Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 14, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CONVERSION LABS, INC. | |
Entity Central Index Key | 0000948320 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 53,404,045 | |
Entity Filer Number | 000-55857 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash | $ 780,893 | $ 180,093 |
Trade accounts receivable, net | 65,254 | 99,053 |
Product deposit | 51,813 | 33,302 |
Inventory, net | 747,525 | 1,022,616 |
Other current assets | 115,949 | 270,006 |
Total Current Assets | 1,761,434 | 1,605,070 |
Non-current assets | ||
ROU Asset | 25,442 | |
Intangible assets, net | 759,356 | 1,011,065 |
Total non-current assets | 784,798 | 1,011,065 |
Total Assets | 2,546,232 | 2,616,135 |
Current Liabilities | ||
Accounts payable and accrued expenses | 2,027,290 | 868,997 |
Notes payable, net | 722,647 | 247,416 |
Deferred revenue | 234,239 | 75,984 |
Total Current Liabilities | 2,984,176 | 1,192,397 |
Long-term Liabilities | ||
Lease Liability | 29,978 | |
Contingent consideration on purchase of LegalSimpli | 100,000 | 600,000 |
Liability to issue shares | ||
Deferred tax liability | 4,000 | |
Total Liabilities | 3,114,154 | 1,796,397 |
Stockholders' Equity (Deficit) | ||
Common stock, $0.01 par value; 100,000,000 shares authorized, 53,403,649 and 45,267,105 shares issued, 52,888,449 and 45,267,105 outstanding as of September 30, 2019 and December 31, 2018, respectively | 534,037 | 457,822 |
Additional paid-in capital | 15,043,196 | 12,744,249 |
Accumulated (deficit) | (15,883,372) | (12,140,670) |
Equity | (306,139) | 1,061,401 |
Treasury stock, 515,200 and 515,200 shares, at cost | (163,701) | (163,701) |
Total Conversion Labs, Inc. Stockholders' (Deficit) | (469,840) | 897,700 |
Non-controlling interest | (98,082) | (77,962) |
Total Stockholders' (Deficit) | (567,922) | 819,738 |
Total Liabilities and Stockholders' (Deficit) | $ 2,546,232 | $ 2,616,135 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
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 | 53,403,649 | 45,267,105 |
Common stock, shares outstanding | 52,888,449 | 45,267,105 |
Treasury stock, shares | 515,200 | 515,200 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Net Sales | $ 3,126,727 | $ 2,037,636 | $ 8,524,124 | $ 6,139,551 |
Cost of Sales | 680,081 | 534,727 | 2,013,265 | 1,329,881 |
Gross Profit | 2,446,646 | 1,502,909 | 6,510,859 | 4,809,670 |
Operating expenses | ||||
Compensation and related expenses | 456,604 | 321,933 | 1,328,137 | 787,898 |
Professional fees | 418,611 | 410,340 | 696,557 | 852,498 |
Marketing expenses | 2,068,017 | 1,407,911 | 5,574,911 | 3,576,096 |
General and administrative expenses | 477,120 | 301,174 | 1,281,494 | 855,620 |
Total operating expenses | 3,420,352 | 2,441,358 | 8,881,099 | 6,072,112 |
Operating Loss | (973,706) | (938,449) | (2,370,240) | (1,262,442) |
Interest (expense) | (130,936) | (147,664) | (430,956) | (205,192) |
Loss from continuing operations before provision for income taxes | (1,104,642) | (1,086,113) | (2,801,196) | (1,467,634) |
Income taxes (Benefit) | ||||
Income from discontinued operations, including gain on sale, net of income taxes | 925,738 | |||
Net Income (Loss) | (1,104,642) | (1,086,113) | (2,801,196) | (541,896) |
Net (loss) income attributable to noncontrolling interests | (160,838) | (37,318) | (375,540) | (66,160) |
Net Income (loss) attributable to Conversion Labs, Inc. | $ (943,804) | $ (1,048,795) | $ (2,425,656) | $ (475,736) |
Basic loss per share attributable to Conversion Labs, Inc. from continuing operation | $ (0.02) | $ (0.02) | $ (0.06) | $ (0.03) |
Basic income per share attributable to Conversion Labs, Inc. from discontinued operation | 0.02 | |||
Diluted loss per share attributable to Conversion Labs, Inc. from continuing operation | (0.02) | (0.02) | (0.06) | (0.03) |
Diluted income per share attributable to Conversion Labs, Inc. from discontinued operation | $ 0.02 | |||
Weighted Average number of common shares outstanding | ||||
Basic | 50,674,838.43 | 44,436,030 | 48,135,466.45 | 43,708,092 |
Diluted | 50,674,838.43 | 44,436,030 | 48,135,466.45 | 43,708,092 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Stockholders' Equity (Deficit) (Unaudited) - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated (Deficit) | Treasury Stock | Total | Noncontrolling interest | Total |
Balance at Dec. 31, 2017 | $ 444,930 | $ 11,500,537 | $ (10,899,843) | $ (163,701) | $ 881,923 | $ (259,084) | $ 622,839 |
Balance, shares at Dec. 31, 2017 | 44,493,063 | ||||||
Stock repurchase from shareholder | (460,000) | (460,000) | (460,000) | ||||
Retirement of common stock | $ (20,000) | (440,000) | 460,000 | ||||
Retirement of common stock, shares | (2,000,000) | ||||||
Conversion of non-controlling interest equity for shares and warrants | |||||||
Conversion of non-controlling interest equity for shares and warrants, shares | |||||||
Warrants Issued in relation to debt offering | 533,691 | 533,691 | 533,691 | ||||
Exercise of stock options | $ 408 | 3,672 | 4,080 | 4,080 | |||
Exercise of stock options, shares | 40,800 | ||||||
Conversion of Notes Payable | $ 13,511 | 297,241 | 310,752 | 310,752 | |||
Conversion of Notes Payable, shares | 1,351,094 | ||||||
Noncontrolling interest in acquisition of subsidiary | 144,118 | 144,118 | |||||
Investment in subsidiary by noncontrolling interest, net of distributions | 127,048 | 127,048 | |||||
Stock compensation | $ 14,500 | 444,350 | 458,850 | 458,850 | |||
Stock compensation, shares | 1,450,000 | ||||||
Net (loss) | (475,736) | (475,736) | (66,160) | (541,896) | |||
Balance at Sep. 30, 2018 | $ 453,349 | 12,339,491 | (11,375,579) | (163,701) | 1,253,560 | (54,078) | 1,199,482 |
Balance, shares at Sep. 30, 2018 | 45,334,957 | ||||||
Balance at Jun. 30, 2018 | $ 429,930 | 11,139,850 | (10,272,566) | (163,701) | 1,133,513 | (246,387) | 887,126 |
Balance, shares at Jun. 30, 2018 | 42,993,063 | ||||||
Exercise of stock options | $ 408 | 3,672 | 4,080 | 4,080 | |||
Exercise of stock options, shares | 40,800 | ||||||
Conversion of Notes Payable | $ 13,511 | 1,077,515 | 1,091,026 | 1,091,026 | |||
Conversion of Notes Payable, shares | 1,351,094 | ||||||
Noncontrolling interest in acquisition of subsidiary | 256,579 | 256,579 | |||||
Investment in subsidiary by noncontrolling interest, net of distributions | (26,952) | (26,952) | |||||
Stock compensation | $ 9,500 | 118,454 | 127,954 | 127,954 | |||
Stock compensation, shares | 950,000 | ||||||
Net (loss) | (1,103,013) | (1,103,013) | (37,318) | (1,140,331) | |||
Balance at Sep. 30, 2018 | $ 453,349 | 12,339,491 | (11,375,579) | (163,701) | 1,253,560 | (54,078) | 1,199,482 |
Balance, shares at Sep. 30, 2018 | 45,334,957 | ||||||
Balance at Dec. 31, 2018 | $ 457,822 | 12,744,249 | (12,140,670) | (163,701) | 897,700 | (77,962) | 819,738 |
Balance, shares at Dec. 31, 2018 | 45,782,305 | ||||||
Warrants issued in conjunction with stock | 20,825 | 20,825 | 20,825 | ||||
Warrants issued in conjunction with debt | 569,146 | 569,146 | 569,146 | ||||
Stock issued for services | $ 1,000 | 15,000 | 16,000 | 16,000 | |||
Stock issued for services, shares | 100,000 | ||||||
Stock compensation | $ 10,000 | 530,015 | 540,015 | 540,015 | |||
Stock compensation, shares | 1,000,000 | ||||||
Shares purchased | $ 15,215 | 313,961 | 329,176 | 329,176 | |||
Shares purchased, shares | 1,521,344 | ||||||
Distributions to non-controlling interest | (61,626) | (61,626) | |||||
Agreement to issue shares for non-controlling interest in CVLB PR | $ 50,000 | 850,000 | (1,317,046) | (417,046) | 417,046 | ||
Agreement to issue shares for non-controlling interest in CVLB PR, shares | 5,000,000 | ||||||
Net (loss) | (2,425,656) | (2,425,656) | (375,540) | (2,801,196) | |||
Balance at Sep. 30, 2019 | $ 534,037 | 15,043,196 | (15,883,372) | (163,701) | (469,840) | (98,082) | (567,922) |
Balance, shares at Sep. 30, 2019 | 53,403,649 | ||||||
Balance at Jun. 30, 2019 | $ 468,822 | 13,122,309 | (14,941,929) | (163,701) | (1,514,499) | 85,415 | (1,429,084) |
Balance, shares at Jun. 30, 2019 | 46,882,305 | ||||||
Warrants issued in conjunction with stock | 20,825 | 20,825 | 20,825 | ||||
Warrants issued in conjunction with debt | 569,146 | 569,146 | 569,146 | ||||
Stock compensation | 166,955 | 166,955 | 166,955 | ||||
Shares purchased | $ 15,215 | 313,961 | 329,176 | 329,176 | |||
Shares purchased, shares | 1,521,344 | ||||||
Distributions to non-controlling interest | (27,328) | (27,328) | |||||
Agreement to issue shares for non-controlling interest in CVLB PR | $ 50,000 | 850,000 | 2,361 | 902,361 | 4,669 | 907,030 | |
Agreement to issue shares for non-controlling interest in CVLB PR, shares | 5,000,000 | ||||||
Net (loss) | (943,804) | (943,804) | (160,838) | (1,104,642) | |||
Balance at Sep. 30, 2019 | $ 534,037 | $ 15,043,196 | $ (15,883,372) | $ (163,701) | $ (469,840) | $ (98,082) | $ (567,922) |
Balance, shares at Sep. 30, 2019 | 53,403,649 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net (Loss) income | $ (2,801,196) | $ (541,896) |
Adjustments to reconcile net (loss) income to net cash provided by (used) in operating activities | ||
Amortization of debt discount | 324,448 | 181,309 |
Amortization and depreciation | 41,891 | |
Amortization of intangibles | 251,709 | |
Operating Lease Payments | 4,536 | |
(Gain) loss on discontinued operations and disposal | (918,537) | |
Stock issued for services | 16,000 | |
Stock compensation expense | 540,015 | 458,850 |
Liability to issue shares for services | ||
Changes in Assets and Liabilities | ||
Trade accounts receivable | 33,799 | (47,441) |
Product deposit | (18,511) | (90,200) |
Inventory | 275,091 | 57,812 |
Other current assets | 154,057 | (138,050) |
Deferred revenue | 158,255 | 15,348 |
Deferred tax liability | (4,000) | |
Accounts payable and accrued expenses | 1,158,293 | 208,426 |
Net cash provided by (used in) operating activities of continuing operations | 92,496 | (772,488) |
Net cash used in operating activities of discontinued operations | 283,287 | |
Net cash provided by operating activities | 92,496 | (489,201) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Payment to seller for contingent consideration | (500,000) | |
Purchase of subsidiary, net of cash received | (148,555) | |
Proceeds from sale of legacy business | 390,000 | |
Net cash (used in) provided by investing activities | (500,000) | 241,445 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Distributions to non-controlling interest | (61,626) | |
Investment in subsidiary by noncontrolling interest, net | 127,048 | |
Proceeds from convertible note payable | 1,126,250 | 550,000 |
Repayment of notes payable | (345,000) | (167,479) |
Proceeds from options exercise | 4,080 | |
Purchase of shares and warrants | 349,999 | |
Debt issuance costs | (61,320) | |
Proceeds from notes payable | ||
Net cash provided by (used in) financing activities | 1,008,303 | 513,649 |
Net increase in cash | 600,799 | 265,893 |
Cash at beginning of the period | 180,093 | 141,379 |
Cash at end of the period | 780,893 | 407,272 |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid during the period for interest | 324,372 | 4,723 |
Issuance of company stock for investment in subsidiary | 900,000 | |
Retirement of stock | 460,000 | |
Stock repurchase from shareholder | 460,000 | |
Conversion of liability as consideration on sale of legacy business | 150,000 | |
Warrants issued in relation to debt | 569,147 | 533,691 |
Conversion of notes payable | $ 310,752 |
Nature of the Organization and
Nature of the Organization and Business | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF THE ORGANIZATION AND BUSINESS | NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS Nature of Business Conversions Labs, Inc. ("Conversion Labs," "we," "us," "our," the "Company") is an online marketing and telemedicine company with a portfolio of health and wellness brands sold directly to consumers. Our brands consist of both clinically studied over-the-counter products and prescription drugs. Our products are sold primarily through national advertising campaigns on Facebook, Google, Amazon and other online advertising platforms. After the establishment of a joint venture with GoGoMeds.com in June 2019, we now sell branded and generic prescription drugs directly to consumers in all 50 states and the District of Columbia. We currently have four commercial stage brands including (i) Shapiro MD, a personalized hair-loss treatment system consisting of 4 patented over-the-counter products and 2 FDA approved drugs for hair re-growth, (ii) iNR Wellness MD, a nutritional supplement for immune and gut support, (iii) RexMD, a male-oriented direct-to-consumer pharmacy line initially focused on generic Viagra and Cialis, and (iv) PDF Simpli, a PDF conversion software, which is marketed through our subsidiary, LegalSimpli Software, LLC, a marketing-driven software solutions business. We launched our online direct-to-consumer 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 (now known as "Conversion Labs PR LLC"). On April 1, 2016, the original operating agreement of Conversion Labs PR LLC was amended and restated, and we increased our ownership and voting interest in Conversion Labs PR LLC to 78.2%. On April 25, 2019, the operating agreement of Conversion Labs PR LLC was amended and restated in its entirety to increase the Company's ownership and voting interest in Conversion Labs PR LLC to 100%. 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"), Conversion Labs Media LLC ("CVLB Media"), a Puerto Rico limited liability company, Conversion Labs Rx, LLC ("CVLB Rx"), a Puerto Rico limited liability company, 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 to the sellers upon execution of the purchase agreement. Additionally, Conversion Labs PR agreed to pay up to an additional $200,000 for such Membership Interests and an additional $400,000 of contingent consideration should the Company or Conversion Labs PR ever pay a dividend. Recent Developments On April 25, 2019, the Company entered into an membership purchase agreement with entities owned by the Company's Chief Executive officer and Chief Technology Officer, Conversion Labs PR, and purchased the remaining 21.8% interest of Conversion Labs PR from the Company's Chief Executive officer and Chief Technology Officer. As such, the Company now wholly-owns 100% of Conversion labs PR. In order to consummate this transaction, the Company agreed to issue 5 million shares of common stock based on the issuance price of $0.18 per share, equal to $900,000 to the Company's Chief Executive Officer and Chief Technology Officer. The shares were not issued until August 6, 2019, therefore, the Company has recorded a liability on the Company's balance sheet as of September 30, 2019. On May 31, 2019, through our wholly-owned subsidiary, Conversion Labs PR, the Company entered into the operating agreement by and among Conversion Labs Rx, LLC, a Puerto Rico limited liability company ("CVLB Rx"), by and among the Company, Conversion Labs PR, LLC, Harborside Advisors, LLC, Happy Walters, an individual ("Walters"), and David Hanig, an individual ("Hanig", and together with CLPR, Harborside and Walters, each a "Member" and together the "Members"). Pursuant to the operating agreement, the Company, through Conversion Labs PR, owns 51% of the membership interests of CVLB Rx. The operating agreement governs the operations of CVLB Rx and provides for CVLB Rx's management by a Board of Managers of at least three members. Among the provisions of the operating agreement are limitations and restrictions on the disposition of membership interests by a member as further defined therein. 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 its ability to raise additional capital from the sale of common stock or through 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. As of September 30, 2019, the Company had an accumulated deficit approximating $15,799,470. Management has significant 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, 2019, and projected cash needs for 2019, management estimates that it will need to increase sales revenue and/or raise additional capital to cover operating and capital requirements for the 2019 fiscal year. Although management has been successful to date in raising capital to fund operations, 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
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 51% owned subsidiaries, CVLB Rx and LegalSimpli and variable interest entities (VIE's) in which the Company has been determined to be the primary beneficiary. Prior to April 25, 2019, the non-controlling interest in Conversion Labs PR represented 21.833% equity interest held by other members of the joint venture, but as of September 30, 2019 the Company owns 100% of the equity interests of the Conversion Labs PR. 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 in the Company's Annual Report on Form 10-K for December 31, 2018 as filed with the SEC on April 1, 2019. 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, 2018, we ceased processing credit card charges through all VIE merchant accounts. As of September 30, 2019 and December 31, 2018, 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 deemed by management to be VIEs. The assets and liabilities and revenues and expenses of these VIEs are 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 have been eliminated upon consolidation of the VIE with Conversion Labs PR and the Company. No assets were pledged or given as collateral against any borrowings. 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. Inventory As of September 30, 2019 and December 31, 2018, inventory consisted primarily of finished cosmetic products. Inventory is maintained in a third-party fulfillment center 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 value, if lower. As of September 30, 2019 and December 31, 2018, the Company recorded an inventory reserve in the amount of $12,500, respectively on the Company's accompanying balance sheet. As of September 30, 2019 and December 31, 2018, the inventory balances, net included on the Company's accompanying balance sheet were approximately $747,525 and $1,022,000, respectively. Product Deposits 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, 2019 and December 31, 2018, the Company has approximately $51,813 and $33,000, respectively included on the Company's accompanying balance sheet for product deposits with multiple vendors for the purchase of raw materials for products the Company sells online. 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. For the Company's product-based contracts with customers, the Company generally records sales of finished products once the customer places and pays for 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, which is usually upon shipment of the product. The Company records an estimate for provisions of discounts, returns, allowances, customer rebates and other adjustments for each shipment, and are netted with gross sales. The Company accounts for such provisions during the same period in which the related revenues are earned. The Company has determined that the population of contracts with customers is typically homogenous, such that review of the contracts and estimate of various revenue related adjustments can be applied to the entire population. The Company began testing trial offers with the Shapiro MD products in late 2018. The Company was unable to adequately implement a process to report any trial-based revenue and the related impact on inventory. Given the relatively new trial period being offered, the Company has not yet been able to estimate the historical effect to determine how this will change the recording of revenue. For the Company's software subscription-based contracts with customers, the Company records the sales after completion of the customers 14-day free trial and at the end of the service period for which the customer purchased a monthly subscription or records revenue over time as the yearly subscription lapses. The Company offers either a monthly subscription or a yearly subscription to the Company's software. The Company offers a discount for purchase of the yearly subscription, which must be paid at initiation of the contract term, so that the Contract price is fixed at the contract initiation. Yearly subscriptions for the software are recorded net of discount. Customer discounts, returns and rebates included on the Company's accompanying statement of operations for the three and nine months ended September 30, 2019 approximated $219,000 and $1,004,000, respectively. Customer discounts, returns and rebates included on the Company's accompanying statement of operations for the three and nine months ended September 30, 2018 approximated $134,000 and $354,000, respectively. 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, 2019 and December 31, 2018, the accounts receivable reserve included on the Company's accompany balance sheet was $0 for both periods. As of September 30, 2019 and December 31, 2018, the reserve for sales returns and allowances included on the Company's accompany balance sheet was approximately $83,000 and $43,000, 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. At September 30, 2019, the Company has approximately $5,370,000 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 Company has fully reserved the deferred tax asset resulting from available net operating loss carryforwards. 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 $0 and $13,600 options and warrants for the three and nine months ended September 30, 2019, respectively, have not been included in the loss per share calculations as the effects are anti-dilutive. Common stock equivalents comprising shares underlying 28,229,377 and 28,229,377 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. Recent Accounting Pronouncements 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 CVLB Rx 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. These variable interest entities had no significant activity during the preceding six months ending September 30, 2019 or the year ended December 31, 2018. 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 tens of 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, 2019, the Company's accounts receivable had no significant concentration from any one customer. As of September 30, 2019, three credit card processors accounted for 66%, 18% and 12% of accounts receivable. |
Discontinued Operations and Ass
Discontinued Operations and Assets and Liabilities Held for Sale | 9 Months Ended |
Sep. 30, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE | 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 net assets of its 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 net assets and liabilities transferred in the sale was $255,248, resulting in a gain on sale of $744,752. As part of the Asset Sale Agreement, the Company and Mark Mclaughlin agreed that the options that were fully vested are no longer issuable and agreed that any contingently issuable performance options issued to Mark McLaughlin and his related family members were cancelled. These cancelled options consisted of approximately 600,000 services based options and 2,000,000 contingently issuable performance options. |
Business Combination
Business Combination | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATION | NOTE 4 – BUSINESS COMBINATION Acquisition of Membership Interest Purchase Agreement On May 29, 2018 (the "Closing Date"), Immudyne, PR (currently Conversion Labs 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 an aggregate 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. As of December 31, 2018, while the Company does not anticipate LegalSimpli meeting the above milestones, the Company anticipates that it is probable that the Company will pay the total $200,000 consideration to the Sellers for these milestones. Regardless of whether LegalSimpli achieves either or both of the Milestones, the Buyer will retain full ownership of the Membership Interests. In addition, the Purchase Agreement calls for an additional $400,000 of consideration to be paid to the Sellers if/when Conversion Labs PR or the Company ever pay a dividend to shareholders. The Company has determined that it is probable that at some future point that the Company will pay this additional $400,000 to the Sellers. 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 Additional consideration to be paid 200,000 Contingent consideration 400,000 Fair value of total consideration $ 750,000 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 ) Deferred revenue (29,818 ) Non-controlling interest (144,118 ) Total identifiable net assets (256,840 ) Customer relationship asset 1,006,840 $ 750,000 |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 5 – INTANGIBLE ASSETS As of September 30, 2019 the Company has the following amounts related to intangible assets: Gross Carrying Amount Accumulated Amortization Amortizable of intangible assets Customer relationship asset $ 1,006,840 $ (447,484 ) Indefinite lived intangible assets Purchased licenses 200,000 — $ 1,206,840 $ (447,484 ) For the three months ended September 30, 2019, the Company recognized amortization expense of approximately $162,009. As of December 31, 2018 the Company has the following amounts related to intangible assets: Gross Carrying Amount Accumulated Amortization Amortizable intangible assets Customer relationship asset $ 1,006,840 $ (195,775 ) Indefinite lived intangible assets Purchased licenses 200,000 — $ 1,206,840 $ (195,775 ) |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 6 – NOTES PAYABLE The following table outlines the Company's notes payable as of September 30, 2019 and December 31, 2018: September 30, 2019 December 31, 2018 Convertible notes in the principal aggregate amount of $450,000 issued in May of 2018. 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. The borrowers have converted $344,642 of these notes including $9,922 of interest as of September 30, 2019 and December 31, 2018. $ 170,280 $ 215,280 Promissory note in the principal aggregate amount of $230,000 issued in October of 2018. This note has a maturity date of April 1, 2019 and bears no interest. The Company has recorded $0 and $12,000 as accrued interest as of June 30, 2018 and December 31, 2018, respectively. This note was repaid on April 1, 2019. — 200,000 The Company issued convertible notes in the principal aggregate amount of $1,291,000 in August of 2019 to three accredited investors. These notes have a maturity date of August 15, 2020 and accrue interest at 12% per annum. The conversion price for these notes is $0.23 per share of common stock, subject to quarterly adjustment pursuant to the terms therein. 1,291,500 — Related party promissory note of $106,000 issued in December of 2018. This note has a maturity date of March 1, 2019 and bears no interest, but requires an additional $6,000 from the original $100,000 received. The Company has recorded $9,000 as accrued interest as of March 31, 2018. — 50,000 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. — (217,864 ) The Company issued convertible notes in the principal aggregate amount of $1,291,000 in August of 2019 to three investors at a 20% discount to the convertible note amount which resulted in a discount of $215,250. In conjunction with the convertible notes, the Company issued warrants to purchase up to 4,612,500 shares of common stock with an exercise price of $0.28 per share. The fair value of the warrants was determined to be $569,147. The Company paid debt issuance costs paid $61,583 in connection with the new note financing on August 15, 2019. For the three months ended September 30, 2019, the Company recognized amortization of $106,584. (739,133 ) — Total Net Debt $ 722,647 $ 247,416 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 7 – STOCKHOLDERS' EQUITY Common Stock In February 2018, in connection with the sale of the Company's legacy yeast beta glucan assets, 2,000,000 shares of common stock belonging to the Company's Former CEO, Mr. McLaughlin, 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 as the Company's Chief Executive Officer. 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. On January 1, 2019, in connection with the Company's agreement with JLS Ventures, LLC, the Company issued 1,000,000 shares of restricted stock to JLS Ventures, LLC, an entity owned by our Chief Executive Officer. The stock was issued for services and was the only compensation that Mr. Shreiber received during the nine months ended September 30, 2019. On February 27, 2019, the Company entered into a short-term note agreement for $100,000 that was repaid prior to the quarter end. As part of the note agreement, the Company issued 100,000 shares of common stock to the note holder valued at $16,000. During the year ended December 31, 2018, certain convertible note holders were issued 1,498,442 shares at a conversion price of $0.23 per share in connection with the conversion of $344,641 of principal and interest of their notes, resulting in a decrease to the aggregate amount of outstanding convertible debt of approximately $344,641 during the year. During the nine months ended September 30, 2019, the Company issued 1,521,344 shares of common stock to various third-party investors, the Company received $350,001 in cash for these shares. In conjunction with one of the stock purchases, the Company issued warrants valued at $20,825 which based on the terms of the warrants, the Company has bifurcated and treated as equity. In addition to the above stock issued, the Company has issued 100,000 shares of common stock to a consultant for services rendered; which were valued at $16,000. Noncontrolling Interest For the three and nine months ended September 30, 2019, the net (loss) income from non-controlling interests attributed the Company amounted to approximately ($161,000) and $(376,000), respectively. For the three and nine months ended September 30, 2018, the net (loss) income from non-controlling interests attributed the Company amounted to approximately ($36,000) and ($66,000), respectively. On May 29, 2018, Conversion Labs PR acquired a 51% interest in LegalSimpli, which operates a marketing-driven software solutions business. On April 25, 2019, the Company entered into an membership purchase agreement with entities owned by the Company's Chief Executive officer and Chief Technology Officer, Conversion Labs PR, whereby the Company acquired the remaining 21.8% interest of Conversion Labs PR from the Company's Chief Executive officer and Chief Technology Officer. As such, the Company now wholly-owns 100% of Conversion labs PR. In order to consummate this transaction, the Company agreed to issue 5 million shares of common stock based on the issuance price of $0.18 per share, or for a total of $900,000 to the Company's Chief Executive officer and Chief Technology Officer. The shares were not issued until August 6, 2019, and, as such, the Company has recorded a liability on the Company's balance sheet as of September 30, 2019. On May 31, 2019, the Company entered into the operating agreement of CVLB Rx, by and among the Company, Conversion Labs PR, Harborside Advisors, LLC, Happy Walters, an individual ("Walters"), and David Hanig, an individual ("Hanig", and together with Conversion Labs PR, Harborside and Walters, each a "Member" and together the "Members"). Pursuant to the Operating Agreement, the Company, through Conversion Labs PR, owns 51% of the membership interests of CVLB Rx. The Operating Agreement governs the operations of CVLB Rx and provides for CVLB Rx's management by a Board of Managers of at least three members. Among the provisions of the Operating Agreement are limitations and restrictions on the disposition of membership interests by a Member, including right of first refusal of the Members and an option for both the Company and the Members to purchase membership interests that are being offered by a Member. Stock Options The following is a summary of outstanding service-based options at September 30, 2019: Options Outstanding Number of Shares Exercise Price per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price per Share Balance at December 31, 2018 13,820,000 $ 0.20 - 0.40 4.59 years $ 0.26 Granted 500,000 $ 0.23 9.45 years 0.23 Cancelled (25,000 ) $ 0.40 8.01 years 0.40 Expired — — — — Balance at September 30, 2019 14,295,000 $ 0.20 - 0.40 4.75 years $ 0.26 Exercisable December 31, 2018 10,805,416 $ 0.20 - 0.40 3.63 years $ 0.24 Exercisable September 30, 2019 11,467,916 $ 0.20 - 0.40 3.89 years $ 0.25 All outstanding options are exercisable and have a cashless exercise provision, and certain options provide for accelerated vesting provisions and modifications, as defined, if the Company is sold or acquired. The intrinsic value of options outstanding and exercisable at September 30, 2019 and December 31, 2018 amounted to $0 and $0, respectively. On February 9, 2019, Robert Kalkstein, the former Chief Financial Officer of the Company, tendered his resignation to the Company's Board of Directors, effective March 31, 2019. In connection with Mr. Kalkstein's resignation, the Company agreed to amend certain options granted to Mr. Kalkstein by decreasing the exercise price of 500,000 options for the Company's common stock previously granted to Mr. Kalkstein from $0.40 per share to $0.28 per share; accelerate the vesting of 150,000 Options with such options to vest on March 31, 2019; and cancel 200,000 unvested options, the vesting of which was not accelerated. The Company determined that the additional compensation expense for this transaction was approximately $3,000, which was recognized in March of 2019. On March 15, 2019 the Company granted Mr. Piñeiro, the Chief Financial Officer of the Company, options to purchase 500,000 shares of the Company's common stock at an exercise price of $0.23. The Company valued the estimated compensation expense for these options as approximately $73,000, using a Black-Scholes option-pricing model as follows: Significant assumptions Risk-free interest rate at grant date 2.38 % Expected stock price volatility 184.78 % Expected dividend payout — Expected option life-years 6.5 years Weighted average grant date fair value $ 0.15 Forfeiture rate 0 % Performance-Based Stock Options The following is a summary of outstanding performance-based options at September 30, 2019: Options Outstanding Number of Shares Exercise Price per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price per Share Balance at December 31, 2018 15,425,000 $ 0.25 - 0.40 5.46 years $ 0.27 Granted — — — — Cancelled (8,600,000 ) 0.25 - 0.40 7.32 years 0.31 Expired — — — — Balance at September 30, 2019 6,825,000 $ 0.25 - 0.40 3.11 years $ 0.23 Exercisable December 31, 2018 3,175,000 $ 0.25 - 0.40 2.63 years $ 0.40 Exercisable September 30, 2019 3,175,000 $ 0.25 - 0.40 2.63 years $ 0.40 Vested During 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 vested 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 During 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 to JLS Ventures, LLC, a related party. The options expire in 10 years and become exercisable upon cash received by Conversion Labs, Inc. 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. On April 25, 2019, concurrent with the Company's purchase of the remaining 21.8% interest of Conversion Labs PR, these options were cancelled. In the third quarter of 2017, the Company granted performance-based options to purchase 3,750,000 shares of common stock with an exercise prices of $0.25 and $0.35 per share. The options expire in 10 years and become 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 $1,152,849. As of February 2018, 2,000,000 of these options had been cancelled. Warrants The following is a summary of outstanding and exercisable warrants: Warrants Outstanding Number of Shares Exercise Price per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price per Share Balance at December 31, 2018 5,225,533 $ 0.20 - 0.50 2.99 years $ 0.35 Granted 6,133,844 $ 0.28 9.84 years 0.28 Exercised — — — — Expired — — — — Balance at September 30, 2019 11,359,377 $ 0.20 - 0.50 6.69 years $ 0.34 Exercisable December 31, 2018 5,225,533 $ 0.20 - 0.50 2.99 years $ 0.31 Exercisable September 30, 2019 10,363,000 $ 0.20 - 0.50 6.41 years $ 0.35 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 connection with a 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 connection an issuance of convertible notes payable. These warrants are fully vested and expire in five years. In May 2019, the Company issued 1,086,957 warrants to purchase shares of common stock with an exercise price of $0.28 to Bertrand Velge, a board member. The warrants will vest monthly over a four year period and expire in five years. On August 15, 2019, the Company entered into securities purchase agreements with three accredited investors (each an "Investor," collectively, the "Investors"). Pursuant to the terms of the Purchase Agreements, the Company issued and sold to the Investors convertible promissory notes for the aggregate original principal amount of $1,291,500 (the "Notes"), and warrants to purchase up to 4,679,348 shares of the Company's common stock (the "Warrants,"). The Warrants are immediately exercisable and have a term of ten years. The Warrants are exercisable at a price per share of $0.28, subject to adjustment as described herein and contain a cashless exercise mechanism. Stock Based Compensation The total stock-based compensation expense related to Service-Based Stock Options, Performance-Based Stock Options and Warrants issued for service approximated $167,000 and $540,000 for the three and nine months ended September 30, 2019, respectively. The total stock-based compensation expense related to Service-Based Stock Options, Performance-Based Stock Options and Warrants issued for service approximated $172,000 and $512,000 for the three and nine months ended September 30, 2018, respectively. Such amounts are included in compensation and related expenses in the consolidated statement of operations. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 8 – COMMITMENTS AND CONTINGENCIES Royalty Agreements Pilaris Laboratories, LLC 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, 2018, 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, 2019 and December 31, 2018, the Company has accrued $10,000 and $0, respectively, which is included in accounts payable and accrued expenses in regard to this agreement. M.ALPHABET, LLC On March 26, 2018, the Company entered into a license agreement (the "Alphabet Agreement") with M.ALPHABET, LLC ("Alphabet"), pursuant to which Alphabet agreed to license its PURPUREX business which consists of methods and compositions for the treatment of purpura, bruising, post-procedural bruising and traumatic bruising (the "Product Line"). Pursuant to the license granted under the Alphabet Agreement, Conversion Labs PR obtained 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 Alphabet Agreement) realized from the sales of Licensed Products. Further, so long as the Alphabet Agreement is not previously terminated, the Company, also agreed to pay Alphabet $50,000 on the 120-day anniversary of the Alphabet Agreement and an additional $50,000 on the 360-day anniversary of the Agreement. Upon execution of the Alphabet Agreement, Alphabet was 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 an additional 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 an additional 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 an additional 200,000 shares of the Company's common stock at an exercise price of $0.75. Milestone-based Royalty Agreement The Company is subject to a royalty agreement based upon sales of certain hair care products, namely the owners of the Shapiro MD product line. For the three and nine months ended September 30, 2019, the Company recognized approximately $26,000 and $76,000, respectively, in royalty expense related to this agreement. For the three and nine months ended September 30, 2018, the Company recognized approximately $28,500 and $67,000, respectively, in royalty expense related to this agreement. These amounts are included in the Company's accompanying statement of operations as general and administrative expenses. 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"). Upon signing, each consultant was issued 1,000,000 restricted shares of the Company's common stock. In addition, each consultant received an additional 150,000 restricted shares of the Company's common stock. 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, 2019, no bonus shares had been issued, and no options have been granted pursuant to the Consultant Agreements. On April 25, 2019, concurrent with the Company's purchase of the remaining 21.8% interest of Conversion Labs PR, these options were cancelled. Legal Matters In the normal course of business operations, the Company may become involved in various legal matters. At September 30, 2019, the Company's management does not believe that there are any potential legal matters that could have an adverse effect on the Company's financial position. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
LEASES | NOTE 9 – LEASES On January 1, 2019, we adopted ASU 2016-02 using the optional transition method resulting in a cumulative-effect adjustment to our Consolidated Balance Sheets. Comparative financial statements of prior periods have not been adjusted to apply the new method retrospectively. The new method of accounting was applied only to leases that have ongoing minimum lease commitments after January 1, 2019, excluding short-term leases. The Company has applied the practical expedient for leases less than 12-months for the following lease, and as such has excluded it from the calculation of right of use assets and lease liabilities. 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 $5,000 per month for this office space. 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. The Company has recognized a right of use asset and lease liability of $30,287 as of January 1, 2019 for adopting ASC 842, and has classified this lease as an operating lease. The lease did not contain any interest for use in the present value calculation, as a result, the Company used the third-party interest rate from similar borrowings of 7%. The Company has paid a security deposit of $2,235 was paid for this lease. The lease payments for this lease were $6,382, and the implied interest for such lease was $4,241. Rent expense, including short-term lease, for the three and nine months ended September 30, 2019, was approximately $8,000 and $95,000, respectively. Rent expense, including short-term lease, for the three and nine months ended September 30, 2018, was approximately $4,000 and $49,000, respectively. These amounts are included in the Company's accompanying statement of operations as general and administrative expenses. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 10 – RELATED PARTY TRANSACTIONS Other 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. Chief Executive Officer 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 and in lieu of any cash compensation, the Company issued 900,000 shares of common stock valued at $432,000. The Company recognized the expense over the term of the agreement. In May 2018, the Company entered into a two year agreement with Mr. Schreiber to compensate him for his service as CEO for the 2018 and 2019 calendar year. In lieu of any cash compensation for serving as CEO of the Company in 2018 and 2019, the Company agreed to issue 1,000,000 shares of common stock per year and is recognizing the expense over the term of the agreement. JSDC, Inc., owned by our Chief Executive Officer, provides credit card processing services through one or more merchant banks. JSDC, Inc. did not receive any compensation for these services. On November 20, 2017, the Company entered into an agreement (the "JOJ Agreement") with JOJ Holdings, LLC ("JOJ"). Pursuant to the terms of the Agreement, Conversion Labs, Inc. ("Conversion Labs") 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 JOJ Agreement was amended on December 8, 2017 and again on March 9, 2018. In consideration for the purchase, Conversion Labs agreed to issue one (1) share of Conversion Labs common stock to JOJ for every dollar Conversion Labs realizes from gross proceeds on the sale of shares of BCII purchased pursuant to the JOJ 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. Conversion Labs PR utilizes office space in Puerto Rico which is subleased from Mr. Schreiber (President and CEO) incurs expense of approximately $5,000 a month on month-to-month terms for this office space. Conversion Labs PR utilizes BV Global Fulfillment, owned by a related party of the Company's current Chief Executive Officer for fulfillment services. The Company pays a monthly fee of $13,000 to $16,000 per month and reimburses BV Global Fulfillment for their costs associated with shipping the Company's products. The Company incurred approximately $279,000 and $225,000 for the three months ended September 30, 2019 and 2018, respectively, for these services. The Company incurred approximately $771,000 and $485,000 for the nine months ended September 30, 2019 and 2018, respectively, for these services. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11 – SUBSEQUENT EVENTS The Company has evaluated and determined that there are no subsequent events through the date these financial statements were issued. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
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 51% owned subsidiaries, CVLB Rx and LegalSimpli and variable interest entities (VIE's) in which the Company has been determined to be the primary beneficiary. Prior to April 25, 2019, the non-controlling interest in Conversion Labs PR represented 21.833% equity interest held by other members of the joint venture, but as of September 30, 2019 the Company owns 100% of the equity interests of the Conversion Labs PR. 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 in the Company's Annual Report on Form 10-K for December 31, 2018 as filed with the SEC on April 1, 2019. |
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, 2018, we ceased processing credit card charges through all VIE merchant accounts. As of September 30, 2019 and December 31, 2018, 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 deemed by management to be VIEs. The assets and liabilities and revenues and expenses of these VIEs are 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 have been eliminated upon consolidation of the VIE with Conversion Labs PR and the Company. No assets were pledged or given as collateral against any borrowings. |
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. |
Inventory | Inventory As of September 30, 2019 and December 31, 2018, inventory consisted primarily of finished cosmetic products. Inventory is maintained in a third-party fulfillment center 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 value, if lower. As of September 30, 2019 and December 31, 2018, the Company recorded an inventory reserve in the amount of $12,500, respectively on the Company's accompanying balance sheet. As of September 30, 2019 and December 31, 2018, the inventory balances, net included on the Company's accompanying balance sheet were approximately $747,525 and $1,022,000, respectively. |
Product Deposits | Product Deposits 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, 2019 and December 31, 2018, the Company has approximately $51,813 and $33,000, respectively included on the Company's accompanying balance sheet for product deposits with multiple vendors for the purchase of raw materials for products the Company sells online. |
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. For the Company's product-based contracts with customers, the Company generally records sales of finished products once the customer places and pays for 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, which is usually upon shipment of the product. The Company records an estimate for provisions of discounts, returns, allowances, customer rebates and other adjustments for each shipment, and are netted with gross sales. The Company accounts for such provisions during the same period in which the related revenues are earned. The Company has determined that the population of contracts with customers is typically homogenous, such that review of the contracts and estimate of various revenue related adjustments can be applied to the entire population. The Company began testing trial offers with the Shapiro MD products in late 2018. The Company was unable to adequately implement a process to report any trial-based revenue and the related impact on inventory. Given the relatively new trial period being offered, the Company has not yet been able to estimate the historical effect to determine how this will change the recording of revenue. For the Company's software subscription-based contracts with customers, the Company records the sales after completion of the customers 14-day free trial and at the end of the service period for which the customer purchased a monthly subscription or records revenue over time as the yearly subscription lapses. The Company offers either a monthly subscription or a yearly subscription to the Company's software. The Company offers a discount for purchase of the yearly subscription, which must be paid at initiation of the contract term, so that the Contract price is fixed at the contract initiation. Yearly subscriptions for the software are recorded net of discount. Customer discounts, returns and rebates included on the Company's accompanying statement of operations for the three and nine months ended September 30, 2019 approximated $219,000 and $1,004,000, respectively. Customer discounts, returns and rebates included on the Company's accompanying statement of operations for the three and nine months ended September 30, 2018 approximated $134,000 and $354,000, respectively. |
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, 2019 and December 31, 2018, the accounts receivable reserve included on the Company's accompany balance sheet was $0 for both periods. As of September 30, 2019 and December 31, 2018, the reserve for sales returns and allowances included on the Company's accompany balance sheet was approximately $83,000 and $43,000, 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. At September 30, 2019, the Company has approximately $5,370,000 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 Company has fully reserved the deferred tax asset resulting from available net operating loss carryforwards. |
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 $0 and $13,600 options and warrants for the three and nine months ended September 30, 2019, respectively, have not been included in the loss per share calculations as the effects are anti-dilutive. Common stock equivalents comprising shares underlying 28,229,377 and 28,229,377 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. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements 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 CVLB Rx 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. These variable interest entities had no significant activity during the preceding six months ending September 30, 2019 or the year ended December 31, 2018. |
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 tens of 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, 2019, the Company's accounts receivable had no significant concentration from any one customer. As of September 30, 2019, three credit card processors accounted for 66%, 18% and 12% of accounts receivable. |
Business Combination (Tables)
Business Combination (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [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 Additional consideration to be paid 200,000 Contingent consideration 400,000 Fair value of total consideration $ 750,000 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 ) Deferred revenue (29,818 ) Non-controlling interest (144,118 ) Total identifiable net assets (256,840 ) Customer relationship asset 1,006,840 $ 750,000 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Gross Carrying Amount Accumulated Amortization Amortizable of intangible assets Customer relationship asset $ 1,006,840 $ (447,484 ) Indefinite lived intangible assets Purchased licenses 200,000 — $ 1,206,840 $ (447,484 ) Gross Carrying Amount Accumulated Amortization Amortizable intangible assets Customer relationship asset $ 1,006,840 $ (195,775 ) Indefinite lived intangible assets Purchased licenses 200,000 — $ 1,206,840 $ (195,775 ) |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | September 30, 2019 December 31, 2018 Convertible notes in the principal aggregate amount of $450,000 issued in May of 2018. 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. The borrowers have converted $344,642 of these notes including $9,922 of interest as of September 30, 2019 and December 31, 2018. $ 170,280 $ 215,280 Promissory note in the principal aggregate amount of $230,000 issued in October of 2018. This note has a maturity date of April 1, 2019 and bears no interest. The Company has recorded $0 and $12,000 as accrued interest as of June 30, 2018 and December 31, 2018, respectively. This note was repaid on April 1, 2019. — 200,000 The Company issued convertible notes in the principal aggregate amount of $1,291,000 in August of 2019 to three accredited investors. These notes have a maturity date of August 15, 2020 and accrue interest at 12% per annum. The conversion price for these notes is $0.23 per share of common stock, subject to quarterly adjustment pursuant to the terms therein. 1,291,500 — Related party promissory note of $106,000 issued in December of 2018. This note has a maturity date of March 1, 2019 and bears no interest, but requires an additional $6,000 from the original $100,000 received. The Company has recorded $9,000 as accrued interest as of March 31, 2018. — 50,000 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. — (217,864 ) The Company issued convertible notes in the principal aggregate amount of $1,291,000 in August of 2019 to three investors at a 20% discount to the convertible note amount which resulted in a discount of $215,250. In conjunction with the convertible notes, the Company issued warrants to purchase up to 4,612,500 shares of common stock with an exercise price of $0.28 per share. The fair value of the warrants was determined to be $569,147. The Company paid debt issuance costs paid $61,583 in connection with the new note financing on August 15, 2019. For the three months ended September 30, 2019, the Company recognized amortization of $106,584. (739,133 ) — Total Net Debt $ 722,647 $ 247,416 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Employee Stock Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Black-Scholes option-pricing model | Significant assumptions Risk-free interest rate at grant date 2.38 % Expected stock price volatility 184.78 % Expected dividend payout — Expected option life-years 6.5 years Weighted average grant date fair value $ 0.15 Forfeiture rate 0 % |
Performance-based options [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of outstanding options | Options Outstanding Number of Shares Exercise Price per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price per Share Balance at December 31, 2018 15,425,000 $ 0.25 - 0.40 5.46 years $ 0.27 Granted — — — — Cancelled (8,600,000 ) 0.25 - 0.40 7.32 years 0.31 Expired — — — — Balance at September 30, 2019 6,825,000 $ 0.25 - 0.40 3.11 years $ 0.23 Exercisable December 31, 2018 3,175,000 $ 0.25 - 0.40 2.63 years $ 0.40 Exercisable September 30, 2019 3,175,000 $ 0.25 - 0.40 2.63 years $ 0.40 |
Services Based Options [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of outstanding options | Options Outstanding Number of Shares Exercise Price per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price per Share Balance at December 31, 2018 13,820,000 $ 0.20 - 0.40 4.59 years $ 0.26 Granted 500,000 $ 0.23 9.45 years 0.23 Cancelled (25,000 ) $ 0.40 8.01 years 0.40 Expired — — — — Balance at September 30, 2019 14,295,000 $ 0.20 - 0.40 4.75 years $ 0.26 Exercisable December 31, 2018 10,805,416 $ 0.20 - 0.40 3.63 years $ 0.24 Exercisable September 30, 2019 11,467,916 $ 0.20 - 0.40 3.89 years $ 0.25 |
Warrant [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of outstanding options | Warrants Outstanding Number of Shares Exercise Price per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price per Share Balance at December 31, 2018 5,225,533 $ 0.20 - 0.50 2.99 years $ 0.35 Granted 6,133,844 $ 0.28 9.84 years 0.28 Exercised — — — — Expired — — — — Balance at September 30, 2019 11,359,377 $ 0.20 - 0.50 6.69 years $ 0.34 Exercisable December 31, 2018 5,225,533 $ 0.20 - 0.50 2.99 years $ 0.31 Exercisable September 30, 2019 10,363,000 $ 0.20 - 0.50 6.41 years $ 0.35 |
Nature of the Organization an_2
Nature of the Organization and Business (Details) - USD ($) | Jul. 02, 2017 | Apr. 25, 2019 | Sep. 30, 2019 | May 31, 2019 | Dec. 31, 2018 | May 29, 2018 | Apr. 02, 2016 |
Nature of the Organization and Business (Textual) | |||||||
Percentage of ownership equity interest | 100.00% | ||||||
Accumulated deficit | $ 15,883,372 | $ 12,140,670 | |||||
Chief Executive Officer [Member] | |||||||
Nature of the Organization and Business (Textual) | |||||||
Stock issued for shares | 900,000 | 900,000 | |||||
Conversion Labs PR [Member] | |||||||
Nature of the Organization and Business (Textual) | |||||||
Percentage of ownership equity interest | 100.00% | 51.00% | 78.20% | ||||
Percentage of purchase business acquired | 21.80% | ||||||
Issuance of shares of common stock | 5,000,000 | ||||||
Issuance of shares per share | $ 0.18 | ||||||
LegalSimpli Software, LLC [Member] | |||||||
Nature of the Organization and Business (Textual) | |||||||
Percentage of purchase business acquired | 51.00% | ||||||
Immudyne PR LLC [Member] | |||||||
Nature of the Organization and Business (Textual) | |||||||
Initial payment amount | $ 150,000 | ||||||
Agreed to pay additional amount | 200,000 | ||||||
Additional contingent consideration | $ 400,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | Apr. 25, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Summary of Significant Accounting Policies (Textual) | ||||||
Non-controlling interest rate | 21.833% | |||||
Inventory reserve | $ 12,500 | $ 12,500 | $ 12,500 | |||
Customer discounts, returns and rebates | 219,000 | $ 134,000 | 1,004,000 | $ 354,000 | ||
Reserve for sales returns and allowances | 83,000 | 43,000 | ||||
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 CVLB RX 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. | |||||
Product deposit | 51,813 | $ 51,813 | 33,000 | |||
Percentage of variable interest entities | 51.00% | |||||
Inventory balances | 747,525 | $ 747,525 | $ 1,022,616 | |||
Operating loss carryforwards for federal | $ 5,370,000 | $ 5,370,000 | ||||
Description of concentration of credit risk | The Company's accounts receivable had no significant concentration from any one customer. As of September 30, 2019, three credit card processors accounted for 66%, 18% and 12% of accounts receivable. | |||||
Credit risk percentage | 90.00% | |||||
Percentage of ownership equity interest | 100.00% | 100.00% | ||||
Employee Stock Option [Member] | Warrant [Member] | ||||||
Summary of Significant Accounting Policies (Textual) | ||||||
Antidilutive securities excluded from computation of earnings per share | 0 | 28,229,377 | 13,600 | 28,229,377 |
Discontinued Operations and A_2
Discontinued Operations and Assets and Liabilities Held for Sale (Details) - USD ($) | Feb. 07, 2018 | Sep. 30, 2019 | Jan. 29, 2018 |
Discontinued Operations and Assets and Liabilities Held for Sale (Details) | |||
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 | ||
Performance-based options [Member] | |||
Discontinued Operations and Assets and Liabilities Held for Sale (Details) | |||
Cancelled options that were fully vested | 8,600,000 | ||
Services Based Options [Member] | |||
Discontinued Operations and Assets and Liabilities Held for Sale (Details) | |||
Cancelled options that were fully vested | 25,000 | ||
President and Chief Executive Officer [Member] | |||
Discontinued Operations and Assets and Liabilities Held for Sale (Details) | |||
Assets | $ 850,000 | ||
Chief Executive Officer [Member] | Performance-based options [Member] | |||
Discontinued Operations and Assets and Liabilities Held for Sale (Details) | |||
Cancelled options that were fully vested | 2,000,000 | ||
Chief Executive Officer [Member] | Services Based Options [Member] | |||
Discontinued Operations and Assets and Liabilities Held for Sale (Details) | |||
Cancelled options that were fully vested | 600,000 |
Business Combination (Details)
Business Combination (Details) | 1 Months Ended |
May 29, 2018USD ($) | |
Consideration Paid: | |
Cash and cash equivalents | $ 150,000 |
Additional consideration to be paid | 200,000 |
Contingent consideration | 400,000 |
Fair value of total consideration | 750,000 |
Financial assets: | |
Cash and cash equivalents | 1,445 |
Financial liabilities: | |
Accounts payable and accrued liabilities | (84,349) |
Deferred revenue | (29,818) |
Non-controlling interest | (144,118) |
Total identifiable net assets | (256,840) |
Customer relationship asset | 1,006,840 |
Fair Value of Consideration Transferred and Recording of Assets Acquired | $ 750,000 |
Business Combination (Details T
Business Combination (Details Textual) | 1 Months Ended |
May 29, 2018 | |
LegalSimpli Software, LLC [Member] | |
Business Combination (Textual) | |
Percentage of purchase business acquired | 51.00% |
Immudyne [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. As of December 31, 2018, while the Company does not anticipate LegalSimpli meeting the above milestones, the Company anticipates that it is probable that the Company will pay the total $200,000 consideration to the Sellers for these milestones. Regardless of whether LegalSimpli achieves either or both of the Milestones, the Buyer will retain full ownership of the Membership Interests. In addition, the Purchase Agreement calls for an additional $400,000 of consideration to be paid to the Sellers if/when Conversion Labs PR or the Company ever pay a dividend to shareholders. The Company has determined that it is probable that at some future point that the Company will pay this $400,000 to the Sellers. |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | May 29, 2018 |
Amortizable intangible assets | |||
Customer relationship asset | $ 1,006,840 | ||
Gross Carrying Amount [Member] | |||
Amortizable intangible assets | |||
Customer relationship asset | $ 1,006,840 | $ 1,006,840 | |
Indefinite lived intangible assets | |||
Purchased licenses | 200,000 | 200,000 | |
Total amount related to intangible assets | 1,206,840 | 1,206,840 | |
Accumulated Amortization [Member] | |||
Amortizable intangible assets | |||
Customer relationship asset | (447,484) | (195,775) | |
Indefinite lived intangible assets | |||
Purchased licenses | |||
Total amount related to intangible assets | $ (447,484) | $ (195,775) |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Intangible Assets (Textual) | ||
Amortization expense | $ 162,009 | $ 251,709 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Three Credit Card Processors [Member] | ||
Convertible notes in the principal aggregate amount of $450,000 issued in May of 2018. 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. The borrowers have converted $344,642 of these notes including $9,922 of interest as of September 30, 2019 and December 31, 2018. | $ 170,280 | $ 215,280 |
Promissory note in the principal aggregate amount of $230,000 issued in October of 2018. This note has a maturity date of April 1, 2019 and bears no interest. The Company has recorded $0 and $12,000 as accrued interest as of June 30, 2018 and December 31, 2018, respectively. This note was repaid on April 1, 2019. | 200,000 | |
The Company issued convertible notes in the principal aggregate amount of $1,291,000 in August of 2019 to three accredited investors. These notes have a maturity date of August 15, 2020 and accrue interest at 12% per annum. The conversion price for these notes is $0.23 per share of common stock, subject to quarterly adjustment pursuant to the terms therein. | 1,291,500 | |
Related party promissory note of $106,000 issued in December of 2018. This note has a maturity date of March 1, 2019 and bears no interest, but requires an additional $6,000 from the original $100,000 received. The Company has recorded $9,000 as accrued interest as of March 31, 2018. | 50,000 | |
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. | (217,864) | |
The Company issued convertible notes in the principal aggregate amount of $1,291,000 in August of 2019 to three investors at a 20% discount to the convertible note amount which resulted in a discount of $215,250. In conjunction with the convertible notes, the Company issued warrants to purchase up to 4,612,500 shares of common stock with an exercise price of $0.28 per share. The fair value of the warrants was determined to be $569,147. | (739,133) | |
Total Net Debt | $ 722,647 | $ 247,416 |
Notes Payable (Details Textual)
Notes Payable (Details Textual) - USD ($) | Aug. 15, 2019 | Aug. 31, 2019 | Oct. 31, 2018 | May 31, 2018 | Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Jun. 30, 2018 | Mar. 31, 2018 |
Notes Payable (Textual) | ||||||||||
Amortization of debt discount | $ 324,448 | $ 181,309 | ||||||||
Warrant [Member] | ||||||||||
Notes Payable (Textual) | ||||||||||
Amortization of debt discount | $ 315,828 | |||||||||
Exercise price | $ 0.28 | |||||||||
Purchase of warrant and common stock | 2,391,305 | |||||||||
Fair value of the warrants | $ 533,691 | |||||||||
Convertible notes payable [Member] | ||||||||||
Notes Payable (Textual) | ||||||||||
Interest rate on notes payable | 12.00% | 12.00% | ||||||||
Maturity date on notes payable | Aug. 15, 2020 | May 28, 2019 | ||||||||
Convertible promissory note | $ 1,291,000 | $ 450,000 | ||||||||
Conversion price | $ 0.23 | $ 0.23 | ||||||||
Interest expense on notes | 9,922 | 9,922 | ||||||||
Borrower converted remaining principle balance | $ 344,642 | 344,642 | ||||||||
Promissory Notes [Member] | ||||||||||
Notes Payable (Textual) | ||||||||||
Maturity date on notes payable | Apr. 1, 2019 | |||||||||
Convertible promissory note | $ 230,000 | |||||||||
Accrued interest | $ 12,000 | $ 0 | ||||||||
Related Party Promissory Notes [Member] | ||||||||||
Notes Payable (Textual) | ||||||||||
Interest rate on notes payable | ||||||||||
Maturity date on notes payable | Mar. 1, 2019 | |||||||||
Convertible promissory note | $ 106,000 | |||||||||
Accrued interest | $ 9,000 | |||||||||
Debt instrument face amount | 100,000 | |||||||||
Additional debt | $ 6,000 | |||||||||
Convertible Notes Payable [Member] | ||||||||||
Notes Payable (Textual) | ||||||||||
Convertible promissory note | $ 1,291,000 | |||||||||
Exercise price | $ 0.23 | |||||||||
Additional debt | $ 215,250 | |||||||||
Discount rate | 20.00% | |||||||||
Convertible Notes Payable [Member] | Warrant [Member] | ||||||||||
Notes Payable (Textual) | ||||||||||
Amortization of debt discount | $ 61,583 | $ 106,584 | ||||||||
Exercise price | $ 0.28 | |||||||||
Purchase of warrant and common stock | 4,612,500 | |||||||||
Fair value of the warrants | $ 569,147 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Services Based Options [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Number of Options, Beginning Balance | 13,820,000 | |
Number of Shares, Granted | 500,000 | |
Number of Shares, Cancelled | (25,000) | |
Number of Shares, Expired | ||
Number of Options, Ending balance | 14,295,000 | 13,820,000 |
Number of Options, Exercisable | 11,467,916 | 10,805,416 |
Weighted Average Remaining Contractual Life, Begining | 4 years 7 months 2 days | |
Weighted Average Remaining Contractual Life, Granted | 9 years 5 months 12 days | |
Weighted Average Remaining Contractual Life, Cancelled | 8 years 4 days | |
Weighted Average Remaining Contractual Life, Ending | 4 years 9 months | |
Weighted Average Remaining Contractual Life, Exercisable | 3 years 10 months 21 days | 3 years 7 months 17 days |
Weighted Average Exercise Price per Share, Beginning balance | $ 0.26 | |
Weighted Average Exercise Price per Share, Granted | 0.23 | |
Weighted Average Exercise Price per Share, Cancelled | 0.40 | |
Weighted Average Exercise Price per Share, Expired | ||
Weighted Average Exercise Price per Share, Ending balance | 0.26 | $ 0.26 |
Weighted Average Exercise Price per Share, Exercisable | 0.25 | 0.24 |
Minimum [Member] | ||
Exercise Price per Share, Begining balance | 0.20 | |
Exercise Price per Share, Granted | 0.23 | |
Exercise Price per Share, Cancelled | 0.40 | |
Exercise Price per Share, Expired | ||
Exercise Price per Share, Ending balance | 0.20 | 0.20 |
Exercise Price per Share, Exercisable | 0.20 | 0.20 |
Maximum [Member] | ||
Exercise Price per Share, Begining balance | 0.40 | |
Exercise Price per Share, Ending balance | 0.40 | 0.40 |
Exercise Price per Share, Exercisable | $ 0.40 | $ 0.40 |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) - Performance-based options [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Number of Options, Beginning Balance | 15,425,000 | |
Number of Shares, Granted | ||
Number of Shares, Cancelled | (8,600,000) | |
Number of Shares, Expired | ||
Number of Options, Ending balance | 6,825,000 | 15,425,000 |
Number of Options, Exercisable | 3,175,000 | 3,175,000 |
Weighted Average Remaining Contractual Life | 5 years 5 months 16 days | |
Weighted Average Remaining Contractual Life, Cancelled | 7 years 3 months 26 days | |
Weighted Average Remaining Contractual Life, Ending | 3 years 1 month 9 days | |
Weighted Average Remaining Contractual Life, Exercisable | 2 years 7 months 17 days | 2 years 7 months 17 days |
Weighted Average Exercise Price per Share, Beginning balance | $ 0.27 | |
Weighted Average Exercise Price per Share, Granted | ||
Weighted Average Exercise Price per Share, Cancelled | 0.31 | |
Weighted Average Exercise Price per Share, Expired | ||
Weighted Average Exercise Price per Share, Ending balance | 0.23 | $ 0.27 |
Weighted Average Exercise Price per Share, Exercisable | 0.40 | 0.40 |
Minimum [Member] | ||
Exercise Price per Share, Begining balance | 0.25 | |
Exercise Price per Share, Cancelled | 0.25 | |
Exercise Price per Share, Ending balance | 0.25 | 0.25 |
Exercise Price per Share, Exercisable | 0.25 | |
Maximum [Member] | ||
Exercise Price per Share, Begining balance | 0.40 | |
Exercise Price per Share, Cancelled | 0.40 | |
Exercise Price per Share, Ending balance | $ 0.40 | 0.40 |
Exercise Price per Share, Exercisable | $ 0.40 |
Stockholders' Equity (Details 2
Stockholders' Equity (Details 2) - Warrant [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Number of Options, Beginning Balance | 5,225,533 | |
Number of Shares, Granted | 6,133,844 | |
Number of Shares, Exercised | ||
Number of Shares, Expired | ||
Number of Options, Ending balance | 11,359,377 | 5,225,533 |
Number of Options, Exercisable | 10,363,000 | 5,225,533 |
Exercise Price per Share, Granted | $ 0.28 | |
Exercise Price per Share, Exercised | ||
Exercise Price per Share, Expired | ||
Weighted Average Remaining Contractual Life | 2 years 11 months 26 days | |
Weighted Average Remaining Contractual Life, Granted | 9 years 10 months 3 days | |
Weighted Average Remaining Contractual Life, Ending | 6 years 8 months 9 days | |
Weighted Average Remaining Contractual Life, Exercisable | 6 years 4 months 28 days | 2 years 11 months 26 days |
Weighted Average Exercise Price per Share, Beginning balance | $ 0.35 | |
Weighted Average Exercise Price per Share, Granted | 0.28 | |
Weighted Average Exercise Price per Share, Exercised | ||
Weighted Average Exercise Price per Share, Expired | ||
Weighted Average Exercise Price per Share, Ending balance | 0.34 | $ 0.35 |
Weighted Average Exercise Price per Share, Exercisable | 0.35 | 0.31 |
Minimum [Member] | ||
Exercise Price per Share, Begining balance | 0.20 | |
Exercise Price per Share, Ending balance | 0.20 | 0.20 |
Exercise Price per Share, Exercisable | 0.50 | |
Maximum [Member] | ||
Exercise Price per Share, Begining balance | 0.50 | |
Exercise Price per Share, Ending balance | 0.50 | $ 0.50 |
Exercise Price per Share, Exercisable | $ 0.50 |
Stockholders' Equity (Details 3
Stockholders' Equity (Details 3) - Employee Stock Option [Member] | 9 Months Ended |
Sep. 30, 2019$ / shares | |
Significant assumptions | |
Risk-free interest rate at grant date | 2.38% |
Expected stock price volatility | 184.78% |
Expected dividend payout | |
Expected option life-years | 6 years 6 months |
Weighted average grant date fair value | $ 0.15 |
Forfeiture rate | 0.00% |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - USD ($) | Aug. 15, 2019 | Mar. 15, 2019 | Feb. 27, 2019 | Feb. 09, 2019 | Aug. 31, 2019 | May 31, 2019 | Apr. 25, 2019 | May 31, 2018 | Feb. 28, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | May 14, 2019 | Jan. 31, 2019 | Jan. 02, 2019 | May 29, 2018 | Mar. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Common stock, shares issued | 53,403,649 | 53,403,649 | 45,267,105 | ||||||||||||||||||
Common stock issued, value | $ 534,037 | $ 534,037 | $ 457,822 | ||||||||||||||||||
Stock compensation expense | 540,015 | $ 458,850 | |||||||||||||||||||
Net income (loss) | (1,104,642) | $ (1,140,331) | $ (1,086,113) | (2,801,196) | (541,896) | ||||||||||||||||
Net (loss) attributable to noncontrolling interests | (160,838) | (37,318) | (375,540) | (66,160) | |||||||||||||||||
Net (loss) attributable to Company | (943,804) | $ (1,048,795) | (2,425,656) | $ (475,736) | |||||||||||||||||
Intrinsic value of options exercisable | 0 | 0 | 0 | ||||||||||||||||||
Intrinsic value of options outstanding | $ 0 | $ 0 | 0 | ||||||||||||||||||
Ownership interest | 100.00% | 100.00% | |||||||||||||||||||
Performance Based Stock Options [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Intrinsic value of options exercised | $ 55,439 | ||||||||||||||||||||
Number of stock options issued | 250,000 | ||||||||||||||||||||
Weighted average exercise price stock option issued | $ 0.40 | ||||||||||||||||||||
Annual sales revenue target | $ 5,000,000 | ||||||||||||||||||||
Stock options, expiration date | Dec. 31, 2027 | ||||||||||||||||||||
Unvested [Member] | Performance Based Stock Options [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Stock compensation expense | $ 55,439 | ||||||||||||||||||||
Options fully vested and expiration period | 10 years | ||||||||||||||||||||
Purchase of common stock | 6,000,000 | ||||||||||||||||||||
Weighted average exercise price stock option issued | $ 0.28 | ||||||||||||||||||||
Options fully vested and expiration period | 10 years | ||||||||||||||||||||
Aggregate fair value | $ 1,688,212 | ||||||||||||||||||||
Warrant [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Warrants to purchase of common stock | 1,086,957 | 2,391,305 | |||||||||||||||||||
Warrants exercise price | $ 0.28 | $ 0.28 | |||||||||||||||||||
Exercise price | $ 0.28 | ||||||||||||||||||||
Conversion Labs [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Common stock, shares issued | 5,000,000 | 250,000 | 250,000 | 250,000 | |||||||||||||||||
Common stock issued, value | $ 900,000 | $ 62,500 | |||||||||||||||||||
Stock compensation expense | $ 167,000 | $ 172,000 | $ 540,000 | $ 512,000 | |||||||||||||||||
Exercise price | $ 0.18 | ||||||||||||||||||||
Net income (loss) | (161,000) | $ (36,000) | (376,000) | $ (66,000) | |||||||||||||||||
Ownership interest | 100.00% | 51.00% | |||||||||||||||||||
Conversion labs PR interest, description | The Company entered into an membership purchase agreement with entities owned by the Company’s Chief Executive officer and Chief Technology Officer, Conversion Labs PR, whereby the Company acquired the remaining 21.8% interest of Conversion Labs PR from the Company’s Chief Executive officer and Chief Technology Officer. As such, the Company now wholly-owns 100% of Conversion labs PR. | ||||||||||||||||||||
Conversion Labs [Member] | Unvested [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Conversion labs PR interest, description | Concurrent with the Company’s purchase of the remaining 21.8% interest of Conversion Labs PR, these options were cancelled. | ||||||||||||||||||||
CVLB PR [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Option vesting, description | The Company granted performance-based options to purchase 3,750,000 shares of common stock with an exercise prices of $0.25 and $0.35 per share. The options expire in 10 years and become 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 $1,152,849. As of February 2018, 2,000,000 of these options had been cancelled. | ||||||||||||||||||||
President [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Number of shares cancelled | 2,000,000 | ||||||||||||||||||||
Chief Financial Officer [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Common stock, shares issued | 500,000 | ||||||||||||||||||||
Shares of common stock, value | $ 73,000 | ||||||||||||||||||||
Shares of common stock, shares | 500,000 | ||||||||||||||||||||
Exercise price | $ 0.23 | ||||||||||||||||||||
Option exercised, shares | 500,000 | ||||||||||||||||||||
Option vesting, description | The Company agreed to amend certain options granted to Mr. Kalkstein by decreasing the exercise price of 500,000 options for the Company's common stock previously granted to Mr. Kalkstein from $0.40 per share to $0.28 per share; accelerate the vesting of 150,000 Options with such options to vest on March 31, 2019; and cancel 200,000 unvested options, the vesting of which was not accelerated. | ||||||||||||||||||||
Convertible Note Holders [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Conversion of common stock | 344,641 | ||||||||||||||||||||
Shares of common stock, value | $ 344,641 | ||||||||||||||||||||
Shares of common stock, shares | 1,498,442 | ||||||||||||||||||||
Exercise price | $ 0.23 | ||||||||||||||||||||
Convertible Note Holders [Member] | Warrant [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Exercise price | $ 0.28 | ||||||||||||||||||||
Securities Purchase Agreements [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Warrants to purchase of common stock | 4,679,348 | ||||||||||||||||||||
Warrants exercise price | $ 0.28 | ||||||||||||||||||||
Original principal amount | $ 1,291,500 | ||||||||||||||||||||
short-term note agreement [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Common stock issued for services as per agreement | $ 100,000 | ||||||||||||||||||||
Consulting Services [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Common stock, shares issued | 200,000 | 500,000 | |||||||||||||||||||
Common stock issued, value | $ 56,000 | $ 120,000 | |||||||||||||||||||
Issuance Of Common Stock [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Sale of stock, price per share | $ 0.23 | ||||||||||||||||||||
Common stock issued, value | $ 500,000 | ||||||||||||||||||||
Issuance Of Common Stock [Member] | short-term note agreement [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Common stock issued for services as per agreement, shares | 100,000 | ||||||||||||||||||||
Common stock issued for services as per agreement | $ 16,000 | ||||||||||||||||||||
Investors [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Shares of common stock, value | $ 350,001 | ||||||||||||||||||||
Shares of common stock, shares | 1,521,344 | ||||||||||||||||||||
Warrants issued | $ 20,825 | $ 20,825 | |||||||||||||||||||
Investors [Member] | Consulting Services [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Shares of common stock, value | $ 16,000 | ||||||||||||||||||||
Shares of common stock, shares | 100,000 | ||||||||||||||||||||
Consultant [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Stock Issued During Period Rescinded Shares | 500,000 | ||||||||||||||||||||
Reissued common stock | 250,000 | ||||||||||||||||||||
Consultant [Member] | Unvested [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Conversion labs PR interest, description | Concurrent with the Company's purchase of the remaining 21.8% interest of Conversion Labs PR, these options were cancelled. | ||||||||||||||||||||
JLS Ventures [Member] | |||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||
Common stock issued for services as per agreement, shares | 1,000,000 | ||||||||||||||||||||
Common stock issued for services as per agreement | $ 230,000 | ||||||||||||||||||||
Common stock, shares issued | 1,000,000 | 1,000,000 | |||||||||||||||||||
Common stock issued, value | $ 230,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Sep. 01, 2016 | Apr. 01, 2016 | Apr. 25, 2019 | Mar. 26, 2018 | Feb. 28, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Commitments and Contingencies (Textual) | ||||||||||
Service agreement, description | 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. The Company has recognized a right of use asset and lease liability of $30,287 as of January 1, 2019 for adopting ASC 842, and has classified this lease as an operating lease. The lease did not contain any interest for use in the present value calculation, as a result, the Company used the third-party interest rate from similar borrowings of 7%. The Company has paid a security deposit of $2,235 was paid for this lease. The lease payments for this lease were $6,382, and the implied interest for such lease was $4,241. | |||||||||
Accounts payable and accrued expenses | $ 2,027,290 | $ 2,027,290 | $ 868,997 | |||||||
M.ALPHABET, LLC [Member] | ||||||||||
Commitments and Contingencies (Textual) | ||||||||||
Agreements, Description | The Alphabet Agreement, Alphabet was 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 an additional 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 an additional 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 an additional 200,000 shares of the Company's common stock at an exercise price of $0.75. | |||||||||
License agreement, description | The license granted under the Alphabet Agreement, Conversion Labs PR obtained 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"). | |||||||||
M.ALPHABET, LLC [Member] | Royalty Agreements [Member] | ||||||||||
Commitments and Contingencies (Textual) | ||||||||||
Agreements, Description | The Company shall pay Alphabet a royalty equal to 13% of Gross Receipts (as defined in the Alphabet Agreement) realized from the sales of Licensed Products. Further, so long as the Alphabet Agreement is not previously terminated, the Company, also agreed to pay Alphabet $50,000 on the 120-day anniversary of the Alphabet Agreement and an additional $50,000 on the 360-day anniversary of the Agreement. | |||||||||
Consultant [Member] | ||||||||||
Commitments and Contingencies (Textual) | ||||||||||
Agreements, Description | 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, 2019, no bonus shares had been issued, and no options have been granted under the Consultant Agreements. | |||||||||
Consultant [Member] | Unvested [Member] | ||||||||||
Commitments and Contingencies (Textual) | ||||||||||
Conversion labs PR interest, description | Concurrent with the Company's purchase of the remaining 21.8% interest of Conversion Labs PR, these options were cancelled. | |||||||||
Consultant [Member] | Restricted Stock One [Member] | ||||||||||
Commitments and Contingencies (Textual) | ||||||||||
Share price | $ 0.30 | |||||||||
Service agreement, description | 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"). Upon signing, each consultant was issued 1,000,000 restricted shares of the Company's common stock. In addition, each consultant received an additional 150,000 restricted shares of the Company's common stock. 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. | |||||||||
CVLB PR [Member] | ||||||||||
Commitments and Contingencies (Textual) | ||||||||||
Agreements, 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, 2018, 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, 2019 and December 31, 2018, the Company has accrued $10,000 and $0, respectively, which is included in accounts payable and accrued expenses in regard to this agreement. | |||||||||
Percentage of net income | 10.00% | |||||||||
Royalty expense | $ 26,000 | $ 28,500 | $ 76,000 | $ 67,000 |
Leases (Details)
Leases (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Leases (Textual) | |||||
Lease agreement, description | 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. The Company has recognized a right of use asset and lease liability of $30,287 as of January 1, 2019 for adopting ASC 842, and has classified this lease as an operating lease. The lease did not contain any interest for use in the present value calculation, as a result, the Company used the third-party interest rate from similar borrowings of 7%. The Company has paid a security deposit of $2,235 was paid for this lease. The lease payments for this lease were $6,382, and the implied interest for such lease was $4,241. | ||||
Operating leases, rent expense | $ 8,000 | $ 4,000 | $ 95,000 | $ 49,000 | |
Per month for office space value | $ 5,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Jul. 02, 2017 | Apr. 25, 2019 | Feb. 28, 2018 | Nov. 20, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Related Party Transactions (Textual) | |||||||
Office space subleased | $ 5,000 | ||||||
Compensation for legal and business advisory services | $ 1,000,000 | $ 1,000,000 | |||||
Purchase agreement, description | Pursuant to the terms of the Agreement, Conversion Labs, Inc. ("Conversion Labs") 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 JOJ Agreement was amended on December 8, 2017 and again on March 9, 2018. In consideration for the purchase, Conversion Labs agreed to issue one (1) share of Conversion Labs common stock to JOJ for every dollar Conversion Labs realizes from gross proceeds on the sale of shares of BCII purchased pursuant to the JOJ 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 PR utilizes office space in Puerto Rico which is subleased from Mr. Schreiber (President and CEO) incurs expense of approximately $5,000 a month on month-to-month terms for this office space. | |||||
Service agreement, description | 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. The Company has recognized a right of use asset and lease liability of $30,287 as of January 1, 2019 for adopting ASC 842, and has classified this lease as an operating lease. The lease did not contain any interest for use in the present value calculation, as a result, the Company used the third-party interest rate from similar borrowings of 7%. The Company has paid a security deposit of $2,235 was paid for this lease. The lease payments for this lease were $6,382, and the implied interest for such lease was $4,241. | ||||||
Common stock valued | $ 534,037 | $ 457,822 | |||||
Chief Executive Officer [Member] | |||||||
Related Party Transactions (Textual) | |||||||
Service agreement, description | The Company's current Chief Executive Officer for fulfillment services. The Company pays a monthly fee of $13,000 to $16,000 per month and reimburses the BV Global Fulfillment for their costs associated with shipping the Company's products. The Company incurred approximately $279,000 and $225,000 for the three months ended September 30, 2019 and 2018, respectively, for these services. The Company incurred approximately $262,000 and $157,000 for the nine months ended September 30, 2019 and 2018, respectively, for these services. | ||||||
Stock issued for shares | 900,000 | 900,000 | |||||
Common stock valued | $ 432,000 | ||||||
Due to related party for services | $ 771,000 | $ 485,000 |