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RELATED PARTY TRANSACTIONS | 12 Months Ended
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Dec. 31, 2021
Related Party Transactions [Abstract] |
RELATED PARTY TRANSACTIONS | NOTE 10 – RELATED PARTY TRANSACTIONS Chief Executive Officer Conversion Labs PR utilizes office space in Puerto Rico, which is currently subleased from Fried LLC, and incurs expense of approximately $3,000 a month for this office space. The Company previously made payments to JLS Ventures, an entity wholly owned by our CEO, for rent on Conversion Labs PR’s Puerto Rico office space which amounted to $78,750 and $45,000 for the years ended December 31, 2021 and 2020, respectively. During the year ended December 31, 2021, Conversion Labs PR utilized BV Global Fulfillment (“BV Global”), owned by a related person of the Company’s CEO, to warehouse a portion of the Company’s finished goods inventory and for fulfillment services. The Company pays a monthly fee of $13,000 to $16,000 for fulfillment services and reimburses BV Global for their direct costs associated with shipping the Company’s products. The Company reimbursed BV Global a total of $1,784,679 and $819,617 during the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, the Company owed BV Global Fulfillment $61,824 and $58,943, respectively, which are included in accounts payable and accrued liabilities on the accompanying consolidated balance sheets. On December 31, 2021, the Company entered into an Asset Purchase Agreement with BV Global and the owner, who is a related person of the Company’s CEO (the “Owner”), whereby BV Global and the Owner agreed to sell to the Company certain purchased assets of BV Global in exchange for approximately $9 thousand. The Company accounted for the transaction as an acquisition of assets under ASC 805, Business Combinations. The cost of the acquisition, including certain transaction costs, was allocated to the assets acquired on the basis of relative fair values. The Company also assumed the BV Global real property lease for approximately 6,000 square feet of warehouse space located in Pennsylvania. The lease term is for one year and ends on June 30, 2022. Straight line rent of $2,100 is payable monthly for a total of $25,200 for the lease term. In addition, the Company and the Owner entered into an employment agreement commencing on January 1, 2022 through January 1, 2027, whereby the Owner will serve in the position of Logistics & Fulfillment Advisor at BV Global for a base salary of $119,000 per year. Promissory Note with Director On July 23, 2020, the Company received proceeds of $250,000 for a promissory note to a director. The promissory note is non-interest bearing and originally matured in July 2021. This promissory note was cancelled in exchange for 96,923 restricted shares of the Company’s common stock and a common stock purchase warrant to purchase 500,000 shares of the Company’s common stock at $4.65 per share as part of a Debt Exchange Agreement dated September 22, 2020. The Company issued the shares of common stock and the purchase warrant on October 7, 2020 and cancelled the note, resulting in the reduction of notes payable of $250,000 with a loss on debt settlement of $914,862 for the year ended December 31, 2020. Consulting Agreement with Chief Operating Officer On November 27, 2020, the Company entered into a consulting agreement (the “Consulting Agreement”) with JDM Investments, LLC (“JDM”), an entity solely owned by our COO, whereby JDM will provide consulting services in support of the Company’s day-to-day call center operations. The Consulting Agreement is for a term of thirty-six months and is renewable for additional twelve-month periods upon the mutual agreement of the Company and JDM. As compensation for the services, JDM will receive a monthly fee of $17,000 and shall be eligible to receive a metric based performance bonus for each calendar quarter during the term of the Consulting Agreement in accordance with metrics to be mutually agreed upon by the Company and JDM. The Company paid a total of $102,000 under this agreement, with no bonus earned or accrued, for the year ended December 31, 2021. On June 15, 2021, the Company and Brad Roberts, our COO, restructured Mr. Roberts’s compensation arrangements. The Company and JDM mutually terminated Mr. Roberts’s Consulting Agreement, and Mr. Roberts waived all consulting fees due for the remainder of the term of the Consulting Agreement. In place of the Consulting Agreement, Mr. Roberts and the Company amended his Amended and Restated Employment Agreement dated December 21, 2020 (the “Amendment”) to increase his base salary to $475,000 per calendar year and to update the terms of his annual bonus, providing for a target amount of $200,000, with any actual bonus to be awarded in the sole discretion of the Board. On June 29, 2021, the Company and Mr. Roberts entered into the Second Amendment to the Amended and Restated Employment Agreement dated December 21, 2020 to provide that Mr. Roberts is eligible to receive up to 300,000 RSUs of the Company’s common stock, par value $0.01, which will vest subject to the Company’s Telehealth Brands (as defined in the Second Amendment) achieving certain revenue milestones. The RSUs will also vest upon a Change of Control (as defined in the Second Amendment). Chief Digital Officer On January 5, 2021, the Board appointed Mr. Bryant Hussey as the Company’s Chief Digital Officer. In connection with the appointment, Mr. Hussey entered into an employment agreement (the “CDO Employment Agreement”) with the Company. Pursuant to the CDO Employment Agreement, Mr. Hussey was granted a Stock Option to purchase up to 200,000 shares of the Company’s common stock, scheduled to vest in equal monthly tranches, based on the passage of time, over the 36 months following the effective date. Chief Medical Officer On January 11, 2021, the Board appointed Dr. Anthony Puopolo as the Company’s Chief Medical Officer. In connection with the appointment, Mr. Puopolo entered into an employment agreement (the “CMO Employment Agreement”). Pursuant to the CMO Employment Agreement, Mr. Puopolo was granted options to purchase up to 200,000 shares of the Company’s common stock. 5,555 of the options shall vest in equal monthly tranches, based on the passage of time, over the 36 months following the approval of the effective date, with the remaining 5,575 options scheduled to vest on January 11, 2024. Chief Business Officer On February 3, 2021, the Board appointed Corey Deutsch (“Deutsch”), the Company’s then current Head of Corporate Development, to serve as the Company’s Chief Business Officer. Pursuant to the employment agreement, Mr. Deutsch was granted a options to purchase up to 175,000 shares of the Company’s common stock. The options were to vest in equal monthly tranches, based on the passage of time, over the 36 months following the effective date. On February 4, 2022, Mr. Deutsch was terminated as an employee of the Company. Upon termination, pursuant to the employment agreement, the Company provided to Mr. Deutsch severance pay equal to his current monthly base salary for four months from the date of termination, during which time Mr. Deutsch will continue to receive all employee benefits and employee benefit plans as described in the employment agreement. Chief Financial Officer On February 4, 2021, the Board appointed Mr. Marc Benathen as the Company’s Chief Financial Officer. In connection with the Appointment, Mr. Benathen entered into an employment agreement with the Company (the “CFO Employment Agreement”). To induce Mr. Benathen to enter into the CFO Employment Agreement, Mr. Benathen was granted a signing bonus of 15,000 RSUs. These RSUs vest in accordance with the following: (i) 3,750 of the RSUs vesting on February 4, 2021 (ii) 3,750 RSUs vesting on February 4, 2022 (iii) 3,750 RSUs vesting on February 4, 2023 and (iv) 3,750 RSUs vesting on February 4, 2024. In addition to the RSUs, Mr. Benathen received stock options to purchase up to 200,000 shares of the Company’s common stock. The stock options shall vest in equal monthly tranches, based on the passage of time, over the 36 months. On March 18, 2021, we issued 3,750 common shares under this CFO Employment Agreement. On January 27, 2022, the Company and Mr. Benathen entered into the First Amendment to the CFO Employment Agreement (see Note 13). President On June 10, 2021, the Board appointed Mr. Alex Mironov as the Company’s President. In connection with the appointment, Mr. Mironov entered into an employment agreement with the Company (the “President Employment Agreement”). To induce Mr. Mironov to enter into the President Employment Agreement, Mr. Mironov was granted an equity award with a grant date of June 10, 2021 outside of the Company’s 2020 Equity and Incentive Plan. Mironov received options to purchase an aggregate of 200,000 shares of LifeMD, Inc. common stock. The options have an exercise price of $14.04, which is equal to the closing price of LifeMD. Inc. common stock on June 10, 2021. The options will vest ratably, with 1/36th of the shares fully vested on June 10, 2021, and the remainder of the shares vesting ratably each month over a 35-month period that commences on the date of grant, subject to, the employee’s continued employment with LifeMD, Inc. on such vesting dates. The options have a five-year term. Additionally, Mr. Mironov received a performance-based grant of up to 300,000 restricted shares of LifeMD, Inc. common stock outside of the Company’s 2020 Equity and Incentive Plan, subject to, the employee’s sourcing, and material contribution to the consummation of pharmaceutical deals, as set forth in more detail in the employment agreement. WorkSimpli Software During the year ended December 31, 2021, WorkSimpli utilized LegalSubmit Pvt. Ltd. (“LegalSubmit”), a company owned by WorkSimpli’s Chief Software Engineer, to provide software development services. WorkSimpli paid LegaSubmit a total of $851,523 and $396,709 during the years ended December 31, 2021 and 2020, respectively, for these services. There were no amounts owed to LegalSubmit as of both December 31, 2021 and 2020. Board of Director Appointment On September 8, 2021, the Company appointed Naveen Bhatia as a member of the Board. In connection with the appointment to the Board, the Company and Mr. Bhatia entered into a director agreement (the “Director Agreement”), whereby, as compensation for his services as a member of the Board, Mr. Bhatia shall receive a one-time grant of eight thousand (8,000) restricted stock units of the Company, vesting quarterly beginning on September 30, 2021, pursuant to the Company’s Employee Stock Option Plan. The Company and Mr. Bhatia also entered into a consulting agreement (the “Bhatia Consulting Agreement”), whereby Mr. Bhatia will assist the Company with its capital markets strategy, business development initiatives and growth strategy for a term of one year. Pursuant to the Bhatia Consulting Agreement, Mr. Bhatia received a stock option to purchase 100,000 shares of the Company’s common stock, par value $0.01 per share, with an exercise price of $7.07 per share.

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- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI http://asc.fasb.org/topic&trid=2122745 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864 + Details
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