10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 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: 333-184487

CONVERSION LABS, INC.

(Exact name of registrant as specified in its charter)

Delaware	76-0238453
(State or other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

1460 Broadway New York, NY	10036
(Address of Principal Executive Offices)	(Zip Code)

(866) 351-5907

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  þ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” a “smaller reporting company” and an “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	þ
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act: ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of November 14, 2018, there were 45,482,305 shares of the registrant’s common stock outstanding.

 EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A (the “Amendment”) amends Conversion Labs, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2018 (the “Form 10-Q”), as filed with the Securities and Exchange Commission on November 14, 2018, and is being filed solely to (i) correct a scrivener’s error in Part I, Item 1. Financial Statements, which inadvertently referenced the period ended June 30, 2018 and the six months ended June 30, 2018, and (ii) to include reference in Part I, Item 1, to an additional issuance of common stock which resulted in immaterial revisions to the consolidated balance sheets, statement of operations and cash flows. None of the other information previously disclosed in the Form 10-Q is modified by this amendment. This Amendment includes new certifications by our Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 attached as Exhibits 31.1, 31.2, 32.1 and 32.2 hereto.

Except as expressly set forth above, this Amendment does not, and does not purport to, amend, update or restate the information in any other item of the Form 10-Q or reflect any events that have occurred after the filing of the Form 10-Q.

CONVERSION LABS, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2018

TABLE OF CONTENTS

		Page
PART I.  FINANCIAL INFORMATION		1
ITEM 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2018 and 2017	2
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017	3
	Notes to Condensed Consolidated Financial Statements	4
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk
ITEM 4.	Controls and Procedures
PART II.  OTHER INFORMATION
ITEM 1.	Legal Proceedings
ITEM 1A.	Risk Factors
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds
ITEM 3.	Defaults Upon Senior Securities
ITEM 4.	Mine Safety Disclosures
ITEM 5.	Other Information
ITEM 6.	Exhibits	22
SIGNATURES		23

i

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CONVERSION LABS, INC.

CONDENSED Consolidated Balance Sheets

	September 30, 2018			December 31, 2017
	(unaudited)
ASSETS
Current Assets
Cash	$	407,272		$	141,379
Trade accounts receivable, net		175,631			128,190
Other receivables		-			-
Product deposit		106,700			16,500
Inventory, net		623,446			681,258
Other current assets		251,184			-
Assets held for sale		-			296,483
Total Current Assets	$	1,564,233		$	1,263,810
Non-current assets
Intangible assets, net	$	335,131		$	-
Total non-current assets		335,131			-
Total Assets	$	1,899,364		$	1,263,810
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts payable and accrued expenses	$	684,274		$	391,759
Notes payable		-			167,479
Convertible notes payable, net		-			-
Deferred revenue		15,608			-
Liabilities held for sale		-			81,733
Total Current Liabilities		699,882			640,971
Stockholders’ Equity (Deficit)
Common stock, $0.01 par value; 100,000,000 shares authorized, 45,334,957 and 44,493,063 shares issued, 44,819,757 and 43,977,863 outstanding as of September 30, 2018 and December 31, 2017, respectively		453,349			444,930
Additional paid-in capital		12,339,491			11,500,537
Accumulated deficit		(11,375,579	)		(10,899,843	)
		1,417,261			1,045,624
Treasury stock, 515,200 and 515,200 shares, at cost		(163,701	)		(163,701	)
Total Conversion Labs, Inc. Stockholders’ Equity (Deficit)		1,253,560			881,923
Non-controlling interest		(54,078	)		(259,084	)
Total Stockholders’  Equity (Deficit)		1,199,482			622,839
Total Liabilities and Stockholders’  Equity (Deficit)	$	1,899,364		$	1,263,810

The accompanying footnotes are in integral part of these unaudited condensed consolidated financial statements.

1

CONVERSION LABS, INC.

CONDENSED Consolidated STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Net Sales	$	2,495,424		$	2,051,734		$	6,139,551		$	3,583,614
Cost of Sales		439,701			535,572			1,329,881			1,068,174
Gross Profit		2,055,723			1,516,162			4,809,670			2,515,440
Operating expenses
Compensation and related expenses		321,933			529,361			787,898			1,131,805
Professional fees		410,340			99,964			852,498			321,548
Marketing expenses		1,407,911			882,845			3,576,096			1,182,715
General and administrative expenses		301,174			277,559			855,620			753,402
Total operating expenses		2,441,358			1,789,729			6,072,112			3,389,470
Operating Loss		(385,635	)		(273,567	)		(1,262,442	)		(874,030	)
Change in fair value of derivative liability		-			(377,213	)		-			496,617
Interest (expense)		(147,664	)		(1,111	)		(205,192	)		(650,718	)
Income (Loss) from continuing operations		(533,299	)		(651,891	)		(1,467,634	)		(1,028,131	)
Income from discontinued operations, including gain on sale, net of income taxes		-			-			925,738			-
Net income (loss)		(533,299	)		(651,891	)		(541,896	)		(1,028,131	)
Net income (loss) attributable to noncontrolling interests		(37,318	)		27,172			(66,160	)		(41,752	)
Net income (loss) attributable to Conversion Labs, Inc.	$	(495,981	)	$	(679,063	)	$	(475,736	)	$	(986,379	)
Basic income (loss) per share attributable to Conversion Labs, Inc. from continuing operation	$	(0.01	)	$	(0.02	)	$	(0.03	)	$	(0.02	)
Basic income per share attributable to Conversion Labs, Inc. from discontinued operation		-			-			-			-
Diluted income (loss) per share attributable to Conversion Labs, Inc. from continuing operation		(0.01	)		(0.01	)		(0.03	)		(0.02	)
Diluted income per share attributable to Conversion Labs , Inc. from discontinued operation	$	-		$	-		$	-		$	-
Average number of common shares outstanding
Basic		44,436,030			40,849,638			43,708,092			44,160,477
Diluted		44,436,030			47,254,218			43,708,092			44,160,477

The accompanying footnotes are in integral part of these unaudited condensed consolidated financial statements.

2

CONVERSION LABS, INC.

CONDENSED Consolidated STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss)	$	(541,896	)	$	(1,028,131	)
Adjustments to reconcile net (loss) to net cash (used) by operating activities
Change in fair value of derivative liability		-			(496,617	)
Amortization of debt discount		181,309			81,558
Amortization and depreciation		41,891
Bad debt recovery		-			(49,119	)
(Gain) loss on discontinued operations and disposal		(918,537	)		-
Loss on settlement of notes and other payables		-			634,325
Stock compensation expense		458,850			162,741
Issuance of warrants for services		-			-
Common stock issued for services					498,930
Changes in Assets and Liabilities
Trade accounts receivable		(47,441	)		216,870
Other receivables		-			2,250
Product deposit		(90,200	)		(119,899	)
Inventory		57,812			(217,530	)
Other current assets		(138,050	)		-
Deferred revenue		15,348			-
Accounts payable and accrued expenses		208,426			(1,067	)
Net cash (used) by operating activities of continuing operations		(772,488	)		(315,689	)
Net cash used in operating activities of discontinued operations		283,287			-
Net cash (used in) provided by operating activities		(489,201	)		(315,689	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of subsidiary, net of cash received		(148,555	)		-
Proceeds from sale of legacy business		390,000			-
Net cash provided by (used in) investing activities		241,445			-
CASH FLOWS FROM FINANCING ACTIVITIES
Investment in subsidiary by noncontrolling interest, net		127,048			63,378
Proceeds from notes payable		-			386,376
Proceeds from convertible note payable		550,000
Repayment of convertible note payable		-			(100,000	)
Repayment of notes payable		(167,479	)		(250,463	)
Proceeds from options exercise		4,080
Sale of common stock and warrants		-			673,245
Purchase of treasury stock		-			(76,648	)
Net cash provided by financing activities	$	513,649			695,888
Net increase in cash		265,893			380,199
Cash at beginning of the period		141,379			182,561
Cash at end of the period	$	407,272		$	562,760
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest	$	4,383		$	-
Issuance of company stock for notes and other payables	$	-		$	242,192
Retirement of stock	$	460,000		$	-
Stock repurchase from shareholder	$	460,000		$	-
Conversion of liability as consideration on sale of legacy business	$	150,000			-
Conversion of equity invested in subsidiary to common stock and warrants	$	-		$	272,203
Reclassification of options, warrants and other contracts to derivative liabilities upon issuance	$	-		$	1,636,590
Warrants issued in relation to debt	$	533,691			-
Conversion of notes payable	$	310,752			-

The accompanying footnotes are in integral part of these unaudited condensed consolidated financial statements.

3

CONVERSION LABS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018

(Unaudited)

NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS

Nature of Business

Conversion Labs, Inc. (“Conversion Labs,” “we,” “us,” “our,” the “Company”) is an internet-based direct response marketing company that in-licenses, acquires and creates innovative and proprietary products that are sold to consumers around the world via our technology infrastructure and relationships with agencies, third party marketers, and online advertising platforms such as Facebook, Google and Amazon. We currently have three commercial stage products including Shapiro MD, a patented shampoo, conditioner, and leave-in foamer for thicker, fuller hair, iNR Wellness MD, a nutritional supplement for immune support, and PDF Simpli, a PDF conversion software, which was acquired through the purchase of 51% of the membership interests of LegalSimpli Software, LLC, a Puerto Rico limited liability company, which operates a marketing-driven software solutions business.

We launched our online direct marketing business in the fourth quarter of 2015 with the establishment of a partnership with Inate Skincare, LLC (“Inate”). Our initial intention was to launch a skin care line containing our proprietary ingredients and to market such products directly to consumers. We entered into a limited liability company operating agreement with our joint venture partners with respect to Inate under the legal name Immudyne PR LLC (“Immudyne PR”). On April 1, 2016, the original operating agreement of Immudyne PR was amended and restated and we increased our ownership and voting interest in Immudyne PR to 78.2%.

During 2016, we utilized third party entities to provide and increase credit card processing capacity and optimize corresponding rates and fees through one or more merchant bank accounts held by such entities. Some of the entities contracted to provide these services had been determined to be variable interest entities (“VIEs”) and were consolidated in the Company’s financial statements. The one (1%) percent fee received by these VIEs was eliminated in consolidation of the net revenues processed and collected by such contractors from sales initiated by the Company. The remaining entities provided such services as independent contractors, the majority of which were considered related parties and no fee was paid. Upon receipt of funds by such contractors from their respective merchant banks, the Company required the prompt transfer of funds to Company controlled accounts. The Company reimbursed and/or advanced funds to such contractors for any deficit or charge related to returns, chargeback and other fees charged by such merchant bank. By our year ended December 31, 2017, we ceased processing credit card charges through all VIE merchant accounts. At December 31, 2017, we recorded the merchant reserves from these VIE merchant accounts on our balance sheet as accounts receivable.

As used in these financial statements and unless otherwise indicated, the terms “Company,” “we,” “us,” and “our” refer to Conversion Labs, Inc. (formerly known as Immudyne, Inc.) and our majority-owned subsidiaries LegalSimpli Software, LLC, a Puerto Rico limited liability company (“LegalSimpli”), Conversion Labs PR, LLC (formerly Immudyne PR LLC), a Puerto Rico limited liability company (“Conversion Labs PR”), and Conversion Labs Asia Limited, a Hong Kong company (“Conversion Labs Asia”). Unless otherwise specified, all dollar amounts are expressed in United States dollars.

Acquisition of Membership Interest Purchase Agreement

On May 29, 2018, Immudyne PR acquired 51% of the membership interests (the “Membership Interests”) of LegalSimpli Software, LLC, a Puerto Rico limited liability company (“LegalSimpli”), which operates a marketing-driven software solutions business. In consideration for Immudyne PR’s purchase of the Membership Interests, Immudyne PR paid $150,000 (the “Initial Payment”) to the sellers upon execution of the purchase agreement. Additionally, Immudyne PR agreed to pay up to an additional $200,000 for such Membership Interests.

4

Going Concern

The Company has funded operations in the past through the sales of its products, issuance of common stock and through loans and advances from officers and directors. The Company’s continued operations are dependent upon obtaining an increase in its sales volume and the continued financial support from officers and directors or the sale of additional shares of common stock or debt securities. The accompanying financial statements have been prepared on the basis that the Company will continue as a going concern, which assumes the realization of assets and the satisfaction of liabilities in the normal course of business. At September 30, 2018, the Company had an accumulated deficit of approximating $11.1 million and has incurred negative cash flows from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Based on the Company’s cash balance at September 30, 2018, and projected cash needs for 2018, management estimates that it will need to increase sales revenue and/or raise additional capital to cover operating and capital requirements for the 2018 fiscal year. Management will need to raise the additional needed funds through increased sales volume, issuing additional shares of common stock or other equity securities, or obtaining debt financing. Although management has been successful to date in raising necessary funding, there can be no assurance that sales revenue will substantially increase or that any required future financing can be successfully completed on a timely basis, or on terms acceptable to the Company.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The Company evaluates the need to consolidate affiliates based on standards set forth in ASC 810 Consolidation (“ASC 810”). The consolidated financial statements include the accounts of the Company and its majority owned subsidiary, Conversion Labs PR, its 51% owned LegalSimpli and variable interest entities (VIE’s) in which the Company has been determined to be the primary beneficiary. The non-controlling interest in Conversion Labs PR represents the 21.833% equity interest held by other members of the joint venture. All significant consolidated transactions and balances have been eliminated in consolidation.

Management’s Representation of Interim Financial Statements

The accompanying unaudited consolidated financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements include all of the adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements at December 31, 2017 and 2016 filed in the Company’s Annual Report on Form 10-K with the SEC on April 2, 2018.

Variable Interest Entities

The Company follows ASC 810-10-15 guidance with respect to accounting for variable interest entities (each, a “VIE”). These entities do not have sufficient equity at risk to finance their activities without additional subordinated financial support from other parties or whose equity investors lack any of the characteristics of a controlling financial interest. A variable interest is an investment or other interest that will absorb portions of a VIE’s expected losses or receive portions of its expected residual returns and are contractual, ownership, or pecuniary in nature and that change with changes in the fair value of the entity’s net assets. A reporting entity is the primary beneficiary of a VIE and must consolidate it when that party has a variable interest, or combination of variable interests, that provides it with a controlling financial interest. A party is deemed to have a controlling financial interest if it meets both of the power and losses/benefits criteria. The power criterion is the ability to direct the activities of the VIE that most significantly impact its economic performance. The losses/benefits criterion is the obligation to absorb losses from, or right to receive benefits from, the VIE that could potentially be significant to the VIE. The VIE model requires an ongoing reconsideration of whether a reporting entity is the primary beneficiary of a VIE due to changes in facts and circumstances.

5

By our fiscal year ending December 31, 2017, we ceased processing credit card charges through all VIE merchant accounts. At September 30, 2018 and December 31, 2017, we recorded the merchant reserves from these VIE merchant accounts on our balance sheet as accounts receivable.

Conversion Labs PR is the primary beneficiary of Innerwell Skincare LLC, Spurs 5, LLC, and Salus LLC, which are qualified as VIEs. The assets and liabilities and revenues and expenses of these VIEs included in the financial statements of Conversion Labs PR and further included in the consolidated financial statements. The assets and liabilities include balances due from and due to the subsidiaries of Conversion Labs PR. These inter-company receivables and payables are eliminated upon consolidation of the VIE with Conversion Labs PR and the Company. No assets were pledged or given as collateral against any borrowings.

The Company utilizes third party entities to provide and increase credit card processing capacity and optimize corresponding rates and fees. A majority of these entities provide this service as independent contractors in exchange for a one (1%) percent fee of the net revenues processed and collected by such contractors from sales initiated by the Company. The VIEs consolidated in the Company’s financial statements are primarily contracted to credit card processing through one or more merchant banks contracted by each VIE. Upon receipt of funds by each VIE, the collection of receipts less any returns, chargeback and other fees charged by such merchant bank is transferred to Conversion Labs PR.

Use of Estimates

The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates required to be made by management include the determination of reserves for accounts receivable, returns and allowances, the accounting for derivatives, the valuation of inventory and stockholders’ equity based transactions. Actual results could differ from those estimates.

Derivative Liabilities

Under ASC 815-40-05, Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company’s Own Stock, in the event the Company does not have a sufficient number of authorized and unissued shares of common stock to satisfy obligations for stock options, warrants and other instruments potentially convertible into common stock, the fair value of these instruments should be reported as a derivative liability. Pursuant to the outstanding option, warrant and convertible debt agreements, there is currently no effective registration statement covering the shares of common stock underlying these agreements, which are currently subject to a cashless exercise whereby the holders, at their option, may surrender their options and warrants to the company in exchange for shares of common stock. The number of shares of common stock into which an option or a warrant would be exchangeable in such a cashless exercise depends on both the exercise price of the options or warrant and the market price of the common stock, each at or near the time of exercise. Because the market price is variable, it is possible that the Company could have insufficient authorized shares to satisfy a cashless exercise. In this scenario, if the Company were unable to obtain shareholder approval to increase the number of authorized shares, the Company could be obligated to settle such a cashless exercise with cash rather than by issuing shares of common stock. Further, ASC 815-40-05 requires that the Company record the potential settlement obligation at each reporting date using the current estimated fair value of these contracts, with any changes in fair value being recorded through our statement of operations. The Company had reported the potential settlement obligation as a derivative liability. In the third quarter of 2017, the Company obtained a majority of shareholders’ approval and amended its Articles of Incorporation to increase the number of shares of its authorized common stock, therefore the derivative liability is no longer applicable.

Inventory

At September 30, 2018 and December 31, 2017, inventory consisted primarily of finished cosmetic products. Inventory is maintained in a third-party warehouse in Pennsylvania.

6

Inventory is valued at the lower of cost or net realizable value with cost determined on a first-in, first-out (“FIFO”) basis. Management compares the cost of inventory with the net realizable value and an allowance is made for writing down inventory to net realizable, if lower. At September 30, 2018 and December 31, 2017, the Company recorded an inventory reserve in the amount of $12,500 and $12,500, respectively. As of September 30, 2018 and December 31, 2017, the inventory balances were $507,211 and 681,258, respectively.

Revenue Recognition

The Company records revenue under the adoption of ASC 606 by analyzing exchanges with its customers using a five-step analysis such as identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company’s policy is to record revenue as earned when a firm commitment, indicating sales quantity and price exists, delivery has taken place and collectability is reasonably assured. The Company generally records sales of finished cosmetic products once the customer places the order and the product is simultaneously shipped, but in limited cases if title does not pass until the product reaches the customer’s delivery site, then recognition of revenue should be deferred until that time, however the Company does not have a process to properly record the recognition of revenue if orders are not immediately shipped. Delivery is considered to have occurred when title and risk of loss have transferred to the customer. Provisions for discounts, returns, allowances, customer rebates and other adjustments are netted with gross sales. The Company accounts for such provisions during the same period in which the related revenues are earned. Customer discounts, returns and rebates for the three and nine months ended September 30, 2018, was approximately $133,000 and $353,000, respectively. Customer discounts, returns and rebates for the three and nine months ended September 30, 2017, was approximately $99,000 and $149,000, respectively. 

There are no formal sales incentives offered to any of the Company’s customers. Volume discounts may be offered from time to time to customers purchasing large quantities on a per transaction basis.

Accounts receivable

Accounts receivable are carried at original invoice amount less an estimate made for holdbacks and doubtful receivables based on a review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions and sets up an allowance for doubtful accounts when collection is uncertain. Customers’ accounts are written off when all attempts to collect have been exhausted. Recoveries of accounts receivable previously written off are recorded as income when received. At September 30, 2018 and December 31, 2017, the accounts receivable reserve was approximately $0 and $0, respectively. At September 30, 2018 and December 31, 2017, the reserve for sales returns and allowances was approximately $33,754 and $23,200, respectively.

Income Taxes

The Company files Corporate Federal and State tax returns, while Conversion Labs PR and LegalSimpli, which were formed as limited liability companies, file separate tax returns with any tax liabilities or benefits passing through to its members.

The Company records current and deferred taxes in accordance with Accounting Standards Codification (ASC) 740, “Accounting for Income Taxes.” This ASC requires recognition of deferred tax assets and liabilities for temporary differences between tax basis of assets and liabilities and the amounts at which they are carried in the financial statements, based upon the enacted rates in effect for the year in which the differences are expected to reverse. The Company establishes a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. The Company periodically assesses the value of its deferred tax asset, a majority of which has been generated by a history of net operating losses and determines the necessity for a valuation allowance. ASC 740 also provides a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken in a tax return. Using this guidance, a company may recognize the tax benefit from an uncertain tax position in its financial statements only if it is more likely-than-not (i.e., a likelihood of more than 50%) that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

7

The Company’s tax returns for all years since December 31, 2014, remain open to federal and state taxing authorities.

Stock-Based Compensation

The Company follows the provisions of ASC 718, “Share-Based Payment”. Under this guidance compensation cost generally is recognized at fair value on the date of the grant and amortized over the respective vesting periods. The fair value of options at the date of grant is estimated using the Black-Scholes option pricing model. The expected option life is derived from assumed exercise rates based upon historical exercise patterns and represents the period of time that options granted are expected to be outstanding. The expected volatility is based upon historical volatility of the Company’s shares using weekly price observations over an observation period that approximates the expected life of the options. The risk-free rate approximates the U.S. Treasury yield curve rate in effect at the time of grant for periods similar to the expected option life. Due to limited history of forfeitures, the estimated forfeiture rate included in the option valuation was zero.

Many of the assumptions require significant judgment and any changes could have a material impact in the determination of stock-based compensation expense.

Earnings (Loss) Per Share

Basic earnings (loss) per common share is based on the weighted average number of shares outstanding during each period presented. Warrants and options to purchase common stock are included as common stock equivalents only when dilutive. Potential common stock equivalents are excluded from dilutive earnings per share when the effects would be antidilutive.

Common stock equivalents comprising shares underlying 1,886,454 options and warrants for the three and nine months ended September 30, 2018, respectively, have not been included in the income per share calculations as the effects are anti-dilutive.

Common stock equivalents comprising shares underlying 9,335,800 options and warrants for the three and nine months ended September 30, 2017, have not been included in the loss per share calculation as the effects are anti-dilutive.

Recent Accounting Pronouncements 

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This pronouncement is effective for annual reporting periods beginning after December 15, 2017 but early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing diversity in practice regarding how certain cash receipts and cash payments are presented in the statement of cash flows. The standard provides guidance on the classification of the following items: (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon debt instruments, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance policies, (6) distributions received from equity method investments, (7) beneficial interests in securitization transactions, and (8) separately identifiable cash flows. The Company is required to adopt ASU 2016-15 for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017 on a retrospective basis. Early adoption is permitted, including adoption in an interim period. We have reviewed ASU 2016-15 and have determined that it will not have any material effect on our financial statements and related disclosures.

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In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes all existing guidance on accounting for leases in ASC Topic 840. ASU 2016-02 is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. ASU 2016-02 will continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statement of income. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. ASU 2016-02 is required to be applied with a modified retrospective approach to each prior reporting period presented with various optional practical expedients. We have reviewed ASC 842 and have determined that it will not have any material effect on our financial statements and related disclosures.

Recent Accounting Pronouncements (continued)

All other accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

Fair Value of Financial Instruments

The carrying value of the Company’s financial instruments, including cash, trade accounts receivable, accounts payable and accrued expenses and the face amount of notes payable approximate fair value for all periods.

Noncontrolling Interests

The Company accounts for its less than 100% interests in Conversion Labs PR and LegalSimpli in accordance with ASC Topic 810, Consolidation, and accordingly the Company presents noncontrolling interests as a component of equity on its consolidated balance sheet and reports the noncontrolling interest’s share of the Conversion Labs PR, and LegalSimpli’s net loss attributable to noncontrolling interests in the consolidated statement of operations.

Consolidation of Variable Interest Entities

In accordance with ASC 810-10-25-37 and as amended by ASU 2009-17, the Company determines whether any legal entity in which the Company becomes involved is a VIE and subject to consolidation. The Company conducts an assessment on an ongoing basis for each VIE including (1) the power to direct activities of the VIE that most significantly impact the VIE’s economic performance, and (2) the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. As a result, the Company determined that six entities were VIEs and subject to consolidation.

Concentration of Credit Risk

The Company grants credit in the normal course of business to its customers. The Company periodically performs credit analysis and monitors the financial condition of its customers to reduce credit risk.

The Company monitors its positions with, and the credit quality of, the financial institutions with which it invests. The Company, at times, maintains balances in various operating accounts in excess of federally insured limits.

Although the Company does have some wholesale customers, over 90% of the Company’s sales are to unique customers. Since the Company sells its products to thousands of customers, there is no accounts receivable concentration from customers. However, the Company uses merchant processors to charge customer credit cards and does contain concentration risk between credit card processors.

As of September 30, 2018, the Company’s accounts receivable had no significant concentration from any one customer.

As of September 30, 2018, three credit card processors accounted for 56%, 22% and 20% of accounts receivable.

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NOTE 3 – DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE

On January 29, 2018, the Company entered into a Legacy Asset Sale Agreement (the “Asset Sale Agreement”) with Mark McLaughlin (the Company’s former President and Chief Executive Officer) whereby the Company sold the assets of the legacy beta glucan business for $850,000. On February 7, 2018, the Company and Mr. McLaughlin entered into an amendment to the Asset Sale Agreement (the “Asset Sale Agreement Amendment”) to amend the purchase price of the assets, whereby Mr. McLaughlin agreed, through a newly formed entity, to purchase the assets and liabilities of the yeast beta glucan manufacturing business, for the following: (i) 2,000,000 shares of the Company’s common stock (valued at $0.23 per share or $460,000), payable on February 12, 2018, (the “Closing Date”), (ii) $190,000 payable on the Closing Date, (iii) $200,000 payable within 120 days following the Closing Date, and (iv) the waiver of all rights to any severance payment in the amount of $150,000. The total purchase price per the Asset Sale Agreement Amendment was $1,000,000. The total assets and liabilities transferred in the sale was $255,248, resulting in a gain on sale of $744,752.

Operating results for the three months and nine months ended September 30, 2018, and 2017 for the yeast beta glucan manufacturing business are presented as discontinued operations and the assets and liabilities classified as held for sale are presented separately in the balance sheet.

A breakdown of the discontinued operations is presented as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Net Sales	$	-	$	447,331	$	363,613	$	703,894
Cost of Sales		-		144,148		56,666		259,331
Gross Profit		-		303,183		306,947		444,563
Operating expenses		-		148,358		125,960		262,931
Income from discontinued operations		-		154,825		180,987		181,632
Gain on sale		-		-		744,752		-
Net income from discontinued operations	$	-	$	154,825	$	925,739	$	181,632

Assets and liabilities of discontinued operations held for sale included the following:

	September 30,		December 31,
	2018		2017
Current assets:
Trade accounts receivable, net	$	-	$	270,580
Inventory, net		-		25,903
	$	-	$	296,483
Current liabilities:
Accounts payable and accrued expenses	$	-	$	81,733
	$	-	$	81,733

NOTE 4 – BUSINESS COMBINATION

Acquisition of Membership Interest Purchase Agreement

On May 29, 2018 (the “Closing Date”), Immudyne, PR entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) by and among nine individuals, as sellers and Conversion Labs PR, as buyer (“Buyer”), pursuant to which Buyer acquired from Sellers all of Sellers’ right, title and interest in and to 51% of the membership interests (the “Membership Interests”) of LegalSimpli Software, LLC, a Puerto Rico limited liability company (“LegalSimpli”), which operates a marketing-driven software solutions business.

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In consideration for Buyer’s purchase of the Membership Interests the Buyer paid $150,000 (the “Initial Payment”) to the Sellers upon execution of the Purchase Agreement. Additionally, Buyer may be obligated to pay up to an additional $200,000 in accordance with the following milestones (the “Milestones”): (i) $100,000 to the Sellers on the 90-day anniversary of the Purchase Agreement, so long LegalSimpli’s gross revenue for the preceding 30-day period is equal to or greater than $75,000; and (ii) $100,000 to the Sellers on the 180-day anniversary of the Purchase Agreement, so long as LegalSimpli’s gross revenue for the preceding 30-day period is equal to or greater than $150,000, with a minimum net profit margin of 25% in each instance.

Regardless of whether LegalSimpli achieves either or both of the Milestones, Buyer will retain full ownership of the Membership Interests.

Fair Value of Consideration Transferred and Recording of Assets Acquired

The following table summarizes the acquisition date fair value of the consideration paid, identifiable assets acquired, and liabilities assumed including an amount for intangible assets:

Consideration Paid:
Cash and cash equivalents	$	150,000
Fair value of total consideration	$	150,000
Recognized amount of identifiable assets acquired, and liabilities assumed:
Financial assets:
Cash and cash equivalents	$	1,445
Financial liabilities:
Accounts payable and accrued liabilities		(84,349	)
Non-controlling interest		(144,118	)
Total identifiable net assets		(227,022
Intangible assets		377,022
	$	150,000

NOTE 5 – NOTES PAYABLE

In the third quarter of 2016 the Company commenced an offering pursuant to which it offered 11% subordinated promissory notes in fifty thousand ($50,000) dollar increments combined with 62,500 shares of the Company’s Common Stock for a maximum offering amount of $200,000 (the “Offering”). In August and September 2016, the Company sold promissory notes totaling $150,000 to three unrelated individuals. Two of the promissory notes totaling $100,000 were payable in February 2017 and one promissory note for $50,000 was payable in March 2017. In October 2016, the Company sold promissory notes totaling $50,000 to two unrelated individuals. These promissory notes were payable in October 2017. In connection with these promissory notes sold, pursuant to the Offering, the Company issued 250,000 shares of common stock valued at $58,750 which was recorded as a debt discount and were amortized over the term of these notes. Amortization of the debt discounts for the year ended December 31, 2017 and 2016 was $25,035 and $33,715, respectively. During 2016, the Company repaid $68,600 of the principal balance; and as a result, the outstanding balances of these notes as of December 31, 2016, were $131,400. The balance of debt discount related to the subordinated promissory notes is $25,035 at December 31, 2016. During 2017, the Company repaid $81,420 of the principal balance and converted the remaining balance of $49,980 into 196,000 shares of common stock and 98,000 warrants, which satisfied the notes in full. The fair market value of the shares and warrants issued upon conversion was determined to be $179,384, of which $129,404 was included in loss on extinguishment of debt. Interest expense related to these notes for the nine months ended September 30, 2018 and 2017, amounted to $0 and $131,117, respectively.

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In January 2017, the Company borrowed $200,000 and issued a promissory note with a 5% original issue discount for a total principal amount of $210,000. The loan incurred 11% interest per annum and matured in various tranches from February 2017 through April 2017. In addition, the Company issued 217,391 shares of common stock related to this note. In February 2017, the Company repaid $70,000 of the principal balance of this note. In March 2017, the Company converted the remaining $140,000 of the principal balance of this note and accrued interest of $2,212 in exchange for 559,179 shares of common stock and 304,348 warrants which satisfied the note in full. The fair market value of the shares and warrants issued upon conversion was determined to be $566,030, of which $423,818 was included in loss on extinguishment of debt.

In February 2017, the Company borrowed $25,000 from an American Express working capital line with 60 days maturity. The interest for this loan is a flat fee of $250. On April 17, 2017, the Company repaid this loan. In June 2017, the Company borrowed $74,043 from an American Express working capital line with 90 days maturity. The interest for this loan is a flat fee of $1,111. On August 30, 2017, the Company repaid this loan. In September 2017, the Company borrowed $77,333 from an American Express working capital line with 90 days maturity. The interest for this loan is a flat fee of $1,160. In November 2017, $42,479 was drawn from the line of credit and $78,493 was paid back in December 2017. In the first quarter of 2018 the Company repaid this loan. As of September 30, 2018 and December 31, 2017, there was $0 and $42,479 outstanding, respectively.

In December 2017, Conversion Labs PR received two working capital loans from related parties for in the amounts of $50,000 and $75,000, respectively. The loans accrue at 2% interest per month and mature in February 2018. In February 2018, the Company repaid these loans including all outstanding accrued interest.

In May 2018, the Company borrowed $550,000 and issued convertible notes in connection therewith. These notes have a maturity date of May 28, 2019 and accrue interest at a rate of 12% compounded annually. The conversion price for these notes is $0.23 per share of common stock, subject to adjustment. In the event the average VWAP (as defined) for the consecutive five trading days preceding but not including the six month anniversary of the original issue date of the note is less than the then conversion price in effect on such six month anniversary date, then the conversion price shall be reduced to 80% of the VWAP for the ten trading days following (but not including) such six month anniversary date, subject to further reduction. In addition, the Company issued warrants to purchase up to 2,391,305 shares of common stock with an exercise price of $0.28 per share. The fair value of the warrants was determined to be $533,691 and was recorded as a debt discount to be amortized over the life of the note. For the nine months ended September 30, 2018, amortization of debt discount was $181,309.

Interest expense related to loans from officers, directors and other related individuals amounted to $4,383 and $1,713 for the nine months ended September 30, 2018 and 2017, respectively. There was no interest expense for the three months ended September 30, 2017 and 2016 related to loans from officers, directors and other related individuals.

Total interest expense on notes payable, inclusive of amortization of debt discount of $181,309 and $81,558, amounted to $205,192 and $650,718 for the nine months ended September 30, 2018 and 2017, respectively.

Total interest expense on notes payable, inclusive of amortization of debt discount of $134,519 and $0, amounted to $147,664 and $1,111 for the three months ended September 30, 2018 and 2017, respectively.

NOTE 6 – INCOME TAXES

At September 30, 2018, the Company has approximately $3,193,000 of operating loss carryforwards for federal that may be applied against future taxable income. The net operating loss carryforwards will begin to expire in the year 2021 if not utilized prior to that date, expiring during various years through 2037. There is no provision for income taxes because the Company has historically incurred operating losses and maintains a full valuation allowance against its net deferred tax assets.

The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. The Act reduces the US federal corporate tax rate from 34% to 21%. The most significant impact of the legislation for the Company was a $242,000 reduction of the value of net deferred tax assets (which represent future tax benefits) as a result of lowering the U.S. corporate income tax rate from statutory rate of 34% to 21%.

The valuation allowance overall decreased by approximately $419,209 during the nine months ended September 30, 2018. The Company has fully reserved the deferred tax asset resulting from available net operating loss carryforwards.

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The tax effect of temporary differences that gave rise to significant portion of the deferred tax assets were as follows:

Net operating loss	$	1,197,251
Accounts receivable reserves		-
Inventory reserves		-
Stock compensation		378,958
Net deferred tax asset		1,576,209
Valuation allowance		(1,576,209	)
Total	$	-

The net operating loss carryforwards could be subject to limitation in any given year in the event of a change in ownership as defined by IRC Section 382.

NOTE 7 – STOCKHOLDERS’ EQUITY

Common Stock

In January 2017, the Company issued 1,183,490 shares of common stock pursuant to a conversion of Conversion Labs PR equity contributions of $272,203 into equity of the Company by the noncontrolling interest.

In January 2017, the Company issued 217,391 shares of common stock in relation to issuance of a $210,000 note payable.

In the first quarter of 2017, the Company commenced an offering to sell up to 4,000,000 shares of common stock at a price of $0.23 per share and warrants to purchase up to 2,000,000 shares of common stock exercisable any time prior to the second anniversary of the issuance. The warrants are paired with the common stock on the basis of one warrant for every two shares of common stock purchased. During 2017, the Company received subscriptions for 2,927,156 shares and issued 1,463,578 warrants to purchase shares of common stock for an aggregate purchase price of $673,246.

In March 2017, the Company issued an aggregate of 755,179 shares of common stock for the conversion of the outstanding balance of three notes payable totaling $499,802 (see Note 4).

On April 24, 2017, the Company, issued 217,390 shares of common stock pursuant to a stock subscription agreement and the Company issued 108,696 warrants with an exercise price of $0.40 per share for the stated consideration and satisfaction of obligation to pay $50,000 on the 180-day anniversary of the execution of the Sole and Exclusive License, Royalty, and Advisory Agreement dated September 1, 2016 with Pilaris Laboratories, LLC.

During the second quarter of 2017 the Company received subscriptions for the purchase of 110,000 shares and issued 55,000 warrants in connection therewith for an aggregate purchase price of $25,300.

On June 1, 2017, the Company entered into an agreement with a consultant to provide services over the course of six months and issued 125,000 shares of common stock as compensation. The shares were valued at $45,000 and the Company is recognizing the expense over the term of the agreement. For the year ending December 31, 2017, $45,000 has been expensed and included in compensation and related expenses on the consolidated statement of operations.

In July 2017, the Company and JLS Ventures, an entity owned by the Company’s current Chief Executive Officer, entered into a second amendment to a Service Agreement effective July 1, 2017. As compensation, the Company issued 900,000 shares of common stock valued at $432,000. The Company is recognizing the expense over the term of the agreement. For the nine months ending September 30, 2018 and 2017, $108,000 and $0, respectively, has been expensed and included in compensation and related expenses on the consolidated statement of operations.

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In July 2017, Mark McLaughlin, the Company’s former President and Chief Executive Officer, exercised 1,500,000 warrants, at an exercise price of $0.12 per share, on a cashless basis and was issued 1,140,000 shares of common stock.

In July 2017, Mark McLaughlin exercised 1,339,473 options, at an exercise price of $0.10 per share, on a cashless basis and was issued 800,000 shares of common stock.

In July 2017, Mark McLaughlin exercised 339,473 options on a cashless basis and was issued 271,579 shares of common stock.

In August 2017, the Company issued 100,000 shares of common stock valued at $40,000 to Acorn Management Partners L.L.C. (“Acorn”) for financial advisory, strategic business planning and other investor relation services. The Company is recognizing the expense over the term of the agreement. For the year ending December 31, 2017, $40,000 has been expensed and included in compensation and related expenses on the consolidated statement of operations.

In August 2017, the Company issued 50,000 shares of common stock valued at $20,000 to BV Global Fulfillment, LLC (“BV Global”) for fulfillment services.

In November 2017, the Company issued 100,000 shares of common stock valued at $44,000 to an employee as a bonus.

In November 2017, the Company issued 135,721 shares of common stock pursuant to a conversion of Conversion Labs PR equity contributions of $31,216 into equity of the Company by the noncontrolling interest.

In February 2018, pursuant to the sale of the Company’s legacy yeast beta glucan assets to the Company’s former CEO, Mr. McLaughlin, 2,000,000 shares of common stock of Mr. McLaughlin’s shares were cancelled. 

In March 2018, the Company issued 500,000 shares of common stock valued at $120,000 to a consultant. In May 2018, the Company amended the agreement with the consultant whereby the Company rescinded the 500,000 shares of common stock and reissued 250,000 shares of common stock. The 250,000 shares of common stock issued on May 14, 2018, were valued at $62,500. The Company is recognizing the expense at the time of issuance.

In May 2018, the Company issued 1,000,000 shares of common stock valued at $230,000 to JLS Ventures, LLC, a company controlled by our CEO, Justin Schreiber, for services. The Company also committed to issue an additional 1,000,000 shares of common stock on January 1, 2019 valued in the aggregate amount of $230,000 if JLS Ventures met the service requirement specified in the agreement. These 2,000,000 shares serve as the compensation for Mr. Schreiber for his services as CEO of the Company. The Company is recognizing the expense for the issuances over the twenty-four month term of the agreement. For the nine months ending September 30, 2018, $172,500 has been expensed and included in compensation and related expenses on the consolidated statement of operations.

In May 2018, the Company issued 200,000 shares of common stock valued at $56,000 to a consultant for services over a three month term. The Company is recognizing the expense at the time of issuance. For the nine months ending September 30, 2018, $56,000 has been expensed and included in compensation and related expenses on the consolidated statement of operations.

Noncontrolling Interest

During 2017, the Company issued a total of 1,319,211 shares of common stock and 659,606 warrants to purchase shares of common stock pursuant to a conversion of Conversion Labs PR equity contributions of $303,418 into equity of the Company by the noncontrolling interest.

For the nine months ended September 30, 2018 and 2017, the net loss of Conversion Labs PR attributed to the Company amounted to $23,145 and $68,924, respectively.

For the three months ended September 30, 2018 and 2017, the net loss of Conversion Labs PR attributed to the Company amounted to $35,842 and $41,194, respectively.

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On May 29, 2018, Conversion Labs PR acquired a 51% interest in LegalSimpli, which operates a marketing-driven software solutions business. For the month of June 2018, the net loss of LegalSimpli was $48,613, of which $5,200 was attributed to the Company. During June 2018, contributions by other members of LegalSimpli resulted an increase in noncontrolling interests of $154,000

During the quarter end September 30, 2018, the Company had convertible note holders convert 1,351,094 shares at a conversion price of $0.23 per share, resulting in a decrease to convertible notes of approximately $310,752 during the quarter.

Service-Based Stock Options

In January 2017, the Company issued 100,000 service-based options valued at $24,109 to Brunilda McLaughlin, the wife of our CEO during this period, as additional compensation pursuant to an employment agreement. These options have an exercise price of $0.40 per shares, are fully vested, and expire in 10 years from date of grant.

In February 2017, the Company issued 500,000 service-based options valued at $113,522 to a director with an exercise price of $0.20 per share. These options are fully vested and expire in 10 years from date of grant.

In July 2017, the Company issued 75,000 service-based options valued at $20,985 to Brunilda McLaughlin, the wife of our CEO during this period, as additional compensation in an employment agreement. These options have an exercise price of $0.35 per shares, are fully vested, and expire in 10 years from date of grant.

In July 2017, the Company issued a total of 300,000 service-based options valued at $83,939 to three directors at 100,000 shares each, with an exercise price of $0.35 per share. These options are fully vested and expire in 10 years from date of grant.

In July 2017, the Company issued 125,000 service-based options valued at $49,219 to a consultant with an exercise price of $0.40 per share. These options are fully vested and expire in 5 years from date of grant.

In July 2017, the Company issued Mark McLaughlin, the Company’s CEO at the time, a ten year option to purchase 750,000 shares of common stock at a price of $0.35 per share, vesting one-third or 250,000 shares upon signing and 250,000 shares on July 1, 2018 and 250,000 shares on July 1, 2019. Once these options are fully vested, they expire in 10 years from date of grant. The options vested at December 31, 2017 are valued at $69,949. In February 2018, Mr. McLaughlin resigned as CEO, therefore no further options will be vested.

On October 1, 2017, Michael Borenstein was appointed to our Board of Directors. In connection with his appointment, Mr. Borenstein received a ten-year, fully-vested option to purchase 100,000 shares of our common stock at a price of $0.35 per share. In addition, Mr. Borenstein received four, ten-year options, each to purchase 75,000 shares of our common stock at prices of $0.25, $0.25, $0.35, and $0.35 per share, which vest upon the Company reaching $4,000,000, $5,000,000, $6,000,000 and $7,000,000 in earnings before income taxes, respectively.

In October 2017, the Company entered into a consulting agreement with Mr. Robert Kalkstein, the Company’s Chief Financial Officer, and issued him a ten-year option to purchase 500,000 shares of common stock at a price of $0.40 per share, vesting 30% upon signing, 35% vesting on the two-year anniversary of the agreement and 35% vesting on the three year anniversary of the agreement. The fair value of the options upon issuance was $199,897 to be recognized as an expense over the three-year term of the agreement. For the nine months ended September 30, 2018 and 2017, $49,974 and $0, respectively, has been recognized as expense. For the three months ended September 30, 2018 and 2017, $16,658 and $0, respectively, has been recognized as expense.

Accordingly, stock-based compensation for the nine months ended September 30, 2018 and 2017 included $204,750 and $406,247, respectively, related to such service-based stock options.

Accordingly, stock-based compensation for the three months ended September 30, 2018 and 2017 included $0 and $292,725, respectively, related to such service-based stock options.

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A Summary of the outstanding service-based options are as follows:

	Number of
	Options
Balance at December 31, 2016		10,700,273
Issued		1,600,000
Exercised		(1,339,473	)
Balance at December 31, 2017		10,960,800
Issued		600,000
Expired		(500,000	)
Exercised		(40,800	)
Balance at September 30, 2018		11,020,000

All outstanding options are exercisable and have a cashless exercise provision, and certain options provide for accelerated vesting provisions and modifications, as defined therein. The intrinsic value of options outstanding and exercisable at September 30, 2018 and December 31, 2017 amounted to $160,796 and $1,210,342, respectively.

The significant assumptions used to determine the fair values of options issued, using a Black-Scholes option-pricing model are as follows:

Significant assumptions:
Risk-free interest rate at grant date		0.65% - 2.84	%
Expected stock price volatility		96.56% -180.45	%
Expected dividend payout		-
Expected option life-years		3 years
Weighted average grant date fair value	$	0.02 - 0.32
Forfeiture rate		0.01	%

The following is a summary of outstanding service-based options at September 30, 2018:

Exercise Price		Number of Options		Weighted Average Remaining Contractual Life
$	0.20 - $0.25		8,720,000	4 years
$	0.35		725,000	9 years
$	0.40		1,575,000	4 years
	Total		11,020,000

Performance-Based Stock Options

Vested

In February 2017, the Company granted performance-based options to purchase 250,000 shares of common stock at an exercise price of $0.40 per share. These options expire in 2027 and are exercisable upon the Company achieving annual sales revenue of $5,000,000. These options are valued at $55,439. During 2017, the Company met the performance criteria.

Unvested

The Company granted performance-based options to purchase 900,000 shares of common stock at an exercise price of $0.80 per share. The options expire at various dates between 2021 and 2027 and are exercisable upon the Company achieving annual sales revenue of $10,000,000. During 2017, these unvested options were cancelled.

In July 2017, the Company granted performance-based options to purchase 6,000,000 shares of common stock with an exercise prices of $0.35 per share. These options expire in 10 years and are exercisable upon cash received by the Company from Conversion Labs PR between $4,000,000 and $7,000,000. The aggregate fair value of these performance-based options is $1,688,212.

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In the third quarter of 2017, the Company granted performance-based options to purchase 1,575,000 shares of common stock with an exercise prices of $0.25 and an additional 1,575,000 shares of common stock with an exercise price of $0.35 per share. The options expire 10 years from date of grant and are exercisable upon the company achieving pre-tax earnings benchmarks between $4,000,000 and $7,000,000. The aggregate fair value of these performance-based options is $910,146.

In the fourth quarter of 2017, the Company granted performance-based options to purchase 300,000 shares of common stock with an exercise prices of $0.25 and an additional 300,000 shares of common stock with an exercise price of $0.35 per share. The options expire in 10 years and are exercisable upon the company achieving pre-tax earnings benchmarks between $4,000,000 and $7,000,000. The aggregate fair value of these performance-based options is $242,709.

Warrants

The following is a summary of outstanding and exercisable warrants:

	Number of			Weighted Average Exercise		Year of
	Shares			Price		Expiration
Balance at December 31, 2016		1,954,981		$	0.19	2017 - 2019
Issued		2,634,228			0.40	2018 - 2020
Exercised		(1,500,000	)		0.12	2017
Balance at December 31, 2017		3,089,119			0.40	2018 - 2020
Issued		2,491,305			0.29	2023 - 2028
Exercised		-
Balance at September 30, 2018		5,580,424		$	0.35	2018 - 2028

In January 2017, the Company issued 591,745 warrants to purchase shares of common stock with an exercise price of $0.40 per share, in relation to an issuance of common stock for the conversion of an equity contribution into Conversion Labs PR by the noncontrolling interest. These warrants are fully vested and expire in two years.

In March 2017, the Company issued 402,348 warrants to purchase shares of common stock with an exercise price of $0.40 per share, in relation to an issuance of common stock for the conversion of debt. These warrants are fully vested and expire in two years.

In the first quarter of 2017, the Company issued 1,408,578 warrants to purchase shares of common stock with an exercise price of $0.40 per share, in relation to a sale of common stock. These warrants are fully vested and expire in two years.

In April 2017, the Company issued 55,000 warrants to purchase shares of common stock with an exercise price of $0.40 per share, in relation to a sale of common stock. These warrants are fully vested and expire in two years.

In April 2017, the Company issued 108,696 warrants to purchase shares of common stock with an exercise price of $0.40 per share, in relation to an issuance of common stock for conversion of a payable. These warrants are fully vested and expire in three years.

In November 2017, the Company issued 67,861 warrants to purchase shares of common stock with an exercise price of $0.40 per share, in relation to an issuance of common stock for conversion of an equity contribution into Conversion Labs PR by the noncontrolling interest. These warrants are fully vested and expire in three years.

In March 2018, the Company issued 100,000 warrants to purchase shares of common stock with an exercise price of $0.50 per share, in relation to royalty license agreement. These warrants are fully vested and expire in ten years.

In May 2018, the Company issued 2,391,305 warrants to purchase shares of common stock with an exercise price of $0.28 per share, in relation to an issuance of convertible notes payable. These warrants are fully vested and expire in five years.

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Warrants outstanding and exercisable amounted to 5,580,424 and 3,089,119 at September 30, 2018 and December 31, 2017, respectively. The weighted average exercise price of warrants outstanding at September 30, 2018 and December 31, 2017 is $0.35 and $0.40, respectively. The warrants expire at various times between September 2018 and March 2028.

The fair value of options and warrants granted (or extended) during the nine months ended September 30, 2018 and 2017, was estimated on the date of grant (or extension) using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	2018	2017
Expected volatility	191% - 196%	125% - 214%
Risk free interest rate	2.44% - 2.58%	1.31% - 2.57%
Expected dividend yield	-	-
Expected option term (in years)	3-5	0.9 - 8.1
Weighted average grant date fair value	$0.21 – 0.22	$0.12 - 0.45

Under ASC 815-40-05, Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company’s Own Stock, in the event the Company does not have a sufficient number of authorized and unissued shares of common stock to satisfy obligations for stock options, warrants and other instruments potentially convertible into common stock, the fair value of these instruments should be reported as a liability. Pursuant to the outstanding option, warrant and convertible debt agreements, there is currently no effective registration statement covering the shares of common stock underlying these agreements, which are currently subject to a cashless exercise whereby the holders, at their option, may surrender their options and warrants to the company in exchange for shares of common stock. The number of shares of common stock into which an option or a warrant would be exchangeable in such a cashless exercise depends on both the exercise price of the options or warrant and the market price of the common stock, each at or near the time of exercise. Because the market price is variable, it is possible that we could have insufficient authorized shares to satisfy a cashless exercise. In this scenario, if we were unable to obtain shareholder approval to increase the number of authorized shares, we could be obligated to settle such a cashless exercise with cash rather than by issuing shares of common stock. Further, ASC 815-40-05 requires that we record the potential settlement obligation at each reporting date using the current estimated fair value of these contracts, with any changes in fair value being recorded through our statement of operations. We reported the potential settlement obligation as a liability until such time as these contracts are exercised or expire or we are otherwise able to modify the agreements to remove the provisions which require this treatment. On September 21, 2017, the Company filed an amendment to its Certificate of Incorporation with the Delaware Secretary of State increasing the number of authorized shares of the Company’s common stock from 50,000,000 to 100,000,000, which enabled the Company to reclassify the derivative liability.

Stock Based Compensation

The total stock-based compensation expense related to Service-Based Stock Options, Performance-Based Stock Options and Warrants issued for service amounted to $383,470 and $142,045 for the nine months ended September 30, 2018 and 2017, respectively. Performance-Based Stock Options and Warrants issued for service amounted to $127,388 and $28,523 for the three months ended September 30, 2018 and 2017, respectively. Such amounts are included in compensation and related expenses in the consolidated statement of operations.

NOTE 8 – ROYALTIES

The Company is subject to a royalty agreement based upon sales of certain hair care products. For the nine months ended September 30, 2018 and 2017, the Company recognized $12,036 and $65,318, respectively, in royalty expense related to this agreement. As of September 30, 2018, $26,357 was included in other current assets and as of December 31, 2017, $14,039 was included in accounts payable and accrued expenses in regard to this agreement. In addition, the Company shall pay a performance fee in relation to this agreement. In April 2017, the Company issued 217,390 shares of common stock and 108,696 warrants, pursuant to a subscription agreement, for the stated consideration and satisfaction of obligation to pay $50,000 of the performance fee (see Note 8).

18

On March 26, 2018, the Company entered into a license agreement (the “Agreement”) with M.ALPHABET, LLC (“Alphabet”), pursuant to which Alphabet agreed to license its PURPUREX business which consists of methods and compositions developed by Licensor for the treatment of purpura, bruising, post-procedural bruising and traumatic bruising (the “Product Line”). Pursuant to the license granted under the 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”).

The Company shall pay Alphabet a royalty equal to 13% of Gross Receipts (as defined in the Agreement) realized from the sales of Licensed Products. Further, so long as the Agreement is not previously terminated, the Company, also agreed to pay Alphabet $50,000 on the 120-day anniversary of the Agreement and an additional $50,000 on the 360-day anniversary of the Agreement.

Upon execution of the Agreement, Alphabet will be granted a 10-year option to purchase 100,000 shares of the Company’s common stock at an exercise price of $0.50. Further, if Licensed Products have gross receipts of $7,500,000 in any calendar year, the Company will grant Alphabet an option to purchase 100,000 shares of the Company’s common stock at an exercise price of $0.50; (ii) if Licensed Products have gross receipts of $10,000,000 in any calendar year, the Company will grant Alphabet an additional option to purchase 100,000 shares of the Company’s common stock at an exercise price of $0.50 and (iii) If Licensed Products have gross receipts of $20,000,000 in any calendar year, the Company will grant Alphabet an option to purchase 200,000 shares of the Company’s common stock at an exercise price of $0.75. 

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Leases

Conversion Labs PR utilizes office space in Puerto Rico which is subleased from Mr. Schreiber (the Company’s President and CEO) and incurs expense of approximately $4,000 a month for this office space. Rent expense for the nine months ended September 30, 2018 and 2017, was $36,000 and $36,000, respectively.

The Company started paying $95 per month to WeWork for a mailing address and the ability to lease conference space on-demand at their locations worldwide. The Company incurred $570 of expenses for the nine month period ended September 30, 2018.

In February 2018, the Company entered into a 3-year agreement to lease office space in Huntington Beach, CA beginning on March 2, 2018. The rent is payable on a monthly basis in the amount of $2,106 for the first twelve months, $2,149 for the second twelve months and $2,235 for the third twelve months. A security deposit of $2,235 was paid for this lease. Rent expense for the nine months ended September 30, 2018 and 2017, was $16,848 and $0, respectively.

Consulting Agreements

In August 2017, the Company entered into a Professional Service Agreement with Acorn Management Partners L.L.C. (“Acorn”) for financial advisory, strategic business planning and other investor relation services for one year effective August 8, 2017. During the term of the Agreement, Acorn shall receive $7,500 cash monthly. As additional compensation, the Company shall issue within five (5) days of signing 100,000 shares of the Company’s common stock and upon each three (3) month period thereafter during the term of the Agreement an additional 100,000 shares of the Company’s common stock for a total of 400,000 shares of the Company’s common stock.

In July 2017, the Company and JLS Ventures, an entity owned by the Company’s current Chief Executive Officer, entered into a second amendment to a Service Agreement effective July 1, 2017. As compensation, the Company issued 900,000 shares of common stock valued at $432,000. The Company is recognizing the expense over the term of the agreement. For the nine months ending September 30, 2018 and 2017, $72,000 and $0, respectively, has been expensed and included in compensation and related expenses on the consolidated statement of operations. In May 2018, the Company issued 1,000,000 shares of common stock valued at $230,000 to JLS Ventures, LLC, a company controlled by our CEO, Justin Schreiber, for services. The Company also committed to issue an additional 1,000,000 shares of common stock on January 1, 2019 valued in the aggregate amount of $230,000 if JLS Ventures met the service requirement specified in the agreement. These 2,000,000 shares serve as the compensation for Mr. Schreiber for his services as CEO of the Company. The Company is recognizing the expense for the issuances over the twenty-four month term of the agreement. For the nine months ending September 30, 2018, $172,500 has been expensed and included in compensation and related expenses on the consolidated statement of operations. 

19

Restricted Stock and Options

The Company has entered into two agreements on April 1, 2016 with two consultants of Conversion Labs PR for business development, marketing and sales related services (the “Consultant Agreements”). The consultants are treated as employees for accounting purposes. Upon signing, each consultant was issued 1,000,000 restricted shares of the Company’s common stock. In addition, each consultant shall receive an additional 150,000 restricted shares of the Company’s common stock for each $500,000 distributed by Conversion Labs PR to the Company. For each consultant, the amount of shares of common stock to be issued by the Company to the consultants shall be capped at 1,500,000 restricted shares of common stock when Conversion Labs PR has transferred $5,000,000 to the Company, for a combined capped total of 3,000,000 restricted shares of common stock. For the year ended December 31, 2016, 2,300,000 restricted shares of common stock have been issued related to the Consultant. The Company valued the shares of common stock at their grant date for a value of $0.30 per share for a total of $690,000 to be expensed over the estimated service period.

In addition, the Consultant Agreements provided that each consultant shall receive a bonus of an additional 750,000 restricted shares of the Company’s common stock, plus an option to buy 1,000,000 shares of the Company’s common stock at a price of $0.20 per share (including a cashless exercise feature) when Conversion Labs PR has transferred to the Company at each of the following three (3) thresholds: $1,250,000, $2,000,000 and $3,000,000 for a total of 2,250,000 of restricted shares of the Company’s common stock and options to purchase up to 3,000,000 shares of the Company’s common stock at a price of $0.20 per share. As of September 30, 2018 no bonus shares have been issued, and no options have been granted under the Consultant Agreement.

Sole and Exclusive License, Royalty, and Advisory Agreement

On September 1, 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. As consideration for granting Conversion Labs PR this license, Pilaris will receive on quarterly basis, 10% of the net income collected by the licensed products based on the following formula: Net Income = total income – cost of goods sold – advertising and operating expenses directly related to the marketing of the licensed products. In addition, Conversion Labs PR shall pay Pilaris a performance fee of $50,000 on the 180-day anniversary of the agreement and an additional $50,000 performance fee on the 365-day anniversary of the agreement. For the year ended December 31, 2017, the Company recognized expenses related to the performance fee in the amount of $100,000. In April 2017, the Company issued 217,390 shares of common stock and 108,696 warrants, pursuant to a subscription agreement, for the stated consideration and satisfaction of obligation to pay $50,000 on the 180-day anniversary of the execution of this agreement. As of September 30, 2018, $26,357 was included in other current assets and as of December 31, 2017, $14,039 was included in accounts payable and accrued expenses in regard to this agreement.

Legal Matters

In the normal course of business operations, the Company may become involved in various legal matters. At September 30, 2018, the Company’s management does not believe that there are any potential legal matters that could have a material adverse effect on the Company’s financial position.

NOTE 10 – PRODUCT DEPOSIT

Many of our vendors require deposits when a purchase order is placed for goods. Our vendors issue a credit memo when sending their final invoice, reducing the amount the Company owes for the deposit amount on file with the vendors. As of September 30, 2018, the Company has $106,700 of products deposit with multiple vendors for the purchase of raw materials for products we sell online.

NOTE 11 – RELATED PARTY TRANSACTIONS

Certain related party transactions were incurred by the legacy business that was sold in February 2018, including reimbursement of home office expenditures to the Company’s former President and CEO, employment of the Company’s former President and CEO’s wife, and legal and business advisory services provided by one of the Company’s directors.

Conversion Labs PR utilizes BV Global Fulfillment, owned by the father of Mr. Schreiber, the Company’s current Chief Executive Officer, and incurred $93,045 and $181,244 for the nine months ended September 30, 2018 and 2017, respectively, for services. For the three months ended September 30, 2018, the Company has incurred $32,582 and $138,687, respectively, for these services.

20

Taggart International Trust (“Taggart”), a shareholder of the Company, provides credit card processing services through one or more merchant banks. Taggart did not receive any compensation for these services.

JLS Ventures LLC, owned by our current CEO, provides credit card processing services through one or more merchant banks. JLS Ventures LLC did not receive any compensation for these services. In July 2017, the Company and JLS Ventures, an entity owned by the Company’s current Chief Executive Officer, entered into a second amendment to a Service Agreement effective July 1, 2017. As compensation, the Company issued 900,000 shares of common stock valued at $432,000. The Company is recognizing the expense over the term of the agreement. For the nine months ending September 30, 2018 and 2017, $72,000 and $0, respectively, has been expensed and included in compensation and related expenses on the consolidated statement of operations. In May 2018, the Company issued 1,000,000 shares of common stock valued at $230,000 to JLS Ventures, LLC, a company controlled by our CEO, Justin Schreiber, for services. The Company also committed to issue an additional 1,000,000 shares of common stock on January 1, 2019 valued in the aggregate amount of $230,000 if JLS Ventures met the service requirement specified in the agreement. These 2,000,000 shares serve as the compensation for Mr. Schreiber for his services as CEO of the Company. The Company is recognizing the expense for the issuances over the twenty-four month term of the agreement. For the nine months ending September 30, 2018, $172,500 has been expensed and included in compensation and related expenses on the consolidated statement of operations.

JSDC, Inc., owned by our current CEO, provides credit card processing services through one or more merchant banks. JSDC, Inc. did not receive any compensation for these services.

Conversion Labs PR utilizes office space in Puerto Rico which is subleased from Mr. Schreiber, our current CEO, and incurs expense of approximately $4,000 a month for this office space.

In December 2017, Conversion Labs PR received two working capital loans from Robert Kalkstein, the Company’s CFO, and from Mr. Schreiber, the Company’s CEO, for $50,000 and $75,000, respectively. These loans accrue at 2% interest per month and mature in February 2018. Accrued interest relating to the loans were $1,867 as of December 31, 2017. In February 2018, these loans were repaid in full.

During 2017, the Company issued a total of 1,319,211 shares of common stock to Mr. Schreiber pursuant to a conversion of Conversion Labs PR equity contributions of $303,419 into equity of the Company.

On November 20, 2017, the Company entered into an agreement (the “Agreement”) with JOJ Holdings, LLC (“JOJ”). Pursuant to the terms of the Agreement, the Company purchased 2,000,000 shares (post-split from a 2:1 forward split on January 16, 2018) of Blockchain Industries, Inc. (“BCII”) from JOJ. The Agreement was amended on December 8, 2017 and again on March 9, 2018. In consideration for the purchase, the Company agreed to issue one (1) share of the Company’s common stock to JOJ for every dollar the Company realizes from gross proceeds on the sale of shares of BCII purchased pursuant to the Agreement, up to a total maximum aggregate amount of 5,000,000 shares. The Company has 3 years to sell the shares of BCII and has agreed not to sell more than 20% of the 30-day average daily trading volume of BCII. Justin Schreiber, the Company’s President and CEO, is the President and owner of JOJ. The transaction was determined not to meet the criteria for recognition as an exchange transaction, therefore no asset or liability has been recorded in the financial statements.

NOTE 12 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date these financial statements were issued.

On October 25, 2018, the Company’s board of directors unanimously decided to amend warrants with a two-year term issued to warrant holders issued between January 2017 and March 2017 with an exercise price of $0.40 per share. The Company amended the warrants to provide for an additional three-year term to warrant holders as consideration for them entering into a call agreement with the Company, so that when the Company’s common stock trades above or over $0.75 per share for at least ten consecutive days. The Company has repriced the grant date fair value as of September 30, 2018 and recognized additional expense as stock-based compensation of approximately $128,000.

On October 31, 2018, the Company entered into a loan agreement with a private lender for $200,000. The Loan agreement requires the one-time fee of $30,000 which is due on the maturity date of April 1, 2019.

21

ITEM 6. EXHIBITS

Exhibit Number	Description
(10)	Material Agreements
10.1	Amended and Restated Operating Agreement of Immudyne PR LLC (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on October 29, 2018)
10.2‡	Employment Agreement by and between the Company and Mr. Sean Fitzpatrick, dated July 23, 2018 (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on October 29, 2018)
10.3	Form of Fitzpatrick Warrant (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed on October 29, 2018)
(31)	Rule 13a-14(a)/15d-14(a) Certifications
31.1*	Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer
31.2*	Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer
(32)	Section 1350 Certifications
32.1*	Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer
32.2*	Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Accounting Officer
(101)*	Interactive Data Files
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

‡ Employment Agreement.

22

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.

CONVERSION LABS, INC.

By:	/s/ Justin Schreiber
Justin Schreiber
Chief Executive Officer and Director (Principal Executive Officer)
Date:  December 4, 2018

By:	/s/ Robert Kalkstein
Robert Kalkstein
Chief Financial Officer (Principal Financial Officer)
Date:  December 4, 2018

23

EX-31.1

Exhibit 31.1

CONVERSION LABS, INC.

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Justin Schreiber, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q/A of Conversion Labs, Inc. for the period ended September 30, 2018;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
	(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ &Justin Schreiber
Justin Schreiber
Chief Executive Officer (Principal Executive Officer)
Date:  December 4, 2018

EX-31.2

Exhibit 31.2

CONVERSION LABS, INC.

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert Kalkstein, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q/A of Conversion Labs, Inc. for the period ended September 30, 2018;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
	(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Robert Kalkstein
Robert Kalkstein
Chief Financial Officer (Principal Financial and Accounting Officer)
Date:  December 4, 2018

EX-32.1

Exhibit 32.1

CONVERSION LABS, INC.

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q/A for the period ended September 30, 2018 of Conversion Labs, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

By:	/s/ Justin Schreiber
Justin Schreiber
Chief Executive Officer (Principal Executive Officer)
Date:  December 4, 2018

EX-32.2

Exhibit 32.2

CONVERSION LABS, INC.

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q/A for the period ended September 30, 2018 of Conversion Labs, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

By:	/s/ Robert Kalkstein
Robert Kalkstein
Chief Financial Officer (Principal Financial and Accounting Officer)
Date:  December 4, 2018

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 14, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	CONVERSION LABS, INC.
Entity Central Index Key	0000948320
Trading Symbol	CVLB
Amendment Flag	true
Amendment Description	This Amendment No. 1 on Form 10-Q/A (the "Amendment") amends Conversion Labs, Inc.'s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2018 (the "Form 10-Q"), as filed with the Securities and Exchange Commission on November 14, 2018, and is being filed solely to (i) correct a scrivener's error in Part I, Item 1. Financial Statements, which inadvertently referenced the period ended June 30, 2018 and the six months ended June 30, 2018, and (ii) to include reference in Part I, Item 1, to an additional issuance of common stock which resulted in immaterial revisions to the consolidated balance sheets, statement of operations and cash flows. None of the other information previously disclosed in the Form 10-Q is modified by this amendment. This Amendment includes new certifications by our Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 attached as Exhibits 31.1, 31.2, 32.1 and 32.2 hereto. Except as expressly set forth above, this Amendment does not, and does not purport to, amend, update or restate the information in any other item of the Form 10-Q or reflect any events that have occurred after the filing of the Form 10-Q.
Current Fiscal Year End Date	--12-31
Document Type	10-Q/A
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		45,482,305

XML

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Current Assets
Cash	$ 407,272	$ 141,379
Trade accounts receivable, net	175,631	128,190
Other receivables
Product deposit	106,700	16,500
Inventory, net	623,446	681,258
Other current assets	251,184
Assets held for sale		296,483
Total Current Assets	1,564,233	1,263,810
Non-current assets
Intangible assets, net	335,131
Total non-current assets	335,131
Total Assets	1,899,364	1,263,810
Current Liabilities
Accounts payable and accrued expenses	684,274	391,759
Notes payable		167,479
Convertible notes payable, net
Deferred revenue	15,608
Liabilities held for sale		81,733
Total Current Liabilities	699,882	640,971
Stockholders' Equity (Deficit)
Common stock, $0.01 par value; 100,000,000 shares authorized, 45,334,957 and 44,493,063 shares issued, 44,819,757 and 43,977,863 outstanding as of September 30, 2018 and December 31, 2017, respectively	453,349	444,930
Additional paid-in capital	12,339,491	11,500,537
Accumulated deficit	(11,375,579)	(10,899,843)
Equity	1,417,261	1,045,624
Treasury stock, 515,200 and 515,200 shares, at cost	(163,701)	(163,701)
Total Conversion Labs, Inc. Stockholders' Equity (Deficit)	1,253,560	881,923
Non-controlling interest	(54,078)	(259,084)
Total Stockholders' Equity (Deficit)	1,199,482	622,839
Total Liabilities and Stockholders' Equity (Deficit)	$ 1,899,364	$ 1,263,810

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	45,334,957	44,493,063
Common stock, shares outstanding	44,819,757	43,977,863
Treasury stock, shares	515,200	515,200

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement [Abstract]
Net Sales	$ 2,495,424	$ 2,051,734	$ 6,139,551	$ 3,583,614
Cost of Sales	439,701	535,572	1,329,881	1,068,174
Gross Profit	2,055,723	1,516,162	4,809,670	2,515,440
Operating expenses
Compensation and related expenses	321,933	529,361	787,898	1,131,805
Professional fees	410,340	99,964	852,498	321,548
Marketing expenses	1,407,911	882,845	3,576,096	1,182,715
General and administrative expenses	301,174	277,559	855,620	753,402
Total operating expenses	2,441,358	1,789,729	6,072,112	3,389,470
Operating Loss	(385,635)	(273,567)	(1,262,442)	(874,030)
Change in fair value of derivative liability		(377,213)		496,617
Interest (expense)	(147,664)	(1,111)	(205,192)	(650,718)
Income (Loss) from continuing operations	(533,299)	(651,891)	(1,467,634)	(1,028,131)
Income from discontinued operations, including gain on sale, net of income taxes			925,738
Net income (loss)	(533,299)	(651,891)	(541,896)	(1,028,131)
Net income (loss) attributable to noncontrolling interests	(37,318)	27,172	(66,160)	(41,752)
Net income (loss) attributable to Conversion Labs, Inc.	$ (495,981)	$ (679,063)	$ (475,736)	$ (986,379)
Basic income (loss) per share attributable to Conversion Labs, Inc. from continuing operation	$ (0.01)	$ (0.02)	$ (0.03)	$ (0.02)
Basic income per share attributable to Conversion Labs, Inc. from discontinued operation
Diluted income (loss) per share attributable to Conversion Labs, Inc. from continuing operation	(0.01)	(0.01)	(0.03)	(0.02)
Diluted income per share attributable to Conversion Labs, Inc. from discontinued operation
Average number of common shares outstanding
Basic	44,436,030	40,849,638	43,708,092	44,160,477
Diluted	44,436,030	47,254,218	43,708,092	44,160,477

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss)	$ (541,896)	$ (1,028,131)
Adjustments to reconcile net (loss) to net cash (used) by operating activities
Change in fair value of derivative liability		(496,617)
Amortization of debt discount	181,309	81,558
Amortization and depreciation	41,891
Bad debt recovery		(49,119)
(Gain) loss on discontinued operations and disposal	(918,537)
Loss on settlement of notes and other payables		634,325
Stock compensation expense	458,850	162,741
Issuance of warrants for services
Common stock issued for services		498,930
Changes in Assets and Liabilities
Trade accounts receivable	(47,441)	216,870
Other receivables		2,250
Product deposit	(90,200)	(119,899)
Inventory	57,812	(217,530)
Other current assets	(138,050)
Deferred revenue	15,348
Accounts payable and accrued expenses	208,426	(1,067)
Net cash (used) by operating activities of continuing operations	(772,488)	(315,689)
Net cash used in operating activities of discontinued operations	283,287
Net cash (used in) provided by operating activities	(489,201)	(315,689)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of subsidiary, net of cash received	(148,555)
Proceeds from sale of legacy business	390,000
Net cash provided by (used in) investing activities	241,445
CASH FLOWS FROM FINANCING ACTIVITIES
Investment in subsidiary by noncontrolling interest, net	127,048	63,378
Proceeds from notes payable		386,376
Proceeds from convertible note payable	550,000
Repayment of convertible note payable		(100,000)
Repayment of notes payable	(167,479)	(250,463)
Proceeds from options exercise	4,080
Sale of common stock and warrants		673,245
Purchase of treasury stock		(76,648)
Net cash provided by financing activities	513,649	695,888
Net increase in cash	265,893	380,199
Cash at beginning of the period	141,379	182,561
Cash at end of the period	407,272	562,760
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest	4,383
Issuance of company stock for notes and other payables		242,192
Retirement of stock	460,000
Stock repurchase from shareholder	460,000
Conversion of liability as consideration on sale of legacy business	150,000
Conversion of equity invested in subsidiary to common stock and warrants		272,203
Reclassification of options, warrants and other contracts to derivative liabilities upon issuance		1,636,590
Warrants issued in relation to debt	533,691
Conversion of notes payable	$ 310,752

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Nature of the Organization and Business

9 Months Ended

Sep. 30, 2018

Nature of the Organization and Business [Abstract]

NATURE OF THE ORGANIZATION AND BUSINESS

NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS

Nature of Business

Conversion Labs, Inc. (“Conversion Labs,” “we,” “us,” “our,” the “Company”) is an internet-based direct response marketing company that in-licenses, acquires and creates innovative and proprietary products that are sold to consumers around the world via our technology infrastructure and relationships with agencies, third party marketers, and online advertising platforms such as Facebook, Google and Amazon. We currently have three commercial stage products including Shapiro MD, a patented shampoo, conditioner, and leave-in foamer for thicker, fuller hair, iNR Wellness MD, a nutritional supplement for immune support, and PDF Simpli, a PDF conversion software, which was acquired through the purchase of 51% of the membership interests of LegalSimpli Software, LLC, a Puerto Rico limited liability company, which operates a marketing-driven software solutions business.

We launched our online direct marketing business in the fourth quarter of 2015 with the establishment of a partnership with Inate Skincare, LLC (“Inate”). Our initial intention was to launch a skin care line containing our proprietary ingredients and to market such products directly to consumers. We entered into a limited liability company operating agreement with our joint venture partners with respect to Inate under the legal name Immudyne PR LLC (“Immudyne PR”). On April 1, 2016, the original operating agreement of Immudyne PR was amended and restated and we increased our ownership and voting interest in Immudyne PR to 78.2%.

During 2016, we utilized third party entities to provide and increase credit card processing capacity and optimize corresponding rates and fees through one or more merchant bank accounts held by such entities. Some of the entities contracted to provide these services had been determined to be variable interest entities (“VIEs”) and were consolidated in the Company’s financial statements. The one (1%) percent fee received by these VIEs was eliminated in consolidation of the net revenues processed and collected by such contractors from sales initiated by the Company. The remaining entities provided such services as independent contractors, the majority of which were considered related parties and no fee was paid. Upon receipt of funds by such contractors from their respective merchant banks, the Company required the prompt transfer of funds to Company controlled accounts. The Company reimbursed and/or advanced funds to such contractors for any deficit or charge related to returns, chargeback and other fees charged by such merchant bank. By our year ended December 31, 2017, we ceased processing credit card charges through all VIE merchant accounts. At December 31, 2017, we recorded the merchant reserves from these VIE merchant accounts on our balance sheet as accounts receivable.

As used in these financial statements and unless otherwise indicated, the terms “Company,” “we,” “us,” and “our” refer to Conversion Labs, Inc. (formerly known as Immudyne, Inc.) and our majority-owned subsidiaries LegalSimpli Software, LLC, a Puerto Rico limited liability company (“LegalSimpli”), Conversion Labs PR, LLC (formerly Immudyne PR LLC), a Puerto Rico limited liability company (“Conversion Labs PR”), and Conversion Labs Asia Limited, a Hong Kong company (“Conversion Labs Asia”). Unless otherwise specified, all dollar amounts are expressed in United States dollars.

Acquisition of Membership Interest Purchase Agreement

On May 29, 2018, Immudyne PR acquired 51% of the membership interests (the “Membership Interests”) of LegalSimpli Software, LLC, a Puerto Rico limited liability company (“LegalSimpli”), which operates a marketing-driven software solutions business. In consideration for Immudyne PR’s purchase of the Membership Interests, Immudyne PR paid $150,000 (the “Initial Payment”) to the sellers upon execution of the purchase agreement. Additionally, Immudyne PR agreed to pay up to an additional $200,000 for such Membership Interests.

Going Concern

The Company has funded operations in the past through the sales of its products, issuance of common stock and through loans and advances from officers and directors. The Company’s continued operations are dependent upon obtaining an increase in its sales volume and the continued financial support from officers and directors or the sale of additional shares of common stock or debt securities. The accompanying financial statements have been prepared on the basis that the Company will continue as a going concern, which assumes the realization of assets and the satisfaction of liabilities in the normal course of business. At September 30, 2018, the Company had an accumulated deficit of approximating $11.1 million and has incurred negative cash flows from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Based on the Company’s cash balance at September 30, 2018, and projected cash needs for 2018, management estimates that it will need to increase sales revenue and/or raise additional capital to cover operating and capital requirements for the 2018 fiscal year. Management will need to raise the additional needed funds through increased sales volume, issuing additional shares of common stock or other equity securities, or obtaining debt financing. Although management has been successful to date in raising necessary funding, there can be no assurance that sales revenue will substantially increase or that any required future financing can be successfully completed on a timely basis, or on terms acceptable to the Company.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The Company evaluates the need to consolidate affiliates based on standards set forth in ASC 810 Consolidation (“ASC 810”). The consolidated financial statements include the accounts of the Company and its majority owned subsidiary, Conversion Labs PR, its 51% owned LegalSimpli and variable interest entities (VIE’s) in which the Company has been determined to be the primary beneficiary. The non-controlling interest in Conversion Labs PR represents the 21.833% equity interest held by other members of the joint venture. All significant consolidated transactions and balances have been eliminated in consolidation.

Management’s Representation of Interim Financial Statements

The accompanying unaudited consolidated financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements include all of the adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements at December 31, 2017 and 2016 filed in the Company’s Annual Report on Form 10-K with the SEC on April 2, 2018.

Variable Interest Entities

The Company follows ASC 810-10-15 guidance with respect to accounting for variable interest entities (each, a “VIE”). These entities do not have sufficient equity at risk to finance their activities without additional subordinated financial support from other parties or whose equity investors lack any of the characteristics of a controlling financial interest. A variable interest is an investment or other interest that will absorb portions of a VIE’s expected losses or receive portions of its expected residual returns and are contractual, ownership, or pecuniary in nature and that change with changes in the fair value of the entity’s net assets. A reporting entity is the primary beneficiary of a VIE and must consolidate it when that party has a variable interest, or combination of variable interests, that provides it with a controlling financial interest. A party is deemed to have a controlling financial interest if it meets both of the power and losses/benefits criteria. The power criterion is the ability to direct the activities of the VIE that most significantly impact its economic performance. The losses/benefits criterion is the obligation to absorb losses from, or right to receive benefits from, the VIE that could potentially be significant to the VIE. The VIE model requires an ongoing reconsideration of whether a reporting entity is the primary beneficiary of a VIE due to changes in facts and circumstances.

By our fiscal year ending December 31, 2017, we ceased processing credit card charges through all VIE merchant accounts. At September 30, 2018 and December 31, 2017, we recorded the merchant reserves from these VIE merchant accounts on our balance sheet as accounts receivable.

Conversion Labs PR is the primary beneficiary of Innerwell Skincare LLC, Spurs 5, LLC, and Salus LLC, which are qualified as VIEs. The assets and liabilities and revenues and expenses of these VIEs included in the financial statements of Conversion Labs PR and further included in the consolidated financial statements. The assets and liabilities include balances due from and due to the subsidiaries of Conversion Labs PR. These inter-company receivables and payables are eliminated upon consolidation of the VIE with Conversion Labs PR and the Company. No assets were pledged or given as collateral against any borrowings.

The Company utilizes third party entities to provide and increase credit card processing capacity and optimize corresponding rates and fees. A majority of these entities provide this service as independent contractors in exchange for a one (1%) percent fee of the net revenues processed and collected by such contractors from sales initiated by the Company. The VIEs consolidated in the Company’s financial statements are primarily contracted to credit card processing through one or more merchant banks contracted by each VIE. Upon receipt of funds by each VIE, the collection of receipts less any returns, chargeback and other fees charged by such merchant bank is transferred to Conversion Labs PR.

Use of Estimates

The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates required to be made by management include the determination of reserves for accounts receivable, returns and allowances, the accounting for derivatives, the valuation of inventory and stockholders’ equity based transactions. Actual results could differ from those estimates.

Derivative Liabilities

Under ASC 815-40-05, Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company’s Own Stock, in the event the Company does not have a sufficient number of authorized and unissued shares of common stock to satisfy obligations for stock options, warrants and other instruments potentially convertible into common stock, the fair value of these instruments should be reported as a derivative liability. Pursuant to the outstanding option, warrant and convertible debt agreements, there is currently no effective registration statement covering the shares of common stock underlying these agreements, which are currently subject to a cashless exercise whereby the holders, at their option, may surrender their options and warrants to the company in exchange for shares of common stock. The number of shares of common stock into which an option or a warrant would be exchangeable in such a cashless exercise depends on both the exercise price of the options or warrant and the market price of the common stock, each at or near the time of exercise. Because the market price is variable, it is possible that the Company could have insufficient authorized shares to satisfy a cashless exercise. In this scenario, if the Company were unable to obtain shareholder approval to increase the number of authorized shares, the Company could be obligated to settle such a cashless exercise with cash rather than by issuing shares of common stock. Further, ASC 815-40-05 requires that the Company record the potential settlement obligation at each reporting date using the current estimated fair value of these contracts, with any changes in fair value being recorded through our statement of operations. The Company had reported the potential settlement obligation as a derivative liability. In the third quarter of 2017, the Company obtained a majority of shareholders’ approval and amended its Articles of Incorporation to increase the number of shares of its authorized common stock, therefore the derivative liability is no longer applicable.

Inventory

At September 30, 2018 and December 31, 2017, inventory consisted primarily of finished cosmetic products. Inventory is maintained in a third-party warehouse in Pennsylvania.

Inventory is valued at the lower of cost or net realizable value with cost determined on a first-in, first-out (“FIFO”) basis. Management compares the cost of inventory with the net realizable value and an allowance is made for writing down inventory to net realizable, if lower. At September 30, 2018 and December 31, 2017, the Company recorded an inventory reserve in the amount of $12,500 and $12,500, respectively. As of September 30, 2018 and December 31, 2017, the inventory balances were $507,211 and 681,258, respectively.

Revenue Recognition

The Company records revenue under the adoption of ASC 606 by analyzing exchanges with its customers using a five-step analysis such as identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company’s policy is to record revenue as earned when a firm commitment, indicating sales quantity and price exists, delivery has taken place and collectability is reasonably assured. The Company generally records sales of finished cosmetic products once the customer places the order and the product is simultaneously shipped, but in limited cases if title does not pass until the product reaches the customer’s delivery site, then recognition of revenue should be deferred until that time, however the Company does not have a process to properly record the recognition of revenue if orders are not immediately shipped. Delivery is considered to have occurred when title and risk of loss have transferred to the customer. Provisions for discounts, returns, allowances, customer rebates and other adjustments are netted with gross sales. The Company accounts for such provisions during the same period in which the related revenues are earned. Customer discounts, returns and rebates for the three and nine months ended September 30, 2018, was approximately $133,000 and $353,000, respectively. Customer discounts, returns and rebates for the three and nine months ended September 30, 2017, was approximately $99,000 and $149,000, respectively. 

There are no formal sales incentives offered to any of the Company’s customers. Volume discounts may be offered from time to time to customers purchasing large quantities on a per transaction basis.

Accounts receivable

Accounts receivable are carried at original invoice amount less an estimate made for holdbacks and doubtful receivables based on a review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions and sets up an allowance for doubtful accounts when collection is uncertain. Customers’ accounts are written off when all attempts to collect have been exhausted. Recoveries of accounts receivable previously written off are recorded as income when received. At September 30, 2018 and December 31, 2017, the accounts receivable reserve was approximately $0 and $0, respectively. At September 30, 2018 and December 31, 2017, the reserve for sales returns and allowances was approximately $33,754 and $23,200, respectively.

Income Taxes

The Company files Corporate Federal and State tax returns, while Conversion Labs PR and LegalSimpli, which were formed as limited liability companies, file separate tax returns with any tax liabilities or benefits passing through to its members.

The Company records current and deferred taxes in accordance with Accounting Standards Codification (ASC) 740, “Accounting for Income Taxes.” This ASC requires recognition of deferred tax assets and liabilities for temporary differences between tax basis of assets and liabilities and the amounts at which they are carried in the financial statements, based upon the enacted rates in effect for the year in which the differences are expected to reverse. The Company establishes a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. The Company periodically assesses the value of its deferred tax asset, a majority of which has been generated by a history of net operating losses and determines the necessity for a valuation allowance. ASC 740 also provides a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken in a tax return. Using this guidance, a company may recognize the tax benefit from an uncertain tax position in its financial statements only if it is more likely-than-not (i.e., a likelihood of more than 50%) that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The Company’s tax returns for all years since December 31, 2014, remain open to federal and state taxing authorities.

Stock-Based Compensation

The Company follows the provisions of ASC 718, “Share-Based Payment”. Under this guidance compensation cost generally is recognized at fair value on the date of the grant and amortized over the respective vesting periods. The fair value of options at the date of grant is estimated using the Black-Scholes option pricing model. The expected option life is derived from assumed exercise rates based upon historical exercise patterns and represents the period of time that options granted are expected to be outstanding. The expected volatility is based upon historical volatility of the Company’s shares using weekly price observations over an observation period that approximates the expected life of the options. The risk-free rate approximates the U.S. Treasury yield curve rate in effect at the time of grant for periods similar to the expected option life. Due to limited history of forfeitures, the estimated forfeiture rate included in the option valuation was zero.

Many of the assumptions require significant judgment and any changes could have a material impact in the determination of stock-based compensation expense.

Earnings (Loss) Per Share

Basic earnings (loss) per common share is based on the weighted average number of shares outstanding during each period presented. Warrants and options to purchase common stock are included as common stock equivalents only when dilutive. Potential common stock equivalents are excluded from dilutive earnings per share when the effects would be antidilutive.

Common stock equivalents comprising shares underlying 1,886,454 options and warrants for the three and nine months ended September 30, 2018, respectively, have not been included in the income per share calculations as the effects are anti-dilutive.

Common stock equivalents comprising shares underlying 9,335,800 options and warrants for the three and nine months ended September 30, 2017, have not been included in the loss per share calculation as the effects are anti-dilutive.

Recent Accounting Pronouncements 

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This pronouncement is effective for annual reporting periods beginning after December 15, 2017 but early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing diversity in practice regarding how certain cash receipts and cash payments are presented in the statement of cash flows. The standard provides guidance on the classification of the following items: (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon debt instruments, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance policies, (6) distributions received from equity method investments, (7) beneficial interests in securitization transactions, and (8) separately identifiable cash flows. The Company is required to adopt ASU 2016-15 for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017 on a retrospective basis. Early adoption is permitted, including adoption in an interim period. We have reviewed ASU 2016-15 and have determined that it will not have any material effect on our financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes all existing guidance on accounting for leases in ASC Topic 840. ASU 2016-02 is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. ASU 2016-02 will continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statement of income. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. ASU 2016-02 is required to be applied with a modified retrospective approach to each prior reporting period presented with various optional practical expedients. We have reviewed ASC 842 and have determined that it will not have any material effect on our financial statements and related disclosures.

All other accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

Fair Value of Financial Instruments

The carrying value of the Company’s financial instruments, including cash, trade accounts receivable, accounts payable and accrued expenses and the face amount of notes payable approximate fair value for all periods.

Noncontrolling Interests

The Company accounts for its less than 100% interests in Conversion Labs PR and LegalSimpli in accordance with ASC Topic 810, Consolidation, and accordingly the Company presents noncontrolling interests as a component of equity on its consolidated balance sheet and reports the noncontrolling interest’s share of the Conversion Labs PR, and LegalSimpli’s net loss attributable to noncontrolling interests in the consolidated statement of operations.

Consolidation of Variable Interest Entities

In accordance with ASC 810-10-25-37 and as amended by ASU 2009-17, the Company determines whether any legal entity in which the Company becomes involved is a VIE and subject to consolidation. The Company conducts an assessment on an ongoing basis for each VIE including (1) the power to direct activities of the VIE that most significantly impact the VIE’s economic performance, and (2) the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. As a result, the Company determined that six entities were VIEs and subject to consolidation.

Concentration of Credit Risk

The Company grants credit in the normal course of business to its customers. The Company periodically performs credit analysis and monitors the financial condition of its customers to reduce credit risk.

The Company monitors its positions with, and the credit quality of, the financial institutions with which it invests. The Company, at times, maintains balances in various operating accounts in excess of federally insured limits.

Although the Company does have some wholesale customers, over 90% of the Company’s sales are to unique customers. Since the Company sells its products to thousands of customers, there is no accounts receivable concentration from customers. However, the Company uses merchant processors to charge customer credit cards and does contain concentration risk between credit card processors.

As of September 30, 2018, the Company’s accounts receivable had no significant concentration from any one customer.

As of September 30, 2018, three credit card processors accounted for 56%, 22% and 20% of accounts receivable.

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Discontinued Operations and Assets and Liabilities Held For Sale

9 Months Ended

Sep. 30, 2018

Discontinued Operations and Assets and Liabilities Held For Sale [Abstract]

DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE

NOTE 3 – DISCONTNUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE

On January 29, 2018, the Company entered into a Legacy Asset Sale Agreement (the “Asset Sale Agreement”) with Mark McLaughlin (the Company’s former President and Chief Executive Officer) whereby the Company sold the assets of the legacy beta glucan business for $850,000. On February 7, 2018, the Company and Mr. McLaughlin entered into an amendment to the Asset Sale Agreement (the “Asset Sale Agreement Amendment”) to amend the purchase price of the assets, whereby Mr. McLaughlin agreed, through a newly formed entity, to purchase the assets and liabilities of the yeast beta glucan manufacturing business, for the following: (i) 2,000,000 shares of the Company’s common stock (valued at $0.23 per share or $460,000), payable on February 12, 2018, (the “Closing Date”), (ii) $190,000 payable on the Closing Date, (iii) $200,000 payable within 120 days following the Closing Date, and (iv) the waiver of all rights to any severance payment in the amount of $150,000. The total purchase price per the Asset Sale Agreement Amendment was $1,000,000. The total assets and liabilities transferred in the sale was $255,248, resulting in a gain on sale of $744,752.

Operating results for the three months and nine months ended September 30, 2018, and 2017 for the yeast beta glucan manufacturing business are presented as discontinued operations and the assets and liabilities classified as held for sale are presented separately in the balance sheet.

A breakdown of the discontinued operations is presented as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Net Sales	$	-	$	447,331	$	363,613	$	703,894
Cost of Sales		-		144,148		56,666		259,331
Gross Profit		-		303,183		306,947		444,563
Operating expenses		-		148,358		125,960		262,931
Income from discontinued operations		-		154,825		180,987		181,632
Gain on sale		-		-		744,752		-
Net income from discontinued operations	$	-	$	154,825	$	925,739	$	181,632

Assets and liabilities of discontinued operations held for sale included the following:

	September 30,		December 31,
	2018		2017
Current assets:
Trade accounts receivable, net	$	-	$	270,580
Inventory, net		-		25,903
	$	-	$	296,483
Current liabilities:
Accounts payable and accrued expenses	$	-	$	81,733
	$	-	$	81,733

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Business Combination

9 Months Ended

Sep. 30, 2018

Business Combination [Abstract]

BUSINESS COMBINATION

NOTE 4 – BUSINESS COMBINATION

Acquisition of Membership Interest Purchase Agreement

On May 29, 2018 (the “Closing Date”), Immudyne, PR entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) by and among nine individuals, as sellers and Conversion Labs PR, as buyer (“Buyer”), pursuant to which Buyer acquired from Sellers all of Sellers’ right, title and interest in and to 51% of the membership interests (the “Membership Interests”) of LegalSimpli Software, LLC, a Puerto Rico limited liability company (“LegalSimpli”), which operates a marketing-driven software solutions business.

In consideration for Buyer’s purchase of the Membership Interests the Buyer paid $150,000 (the “Initial Payment”) to the Sellers upon execution of the Purchase Agreement. Additionally, Buyer may be obligated to pay up to an additional $200,000 in accordance with the following milestones (the “Milestones”): (i) $100,000 to the Sellers on the 90-day anniversary of the Purchase Agreement, so long LegalSimpli’s gross revenue for the preceding 30-day period is equal to or greater than $75,000; and (ii) $100,000 to the Sellers on the 180-day anniversary of the Purchase Agreement, so long as LegalSimpli’s gross revenue for the preceding 30-day period is equal to or greater than $150,000, with a minimum net profit margin of 25% in each instance.

Regardless of whether LegalSimpli achieves either or both of the Milestones, Buyer will retain full ownership of the Membership Interests.

Fair Value of Consideration Transferred and Recording of Assets Acquired

The following table summarizes the acquisition date fair value of the consideration paid, identifiable assets acquired, and liabilities assumed including an amount for intangible assets:

Consideration Paid:
Cash and cash equivalents	$	150,000
Fair value of total consideration	$	150,000
Recognized amount of identifiable assets acquired, and liabilities assumed:
Financial assets:
Cash and cash equivalents	$	1,445
Financial liabilities:
Accounts payable and accrued liabilities		(84,349	)
Non-controlling interest		(144,118	)
Total identifiable net assets		(227,022
Intangible assets		377,022
	$	150,000

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Notes Payable

9 Months Ended

Sep. 30, 2018

Notes Payable [Abstract]

NOTES PAYABLE

NOTE 5 – NOTES PAYABLE

In the third quarter of 2016 the Company commenced an offering pursuant to which it offered 11% subordinated promissory notes in fifty thousand ($50,000) dollar increments combined with 62,500 shares of the Company’s Common Stock for a maximum offering amount of $200,000 (the “Offering”). In August and September 2016, the Company sold promissory notes totaling $150,000 to three unrelated individuals. Two of the promissory notes totaling $100,000 were payable in February 2017 and one promissory note for $50,000 was payable in March 2017. In October 2016, the Company sold promissory notes totaling $50,000 to two unrelated individuals. These promissory notes were payable in October 2017. In connection with these promissory notes sold, pursuant to the Offering, the Company issued 250,000 shares of common stock valued at $58,750 which was recorded as a debt discount and were amortized over the term of these notes. Amortization of the debt discounts for the year ended December 31, 2017 and 2016 was $25,035 and $33,715, respectively. During 2016, the Company repaid $68,600 of the principal balance; and as a result, the outstanding balances of these notes as of December 31, 2016, were $131,400. The balance of debt discount related to the subordinated promissory notes is $25,035 at December 31, 2016. During 2017, the Company repaid $81,420 of the principal balance and converted the remaining balance of $49,980 into 196,000 shares of common stock and 98,000 warrants, which satisfied the notes in full. The fair market value of the shares and warrants issued upon conversion was determined to be $179,384, of which $129,404 was included in loss on extinguishment of debt. Interest expense related to these notes for the nine months ended September 30, 2018 and 2017, amounted to $0 and $131,117, respectively.

In January 2017, the Company borrowed $200,000 and issued a promissory note with a 5% original issue discount for a total principal amount of $210,000. The loan incurred 11% interest per annum and matured in various tranches from February 2017 through April 2017. In addition, the Company issued 217,391 shares of common stock related to this note. In February 2017, the Company repaid $70,000 of the principal balance of this note. In March 2017, the Company converted the remaining $140,000 of the principal balance of this note and accrued interest of $2,212 in exchange for 559,179 shares of common stock and 304,348 warrants which satisfied the note in full. The fair market value of the shares and warrants issued upon conversion was determined to be $566,030, of which $423,818 was included in loss on extinguishment of debt.

In February 2017, the Company borrowed $25,000 from an American Express working capital line with 60 days maturity. The interest for this loan is a flat fee of $250. On April 17, 2017, the Company repaid this loan. In June 2017, the Company borrowed $74,043 from an American Express working capital line with 90 days maturity. The interest for this loan is a flat fee of $1,111. On August 30, 2017, the Company repaid this loan. In September 2017, the Company borrowed $77,333 from an American Express working capital line with 90 days maturity. The interest for this loan is a flat fee of $1,160. In November 2017, $42,479 was drawn from the line of credit and $78,493 was paid back in December 2017. In the first quarter of 2018 the Company repaid this loan. As of September 30, 2018 and December 31, 2017, there was $0 and $42,479 outstanding, respectively.

In December 2017, Conversion Labs PR received two working capital loans from related parties for in the amounts of $50,000 and $75,000, respectively. The loans accrue at 2% interest per month and mature in February 2018. In February 2018, the Company repaid these loans including all outstanding accrued interest.

In May 2018, the Company borrowed $550,000 and issued convertible notes in connection therewith. These notes have a maturity date of May 28, 2019 and accrue interest at a rate of 12% compounded annually. The conversion price for these notes is $0.23 per share of common stock, subject to adjustment. In the event the average VWAP (as defined) for the consecutive five trading days preceding but not including the six month anniversary of the original issue date of the note is less than the then conversion price in effect on such six month anniversary date, then the conversion price shall be reduced to 80% of the VWAP for the ten trading days following (but not including) such six month anniversary date, subject to further reduction. In addition, the Company issued warrants to purchase up to 2,391,305 shares of common stock with an exercise price of $0.28 per share. The fair value of the warrants was determined to be $533,691 and was recorded as a debt discount to be amortized over the life of the note. For the nine months ended September 30, 2018, amortization of debt discount was $181,309.

Interest expense related to loans from officers, directors and other related individuals amounted to $4,383 and $1,713 for the nine months ended September 30, 2018 and 2017, respectively. There was no interest expense for the three months ended September 30, 2017 and 2016 related to loans from officers, directors and other related individuals.

Total interest expense on notes payable, inclusive of amortization of debt discount of $181,309 and $81,558, amounted to $205,192 and $650,718 for the nine months ended September 30, 2018 and 2017, respectively.

Total interest expense on notes payable, inclusive of amortization of debt discount of $134,519 and $0, amounted to $147,664 and $1,111 for the three months ended September 30, 2018 and 2017, respectively.

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Income Taxes

9 Months Ended

Sep. 30, 2018

Income Taxes [Abstract]

INCOME TAXES

NOTE 6 – INCOME TAXES

At September 30, 2018, the Company has approximately $3,193,000 of operating loss carryforwards for federal that may be applied against future taxable income. The net operating loss carryforwards will begin to expire in the year 2021 if not utilized prior to that date, expiring during various years through 2037. There is no provision for income taxes because the Company has historically incurred operating losses and maintains a full valuation allowance against its net deferred tax assets.

The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. The Act reduces the US federal corporate tax rate from 34% to 21%. The most significant impact of the legislation for the Company was a $242,000 reduction of the value of net deferred tax assets (which represent future tax benefits) as a result of lowering the U.S. corporate income tax rate from statutory rate of 34% to 21%.

The valuation allowance overall decreased by approximately $419,209 during the nine months ended September 30, 2018. The Company has fully reserved the deferred tax asset resulting from available net operating loss carryforwards.

The tax effect of temporary differences that gave rise to significant portion of the deferred tax assets were as follows:

Net operating loss	$	1,197,251
Accounts receivable reserves		-
Inventory reserves		-
Stock compensation		378,958
Net deferred tax asset		1,576,209
Valuation allowance		(1,576,209	)
Total	$	-

The net operating loss carryforwards could be subject to limitation in any given year in the event of a change in ownership as defined by IRC Section 382.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2018

Stockholders' Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE 7 – STOCKHOLDERS’ EQUITY

Common Stock

In January 2017, the Company issued 1,183,490 shares of common stock pursuant to a conversion of Conversion Labs PR equity contributions of $272,203 into equity of the Company by the noncontrolling interest.

In January 2017, the Company issued 217,391 shares of common stock in relation to issuance of a $210,000 note payable.

In the first quarter of 2017, the Company commenced an offering to sell up to 4,000,000 shares of common stock at a price of $0.23 per share and warrants to purchase up to 2,000,000 shares of common stock exercisable any time prior to the second anniversary of the issuance. The warrants are paired with the common stock on the basis of one warrant for every two shares of common stock purchased. During 2017, the Company received subscriptions for 2,927,156 shares and issued 1,463,578 warrants to purchase shares of common stock for an aggregate purchase price of $673,246.

In March 2017, the Company issued an aggregate of 755,179 shares of common stock for the conversion of the outstanding balance of three notes payable totaling $499,802 (see Note 4).

On April 24, 2017, the Company, issued 217,390 shares of common stock pursuant to a stock subscription agreement and the Company issued 108,696 warrants with an exercise price of $0.40 per share for the stated consideration and satisfaction of obligation to pay $50,000 on the 180-day anniversary of the execution of the Sole and Exclusive License, Royalty, and Advisory Agreement dated September 1, 2016 with Pilaris Laboratories, LLC.

During the second quarter of 2017 the Company received subscriptions for the purchase of 110,000 shares and issued 55,000 warrants in connection therewith for an aggregate purchase price of $25,300.

On June 1, 2017, the Company entered into an agreement with a consultant to provide services over the course of six months and issued 125,000 shares of common stock as compensation. The shares were valued at $45,000 and the Company is recognizing the expense over the term of the agreement. For the year ending December 31, 2017, $45,000 has been expensed and included in compensation and related expenses on the consolidated statement of operations.

In July 2017, the Company and JLS Ventures, an entity owned by the Company’s current Chief Executive Officer, entered into a second amendment to a Service Agreement effective July 1, 2017. As compensation, the Company issued 900,000 shares of common stock valued at $432,000. The Company is recognizing the expense over the term of the agreement. For the nine months ending September 30, 2018 and 2017, $108,000 and $0, respectively, has been expensed and included in compensation and related expenses on the consolidated statement of operations.

In July 2017, Mark McLaughlin, the Company’s former President and Chief Executive Officer, exercised 1,500,000 warrants, at an exercise price of $0.12 per share, on a cashless basis and was issued 1,140,000 shares of common stock.

In July 2017, Mark McLaughlin exercised 1,339,473 options, at an exercise price of $0.10 per share, on a cashless basis and was issued 800,000 shares of common stock.

In July 2017, Mark McLaughlin exercised 339,473 options on a cashless basis and was issued 271,579 shares of common stock.

In August 2017, the Company issued 100,000 shares of common stock valued at $40,000 to Acorn Management Partners L.L.C. (“Acorn”) for financial advisory, strategic business planning and other investor relation services. The Company is recognizing the expense over the term of the agreement. For the year ending December 31, 2017, $40,000 has been expensed and included in compensation and related expenses on the consolidated statement of operations.

In August 2017, the Company issued 50,000 shares of common stock valued at $20,000 to BV Global Fulfillment, LLC (“BV Global”) for fulfillment services.

In November 2017, the Company issued 100,000 shares of common stock valued at $44,000 to an employee as a bonus.

In November 2017, the Company issued 135,721 shares of common stock pursuant to a conversion of Conversion Labs PR equity contributions of $31,216 into equity of the Company by the noncontrolling interest.

In February 2018, pursuant to the sale of the Company’s legacy yeast beta glucan assets to the Company’s former CEO, Mr. McLaughlin, 2,000,000 shares of common stock of Mr. McLaughlin’s shares were cancelled. 

In March 2018, the Company issued 500,000 shares of common stock valued at $120,000 to a consultant. In May 2018, the Company amended the agreement with the consultant whereby the Company rescinded the 500,000 shares of common stock and reissued 250,000 shares of common stock. The 250,000 shares of common stock issued on May 14, 2018, were valued at $62,500. The Company is recognizing the expense at the time of issuance.

In May 2018, the Company issued 1,000,000 shares of common stock valued at $230,000 to JLS Ventures, LLC, a company controlled by our CEO, Justin Schreiber, for services. The Company also committed to issue an additional 1,000,000 shares of common stock on January 1, 2019 valued in the aggregate amount of $230,000 if JLS Ventures met the service requirement specified in the agreement. These 2,000,000 shares serve as the compensation for Mr. Schreiber for his services as CEO of the Company. The Company is recognizing the expense for the issuances over the twenty-four month term of the agreement. For the nine months ending September 30, 2018, $172,500 has been expensed and included in compensation and related expenses on the consolidated statement of operations.

In May 2018, the Company issued 200,000 shares of common stock valued at $56,000 to a consultant for services over a three month term. The Company is recognizing the expense at the time of issuance. For the nine months ending September 30, 2018, $56,000 has been expensed and included in compensation and related expenses on the consolidated statement of operations.

Noncontrolling Interest

During 2017, the Company issued a total of 1,319,211 shares of common stock and 659,606 warrants to purchase shares of common stock pursuant to a conversion of Conversion Labs PR equity contributions of $303,418 into equity of the Company by the noncontrolling interest.

For the nine months ended September 30, 2018 and 2017, the net loss of Conversion Labs PR attributed to the Company amounted to $23,145 and $68,924, respectively.

For the three months ended September 30, 2018 and 2017, the net loss of Conversion Labs PR attributed to the Company amounted to $35,842 and $41,194, respectively.

On May 29, 2018, Conversion Labs PR acquired a 51% interest in LegalSimpli, which operates a marketing-driven software solutions business. For the month of June 2018, the net loss of LegalSimpli was $48,613, of which $5,200 was attributed to the Company. During June 2018, contributions by other members of LegalSimpli resulted an increase in noncontrolling interests of $154,000

During the quarter end September 30, 2018, the Company had convertible note holders convert 1,351,094 shares at a conversion price of $0.23 per share, resulting in a decrease to convertible notes of approximately $310,752 during the quarter.

Service-Based Stock Options

In January 2017, the Company issued 100,000 service-based options valued at $24,109 to Brunilda McLaughlin, the wife of our CEO during this period, as additional compensation pursuant to an employment agreement. These options have an exercise price of $0.40 per shares, are fully vested, and expire in 10 years from date of grant.

In February 2017, the Company issued 500,000 service-based options valued at $113,522 to a director with an exercise price of $0.20 per share. These options are fully vested and expire in 10 years from date of grant.

In July 2017, the Company issued 75,000 service-based options valued at $20,985 to Brunilda McLaughlin, the wife of our CEO during this period, as additional compensation in an employment agreement. These options have an exercise price of $0.35 per shares, are fully vested, and expire in 10 years from date of grant.

In July 2017, the Company issued a total of 300,000 service-based options valued at $83,939 to three directors at 100,000 shares each, with an exercise price of $0.35 per share. These options are fully vested and expire in 10 years from date of grant.

In July 2017, the Company issued 125,000 service-based options valued at $49,219 to a consultant with an exercise price of $0.40 per share. These options are fully vested and expire in 5 years from date of grant.

In July 2017, the Company issued Mark McLaughlin, the Company’s CEO at the time, a ten year option to purchase 750,000 shares of common stock at a price of $0.35 per share, vesting one-third or 250,000 shares upon signing and 250,000 shares on July 1, 2018 and 250,000 shares on July 1, 2019. Once these options are fully vested, they expire in 10 years from date of grant. The options vested at December 31, 2017 are valued at $69,949. In February 2018, Mr. McLaughlin resigned as CEO, therefore no further options will be vested.

On October 1, 2017, Michael Borenstein was appointed to our Board of Directors. In connection with his appointment, Mr. Borenstein received a ten-year, fully-vested option to purchase 100,000 shares of our common stock at a price of $0.35 per share. In addition, Mr. Borenstein received four, ten-year options, each to purchase 75,000 shares of our common stock at prices of $0.25, $0.25, $0.35, and $0.35 per share, which vest upon the Company reaching $4,000,000, $5,000,000, $6,000,000 and $7,000,000 in earnings before income taxes, respectively.

In October 2017, the Company entered into a consulting agreement with Mr. Robert Kalkstein, the Company’s Chief Financial Officer, and issued him a ten-year option to purchase 500,000 shares of common stock at a price of $0.40 per share, vesting 30% upon signing, 35% vesting on the two-year anniversary of the agreement and 35% vesting on the three year anniversary of the agreement. The fair value of the options upon issuance was $199,897 to be recognized as an expense over the three-year term of the agreement. For the nine months ended September 30, 2018 and 2017, $49,974 and $0, respectively, has been recognized as expense. For the three months ended September 30, 2018 and 2017, $16,658 and $0, respectively, has been recognized as expense.

Accordingly, stock-based compensation for the nine months ended September 30, 2018 and 2017 included $204,750 and $406,247, respectively, related to such service-based stock options.

Accordingly, stock-based compensation for the three months ended September 30, 2018 and 2017 included $0 and $292,725, respectively, related to such service-based stock options.

A Summary of the outstanding service-based options are as follows:

	Number of
	Options
Balance at December 31, 2016		10,700,273
Issued		1,600,000
Exercised		(1,339,473	)
Balance at December 31, 2017		10,960,800
Issued		600,000
Expired		(500,000	)
Exercised		(40,800	)
Balance at September 30, 2018		11,020,000

All outstanding options are exercisable and have a cashless exercise provision, and certain options provide for accelerated vesting provisions and modifications, as defined therein. The intrinsic value of options outstanding and exercisable at September 30, 2018 and December 31, 2017 amounted to $160,796 and $1,210,342, respectively.

The significant assumptions used to determine the fair values of options issued, using a Black-Scholes option-pricing model are as follows:

Significant assumptions:
Risk-free interest rate at grant date		0.65% - 2.84	%
Expected stock price volatility		96.56% -180.45	%
Expected dividend payout		-
Expected option life-years		3 years
Weighted average grant date fair value	$	0.02 - 0.32
Forfeiture rate		0.01	%

The following is a summary of outstanding service-based options at September 30, 2018:

Exercise Price		Number of Options		Weighted Average  Remaining Contractual Life
$	0.20 - $0.25		8,720,000	4 years
$	0.35		725,000	9 years
$	0.40		1,575,000	4 years
	Total		11,020,000

Performance-Based Stock Options

Vested

In February 2017, the Company granted performance-based options to purchase 250,000 shares of common stock at an exercise price of $0.40 per share. These options expire in 2027 and are exercisable upon the Company achieving annual sales revenue of $5,000,000. These options are valued at $55,439. During 2017, the Company met the performance criteria.

Unvested

The Company granted performance-based options to purchase 900,000 shares of common stock at an exercise price of $0.80 per share. The options expire at various dates between 2021 and 2027 and are exercisable upon the Company achieving annual sales revenue of $10,000,000. During 2017, these unvested options were cancelled.

In July 2017, the Company granted performance-based options to purchase 6,000,000 shares of common stock with an exercise prices of $0.35 per share. These options expire in 10 years and are exercisable upon cash received by the Company from Conversion Labs PR between $4,000,000 and $7,000,000. The aggregate fair value of these performance-based options is $1,688,212.

In the third quarter of 2017, the Company granted performance-based options to purchase 1,575,000 shares of common stock with an exercise prices of $0.25 and an additional 1,575,000 shares of common stock with an exercise price of $0.35 per share. The options expire 10 years from date of grant and are exercisable upon the company achieving pre-tax earnings benchmarks between $4,000,000 and $7,000,000. The aggregate fair value of these performance-based options is $910,146.

In the fourth quarter of 2017, the Company granted performance-based options to purchase 300,000 shares of common stock with an exercise prices of $0.25 and an additional 300,000 shares of common stock with an exercise price of $0.35 per share. The options expire in 10 years and are exercisable upon the company achieving pre-tax earnings benchmarks between $4,000,000 and $7,000,000. The aggregate fair value of these performance-based options is $242,709.

Warrants

The following is a summary of outstanding and exercisable warrants:

	Number of			Weighted Average Exercise		Year of
	Shares			Price		Expiration
Balance at December 31, 2016		1,954,981		$	0.19	2017 - 2019
Issued		2,634,228			0.40	2018 - 2020
Exercised		(1,500,000	)		0.12	2017
Balance at December 31, 2017		3,089,119			0.40	2018 - 2020
Issued		2,491,305			0.29	2023 - 2028
Exercised		-
Balance at September 30, 2018		5,580,424		$	0.35	2018 - 2028

In January 2017, the Company issued 591,745 warrants to purchase shares of common stock with an exercise price of $0.40 per share, in relation to an issuance of common stock for the conversion of an equity contribution into Conversion Labs PR by the noncontrolling interest. These warrants are fully vested and expire in two years.

In March 2017, the Company issued 402,348 warrants to purchase shares of common stock with an exercise price of $0.40 per share, in relation to an issuance of common stock for the conversion of debt. These warrants are fully vested and expire in two years.

In the first quarter of 2017, the Company issued 1,408,578 warrants to purchase shares of common stock with an exercise price of $0.40 per share, in relation to a sale of common stock. These warrants are fully vested and expire in two years.

In April 2017, the Company issued 55,000 warrants to purchase shares of common stock with an exercise price of $0.40 per share, in relation to a sale of common stock. These warrants are fully vested and expire in two years.

In April 2017, the Company issued 108,696 warrants to purchase shares of common stock with an exercise price of $0.40 per share, in relation to an issuance of common stock for conversion of a payable. These warrants are fully vested and expire in three years.

In November 2017, the Company issued 67,861 warrants to purchase shares of common stock with an exercise price of $0.40 per share, in relation to an issuance of common stock for conversion of an equity contribution into Conversion Labs PR by the noncontrolling interest. These warrants are fully vested and expire in three years.

In March 2018, the Company issued 100,000 warrants to purchase shares of common stock with an exercise price of $0.50 per share, in relation to royalty license agreement. These warrants are fully vested and expire in ten years.

In May 2018, the Company issued 2,391,305 warrants to purchase shares of common stock with an exercise price of $0.28 per share, in relation to an issuance of convertible notes payable. These warrants are fully vested and expire in five years.

Warrants outstanding and exercisable amounted to 5,580,424 and 3,089,119 at September 30, 2018 and December 31, 2017, respectively. The weighted average exercise price of warrants outstanding at September 30, 2018 and December 31, 2017 is $0.35 and $0.40, respectively. The warrants expire at various times between September 2018 and March 2028.

The fair value of options and warrants granted (or extended) during the nine months ended September 30, 2018 and 2017, was estimated on the date of grant (or extension) using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	2018	2017
Expected volatility	191% - 196%	125% - 214%
Risk free interest rate	2.44% - 2.58%	1.31% - 2.57%
Expected dividend yield	-	-
Expected option term (in years)	3-5	0.9 - 8.1
Weighted average grant date fair value	$0.21 – 0.22	$0.12 - 0.45

Under ASC 815-40-05, Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company’s Own Stock, in the event the Company does not have a sufficient number of authorized and unissued shares of common stock to satisfy obligations for stock options, warrants and other instruments potentially convertible into common stock, the fair value of these instruments should be reported as a liability. Pursuant to the outstanding option, warrant and convertible debt agreements, there is currently no effective registration statement covering the shares of common stock underlying these agreements, which are currently subject to a cashless exercise whereby the holders, at their option, may surrender their options and warrants to the company in exchange for shares of common stock. The number of shares of common stock into which an option or a warrant would be exchangeable in such a cashless exercise depends on both the exercise price of the options or warrant and the market price of the common stock, each at or near the time of exercise. Because the market price is variable, it is possible that we could have insufficient authorized shares to satisfy a cashless exercise. In this scenario, if we were unable to obtain shareholder approval to increase the number of authorized shares, we could be obligated to settle such a cashless exercise with cash rather than by issuing shares of common stock. Further, ASC 815-40-05 requires that we record the potential settlement obligation at each reporting date using the current estimated fair value of these contracts, with any changes in fair value being recorded through our statement of operations. We reported the potential settlement obligation as a liability until such time as these contracts are exercised or expire or we are otherwise able to modify the agreements to remove the provisions which require this treatment. On September 21, 2017, the Company filed an amendment to its Certificate of Incorporation with the Delaware Secretary of State increasing the number of authorized shares of the Company’s common stock from 50,000,000 to 100,000,000, which enabled the Company to reclassify the derivative liability.

Stock Based Compensation

The total stock-based compensation expense related to Service-Based Stock Options, Performance-Based Stock Options and Warrants issued for service amounted to $383,470 and $142,045 for the nine months ended September 30, 2018 and 2017, respectively. Performance-Based Stock Options and Warrants issued for service amounted to $127,388 and $28,523 for the three months ended September 30, 2018 and 2017, respectively. Such amounts are included in compensation and related expenses in the consolidated statement of operations.

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Royalties

9 Months Ended

Sep. 30, 2018

Royalties [Abstract]

ROYALTIES

NOTE 8 – ROYALTIES

The Company is subject to a royalty agreement based upon sales of certain hair care products. For the nine months ended September 30, 2018 and 2017, the Company recognized $12,036 and $65,318, respectively, in royalty expense related to this agreement. As of September 30, 2018, $26,357 was included in other current assets and as of December 31, 2017, $14,039 was included in accounts payable and accrued expenses in regard to this agreement. In addition, the Company shall pay a performance fee in relation to this agreement. In April 2017, the Company issued 217,390 shares of common stock and 108,696 warrants, pursuant to a subscription agreement, for the stated consideration and satisfaction of obligation to pay $50,000 of the performance fee (see Note 8).

On March 26, 2018, the Company entered into a license agreement (the “Agreement”) with M.ALPHABET, LLC (“Alphabet”), pursuant to which Alphabet agreed to license its PURPUREX business which consists of methods and compositions developed by Licensor for the treatment of purpura, bruising, post-procedural bruising and traumatic bruising (the “Product Line”). Pursuant to the license granted under the 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”).

The Company shall pay Alphabet a royalty equal to 13% of Gross Receipts (as defined in the Agreement) realized from the sales of Licensed Products. Further, so long as the Agreement is not previously terminated, the Company, also agreed to pay Alphabet $50,000 on the 120-day anniversary of the Agreement and an additional $50,000 on the 360-day anniversary of the Agreement.

Upon execution of the Agreement, Alphabet will be granted a 10-year option to purchase 100,000 shares of the Company’s common stock at an exercise price of $0.50. Further, if Licensed Products have gross receipts of $7,500,000 in any calendar year, the Company will grant Alphabet an option to purchase 100,000 shares of the Company’s common stock at an exercise price of $0.50; (ii) if Licensed Products have gross receipts of $10,000,000 in any calendar year, the Company will grant Alphabet an additional option to purchase 100,000 shares of the Company’s common stock at an exercise price of $0.50 and (iii) If Licensed Products have gross receipts of $20,000,000 in any calendar year, the Company will grant Alphabet an option to purchase 200,000 shares of the Company’s common stock at an exercise price of $0.75. 

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Leases

Conversion Labs PR utilizes office space in Puerto Rico which is subleased from Mr. Schreiber (the Company’s President and CEO) and incurs expense of approximately $4,000 a month for this office space. Rent expense for the nine months ended September 30, 2018 and 2017, was $36,000 and $36,000, respectively.

The Company started paying $95 per month to WeWork for a mailing address and the ability to lease conference space on-demand at their locations worldwide. The Company incurred $570 of expenses for the nine month period ended September 30, 2018.

In February 2018, the Company entered into a 3-year agreement to lease office space in Huntington Beach, CA beginning on March 2, 2018. The rent is payable on a monthly basis in the amount of $2,106 for the first twelve months, $2,149 for the second twelve months and $2,235 for the third twelve months. A security deposit of $2,235 was paid for this lease. Rent expense for the nine months ended September 30, 2018 and 2017, was $16,848 and $0, respectively.

Consulting Agreements

In August 2017, the Company entered into a Professional Service Agreement with Acorn Management Partners L.L.C. (“Acorn”) for financial advisory, strategic business planning and other investor relation services for one year effective August 8, 2017. During the term of the Agreement, Acorn shall receive $7,500 cash monthly. As additional compensation, the Company shall issue within five (5) days of signing 100,000 shares of the Company’s common stock and upon each three (3) month period thereafter during the term of the Agreement an additional 100,000 shares of the Company’s common stock for a total of 400,000 shares of the Company’s common stock.

In July 2017, the Company and JLS Ventures, an entity owned by the Company’s current Chief Executive Officer, entered into a second amendment to a Service Agreement effective July 1, 2017. As compensation, the Company issued 900,000 shares of common stock valued at $432,000. The Company is recognizing the expense over the term of the agreement. For the nine months ending September 30, 2018 and 2017, $72,000 and $0, respectively, has been expensed and included in compensation and related expenses on the consolidated statement of operations. In May 2018, the Company issued 1,000,000 shares of common stock valued at $230,000 to JLS Ventures, LLC, a company controlled by our CEO, Justin Schreiber, for services. The Company also committed to issue an additional 1,000,000 shares of common stock on January 1, 2019 valued in the aggregate amount of $230,000 if JLS Ventures met the service requirement specified in the agreement. These 2,000,000 shares serve as the compensation for Mr. Schreiber for his services as CEO of the Company. The Company is recognizing the expense for the issuances over the twenty-four month term of the agreement. For the nine months ending September 30, 2018, $172,500 has been expensed and included in compensation and related expenses on the consolidated statement of operations. 

Restricted Stock and Options

The Company has entered into two agreements on April 1, 2016 with two consultants of Conversion Labs PR for business development, marketing and sales related services (the “Consultant Agreements”). The consultants are treated as employees for accounting purposes. Upon signing, each consultant was issued 1,000,000 restricted shares of the Company’s common stock. In addition, each consultant shall receive an additional 150,000 restricted shares of the Company’s common stock for each $500,000 distributed by Conversion Labs PR to the Company. For each consultant, the amount of shares of common stock to be issued by the Company to the consultants shall be capped at 1,500,000 restricted shares of common stock when Conversion Labs PR has transferred $5,000,000 to the Company, for a combined capped total of 3,000,000 restricted shares of common stock. For the year ended December 31, 2016, 2,300,000 restricted shares of common stock have been issued related to the Consultant. The Company valued the shares of common stock at their grant date for a value of $0.30 per share for a total of $690,000 to be expensed over the estimated service period.

In addition, the Consultant Agreements provided that each consultant shall receive a bonus of an additional 750,000 restricted shares of the Company’s common stock, plus an option to buy 1,000,000 shares of the Company’s common stock at a price of $0.20 per share (including a cashless exercise feature) when Conversion Labs PR has transferred to the Company at each of the following three (3) thresholds: $1,250,000, $2,000,000 and $3,000,000 for a total of 2,250,000 of restricted shares of the Company’s common stock and options to purchase up to 3,000,000 shares of the Company’s common stock at a price of $0.20 per share. As of September 30, 2018 no bonus shares have been issued, and no options have been granted under the Consultant Agreement.

Sole and Exclusive License, Royalty, and Advisory Agreement

On September 1, 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. As consideration for granting Conversion Labs PR this license, Pilaris will receive on quarterly basis, 10% of the net income collected by the licensed products based on the following formula: Net Income = total income – cost of goods sold – advertising and operating expenses directly related to the marketing of the licensed products. In addition, Conversion Labs PR shall pay Pilaris a performance fee of $50,000 on the 180-day anniversary of the agreement and an additional $50,000 performance fee on the 365-day anniversary of the agreement. For the year ended December 31, 2017, the Company recognized expenses related to the performance fee in the amount of $100,000. In April 2017, the Company issued 217,390 shares of common stock and 108,696 warrants, pursuant to a subscription agreement, for the stated consideration and satisfaction of obligation to pay $50,000 on the 180-day anniversary of the execution of this agreement. As of September 30, 2018, $26,357 was included in other current assets and as of December 31, 2017, $14,039 was included in accounts payable and accrued expenses in regard to this agreement.

Legal Matters

In the normal course of business operations, the Company may become involved in various legal matters. At September 30, 2018, the Company’s management does not believe that there are any potential legal matters that could have a material adverse effect on the Company’s financial position.

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Product Deposit

9 Months Ended

Sep. 30, 2018

Product Deposit [Abstract]

PRODUCT DEPOSIT

NOTE 10 – PRODUCT DEPOSIT

Many of our vendors require deposits when a purchase order is placed for goods. Our vendors issue a credit memo when sending their final invoice, reducing the amount the Company owes for the deposit amount on file with the vendors. As of September 30, 2018, the Company has $106,700 of products deposit with multiple vendors for the purchase of raw materials for products we sell online.

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Related Party Transactions

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 11 – RELATED PARTY TRANSACTIONS

Certain related party transactions were incurred by the legacy business that was sold in February 2018, including reimbursement of home office expenditures to the Company’s former President and CEO, employment of the Company’s former President and CEO’s wife, and legal and business advisory services provided by one of the Company’s directors.

Conversion Labs PR utilizes BV Global Fulfillment, owned by the father of Mr. Schreiber, the Company’s current Chief Executive Officer, and incurred $93,045 and $181,244 for the nine months ended September 30, 2018 and 2017, respectively, for services. For the three months ended September 30, 2018, the Company has incurred $32,582 and $138,687, respectively, for these services.

Taggart International Trust (“Taggart”), a shareholder of the Company, provides credit card processing services through one or more merchant banks. Taggart did not receive any compensation for these services.

JLS Ventures LLC, owned by our current CEO, provides credit card processing services through one or more merchant banks. JLS Ventures LLC did not receive any compensation for these services. In July 2017, the Company and JLS Ventures, an entity owned by the Company’s current Chief Executive Officer, entered into a second amendment to a Service Agreement effective July 1, 2017. As compensation, the Company issued 900,000 shares of common stock valued at $432,000. The Company is recognizing the expense over the term of the agreement. For the nine months ending September 30, 2018 and 2017, $72,000 and $0, respectively, has been expensed and included in compensation and related expenses on the consolidated statement of operations. In May 2018, the Company issued 1,000,000 shares of common stock valued at $230,000 to JLS Ventures, LLC, a company controlled by our CEO, Justin Schreiber, for services. The Company also committed to issue an additional 1,000,000 shares of common stock on January 1, 2019 valued in the aggregate amount of $230,000 if JLS Ventures met the service requirement specified in the agreement. These 2,000,000 shares serve as the compensation for Mr. Schreiber for his services as CEO of the Company. The Company is recognizing the expense for the issuances over the twenty-four month term of the agreement. For the nine months ending September 30, 2018, $172,500 has been expensed and included in compensation and related expenses on the consolidated statement of operations.

JSDC, Inc., owned by our current CEO, provides credit card processing services through one or more merchant banks. JSDC, Inc. did not receive any compensation for these services.

Conversion Labs PR utilizes office space in Puerto Rico which is subleased from Mr. Schreiber, our current CEO, and incurs expense of approximately $4,000 a month for this office space.

In December 2017, Conversion Labs PR received two working capital loans from Robert Kalkstein, the Company’s CFO, and from Mr. Schreiber, the Company’s CEO, for $50,000 and $75,000, respectively. These loans accrue at 2% interest per month and mature in February 2018. Accrued interest relating to the loans were $1,867 as of December 31, 2017. In February 2018, these loans were repaid in full.

During 2017, the Company issued a total of 1,319,211 shares of common stock to Mr. Schreiber pursuant to a conversion of Conversion Labs PR equity contributions of $303,419 into equity of the Company.

On November 20, 2017, the Company entered into an agreement (the “Agreement”) with JOJ Holdings, LLC (“JOJ”). Pursuant to the terms of the Agreement, the Company purchased 2,000,000 shares (post-split from a 2:1 forward split on January 16, 2018) of Blockchain Industries, Inc. (“BCII”) from JOJ. The Agreement was amended on December 8, 2017 and again on March 9, 2018. In consideration for the purchase, the Company agreed to issue one (1) share of the Company’s common stock to JOJ for every dollar the Company realizes from gross proceeds on the sale of shares of BCII purchased pursuant to the Agreement, up to a total maximum aggregate amount of 5,000,000 shares. The Company has 3 years to sell the shares of BCII and has agreed not to sell more than 20% of the 30-day average daily trading volume of BCII. Justin Schreiber, the Company’s President and CEO, is the President and owner of JOJ. The transaction was determined not to meet the criteria for recognition as an exchange transaction, therefore no asset or liability has been recorded in the financial statements.

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Subsequent Events

9 Months Ended

Sep. 30, 2018

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 12 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date these financial statements were issued.

On October 25, 2018, the Company’s board of directors unanimously decided to amend warrants with a two-year term issued to warrant holders issued between January 2017 and March 2017 with an exercise price of $0.40 per share. The Company amended the warrants to provide for an additional three-year term to warrant holders as consideration for them entering into a call agreement with the Company, so that when the Company’s common stock trades above or over $0.75 per share for at least ten consecutive days. The Company has repriced the grant date fair value as of September 30, 2018 and recognized additional expense as stock-based compensation of approximately $128,000.

On October 31, 2018, the Company entered into a loan agreement with a private lender for $200,000. The Loan agreement requires the one-time fee of $30,000 which is due on the maturity date of April 1, 2019.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The Company evaluates the need to consolidate affiliates based on standards set forth in ASC 810 Consolidation (“ASC 810”). The consolidated financial statements include the accounts of the Company and its majority owned subsidiary, Conversion Labs PR, its 51% owned LegalSimpli and variable interest entities (VIE’s) in which the Company has been determined to be the primary beneficiary. The non-controlling interest in Conversion Labs PR represents the 21.833% equity interest held by other members of the joint venture. All significant consolidated transactions and balances have been eliminated in consolidation.

Management's Representation of Interim Financial Statements

Management’s Representation of Interim Financial Statements

The accompanying unaudited consolidated financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements include all of the adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements at December 31, 2017 and 2016 filed in the Company’s Annual Report on Form 10-K with the SEC on April 2, 2018.

Variable Interest Entities

Variable Interest Entities

The Company follows ASC 810-10-15 guidance with respect to accounting for variable interest entities (each, a “VIE”). These entities do not have sufficient equity at risk to finance their activities without additional subordinated financial support from other parties or whose equity investors lack any of the characteristics of a controlling financial interest. A variable interest is an investment or other interest that will absorb portions of a VIE’s expected losses or receive portions of its expected residual returns and are contractual, ownership, or pecuniary in nature and that change with changes in the fair value of the entity’s net assets. A reporting entity is the primary beneficiary of a VIE and must consolidate it when that party has a variable interest, or combination of variable interests, that provides it with a controlling financial interest. A party is deemed to have a controlling financial interest if it meets both of the power and losses/benefits criteria. The power criterion is the ability to direct the activities of the VIE that most significantly impact its economic performance. The losses/benefits criterion is the obligation to absorb losses from, or right to receive benefits from, the VIE that could potentially be significant to the VIE. The VIE model requires an ongoing reconsideration of whether a reporting entity is the primary beneficiary of a VIE due to changes in facts and circumstances.

By our fiscal year ending December 31, 2017, we ceased processing credit card charges through all VIE merchant accounts. At September 30, 2018 and December 31, 2017, we recorded the merchant reserves from these VIE merchant accounts on our balance sheet as accounts receivable.

Conversion Labs PR is the primary beneficiary of Innerwell Skincare LLC, Spurs 5, LLC, and Salus LLC, which are qualified as VIEs. The assets and liabilities and revenues and expenses of these VIEs included in the financial statements of Conversion Labs PR and further included in the consolidated financial statements. The assets and liabilities include balances due from and due to the subsidiaries of Conversion Labs PR. These inter-company receivables and payables are eliminated upon consolidation of the VIE with Conversion Labs PR and the Company. No assets were pledged or given as collateral against any borrowings.

The Company utilizes third party entities to provide and increase credit card processing capacity and optimize corresponding rates and fees. A majority of these entities provide this service as independent contractors in exchange for a one (1%) percent fee of the net revenues processed and collected by such contractors from sales initiated by the Company. The VIEs consolidated in the Company’s financial statements are primarily contracted to credit card processing through one or more merchant banks contracted by each VIE. Upon receipt of funds by each VIE, the collection of receipts less any returns, chargeback and other fees charged by such merchant bank is transferred to Conversion Labs PR.

Use of Estimates

Use of Estimates

The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates required to be made by management include the determination of reserves for accounts receivable, returns and allowances, the accounting for derivatives, the valuation of inventory and stockholders’ equity based transactions. Actual results could differ from those estimates.

Derivative Liabilities

Derivative Liabilities

Under ASC 815-40-05, Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company’s Own Stock, in the event the Company does not have a sufficient number of authorized and unissued shares of common stock to satisfy obligations for stock options, warrants and other instruments potentially convertible into common stock, the fair value of these instruments should be reported as a derivative liability. Pursuant to the outstanding option, warrant and convertible debt agreements, there is currently no effective registration statement covering the shares of common stock underlying these agreements, which are currently subject to a cashless exercise whereby the holders, at their option, may surrender their options and warrants to the company in exchange for shares of common stock. The number of shares of common stock into which an option or a warrant would be exchangeable in such a cashless exercise depends on both the exercise price of the options or warrant and the market price of the common stock, each at or near the time of exercise. Because the market price is variable, it is possible that the Company could have insufficient authorized shares to satisfy a cashless exercise. In this scenario, if the Company were unable to obtain shareholder approval to increase the number of authorized shares, the Company could be obligated to settle such a cashless exercise with cash rather than by issuing shares of common stock. Further, ASC 815-40-05 requires that the Company record the potential settlement obligation at each reporting date using the current estimated fair value of these contracts, with any changes in fair value being recorded through our statement of operations. The Company had reported the potential settlement obligation as a derivative liability. In the third quarter of 2017, the Company obtained a majority of shareholders’ approval and amended its Articles of Incorporation to increase the number of shares of its authorized common stock, therefore the derivative liability is no longer applicable.

Inventory

Inventory

At September 30, 2018 and December 31, 2017, inventory consisted primarily of finished cosmetic products. Inventory is maintained in a third-party warehouse in Pennsylvania.

Inventory is valued at the lower of cost or net realizable value with cost determined on a first-in, first-out (“FIFO”) basis. Management compares the cost of inventory with the net realizable value and an allowance is made for writing down inventory to net realizable, if lower. At September 30, 2018 and December 31, 2017, the Company recorded an inventory reserve in the amount of $12,500 and $12,500, respectively. As of September 30, 2018 and December 31, 2017, the inventory balances were $507,211 and 681,258, respectively.

Revenue Recognition

Revenue Recognition

The Company records revenue under the adoption of ASC 606 by analyzing exchanges with its customers using a five-step analysis such as identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company’s policy is to record revenue as earned when a firm commitment, indicating sales quantity and price exists, delivery has taken place and collectability is reasonably assured. The Company generally records sales of finished cosmetic products once the customer places the order and the product is simultaneously shipped, but in limited cases if title does not pass until the product reaches the customer’s delivery site, then recognition of revenue should be deferred until that time, however the Company does not have a process to properly record the recognition of revenue if orders are not immediately shipped. Delivery is considered to have occurred when title and risk of loss have transferred to the customer. Provisions for discounts, returns, allowances, customer rebates and other adjustments are netted with gross sales. The Company accounts for such provisions during the same period in which the related revenues are earned. Customer discounts, returns and rebates for the three and nine months ended September 30, 2018, was approximately $133,000 and $353,000, respectively. Customer discounts, returns and rebates for the three and nine months ended September 30, 2017, was approximately $99,000 and $149,000, respectively. 

There are no formal sales incentives offered to any of the Company’s customers. Volume discounts may be offered from time to time to customers purchasing large quantities on a per transaction basis.

Accounts receivable

Accounts receivable

Accounts receivable are carried at original invoice amount less an estimate made for holdbacks and doubtful receivables based on a review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions and sets up an allowance for doubtful accounts when collection is uncertain. Customers’ accounts are written off when all attempts to collect have been exhausted. Recoveries of accounts receivable previously written off are recorded as income when received. At September 30, 2018 and December 31, 2017, the accounts receivable reserve was approximately $0 and $0, respectively. At September 30, 2018 and December 31, 2017, the reserve for sales returns and allowances was approximately $33,754 and $23,200, respectively.

Income Taxes

Income Taxes

The Company files Corporate Federal and State tax returns, while Conversion Labs PR and LegalSimpli, which were formed as limited liability companies, file separate tax returns with any tax liabilities or benefits passing through to its members.

The Company records current and deferred taxes in accordance with Accounting Standards Codification (ASC) 740, “Accounting for Income Taxes.” This ASC requires recognition of deferred tax assets and liabilities for temporary differences between tax basis of assets and liabilities and the amounts at which they are carried in the financial statements, based upon the enacted rates in effect for the year in which the differences are expected to reverse. The Company establishes a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. The Company periodically assesses the value of its deferred tax asset, a majority of which has been generated by a history of net operating losses and determines the necessity for a valuation allowance. ASC 740 also provides a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken in a tax return. Using this guidance, a company may recognize the tax benefit from an uncertain tax position in its financial statements only if it is more likely-than-not (i.e., a likelihood of more than 50%) that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The Company’s tax returns for all years since December 31, 2014, remain open to federal and state taxing authorities.

Stock-Based Compensation

Stock-Based Compensation

The Company follows the provisions of ASC 718, “Share-Based Payment”. Under this guidance compensation cost generally is recognized at fair value on the date of the grant and amortized over the respective vesting periods. The fair value of options at the date of grant is estimated using the Black-Scholes option pricing model. The expected option life is derived from assumed exercise rates based upon historical exercise patterns and represents the period of time that options granted are expected to be outstanding. The expected volatility is based upon historical volatility of the Company’s shares using weekly price observations over an observation period that approximates the expected life of the options. The risk-free rate approximates the U.S. Treasury yield curve rate in effect at the time of grant for periods similar to the expected option life. Due to limited history of forfeitures, the estimated forfeiture rate included in the option valuation was zero.

Many of the assumptions require significant judgment and any changes could have a material impact in the determination of stock-based compensation expense.

Earnings (Loss) Per Share

Earnings (Loss) Per Share

Basic earnings (loss) per common share is based on the weighted average number of shares outstanding during each period presented. Warrants and options to purchase common stock are included as common stock equivalents only when dilutive. Potential common stock equivalents are excluded from dilutive earnings per share when the effects would be antidilutive.

Common stock equivalents comprising shares underlying 1,886,454 options and warrants for the three and nine months ended September 30, 2018, respectively, have not been included in the income per share calculations as the effects are anti-dilutive.

Common stock equivalents comprising shares underlying 9,335,800 options and warrants for the three and nine months ended September 30, 2017, have not been included in the loss per share calculation as the effects are anti-dilutive.

Recent Accounting Pronouncements

Recent Accounting Pronouncements 

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This pronouncement is effective for annual reporting periods beginning after December 15, 2017 but early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing diversity in practice regarding how certain cash receipts and cash payments are presented in the statement of cash flows. The standard provides guidance on the classification of the following items: (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon debt instruments, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance policies, (6) distributions received from equity method investments, (7) beneficial interests in securitization transactions, and (8) separately identifiable cash flows. The Company is required to adopt ASU 2016-15 for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017 on a retrospective basis. Early adoption is permitted, including adoption in an interim period. We have reviewed ASU 2016-15 and have determined that it will not have any material effect on our financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes all existing guidance on accounting for leases in ASC Topic 840. ASU 2016-02 is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. ASU 2016-02 will continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statement of income. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. ASU 2016-02 is required to be applied with a modified retrospective approach to each prior reporting period presented with various optional practical expedients. We have reviewed ASC 842 and have determined that it will not have any material effect on our financial statements and related disclosures.

All other accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying value of the Company’s financial instruments, including cash, trade accounts receivable, accounts payable and accrued expenses and the face amount of notes payable approximate fair value for all periods.

Noncontrolling Interests

Noncontrolling Interests

The Company accounts for its less than 100% interests in Conversion Labs PR and LegalSimpli in accordance with ASC Topic 810, Consolidation, and accordingly the Company presents noncontrolling interests as a component of equity on its consolidated balance sheet and reports the noncontrolling interest’s share of the Conversion Labs PR, and LegalSimpli’s net loss attributable to noncontrolling interests in the consolidated statement of operations.

Consolidation of Variable Interest Entities

Consolidation of Variable Interest Entities

In accordance with ASC 810-10-25-37 and as amended by ASU 2009-17, the Company determines whether any legal entity in which the Company becomes involved is a VIE and subject to consolidation. The Company conducts an assessment on an ongoing basis for each VIE including (1) the power to direct activities of the VIE that most significantly impact the VIE’s economic performance, and (2) the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. As a result, the Company determined that six entities were VIEs and subject to consolidation.

Concentration of Credit Risk

Concentration of Credit Risk

The Company grants credit in the normal course of business to its customers. The Company periodically performs credit analysis and monitors the financial condition of its customers to reduce credit risk.

The Company monitors its positions with, and the credit quality of, the financial institutions with which it invests. The Company, at times, maintains balances in various operating accounts in excess of federally insured limits.

Although the Company does have some wholesale customers, over 90% of the Company’s sales are to unique customers. Since the Company sells its products to thousands of customers, there is no accounts receivable concentration from customers. However, the Company uses merchant processors to charge customer credit cards and does contain concentration risk between credit card processors.

As of September 30, 2018, the Company’s accounts receivable had no significant concentration from any one customer.

As of September 30, 2018, three credit card processors accounted for 56%, 22% and 20% of accounts receivable.

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Discontinued Operations and Assets and Liabilities Held For Sale (Tables)

9 Months Ended

Sep. 30, 2018

Discontinued Operations and Assets and Liabilities Held For Sale [Abstract]

Schedule of discontinued operations and the assets and liabilities

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Net Sales	$	-	$	447,331	$	363,613	$	703,894
Cost of Sales		-		144,148		56,666		259,331
Gross Profit		-		303,183		306,947		444,563
Operating expenses		-		148,358		125,960		262,931
Income from discontinued operations		-		154,825		180,987		181,632
Gain on sale		-		-		744,752		-
Net income from discontinued operations	$	-	$	154,825	$	925,739	$	181,632

	September 30,		December 31,
	2018		2017
Current assets:
Trade accounts receivable, net	$	-	$	270,580
Inventory, net		-		25,903
	$	-	$	296,483
Current liabilities:
Accounts payable and accrued expenses	$	-	$	81,733
	$	-	$	81,733

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Business Combination (Tables)

9 Months Ended

Sep. 30, 2018

Business Combination [Abstract]

Schedule of fair value of the identifiable assets acquired, and liabilities assumed including an amount for intangible assets

Consideration Paid:
Cash and cash equivalents	$	150,000
Fair value of total consideration	$	150,000
Recognized amount of identifiable assets acquired, and liabilities assumed:
Financial assets:
Cash and cash equivalents	$	1,445
Financial liabilities:
Accounts payable and accrued liabilities		(84,349	)
Non-controlling interest		(144,118	)
Total identifiable net assets		(227,022
Intangible assets		377,022
	$	150,000

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2018

Income Taxes [Abstract]

Summary of deferred tax assets

Net operating loss	$	1,197,251
Accounts receivable reserves		-
Inventory reserves		-
Stock compensation		378,958
Net deferred tax asset		1,576,209
Valuation allowance		(1,576,209	)
Total	$	-

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2018

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of fair value of derivative liabilities using Black-Scholes option-pricing model

	2018	2017
Expected volatility	191% - 196%	125% - 214%
Risk free interest rate	2.44% - 2.58%	1.31% - 2.57%
Expected dividend yield	-	-
Expected option term (in years)	3-5	0.9 - 8.1
Weighted average grant date fair value	$0.21 – 0.22	$0.12 - 0.45

Warrants [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Summary of outstanding service-based options

	Number of			Weighted Average Exercise		Year of
	Shares			Price		Expiration
Balance at December 31, 2016		1,954,981		$	0.19	2017 - 2019
Issued		2,634,228			0.40	2018 - 2020
Exercised		(1,500,000	)		0.12	2017
Balance at December 31, 2017		3,089,119			0.40	2018 - 2020
Issued		2,491,305			0.29	2023 - 2028
Exercised		-
Balance at September 30, 2018		5,580,424		$	0.35	2018 - 2028

Service-Based Stock Options [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Summary of outstanding service-based options

	Number of
	Options
Balance at December 31, 2016		10,700,273
Issued		1,600,000
Exercised		(1,339,473	)
Balance at December 31, 2017		10,960,800
Issued		600,000
Expired		(500,000	)
Exercised		(40,800	)
Balance at September 30, 2018		11,020,000

Summary of significant assumptions used to determine fair values of options issued using Black-Scholes option-pricing model

Significant assumptions:
Risk-free interest rate at grant date		0.65% - 2.84	%
Expected stock price volatility		96.56% -180.45	%
Expected dividend payout		-
Expected option life-years		3 years
Weighted average grant date fair value	$	0.02 - 0.32
Forfeiture rate		0.01	%

Summary of outstanding service-based options exercise price

Exercise Price		Number of Options		Weighted Average  Remaining Contractual Life
$	0.20 - $0.25		8,720,000	4 years
$	0.35		725,000	9 years
$	0.40		1,575,000	4 years
	Total		11,020,000

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Nature of the Organization and Business (Details) - USD ($)	9 Months Ended
	Sep. 30, 2018	May 29, 2018	Dec. 31, 2017	Dec. 31, 2016	Apr. 01, 2016
Organization (Textual)
Accumulated deficit	$ (11,375,579)		$ (10,899,843)
Immudyne PR LLC [Member]
Organization (Textual)
Percentage of ownership equity interest					78.20%
Membership interest purchase agreement, description	Buyer's purchase of the Membership Interests the Buyer paid $150,000 (the "Initial Payment") to the Sellers upon execution of the Purchase Agreement. Additionally, Buyer may be obligated to pay up to an additional $200,000 in accordance with the following milestones (the "Milestones"): (i) $100,000 to the Sellers on the 90-day anniversary of the Purchase Agreement, so long LegalSimpli's gross revenue for the preceding 30-day period is equal to or greater than $75,000; and (ii) $100,000 to the Sellers on the 180-day anniversary of the Purchase Agreement, so long as LegalSimpli's gross revenue for the preceding 30-day period is equal to or greater than $150,000, with a minimum net profit margin of 25% in each instance.
Initial payment amount		$ 150,000
Agreed to pay additional amount		$ 200,000
LegalSimpli Software, LLC [Member]
Organization (Textual)
Percentage of purchase business acquired	51.00%	51.00%
Variable Interest Entities [Member]
Organization (Textual)
Percentage of purchase business acquired				1.00%

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Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Summary of Significant Accounting Policies (Textual)
Percentage of owned LSS and variable interest entities			51.00%
Non-controlling interest rate			21.833%
Inventory reserve	$ 12,500		$ 12,500		$ 12,500
Inventory balances	623,446		623,446		681,258
Customer discounts, returns and rebates	133,000	$ 99,000	353,000	$ 149,000
Reserve for sales returns and allowances			33,754		23,200
Accounts receivable reserve	$ 0		$ 0		$ 0
Income tax, description			More than 50
Noncontrolling interests, description			The Company accounts for its less than 100% interests in Conversion Labs PR and LegalSimpli in accordance with ASC Topic 810, Consolidation, and accordingly the Company presents noncontrolling interests as a component of equity on its consolidated balance sheet and reports the noncontrolling interest's share of the Conversion Labs PR, and LegalSimpli's net loss attributable to noncontrolling interests in the consolidated statement of operations.
Accounts Receivable [Member]
Summary of Significant Accounting Policies (Textual)
Concentration risk percentage			90.00%
Accounts Receivable [Member] | One credit card processor [Member]
Summary of Significant Accounting Policies (Textual)
Concentration risk percentage			56.00%
Accounts Receivable [Member] | Two credit card processor [Member]
Summary of Significant Accounting Policies (Textual)
Concentration risk percentage			22.00%
Accounts Receivable [Member] | Three credit card processors [Member]
Summary of Significant Accounting Policies (Textual)
Concentration risk percentage			20.00%
Option [Member] | Warrant [Member]
Summary of Significant Accounting Policies (Textual)
Antidilutive securities excluded from computation of earnings per share	1,886,454	9,335,800	1,886,454	9,335,800

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Discontinued Operations and Assets and Liabilities Held For Sale (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Discontinued Operations and Assets and Liabilities Held For Sale [Abstract]
Net Sales		$ 447,331	$ 363,613	$ 703,894
Cost of Sales		144,148	56,666	259,331
Gross Profit		303,183	306,947	444,563
Operating expenses		148,358	125,960	262,931
Income from discontinued operations		154,825	180,987	181,632
Gain on sale			744,752
Net income from discontinued operations			925,738
Current assets:
Trade accounts receivable, net					$ 270,580
Inventory, net					25,903
Current assets total					296,483
Current liabilities:
Accounts payable and accrued expenses					81,733
Current liabilities total					$ 81,733

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Discontinued Operations and Assets and Liabilities Held For Sale (Details Textual) - USD ($)	Feb. 07, 2018	Jan. 29, 2018
Discontinued Operations and Assets and Liabilities Held For Sale (Textual)
Discontinued operations, description	(i) 2,000,000 shares of the Company's common stock (valued at $0.23 per share or $460,000), payable on February 12, 2018, (the "Closing Date"), (ii) $190,000 payable on the Closing Date, (iii) $200,000 payable within 120 days following the Closing Date, and (iv) the waiver of all rights to any severance payment in the amount of $150,000.
Gain on sale assets	$ 744,752
Asset sale agreement	1,000,000
Total assets and liabilities transferred	$ 255,248
President and CEO [Member]
Discontinued Operations and Assets and Liabilities Held For Sale (Textual)
Assets		$ 850,000

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Business Combination (Details)	9 Months Ended
	Sep. 30, 2018 USD ($)
Consideration Paid:
Cash and cash equivalents	$ 150,000
Fair value of total consideration	150,000
Financial assets:
Cash and cash equivalents	1,445
Financial liabilities:
Accounts payable and accrued liabilities	(84,349)
Non-controlling interest	(144,118)
Total identifiable net assets	(227,022)
Intangible assets	377,022
Fair Value of Consideration Transferred and Recording of Assets Acquired	$ 150,000

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Business Combination (Details Textual)	9 Months Ended
	Sep. 30, 2018	May 29, 2018
Immudyne PR LLC [Member]
Business Combination (Textual)
Membership interest purchase agreement, description	Buyer's purchase of the Membership Interests the Buyer paid $150,000 (the "Initial Payment") to the Sellers upon execution of the Purchase Agreement. Additionally, Buyer may be obligated to pay up to an additional $200,000 in accordance with the following milestones (the "Milestones"): (i) $100,000 to the Sellers on the 90-day anniversary of the Purchase Agreement, so long LegalSimpli's gross revenue for the preceding 30-day period is equal to or greater than $75,000; and (ii) $100,000 to the Sellers on the 180-day anniversary of the Purchase Agreement, so long as LegalSimpli's gross revenue for the preceding 30-day period is equal to or greater than $150,000, with a minimum net profit margin of 25% in each instance.
LegalSimpli Software, LLC [Member]
Business Combination (Textual)
Percentage of purchase business acquired	51.00%	51.00%

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Notes Payable (Details) - USD ($)	1 Months Ended					3 Months Ended			9 Months Ended			12 Months Ended
	May 31, 2018	Sep. 30, 2017	Mar. 31, 2017	Feb. 28, 2017	Jan. 31, 2017	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2017	Dec. 31, 2016	Nov. 30, 2017	Jun. 30, 2017	Oct. 31, 2016	Aug. 31, 2016	Sep. 30, 2015
Notes Payable (Textual)
Interest rate on notes payable												2.00%						11.00%
Maturity date on notes payable												Feb. 28, 2018
Interest expense related to loans						$ 147,664	$ 1,111		$ 205,192	$ 650,718
Common stock shares issued											62,500
Issuance of common stock in relation to debt offering
Amortization of debt discount									181,309	81,558
Repaid of principal amount				$ 70,000								81,420	$ 68,600
Common stock for maximum offering											$ 200,000
Convertible promissory note						$ 1,351,094			$ 1,351,094				$ 25,035
Conversion of fair market value shares and warrants issued										566,030		$ 179,384
Conversion price						$ 0.23			$ 0.23				$ 0.23
Flat fee				250
Original debt, discount												2.00%
Interest expense on notes									$ 0	131,117
Borrowing amount			$ 499,802	$ 25,000	$ 210,000
Agreement term				60 days
Converted remaining principle balance										140,000		$ 49,980
Loss on settlement of notes payable										$ 423,818		129,404
Accrued interest			$ 2,212
Convertible notes						$ 310,752			310,752
Line of credit												78,493
Outstanding borrowings						0			$ 0			42,479	$ 131,400	$ 42,479
Related Party [Member]
Notes Payable (Textual)
Working capital												75,000
Related Party One [Member]
Notes Payable (Textual)
Working capital												50,000
Common Stock [Member]
Notes Payable (Textual)
Common stock shares issued									217,391
Issuance of common stock in relation to debt offering												$ 2,174
Converted remaining principle balance, shares			559,179									196,000
Warrant [Member]
Notes Payable (Textual)
Converted remaining principle balance, shares			304,348									98,000
Convertible notes payable [Member]
Notes Payable (Textual)
Interest rate on notes payable	12.00%
Maturity date on notes payable	May 29, 2019
Amortization of debt discount									$ 181,309
Convertible promissory note	$ 550,000
Conversion price	$ 0.23
Exercise price	$ 0.28
Purchase of warrant and common stock	2,391,305
Fair value of the warrants									533,691
Promissory note [Member]
Notes Payable (Textual)
Interest rate on notes payable					11.00%
Common stock shares issued										250,000
Amortization of debt discount								$ 58,750	0	$ 91,556		$ 25,035	$ 33,715
Original debt, discount					5.00%
Principle amount					$ 210,000
Borrowing amount					$ 200,000			$ 150,000			$ 150,000					$ 50,000	$ 150,000
Promissory note one [Member]
Notes Payable (Textual)
Borrowing amount			$ 50,000									$ 50,000
Promissory note two [Member]
Notes Payable (Textual)
Borrowing amount				$ 100,000
Officer [Member]
Notes Payable (Textual)
Maturity date on notes payable													Feb. 28, 2017
Officers, directors and other related individuals [Member]
Notes Payable (Textual)
Interest expense related to loans									4,383	1,713
Amortization of debt discount						147,664	1,111		205,192	650,718
Total interest expense on notes payable						$ 134,519	0		$ 181,309	81,558
American Express Working Capital [Member]
Notes Payable (Textual)
Flat fee		$ 1,160								1,111
Borrowing amount		$ 77,333					$ 77,333			$ 77,333					$ 74,043
Agreement term		90 days								90 days

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Income Taxes (Details)	Sep. 30, 2018 USD ($)
Components of deferred tax assets
Net operating loss	$ 1,197,251
Accounts receivable reserves
Inventory reserves
Stock compensation	378,958
Net deferred tax asset	1,576,209
Valuation allowance	(1,576,209)
Total

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Income Taxes (Details Textual)	9 Months Ended
	Sep. 30, 2018 USD ($)
Income Taxes (Textual)
Net operating loss carryforwards	$ 3,193,000
Operating loss carryforwards, expiration date	Dec. 31, 2037
Increase or decrease in valuation allowance	$ 419,209
Effective income tax rate, description	The Act reduces the US federal corporate tax rate from 34% to 21%. The most significant impact of the legislation for the Company was a $242,000 reduction of the value of net deferred tax assets (which represent future tax benefits) as a result of lowering the U.S. corporate income tax rate from statutory rate of 34% to 21%.

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Stockholders' Equity (Details) - Service-Based Stock Options [Member] - shares	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Options/Warrants, Beginning Balance	10,960,800	10,700,273
Number of Options, Issued	600,000	1,600,000
Number of Options, Expired	(500,000)
Number of Options, Exercised	(40,800)	(1,339,473)
Number of Options/Warrants, Ending balance	11,020,000	10,960,800

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Stockholders' Equity (Details 1) - Stock Options [Member]	9 Months Ended
	Sep. 30, 2018 $ / shares
Summary of significant assumptions used to determine fair values of options issued using Black-Scholes option-pricing mode
Expected dividend payout
Expected option life-years	3 years
Forfeiture rate	0.01%
Minimum [Member]
Summary of significant assumptions used to determine fair values of options issued using Black-Scholes option-pricing mode
Risk-free interest rate at grant date	0.65%
Expected stock price volatility	96.56%
Weighted average grant date fair value	$ 0.02
Maximum [Member]
Summary of significant assumptions used to determine fair values of options issued using Black-Scholes option-pricing mode
Risk-free interest rate at grant date	2.84%
Expected stock price volatility	180.45%
Weighted average grant date fair value	$ 0.32

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Stockholders' Equity (Details 2) - $ / shares	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017	Dec. 31, 2016
Summary of outstanding service-based options
Exercise Price	$ 0.41	$ 0.40
Service-Based Stock Options [Member]
Summary of outstanding service-based options
Number of Options	11,020,000	10,960,800	10,700,273
$0.20 - $0.25 [Member] | Service-Based Stock Options [Member]
Summary of outstanding service-based options
Number of Options	8,720,000
Weighted Average Remaining Contractual Life	4 years
$0.20 - $0.25 [Member] | Minimum [Member] | Service-Based Stock Options [Member]
Summary of outstanding service-based options
Exercise Price	$ 0.20
$0.20 - $0.25 [Member] | Maximum [Member] | Service-Based Stock Options [Member]
Summary of outstanding service-based options
Exercise Price	0.25
$.35 [Member] | Service-Based Stock Options [Member]
Summary of outstanding service-based options
Exercise Price	$ 0.35
Number of Options	725,000
Weighted Average Remaining Contractual Life	9 years
$0.40 [Member] | Service-Based Stock Options [Member]
Summary of outstanding service-based options
Exercise Price	$ 0.40
Number of Options	1,575,000
Weighted Average Remaining Contractual Life	4 years
$0.40 [Member] | Service-Based Stock Options [Member]
Summary of outstanding service-based options
Exercise Price	$ 0.40
Number of Options	1,575,000

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Stockholders' Equity (Details 3) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Exercise Price, Beginning Balance,	$ 0.40
Weighted Average Exercise Price, Ending Balance,	$ 0.41	$ 0.40
Warrant [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Options/Warrants, Beginning Balance	3,089,119	1,954,981
Number of Shares, Issued	2,491,305	2,634,228
Number of Shares, Exercised		(1,500,000)
Number of Options/Warrants, Ending balance	5,580,424	3,089,119
Weighted Average Exercise Price, Beginning Balance,	$ 0.40	$ 0.19
Weighted Average Exercise Price, Issued	0.29	0.40
Weighted Average Exercise Price, Exercised		0.12
Weighted Average Exercise Price, Ending Balance,	$ 0.35	$ 0.40
Year of Expiration, Beginning Balance	2018 - 2020	2017 - 2019
Year of Expiration, Issued	2023 - 2028	2018 - 2020
Year of Expiration, Exercised		2017
Year of Expiration, Ending Balance	2018 - 2028	2018 - 2020

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Stockholders' Equity (Details 4) - Warrants [Member] - $ / shares	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Summary of fair value of options and warrants granted using black-scholes option-pricing model with weighted-average assumptions
Expected dividend yield
Minimum [Member]
Summary of fair value of options and warrants granted using black-scholes option-pricing model with weighted-average assumptions
Expected volatility	191.00%	125.00%
Risk free interest rate	2.44%	1.31%
Expected option term (in years)	3 years	10 months 25 days
Weighted average grant date fair value	$ 0.21	$ 0.12
Maximum [Member]
Summary of fair value of options and warrants granted using black-scholes option-pricing model with weighted-average assumptions
Expected volatility	196.00%	214.00%
Risk free interest rate	2.58%	2.57%
Expected option term (in years)	5 years	8 years 1 month 6 days
Weighted average grant date fair value	$ 0.22	$ 0.45

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Stockholders' Equity (Details Textual)					1 Months Ended												3 Months Ended			9 Months Ended		12 Months Ended
	Oct. 01, 2017 $ / shares shares	Jun. 01, 2017 USD ($) shares	Apr. 01, 2016 USD ($)	Mar. 31, 2016 USD ($)	Jan. 01, 2019 USD ($) shares	Oct. 25, 2018 USD ($) $ / shares	May 31, 2018 USD ($) $ / shares shares	Feb. 28, 2018 shares	Nov. 30, 2017 USD ($) $ / shares shares	Oct. 31, 2017 USD ($)	Aug. 31, 2017 USD ($) shares	Jul. 31, 2017 USD ($) $ / shares shares	Apr. 30, 2017 USD ($) $ / shares shares	Apr. 24, 2017 $ / shares shares	Feb. 28, 2017 USD ($) $ / shares shares	Jan. 31, 2017 USD ($) $ / shares shares	Sep. 30, 2018 USD ($) $ / shares shares	Dec. 31, 2017 USD ($) $ / shares shares	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($) $ / shares shares	Sep. 30, 2017 USD ($) shares	Dec. 31, 2017 USD ($) $ / shares shares	Dec. 31, 2016 USD ($) Customers $ / shares shares	May 29, 2018	May 14, 2018 USD ($) shares	Sep. 21, 2017 shares	Jun. 30, 2017 USD ($) shares	Mar. 31, 2017 USD ($) $ / shares shares	Sep. 30, 2016 USD ($)
Stockholders' Equity (Textual)
Common stock issued for services as per agreement
Treasury stock, value																	$ 163,701	$ 163,701		$ 163,701		$ 163,701
Treasury stock, shares | shares																	515,200	515,200		515,200		515,200
Common stock, shares issued | shares																217,391	45,334,957	44,493,063		45,334,957		44,493,063
Common stock issued, value																	$ 453,349	$ 444,930		$ 453,349		$ 444,930
Note payable															$ 25,000	$ 210,000												$ 499,802
Offering to sell shares of common stock | shares																					4,000,000
Sale of stock, price per share | $ / shares																												$ 0.23
Subscriptions shares received | shares														217,390				2,927,156				2,927,156
Issued of warrants | shares														108,696								1,463,578
Aggregate purchase price																		$ 673,246				$ 673,246
Conversion of common stock, shares | shares																					755,179
Net (loss)																	(533,299)		$ (651,891)	(541,896)	$ (1,028,131)
Net (loss) attributable to noncontrolling interests																	(37,318)		27,172	(66,160)	(41,752)
Net (loss) attributable to Company																	(495,981)		(679,063)	(475,736)	(986,379)
Stock compensation expense																				458,850	162,741
General and administrative expense																	301,174		277,559	$ 855,620	$ 753,402
Shares of common stock, shares | shares									100,000			900,000
Shares of common stock, value									$ 44,000			$ 432,000
Investment in subsidiary by noncontrolling interest
Warrants to purchase of common stock | shares																					2,000,000
Warrant expiration date, description																				The warrants expire at various times between September 2018 and March 2028.
Proceeds from options exercise																				$ 4,080
Intrinsic value of options exercisable																	160,796	$ 1,210,342		160,796		$ 1,210,342
Compensation and related expenses																	321,933		529,361	787,898	1,131,805
Interest expense																	$ 147,664		1,111	$ 205,192	650,718
Weighted average exercise price of warrants | $ / shares																	$ 0.41	$ 0.40		$ 0.41		$ 0.40
Common stock, shares authorized | shares																	100,000,000	100,000,000		100,000,000		100,000,000
Convertible promissory note																	$ 1,351,094			$ 1,351,094			$ 25,035
Conversion price | $ / shares																	$ 0.23			$ 0.23			$ 0.23
Convertible notes																	$ 310,752			$ 310,752
Additional shares
Consulting services [Member]
Stockholders' Equity (Textual)
Common stock, shares issued | shares							200,000										500,000			500,000
Common stock issued, value							$ 56,000										$ 120,000			$ 120,000
Stock compensation expense																				56,000
Issuance of Common Stock [Member] | Subscription Agreement [Member]
Stockholders' Equity (Textual)
Warrants issued | shares														108,696
Warrants exercise price | $ / shares														$ 0.40
Issuance of company stock, shares | shares													217,390
Satisfaction of obligation to pay amount													$ 50,000
Michael T. Bornstein [Member]
Stockholders' Equity (Textual)
Options fully vested and expiration period	10 years
Exercise price | $ / shares	$ 0.35
Purchase of common stock | shares	100,000
Michael T. Bornstein [Member] | Equity Option [Member]
Stockholders' Equity (Textual)
Options fully vested and expiration period	10 years
Purchase of common stock description	Mr. Borenstein received four ten-year options to each purchase 75,000 shares of our common stock at prices of $0.25, $0.25, $0.35, and $0.35 per share, which vest upon the Company earning $4,000,000, $5,000,000, $6,000,000 and $7,000,000 in earnings before income taxes, respectively.
Purchase of common stock | shares	75,000
Mark McLaughlin [Member]
Stockholders' Equity (Textual)
Options vested fair value																		$ 69,949				69,949
Shares of common stock, shares | shares												271,579
Number of shares cancelled | shares								2,000,000
Option exercised, shares | shares												339,473
Option vesting, description												In July 2017, the Company issued Mark McLaughlin, the Company's CEO at the time, a ten year option to purchase 750,000 shares of common stock at a price of $0.35 per share, vesting one-third or 250,000 shares upon signing and 250,000 shares on July 1, 2018 and 250,000 shares on July 1, 2019. Once these options are fully vested, they expire in 10 years from date of grant.
Mark McLaughlin [Member] | Equity Option [Member]
Stockholders' Equity (Textual)
Number of stock options issued | shares												75,000
Number of options granted, value												$ 20,985
Weighted average exercise price stock option issued | $ / shares												$ 0.35
Options fully vested and expiration period												10 years
Shares of common stock, shares | shares												800,000
Option exercised, shares | shares												1,339,473
Exercise price | $ / shares												$ 0.10
Robert Kalkstein [Member] | Consulting services [Member]
Stockholders' Equity (Textual)
Recognized expense																	16,658		0	$ 49,974	0
Options vested fair value										$ 199,897
Option vesting, description										In October 2017, the Company entered into a consulting agreement with Mr. Robert Kalkstein, the Company's Chief Financial Officer, and issued him a ten-year option to purchase 500,000 shares of common stock at a price of $0.40 per share, vesting 30% upon signing, 35% vesting on the two-year anniversary of the agreement and 35% vesting on the three year anniversary of the agreement.
Acorn Management Partners, LLC [Member]
Stockholders' Equity (Textual)
Common stock issued for services as per agreement, shares | shares											100,000
Common stock issued for services as per agreement											$ 40,000
Stock compensation expense																						$ 40,000
BV Global Fulfillment, LLC [Member]
Stockholders' Equity (Textual)
Common stock issued for services as per agreement, shares | shares											50,000
Common stock issued for services as per agreement											$ 20,000
Stock Options [Member]
Stockholders' Equity (Textual)
Number of stock options issued | shares																				600,000		1,600,000
Stock compensation expense																	$ 0		292,725	$ 204,750	406,247
Number of common stock exercises | shares																				40,800		1,339,473
Warrants outstanding and exercisable amount | shares																	11,020,000	10,960,800		11,020,000		10,960,800	10,700,273
Stock Options [Member] | Michael T. Bornstein [Member]
Stockholders' Equity (Textual)
Number of stock options issued | shares												300,000			500,000
Number of options granted, value												$ 83,939			$ 113,522
Weighted average exercise price stock option issued | $ / shares												$ 0.35			$ 0.20
Options fully vested and expiration period												10 years			10 years
Stock Options [Member] | Mark McLaughlin [Member]
Stockholders' Equity (Textual)
Shares of common stock, shares | shares												1,140,000
Exercised of warrants | shares												1,500,000
Exercise price | $ / shares												$ 0.12
Stock Options [Member] | Brunilda Mclaughlin [Member]
Stockholders' Equity (Textual)
Number of stock options issued | shares																100,000
Number of options granted, value																$ 24,109
Weighted average exercise price stock option issued | $ / shares																$ 0.40
Options fully vested and expiration period																10 years
Warrants [Member]
Stockholders' Equity (Textual)
Subscriptions shares received | shares																											110,000
Issued of warrants | shares																						55,000
Aggregate purchase price																											$ 25,300
Stock compensation expense																	$ 127,388		28,523	$ 383,470	$ 142,045
Warrants issued | shares																	100,000			100,000
Warrants exercise price | $ / shares																	$ 0.50			$ 0.50
Warrants outstanding and exercisable amount | shares																	5,580,424	3,089,119		5,580,424		3,089,119
Warrants [Member] | Subsequent Event [Member]
Stockholders' Equity (Textual)
Stock compensation expense						$ 128,000
Warrants exercise price | $ / shares						$ 0.40
Warrants [Member] | Convertible Notes Payable [Member]
Stockholders' Equity (Textual)
Warrants issued | shares							2,391,305
Warrants exercise price | $ / shares							$ 0.28
Warrants fully vested and expiration period							5 years
Warrants [Member] | IPO [Member]
Stockholders' Equity (Textual)
Warrants issued | shares													55,000
Warrants exercise price | $ / shares													$ 0.40
Warrants fully vested and expiration period													2 years
Warrants [Member] | Issuance of Common Stock [Member]
Stockholders' Equity (Textual)
Note payable																													$ 50,000
Warrants issued | shares									67,861							591,745												402,348
Warrants exercise price | $ / shares									$ 0.40							$ 0.40												$ 0.40
Warrants fully vested and expiration period													3 years			2 years					2 years
Performance-Based Stock Options [Member] | Unvested [Member]
Stockholders' Equity (Textual)
Number of stock options issued | shares															250,000
Weighted average exercise price stock option issued | $ / shares												$ 0.35			$ 0.40							$ 0.80
Options fully vested and expiration period												10 years
Intrinsic value of options exercised															$ 55,439
Stock options, expiration date															Dec. 31, 2027
Option vesting, description																		The options expire 10 years from date of grant and are exercisable upon the company achieving pre-tax earnings benchmarks between $4,000,000 and $7,000,000.			The options expire 10 years from date of grant and are exercisable upon the company achieving pre-tax earnings benchmarks between $4,000,000 and $7,000,000.
Options expire date, description															The options expire in 2027.							The options expire at various dates between 2021 and 2027.
Number of consultant | Customers																							2
Purchase of common stock | shares												6,000,000						300,000			1,575,000	900,000
Annual sales revenue target															$ 5,000,000							$ 10,000,000
Aggregate fair value												$ 1,688,212						$ 242,709			$ 910,146
Additional shares																		$ 300,000			1,575,000
Warrant One [Member] | Issuance of Common Stock [Member]
Stockholders' Equity (Textual)
Warrants issued | shares																												1,408,578
Warrants exercise price | $ / shares																												$ 0.40
Warrants fully vested and expiration period																						2 years
Minimum [Member]
Stockholders' Equity (Textual)
Common stock, shares authorized | shares																										50,000,000
Minimum [Member] | Performance-Based Stock Options [Member] | Unvested [Member]
Stockholders' Equity (Textual)
Weighted average exercise price stock option issued | $ / shares																		$ 0.25				$ 0.40
Maximum [Member]
Stockholders' Equity (Textual)
Common stock, shares authorized | shares																										100,000,000
Maximum [Member] | Performance-Based Stock Options [Member] | Unvested [Member]
Stockholders' Equity (Textual)
Weighted average exercise price stock option issued | $ / shares																		$ 0.35				$ 0.80
Conversion Labs [Member]
Stockholders' Equity (Textual)
Common stock, shares issued | shares																1,183,490		1,319,211				1,319,211
Conversion of common stock																$ 272,203
Conversion of common stock, shares | shares									135,721
Charge to noncontrolling interest				$ 91,612					$ 31,216													$ 303,418
Net (loss)																	$ 35,842		$ 41,194	$ 23,145	68,924
Warrants issued | shares																		659,606				659,606
Option vesting, description												The options expire in 10 years and are exercisable upon cash received by the Company from Immudyne PR between $4,000,000 and $7,000,000.
Conversion Labs [Member] | Mark McLaughlin [Member]
Stockholders' Equity (Textual)
Issuance of company stock, shares | shares																						1,319,211
Additional shares																						$ 303,419
Consultants [Member]
Stockholders' Equity (Textual)
Common stock issued for services as per agreement, shares | shares		125,000
Common stock issued for services as per agreement		$ 45,000
Common stock, shares issued | shares																									250,000
Common stock issued, value																									$ 62,500
Charge to noncontrolling interest			$ 91,612
Stock compensation expense																						$ 45,000
Stock Issued During Period Rescinded Shares | shares							500,000
Reissued common stock | shares							250,000
Consultants [Member] | Stock Options [Member]
Stockholders' Equity (Textual)
Number of stock options issued | shares												125,000
Number of options granted, value												$ 49,219
Weighted average exercise price stock option issued | $ / shares												$ 0.40
Options fully vested and expiration period												5 years
JLS Ventures [Member]
Stockholders' Equity (Textual)
Stock compensation expense																				$ 108,000	$ 0
JLS Ventures [Member] | Subsequent Event [Member]
Stockholders' Equity (Textual)
Common stock issued for services as per agreement, shares | shares					1,000,000
Common stock issued for services as per agreement					$ 230,000
JLS Ventures [Member] | Justin Schreiber [Member]
Stockholders' Equity (Textual)
Common stock issued for services as per agreement, shares | shares																				2,000,000
Common stock, shares issued | shares							1,000,000
Common stock issued, value							$ 230,000
Stock compensation expense																				$ 172,500
LegalSimpli Software, LLC [Member]
Stockholders' Equity (Textual)
Percentage of purchase business acquired																	51.00%			51.00%				51.00%
Net (loss) attributable to noncontrolling interests																				$ 48,613
Net (loss) attributable to Company																				5,200
Increase in noncontrolling interests																				$ 154,000

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Royalties (Details) - USD ($)	1 Months Ended	9 Months Ended
	Apr. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Apr. 24, 2017
Royalties (Textual)
Accounts payable and accrued expenses		$ 570
Royalty payment agreement, description		The Company shall pay Alphabet a royalty equal to 13% of Gross Receipts (as defined in the Agreement) realized from the sales of Licensed Products. Further, so long as the Agreement is not previously terminated, the Company, also agreed to pay Alphabet $50,000 on the 120-day anniversary of the Agreement and an additional $50,000 on the 360-day anniversary of the Agreement.
Agreement licensed products, description		Upon execution of the Agreement, Alphabet will be granted a 10-year option to purchase 100,000 shares of the Company's common stock at an exercise price of $0.50. Further, if Licensed Products have gross receipts of $7,500,000 in any calendar year, the Company will grant Alphabet an option to purchase 100,000 shares of the Company's common stock at an exercise price of $0.50; (ii) if Licensed Products have gross receipts of $10,000,000 in any calendar year, the Company will grant Alphabet an additional option to purchase 100,000 shares of the Company's common stock at an exercise price of $0.50 and (iii) If Licensed Products have gross receipts of $20,000,000 in any calendar year, the Company will grant Alphabet an option to purchase 200,000 shares of the Company's common stock at an exercise price of $0.75.
Other current assets		$ 251,184
Subscription Agreement [Member]
Royalties (Textual)
Royalty expense		12,036	$ 65,318
Accounts payable and accrued expenses		26,357		$ 14,039
Other current assets		$ 26,357
Issuance of common stock [Member] | Subscription Agreement [Member]
Royalties (Textual)
Warrants issued					108,696
Issuance of company stock	217,390
Consideration and satisfaction of obligation to pay	$ 50,000

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Commitments and Contingencies (Details)				1 Months Ended					9 Months Ended		12 Months Ended
	Jun. 01, 2017 USD ($)	Sep. 01, 2016	Apr. 01, 2016 USD ($) $ / shares shares	Feb. 28, 2018	Nov. 30, 2017 shares	Aug. 31, 2017 USD ($)	Jul. 31, 2017 shares	Apr. 30, 2017 USD ($) shares	Sep. 30, 2018 USD ($) Thresholds $ / shares shares	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($) shares	Dec. 31, 2016 shares	Apr. 24, 2017 shares
Commitments and Contingencies (Textual)
Operating leases, rent expense | $									$ 36,000	$ 36,000
Restricted shares issued | shares									2,250,000
Common stock issued for services as per agreement | $
Share price | $ / shares									$ 0.20
Purchase common stock option | shares									3,000,000
Agreements of performance fees, Description				The Company entered into a 3-year agreement to lease office space in Huntington Beach, CA beginning on March 2, 2018. The monthly rent is $2,106 for the first twelve months, $2,149 for the second twelve months and $2,235 for the third twelve months. A security deposit of $2,235 was paid for this lease. Rent expense for the nine months ended September 30, 2018 and 2017, was $16,848 and $-0-, respectively.
Shares of common stock, shares | shares					100,000		900,000
Lease expenses | $									$ 570
Number of thresholds | Thresholds									3
Subscription Agreement [Member]
Commitments and Contingencies (Textual)
Lease expenses | $									$ 26,357		$ 14,039
Consulting Agreements [Member]
Commitments and Contingencies (Textual)
Service agreement, description									The Company and JLS Ventures, an entity owned by the Company's current Chief Executive Officer, entered into a second amendment to a Service Agreement effective July 1, 2017. As compensation, the Company issued 900,000 shares of common stock valued at $432,000. The Company is recognizing the expense over the term of the agreement. For the nine months ending September 30, 2018 and 2017, $72,000 and $0, respectively, has been expensed and included in compensation and related expenses on the consolidated statement of operations. In May 2018, the Company issued 1,000,000 shares of common stock valued at $230,000 to JLS Ventures, LLC, a company controlled by our CEO, Justin Schreiber, for services. The Company also committed to issue an additional 1,000,000 shares of common stock on January 1, 2019 valued in the aggregate amount of $230,000 if JLS Ventures met the service requirement specified in the agreement. These 2,000,000 shares serve as the compensation for Mr. Schreiber for his services as CEO of the Company. The Company is recognizing the expense for the issuances over the twenty-four month term of the agreement. For the nine months ending September 30, 2018, $172,500 has been expensed and included in compensation and related expenses on the consolidated statement of operations.
Issuance of Common Stock [Member] | Subscription Agreement [Member]
Commitments and Contingencies (Textual)
Warrants issued | shares													108,696
Issuance of company stock, shares | shares								217,390
Contractual Obligation | $								$ 50,000
Mark McLaughlin [Member]
Commitments and Contingencies (Textual)
Shares of common stock, shares | shares							271,579
Acorn Management Partners, LLC [Member]
Commitments and Contingencies (Textual)
Common stock issued for services as per agreement | $						$ 40,000
Service agreement, description						Acorn shall receive $7,500 cash monthly. As additional compensation, the Company shall issue within five (5) days of signing 100,000 shares of the Company's common stock and upon each three (3) month period thereafter during the term of the Agreement an additional 100,000 shares of the Company's common stock for a total of 400,000 shares of the Company's common stock.
Conversion Labs [Member]
Commitments and Contingencies (Textual)
Operating leases, rent expense | $									$ 95
Office space subleased | $									$ 4,000
Warrants issued | shares											659,606
Agreements of performance fees, Description		In addition, Conversion Labs PR shall pay Pilaris a performance fee of $50,000 on the 180-day anniversary of the agreement and an additional $50,000 performance fee on the 365-day anniversary of the agreement. For the year ended December 31, 2017, the Company recognized expenses related to the performance fee in the amount of $100,000.
Percentage of net income		10.00%
Conversion Labs [Member] | Mark McLaughlin [Member]
Commitments and Contingencies (Textual)
Issuance of company stock, shares | shares											1,319,211
Consultants [Member]
Commitments and Contingencies (Textual)
Common stock issued for services as per agreement | $	$ 45,000
Restricted Stock and Options [Member]
Commitments and Contingencies (Textual)
Restricted shares issued | shares			1,000,000									2,300,000
Common stock issued for services as per agreement | $			$ 690,000
Share price | $ / shares									$ 0.20
Combined capped | shares			1,500,000
Restricted Stock One [Member]
Commitments and Contingencies (Textual)
Restricted shares issued | shares			150,000
Common stock issued for services as per agreement | $			$ 500,000
Restricted shares value | $			$ 5,000,000						$ 1,250,000
Share price | $ / shares			$ 0.30
Combined capped | shares			3,000,000
Additional bonus shares | shares									750,000
Option to buy shares | shares									1,000,000
Restricted Stock Two [Member]
Commitments and Contingencies (Textual)
Restricted shares value | $									$ 2,000,000
Restricted Stock Three [Member]
Commitments and Contingencies (Textual)
Restricted shares value | $									$ 3,000,000

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Product Deposit (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Product Deposit (Textual)
Products deposit	$ 106,700	$ 16,500

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Related Party Transactions (Details) - USD ($)	1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Nov. 20, 2017	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Related Party Transactions (Textual)
Accountant charges per month		$ 410,340	$ 99,964	$ 852,498	$ 321,548
loans accrued interest per month						2.00%
Maturity date						Feb. 28, 2018
Accrued interest relating to loans						$ 1,867
Contributions into equity value
Purchase agreement, description	Pursuant to the terms of the Agreement, the Company purchased 2,000,000 shares (post-split from a 2:1 forward split on January 16, 2018) of Blockchain Industries, Inc. ("BCII") from JOJ. The Agreement was amended on December 8, 2017 and again on March 9, 2018. In consideration for the purchase, the Company agreed to issue one (1) share of the Company's common stock to JOJ for every dollar the Company realizes from gross proceeds on the sale of shares of BCII purchased pursuant to the Agreement, up to a total maximum aggregate amount of 5,000,000 shares. The Company has 3 years to sell the shares of BCII and has agreed not to sell more than 20% of the 30-day average daily trading volume of BCII. Justin Schreiber, the Company's President and CEO, is the President and owner of JOJ.
Conversion Labs [Member]
Related Party Transactions (Textual)
Office space subleased				4,000
Compensation for legal and business advisory services		$ 32,582	$ 138,687	$ 93,045	$ 181,244
JLS Ventures [Member]
Related Party Transactions (Textual)
Service Agreement Description				The Company and JLS Ventures, an entity owned by the Company's current Chief Executive Officer, entered into a second amendment to a Service Agreement effective July 1, 2017. As compensation, the Company issued 900,000 shares of common stock valued at $432,000. The Company is recognizing the expense over the term of the agreement. For the nine months ending September 30, 2018 and 2017, $72,000 and $0, respectively, has been expensed and included in compensation and related expenses on the consolidated statement of operations. In May 2018, the Company issued 1,000,000 shares of common stock valued at $230,000 to JLS Ventures, LLC, a company controlled by our CEO, Justin Schreiber, for services. The Company also committed to issue an additional 1,000,000 shares of common stock on January 1, 2019 valued in the aggregate amount of $230,000 if JLS Ventures met the service requirement specified in the agreement. These 2,000,000 shares serve as the compensation for Mr. Schreiber for his services as CEO of the Company. The Company is recognizing the expense for the issuances over the twenty-four month term of the agreement. For the nine months ending September 30, 2018, $172,500 has been expensed and included in compensation and related expenses on the consolidated statement of operations.
President [Member] | Conversion Labs [Member]
Related Party Transactions (Textual)
Shares of common stock						1,319,211
Contributions into equity value						$ 303,419
Working capital loans						75,000
Chief Financial Officer [Member] | Conversion Labs [Member]
Related Party Transactions (Textual)
Working capital loans						$ 50,000

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Subsequent Events (Details Textual) - USD ($)	1 Months Ended			3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 31, 2018	Oct. 25, 2018	Feb. 28, 2017	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Subsequent Events (Textual)
Stock compensation expense						$ 458,850	$ 162,741
Loan amount			$ 70,000					$ 81,420	$ 68,600
Maturity date								Feb. 28, 2018
Agreement term			60 days
Warrant [Member]
Subsequent Events (Textual)
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 0.50		$ 0.50
Stock compensation expense				$ 127,388	$ 28,523	$ 383,470	$ 142,045
Subsequent Events [Member] | Warrant [Member]
Subsequent Events (Textual)
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.40
Stock compensation expense		$ 128,000
Loan amount	$ 200,000
Loan agreement one-time fee	$ 30,000
Maturity date	Apr. 01, 2019
Loan agreement, description		The Company amended the warrants to provide for an additional three-year term to warrant holders as consideration for them entering into a call agreement with the Company, so that when the Company's common stock trades above or over $0.75 per share for at least ten consecutive days.
Agreement term		2 years