美國
證券交易委員會
華盛頓，特區。20549
表格
截至季度結束的日期
or
從________到________的過渡時期
佣金
文件編號:
（公司章程中指定的準確公司名稱）
(州
或其他轄區 |
（國稅局僱主 (主要 執行人員之地址) |
| （總部地址） | (郵政 編 碼) |
根據交易所法規（17 CFR 240.14a-12）第14a-12規定的招股材料
根據法案第12(b)節註冊的證券:
| 標題 每個班級的 | 交易 符號 | 姓名 註冊的交易所 | ||
請勾選標記以指示註冊者是否（1）在過去12個月內（或註冊者需要提交這些報告的更短時間內）已提交證券交易所法案第13或15（d）節要求提交的所有報告，及 （2）是否已被提交要求過去90天的提交要求所制約。
通過勾選圓圈表明註冊者是否在過去12個月內(或註冊者需要提交這些文件的較短期限內)已經遞交規章S-T(本章第232.405條)規定的每個交互式數據文件。
勾選表示報名者是否爲大型加速申報人，加速申報人，非加速申報人，或小型報告公司。請參閱《交易所法》120億.2規則中「大型加速申報人」，「加速申報人」，「小型報告公司」和「新興成長公司」的定義。
| 大型加速文件提交人 | ☐ | ☒ | |
| 非加速文件提交人 | ☐ | 小型報告公司 | |
| 新興成長公司 |
如果是新興成長型企業，請勾選表示該註冊公司已選擇不使用按照證券交易所法第13(a)節規定提供的任何新的或修訂後的財務會計準則的延長過渡期來遵守。☐
請勾選適用的圓圈，表示註冊登記者是否是空殼公司(根據交易所法案第12b-2條的定義)。是 ☐ 否
截至2024年11月6日，該公司已發行並流通的股份爲 股。
LIFEMD，INC。
☒季度報告，根據1934年證券交易法第13條或第15（d）條
截至2024年9月30日季度結束
目錄
| 第一部分 財務信息 | ||
| 項目1. | 基本報表（未經審計） | 3 |
| 彙編的綜合資產負債表 | 3 | |
| 簡明的彙總操作表 | 4 | |
| 綜合股東權益（赤字）的綜合合併報表 | 5 | |
| 簡明的綜合現金流量表 | 7 | |
| 簡明合併財務報表註釋 | 8 | |
| 項目 2. | 分銷計劃 | 27 |
| 項目 3. | 市場風險的定量和定性披露 | 37 |
| 項目 4. | 控制和程序 | 37 |
| 第二部分.其他信息 | ||
| 項目1. | 法律訴訟 | 39 |
| 條目 1A. | 風險因素 | 39 |
| 項目 2. | 未註冊的股票股權銷售和籌款用途 | 39 |
| 項目 3. | 對優先證券的違約 | 39 |
| 項目 4. | 礦山安全披露 | 39 |
| 條目 5。 | 其他信息 | 39 |
| 條目 6。 | 展示資料 | 40 |
| 簽名 | 41 | |
| 2 |
第一部分 - 財務信息
項目 1. 基本報表
LIFEMD， INC。
簡明合併資產負債表
| 2024年9月30日 | 2023年12月31日 | |||||||
| (未經查核) | ||||||||
| 資產 | ||||||||
| 流動資產 | ||||||||
| 現金 | $ | $ | ||||||
| 應收帳款淨額 | ||||||||
| 產品存入資金 | ||||||||
| 存貨，淨額 | ||||||||
| 其他流動資產 | ||||||||
| 所有流動資产總額 | ||||||||
| 非流動資產 | ||||||||
| 設備，淨額 | ||||||||
| 租賃資產 | ||||||||
| 資本化軟體，淨額 | ||||||||
| 無形資產，扣除累計攤銷 | ||||||||
| 非流動資產總額 | ||||||||
| 總資產 | $ | $ | ||||||
| 負債、中間權益和股東權益（赤字） | ||||||||
| 流動負債 | ||||||||
| 應付賬款 | $ | $ | ||||||
| 應計費用 | ||||||||
| 應付票據，淨額 | ||||||||
| 當期營運租賃負債 | ||||||||
| 長期債務的當期償還 | ||||||||
| 逐步認列的收入 | ||||||||
| 全部流动负债 | ||||||||
| 長期負債 | ||||||||
| 長期負債淨額 | ||||||||
| 非當期營運租賃負債 | ||||||||
| 條件付款 | ||||||||
| 總負債 | ||||||||
| 合同和應付之可能負債（註10） | ||||||||
| 夾層股權 | ||||||||
| 每股面額$ 面值; 股份授權股數 可轉換優先股系列b，$ 面值; 股份已授權 股份已發行並流通，清算價值為$ 截至2024年9月30日和2023年12月31日的每股 | ||||||||
| 股東權益（赤字） | ||||||||
| A系列優先股，$ 面值; 股份已授權 股份已發行並流通，大約清算價值為$ | ||||||||
| 普通股，每股面值$ 面值; 股份已授權 和 發行股份， 和 截至2024年9月30日和2023年12月31日分别為未流通 | ||||||||
| 資本公積額額外增資 | ||||||||
| 累積虧損 | ( | ) | ( | ) | ||||
| 庫藏股票：$373,420和$353,470的股票成本分別在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.股東（赤字）權益 | ( | ) | ||||||
| 非控制權益 | ||||||||
| 股東（赤字）權益合計 | ( | ) | ||||||
| 負債總額、中間資本和股東（赤字）權益 | $ | $ | ||||||
隨附註釋為這些未經審計的縮短綜合財務報表的一個重要組成部分。
| 3 |
LIFEMD， INC。
總結 統合營運報表
(未經查核)
| 截至9月30日的三個月 | 截至9月30日的九個月 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 收益 | ||||||||||||||||
| 遠距健康營業收入淨額 | $ | $ | $ | $ | ||||||||||||
| WorkSimpli營業收入淨額 | ||||||||||||||||
| 總收入淨額 | ||||||||||||||||
| 銷售成本 | ||||||||||||||||
| 遠距健康營業收入成本 | ||||||||||||||||
| Cost of WorkSimpli revenue | ||||||||||||||||
| 總營業成本 | ||||||||||||||||
| 毛利潤 | ||||||||||||||||
| 費用 | ||||||||||||||||
| 銷售及行銷費用 | ||||||||||||||||
| 總部及行政費用 | ||||||||||||||||
| Customer service expenses | ||||||||||||||||
| 其他營業費用 | ||||||||||||||||
| 發展成本 | ||||||||||||||||
| 總支出 | ||||||||||||||||
| 營業虧損 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 利息費用，淨額 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 償債槓桿損失 | ( | ) | ||||||||||||||
收入稅前淨損失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 所得稅支出 | ( | ) | ( | ) | ||||||||||||
| 淨損失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 歸屬於非控制權益的净（虧損）收益 | ( | ) | ( | ) | ||||||||||||
| 歸屬於LifeMD, Inc.的淨虧損 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 優先股股息 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 歸屬於LifeMD, Inc.普通股股東的净虧損 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 基本每股虧損歸屬於LifeMD, Inc.普通股股東 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 稀釋每股虧損歸屬於LifeMD, Inc.普通股股東 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 流通的普通股加權平均數量： | ||||||||||||||||
| 基礎 | ||||||||||||||||
| 稀釋 | ||||||||||||||||
隨附註釋為這些未經審計的縮短綜合財務報表的一個重要組成部分。
| 4 |
LIFEMD， INC。
簡明綜合 股東權益（赤字）變動表
(未經查核)
| LifeMD公司。 | ||||||||||||||||||||||||||||||||||||||||
| A級優先股 股本 | 普通股 | 股本溢價資本額 | 累計 | 金庫 | 其他- 控制項 | |||||||||||||||||||||||||||||||||||
| 股份 | 金額 | 股份 | 金額 | 資本 | 赤字累計 | 股票 | 總計 | 利息 | 總計 | |||||||||||||||||||||||||||||||
| 2023年1月1日的結餘 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( |
) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| 股票報酬費用 | - | |||||||||||||||||||||||||||||||||||||||
| 股票發行以非有條件支付作為對價 | - | |||||||||||||||||||||||||||||||||||||||
| 發行債務工具的認股權證 | - | - | ||||||||||||||||||||||||||||||||||||||
| A系列優先股股息 | - | - | ( | ) | ( |
) | ( | ) | ||||||||||||||||||||||||||||||||
| 分配給非控股權益 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| WorkSimpli的會員權益調整 | - | - | ( | ) | ( |
) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| 淨（虧損）收益 | - | - | ( | ) | ( |
) | ( | ) | ||||||||||||||||||||||||||||||||
| 2023年3月31日結餘 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( |
) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| 股票報酬費用 | - | |||||||||||||||||||||||||||||||||||||||
| 發行給非條件考量支付的股票 | - | |||||||||||||||||||||||||||||||||||||||
| 非現金行使股票期權 | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| A輪優先股股息 | - | - | ( | ) | ( |
) | ( | ) | ||||||||||||||||||||||||||||||||
| 發放給非控股權益 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| 調整對WorkSimpli的股份興趣 | - | - | ( | ) | ( |
) | ||||||||||||||||||||||||||||||||||
| 淨（虧損）收益 | - | - | ( | ) | ( |
) | ( | ) | ||||||||||||||||||||||||||||||||
| 2023年6月30日結餘 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( |
) | $ | $ | ( | ) | ||||||||||||||||||||||||
| 股票報酬費用 | - | |||||||||||||||||||||||||||||||||||||||
| 發行股票以用於非條件支付 | - | |||||||||||||||||||||||||||||||||||||||
| 股票發行以解決法律問題 | - | |||||||||||||||||||||||||||||||||||||||
| 非現金行使股票期權 | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| ATm下普通股票的銷售淨額 | - | |||||||||||||||||||||||||||||||||||||||
| B 轉換優先股 | - | |||||||||||||||||||||||||||||||||||||||
| 發行期權以調整債券公允價值 | - | - | ( | ) | ( |
) | ( | ) | ||||||||||||||||||||||||||||||||
| A 系列優先股股息 | - | - | ( | ) | ( |
) | ( | ) | ||||||||||||||||||||||||||||||||
| 分配給非控制權益 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| 淨（虧損）收益 | - | - | ( | ) | ( |
) | ( | ) | ||||||||||||||||||||||||||||||||
| 2023年9月30日的餘額 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( |
) | $ | $ | ( | ) | ||||||||||||||||||||||||
| 5 |
| LifeMD公司。 | ||||||||||||||||||||||||||||||||||||||||
| A級優先股 股本 | 普通股 | 股本溢價資本額 | 累計 | 金庫 | 其他- 控制 | |||||||||||||||||||||||||||||||||||
| 股份 | 金額 | 股份 | 金額 | 資本 | 赤字累計 | 股票 | 總計 | 利息 | 總計 | |||||||||||||||||||||||||||||||
| 2024年1月1日的餘額 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||
| 股票報酬費用 | - | |||||||||||||||||||||||||||||||||||||||
| 發行股票以用於非條件支付 | - | |||||||||||||||||||||||||||||||||||||||
| 行使股票期權 | - | |||||||||||||||||||||||||||||||||||||||
| 行使認股權而無需現金支出 | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| 期權無現金行使 | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| A 系列優先股股息 | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 分配給非控制權益 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| 淨（虧損）收益 | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 2024年3月31日結餘 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||
| 股票報酬費用 | - | |||||||||||||||||||||||||||||||||||||||
| 股票期權行使 | - | |||||||||||||||||||||||||||||||||||||||
| 非現金行使股票期權 | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| 無現金行使權證 | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| A 系列優先股股息 | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 分配給非控制權益 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| 淨（虧損）收益 | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 2024年6月30日資產負債表 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||
| 股票報酬費用 | - | |||||||||||||||||||||||||||||||||||||||
| A 系列優先股股息 | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 分配給非控制權益 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| 淨損失 | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| 2024年9月30日結餘 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
隨附註釋為這些未經審計的縮短綜合財務報表的一個重要組成部分。
| 6 |
LIFEMD， INC。
精簡 綜合現金流量表
(未經查核)
| 截至9月30日的九個月 | ||||||||
| 2024 | 2023 | |||||||
| 營運活動現金流量 | ||||||||
| 淨損失 | $ | ( | ) | $ | ( | ) | ||
| 調整淨損失為經營活動提供的淨現金流量： | ||||||||
| 債務折價攤銷 | ||||||||
| 已資本化的軟體攤銷 | ||||||||
| 無形資產攤銷 | ||||||||
| 應付考慮增加 | ||||||||
| 固定資產的折舊 | ||||||||
| 償債槓桿損失 | ||||||||
| 經營租賃支付 | ||||||||
| 股票發行以解決法律問題 | ||||||||
| 股票報酬費用 | ||||||||
| 資產及負債的變動 | ||||||||
| 應收帳款 | ( | ) | ( | ) | ||||
| 產品存入資金 | ||||||||
| 存貨 | ( | ) | ||||||
| 其他流動資產 | ( | ) | ( | ) | ||||
| 營業租賃負債 | ( | ) | ( | ) | ||||
| 逐步認列的收入 | ||||||||
| 應付賬款 | ( | ) | ||||||
| 應計費用 | ||||||||
| 其他经营活动 | ( | ) | ||||||
| 經營活動產生的淨現金流量 | ||||||||
| 投資活動現金流量 | ||||||||
| 支付的資本化軟體成本 | ( | ) | ( | ) | ||||
| 購置設備 | ( | ) | ( | ) | ||||
| 購置無形資產 | ( | ) | ( | ) | ||||
| 投資活動中使用的淨現金 | ( | ) | ( | ) | ||||
| 融資活動之現金流量淨額 | ||||||||
| 長期負債淨收益 | ||||||||
| 應付票據款項收益 | ||||||||
| 償還應付票據，減去預付罰金 | ( | ) | ( | ) | ||||
| 現金收益來自期權的行使 | ||||||||
| ATm下普通股票的銷售淨額 | ||||||||
| 優先股股息 | ( | ) | ( | ) | ||||
| 為ResumeBuild收購而支付的條件性收購款 | ( | ) | ( | ) | ||||
| 購入WorkSimpli的成員權益的淨支付 | ( | ) | ||||||
| 給非控股權益的分配 | ( | ) | ( | ) | ||||
| 籌資活動提供的淨現金流量 | ( | ) | ||||||
| 現金增加量 | ||||||||
| 期初現金 | ||||||||
| 期末現金 | $ | $ | ||||||
| 支付利息的現金 | ||||||||
| 本期支付之利息現金 | $ | $ | ||||||
| 非現金投資和融資活動 | ||||||||
| 通過無現金行使期權 | $ | $ | ||||||
| 行使認股權而無需現金支出 | $ | $ | ||||||
| 發行股票以用於非條件支付 | $ | $ | ||||||
| B 轉換優先股 | $ | $ | ||||||
| 發行債務工具的認股權證 | $ | $ | ||||||
| 租賃資產 | $ | $ | ||||||
| 營業租賃負債 | $ | $ | ||||||
隨附註釋為這些未經審計的縮短綜合財務報表的一個重要組成部分。
| 7 |
LIFEMD， INC。
附註 至未經審核之簡明合併基本財務報表
備註 1 – 組織及業務性質
公司 歷史
LifeMD成立於1994年5月24日，在特拉華州成立，起初名為Immudyne, Inc. 公司於2018年6月22日更名為Conversion Labs, Inc. 然後在2021年2月22日再次更名為LifeMD, Inc. 自2021年2月22日起，公司普通股的交易標的，每股面值$ 在納斯達克交易所，LifeMD公司的普通股股票交易符號從“CVLB”更改為“LFMD”。
2016年4月1日，原Immudyne PR LLC（“Immudyne PR”）的營運協議經修訂並新修訂，公司增加其在Immudyne PR的所有權和表決權。
在2018年6月，該公司完成了對LegalSimpli Software, LLC的戰略收購
從2023年3月31日開始，公司贖回了股權。
在2022年1月18日，公司收購了Cleared Technologies, PBC，一家特許的特拉華州公益公司（以下簡稱“Cleared”），這是一個全國性的過敏電訪平台，提供個性化的過敏、氣喘和免疫治療（參見附註3）。
業務性質
該公司是一家直達患者的遠程醫療保健公司，提供高品質、具成本效益且方便的方式來獲得全面、虛擬和在家中的醫療保健。該公司認為傳統的看醫生、前往零售藥店，然後返回進行追踪護理或處方補充的模式複雜、效率低且昂貴，阻礙了許多人尋求醫療保健。通過我們的專利技術平台、附屬和專職的供應商網絡、廣泛且擴展的治療能力，以及獨特的建立患者關係的能力，該公司正在改善遠程醫療保健的提供。直達患者遠程醫療保健科技公司，如該公司，將消費者連接到具有執照的醫療專業人士，提供跨多種症狀的護理，包括緊急和初級護理、體重管理、睡眠、脫髮、男性和女性健康、荷爾蒙治療和皮膚科、慢性護理管理等。
該公司的遠程醫療平台幫助患者接觸持牌提供者進行診斷、虛擬護理和處方藥物，通常定期提供。除了遠程醫療處方外，該公司還銷售場外交易（“OTC”）產品。所有產品均可按照訂閱或會員制度購買，患者可以訂閱以定期收到處方藥物或產品的裝運。這為患者提供了便利，並為患者帶來往往享有折扣價格的機會，為公司帶來了循環營業收入。
這家公司的第一個品牌ShapiroMD已經建立了一整套專有的場外交易產品，用於男性和女性脫髮，包括美國食品藥品監督管理局（“FDA”）批准的場外交易米諾地爾和經FDA核准的醫療器械，以及一個個人化的遠程醫療平台，可以讓消費者從他們的提供者那裡獲得虛擬醫療治療，並在適當時提供一整套口服和局部處方藥物來治療脫髮。公司的男士品牌RexMD目前提供基於提供者的治療，包括治療陽痿，以及其他常見的男性健康問題，包括早洩和脫髮。2021年第一季度，公司推出了NavaMD，一個專為女性而設的遠程皮膚科和護膚品牌。該公司建立了一個平台，使其能夠高效地推出遠程醫療和健康產品系列，無論在哪裡，只要確定市場有需求。
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2022年第一季，我們推出了LifeMD品牌下的虛擬初級護理方案LifeMD Primary Care。此方案為患者提供24/7接觸合作醫療服務提供商以滿足其初級護理、緊急護理和慢性疾病護理需求。
2023年4月，我們推出了GLP-1體重管理計劃，為希望使用醫學支持的減重方案的患者提供一級護理、減重、全人醫療、化驗和處方服務。2024年9月，我們擴展了我們的體重管理計劃，增加了一個針對無法或不願使用GLP-1藥物的患者設計的替代方案。該治療計劃包括三種口服藥物-二甲双胍、舍曲林和托吡酮。
業務 與子公司歷史
在2018年6月，該公司完成了對LegalSimpli Software, LLC的戰略收購
開啟
2022 年 1 月 18 日，該公司收購了 Cleared，這是一個全國的過敏遠程醫療平台，該平台為過敏提供個性化治療，
哮喘和免疫學。根據協議條款，本公司收購結算結算的所有未償還股份，以交換
為一個 $
在2022年2月，WorkSimpli與杜拜阿聯酋的East Fusion FZCO（“賣方”）簽訂了一份資產收購協議（“ResumeBuild APA”），WorkSimpli收購了與賣方業務相關的幾乎所有資產，透過服務器軟體提供基於訂閱的履歷建構軟體（“Acquisition”）。WorkSimpli在交易完成時向賣方支付了$
除非另行指明，"LifeMD"、"公司"、"我們"、"我們" 和 "我們的" 指的是 LifeMD, Inc.（前身為 Conversion Labs, Inc.）及其主要擁有的子公司 Cleared，一家特許的德拉瓦公益公司，以及 WorkSimpli。由 LifeMD Southern Patient Medical Care, P.C.（"LifeMD PC"）管理的醫療專業公司和醫療專業協會的聯繫網路，是公司的附屬公司，我們持有一個具決定性財務利益的變量實體。除非另有規定，所有金額均以美元表示。
流動性 評估
截至2024年9月30日，本公司累積赤字約$
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開啟
2023 年 3 月 21 日，本公司簽訂及簽訂貸款及保證協議（「大道信用協議」），以及
與大道創業機遇基金二號公司及大道簽訂的信貸協議（「大道附錄」）的補充資料
創業機會基金股份有限公司（統稱「大道」）。大道信用協議規定可轉換高級人
最高總金額為 $ 的抵押信貸保障
2023年12月11日，公司通過及與其特定全資子公司Medifast，Inc.達成合作協議。根據雙方之間的某些協議，Medifast已同意支付給公司$數百萬以支持該合作，資助公司平台、運營和支援製造行業的增強，其中$數百萬於2023年12月12日結束時支付，$數百萬於2024年3月31日結束三個月內支付，剩餘的$數百萬則在2024年6月30日結束三個月內支付（「Medifast Collaboration」）。
此外，在快驗保合作中，公司與快驗保的全資子公司Jason Pharmaceuticals, Inc. 簽訂了一份普通股購買協議和登記權協議，根據該協議，公司向其發行了股票 在定向增發（Medifast 定向增發）中以每股 $ 款價出售其普通股股票，共發行股票 每股為 $ 的價格，總計籌集約 $
公司與b.Riley Securities, Inc.及Cantor Fitzgerald & Co.簽訂了按市場發行銷售協議（“ATm銷售協議”），有關出售普通股。根據ATm銷售協議的條款，公司可能但無義務，不時透過代理人或獨立地向代理人提出或出售普通股。任何可能銷售普通股的方式，將被認定為《證券法》第415條規定的“市場銷售”。2024年6月7日，公司根據《證券法》提交了S-3表格的架構登記聲明，該聲明於2024年7月18日生效（“2024架構”）。生效時，根據2024架構，公司有能力籌集多達$ 百萬美元，通過出售普通股、優先股、債務證券、認股權以及單位，其中包括$
該公司截至申報日期當天的現金餘額約為$
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注意 2 - 報表編制基礎及重大會計政策摘要
報表說明基礎
附帶的未經審核簡明綜合基本報表已按照美國會計原則，根據揭示10-Q表格和S-X章程第8條中指示編製的暫行財務信息編製。因此，它們不包括所有美國通常會計原則（"US GAAP"）要求的所有信息和附註揭示，以形成完整的經審核財務報表。附帶的未經審核財務信息應與我們向證券交易委員會提交的2023年年度報告10-K中包含的截至2023年12月31日的經審核綜合財務報表及其附註一起查閱。本報告提供的信息反映了所有調整（由管理層認為必要的正常循環性調整），以便對我們每個呈現期間的財務狀況、營運和現金流量進行公平呈現。截至2024年9月30日的三個和九個月的營運結果不一定代表截至2024年12月31日結束或任何未來期間的結果。
合併財務報表的準則
公司根據《會計準則註釋》（“ASC”）810制定的標準來評估是否需要合併聯屬公司。 合併.
未經審計的簡明綜合財務報表包括公司、其控股的Cleared、其控股的WorkSimpli，以及公司附屬的基本報表利益實體LifeMD PC，在其中我們持有控制性的財務利益。在截至2021年12月31日的一年中，公司額外購入了
在合併中，所有重要的企業內部交易和餘額都已被消除。
現金及現金等價物
購買時剩三個月或更短期限的高流動性投資被視為現金及現金等價物。截至2024年9月30日及2023年12月31日時，並無現金及現金等價物。公司在金融機構保留超過聯邦存款保險公司擔保金額的存入資金。現金及現金等價物保留在金融機構，有時存款餘額可能超過聯邦保險限額。如果我們存入資金的一家或多家金融機構出現倒閉或者金融或信貸市場出現其他不利情況，這些餘額可能會受到影響。我們從未因這些餘額而遭受損失。
變量 利益實體
根據ASC 810，企業合併，公司確定公司參與的任何法律實體是否屬於變量利益實體（“VIE”）並受合併的規定。此決定是根據實體是否有足夠的風險資本來資助其活動，而無需從性次級財務支援；或實體的股東缺乏控制財務利益的特徵；以及利益是否將吸收VIE預期損失的部分或收取其預期剩餘收益的部分，而這些利益是基於契約、所有權或金錢性質的，並且隨著實體淨資產公允價值的變化而變化。報告實體是VIE的主要受益人，在當事方具有變量利益或多個變量利益的情況下，當事方被要求合併VIE，使其具有控制財務利益。如果當事方符合權力和損失/利益準則，則被認為具有控制財務利益。權力標準是指能夠指導最重大影響其經濟表現的VIE活動。損失/利益準則是指有義務吸收可能對VIE重要的損失，或有權獲得VIE可能重大的利益。
公司確定LifeMD PC實體，即公司附屬的醫療專業公司和醫療專業協會網絡，在行政上由LifeMD Southern Patient Medical Care, P.C.主導，是一個可變利益實體並受整合。LifeMD PC和公司沒有任何共同的股東。LifeMD PC由持有執照的醫生擁有，而公司與LifeMD PC簽訂了一項管理服務協議，根據該協議，我們向LifeMD PC提供所有非臨床服務。公司確定自己是LifeMD PC的主要受益人並且必須進行合併，因為我們具有指導最大程度影響該實體的經濟表現的活動的權力，並且我們有責任吸收損失。因此，公司將LifeMD PC的財務狀況、營運結果和現金流量呈現為公司的未經審計的簡明合併財務報表的一部分。在對LifeMD PC進行合併時沒有非控制權益。
LifeMD PC的總營業收入分別約為2900萬美元（2024年和2023年三個月完結）
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使用估計值
公司按照美國通行的會計原則準則，編製其未經審計的摘要綜合基本報表，該原則要求管理層進行可能影響資產和負債金額以及收入和支出金額的估計和假設，並在財務報表日期和報告期間內進行申報。管理層需要做出的一些較為重要的估計包括退貨和折讓、股東權益相關的交易、資本化和資本化軟體的減損及其他長期資產的減損、現金流量預測估計和流動性評估。實際結果可能與這些估計不同。
營業收入 認列
公司根據ASC 606的採納記錄營業收入， 客戶合同的營業收入透過對其客戶的交易進行五步分析：
| 1. | 判斷合約 |
| 2. | 判斷履行義務 |
| 3. | 判斷交易價格 |
| 4. | 分配交易價格 |
| 5. | 確認營業收入 |
對於公司與客戶的基於產品的合同，公司確定存在一個履行義務，即產品的交付；該履行義務在特定的一個時間點轉讓。公司通常在客戶下訂單並支付訂單後記錄成品產品的銷售，產品同時由第三方履行服務提供商發貨。在所有情況下，交付被認為在客戶獲得控制時發生，通常是在產品發貨時。如果交付與產品發貨不相稱，則推遲認列收入直至那時。對於基於產品的合同，公司提供基於定期運送產品的訂閱敏感服務。公司在接收月度產品訂單後根據訂閱協議記錄相關收入，並在履行向客戶發貨義務時記錄收入。
對於與客戶的基於產品的合同，公司對折扣、退貨、津貼、客戶回扣和其他產品發貨的調整項目進行估計，並作為減少報告總收入的反向收入予以反映。公司的折扣和客戶回扣在銷售時已知；相應地，公司對這些折扣和客戶回扣的總產品銷售額進行減少。公司根據從歷史交易明細中獲得的信息，估計客戶退貨和津貼，並在相同的會計期間內作為反向收入進行核算，與相關收入同期賺取。公司已確定其與客戶的基於產品的合同人口是同質的，支持對退貨和津貼預估的應用於整個基於產品的合同人口。
對於其與客戶簽訂的LifeMD PC合約，公司提供一次性和基於訂閱的使用權，以獲取公司的遠程醫療平台。 公司提供依賴於訂戶選擇的每月和多個月的訂閱。公司估計有一個隨時間交付的履行義務，因為公司允許訂戶在購買的訂閱時間段內訪問遠程醫療平台。公司在客戶的訂閱期間內記錄收入，對於每月和多個月的訂戶。
客戶折扣、退貨和回扣對遠程醫療收入成交量約為$
公司透過其持有大部分股份的子公司WorkSimpli，提供基於訂閱的服務，為訂戶提供一套軟體應用程式。主要是以每月訂閱的方式進行。該軟體套裝允許訂閱者/用戶將幾乎任何類型的文件轉換為可編輯文件的電子形式，提供編輯的便利性。對於這些與客戶簽訂的基於訂閱的合同，公司提供最初的14天試用期，收費為$，接著是每月訂閱或每年訂閱公司的軟體套裝，視訂戶的選擇而定。公司估計，有一項產品和一項績效義務是隨時間提供的，因為公司允許訂閱者在所購買的訂閱期間內存取服務套裝。公司允許客戶在結帳週期的任何時候取消，此時客戶的訂閱將不會在下個月或年自動續訂，具體取決於最初的訂閱。公司記錄按月和年訂閱客戶的訂閱期間內收入，或記錄到為購買最初訂閱的客戶提供服務的14天結束時。公司為購買月度或年度訂閱的訂戶提供折扣，在合同期開始時扣減；因此，合同價格在合同開始時即確定且可確定。服務的每月和每年訂閱按照公司已知的折扣率記錄。 WorkSimpli 收入所採用的客戶折扣和津貼分別為在截至2024年9月30日和2023年同期的數千美元。WorkSimpli 收入所採用的客戶折扣和津貼金額為
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如上所述，2023年12月11日，公司與快驗保展開了合作。根據雙方的協議，壓力位同意向公司支付$
截至2024年和2023年9月30日結束的三個月和九個月，公司的營業收入分解如下:
| 截至9月30日的三個月 | 截至9月30日的九個月 | |||||||||||||||||||||||||||||||
| 2024 | % | 2023 | % | 2024 | % | 2023 | % | |||||||||||||||||||||||||
| 遠程健康產品和訂閱營業收入 | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| LifeMD PC訂閱營業收入 | % | % | % | % | ||||||||||||||||||||||||||||
| WorkSimpli營業收入 | % | % | % | % | ||||||||||||||||||||||||||||
| 快驗保合作營業收入 | % | % | % | % | ||||||||||||||||||||||||||||
| 營業收入總額 | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
已延遲 收入
當公司收到或預付現金款項超前於履約之時，公司會記錄递延營業收入。截至2024年9月30日和2023年12月31日，公司已按約留下的合約負債，作為累計递延收入，約$
截至2024年9月30日，相較於2023年12月31日，逾延後
營業收入增加了$百萬。
公司預計將於2025年9月30日前，將所有未滿足或部分未滿足的未來履行義務的逕期收入認列為營業收入。
以下的表格總結了所呈現期間的逕留營業收入活動:
| 截至9月30日的三個月 | 截至9月30日的九個月 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 期初 | $ | $ | $ | $ | ||||||||||||
| 新增款項 | ||||||||||||||||
| 已認定收入 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 期末 | $ | $ | $ | $ | ||||||||||||
| 13 |
租賃
公司在合約開始階段確定是否為租賃。營運租賃使用權（ROU）資產包括在未經審計的簡明綜合賬目資產中的使用權資產中。營運租賃負債的當期和長期元件分別包括在未經審計的簡明綜合賬目中的當期營運租賃負債和非當期營運租賃負債。
根據未來最低租金支付的現值，認列經營租約的ROU資產和經營租賃負債。由於大部分公司的租賃未提供內含利率，公司根據起租日可得資訊使用增量借款利率來確定未來支付的現值。某些租賃合約可能包括延長或終止租約的選項。對最低租金支付的租賃費用在租賃期內採用直線法認列。初期期限為12個月或以下的租約不會記錄在資產負債表中。
應收帳款淨額
應收帳款主要包括應收款項來自第三方商戶處理我們的訂閱收入；商戶帳戶應收餘額代表尚未與公司存入的商戶處理的費用。未結商戶應收金額通常代表當月最後一到三天處理的銷售交易，公司在隨後月份的第一週內進行收款。管理層通過定期評估客戶退款活動總額，並考慮退款和追討的保留權，以及考慮目前的經濟情況，來確定是否需要對未來可能授予客戶信用的抵免提供允許。截至2024年9月30日和2023年12月31日，銷貨退回和折讓的儲備金分別約為$
存貨
截至2024年9月30日和2023年12月31日，庫存主要包括完成貨品、原材料和與公司在上表中場外交易產品的遠程健康營業收入相關的包裝。庫存保存在公司位於懷俄明州的第三方倉庫位置以及各個亞馬遜履行中心。公司還在賓夕法尼亞州擁有的倉庫中保有庫存。
庫存的價值按成本或資產淨變現值的較低者評估，成本按平均成本基礎確定。管理層將庫存成本與資產淨變現值進行比較，並作出對庫存進行降記至資產淨變現值的備抵，若末小。截至2024年9月30日和2023年12月31日，公司分別錄得約$的庫存備抵。
截至2024年9月30日和2023年12月31日，公司的存貨如下：
| 九月三十日， | 12月31日， | |||||||
| 2024 | 2023 | |||||||
| 成品 | $ | $ | ||||||
| 原材料和包裝元件 | ||||||||
| 存貨儲備 | ( | ) | ( | ) | ||||
| 存貨總額，淨額 | $ | $ | ||||||
產品 存入資金
我們的許多供應商在下訂單購買商品或提供履行服務時需要收取存入資金。這些存入資金通常從中間區間開始
大寫 軟體成本
公司對某些內部工資和與內部開發的軟體相關的第三方成本進行資本化，並使用直線法在軟體的預期使用壽命中分期攤銷，通常為三年。公司不賣出內部開發的軟體，除非通過訂閱服務提供。根據ASC 350-40標準，某些未符合資本化標準的開發成本將在發生時予以支出。，內部使用的軟體，分別是2024年9月30日和2023年12月31日，公司對內部開發的軟體成本進行了淨額為美元的資本化處理，該成本將隨軟體的使用壽命分期攤銷，並計入我們營運報表的開發成本中。
| 14 |
無形資產
無形資產包括：（1）ResumeBuild品牌，（2）客戶關係資產，（3）Cleared商標，（4）Cleared開發的科技，（5）已購買的許可證和（6）四個已購買的域名。無形資產使用直線法按其預估壽命攤銷。為更新或延長確認的無形資產的期限而發生的成本，按該資產的使用壽命進行資本化和攤銷。
長壽資產的減值
長壽資產包括設備和資本化軟體。 當事件或情況的變化指示資產的攜帶金額可能無法收回時，將審查長壽資產是否出現減損。 如果認為該等資產已受損，則將認定減損額即資產攜帶金額超過資產估計公允值的金額。 截至2024年9月30日和2023年12月31日，公司確定不存在任何事件或情況的變化，表明其長壽資產已受損。
收入 稅收
公司提交企業聯邦、州和地方稅務申報。WorkSimpli在波多黎各提交稅務申報。根據ASC 740，公司按照目前和遞延稅務來記錄稅收。 基本報表採用ASC 740「所得稅會計」會計處理收入稅問題。此ASC要求承認資產和負債的遞延稅款，以彌補資產和負債的稅務基礎與負債承受金額之間的暫時性差異，並根據預計差異將實施的年份中施行的稅率。當有需要時，公司設立評估準備金，以減少預期實現的遞延稅款。公司定期評估其遞延稅款的價值，其中大部分是通過歷史淨虧損產生的，管理層確定評估準備金的必要性。ASC 740還為稅務聲明的識別門檻和測量屬性提供了規定，該聲明關於預計在稅務申報中採取的稅務地位或即將採取的地位。依此指引，公司只有在對稅務當局檢查中有超過50％的可能性時才能在財務報表中承認來自不確定稅務地位的稅務利益，這是指根據立場的技術優勢，稅務地位將得以維持。截至2020年12月31日以來，公司的所有稅務申報都仍然開放，可由所有相關的稅務當局審核。
基於股票的報酬
本公司遵循ASC 718的規定，即股份支付。根據該指南，補償成本通常在授予當日以公平價值確認，然後在各自的授權或服務期間內分期攤銷。授權當日的期權公正價值是使用Black-Scholes期權定價模型來估計的。預期期權壽命來自於基於歷史行使模式的假定行使率，代表授予的期權預計持有的時間。預期波動性基於本公司普通股的歷史波動性，使用與預期的期權壽命相似的觀察期間內的每週價格觀察。無風險利率近似於授予時的美國國庫債券殖利率，適用於與預期期權壽命相似的時段。由於沒有太多的放棄歷史，本公司選擇在放棄發生時進行記錄。許多假設需要重大判斷，任何變動都可能對股份支付支出的確定產生重大影響。
基本每股收益（純利潤）基於每一期間內流通股份的加權平均數計算。未發行的已發放受限制的股票單位（RSUs）和受限制股票獎勵（RSAs）均納入我們的基本加權平均流通股份計算中。可轉換證券、認股權證和購買普通股的期權僅在具擴散性時才被納入為普通股等價物。當影響將具防稀釋性時，潛在的普通股等價物不會被納入稀釋每股盈利。
公司遵循ASC 260的規定，即每股摊薄收益。在計算摊薄後每股收益時，基本每股收益將根據所有可能具有摊薄效應的證券的假定發行進行調整。看漲期權、認股權證和股份支付獎勵的摊薄效應是通過“庫藏庫存法”來計算的，該方法假設從這些工具的行使中獲得的“收益”被用來以該期間的平均市價購買普通股。傳統可轉換債務和優先股的摊薄效應是使用“換股法”來計算的。根據換股法，證券被假設在期初轉換，導致的普通股被包括在摊薄後每股收益計算的分母中，以呈現的整個期間。
| 15 |
| 截至9月30日的三個月 | 截至9月30日的九個月 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| B系列優先股 | ||||||||||||||||
| RSUs 和 RSAs | ||||||||||||||||
| 加權平均行使價 | ||||||||||||||||
| 認股證 | ||||||||||||||||
| 可轉換長期債務 | ||||||||||||||||
| 可能具稀釋效果的證券 | ||||||||||||||||
分段 資料
我們品牌組合包含在兩個營運部門內：遠程醫療和WorkSimpli。我們相信我們目前的部門和品牌在各自的部門內相互補充，並且為未來增長做好了準備。該公司的首席執行官是業務營運決策者，負責審查各部門的營運結果，以做出有關資源分配和評估績效的決定。在確定公司營運部門時，還會審查其他因素，包括業務類型、營業收入和營運結果。
金融工具公允價值
金融工具的公允價值是基於在測量日期市場參與者之間進行有序交易時將獲得的沽出資產或轉移負債的價格。持續公允價值衡量的資產和負債根據在評估中使用的可觀或不可觀輸入分類和披露為三個類別中的一個。直接與用於估值這些資產或負債的輸入相關的分層級別如下：
| 1. | 層次 1: 在計量日期起，未經調整的活躍市場中對於相同資產或負債的報價價格。 | |
| 2. | 層次 2: 對於資產或負債，除了包含在第1層中的報價價格之外，透過與市場數據在計量日期以及工具預期壽命期間的相關性，而直接或間接觀察到的輸入。 | |
| 3. | 層次 3: 未經觀察到的輸入，這些輸入受到很少或沒有市場活動支持，並且對於資產或負債的公允價值至關重要，反映了管理隊估計的市場參與者在計量日期時將用來定價資產或負債的最佳估計。 |
在某些情況下，用於衡量公平價值的輸入可能被歸類為公平價值層級的不同級別。 在這些情況下，根據對公平價值衡量具有重要意義的最低級別輸入，整個公平價值衡量將被完全歸類於公平價值層級。
公司財務工具的攜帶價值，包括現金、應收帳款、應付帳款、應計費用、以及應付票據和可轉換長期債務的票面金額，對於所有期間均大致等於公平價值。
風險的濃度
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 $
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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.
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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,
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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 $
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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 $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Note Regarding Forward-Looking Statements
The following discussion should be read in conjunction with the financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q. Certain statements made in this discussion are “forward-looking statements” within the meaning of 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.
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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%.
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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. |
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| ○ | 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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of our operations, we become involved in ordinary routine litigation incidental to the business. 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
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ITEM 6. EXHIBITS
# Indicates management contract or compensatory plan, contract or arrangement.
* Filed herewith.
** Furnished herewith
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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 | ||
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