Financial Data and Key Metrics Changes - Conversion Labs reported record revenue of $11 million for Q3 2020, representing a 21% increase from the previous quarter and a 252% increase compared to the same quarter last year [6][12] - Gross profit for Q3 2020 increased by 238% to $8.3 million, although gross profit margin decreased to 75.1% from 78.2% year-over-year due to product mix [13] - The company experienced a GAAP net loss of $24.1 million or negative $1.64 per share in Q3 2020, compared to a net loss of $944,000 or negative $0.09 per share in Q3 2019 [15] - Annual recurring revenue (ARR) from subscriptions increased by 458% to $19.3 million in September and further increased to $22.1 million in October, up 514% year-over-year [8][6] Business Line Data and Key Metrics Changes - The PDFSimpli subsidiary contributed net sales of $1.6 million in Q3 2020, up 136% from the same year-ago quarter [12] - The company noted strong organic growth across its brand portfolio, particularly in men's health and hair loss products [4][5] Market Data and Key Metrics Changes - The ongoing COVID-19 pandemic has accelerated the adoption of telemedicine, significantly benefiting Conversion Labs' growth strategy focused on new patient acquisition [5] - The company achieved an annualized revenue run rate of nearly $50 million, a four-fold increase from $12.5 million for the entire previous year [7] Company Strategy and Development Direction - Conversion Labs is focused on building out its telehealth technology platform and expanding its provider network, with significant investments in customer service and sales teams [9][10] - The company completed a $15 million financing round to support its growth and plans to uplift to the NASDAQ capital market [11][29] - The launch of new telehealth brands, including Nava MD for teledermatology, is part of the company's strategy to capture growth in rapidly expanding market segments [44] Management's Comments on Operating Environment and Future Outlook - Management believes that the telehealth opportunity is substantial and that the company is well-positioned for continued growth [26] - The company anticipates that lockdowns due to COVID-19 will drive e-commerce and telemedicine growth, viewing these conditions as beneficial for its business [60][61] - Management expressed confidence in the company's ability to maintain strong unit economics and cash-on-cash returns despite being in a new business [48] Other Important Information - The company has appointed new board members with significant experience, including Roberto Simon and Dr. Connie Mariano, to strengthen its governance as it prepares for NASDAQ listing [32][34] - Conversion Labs has engaged B. Riley as a financial advisor to enhance its visibility among institutional investors [30] Q&A Session Summary Question: Can you discuss the stickiness of subscriptions and visibility? - Management has not formally released retention numbers but plans to address this in the first quarter of 2021, noting strong unit economics and quick cash returns [48] Question: What is the average age of customers and success demographics? - The average age of customers for the ED offer is 65 years old, which aligns well with the rollout of additional categories [52] Question: How does the company view the potential impact of COVID-19 on growth? - Management believes telemedicine is here to stay and that lockdowns will drive e-commerce growth, benefiting the company [60][61] Question: Can you provide an update on the NASDAQ uplisting? - Management is hopeful for a quick approval from NASDAQ, having satisfied all requests, but no specific timeline was provided [66]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2020 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _________ to _________ Commission file number: 000-55857 CONVERSION LABS, INC. (Exact name of registrant as specified in its charter) (State or other Jurisdictio ...

Conversion Labs Inc (CVLB) Q2 2020 Results Conference Call August 17, 2020 1:00 PM ET Company Participants Justin Schreiber - Chief Executive Officer Juan Piñeiro - Chief Financial Officer Stefan Galluppi - Chief Operating and Technology Officer Conference Call Participants John Formicola - Performance Capital Operator Good afternoon. Thank you for joining us today to discuss Conversion Labs second quarter and first half of 2020 results ended June 30, 2020. Joining us today is the Chief Executive Officer of ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2020 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _________ to _________ Commission file number: 000-55857 CONVERSION LABS, INC. (Exact name of registrant as specified in its charter) Delaware 76-0238453 (State or ot ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (unaudited)](index=4&type=section&id=ITEM%201.%20Financial%20Statements%20(unaudited)) Unaudited Q1 2020 financial statements show revenue growth to **$4.3 million** but a widened net loss of **$2.5 million**, with 'going concern' uncertainty [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2020, total assets decreased to **$2.3 million**, while total liabilities increased to **$6.0 million**, resulting in a widened stockholders' deficit of **$3.7 million** Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $357,877 | $1,106,624 | | Total Current Assets | $1,571,843 | $2,747,102 | | Total Assets | $2,291,048 | $3,446,179 | | **Liabilities & Stockholders' Deficit** | | | | Total Current Liabilities | $4,639,464 | $3,975,442 | | Total Liabilities | $6,000,455 | $4,575,420 | | Total Stockholders' (Deficit) | ($3,709,407) | ($1,129,241) | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2020 net revenues increased **59.5%** to **$4.3 million**, but operating and net losses widened to **$1.7 million** and **$2.5 million** respectively due to higher expenses Q1 2020 vs. Q1 2019 Statement of Operations (Unaudited) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Total revenues, net | $4,304,812 | $2,698,990 | | Gross Profit | $2,545,173 | $1,986,545 | | Operating Loss | ($1,740,505) | ($563,369) | | Net loss | ($2,533,544) | ($733,563) | | Basic and Diluted loss per share | ($0.05) | ($0.02) | - Software revenues saw a substantial increase, growing from **$277 thousand** in Q1 2019 to **$1.3 million** in Q1 2020, representing **31%** of total net revenue[13](index=13&type=chunk)[35](index=35&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2020 operating cash flow was **$661 thousand**, but investing and financing activities, including **$1.64 million** debt repayment, led to a **$748 thousand** overall cash decrease Q1 2020 vs. Q1 2019 Cash Flow Summary (Unaudited) | Activity | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $661,355 | $546,464 | | Net cash (used in) investing activities | ($468,400) | ($500,000) | | Net cash (used in) provided by financing activities | ($941,702) | $15,702 | | **Net (decrease) increase in cash** | **($748,747)** | **$62,166** | | **Cash at end of the period** | **$357,877** | **$242,259** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's healthcare business, accounting policies, and a 'going concern' warning due to a **$20.2 million** accumulated deficit and low cash, alongside debt and stock disclosures - The company is a direct response healthcare company focusing on Over The Counter (OTC) products and prescription medications through telemedicine[22](index=22&type=chunk) - Management has determined that there is substantial doubt about the Company's ability to continue as a going concern due to its accumulated deficit of approximately **$20.2 million** and its cash balance of **$358 thousand** as of March 31, 2020[25](index=25&type=chunk) - In February 2020, the company repaid convertible notes to Alpha and Brio totaling **$1.29 million** and amended the associated warrants, reducing exercise prices and increasing the number of shares issuable[61](index=61&type=chunk)[75](index=75&type=chunk)[77](index=77&type=chunk) - Subsequent to the quarter end, in May 2020, Alpha and Brio exercised their amended warrants on a cashless basis, resulting in the issuance of over **2.5 million** shares of common stock[95](index=95&type=chunk)[96](index=96&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes **59.5%** Q1 2020 revenue growth to software and telemedicine, with COVID-19 positively impacting online behavior, but gross margin decreased and net loss widened, highlighting a going concern risk - The company is a direct-to-consumer telemedicine company offering virtual treatment from licensed physicians and home delivery of prescription and OTC products[107](index=107&type=chunk) - The COVID-19 pandemic has driven significant growth, with website traffic to Rex MD and Shapiro MD increasing **371%** and **91%** respectively from Q4 2019 to Q1 2020, and subscription customers for Shapiro MD and Rex MD grew by **96%** and **1,380%** quarter-over-quarter[128](index=128&type=chunk) Q1 2020 vs. Q1 2019 Performance | Metric | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Revenues | ~$4.3 million | ~$2.7 million | | Gross Profit | ~$2.5 million | ~$2.0 million | | Gross Margin | ~59% | ~74% | | Operating Expenses | ~$4.3 million | ~$2.5 million | | Net Loss | ($2.5 million) | ($0.7 million) | - The company faces a going concern risk, with an accumulated deficit of **$20.4 million** as of March 31, 2020, and will need to increase sales or raise additional capital to fund operations through 2020[145](index=145&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Conversion Labs is not required to provide quantitative and qualitative disclosures about market risk[162](index=162&type=chunk) [Controls and Procedures](index=34&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of March 31, 2020, due to material weaknesses including a lack of an audit committee and inadequate segregation of duties - Management evaluated disclosure controls and procedures and concluded they were not effective as of the end of the reporting period[164](index=164&type=chunk) - Material weaknesses identified include: - Lack of a functioning audit committee and majority of outside directors - Inadequate segregation of duties - Insufficient written policies for accounting and financial reporting - Lack of a formal policy for related-party transactions - No written whistleblower policy[168](index=168&type=chunk) [PART II. OTHER INFORMATION](index=34&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=34&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is not currently involved in any litigation expected to have a material adverse effect on its financial condition or operations - The company is not currently involved in any litigation expected to have a material adverse effect on its financial condition or operations[167](index=167&type=chunk) [Risk Factors](index=35&type=section&id=ITEM%201A.%20Risk%20Factors) The company highlights risks associated with managing organizational growth, including personnel recruitment and system improvements, and its reliance on independent consultants and advisors - The company highlights the risk associated with managing its growth, which includes recruiting personnel, improving controls, and managing internal development efforts effectively[170](index=170&type=chunk) - The company relies substantially on independent organizations, advisors, and consultants, and there is no assurance their services will remain available or that qualified replacements can be found[171](index=171&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2020, the company agreed to sell **5.25 million** common shares for **$840 thousand** and issued **739 thousand** shares via cashless warrant exercise, all exempt from registration - In February and March 2020, the company entered into agreements to sell **5.25 million** shares of common stock for **$840 thousand** in cash consideration, with shares not yet issued as of March 31, 2020[173](index=173&type=chunk)[174](index=174&type=chunk) - In March 2020, Alpha and Brio performed a cashless exercise of warrants, resulting in the issuance of **739 thousand** shares of common stock[174](index=174&type=chunk) [Defaults Upon Senior Securities](index=36&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[176](index=176&type=chunk) [Mine Safety Disclosures](index=36&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[177](index=177&type=chunk) [Other Information](index=36&type=section&id=ITEM%205.%20Other%20Information) Post-quarter, the company raised **$1.25 million** from stock sales, acquired exclusive telehealth platform rights, and amended key executive employment and consulting agreements - In April and May 2020, the company raised an aggregate of approximately **$1.25 million** through unregistered sales of common stock to accredited investors[178](index=178&type=chunk)[179](index=179&type=chunk) - On April 14, 2020, the company entered into an agreement with Auxo Technology Labs to acquire exclusive rights to its telehealth platform for the North American direct-to-consumer market[181](index=181&type=chunk)[182](index=182&type=chunk) - The company entered into or amended employment and consulting agreements for key executives, including the CEO, Chief Acquisition Officer, and Chief Technology Officer, effective in March and April 2020[185](index=185&type=chunk)[186](index=186&type=chunk)[188](index=188&type=chunk) [Exhibits](index=38&type=section&id=ITEM%206.%20Exhibits) The report includes a list of filed exhibits, such as warrant amendments, consulting agreements, and officer certifications - The report includes a list of filed exhibits, such as warrant amendments, consulting agreements, and officer certifications[190](index=190&type=chunk)

PART I [Business](index=5&type=section&id=ITEM%201.%20BUSINESS) The company operates as a direct-to-consumer telemedicine provider with a portfolio of wellness and software brands - The company is a direct response healthcare company focusing on telemedicine to provide consumers with OTC products and prescription medications[21](index=21&type=chunk) - In June 2018, the company acquired a **51% stake in LegalSimpli Software, LLC**, a SaaS application for PDF document management, adding search engine optimization and marketing expertise[17](index=17&type=chunk) - A joint venture was formed in June 2019 with GoGoMeds.com through the subsidiary Conversion Labs Rx, LLC, enabling the online sale and shipment of prescription drugs across all 50 states[19](index=19&type=chunk) Brand Portfolio Overview | Brand | Market Segment | Description | | :--- | :--- | :--- | | **Shapiro MD** | Hair Loss | Offers OTC and prescription products for male and female hair loss. Received FDA 510(k) clearance for a Laser Hair Restoration Device in March 2020 | | **iNR Wellness MD** | Immune Health | A supplement for immune and gut support | | **RexMD** | Men's Health | A telemedicine brand offering treatment plans for erectile dysfunction, with plans to expand into other men's health areas | | **SOSRx** | Disaster Preparedness | A new telemedicine brand (launched Q1 2020) offering prescription medications and emergency supplies for disaster situations | | **PDFSimpli** | Software | A majority-owned SaaS product for converting, editing, and signing PDF documents, with over 39,000 active subscriptions as of March 1, 2020 | - The company's growth strategy focuses on increasing brand awareness via telehealth, expanding into traditional marketing channels and international markets, investing in new products and services, and driving operational excellence through price optimization and supply chain investments[45](index=45&type=chunk)[47](index=47&type=chunk)[50](index=50&type=chunk) - As of December 31, 2019, the company had **26 full-time employees** across offices in California and Puerto Rico[69](index=69&type=chunk)[70](index=70&type=chunk) [Risk Factors](index=14&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces significant going concern risks, along with operational, regulatory, and financial vulnerabilities - The independent auditor's report includes a **going concern warning**, citing substantial doubt about the company's ability to continue due to its history of generating losses and not yet achieving positive cash flows[72](index=72&type=chunk)[73](index=73&type=chunk) - The business is **heavily reliant on the expertise and continued services of its President and CEO**, Justin Schreiber, the loss of whom could adversely affect business objectives[77](index=77&type=chunk) - Significant regulatory risks exist, including compliance with laws governing telehealth, the corporate practice of medicine, and federal/state privacy regulations like **HIPAA**, which carry substantial penalties for violations[86](index=86&type=chunk)[87](index=87&type=chunk)[114](index=114&type=chunk) - The company's direct-to-consumer business is highly dependent on the effectiveness and cost of marketing through third-party platforms like **Google and Facebook**[130](index=130&type=chunk)[139](index=139&type=chunk) - The company's common stock may be subject to **"penny stock" rules**, which could adversely affect market price and liquidity by increasing transaction costs and deterring broker-dealers[144](index=144&type=chunk)[146](index=146&type=chunk) [Unresolved Staff Comments](index=29&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved staff comments - Not Applicable[147](index=147&type=chunk) [Properties](index=29&type=section&id=ITEM%202.%20PROPERTIES) The company leases office spaces in California and Puerto Rico and utilizes a virtual executive office in New York Leased Properties | Location | Type | Lease Term | Details | | :--- | :--- | :--- | :--- | | **New York, NY** | Principal Executive Office | Month-to-month | Virtual office with conference space access | | **Huntington Beach, CA** | Office Space | 36-month lease (ending Feb 2021) | 1,239 sq. ft. office for marketing staff | | **Puerto Rico** | Office Space | Month-to-month | Approx. 1,000 sq. ft. office | [Legal Proceedings](index=30&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company reports no material legal proceedings that would adversely affect its business - The company reports **no material legal proceedings**[151](index=151&type=chunk) [Mine Safety Disclosures](index=30&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section is not applicable to the company's operations - Not applicable[152](index=152&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=30&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on the OTCQB market, and no cash dividends are anticipated - The company's common stock is quoted on the OTC Markets-OTCQB under the symbol **"CVLB"**[154](index=154&type=chunk) - As of March 30, 2020, the company had **54,142,940 shares of common stock** issued and outstanding[154](index=154&type=chunk) - The company has **never paid cash dividends** on its common stock and does not anticipate doing so in the foreseeable future[159](index=159&type=chunk) [Selected Financial Data](index=31&type=section&id=ITEM%206.%20SELECTED%20FINANCIAL%20DATA) This section is not applicable as the company is a smaller reporting company - Not applicable[163](index=163&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Revenue grew 49.8% in 2019, but operating and net losses widened due to increased marketing expenses Financial Performance Comparison (2019 vs. 2018) | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | **Total Revenues, net** | **$12,468,578** | **$8,324,129** | **+49.8%** | | Product revenues, net | $9,919,506 | $8,044,416 | +23.3% | | Software revenues, net | $2,539,129 | $277,713 | +814.3% | | **Gross Profit** | **$9,197,982** | **$6,327,907** | **+45.3%** | | Gross Margin | 73.8% | 76.0% | -2.2 p.p. | | **Total Operating Expenses** | **$12,087,590** | **$8,384,047** | **+44.2%** | | **Loss from Operations** | **($2,889,608)** | **($2,056,140)** | **+40.5%** | | **Net Loss** | **($3,528,258)** | **($1,360,090)** | **+159.4%** | | Net Loss Attributable to Conversion Labs, Inc. | ($3,137,203) | ($1,240,828) | +152.8% | - The significant increase in revenue was primarily due to a full year of software revenues from the LegalSimpli acquisition, which accounted for **20% of total revenues in 2019** compared to 3% in 2018[176](index=176&type=chunk) - Operating expenses rose by **$3.8 million (45%)**, largely due to a **$3.1 million increase** in selling and marketing expenses to drive revenue growth[179](index=179&type=chunk) Working Capital and Cash Flow Summary | Metric | Dec 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | **Working Capital** | **($1,228,340)** | **$412,673** | | Net cash provided by (used in) operating activities | $251,408 | ($905,519) | | Net cash provided by financing activities | $775,123 | $802,787 | - Management states that based on the company's cash balance and projected needs, it will need to increase sales revenue and/or raise additional capital, which **raises substantial doubt about its ability to continue as a going concern**[189](index=189&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section is not applicable as the company is a smaller reporting company - Not applicable[204](index=204&type=chunk) [Financial Statements and Supplementary Data](index=40&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the consolidated financial statements, which include a going concern warning from the auditor - The report from the independent registered public accounting firm, BF Borgers CPA PC, explicitly states that the company's significant operating losses **raise substantial doubt about its ability to continue as a going concern**[317](index=317&type=chunk) Key Balance Sheet Items (as of Dec 31) | Account | 2019 | 2018 | | :--- | :--- | :--- | | Cash | $1,106,624 | $180,093 | | Total Current Assets | $2,747,102 | $1,605,070 | | Total Assets | $3,446,179 | $2,616,135 | | Total Current Liabilities | $3,975,442 | $1,192,397 | | Total Liabilities | $4,575,420 | $1,796,397 | | Total Stockholders' (Deficit) | ($1,129,241) | $819,738 | - In 2018, the company sold its legacy beta glucan business for **$1,000,000**, resulting in a gain on sale of **$744,752**, which is reported under discontinued operations[364](index=364&type=chunk)[367](index=367&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=40&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports no disagreements with its accountants - None[206](index=206&type=chunk) [Controls and Procedures](index=40&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls were ineffective due to material weaknesses in internal control - Management concluded that the company's disclosure controls and procedures were **not effective** as of the end of the period[208](index=208&type=chunk) - Material weaknesses identified include: **lack of a functioning audit committee**, inadequate segregation of duties, insufficient written policies and procedures for accounting and financial reporting, and inadequate IT security[213](index=213&type=chunk) - Management has a plan to remediate the material weaknesses, which includes continuing to search for qualified independent directors and redesigning control procedures[213](index=213&type=chunk) [Other Information](index=41&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) The company reports no other information - None[217](index=217&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=42&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) The company lacks formal board committees and a Code of Ethics, with key governance functions handled by the full board - The board of directors consists of eight members, with Justin Schreiber serving as Chairman, President, and CEO[220](index=220&type=chunk)[221](index=221&type=chunk) - The company has **not established an audit, compensation, or nominating and corporate governance committee**, with these functions handled by the full board of directors[239](index=239&type=chunk) - The board has determined that directors Bruzzese, DiTrolio, Walters, Velge, and Strawn are independent[238](index=238&type=chunk) - The company **does not currently have a Code of Ethics** but plans to adopt one in the near future[236](index=236&type=chunk) [Executive Compensation](index=46&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Executive compensation is heavily weighted towards stock awards, with minimal cash salaries for top executives 2019 Summary Compensation for Named Executive Officers | Name and Principal Position | Salary ($) | Stock Awards ($) | Option Awards ($) | All Other Comp. ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Justin Schreiber** (President, CEO) | - | 824,000 | - | 52,000 | 876,000 | | **Stefan Galluppi** (COO, CTO) | 111,000 | 450,000 | - | - | 561,000 | | **Juan Manuel Piñerio Dagnery** (CFO) | 84,000 | - | 73,415 | - | 157,415 | | **Sean Fitzpatrick** (President of LegalSimpli) | 119,265 | - | 571,875 | - | 691,140 | - CEO Justin Schreiber's compensation for his role is primarily through restricted stock awards rather than cash salary, with "All Other Compensation" of **$52,000** representing rent payments from the company for office space[249](index=249&type=chunk)[256](index=256&type=chunk) - Independent directors **received no compensation** for their services during the fiscal year ended December 31, 2019[268](index=268&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=51&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Company insiders and management collectively hold a significant portion of the common stock, with the CEO being the largest shareholder Security Ownership of Major Holders (as of March 25, 2020) | Beneficial Owner | Beneficial Ownership | Percent | | :--- | :--- | :--- | | **Justin Schreiber** (CEO) | 9,539,099 | 17.62% | | **Mark McLaughlin** (Former CEO) | 4,299,960 | 7.94% | | **Stefan Galluppi** (COO) | 3,650,000 | 6.74% | | **Directors & Executive Officers as a Group (9 persons)** | 18,517,108 | 34.20% | - Ownership percentages are based on **54,142,940 shares** of common stock outstanding as of the determination date[271](index=271&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=53&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) The company engages in multiple related-party transactions, primarily involving entities controlled by the CEO - The company's subsidiary, CVLB PR, subleases office space in Puerto Rico from CEO Justin Schreiber, paying **$52,000 in rent for 2019**[288](index=288&type=chunk)[286](index=286&type=chunk) - The company uses BV Global Fulfillment, owned by a relative of the CEO, for warehousing and fulfillment services, with payments amounting to **$1,085,114 in 2019**[293](index=293&type=chunk)[286](index=286&type=chunk) - JLS Ventures, LLC, an entity controlled by CEO Justin Schreiber, has service agreements with the company for which it receives compensation in the form of common stock[289](index=289&type=chunk)[290](index=290&type=chunk) [Principal Accountant Fees and Services](index=55&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Total fees billed by the independent auditor, BF Borgers CPA PC, were consistent in 2019 and 2018 Accountant Fees (BF Borgers CPA PC) | Service | 2019 | 2018 | | :--- | :--- | :--- | | Audit Fees | $92,000 | $87,000 | | Tax Fees | $1,400 | $1,400 | | All Other Fees | - | $5,400 | | **Total Fees** | **$93,400** | **$93,800** | - All services provided by the independent registered public accounting firm were pre-approved by the board of directors[296](index=296&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=56&type=section&id=ITEM%2015.%20EXHIBITS%2C%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all exhibits filed with the report, including corporate documents and material contracts - The exhibits include the company's Certificate of Incorporation, Bylaws, forms of convertible notes and warrants, various employment and consulting agreements, and CEO/CFO certifications[300](index=300&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _________ to _________ Commission file number: 000-55857 CONVERSION LABS, INC. (Exact name of registrant as specified in its charter) Delaware 76-0238453 (State or o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _________ to _________ Commission file number: 000-55857 CONVERSION LABS, INC. (Exact name of registrant as specified in its charter) Delaware 76-0238453 (State or other ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%2E%20FINANCIAL%20INFORMATION) [Financial Statements (unaudited)](index=4&type=section&id=ITEM%201%2E%20Financial%20Statements%20(unaudited)) This section presents Conversion Labs, Inc.'s unaudited condensed consolidated financial statements for the quarter ended March 31, 2019, covering balance sheets, operations, equity, and cash flows Condensed Consolidated Balance Sheet Highlights | Metric | March 31, 2019 (unaudited) | December 31, 2018 | | :--- | :--- | :--- | | **Total Current Assets** | $1,671,286 | $1,605,070 | | **Total Assets** | $2,626,918 | $2,616,135 | | **Total Current Liabilities** | $2,274,172 | $1,192,397 | | **Total Liabilities** | $2,404,441 | $1,796,397 | | **Total Stockholders' Equity** | $222,477 | $819,738 | Condensed Consolidated Statements of Operations Highlights | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | **Net Sales** | $2,698,990 | $1,606,491 | | **Gross Profit** | $2,021,017 | $1,251,038 | | **Operating Loss** | ($563,369) | ($279,314) | | **Net Income (Loss)** | ($733,563) | $639,974 | | **Basic loss per share from continuing operations** | ($0.02) | ($0.01) | Condensed Consolidated Statements of Cash Flows Highlights | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $546,464 | $65,928 | | **Net cash (used in) provided by investing activities** | ($500,000) | $190,000 | | **Net cash provided by (used in) financing activities** | $15,702 | ($167,479) | | **Net increase in cash** | $153,527 | $88,449 | - The company's business model is internet-based direct response marketing, selling proprietary and in-licensed products like Shapiro MD (hair care), iNR Wellness MD (immune support), and PDF Simpli (software)[24](index=24&type=chunk) - The company has substantial doubt about its ability to continue as a going concern due to an accumulated deficit of approximately **$12.9 million** and negative cash flows from operations[29](index=29&type=chunk) - In January 2018, the company sold the net assets of its legacy beta glucan business for **$1,000,000**, resulting in a gain on sale of **$744,752**[63](index=63&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=ITEM%202%2E%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%2E) Management discusses Q1 2019 financial results, highlighting a 68% net sales increase driven by acquisitions and product growth, alongside a net loss due to increased marketing and ongoing going concern doubts - The company's growth strategy includes acquiring or licensing new products, expanding into international markets (with a focus on Asia), and launching a new e-commerce marketing service, Conversion Labs Media LLC[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) - In Q1 2019, Robert Kalkstein resigned as CFO, effective March 31, 2019, and was replaced by Juan Manuel Piñeiro Dagnery, the former Controller[129](index=129&type=chunk)[132](index=132&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Net sales increased **68%** to **$2.7 million** in Q1 2019, driven by acquisitions and product growth, but a net loss of **$733,000** resulted from a **69%** rise in operating expenses, primarily marketing Comparison of Operations for the Three Months Ended March 31 | Metric | 2019 | 2018 | | :--- | :--- | :--- | | **Net sales** | $2,698,990 | $1,606,491 | | **Gross profit** | $2,021,017 | $1,251,038 | | **Operating expenses** | $2,584,386 | $1,530,352 | | **Operating (loss)** | ($563,369) | ($279,314) | | **Net (loss) income** | ($733,563) | $639,974 | - The **68%** increase in net sales is mainly attributed to revenue from the acquisition of LegalSimpli and increased investment and sales of the in-licensed Shapiro MD hair loss products[135](index=135&type=chunk) - Operating expenses increased by **69%**, primarily due to a **~$795,000** increase in marketing efforts for the Shapiro MD product line[139](index=139&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces a **$602,886** working capital deficit and negative operating cash flows, raising substantial doubt about its going concern ability and necessitating future equity or debt financing Working Capital Summary | | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Current assets** | $1,671,286 | $1,605,070 | | **Current liabilities** | $2,274,172 | $1,192,397 | | **Working capital** | ($602,886) | $412,673 | - The company has substantial doubt about its ability to continue as a going concern due to negative operating cash flows and its working capital deficit[147](index=147&type=chunk)[155](index=155&type=chunk) - Management states that additional funds will be required to implement its growth strategy, which may be raised through equity or debt financing, potentially resulting in further dilution to shareholders[148](index=148&type=chunk)[156](index=156&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=33&type=section&id=ITEM%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Conversion Labs, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is not required to provide information on market risk as it qualifies as a smaller reporting company[157](index=157&type=chunk) [Controls and Procedures](index=34&type=section&id=ITEM%204%2E%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of March 31, 2019, due to material weaknesses, with a remediation plan underway to improve internal controls - Management concluded that disclosure controls and procedures were not effective as of the end of the reporting period[160](index=160&type=chunk) - Material weaknesses identified include: lack of a functioning audit committee, inadequate segregation of duties, insufficient written policies for accounting and financial reporting, and no written whistleblower policy[163](index=163&type=chunk) - The company's remediation plan involves searching for qualified independent directors, retaining consulting firms to draft policies, developing a disaster recovery plan, and migrating the accounting functions of LegalSimpli under the company's policies[164](index=164&type=chunk)[166](index=166&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II%2E%20OTHER%20INFORMATION) [Legal Proceedings](index=36&type=section&id=ITEM%201%2E%20Legal%20Proceedings) The company is not currently involved in any litigation expected to have a material adverse effect on its financial condition or operations - As of the report date, the company is not involved in any litigation expected to have a material adverse effect[168](index=168&type=chunk) [Risk Factors](index=36&type=section&id=ITEM%201A%2E%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2018 Annual Report on Form 10-K - There are no material changes to the risk factors previously disclosed in the 2018 Form 10-K[169](index=169&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=ITEM%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2019, the company issued **1,000,000** restricted shares to JLS Ventures, LLC, **100,000** restricted shares for a note, and granted a **500,000** share option to the new CFO - On January 1, 2019, the Company issued **1,000,000** shares of restricted stock to JLS Ventures, LLC[170](index=170&type=chunk) - On February 27, 2019, the Company issued **100,000** restricted shares of common stock to a note holder as part of a short-term note agreement[170](index=170&type=chunk) - On April 1, 2019, the Company granted its new CFO, Juan Manuel Piñeiro Dagnery, an option to purchase **500,000** shares at an exercise price of **$0.23** per share[171](index=171&type=chunk) [Defaults Upon Senior Securities](index=36&type=section&id=ITEM%203%2E%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[173](index=173&type=chunk) [Mine Safety Disclosures](index=36&type=section&id=ITEM%204%2E%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not Applicable[174](index=174&type=chunk) [Other Information](index=36&type=section&id=ITEM%205%2E%20Other%20Information) No other information required to be disclosed under this item has not been previously reported - No other information is required to be disclosed[175](index=175&type=chunk) [Exhibits](index=37&type=section&id=ITEM%206%2E%20Exhibits) This section lists exhibits filed with the Form 10-Q, including material agreements and Sarbanes-Oxley Act certifications - The report includes exhibits such as material agreements and certifications by the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act[177](index=177&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2018 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________________ to __________________________ Commission file number 000-55857 CONVERSION LABS, INC. (Exact name of registrant as specified in its charter) | D ...