美国
证券交易委员会
华盛顿，特区。20549
表格
截至季度结束的日期
or
从________到________的过渡时期
佣金
文件编号:
（公司章程中指定的准确公司名称）
(州
或其他辖区 |
（国税局雇主 (主要 执行人员之地址) |
| （总部地址） | (邮政 编 码) |
根据交易所法规（17 CFR 240.14a-12）第14a-12规定的招股材料
根据法案第12(b)节注册的证券:
| 标题 每个班级的 | 交易 符号 | 姓名 注册的交易所 | ||
请勾选标记以指示注册者是否（1）在过去12个月内（或注册者需要提交这些报告的更短时间内）已提交证券交易所法案第13或15（d）节要求提交的所有报告，及 （2）是否已被提交要求过去90天的提交要求所制约。
通过勾选圆圈表明注册者是否在过去12个月内(或注册者需要提交这些文件的较短期限内)已经递交规章S-T(本章第232.405条)规定的每个交互式数据文件。
勾选表示报名者是否为大型加速申报人，加速申报人，非加速申报人，或小型报告公司。请参阅《交易所法》120亿.2规则中“大型加速申报人”，“加速申报人”，“小型报告公司”和“新兴成长公司”的定义。
| 大型加速文件提交人 | ☐ | ☒ | |
| 非加速文件提交人 | ☐ | 小型报告公司 | |
| 新兴成长公司 |
如果是新兴成长型企业，请勾选表示该注册公司已选择不使用按照证券交易所法第13(a)节规定提供的任何新的或修订后的财务会计准则的延长过渡期来遵守。☐
请勾选适用的圆圈，表示注册登记者是否是空壳公司(根据交易所法案第12b-2条的定义)。是 ☐ 否
截至2024年11月6日，该公司已发行并流通的股份为 股。
LIFEMD，INC。
☒季度报告，根据1934年证券交易法第13条或第15（d）条
截至2024年9月30日季度结束
目录
| 第一部分 财务信息 | ||
| 项目1. | 基本报表（未经审计） | 3 |
| 汇编的综合资产负债表 | 3 | |
| 简明的汇总操作表 | 4 | |
| 综合股东权益（赤字）的综合合并报表 | 5 | |
| 简明的综合现金流量表 | 7 | |
| 简明合并财务报表注释 | 8 | |
| 项目 2. | 分销计划 | 27 |
| 项目 3. | 市场风险的定量和定性披露 | 37 |
| 项目 4. | 控制和程序 | 37 |
| 第二部分.其他信息 | ||
| 项目1. | 法律诉讼 | 39 |
| 条目 1A. | 风险因素 | 39 |
| 项目 2. | 未注册的股票股权销售和筹款用途 | 39 |
| 项目 3. | 对优先证券的违约 | 39 |
| 项目 4. | 矿山安全披露 | 39 |
| 条目 5。 | 其他信息 | 39 |
| 条目 6。 | 展示资料 | 40 |
| 签名 | 41 | |
| 2 |
第一部分 - 财务信息
项目 1. 基本报表
LIFEMD， INC。
简明合并资产负债表
| 2024年9月30日 | 2023年12月31日 | |||||||
| (未经查核) | ||||||||
| 资产 | ||||||||
| 流动资产 | ||||||||
| 现金 | $ | $ | ||||||
| 应收帐款净额 | ||||||||
| 产品存入资金 | ||||||||
| 存货，净额 | ||||||||
| 其他流动资产 | ||||||||
| 所有流动资产总额 | ||||||||
| 非流动资产 | ||||||||
| 设备，净额 | ||||||||
| 租赁资产 | ||||||||
| 资本化软体，净额 | ||||||||
| 无形资产，扣除累计摊销 | ||||||||
| 非流动资产总额 | ||||||||
| 总资产 | $ | $ | ||||||
| 负债、中间权益和股东权益（赤字） | ||||||||
| 流动负债 | ||||||||
| 应付账款 | $ | $ | ||||||
| 应计费用 | ||||||||
| 应付票据，净额 | ||||||||
| 当期营运租赁负债 | ||||||||
| 长期债务的当期偿还 | ||||||||
| 逐步认列的收入 | ||||||||
| 全部流动负债 | ||||||||
| 长期负债 | ||||||||
| 长期负债净额 | ||||||||
| 非当期营运租赁负债 | ||||||||
| 条件付款 | ||||||||
| 总负债 | ||||||||
| 合同和应付之可能负债（注10） | ||||||||
| 夹层股权 | ||||||||
| 每股面额$ 面值; 股份授权股数 可转换优先股系列b，$ 面值; 股份已授权 股份已发行并流通，清算价值为$ 截至2024年9月30日和2023年12月31日的每股 | ||||||||
| 股东权益（赤字） | ||||||||
| A系列优先股，$ 面值; 股份已授权 股份已发行并流通，大约清算价值为$ | ||||||||
| 普通股，每股面值$ 面值; 股份已授权 和 发行股份， 和 截至2024年9月30日和2023年12月31日分别为未流通 | ||||||||
| 资本公积额额外增资 | ||||||||
| 累积亏损 | ( | ) | ( | ) | ||||
| 库藏股票：$373,420和$353,470的股票成本分别在2024年6月30日和2023年12月31日。 ，截至2024年9月30日和2023年12月31日成本 | ( | ) | ( | ) | ||||
| Total LifeMD, Inc.股东（赤字）权益 | ( | ) | ||||||
| 非控制权益 | ||||||||
| 股东（赤字）权益合计 | ( | ) | ||||||
| 负债总额、中间资本和股东（赤字）权益 | $ | $ | ||||||
随附注释为这些未经审计的缩短综合财务报表的一个重要组成部分。
| 3 |
LIFEMD， INC。
总结 统合营运报表
(未经查核)
| 截至9月30日的三个月 | 截至9月30日的九个月 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 收益 | ||||||||||||||||
| 远距健康营业收入净额 | $ | $ | $ | $ | ||||||||||||
| WorkSimpli营业收入净额 | ||||||||||||||||
| 总收入净额 | ||||||||||||||||
| 销售成本 | ||||||||||||||||
| 远距健康营业收入成本 | ||||||||||||||||
| Cost of WorkSimpli revenue | ||||||||||||||||
| 总营业成本 | ||||||||||||||||
| 毛利润 | ||||||||||||||||
| 费用 | ||||||||||||||||
| 销售及行销费用 | ||||||||||||||||
| 总部及行政费用 | ||||||||||||||||
| Customer service expenses | ||||||||||||||||
| 其他营业费用 | ||||||||||||||||
| 发展成本 | ||||||||||||||||
| 总支出 | ||||||||||||||||
| 营业亏损 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 利息费用，净额 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 偿债杠杆损失 | ( | ) | ||||||||||||||
收入税前净损失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 所得税支出 | ( | ) | ( | ) | ||||||||||||
| 净损失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 归属于非控制权益的净（亏损）收益 | ( | ) | ( | ) | ||||||||||||
| 归属于LifeMD, Inc.的净亏损 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 优先股股息 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 归属于LifeMD, Inc.普通股股东的净亏损 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 基本每股亏损归属于LifeMD, Inc.普通股股东 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 稀释每股亏损归属于LifeMD, Inc.普通股股东 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 流通的普通股加权平均数量： | ||||||||||||||||
| 基础 | ||||||||||||||||
| 稀释 | ||||||||||||||||
随附注释为这些未经审计的缩短综合财务报表的一个重要组成部分。
| 4 |
LIFEMD， INC。
简明综合 股东权益（赤字）变动表
(未经查核)
| LifeMD公司。 | ||||||||||||||||||||||||||||||||||||||||
| A级优先股 股本 | 普通股 | 股本溢价资本额 | 累计 | 金库 | 其他- 控制项 | |||||||||||||||||||||||||||||||||||
| 股份 | 金额 | 股份 | 金额 | 资本 | 赤字累计 | 股票 | 总计 | 利息 | 总计 | |||||||||||||||||||||||||||||||
| 2023年1月1日的结余 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( |
) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| 股票报酬费用 | - | |||||||||||||||||||||||||||||||||||||||
| 股票发行以非有条件支付作为对价 | - | |||||||||||||||||||||||||||||||||||||||
| 发行债务工具的认股权证 | - | - | ||||||||||||||||||||||||||||||||||||||
| A系列优先股股息 | - | - | ( | ) | ( |
) | ( | ) | ||||||||||||||||||||||||||||||||
| 分配给非控股权益 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| WorkSimpli的会员权益调整 | - | - | ( | ) | ( |
) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| 净（亏损）收益 | - | - | ( | ) | ( |
) | ( | ) | ||||||||||||||||||||||||||||||||
| 2023年3月31日结余 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( |
) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| 股票报酬费用 | - | |||||||||||||||||||||||||||||||||||||||
| 发行给非条件考量支付的股票 | - | |||||||||||||||||||||||||||||||||||||||
| 非现金行使股票期权 | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| A轮优先股股息 | - | - | ( | ) | ( |
) | ( | ) | ||||||||||||||||||||||||||||||||
| 发放给非控股权益 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| 调整对WorkSimpli的股份兴趣 | - | - | ( | ) | ( |
) | ||||||||||||||||||||||||||||||||||
| 净（亏损）收益 | - | - | ( | ) | ( |
) | ( | ) | ||||||||||||||||||||||||||||||||
| 2023年6月30日结余 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( |
) | $ | $ | ( | ) | ||||||||||||||||||||||||
| 股票报酬费用 | - | |||||||||||||||||||||||||||||||||||||||
| 发行股票以用于非条件支付 | - | |||||||||||||||||||||||||||||||||||||||
| 股票发行以解决法律问题 | - | |||||||||||||||||||||||||||||||||||||||
| 非现金行使股票期权 | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| ATm下普通股票的销售净额 | - | |||||||||||||||||||||||||||||||||||||||
| B 转换优先股 | - | |||||||||||||||||||||||||||||||||||||||
| 发行期权以调整债券公允价值 | - | - | ( | ) | ( |
) | ( | ) | ||||||||||||||||||||||||||||||||
| A 系列优先股股息 | - | - | ( | ) | ( |
) | ( | ) | ||||||||||||||||||||||||||||||||
| 分配给非控制权益 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| 净（亏损）收益 | - | - | ( | ) | ( |
) | ( | ) | ||||||||||||||||||||||||||||||||
| 2023年9月30日的余额 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( |
) | $ | $ | ( | ) | ||||||||||||||||||||||||
| 5 |
| LifeMD公司。 | ||||||||||||||||||||||||||||||||||||||||
| A级优先股 股本 | 普通股 | 股本溢价资本额 | 累计 | 金库 | 其他- 控制 | |||||||||||||||||||||||||||||||||||
| 股份 | 金额 | 股份 | 金额 | 资本 | 赤字累计 | 股票 | 总计 | 利息 | 总计 | |||||||||||||||||||||||||||||||
| 2024年1月1日的余额 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||
| 股票报酬费用 | - | |||||||||||||||||||||||||||||||||||||||
| 发行股票以用于非条件支付 | - | |||||||||||||||||||||||||||||||||||||||
| 行使股票期权 | - | |||||||||||||||||||||||||||||||||||||||
| 行使认股权而无需现金支出 | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| 期权无现金行使 | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| A 系列优先股股息 | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 分配给非控制权益 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| 净（亏损）收益 | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 2024年3月31日结余 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||
| 股票报酬费用 | - | |||||||||||||||||||||||||||||||||||||||
| 股票期权行使 | - | |||||||||||||||||||||||||||||||||||||||
| 非现金行使股票期权 | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| 无现金行使权证 | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| A 系列优先股股息 | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 分配给非控制权益 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| 净（亏损）收益 | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 2024年6月30日资产负债表 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||
| 股票报酬费用 | - | |||||||||||||||||||||||||||||||||||||||
| A 系列优先股股息 | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 分配给非控制权益 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| 净损失 | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| 2024年9月30日结余 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
随附注释为这些未经审计的缩短综合财务报表的一个重要组成部分。
| 6 |
LIFEMD， INC。
精简 综合现金流量表
(未经查核)
| 截至9月30日的九个月 | ||||||||
| 2024 | 2023 | |||||||
| 营运活动现金流量 | ||||||||
| 净损失 | $ | ( | ) | $ | ( | ) | ||
| 调整净损失为经营活动提供的净现金流量： | ||||||||
| 债务折价摊销 | ||||||||
| 已资本化的软体摊销 | ||||||||
| 无形资产摊销 | ||||||||
| 应付考虑增加 | ||||||||
| 固定资产的折旧 | ||||||||
| 偿债杠杆损失 | ||||||||
| 经营租赁支付 | ||||||||
| 股票发行以解决法律问题 | ||||||||
| 股票报酬费用 | ||||||||
| 资产及负债的变动 | ||||||||
| 应收帐款 | ( | ) | ( | ) | ||||
| 产品存入资金 | ||||||||
| 存货 | ( | ) | ||||||
| 其他流动资产 | ( | ) | ( | ) | ||||
| 营业租赁负债 | ( | ) | ( | ) | ||||
| 逐步认列的收入 | ||||||||
| 应付账款 | ( | ) | ||||||
| 应计费用 | ||||||||
| 其他经营活动 | ( | ) | ||||||
| 经营活动产生的净现金流量 | ||||||||
| 投资活动现金流量 | ||||||||
| 支付的资本化软体成本 | ( | ) | ( | ) | ||||
| 购置设备 | ( | ) | ( | ) | ||||
| 购置无形资产 | ( | ) | ( | ) | ||||
| 投资活动中使用的净现金 | ( | ) | ( | ) | ||||
| 融资活动之现金流量净额 | ||||||||
| 长期负债净收益 | ||||||||
| 应付票据款项收益 | ||||||||
| 偿还应付票据，减去预付罚金 | ( | ) | ( | ) | ||||
| 现金收益来自期权的行使 | ||||||||
| ATm下普通股票的销售净额 | ||||||||
| 优先股股息 | ( | ) | ( | ) | ||||
| 为ResumeBuild收购而支付的条件性收购款 | ( | ) | ( | ) | ||||
| 购入WorkSimpli的成员权益的净支付 | ( | ) | ||||||
| 给非控股权益的分配 | ( | ) | ( | ) | ||||
| 筹资活动提供的净现金流量 | ( | ) | ||||||
| 现金增加量 | ||||||||
| 期初现金 | ||||||||
| 期末现金 | $ | $ | ||||||
| 支付利息的现金 | ||||||||
| 本期支付之利息现金 | $ | $ | ||||||
| 非现金投资和融资活动 | ||||||||
| 通过无现金行使期权 | $ | $ | ||||||
| 行使认股权而无需现金支出 | $ | $ | ||||||
| 发行股票以用于非条件支付 | $ | $ | ||||||
| B 转换优先股 | $ | $ | ||||||
| 发行债务工具的认股权证 | $ | $ | ||||||
| 租赁资产 | $ | $ | ||||||
| 营业租赁负债 | $ | $ | ||||||
随附注释为这些未经审计的缩短综合财务报表的一个重要组成部分。
| 7 |
LIFEMD， INC。
附注 至未经审核之简明合并基本财务报表
备注 1 – 组织及业务性质
公司 历史
LifeMD成立于1994年5月24日，在特拉华州成立，起初名为Immudyne, Inc. 公司于2018年6月22日更名为Conversion Labs, Inc. 然后在2021年2月22日再次更名为LifeMD, Inc. 自2021年2月22日起，公司普通股的交易标的，每股面值$ 在纳斯达克交易所，LifeMD公司的普通股股票交易符号从“CVLB”更改为“LFMD”。
2016年4月1日，原Immudyne PR LLC（“Immudyne PR”）的营运协议经修订并新修订，公司增加其在Immudyne PR的所有权和表决权。
在2018年6月，该公司完成了对LegalSimpli Software, LLC的战略收购
从2023年3月31日开始，公司赎回了股权。
在2022年1月18日，公司收购了Cleared Technologies, PBC，一家特许的特拉华州公益公司（以下简称“Cleared”），这是一个全国性的过敏电访平台，提供个性化的过敏、气喘和免疫治疗（参见附注3）。
业务性质
该公司是一家直达患者的远程医疗保健公司，提供高品质、具成本效益且方便的方式来获得全面、虚拟和在家中的医疗保健。该公司认为传统的看医生、前往零售药店，然后返回进行追踪护理或处方补充的模式复杂、效率低且昂贵，阻碍了许多人寻求医疗保健。通过我们的专利技术平台、附属和专职的供应商网络、广泛且扩展的治疗能力，以及独特的建立患者关系的能力，该公司正在改善远程医疗保健的提供。直达患者远程医疗保健科技公司，如该公司，将消费者连接到具有执照的医疗专业人士，提供跨多种症状的护理，包括紧急和初级护理、体重管理、睡眠、脱发、男性和女性健康、荷尔蒙治疗和皮肤科、慢性护理管理等。
该公司的远程医疗平台帮助患者接触持牌提供者进行诊断、虚拟护理和处方药物，通常定期提供。除了远程医疗处方外，该公司还销售场外交易（“OTC”）产品。所有产品均可按照订阅或会员制度购买，患者可以订阅以定期收到处方药物或产品的装运。这为患者提供了便利，并为患者带来往往享有折扣价格的机会，为公司带来了循环营业收入。
这家公司的第一个品牌ShapiroMD已经建立了一整套专有的场外交易产品，用于男性和女性脱发，包括美国食品药品监督管理局（“FDA”）批准的场外交易米诺地尔和经FDA核准的医疗器械，以及一个个人化的远程医疗平台，可以让消费者从他们的提供者那里获得虚拟医疗治疗，并在适当时提供一整套口服和局部处方药物来治疗脱发。公司的男士品牌RexMD目前提供基于提供者的治疗，包括治疗阳痿，以及其他常见的男性健康问题，包括早泄和脱发。2021年第一季度，公司推出了NavaMD，一个专为女性而设的远程皮肤科和护肤品牌。该公司建立了一个平台，使其能够高效地推出远程医疗和健康产品系列，无论在哪里，只要确定市场有需求。
| 8 |
2022年第一季，我们推出了LifeMD品牌下的虚拟初级护理方案LifeMD Primary Care。此方案为患者提供24/7接触合作医疗服务提供商以满足其初级护理、紧急护理和慢性疾病护理需求。
2023年4月，我们推出了GLP-1体重管理计划，为希望使用医学支持的减重方案的患者提供一级护理、减重、全人医疗、化验和处方服务。2024年9月，我们扩展了我们的体重管理计划，增加了一个针对无法或不愿使用GLP-1药物的患者设计的替代方案。该治疗计划包括三种口服药物-二甲双胍、舍曲林和托吡酮。
业务 与子公司历史
在2018年6月，该公司完成了对LegalSimpli Software, LLC的战略收购
开启
2022 年 1 月 18 日，该公司收购了 Cleared，这是一个全国的过敏远程医疗平台，该平台为过敏提供个性化治疗，
哮喘和免疫学。根据协议条款，本公司收购结算结算的所有未偿还股份，以交换
为一个 $
在2022年2月，WorkSimpli与杜拜阿联酋的East Fusion FZCO（“卖方”）签订了一份资产收购协议（“ResumeBuild APA”），WorkSimpli收购了与卖方业务相关的几乎所有资产，透过服务器软体提供基于订阅的履历建构软体（“Acquisition”）。WorkSimpli在交易完成时向卖方支付了$
除非另行指明，"LifeMD"、"公司"、"我们"、"我们" 和 "我们的" 指的是 LifeMD, Inc.（前身为 Conversion Labs, Inc.）及其主要拥有的子公司 Cleared，一家特许的德拉瓦公益公司，以及 WorkSimpli。由 LifeMD Southern Patient Medical Care, P.C.（"LifeMD PC"）管理的医疗专业公司和医疗专业协会的联系网路，是公司的附属公司，我们持有一个具决定性财务利益的变量实体。除非另有规定，所有金额均以美元表示。
流动性 评估
截至2024年9月30日，本公司累积赤字约$
| 9 |
开启
2023 年 3 月 21 日，本公司签订及签订贷款及保证协议（「大道信用协议」），以及
与大道创业机遇基金二号公司及大道签订的信贷协议（「大道附录」）的补充资料
创业机会基金股份有限公司（统称「大道」）。大道信用协议规定可转换高级人
最高总金额为 $ 的抵押信贷保障
2023年12月11日，公司通过及与其特定全资子公司Medifast，Inc.达成合作协议。根据双方之间的某些协议，Medifast已同意支付给公司$数百万以支持该合作，资助公司平台、运营和支援制造行业的增强，其中$数百万于2023年12月12日结束时支付，$数百万于2024年3月31日结束三个月内支付，剩余的$数百万则在2024年6月30日结束三个月内支付（「Medifast Collaboration」）。
此外，在快验保合作中，公司与快验保的全资子公司Jason Pharmaceuticals, Inc. 签订了一份普通股购买协议和登记权协议，根据该协议，公司向其发行了股票 在定向增发（Medifast 定向增发）中以每股 $ 款价出售其普通股股票，共发行股票 每股为 $ 的价格，总计筹集约 $
公司与b.Riley Securities, Inc.及Cantor Fitzgerald & Co.签订了按市场发行销售协议（“ATm销售协议”），有关出售普通股。根据ATm销售协议的条款，公司可能但无义务，不时透过代理人或独立地向代理人提出或出售普通股。任何可能销售普通股的方式，将被认定为《证券法》第415条规定的“市场销售”。2024年6月7日，公司根据《证券法》提交了S-3表格的架构登记声明，该声明于2024年7月18日生效（“2024架构”）。生效时，根据2024架构，公司有能力筹集多达$ 百万美元，通过出售普通股、优先股、债务证券、认股权以及单位，其中包括$
该公司截至申报日期当天的现金余额约为$
| 10 |
注意 2 - 报表编制基础及重大会计政策摘要
报表说明基础
附带的未经审核简明综合基本报表已按照美国会计原则，根据揭示10-Q表格和S-X章程第8条中指示编制的暂行财务信息编制。因此，它们不包括所有美国通常会计原则（"US GAAP"）要求的所有信息和附注揭示，以形成完整的经审核财务报表。附带的未经审核财务信息应与我们向证券交易委员会提交的2023年年度报告10-K中包含的截至2023年12月31日的经审核综合财务报表及其附注一起查阅。本报告提供的信息反映了所有调整（由管理层认为必要的正常循环性调整），以便对我们每个呈现期间的财务状况、营运和现金流量进行公平呈现。截至2024年9月30日的三个和九个月的营运结果不一定代表截至2024年12月31日结束或任何未来期间的结果。
合并财务报表的准则
公司根据《会计准则注释》（“ASC”）810制定的标准来评估是否需要合并联属公司。 合并.
未经审计的简明综合财务报表包括公司、其控股的Cleared、其控股的WorkSimpli，以及公司附属的基本报表利益实体LifeMD PC，在其中我们持有控制性的财务利益。在截至2021年12月31日的一年中，公司额外购入了
在合并中，所有重要的企业内部交易和余额都已被消除。
现金及现金等价物
购买时剩三个月或更短期限的高流动性投资被视为现金及现金等价物。截至2024年9月30日及2023年12月31日时，并无现金及现金等价物。公司在金融机构保留超过联邦存款保险公司担保金额的存入资金。现金及现金等价物保留在金融机构，有时存款余额可能超过联邦保险限额。如果我们存入资金的一家或多家金融机构出现倒闭或者金融或信贷市场出现其他不利情况，这些余额可能会受到影响。我们从未因这些余额而遭受损失。
变量 利益实体
根据ASC 810，企业合并，公司确定公司参与的任何法律实体是否属于变量利益实体（“VIE”）并受合并的规定。此决定是根据实体是否有足够的风险资本来资助其活动，而无需从性次级财务支援；或实体的股东缺乏控制财务利益的特征；以及利益是否将吸收VIE预期损失的部分或收取其预期剩余收益的部分，而这些利益是基于契约、所有权或金钱性质的，并且随著实体净资产公允价值的变化而变化。报告实体是VIE的主要受益人，在当事方具有变量利益或多个变量利益的情况下，当事方被要求合并VIE，使其具有控制财务利益。如果当事方符合权力和损失/利益准则，则被认为具有控制财务利益。权力标准是指能够指导最重大影响其经济表现的VIE活动。损失/利益准则是指有义务吸收可能对VIE重要的损失，或有权获得VIE可能重大的利益。
公司确定LifeMD PC实体，即公司附属的医疗专业公司和医疗专业协会网络，在行政上由LifeMD Southern Patient Medical Care, P.C.主导，是一个可变利益实体并受整合。LifeMD PC和公司没有任何共同的股东。LifeMD PC由持有执照的医生拥有，而公司与LifeMD PC签订了一项管理服务协议，根据该协议，我们向LifeMD PC提供所有非临床服务。公司确定自己是LifeMD PC的主要受益人并且必须进行合并，因为我们具有指导最大程度影响该实体的经济表现的活动的权力，并且我们有责任吸收损失。因此，公司将LifeMD PC的财务状况、营运结果和现金流量呈现为公司的未经审计的简明合并财务报表的一部分。在对LifeMD PC进行合并时没有非控制权益。
LifeMD PC的总营业收入分别约为2900万美元（2024年和2023年三个月完结）
| 11 |
使用估计值
公司按照美国通行的会计原则准则，编制其未经审计的摘要综合基本报表，该原则要求管理层进行可能影响资产和负债金额以及收入和支出金额的估计和假设，并在财务报表日期和报告期间内进行申报。管理层需要做出的一些较为重要的估计包括退货和折让、股东权益相关的交易、资本化和资本化软体的减损及其他长期资产的减损、现金流量预测估计和流动性评估。实际结果可能与这些估计不同。
营业收入 认列
公司根据ASC 606的采纳记录营业收入， 客户合同的营业收入透过对其客户的交易进行五步分析：
| 1. | 判断合约 |
| 2. | 判断履行义务 |
| 3. | 判断交易价格 |
| 4. | 分配交易价格 |
| 5. | 确认营业收入 |
对于公司与客户的基于产品的合同，公司确定存在一个履行义务，即产品的交付；该履行义务在特定的一个时间点转让。公司通常在客户下订单并支付订单后记录成品产品的销售，产品同时由第三方履行服务提供商发货。在所有情况下，交付被认为在客户获得控制时发生，通常是在产品发货时。如果交付与产品发货不相称，则推迟认列收入直至那时。对于基于产品的合同，公司提供基于定期运送产品的订阅敏感服务。公司在接收月度产品订单后根据订阅协议记录相关收入，并在履行向客户发货义务时记录收入。
对于与客户的基于产品的合同，公司对折扣、退货、津贴、客户回扣和其他产品发货的调整项目进行估计，并作为减少报告总收入的反向收入予以反映。公司的折扣和客户回扣在销售时已知；相应地，公司对这些折扣和客户回扣的总产品销售额进行减少。公司根据从历史交易明细中获得的信息，估计客户退货和津贴，并在相同的会计期间内作为反向收入进行核算，与相关收入同期赚取。公司已确定其与客户的基于产品的合同人口是同质的，支持对退货和津贴预估的应用于整个基于产品的合同人口。
对于其与客户签订的LifeMD PC合约，公司提供一次性和基于订阅的使用权，以获取公司的远程医疗平台。 公司提供依赖于订户选择的每月和多个月的订阅。公司估计有一个随时间交付的履行义务，因为公司允许订户在购买的订阅时间段内访问远程医疗平台。公司在客户的订阅期间内记录收入，对于每月和多个月的订户。
客户折扣、退货和回扣对远程医疗收入成交量约为$
公司透过其持有大部分股份的子公司WorkSimpli，提供基于订阅的服务，为订户提供一套软体应用程式。主要是以每月订阅的方式进行。该软体套装允许订阅者/用户将几乎任何类型的文件转换为可编辑文件的电子形式，提供编辑的便利性。对于这些与客户签订的基于订阅的合同，公司提供最初的14天试用期，收费为$，接著是每月订阅或每年订阅公司的软体套装，视订户的选择而定。公司估计，有一项产品和一项绩效义务是随时间提供的，因为公司允许订阅者在所购买的订阅期间内存取服务套装。公司允许客户在结帐周期的任何时候取消，此时客户的订阅将不会在下个月或年自动续订，具体取决于最初的订阅。公司记录按月和年订阅客户的订阅期间内收入，或记录到为购买最初订阅的客户提供服务的14天结束时。公司为购买月度或年度订阅的订户提供折扣，在合同期开始时扣减；因此，合同价格在合同开始时即确定且可确定。服务的每月和每年订阅按照公司已知的折扣率记录。 WorkSimpli 收入所采用的客户折扣和津贴分别为在截至2024年9月30日和2023年同期的数千美元。WorkSimpli 收入所采用的客户折扣和津贴金额为
| 12 |
如上所述，2023年12月11日，公司与快验保展开了合作。根据双方的协议，压力位同意向公司支付$
截至2024年和2023年9月30日结束的三个月和九个月，公司的营业收入分解如下:
| 截至9月30日的三个月 | 截至9月30日的九个月 | |||||||||||||||||||||||||||||||
| 2024 | % | 2023 | % | 2024 | % | 2023 | % | |||||||||||||||||||||||||
| 远程健康产品和订阅营业收入 | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| LifeMD PC订阅营业收入 | % | % | % | % | ||||||||||||||||||||||||||||
| WorkSimpli营业收入 | % | % | % | % | ||||||||||||||||||||||||||||
| 快验保合作营业收入 | % | % | % | % | ||||||||||||||||||||||||||||
| 营业收入总额 | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
已延迟 收入
当公司收到或预付现金款项超前于履约之时，公司会记录递延营业收入。截至2024年9月30日和2023年12月31日，公司已按约留下的合约负债，作为累计递延收入，约$
截至2024年9月30日，相较于2023年12月31日，逾延后
营业收入增加了$百万。
公司预计将于2025年9月30日前，将所有未满足或部分未满足的未来履行义务的迳期收入认列为营业收入。
以下的表格总结了所呈现期间的迳留营业收入活动:
| 截至9月30日的三个月 | 截至9月30日的九个月 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 期初 | $ | $ | $ | $ | ||||||||||||
| 新增款项 | ||||||||||||||||
| 已认定收入 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 期末 | $ | $ | $ | $ | ||||||||||||
| 13 |
租赁
公司在合约开始阶段确定是否为租赁。营运租赁使用权（ROU）资产包括在未经审计的简明综合账目资产中的使用权资产中。营运租赁负债的当期和长期元件分别包括在未经审计的简明综合账目中的当期营运租赁负债和非当期营运租赁负债。
根据未来最低租金支付的现值，认列经营租约的ROU资产和经营租赁负债。由于大部分公司的租赁未提供内含利率，公司根据起租日可得资讯使用增量借款利率来确定未来支付的现值。某些租赁合约可能包括延长或终止租约的选项。对最低租金支付的租赁费用在租赁期内采用直线法认列。初期期限为12个月或以下的租约不会记录在资产负债表中。
应收帐款净额
应收帐款主要包括应收款项来自第三方商户处理我们的订阅收入；商户账户应收余额代表尚未与公司存入的商户处理的费用。未结商户应收金额通常代表当月最后一到三天处理的销售交易，公司在随后月份的第一周内进行收款。管理层通过定期评估客户退款活动总额，并考虑退款和追讨的保留权，以及考虑目前的经济情况，来确定是否需要对未来可能授予客户信用的抵免提供允许。截至2024年9月30日和2023年12月31日，销货退回和折让的储备金分别约为$
存货
截至2024年9月30日和2023年12月31日，库存主要包括完成货品、原材料和与公司在上表中场外交易产品的远程健康营业收入相关的包装。库存保存在公司位于怀俄明州的第三方仓库位置以及各个亚马逊履行中心。公司还在宾夕法尼亚州拥有的仓库中保有库存。
库存的价值按成本或资产净变现值的较低者评估，成本按平均成本基础确定。管理层将库存成本与资产净变现值进行比较，并作出对库存进行降记至资产净变现值的备抵，若末小。截至2024年9月30日和2023年12月31日，公司分别录得约$的库存备抵。
截至2024年9月30日和2023年12月31日，公司的存货如下：
| 九月三十日， | 12月31日， | |||||||
| 2024 | 2023 | |||||||
| 成品 | $ | $ | ||||||
| 原材料和包装元件 | ||||||||
| 存货储备 | ( | ) | ( | ) | ||||
| 存货总额，净额 | $ | $ | ||||||
产品 存入资金
我们的许多供应商在下订单购买商品或提供履行服务时需要收取存入资金。这些存入资金通常从中间区间开始
大写 软体成本
公司对某些内部工资和与内部开发的软体相关的第三方成本进行资本化，并使用直线法在软体的预期使用寿命中分期摊销，通常为三年。公司不卖出内部开发的软体，除非通过订阅服务提供。根据ASC 350-40标准，某些未符合资本化标准的开发成本将在发生时予以支出。，内部使用的软体，分别是2024年9月30日和2023年12月31日，公司对内部开发的软体成本进行了净额为美元的资本化处理，该成本将随软体的使用寿命分期摊销，并计入我们营运报表的开发成本中。
| 14 |
无形资产
无形资产包括：（1）ResumeBuild品牌，（2）客户关系资产，（3）Cleared商标，（4）Cleared开发的科技，（5）已购买的许可证和（6）四个已购买的域名。无形资产使用直线法按其预估寿命摊销。为更新或延长确认的无形资产的期限而发生的成本，按该资产的使用寿命进行资本化和摊销。
长寿资产的减值
长寿资产包括设备和资本化软体。 当事件或情况的变化指示资产的携带金额可能无法收回时，将审查长寿资产是否出现减损。 如果认为该等资产已受损，则将认定减损额即资产携带金额超过资产估计公允值的金额。 截至2024年9月30日和2023年12月31日，公司确定不存在任何事件或情况的变化，表明其长寿资产已受损。
收入 税收
公司提交企业联邦、州和地方税务申报。WorkSimpli在波多黎各提交税务申报。根据ASC 740，公司按照目前和递延税务来记录税收。 基本报表采用ASC 740「所得税会计」会计处理收入税问题。此ASC要求承认资产和负债的递延税款，以弥补资产和负债的税务基础与负债承受金额之间的暂时性差异，并根据预计差异将实施的年份中施行的税率。当有需要时，公司设立评估准备金，以减少预期实现的递延税款。公司定期评估其递延税款的价值，其中大部分是通过历史净亏损产生的，管理层确定评估准备金的必要性。ASC 740还为税务声明的识别门槛和测量属性提供了规定，该声明关于预计在税务申报中采取的税务地位或即将采取的地位。依此指引，公司只有在对税务当局检查中有超过50％的可能性时才能在财务报表中承认来自不确定税务地位的税务利益，这是指根据立场的技术优势，税务地位将得以维持。截至2020年12月31日以来，公司的所有税务申报都仍然开放，可由所有相关的税务当局审核。
基于股票的报酬
本公司遵循ASC 718的规定，即股份支付。根据该指南，补偿成本通常在授予当日以公平价值确认，然后在各自的授权或服务期间内分期摊销。授权当日的期权公正价值是使用Black-Scholes期权定价模型来估计的。预期期权寿命来自于基于历史行使模式的假定行使率，代表授予的期权预计持有的时间。预期波动性基于本公司普通股的历史波动性，使用与预期的期权寿命相似的观察期间内的每周价格观察。无风险利率近似于授予时的美国国库债券殖利率，适用于与预期期权寿命相似的时段。由于没有太多的放弃历史，本公司选择在放弃发生时进行记录。许多假设需要重大判断，任何变动都可能对股份支付支出的确定产生重大影响。
基本每股收益（纯利润）基于每一期间内流通股份的加权平均数计算。未发行的已发放受限制的股票单位（RSUs）和受限制股票奖励（RSAs）均纳入我们的基本加权平均流通股份计算中。可转换证券、认股权证和购买普通股的期权仅在具扩散性时才被纳入为普通股等价物。当影响将具防稀释性时，潜在的普通股等价物不会被纳入稀释每股盈利。
公司遵循ASC 260的规定，即每股摊薄收益。在计算摊薄后每股收益时，基本每股收益将根据所有可能具有摊薄效应的证券的假定发行进行调整。看涨期权、认股权证和股份支付奖励的摊薄效应是通过“库藏库存法”来计算的，该方法假设从这些工具的行使中获得的“收益”被用来以该期间的平均市价购买普通股。传统可转换债务和优先股的摊薄效应是使用“换股法”来计算的。根据换股法，证券被假设在期初转换，导致的普通股被包括在摊薄后每股收益计算的分母中，以呈现的整个期间。
| 15 |
| 截至9月30日的三个月 | 截至9月30日的九个月 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| B系列优先股 | ||||||||||||||||
| RSUs 和 RSAs | ||||||||||||||||
| 加权平均行使价 | ||||||||||||||||
| 认股证 | ||||||||||||||||
| 可转换长期债务 | ||||||||||||||||
| 可能具稀释效果的证券 | ||||||||||||||||
分段 资料
我们品牌组合包含在两个营运部门内：远程医疗和WorkSimpli。我们相信我们目前的部门和品牌在各自的部门内相互补充，并且为未来增长做好了准备。该公司的首席执行官是业务营运决策者，负责审查各部门的营运结果，以做出有关资源分配和评估绩效的决定。在确定公司营运部门时，还会审查其他因素，包括业务类型、营业收入和营运结果。
金融工具公允价值
金融工具的公允价值是基于在测量日期市场参与者之间进行有序交易时将获得的沽出资产或转移负债的价格。持续公允价值衡量的资产和负债根据在评估中使用的可观或不可观输入分类和披露为三个类别中的一个。直接与用于估值这些资产或负债的输入相关的分层级别如下：
| 1. | 层次 1: 在计量日期起，未经调整的活跃市场中对于相同资产或负债的报价价格。 | |
| 2. | 层次 2: 对于资产或负债，除了包含在第1层中的报价价格之外，透过与市场数据在计量日期以及工具预期寿命期间的相关性，而直接或间接观察到的输入。 | |
| 3. | 层次 3: 未经观察到的输入，这些输入受到很少或没有市场活动支持，并且对于资产或负债的公允价值至关重要，反映了管理队估计的市场参与者在计量日期时将用来定价资产或负债的最佳估计。 |
在某些情况下，用于衡量公平价值的输入可能被归类为公平价值层级的不同级别。 在这些情况下，根据对公平价值衡量具有重要意义的最低级别输入，整个公平价值衡量将被完全归类于公平价值层级。
公司财务工具的携带价值，包括现金、应收帐款、应付帐款、应计费用、以及应付票据和可转换长期债务的票面金额，对于所有期间均大致等于公平价值。
风险的浓度
The Company monitors its positions with, and the credit quality of, the financial institutions with which it invests. The Company, at times, maintains balances in various operating accounts in excess of federally insured limits. We are dependent on certain third-party manufacturers and pharmacies, although we believe that other contract manufacturers or third-party pharmacies could be quickly secured if any of our current manufacturers or pharmacies cease to perform adequately. As of September 30, 2024, we utilized four (4) suppliers for fulfillment services, fifteen (15) suppliers for manufacturing finished goods, eight (8) suppliers for packaging, bottling, and labeling, and eight (8) suppliers for prescription medications. As of December 31, 2023, we utilized three (3) suppliers for fulfillment services, nine (9) suppliers for manufacturing finished goods, seven (7) suppliers for packaging, bottling, and labeling, and five (5) suppliers for prescription medications.
Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 will become effective for the Company’s annual period beginning on January 1, 2024 and interim periods within beginning after January 1, 2025. The Company does not expect the application of ASU 2023-07 to have a material impact to its consolidated financial statements and related disclosures.
| 16 |
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to improve its income tax disclosure requirements. Under ASU 2023-09, entities must annually: (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will become effective for the Company beginning on January 1, 2025. The Company does not expect the application of ASU 2023-09 to have a material impact to its consolidated financial statements and related disclosures.
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 unaudited condensed consolidated financial statements upon adoption.
NOTE 3 – ACQUISITIONS
On January 18, 2022, the Company completed the acquisition of Cleared. 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.
On
February 4, 2023, the Company entered into the Cleared First Amendment. The Cleared Stock Purchase Agreement was amended to, among other
things: (i) reduce the total purchase price by $
In
February 2022, WorkSimpli closed on the ResumeBuild APA to purchase the related intangible assets associated with the ResumeBuild brand,
a subscription-based resume building software. The acquisition further adds to the capabilities of the WorkSimpli software as a service
application. The purchase price was $
NOTE 4 –INTANGIBLE ASSETS
As of September 30, 2024 and December 31, 2023, the Company has the following amounts related to amortizable intangible assets:
| September 30, | December 31, | Amortizable | ||||||||
| 2024 | 2023 | Life | ||||||||
| Amortizable Intangible Assets: | ||||||||||
| ResumeBuild brand | $ | $ | ||||||||
| Customer relationship asset | ||||||||||
| Cleared trade name | ||||||||||
| Cleared developed technology | ||||||||||
| Purchased licenses | ||||||||||
| Website domain names | ||||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||||
| Total intangible assets, net | $ | $ | ||||||||
The
aggregate amortization expense of the Company’s intangible assets for both the three months ended September 30, 2024 and 2023 was
$
| 17 |
NOTE 5 – ACCRUED EXPENSES
As of September 30, 2024 and December 31, 2023, the Company has the following amounts related to accrued expenses:
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Accrued selling and marketing expenses | $ | $ | ||||||
| Accrued compensation | ||||||||
| Sales tax payable | ||||||||
| Accrued dividends payable | ||||||||
| Purchase price payable | ||||||||
| Other accrued expenses | ||||||||
| Total accrued expenses | $ | $ | ||||||
NOTE 6 – NOTES PAYABLE
Working Capital Loans
In
October 2022, the Company received proceeds of $
In
January and February 2023, the Company received proceeds of $
During
the year ended December 31, 2023, the Company financed a $
Total
interest expense on notes payable amounted to $
NOTE 7 –LONG-TERM DEBT
Avenue Capital Credit Facility
As
noted in Note 1 above, on March 21, 2023, the Company entered into the Avenue Credit Agreement and the Avenue Supplement. The Avenue
Credit Agreement provides for a convertible senior secured credit facility of up to an aggregate amount of $
| 18 |
The
Avenue Facility matures on
As
of September 30, 2024, the Company will pay $
The
Company is subject to certain affirmative and negative covenants under the Avenue Facility, including the requirement, beginning on the
closing date, to maintain at least $
Total
interest expense on long-term debt, inclusive of amortization of debt discounts, amounted to $
NOTE 8 – STOCKHOLDERS’ EQUITY
The
Company has authorized the issuance of up to shares of common stock, $ par value, and shares of preferred stock,
$ par value, of which shares are designated as Series B Convertible Preferred Stock, are designated as Series A
Preferred Stock and
The
Company entered into the ATM Sales Agreement whereby the Company may offer and sell, from time to time, shares of common stock. On June
7, 2024, the Company filed the 2024 Shelf. Under the 2024 Shelf at the time of effectiveness, the Company had the ability to raise up
to $ million by selling common stock, preferred stock, debt securities, warrants, and units including $
Options and Warrants
During the nine months ended September 30, 2024, the Company issued an aggregate of shares of common stock related to the cashless exercise of options.
During the nine months ended September 30, 2024, the Company issued an aggregate of shares of common stock related to the cashless exercise of warrants.
During
the nine months ended September 30, 2024, the Company issued an aggregate of shares of common stock related to the exercise of
options for total proceeds of approximately $
Common Stock
Common Stock Transactions During the Nine Months Ended September 30, 2024
During the nine months ended September 30, 2024, the Company issued an aggregate of shares of common stock for service, including vested restricted stock.
On
February 4, 2023, the Company entered into the Cleared First Amendment between the Company and the sellers of Cleared. The Cleared Stock
Purchase Agreement was amended to, among other things change the timing of the payment of the purchase price to $
| 19 |
Noncontrolling Interest
Net
loss attributed to the non-controlling interest amounted to $
WorkSimpli Software Capitalization Update
On
September 30, 2022, Sean Fitzpatrick and Varun Pathak exercised their options to purchase and membership interest units,
respectively, of WorkSimpli for an exercise price of $
On
March 31, 2024, WorkSimpli declared a cash dividend in the amount of $
Dividends
The
Company pays cumulative dividends on its Series A Preferred Stock, in the amount of $ per share each year, which is equivalent
to
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 Stockholders 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 shares of Common Stock. The number of shares of Common Stock available for issuance under the 2020 Plan automatically increases by 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.
| 20 |
On June 24, 2021, at the Annual Meeting of Stockholders, the stockholders of the Company approved the 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 shares. On June 16, 2022, at the Annual Meeting of Stockholders, the stockholders of the Company approved the second amendment and restatement of the 2020 Plan, which amended the 2020 Plan to increase the maximum number of shares of the Company’s common stock available for issuance under the 2020 Plan by shares. On June 14, 2024, at the Annual Meeting of Stockholders, the stockholders of the Company approved the third amendment and restatement to the 2020 Plan (the “Amended 2020 Plan”), which further amended the 2020 Plan by increasing the maximum number of shares of the Company’s common stock available for issuance under the Amended 2020 Plan by shares.
As of September 30, 2024, the Amended 2020 Plan provided for the issuance of up to shares of Common Stock. Remaining authorization under the Amended 2020 Plan was shares as of September 30, 2024.
The forms of award agreements to be used in connection with awards made under the Amended 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. |
Options Outstanding Number of Shares | Exercise Price per Share | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price per Share | |||||||||||||
| Balance, December 31, 2023 | $ | – | years | $ | ||||||||||||
| Granted | - | |||||||||||||||
| Exercised | ( | ) | – | years | ||||||||||||
| Balance at September 30, 2024 | $ | – | years | $ | ||||||||||||
| Exercisable at December 31, 2023 | $ | – | years | $ | ||||||||||||
| Exercisable at September 30, 2024 | $ | – | years | $ | ||||||||||||
Total
compensation expense under the Amended 2020 Plan options above was $ thousand and $ million for the three months ended September
30, 2024 and 2023, respectively, with unamortized expense remaining of $
Options Outstanding Number of Shares |
Exercise Price per Share |
Weighted Average Remaining Contractual Life |
Weighted Average Exercise Price per Share |
|||||||||||||
| Balance, December 31, 2023 | $ | – | years | $ | ||||||||||||
| Granted | - | |||||||||||||||
| Exercised | ( |
) | – | years | ||||||||||||
| Cancelled/Forfeited/Expired | ( |
) | – | - | ||||||||||||
| Balance at September 30, 2024 | $ | – | years | $ | ||||||||||||
| Exercisable December 31, 2023 | $ | – | years | $ | ||||||||||||
| Exercisable at September 30, 2024 | $ | – | years | $ | ||||||||||||
| 21 |
Total
compensation expense under the above service-based option plan was $ thousand and $ thousand for the three months ended September
30, 2024 and 2023, respectively, with unamortized expense remaining of $
Options Outstanding Number of Shares | Exercise Price per Share | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price per Share | |||||||||||||
| Balance at December 31, 2023 | $ | – | years | $ | ||||||||||||
| Granted | - | |||||||||||||||
| Exercised | ( | ) | – | years | ||||||||||||
| Balance at September 30, 2024 | $ | – | years | $ | ||||||||||||
| Exercisable December 31, 2023 | $ | – | years | $ | ||||||||||||
| Exercisable at September 30, 2024 | $ | – | years | $ | ||||||||||||
No compensation expense was recognized on the performance-based options above for the three and nine months ended September 30, 2024, as the performance terms have not been met or are not probable. As of September 30, 2024, the aggregate intrinsic value of vested performance options outstanding was $ thousand. Of the total performance-based options exercised during the nine months ended September 30, 2024, options were exercised on a cashless basis, which resulted in shares issued and options were exercised for cash.
RSUs and RSAs (under our Amended 2020 Plan)
| RSU Outstanding Number of Shares | ||||
| Balance at December 31, 2023 | ||||
| Granted | ||||
| Vested | ( | ) | ||
| Cancelled/Forfeited | ( | ) | ||
| Balance at September 30, 2024 | ||||
The
total fair value of the RSUs and RSAs granted was $ million which was determined using the fair value of the quoted market
price on the date of grant. Total compensation expense under the Amended 2020 Plan RSUs and RSAs above was $ million and $ million
for the three months ended September 30, 2024 and 2023, respectively, with unamortized expense remaining of $
| 22 |
RSUs and RSAs (outside of our Amended 2020 Plan)
| RSU Outstanding Number of Shares | ||||
| Balance at December 31, 2023 | ||||
| Granted | ||||
| Vested | ( | ) | ||
| Balance at September 30, 2024 | ||||
Total
compensation expense for RSUs and RSAs outside of the Amended 2020 Plan was $ thousand and $ thousand for the three months ended
September 30, 2024 and 2023, respectively, with unamortized expense remaining of $
Warrants
The following is a summary of outstanding and exercisable warrants activity during the nine months ended September 30, 2024:
Warrants Outstanding Number of Shares | Exercise Price per Share | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price per Share | |||||||||||||
| Balance at December 31, 2023 | $ | – | years | $ | ||||||||||||
| Exercised | ( | ) | – | years | ||||||||||||
| Balance at September 30, 2024 | $ | – | years | $ | ||||||||||||
| Exercisable December 31, 2023 | $ | – | years | $ | ||||||||||||
| Exercisable September 30, 2024 | $ | – | years | $ | ||||||||||||
Total
compensation expense on the above warrants was $ thousand for both the three months ended September 30, 2024 and 2023, with
Stock-based Compensation
The
total stock-based compensation expense related to common stock issued for services, service-based stock options, performance-based stock
options, warrants, RSUs, and RSAs amounted to approximately $ million and $ million for the three months ended September 30, 2024
and 2023, respectively. The total stock-based compensation expense related to common stock issued for services, service-based stock options,
performance-based stock options, warrants and RSUs, and RSAs amounted to $ million and $ million for the nine months ended September
30, 2024 and 2023, respectively. Such amounts are included in general and administrative expenses in the unaudited condensed consolidated
statement of operations. Unamortized expense remaining related to service-based stock options, performance-based stock options, warrants,
RSUs, and RSAs was $
NOTE 9 – LEASES
The Company leases office space domestically under operating leases including: (1) the Company’s headquarters in New York, New York for which the lease expires in 2028, (2) a marketing and sales center in Huntington Beach, California for which the lease expires in 2027, (3) a patient care center in Greenville, South Carolina for which the lease expires in 2031, with an additional five year option to extend, for which the Company expects to utilize, (4) warehouse and fulfillment centers in Columbia, Pennsylvania and Lancaster, Pennsylvania for which the leases expired in 2024 and (5) a warehouse and pharmacy operations center in Lancaster, Pennsylvania for which the lease expires in 2029, with an additional five year option to extend, for which the Company expects to utilize. WorkSimpli leases two office spaces in Puerto Rico for which the leases expire in 2026.
| 23 |
The following is a summary of the Company’s operating right-of-use assets and operating lease liabilities as of September 30, 2024:
| Operating right-of-use assets | $ | |||
| Operating lease liabilities –- current | $ | |||
| Operating lease liabilities – noncurrent | $ |
Total
accumulated amortization of the Company’s operating right-of-use assets was $
The table below reconciles the undiscounted future minimum lease payments under the above noted operating leases to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of September 30, 2024:
| Fiscal year 2024 | $ | |||
| Fiscal year 2025 | ||||
| Fiscal year 2026 | ||||
| Fiscal year 2027 | ||||
| Fiscal year 2028 | ||||
| Thereafter | ||||
| Less: imputed interest | ( | ) | ||
| Present value of operating lease liabilities | $ |
Operating
lease expenses were $
| September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash paid for operating lease liabilities | $ | $ | ||||||
Supplemental balance sheet information related to operating lease liabilities consisted of the following:
| September 30, 2024 | December 31, 2023 | |||||||
| Weighted average remaining lease term in years | ||||||||
| Weighted average discount rate | % | % | ||||||
We
have elected to apply the short-term lease exception to the warehouse and fulfillment center spaces we lease in Columbia, Pennsylvania
and Lancaster, Pennsylvania. These leases have a term of less than
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Royalty Agreements
During
2016, Conversion Labs PR entered into a sole and exclusive license, royalty and advisory agreement with Pilaris Laboratories, LLC (“Pilaris”)
relating to Pilaris’ PilarisMax shampoo formulation and conditioner. The term of the agreement will be the life of the US Patent
held by Pilaris,
| 24 |
During
2018, the Company entered into a license agreement (the “Alphabet Agreement”) with M.ALPHABET, LLC (“Alphabet”),
pursuant to which Alphabet agreed to license its PURPUREX business which consists of methods and compositions developed by Alphabet for
the treatment of purpura, bruising, post-procedural bruising, and traumatic bruising (the “Product Line”). Pursuant to the
license granted under the Alphabet Agreement, Conversion Labs PR obtains an exclusive license to incorporate (i) any intellectual property
rights related to the Product Line and (ii) all designs, drawings, formulas, chemical compositions and specifications used or useable
in the Product Line into one or more products manufactured, sold, and/or distributed by Alphabet for the treatment of purpura, bruising,
post-procedural bruising and traumatic bruising and for all other fields of use or purposes (the “Licensed Product(s)”),
and to make, have made, advertise, promote, market, sell, import, export, use, offer to sell, and distribute the Licensed Product(s)
throughout the world with the exception of China, Hong Kong, Japan, and Australia (the “License”).
Upon
execution of the Alphabet Agreement, Alphabet was granted a -year stock option to purchase shares of the Company’s common
stock at an exercise price of $. Further, if Licensed Products have gross receipts of $
Purchase Commitments
Many
of the Company’s vendors require product deposits when a purchase order is placed for goods or fulfillment services related to
inventory requirements. The Company’s history of product deposits with its inventory vendors, creates an implicit purchase commitment
equaling the total expected product acceptance cost in excess of the product deposit. As of September 30, 2024, the Company approximates
its implicit purchase commitments to be $
Legal Matters
In the normal course of business operations, the Company may become involved in various legal matters. As of September 30, 2024, other than as set forth below, the Company’s management does not believe that there are any potential legal matters that could have an adverse effect on the Company’s consolidated financial position.
On August 23, 2023, a purported putative class action complaint captioned Marden v. LifeMD, Inc., Case No. 23-cv-07469, was filed in the United States District Court for the Southern District of New York (the “Marden Complaint”) against the Company’s RexMD brand. The Marden Complaint alleges, inter alia, unauthorized disclosure of certain information of class members to third parties. On November 21, 2023, the plaintiffs amended the Marden Complaint. On March 4, 2024, the Company moved to dismiss the Marden Complaint, and that motion is pending. On July 12, 2024, the parties attended a mediation. The results of legal proceedings are inherently uncertain, and the best estimate of cost is reflected in the Company’s financial results.
On
September 5, 2023, the Internal Revenue Service (the “IRS”) issued a notice of deficiency to the Company in which the IRS
asserted an income tax deficiency of approximately $
NOTE 11 – RELATED PARTY TRANSACTIONS
Working Capital Loan
In
January and February 2023, the Company received proceeds of $
WorkSimpli Software
During
the nine months ended September 30, 2024 and 2023, the Company utilized CloudBoson Technologies Pvt. Ltd. (“CloudBoson”),
formerly LegalSubmit Pvt. Ltd. (“LegalSubmit”), a company owned by WorkSimpli’s Chief Software Engineer, to provide
software development services. The Company paid CloudBoson a total of $
| 25 |
Legal Services
During
the nine months ended September 30, 2024 and 2023, the Company utilized King & Spalding LLP (“King & Spalding”),
a large international law firm, for which one of the Company’s Board of Directors’ immediate family members is the Company’s
relationship partner, to provide legal services. The Company paid King & Spalding a total of approximately $
Director Consulting Agreements
On May 30, 2023, Will Febbo, a member of the Board of the Company, entered into a consulting services agreement with the Company, pursuant to which he provides certain investor relations and strategic business development services, in consideration for restricted shares of the Company’s common stock, which will vest in quarterly installments from August 30, 2023 through November 30, 2024. The Company issued restricted shares of common stock related to this agreement during the nine months ended September 30, 2024.
On June 14, 2023, Robert Jindal, a member of the Board of the Company, entered into a consulting services agreement (the “Jindal Consulting Agreement”) with the Company, pursuant to which Mr. Jindal provides certain investor relations and strategic business development services, in consideration for restricted shares of the Company’s common stock, which will vest in six-month installments from June 14, 2023 through December 31, 2024. On July 17, 2024, Mr. Jindal entered into the First Amendment to the Jindal Consulting Services Agreement with the Company (the “Jindal First Amendment”), pursuant to which the Company shall issue restricted shares of the Company’s common stock, all of which vested on September 14, 2024.
On June 14, 2023, Naveen Bhatia, a member of the Board of the Company, entered into a consulting services agreement with the Company, pursuant to which Mr. Bhatia provides certain investor relations and strategic business development services, in consideration for restricted shares of the Company’s common stock, which will vest in six-month installments from June 14, 2023 through December 31, 2024.
Amended Employment Agreement
Effective
May 1, 2024, Brian Schreiber, Logistics & Fulfillment Advisor, and a relative of the Company’s Chief Executive Officer, entered
into an amended employment agreement. Mr. Schreiber’s compensation package was adjusted to reflect the increased scope of his responsibilities.
The compensation adjustment, approved by the Compensation Committee of the Board, includes a base salary increase to $
NOTE 12 – SEGMENT DATA
Our portfolio of brands are included within two operating segments: Telehealth and WorkSimpli. We believe our current segments and brands within our segments complement one another and position us well for future growth. Relevant segment data for the three and nine months ended September 30, 2024 and 2023 is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Telehealth | ||||||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Gross margin | % | % | % | % | ||||||||||||
| Operating loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| WorkSimpli | ||||||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Gross margin | % | % | % | % | ||||||||||||
| Operating (loss) income | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Consolidated | ||||||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Gross margin | % | % | % | % | ||||||||||||
| Operating loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Relevant segment data as of September 30, 2024 and December 31, 2023 is as follows:
| September 30, 2024 | December 31, 2023 | |||||||
| Total Assets | ||||||||
| Telehealth | $ | $ | ||||||
| WorkSimpli | ||||||||
| Consolidated | $ | $ | ||||||
NOTE 13 – SUBSEQUENT EVENTS
Stock Issued for Service
In
October 2024, the Company issued shares of common stock related to vested restricted stock with a total fair value of $
Stock Option Exercise
In October 2024, the Company issued an aggregate of shares of common
stock related to the exercise of options for total proceeds of approximately $
| 26 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Note Regarding Forward-Looking Statements
The following discussion should be read in conjunction with the financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q. Certain statements made in this discussion are “forward-looking statements” within the meaning of 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by the Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company’s business, industry, and the Company’s operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.
Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited 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 unaudited condensed consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our unaudited 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; |
| ● | the impact of competitive products and pricing; |
| ● | 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, including applications and risks of artificial intelligence (“AI”); |
| ● | our ability to prevent, detect and remediate cybersecurity incidents; |
| ● | our ability to protect our trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent others from infringing on our proprietary rights; |
| ● | our ability to successfully acquire, develop or commercialize new products and equipment; |
| ● | our ability to collaborate successfully with other businesses and to integrate acquired businesses or new brands; |
| ● | supply chain constraints or difficulties; |
| ● | current and potential material weaknesses in our internal control over financial reporting; |
| ● | our need to raise additional funds in the future; |
| ● | our ability to successfully recruit and retain qualified personnel; |
| ● | the impact of industry regulation, including regulation of compounded medications, privacy and digital healthcare; |
| ● | general economic and business conditions, including inflation, slower growth or recession; |
| ● | changes in the political or regulatory conditions in the markets in which we operate; and |
| ● | business interruptions resulting from geo-political actions, including war, and terrorism or disease outbreaks. |
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.
| 27 |
Our unaudited 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. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the unaudited condensed consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our unaudited condensed consolidated financial statements would be affected to the extent there are material differences between these estimates and actual results. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.
As used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms “Company,” “we,” “us,” and “our” refer to LifeMD, Inc. (formerly known as Conversion Labs, Inc.), Cleared Technologies PBC, a Delaware public benefit corporation (“Cleared”) and our majority-owned subsidiary WorkSimpli Software, LLC (formerly known as LegalSimpli Software, LLC), a Puerto Rico limited liability company (“WorkSimpli”). The affiliated network of medical Professional Corporations and medical Professional Associations administratively led by LifeMD Southern Patient Medical Care, P.C., (“LifeMD PC”) is the Company’s variable interest entity in which we hold a controlling financial interest. Unless otherwise specified, all dollar amounts are expressed in United States (“U.S.”) dollars.
Corporate History
We were formed in the State of Delaware on May 24, 1994, under our prior name, Immudyne, Inc. We changed our name to Conversion Labs, Inc. on June 22, 2018 and then subsequently, on February 22, 2021, we changed our name to LifeMD, Inc. Further, in connection with our name change, we changed our trading symbol to LFMD. In June 2018, the Company closed the strategic acquisition of 51% of WorkSimpli, a company that provides a software as a service for converting, editing, signing and sharing PDF documents called PDFSimpli. Effective January 22, 2021, we consummated a transaction to restructure the ownership of WorkSimpli through a series of agreements and concurrently increased our ownership stake in WorkSimpli to 85.6%. Effective September 30, 2022, two option agreements were exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.6%. 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 74.1%. 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 73.3%. 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 a high-quality, cost-effective, and convenient way to access comprehensive, virtual and in-home healthcare. We believe the traditional model of visiting a doctor’s office, traveling to a retail 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 improving the delivery of healthcare experience through telehealth with our proprietary technology platform, affiliated and dedicated provider network, broad and expanding treatment capabilities, and unique ability to nurture patient relationships.
The LifeMD telehealth platform integrates best-in-class capabilities including a 50-state medical group, a nationwide pharmacy network, nationwide laboratory and diagnostic testing capabilities, a fully integrated electronic medical records (“EMR”) system and an internal patient care and service call center. These capabilities are integrated by an industry-leading, proprietary telehealth technology that supports a broad range of primary care, chronic disease and lifestyle healthcare needs. Currently, LifeMD treats approximately 269,000 active patient subscribers across a range of their medical needs including primary care, men’s sexual health, weight management, sleep, hair loss and hormonal therapy by providing telehealth clinical services and prescription and over-the-counter (“OTC”) treatments, as medically appropriate. Our virtual primary care services are primarily offered on a subscription basis. Since inception, we have helped approximately 1,059,000 customers and patients by providing them greater access to high-quality, convenient, and affordable care.
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 been, and will continue to be, attributable to an amazing patient experience, made possible by attracting and retaining the highest-quality providers in the country, and our proprietary end-to-end technology platform. As we continue to pursue long-term growth, we plan to continue to introduce new telehealth product and service offerings that complement our already expansive treatment areas. During April 2023, we launched a highly successful and differentiated GLP-1 Weight Management offering driven by our existing primary care capabilities that already had more than 71,000 patient subscribers as of September 30, 2024. Patients receive a range of weight loss services including prescriptions for GLP-1 medications, as medically appropriate, lab work services, general primary care and holistic healthcare and coaching. The GLP-1 medically supported weight loss market is rapidly growing and is projected to increase from over $13 billion to over $100 billion by 2030, according to J.P. Morgan Research.
Our telehealth revenue increased 62% for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. 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. WorkSimpli revenue from recurring subscriptions is 100%.
| 28 |
Our Platform and Business Strategy
We are a patient-centric telehealth company dedicated to delivering seamless end-to-end virtual healthcare directly to consumers and through select enterprise (“B2B”) partnerships. Our mission is facilitated by our robust technology platform that is purpose-built to seamlessly connect the various 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 offerings are sold to consumers on a subscription basis thus creating a relationship-driven patient experience to bolster retention rates and recurring revenue. Our offerings range from prescription medication and OTC products fulfilled on a recurring basis, to primary care and weight management clinical services and ongoing care from a team of dedicated medical providers. In general, our offerings seek to serve a patient throughout the lifecycle of both their general and chronic healthcare needs. As appropriate, prescription medications and OTC products are filled by pharmacy fulfillment partners, and are shipped directly to the patient. The number of patients and customers we serve across the nation continues to increase at a robust pace, with approximately 1,059,000 individuals having purchased our products and services to date.
Our platform also includes a robust customer relationship management (“CRM”) system, and performance marketing platform that enables us to acquire and retain new patients and customers at scale by driving brand visibility through strategic media placements, influencer partnerships, and direct response advertising methods across highly visible 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 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.
In April 2023, we launched our rapidly growing GLP-1 Weight Management program providing primary care, weight loss, holistic healthcare, lab work and prescription services, as appropriate, to patients seeking to access a medically supported weight loss solution. Since inception, our Weight Management program has grown exponentially to over 71,000 patient subscribers as of September 30, 2024. We remain at the forefront of the rapidly growing GLP-1 weight loss market, which is expected to exceed $100 billion by 2030, with our highly differentiated and comprehensive offering. In September 2024, we expanded our Weight Management program with an alternative designed for patients who are unable or unwilling to use GLP-1 medications. This treatment plan consists of three oral medications – metformin, bupropion, and topiramate.
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, hormone therapy and hair loss. RexMD has served approximately 578,000 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 United States (“U.S.”) and has served approximately 265,000 customers and patients since inception with a 4.9-star Trustpilot rating. |
| 29 |
| ○ | 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 50-state network of affiliated medical professionals and providers, various pharmaceutical partners and treatments and tests that cost up to 50% 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. |
B2B Telehealth Partnerships
Organizations selling healthcare products face a challenging commercial landscape. Increased competition, shrinking market sizes and challenges reaching patients via the traditional brick-and-mortar physician offices are forcing pharmaceutical, medical device and diagnostic companies to rethink their commercial strategies and increase their focus on digital patient awareness and engagement initiatives. It is estimated that spending on digital solutions to facilitate greater access to end markets accounts for one-third of the collective $30 billion commercial spend by these companies in the U.S. We believe LifeMD’s unique telehealth technology platform and virtual care 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. To date, LifeMD has executed the following enterprise commercial agreements providing access to our industry leading telehealth platform capabilities.
| ○ | In September 2023, LifeMD executed a partnership agreement with ASCEND Therapeutics, LLC (“ASCEND”), a subsidiary of Besins Healthcare, and a specialty pharmaceutical company concentrating on women’s health, to provide integrated telehealth services to improve access to EstroGel®. Under the terms of the agreement, LifeMD receives fees related to certain corporate services provided to ASCEND while having our telehealth services featured on the www.estrogel.com website. |
| ○ | On December 11, 2023, the Company entered into a collaboration with Medifast, Inc. through and with certain of its wholly-owned subsidiaries (“Medifast”). Medifast will utilize the Company’s virtual care technology platform to provide its clients access to a clinically supported weight management program, including GLP-1 medications, which are a class of medications that mainly help manage blood sugar (glucose) levels in people with Type 2 diabetes but can also treat obesity. Pursuant to certain agreements between the parties, Medifast has agreed to pay to the Company the amount of $10 million to support the collaboration, funding enhancements to the Company platform, operations and supporting infrastructure, of which $5 million was paid at the closing on December 12, 2023, $2.5 million was paid during the three months ended March 31, 2024, and the remaining $2.5 million was paid during the three months ended June 30, 2024 (the “Medifast Collaboration”). |
| In addition, in connection with the Medifast Collaboration, the Company entered into a stock purchase agreement and registration rights agreement with Medifast’s wholly-owned subsidiary, Jason Pharmaceuticals, Inc., whereby the Company issued 1,224,425 shares of its common stock in a private placement (the “Medifast Private Placement”) at a purchase price of $8.1671 per share, for aggregate proceeds of approximately $10 million. The Company granted Jason Pharmaceuticals the right, for a period contemporaneous with the ongoing collaboration, to appoint one non-voting observer to the Board of Directors of the Company, entitled to attend Board meetings. |
Manufacturing and Supply Chain
We use third parties to manufacture and package our OTC products according to the formulas and packaging guidelines we dictate. In order to minimize costs, we may elect to purchase raw or bulk materials directly from our suppliers and have them shipped to our manufacturers so that we may incur only tableting, encapsulating, and/or packaging costs and avoid the additional costs associated with purchasing the finished product.
FDA potential restrictions on compounding of GLP-1s, including removal of tirzepatide (marketed as Mounjaro® and Zepbound®) and/or semaglutide (marketed as Ozempic® and Wegovy®) from the drug shortage list, have the potential to disrupt patient treatment continuity, by limiting our ability to provide personalized treatment plans that meet individual patient needs, and could adversely impact our financial results. These restrictions may lead to decreased patient satisfaction, increased attrition rates, and potential legal challenges if patients are unable to access needed medications in a timely manner. Additionally, the inability to offer compounded options may drive patients who do not have insurance coverage, or who are unwilling to pay out-of-pocket, for branded GLP-1 medications to seek other medications and/or alternatives outside of telehealth, adversely impacting the growth and viability of the business.
| 30 |
Majority Owned Subsidiary: WorkSimpli
WorkSimpli is a leading provider of workplace and document services for consumers, gig workers and small businesses. WorkSimpli operates the following brands: (1) PDFSimpli, an online software as a service platform that allows users to create, edit, convert, sign, and share PDF documents, (2) ResumeBuild, a leading provider of digital resume and cover letter services, (3) SignSimpli, a digital signature platform and (4) LegalSimpli, a provider of legal forms for consumers and small businesses. We acquired WorkSimpli 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. On January 22, 2021, LifeMD consummated a transaction and increased its ownership of WorkSimpli to 85.6%. Effective September 30, 2022, two option agreements were exercised which further restructured the ownership of WorkSimpli. As a result, the Company’s ownership interest in WorkSimpli decreased to 73.6%. 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 74.1%. 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 73.3%.
WorkSimpli was ranked in the top 25,000 websites globally, with more than 56 million registrants. Since its launch, WorkSimpli has converted or edited over 276 terabytes of documents for customers from the legal, financial, real-estate and academic sectors. WorkSimpli had over 160,000 active subscriptions as of September 30, 2024.
Results of Operations
Comparison of the Three Months Ended September 30, 2024 to the Three Months Ended September 30, 2023
Our financial results for the three months ended September 30, 2024 are summarized as follows in comparison to the three months ended September 30, 2023:
| September 30, 2024 | September 30, 2023 | |||||||||||||||
| $ | % of Sales | $ | % of Sales | |||||||||||||
| Telehealth revenue, net | $ | 40,275,546 | 75.43 | % | $ | 24,342,789 | 63.04 | % | ||||||||
| WorkSimpli revenue, net | 13,117,611 | 24.57 | % | 14,271,122 | 36.96 | % | ||||||||||
| Total revenue, net | 53,393,157 | 100 | % | 38,613,911 | 100 | % | ||||||||||
| Cost of telehealth revenue | 4,300,877 | 8.06 | % | 4,479,760 | 11.60 | % | ||||||||||
| Cost of WorkSimpli revenue | 712,664 | 1.33 | % | 301,746 | 0.78 | % | ||||||||||
| Total cost of revenue | 5,013,541 | 9.39 | % | 4,781,506 | 12.38 | % | ||||||||||
| Gross profit | 48,379,616 | 90.61 | % | 33,832,405 | 87.62 | % | ||||||||||
| Selling and marketing expenses | 26,611,672 | 49.84 | % | 19,776,797 | 51.22 | % | ||||||||||
| General and administrative expenses | 18,925,844 | 35.45 | % | 13,398,387 | 34.70 | % | ||||||||||
| Customer service expenses | 2,804,210 | 5.25 | % | 2,106,252 | 5.45 | % | ||||||||||
| Other operating expenses | 2,112,169 | 3.96 | % | 1,622,137 | 4.20 | % | ||||||||||
| Development costs | 2,611,833 | 4.89 | % | 1,498,213 | 3.88 | % | ||||||||||
| Total expenses | 53,065,728 | 99.39 | % | 38,401,786 | 99.45 | % | ||||||||||
| Operating loss | (4,686,112 | ) | (8.78 | )% | (4,569,381 | ) | (11.83 | )% | ||||||||
| Interest expense, net | (558,597 | ) | (1.04 | )% | (713,766 | ) | (1.85 | )% | ||||||||
Net loss before income taxes | (5,244,709 | ) | (9.82 | )% | (5,283,147 | ) | (13.68 | )% | ||||||||
Income tax expense | (232,523 | ) | (0.44 | )% | - | - | % | |||||||||
| Net loss | (5,477,232 | ) | (10.26 | )% | (5,283,147 | ) | (13.68 | )% | ||||||||
| Net income attributable to non-controlling interest | (345,767 | ) | (0.65 | )% | 839,288 | 2.18 | % | |||||||||
| Net loss attributable to LifeMD, Inc. | (5,131,465 | ) | (9.61 | )% | (6,122,435 | ) | (15.86 | )% | ||||||||
| Preferred stock dividends | (776,563 | ) | (1.46 | )% | (776,563 | ) | (2.01 | )% | ||||||||
| Net loss attributable to common stockholders | $ | (5,908,028 | ) | (11.07 | )% | $ | (6,898,998 | ) | (17.87 | )% | ||||||
Total revenue, net. Revenues for the three months ended September 30, 2024 were approximately $53.4 million, an increase of 38% compared to approximately $38.6 million for the three months ended September 30, 2023. The increase in revenues was attributable to an increase in telehealth revenue of 65%, partially offset by a decrease in WorkSimpli revenue of 8%. Telehealth revenue accounts for 75% of total revenue and has increased during the three months ended September 30, 2024 due to an increase in online sales demand primarily for LifeMD primary care which experienced an increase of approximately $18.1 million during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. WorkSimpli revenue accounts for 25% of total revenue and has decreased slightly year over year due to a lower demand.
| 31 |
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 increased by approximately 5% to approximately $5.0 million for the three months ended September 30, 2024 compared to approximately $4.8 million for the three months ended September 30, 2023. The combined cost of revenue increase was due to increased telehealth sales volume during the three months ended September 30, 2024 when compared to the three months ended September 30, 2023. Telehealth costs decreased to 11% of associated telehealth revenues experienced during the three months ended September 30, 2024, from 18% of associated telehealth revenues during the three months ended September 30, 2023 primarily due to improved pricing. WorkSimpli costs were 5% of associated WorkSimpli revenues for the three months ended September 30, 2024 as compared to 2% of associated WorkSimpli revenues for the three months ended September 30, 2023.
Gross profit. Gross profit increased by approximately 43% to approximately $48.4 million for the three months ended September 30, 2024 compared to approximately $33.8 million for the three months ended September 30, 2023, as a result of increased telehealth revenue and improved pricing. Gross profit as a percentage of revenues was 91% for the three months ended September 30, 2024 as compared to 88% for the three months ended September 30, 2023. Gross profit as a percentage of revenues for telehealth was 89% for the three months ended September 30, 2024 compared to 82% for the three months ended September 30, 2023, and for WorkSimpli was 95% for the three months ended September 30, 2024 compared to 98% for the three months ended September 30, 2023. The increase in sales volume and demand for LifeMD primary care and improved pricing have contributed to the increase in gross profit.
Total expenses. Operating expenses for the three months ended September 30, 2024 were approximately $53.1 million, as compared to approximately $38.4 million for the three months ended September 30, 2023. This represents an increase of approximately 38%, or $14.7 million. The increase is primarily attributable to:
| (i) | Selling and marketing expenses: This mainly consists of online marketing and advertising expenses. During the three months ended September 30, 2024, the Company had an increase of approximately $6.8 million, or 35% in selling and marketing costs resulting from additional sales and marketing initiatives to drive the current period’s sales growth primarily for LifeMD primary care. This ramp up is expected to both increase and maintain sustained revenue growth in future years, based on the Company’s recurring revenue subscription-based sales model. |
| (ii) | General and administrative expenses: During the three months ended September 30, 2024, stock-based compensation was $2.4 million, with the majority related to stock compensation expense attributable to restricted stock awards, as compared to stock-based compensation expense of $3.3 million for the three months ended September 30, 2023. This category also consists of merchant processing fees, payroll expenses for corporate employees, taxes and licenses, amortization expense and legal and professional fees. During the three months ended September 30, 2024, the Company had an increase of approximately $5.5 million in general and administrative expenses, primarily related to increases in compensation costs of $3.7 million, merchant processing fees of $1.5 million and legal and professional fees of $1.0 million, partially offset by the decrease in stock-based compensation noted above. |
| (iii) | Customer service expenses: This consists of rent, insurance, payroll and benefit expenses related to the Company’s customer service department located in South Carolina and Puerto Rico. During the three months ended September 30, 2024, the Company had an increase of approximately $698 thousand, or 33%, primarily related to increases in infrastructure costs and headcount in the Company’s customer service department. |
| (iv) | Other operating expenses: This consists of rent and lease expense, insurance, office supplies and software subscriptions, royalty expense and bank charges. During the three months ended September 30, 2024, the Company had an increase of approximately $490 thousand, or 30%, primarily related to software subscriptions. |
| (v) | Development costs: This mainly relates to third-party technology services for developing and maintaining our online platforms. During the three months ended September 30, 2024, the Company had an increase of approximately $1.1 million or 74%, primarily resulting from technology platform improvements and amortization expenses. |
Interest expense, net. Interest expense, net consists of interest expense related to the Avenue Facility and notes payable, partially offset by interest income on the Company’s cash account balances for the three months ended September 30, 2024 and interest expense related to the Avenue Facility, notes payable and interest accrued on the Company’s Series B Convertible Preferred Stock for the three months ended September 30, 2023. Interest expense, net decreased by approximately $155 thousand during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to an increase in interest income on the Company’s cash account balances for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.
| 32 |
Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023
Our financial results for the nine months ended September 30, 2024 are summarized as follows in comparison to the nine months ended September 30, 2023:
| September 30, 2024 | September 30, 2023 | |||||||||||||||
| $ | % of Sales | $ | % of Sales | |||||||||||||
| Telehealth revenue, net | $ | 108,549,257 | 73.25 | % | $ | 66,896,719 | 62.12 | % | ||||||||
| WorkSimpli revenue, net | 39,650,009 | 26.75 | % | 40,790,439 | 37.88 | % | ||||||||||
| Total revenue, net | 148,199,266 | 100 | % | 107,687,158 | 100 | % | ||||||||||
| Cost of telehealth revenue | 13,049,315 | 8.81 | % | 12,525,887 | 11.63 | % | ||||||||||
| Cost of WorkSimpli revenue | 1,589,318 | 1.07 | % | 1,019,018 | 0.95 | % | ||||||||||
| Total cost of revenue | 14,638,633 | 9.88 | % | 13,544,905 | 12.58 | % | ||||||||||
| Gross profit | 133,560,633 | 90.12 | % | 94,142,253 | 87.42 | % | ||||||||||
| Selling and marketing expenses | 77,164,480 | 52.07 | % | 56,062,345 | 52.06 | % | ||||||||||
| General and administrative expenses | 52,752,961 | 35.60 | % | 36,120,723 | 33.54 | % | ||||||||||
| Customer service expenses | 7,385,669 | 4.98 | % | 5,573,734 | 5.18 | % | ||||||||||
| Other operating expenses | 6,318,791 | 4.26 | % | 4,640,690 | 4.31 | % | ||||||||||
| Development costs | 7,101,655 | 4.79 | % | 4,062,498 | 3.77 | % | ||||||||||
| Total expenses | 150,723,556 | 101.70 | % | 106,459,990 | 98.86 | % | ||||||||||
| Operating loss | (17,162,923 | ) | (11.58 | )% | (12,317,737 | ) | (11.44 | )% | ||||||||
| Interest expense, net | (1,567,743 | ) | (1.06 | )% | (1,973,901 | ) | (1.83 | )% | ||||||||
| Loss on debt extinguishment | - | - | % | (325,198 | ) | (0.30 | )% | |||||||||
| Net loss before income taxes | (18,730,666 | ) | (12.64 | )% | (14,616,836 | ) | (13.57 | )% | ||||||||
Income tax expense | (232,523 | ) | (0.16 | )% | - | - | % | |||||||||
| Net loss | (18,963,189 | ) | (12.80 | )% | (14,616,836 | ) | (13.57 | )% | ||||||||
| Net income attributable to non-controlling interest | (187,729 | ) | (0.13 | )% | 2,247,055 | 2.09 | % | |||||||||
| Net loss attributable to LifeMD, Inc. | (18,775,460 | ) | (12.67 | )% | (16,863,891 | ) | (15.66 | )% | ||||||||
| Preferred stock dividends | (2,329,688 | ) | (1.57 | )% | (2,329,688 | ) | (2.16 | )% | ||||||||
| Net loss attributable to common stockholders | $ | (21,105,148 | ) | (14.24 | )% | $ | (19,193,579 | ) | (17.82 | )% | ||||||
Total revenue, net. Revenues for the nine months ended September 30, 2024 were approximately $148.2 million, an increase of 38% compared to approximately $107.7 million for the nine months ended September 30, 2023. The increase in revenues was attributable to an increase in telehealth revenue of 62%, partially offset by a decrease in WorkSimpli revenue of 3%. Telehealth revenue accounts for 73% of total revenue and has increased during the nine months ended September 30, 2024 due to an increase in online sales demand primarily for LifeMD primary care which experienced an increase of approximately $38.8 million during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 and Medifast Collaboration revenue. WorkSimpli revenue accounts for 27% of total revenue and has decreased slightly year over year due to a lower demand.
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 increased by approximately 8% to approximately $14.6 million for the nine months ended September 30, 2024 compared to approximately $13.5 million for the nine months ended September 30, 2023. The combined cost of revenue increase was due to increased telehealth sales volume during the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023. Telehealth costs decreased to 12% of associated telehealth revenues experienced during the nine months ended September 30, 2024, from 19% of associated telehealth revenues during the nine months ended September 30, 2023 primarily due to improved pricing. WorkSimpli costs increased to 4% of associated WorkSimpli revenues during the nine months ended September 30, 2024, compared to 3% of associated WorkSimpli revenues for the nine months ended September 30, 2023.
Gross profit. Gross profit increased by approximately 42% to approximately $133.6 million for the nine months ended September 30, 2024 compared to approximately $94.1 million for the nine months ended September 30, 2023, as a result of increased combined sales. Gross profit as a percentage of revenues was 90% for the nine months ended September 30, 2024 as compared to 87% for the nine months ended September 30, 2023. Gross profit as a percentage of revenues for telehealth was 88% for the nine months ended September 30, 2024 compared to 81% for the nine months ended September 30, 2023, and for WorkSimpli was 96% for the nine months ended September 30, 2024 as compared to 98% for the nine months ended September 30, 2023. The increase in sales volume and demand for LifeMD primary care, Medifast Collaboration revenue, and improved pricing have contributed to the increase in gross profit.
| 33 |
Total expenses. Operating expenses for the nine months ended September 30, 2024 were approximately $150.7 million, as compared to approximately $106.5 million for the nine months ended September 30, 2023. This represents an increase of 42%, or approximately $44.2 million. The increase is primarily attributable to:
| (i) | Selling and marketing expenses: This mainly consists of online marketing and advertising expenses. During the nine months ended September 30, 2024, the Company had an increase of approximately $21.1 million, or 38% in selling and marketing costs resulting from additional sales and marketing initiatives to drive the current period’s sales growth primarily for LifeMD primary care. This ramp up is expected to both increase and maintain sustained revenue growth in future years, based on the Company’s recurring revenue subscription-based sales model. |
| (ii) | General and administrative expenses: During the nine months ended September 30, 2024, stock-based compensation was $9.1 million, with the majority related to stock compensation expense attributable to restricted stock awards, as compared to stock-based compensation expense of $8.8 million for the nine months ended September 30, 2023. This category also consists of merchant processing fees, payroll expenses for corporate employees, taxes and licenses, amortization expense and legal and professional fees. During the nine months ended September 30, 2024, the Company had an increase of approximately $16.6 million in general and administrative expenses, primarily related to increases in compensation costs of $9.5 million, legal and professional fees of $3.9 million and merchant processing fees of $2.8 million. |
| (iii) | Customer service expenses: This consists of rent, insurance, payroll and benefit expenses related to the Company’s customer service department located in South Carolina and Puerto Rico. During the nine months ended September 30, 2024, the Company had an increase of approximately $1.8 million, or 33%, primarily related to increases in infrastructure costs and headcount in the Company’s customer service department. |
| (iv) | Other operating expenses: This consists of rent and lease expense, insurance, office supplies and software subscriptions, royalty expense and bank charges. During the nine months ended September 30, 2024, the Company had an increase of approximately $1.7 million, or 36%, primarily related to software subscriptions and a reduction in credit card rewards. |
| (v) | Development costs: This mainly relates to third-party technology services for developing and maintaining our online platforms. During the nine months ended September 30, 2024, the Company had an increase of approximately $3 million, or 75%, primarily resulting from technology platform improvements and amortization expenses. |
Interest expense, net. Interest expense, net consists of interest expense related to the Avenue Facility and notes payable, partially offset by interest income on the Company’s cash account balances for the nine months ended September 30, 2024 and interest expense related to the Avenue Facility, notes payable and interest accrued on the Company’s Series B Convertible Preferred Stock for the nine months ended September 30, 2023. Interest expense, net decreased by approximately $406 thousand during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to an increase in interest income on the Company’s cash account balances for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.
Loss on debt extinguishment. The Company recorded a $325 thousand loss on debt extinguishment related to the repayment of the CRG Financial loan during the nine months ended September 30, 2023 due to a prepayment penalty and various fees associated with the CRG Financial loan.
Working Capital
| September 30, 2024 | December 31, 2023 | |||||||
| Current assets | $ | 48,656,957 | $ | 42,604,267 | ||||
| Current liabilities | 58,952,281 | 34,781,724 | ||||||
| Working capital | $ | (10,295,324 | ) | $ | 7,822,543 | |||
Working capital decreased by approximately $18.1 million during the nine months ended September 30, 2024. The increase in current assets is primarily attributable to an increase in cash of approximately $4.4 million. Current liabilities increased by approximately $24.2 million, which was primarily attributable to an increase in accounts payable and accrued expenses of $11.9 million as a result of timing of payments and the Company extending payables and credit terms with vendors, an increase in deferred revenue of $7.6 million as a result of increased recurring telehealth subscription revenue, and an increase in current portion of long-term debt of $5.3 million.
| 34 |
Liquidity and Capital Resources
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Net cash provided by operating activities | $ | 15,944,841 | $ | 3,106,602 | ||||
| Net cash used in investing activities | (8,815,591 | ) | (6,516,645 | ) | ||||
| Net cash (used in) provided by financing activities | (2,688,722 | ) | 14,739,416 | |||||
| Net increase in cash | 4,440,528 | 11,329,373 | ||||||
Net cash provided by operating activities was approximately $15.9 million for the nine months ended September 30, 2024, as compared with approximately $3.1 million for the nine months ended September 30, 2023. The significant factors contributing to the net cash provided by operating activities during the nine months ended September 30, 2024, include: (1) an increase in accounts payable and accrued expenses of $12.5 million, (2) $9.1 million in non-cash stock-based compensation charges, (3) an increase in deferred revenue of $7.6 million, and (4) $7.3 million in non-cash depreciation and amortization. These increases were partially offset by the Company’s net loss of $19.0 million for the nine months ended September 30, 2024. Net cash provided by operating activities for the nine months ended September 30, 2023, was driven primarily by the following: (1) $8.8 million in non-cash stock-based compensation charges, (2) $5.0 million in non-cash depreciation and amortization, (3) a net increase in accounts payable, accrued expenses and other operating activities of $4.6 million, (4) a $325 thousand loss on debt extinguishment and (5) an increase in deferred revenue of $692 thousand. These increases were partially offset by the Company’s net loss of $14.6 million for the nine months ended September 30, 2023.
Net cash used in investing activities for the nine months ended September 30, 2024 was approximately $8.8 million, as compared with approximately $6.5 million for the nine months ended September 30, 2023. Net cash used in investing activities for the nine months ended September 30, 2024, was due to cash paid for capitalized software costs of approximately $7.5 million, and cash paid for the purchase of equipment of approximately $1.3 million. Net cash used in investing activities for the nine months ended September 30, 2023, was due to cash paid for capitalized software costs of approximately $6.3 million, cash paid for the purchase of intangible assets of $149 thousand and cash paid for the purchase of equipment of approximately $94 thousand.
Net cash used in financing activities for the nine months ended September 30, 2024 was approximately $2.7 million as compared with approximately $14.7 million in net cash provided by financing activities for the nine months ended September 30, 2023. Net cash used in financing activities for the nine months ended September 30, 2024, consisted of: (1) preferred stock dividends of $2.3 million, (2) repayments of notes payable of approximately $328 thousand, (3) distributions to non-controlling interest of $108 thousand, and (4) the final contingent consideration payment made related to the ResumeBuild acquisition of approximately $31 thousand, partially offset by proceeds from the exercise of options of approximately $108 thousand. Net cash provided by financing activities for the nine months ended September 30, 2023, consisted of: (1) $19.5 million in net proceeds received from the Avenue Facility, (2) $2.3 million in proceeds received from notes payable and (3) $900 thousand in net proceeds received for the sale of common stock under the ATM Sales Agreement (as defined below). These factors contributing to net cash provided by financing activities were partially offset by repayments of notes payable of approximately $5 million net of a $325 thousand loss on debt extinguishment on the CRG Financial loan, preferred stock dividends of approximately $2.3 million, payments made to redeem 500 WorkSimpli membership interest units of approximately $306 thousand, contingent consideration payments made related to the ResumeBuild brand acquisition of approximately $188 thousand and distributions to non-controlling interest of $108 thousand.
Liquidity and Capital Resources Outlook
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. The Company’s continued operations are dependent upon obtaining an increase in its sale volumes or the issuance of additional shares of common stock. 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. For more information on our operating lease obligations, see Note 9—Leases to our unaudited condensed consolidated financial statements included in this report. There can be no assurances that we will be successful in increasing revenues and improving operational efficiencies.
On December 11, 2023, the Company entered into a collaboration with Medifast. Pursuant to certain agreements between the parties, Medifast has agreed to pay to the Company the amount of $10 million to support the collaboration, funding enhancements to the Company platform, operations and supporting infrastructure, of which $5 million was paid at the closing on December 12, 2023, $2.5 million was paid during the three months ended March 31, 2024, and the remaining $2.5 million was paid during the three months ended June 30, 2024.
In addition, in connection with the Medifast Collaboration, on December 11, 2023, the Company entered into a stock purchase agreement with Medifast’s wholly-owned subsidiary, Jason Pharmaceuticals, Inc., whereby the Company issued 1,224,425 shares of its common stock in the Medifast Private Placement, at a purchase price of $8.1671 per share, for aggregate proceeds of approximately $10 million.
| 35 |
On March 21, 2023, the Company entered into and closed on a Credit Agreement, and a supplement to the Credit Agreement with Avenue. The Credit Agreement provides for a convertible senior secured credit facility of up to an aggregate amount of $40 million, comprised of the following: (1) $15 million in term loans funded at closing, (2) $5 million of additional committed term loans which the Company received on September 26, 2023 under the Avenue First Amendment and (3) $20 million of additional uncommitted term loans, collectively referred to as the “Avenue Facility”. The Avenue Facility matures on October 1, 2026. The Company issued Avenue warrants to purchase $1.2 million of the Company’s common stock at an exercise price of $1.24, subject to adjustments. In addition, Avenue may convert up to $2 million of the $15 million in term loans funded at closing into shares of the Company’s common stock at any time while the loans are outstanding, at a price per share equal to $1.49. Proceeds from the Avenue Facility were used to repay the Company’s outstanding notes payable balances with CRG Financial and are expected to be used for general corporate purposes.
On November 15, 2023, Avenue converted $1 million of the principal amount of the outstanding term loans into shares of the Company’s common stock. This resulted in 672,042 shares of common stock issued to Avenue. Additionally on November 15, 2023, Avenue exercised 96,773 of the Avenue Warrants on a cashless basis resulting in 79,330 shares of the Company’s common stock issued.
The Company entered into an At Market Issuance Sales Agreement (the “ATM Sales Agreement”) with B. Riley Securities, Inc. and Cantor Fitzgerald & Co. relating to the sale of its common stock. In accordance with the terms of the ATM Sales Agreement, the Company may, but is not obligated to, offer and sell, from time to time, shares of common stock having an aggregate offering price of up to $60 million, through or to the Agents, acting as agent or principal. Sales of common stock, if any, will be made by any method permitted that is deemed an “at the market offering” as defined in Rule 415 under the Securities Act. On June 7, 2024, the Company filed a shelf registration statement on Form S-3 under the Securities Act, which was declared effective on July 18, 2024 (the “2024 Shelf”). Under the 2024 Shelf at the time of effectiveness, the Company had the ability to raise up to $150.0 million by selling common stock, preferred stock, debt securities, warrants, and units including $53.3 million of its common stock under the ATM Sales Agreement. As of September 30, 2024, the Company had $53.3 million available under the ATM Sales Agreement, which is part of the $150.0 million available under the 2024 Shelf.
The Company reviewed its forecasted operating results and sources and uses of cash used in management’s assessment, which included the available financing and consideration of positive and negative evidence impacting management’s forecasts, market, and industry factors. Positive indicators that lead to the Company’s expectation that it will have sufficient cash over the next 12 months following the date of this report include: (1) the Company’s continued strengthening of the Company’s revenues and improvement of operational efficiencies across the business, (2) the expected improvement in its cash burn rate over the next 12 months and positive operating cash flows during the nine months ended September 30, 2024, (3) cash on hand of $37.6 million as of September 30, 2024, (4) $53.3 million available under the ATM Sales Agreement, which is part of the $150.0 million available under the 2024 Shelf, (5) management’s ability to curtail expenses, if necessary, and (6) the overall market value of the telehealth industry, which it believes will continue to drive interest in the Company already evidenced by the Medifast Collaboration and Medifast Private Placement noted above.
Critical Accounting Estimates
We prepare our unaudited condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking into account our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.
We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statements that require estimation but are not deemed critical, as defined above.
Our significant accounting policies are more fully described in Note 2—Basis of Presentation and Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements included in this report. We believe that these accounting policies are critical for one to fully understand and evaluate our financial condition and results of operations.
| 36 |
Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 will become effective for the Company’s annual period beginning on January 1, 2024 and interim periods within beginning after January 1, 2025. The Company does not expect the application of ASU 2023-07 to have a material impact to its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to improve its income tax disclosure requirements. Under ASU 2023-09, entities must annually: (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will become effective for the Company beginning on January 1, 2025. The Company does not expect the application of ASU 2023-09 to have a material impact to its consolidated financial statements and related disclosures.
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 unaudited condensed consolidated financial statements upon adoption.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.
Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation and subject to the foregoing, our chief executive officer and chief financial officer concluded that, our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting described below.
Management’s Report on Internal Control Over Financial Reporting
Management of our Company and its consolidated subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of its chief executive and chief financial officers and effected by the Company’s Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of its consolidated financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Material Weaknesses in Internal Control over Financial Reporting
Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2024, based on the framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission. Based on this assessment, management has determined that the Company’s internal control over financial reporting was not effective.
A material weakness, as defined in the standards established by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
| 37 |
Management identified the following control deficiencies during the year ended December 31, 2023 that constituted material weaknesses:
| ● | Ineffective design, implementation, and operation of controls over program change management, user access and vendor management to ensure: |
| (i) | information technology (“IT”) program and data changes affecting the Company’s financial IT applications and underlying accounting records, are identified, tested, authorized, and implemented appropriately to validate that data produced by its relevant IT systems were complete and accurate. Automated process-level and manual controls that are dependent upon the information derived from such financially relevant systems were also determined to be ineffective as a result of such deficiency; | |
| (ii) | appropriate restrictions that would adequately prevent users from gaining inappropriate access to the financially relevant systems; and | |
| (iii) | key third-party service provider Systems and Organizational Controls (“SOC”) reports were obtained and reviewed. |
| ● | Business process controls across the entity’s financial reporting processes were not effectively designed and implemented to properly address the risk of material misstatement from: |
| (i) | insufficient evidence to verify the completeness and accuracy of manually generated Information Produced by the Entity (“IPE”) and system generated IPE; and | |
| (ii) | insufficient evidence of formal review and approval procedures of key information utilized in the performance of the control. |
Management is in the process of remediating these identified material weaknesses.
Management’s Plan to Remediate the Material Weaknesses
To remediate the identified material weaknesses, our management, with oversight from our audit committee, implemented a remediation plan. The Company has taken the following remediation steps during the year ended December 31, 2023:
| (i) | engaged an independent third-party consulting firm to conduct internal control walkthroughs and testing and to provide assistance with deficiency remediation; | |
| (ii) | prepared risk assessments of our financial statement accounts in accordance with the COSO 2013 Framework; | |
| (iii) | developed risk and control matrices for critical internal control processes supporting internal control over financial reporting; | |
| (iv) | created key process flowcharts, including documentation of key and compensating controls; | |
| (v) | assessed the design and operating effectiveness of our controls; | |
| (vi) | identified control gaps and weaknesses in the design and operating effectiveness of our controls; | |
| (vii) | implemented a ticketing system for user provisioning, modifications, and termination; | |
| (viii) | formalized information technology change management processes and retention of audit documentation; | |
| (ix) | established policies and procedures related to system backups and monitoring, software development life cycle and cybersecurity; | |
| (x) | started to formalize user access and change management reviews as well as SOC report reviews for in-scope third-party systems; and | |
| (xi) | summarized our control deficiencies identified to date. |
Management 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 other remediation actions planned include:
| (i) | continue to formalize accounting and financial reporting policies and procedures including entity-level controls and segregation of duties review and analysis; | |
| (ii) | maintain evidence of the completeness and accuracy of manually generated IPE and system generated IPE; | |
| (iii) | enhance documentation and evidence of review of controls; and | |
| (iv) | continue to formalize user access and change management reviews as well as SOC report reviews for in-scope third-party systems. |
The remediation plan, once fully implemented and determined to be operating effectively, is expected to result in the remediation of the identified material weaknesses in internal controls over financial reporting. We are committed to maintaining a strong internal control environment and believe that these remediation efforts will represent significant improvements in our control environment. Our management will continue to monitor and evaluate the relevance of our risk-based approach and the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary.
These material weaknesses did not result in a misstatement of the company’s financial statements; however, they could have resulted in misstatements of interim or annual consolidated financial statements and disclosures that would result in a material misstatement that would not be prevented or detected.
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 have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended September 30, 2024 that materially affected our internal control over financial reporting as of that date.
| 38 |
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of our operations, we become involved in ordinary routine litigation incidental to the business. Material proceedings are described under Note 10, “Commitments and Contingencies” to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
ITEM 1A. RISK FACTORS
An investment in the Company’s common stock involves a number of very significant risks. You should carefully consider the risk factors included in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 11, 2024, 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, 2023. The Company’s business, operating results and financial condition could be adversely affected due to any of those risks.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following disclosures set forth certain information with respect to all securities sold by the Company during the three months ended September 30, 2024 without registration under the Securities Act:
On July 1, 2024 and August 26, 2024, the Company issued 100,000 and 50,000 shares, respectively, of common stock for services, including vested restricted stock to employees.
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
| 39 |
ITEM 6. EXHIBITS
# Indicates management contract or compensatory plan, contract or arrangement.
* Filed herewith.
** Furnished herewith
| 40 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
LIFEMD, INC.
| By: | /s/ Justin Schreiber | |
| Justin Schreiber | ||
| Chief Executive Officer and Chairman of the Board of Directors | ||
| Date: November 7, 2024 | ||
| By: | /s/ Marc Benathen | |
| Marc Benathen | ||
| Chief Financial Officer | ||
| Date: November 7, 2024 | ||
| By: | /s/ Maria Stan | |
| Maria Stan | ||
| Chief Accounting Officer | ||
| Date: November 7, 2024 | ||
| 41 |