UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM
10-K
☒ ANNUAL REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
fiscal year ended December 31, 2022
☐
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the
transition period from _________ to ________
Commission file number: 001-38543
OptimizeRx
Corporation
|
(Exact name of registrant as
specified in its charter) |
Nevada |
|
26-1265381 |
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
400 Water Street, Suite 200
Rochester, MI
|
|
48307 |
(Address of principal executive
offices) |
|
(Zip Code) |
Registrant’s telephone number: 248-651-6568
Securities registered under Section 12(b) of the Exchange Act:
Title of each class
|
|
Trading Symbol |
|
Name of each exchange on which
registered |
Common
Stock, par value $0.001 |
|
OPRX |
|
NASDAQ
Capital Market |
Securities registered under Section 12(g) of the Exchange Act:
None
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No
☒
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
No ☒
Indicate by checkmark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
☐ |
Large
accelerated filer |
☐ |
Accelerated
filer |
☒ |
Non-accelerated
filer |
☒ |
Smaller
reporting company |
|
|
☐ |
Emerging
growth company |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit
report. ☐
If securities are registered pursuant to Section 12(b) of the Act,
indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an
error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are
restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers
during the relevant recovery period pursuant to §240.10D-1(b).
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the
price at which the common equity was last sold, or the average bid
and asked price of such common equity, as of the last business day
of the registrant’s most recently completed second fiscal quarter.
$486,888,119
Indicate the number of shares outstanding of each of the
registrant’s classes of common stock, as of the latest practicable
date. 17,100,097 common shares as of February 28, 2023.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant’s definitive proxy statement, in
connection with its 2023 Annual Meeting of Shareholders, to be
filed with the Securities and Exchange Commission within 120 days
after December 31, 2022, are incorporated by reference into
PART III of this Annual Report on Form 10-K.
TABLE OF
CONTENTS
PART I
Forward-Looking Statements
This Annual Report on Form 10-K contains statements that relate to
future events and expectations and, as such, constitute
forward-looking statements, within the meaning of the Private
Securities Litigation Reform Act of 1995. Certain statements, other
than purely historical information, including estimates,
projections, statements relating to our strategies, outlook,
business and financial prospects, business plans, objectives, and
expected operating results, and the assumptions upon which those
statements are based, are “forward-looking statements.” These
forward-looking statements generally are identified by the words
“believes,” “project,” “expects,” “anticipates,” “estimates,”
“intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,”
“will continue,” “will likely result,” and similar expressions.
Forward-looking statements are based on current expectations and
assumptions that are subject to risks and uncertainties which may
cause actual results to differ materially from the forward-looking
statements. Forward-looking statements are not guarantees of future
performance. Although OptimizeRx believes that the expectations
reflected in any forward-looking statements are based on reasonable
assumptions, these expectations may not be attained and it is
possible that actual results may differ materially from those
indicated by these forward-looking statements due to a variety of
risks, uncertainties and changes in circumstances, many of which
are beyond OptimizeRx’s control.
For a discussion of some of the specific factors that could cause
actual results to differ materially from the information contained
in this report, see the following sections of this report: Part I,
Item 1A. “Risk Factors,” and Part II, Item 7. “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations,” including the disclosures under “Critical Accounting
Estimates”. Market projections are subject to the risks discussed
in this report and other risks in the market. OptimizeRx disclaims
any intention or obligation to update publicly any forward-looking
statements, whether in response to new information, future events
or otherwise, except as required by applicable law.
Unless otherwise specified or the context otherwise requires, when
used in this Annual Report on Form 10-K, the terms “we,” “our,”
“us,” “OptimizeRx,” or the “Company” refer to OptimizeRx
Corporation and its subsidiaries.
Item 1. Business
General
OptimizeRx is a digital health technology company enabling
care-focused engagement between life sciences organizations,
healthcare providers, and patients at critical junctures throughout
the patient care journey. Connecting over 60% of U.S. healthcare
providers and millions of their patients through an intelligent
technology platform embedded within a proprietary point-of-care
network, OptimizeRx helps patients start and stay on their
medications.
We are a Nevada corporation organized in September 2008. We conduct
our operations through our wholly-owned subsidiaries, OptimizeRx
Corporation, a Michigan corporation, CareSpeak Communications,
Inc., a New Jersey corporation, CareSpeak Communications, D.O.O., a
controlled foreign corporation incorporated in Croatia, and
Cyberdiet, a controlled foreign corporation incorporated in
Israel.
We employ a “land and expand” strategy focused on growing our
existing client base and generating greater and more consistent
revenues in part through the continued shift in our business model
toward enterprise level engagements, while also broadening our
platform with innovative proprietary solutions such as our TelaRep™
virtual communication solution and our AI-powered real-world
evidence solution which uses sophisticated proprietary
algorithms.
Industry Background
Life sciences organizations face a challenging commercial
landscape. In recent years, they have met increased competition,
shrinking market sizes, and inconsistent access to patients and
healthcare professionals - their most important customers. The
majority of new drug approvals, 81%, are specialty medications,
leading to more complex diagnosis criteria, increased utilization
management by healthcare payors, and lengthy wait times for
patients to begin treatment once care decisions are made.
As a result, life sciences organizations have increasingly turned
to technology solutions to support their commercial strategies.
Spending on digital solutions to facilitate greater access to their
end markets accounts for one-third of their collective $30bn
commercial spend in the United States (U.S.).
We believe significant opportunity exists to address the unmet
needs of life sciences organizations as they relate to digital
solutions, including omni-channel access to health care
professionals, for complex commercial challenges.
2022 Company Highlights
|
1. |
Net revenue increased to a
record $62. 5 million in 2022, a 2% increase over 2021. |
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2. |
Achieved positive cash flow
from operations of $10.7 million for the year ended
December 31, 2022. |
|
|
|
|
3. |
Gross margins increased from 58% to
62%. |
|
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|
|
4. |
Repurchased 1,214,398 shares during
2022 at an average price of $16.49 per share. |
|
|
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|
5. |
Increased use of Real-World Data
Artificial Intelligence (“RWD.AI”) solutions. Ended the year with 6
RWD.AI deals. |
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6. |
Acquired the EvinceMed platform and
related assets. |
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7. |
Published Company’s first
Environmental, Social and Governance (“ESG”) Report. |
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8. |
Announced partnership with Equals
5, becoming the only source capable of delivering true omni-channel
engagement with HCPs, spanning web, social, and point-of-care
messaging delivery modalities. |
Principal Solutions
Historically, we primarily facilitated financial messages to health
care providers via their EHR and ePrescribe systems using the
OptimizeRx proprietary network to solve the ever-increasing
communication barriers between pharmaceutical representatives and
healthcare providers. Over time, as the demand for communication of
an increasing variety of different health information between life
science companies, providers, and patients has risen, our platform
has expanded to encompass additional solutions that enable
healthcare providers to access information for patients at the
point of care. These solutions include evidence-based physician
engagement, point of care banner messaging, social network banner
messaging, institutional account-based banner messaging, innovative
patient engagement services, and various accelerators to the
therapy initiation workflow.
Our principal solutions can be summarized as follows:
Evidence-Based Physician Engagement – Our
evidence-based physician engagement solution uses predictive
analytics via machine learning methods applied to real-world data
(RWD) to assist healthcare providers (HCPs) in identifying patients
who may be qualified for specific therapies, raise awareness of
patient access pathways, and identify early indicators of
non-adherence among patient populations. This RWD-enabled solution
translates into better support for providers as they look to make
the best treatment decisions for their patients. This solution has
a “patient-first” focus, helping manufacturers identify which HCPs
to engage by first identifying if they currently care for qualified
patients, based on where they are in their care journey and disease
state. These Artificial Intelligence (“AI”) models provide our
clients with the most relevant targets and fuel the deployment of
programs across our other solutions.
Point of Care Banner Messaging – Our point of care
banner messaging solution is utilized to deliver a variety of
awareness (brand, therapeutic support, affordability, HUB, and
patient support program) and messaging within the clinical workflow
which can be tailored to meet the needs of each brand.
Social Network Banner Messaging – This past year we
expanded to provide exclusive access to deliver banner messaging to
HCPs within their social network apps. With extensive reach and
granular reporting, this solution both expands the ability to reach
more prescribers while adding to the mind share we can capture
throughout a care delivery day. Given these messages are targeted
to specific HCPs, many of the same awareness messages offered on
the point of care banner solution are offered here as well.
Institutional Account-based Banner Messaging – Our
Institutional Account-based Banner Messaging solution provides our
clients access to delivering banner messaging online and on the
intranets of targeted health system accounts. This allows our
clients to capture additional mind share while also reaching other
prescribers and support staff at key health systems or integrated
delivery networks (IDNs).
Financial Messaging – Our Financial Messaging
solution has been enhanced by Patient Support Messaging at the
point-of-care. This solution provides prescribers visibility to
branded copay offers and other patient support programs directly
within their EHR and/or e-Prescribe system(s). It allows them to
print, digitally send directly to patients via SMS, and/or
digitally send copay offer details electronically to the dispensing
pharmacy. Our solution addresses the fact that many healthcare
systems and prescribers are looking for an easier, more effective
way to increase affordable access and adherence to their prescribed
branded medications.
Patient Engagement – Our technology solution provides
digital messaging services through our cloud-based Mobile Health
Messenger (“MHM”) Platform. We provide interactive health messaging
for improved medication adherence and care coordination. Our
HIPAA-compliant, automated, mobile messaging platform allows
pharmaceutical manufactures and related entities to directly engage
with patients to improve regimen compliance.
Therapy Initiation Workflow – The therapy initiation
workflow is a group of digital solutions focused on accelerating
patient access to treatments where time-consuming medical
documentation is required of HCPs prior to pharmacies dispensing
prescribed drugs. These solutions support the fast-growing area of
specialty medications. This technology enhancement allows life
sciences companies to simplify therapy initiation by presenting
HCPs with a fully electronic option synchronizing enrollment,
benefits verification, prior authorization, and patient support
onboarding.
Sales and Marketing
We employ a sales team of over 19 people, marketing
our solutions to new and existing clients. Our sales team drives
awareness of the increased value of our technology stack as an
enterprise platform, enhanced this year by the addition of the
social channel, and momentum of our institutional/account-based
banner message solutions offering. Accordingly, our sales efforts
are not directed merely at selling individual solutions, but more
broadly towards selling enterprise platform engagements with access
to our full set of solutions across our network.
Our sales and marketing organizations work closely together
to cultivate customer relationships. We use a number of methods to
market and promote our solutions, including digital advertising,
industry events, trade shows, conferences, media coverage, social
media and email. We released a physician survey of 100
physicians across five specialties, detailing the specialty
landscape as it pertains to prescribing pain points specialists
experience. Additionally, we hosted our third annual
Innovate4Outcomes event, partnering with Melinta Therapeutics,
bringing individuals together across healthcare verticals,
including HCPs, commercial manufacturer representatives, and health
tech. The event focused on applying design thinking principles to
contributing factors to Anti-Microbial Resistance, and was
independently covered in end-of-year trade publications for the
first time.
Technology
To support our growth and provide maximum security, scalability,
and flexibility, all of our systems, including from acquisitions,
are now hosted and integrated in the cloud. Our technology
development and systems management core team is in the U.S. and in
Croatia, with contractors in India and Ukraine to provide bench
depth, rich skills experience, and business economies. The teams
are organized into Centers of Excellence focused on Product
Domains, Quality Assurance, Information Security, Data Warehousing
and Business Intelligence, Platform Services, and Internal Systems
Support.
Systems enhancements in 2022 included upgrades and documentation of
processes and procedures and security implementation for ongoing
Sarbanes Oxley, HIPAA, and customer assessments, and in achieving
Enterprise HITRUST Certification, as well as for other needs.
Competition
Our platforms face competition from numerous other companies, both
in attracting users and in generating revenue from advertisers and
sponsors. We compete for users with online services and websites
that provide savings on medications and healthcare products. Our
messaging offerings compete for pharmaceutical budgets with a
variety of other forms of advertising and promotion.
Our platforms compete broadly in the highly competitive
pharmaceutical and life sciences digital marketing industry that is
dominated by large well-known companies with established names,
solid market niches, wide arrays of product offerings and marketing
networks. Many of our competitors have greater financial,
technical, product development, marketing and other resources than
we do. These companies may be better known than we are and have
more customers or users than we do. As a result, many of these
companies may respond more quickly to new or emerging technologies
and standards and changes in customer requirements. These companies
may be able to invest more resources in research and development,
strategic acquisitions, and sales and marketing. The primary direct
competitor in our financial messaging solution is ConnectiveRx. We
generally compete on the basis of several factors, including size
of our network, quality of our service, our ability to target
specific customer needs, and to a lesser extent, price. For more
information on risks relating to our competition, see Item 1A. Risk
Factors.
Intellectual Property
We own patents important to our business, and we expect to continue
to file patent applications to protect our research and development
investments in new products. As of December 31, 2022 we held 3
patents and several pending patent applications, including foreign
counterpart patents and foreign applications. For the United
States, patents may last 20 years from the date of the patent’s
filing, depending upon term adjustments made by the patent
office.
In addition, we hold trademarks in the United States and other
countries. As of December 31, 2022, OPTIMIZERx, OPTIMIZEMD,
CareSpeak, DIETWATCH, Innovate4Outcomes, SPRx, SPx and TELAREP are
our registered trademarks. We also have several pending trademark
applications.
We also have licenses to intellectual property for the use and sale
of certain of our solutions. In addition, we obtain other
intellectual property rights and/or licenses used in connection
with our business when practical and appropriate. Historically, we
have created intellectual property or obtained intellectual
property through commercial relationships and in connection with
acquisitions.
Government Regulation
The healthcare industry and, in particular, our customers and
partners are subject to U.S. federal, state and local laws and
regulations, including those governing fraud, abuse, privacy and
security. Many of these laws and regulations are complicated and
how they might apply to us, our customers, our partners, or the
specific services and relationships we have with our customers and
partners are not always well-defined. Our failure, or perceived
failure, to accurately apply, or comply with, these laws and
regulations could subject us to significant fines and liability,
result in reputational harm, and adversely affect our business. Any
new or amended laws or regulations that impose significant
operational restrictions and compliance requirements may negatively
impact our business. See Item 1A. Risk Factors for more information
on the impact of Government Regulations on OptimizeRx.
Employees
As of December 31, 2022, we had 94 full-time employees in the
U.S, as well as 15 full-time employees in Croatia, and 1 part-time
employee. None of our employees are represented by a labor union or
collective bargaining agreement with respect to their employment
with us. The majority of our employees work remotely and are
geographically distributed across the United States and Croatia. We
supplement our workforce with contractors in the United States and
internationally on an as-needed basis. We consider our relationship
with our employees to be good and have not experienced any work
stoppages.We are dedicated to maintaining an environment where
everyone feels valued, and we celebrate both the differences and
similarities among our people. We also believe that diversity in
all areas, including cultural background, experience and thought,
is essential in making our Company stronger. Our Diversity, Equity
& Inclusion Committee (DE&I) is actively engaged in
improving our culture, hiring practices and education. In 2022, we
endeavored to uphold the Parity Pledge – a commitment made in 2021
to interview and consider at least one qualified woman and
underrepresented minority for every open role, VP or higher. In
addition, the DE&I Committee sponsored quarterly events in
2022, including “Celebrate Women’s History”, “Celebrate Diversity
Month”, and “Hot One’s Trivia Show.”
We prioritize recruiting, retaining, and incentivizing a highly
qualified, diverse workforce. We pay our employees
competitively and offer a broad range of company-paid benefits,
which we believe are competitive with others in our industry.
Moreover, we believe our long-term incentives are structured in a
manner to provide time-based vesting schedules that are
retentive and we incentivize selected employees through the
granting of stock-based awards for and cash-based performance bonus
awards.
We have increased our focus on training and development for our
current employees. We offer learning and development opportunities
and other resources to support our employees in achieving and
enhancing their development objectives. We equip our managers with
the skills and tools to provide ongoing coaching and feedback so
employees can maximize their performance and potential, delivering
success for the company and the employee.
Available Information
Our Internet address is www.optimizerx.com. The information on the
website is not and should not be considered part of this Form 10-K
and is not incorporated by reference in this Form 10-K. The website
is, and is only intended to be, for reference purposes only. We
make available free of charge on or through our website our Annual
Report on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K, and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) as soon as
reasonably practicable after we electronically file such material
with, or furnish it to, the Securities and Exchange Commission (the
“SEC”). In addition, we will provide, at no cost, paper or
electronic copies of our reports and other filings made with the
SEC. Requests should be directed to: Attention: Secretary,
OptimizeRx Corporation, 400 Water Street, Suite 200, Rochester, MI
48307.
Item 1A. Risk Factors
Risks Relating to Our Business
Because we have historically experienced losses, if we are
unable to achieve profitability, our financial condition and
company could suffer.
With the exception of 2021, we have historically incurred losses as
a result of investing in future growth. We incurred losses in 2022
as a result of our increased spending to build the organization to
support expected future growth – both through additional new hires,
as well as through acquisitions. While we have increased revenues,
we have not yet consistently achieved profitability due to these
investments and non-cash expenses. Our ability to achieve
consistent profitability depends on our ability to generate sales
through our technology platform and advertising model, while
maintaining reasonable expense levels. If we do not achieve
sustainable profitability, it may impact our ability to continue
our operations.
Seasonal trends in the pharmaceutical brand marketing
industry could affect our operating results.
In general, the pharmaceutical brand marketing industry experiences
seasonal trends that affect the vast majority of participants in
the pharmaceutical digital marketing industry. Many pharmaceutical
companies allocate the largest portion of their brand marketing to
the fourth quarter of the calendar year. As a result, the first
quarter tends to reflect lower activity levels and lower revenue,
with gradual increases in the following quarters. We generally
expect these seasonality trends to continue and our ability to
effectively manage our resources in anticipation of these trends
may affect our operating results.
Developing and implementing new and updated applications,
features and services for our portals may be more difficult than
expected, may take longer and cost more than expected and may not
result in sufficient increases in revenue to justify the
costs.
Attracting and retaining users of our portals requires us to
continue to improve the technology underlying those portals and to
continue to develop new and updated applications, features and
services for those portals. If we are unable to do so on a timely
basis or if we are unable to implement new applications, features
and services without disruption to our existing ones, we may lose
potential users and clients. The costs of development of these
enhancements may negatively impact our ability to achieve
profitability.
We rely on a combination of internal development, strategic
relationships, licensing and acquisitions to develop our portals
and related applications, features and services. Our development
and/or implementation of new technologies, applications, features
and services may cost more than expected, may take longer than
originally expected, may require more testing than originally
anticipated and may require the acquisition of additional personnel
and other resources. There can be no assurance that the revenue
opportunities from any new or updated technologies, applications,
features or services will justify the amounts spent.
Any failure to offer high-quality customer support for our
portals may adversely affect our relationships with our customers
and harm our financial results.
Once our solutions are implemented, our customers use our support
organization to resolve technical issues relating to our solutions.
In addition, we also believe that our success in selling our
solutions is highly dependent on our business reputation and on
favorable recommendations from our existing customers. Any failure
to maintain high-quality customer support, or a market perception
that we do not maintain high-quality support, could harm our
reputation, adversely affect our ability to maintain existing
customers or sell our solutions to existing and prospective
customers, and harm our business, operating results and financial
condition.
We may be unable to respond quickly enough to accommodate
short-term increases in customer demand for support services.
Increased customer demand for these services, without corresponding
revenues, could also increase costs and adversely affect our
operating results.
We are dependent on a concentrated group of
customers.
Because the pharmaceutical industry is dominated by large companies
with multiple brands, our revenue is concentrated in a relatively
small number of companies. We have approximately 100 pharmaceutical
manufacturers as customers, and our revenues are concentrated in
these customers. Loss of one or more of our larger customers could
have a negative impact on our operating results. Our top five
customers represented 39% of revenue for the year ended December
31, 2022. In each of 2022 and 2021, we had one customer that each
represented slightly over 10% of our revenues.
We expect that we will continue to depend upon a relatively small
number of customers for a significant portion of our total revenues
for the foreseeable future. The loss of any of these customers or
groups of customers for any reason, or a change of relationship
with any of our key customers could cause a material decrease in
our total revenues.
Additionally, mergers or consolidations among our customers in the
healthcare industry could reduce the number of our customers and
could adversely affect our revenues and sales. In particular, if
our customers are acquired by entities that are not also our
customers, that do not use our solutions or that have more
favorable contract terms with competitors and choose to
discontinue, reduce or change the terms of their use of our
solutions, our business and operating results could be materially
and adversely affected.
If we are unable to maintain our contracts with electronic
prescription platforms, our business will suffer.
We are reliant upon our contracts with leading electronic
prescribing (“ERx”) platforms and electronic health record (“EHR”)
systems to generate our revenues received from customers. Such
arrangements subject us to a number of risks, including the
following:
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● |
Our ERx and EHR partners may
experience financial, regulatory or operational difficulties, which
may impair their ability to focus on and fulfill their contract
obligations to us; |
|
● |
Legal disputes or disagreements,
including the ownership of intellectual property, may occur with
one or more of our ERx and EHR partners and may lead to lengthy and
expensive litigation or arbitration; |
|
● |
Significant changes in an ERx and
EHR partner’s business strategy may adversely affect a partner’s
willingness or ability to satisfy obligations under any such
arrangement; |
|
● |
The failure of an ERx or EHR
partner to provide accurate and complete financial information to
us or to maintain adequate and effective internal control over its
financial reporting may negatively affect our ability to meet our
financial reporting obligations as required by the SEC;and |
|
● |
An ERx and EHR partner could
terminate the partnership arrangement, which could negatively
impact our ability to sell our solutions and achieve revenues. |
We will need to maintain these relationships as well as diversify
them. The inability to do so could adversely impact our business.
We generated 31.8% and 53.9% of our revenue through our largest
partner in 2022 and 2021, respectively.
Our agreements with ERx and EHR channel partners are subject
to audit.
Our agreements with our ERx and EHR channel partners provide for
revenue sharing payments to them based on the revenue we generate
through their platforms and systems. These payments are subject to
audit by our channel partners, at their cost, and if there is a
dispute as to the calculation, we may be liable for additional
payments. If an underpayment is determined to be in excess of a
certain amount, for example 10%, some agreements would require us
to pay for the cost of the audit, as well.
If we fail to attract new customers or retain and expand
existing customers, our business and future prospects may be
materially and adversely impacted.
We currently work with many leading pharmaceutical companies,
medical device manufacturers, associations, and other companies.
While we have experienced customer growth, this growth may not
continue at the same pace in the future or at all. Achieving growth
in our customer base may require us to engage in increasingly
sophisticated and costly sales and marketing efforts that may not
result in additional customers. We may also need to modify our
pricing model to attract and retain such customers. If we fail to
attract new customers or fail to maintain or expand existing
relationships in a cost-effective manner, our business and future
prospects may be materially and adversely impacted.
Actual or perceived failures to comply with applicable laws
and regulations that affect the healthcare industry, including data
protection, privacy and security, fraud and abuse laws,
regulations, standards and other requirements could adversely
affect our business, results of operations, and financial
condition.
The global data protection landscape is rapidly evolving, and we
are or may become subject to numerous state, federal and foreign
laws, requirements and regulations governing the collection, use,
disclosure, retention, and security of personal information,
including health-related information. This evolution may create
uncertainty in our business, affect our ability to operate in
certain jurisdictions or to collect, store, transfer, use and share
personal information, necessitate the acceptance of more onerous
obligations in our contracts, result in liability or impose
additional costs on us. The cost of compliance with these laws,
regulations and standards is high and is likely to increase in the
future. Any failure or perceived failure by us to comply with
federal, state or foreign laws or regulation, our internal policies
and procedures or our contracts governing our processing of
personal information could result in negative publicity, government
investigations and enforcement actions, claims by third parties,
and damage to our reputation, any of which could have a material
adverse effect on our operations, financial performance and
business.
We also may be bound by contractual obligations and other
obligations relating to privacy, data protection, and information
security that are more stringent than applicable laws and
regulations. The costs of compliance with, and other burdens
imposed by, laws, regulations, standards, and other obligations
relating to privacy, data protection, and information security are
significant. Although we work to comply with applicable laws,
regulations, and standards, our contractual obligations and other
legal obligations, these requirements are evolving and may be
modified, interpreted and applied in an inconsistent manner from
one jurisdiction to another, and may conflict with another or other
legal obligations with which we must comply. Accordingly, our
failure, or perceived inability, to comply with these laws,
regulations, standards, and other obligations may limit the use and
adoption of our solution, reduce overall demand for our solution,
lead to regulatory investigations, breach of contract claims,
litigation, and significant fines, penalties, or liabilities for
actual or alleged noncompliance or slow the pace at which we close
sales transactions, any of which could harm our business.
The Health Insurance Portability and Accountability Act of 1996, or
HIPAA, and the rules promulgated thereunder require certain
entities, referred to as Covered Entities, to comply with
established standards, including standards regarding the privacy
and security of protected health information, or PHI. HIPAA further
requires that Covered Entities enter into agreements meeting
certain regulatory requirements with their business associates, as
such term is defined by HIPAA, which, among other things, obligate
the business associates to safeguard the covered entity’s PHI
against improper use and disclosure. While we are not a Covered
Entity, we have contracted as a business associate of our Covered
Entity customers and, as such, may be regulated by HIPAA and have
contractual obligations unders such agreements, including to enter
into business associate agreements with our third-party vendors.
We, and our Covered Entity customers might face significant
contractual liability pursuant to such business associate
agreements if the business associate breaches the agreement or
causes the Covered Entity to fail to comply with HIPAA. It is
possible that HIPAA compliance could become a substantial
regulatory burden and expense to our operations as we expand our
point of care technology solutions to help patients start and stay
on therapies.
Certain other laws and regulations such as federal and state
anti-kickback and false claims laws may apply to us indirectly
through our relationships with our customers and partners.
Violations can result in considerable penalties and sanctions. If
we are found to have violated, or to have facilitated the violation
of such laws, we could be subject to significant penalties.
The markets in which we operate are competitive, continually
evolving and, in some cases, subject to rapid change.
Our platforms face competition from numerous other companies, both
in attracting users and in generating revenue from advertisers and
sponsors. We compete for users with online services and websites
that provide savings on medications and healthcare products,
including both commercial sites and not-for-profit sites. We
compete for advertisers and sponsors with health-related web sites,
general purpose consumer web sites that offer specialized health
sub-channels, other high-traffic web sites that include both
healthcare-related and non-healthcare-related content and services,
search engines that provide specialized health searches, and
advertising networks that aggregate traffic from multiple
sites.
Many of our competitors have greater financial, technical, product
development, marketing and other resources than we do. These
organizations may be better known than we are and have more
customers or users than we do. We cannot provide assurance that we
will be able to compete successfully against these organizations or
any alliances they have formed or may form. Since there are no
substantial barriers to entry into the markets in which our public
portals participate, we expect that competitors will continue to
enter these markets.
Developments in the healthcare industry could adversely
affect our business.
Most of our revenue is derived from pharmaceutical manufacturers
and could be affected by changes affecting the broader healthcare
industry, including decreased spending in the industry overall.
General reductions in expenditures by healthcare industry
participants could result from, among other things:
|
● |
Government regulation or private
initiatives that affect the manner in which healthcare industry
participants interact with consumers and the general public; |
|
● |
Government regulation prohibiting
the use of coupons by patients covered by federally funded health
insurance programs; |
|
● |
Consolidation of healthcare
industry participants; |
|
● |
Reductions in governmental funding
for healthcare; and |
|
● |
Adverse changes in business or
economic conditions affecting healthcare industry
participants. |
Even if general expenditures by industry participants remain the
same or increase, developments in the healthcare industry may
result in reduced spending in some or all of the specific market
segments that we serve now or may serve in the future. For example,
use of our solutions and services could be affected by:
|
● |
A decrease in the number of new
drugs or medical devices coming to market; and |
|
● |
A decrease in marketing
expenditures by pharmaceutical or medical device companies. |
The healthcare industry has changed significantly in recent years
and we expect that significant changes will continue to occur.
However, the timing and impact of developments in the healthcare
industry are difficult to predict. We cannot assure you that the
demands for our solutions and services will continue to exist at
current levels or that we will have adequate technical, financial
and marketing resources to react to changes in the healthcare
industry.
If we are unable to manage growth, our operations could be
adversely affected.
Our ability to manage growth effectively will depend on our ability
to improve and expand operations, including our financial and
management information systems, and to recruit, train and manage
personnel. There can be no assurance that management will be able
to manage growth effectively. To manage growth effectively, we will
be required to continue to implement and improve our operating and
financial systems and controls to expand, train and manage our
employee base. Our ability to manage our operations and growth
effectively will require us to continue to expend funds to enhance
our operational, financial and management controls, reporting
systems and procedures, and to attract and retain sufficient
talented personnel.
If we do not properly manage the growth of our business, we may
experience significant strains on our management and operations and
disruptions in our business. Various risks arise when companies
grow too quickly. If our business grows too quickly, our ability to
meet customer demand in a timely and efficient manner could be
challenged. We may also experience development delays as we seek to
meet increased demand for our solutions. Our failure to properly
manage the growth that we or our industry might experience could
negatively impact our ability to execute on our operating plan and,
accordingly, could have an adverse impact on our business, our cash
flow and results of operations, and our reputation with our current
or potential customers.
Our growth may be impacted by acquisitions. We may not be
able to identify suitable acquisition candidates, complete
acquisitions or integrate acquisitions successfully.
Our future growth is likely to depend to some degree on our ability
to acquire and successfully integrate new businesses. We may not be
able to identify suitable acquisition candidates, complete
acquisitions, or integrate acquisitions successfully. We may seek
additional acquisition opportunities, both to further diversify our
business and to penetrate or expand important product offerings or
markets. There are no assurances, however, that we will be able to
successfully identify suitable candidates, negotiate appropriate
terms, obtain financing on acceptable terms, complete proposed
acquisitions, successfully integrate acquired businesses, or expand
into new markets. Once acquired, operations may not achieve
anticipated levels of revenues or profitability. Acquisitions
involve risks, including difficulties in the integration of the
operations, technologies, services and products of the acquired
companies and the diversion of management’s attention from other
business concerns. Although our management will endeavor to
evaluate the risks inherent in any particular transaction, there
are no assurances that we will properly ascertain all such risks.
Difficulties encountered with acquisitions could have a material
adverse impact on our business.
Our business and growth may suffer if we are unable to
attract and retain members of our senior management team and other
key employees.
Our success has been largely dependent on the skills, experience
and efforts of our senior management team and key employees and the
loss of the services of any of our senior management team or other
key employees, without a properly executed transition plan, could
have an adverse effect on us. The loss of any member of our senior
management team or any of our other key employees could damage
critical customer relationships, result in the loss of vital
knowledge, experience and expertise, could lead to an increase in
recruitment and training costs and make it more difficult to
successfully operate our business and execute our business
strategy. We may not be able to find qualified potential
replacements for these individuals and the integration of potential
replacements may be disruptive to our business.
Furthermore, our ability to expand operations to accommodate our
anticipated growth will also depend on our ability to attract and
retain qualified management, sales and technical personnel.
However, competition for these types of employees is intense due to
the limited number of qualified professionals. Our ability to meet
our business development objectives will depend in part on our
ability to recruit, train and retain top quality people with
advanced skills who understand our industry, technology and
business. If we are unable to engage and retain the necessary
personnel, our business may be materially and adversely
affected.
We could be subject to economic, political, regulatory and
other risks arising from our international operations.
Operating in international markets requires significant resources
and management attention and will subject us to regulatory,
economic and political risks that may be different from and
incremental to those in the United States. In addition to the risks
that we face in the United States, our international operations in
Israel and Croatia, may involve risks that could adversely affect
our business, including:
|
● |
difficulties and costs associated
with staffing and managing foreign operations; |
|
● |
natural or man-made disasters,
political, social and economic instability, including wars,
terrorism and political unrest, outbreak of disease , boycotts,
curtailment of trade, and other business restrictions; |
|
● |
compliance with United States laws,
such as the Foreign Corrupt Practices Act, export controls and
economic sanctions, and local laws prohibiting corrupt payments to
government officials; |
|
● |
unexpected changes in regulatory
requirements; |
|
● |
less favorable foreign intellectual
property laws; |
|
● |
adverse tax consequences such as
those related to repatriation of cash from foreign jurisdictions
into the United States, non-income related taxes such as
value-added tax or other indirect taxes, changes in tax laws or
their interpretations, or the application of judgment in
determining our global provision for income taxes and other tax
liabilities given inter-company transactions and calculations where
the ultimate tax determination is uncertain; |
|
● |
fluctuations in currency exchange
rates, which could impact expenses of our international operations
and expose us to foreign currency exchange rate risk; |
|
● |
profit repatriation and other
restrictions on the transfer of funds; |
|
● |
differing payment processing
systems as well as use and acceptance of electronic payment
methods, such as payment cards; |
|
● |
new and different sources of
competition; and |
|
● |
different and more stringent user
protection, data protection, privacy and other laws. |
Our failure to manage any of these risks successfully could harm
our international operations and our overall business, as well as
results of our operations.
A global pandemic may disrupt our business or the business of
our customers.
In December 2019, a novel strain of corona virus, which causes the
infectious disease known as COVID-19 was reported. The World Health
Organization declared COVID-19 a Public Health Emergency and Global
Pandemic. Although many economies around the world have started to
rebound from the severe impact of COVID-19, the healthcare industry
in which we operate remains impacted. The emergence and spread of
new variants and resurgences, or other epidemics or pandemics,
actions taken by governmental authorities and others in response to
the pandemic, the acceptance, and the ability of pharmaceutical
manufacturers and other life sciences companies to develop
effective and safe treatment, and global economic conditions could
affect the desire and/or need for our solutions. We are prepared to
take steps to modify our business practices and mitigate the impact
of the emergence and spread of new variants and resurgences, or
another pandemic or epidemic; however, there can be no assurance
that such steps will be successful, or that our business
operations, or the operations of our customers or partners will not
be materially and adversely affected by the consequences of such
pandemic or epidemic, which could materially impact our results of
operations, cash flows, and financial condition.
Risks Related to Inflation and Other Adverse Economic
Conditions
Inflation and other adverse economic conditions may adversely
affect our business, results of operations and financial
condition.
Recently, inflation has increased throughout the U.S. economy. In
an inflationary environment, we may experience increases in the
prices of labor and other costs of doing business. Additionally,
cost increases may outpace our expectations, causing us to use our
cash and other liquid assets faster than forecasted. If we are
unable to successfully manage the effects of inflation, our
business, operating results, cash flows and financial condition may
be adversely affected.
The occurrence or perception of an economic slowdown or recession,
or of a further increase in inflation, may have a negative impact
on the global economy and may reduce customer demand for our
products and services. In addition, macroeconomic effects such as
increases in interest rates and other measures taken by central
banks and other policy makers could have a negative effect on
overall economic activity that could reduce our customers’ demand
for our products and serves. Adverse changes in demand could impact
our business, collection of accounts receivable and our expected
cash flow generation, which may adversely impact our financial
condition and results of operations.
Risks Related to Our Intellectual Property and
Technology
We are dependent, in part, on our intellectual property. If
we are not able to protect our proprietary rights or if those
rights are invalidated or circumvented, our business may be
adversely affected.
Our business is dependent, in part, on our ability to innovate,
and, as a result, we are reliant on our intellectual property. We
generally protect our intellectual property through patents,
trademarks, trade secrets, confidentiality and nondisclosure
agreements and other measures to the extent our budget permits.
There can be no assurance that patents will be issued from pending
applications that we have filed or that our patents will be
sufficient to protect our key technology from misappropriation or
falling into the public domain, nor can assurances be made that any
of our patents, patent applications, trademarks or our other
intellectual property or proprietary rights will not be challenged,
invalidated or circumvented. In the event a competitor or other
party successfully challenges our solutions, processes, patents or
licenses or claims that we have infringed upon their intellectual
property, we could incur substantial litigation costs defending
against such claims, be required to pay royalties, license fees or
other damages or be barred from using the intellectual property at
issue, any of which could have a material adverse effect on our
business, operating results and financial condition. We cannot
assure you that steps taken by us to protect our intellectual
property and other contractual agreements for our business will be
adequate, that our competitors will not independently develop or
patent substantially equivalent or superior technologies or be able
to design around patents that we may receive, or that our
intellectual property will not be misappropriated.
If we are unable to protect our proprietary rights, we may be at a
disadvantage to others who do not incur the substantial time and
expense we incur. Preventing unauthorized use or infringement of
our intellectual property rights is inherently difficult. Moreover,
it may be difficult or practically impossible to detect theft or
unauthorized use of our intellectual property. Any of the foregoing
could have a material adverse effect upon our business, financial
condition and results of operations.
Cybersecurity incidents could disrupt business operations,
result in the loss of critical and confidential information, and
adversely impact our reputation and results of
operations.
Global cybersecurity threats can range from uncoordinated
individual attempts to gain unauthorized access to our information
technology (IT) systems to sophisticated and targeted measures
known as advanced persistent threats. While we employ comprehensive
measures to prevent, detect, address and mitigate these threats
(including access controls, insurance, vulnerability assessments,
continuous monitoring of our IT networks and systems, maintenance
of backup and protective systems and user training and education),
cybersecurity incidents, depending on their nature and scope, could
potentially result in the misappropriation, destruction, corruption
or unavailability of critical data and confidential or proprietary
information (our own or that of third parties) and the disruption
of business operations. The potential consequences of a material
cybersecurity incident include reputational damage, loss of
customers, litigation with customers and other parties, loss of
trade secrets and other proprietary business data and increased
cybersecurity protection and remediation costs, which in turn could
adversely affect our competitiveness and results of operations.
We may be unable to support our technology to further scale
our operations successfully.
Our plan is to grow through further integration of our technology
in electronic platforms. Our growth will place significant demands
on our management and technology development, as well as our
financial, administrative and other resources. We cannot guarantee
that any of the systems, procedures and controls we put in place
will be adequate to support the commercialization of our
operations. Our operating results will depend substantially on the
ability of our officers and key employees to manage changing
business conditions and to implement and improve our financial,
administrative and other resources. If we are unable to respond to
and manage changing business conditions, or the scale of our
solutions, services and operations, then the quality of our
services, our ability to retain key personnel and our business
could be harmed.
Our business will suffer if our network systems fail or
become unavailable.
A reduction in the performance, reliability and availability of our
network infrastructure would harm our ability to distribute our
solutions to our users, as well as our reputation and ability to
attract and retain customers. Our systems and operations could be
damaged or interrupted by fire, flood, power loss,
telecommunications failure, Internet breakdown, earthquake and
similar events. Our systems could also be subject to viruses,
break-ins, sabotage, acts of terrorism, acts of vandalism, hacking,
cyber-terrorism and similar misconduct. We might not carry adequate
business interruption insurance to compensate us for losses that
may occur from a system outage. Any system error or failure that
causes interruption in availability of our solutions or an increase
in response time could result in a loss of potential customers,
which could have a material adverse effect on our business,
financial condition and results of operations. If we suffer
sustained or repeated interruptions, then our solutions and
services could be less attractive to our users and our business
would be materially harmed.
Risks Relating to Our Common Stock
If a market for our common stock is not maintained,
shareholders may be unable to sell their shares.
Our common stock is traded under the symbol “OPRX” on the Nasdaq
Capital Market. We do not currently have a consistent active
trading market. There can be no assurance that a consistent active
and liquid trading market will develop or, if developed, that it
will be sustained.
Historically, our securities have been thinly traded. Accordingly,
it may be difficult to sell shares of our common stock without
significantly depressing the value of the stock. Unless we are
successful in developing continued investor interest in our stock,
sales of our stock could continue to result in major fluctuations
in the price of the stock.
The market price of our common stock may be highly volatile
and could fluctuate widely in price in response to various factors,
many of which are beyond our control.
Our stock price is subject to a number of factors, including:
|
● |
Technological innovations or new
solutions and services by us or our competitors; |
|
● |
Government regulation of our
solutions and services; |
|
● |
The establishment of partnerships
with other healthcare companies; |
|
● |
Intellectual property
disputes; |
|
● |
Additions or departures of key
personnel; |
|
● |
Sales of our common stock; |
|
● |
Our ability to execute our business
plan; |
|
● |
Operating results below or
exceeding expectations; |
|
● |
Our operating and financial
performance and prospects; |
|
● |
Loss or addition of any strategic
relationship; |
|
● |
General financial, domestic,
international, economic, industry and other market trends or
conditions; and |
|
● |
Period-to-period fluctuations in
our financial results. |
Our stock price may fluctuate widely as a result of any of the
above. In addition, the securities markets have from time to time
experienced significant price and volume fluctuations that are
unrelated to the operating performance of particular companies.
These market fluctuations may also materially and adversely affect
the market price of our common stock.
We do not expect to pay dividends in the foreseeable future
and any return on investment may be limited to the value of our
common stock.
We have never declared or paid any cash dividends on our common
stock. We currently intend to retain all available funds and future
earnings, if any, to fund our future growth and do not expect to
declare or pay any dividend on shares of our common stock in the
foreseeable future. As a result, the success of an investment in
our common stock may depend entirely upon any future appreciation
in its value. There is no guarantee that our common stock will
appreciate in value or even maintain the price at which it is
purchased.
Anti-takeover provisions may make it more difficult for a
third party to acquire control of us, even if the change in control
would be beneficial to shareholders.
The Company is a Nevada corporation. Anti-takeover provisions in
Nevada law and our charter and bylaws could make it more difficult
for a third party to acquire control of us. These provisions could
adversely affect the market price of the common stock and could
reduce the amount that shareholders might receive if the Company is
sold. For example, our charter provides that the board of directors
may issue preferred stock without shareholder approval. In
addition, our bylaws provide that shareholders cannot act by
written consent and that directors may be removed by shareholders
only with the approval of the holders of not less than two-thirds
of the voting power of the issued and outstanding stock entitled to
vote at an annual or special meeting of the shareholders.
Risks Related to Being a Public Company
We have identified a material weakness in our internal
control over financial reporting. Failure to remediate the material
weakness or any other material weaknesses that we identify in the
future could result in material misstatements in our financial
statements.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as
amended, our management is required to report on the effectiveness
of our internal control over financial reporting. The rules
governing the standards that must be met for management to assess
our internal control over financial reporting are complex and
require significant documentation, testing and possible
remediation. Annually, we perform activities that include
reviewing, documenting and testing our internal control over
financial reporting. In addition, if we fail to maintain the
adequacy of our internal control over financial reporting, we will
not be able to conclude on an ongoing basis that we have effective
internal control over financial reporting in accordance with
Section 404 of the Sarbanes-Oxley Act of 2002. If we fail to
achieve and maintain an effective internal control environment, we
could suffer misstatements in our financial statements and fail to
meet our reporting obligations, which would likely cause investors
to lose confidence in our reported financial information. This
could result in significant expenses to remediate any internal
control deficiencies and lead to a decline in our stock price.
The Company has identified a material weakness in the Company’s
internal control over financial reporting. A material weakness is a
deficiency, or a combination of deficiencies, in internal control
over financial reporting, such that there is a reasonable
possibility that a material misstatement of a company’s annual or
interim financial statements will not be prevented or detected on a
timely basis. For further discussion of the material weaknesses,
see Item 9A, Controls and Procedures.
We cannot provide assurance that we have identified all, or that we
will not in the future have additional, material weaknesses in our
internal control over financial reporting. As a result, we may be
required to implement further remedial measures and to design
enhanced processes and controls to address deficiencies. If we do
not effectively remediate the material weakness identified by
management and maintain adequate internal controls over financial
reporting in the future, we may not be able to prepare reliable
financial reports and comply with our reporting obligations under
the Exchange Act on a timely basis. Any such delays in the
preparation of financial reports and the filing of our periodic
reports may result in a loss of public confidence in the
reliability of our financial statements, which, in turn, could
materially adversely affect our business, the market value of our
common stock and our access to capital markets.
Item 1B. Unresolved Staff comments
None
Item 2. Properties
Currently, we do not own any real estate. Our principal executive
offices are located at 400 Water Street, Suite 200, Rochester,
Michigan 48307.
As of December 31, 2022, we have operating leases for office
space in two multitenant facilities. The leases include our
headquarters space in Rochester, Michigan and a technical facility
in Zagreb, Croatia. The lease in Rochester, Michigan expires
November 30, 2023, with a two-year renewal option through 2025, and
has a monthly rent of $6,384 to $6,688. The lease in Zagreb,
Croatia expires February 2024 and has a monthly rent of
approximately $1,883. We also had a lease on office space in
Cranbury, New Jersey which expired in January 2022; we did not
renew this lease. We also lease minor amounts of space in shared
space facilities on a month-to-month basis as necessary.
Item 3. Legal Proceedings
We have no current legal proceedings.
Item 4. Mine Safety Disclosures
Not applicable.
Item 4.1 Information About Our Executive Officers
The following information sets forth the names, ages, and positions
of our executive officers as of March 10, 2023.
Name
|
|
Age |
|
Positions and Offices
Held |
William J. Febbo |
|
54 |
|
Chief Executive
Officer |
Stephen L. Silvestro |
|
45 |
|
Chief Commercial
Officer |
Marion Odence-Ford |
|
58 |
|
General Counsel and Chief
Compliance Officer |
Edward Stelmakh |
|
57 |
|
Chief Financial Officer and Chief
Operations Officer |
Todd Inman |
|
67 |
|
Chief Technology
Officer |
Doug Besch |
|
41 |
|
Chief Product Officer |
Set forth below is a brief description of the background and
business experience of each of our current executive officers.
William J. Febbo
Mr. Febbo joined the Company as Chief Executive Officer and as a
director in February 2016. Mr. Febbo founded Plexuus, LLC, a
payment processing business for medical professionals in September
2015 and remained its Chairman from September 2015 to December
2020. From April 2007 to September 2015, Mr. Febbo served as Chief
Operating Officer of Merriman Holdings, Inc., an investment banking
firm, where he assisted with capital raises in the tech, biotech,
cleantech, consumer and resources industries. Mr. Febbo was a
co-founder of, and from September 2013 to September 2015 served as
Chief Executive Officer of, Digital Capital Network, Inc., a
transaction platform for institutional and accredited investors.
Mr. Febbo was a co-founder of, and from January 1999 to September
2015 was Chief Executive Officer of, MedPanel, LLC, a provider of
market intelligence and communications for the pharmaceutical,
biomedical, and medical device industries. Since 2017, Mr. Febbo
has been a faculty member of the Massachusetts Institute of
Technology’s linQ program, which is a collaborative initiative
focused on increasing the potential of innovative research to
benefit society and the economy. Mr. Febbo currently serves as a
director of Modular Medical (NASDAQ: MODD), a development stage
medical device company focused on the design, development and
eventual commercialization of an innovative insulin pump, and
as a director of Augmedix, Inc. (NASDAQ: AUGX), a provider
of automated medical documentation and data services. In
addition, Mr. Febbo has been a board member of the United Nations
Association of Greater Boston, a resource for the citizens of
Greater Boston on the broad agenda of critical global issues
addressed by the UN and its agencies, since 2004.
On January 29, 2018, FINRA accepted a Letter of Acceptance, Waiver
and Consent (the “Consent”) submitted by William Febbo. Without
admitting or denying the findings, Mr. Febbo consented to the
sanctions and to the entry of findings that he permitted Merriman
Capital, Inc. to conduct a securities business while below its net
capital requirement. From August 2012 to October 2015, Mr. Febbo
was the Financial and Operations Principal (FinOp) for a registered
broker-dealer, Merriman Capital, Inc. (“Merriman”). During certain
months while Mr. Febbo was FinOp, FINRA found that certain of
Merriman’s net capital filings with FINRA were inaccurate because
of the method by which Merriman calculated net capital and that,
when corrected, it was retroactively determined that Merriman had
operated below its minimum net capital requirements. Mr. Febbo, as
FinOp, signed certain of these reports and was thus held
responsible. Based on the Consent, in settlement, Mr. Febbo, who
was then no longer registered with any broker-dealer, accepted a
fine of $5,000, a 10-business day suspension from acting as FinOp
for any FINRA member and required to requalify by examination for
the Series 27 license before again acting in a FinOp capacity.
Stephen L. Silvestro
Mr. Silvestro joined the Company as Chief Commercial Officer on
April 29, 2019. Mr. Silvestro was with CCH® Tagetik, a Wolters
Kluwer company that provides corporate performance management
software solutions for planning, consolidation and reporting, as
its Vice President and General Manager from January 2018 until
April 2019. From April 2017 to January 2018, Mr. Silvestro was with
Prognos Health, Inc., a healthcare data and analytics company, as
its Chief Commercial Officer and, before that, from September 2007
to April 2017, he was with Decision Resources Group, a
multi-national corporation that provides high value global data
solutions, analytics and consulting services to pharmaceutical,
biotech, medical device, healthcare provider and payer, and managed
care companies, in various capacities with him last serving as
Executive Vice President, Head of Global Sales.
Marion Odence-Ford
Ms. Odence-Ford joined the Company as General Counsel & Chief
Compliance Officer in February 2021. From April 2013 to June 2020,
Ms. Odence-Ford was Vice President & Deputy General Counsel at
Decision Resources Group, a multi-national corporation that
provides high value global data solutions, analytics and consulting
services to pharmaceutical, biotech, medical device, healthcare
provider and payer, and managed care companies. From November 2004
to November 2012, Ms. Odence-Ford was Vice President &
Associate General Counsel at CRA International, Inc. (dba Charles
River Associates) (NASDAQ: CRAI), a global consulting firm that
offers economic, financial, and strategic expertise to major law
firms, corporations, accounting firms, and governments around the
world. From May 2004 to November 2004, Ms. Odence-Ford was a member
of the GTC Law Group, LLP, a law firm specializing in the business
affairs of companies in the high tech and biotech industries. Prior
to joining the GTC Law Group, Ms. Odence-Ford worked on the legal
teams of Bank of America Corporation/Fleet Boston Financial
Corporation (NYSE: BAC) from November 2002 to May 2004, and Akamai
Technologies, Inc. (NASDAQ: AKAM) from October 1999 to November
2002. Ms. Odence-Ford began her legal career in private practice at
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC, where she
advised public and private companies on corporate matters.
Edward Stelmakh
Mr. Stelmakh joined the Company as Chief Financial Officer and
Chief Operating Officer on October 11, 2021. Prior to joining the
Company, Mr. Stelmakh served as Senior Vice President, Chief
Financial Officer and Chief Operating Officer of Otsuka America
Pharmaceuticals Inc. (“Otsuka”), a US division of a Japanese global
healthcare enterprise, since April 2020. Previously, he held
various positions at Otsuka including Senior Vice President and
Chief Financial Officer (December 2017 – March 2020) and Vice
President and Chief Financial Officer (December 2015 – November
2017). From March 2010 to December 2015, Mr. Stelmakh worked at
Covance, a division of LabCorp, Inc., as Vice President, Finance,
Clinical Development and Commercialization Services. Prior thereto,
Mr. Stelmakh held a variety of positions of increasing
responsibilities at Johnson & Johnson, Sanofi-Aventis,
Organon/Schering-Plough and Mylan.
Todd Inman
Mr. Inman joined the Company on January 1, 2019 as Vice President,
Technology and became the Company’s Chief Technology Officer in
November 2019. Prior to joining the Company, from May 2017 to
December 2018, Mr. Inman was the Founder and Chief Technology
Officer of Meghadata, LLC, a master data management firm, and from
July 2016 to December 2017, Mr. Inman was the Founder and Managing
Partner of Data Solutions Partners, a data intelligence solutions
company. From January 2011 through June 2016, Mr. Inman was
Director of Data Solutions at Change HealthCare, a healthcare
technology and business solutions company, and from 2005 to 2011,
Mr. Inman was the Director of Data Integration of Emdeon Business
Services, LLC, an information technology and services company.
Prior to Emdeon, from 2001 to 2005, Mr. Inman was the Director of
Clearinghouse Services at WebMD Health Corp and, from 1996 to 2001,
he was the Manager of Clearinghouse Operations at Professional
Office Systems, a CareFirst subsidiary, providing medical office
electronic data interchange services.
Doug Besch
Dr. Besch joined the Company on May 24, 2021 as SVP Product
Strategy & Innovation and became the Company’s Chief Product
Officer in October 2022. Prior to joining the Company, from January
2018 to May 2021, Dr. Besch was the Vice President over Payor and
Market Access Solutions for Clarivate (previously Decision
Resources Group (DRG)), a multi-national corporation that provides
high value global data solutions, analytics and consulting services
to pharmaceutical, biotech, medical device, healthcare provider and
payer, and managed care companies. Prior to Clarivate, from January
2012 to June 2017, Dr. Besch was a co-founder and the Chief Product
Officer for Rx Savings Solution, a company which helps
members and payers reduce prescription drug costs through a
combination of clinical technology, transparency, member engagement
and concierge support. Dr. Besch holds a PharmD and MBA from
Creighton University and practiced as a pharmacist for the
Walgreens Boots Alliance corporation from 2007 through 2013.
PART II
Item 5. Market for Registrant’s Common Equity and Related
Stockholder Matters and Issuer Purchases of Equity
Securities
Our common stock is traded under the symbol “OPRX” on the Nasdaq
Capital Market. At February 28, 2023, there were approximately
350 shareholders of record of our common stock.
We currently intend to retain future earnings for the operation of
our business. We have never declared or paid cash dividends on our
common stock, and we do not anticipate paying any cash dividends in
the foreseeable future. Any payment of future dividends will be at
the discretion of our board of directors and will depend upon,
among other things, our earnings, financial condition, capital
requirements, level of indebtedness, and other factors that our
board of directors deems relevant.
For the information regarding our equity compensation plans, see
PART III, Item 12, “Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters.”
Issuer Purchases of Equity Securities
During the three months ended December 31, 2022, we purchased
shares of our common stock as follows:
Period |
|
Total
Number of
Shares
Purchased
(1) |
|
|
Average
Price Paid
per Share |
|
|
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs (1) |
|
|
Maximum
Number (or
Approximate
Dollar Value) of
Shares that
May Yet Be
Purchased
Under the Plans
or Programs
(1) |
|
10/1/22 - 10/31/22 |
|
|
341,934 |
|
|
$ |
14.83 |
|
|
|
341,934 |
|
|
$ |
2,416,111 |
|
11/1/22 - 11/30/22 |
|
|
166,350 |
|
|
$ |
14.62 |
|
|
|
166,350 |
|
|
$ |
28 |
|
12/1/22 - 12/31/22 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
0 |
|
|
(1) |
On
May 17, 2022, we announced that our Board of Directors had
authorized the repurchase of up to $20 million of our outstanding
common stock. Under this program, share repurchases may be made
from time to time depending on market conditions, share price and
availability and other factors at our discretion. This stock
repurchase authorization expires on the earlier of May
17, 2023, or when the repurchase of $20 million of
shares of our common stock has been reached. In accordance with its
terms, the stock repurchase plan terminated as of December 1, 2022.
Our stock repurchases may take place in open market transactions or
privately negotiated transactions in accordance with applicable
securities and other laws. |
Item 6. Reserved
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Overview
We are a digital health technology company enabling care-focused
engagement between life sciences organizations, healthcare
providers, and patients at critical junctures throughout the
patient care journey. Connecting over 60% of U.S. healthcare
providers and millions of their patients through an intelligent
technology platform embedded within a proprietary point-of-care
network, OptimizeRx helps patients start and stay on their
medications.
Historically, our revenue was generated primarily through the
facilitation of financial messages to health care providers via
their EHR and ePrescribe systems using the OptimizeRx proprietary
network to solve the ever-increasing communication barriers between
pharmaceutical representatives and healthcare providers that have
presented in the rapidly changing healthcare industry. Over time,
as the demand for communication of an increasing variety of
different health information between life science companies,
providers, and patients continued to rise, our platform has
expanded to encompass additional solutions that enable healthcare
providers to access information for patients at the point of care.
These solutions include brand messaging, therapeutic support
messaging, brand support, and innovative patient engagement
services, all of which now make up a significant portion of our
total revenue.
We employ a “land and expand” strategy focused on growing our
existing client base and generating greater and more consistent
revenues in part through the continued shift in our business model
toward enterprise level engagements, while also broadening our
platform with innovative proprietary solutions such as our TelaRep™
virtual communication solution and our AI-powered real-world
evidence solution which uses sophisticated proprietary algorithms
to derive additional revenue from our existing network. In
addition, we have continued to expand our team in preparation for
future growth aspirations, which may be supplemented with future
acquisitions and other strategic collaborations and investments.
Our strategy for driving revenue growth is also expected to work in
tandem with our efforts to increase margin and profitability using
the aforementioned recurring revenue models that have inherently
higher margins.
Because the pharmaceutical industry is dominated by large companies
with multiple brands, our revenue is concentrated in a relatively
small number of companies. We have approximately 100 pharmaceutical
companies as customers, and our revenues are concentrated in these
customers. Loss of one of more of our larger customers could have a
negative impact on our operating results. Our top five customers
represented 39% of our revenue for the year ended December 31,
2022. In each of 2022 and 2021, we had one customer that each
represented more than 10% of our revenues.
Seasonality
In general, the pharmaceutical brand marketing industry experiences
seasonal trends that affect the vast majority of participants in
the pharmaceutical digital marketing industry. Many pharmaceutical
companies allocate the largest portion of their brand marketing to
the fourth quarter of the calendar year. As a result, the first
quarter tends to reflect lower activity levels and lower revenue,
with gradual increases in the following quarters. We generally
expect these seasonality trends to continue and our ability to
effectively manage our resources in anticipation of these trends
may affect our operating results.
Impact of Macroeconomic Events
Unfavorable conditions in the economy may negatively affect the
growth of our business and our results of operations. For example,
macroeconomic events including the COVID-19 pandemic, rising
inflation and the U.S. Federal Reserve raising interest rates have
led to economic uncertainty. In addition, high levels of employee
turnover across the pharmaceutical industry as well as fewer number
of U.S. drug approvals could create additional certainty within our
target customer markets. Historically, during periods of economic
uncertainty and downturns, businesses may slow spending, which may
impact our business and our customers’ businesses. Adverse changes
in demand could impact our business, collection of accounts
receivable and our expected cash flow generation, which may
adversely impact our financial condition and results of
operations.
Key Performance Indicators
We monitor the following key performance indicators to help us
evaluate our business, measure our performance, identify trends
affecting our business and make strategic decisions.
Average revenue per top 20 pharmaceutical manufacturer.
Average revenue per top 20 pharmaceutical manufacturer is
calculated by taking the total revenue the company recognized
through pharmaceutical manufacturers listed in Fierce Pharma’s “The
top 20 pharma companies by 2020 revenue” over the last twelve
months, divided by the total number of the aforementioned
pharmaceutical manufacturers that our solutions helped support over
that time period. The Company uses this metric to monitor its
progress in “landing and expanding” with key customers within its
largest customer vertical and believe it also provides investors
with a transparent way to chart our progress in penetrating this
important customer segment. The decrease in the average in 2022 as
compared to 2021 is primarily the result of the convergence of
numerous macroeconomic factors that resulted in our customers
slowing their rate of spend, particularly for large and/or new
implementations, which we believe prolonged sales cycles with the
top 20 pharmaceutical manufacturers that were existing
customers.
|
|
Twelve
Months Ended
December 31 |
|
|
|
2022 |
|
|
2021 |
|
Average revenue per top 20
pharmaceutical manufacturer |
|
$ |
2,143,296 |
|
|
$ |
2,484,557 |
|
Percent of top 20 pharmaceutical manufacturers that are
customers. Percent of top 20 pharmaceutical manufacturers that
are customers is calculated by taking the number of revenue
generating customers that are pharmaceutical manufacturers listed
in Fierce Pharma’s “The top 20 pharma companies by 2020 revenue”
over the last 12 months, which is then divided by 20—which is the
number of pharmaceutical manufacturers included in the
aforementioned list. The Company uses this metric to monitor its
progress in penetrating key customers within its largest customer
vertical and believes it also provides investors with a transparent
way to chart our progress in penetrating this important customer
segment. The decrease in 2022 was due to the Company not supporting
programs for a smaller revenue customer from 2021 in 2022.
|
|
Twelve
Months Ended
December 31 |
|
|
|
2022 |
|
|
2021 |
|
Percent of top 20
pharmaceutical manufacturers that are customers |
|
|
90 |
% |
|
|
95 |
% |
Percent of total revenue attributable to top 20 pharmaceutical
manufacturers. Percent of total revenue attributable to top 20
pharmaceutical manufacturers is calculated by taking the total
revenue the company recognized through pharmaceutical manufacturers
listed in Fierce Pharma’s “The top 20 pharma companies by 2020
revenue” over the last twelve months, divided by our consolidated
revenue over the same period. The Company uses this metric to
monitor its progress in “landing and expanding” with key customers
within its largest customer vertical and believes it also provides
investors with a transparent way to chart our progress in
penetrating this important customer segment. Our revenue from
customers that aren’t top 20 pharmaceutical manufacturers increased
faster than our overall revenue, decreasing the percentage of our
overall revenues from top 20 pharmaceutical manufacturers.
|
|
Twelve
Months Ended
December 31 |
|
|
|
2022 |
|
|
2021 |
|
Percent of total revenue
attributable to top 20 pharmaceutical manufacturers |
|
|
62 |
% |
|
|
77 |
% |
Net revenue retention. Net revenue retention is a comparison
of revenue generated from all customers in the previous
twelve-month period to total revenue generated from the same
customers in the following twelve-month period (i.e., excludes new
customer relationships for the most recent twelve-month period).
The Company uses this metric to monitor its ability to improve its
penetration with existing customers and believes it also provides
investors with a metric to chart our ability to increase our
year-over-year penetration and revenue with existing customers. The
retention rate in 2022 decreased due to the convergence of numerous
macroeconomic factors that resulted in our customers slowing their
rate of spend, particularly for large and/or new implementations,
which we believe prolonged sales cycles.
|
|
Twelve
Months Ended
December 31 |
|
|
|
2022 |
|
|
2021 |
|
Net revenue retention |
|
|
90 |
% |
|
|
127 |
% |
Revenue per average full-time employee. We define revenue
per average full-time employee as total revenue over the last
twelve months divided by the average number of employees over the
last twelve months (i.e., the average between the number of FTEs at
the end of the reported period and the number of FTEs at the end of
the same period of the prior year). The Company uses this metric to
monitor the productivity of its workforce and its ability to scale
efficiently over time and believes the metric provides investors
with a way to chart our productivity and scalability. Our revenue
rate per employee declined year over year due to slower revenue
growth and a higher average number of FTEs over the last 12 month
period.
|
|
Twelve
Months Ended
December 31 |
|
|
|
2022 |
|
|
2021 |
|
Revenue per average full-time employee |
|
$ |
606,312 |
|
|
$ |
729,674 |
|
Results of Operations for the Years Ended December 31, 2022 and
2021
The following table sets forth, for the periods indicated, the
dollar value and percentage of total return represented by certain
items in our consolidated statements of operations:
|
|
Years Ended December 31, |
|
(in
thousands, except percentage data) |
|
2022 |
|
|
2021 |
|
Total Revenue |
|
$ |
62,450 |
|
|
|
100.0 |
% |
|
$ |
61,293 |
|
|
|
100.0 |
% |
Cost of Revenues |
|
|
23,483 |
|
|
|
37.6 |
% |
|
|
25,654 |
|
|
|
41.9 |
% |
Gross margin |
|
|
38,967 |
|
|
|
62.4 |
% |
|
|
35,638 |
|
|
|
58.1 |
% |
Operating
expenses |
|
|
51,258 |
|
|
|
82.1 |
% |
|
|
35,277 |
|
|
|
57.6 |
% |
Income (loss) from operations |
|
|
(12,291 |
) |
|
|
(19.7 |
)% |
|
|
361 |
|
|
|
0.6 |
% |
Other
income |
|
|
852 |
|
|
|
1.4 |
% |
|
|
17 |
|
|
|
— |
% |
Income (loss) before provision for
income taxes |
|
|
(11,438 |
) |
|
|
(18.3 |
)% |
|
|
378 |
|
|
|
0.6 |
% |
Income tax
benefit |
|
|
— |
|
|
|
— |
% |
|
|
— |
|
|
|
— |
% |
Net income
(loss) |
|
$ |
(11,438 |
) |
|
|
(18.3 |
)% |
|
$ |
378 |
|
|
|
0.6 |
% |
|
* |
Balances
and percentage of total revenue information may not add due to
rounding |
Net Revenue
Our net revenue increased 2% to $62.5 million for the year ended
December 31, 2022 from $61.3 million for the year ended
December 31, 2021. This increase resulted from increases in
sales of our access solutions.
Cost of Revenues
Our total cost of revenues, composed primarily of revenue share
expense paid to our network partners, decreased in the year ended
December 31, 2022 compared to the year ended December 31,
2021. Our cost of revenues as a percentage of revenue decreased to
approximately 38% in the year ended December 31, 2022 from
approximately 42% in the year ended December 31, 2021. This
decrease in our cost of revenues as a percentage of revenue
resulted primarily due to favorable solution and channel partner
mix and increases in the type of services we provide that are not
subject to revenue share.
Gross Margin
Our gross margin, which is the difference between our revenues and
our cost of revenues, increased from 2021 to 2022 as a result of
solution mix. In general, during 2022, there was an increase in the
percentage of activity flowing through our lower cost channels
compared with 2021. Additionally, revenue increases in our access
solutions includes a much higher percentage of program design,
which carries a higher margin than the delivery of the actual
messages. In addition, our gross margin percentage increased to 62%
in 2022 from 58% in 2021 for the reasons discussed above in the
cost of revenues section.
Operating Expenses
Operating expenses increased to $51.3 million for the year ended
December 31, 2022, from $35.3 million for the year ended
December 31, 2021, an increase of approximately 45%. The
increase in sales, general and administrative expense was $5.8
million. The detail by major category is reflected in the table
below.
|
|
Years
Ended December 31 |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Stock-based compensation |
|
$ |
15,745,822 |
|
|
$ |
5,491,957 |
|
Depreciation and
amortization |
|
|
2,022,029 |
|
|
|
2,086,454 |
|
Other sales,
general, and administrative expense |
|
|
33,489,707 |
|
|
|
27,698,703 |
|
|
|
|
|
|
|
|
|
|
Total Operating
Expense |
|
$ |
51,257,558 |
|
|
$ |
35,277,114 |
|
Within the operating expenses, there were a variety of increases,
the largest of which was in stock-based compensation, a non-cash
expense, which increased by $10.3 million from $5.5 million in 2021
to $15.7 million in 2022. Stock-based compensation is awarded to
all full-time employees upon their start of employment as well as
to directors, officers and certain key employees to provide an
equity-based incentive to maintain and enhance the performance and
profitability of the Company. In the fourth quarter of 2021, we
issued a significant market-based grant with a requisite service
period of less than 3 years. The expense for the market-based award
is amortized over the expected service period. The impact on 2022
expense for such market-based award in 2022 was $6.1 million.
The increase in other sales, general, and administrative expense is
due to higher salaries, wages, and benefits and other human
resources related costs as a result of the expansion of, and
investment in, our team to support additional growth. During 2022,
we hired 12 net additional employees.
Net Income (Loss)
We finished the year ended December 31, 2022 with a net loss
of $11.4 million, compared to net income of $0.4 million during the
year ended December 31, 2021. The reasons for specific
components are discussed above. Overall, we had an increase in
revenue and gross margin partially offset by increased operating
expenses. In addition, the income or loss in both periods included
significant noncash items. We had $18.0 million in noncash
operating expenses in 2022 compared to $7.6 million in noncash
operating expenses in 2021.
Liquidity and Capital Resources
Historically, our primary sources of liquidity have been cash
receipts from customers and proceeds from equity offerings. As of
December 31, 2022, we had total current assets of $98.6
million, compared with current liabilities of $8.4 million,
resulting in working capital of $90.2 million and a current ratio
of 12 to 1. This compares with a working capital balance of $105.7
million and a current ratio of 12 to 1 at December 31, 2021.
This decrease in working capital, as discussed in more detail
below, is primarily the result of the common stock buyback
program.
Following is a table with summary data from the consolidated
statement of cash flows for the years ended December 31, 2022 and
2021, as presented.
|
|
2022 |
|
2021 |
Net cash
provided by operating activities |
|
$ |
10,654,078 |
|
|
|
726,039 |
|
Net cash used in
investing activities |
|
|
(58,176,386 |
) |
|
|
(485,999 |
) |
Net cash (used in) /
provided by financing activities |
|
|
(18,950,777 |
) |
|
|
73,924,954 |
|
Net (decrease) /
increase in cash and cash equivalents |
|
$ |
(66,473,085 |
) |
|
$ |
74,164,994 |
|
Our operating activities provided $10.7 million in the year ended
December 31, 2022, as compared with approximately $0.7 million
provided by operating activities in the year ended
December 31, 2021. We had a net loss of $11.4 million for
2022, but non-cash expenses of $18.1 million and working capital
generated by the collection of receivables offset the loss. The
cash provided in 2021 was the result of our net income and non-cash
expenses, which together totaled $8.0 million. This was partially
offset by the increased working capital, totaling $7.3 million,
required to support higher revenues.
We used $58.2 million in investing activities in 2022, compared
with $0.5 million in 2021. In addition to the $2.0 million
investment in EvinceMed technology, we purchased $55.9 million in
Treasury bills in 2022 with maturity dates in 2023. The 2021 amount
included $0.4 million of capitalized software development costs
related to our proprietary systems and $0.1 million of tangible
property, primarily personal computers.
We used $19.0 million in financing activities in the year ended
December 31, 2022. We repurchased 1,214,398 shares of common
stock for $20.0 million. This was partially offset by the
collection of $1.1 million related to the exercise of stock options
during the period. The cash provided in 2021 was the result of our
underwritten offering in 2021, which generated $70.7 million, as
well as from the proceeds of option exercises, which generated $4.9
million. This was partially offset by the payment of contingent
consideration related to previous acquisitions of $1.6 million.
We believe that funds generated from operations, together with
existing cash and short term investments, will be sufficient to
finance our current operations and planned growth for the next
twelve months. We do not anticipate the need to raise any
additional cash to support operations. However, we could require
additional debt or equity financing if we were to make any
significant acquisitions for cash during that period. In addition,
we believe we can generate the cash needed to operate beyond the
next 12 months from operations.
Off Balance Sheet Arrangements
As of December 31, 2022, there were no off-balance sheet
arrangements.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results
of operations are based upon the Consolidated Financial Statements,
which have been prepared in accordance with U.S. generally accepted
accounting principles. The preparation of these financial
statements requires us to make estimates, judgments and assumptions
that affect the reported amounts of assets and liabilities at the
date of the financial statements and reported amounts of revenues
and expenses during the periods presented. Actual results could
differ from those estimates and assumptions. See Note 2 to the
Consolidated Financial Statements for a discussion of significant
accounting policies. Actual results may differ materially from
these estimates due to different assumptions or conditions. The
following areas all require the use of subjective or complex
judgments, estimates and assumptions:
Revenue
Recognition
Recognition of revenue requires evidence of a contract, probable
collection of proceeds, and completion of substantially all
performance obligations. We use a 5-step model to recognize
revenue. These steps are: identify the contract with a customer,
identify the performance obligations in the contract, determine the
transaction price, allocate the transaction price to the
performance obligations in the contract, and recognize revenue when
or as the performance obligations are satisfied.
Revenues are primarily generated from content delivery activities
in which we deliver financial, clinical, or brand messaging through
a distribution network of eprescribers and electronic health record
technology providers (channel partners), directly to consumers, or
from reselling services that complement the business. This content
delivery for a customer is referred to as a program. Unless
otherwise specified, revenue is recognized based on the selling
price to customers.
Our contracts are generally all less than one year and the primary
performance obligation is delivery of messages or other forms of
content, but the contract may contain additional services.
Additional services may include program design, which is the design
of the content delivery program, set up, and reporting. We consider
set up and reporting services to be complimentary to the primary
performance obligation and recognized through performance of the
delivery of content. We consider the design of the programs and
related consulting services to be performance obligations separate
from the delivery of messages.
As the content is distributed through the platform and network of
channel partners (a transaction), these transactions are recorded,
and revenue is recognized, over time as the distributions occur.
Revenue for transactions can be realized based on a price per
message, a price per redemption, as a flat fee occurring over a
period of time, or upon completion of the program, depending on the
client contract. We recognize setup fees that are required for
integrating client offerings and campaigns into the rule-based
content delivery system and network over the life of the initial
program, based either on time, or units delivered, depending upon
which is most appropriate in the specific situation. Should a
program be cancelled before completion, the balance of set up
revenue is recognized at the time of cancellation, as set up fees
are nonrefundable. Additionally, we also recognize revenue for
providing program performance reporting and maintenance, either by
our company directly delivering reports or by providing access to
our online reporting portal that the client can utilize. This
reporting revenue is recognized over time as the messages are
delivered. Program design, which is the design of the content
delivery program, and related consulting services are recognized as
services are performed.
In some instances, we license certain of our software applications
in arrangements that do not include other performance obligations.
In those instances, we record license revenue when the software is
delivered for use to the license. In instances where our contracts
included Software as a Service, the revenue is recognized over the
subscription period as services are delivered to the customer.
In some instances, we also resell messaging solutions that are
available through channel partners that are complementary to the
core business and client base. These partner specific solutions are
frequently similar to our own solutions and revenue recognition for
these programs is the same as described above. In instances where
we sell solutions on a commission basis, net revenue is recognized
based on the commission-based revenue split that we receive. There
were no programs recorded on a net basis in the years presented. In
instances where we resell these messaging solutions and have all
financial risk and significant operation input and risk, we record
the revenue based on the gross amount sold and the amount paid to
the channel partner as a cost of sales.
Cost of Revenues
The primary cost of revenue is revenue share expense. Based on the
volume of transactions that are delivered through the channel
partner network, we provide a revenue share to compensate the
partner for their promotion of the campaign. Revenue shares are a
negotiated percentage of the transaction fees and can also be
specific to special considerations and campaigns. In addition, we
pay revenue share to ConnectiveRx as a result of a 2014 legal
settlement in an amount equal to the greater of 10% of financial
messaging distribution revenues generated through our integrated
network, or $0.37 per financial message distributed through our
integrated network. As our solution mix has expanded and our
revenues have grown, financial messaging has become a smaller
percentage of our revenues and these payments to ConnectiveRx, a
smaller portion of our revenue share. The contractual amount due to
the channel partners is recorded as an expense at the time the
message is distributed.
Intangible
Assets
Intangible assets are stated at cost. Finite-lived assets are being
amortized over their estimated useful lives of fifteen to seventeen
years for patents, eight years for customer relationships, fifteen
years for tradenames, two to four years for covenants not to
compete, and three to ten years for software and websites, all
using the straight-line method. These assets are evaluated when
there is a triggering event. There was no impairment of our
intangible assets in either year presented.
Goodwill
We evaluate goodwill for impairment during our fiscal fourth
quarter, or more frequently if an event occurs or circumstances
change. We determined there was no impairment as goodwill had a
fair value comfortably in excess of its carrying value.
Stock-based
Compensation
We use the fair value method to account for stock-based
compensation. The fair value of the equity instrument is charged
directly to compensation expense and additional paid-in capital
over the period during which services are rendered. The fair value
of each award is estimated on the date of each grant.
For options, fair value is estimated using the Black-Scholes option
pricing model that uses the following assumptions. Estimated
volatilities are based on the historical volatility of our stock
over the same period as the expected term of the options. The
expected term of options granted represents the period of time that
options granted are expected to be outstanding. We use historical
data to estimate option exercise behavior and to determine this
term. The risk-free rate used is based on the U.S. Treasury yield
curve in effect at the time of the grant using a time period equal
to the expected option term. We have never paid dividends and do
not expect to pay any dividends in the future.
The Black-Scholes option valuation model and other existing models
were developed for use in estimating the fair value of traded
options that have no vesting restrictions and are fully
transferable. These option valuation models require the input of,
and are highly sensitive to, subjective assumptions including the
expected stock price volatility. Our stock options have
characteristics significantly different from those of traded
options, and changes in the subjective input assumptions could
materially affect the fair value estimate.
For restricted stock units, the fair value is based on the market
value of the Company’s common stock on the date of grant. For
market based restricted stock units, fair value is estimated using
a Monte Carlo simulation model. This valuation technique includes
estimating the movement of stock prices and the effects of
volatility, interest rates and dividends.
Recently Issued Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes
(Topic 740): Simplifying the Accounting for Income Taxes. ASU
2019-12 is intended to improve consistent application and simplify
the accounting for income taxes. ASU 2019-12 removes certain
exceptions to the general principles in Topic 740 and clarifies and
amends existing guidance. ASU 2019-12 was effective for us as of
January 1, 2021. The adoption of this standard did not have a
material effect on our financial position, results of operations,
or cash flows.
Not Yet Adopted
ASU Topic 2021-08 Business Combinations (Topic 805), Accounting
for Contract Assets and Contract Liabilities from Contracts with
Customers, which requires contract assets and contract
liabilities acquired in a business combination to be recognized and
measured by the acquirer on the acquisition date in accordance with
ASC 606, Revenue from Contracts with Customers, as if it had
originated the contracts. The standard is effective for the
Company’s fiscal year beginning January 1, 2023, with early
adoption permitted. The adoption of this standard is not expected
to have a material effect on our financial position, results of
operations, or cash flows.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
Not applicable.
Item 8. Financial Statements and Supplementary Data
Index to Financial Statements Required by Article 8 of Regulation
S-X:

Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
OptimizeRx Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of
OptimizeRx Corporation and Subsidiaries (the “Company”) as of
December 31, 2022 and 2021, and the related consolidated statements
of operations, stockholders’ equity and cash flows for the years
then ended, and the related notes (collectively referred to as the
consolidated financial statements).
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of the Company as of December 31, 2022 and 2021, and the
results of its operations and its cash flows for the years then
ended, in conformity with accounting principles generally accepted
in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of
Company’s management. Our responsibility is to express an opinion
on the Company’s consolidated financial statements based on our
audit. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audit in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due
to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting. As part of our audit, we are required to obtain an
understanding of internal control over financial reporting, but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of
material misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation
of the consolidated financial statements. We believe that our audit
provides a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising
from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to
the audit committee and that: (1) relate to accounts or disclosures
that are material to the consolidated financial statements and (2)
involved especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter in any
way our opinion on the consolidated financial statements, taken as
a whole, and we are not, by communicating the critical audit matter
below, providing separate opinions on the critical audit matter or
on the accounts or disclosures to which they related.
Critical Audit Matter -
Revenue Recognition
As disclosed in Note 2 to the consolidated financial statements,
the Company recognizes revenue upon transfer of control of promised
products or services to customers in an amount that reflects the
consideration the Company expects to receive in exchange for those
products or services.
Significant judgment is exercised by the Company in determining
revenue recognition for these customer agreements and includes the
following: (1) determining whether services are considered distinct
performance obligations that should be accounted for separately
versus together, (2) the pattern and timing of delivery for each
distinct performance obligation, and (3) identification and
treatment of contract terms that may impact the timing and amount
of revenue recognized.
How the Critical Audit
Matter Was Addressed in the Audit
The audit procedures we performed to address this critical audit
matter included the following: (1) obtaining an understanding of
the design and implementation of controls related to identifying
distinct performance obligations, determining the timing of revenue
recognition and any estimation of variable consideration, (2)
selection of a sample of customer agreements and testing
management’s identification and treatment of contract terms, and
(3) testing the mathematical accuracy of management’s calculations
of revenue and the associated timing of revenue recognized in the
consolidated financial statements.
We have served as the Company’s auditor since 2020.
/s/ UHY LLP
Sterling Heights, Michigan
March 10, 2023
Firm ID: 1195
OPTIMIZERx CORPORATION
Consolidated Balance Sheets
|
|
December 31,
2022 |
|
|
December 31,
2021 |
|
ASSETS |
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
18,208,685 |
|
|
$ |
84,681,770 |
|
Short-term investments |
|
|
55,931,821 |
|
|
|
—
|
|
Accounts receivable, net |
|
|
22,155,301 |
|
|
|
24,800,585 |
|
Prepaid expenses and other |
|
|
2,280,828 |
|
|
|
5,630,655 |
|
Total Current Assets |
|
|
98,576,635 |
|
|
|
115,113,010 |
|
Property and equipment, net |
|
|
137,448 |
|
|
|
143,818 |
|
Other Assets |
|
|
|
|
|
|
|
|
Goodwill |
|
|
22,673,820 |
|
|
|
14,740,031 |
|
Technology assets, net |
|
|
7,702,895 |
|
|
|
4,589,126 |
|
Patent rights, net |
|
|
1,940,178 |
|
|
|
2,155,026 |
|
Right of use assets, net |
|
|
235,320 |
|
|
|
328,820 |
|
Other intangible assets, net |
|
|
3,379,838 |
|
|
|
3,902,502 |
|
Security deposits and other assets |
|
|
5,051 |
|
|
|
12,859 |
|
Total Other Assets |
|
|
35,937,102 |
|
|
|
25,728,364 |
|
TOTAL ASSETS |
|
$ |
134,651,185 |
|
|
$ |
140,985,192 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable – trade |
|
$ |
1,549,979 |
|
|
$ |
606,808 |
|
Accrued expenses |
|
|
2,601,246 |
|
|
|
2,902,836 |
|
Revenue
share payable |
|
|
3,990,440 |
|
|
|
4,378,216 |
|
Current portion of lease liabilities |
|
|
89,902 |
|
|
|
90,982 |
|
Deferred revenue |
|
|
164,309 |
|
|
|
1,389,907 |
|
Total Current Liabilities |
|
|
8,395,876 |
|
|
|
9,368,749 |
|
Non-current Liabilities |
|
|
|
|
|
|
|
|
Lease liabilities, net of current portion |
|
|
144,532 |
|
|
|
236,726 |
|
Total Liabilities |
|
|
8,540,408 |
|
|
|
9,605,475 |
|
Commitments and contingencies (See Note 15) |
|
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value, 10,000,000 shares authorized,
none
issued and outstanding at December 31, 2022 and 2021,
respectively |
|
|
—
|
|
|
|
—
|
|
Common stock, $0.001 par value, 166,666,667 shares authorized,
18,288,571 and 17,860,975 shares issued at December 31, 2022
and 2021, respectively |
|
|
18,289 |
|
|
|
17,861 |
|
Treasury stock, $0.001 par value, 1,214,398 and none held at
December 31, 2022 and 2021, respectively |
|
|
(1,214 |
) |
|
|
—
|
|
Additional paid-in-capital |
|
|
172,785,800 |
|
|
|
166,615,514 |
|
Accumulated deficit |
|
|
(46,692,098 |
) |
|
|
(35,253,658 |
) |
Total Stockholders’ Equity |
|
|
126,110,777 |
|
|
|
131,379,717 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
134,651,185 |
|
|
$ |
140,985,192 |
|
The accompanying notes are an integral part of these financial
statements.
OPTIMIZERx CORPORATION
Consolidated Statements of Operations
|
|
For
the
year ended
December 31,
2022 |
|
|
For
the
year ended
December 31,
2021 |
|
|
|
|
|
|
|
|
Net revenue |
|
$ |
62,450,156 |
|
|
$ |
61,292,598 |
|
Cost of revenues |
|
|
23,483,336 |
|
|
|
25,654,384 |
|
Gross margin |
|
|
38,966,820 |
|
|
|
35,638,214 |
|
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
Stock-based
compensation |
|
|
15,745,822 |
|
|
|
5,491,957 |
|
Depreciation,
amortization, and noncash lease expense |
|
|
2,022,029 |
|
|
|
2,086,454 |
|
Other general
and administrative expenses |
|
|
33,489,707 |
|
|
|
27,698,703 |
|
Total operating expenses |
|
|
51,257,558 |
|
|
|
35,277,114 |
|
Income (loss) from operations |
|
|
(12,290,738 |
) |
|
|
361,100 |
|
Other income |
|
|
|
|
|
|
|
|
Interest
income |
|
|
852,298 |
|
|
|
16,979 |
|
Income (loss) before provision for
income taxes |
|
|
(11,438,440 |
) |
|
|
378,079 |
|
Income tax benefit |
|
|
—
|
|
|
|
—
|
|
Net income (loss) |
|
$ |
(11,438,440 |
) |
|
$ |
378,079 |
|
Weighted average number of shares outstanding – basic |
|
|
17,783,992 |
|
|
|
17,228,019 |
|
Weighted average number of shares outstanding – diluted |
|
|
17,783,992 |
|
|
|
17,690,489 |
|
Income (loss) per share – basic |
|
$ |
(0.64 |
) |
|
$ |
0.02 |
|
Income (loss) per share – diluted |
|
$ |
(0.64 |
) |
|
$ |
0.02 |
|
The accompanying notes are an integral part of these financial
statements.
OPTIMIZERx CORPORATION
Consolidated Statement of Stockholders’ Equity for the
Year
Ended December 31, 2022
|
|
Common
Stock |
|
|
Treasury
Stock |
|
|
Additional
Paid-in |
|
|
Accumulated |
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Total |
|
Balance,
January 1, 2022 |
|
|
17,860,975 |
|
|
$ |
17,861 |
|
|
|
— |
|
|
$ |
—
|
|
|
$ |
166,615,514 |
|
|
$ |
(35,253,658 |
) |
|
$ |
131,379,717 |
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
— |
|
|
|
—
|
|
|
|
— |
|
|
|
—
|
|
|
|
4,956,619 |
|
|
|
—
|
|
|
|
4,956,619 |
|
Restricted Stock |
|
|
— |
|
|
|
—
|
|
|
|
— |
|
|
|
—
|
|
|
|
10,789,203 |
|
|
|
—
|
|
|
|
10,789,203 |
|
Issuance of common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
stock options exercised |
|
|
156,910 |
|
|
|
157 |
|
|
|
— |
|
|
|
—
|
|
|
|
1,205,724 |
|
|
|
—
|
|
|
|
1,205,881 |
|
For
acquisition |
|
|
240,741 |
|
|
|
241 |
|
|
|
— |
|
|
|
—
|
|
|
|
9,374,214 |
|
|
|
—
|
|
|
|
9,374,455 |
|
For
restricted stock units vested, net of cancelled units |
|
|
29,945 |
|
|
|
30 |
|
|
|
— |
|
|
|
—
|
|
|
|
(132,430 |
) |
|
|
—
|
|
|
|
(132,400 |
) |
Repurchase of common stock |
|
|
— |
|
|
|
—
|
|
|
|
(1,214,398 |
) |
|
|
1,214 |
|
|
|
(20,023,044 |
) |
|
|
—
|
|
|
|
(20,021,830 |
) |
Net loss for the year |
|
|
— |
|
|
|
—
|
|
|
|
— |
|
|
|
—
|
|
|
|
—
|
|
|
|
(11,438,440 |
) |
|
|
(11,438,440 |
) |
Balance,
December 31, 2022 |
|
|
18,288,571 |
|
|
$ |
18,289 |
|
|
|
(1,214,398 |
) |
|
$ |
1,214 |
|
|
$ |
172,785,800 |
|
|
$ |
(46,692,098 |
) |
|
$ |
126,110,777 |
|
The accompanying notes are an integral part of these financial
statements.
OPTIMIZERx CORPORATION
Consolidated Statement of Stockholders’ Equity for the
Year
Ended December 31, 2021
|
|
Common
Stock |
|
|
Additional
Paid-in |
|
|
Accumulated |
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Total |
|
Balance, January 1, 2021 |
|
|
15,223,340 |
|
|
$ |
15,223 |
|
|
$ |
85,590,428 |
|
|
$ |
(35,631,737 |
) |
|
$ |
49,973,914 |
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
— |
|
|
|
—
|
|
|
|
2,709,781 |
|
|
|
—
|
|
|
|
2,709,781 |
|
Restricted
Stock |
|
|
— |
|
|
|
—
|
|
|
|
2,532,091 |
|
|
|
—
|
|
|
|
2,532,088 |
|
Issuance of common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For board
compensation |
|
|
4,730 |
|
|
|
5 |
|
|
|
250,080 |
|
|
|
—
|
|
|
|
250,085 |
|
For stock
options exercised |
|
|
1,105,822 |
|
|
|
1,106 |
|
|
|
4,863,125 |
|
|
|
—
|
|
|
|
4,864,231 |
|
Public offering of common shares, net of offering costs |
|
|
1,523,750 |
|
|
|
1,524 |
|
|
|
70,670,012 |
|
|
|
—
|
|
|
|
70,671,536 |
|
For restricted
stock units vested |
|
|
3,333 |
|
|
|
3 |
|
|
|
(3
|
) |
|
|
—
|
|
|
|
3 |
|
Net income for the year |
|
|
— |
|
|
|
—
|
|
|
|
—
|
|
|
|
378,079 |
|
|
|
378,079 |
|
Balance, December 31, 2021 |
|
|
17,860,975 |
|
|
$ |
17,861 |
|
|
$ |
166,615,514 |
|
|
$ |
(35,253,658 |
) |
|
$ |
131,379,717 |
|
The accompanying notes are an integral part of these financial
statements.
OPTIMIZERx CORPORATION
Consolidated Statements of Cash Flows
|
|
For the
year ended
December 31,
2022 |
|
|
For the
year ended
December 31,
2021 |
|
CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
|
|
|
Net
(loss) income |
|
$ |
(11,438,440 |
) |
|
$ |
378,079 |
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
2,022,029 |
|
|
|
1,965,325 |
|
Increase in bad
debt reserve |
|
|
363,512 |
|
|
|
80,000 |
|
Stock-based
compensation |
|
|
15,745,822 |
|
|
|
5,491,957 |
|
Changes in: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
2,281,773 |
|
|
|
(6,994,880 |
) |
Prepaid expenses
and other assets |
|
|
2,650,951 |
|
|
|
(1,174,044 |
) |
Accounts
payable |
|
|
943,171 |
|
|
|
(11,442 |
) |
Revenue share payable |
|
|
(387,776 |
) |
|
|
(591,652 |
) |
Accrued expenses
and other liabilities |
|
|
(301,592 |
) |
|
|
482,475 |
|
Change in operating
lease liabilities |
|
|
226 |
|
|
|
(3,891 |
) |
Deferred revenue |
|
|
(1,225,598 |
) |
|
|
1,104,112 |
|
NET
CASH PROVIDED BY OPERATING ACTIVITIES |
|
|
10,654,078 |
|
|
|
726,039 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS USED IN
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchases of
property and equipment |
|
|
(81,005 |
) |
|
|
(100,322 |
) |
EvinceMed
acquisition |
|
|
(2,000,000 |
) |
|
|
—
|
|
Purchase of
short-term investments |
|
|
(55,931,821 |
) |
|
|
—
|
|
Acquisition of
intangible assets, including intellectual property rights |
|
|
(1,830 |
) |
|
|
(21,511 |
) |
Capitalized software development costs |
|
|
(161,730 |
) |
|
|
(364,166 |
) |
NET
CASH USED IN INVESTING ACTIVITIES |
|
|
(58,176,386 |
) |
|
|
(485,999 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS (USED IN
) / PROVIDED BY FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from
public offering of common stock, net of offering costs |
|
|
—
|
|
|
|
70,671,536 |
|
Repurchase of
common stock |
|
|
(20,024,258 |
) |
|
|
— |
|
Proceeds from
exercise of stock options, net of cash paid for withholding
taxes |
|
|
1,073,481 |
|
|
|
4,864,231 |
|
Payment of contingent consideration |
|
|
—
|
|
|
|
(1,610,813 |
) |
NET
CASH (USED IN) / PROVIDED BY FINANCING ACTIVITIES |
|
|
(18,950,777 |
) |
|
|
73,924,954 |
|
NET (DECREASE) /
INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
(66,473,085 |
) |
|
|
74,164,994 |
|
CASH
AND CASH EQUIVALENTS – BEGINNING OF PERIOD |
|
|
84,681,770 |
|
|
|
10,516,776 |
|
CASH AND
CASH EQUIVALENTS – END OF PERIOD |
|
$ |
18,208,685 |
|
|
$ |
84,681,770 |
|
SUPPLEMENTAL CASH
FLOW INFORMATION: |
|
|
|
|
|
|
|
|
Cash
paid for interest |
|
$ |
—
|
|
|
$ |
—
|
|
Reduction of EvinceMed purchase price for amounts previously
paid |
|
$ |
708,334 |
|
|
$ |
—
|
|
Shares
issued in connection with acquisition |
|
$ |
9,374,455 |
|
|
$ |
—
|
|
Cash
paid for income taxes |
|
$ |
—
|
|
|
$ |
—
|
|
The accompanying notes are an integral part of these financial
statements.
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
OptimizeRx is a digital health technology company enabling
care-focused engagement between life sciences organizations,
healthcare providers, and patients at critical junctures throughout
the patient care journey. Connecting over 60% of U.S. healthcare
providers and millions of their patients through an intelligent
technology platform embedded within a proprietary point-of-care
network, OptimizeRx helps patients start and stay on their
medications.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of
Presentation
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the
United States of America and are presented in US dollars.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles 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. Estimates and assumptions have been made in determining the
carrying value of assets, depreciable and amortizable lives of
tangible and intangible assets, the carrying value of liabilities,
the valuation allowance for the deferred tax asset, the timing of
revenue recognition and related revenue share expenses, and inputs
used in the calculation of stock based compensation. Actual results
could differ from these estimates.
Principles of
Consolidation
The financial statements reflect the consolidated results of
OptimizeRx Corporation, a Nevada corporation, and its wholly owned
subsidiaries: OptimizeRx Corporation, a Michigan corporation,
CareSpeak Communications, Inc., a New Jersey corporation,
Cyberdiet, a controlled foreign corporation incorporated in Israel,
and CareSpeak Communications D.O.O., a Controlled Foreign
Corporation incorporated in Croatia. Together, these companies are
referred to as “OptimizeRx” and “the Company.” All material
intercompany transactions have been eliminated.
Reclassifications
Certain items in the previous year financial statements have been
reclassified to match the current year presentation.
Foreign Currency
The Company’s functional currency is the U.S. dollar, however it
pays certain expenses related to its two foreign subsidiaries in
the local currency, which is the shekel for its subsidiary in
Israel and the kuna for its Croatian subsidiary. All transactions
are recorded at the exchange rate at the time of payment. If there
is a time lag between the time of recording the liability and the
time of payment, a gain or loss is recorded in the Consolidated
Statement of Operations due to any fluctuations in the exchange
rate.
Cash and Cash
Equivalents
For purposes of the accompanying financial statements, the Company
considers all highly liquid instruments, consisting of money market
accounts, with an initial maturity of three months or less to be
cash equivalents.
Investments
We account for marketable securities in accordance with ASC 320,
“Investments - Debt Securities”, which require that certain debt
securities be classified into one of three categories:
held-to-maturity, available-for-sale, or trading securities, and
depending upon the classification, value the security at amortized
cost or fair market value.
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair Value of Financial
Instruments
Fair value is defined as the price that would be received upon sale
of an asset or paid upon transfer of a liability in an orderly
transaction between market participants at the measurement date and
in the principal or most advantageous market for that asset or
liability. The fair value should be calculated based on assumptions
that market participants would use in pricing the asset or
liability, not on assumptions specific to the entity. In addition,
the fair value of liabilities should include consideration of
non-performance risk including our own credit risk.
In addition to defining fair value, the disclosure requirements
around fair value establish a fair value hierarchy for valuation
inputs, which is expanded. The hierarchy prioritizes the inputs
into three levels based on the extent to which inputs used in
measuring fair value are observable in the market. Each fair value
measurement is reported in one of the three levels, which is
determined by the lowest level input that is significant to the
fair value measurement in its entirety. These levels are:
Level 1 – Inputs are based upon unadjusted quoted prices for
identical instruments traded in active markets.
Level 2 – Inputs are based upon significant observable inputs other
than quoted prices included in Level 1, such as quoted prices for
identical or similar instruments in markets that are not active,
and model-based valuation techniques for which all significant
assumptions are observable in the market or can be corroborated by
observable market data for substantially the full term of the
assets or liabilities.
Level 3 – Inputs are generally unobservable and typically reflect
management’s estimates of assumptions that market participants
would use in pricing the asset or liability. The fair values are
therefore determined using model-based techniques that include
option pricing models, discounted cash flow models, and similar
techniques. The Company’s stock options and warrants are valued
using level 3 inputs.
The Company’s carrying amounts of financial instruments including
cash and cash equivalents, accounts receivable, accounts payable,
and other current liabilites approximate their fair values due to
their short maturities.
Accounts Receivable and
Allowance for Doubtful Accounts
Accounts receivable are reported at realizable value, net of
allowances for doubtful accounts, which is estimated and recorded
in the period the related revenue is recorded. The Company has a
standardized approach to estimate and review the collectability of
its receivables based on a number of factors, including the period
they have been outstanding. Historical collection and payer
reimbursement experience is an integral part of the estimation
process related to allowances for doubtful accounts. In addition,
the Company regularly assesses the state of its billing operations
in order to identify issues, which may impact the collectability of
these receivables or reserve estimates. Because the Company’s
customers are primarily large well-capitalized companies,
historically there has been very little bad debt expense. Bad debt
expense was $363,512 for the year ended December 31, 2022 and
$80,000 for the year ended December 31, 2021. The allowance
for doubtful accounts was $352,043 and $241,219 as of
December 31, 2022 and 2021, respectively. From time to time,
we may record revenue based on our revenue recognition policies
described below in advance of being able to invoice the customer.
Included in accounts receivable are unbilled amounts of
$3,582,735,$2,110,865 and $757,218 at December 31, 2022, 2021
and 2020, respectively.
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and
Equipment
Property and equipment are stated at cost and are being depreciated
over their estimated useful lives of three to five years for office
equipment and three years for computer equipment using the
straight-line method of depreciation for book purposes. Maintenance
and repair charges are expensed as incurred.
Intangible
Assets
Intangible assets are stated at cost. Finite-lived assets are being
amortized over their estimated useful lives of fifteen to seventeen
years for patents, eight years for customer relationships, fifteen
years for tradenames, two to four years for covenants not to
compete, and three to ten years for software and websites, all
using the straight-line method. These assets are evaluated when
there is a triggering event. There was no impairment of our
intangible assets in either year presented.
Goodwill
We evaluate goodwill for impairment during our fiscal fourth
quarter, or more frequently if an event occurs or circumstances
change. Our analysis determined that there was no impairment of our
goodwill.
Revenue
Recognition
Recognition of revenue requires evidence of a contract, probable
collection of proceeds, and completion of substantially all
performance obligations. We use a 5-step model to recognize
revenue. These steps are: identify the contract with a customer,
identify the performance obligations in the contract, determine the
transaction price, allocate the transaction price to the
performance obligations in the contract, and recognize revenue when
or as the performance obligations are satisfied.
Revenues are primarily generated from content delivery activities
in which the Company delivers financial, clinical, or brand
messaging through a distribution network of eprescribers and
electronic health record technology providers (channel partners),
directly to consumers, or from reselling services that complement
the business. This content delivery for a customer is referred to
as a program. Unless otherwise specified, revenue is recognized
based on the selling price to customers.
The Company’s contracts are generally all less than one year and
the primary performance obligation is delivery of messages, or
content, but the contract may contain additional services.
Additional services may include program design, which is the design
of the content delivery program, set up, and reporting. We consider
set up and reporting services to be complimentary to the primary
performance obligation and recognized through performance of the
delivery of content. We consider program design and related
consulting services to be performance obligations separate from the
delivery of messages.
As the content is distributed through the platform and network of
channel partners (a transaction), these transactions are recorded,
and revenue is recognized over time as the distributions occur.
Revenue for transactions can be realized based on a price per
message, a price per redemption, as a flat fee occurring over a
period of time, or upon completion of the program, depending on the
client contract. The Company recognizes setup fees that are
required for integrating client offerings and campaigns into the
rule-based content delivery system and network over the life of the
initial program, based either on time, or units delivered,
depending upon which is most appropriate in the specific situation.
Should a program be cancelled before completion, the balance of set
up revenue is recognized at the time of cancellation, as set up
fees are nonrefundable. Additionally, the Company also recognizes
revenue for providing program performance reporting and
maintenance, either by the Company directly delivering reports or
by providing access to its online reporting portal that the client
can utilize. This reporting revenue is recognized over time as the
messages are delivered. Program design, which is the design of the
content delivery program, and related consulting services are
recognized as services are performed.
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Disaggregation of Revenue
Consistent with ASC Topic 606, we have disaggregated our revenue by
timing of revenue recognition. The majority of our revenue is
recognized over time as solutions are provided. A small portion of
our revenue related to program development, solution architect
design, and other solutions is recognized at a point in time upon
delivery to customers. A break down is set forth in the table
below.
|
|
2022 |
|
|
2021 |
|
Revenue recognized over
time |
|
$ |
55,437,418 |
|
|
$ |
57,077,743 |
|
Revenue
recognized at a point in time |
|
|
7,012,738 |
|
|
|
4,214,855 |
|
Total
Revenue |
|
$ |
62,450,156 |
|
|
$ |
61,292,598 |
|
Revenue Recognition
(Continued)
In some instances, we license certain of our software applications
in arrangements that do not include other performance obligations.
In those instances, we record license revenue when the software is
delivered for use to the license. In instances where our contracts
included Software as a Service, the revenue is recognized over the
subscription period as services are delivered to the customer.
In some instances, the Company also resells messaging solutions
that are available through channel partners that are complementary
to the core business and client base. These partner specific
solutions are frequently similar to our own solutions and revenue
recognition for these programs is the same as described above. In
instances where the Company sells solutions on a commission basis,
net revenue is recognized based on the commission-based revenue
split that the Company receives. There were no programs recorded on
a net basis in the years presented. In instances where the Company
resells these messaging solutions and has all financial risk and
significant operation input and risk, the Company records the
revenue based on the gross amount sold and the amount paid to the
channel partner as a cost of sales.
Cost of Revenues
The primary cost of revenue is revenue share expense. Cost of
revenues does not include depreciation and amortization which is
listed separately on the statements of operations. Based on the
volume of transactions that are delivered through the channel
partner network, the Company provides a revenue share to compensate
the partner, or others, for their promotion of the campaign.
Revenue shares are a negotiated percentage of the transaction fees
and can also be specific to special considerations and
campaigns.
Income Taxes
Income taxes are computed using the asset and liability method.
Under the asset and liability method, deferred income tax assets
and liabilities are determined based on the differences between the
financial reporting and tax basis of assets and liabilities and are
measured using the currently enacted tax rates and laws. A
valuation allowance is provided for the amount of deferred tax
assets that, based on available evidence, are not expected to be
realized.
The Company recognizes the tax benefit from uncertain tax positions
if it is more likely than not that the tax positions will be
sustained on examination by the tax authorities, based on the
technical merits of the position. The tax benefit is measured based
on the largest benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement. It is the Company’s policy
to include interest and penalties related to tax positions as a
component of income tax expense.
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Concentration of Credit
Risks
The Company maintains its cash and cash equivalents in bank deposit
accounts, which, at times, may exceed federally insured limits. The
Company has not experienced any losses in such accounts; however,
amounts in excess of the federally insured limit may be at risk if
the bank experiences financial difficulties. As of
December 31, 2022 and 2021 the Company had $15,669,837 and
$83,312,524, respectively, in cash balances in excess of federally
insured limits, primarily at Bank of America.
Research and
Development
The Company expenses research and development expenses as incurred.
There was no research and development expense for the years ended
December 31, 2022 and 2021.
Stock-based
Compensation
The Company uses the fair value method to account for stock-based
compensation. The fair value of the equity instrument is charged
directly to compensation expense and additional paid-in capital
over the period during which services are rendered. The fair value
of each award is estimated on the date of each grant.
For restricted stock awards, the fair value is based on the market
value of the Company’s common stock on the date of grant. For
market based restricted stock units, the fair value is estimated
using a Monte Carlo simulation model. This valuation technique
includes estimating the movement of stock prices and the effects of
volatility, interest rates and dividends.
For options, fair value is estimated using the Black-Scholes option
pricing model that uses the following assumptions. Estimated
volatilities are based on the historical volatility of the
Company’s common stock over the same period as the expected term of
the options. The expected term of options granted represents the
period of time that options granted are expected to be outstanding.
The Company uses historical data to estimate option exercise
behavior and to determine this term. The risk-free rate used is
based on the U.S. Treasury yield curve in effect at the time of the
grant using a time period equal to the expected option term. The
Company has never paid dividends and do not expect to pay any
dividends in the future.
|
|
2022 |
|
|
2021 |
|
Expected dividend
yield |
|
|
0 |
% |
|
|
0 |
% |
Risk free
interest rate |
|
|
0.82% - 4.38% |
|
|
|
0.19% - 0.67% |
|
Expected option term |
|
|
3.5
years |
|
|
|
3.5
years |
|
Turnover/forfeiture rate |
|
|
0 |
% |
|
|
0 |
% |
Expected volatility |
|
|
68% -
71% |
|
|
|
67% -
70% |
|
Weighted average grant date fair value |
|
$ |
12.82 |
|
|
$ |
26.36 |
|
The Black-Scholes option valuation model and other existing models
were developed for use in estimating the fair value of traded
options that have no vesting restrictions and are fully
transferable. These option valuation models require the input of,
and are highly sensitive to, subjective assumptions including the
expected stock price volatility. The Company’s stock options have
characteristics significantly different from those of traded
options, and changes in the subjective input assumptions could
materially affect the fair value estimate.
Loss Per Common and Common
Equivalent Share
The computation of basic (loss) earnings per common share is
computed using the weighted average number of common shares
outstanding during the year. The computation of diluted (loss)
earnings per common share is based on the basic weighted average
number of shares outstanding during the year plus common stock
equivalents, which would arise from the exercise of options and
warrants outstanding using the treasury stock method and the
average market price per share during the year. The number of
common shares potentially issuable upon the exercise of certain
awards that were excluded from the diluted loss per common share
calculation in 2022 was 93,626 related to options, and 170,859
related to restricted stock units, for a total of 264,485 because
they are anti-dilutive, as a result of a net loss for the year
ended December 31, 2022.
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The computation of weighted average shares outstanding and the
basic and diluted earnings per common share for the years ended
December 31, 2022 and 2021 consisted of the following:
|
|
Year ended December 31, 2022 |
|
|
|
Net (Loss) |
|
|
Shares |
|
|
Per Share
Amount |
|
Basic EPS |
|
$ |
(11,438,440 |
) |
|
|
17,783,992 |
|
|
$ |
(0.64 |
) |
Effect of
dilutive securities |
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Diluted EPS |
|
$ |
(11,438,440 |
) |
|
|
17,783,992 |
|
|
$ |
(0.64 |
) |
|
|
Year ended December 31, 2021 |
|
|
|
Net Income |
|
|
Shares |
|
|
Per Share
Amount |
|
Basic EPS |
|
$ |
378,079 |
|
|
|
17,228,019 |
|
|
$ |
0.02 |
|
Effect of
dilutive securities |
|
|
|
|
|
|
462,470 |
|
|
|
—
|
|
Diluted EPS |
|
$ |
378,079 |
|
|
|
17,690,489 |
|
|
$ |
0.02 |
|
Impairment of Long-Lived
Assets
The Company continually monitors events and changes in
circumstances that could indicate carrying amounts of long-lived
assets may not be recoverable. When such events or changes in
circumstances are present, the Company assesses the recoverability
of long-lived assets by determining whether the carrying value of
such assets will be recovered through undiscounted expected future
cash flows. If the total of the future cash flows is less than the
carrying amount of those assets, the Company recognizes an
impairment loss based on the excess of the carrying amount over the
fair value of the assets. Assets to be disposed of are reported at
the lower of the carrying amount or the fair value less costs to
sell.
Segment
reporting
We operate in one reportable segment. Overall, our business
involves connecting life science companies to patients and
providers. We have a common customer base for all of our solutions,
which are primarily all communications with healthcare providers or
patients on behalf of life science customers. Our customers are
geographically located in the U.S although we have two technology
centers located internationally. We do not prepare separate
internal income statements by solutions as our focus is on selling
enterprise arrangements covering multiple solutions that span the
entire patient journey with a specific brand.
Recently Issued Accounting
Guidance
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes
(Topic 740): Simplifying the Accounting for Income Taxes. ASU
2019-12 is intended to improve consistent application and simplify
the accounting for income taxes. ASU 2019-12 removes certain
exceptions to the general principles in Topic 740 and clarifies and
amends existing guidance. ASU 2019-12 was effective for us as of
January 1, 2021. The adoption of this standard did not have a
material effect on our financial position, results of operations,
or cash flows.
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Not Yet Adopted
ASU Topic 2021-08 Business Combinations (Topic 805), Accounting
for Contract Assets and Contract Liabilities from Contracts with
Customers, which requires contract assets and contract
liabilities acquired in a business combination to be recognized and
measured by the acquirer on the acquisition date in accordance with
ASC 606, Revenue from Contracts with Customers, as if it had
originated the contracts. The standard is effective for the
Company’s fiscal year beginning January 1, 2023, with early
adoption permitted. The adoption of this standard is not expected
to have a material effect on our financial position, results of
operations, or cash flows.
NOTE 3 – ACQUISITIONS
On April 14, 2022, we completed the acquisition of substantially
all of the assets of EvinceMed Corp., a privately held leading
provider of delivering end-to-end automation for specialty
pharmaceutical transactions. We completed the acquisition to expand
the breadth of the solutions we offer our customers, particularly
where specialty medications are involved, The acquisition included
the full Market Access Management Platform for supporting pharma
manufacturers, hub providers and pharmacies to improve patient
access, speed to therapy and activation of affordability programs.
With the EvinceMed platform, OptimizeRx is able to help patients
get access to the drugs they need by simplifying the prescribing
process for specialty medications, automating manual steps to
determine drug eligibility and affordability, and introducing
electronic enrollment and medical documentation across
the OptimizeRx network of electronic health record (EHR) systems,
ePrescribing platforms, and account-based marketing
technologies.
The consideration was comprised of $2.0 million in cash, the
issuance of 240,741 shares of common stock valued at $9,374,455,
and $708,334 of amounts previously paid. The total purchase price
was $12,082,789. Of the 240,741 shares of common stock, 185,185
were issued at closing and 55,556 were issued but held back to
secure potential adjustments to the purchase price that may result
from the indemnification obligations of EvinceMed and the EvinceMed
shareholder indemnitors. The holdback amount will be released
twelve months from the closing, subject to any adjustments for the
payment by EvinceMed and the shareholder indemnitors for its and
their indemnification obligations. The purchase price was allocated
to acquired technology totaling $4,149,000 with an estimated useful
life of 8 years and the remaining $7,933,789 was allocated to
goodwill. Goodwill represents the processes and synergies expected
by integrating those processes with our own. The full amount of
goodwill will be deductible for tax purposes using a 15 year life.
The increase in goodwill for the period is fully accounted for by
this acquisition. We determined pro forma data was immaterial for
financial reporting purposes. The initial accounting is provisional
and subject to change based on the completion of formal
valuations.
Acquisition costs of approximately $19,739 were expensed as
incurred.
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 4 – INVESTMENT SECURITIES
At December 31, 2022 the Company held $55.9 million in U.S.
government and agency securities. All securities have maturity
dates of less than one year. The Company reports them at amortized
cost. The amortized cost approximates fair value at December 31,
2022 due to the short nature of the securities.
There were no securities held at December 31, 2021.
NOTE 5 – PREPAID EXPENSES
Prepaid expenses consisted of the following as of December 31,
2022 and 2021:
|
|
2022 |
|
|
2021 |
|
Revenue
share and exclusivity payments |
|
$ |
1,025,000 |
|
|
$ |
4,516,668 |
|
Software |
|
|
408,063 |
|
|
|
181,044 |
|
Insurance |
|
|
221,580 |
|
|
|
156,327 |
|
Data |
|
|
152,533 |
|
|
|
168,462 |
|
Other |
|
|
473,652 |
|
|
|
608,154 |
|
Total
prepaid expenses |
|
$ |
2,280,828 |
|
|
$ |
5,630,655 |
|
NOTE 6 – PROPERTY AND EQUIPMENT
The Company owned equipment recorded at cost, which consisted of
the following as of December 31, 2022 and 2021:
|
|
2022 |
|
|
2021 |
|
Computer equipment |
|
$ |
230,467 |
|
|
$ |
267,917 |
|
Furniture and fixtures |
|
|
38,500 |
|
|
|
200,250 |
|
|
|
|
268,967 |
|
|
|
468,167 |
|
Less accumulated depreciation |
|
|
131,519 |
|
|
|
324,349 |
|
Property and
equipment, net |
|
$ |
137,448 |
|
|
$ |
143,818 |
|
Depreciation expense was $85,725 and $105,360 for the years ended
December 31, 2022 and 2021, respectively.
NOTE 7 – INTANGIBLE ASSETS
Goodwill
Our goodwill is related to the acquisitions of EvinceMed in 2022,
RMDY Health, Inc. in 2019 and CareSpeak Communications in 2018.
Goodwill is not amortizable for financial statement purposes.
Changes in the carrying amount of goodwill on the consolidated
balance sheet consist of the following:
Balance at January 1, 2021 |
|
$ |
14,740,031 |
|
Acquisitions |
|
|
-
|
|
Impairments |
|
|
-
|
|
Balance January 1, 2022 |
|
$ |
14,740,031 |
|
Revenue recognized |
|
|
7,933,789 |
|
Amount
collected |
|
|
-
|
|
Balance December 31, 2022 |
|
$ |
22,673,820 |
|
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 7 – INTANGIBLE ASSETS (CONTINUED)
Intangible Assets
Intangible assets included on the consolidated balance sheets
consist of the following:
|
|
December 31, 2022 |
|
|
|
|
|
|
Gross
Carrying
Amount |
|
|
Accumulated
Amortization |
|
|
Net |
|
|
Weighted
Average Life
Remaining |
|
Patent rights |
|
$ |
3,364,729 |
|
|
$ |
1,424,551 |
|
|
$ |
1,940,178 |
|
|
|
8.5 |
|
Technology
assets |
|
|
12,859,660 |
|
|
|
5,156,765 |
|
|
|
7,702,895 |
|
|
|
5.1 |
|
Other intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tradename |
|
|
3,586,000 |
|
|
|
776,966 |
|
|
|
2,809,034 |
|
|
|
11.7 |
|
Non-compete
agreements |
|
|
1,093,000 |
|
|
|
1,093,000 |
|
|
|
—
|
|
|
|
0 |
|
Customer relationships |
|
|
923,000 |
|
|
|
352,196 |
|
|
|
570,804 |
|
|
|
7.4 |
|
Total other |
|
|
5,602,000 |
|
|
|
2,222,162 |
|
|
|
3,379,838 |
|
|
|
|
|
Total intangible
assets |
|
$ |
21,826,389 |
|
|
$ |
8,803,478 |
|
|
$ |
13,022,911 |
|
|
|
|
|
|
|
December 31, 2021 |
|
|
|
|
|
|
Gross
Carrying
Amount |
|
|
Accumulated
Amortization |
|
|
Net |
|
|
Weighted
Average Life
Remaining |
|
Patent rights |
|
$ |
3,362,898 |
|
|
$ |
1,207,872 |
|
|
$ |
2,155,026 |
|
|
|
9.6 |
|
Technology
assets |
|
|
8,548,930 |
|
|
|
3,959,804 |
|
|
|
4,589,126 |
|
|
|
4.9 |
|
Other intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tradename |
|
|
3,586,000 |
|
|
|
537,900 |
|
|
|
3,048,100 |
|
|
|
12.7 |
|
Non-compete
agreements |
|
|
1,093,000 |
|
|
|
899,635 |
|
|
|
193,365 |
|
|
|
0.6 |
|
Customer relationships |
|
|
923,000 |
|
|
|
261,963 |
|
|
|
661,037 |
|
|
|
8.4 |
|
Total other |
|
|
5,602,000 |
|
|
|
1,699,498 |
|
|
|
3,902,502 |
|
|
|
|
|
Total intangible
assets |
|
$ |
17,513,828 |
|
|
$ |
6,867,174 |
|
|
$ |
10,646,654 |
|
|
|
|
|
Intangibles are being amortized on a straight-line basis over the
following estimated useful lives.
Patents |
|
15
– 17 years |
Tradenames |
|
15 years |
Non-compete agreements |
|
2 – 4
years |
Customer relationships |
|
8 years |
Technology assets |
|
3 – 10
years |
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 7 – INTANGIBLE ASSETS (CONTINUED)
The Company recorded amortization expense of $1,936,304 and
$1,859,965 in the years ended December 31, 2022 and 2021,
respectively. Expected future amortization expense of the
intangibles assets as of December 31, 2022 is as follows:
Year ended December 31, |
|
|
|
2023 |
|
$ |
1,769,212 |
|
2024 |
|
|
1,769,212 |
|
2025 |
|
|
1,682,054 |
|
2026 |
|
|
1,566,184 |
|
2027 |
|
|
1,483,765 |
|
Thereafter |
|
|
4,752,484 |
|
Total |
|
$ |
13,022,911 |
|
NOTE 8 – DEFERRED REVENUE
The Company has several signed contracts with customers for the
distribution of financial messaging, or other services, which
include payment in advance. The payments are not recorded as
revenue until the revenue is earned under its revenue recognition
policy discussed in Note 2. Deferred revenue was $164,309 and
$1,389,907 as of December 31, 2022 and 2021, respectively.
These contracts are all short term in nature and all revenue is
expected to be recognized within 12 months, or less. Following is a
summary of activity in the deferred revenue account for the year
ended December 31, 2022.
Balance
January 1, 2022 |
|
$ |
1,389,907 |
|
Revenue recognized |
|
|
(36,346,653 |
) |
Amount collected |
|
|
35,121,055 |
|
Balance
December 31, 2022 |
|
$ |
164,309 |
|
Following is a summary of activity in the deferred revenue account
for the year ended December 31, 2021.
Balance January 1,
2021 |
|
$ |
285,795 |
|
Revenue
recognized |
|
|
(18,006,973 |
) |
Amount
collected |
|
|
19,111,085 |
|
Balance December
31, 2021 |
|
$ |
1,389,907 |
|
NOTE 9 – RELATED PARTY TRANSACTIONS
During the year ended December 31, 2010, the Company acquired the
technical contributions and assignment of all exclusive rights to
and for a key patent in process at the time from a former CEO in
exchange for a total payment in shares of common stock and options
valued at $930,000 at the time of the acquisition and recorded the
patent at that cost. That patent remains in Patents on the
consolidated balance sheet as of December 31, 2022.
Jim Lang, one of our Board Members, is the CEO of Eversana, a
leading global provider of services to the life sciences industry.
Eversana is similar to other customers we generate revenue from,
such as agencies or resellers. During the years ended
December 31, 2022 and 2021, respectively, we have recognized
$401,972 and $218,333 in revenue from contracts engaged with
Eversana. These contracts were sourced by Eversana on behalf of
life science customers of theirs. The contracts are at market rates
and were generated in the normal course of business.
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 10 – STOCKHOLDERS’ EQUITY
Preferred
Stock
The Company had 10,000,000 shares of preferred stock, $0.001 par
value per share, authorized as of December 31, 2022. No shares
were issued or outstanding in either 2021 or 2022.
Common
Stock
The Company had 166,666,667 shares of common stock, $0.001 par
value per share, authorized as of December 31, 2022. There
were 17,074,173 and 17,860,975 shares of common stock outstanding,
net of shares held in treasury, at December 31, 2022 and 2021,
respectively.
We issued 156,910 shares of common stock and received proceeds of
$1,205,881 in 2022 in connection with the exercise of options. We
also issued 1,105,822 shares of common stock and received proceeds
of $4,864,231 in 2021 in connection with the exercise of
options.
We issued 29,945 shares of common stock in 2022 and 3,333 shares of
common in stock in 2021 in connection with the vesting of
restricted stock units and discussed in greater detail in Note 11,
Stock Based Compensation.
The Company had a Director Compensation plan covering its
independent non-employee Directors that was in effect through
June 30, 2021. A total of 4,730 were granted and issued in the
year ended December 31, 2021 in connection with this
compensation plan. These shares were valued at $250,085. The plan
was changed to grant restricted stock units under the Company’s
2021 Equity Incentive Plan and those grants are discussed in Note
10, Stock Based Compensation.
During the year ended December 31, 2021, in an underwritten
primary offering, we issued 1,523,750 shares of our common stock
for gross proceeds of $75,425,625. In connection with this
transaction, we incurred equity issuance costs of $4,754,089
related to payments to the underwriter, advisors and legal fees
associated with the transaction, resulting in net proceeds to the
Company of $70,671,536.
During the year ended December 31, 2022, the Board authorized
a share repurchase program, under which the Company may repurchase
up to $20.0 million of its outstanding common stock. Through
December 31, 2022, we repurchased 1,214,398 shares of our
common stock for a total of $20,024,258, including commissions paid
on repurchases. These shares were recorded as Treasury Shares using
the par value method.
NOTE 11 – STOCK BASED COMPENSATION
The Company sponsors two stock-based incentive compensation
plans.
The first plan is known as the 2013 Incentive Plan (the “2013
Plan”) and was established by the Board of Directors of the Company
in June 2013. The 2013 Plan, as amended, authorized the issuance of
3,000,000 shares of Company common stock. The amended plan was
approved by shareholders. A total of 410,701 shares of common stock
underlying options and 128,590 shares of common stock underlying
restricted stock unit awards were outstanding at December 31,
2022. In connection with the adoption of a new plan in 2021, the
Company froze the 2013 Plan. At December 31, 2022, there were
no shares available for grant under the 2013 Plan.
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 11 – STOCK BASED COMPENSATION (CONTINUED)
In 2021, the Company adopted a new plan known as the 2021 Equity
Incentive Plan (“2021 Plan”). The plan was established by the Board
of Directors and approved by shareholders in August 2021. A total
of 2,500,000 shares are authorized for issuance under the 2021
Plan. A total of 896,169 shares of common stock underlying options
and 660,484 shares of common stock underlying restricted stock unit
awards were outstanding at December 31, 2022. At
December 31, 2022, 921,946 shares were available for grant
under the 2021 Plan.
The 2021 Plan allows the Company to grant incentive stock options,
non-qualified stock options, stock appreciation rights, restricted
stock, restricted stock units, performance awards and other
stock-based awards. Incentive stock options may only be granted to
persons who are regular full-time employees of the Company at the
date of the grant of the option. Non-qualified options may be
granted to any person, including, but not limited to, directors,
officers, employees and consultants, who the Company’s Board or
Compensation Committee determines. The exercise price of options
granted under the 2021 Plan must be equal to at least 100% of the
fair market value of our common stock as of the date of the grant
of the option. Options granted under the 2021 Plan are exercisable
as determined by the Compensation Committee and specified in the
applicable award agreement. In no event will an option be
exercisable after ten years from the date of grant.
Stock Options
The compensation cost that has been charged against income related
to options for the years ended December 31, 2022 and 2021, was
$4,956,619 and $2,709,781, respectively. No income tax benefit was
recognized in the consolidated statements of income and no
compensation was capitalized in any of the years presented. During
the year ended December 31, 2022, we granted certain
performance based options, the expense for which will be recorded
over time once the achievement of the performance is deemed
probable. There was no expense related to these options recorded
during the period. The fair value of these instruments was
calculated using the Black-Scholes option pricing model.
In the year ended December 31, 2021, certain participants utilized
a net withhold exercise method in which options were surrendered to
cover payroll withholding tax. Of the cumulative net options
exercised by participants were 31,243 options, valued at $100,290,
were surrendered and subsequently cancelled.
The Company had the following option activity during the year ended
December 31, 2022 and 2021:
|
|
Number of Options |
|
|
Weighted average exercise price |
|
|
Weighted average remaining contractual life (years) |
|
|
Aggregate intrinsic
value $ |
|
Outstanding at January 1, 2021 |
|
|
1,545,518 |
|
|
$ |
7.31 |
|
|
|
|
|
|
|
|
|
Granted |
|
|
424,588 |
|
|
$ |
54.34 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(1,105,822 |
) |
|
$ |
7.33 |
|
|
|
|
|
|
|
|
|
Withheld and
cancelled |
|
|
(31,243 |
) |
|
|
3.21 |
|
|
|
|
|
|
|
|
|
Expired or
forfeited |
|
|
(49,494 |
) |
|
$ |
24.57 |
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2021 |
|
|
783,547 |
|
|
$ |
34.17 |
|
|
|
3.4 |
|
|
$ |
23,368,961 |
|
Granted |
|
|
862,938 |
|
|
$ |
25.43 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(156,910 |
) |
|
$ |
7.69 |
|
|
|
|
|
|
|
|
|
Expired or
forfeited |
|
|
(182,705 |
) |
|
$ |
37.13 |
|
|
|
|
|
|
|
|
|
Outstanding, December 31,
2022 |
|
|
1,306,870 |
|
|
$ |
31.14 |
|
|
|
2.7 |
|
|
$ |
1,537,752 |
|
Exercisable, December 31, 2022 |
|
|
250,684 |
|
|
$ |
33.82 |
|
|
|
2.6 |
|
|
$ |
538,652 |
|
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 11 – STOCK BASED COMPENSATION (CONTINUED)
The table below reflects information for the total options
outstanding at December 31, 2022
Range
of Exercise Prices |
|
Number of
Options |
|
|
Weighted
average remaining contractual life (years) |
|
|
Weighted
average exercise price |
|
$4.20 to $10.00 |
|
|
30,335 |
|
|
|
1.5 |
|
|
$ |
6.40 |
|
$10.00 to $20.00 |
|
|
568,358 |
|
|
|
2.6 |
|
|
$ |
14.66 |
|
$20.00 to $40.00 |
|
|
322,916 |
|
|
|
2.6 |
|
|
$ |
33.79 |
|
$40.00 to $60.00 |
|
|
284,231 |
|
|
|
2.8 |
|
|
$ |
47.99 |
|
$60.00 to
$96.70 |
|
|
101,030 |
|
|
|
3.7 |
|
|
$ |
75.43 |
|
Total |
|
|
1,306,870 |
|
|
|
2.7 |
|
|
$ |
31.14 |
|
The table below reflects information for the vested options
outstanding at December 31, 2022.
Range
of Exercise Prices |
|
Number of
Options |
|
|
Weighted
average remaining contractual life (years) |
|
|
Weighted
average exercise price |
|
$4.20 to $10.00 |
|
|
24,168 |
|
|
|
1.3 |
|
|
$ |
6.22 |
|
$10.00 to $20.00 |
|
|
69,868 |
|
|
|
1.7 |
|
|
$ |
12.84 |
|
$20.00 to $40.00 |
|
|
69,170 |
|
|
|
2.9 |
|
|
$ |
30.77 |
|
$40.00 to $60.00 |
|
|
54,667 |
|
|
|
3.3 |
|
|
$ |
51.54 |
|
$60.00
to$96.70 |
|
|
32,811 |
|
|
|
3.7 |
|
|
$ |
75.74 |
|
Total |
|
|
250,684 |
|
|
|
2.6 |
|
|
$ |
33.82 |
|
A summary of the status of the Company’s nonvested options as of
December 31, 2022, and changes during the year ended
December 31, 2022, is presented below.
Nonvested Options |
|
Options |
|
|
Weighted average exercise price |
|
Nonvested at January 1, 2022 |
|
|
586,276 |
|
|
$ |
42.01 |
|
Granted |
|
|
862,938 |
|
|
$ |
25.43 |
|
Vested |
|
|
(223,323 |
) |
|
$ |
35.04 |
|
Forfeited |
|
|
(169,705 |
) |
|
$ |
37.83 |
|
Nonvested at December 31, 2022 |
|
|
1,056,186 |
|
|
$ |
30.51 |
|
There is $12,528,706 of expense remaining to be recognized over a
period of approximately 2.1 years related to options outstanding at
December 31, 2022.
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 11 – STOCK BASED COMPENSATION (CONTINUED)
Restricted Stock
Units
The Company had the following restricted stock unit (“RSU”)
activity during the years ended December 31, 2022 and
2021:
|
|
Number of RSUs |
|
|
Weighted average grant date fair value |
|
|
Weighted average remaining contractual life (years) |
|
Outstanding at January 1, 2021 |
|
|
100,000 |
|
|
$ |
11.51 |
|
|
|
|
|
Granted |
|
|
303,556 |
|
|
$ |
66.30 |
|
|
|
|
|
Forfeited |
|
|
(485 |
) |
|
$ |
61.82 |
|
|
|
|
|
Shares issued |
|
|
(3,333 |
) |
|
$ |
21.20 |
|
|
|
|
|
Outstanding at December 31, 2021 |
|
|
399,738 |
|
|
$ |
52.99 |
|
|
|
3.3 |
|
Granted |
|
|
467,043 |
|
|
$ |
25.69 |
|
|
|
|
|
Forfeited |
|
|
(39,346 |
) |
|
$ |
44.06
|
|
|
|
|
|
Vested and issued |
|
|
(29,945 |
) |
|
$ |
59.41
|
|
|
|
|
|
Withheld and
cancelled |
|
|
(8,416 |
) |
|
$ |
68.69 |
|
|
|
|
|
Outstanding at December 31,
2022 |
|
|
789,074 |
|
|
$ |
36.95 |
|
|
|
2.0 |
|
The Company granted restricted stock units of 467,043 and 303,556
units in 2022 and 2021, respectively, and valued at $11,996,111 and
$20,125,861, respectively. These restricted stock units vest over a
period of 1 year to 5 years. The Company recognized expense of
$10,789,203 and $2,532,091 in 2022 and 2021, respectively, related
to these restricted stock units. A total of $17,862,951 remains to
be recognized at December 31, 2022 over a period of 2.0
years.
In the year ended December 31, 2022, certain participants utilized
a net withhold settlement method, in which shares were surrendered
to cover payroll withholding tax. Of the cumulative net options
exercised by participants were 31,243 options, valued at $100,290,
were surrendered and subsequently cancelled.
Performance Stock
Units
Of the restricted stock units issued in 2021, 182,938 are
market-based awards that vest if the Company’s stock price hits
certain price targets and maintains that price for 30 days. A total
of 60,191, 60,191, and 62,016 units vest if the stock price hits
$98.87, $131.82, and $164.78, respectively. As described in Note 2,
these market-based restricted stock units were valued using a Monte
Carlo simulation model, with expected vesting in 1.60, 2.25, and
2.71 years, respectively, for the three price targets. During the
year ended December 31, 2022, we granted certain performance
based stock units, the expense for which will be recorded over time
once the achievement of the performance is deemed probable. There
was no expense related to these options recorded during the
period.
Non-employee Directors’
Compensation
Our previous director’s compensation plan called for the issuance
of fully-vested shares of common stock each quarter to each
independent director. In 2021, we issued 4,730 shares valued at
$250,085 that immediately vested. Subsequent to these grants, we
adopted a new directors compensation program that calls for the
grant of restricted stock units with a one year vesting period. We
granted 3,715 restricted stock units valued at $250,175 in the
second half of 2021 under the new plan. These restricted stock
units vested in 2022. There were 26,470 restricted stock units,
valued at $750,130, granted to the board of directors in 2022 that
will vest in 2023, 12 months from the grant dates.
NOTE 12 – LEASES
In February 2016, the Financial Accounting Standards Board (“FASB”)
issued new accounting guidance on leases. The accounting standard,
effective January 1, 2019, requires virtually all leases to be
recognized on the balance sheet. Under the guidance, we have
elected not to separate lease and non-lease components in
recognition of the lease-related assets and liabilities, as well as
the related lease expense.
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 12 – LEASES (CONTINUED)
We had operating leases with terms greater than 12 months for
office space in three multitenant facilities, which are recorded as
assets and liabilities. The lease on our headquarters space in
Rochester, Michigan expires November 30, 2023, with a renewal
option through 2025, with monthly rent payable at rates ranging
from $6,384 to $6,688. We have assumed renewal of the lease. We
also had a lease on office space in Cranbury, New Jersey, which
expired in January 2022 with a monthly payment of $3,158, as well
as a lease of approximately $1,883 per month in Zagreb, Croatia
expiring in 2024.
Lease-related assets, or right-of-use assets, are recognized at the
lease commencement date at amounts equal to the respective lease
liabilities, adjusted for prepaid lease payments, initial direct
costs, and lease incentives received. Lease-related liabilities are
recognized at the present value of the remaining contractual fixed
lease payments, discounted using our incremental borrowing rate.
Operating lease expense is recognized on a straight-line basis over
the lease term, while variable lease payments are expensed as
incurred.
For the years ended December 31, 2022 and 2021, the Company’s
lease cost consisted of the following components, each of which is
included in operating expenses within the Company’s consolidated
statements of operations:
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Operating lease cost |
|
$ |
100,771 |
|
|
$ |
132,305 |
|
Short-term lease cost (1) |
|
|
75,784 |
|
|
|
52,375 |
|
Total
lease cost |
|
$ |
176,555 |
|
|
$ |
184,680 |
|
(1) |
Short-term lease cost includes any lease with a
term of less than 12 months. |
The table below presents the future minimum lease payments to be
made under operating leases as of December 31, 2022:
For the year
ending December 31, |
|
|
|
2023 |
|
$ |
98,247 |
|
2024 |
|
|
80,215 |
|
2025 |
|
|
70,224 |
|
Total |
|
|
248,686 |
|
Less:
present value discount |
|
|
14,252 |
|
Total
lease liabilities |
|
$ |
234,434 |
|
The weighted average remaining lease term for operating leases is
2.7 years and the weighted average discount rate used in
calculating the operating lease asset and liability is 4.5%. Cash
paid for amounts included in the measurement of lease liabilities
was $89,111. For the year ended December 31, 2022, payments on
lease obligations were $101,405 and amortization on the right of
use assets was $101,433. For the year ended December 31, 2021,
payments on lease obligations were $142,284 and amortization on the
right of use assets was $121,129.
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 13 – MAJOR CUSTOMERS AND VENDORS
The Company had the following customers that accounted for 10% or
greater of revenue in either 2022 or 2021. No other customers
accounted for more than 10% of revenue in either year
presented.
|
|
2022 |
|
|
2021 |
|
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
Customer A |
|
|
6,817,682 |
|
|
|
10.9 |
|
|
|
5,206,305 |
|
|
|
8.5 |
|
Customer B |
|
|
3,876,580 |
|
|
|
6.2 |
|
|
|
14,268,819 |
|
|
|
23.0 |
|
Our accounts receivable included two entities, including one agency
that represented multiple customers, that individually made up more
than 10% of our accounts receivable at December 31, 2022 in
the percentages of 13.3% and 10.8%. As of December 31, 2021,
our accounts receivable included two agencies that represented
multiple customers that individually made up more than 10% of our
accounts receivable in the percentages of 33.5% and 12.2%.
The Company generates its revenues through its EHR and ePrescribe
partners. There were three key partners and/or vendors through
which 10% or greater of its revenue was generated in either 2022 or
2021 as set forth below. The amounts in the table below reflect the
amount of revenue generated through those partners.
|
|
2022 |
|
|
2021 |
|
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
Partner A |
|
|
19,882,511 |
|
|
|
31.8 |
|
|
|
33,041,503 |
|
|
|
53.9 |
|
Partner B |
|
|
12,494,227 |
|
|
|
20.0 |
|
|
|
2,761,893 |
|
|
|
4.5 |
|
Partner C |
|
|
6,578,661 |
|
|
|
10.5 |
|
|
|
9,554,266 |
|
|
|
15.6 |
|
NOTE 14 – INCOME TAXES
As of December 31, 2022, the Company had net operating loss
(“NOLs”) carry-forwards for federal income tax purposes of
approximately $21.5 million, consisting of pre-2018 losses in the
amount of approximately $8.2 million that expire from 2022 through
2037, and post-2017 losses in the amount of approximately $13.3
million that will never expire. These net operating losses are
available to offset future taxable income. The Company was formed
in 2008 as a Nevada Corporation. Activity prior to incorporation is
not reflected in the Company’s corporate tax returns. In the
future, the cumulative net operating loss carry-forward for income
tax purposes may differ from the cumulative financial statement
loss due to timing differences between book and tax reporting.
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 14 – INCOME TAXES (CONTINUED)
The provision for Federal income tax consists of the following for
the years ended December 31, 2022 and 2021:
|
|
2022 |
|
|
2021 |
|
Federal income tax benefit (expense) attributable to: |
|
|
|
|
|
|
Current operations |
|
$ |
2,402,000 |
|
|
$ |
(79,000 |
) |
State tax effect, net of federal
benefit |
|
|
545,000 |
|
|
|
979,000 |
|
Option exercise benefits (expenses),
net of Section 162M limitations |
|
|
(268,000 |
) |
|
|
2,171,000 |
|
Other adjustments |
|
|
221,000 |
|
|
|
(30,000 |
) |
NOLs expiring |
|
|
—
|
|
|
|
(26,000 |
) |
Valuation
allowance |
|
|
(2,900,000 |
) |
|
|
(3,006,000 |
) |
Net provision for
federal income tax |
|
$ |
—
|
|
|
$ |
—
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
Current
tax benefit (expense) - Federal |
|
$ |
—
|
|
|
$ |
—
|
|
Deferred tax
benefit (expense) - Federal |
|
|
—
|
|
|
|
—
|
|
Adjustment of valuation allowance from business combination |
|
|
—
|
|
|
|
—
|
|
Total
tax benefit (expense) on income |
|
$ |
—
|
|
|
$ |
—
|
|
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 14 – INCOME TAXES (CONTINUED)
The cumulative tax effect of significant items comprising our net
deferred tax amount at the expected rate of 21% is as follows as of
December 31, 2022 and 2021:
|
|
2022 |
|
2021 |
Deferred tax asset attributable to: |
|
|
|
|
Net operating loss
carryover |
|
$ |
5,545,000 |
|
|
$ |
6,887,000 |
|
Stock compensation |
|
|
3,953,000 |
|
|
|
809,000 |
|
Operating lease liability |
|
|
63,000 |
|
|
|
88,000 |
|
Section 174 Capitalized Expenses |
|
|
789,000 |
|
|
|
—
|
|
Fixed Assets |
|
|
126,000 |
|
|
|
13,000 |
|
Other |
|
|
16,000 |
|
|
|
85,000 |
|
Deferred tax
asset |
|
$ |
10, 492,000 |
|
|
$ |
7,882,000 |
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities attributable
to: |
|
|
|
|
|
|
|
|
Intangibles |
|
$ |
(2,102,000 |
) |
|
$ |
(2,490,000 |
) |
Operating lease right of use
assets |
|
|
(63,000 |
) |
|
|
(88,000 |
) |
Goodwill |
|
|
(106,000 |
) |
|
|
—
|
|
Other |
|
|
(59,000 |
) |
|
|
(42,000 |
) |
Deferred tax
liability |
|
|
(2,330,000 |
) |
|
|
(2,620,000 |
) |
Net deferred tax asset |
|
$ |
8,162,000 |
|
|
$ |
5,262,000 |
|
Valuation
allowance |
|
|
(8,162,000 |
) |
|
|
(5,262,000 |
) |
Net deferred tax
asset, net of valuation allowance |
|
$ |
—
|
|
|
$ |
—
|
|
The ultimate realization of deferred tax assets is dependent upon
the Company’s ability to generate sufficient taxable income during
the periods in which the net operating losses expire and the
temporary differences become deductible. The Company has determined
that there is significant uncertainty that the results of future
operations and the reversals of existing taxable temporary
differences will generate sufficient taxable income to realize the
deferred tax assets; therefore, a valuation allowance has been
recorded. In making this determination, the Company considered
historical levels of income, projections for future periods, and
the significant amount of tax deductions to be generated from the
future exercise of stock options.
The tax years 2019 to 2022 remain open for potential audit by the
Internal Revenue Service. There are no uncertain tax positions as
of December 31, 2021 or December 31, 2022, and none are
expected in the next 12 months. The Company’s foreign subsidiaries
are cost centers that are primarily reimbursed for expenses, as a
result they generate an immaterial amount of income or loss. Pretax
book income (loss) is all from domestic operations. Up to four
years of returns remain open for potential audit in foreign
jurisdictions, however any audits for periods prior to ownership by
the Company are the responsibility of the previous owners.
Under certain circumstances issuance of common shares can result in
an ownership change under Internal Revenue Code Section 382, which
limits the Company’s ability to utilize carry-forwards from prior
to the ownership change. Any such ownership change resulting from
stock issuances and redemptions could limit the Company’s ability
to utilize any net operating loss carry-forwards or credits
generated before this change in ownership. These limitations can
limit both the timing of usage of these laws, as well as the loss
of the ability to use these net operating losses. The Company had
an ownership change as described in IRC Section 382 on March 18,
2014. The Company NOL’s generated up until March 18, 2014 have been
fully released.
OPTIMIZERx CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
NOTE 15 – COMMITMENTS AND CONTINGENT LIABILITIES
Legal
The Company is not involved in any legal proceedings.
Revenue-share
contracts
The Company has contracts with various electronic health records
systems and ePrescribe platforms, whereby we agree to share a
portion of the revenue we generate for eCoupons distributed and
banners delivered through their networks. These contracts grant
audit rights related to the payments to our partners, and, in some
cases would require us to pay for the audit if the audit determined
there was an underpayment and the underpayment meets certain
thresholds, such as 10%. From time to time the Company enters into
arrangements with a partner to acquire minimum amounts of messaging
capabilities. As of December 31, 2022, the Company had
commitments for future minimum payments of $16.4 million that
will be reflected in cost of revenues during the years from 2023
through 2025. Minimum payments are due in 2023, 2024 and 2025, in
the amounts of $6.2 million, $5.2 million and $5.0 million,
respectively.
NOTE 16 – RETIREMENT PLAN
The Company sponsors a defined contribution 401(k) profit sharing
plan which was adopted in December 2015, effective in January 2016.
Under the terms of the plan, the Company matches 100% of the first
3% of payroll contributed by the employee and 50% of the next 2% of
payroll contributed by the employee to a maximum of 4% of an
employee’s payroll. There was expense of $489,780 and $343,221
recorded in 2022 and 2021, respectively, for the Company’s
contributions to the plan.
NOTE 17 – SUBSEQUENT EVENTS
None.
Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure
None
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
We maintain disclosure controls and procedures designed to provide
reasonable assurance that information required to be disclosed in
reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission’s rules and
forms and accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer, or persons
performing similar functions, as appropriate to allow timely
decisions regarding required disclosures.
Our management, with the participation of our Chief Executive
Officer and our Chief Financial Officer, conducted an evaluation,
as of the end of the period covered by this report, of the
effectiveness of our disclosure controls and procedures, as such
term is defined in Exchange Act Rule 13a-15(e). Based on this
evaluation, our Chief Executive Officer and our Chief Financial
Officer have concluded that, as of the end of the period covered by
this report, due to a material weakness in our internal control
over financial reporting, our disclosure controls and procedures,
as defined in Rule 13a-15(e), were not effective at the reasonable
assurance level.
To address the material weakness referenced above, the
Company performed additional analysis and performed other
procedures in order to prepare the audited consolidated financial
statements in accordance with generally accepted accounting
principles (GAAP). Accordingly, management believes that the
consolidated financial statements included in this Annual Report on
Form 10-K fairly present, in all material respects, our financial
condition, results of operations and cash flows for the periods
presented.
Management’s Report on Internal Control Over Financial
Reporting.
The Company’s management is responsible for establishing and
maintaining adequate internal control over financial reporting, as
defined in Exchange Act Rule 13a-15(f). Internal control over
financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles in the
United States of America. The Company’s internal control over
financial reporting includes those policies and procedures
that:
|
● |
pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the
Company; |
|
● |
provide reasonable assurance that
transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the
Company are being made only in accordance with authorizations of
management and directors of the Company; and |
|
● |
provide reasonable assurance
regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company’s assets that could
have a material effect on the financial statements. |
Because of its inherent limitations, any system of internal control
over financial reporting, no matter how well defined, may not
prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate. The Company’s management, with the
participation of our Chief Executive Officer and our Chief
Financial Officer, assessed the effectiveness of the Company’s
internal control over financial reporting as of December 31, 2022.
In making this assessment, management used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control — Integrated Framework
(2013). Based on this assessment using those criteria, management
identified the following material weakness existed as of December
31, 2022: inadequate controls to ensure that data received from
third-party service organizations is complete and accurate. As a
result, based on the COSO criteria, the Company’s management has
concluded that we did not maintain effective internal control over
financial reporting as of December 31, 2022.
Plan for Remediation of Material Weakness
Management is actively engaged in the planning for, and
implementation of, remediation efforts to address the material
weakness identified above. Management intends to implement the
following remediation steps:
|
a. |
The Company will require each
third-party service organization to provide a SOC-1, Type 2 report
to us. |
|
b. |
If a SOC-1, Type 2 report is not
available, the Company will evaluate each third-party’s relevant
system(s) and reporting directly through inquiry and substantive
testing of such third-party’s control environment. |
Management believes the measures described above will remediate the
material weakness that we have identified. As management continues
to evaluate and improve our disclosure controls and procedures and
internal control over financial reporting, the Company may decide
to take additional measures to address control deficiencies or
determine to modify, or in appropriate circumstances not to
complete, certain of the remediation measures identified.
Changes in Internal Controls Over Financial Reporting.
There was no change in our internal control over financial
reporting (as defined in Rule 13a-15(f) under the Exchange Act),
that occurred during the quarter ended December 31, 2022 that
has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
Item 9B. Other Information
Amended and Restated Bylaws
In connection with new universal proxy card rules adopted by
the US Securities and Exchange Commission (“SEC”), the Board of
Directors (the “Board”) of the Company approved third amended and
restated bylaws of the Company (the “Amended and Restated Bylaws”),
effective as of March 7, 2023. Among other things, the Amended and
Restated Bylaws require that any shareholder soliciting proxies in
support of a nominee other than the Board’s nominees must comply
with Rule 14a-19 under the Securities Exchange Act of 1934, as
amended, including applicable notice and solicitation requirements.
Further, any shareholder directly or indirectly soliciting proxies
from other shareholders must use a proxy card color other than
white, with the white proxy card being reserved for the exclusive
use by the Board. This description of the Amended and Restated
Bylaws does not purport to be complete and is qualified in its
entirety by reference to the text of the Amended and Restated
Bylaws, which is attached hereto as Exhibit 3.2 and incorporated
herein by reference.
Executive Severance Plan
On March 8, 2023, the Compensation Committee adopted the OptimizeRx
Corporation Executive Severance Plan (the “Severance Plan”) to
provide severance benefits to certain eligible employees of the
Company. Each of the Company’s named executive officers, other than
Mr. Febbo, identified in the Company’s proxy statement filed in
connection with its 2022 annual meeting of shareholders
(collectively, the “Named Executive Officers”) has been designated
a participant in the Severance Plan.
The Severance Plan provides that if a Named Executive Officer
is terminated without cause or resigns for Good Reason, he/she will
be paid (i) an amount equal to 1.0 times his/her base
salary, paid in installments over 12 months, (ii) an amount equal
to his/her target annual bonus in effect at the time of
termination, paid in a lump sum, and (iii) payment by the
Company of COBRA premiums for the Named Executive Officer and
his/her spouse and eligible dependents for up to 12 months
following termination (the payments in (i), (ii) and (iii)
collectively referred to as “Severance Benefits”). In addition, if
a Named Executive Officer is terminated without cause or
resigns for Good Reason three months prior to or 24 months
following a Change in Control, in addition to the Severance
Benefits, such Named Executive Officer will be paid a lump sum
payment equal to 2.0 times his/her then current base salary. The
Severance Plan also provides that if a Named Executive Officer is
terminated due to death or Disability, such Named Executive Officer
(or his/her estate) will be paid an amount equal to his/her target
annual bonus in effect at the time of termination, paid in a
lump sum. Terms not otherwise defined herein have the meanings
assigned to them in Severance Plan.
Unless otherwise stated in a participant’s individual employment
agreement, if any payments or benefits under the Severance Plan
would be considered “parachute payments” under Section 280G of the
Code, and would be subject to the excise tax imposed by Section
4999 of the Code, then such payments will either be (i) reduced so
than no portion of the payments is subject to the excise tax or
(ii) delivered in full, whichever of the foregoing results in the
participant receiving a greater amount on a net after-tax basis,
taking into account all federal, state and local taxes and the
excise tax imposed by Section 4999 of the Code.
The foregoing description of the Severance Plan is not complete and
is qualified in its entirety by reference to the complete text of
the Severance Plan, a copy of which is filed as Exhibit 10.18 to
this Form 10-K and is incorporated herein by reference.
Amendment to Will Febbo’s Employment Agreement
On March 8, 2023, the Company entered into a Fourth Addendum
(the “Fourth Addendum”) to the employment offer letter dated
February 25, 2019, as amended, with William J. Febbo (the
“Employment Agreement”) which updates and amends the Employment
Agreement to, among other things, provide that if three
months prior to, or 24 months following, a Change in Control,
Mr. Febbo is terminated without Cause or resigns for
Good Reason, in addition to other amounts payable to Mr. Febbo
pursuant to the Employment Agreement, Mr. Febbo will be paid a lump
sum payment equal to 4.0 times his then current base salary.
Terms not otherwise defined herein have the meanings assigned
to them in the Fourth Addendum.
The above summary of Mr. Febbo’s Fourth Addendum is
not complete and is qualified in its entirety by reference to the
complete text of the Fourth Addendum, a copy of which
is filed as Exhibit 10.19 to this Form 10-K and is incorporated
herein by reference.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections.
None
PART III
Item 10. Directors, Executive Officers and Corporate
Governance
Except for the information provided in PART I, Item 4.1,
“Information About Our Executive Officers” and as set forth below,
the required information is incorporated by reference from our
definitive proxy statement for our 2023 Annual Meeting of
Shareholders, including, but not necessarily limited to, the
sections entitled “Proposal No. 1 Election of Directors,
“Committees of the Board of Directors” and “Information Regarding
Security Holders – Delinquent Section 16(a) Reports.”
We have a Code of Business Conduct and Ethics (the “Code”) that
applies to our directors, officers, and employees. Only the Board
may grant a waiver of any provision for a director, executive
officer, or any other principal financial officer, and any such
waiver, or any amendment to the Code, will be promptly disclosed as
required at www.optimizerx.com. The Code can be found on the
Company’s website at www.optimizerx.com under “Investor
Relations—Governance.” The information on the website is not and
should not be considered part of this Form 10-K and is not
incorporated by reference in this Form 10-K.
Item 11. Executive Compensation
The required information is incorporated by reference from our
definitive proxy statement for our 2023 Annual Meeting of
Shareholders, including, but not necessarily limited to, the
sections entitled “Director Compensation” and “Executive
Compensation”.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.
Except for the information set forth below, the required
information is incorporated by reference from our definitive proxy
statement for our 2023 Annual Meeting of Shareholders, including,
but not necessarily limited to, the section entitled “Information
Regarding Security Holders.”
Equity Compensation Plan Information
The following table details information regarding our existing
equity compensation plans as of December 31, 2022:
Plan Category
|
|
Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants
and rights
|
|
|
Weighted- average
exercise
price of outstanding
options, warrants
and rights
|
|
|
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding securities
reflected in column (a))
|
|
|
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity
compensation plans approved by security holders |
|
|
|
|
|
|
|
|
|
2013 Equity Compensation Plan – Options |
|
|
410,701
|
|
|
|
33.57 |
|
|
|
0 |
|
2013
Equity Compensation Plan – Restricted Stock Units |
|
|
128,590 |
|
|
|
N/A |
|
|
|
0 |
|
2021
Equity Incentive Plan – Options |
|
|
896,169 |
|
|
|
30.03 |
|
|
|
0 |
|
2021
Equity Incentive Plan – Restricted Stock Units |
|
|
660,484
|
|
|
|
N/A |
|
|
|
921,946 |
|
Equity compensation plans not approved by security holders |
|
|
0 |
|
|
|
N/A |
|
|
|
0 |
|
Total |
|
|
2,095,944 |
|
|
|
|
|
|
|
921,946 |
|
Item 13. Certain Relationships and Related Transactions, and
Director Independence
The required information is incorporated by reference from our
definitive proxy statement for our 2023 Annual Meeting of
Shareholders, including, but not necessarily limited to, the
sections entitled “Certain Relationships and Related Transactions”
and “Corporate Governance - Director Independence.”
Item 14. Principal Accounting Fees and Services
The required information is incorporated by reference from our
definitive proxy statement for our 2023 Annual Meeting of
Shareholders, including, but not necessarily limited to, the
sections entitled “Ratification of UHY LLP as Independent
Registered Public Accounting Firm – Independent Registered Public
Accountant Fee Information” and “Ratification of UHY LLP as
Independent Registered Public Accounting Firm – Pre-Approval
Policies and Procedures.”
PART IV
Item 15. Exhibits and Financial Statements Schedules
(a) The consolidated financial statements and exhibits listed below
are filed as part of this Annual Report on Form 10-K.
|
(1) |
The Company’s consolidated
financial statements, the notes thereto and the report of the
Independent Registered Public Accounting Firm are included in PART
II, Item 8. “Financial Statements and Supplementary Data.” |
|
(2) |
Financial statement schedules have
been omitted because they are not applicable, not required, or the
required information is included in the Consolidated Financial
Statements or Notes thereto. |
|
(3) |
Exhibits. Reference is made to Item
15(b) below. |
(b) Exhibits. The Exhibit Index, which immediately precedes
the signature page, is incorporated by reference into this Annual
Report on Form 10-K.
(c) Financial Statement Schedules. Reference is made to Item
15(a)(2) above.
Item 16. Form 10-K Summary
None
EXHIBIT INDEX
Exhibit
Number
|
|
Description |
3.1 |
|
Articles of Incorporation of OptimizeRx Corporation (the “Company”)
Incorporated by reference to Exhibit 3.1 to the Company’s
Registration Statement on Form S-1 (Registration No. 333-155280)
filed on November 12, 2008. |
|
|
|
3.2 |
|
Certificate of Correction, dated April 30, 2018. Incorporated by
reference to Exhibit 3.5 to the Company’s Annual Report on Form
10-K for the year ended December 31, 2018. |
|
|
|
3.3** |
|
Third Amended and Restated Bylaws
of the Company. |
|
|
|
4.1 |
|
Description of the Registrant’s Securities Registered Pursuant to
Section 12 of the Securities Exchange Act of 1934. Incorporated by
reference to Exhibit 4.1 to the Company’s Annual Report on Form
10-K for the year ended December 31, 2021. |
|
|
|
10.1† |
|
Fourth Amended and Restated 2013 Equity Incentive Plan.
Incorporated by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed on March 12, 2020. |
|
|
|
10.2† |
|
OptimizeRx 2021 Equity Incentive Plan. Incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on
August 25, 2021. |
|
|
|
10.3† |
|
Form of Stock Option Award for grants under the OptimizeRx
Corporation 2021 Equity Incentive Plan. Incorporated by reference
to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed
on August 25, 2021. |
|
|
|
10.4† |
|
Form of Performance Stock Option Award for grants under the
OptimizeRx Corporation 2021 Equity Incentive Plan. Incorporated by
reference to Exhibit 10.3 to the Company’s Current Report on Form
8-K filed on August 25, 2021. |
|
|
|
10.5† |
|
Form of Restricted Stock Unit Award for grants under the OptimizeRx
Corporation 2021 Equity Incentive Plan. Incorporated by reference
to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed
on August 25, 2021. |
|
|
|
10.6† |
|
Form of Performance Restricted Stock Unit Award for grants under
the OptimizeRx Corporation 2021. Incorporated by reference to
Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on
August 25, 2021 |
|
|
|
10.7† |
|
Amended Employment Agreement by and between the Company and William
J. Febbo. Incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed on February 26,
2019. |
|
|
|
10.8† |
|
Amendment to the Employment Agreement with William Febbo.
Incorporated by reference to Exhibit 10.4 to the Company’s Annual
Report on Form 10-K for the year ended December 31,
2019. |
|
|
|
10.9
† |
|
Addendum to the Employment Agreement with William J. Febbo.
Incorporated by reference to Exhibit 10.1 to the Company’s
Quarterly Report on Form 10-Q for the quarter ended June 30,
2021. |
|
|
|
10.10*† |
|
Third Addendum to the Employment
Agreement with William J. Febbo,. Incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on
October 19, 2021. |
|
|
|
10.11† |
|
Employment Agreement by and between
the Company and Stephen Silvestro. Incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on
May 3, 2019. |
|
|
|
10.12† |
|
Amendment to the Employment Agreement with Stephen Silvestro.
Incorporated by reference to Exhibit 10.5 to the Company’s Annual
Report on Form 10-K for the year ended December 31,
2019. |
|
|
|
10.13† |
|
Amendment to Employment Agreement by
and between the Company and Stephen Silvestro dated February 28,
2022. Incorporated by reference to Exhibit 10.2 to the Company’s
Current Report on Form 8-K filed on March 4,
2022. |
|
|
|
10.14† |
|
Employment Agreement with Marion
Odence-Ford. Incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed on February 11,
2021. |
|
|
|
10.15† |
|
Amendment to Employment Agreement by
and between the Company and Marion Odence-Ford dated February 28,
2022. Incorporated by reference to Exhibit 10.3 to the Company’s
Current Report on Form 8-K filed on March 4,
2022. |
|
|
|
10.16*† |
|
Offer Letter by and between the
Company and Edward Stelmakh. Incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed on September
30, 2021. |
|
|
|
10.17† |
|
OptimizeRx Corporation 2022 Cash
Bonus Plan. Incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed on March 4,
2022. |
|
|
|
10.18** |
|
OptimizeRx Corporation Executive Severance
Plan |
† |
Management Contracts and
Compensatory Plans, Contracts or Arrangements. |
* |
Exhibits have been omitted pursuant
to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish
supplementally a copy of any omitted exhibit to the SEC upon
request. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
OptimizeRx
Corporation |
|
|
|
|
By: |
/s/ William J. Febbo |
|
|
William Febbo |
|
Title: |
Chief
Executive Officer |
|
Date: |
March 10, 2023 |
|
|
|
|
By: |
/s/ Edward Stelmakh |
|
|
Edward Stelmakh |
|
Title: |
Chief Financial Officer |
|
|
Chief Operations Officer |
|
Date: |
March 10, 2023 |
|
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature
|
|
Title |
|
Date |
|
|
|
|
|
/s/ William J. Febbo |
|
Chief Executive Officer and Director
(principal executive officer)
|
|
March
10, 2023 |
William J. Febbo |
|
|
|
|
|
|
|
|
/s/ Edward Stelmakh |
|
Chief Financial Officer and Chief Operations Officer
(principal financial and accounting officer)
|
|
March
10, 2023 |
Edward Stelmakh |
|
|
|
|
|
|
|
|
/s/ Gus D. Halas |
|
Chairman |
|
March
10, 2023 |
Gus D. Halas |
|
|
|
|
|
|
|
|
|
/s/ James Lang |
|
Director |
|
March
10, 2023 |
James Lang |
|
|
|
|
|
|
|
|
|
/s/ Patrick Spangler |
|
Director |
|
March
10, 2023 |
Patrick Spangler |
|
|
|
|
|
|
|
|
|
/s/ Lynn Vos |
|
Director |
|
March
10, 2023 |
Lynn Vos |
|
|
|
|
|
|
|
|
|
/s/ Greg Wasson |
|
Director |
|
March
10, 2023 |
Greg Wasson |
|
|
|
|
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