~the removal of ~~which $423,818 was included~~all earn-out payments payable by the Company from the terms of the First Amendment. During the year ended December 31, 2022, the Company also recorded an $8.0 million goodwill impairment charge and an $827 thousand intangible asset impairment charge based on the decline in ~~interest expense~~the Cleared financial projections (See Note 4).
The pro forma financial information, assuming the acquisition had taken place on January 1, 2022, as ~~loss on settlement of notes payable.~~well as the revenue and earnings generated during the period after the acquisition date, were not material for separate disclosure and, accordingly, have not been presented.
In February ~~2017,~~2022, WorkSimpli closed on the ResumeBuild APA to purchase the related intangible assets associated with the ResumeBuild brand, a subscription-based resume building software. The acquisition further adds to the capabilities of the WorkSimpli software as a service application. The purchase price was $4.5 million, including cash paid upfront of $4.0 million and contingent consideration of $500 thousand. In accordance with ASC 805, Business Combinations, the Company ~~borrowed $25,000 from~~accounted for the ResumeBuild APA as an ~~American Express working capital line~~acquisition of assets as substantially all the fair value of the gross assets acquired is concentrated in a group of similar assets. The Company has elected to group the complementary intangible assets acquired as a single brand intangible asset. Additionally, the Seller is entitled to quarterly payments equal to the greater of 15% of net profits (as defined in the ResumeBuild APA) or approximately $63 thousand, for a two-year period ending on the two-year anniversary of the closing of the Acquisition. As of June 30, 2023, WorkSimpli has paid the Seller approximately $281 thousand in accordance with ~~60 days maturity.~~the ResumeBuild APA. The ~~interest~~Company estimated the fair value of the contingent consideration using the income approach and will remeasure the fair value quarterly with changes accounted for ~~this loan is a flat fee~~through earnings.
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NOTE 4 – GOODWILL AND INTANGIBLE ASSETS
The Company’s goodwill balance related to the Cleared acquisition was $0 as of ~~$250. On April 17, 2017,~~both June 30, 2023 and December 31, 2022. During the year ended December 31, 2022, the Company ~~repaid this loan. In~~recorded an $8.0 million goodwill impairment charge related to a decline in the estimated fair value of Cleared as a result of a decline in the Cleared financial projections.
As of June ~~2017,~~30, 2023 and December 31, 2022, 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,~~has the following amounts related to amortizable intangible assets:
SCHEDULE OF GOODWILL AND INTANGIBLE ASSETS
June 30, December 31, Amortizable
2023 2022 Life
Amortizable Intangible Assets:
ResumeBuild brand $ 4,500,000 $ 4,500,000 5 years
Customer relationship asset 1,006,840 1,006,840 3 years
Cleared trade name 133,339 133,339 5 years
Cleared developed technology 12,920 12,920 1 year
Purchased licenses 200,000 200,000 10 years
Website domain names 171,599 22,731 3 years
Amortizable intangible assets 171,599 22,731 3 years
Less: accumulated amortization (2,523,499 ) (2,043,971 )
Total net amortizable intangible assets $ 3,501,199 $ 3,831,859
During the year ended December 31, 2022, the Company ~~repaid this loan. In September 2017, the Company borrowed $77,333 from~~recorded 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~~$827 thousand impairment charge related to ~~loans from officers, directors~~a decline in the estimated fair value of the Cleared customer relationship intangible asset with an original cost of $919 thousand and ~~other related individuals amounted to $1,713 and $313 for~~accumulated amortization of $92 thousand. The aggregate amortization expense of the ~~nine month periods ended September 30, 2017 and 2016, respectively. There was no interest expense~~Company’s intangible assets for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 was $246 thousand and $227 thousand, respectively. The aggregate amortization expense of the Company’s intangible assets for the six months ended June 30, 2023 and 2022 was $480 thousand and $341 thousand, respectively. Total amortization expense for the remainder of 2023 is approximately $492 thousand, 2024 through 2025 is approximately $980 thousand per year, 2026 is approximately $940 thousand and 2027 is approximately $113 thousand.
NOTE 5 – ACCRUED EXPENSES
As of June 30, 2023 and December 31, 2022, the Company has the following amounts related to accrued expenses:
SCHEDULE OF ACCRUED EXPENSES
June 30, December 31,
2023 2022
Accrued selling and marketing expenses $ 5,273,738 $ 3,508,883
Sales tax payable 2,501,035 2,501,035
Purchase price payable 1,872,037 2,463,002
Accrued dividends payable 776,562 776,563
Accrued compensation 1,568,737 576,027
Accrued interest 4,042 448,718
Other accrued expenses 2,765,605 1,892,281
Total accrued expenses $ 14,761,756 $ 12,166,509
NOTE 6 – NOTES PAYABLE
Working Capital Loans
In October 2022, the Company received proceeds of $976 thousand under a 12-month working capital loan with Amazon. The terms of the loan include interest in the amount of $62 thousand. As of June 30, 2023 and December 31, 2022, the outstanding balance was $442 thousand and $976 thousand, respectively, and is included in notes payable, net, on the accompanying unaudited condensed consolidated balance sheet.
In November 2022, the Company received proceeds of $1.9 million under two 10-month working capital loans ~~from officers, directors~~with Balanced Management. The terms of the loans include loan origination fees in the amount of $60 thousand and ~~other related individuals as there were no loans~~total interest of $840 thousand. As of June 30, 2023 and December 31, 2022, the outstanding ~~during~~balance was $294 thousand and $1.821 million, respectively, and is included in notes payable, net, on the ~~three~~accompanying unaudited condensed consolidated balance sheet.
During the six months ended ~~September~~June 30, ~~2017.~~2023, the Company received proceeds of $2 million under a $2.5 million loan facility with CRG Financial, maturing on December 15, 2023. The loan facility includes interest of 12%. The Company repaid the $2 million outstanding loan balance on March 21, 2023 with the proceeds received from the Avenue Facility and recorded a $325 thousand loss on debt extinguishment related to the repayment of the CRG Financial loan due to a prepayment penalty and various fees. As of both June 30, 2023 and December 31, 2022, the outstanding balance was $0 related to the CRG Financial loan.
17

Total interest expense on notes payable amounted to ~~$650,718~~$13 thousand and ~~$15,805 for the nine months ended September 30, 2017 and 2016, respectively. Total interest expense amounted to $1,111 and $9,992~~$0 for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively. Total interest expense on notes payable amounted to $34 thousand and $0 for the six months ended June 30, 2023 and 2022, respectively.
4. ~~Income Taxes~~
NOTE 7 – LONG-TERM DEBT
Avenue Capital Credit Facility
As noted in Note 1 above, on March 21, 2023, the Company entered into and closed on a Credit Agreement, and a Supplement to the Credit Agreement with Avenue. The Credit Agreement provides for a convertible senior secured credit facility of up to an aggregate amount of $40 million, comprised of the following: (1) $15 million in term loans funded at closing, (2) $5 million of additional committed term loans available in the fourth quarter of 2023 and (3) $20 million of additional uncommitted term loans, collectively referred to as the “Avenue Facility”. The Company issued Avenue warrants to purchase $1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments. The Warrants have a term of five years. The relative fair value of the Warrants issued to Avenue upon closing was $1.1 million. In addition, Avenue may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share equal to $1.49. The relative fair value was recorded to debt discount and is included as a reduction to long-term debt on the unaudited condensed consolidated balance sheet as of June 30, 2023. The Company incurred other fees associated with the Avenue Facility including: (1) a $300 thousand financing fee, (2) a $200 thousand upfront commitment fee of 1% of the total $20 million in committed capital and (3) $27 thousand in legal fees. The total debt discount recorded of $1.6 million will be amortized over a forty-two-month period. Total amortization of debt discount was $115 thousand and $154 thousand for the three and six months ended June 30, 2023, respectively.
The Avenue Facility matures on October 1, 2026 and interest is based on the greater of: (1) the Prime Rate (as defined in the Supplement) plus 4.75% and (2) 12.5%. At June 30, 2023, the interest rate was 12.75%. Payments are interest only until November 2024. The Company received gross proceeds of $15.0 million (net proceeds of $12.3 million after repayment of the $2 million outstanding CRG loan balance and various fees). Proceeds from the Avenue Facility were used to repay the Company’s outstanding notes payable balances with CRG Financial and are expected to be utilized for general corporate purposes and at the Company’s election, re-financing up to $5 million liquidation value plus accrued interest of the Series B Preferred Stock.
The Company is ~~not expected~~subject to ~~have taxable income~~certain affirmative and negative covenants under the Avenue Facility, including the requirement, beginning on the closing date, to maintain at least $5 million of unrestricted cash to be tested at the end of each month, and beginning on the period ended September 30, 2023, and at the end of each quarter thereafter, a trailing six-month cash flow, subject to certain adjustments as provided by the Credit Agreement, of at least $2 million.As of the date of filing, there is $15 million outstanding under the Avenue Facility and the Company is in ~~2017~~compliance with the Avenue Facility terms.
Total interest expense on long-term debt, inclusive of amortization of debt discounts, amounted to $598 thousand and ~~incurred a loss~~$0 for the three months ended June 30, 2023 and 2022, respectively. Total interest expense on long-term debt, inclusive of amortization of debt discounts, amounted to $694 thousand and $0 for the six months ended June 30, 2023 and 2022, respectively.
NOTE 8 – STOCKHOLDERS’ EQUITY
The Company has authorized the issuance of up to 100,000,000 shares of common stock, $0.01 par value, and 5,000,000 shares of preferred stock, $0.0001 par value, of which 5,000 shares are designated as Series B 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 originally had the ability to raise up to $150 million by selling common stock, preferred stock, debt securities, warrants and units. In conjunction with the 2021 Shelf, the Company also entered into the ATM Sales Agreement whereby the Company may offer and sell, from time to time, shares of common stock. On March 22, 2023, the date the Company filed its Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016, and accordingly, no provision for federal income tax has been made in the accompanying financial statements. At September 30, 2017,~~2022, the Company ~~had available net operating loss carryforwards~~became subject to the offering limits in General Instruction I.B.6 of ~~approximately $5,032,100, expiring during various years through 2037.~~
~~A summary~~Form S-3 (i.e., the “baby shelf limitations”). As a result 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,~~baby shelf limitations, 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 Companymay only offer 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, the Company issued 1,183,490~~sell shares of common stock having an aggregate offering price of up to $18.435 million pursuant to the ATM Sales Agreement, and it filed a ~~conversion~~prospectus supplement with the SEC to that effect on March 27, 2023. In June 2023, the Company’s public float increased above $75.0 million. As a result, the Company is no longer subject to the baby shelf limitations. The Company filed another prospectus supplement with the SEC to that effect on June 29, 2023. As of ~~Immudyne PR equity contributions of $272,203 into equity of Immudyne, Inc. by~~June 30, 2023, the ~~noncontrolling interest.~~Company has $59.5 million available under the ATM Sales Agreement.
18

~~In January 2017,~~
Options
During the six months ended June 30, 2023, the Company issued ~~217,391~~an aggregate of 16,471 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 priorrelated to the ~~secondary anniversary~~cashless exercise of ~~the issuance. The warrants are paired with the stock on the basis of one warrant for every two shares of stock purchased.~~options.
Common Stock
Common Stock Transactions During the ~~first quarter of 2017,~~Six Months Ended June 30, 2023
During 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,~~six months ended June 30, 2023, the Company issued ~~755,179~~an aggregate of 202,375 shares of common stock for service, including vested restricted stock units.
On February 4, 2023, the ~~conversion~~Company entered into the First Amendment to the Stock Purchase Agreement (the “First Amendment”) between the Company and the sellers of Cleared. The First Amendment was amended to, among other things change the timing of the ~~outstanding balance~~payment of ~~three notes payable totaling $499,802 (see Note 3).~~
the purchase price to $460 thousand paid at closing (which has already been paid by the Company), with the remaining amount to be paid in five quarterly installments beginning on or before February 6, 2023 and ending January 15, 2024. On ~~April 24, 2017,~~February 6, 2023, the Company issued ~~217,390~~337,895 shares of common stock ~~pursuant~~related to ~~a stock subscription agreement and~~the first of five quarterly installment payments due to the sellers of Cleared under the First Amendment. On April 17, 2023, the Company issued ~~108,696~~ 455,319 shares of common stock related to the second of five quarterly installment payments due to the sellers of Cleared under the First Amendment.
On March 21, 2023, in connection with the Company’s closing of a Credit Agreement with Avenue, the Company issued Avenue warrants ~~with~~to purchase $1.2 million of the Company’s common stock at an exercise price of ~~$0.40~~$1.24, subject to adjustments. In addition, Avenue may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share ~~for the stated consideration and satisfaction of obligation~~equal 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.$1.49.
~~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, the Company increased its ownership in Immudyne PR 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 of $91,612.
~~For the nine months ended September 30, 2017, the net loss of Immudyne PR~~Net 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~~$842 thousand 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 and 2016 included $406,247 and $40,829, respectively, related to such service-based stock options. Stock based compensation expense$46 thousand for the three months ended June 30, 2023 and 2022, respectively. During both the three months ended June 30, 2023 and 2022, the Company paid distributions to non-controlling shareholders of $36 thousand. Net income attributed to the non-controlling interest amounted to $1.4 million and $71 thousand for the six months ended June 30, 2023 and 2022, respectively. During both the six months ended June 30, 2023 and 2022, the Company paid distributions to non-controlling shareholders of $72 thousand.
WorkSimpli Software Restructuring Transaction
Effective January 22, 2021 (the “WSS Effective Date”), the Company consummated the WSS Restructuring, which is described in Note 1. To effect the WSS Restructuring the Company’s wholly-owned subsidiary Conversion Labs PR, entered into a series of membership interest exchange agreements, pursuant to which, Conversion Labs PR exchanged that certain promissory note, dated May 8, 2019 with an outstanding balance of $376 thousand (the “CVLBPR Note”), issued by WSS in favor of Conversion Labs PR, for 37,531 newly issued membership interests of WSS (the “Exchange”). Upon consummation of the Exchange the CVLBPR Note was extinguished.
Concurrently, in furtherance of the WSS Restructuring, Conversion Labs PR entered into two Membership Interest Purchase Agreements (the “Founding Members MIPAs”) with two founding members of WSS (the “Founding Members”) whereby Conversion Labs PR purchased from the Founding Members an aggregate of 2,183 membership interests of WSS for an aggregate purchase price of $225,000, paid in December 2020.
In furtherance of the WSS Restructuring, Conversion Labs PR entered into a Membership Interest Purchase Agreement with WSS, (the “CVLB PR MIPA”), pursuant to which Conversion Labs PR purchased 12,000 membership interests of WSS for an aggregate purchase price of $300 thousand. The CVLB PR MIPA provides that the transaction may be completed in three (3) tranches with a purchase price of $100 thousand per tranche to be made at the sole discretion of Conversion Labs PR. Payment for the first tranche of $100 thousand was made upon execution of the CVLB PR MIPA in January 2021. Payments for the second and third tranches were made on the 60-day anniversary and the 120-day anniversary of the WSS Effective Date.
Following the consummation of the WSS Restructuring, Conversion Labs PR increased its ownership of WSS from 51% to approximately 85.58% on a fully diluted basis. WSS entered into an amendment to its operating agreement (the “WSS Operating Agreement Amendment”) to reflect the change in ownership.
Concurrently with the WSS Restructuring, Conversion Labs PR entered into option agreements with Sean Fitzpatrick (the “Fitzpatrick Option Agreement”) and Varun Pathak (the “Pathak Option Agreement” together with Fitzpatrick Option Agreement the “Option Agreements”), pursuant to which Conversion Labs PR granted options to purchase membership interest units of WSS. Upon vesting, the Fitzpatrick Options and the Pathak Options provide for the potential re-purchase of up to an additional 13.25% of WSS by Fitzpatrick and Pathak in the aggregate with Conversion Labs PR ownership ratably reduced to approximately 72.98%.
19
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 $2.5 million of gross sales in any fiscal quarter (ii) 3,434 membership interests upon WSS achieving $4.0 million of gross sales in any fiscal quarter, and (iii) 3,434 membership interests upon WSS achieving $8.0 million of gross sales with a ten percent (10%) net profit margin in any fiscal quarter.
The Pathak Option Agreement grants Varun Pathak the option to purchase 2,100 membership interest units of WSS for an exercise price of $1.00 per membership interest unit. The Pathak Options vest in accordance with the following (i) 700 membership interests upon WSS achieving $2.5 million of gross sales in any fiscal quarter (ii) 700 membership interests upon WSS achieving $4.0 million of gross sales in any fiscal quarter, and (iii) 700 membership interests upon WSS achieving $8.0 million of gross sales with a ten percent (10%) net profit margin in any fiscal quarter.
On September 30, ~~2017~~2022, Sean Fitzpatrick and ~~2016 included $292,725~~Varun Pathak exercised their options to purchase 10,300 and ~~$40,829,~~2,100 membership interest units, respectively, ~~related to such service-based stock options.~~

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
5. ~~Stockholders’ Equity (continued)~~
~~A summary~~of WorkSimpli for an exercise price of $1.00 per membership interest unit under the Option Agreements. Following the exercise of the ~~outstanding service-based options~~Option Agreements, Conversion Labs PR decreased its ownership interest in WorkSimpli from 85.58% to 73.64%. Effective March 31, 2023, the Company redeemed 500 membership interest units in WorkSimpli. Following the retirement, Conversion Labs PR’s ownership interest in WorkSimpli increased to 74.06%. On June 30, 2023, Lisa Bowlin, WorkSimpli’s Chief Operating Officer, exercised her option agreement (the “Bowlin Option Agreement”) to purchase 889 membership interest units of WorkSimpli for an exercise price of $1.00 per membership interest unit. Following the exercise of the Bowlin Option Agreement, Conversion Labs PR decreased its ownership interest in WorkSimpli from 74.06% to 73.32%.
Dividends
The Company pays cumulative distributions on its Series A Preferred Stock, in the amount of $2.21875 per share each year, which is equivalent to 8.875% of the $25.00 liquidation preference per share. Dividends on the Series A Preferred Stock are payable quarterly in arrears, on or about the 15th day of January, April, July, and October of each year. Dividends declared and paid on the Series A Preferred Stock during the six months ended June 30, 2023 are as follows: (1) quarterly dividend declared on March 28, 2023 to holders of record as of April 7, 2023 and was paid on April 17, 2023 and (2) quarterly dividend declared on June 27, 2023 to holders of record as of July 7, 2023 and was paid on July 17, 2023. The dividends are included in the Company’s results of operations for the three and six months ended June 30, 2023.
On June 30, 2023, WorkSimpli declared a cash dividend in the amount of $22.40 per membership interest unit to all unit holders of record as of June 30, 2023 and was paid on July 3, 2023. The total dividend declared to noncontrolling interest holders was $534 thousand for the three and six months ended June 30, 2023 and is included in the Company’s results of operations for the three and six months ended June 30, 2023.
Stock Options
On January 8, 2021, the Company approved the Company’s 2020 Equity and Incentive Plan (the “2020 Plan”). Approval of the 2020 Plan was included as Proposal 1 in the Company’s definitive proxy statement for its Special Meeting of Shareholders filed with the Securities and Exchange Commission on December 7, 2020. The 2020 Plan is administered by the Compensation Committee of the Board of Directors (the “Board”) and initially provided for the issuance of up to 1,500,000 shares of Common Stock. The number of shares of Common Stock available for issuance under the 2020 Plan automatically increases by 150,000 shares of Common Stock on January 1st of each year, for a period of not more than ten years, commencing on January 1, 2021 and ending on (and including) January 1, 2030. Awards under the 2020 Plan can be granted in the form of stock options, non-qualified and incentive options, stock appreciation rights, restricted stock, and restricted stock units.
On June 24, 2021, at the Annual Meeting of Stockholders, the stockholders of the Company approved an amendment to the 2020 Plan to increase the maximum number of shares of the Company’s common stock available for issuance under the 2020 Plan by 1,500,000 shares.
On June 16, 2022, at the Annual Meeting of Stockholders, the stockholders of the Company approved an amendment to the 2020 Plan to increase the maximum number of shares of the Company’s common stock available for issuance under the 2020 Plan by 1,500,000 shares. As of June 30, 2023, the 2020 Plan, as amended, provided for the issuance of up to 4,950,000 shares of Common Stock. Remaining authorization under the 2020 Plan, as amended, was 782,830 shares as of June 30, 2023.
The forms of award agreements to be used in connection with awards made under the 2020 Plan to the Company’s executive officers and non-employee directors are:
● Form of Non-Qualified Option Agreement (Non-Employee Director Awards)
● Form of Non-Qualified Option Agreement (Employee Awards); and
● Form of Restricted Stock Award Agreement.
~~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~~20

~~All~~
Previously, the Company had granted service-based stock options and performance-based stock options separate from the 2020 Plan.
During the six months ended June 30, 2023, the Company issued an aggregate of 218,000 stock options to employees under the 2020 Plan and the prior plan. These stock options have a contractual term of 4 to 6.5 years and vest in increments which fully vest the options over a two to three-year period, dependent on the specific agreements’ terms.
The following is a summary of outstanding options ~~are exercisable~~activity under our 2020 Plan for the six months ended June 30, 2023:
SCHEDULE OF OPTION ACTIVITY

Options
Outstanding
Number of
Shares

Exercise Price
per Share

Weighted
Average
Remaining
Contractual
Life

Weighted
Average
Exercise Price
per Share

Balance, December 31, 2022 1,784,587 $2.30 – 21.02 6.95 years $ 9.54
Granted 78,000 1.84 – 3.56 4.79 years 2.69
Cancelled/Forfeited/Expired (473,167 ) 2.30 – 7.50 6.79
Balance at June 30, 2023 1,389,420 $1.84 – 21.02 6.31 years $ 10.09

Exercisable at December 31, 2022 1,185,153 $2.30 – 21.02 7.64 years $ 9.62
Exercisable at June 30, 2023 1,096,732 $1.84 – 21.02 7.07 years $ 10.31
The total fair value of the options granted was $181 thousand, which was determined by the Black-Scholes Pricing Model with the following assumptions: dividend yield of 0%, expected term of 4 years, volatility of 119.16% – 123.8% and ~~have a cashless exercise provision,~~risk-free rate of 3.58% – 3.96%. Total compensation expense under the 2020 Plan options above was $1.2 million and ~~certain~~$1.8 million for the three months ended June 30, 2023 and 2022, respectively, with unamortized expense remaining of $3.2 million as of June 30, 2023. Total compensation expense under the 2020 Plan options ~~provide~~above was $2.3 million and $3.5 million for ~~accelerated vesting provisions~~the six months ended June 30, 2023 and ~~modifications, as defined, if the Company is sold or acquired. The~~2022, respectively. As of June 30, 2023, aggregate intrinsic value of ~~service based~~vested service-based options outstanding ~~and exercisable at September 30, 2017 and December 31, 2016 amounted to $2,079,564 and $704,794, respectively.~~was $206 thousand.
~~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~~activity (prior to the establishment of our 2020 Plan above) for the six months ended June 30, ~~2017:~~2023:
SCHEDULE OF OPTION ACTIVITY

Options
Outstanding
Number of
Shares

Exercise Price
per Share

Weighted
Average
Remaining
Contractual
Life

Weighted
Average
Exercise Price
per Share

Balance, December 31, 2022 1,439,333 $1.00 – 19.61 5.63 years $ 6.11
Granted 140,000 1.00 – 2.00 2.44 years 1.71
Exercised (40,000 ) 1.00 1.00
Balance at June 30, 2023 1,539,333 $1.00 – 19.61 5.03 years $ 5.84

Exercisable December 31, 2022 1,158,764 $1.00 – 19.61 5.63 years $ 5.25
Exercisable at June 30, 2023 1,379,369 $1.00 – 19.61 5.05 years $ 5.34
The total fair value of the options granted was $142 thousand, which was determined by the Black-Scholes Pricing Model with the following assumptions: dividend yield of 0%, expected term of 6.5 years, volatility of 187.76% – 195.58% and risk-free rate of 1.21% – 2.26%. Total compensation expense under the above service-based option plan was $505 thousand and $547 thousand for the three months ended June 30, 2023 and 2022, respectively, with unamortized expense remaining of $1.6 million as of June 30, 2023. Total compensation expense under the above service-based option plan was $1.1 million for both the six months ended June 30, 2023 and 2022. Of the total service-based options exercised during the six months ended June 30, 2023, 40,000 options were exercised on a cashless basis, which resulted in 16,471 shares issued. As of June 30, 2023, aggregate intrinsic value of vested service-based options outstanding was $2.0 million.
21

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~~following is a summary of outstanding performance-based options ~~to purchase 2,925,000 shares of common stock at exercise prices of $0.40. The options expire at various dates between 2021 and 2026 and are exercisable upon~~activity (separate from the ~~Company achieving annual sales revenue of $5,000,000. During~~2020 Plan) for the ~~year~~six months ended ~~December 31, 2016, the Company cancelled 287,500 of these service-based options issued to two consultants, valued at $12,457.~~June 30, 2023:
SCHEDULE OF OPTION ACTIVITY

Options
Outstanding
Number of
Shares

Exercise Price
per Share

Weighted
Average
Remaining
Contractual
Life

Weighted
Average
Exercise Price
per Share

Balance at December 31, 2022 535,000 $1.25 – 2.50 4.59 years $ 1.60
Granted -
Balance at June 30, 2023 535,000 $1.25 – 2.50 4.10 years $ 1.60

Exercisable December 31, 2022 470,000 $1.50 – 2.50 4.58 years $ 1.61
Exercisable at June 30, 2023 470,000 $1.50 – 2.50 4.09 years $ 1.61
~~During 2016, the Company met the performance criteria and accordingly, recorded stock based~~No compensation expense ~~of $165,241 and $513,804~~was recognized on the performance-based options above for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016, respectively.~~

~~Immudyne, Inc.~~
~~Notes to Consolidated Financial Statements~~
~~September 30, 2017~~
~~(unaudited)~~
5. ~~Stockholders’ Equity (continued)~~
~~Unvested~~
~~In February 2017,~~2023, as the ~~Company granted~~performance terms have not been met or are not probable. Total compensation expense under the above performance-based options ~~to purchase 250,000 shares of common stock at exercise prices of $0.40. The options expire in 2027~~was $106 thousand and ~~are exercisable upon the Company achieving annual sales revenue 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 compensation expense of $27,719~~$212 thousand for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, respectively. As of June 30, 2023, aggregate intrinsic value of vested performance options outstanding was $1.3 million.
RSUs and RSAs
The ~~Company granted performance-based options to purchase 900,000 shares~~following is a summary of ~~common stock at exercise price of $0.80.~~ outstanding RSUs and RSAs activity under our 2020 Plan for the six months ended June 30, 2023:
SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY
RSU Outstanding
Number of Shares
Balance at December 31, 2022 1,028,250
Granted 1,974,500
Vested (322,625 )
Cancelled/Forfeited (480,000 )
Balance at June 30, 2023 2,200,125
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 performance-based options is $2,446,739.~~
In the ~~third quarter of 2017,~~1,974,500 RSUs and RSAs granted was $5.6 million which was determined using 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 fair value of ~~these performance-based~~the quoted market price on the date of grant. Total compensation expense under the 2020 Plan RSUs and RSAs above was $894 thousand and $595 thousand for the three months ended June 30, 2023 and 2022, respectively, with unamortized expense remaining of $4.8 million as of June 30, 2023. Total compensation expense under the 2020 Plan RSUs and RSAs above was $1.4 million and $1.6 million for the six months ended June 30, 2023 and 2022, respectively. During the six months ended June 30, 2023, 322,625 RSUs and RSAs vested, of which 52,375 RSUs and RSAs were issued. During the six months ended June 30, 2023, 405,000 RSUs and 400,000 service-based stock options were cancelled and replaced with 962,500 RSAs for two executives. Incremental compensation cost resulting from the modifications was immaterial to the unaudited condensed consolidated financial statements for the three and six months ended June 30, 2023.
The following is ~~$1,284,538.~~a summary of outstanding RSUs and RSAs activity (outside of our 2020 Plan) for the six months ended June 30, 2023:
SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY
RSU Outstanding
Number of Shares
Balance at December 31, 2022 715,000
Granted 425,000
Vested (165,000 )
Balance at June 30, 2023 975,000
The total fair value of the 425,000 RSUs and RSAs granted was $860 thousand which was determined using the fair value of the quoted market price on the date of grant. Total compensation expense for RSUs and RSAs outside of the 2020 Plan was $285 thousand and $348 thousand for the three months ended June 30, 2023 and 2022, respectively, with unamortized expense remaining of $5.4 million as of June 30, 2023. Total compensation expense for RSUs and RSAs outside of the 2020 Plan was $589 thousand and $939 thousand for the six months ended June 30, 2023 and 2022, respectively. During the six months ended June 30, 2023, 165,000 RSUs and RSAs vested, of which 150,000 RSUs and RSAs were issued.
22

Warrants
The following is a summary of outstanding and exercisable ~~warrants:~~warrants activity during the six months ended June 30, 2023:
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.~~SCHEDULE OF WARRANT OUTSTANDING AND EXERCISABLE

Warrants
Outstanding
Number of
Shares

Exercise Price
per Share

Weighted
Average
Remaining
Contractual
Life

Weighted
Average
Exercise Price
per Share

Balance at December 31, 2022 3,859,638 $1.40 – 12.00 5.85 years $ 5.59
Granted 967,742 1.24 4.73 years 1.24
Balance at June 30, 2023 4,827,380 $1.24 – 12.00 4.46 years $ 4.74

Exercisable December 31, 2022 3,836,993 $1.40 – 12.00 4.88 years $ 5.63
Exercisable June 30, 2023 4,827,380 $1.24 – 12.00 4.46 years $ 4.73
~~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 total fair value of the warrants granted ~~during the period ended September 30, 2017,~~ was ~~estimated on the date of grant using~~$1.1 million, which was determined by the Black-Scholes ~~option-pricing model~~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 of ~~December 31, 2016, certain~~0%, expected term of ~~the Company’s stock options, stock warrants~~4 years, volatility of 122.6% and ~~convertible debt instruments were accounted for as derivative liabilities due to insufficient authorized shares~~risk-free rate 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~~3.73%. Total compensation expense ~~related Service-Based Stock Options~~on the above warrants was $6 thousand and ~~Performance-Based Stock Options and Warrants amounted to $142,045 and $40,829~~$605 thousand for ~~the nine months ended September 30, 2017 and 2016, respectively. For~~ the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively, with no unamortized expense remaining as of June 30, 2023. Total compensation expense on the above warrants was $18 thousand and $1.2 million for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, aggregate intrinsic value of vested warrants outstanding was $3.9 million.
Stock-based Compensation
The total stock-based compensation expense related to common stock ~~based compensation~~issued for services, service-based stock options, performance-based stock options, warrants, RSUs and RSAs amounted to ~~$28,523~~$2.9 million and ~~$40,829,~~$4.0 million for the three months ended June 30, 2023 and 2022, respectively. The total stock-based compensation expense related to common stock issued for services, service-based stock options, performance-based stock options, warrants RSUs and RSAs amounted to $5.5 million and $8.5 million for the six months ended June 30, 2023 and 2022, respectively. Such amounts are included in ~~compensation~~general and ~~related~~administrative expenses in the ~~accompanying~~unaudited condensed consolidated statement of operations. Unamortized expense remaining related to service-based stock options, performance-based stock options, warrants, RSUs and RSAs was $15.0 million as of June 30, 2023, which is expected to be recognized through 2026.
NOTE 9 – LEASES
The Company leases office space domestically under operating leases. The Company’s headquarters are located in New York, New York for which the lease expires in 2025. We operate a marketing and sales center in Huntington Beach, California for which the lease expires in 2024, a patient care center in Greenville, South Carolina for which the lease expires in 2024 and a warehouse and fulfillment center in Columbia, Pennsylvania for which the lease expires in 2024. WorkSimpli leases office space in Puerto Rico for which the lease expires in 2024.
The following is a summary of the Company’s operating right-of-use assets and operating lease liabilities as of June 30, 2023:
SCHEDULE OF OPERATING RIGHT OF USE OF ASSETS
2023
Operating right-of-use assets $ 928,696
Operating lease liabilities - current $ 758,927
Operating lease liabilities - noncurrent $ 276,340
Total accumulated amortization of the Company’s operating right-of-use assets was $1.7 million as of June 30, 2023.
The table below reconciles the undiscounted future minimum lease payments under the above noted operating leases to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of June 30, 2023:
SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES

Fiscal year 2023 $ 453,908
Fiscal year 2024 562,206
Fiscal year 2025 68,850
Less: imputed interest (49,697 )
Present value of operating lease liabilities $ 1,035,267
23

~~Common stock issued for services amounted to $319,313~~
Operating lease expenses were $206 thousand and ~~$230,000~~$201 thousand for ~~the nine months ended September 30, 2017 and 2016, respectively. For~~ the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016, common stock issued~~2022, respectively, and $429 thousand and $404 thousand for ~~services amounted to $158,480~~the six months ended June 30, 2023 and ~~$-0-, respectively. Such amounts are~~2022, respectively, and were included in ~~compensation and related~~other operating expenses in ~~the accompanying~~our unaudited condensed consolidated 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 and $65,318, respectively, in royalty expenseSupplemental 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:
7. ~~Commitments and Contingencies~~
~~Leases~~SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE LIABILITIES
June 30,
2023 2022
Cash paid for operating lease liabilities $ 441,290 $ 323,580
~~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:
June 30, 2023 December 31, 2022
Weighted average remaining lease term in years 2.36 2.82
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~~$3 thousand 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~~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 thousand per month.
NOTE 10 - 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~~ As of ~~$50,000 on the 180-day anniversary of the agreement~~June 30, 2023 and ~~an additional $50,000 performance fee on the 365-day anniversary of the~~December 31, 2022, $0 and approximately $138 thousand, respectively, were included in accrued expenses in regard to this agreement. ~~For the three and nine months ended September 30, 2017,~~

During 2018, the Company ~~recognized expenses~~entered into a license agreement (the “Alphabet Agreement”) with M.ALPHABET, LLC (“Alphabet”), pursuant to which Alphabet agreed to license its PURPUREX business which consists of methods and compositions developed by Alphabet for the treatment of purpura, bruising, post-procedural bruising, and traumatic bruising (the “Product Line”). Pursuant to the license granted under the Alphabet Agreement, Conversion Labs PR obtains an exclusive license to incorporate (i) any intellectual property rights related to the ~~performance fee~~Product Line and (ii) all designs, drawings, formulas, chemical compositions and specifications used or useable in the ~~amount~~Product Line into one or more products manufactured, sold, and/or distributed by Alphabet for the treatment of ~~$16,667~~purpura, bruising, post-procedural bruising and ~~$100,000, respectively. In April 2017,~~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 June 30, 2023.

Upon execution of the Alphabet Agreement, Alphabet was granted a 10-year stock option to purchase 20,000 shares of the Company’s common stock at an exercise price of $2.50. Further, if Licensed Products have gross receipts of $7.5 million in any calendar year, the Company ~~issued 217,390~~will grant Alphabet an option to purchase 20,000 shares of the Company’s common stock at an exercise price of $2.50; (ii) if Licensed Products have gross receipts of $10.0 million in any calendar year, the Company will grant Alphabet an additional option to purchase 20,000 shares of the Company’s common stock at an exercise price of $2.50and ~~108,696 warrants, pursuant~~(iii) if Licensed Products have gross receipts of $20.0 million in any calendar year, the Company will grant Alphabet an option to ~~a subscription agreement,~~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 ~~stated consideration~~licensed products are remote and, ~~satisfaction of obligation to pay $50,000 on~~therefore, the ~~180-day anniversary~~Company has not recognized any compensation.

Purchase Commitments

Many of the ~~execution~~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 ~~this agreement.~~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~~June 30, ~~2017,~~2023, the ~~balance in accounts payable and accrued expenses is $0 expense related~~Company approximates its implicit purchase commitments to ~~this agreement.~~be $168 thousand.

Legal Matters

In the normal course of business operations, the Company may become involved in various legal matters. ~~At September~~As of June 30, ~~2017,~~2023, 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~~a material 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 fair dealing, unjust enrichment, quantum meruit, and fraud lawsuit, captioned Harborside Advisors LLC v. LifeMD, Inc., Case No. 21-cv-10593, was filed in the United States District Court for the Southern District of New York against the Company. The Harborside Complaint alleges, among other things, that the Company breached a Consulting Services Agreement dated as of June 5, 2019, and Harborside was entitled to 1 million shares (i.e., 200,000 shares post 5-for-1 reverse stock split) in the Company if the Conversion Labs Rx business ~~advisory services~~achieved a topline revenue of $10 million and an additional 1 million shares (i.e., 200,000 shares post 5-for-1 reverse stock split) for each additional $5 million in topline revenue up to a maximum of 5 million shares (i.e., 1,000,000 shares post 5-for-1 reverse stock split). The Complaint further alleges that the Company fraudulently induced Harborside to give up its ownership interest in Conversion Labs Rx and that it was a breach of the duty of good faith and fair dealing and fraudulent for the Company to have dissolved Conversion Labs Rx. Consequently, alleges Harborside, the Company was unjustly enriched, and Harborside is entitled to recover from the Company for quantum meruit. The Harborside Complaint implies between $5.0 million and $33.0 million in alleged damages related to failure to award the aforementioned stock but only specifically states that “Harborside has incurred damages in excess of $75 thousand, with the exact amount to be determined with specificity at trial” for each of the 5 counts. On February 11, 2022, the Company filed a Motion to Dismiss the Harborside Complaint, which Harborside opposed. The Company replied on April 4, 2022 and was awaiting a decision from the Court on whether the case will be fully or partially dismissed. In the meantime, the parties agreed to mediate both cases (Harborside Advisors LLC v. LifeMD, Inc., Case No. 21-cv-10593, and Specialty Medical Drugstore, LLC D/B/A GoGoMeds v. LifeMD, Inc., Case No. 21-cv-10599, noted below) together. On September 22, 2022, as a result of mediation, the parties reached a settlement to resolve the matters in these cases. The Company issued 400,000 shares of common stock during the year ended December 31, 2022 and 100,000 additional shares of common stock on July 10, 2023 related to this settlement. The costs of this settlement are reflected in the Company’s financial results.

On December 10, 2021, a purported breach of contract, unjust enrichment, quantum meruit, and account stated lawsuit, captioned Specialty Medical Drugstore, LLC D/B/A GoGoMeds v. LifeMD, Inc., Case No. 21-cv-10599, was filed in the United States District Court for the Southern District of New York against the Company. The GoGoMeds Complaint alleges, among other things, that Conversion Labs Rx breached a Strategic Partnership Agreement (dated May 27, 2019) (the “SPA”) by the Company not paying two invoices (#3269 and 3270) totaling $274 thousand, and, therefore, “LifeMD has been unjustly enriched in an amount in excess of $274 thousand, with the exact amount to be determined with specificity at trial.” Further, GoGoMeds alleges that “to the extent that the SPA is inapplicable, GoGoMeds is entitled to recover from LifeMD from quantum meruit” because “GoGoMeds conferred a benefit on LifeMD by fulfilling over 17,000 prescriptions and over the counter drug orders for LifeMD’s clients.” On February 11, 2022, the Company filed its Answer and Counterclaim to the GoGoMeds Complaint, pleading the affirmative defenses that the claims are barred, in whole or in part: (i) because they fail to state claims upon which relief can be granted; (ii) by breach of contract by plaintiff; (iii) by offset, recoupment, and/or unjust enrichment to plaintiff; (iv) by accord and satisfaction; (v) for failure of condition precedent; (vi) because adequate remedies at law exist; (vii) by failure to mitigate; (viii) by the doctrine of unclean hands; and (ix) by consent ratification, waiver, excuse, and/or estoppel, (x) as well as that attorney fees and costs, as well as special, indirect, incidental, and/or consequential damages are not recoverable. Further, the Company counterclaimed against GoGoMeds for: (a) breach of contract for failing to: (i) provide adequate customer service and related pharmacy services; (ii) charge LifeMD actual costs for prescription and over the counter drugs (including shipping), as was contractually required; and (iii) provide regular reports and allow audits for review to establish adequate service and accurate costs; (b) trade secret misappropriation of the LifeMD Information, Data, and Materials, as defined therein; (c) unjust enrichment of GoGoMeds through its retention of such LifeMD Information, Data, and Materials, and for the benefit of the creation of the GoGoCare telehealth company; (d) conversion by GoGoMeds by exercising unauthorized dominion and control over the LifeMD Information, Data, and Materials; (e) detinue; and (f) an accounting. GoGoMeds’ responded to the counterclaims on March 4, 2022 and the parties had commenced fact discovery. In the meantime, the parties agreed to mediate both cases (Harborside Advisors LLC v. LifeMD, Inc., Case No. 21-cv-10593, and Specialty Medical Drugstore, LLC D/B/A GoGoMeds v. LifeMD, Inc., Case No. 21-cv-10599) together. The court granted a 60-day stay in the Specialty Medical Drugstore, LLC D/B/A GoGoMeds v. LifeMD, Inc., Case No. 21-cv-10599, and the parties were ~~provided~~amenable in the Harborside Advisors LLC v. LifeMD, Inc., Case No. 21-cv-10593, to the court foregoing any decision on our motion to dismiss until after mediation. On September 22, 2022, as a result of mediation, the parties reached a settlement to resolve the matters in these cases. As noted above, the Company issued 400,000 shares of common stock during the year ended December 31, 2022 and 100,000 additional shares of common stock on July 10, 2023 related to this settlement. The costs of this settlement are reflected in the Company’s financial results.

On February 28, 2022, a purported breach of contract lawsuit (with six counts of alleged breach, and indemnity reliance concerning reasonable costs and expenses), captioned William Blair LLC v. LifeMD, Inc., Case No. 2022L001978, was filed in the Circuit Court of Cook County, Illinois County Department, Law Division against the Company (the “Blair Complaint”). The Blair Complaint alleges, among other things, that LifeMD breached an engagement letter agreement entered into on January 7, 2021 with Blair that concerned potential debt financing. In particular, Blair alleges that the Company breached its obligations by, inter alia: (i) failing to advise Blair of, and ultimately completing, a debt financing transaction with a different investment banking firm on or about June 3, 2021; (ii) reproducing several pages from a Confidential Information Brochure used in the Company’s debt financing transaction with a different investment banking firm; (iii) failing to provide Blair with a right of first refusal to be its joint active bookrunning manager for a common stock sales agreement that it executed on or about June 3, 2021, through a different investment banking firm; (iv) failing to provide Blair with a right of first refusal to be its joint active bookrunning manager for a common stock sales agreement that it executed on or about September 28, 2021, through a different investment banking firm (despite the Company having formally terminated the engagement letter with Blair on or about July 16, 2021); (v) failing to provide Blair with a right of first refusal to be its joint active bookrunning manager for a preferred stock offering that it executed on or about September 28, 2021, through two different investment banking firms as bookrunning co-managers (despite the Company having formally terminated the engagement letter with Blair on or about July 16, 2021); and (vi) purchasing a convertible note from a pharmaceutical investor in connection with its acquisition of all outstanding shares of allergy telehealth platform, Cleared. The Blair Complaint seeks damages adequate to compensate Blair for the aforementioned alleged breaches (i.e., which implicitly meets or exceeds the purported $1.0 million minimum fee in the engagement letter), as well as reasonable costs and expenses incurred in this action. On May 22, 2022, the Company filed its answer, affirmative defenses, and counterclaim, denying the alleged breaches of its obligations under the engagement letter agreement. Further, the Company asserted the following affirmative defenses: (1) failure to state a claim on which relief can be granted; (2) laches; (3) breach of the engagement letter agreement; (4) unclean hands; (5) failure to mitigate; (6) the doctrines of waiver, accord, and satisfaction, and res judicata; (7) estoppel; and (8) repudiation/anticipatory breach. The Company also counterclaimed for a declaratory judgment that: (i) Plaintiff breached, repudiated and/or anticipatorily breached the engagement letter agreement; (ii) as a result, the Company was not bound by the terms of the engagement letter agreement from that time forward; (iii) Plaintiff is not owed any amounts under the engagement letter agreement; and (iv) and an award to the Company of any further relief that the Court deems just and proper.

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

NOTE 11 – RELATED PARTY TRANSACTIONS

Working Capital Loan

During the six months ended ~~September~~June 30, ~~2016 this director was compensated $6,000~~2023, the Company received proceeds of $2 million under a $2.5 million loan facility with CRG Financial, maturing on December 15, 2023. The loan facility includes interest of 12%. The Company repaid the $2 million outstanding loan balance on March 21, 2023 with the proceeds received from the Avenue Facility and ~~$15,000, respectively. During 2017, legal and business advisory services were provided~~recorded a $325 thousand loss on debt extinguishment related to the repayment of the CRG Financial loan (see Note 6). As of both June 30, 2023 and December 31, 2022, the outstanding balance was $0 related to the CRG Financial loan. Mr. Bhatia, a member of the Board of the Company, ~~by one~~also serves on the Board of ~~its directors. For~~Directors of CRG Financial.

WorkSimpli Software

During the ~~three and nine~~six months ended ~~September~~June 30, ~~2016 this director was compensated $3,000~~2023 and ~~$7,500, respectively.~~

~~During the nine months ended September 30, 2017~~2022, 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 $570 thousand and ~~2016, the Company’s President received $18,000 and $20,000, respectively for reimbursement of home office expenditures, including rent, utilities and other related expenses for two offices. During~~$352 thousand during the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively, and $1.2 million and $651 thousand during the ~~Company’s President received $6,000~~six months ended June 30, 2023 and ~~$6,000,~~2022, respectively, for ~~reimbursement~~these services. There were no amounts owed to LegalSubmit as of ~~these expenses.~~both June 30, 2023 and December 31, 2022.

~~Immudyne, Inc. employs the wife~~NOTE 12 – SEGMENT DATA

Our portfolio of ~~the President of the Company as an accountant~~brands are included within two operating segments: Telehealth and ~~incurs $3,000 per month, plus an annual incentive bonus award equal to 0.5% of the Company’s pre-tax earnings.~~

~~Immudyne PR utilizes BV Global Fulfillment, owned by the father of Immudyne PR’s President,~~WorkSimpli. We believe our current segments and ~~incurred $138,687~~brands within our segments complement one another and ~~$181,244~~position us well for future growth. Relevant segment data for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017, respectively, for these services. During the three~~2023 and ~~nine months ended September~~2022 is as follows:

SCHEDULE OF RELEVANT SEGMENT DATA

	2023			2022			2023			2022
	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Telehealth
Revenue	$	22,351,128		$	22,267,963		$	42,553,931		$	44,866,024
Gross margin		81.5	%		80.0	%		81.1	%		78.7	%
Operating loss	$	(8,141,868	)	$	(13,210,799	)	$	(13,143,226	)	$	(26,482,656	)
WorkSimpli
Revenue	$	13,595,785		$	8,190,535		$	26,519,317		$	14,635,311
Gross margin		96.9	%		97.8	%		97.3	%		97.7	%
Operating income	$	3,246,322		$	306,674		$	5,394,870		$	471,516
Consolidated
Revenue	$	35,946,913		$	30,458,498		$	69,073,248		$	59,501,335
Gross margin		87.4	%		84.8	%		87.3	%		83.4	%
Operating loss	$	(4,895,546	)	$	(12,904,125	)	$	(7,748,356	)	$	(26,011,140	)

Relevant segment data as of June 30, ~~2016, Immudyne PR did not utilize BV Global Fulfillment.~~2023 and December 31, 2022 is as follows:

	June 30, 2023		December 31, 2022
Total Assets
Telehealth	$	26,561,946	$	18,163,464
WorkSimpli		8,884,443		7,502,389
Consolidated	$	35,446,389	$	25,665,853

~~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 13 – SUBSEQUENT EVENTS

~~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.~~

~~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 PR utilizes office space in Puerto Rico which is subleased from the President of Immudyne PR and incurs expense of approximately $4,000 a month for this office space.~~

9.	~~Subsequent Events~~

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

Stock Issued for Service

In July and August 2023, the Company issued 112,500 shares of common stock related to vested RSUs and RSAs.

ATM Sales Agreement

In July 2023, the Company sold 88,021 shares of common stock under the ATM Sales Agreement and net proceeds received were $410 thousand.

Stock Issued for Legal Settlement

On ~~October 2, 2017, Robert Kalkstein was appointed as~~July 10, 2023, the ~~Chief Financial Officer~~Company issued 100,000 shares of ~~Immudyne,~~common stock related to the settlement of the Harborside Advisors LLC v. LifeMD, Inc., Case No. 21-cv-10593, and the Specialty Medical Drugstore, LLC D/B/A GoGoMeds v. LifeMD, Inc., Case No. 21-cv-10599.

Series B Preferred Stock Conversion

On July 12, 2023, the holder of the Company’s Series B Preferred Stock elected to convert 2,275 shares of the Company’s Series B Preferred Stock. 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 500,000conversion resulted in 1,010,170 shares of the Company’s common stock ~~at $0.40 per share,~~issued to the holder of the Company’s Series B Preferred Stock.

Stock Issued for Noncontingent Consideration Payment

On July 17, 2023, the Company issued 158,129 shares of common stock related to the third of five quarterly installment payments due to the sellers of Cleared under the First Amendment.

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

Note Regarding Forward-Looking Statements

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

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

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

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

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

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

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

Corporate History

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

Business Overview

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

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

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

Since inception, we have helped approximately 755,000 customers and patients, providing them greater access to high-quality, convenient, and affordable care in all 50 states. Total revenue from recurring subscriptions is approximately 92%. In addition to our telehealth business, we own 73.32% of WorkSimpli, which operates PDFSimpli, a rapidly growing software as a service platform for converting, signing, editing, and sharing PDF documents. This business has seen 81% year-over-year revenue growth, with recurring revenue of 98%.

Our Platform and Business Strategy

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

Our proprietary platform also facilitates and accelerates the development and launch of novel offerings throughout clinical protocol establishment, marketing, and fulfillment. Our offerings are sold to consumers on a subscription basis thus creating convenience and discounted pricing opportunities for patients and recurring revenue streams for the Company. Our offerings range from prescription medication fulfilled on a recurring basis, to complementary OTC products, to ongoing care from a team of medical providers. In general, our offerings seek to serve a patient from beginning to end, starting from brand or offering discovery to the medical intake and product selection process, after which a licensed U.S. physician conducts a virtual consultation and determines a treatment plan. As appropriate, prescription medications and OTC products are filled by pharmacy fulfillment partners, and if preferred, shipped directly to the patient. The number of patients and customers we serve across the nation continues to increase at a robust pace, with more than 755,000 individuals having purchased our products and services to date.

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

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

Direct-to-Consumer Virtual Primary Care

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

Direct-to-Patient Telehealth

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

	○	RexMD is a men’s telehealth platform brand that offers access to virtual medical treatment for a variety of men’s health needs. After treatment from an affiliated licensed physician, if appropriate, one of our partner pharmacies will dispense and ship prescription medications and OTC products directly to the customer. Since RexMD’s initial launch in the erectile dysfunction treatment market, it has expanded into additional indications, including but not limited to, premature ejaculation, testosterone, and hair loss. RexMD is a leading men’s telehealth platform across the U.S. and has served more than 443,000 customers and patients since inception with a 4.6-star Trustpilot rating.

	○	ShapiroMD offers access to virtual medical treatment, prescription medications, patented doctor formulated OTC products, topical compounded medications, and Food and Drug Administration (“FDA”) approved medical devices treating male and female hair loss through our telehealth platform. ShapiroMD has emerged as a leading destination for hair loss treatment across the U.S. and has served more than 265,000 customers and patients since inception with a 4.9-star Trustpilot rating.

	○	NavaMD is a female-oriented, tele-dermatology brand that offers access to virtual medical treatment from dermatologists and other providers, and, if appropriate, prescription oral and compounded topical medications to treat dermatological conditions such as aging and acne. In addition to the brand’s telehealth offerings, NavaMD’s proprietary products leverage intellectual property and proprietary formulations licensed from Restorsea, a leading medical grade skincare technology platform.

	○	Cleared is a telehealth brand that provides personalized treatments for allergy, asthma, and immunology. Offerings include in-home tests for both environmental and food allergies, prescriptions for allergies and asthma, and FDA-approved immunotherapies for treating chronic allergies. Cleared leverages a network of affiliated medical professionals and providers in all 50 states, various pharmaceutical partners, and treatments and tests that cost up to 50 percent less than the brand-name competition. The offerings include free consultations, prescription medication, complementary OTC products, and ongoing care from U.S.-licensed allergists and nurses.

Enterprise Telehealth Offerings

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

Majority Owned Subsidiary: WorkSimpli

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

Significant Developments During the Three Months Ended June 30, 2023

Amendment to Cleared Stock Purchase Agreement

On February 4, 2023, the Company entered into the First Amendment to the Stock Purchase Agreement (the “First Amendment”) between the Company and the sellers of Cleared. The First Amendment was amended to, among other things: (i) reduce the total purchase price by $250 thousand to a total of $3.67 million; (ii) change the timing of the payment of the purchase price to $460 thousand paid at closing (which has already been paid by the Company), with the remaining amount to be paid in five quarterly installments beginning on or before February 6, 2023 and ending January 15, 2024; (iii) remove all “earn-out” payments payable by the Company to the sellers; and (iv) removing certain representations and warranties of the Company and ~~certain vesting requirements set forth~~sellers in connection with the ~~consulting agreement.~~

~~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,~~transaction. On February 6, 2023, the Company issued ~~a ten year, fully vested option to purchase 100,000~~337,895 shares of common stock ~~at an exercise price~~related to the first of ~~$0.35 per share. In addition,~~five quarterly installment payments due to the sellers of Cleared under the First Amendment. On April 17, 2023, the Company issued ~~ten year options that vest upon the Company achieving pre-tax earnings benchmarks between $4,000,000 and $7,000,000. The exercise price for the options are $0.25 and $0.35 per share.~~

~~In November 2017, the Company issued 135,721~~455,319 shares of common stock ~~and 67,861 warrants pursuant to a conversion of Immudyne PR equity contributions of $31,216 into equity of Immudyne, Inc. by the noncontrolling interest.~~

~~10.~~

~~Restatement of Financial Statements~~

~~The September 30, 2016 financial statements were restated to reclassify marketing expense that was recorded in cost of goods sold to marketing expenses. There were no other changes~~related to the ~~financial statements. These reclassifications have no impact on previously reported net income.~~

~~The following table shows the changes made~~second of five quarterly installment payments due to the ~~September 30, 2016 income statement.~~sellers of Cleared under the First Amendment.

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

~~* * * * *~~Results of Operations

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

~~Overview~~

We are a health and wellness company that develops, manufactures, and markets innovative consumer products. We manufacture and market a proprietary and patent protected Yeast Beta Glucan that has been shown in clinical studies to support and regulate the human immune system. It has broad applications in skincare and as an immune support supplement. Our majority owned subsidiary is our digital marketing arm and is currently focused on marketing patented products for thicker and fuller hair and a skincare line containing our proprietary Yeast Beta Glucan ingredient.

We have performance based contracts with our sales and marketing executives, which allows us to continue to maintain a relatively low overhead. Our priority is to pursue opportunities to market our products and increase sales. We expect that a significant component of our selling, general and administration expenses going forward will 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 the additional costs resulting from our operations as a public reporting company, could adversely impact our future results of operations. Additional significant factors that we believe will affect our operating results going forward are: (i) protection of our intellectual property rights; (ii) imposition of more stringent government regulations of our products; and (iii) marketing expenses.

In the 2016 fiscal year, we utilized third party entities 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 consolidationComparison of the net revenues processed and collected by such contractors from sales initiated by the Company. The remaining entities provided such services as independent contractors, the majority 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 the prompt transfer of funds to Company controlled accounts. 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 funded operations in the past through the sales of our products and loans and advances from Mark McLaughlin, our President, and other directors, as well as from debt and equity financings. 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 our operations through 2017. However, if necessary, we may raise additional capital through 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. For additional information regarding these and other risks please see “Risk Factors” contained in our annual report for the fiscal year ended December 31, 2016.

~~Results of Operations~~

Three Months Ended ~~September~~June 30, ~~2017, compared~~2023 to the Three Months Ended ~~September~~June 30, 2022,~~2016~~

~~The following table sets forth the~~Our financial results ~~of our operations~~ for the ~~periods indicated~~three months ended June 30, 2023 are summarized as ~~a percentage of net sales:~~follows in comparison to the three months ended June 30, 2022:

June 30, 2023 June 30, 2022
% of % of
$ Sales $ Sales
Telehealth revenue, net $ 22,351,128 62.18 % $ 22,267,963 73.11 %
WorkSimpli revenue, net 13,595,785 37.82 % 8,190,535 26.89 %
Total revenue, net 35,946,913 100 % 30,458,498 100 %
Cost of telehealth revenue 4,125,945 11.48 % 4,453,126 14.62 %
Cost of WorkSimpli revenue 422,485 1.17 % 182,185 0.60 %
Total cost of revenue 4,548,430 12.65 % 4,635,311 15.22 %
Gross profit 31,398,483 87.35 % 25,823,187 84.78 %
Selling and marketing expenses 19,567,903 54.44 % 21,817,966 71.63 %
General and administrative expenses 12,119,573 33.72 % 13,159,937 43.22 %
Other operating expenses 1,313,789 3.65 % 2,041,976 6.70 %
Customer service expenses 1,912,078 5.32 % 1,006,363 3.30 %
Development costs 1,380,686 3.84 % 701,070 2.30 %
Goodwill impairment charge - - % 2,735,000 8.98 %
Change in fair value of contingent consideration - - % (2,735,000 ) (8.98 )%
Total expenses 36,294,029 100.97 % 38,727,312 127.15 %
Operating loss (4,895,546 ) (13.62 )% (12,904,125 ) (42.37 )%
Interest expense, net (995,670 ) (2.77 )% (132,236 ) (0.43 )%
Gain on debt forgiveness - - % 63,400 0.21 %
Net loss (5,891,216 ) (16.39 )% (12,972,961 ) (42.59 )%
Net income attributable to non-controlling interest 841,784 2.34 % 46,001 0.15 %
Net loss attributable to LifeMD, Inc. (6,733,000 ) (18.73 )% (13,018,962 ) (42.74 )%
Preferred stock dividends (776,562 ) (2.16 )% (776,562 ) (2.55 )%
Net loss attributable to common shareholders $ (7,509,562 ) (20.89 )% $ (13,795,524 ) (45.29 )%
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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~~Total revenue, net. Revenues for the three months ended June 30, 2023 were approximately ~~$2.05~~$35.9 million, an increase of 18% compared to approximately $30.5 million for the three months ended ~~September~~June 30, ~~2017, compared~~2022. The increase in revenues was attributable to an increase in WorkSimpli revenue of 66% and an increase in telehealth revenue of 0.4%. Telehealth revenue accounts for 62% of total revenue and has increased during the three months ended June 30, 2023 due to a decrease product refunds and rebates, partially offset by a reduction in online sales demand. WorkSimpli revenue accounts for 38% of total revenue and has steadily increased year over year due to a combination of higher demand, increased market awareness, enhanced digital capabilities, continued marketing campaign expansion and the addition of the ResumeBuild brand in the first quarter of 2022.
Total cost of revenue. Total cost of revenue consists of 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 2% to approximately ~~$1.38~~$4.5 million for the three months ended ~~September~~June 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,~~2023 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~~$4.6 million for the three months ended ~~September~~June 30, ~~2017,~~2022. The combined cost of revenue decrease was due to decreased telehealth costs during the three months ended June 30, 2023 when compared to the three months ended June 30, 2022. Telehealth costs decreased to 18% of associated telehealth revenues experienced during the three months ended June 30, 2023, from 20% of associated telehealth revenues during the three months ended June 30, 2022 primarily due to improved pricing. WorkSimpli costs were 3% of associated WorkSimpli revenues for the three months ended June 30, 2023 and were 2% of associated WorkSimpli revenues for the three months ended June 30, 2022.
Gross profit. Gross profit increased by approximately ~~$1.15~~22% to approximately $31.4 million for the three months ended ~~September~~June 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,~~2023 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~~$25.8 million for the three months ended ~~September~~June 30, ~~2017, compared to approximately $996,000~~2022, as a result of increased combined sales. Gross profit as a percentage of revenues was 87% for the three months ended ~~September~~June 30, ~~2016, an increase~~2023 as compared to 85% for the three months ended June 30, 2022. Gross profit as a percentage of ~~52.2%.~~revenues for telehealth was 82% for the three months ended June 30, 2023 compared to 80% for the three months ended June 30, 2022, and for WorkSimpli was 97% for the three months ended June 30, 2023 and 98% for the three months ended June 30, 2022. The increase in ~~our~~sales volume for WorkSimpli and improved pricing for Telehealth have contributed to the increase in gross ~~profit was a result of~~profit.
Total expenses. Operating expenses for 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%~~three months ended June 30, 2023 were approximately $36.3 million, as compared to approximately ~~$1.80~~$38.7 million for the three months ended ~~September~~June 30, ~~2017, from approximately $1.20~~2022. This represents a decrease of 6%, or $2.4 million. The decrease is primarily attributable to:
(i) Selling and marketing expenses: This mainly consists of online marketing and advertising expenses. During the three months ended June 30, 2023, the Company had a decrease of approximately $2.3 million, or 10% in selling and marketing costs as a result of a Company-wide strategic reduction in costs and alignment of sales and marketing initiatives to drive the Company’s recurring revenue subscription-based sales model.
(ii) General and administrative expenses: During the three months ended June 30, 2023, stock-based compensation was $2.9 million, with the majority related to stock compensation expense attributable to service-based stock options and restricted stock units, as compared to stock-based compensation expense of $4.0 million for the three months ended June 30, 2022. This category also consists of merchant processing fees, payroll expenses for corporate employees, taxes and licenses, amortization expense and legal and professional fees. During the three months ended June 30, 2023, the Company had a decrease of approximately $1.0 million in general and administrative expenses, primarily related to the decrease in stock-based compensation costs referenced above and a Company-wide strategic reduction in costs.
32
(iii) Other operating expenses: This consists of rent and lease expense, insurance, office supplies and software subscriptions, royalty expense and bank charges. During the three months ended June 30, 2023, the Company had a decrease of approximately $728 thousand, or 36%, primarily related to decreases in office supplies and software subscriptions.
(iv) Goodwill impairment charge: During the three months ended June 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) Change in fair value of contingent consideration: During the three months ended June 30, 2022, the Company recorded a $2.7 million reduction to the Cleared contingent consideration as a result of the remeasurement of the fair value.
These decreases in operating expenses were partially offset by increases in the following:
(i) Customer service expenses: This consists of rent, insurance, payroll and benefit expenses related to the Company’s customer service department located in South Carolina and Puerto Rico. During the three months ended June 30, 2023, the Company had an increase of approximately $906 thousand, or 90%, primarily related to increases in headcount in the Company’s customer service department.
(ii) Development costs: This mainly relates to third-party technology services for developing and maintaining our online platforms. During the three months ended June 30, 2023, the Company had an increase of approximately $680 thousand, or 97%, primarily resulting from technology platform improvements and amortization expense.
Interest expense, net. Interest expense, net consists of interest expense related to the Avenue Facility, notes payable and the Series B Convertible Preferred Stock for the three months ended ~~September~~June 30, ~~2016.The increase in our operating expenses between~~2023 and interest accrued on the ~~periods was mostly attributable to our increased marketing efforts for Finished Cosmetic Products.~~
~~Net Income~~
~~Net loss~~Series B Convertible Preferred Stock for the three months ended ~~September~~June 30, ~~2017 was~~2022. Interest expense increased by approximately ~~$652,000, compared to net loss of approximately $227,000 for~~$863 thousand during the three months ended ~~September~~June 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~~2023 as compared to ~~the Company as a percentage of sales was (33)% for~~ the three months ended ~~September~~June 30, ~~2017, compared to net loss as~~2022.
Gain on debt forgiveness. The Company recorded a ~~percentage~~$63 thousand gain on debt forgiveness of ~~sales of (16)% for~~Paycheck Protection Program (“PPP”) loans during the three months ended ~~September~~June 30, ~~2016.~~ 2022.
Comparison of the Six Months Ended June 30, 2023 to the Six Months Ended June 30, 2022
Our ~~net loss during~~financial results for the ~~period~~six months ended June 30, 2023 are summarized as follows in comparison to the six months ended June 30, 2022:
June 30, 2023 June 30, 2022
% of % of
$ Sales $ Sales
Telehealth revenue, net $ 42,553,931 61.61 % $ 44,866,024 75.40 %
WorkSimpli revenue, net 26,519,317 38.39 % 14,635,311 24.60 %
Total revenue, net 69,073,248 100 % 59,501,335 100 %
Cost of telehealth revenue 8,046,126 11.65 % 9,539,194 16.03 %
Cost of WorkSimpli revenue 717,273 1.04 % 344,292 0.58 %
Total cost of revenue 8,763,399 12.69 % 9,883,486 16.61 %
Gross profit 60,309,849 87.31 % 49,617,849 83.39 %
Selling and marketing expenses 36,285,548 52.53 % 43,727,791 73.49 %
General and administrative expenses 22,722,336 32.90 % 25,372,680 42.64 %
Other operating expenses 3,018,554 4.37 % 3,459,445 5.81 %
Customer service expenses 3,467,482 5.02 % 1,939,670 3.26 %
Development costs 2,564,285 3.71 % 1,129,403 1.90 %
Goodwill impairment charge - - % 2,735,000 4.60 %
Change in fair value of contingent consideration - - % (2,735,000 ) (4.60 )%
Total expenses 68,058,205 98.53 % 75,628,989 127.10 %
Operating loss (7,748,356 ) (11.22 )% (26,011,140 ) (43.71 )%
Interest expense, net (1,260,135 ) (1.82 )% (300,170 ) (0.50 )%
(Loss) gain on debt extinguishment (325,198 ) (0.47 )% 63,400 0.10 %
Net loss (9,333,689 ) (13.51 )% (26,247,910 ) (44.11 )%
Net income attributable to non-controlling interest 1,407,767 2.04 % 70,727 0.12 %
Net loss attributable to LifeMD, Inc. (10,741,456 ) (15.55 )% (26,318,637 ) (44.23 )%
Preferred stock dividends (1,553,125 ) (2.25 )% (1,553,125 ) (2.61 )%
Net loss attributable to common shareholders $ (12,294,581 ) (17.80 )% $ (27,871,762 ) (46.84 )%
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Total revenue, net. Revenues for the six months ended June 30, 2023 were approximately $69.1 million, an increase of 16% compared to approximately $59.5 million for the six months ended June 30, 2022. The increase in revenues was attributable to ~~increasing~~an increase in WorkSimpli revenue of 81%, partially offset by a decrease in telehealth revenue of 5%. Telehealth revenue accounts for 62% of total revenue and has decreased during the six months ended June 30, 2023 due to a reduction in online sales demand. WorkSimpli revenue accounts for 38% of total revenue and has steadily increased year over year due to a combination of higher demand, increased market awareness, enhanced digital capabilities, continued marketing ~~efforts~~campaign expansion and the ~~decrease in~~addition of the ~~fair value of our derivative liability, which we incurred~~ResumeBuild brand in the first quarter of ~~2017~~2022.
Total cost of revenue. 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 11% to approximately $8.8 million for the six months ended June 30, 2023 compared to approximately $9.9 million for the six months ended June 30, 2022. The combined cost of revenue decrease was due to ~~our having insufficient authorized shares to satisfy outstanding derivative securities issued by~~decreased telehealth sales volume during the ~~Company.~~
~~Nine Months Ended September~~six months ended June 30, ~~2017, Compared~~2023 when compared to the ~~Nine Months Ended September~~six months ended June 30, ~~2016~~
~~The following table sets forth~~2022. Telehealth costs decreased to 19% of associated telehealth revenues experienced during the ~~results~~six months ended June 30, 2023, from 21% of ~~our operations~~associated telehealth revenues during the six months ended June 30, 2022 primarily due to lower sales volume and improved pricing. WorkSimpli costs were 3% of associated WorkSimpli revenues for the ~~periods indicated~~six months ended June 30, 2023 and were 2% of associated WorkSimpli revenues for the six months ended June 30, 2022.
Gross profit. Gross profit increased by approximately 22% to approximately $60.3 million for the six months ended June 30, 2023 compared to approximately $49.6 million for the six months ended June 30, 2022, as a result of increased combined sales. Gross profit 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~~revenues was 87% for the ~~nine~~six months ended ~~September~~June 30, ~~2017 were approximately $3.58 million, a decrease of 15.7% from approximately $4.25 million~~2023 as compared to 83% 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~~six months ended ~~September~~June 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 million for the nine months ended September 30, 2017, compared to approximately $3.47 million for the nine months ended September 30, 2016. The decrease of 25.1% is attributed to stopping sales in this area in early 2017 and re-launching different products late in the second quarter.
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~~Cost of Sales~~
Total cost of sales was approximately $1.07 million for the nine months ended September 30, 2017, compared to $1.27 million for the nine months ended September 30, 2016. The decrease in our cost of sales was due to introducing products with lower cost of goods.
~~Gross Profit~~
2022. Gross profit was approximately $2.52 million for the nine months ended September 30, 2017, compared 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 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~~revenues for telehealth was ~~(27.5)%~~81% for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023 compared to 79% for the six months ended June 30, 2022, and for WorkSimpli was 97% for the six months ended June 30, 2023 and 98% for the six months ended June 30, 2022. The increase in sales volume for WorkSimpli and improved pricing for Telehealth have contributed to the increase in gross profit.
Total expenses. Operating expenses for the six months ended June 30, 2023 were approximately $68.1 million, as compared to approximately $75.6 million for the six months ended June 30, 2022. This represents a decrease of 10%, or $7.6 million. The decrease is primarily attributable to:
(i) Selling and marketing expenses: This mainly consists of online marketing and advertising expenses. During the six months ended June 30, 2023, the Company had a decrease of approximately $7.4 million, or 17% in selling and marketing costs as a result of a Company-wide strategic reduction in costs and alignment of sales and marketing initiatives to drive the Company’s recurring revenue subscription-based sales model.
(ii) General and administrative expenses: During the six months ended June 30, 2023, stock-based compensation was $5.5 million, with the majority related to stock compensation expense attributable to service-based stock options and restricted stock units, as compared to stock-based compensation expense of $8.5 million for the six months ended June 30, 2022. This category also consists of merchant processing fees, payroll expenses for corporate employees, taxes and licenses, amortization expense and legal and professional fees. During the six months ended June 30, 2023, the Company had a decrease of approximately $2.7 million in general and administrative expenses, primarily related to the decrease in stock-based compensation costs referenced above and a Company-wide strategic reduction in costs.
(iii) Other operating expenses: This consists of rent and lease expense, insurance, office supplies and software subscriptions, royalty expense and bank charges. During the six months ended June 30, 2023, the Company had a decrease of approximately $441 thousand, or 13%, primarily related to decreases in office supplies and software subscriptions.
(iv) Goodwill impairment charge: During the six months ended June 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) Change in fair value of contingent consideration: During the six months ended June 30, 2022, the Company recorded a $2.7 million reduction to the Cleared contingent consideration as a result of the remeasurement of the fair value.
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These decreases in operating expenses were partially offset by increases in the following:
(i) Customer service expenses: This consists of rent, insurance, payroll and benefit expenses related to the Company’s customer service department located in South Carolina and Puerto Rico. During the six months ended June 30, 2023, the Company had an increase of approximately $1.5 million, or 79%, primarily related to increases in headcount in the Company’s customer service department.
(ii) Development costs: This mainly relates to third-party technology services for developing and maintaining our online platforms. During the six months ended June 30, 2023, the Company had an increase of approximately $1.4 million, or 127%, primarily resulting from technology platform improvements and amortization expense.
Interest expense, net. Interest expense, net consists of interest expense related to the Avenue Facility, notes payable and the Series B Convertible Preferred Stock for the six months ended June 30, 2023 and interest accrued on the Series B Convertible Preferred Stock for the six months ended June 30, 2022. Interest expense increased by approximately $960 thousand during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.
(Loss) gain on debt extinguishment. The Company recorded a $325 thousand loss on debt extinguishment related to the repayment of the CRG Financial loan during the six months ended June 30, 2023 due to a prepayment penalty and various fees associated with the CRG Financial loan. The Company recorded a $63 thousand gain on debt forgiveness of PPP loans during the six months ended June 30, 2022.
Working Capital
June 30, 2023 December 31, 2022
Current assets $ 20,180,896 $ 11,311,357
Current liabilities 31,517,806 31,374,151
Working capital $ (11,336,910 ) $ (20,062,794 )
Working capital increased by approximately $8.7 million during the six months ended June 30, 2023. The increase in current assets is primarily attributable to an increase in cash of approximately $7.9 million as a ~~percentage~~result of ~~sales~~the Avenue Facility, an increase in accounts receivable of ~~(11.5)% for the nine months ended September 30, 2016. Our net loss during the period~~$834 thousand and an increase in product deposits of $108 thousand. Current liabilities increased by $144 thousand, which was primarily attributable to ~~our increased operating~~an increase in accounts payable and accrued expenses ~~as we shifted to~~of $2.1 million and an ~~internal marketing strategy and increased interest expense to service our debt incurred late~~increase in ~~2016 and early~~deferred revenue of $120 thousand, partially offset by a decrease in ~~2017. We also experienced decreased sales during the first quarter~~notes payable 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.~~$2.1 million.
Liquidity and Capital Resources
Six Months Ended June 30,
2023 2022
Net cash provided by (used in) operating activities $ 2,030,386 $ (18,190,108 )
Net cash used in investing activities (4,112,939 ) (9,893,154 )
Net cash provided by (used in) financing activities 10,030,337 (1,527,475 )
Net increase (decrease) in cash 7,947,784 (29,610,737 )
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,Since inception, the Company ~~issued several 11% subordinated promissory~~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 ~~accredited investors~~third-party investors. Rising interest rates and inflation may increase the cost of capital and make it more difficult for total borrowings of $200,000. Additionally, the Company borrowed $200,000 at 11% from an investor and borrowed $100,000 from an officer 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 of the Company.
The Company also has access to a working capital line provided by American Express, guaranteed by the Company’s Chief Executive Officer, in the amount of $140,000 with a term of 60 to 90 days and interest at a flat fee of 1.5%. Additionally, in the nine months ended September 30, 2017, 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 through 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.~~access capital markets.
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~~Net cash provided by ~~or used in each of~~operating activities increased by $20.2 million to $2.0 million for the ~~indicated types of activities during the nine~~six months ended ~~September~~June 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,~~2023, as compared towith net cash used in operating activities of approximately ~~$112,000~~$18.2 million for the ~~same period~~six months ended June 30, 2022 primarily related to the decrease in ~~2016.~~the Company’s net loss of $16.9 million to $9.3 million for the six months ended June 30, 2023, as compared with $26.2 million for the six months ended June 30, 2022. Other significant factors contributing to net cash provided by operating activities during the six months ended June 30, 2023, include $5.5 million in non-cash stock-based compensation charges, $3.2 million in non-cash depreciation and amortization, a net increase in accounts payable, accrued expenses and other operating activities of $3.1 million, a $325 thousand loss on debt extinguishment and an increase in deferred revenue of $120 thousand. Net cash used in operating activities for the six months ended June 30, 2022, was driven primarily by the net loss of approximately $26.2 million (inclusive of $8.5 million in non-cash, stock-based compensation charges), an increase in accounts receivable of $1.5 million and the purchase of inventory of $1.3 million, partially offset by the Company’s increase in accounts payable and accrued expenses of approximately $0.7 million.
Net cash used in investing activities for the six months ended June 30, 2023 was approximately $4.1 million, as compared with approximately $9.9 million for the six months ended June 30, 2022. Net cash used in investing activities for the six months ended June 30, 2023, was due to cash paid for capitalized software costs of approximately $3.9 million, cash paid for the purchase of intangible assets of approximately $149 thousand and cash paid for the purchase of equipment of approximately $64 thousand. Net cash used in investing activities for the six months ended June 30, 2022, was due to cash paid for capitalized software costs of approximately $4.5 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 $357 thousand.
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Net cash provided by financing activities for the six months ended June 30, 2023 was approximately $10.0 million as compared with net cash used in financing activities of approximately $1.5 million for the six months ended June 30, 2022. During the six months ended June 30, 2023, net cash provided by financing activities consisted of: (1) $14.5 million in net proceeds received from the Avenue Facility and (2) $2.0 million in proceeds received from the CRG Financial loan. These factors contributing to net cash provided by financing activities were partially offset by repayments of notes payable of approximately $4.4 million net of a $325 thousand loss on debt extinguishment on the CRG Financial loan, preferred stock dividends of approximately $1.6 million, net payments made related to adjustments in the membership interest units of WorkSimpli of approximately $306 thousand, contingent consideration payments made related to the ResumeBuild brand acquisition of approximately $125 thousand and distributions to non-controlling interest of $72 thousand. Net cash used in financing activities for the six months ended June 30, 2022, consisted of preferred stock dividends of $1.6 million, distributions to non-controlling interest of $72 thousand and a contingent consideration payment related the ResumeBuild acquisition of $31 thousand, partially offset by proceeds from the exercise of options and warrants of $129 thousand.
Liquidity and Capital Resources Outlook
As of June 30, 2023, the Company has an accumulated deficit approximating $202.9 million and has experienced significant losses from its operations. To date, the Company has been funding operations primarily through the sales of its products, issuance of common and preferred stock and through loans and advances from officers and directors. Our primary short-term and long-term requirements for liquidity and capital are for customer acquisitions, funding business acquisitions and investments we may make from time to time, working capital including our noncancelable operating lease obligations, noncontingent consideration, capital expenditures and general corporate purposes. The ~~increase~~Company has a current cash balance of approximately $6.4 million as of the filing date.
On March 21, 2023, the Company entered into and closed on a Credit Agreement, and a supplement to the Credit Agreement with Avenue. The Credit Agreement provides for a convertible senior secured credit facility of up to an aggregate amount of $40 million, comprised of the following: (1) $15 million in term loans funded at closing, (2) $5 million of additional committed term loans available in the fourth quarter of 2023 and (3) $20 million of additional uncommitted term loans, collectively referred to as the “Avenue Facility”. The Avenue Facility matures on October 1, 2026. The Company issued Avenue warrants to purchase $1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments. In addition, Avenue may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share equal to $1.49. Proceeds from the Avenue Facility were used to repay the Company’s outstanding notes payable balances with CRG Financial and are expected to be used for general corporate purposes and at the Company’s election, re-financing up to $5 million liquidation value plus accrued interest of the Series B Preferred Stock.
During the six months ended June 30, 2023, the Company received proceeds of $2 million under a $2.5 million loan facility with CRG Financial, maturing on December 15, 2023. The loan facility includes interest of 12%. The Company repaid the $2 million outstanding loan balance on March 21, 2023 with the proceeds received from the Avenue Facility and recorded a $325 thousand loss on debt extinguishment due to a prepayment penalty and various fees associated with the CRG Financial loan. As of both June 30, 2023 and December 31, 2022, the outstanding balance was $0 related to the CRG Financial loan.
In October 2022, the Company received proceeds of $976 thousand under a 12-month working capital loan with Amazon. The terms of the loan include interest in the amount of ~~cash used~~$62 thousand. As of June 30, 2023 and December 31, 2022, the outstanding balance was $442 thousand and $976 thousand, respectively, and is included in notes payable, net, on the accompanying unaudited condensed consolidated balance sheet.
In November 2022, the Company received proceeds of $1.9 million under two 10-month working capital loans with Balanced Management. The terms of the loans include loan origination fees in the amount of $60 thousand and total interest of $840 thousand. As of June 30, 2023 and December 31, 2022, the outstanding balance was $294 thousand and $1.821 million, respectively, and is included in notes payable, net, on the accompanying unaudited condensed consolidated balance sheet.
On June 8, 2021, the Company filed a shelf registration statement on Form S-3 under the Securities Act, which was declared effective on June 22, 2021 (the “2021 Shelf”). Under the 2021 Shelf at the time of effectiveness, the Company originally had the ability to raise up to $150 million by ~~our operating activities was due primarily~~selling common stock, preferred stock, debt securities, warrants, and units. In conjunction with the 2021 Shelf, the Company also entered into an At Market Issuance Sales Agreement (the “ATM Sales Agreement”) with B. Riley Securities, Inc. and Cantor Fitzgerald & Co. relating to ~~our overall net loss, product deposits~~the sale of its common stock. In accordance with the terms of the ATM Sales Agreement, the Company may, but is not obligated to, offer and sell, from time to time, shares of common stock, through or to the Agents, acting as agent or principal. Sales of common stock, if any, will be made by any method permitted that is deemed an ~~increase~~“at the market offering” as defined in ~~inventory.~~
~~Net cash flows provided by financing activities was approximately $696,000~~Rule 415 under the Securities Act. On March 22, 2023, the date the Company filed its Annual Report on Form 10-K for the ~~nine months~~fiscal year ended ~~September 30, 2017, compared~~December 31, 2022, the Company became subject to ~~net cash flows provided by financing activities~~the offering limits in General Instruction I.B.6 of ~~$353,000 for~~Form S-3 (i.e., the ~~same period in 2016. Our increase in net cash flows provided by financing activities was primarily~~“baby shelf limitations”). As a result of the ~~sale~~baby shelf limitations, the Company was only able to offer and sell shares of ~~our~~ common stock having an aggregate offering price of up to $18.435 million pursuant to the ATM Sales Agreement, and ~~warrants, and proceeds from notes payable in~~it filed a prospectus supplement with the ~~first quarter of 2017.~~

~~Indebtedness~~
~~From time~~SEC to ~~time, our directors, officers and other related individuals have made short-term advances to us for our operating needs. Late in~~that effect on March 27, 2023. In June 2023, the ~~2016 fiscal year and early in 2017,~~Company’s public float increased above $75.0 million. As a result, the Company ~~issued several 11% subordinated promissory notes~~is no longer subject to ~~accredited investors for total borrowings~~the baby shelf limitations. The Company filed another prospectus supplement with the SEC to that effect on June 29, 2023. As of ~~$200,000, borrowed $200,000 at 11% from~~June 30, 2023, the Company has $59.5 million available under the ATM Sales Agreement.
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The Company’s continued operations are dependent upon obtaining an ~~investor and borrowed $100,000 from an officer of~~increase in its sales volumes which 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 of the Company. We also have access to a $140,000 working capital line through American Express, guaranteed by the Company’s Chief Executive Officer, at rates that are more favorable than those that Company has been ~~able achieve previously.~~
~~Off-Balance Sheet Arrangements~~
~~There are~~successful in achieving to date. However, there can be no ~~off-balance sheet arrangements between us and any other entity~~assurances that ~~have, or are reasonably likely~~we will continue to ~~have, a current or future effect on our financial condition, changes~~be successful in ~~financial condition,~~increasing revenues, ~~or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders.~~
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 and classified as stockholders’ equityimproving operational efficiencies or that ~~are not reflected~~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 ~~our consolidated financial statements. Furthermore, we~~management’s assessment, which included the available financing and consideration of positive and negative evidence impacting management’s forecasts, market, and industry factors. The Company’s continuance as a going concern is highly dependent on its future profitability and on the on-going support of its stockholders, affiliates, and creditors. Based on these circumstances, management has determined that these conditions raise substantial doubt about the Company’s ability to continue as a going concern.
The Company has begun to implement strategies to strengthen revenues and improve operational efficiencies across the business and is significantly curtailing expenses, however, these strategies do not ~~have any retained or contingent~~mitigate the substantial doubt about the Company’s ability to continue as a going concern. Management believes that the overall market value of the telehealth industry is positive and that it will continue to drive interest in assets transferred 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 research and development services with us.the Company.
Critical Accounting Policies and Estimates
Our significant accounting policies are ~~described~~ more fully described in ~~Note 2~~the notes to our unaudited condensed consolidated financial ~~statements, which we~~statements. We believe that the accounting policies below are critical for one to fully understand and evaluate our financial condition and results of operations.
Revenue Recognition
The Company records revenue under the ~~most critical to aid you in fully understanding and evaluating this management discussion and analysis.~~adoption of ASC 606, Revenue from Contracts with Customers, by analyzing exchanges with its customers using a five-step analysis:
~~Item 3.~~1. ~~Quantitative and Qualitative Disclosures about Market Risk~~Identify the contract
2. Identify performance obligations
3. Determine the transaction price
4. Allocate the transaction price
5. Recognize revenue
~~Not applicable.~~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 some cases, the customer does not obtain control until the product reaches the customer’s delivery site; in these cases, recognition of revenue is deferred until that time. In all cases, delivery is considered to have occurred when the customer obtains control, which is usually commensurate upon shipment of the product. In the case where delivery is not commensurate upon shipment of the product, recognition of revenue is deferred until that time. In the case of its product-based contracts, the Company provides a subscription sensitive service based on the recurring shipment of products. The Company records the related revenue under the subscription agreements subsequent to receiving the monthly product order, recording the revenue at the time it fulfills the shipment obligation to the customer.
For its product-based contracts with customers, the Company records an estimate for provisions of discounts, returns, allowances, customer rebates, and other adjustments for its product shipments and are reflected as contra revenues in arriving at reported net revenues. The Company’s discounts and customer rebates are known at the time of sale; correspondingly, the Company reduces gross product sales for such discounts and customer rebates. The Company estimates customer returns and allowances based on information derived from historical transaction detail and accounts for such provisions, as contra revenue, during the same period in which the related revenues are earned. The Company has determined that the population of its product-based contracts with customers are homogenous, supporting the ability to record estimates for returns and allowances to be applied to the entire product-based portfolio population. Customer discounts, returns and rebates on telehealth revenues approximated $497 thousand and $1.6 million, respectively, during the three months ended June 30, 2023 and 2022, respectively. Customer discounts, returns and rebates on telehealth revenues approximated $828 thousand and $3.1 million, respectively, during the six months ended June 30, 2023 and 2022, respectively.
The Company, through its majority-owned subsidiary WorkSimpli, offers a subscription-based service providing a suite of software applications to its subscribers, principally on a monthly subscription basis. The software suite allows the subscriber/user to convert almost any type of document to another electronic form of editable document, providing ease of editing. For these subscription-based contracts with customers, the Company offers an initial 14-day trial period which is billed at $1.95, followed by a monthly subscription, or a yearly subscription to the Company’s software suite dependent on the subscriber’s enrollment selection. The Company has estimated that there is one product and one performance obligation that is delivered over time, as the Company allows the subscriber to access the suite of services for the time period of the subscription purchased. The Company allows the customer to cancel at any point during the billing cycle, in which case the customers subscription will not be renewed for the following month or year depending on the original subscription. The Company records the revenue over the customers subscription period for monthly and yearly subscribers or at the end of the initial 14-day service period for customers who purchased the initial subscription, as the circumstances dictate. The Company offers a discount for the monthly or yearly subscriptions being purchased, which is deducted at the time of payment at the initiation of the contract term; therefore the Contract price is fixed and determinable at the contract initiation. Monthly and annual subscriptions for the service are recorded net of the Company’s known discount rates. Customer discounts and allowances on WorkSimpli revenues approximated $788 thousand and $580 thousand, respectively, during the three months ended June 30, 2023 and 2022, respectively. Customer discounts and allowances on WorkSimpli revenues approximated $1.7 million and $1.0 million, respectively, during the six months ended June 30, 2023 and 2022, respectively.
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As of June 30, 2023 and December 31, 2022, the Company has accrued contract liabilities, as deferred revenue, of approximately $5.7 million and $5.5 million, respectively, which represent the following: (1) obligations for products which the customer has not yet obtained control due to delivery not commensurate upon shipment of the product, (2) obligations on WorkSimpli in-process monthly or yearly contracts with customers and (3) a portion attributable to the yet to be recognized WorkSimpli initial 14-day trial period collections.
Capitalized Software Costs
The Company capitalizes certain internal payroll costs and third-party costs related to internally developed software and amortizes these costs using the straight-line method over the estimated useful life of the software, generally three years. The Company does not sell internally developed software other than through the use of subscription service. Certain development costs not meeting the criteria for capitalization, in accordance with ASC 350-40, Internal-Use Software, are expensed as incurred. As of June 30, 2023 and December 31, 2022, the Company capitalized a net amount of $10.4 million and $8.8 million, respectively, related to internally developed software costs which are amortized over the useful life and included in development costs on our statement of operations. The increase in capitalized software costs of $1.6 million or 18%, is primarily attributable to costs incurred related to development efforts of our LifeMD PC platform.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill is not amortized but is tested for impairment annually or more frequently, if events or changes in circumstances indicate that the asset may be impaired. Goodwill in the amount of $8.0 million was recognized in conjunction with the Cleared acquisition. The Company recorded an $8.0 million goodwill impairment charge and an $827 thousand intangible asset impairment charge during the year ended December 31, 2022 related to a decline in the estimated fair value of Cleared as a result of a decline in the Cleared financial projections (see Note 3).
Other intangible assets are comprised of: (1) the ResumeBuild brand, (2) a customer relationship asset, (3) the Cleared trade name, (4) Cleared developed technology, (5) a purchased license and (6) two purchased domain names. During the year ended December 31, 2022, the Company recorded an $827 thousand impairment loss related to a decline in the estimated fair value of the Cleared customer relationship intangible asset with an original cost of $919 thousand and accumulated amortization of $92 thousand. Other intangible assets are amortized over their estimated lives using the straight-line method. Costs incurred to renew or extend the term of recognized intangible assets are capitalized and amortized over the useful life of the asset.
Impairment of Long-Lived Assets
Long-lived assets include equipment and capitalized software. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, an impairment is recognized as the amount by which the carrying amount of the assets exceeds the estimated fair values of the assets. As of June 30, 2023 and December 31, 2022, the Company determined that no events or changes in circumstances existed that would indicate any impairment of its long-lived assets.
Recently Adopted Accounting Standards
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments, which requires an entity to utilize the current expected credit loss (“CECL”) impairment model to estimate its lifetime “expected credit loss” and record an allowance that is deducted from the amortized cost basis of the financial assets and certain other instruments, including but not limited to available-for-sale debt securities. Credit losses relating to available-for-sale debt securities are recorded through an allowance for credit losses. ASU 2016-13 requires a cumulative effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates, which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022 for all entities except SEC reporting companies that are not smaller reporting companies. The Company adopted ASU 2016-13 as of January 1, 2023. The adoption did not have a material impact on the Company’s financial statements.
~~Item 4.~~ ~~Controls and Procedures~~38

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805); Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This new guidance affects all entities that enter into a business combination within the scope of ASC 805-10. Under this new guidance, the acquirer should determine what contract assets and/or liabilities it would have recorded under ASC 606, Revenue from Contracts with Customers, as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquirer. Under current U.S. GAAP, contract assets and contract liabilities acquired in a business combination are recorded by the acquirer at fair value. The Company adopted ASU 2021-08 as of January 1, 2023. The adoption did not have a material impact on the Company’s financial statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We 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) inadequate controls related to revenue recognition;
(iii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both U.S. GAAP and SEC Guidelines; and
(iv) inadequate information technology general controls specifically related to security, segregation of duties, user access, restricted access and change management.
~~We may become involved~~Management’s Plan to Remediate the Material Weakness
Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated, such that these controls are designed, implemented, and operating effectively. The Company has formally documented its procedures for many of the significant accounting and financial reporting processes, in ~~various lawsuits~~addition to, identifying and ~~legal proceedings arising~~remediating design deficiencies in its processes. The other remediation actions planned include:
(i) implementation of controls to ensure revenue is recognized upon shipment;
(ii) further documentation and implementation of control procedures and the implementation of control monitoring; and
(iii) identify and remedy gaps in our information technology general controls specifically related to the areas of security, segregation of duties, user access, restricted access and change management.
Changes in Internal Control over Financial Reporting
As discussed above, we are implementing certain measures to remediate the material weaknesses identified in the design and operation of our internal control over financial reporting. Other than those measures, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended June 30, 2023, that materially affected, our internal control over financial reporting as of that date.

39
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 10, “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, 2022, as filed with the SEC on March 22, 2023, in addition to other information contained in our reports and in this quarterly report in evaluating the Company and its business before purchasing shares of our common stock. There have been no material changes to our risk factors contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022. The Company’s business, operating results and financial condition could be adversely affected due to any of those risks.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following disclosures set forth certain information with respect to all securities sold by the Company during the three months ended June 30, 2023 without registration under the Securities Act:
On April 10, 2023, the Company issued an aggregate of 16,471 shares of common stock related to the cashless exercise of options held by Dmytry Shepsen.
On February 4, 2023, the Company entered into the First Amendment to the Stock Purchase Agreement (the “First Amendment”) between the Company and the sellers of Cleared. The First Amendment was amended to, among other things change the timing of the payment of the purchase price to $460 thousand paid at closing (which has already been paid by the Company), with the remaining amount to be paid in five quarterly installments beginning on or before February 6, 2023 and ending January 15, 2024. On April 17, 2023, the Company issued 455,319 shares of common stock related to the second of five quarterly installment payments due to the sellers of Cleared under the First Amendment.
On May 1, 2023 and May 23, 2023, the Company issued 3,000 and 50,000 shares, respectively, of common stock for services, including vested restricted stock units, to employees and consultants.
The above transactions did not involve any underwriters, underwriting discounts or commissions, or any public offering. The Company relied upon the exemption from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof and/or Regulation D promulgated by the SEC under the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
None.
40
ITEM 6. EXHIBITS
~~Item 2.~~ ~~Unregistered Sales~~ Incorporated by Reference
Exhibit Number Exhibit Description Form Exhibit Filing Date/Period End Date
10.1#* Third Amendment to Amended and Restated Employment Agreement, dated June 13, 2023, by and between the Company and Brad Roberts
10.2#* Restricted Stock Award Agreement dated June 13, 2023 between Brad Roberts and LifeMD, Inc.
10.3#* Director and Officer Indemnification Agreement between Brad Roberts and LifeMD, Inc. dated June 13, 2023
10.4#* Consulting Services Agreement, dated June 14, 2023, by and between the Company and Naveen Bhatia
10.5#* Consulting Services Agreement, dated June 14, 2023, by and between the Company and Robert Jindal
10.6# Second Amendment dated June 15, 2023 to the Employment Agreement between Eric Yecies and LifeMD, Inc. 8-K 10.3 6/20/2023
10.7# Restricted Stock Award Agreement dated June 15, 2023 between Eric Yecies and LifeMD, Inc 8-K 10.4 6/20/2023
10.8# Director Agreement, dated June 20, 2023 between LifeMD, Inc. and William J. Febbo 8-K 10.1 6/22/2023
10.9# Restricted Stock Award Agreement, dated June 20, 2023, between LifeMD, Inc. and William J. Febbo 8-K 10.2 6/22/2023
10.10# Non-Qualified Stock Option Agreement, dated June 20, 2023, between LifeMD, Inc. and William J. Febbo 8-K 10.3 6/22/2023
10.11# Consulting Services Agreement, dated May 30, 2023, between LifeMD, Inc. and William J. Febbo 8-K 10.4 6/22/2023
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
41

~~Item 3.~~ ~~Defaults Upon Senior Securities~~
~~None.~~SIGNATURES
~~Item 4.~~ ~~Mine Safety Disclosures~~
~~Not applicable.~~
~~Item 5.~~
~~Other Information~~
~~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: /s/ Justin Schreiber
Justin Schreiber
Chief Executive Officer and Chairman of the Board of Directors
Date: August 9, 2023
By: /s/ Marc Benathen
Marc Benathen
Chief Financial Officer
Date: August 9, 2023
By: /s/ Maria Stan
Maria Stan
Principal Accounting Officer
Date: August 9, 2023
~~IMMUDYNE INC.~~
~~(Registrant)~~
42
~~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 Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
~~101.INS†~~ ~~XBRL Instance Document~~
~~101.SCH†~~ ~~XBRL Schema Document~~
~~101.CAL†~~ ~~XBRL Calculation Linkbase Document~~
~~101.DEF†~~ ~~XBRL Definition Linkbase Document~~
~~101.LAB†~~ ~~XBRL Label Linkbase Document~~
~~101.PRE†~~ ~~XBRL Presentation Linkbase Document~~
~~† Filed herewith~~
~~‡ Furnished herewith~~
31

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

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☐☒	Smaller reporting company	☒
~~(do not check if a smaller reporting company)~~
		Emerging growth company	☒☐

		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’ Equity (Deficit)	5

	Condensed Consolidated Statements of Cash Flows	6

	Notes to Condensed Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2428
~~Item~~
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	2839
~~Item~~
ITEM 4.	Controls and Procedures	2839

PART II. OTHER INFORMATION

~~Item~~ITEM 1.	Legal Proceedings	2940
~~Item 1A.~~	~~Risk Factors~~	29
~~Item~~ITEM 1A.	Risk Factors	40

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2940
~~Item~~
ITEM 3.	Defaults Upon Senior Securities	2940
~~Item~~
ITEM 4.	Mine Safety Disclosures	2940
~~Item 5.~~	~~Other Information~~	29
~~Item~~ITEM 5.	Other Information	40

ITEM 6.	Exhibits	2941

SIGNATURES		42

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

	June 30, 2023			December 31, 2022
	(Unaudited)
ASSETS
Current Assets
Cash	$	11,906,741		$	3,958,957
Accounts receivable, net		3,668,543			2,834,750
Product deposit		235,115			127,265
Inventory, net		3,698,302			3,703,363
Other current assets		672,195			687,022
Total Current Assets		20,180,896			11,311,357
Non-current Assets
Equipment, net		444,226			476,441
Right of use asset		928,696			1,206,009
Capitalized software, net		10,391,372			8,840,187
Intangible assets, net		3,501,199			3,831,859
Total Non-current Assets		15,265,493			14,354,496
Total Assets	$	35,446,389		$	25,665,853
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable	$	9,593,379		$	10,106,793
Accrued expenses		14,761,756			12,166,509
Notes payable, net		735,534			2,797,250
Current operating lease liabilities		758,927			756,093
Deferred revenue		5,668,210			5,547,506
Total Current Liabilities		31,517,806			31,374,151
Long-term Liabilities
Long-term debt, net		13,538,502			-
Noncurrent operating lease liabilities		276,340			574,136
Contingent consideration		318,750			443,750
Purchase price payable		-			579,319
Total Liabilities		45,651,398			32,971,356
Commitments and Contingencies (Note 10)		-			-
Mezzanine Equity
Preferred Stock, $0.0001 par value; 5,000,000 shares authorized Series B Preferred Stock, $0.0001 par value; 5,000 shares authorized, 3,500 and 3,500 shares issued and outstanding, liquidation value approximately, $1,438 and $1,305 per share as of June 30, 2023 and December 31, 2022, respectively		5,032,929			4,565,822
Stockholders’ Deficit
Series A Preferred Stock, $0.0001 par value; 1,610,000 shares authorized, 1,400,000 shares issued and outstanding, liquidation value approximately, $28.94 and $27.84 per share as of June 30, 2023 and December 31, 2022, respectively		140			140
Common stock, $0.01 par value; 100,000,000 shares authorized, 32,564,835 and 31,552,775 shares issued, 32,461,795 and 31,449,735 outstanding as of June 30, 2023 and December 31, 2022, respectively		325,649			315,528
Additional paid-in capital		186,673,930			179,015,250
Accumulated deficit		(202,857,575	)		(190,562,994	)
Treasury stock, 103,040 and 103,040 shares, at cost, as of June 30, 2023 and December 31, 2022, respectively		(163,701	)		(163,701	)
Total LifeMD, Inc. Stockholders’ Deficit		(16,021,557	)		(11,395,777	)
Non-controlling interest		783,619			(475,548	)
Total Stockholders’ Deficit		(15,237,938	)		(11,871,325	)
Total Liabilities, Mezzanine Equity and Stockholders’ Deficit	$	35,446,389		$	25,665,853

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

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, 2023		1,400,000	$	140		31,552,775	$	315,528	$	179,015,250		$	(190,562,994	)	$	(163,701	)	$	(11,395,777	)	$	(475,548	)	$	(11,871,325	)
Stock compensation expense		-		-		149,375		1,494		2,662,020			-			-			2,663,514			-			2,663,514
Stock issued for noncontingent consideration payment		-		-		337,895		3,379		638,621			-			-			642,000			-			642,000
Warrants issued with debt instrument		-		-		-		-		1,088,343			-			-			1,088,343			-			1,088,343
Series A Preferred Stock dividend		-		-		-		-		-			(776,563	)		-			(776,563	)		-			(776,563	)
Distribution to non-controlling interest		-		-		-		-		-			-			-			-			(36,000	)		(36,000	)
Adjustment of membership interest in WorkSimpli		-		-		-		-		(220,582	)		-			-			(220,582	)		(85,932	)		(306,514	)
Net (loss) income		-		-		-		-		-			(4,008,456	)		-			(4,008,456	)		565,983			(3,442,473	)
Balance, March 31, 2023		1,400,000	$	140		32,040,045	$	320,401	$	183,183,652		$	(195,348,013	)	$	(163,701	)	$	(12,007,521	)	$	(31,497	)	$	(12,039,018	)
Beginning balance		1,400,000	$	140		32,040,045	$	320,401	$	183,183,652		$	(195,348,013	)	$	(163,701	)	$	(12,007,521	)	$	(31,497	)	$	(12,039,018	)
Stock compensation expense		-		-		53,000		530		2,861,439			-			-			2,861,969			-			2,861,969
Stock issued for noncontingent consideration payment		-		-		455,319		4,553		637,447			-			-			642,000			-			642,000
Cashless exercise of stock options		-		-		16,471		165		(165	)		-			-			-			-			-
Series A Preferred Stock dividend		-		-		-		-		-			(776,562	)		-			(776,562	)		-			(776,562	)
Distribution to non-controlling interest		-		-		-		-		-			-			-			-			(36,000	)		(36,000	)
Adjustment of membership interest in WorkSimpli		-		-		-		-		(8,443	)		-			-			(8,443	)		9,332			889
Net (loss) income		-		-		-		-		-			(6,733,000	)		-			(6,733,000	)		841,784			(5,891,216	)
Balance, June 30, 2023		1,400,000	$	140		32,564,835	$	325,649	$	186,673,930		$	(202,857,575	)	$	(163,701	)	$	(16,021,557	)	$	783,619		$	(15,237,938	)
Ending balance		1,400,000	$	140		32,564,835	$	325,649	$	186,673,930		$	(202,857,575	)	$	(163,701	)	$	(16,021,557	)	$	783,619		$	(15,237,938	)

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

	June 30,			December 31,
	2023			2022

Finished goods - products	$	2,380,392		$	2,587,370
Raw materials and packaging components		1,417,623			1,276,891
Inventory reserve		(99,713	)		(160,898	)
Total Inventory - net	$	3,698,302		$	3,703,363

	September 30, 2017		December 31, 2016

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

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

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

	2
~~Signatures~~		30

~~Exhibit Index~~		31


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

	June 30,			December 31,			Amortizable
	2023			2022			Life
Amortizable Intangible Assets:
ResumeBuild brand	$	4,500,000		$	4,500,000			5 years
Customer relationship asset		1,006,840			1,006,840			3 years
Cleared trade name		133,339			133,339			5 years
Cleared developed technology		12,920			12,920			1 year
Purchased licenses		200,000			200,000			10 years
Website domain names		171,599			22,731			3 years
Amortizable intangible assets		171,599			22,731			3 years
Less: accumulated amortization		(2,523,499	)		(2,043,971	)
Total net amortizable intangible assets	$	3,501,199		$	3,831,859

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.

	~~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~~20

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

Balance, December 31, 2022		1,784,587			$2.30 – 21.02		6.95 years	$	9.54
Granted		78,000			1.84 – 3.56		4.79 years		2.69
Cancelled/Forfeited/Expired		(473,167	)		2.30 – 7.50				6.79
Balance at June 30, 2023		1,389,420			$1.84 – 21.02		6.31 years	$	10.09

Exercisable at December 31, 2022		1,185,153			$2.30 – 21.02		7.64 years	$	9.62
Exercisable at June 30, 2023		1,096,732			$1.84 – 21.02		7.07 years	$	10.31

~~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

	RSU Outstanding Number of Shares
Balance at December 31, 2022		1,028,250
Granted		1,974,500
Vested		(322,625	)
Cancelled/Forfeited		(480,000	)
Balance at June 30, 2023		2,200,125

	RSU Outstanding Number of Shares
Balance at December 31, 2022		715,000
Granted		425,000
Vested		(165,000	)
Balance at June 30, 2023		975,000

	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, 2022		3,859,638		$1.40 – 12.00		5.85 years	$	5.59
Granted		967,742		1.24		4.73 years		1.24
Balance at June 30, 2023		4,827,380		$1.24 – 12.00		4.46 years	$	4.74

Exercisable December 31, 2022		3,836,993		$1.40 – 12.00		4.88 years	$	5.63
Exercisable June 30, 2023		4,827,380		$1.24 – 12.00		4.46 years	$	4.73

	~~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~~

		2023
Operating right-of-use assets	$	928,696
Operating lease liabilities - current	$	758,927
Operating lease liabilities - noncurrent	$	276,340


Fiscal year 2023	$	453,908
Fiscal year 2024		562,206
Fiscal year 2025		68,850
Less: imputed interest		(49,697	)
Present value of operating lease liabilities	$	1,035,267

	June 30, 2023			December 31, 2022
Weighted average remaining lease term in years		2.36			2.82
Weighted average discount rate		7.16	%		7.15	%

	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

	June 30, 2023						June 30, 2022
				% of						% of
	$			Sales			$			Sales
Telehealth revenue, net	$	22,351,128			62.18	%	$	22,267,963			73.11	%
WorkSimpli revenue, net		13,595,785			37.82	%		8,190,535			26.89	%
Total revenue, net		35,946,913			100	%		30,458,498			100	%
Cost of telehealth revenue		4,125,945			11.48	%		4,453,126			14.62	%
Cost of WorkSimpli revenue		422,485			1.17	%		182,185			0.60	%
Total cost of revenue		4,548,430			12.65	%		4,635,311			15.22	%
Gross profit		31,398,483			87.35	%		25,823,187			84.78	%
Selling and marketing expenses		19,567,903			54.44	%		21,817,966			71.63	%
General and administrative expenses		12,119,573			33.72	%		13,159,937			43.22	%
Other operating expenses		1,313,789			3.65	%		2,041,976			6.70	%
Customer service expenses		1,912,078			5.32	%		1,006,363			3.30	%
Development costs		1,380,686			3.84	%		701,070			2.30	%
Goodwill impairment charge		-			-	%		2,735,000			8.98	%
Change in fair value of contingent consideration		-			-	%		(2,735,000	)		(8.98	)%
Total expenses		36,294,029			100.97	%		38,727,312			127.15	%
Operating loss		(4,895,546	)		(13.62	)%		(12,904,125	)		(42.37	)%
Interest expense, net		(995,670	)		(2.77	)%		(132,236	)		(0.43	)%
Gain on debt forgiveness		-			-	%		63,400			0.21	%
Net loss		(5,891,216	)		(16.39	)%		(12,972,961	)		(42.59	)%
Net income attributable to non-controlling interest		841,784			2.34	%		46,001			0.15	%
Net loss attributable to LifeMD, Inc.		(6,733,000	)		(18.73	)%		(13,018,962	)		(42.74	)%
Preferred stock dividends		(776,562	)		(2.16	)%		(776,562	)		(2.55	)%
Net loss attributable to common shareholders	$	(7,509,562	)		(20.89	)%	$	(13,795,524	)		(45.29	)%

	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	)%

(iii)	Other operating expenses: This consists of rent and lease expense, insurance, office supplies and software subscriptions, royalty expense and bank charges. During the three months ended June 30, 2023, the Company had a decrease of approximately $728 thousand, or 36%, primarily related to decreases in office supplies and software subscriptions.

(iv)	Goodwill impairment charge: During the three months ended June 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.