UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 
 FORM
10-K
 
 [X]
                                              ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended December 31,
  2008[  ]
                                              TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACTFor
      the transition period from _________ to ________Commission
      file number:000-53605
 
 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.)407 Sixth Street, Rochester,
    MI
                          48307(Address
      of principal executive offices)
                          (Zip
      Code)
  Registrant’s
      telephone number:  248.651.6558Securities
      registered under Section 12(b) of the Exchange Act:Title
      of each class
                      Name
      of each exchange on which registeredNone
                      Not ApplicableSecurities
      registered under Section 12(g) of the Exchange Act:Title
      of each classCommon Stock, par value
    $0.001
 
 Indicate by check
mark if the registrant is a well-known seasoned issuer, as defined in Rule 405
of the Securities Act.  Yes [  ]  No
[X]
  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
[X]
  Check whether the
Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act during the past 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 [X]  No
[   ]
  Indicate by check
mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
(§ 229.405 of this chapter) is not contained herein, and will not be contained,
to the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes [X] No
[  ]
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
  Large
accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ] Smaller reporting company [X]
  Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).   Yes
[  ]   No [X]
  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. $32,439,763
  Indicate the number
of shares outstanding of each of the registrant’s classes of common stock, as of
the latest practicable date.  12,262,958 as of December 31,
2008.
  Table of Contents
  TABLEOF
CONTENTS
  
  PagePART IItem
      1.
                                                          Business
                                                          3Item
      1A.
                                                          Risk
      Factors
                                                          9Item
      1B.
                                                          Unresolved
      Staff Comments
                                                          9Item
      2.
                                                          Properties
                                                          9Item
      3.
                                                          Legal
      Proceedings
                                                          9Item
      4.
                                                          Submission
      of Matters to a Vote of Security Holders
                                                          9PART IIItem
      5.
                                                          Market
      for Registrant’s Common Equity and Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                                                          10Item
      6.
                                                          Selected
      Financial Data
                                                          13Item
      7.
                                                          Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                                          14Item
      7A.
                                                          Quantitative
      and Qualitative Disclosures About Market Risk
                                                          17Item
      8.
                                                          Financial
      Statements and Supplementary Data
                                                          17Item
      9.
                                                          Changes
      In and Disagreements With Accountants on Accounting and Financial
      Disclosure
                                                          17Item
      9A(T).
                                                          Controls
      and Procedures
                                                          18Item
      9B.
                                                          Other
      Information
                                                          19PART IIIItem
      10.
                                                          Directors,
      Executive Officers and Corporate Governance
                                                          19Item
      11.
                                                          Executive
      Compensation
                                                          22Item
      12.
                                                          Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                                                          25Item
      13.
                                                          Certain
      Relationships and Related Transactions, and Director
      Independence
                                                          26Item
      14.
                                                          Principal
      Accountant Fees and Services
                                                          26PART
      IVItem
      15.
                                                          Exhibits,
      Financial Statement Schedules
                                                          27
 
 2
 Table of Contents
  PART I
 
 Item1.   Business
 
 Company
Overview
 
 We
conduct all of our operations through our wholly-owned subsidiary, OptimizeRx
Michigan. We are a development-stage company that has developed a website,
www.optimizerx.com (our “Site”), to help medical patients better afford and
manage their rising healthcare costs.  In addition, we provide unique
advertising programs to the pharmaceutical and healthcare
industries.
 
 We
recognize that patients have increasing influence in their healthcare decisions,
particularly in their medications: what to buy, where to buy, and how to buy.
However, there is very little information available to consumers regarding how
to access available savings and support programs. We developed our Site to
enable consumers to meet their prescribed pharmacological therapies in the most
cost-effective manner possible. Our Site is a portal that identifies programs
and savings that are available to consumers, based upon their needs. By creating
a portal by which consumers access savings on their pharmaceutical needs, we
have also created a Site where pharmaceutical companies can reach consumers with
their advertising and other programs.
 
 Principal
Products and Applications
 
 o
                OPTIMIZERx.com
      – Our Site is a portal to healthcare savings for patients to centrally
      review and participate in prescription and healthcare savings and support
      programs. We strive to provide all the information and guidance that
      patients undergoing long-term pharmaceutical treatments may require.
      Patients can search by their medication or their condition in order to
      access educational information regarding their condition, information
      regarding their medication, coupons for instant savings when they purchase
      their medications, information on free drug trials, and guidance to any
      other savings programs available to them.
                  
                  By
      providing information as well as significant savings opportunities to
      users of our Site, we hope to become the default medical website for both
      patients and the pharmaceutical industry. We feel that the aging of the
      baby boom generation, combined with the preponderance of internet usage to
      access information and savings in all areas, has created a large potential
      market for our Site. The Site is also the launching point for our other
      products, OFFERx and ADHERxE.
 
 o
                OFFERx
      – We have entered into an exclusive relationship with Cegedim Dendrite’s
      OPUS Health division (“OPUS”). OPUS specializes in developing
      pharmaceutical sales and marketing programs, having pioneered the use of
      pharmacy loyalty cards. They also have the largest pharmacy network in the
      industry, having contracted with over 61,000 pharmacies. Through our
      relationship with OPUS, we gain access to and have the opportunity to
      offer programs for the pharmacies in OPUS’s network. OPUS, in turn,
      manages the loyalty cards generated through the program, building their
      patient database as well.
                  
                  Our
      turn-key online platform, OFFERx, allows manufactures to create, promote,
      and fulfill new medication offering programs directly in all of the
      pharmacies that participate in our system, which now includes the over
      61,000 pharmacies in OPUS’s network. Through our simple online interface,
      pharmaceutical manufacturers can offer coupons, discounts, and free trials
      directly to patients on our Site. This gives a significant level of
      control to manufacturers regarding the timing and level of their
      discounts. It also allows unprecedented flexibility in responding to
      market conditions as manufacturers will no longer need to allow for the
      long lead times necessary to prepare, print, and distribute the materials
      traditional required for such
programs.
  3
 Table of Contents
  o
                ADHERxE
      – We have entered into an exclusive relationship with S&H Digital
      (“S&H”), the Interactive division of Suddler and Hennessey of WPP
      healthcare communications agency. S&H has experience in web
      development, search engine marketing, database marketing, reporting, and
      analytics, specializing in pharmaceutical marketing. Through our
      agreement, S&H is responsible for the creating content and managing
      ADHERxE.
                  
                  AHERxE
      is our turn-key online platform that allows manufacturers to engage and
      monitor patients each month in exchange for activation of their monthly
      co-pay coupons. Pharmaceutical companies that wish to monitor the usage
      and effectiveness of their products through online surveys are able to
      provide incentives for patients to participate in the surveys by providing
      discounts through online coupons available on our Site. Patients complete
      an initial survey to determine their treatment status. Each month, when
      patients respond to reminder emails and complete the manufacturer’s
      ongoing survey, they receive a coupon for discounts on their medications
      copays. This helps patients afford their medications and provides a way
      for pharmaceutical companies to track patient usage and results of
      treatment programs.
 
 Marketing
and Sales
 
 With our
marketing partners, including our New York advertising and PR agencies, we
intend to promote OPTIMIZERx primarily through the following:
 
 ·
                Internet
      Marketing
 ·
                Public
      Relations Campaigns
 ·
                Physician
      Offices
 ·
                Direct
      to Consumer Marketing
 ·
                Newspaper
      and Advertising
 ·
                Cable
      TV
 ·
                Pharmacy
      Partners
 ·
                Fortune
      500 Employers- Benefits Departments
 ·
                Unions
      and Other Church and Civic
organizations
 
 For
distribution and sales purposes, we rely on internal and independent sales
representatives.  Additionally, the Company has entered into
co-promotional agreements with both OPUS and S&H as detailed
above.
  4
 Table of Contents
 
 Research
and Development
 
 All of
our officers and directors are part of our continual research development team
and monitor new technologies, trends, services, and partnerships that can help
us provide additional services and increased value to the healthcare and
pharmaceutical industries and to the patients we serve.
 
 We are
currently in launch phase with ADHERxE to allow pharmaceutical and healthcare
manufacturers unique way to engage and monitor patients each month in exchange
for activation of their next savings offer.
 
 We seek
to educate our team through an understanding of all market dynamics that have
the potential to affect our business in both the short and long
term.  Our primary goal is to help patients better afford and access
the medicines their doctors prescribe, as well as other healthcare products and
services they need. Based on this goal, we continually seek better ways to meet
this mission through the use of improved technology, user feedback, and working
closely with the pharmaceutical industry. We are continually seeking new ways we
can engage the pharmaceutical industry to provide new support programs to
patients in need of their products.
  Like any
company, we are seeking new services and solutions to offer.  However,
we feel that our three current platforms will provide robust opportunities and
growth during the next five years.
 
 Competition
  We will
compete in the highly competitive pharmaceutical and healthcare advertising
industry that is dominated by large well-known companies with established names,
solid market niches, wide arrays of product offerings and marketing
networks.  Our largest competitors include a variety of healthcare
website publishers and networks who provide online advertising competition to
OPTIMIZERx.com, including Quality Health, WebMD, McKesson, and
Drugs.com.
 
 ·
                Quality
      Health – Quality Health hosts an interactive website that allows users to
      research information regarding medical conditions, medications, and
      treatments. Visitors to their website can also search for doctors or
      health centers in their area, both generally and specific to their
      condition.
 
 ·
                WebMD
      – WebMD provides in-depth reference material regarding medical conditions
      and medicines to users. Individuals can search for a diagnosis via
      symptoms or research details regarding their previously diagnosed medical
      conditions. Online support forums are also hosted for patients with
      particularly challenging
conditions.
  5
 Table of Contents
  ·
                McKesson
      – McKesson Corporation has been providing health care services in the
      United States for over 175 years. They act as a distributor for
      pharmaceutical companies to a network of pharmacies, and have developed
      online solutions for customers, third-party payors, and manufacturers.
      McKesson has significantly greater financial resources and brand
      recognition than we do.
 
 ·
                Drugs.com
      – Drugs.com provides free, accurate, and independent advice on more than
      24,000 prescription drugs, over-the-counter medicines, and natural
      products. Their data sources include MicromedexTM, Cerner MultumTM, Wolters
      KluwerTM, and others. Users can search by condition or
      medication.
  Companies
who provide similar offer redemption services through a network of pharmacies,
such as McKesson, could seek to disrupt our exclusive partnership with OPUS.
However, each of our competitors could also be a partner in co-promotion of
exclusive offer and adherence campaigns we create on behalf of the client
through OFFERx and ADHERxE.
 
 Our
competitors who have not done so already may be able to enter into the field by
developing a website to promote health care offers. However, most may be limited
in their ability to create, promote and manage new and exclusive prescription
trials or offers. Additionally, with ADHERxE and the ability to create multiple
offers activated each month for returning patients who sign up, we believe that
we are uniquely positioned with significant barriers to entry for potential
competitors in this area.
 
 Intellectual
Property
 
 All key
aspects of our promotional and offer development platforms are pending patent
review. However, business is not predicated on being awarded patent
exclusiveness. Rather, patent protection represents a huge asset and further
opportunity upon its receipt.
 
 OPTIMIZERx
is a licensed trademark.
  Our
intellectual property is developed significantly each month.  Since
inception, we have developed and launched OFFERx and ADHERxE, and we are further
integrating these platforms to provide more robust
offerings.  OPTIMIZERx.com and OFFERx are patent pending.
  6
 Table of Contents
 
 The
following table summarizes the status of our patents and patent applications as
of the date hereof:
 
 App
      Number/Filing
      Date
                          Brief
      Summary
                            (Products
      Covered)
                          StatusS.N.
      11/528,292
                            September
      27, 2006
                          System
      for providing patient savings and promoting health care product
      sales
                          Patent
      application
pending.
 
 Government
Regulation
 
 Fraud
and Abuse Laws
 
 Anti-Kickback
Statutes
 
 The
federal healthcare program Anti-Kickback Statute prohibits persons from
knowingly and willfully soliciting, offering, receiving or providing
remuneration, directly or indirectly, in exchange for or to induce either the
referral of an individual for, or the furnishing, arranging for or recommending
a good or service for which payment may be made in whole or part under a federal
healthcare program such as Medicare or Medicaid. The definition of remuneration
has been broadly interpreted to include anything of value, including for example
gifts, discounts, the furnishing of supplies or equipment, credit arrangements,
payments of cash and waivers of payments. Several courts have interpreted the
statute's intent requirement to mean that if any one purpose of an arrangement
involving remuneration is to induce referrals or otherwise generate business
involving goods or services reimbursed in whole or in part under federal
healthcare programs, the statute has been violated. The law contains a few
statutory exceptions, including payments to bona fide employees, certain
discounts and certain payments to group purchasing organizations. Violations can
result in significant penalties, imprisonment and exclusion from Medicare,
Medicaid and other federal healthcare programs. Exclusion of a manufacturer
would preclude any federal healthcare program from paying for its products. In
addition, kickback arrangements can provide the basis for an action under the
Federal False Claims Act, which is discussed in more detail below. The
Anti-Kickback Statute is broad and potentially prohibits many arrangements and
practices that are lawful in businesses outside of the healthcare industry.
Recognizing that the Anti-Kickback Statute is broad and may technically prohibit
many innocuous or beneficial arrangements, the Office of Inspector General of
Health and Human Services, or OIG, issued a series of regulations, known as the
safe harbors, beginning in July 1991. These safe harbors set forth provisions
that, if all the applicable requirements are met, will assure healthcare
providers and other parties that they will not be prosecuted under the
Anti-Kickback Statute. The failure of a transaction or arrangement to fit
precisely within one or more safe harbors does not necessarily mean that it is
illegal or that prosecution will be pursued. However, conduct and business
arrangements that do not fully satisfy each applicable safe harbor may result in
increased scrutiny by government enforcement authorities such as the OIG.
Arrangements that implicate the Anti-Kickback Law, and that do not fall within a
safe harbor, are analyzed by the OIG on a case-by-case basis. Government
officials have focused recent enforcement efforts on, among other things, the
sales and marketing activities of healthcare companies, and recently have
brought cases against individuals or entities with personnel who allegedly
offered unlawful inducements to potential or existing customers in an attempt to
procure their business. Settlements of these cases by healthcare companies have
involved significant fines and/or penalties and in some instances criminal
pleas. In addition to the Federal Anti-Kickback Statute, many states have their
own kickback laws. Often, these laws closely follow the language of the federal
law, although they do not always have the same exceptions or safe harbors. In
some states, these anti-kickback laws apply with respect to all payors,
including commercial health insurance companies.
  7
 Table of Contents
 
 False
Claims Laws
 
 Federal
false claims laws prohibit any person from knowingly presenting, or causing to
be presented, a false claim for payment to the federal government or knowingly
making, or causing to be made, a false statement to get a false claim paid.
Manufacturers can be held liable under false claims laws, even if they do not
submit claims to the government, if they are found to have caused submission of
false claims. The Federal Civil False Claims Act also includes whistle blower
provisions that allow private citizens to bring suit against an entity or
individual on behalf of the United States and to recover a portion of any
monetary recovery. Many of the recent highly publicized settlements in the
healthcare industry related to sales and marketing practices have been cases
brought under the False Claims Act. The majority of states also have statutes or
regulations similar to the federal false claims laws, which apply to items and
services reimbursed under Medicaid and other state programs, or, in several
states, apply regardless of the payor. Sanctions under these federal and state
laws may include civil monetary penalties, exclusion of a manufacturer's
products from reimbursement under government programs, criminal fines and
imprisonment.
 
 Privacy
and Security
 
 The
Health Insurance Portability and Accountability Act of 1996, or HIPAA, and the
rules promulgated there under 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 not directly
regulated by HIPAA, our customers or distributors might face significant
contractual liability pursuant to such an agreement if the business associate
breaches the agreement or causes the covered entity to fail to comply with
HIPAA.  It is possible that HIPPA compliance could become a
substantial regulatory burden and expense to our operations, although we do not
believe that this will occur as a general website publisher.
 
 Corporate
History
 
 Optimizer
Systems, LLC was formed in the State of Michigan on January 31,
2006.  It then became a corporation in the state of Michigan on
October 22, 2007 and changed its name to OptimizeRx Corporation on October 22,
2007.  On April 14, 2008, our company, known at the time as RFID Ltd.,
consummated entered into a share exchange agreement with the stockholders of
OptimizeRx Corporation, pursuant to which the stockholders of OptimizeRx
Corporation exchanged all of the issued and outstanding capital stock of
OptimizeRx Corporation for 10,664,000 shares of common stock of RFID
Ltd..  As of April 30, 2008, RFID’s officers and directors resigned
their positions and RFID changed its business to OptimizeRx’s
business.  As a result, the historical discussion and financial
statements included in this annual report are those of OptimizeRx
Corporation.  On April 15, 2008, RFID Ltd’s corporate name was changed
to OptimizeRx Corporation. On September 4, 2008, we then completed a migratory
merger, thereby changing our state of incorporation from Colorado to Nevada,
resulting in the current corporate structure in which we, OptimizeRx
Corporation, a Nevada corporation is the parent corporation, and OptimizeRx
Corporation, a Michigan Corporation is our wholly-owned subsidiary.
  8
 Table of Contents
 
 Employees
 
 As of
January 30, 2009, we had two full-time employees and four independent sales and
programming contractors who perform various services for us.   We also
engage consultants for investor relations, accounting and legal
services.
 
 Subsidiaries
 
 We
conduct our operations through our wholly-owned subsidiary, OptimizeRx
Michigan.
 
 Item1A.  Risk Factors
 
 A smaller
reporting company is not required to provide the information required by this
Item.
 
 Item1B. Unresolved Staff Comments
 
 None
 
 Item2.   Properties
 
 Currently,
we do not own any real estate. Our principal executive offices are located at
407 Sixth Street, Rochester, Michigan, 48307.  We have entered into a
six-month lease for this 2,000 square foot facility, with a cost of
approximately $2,500 per month. We additionally have free offices within both
Cegedim Dendrite’s US Headquarters, as well as Sudler & Hennessey’s New York
City offices. We believe that our properties are adequate for our current and
immediately foreseeable operating needs. We do not have any policies regarding
investments in real estate, securities or other forms of
property.
 
 Item3.   Legal Proceedings
 
 We are
not a party to any pending legal proceeding. We are not aware of any pending
legal proceeding to which any of our officers, directors, or any beneficial
holders of 5% or more of our voting securities are adverse to us or have a
material interest adverse to us.
 
 Item4.   Submission of Matters to a Vote of Security
Holders
 
 No
matters were submitted to a vote of our shareholders during the fourth quarter
of our fiscal year ended December 31, 2008.
  9
 Table of Contents
 
 PART II
 
 Item5.    Market for Registrant’s Common Equity
and Related Stockholder Matters and Issuer Purchases of Equity
Securities
 
 Market
Information
 
 Our
common stock is currently quoted on the Pink Sheets, under the symbol
“OPRX.” We have requested that a market maker apply for quotation on the
OTC Bulletin Board.  As of the date of this Annual Report, that
application is still pending.
 
 The
following table sets forth the range of high and low bid quotations for our
common stock for each of the periods indicated as reported by the Pink Sheets.
These quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission and may not necessarily represent actual
transactions.
 
 Fiscal
      Year Ending December 31, 2008Quarter
      Ended
                    
                    High
      $
                    
                    Low
      $December
      31, 2008
                    
                    4.30
                    
                    1.56September
      30, 2008
                    
                    4.20
                    
                    3.90June
      30, 2008
                    
                    15.00
                    
                    3.90March
      31, 2008
                    
                    7.00
                    
                    4.00
  Fiscal
      Year Ending December 31, 2007Quarter
      Ended
                    
                    High
      $
                    
                    Low
      $December
      31, 2007
                    
                    72.00
                    
                    3.00September
      30, 2007
                    
                    490.00
                    
                    64.00June
      30, 2007
                    
                    550.00
                    
                    360.00March
      31, 2007
                    
                    590.00
                    
                    380.00
 
 On March
13, 2009, the last sales price per share of our common stock was
$4.30.
 
 Penny
Stock
 
 The SEC
has adopted rules that regulate broker-dealer practices in connection with
transactions in penny stocks. Penny stocks are generally equity securities with
a market price of less than $5.00, other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or system. The penny stock rules require
a broker-dealer, prior to a transaction in a penny stock, to deliver a
standardized risk disclosure document prepared by the SEC, that: (a) contains a
description of the nature and level of risk in the market for penny stocks in
both public offerings and secondary trading; (b) contains a description of the
broker's or dealer's duties to the customer and of the rights and remedies
available to the customer with respect to a violation of such duties or other
requirements of the securities laws; (c) contains a brief, clear, narrative
description of a dealer market, including bid and ask prices for penny stocks
and the significance of the spread between the bid and ask price; (d) contains a
toll-free telephone number for inquiries on disciplinary actions; (e) defines
significant terms in the disclosure document or in the conduct of trading in
penny stocks; and (f) contains such other information and is in such form,
including language, type size and format, as the SEC shall require by rule or
regulation.
  10
 Table of Contents
 
 The
broker-dealer also must provide, prior to effecting any transaction in a penny
stock, the customer with (a) bid and offer quotations for the penny stock; (b)
the compensation of the broker-dealer and its salesperson in the transaction;
(c) the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market for
such stock; and (d) a monthly account statement showing the market value of each
penny stock held in the customer's account.
 
 In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement as to transactions involving
penny stocks, and a signed and dated copy of a written suitability
statement.
 
 These
disclosure requirements may have the effect of reducing the trading activity for
our common stock. Therefore, stockholders may have difficulty selling our
securities.
 
 Holders
of Our Common Stock
 
 As of
December 31, 2008, we had 12,262,958 shares of our common stock issued and
outstanding, held by 336 shareholders of record.
 
 Dividends
  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.
  In the
event that a dividend is declared, common stockholders on the record date are
entitled to share ratably in any dividends that may be declared from time to
time on the common stock by our board of directors from funds legally
available.
  There are
no restrictions in our articles of incorporation or bylaws that restrict us from
declaring dividends. The Nevada Revised Statutes, however, do prohibit us from
declaring dividends where, after giving effect to the distribution of the
dividend:
 
 1.
                We
      would not be able to pay our debts as they become due in the usual course
      of business; or
 
 2.
                Our
      total assets would be less than the sum of our total liabilities, plus the
      amount that would be needed to satisfy the rights of shareholders who have
      preferential rights superior to those receiving the
      distribution.
 
 11
 Table of Contents
  Securities
Authorized for Issuance under Equity Compensation Plans
 
 On March
5, 2008, our Board of Directors adopted the 2008 Company Stock Option Plan. The
purpose of this plan is to provide incentives to attract, retain and motivate
eligible persons whose present and potential contributions are important to our
success, by offering them an opportunity to participate in the our future
performance through awards of options, the right to purchase common stock and
stock bonuses. We reserved 1,490,000 shares of our Common Stock for awards to be
made under the 2008 Plan. The 2008 Plan is administered by a committee of two or
more members of the Board of Directors or, if no committee is appointed, then by
the Board of Directors. The committee, or the Board of Directors if there is no
committee, determines who is eligible to receive awards under the plan, grant
awards and interpret the 2008 Plan.
 
 We also
have warrants outstanding to purchase 7,059,500 shares of our common stock as of
December 31, 2008.
 
 Equity
Compensation Plans as of December 31, 2008
 A
                                B
                                CPlan
      Category
                                Number
      of securitiesto
      be issued
                                  upon
      exercise ofoutstanding
                                  options,
      warrants and rights
                                Weighted-average
                                  exercise
      price of outstanding
                                  options,
      warrants and right
                                Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities reflected in column
      (A))Equity
      compensation plans
                                  approved
      by security
                                  holders
                                -
                                -
                                -Equity
      compensation plans
                                  not
      approved by security
                                  holders
                                7,424,500
                                $1.89
                                1,125,000Total
                                7,424,500
                                $1.89
                                1,125,000
 
 Recent
Sales of Unregistered Securities
 
 On
October 22, 2007, Optimizer Systems, LLC converted to a C-corporation and was
renamed OptimizeRx Corporation.  The total issued and outstanding at
the time of conversion for OptimizeRx Corporation was 10,000,000 shares of
common stock.  Following the conversion, in 2007, OptimizeRx
Corporation issued 300,000 shares of its common stock at a price of $1.00 per
share for an aggregate purchase price of $300,000.
 
 During
2008, OptimizeRx Corporation sold an aggregate of 364,000 shares of its common
stock in a private placement to multiple accredited investors at a price of
$1.00 per share for an aggregate purchase price of $364,000.
  12
 Table of Contents
 
 On April
14, 2008, as RFID, Ltd., we entered into a Share Exchange Agreement with
OptimizeRx Corporation, a Michigan corporation and the shareholders of
OptimizeRx Corporation, pursuant to which we acquired all of the outstanding
stock of OptimizeRx Corporation.  As consideration for the acquisition
of OptimizeRx Corporation, we agreed to issue 10,664,000 shares of our common
stock to acquire 100% of issued and outstanding shares of OptimizeRx
Corporation.
 
 Following
the Share Exchange Agreement, we sold an additional 272,000 shares of our common
stock in a private placement to multiple accredited investors at a price of
$1.00 per share for an aggregate purchase price of $272,000
 
 On
September 8, 2008, we sold 35 shares Series A Preferred Stock for $3,500,000 to
an accredited investor in a private placement exempt from registration under
Rule 506 of Regulation D of the Securities Act.  The Series A
Preferred Stock is convertible into an aggregate of 3,500,000 shares of our
common stock.  Holders of the Series A Preferred Stock are entitled to
receive dividends at the rate per share of 10% per annum of the stated value,
payable semi-annually, either in cash or in shares of registered common stock,
at a ten percent (10%) discount to the market price.  Purchasers of
the Series A Preferred Stock were also issued seven-year Series A warrants to
purchase 6,000,000 shares of our common stock at an exercise price of $2.00 per
share.  We paid finders’ fees of $350,000 and issued to finders
seven-year warrants to purchase 600,000 shares of our common stock at the
exercise price of $2.00 per share and seven-year warrants to purchase 350,000
shares of our common stock at the exercise price of $1.00 per
share.  The offerings and sales were made to a limited number of
persons, of who were accredited investors and transfer was restricted by
OptimizeRx in accordance with the requirement of the Securities Act of
1933.
 
 In 2008,
we issued 70,000 shares of our common stock in exchange for services
rendered.
 
 These
issuances were deemed to be exempt under rule 506 of Regulation D and Section
4(2) of the Securities Act of 1933, as amended, since, among other things, the
transactions did not involve a public offering, the investors were accredited
investors and / or qualified institutional buyers, the investors had access to
information about the Company and their investment, the investors took the
securities for investment and not resale, and the Company took appropriate
measures to restrict the transfer of the securities.
 
 Item6.   Selected Financial Data
 
 A smaller
reporting company is not required to provide the information required by this
Item.
  13
 Table of Contents
 
 Item7.  Management’s Discussion and Analysis of Financial
Condition and Results of Operations
 
 Forward-Looking
Statements
 
 Certain
statements, other than purely historical information, including estimates,
projections, statements relating to our business plans, objectives, and expected
operating results, and the assumptions upon which those statements are based,
are “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. 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. We intend such forward-looking statements to be covered by the
safe-harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and are including this statement for
purposes of complying with those safe-harbor provisions. 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. Our ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which
could have a material adverse affect on our operations and future prospects on a
consolidated basis include, but are not limited to: changes in economic
conditions, legislative/regulatory changes, availability of capital, interest
rates, competition, and generally accepted accounting principles. These risks
and uncertainties should also be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. We
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
Further information concerning our business, including additional factors that
could materially affect our financial results, is included herein and in our
other filings with the SEC.
 
 Overview
  We are a
development-stage company located in Michigan. Since our formation, we have
concentrated on developing our business strategy and obtaining financing. We
plan to expand awareness, traffic and database to our patient savings portal
OPTIMIZERx.com, as well as the launch of our offer development systems OFFERxTM
and ADHERxE.  We expect that the primary components of our business
will be:
  ·
                The
      online patient savings portal OPTIMIZERx.com and our network
      affiliates·
                OFFERx
      to develop, promote and fulfill new offers from pharmaceutical and
      healthcare manufactures·
                ADHERxE
      to allow manufacturers to re-engage their customers through the activation
      of new savings each month
  As demand
increases for savings and support programs to help the growing number of
patients manage their rising healthcare costs, we plan to extend our reach and
visibility through increased online, print and broadcast marketing to increase
traffic and our database of qualified health care consumers.
  In turn,
we will generate revenues through: (i) advertising sales from our online
OPTIMIZERx.com and affiliate network; (ii) its database; (iii) direct marketing
and sponsorships and (iv) our platforms to create, promote and manage new
savings offers for additional clients.
 
 Subsequent
to the end of the reporting period, on February 9, 2009, we recorded our
300,000th new member since the beginning of 2009. We feel that the rapid growth
of our registered user database will increase our ability to negotiate with
pharmaceutical companies and generate advertising revenue. Also, subsequent to
the end of the reporting period, on February 13, 2009, we began airing
advertisements for OpimizeRx.com on AMC, Travel, MSNBC, Lifetime Movings, and
other channels. We anticipate that this national exposure will further increase
the growth of our database of registered users.
  14
 Table of Contents
 
 Results
of Operations for the Years Ended December 31, 2008 and 2007
 
 Since
inception, OPTIMIZERx Corp. has generated minimal revenue from advertising and
use of its database.  In the same period, OPTIMIZERx Corp has incurred
expenses related to funding the development of the business plan, new products
and platforms and raising capital.
 
 Gross
Revenues
 
 Our total
revenue reported for the year ended December 31, 2008 was
$­­­­83,686, a decrease from $100,318 for the year ended
December 31, 2007.
 
 Operating
Expenses
 
 Operating
expenses increased to $1,591,738 for the year ended December 31, 2008 from
$456,259 for the year ended December 31, 2007. Our operating expenses for the
year ended December 31, 2008 consisted mainly of advertising expenses of
$380,497, stock based compensation expenses of $333,004, consulting fees of
$322,625, salaries and wages of $151,593, commission expenses of $87,825,
website maintenance of $76,746, legal and accounting fees of $58,934, and travel
expenses of $54,929.
 
 Other
Expenses
 
 Other
expenses increased to $2,740,801 for the year ended December 31, 2008 from
$5,525 for the year ended December 31, 2007.  The increase in other
expenses for the year ended December 31, 2008 from the prior year is primarily
attributable to an increase in warrant based compensation.
 
 Net
Loss
 
 Net loss
for the year ended December 31, 2008 was $4,248,853, compared to net loss of
$361,466 for the year ended December 31, 2007.
  15
 Table of Contents
 
 Liquidity
and Capital Resources
 
 As of
December 31, 2008, we had total current assets of $2,507,294 and total assets in
the amount of $2,643,301. Our total current liabilities as of December 31, 2008
were $217,797.  We had working capital of $2,289,497 as of December
31, 2008.
 
 Operating
activities used $919,402 in cash for the year ended December 31, 2008. Our net
loss of $4,248,853 was the primary component of our negative operating cash
flow, offset mainly by $2,745,280 in stock warrants issued for services,
$333,004 in stock options issued for compensation, a $128,648 increase in
accounts payable, $70,000 in stock issued for services. Cash flows used by
investing activities during the year ended December 31, 2008 was $10,621 for the
acquisition of property and equipment.  Cash flows provided by
financing activities during the year ended December 31, 2008 amounted to
$3,297,250 and consisted of $2,985,000 as proceeds from the issuances of
preferred stock, $636,000 as proceeds from the issuances of common stock,
$320,000 as proceeds from notes payable, offset by $643,750 incurred in the
repayment of notes payable to related parties.
 
 In July
7, 2008, we entered into an investment placement agent
agreement with Midtown Partners & Co LLC to raise on a best
efforts basis an amount of up to USD $3 million.  Prior to this
relationship our financing activities consisted of private investors and loans
to cover our operating expenses.
  On Sept
8, 2008 we received gross proceeds of $3,500,000 (net $2,985,000) from
VICIS Capital for preferred equity share sales which was used towards our
working capital.
  Our
monthly use of funds is for general operations, product development, sales and
marketing. Our operational overhead is generally minimized through our small
staff and use of independent contractors.
 
 Estimated
      Monthly Expenses:
                    Normal
      Expected RangeStaff
      salaries
                    $25,000
      - 35,000Independent
      Sales Representatives
                    $10,000
      - 15,000IT
      and Web/Product Development
                    $10,000
      - 15,000Rent
      and other general expenses
                    $5,000
      - 10,000Travel
      and other related expenses
                    $5,000
      - 10,000Other
      expenses
                    $2,000
      - 5,000Marketing
      & Advertising
                    (Variable:
      See comments below)
 
 Normal
Expected Monthly Cash Burn Rate:  Approximately $57,000- 90,000 plus
marketing and advertising
 
 The
biggest anticipated variance in expenses will relate to company’s
marketing/advertising expenses to both the pharmaceutical industry and direct to
consumers. Based on confirmation of successful online and traditional
advertising programs, we will aggressively ramp up these programs to increase
site traffic, membership database and revenue.
 
 We have
invested during the first 4 months of 2009 approximately $250,000  in
online advertising that generated approximately 500,000+ enrollments into our
database which now exceeds 1 million members. Additionally, we have begun
testing a new 30 second national cable commercial to deliver approximately 70
million views/impressions at a cost of approximately $150,000 within the first
quarter of 2009 (for a preview, please go to
www.optimizerx.com/commercial/).  Upon attaining specific advertisers,
we may also have additional advertising expenses to generate maximum advertising
revenue to the company.  Management feels that our current cash
balance will allow us to meet the expenses required to support our growth plans
over the next twelve months.
  16
 Table of Contents
 
 Off
Balance Sheet Arrangements
 
 As of
December 31, 2008, there were no off balance sheet arrangements.
 
 Stock
Based Compensation
 
 Effective
January 1, 2006, the Company adopted SFAS No. 123 (revised), "Share-Based
Payment" (SFAS 123(R)) utilizing the modified prospective approach. Prior to the
adoption of SFAS 123(R) we accounted for stock option grant in accordance with
APB Opinion No. 25, “Accounting for Stock Issued to Employees," and accordingly,
recognized compensation expense for stock option grants using the intrinsic
value method.
 
 Under the
modified prospective approach, SFAS 123(R) applies to new awards and to awards
that were outstanding on January 1, 2006 that are subsequently modified,
repurchased or cancelled.  Under the modified prospective approach,
compensation cost recognized in the first quarter of fiscal 2006 includes
compensation cost for all share-based payments granted prior to, but not yet
vested as of January 1, 2006, based on the grant-date fair value estimated in
accordance with the original  provisions of SFAS 123, and compensation
cost for all share-based payments granted subsequent  to January 1,
2006 based on the grant-date fair value estimated in accordance with the
provisions of SFAS 123(R).  For all quarters after the first quarter
of fiscal 2006, compensation costs recognized will include compensation costs
for all share-based payments granted based on the grant date fair value
estimated in accordance with the provisions of SFAS 123(R).
 
 The fair
value of each option granted in 2008 is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions: dividend yield of 0%, expected volatility of 150%, risk-free
interest rate of 2.59% and expected life of 60 months.
 
 Item7A.   Quantitative and Qualitative Disclosures
About Market Risk
 
 A smaller
reporting company is not required to provide the information required by this
Item.
 
 Item8.   Financial Statements and Supplementary
Data
 
 See the
financial statements annexed to this annual report.
 
 Item 9.   Changes In and Disagreements with
Accountants on Accounting and Financial Disclosure
 
 No events
occurred requiring disclosure under Item 307 and 308 of Regulation S-K during
the fiscal year ending December 31, 2008.
  17
 Table of Contents
 
 Item9A(T).  Controls and Procedures
 
 Evaluation
of Controls and Procedures
 
 Management
is responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rule 13a-15(f) under the Exchange Act. This
rule defines internal control over financial reporting as a process designed by,
or under the supervision of, the Company’s Chief Executive Officer and Chief
Financial Officer, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with U.S. GAAP. Our 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 U.S. GAAP, 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, internal control over financial reporting may not
prevent or detect misstatements. In addition, 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.
 
 With the
participation of the Chief Executive Officer and the Chief Financial Officer,
our management conducted an evaluation of the effectiveness of our internal
control over financial reporting.   Based on this evaluation, our
management has concluded that our internal control over financial reporting was
not effective as of December 31, 2008 as the result of a material
weakness.   The material weakness results from significant
deficiencies in internal control that collectively constitute a material
weakness.
 
 A
significant deficiency is a deficiency, or combination of deficiencies, in
internal control over financial reporting that is less severe than a material
weakness, yet important enough to merit attention by those responsible for
oversight of the registrant’s financial reporting.   The Company
had the following significant deficiencies at December 31, 2008:
 
 §
                  The
      company currently only has one employee to oversee bank reconciliations,
      posting payables, and so forth, so there are no checks and balances on
      internal controls. Mr. David Lester recently assumed responsibilities for
      the company as the sole officer.  Prior officers of the company
      have not implemented checks and balances on internal
    controls.
 
 Remediation of Material
Weakness
 
 In the
first quarter 2009, the company engaged the accounting firm of Tama Budaj
& Raab P.C. to assist on the preparation of quarterly and annual
financials.  The firm also plans to assist the company with quickbooks
assistance. The company plans to remedy internal control weaknesses during
2009.
 
 Limitations on the
Effectiveness of Internal Controls
 
 Our
management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will necessarily prevent all fraud and
material error. Our disclosure controls and procedures are designed to provide
reasonable assurance of achieving our objectives and our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures are effective at that reasonable assurance level.  Further, the
design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within our company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
internal control. The design of any system of controls also is based in part
upon certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. Over time, control may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate.
  18
 Table of Contents
  Management’s
Annual Report on Internal Control over Financing Reporting
  This
annual report does not include a report of management's assessment regarding
internal control over financial reporting or an attestation report of the
company's registered public accounting firm due to a transition period
established by rules of the Securities and Exchange Commission for newly public
companies.
 
 Changes
in Internal Control over Financial Reporting
 
 During
the most recently completed fiscal quarter, there has been no change in our
internal control over financial reporting that has materially affected or is
reasonably likely to materially affect, our internal control over financial
reporting.
 
 Item9B.   Other Information
 
 None.
  PART III
 
 Item10.  Directors, Executive Officers and Corporate
Governance
 
 The
following information sets forth the names, ages, and positions of our current
directors and executive officers as of December 31, 2008.
 
 Name
                          Age
                          Position(s)
      and Office(s) HeldDavid
      A. Harrell
                          42
                          Chief
      Executive Officer, President and DirectorThomas
      E. Majerowicz
                          57
                          Secretary
      and DirectorTerence
      J. Hamilton
                          43
                          Director
 
 Set forth
below is a brief description of the background and business experience of each
of our current executive officers and directors.
 
 David
A. Harrell
 
 Mr.
Harrell founded the Company in January of 2006 and has served as our President
and Chief Executive Officer.  He became a director when the Company
changed from a limited liability to a corporation in 2007.  Mr.
Harrell was the Vice President of Development for Meridian Incorporated from
2003-2005 and, prior to that, had been Vice President of Sales and Marketing
since 1999 at Advance Graphic Systems.  Mr. Harrell has spent two
decades leading sales, marketing and business development units within the
pharmaceutical and national retail industries. Prior to his work at Advance
Graphic Systems, Mr. Harrell served for ten years at SmithKline Beecham,
specializing in the managed markets healthcare segment.  As part of the
Integrated Health Division, Mr. Harrell was responsible for contracting and
achieving regional revenue growth for SmithKline Beecham's four business units:
Pharmaceuticals, Consumer Health, Clinical Labs and Diversified Pharmaceutical
Services (PBM). During his tenure with SmithKline Beecham, he was a recipient of
numerous national awards and served as a member of the Division's Strategic
Planning Committee. Mr. Harrell graduated from Oakland University with a
Bachelor of Science in Business Administration.
 
 Thomas
E. Majerowicz
 
 Mr.
Majerowicz joined the Company as our Director in 2007.  Mr. Majerowicz
has been a partner at the law firm of Puzzuoli, Hribar, Iafrate, Majerowicz
& Kohler since 1979.
  Terence
J. Hamilton
  Mr.
Hamilton joined the Company as a Director and VP of Sales in February
2008.  Prior to that, Mr. Hamilton was Manager at MedImmune since 2005
and was Senior National Account Manager for Glaxo SmithKline pharmaceuticals for
13 years prior to that.  Mr. Hamilton has spent the last 19 years
working in the pharmaceutical and biotech arenas within various sales, marketing
and managed markets management positions. He also has held many positions within
the pharmaceutical and biotech industries, including District Manager, Brand
Manager, Managed Market Specialist, Contract Manager, Government Account
Manager.
  19
 Table of Contents
 
 Directors
 
 Our
bylaws authorize two (2) directors unless changed by the Board of
Directors.  The board has since changed the number of directors
authorized, and we currently have three (3) Directors.
 
 Term
of Office
 
 Our
Directors are appointed for a one-year term to hold office until the next annual
general meeting of our shareholders or until removed from office in accordance
with our bylaws.  Our officers are appointed by our board of directors
and hold office until removed by the board.
 
 Significant
Employees
 
 We have
no significant employees other than our officers and directors.
 
 Family
Relationships
 
 There are
no family relationships between or among the directors, executive officers or
persons nominated or chosen by us to become directors or executive
officers.
 
 Involvement
in Certain Legal Proceedings
 
 To  the
best of our knowledge, during the past five years, none of the
following  occurred  with  respect  to a
present or former director, executive officer, or  employee: (1) any
bankruptcy petition filed by or against any business  of which such
person was a general partner or executive officer either
at  the  time  of the bankruptcy or within two
years prior to that time; (2) any conviction in a
criminal  proceeding  or  being subject to a
pending criminal
proceeding  (excluding  traffic  violations and
other minor offenses); (3) being subject  to  any order,
judgment or decree, not subsequently reversed, suspended
or  vacated,  of  any  court  of  competent  jurisdiction,  permanently  or
temporarily enjoining, barring, suspending or otherwise limiting his or her
involvement in  any  type of business, securities or banking
activities; and (4) being found
by  a  court  of  competent  jurisdiction  (in  a  civil
action), the SEC or the
Commodities  Futures  Trading  Commission  to  have  violated
a federal or state securities or commodities law, and the judgment has not been
reversed, suspended or vacated.
 
 Audit
Committee
 
 We do not
have a separately-designated standing audit committee.  The entire
board of directors performs the functions of an audit committee, but no written
charter governs the actions of the board of directors when performing the
functions of that would generally be performed by an audit committee. The board
of directors approves the selection of our independent accountants and meets and
interacts with the independent accountants to discuss issues related to
financial reporting. In addition, the board of directors reviews the scope and
results of the audit with the independent accountants, reviews with management
and the independent accountants our annual operating results, considers the
adequacy of our internal accounting procedures and considers other auditing and
accounting matters including fees to be paid to the independent auditor and the
performance of the independent auditor.
  20
 Table of Contents
 
 We do not
have an audit committee financial expert because of the size of our company and
our board of directors at this time.  We believe that we do not
require an audit committee financial expert at this time because we retain
outside consultants who possess these attributes as
needed.
 
 For the
fiscal year ending December 31, 2008, the board of directors:
 
 1.
                Reviewed
      and discussed the audited financial statements with management,
      and
 
 2.
                Reviewed
      and discussed the written disclosures and the letter from our independent
      auditors on the matters relating to the auditor's
      independence.
 
 Based
upon the board of directors’ review and discussion of the matters above, the
board of directors authorized inclusion of the audited financial statements for
the year ended December 31, 2008 to be included in this Annual Report on Form
10-KSB and filed with the Securities and Exchange Commission.
 
 Section
16(a) Beneficial Ownership Reporting Compliance
 
 We were
not a reporting company under Section 12 of the Securities and Exchange Act of
1934 at the end of fiscal year December 31, 2008, and therefore do not have
Section 16 reporting compliance information to report during that period of
time.
 
 Code
of Ethics
 
 As of
December 31, 2008, we had not adopted a Code of Ethics for Financial Executives,
which would include our principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing
similar functions.
  21
 Table of Contents
  Item11.  Executive Compensation
 
 Summary
Compensation Table
  The table
below summarizes all compensation awarded to, earned by, or paid to our former
or current executive officers for the fiscal years ended December 31, 2008, 2007
and 2006.
 
 SUMMARY
      COMPENSATION TABLENameandprincipalposition
                    Year
                    Salary($)
                    Bonus
                      ($)
                    Stock
                      Awards
                      ($)
                    Option
                      Awards
                      ($)
                    Non-Equity
                      Incentive
      Plan
                      Compensation
                      ($)
                    Nonqualified
                      Deferred
                      Compensation
                      Earnings
      ($)
                    All
      Other
                      Compensation
                      ($)
                    Total
                      ($)David
      Harrell, Former President and CEO
                    2008
                      2007
                      2006
                    144,000
                      144,000
                      111,000
                    -
                      -
                      -
                    -
                      -
                      -
                    91,000(1)
                      -
                      -
                    -
                      -
                      -
                    -
                      -
                      -
                    -
                      -
                      -
                    235,000
                      144,000
                      111,000James
      Vandeberg, Former CEO of RFID
                    2008
                      2007
                      2006
                    -
                      -
                      -
                    -
                      -
                      -
                    -
                      -
                      -
                    -
                      -
                      -
                    -
                      -
                      -
                    -
                      -
                      -
                    -
                      -
                      -
                    -
                      -
                      -
 
 (1)
                Options
      to purchase 100,000 shares of Common Stock valued at $0.91 per share with
      an exercise price of $1.00 per share.  Please see our
      Management’s Discussion and Analysis for a discussion on the valuation of
      our options .
  Narrative
Disclosure to the Summary Compensation Table
  On April
6, 2009, we entered into an employment agreement with Mr. Lester to serve as our
Chief Executive Officer.  Under the agreement, we agreed to compensate
Mr. Lester $150,000 annually and we granted him options to purchase 500,000
shares of our common stock, with 25% vesting immediately and 25% vesting after
the completion of each quarter of hire.  Mr. Lester is also eligible
for additional quarterly and annual bonus compensation, stock options, and stock
grants based on performance metrics outlined by our board of
directors.  He is entitled to vacation and sick days, and other
benefits included in the agreement.
  22
 Table of Contents
 
 Outstanding
Equity Awards at Fiscal Year-End
 
 The table
below summarizes all unexercised options, stock that has not vested, and equity
incentive plan awards for each named executive officer and directors as of
December 31, 2008.
 
 OUTSTANDING
      EQUITY AWARDS AT FISCAL YEAR-ENDOPTION
      AWARDS
                                  STOCK
      AWARDSName
                                  Number
      of
                                    Securities
                                    Underlying
                                    Unexercised
                                    Options
                                    (#)
                                    Exercisable
                                  Number
      of
                                    Securities
                                    Underlying
                                    Unexercised
                                    Options
                                    (#)
                                    Unexercisable
                                  Equity
                                    Incentive
                                    Plan
                                    Awards:
                                    Number
      of
                                    Securities
                                    Underlying
                                    Unexercised
                                    Unearned
                                    Options
                                    (#)
                                  Option
                                    Exercise
                                    Price
                                    ($)
                                  Option
                                    Expiration
                                    Date
                                  Number
                                    of
                                    Shares
                                    or
      Units
                                    of
                                    Stock
      That
                                    Have
                                    Not
                                    Vested
                                    (#)
                                  Market
                                    Value
                                    of
                                    Shares
                                    or
                                    Units
                                    of
                                    Stock
                                    That
                                    Have
                                    Not
                                    Vested
                                    ($)
                                  Equity
                                    Incentive
                                    Plan
                                    Awards:
                                    Number
                                    of
                                    Unearned
                                    Shares,
                                    Units
      or
                                    Other
                                    Rights
                                    That
      Have
                                    Not
                                    Vested
                                    (#)
                                  Equity
                                    Incentive
                                    Plan
                                    Awards:
                                    Market
      or
                                    Payout
                                    Value
      of
                                    Unearned
                                    Shares,
                                    Units
      or
                                    Other
                                    Rights
                                    That
                                    Have
      Not
                                    Vested
                                    (#)David
      Harrell
                                  100,000
      (1)
                                  0
                                  0
                                  $1.00
                                  March
      5, 2013
                                  0
                                  0
                                  0
                                  0Terry
      Hamilton
                                  150,000
      (1)
                                  0
                                  0
                                  $1.00
                                  March
      5, 2013
                                  0
                                  0
                                  0
                                  0Vernon
      Hartman
                                  50,000
      (1)
                                  0
                                  0
                                  $1.00
                                  March
      5, 2013
                                  0
                                  0
                                  0
                                  0Andrew
      Dahl
                                  20,000
      (1)
                                  0
                                  0
                                  $1.00
                                  March
      5, 2013
                                  0
                                  0
                                  0
                                  0Jay
      Pinney, MD
                                  25,000
      (1)
                                  0
                                  0
                                  $1.00
                                  March
      5, 2013
                                  0
                                  0
                                  0
                                  0Thomas
      Majerowicz
                                  20,000
      (1)
                                  0
                                  0
                                  $1.00
                                  March
      5, 2013
                                  0
                                  0
                                  0
                                  0
  (1)
                These
      options fully vested on the date of
grant.
  On March
5, 2008, the Board of Directors of the Company approved the issuance of stock
options to the above individuals.
 
 23
 Table of Contents
 
 Director
Compensation
 
 The table
below summarizes all compensation of our directors as of December 31,
2008.
 
 DIRECTOR
      COMPENSATIONName
                          Fees
      Earned or
                            Paid
      in
                            Cash
                            ($)
                          Stock
      Awards
                            ($)
                          Option
      Awards
                            ($)
                          Non-Equity
                            Incentive
                            Plan
                            Compensation
                            ($)
                          Non-Qualified
                            Deferred
                            Compensation
                            Earnings
                            ($)
                          All
                            Other
                            Compensation
                            ($)
                          Total
                            ($)Thomas
      E. Majerowicz
                          -
                          -
                          18,200(1)
                          -
                          -
                          -
                          18,200Terence
      J. Hamilton
                          -
                          -
                          136,500(2)
                          -
                          -
                          -
                          ?136,500
 
 (1)
                Represents
      20,000 options to purchase common stock valued at $0.91 per share with an
      exercise price of $1.00 per share. 20,000 options were outstanding at the
      end of our fiscal 2008 year. Please see our Management’s Discussion
      and Analysis for a discussion on the valuation of our common
      stock.(2)
                Represents
      150,000 options to purchase common stock valued at $0.91 per share with an
      exercise price of $1.00 per share. 150,000 options were outstanding
      at the end of our fiscal 2008 year. Please see our Management’s
      Discussion and Analysis for a discussion on the valuation of our common
      stock.
 
 24
 Table of Contents
  Item12.  Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder
Matters
 
 The
following table sets forth certain information known to us with respect to the
beneficial ownership of our Common Stock as of January 30, 2009, by (1) all
persons who are beneficial owners of 5% or more of our voting securities, (2)
each director, (3) each executive officer, and (4) all directors and executive
officers as a group. The information regarding beneficial ownership of our
common stock has been presented in accordance with the rules of the Securities
and Exchange Commission. Under these rules, a person may be deemed to
beneficially own any shares of capital stock as to which such person, directly
or indirectly, has or shares voting power or investment power, and to
beneficially own any shares of our capital stock as to which such person has the
right to acquire voting or investment power within 60 days through the exercise
of any stock option or other right. The percentage of beneficial ownership as to
any person as of a particular date is calculated by dividing (a) (i) the number
of shares beneficially owned by such person plus (ii) the number of shares as to
which such person has the right to acquire voting or investment power within 60
days by (b) the total number of shares outstanding as of such date, plus any
shares that such person has the right to acquire from us within 60 days.
Including those shares in the tables does not, however, constitute an admission
that the named stockholder is a direct or indirect beneficial owner of those
shares. Unless otherwise indicated, each person or entity named in the table has
sole voting power and investment power (or shares that power with that person’s
spouse) with respect to all shares of capital stock listed as owned by that
person or entity.
 
 Except as
otherwise indicated, all shares are owned directly and the percentage shown is
based on 12,262,958 shares of common stock issued and outstanding on December
31, 2008. Except as otherwise indicated, the address of each person named in
this table is c/o OptimizeRx Corporation, 407 Sixth Street, Rochester,
MI  48307.
 
 Title
      of class
                  Name
      and addressof
      beneficial owner (1)
                  Amount
      ofbeneficial
      ownership
                  Percentof
      class(2)Executive
      Officers & Directors:Common
                  David
      A. Harrell(3)
                  3,612,250
      shares
                  29.21%Common
                  Thomas
      E. Majerowicz(4)
                  242,750
      shares
                  2.00%Common
                  Terence
      J. Hamilton(5)
                  595,500
      shares
                  4.80%Total
      of All Directors and Executive Officers:
                  4,450,500
      shares
                  35.51%More
      Than 5% Beneficial Owners:Common
                  Richard
      J. Kraniak Roth IRA(6)
                  1,250,000
      shares
                  10.19%Common
                  Cypress
      Trust(7)
                  1,150,000
      shares
                  9.38%Common
                  Vicis
      Capital Master Fund(8)
                  9,500,000
      shares
                  77.47%
      (9)Common
                  Cypress
      Trust i/t/f Jillene Pinella
                  1,150,000
      shares
                  9.38%Total
      of All 5% Beneficial Owners:
                  13,050,000
      shares
                  60.34%
 
 (1)
                Includes
      stock option grants made to officers, directors, employees and/or
      consultants under the 2008 Company Stock Option Plan.  All
      options listed in this table were granted under the 2008 Stock Option
      Plan.(2)
                Applicable
      percentage ownership is based on 12,262,958 shares of common stock
      outstanding as of December 31, 2008, together with securities exercisable
      or convertible into shares of common stock within 60 days of December 31,
      2008 for each stockholder. Shares of common stock that are currently
      exercisable or exercisable within 60 days of January 30, 2009 are deemed
      to be beneficially owned by the person holding such securities for the
      purpose of computing the percentage of ownership of such person, but are
      not treated as outstanding for the purpose of computing the percentage
      ownership of any other person.(3)
                Includes
      options to purchase 100,000 shares of common stock at a price of $1.00 per
      share.(4)
                Includes
      options to purchase 20,000 shares of common stock at a price of $1.00 per
      share.(5)
                Includes
      options to purchase 150,000 shares of common stock at a price of $1.00 per
      share.(6)
                Richard
      J. Kraniak has voting and dispositive control over the shares held by
      Richard J. Kraniak Roth IRA, which is located at 101 West Long Lake,
      Bloomfield Hills, Michigan 48304.(7)
                Linwood
      C. Meehan III has voting and dispositive control over the shares held by
      Cypress Trust, which is located at 13750 W. Colonial Dr., Ste. 250-317,
      Winter Garden, Florida 34787.(8)
                Chris
      Phillips holds investment and dispositive power of the shares held by
      Vicis Capital Master Fund.  Shares beneficially
      owned represent an aggregate of 9,500,000 shares of Common Stock,
      consisting of (i) 3,500,000 shares issuable upon the conversion of the
      Series A Preferred Stock; and (ii) 6,000,000 shares issuable upon the
      exercise of the Series A Warrants. The selling stockholder has
      informed us that it is not a broker-dealer or affiliate of a
      broker-dealer.(9)
                Percentage
      of outstanding shares assumes full conversion and/or exercise of the
      Series A Preferred Stock and Series A Warrants,
      respectively.  The selling stockholders purchased the securities
      which are convertible into common shares.  The selling
      stockholders have contractually agreed to restrict their ability to
      convert their shares of Series A Preferred Stock into shares of common
      stock and to exercise their warrants to purchase shares of common stock
      such that the number of shares of common stock held by them in the
      aggregate and their affiliates after such conversion or exercise does not
      exceed 4.99% of the then issued and outstanding shares of common stock as
      determined in accordance with Section 13(d) of the Exchange Act.
      Accordingly, the number of shares of common stock set forth in the table
      for the selling stockholders exceeds the number of shares of common stock
      that the selling stockholders could own beneficially at any given time
      through their ownership of the Series A Preferred Stock and the warrants.
      In that regard, the beneficial ownership of the common stock by the
      selling stockholder set forth in the table is not determined in accordance
      with Rule 13d-3 under the Securities Exchange Act of 1934, as
      amended.
 
 25
 Table of Contents
  Item13.   Certain Relationships and Related
Transactions, and Director Independence
 
 Except as
follows, none of our directors or executive officers, nor any proposed nominee
for election as a director, nor any person who beneficially owns, directly or
indirectly, shares carrying more than 5% of the voting rights attached to all of
our outstanding shares, nor any members of the immediate family (including
spouse, parents, children, siblings, and in-laws) of any of the foregoing
persons has any material interest, direct or indirect, in any transaction since
the beginning of our last fiscal year on January 1, 2008 or in any presently
proposed transaction which, in either case, has or will materially affect
us.
 
 §
                We
      had personal loans from private investors to Richard Krankiak and Jillene
      Pinella, each consisting of $160,000. Both Mr. Krankiak and Ms. Pinella
      are shareholders each holding in excess of 5% of the issued and
      outstanding common stock of our company.  No interest accrued on
      either loan.  We paid each loan in full with proceeds from the
      September 8, 2008 private placement we conducted with Vicis Capital Master
      Fund.
 
 §
                We
      engaged David
      Harrellfor management services under a contract that paid him
      $48,000 for the period ended April 30, 2008 and $114,500 for the year
      ended December 31, 2008.  Mr. Harrellbecame an employee of our company beginning on June 1,
      2008.
 
 §
                Upon
      the transfer of the assets and liabilities from the Optimizer Systems, LLC
      to OptimizeRx Corporation, the LLC members were issued promissory notes
      totaling $253,750 under a dilution agreement for a portion of their
      interests in Optimizer Systems, LLC, except for David Harrell, our
      director.  Under the exchange agreement, dated April 8, 2008,
      Mr. Harrell is entitled to the same benefits other LLC members received,
      only against our company in exchange for waiving his anti-dilution
      rights.
 
 §
                There
      was a note to David Harrell for $4,000 and $24,000 at December 31, 2008
      and 2007, respectively.
 
 Item14.   Principal Accounting Fees and
Services
 
 Below is
the table of Audit Fees (amounts in US$) billed by our auditor in connection
with the audit of the Company’s annual financial statements for the years
ended:
 
 Financial
      Statements for the Year Ended December 31
                        Audit
      Services
                        Audit
      Related Fees
                        Tax
      Fees
                        Other
      Fees2008
                        $16,475
                        $0
                        $0
                        $02007
                        $11,927
                        $0
                        $0
                        $0
  26
 Table of
Contents
 
 PART IV
 
 Item15.   Exhibits, Financial Statements
Schedules
 
 Index to
Financial Statements Required by Article 8 of Regulation S-X:
 
 Audited
      Financial Statements:F-1
                                Report of Independent Registered Public Accounting
      FirmF-2
                                Consolidated Balance Sheets as of December 31,
      2008  and 2007;F-3
                                Consolidated Statements of Operations for the years ended
      December 31, 2008 and 2007, and the periods from inception to December 31,
      2008;F-4
                                Consolidated Statement of Stockholders’ Equity for period from
      inception to December 31, 2008;F-5
                                Consolidated Statements of Cash Flows for the year ended
      December 31, 2008 and 2007, and the periods from inception to December 31,
      2008;F-6
                                Notes to Consolidated Financial
    Statements
 
 Exhibit Number
                            Description3.1
                            Articles
      of Incorporation of OptimizeRx Corporation (the “Company”)1.3.2
                            Amended
      and Restated Bylaws of the Company1.3.3
                            Certificate
      of Designation, filed on September 5, 2008, with the Secretary of State of
      the State of Nevada by the Company1.10.1
                            Agreement
      Concerning the Exchange of Securities, dated on April 14, 2008 by and
      among RFID, Ltd., OptimizeRx Corporation and the Security Holders of
      OptimizeRx Corporation1.10.2
                            Securities
      Purchase Agreement, dated September 8, 2008, by and between the Company
      and Vicis Capital Master Fund (“Vicis”)1.10.3
                            Form
      of Series A Warrant1.10.4
                            Registration
      Rights Agreement, dated September 8, 2008, by and between the Company and
      Vicis1.10.5
                            Security
      Agreement, dated September 8, 2008, by and between the Company and
      Vicis1.10.6
                            Guaranty
      Agreement, dated September 8, 2008, by and between the Company and
      Vicis1.10.7
                            Guarantor
      Security Agreement, dated September 8, 2008, by and between the Company
      and Vicis1.10.8
                            Form
      of Partnership Agreement between the Company and Dendrite International,
      Inc. d/b/a/ Cegedim Dendrite, as entered into on June 24, 20081.10.9
                            Letter
      of Intent between the Company and Sudler & Hennessy, dated September
      30, 20081.21.1
                            List
      of Subsidiaries123.1
                            Consent of Maddox Ungar Silberstein, PLLC CPAs and
      Business Advisors31.1
                            Section 302 Certification of Principal Executive
      Officer31.2
                            Section 302 Certification of Principal Financial
      Officer32.1
                            Section 906 Certification of Principal Executive
      Officer
  1Incorporated
by reference to the Form S-1, filed by the Company with the Securities and
Exchange Commission on November 12, 2008.
 27
 Table of Contents
  SIGNATURES
 
 In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 OptimizeRx
Corporation
 
 By:
                /s/
      David LesterDavid
      Lester
                  Chief
      Executive Officer, Principal Executive Officer,
                  Chief
      Financial Officer, Principal Financial Officer, Principal Accounting
      Officer and DirectorApril
      15, 2009
 
 In accordance with Section 13 or 15(d)
of the Exchange Act, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates
indicated:
  By:
                /s/
      David Harrell
                By:
                /s/
      Terence J. HamiltonDavid
      Harrell
                  Director
                
                Terence
      J. Hamilton
                  DirectorApril
      15, 2009
                
                April
      15, 2009By:
                /s/
      Thomas
      E. MajerowiczThomas
      E. Majerowicz
                  DirectorApril
      15, 2009




28
 Table of Contents


MaddoxUngar
Silberstein, PLLCCPAs and Business
Advisors


Phone
(248) 203-0080


Fax (248)
281-0940


30600
Telegraph Road, Suite 2175


Bingham
Farms, MI 48025-4586


www.maddoxungar.com





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors


OptimizeRx
Corporation


Rochester,
Michigan





We have
audited the accompanying consolidated balance sheets of OptimizeRx Corporation,
as of December 31, 2008 and 2007, and the related consolidated statements of
operations, stockholders’ equity (deficit), and cash flows for the years then
ended and the period from January 31, 2006 (inception) to December 31,
2008.  These financial statements are the responsibility of the
Companies management. Our responsibility is to express an opinion on these
financial statements based on our audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Company has determined that it is not required to have, nor were we engaged to
perform, an audit of its internal control over financial
reporting.  Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, 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.  An
audit includes examining on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of OptimizeRx Corporation, as
of December 31, 2008 and 2007 and the results of their operations and cash flows
for the years then ended and for the period from January 31, 2006 (inception) to
December 31, 2008, in conformity with accounting principles generally accepted
in the United States.











/s/ Maddox Ungar
Silberstein, PLLC


Maddox
Ungar Silberstein, PLLC





Bingham
Farms, Michigan


April 10,
2009




F-1
 Table of Contents


OPTIMIZERxCORPORATION


(A
DEVELOPMENT STAGE COMPANY)


CONSOLIDATED
BALANCE SHEETS


AS
OF DECEMBER 31, 2008 AND 2007





ASSETS
                          2008
                          
                          2007Current
      AssetsCash
      and cash equivalents
                          $
                          2,502,656
                          
                          $
                          135,429Account
      receivable – employee
                          
                          1,346
                          
                          
                          0Prepaid
      expenses
                          
                          3,292
                          
                          
                          2,000Total
      Current Assets
                          
                          2,507,294
                          
                          
                          137,429Property
      and Equipment, net
                          
                          15,270
                          
                          
                          5,972Website
      Development Costs, net
                          
                          120,737
                          
                          
                          151,564TOTAL
      ASSETS
                          $
                          2,643,301
                          
                          $
                          294,965LIABILITIES
      AND STOCKHOLDERS’ EQUITY (DEFICIT)Current
      LiabilitiesAccounts
      payable
                          $
                          171,864
                          
                          $
                          43,216Accrued
      expenses
                          
                          41,933
                          
                          
                          18,926Notes
      payable – related parties
                          
                          4,000
                          
                          
                          277,750Total
      Current Liabilities
                          
                          217,797
                          
                          
                          339,892Long
      - term DebtNotes
      payable – related party
                          
                          0
                          
                          
                          50,000TOTAL
      LIABILITIES
                          
                          217,797
                          
                          
                          389,892STOCKHOLDERS’
      EQUITY (DEFICIT)Common
      stock, par $.001, 450,000,000 shares authorized, 12,222,958 shares issued
      and outstanding (10,300,000 – 2007)
                          
                          12,263
                          
                          
                          10,300Preferred
      stock, par $.001, 10,000,000 shares authorized, 35 shares issued and
      outstanding
                          
                          0
                          
                          
                          0Stock
      warrants
                          
                          16,905,280
                          
                          
                          0Paid
      in capital
                          
                          0
                          
                          
                          289,700Deficit
      accumulated during the development stage
                          
                          (14,492,039)
                          
                          
                          (394,927)Total
      Stockholders’ Equity (Deficit)
                          
                          2,425,504
                          
                          
                          (94,927)TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
                          $
                          2,643,301
                          
                          $
                          294,965


The
accompanying notes are an integral part of the financial
statements.


F-2
 Table of Contents


OPTIMIZERxCORPORATION


(A
DEVELOPMENT STAGE COMPANY)


CONSOLIDATED
STATEMENTS OF OPERATIONS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


FOR
THE PERIOD FROM JANUARY 31, 2006 (INCEPTION) TO DECEMBER 31, 2008





2008
                            
                            2007
                            
                            Inception
      through December 31, 2008GROSS
      REVENUES
                            $
                            83,686
                            
                            $
                            100,318
                            
                            $
                            184,004OPERATING
      EXPENSES
                            
                            1,591,738
                            
                            
                            456,259
                            
                            
                            2,232,308NET
      OPERATING LOSS
                            
                            (1,508,052)
                            
                            
                            (355,941)
                            
                            
                            (2,048,304)OTHER
      INCOME (EXPENSES)
                            
                            (2,740,801)
                            
                            
                            (5,525)
                            
                            
                            (2,746,326)NET
      LOSS BEFORE INCOME TAXES
                            
                            (4,248,853)
                            
                            
                            (361,466)
                            
                            
                            (4,794,630)PROVISION
      FOR INCOME TAXES
                            
                            0
                            
                            
                            0
                            
                            
                            0NET
      LOSS
                            $
                            (4,248,853)
                            
                            $
                            (361,466)
                            
                            $
                            (4,794,630)WEIGHTED
      AVERAGE NUMBER OF SHARES OUTSTANDING
                            
                            12,014,772
                            
                            
                            2,071,233
                            
                            
                            -NET
      LOSS PER SHARE
                            $
                            (0.35)
                            
                            $
                            (0.17)
                            
                            
                            -





The
accompanying notes are an integral part of the financial
statements.


F-3
 Table of Contents


OPTIMIZERxCORPORATION


(A
DEVELOPMENT STAGE COMPANY)


CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)


AS
OF DECEMBER 31, 2008





Common
      Stock
                                                        
                                                        Preferred
      Stock
                                                        
                                                        Stock
                                                        
                                                        Additional
                                                          Paid
      in
                                                        
                                                        Deficit
                                                                Accumulated
                                                                During the DevelopmentShares
                                                        
                                                        Amount
                                                        
                                                        Shares
                                                        
                                                        Amount
                                                        
                                                        Warrants
                                                        
                                                        Capital
                                                        
                                                        Stage
                                                        
                                                        TotalBalance,
      January 1, 2007
                                                        
                                                        0
                                                        
                                                        $
                                                        0
                                                        
                                                        
                                                        0
                                                        
                                                        $
                                                        0
                                                        
                                                        $
                                                        0
                                                        
                                                        $
                                                        0
                                                        
                                                        $
                                                        40,289
                                                        
                                                        $
                                                        40,289Member
      contributions
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        180,000
                                                        
                                                        
                                                        180,000Member
      distributions
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        (253,750)
                                                        
                                                        
                                                        (253,750)Common
      stock issued to LLC members
                                                        
                                                        10,000,000
                                                        
                                                        
                                                        10,000
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        (10,000)
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -Common
      stock issued for cash
                                                        
                                                        300,000
                                                        
                                                        
                                                        300
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        299,700
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        300,000Net
      loss for the year ended December 31, 2007
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        (361,466)
                                                        
                                                        
                                                        (361,466)Balance,
      December 31, 2007
                                                        
                                                        10,300,000
                                                        
                                                        $
                                                        10,300
                                                        
                                                        
                                                        0
                                                        
                                                        $
                                                        0
                                                        
                                                        $
                                                        0
                                                        
                                                        $
                                                        289,700
                                                        
                                                        $
                                                        (394,927)
                                                        
                                                        $
                                                        (94,927)





The
accompanying notes are an integral part of the financial
statements.


F-4
 Table of Contents


OPTIMIZERx
CORPORATION


(A
DEVELOPMENT STAGE COMPANY)


CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)


AS
OF DECEMBER 31, 2008 (CONTINUED)





Common
      Stock
                                                
                                                Preferred
      Stock
                                                
                                                Stock
                                                
                                                Additional
                                                  Paid
      in
                                                
                                                Deficit
                                                        Accumulated
                                                        During the
                                                        DevelopmentShares
                                                
                                                Amount
                                                
                                                Shares
                                                
                                                Amount
                                                
                                                Warrants
                                                
                                                Capital
                                                
                                                Stage
                                                
                                                TotalBalance,
      December 31, 2007
                                                
                                                10,300,000
                                                
                                                $
                                                10,300
                                                
                                                
                                                0
                                                
                                                $
                                                0
                                                
                                                $
                                                0
                                                
                                                $
                                                289,700
                                                
                                                $
                                                (394,927)
                                                
                                                $
                                                (94,927)Issuance
      of common stock for cash
                                                
                                                636,000
                                                
                                                
                                                636
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                635,364
                                                
                                                
                                                -
                                                
                                                
                                                636,000Outstanding
      common stock prior to reverse merger
                                                
                                                1,256,958
                                                
                                                
                                                1,257
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                (1,257)
                                                
                                                
                                                -
                                                
                                                
                                                -Common
      stock issued for services
                                                
                                                70,000
                                                
                                                
                                                70
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                69,930
                                                
                                                
                                                -
                                                
                                                
                                                70,000Issuance
      of stock options
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                333,004
                                                
                                                
                                                -
                                                
                                                
                                                333,004Preferred
      stock issued for cash
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                35
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                3,500,000
                                                
                                                
                                                -
                                                
                                                
                                                3,500,000Preferred
      stock issuance costs
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                (515,000)
                                                
                                                
                                                -
                                                
                                                
                                                (515,000)Stock
      warrants issued
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                14,160,000
                                                
                                                
                                                (4,311,741)
                                                
                                                
                                                (9,848,259)
                                                
                                                
                                                0Stock
      warrants issued for services
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                2,745,280
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                2,745,280Net
      loss for the year ended December 31, 2008
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                (4,248,853)
                                                
                                                
                                                (4,248,853)Balance,
      December 31, 2008
                                                
                                                12,262,958
                                                
                                                $
                                                12,263
                                                
                                                
                                                35
                                                
                                                $
                                                0
                                                
                                                $
                                                16,905,280
                                                
                                                $
                                                0
                                                
                                                $
                                                (14,492,039)
                                                
                                                $
                                                2,425,504





The
accompanying notes are an integral part of the financial
statements.


F-5
 Table of Contents


OPTIMIZERxCORPORATION


(A
DEVELOPMENT STAGE COMPANY)


CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


FOR
THE PERIOD FROM JANUARY 31, 2006 (INCEPTION) TO DECEMBER 31, 2008





2008
                            
                            2007
                            
                            Inception
      through December 31, 2008Cash
      Flows from Operating Activities:Net
      Loss
                            $
                            (4,248,853)
                            
                            $
                            (361,466)
                            
                            $
                            (4,794,630)Adjustments
      to Reconcile Net Loss to Net Cash Used in Operating
      Activities:Depreciation
      and amortization expense
                            
                            32,150
                            
                            
                            2,824
                            
                            
                            35,013Stock
      issued for services
                            
                            70,000
                            
                            
                            0
                            
                            
                            70,000Stock
      options issued for compensation
                            
                            333,004
                            
                            
                            0
                            
                            
                            333,004Stock
      warrants issued for services
                            
                            2,745,280
                            
                            
                            0
                            
                            
                            2,745,280Changes
      in Assets and Liabilities(Increase)
      in prepaid expenses and other current assets
                            
                            (2,638)
                            
                            
                            (2,000)
                            
                            
                            (4,638)Increase
      in accounts payable
                            
                            128,648
                            
                            
                            43,216
                            
                            
                            171,864Increase
      in accrued expenses
                            
                            23,007
                            
                            
                            13,793
                            
                            
                            41,933Net
      Cash Used in Operating Activities
                            
                            (919,402)
                            
                            
                            (303,633)
                            
                            
                            (1,402,174)Cash
      Flows from Investing Activities:Acquisitions
      of property and equipment
                            
                            (10,621)
                            
                            
                            (5,493)
                            
                            
                            (16,887)Website
      development costs
                            
                            0
                            
                            
                            (120,088)
                            
                            
                            (154,133)Net
      Cash Used in Investing Activities
                            
                            (10,621)
                            
                            
                            (125,581)
                            
                            
                            (171,020)Cash
      Flows from Financing Activities:Proceeds
      from issuance of notes payable
                            
                            320,000
                            
                            
                            70,000
                            
                            
                            394,000Repayments
      of notes payable – related parties
                            
                            (643,750)
                            
                            
                            0
                            
                            
                            (643,750)Member
      contributions
                            
                            0
                            
                            
                            180,000
                            
                            
                            404,600Net
      proceeds from common stock
                            
                            636,000
                            
                            
                            300,000
                            
                            
                            936,000Net
      proceeds from preferred stock
                            
                            2,985,000
                            
                            
                            0
                            
                            
                            2,985,000Net
      Cash Provided by Financing Activities
                            
                            3,297,250
                            
                            
                            550,000
                            
                            
                            4,075,850Net
      Increase in Cash and Cash Equivalents
                            
                            2,367,227
                            
                            
                            120,786
                            
                            
                            2,502,656Cash
      and Cash Equivalents – Beginning
                            
                            135,429
                            
                            
                            14,643
                            
                            
                            0Cash
      and Cash Equivalents – Ending
                            $
                            2,502,656
                            
                            $
                            135,429
                            
                            $
                            2,502,656Supplemental
      Cash Flow Information:Cash
      paid for interest
                            $
                            0
                            
                            $
                            4,453
                            
                            $
                            4,453Cash
      paid for income taxes
                            $
                            0
                            
                            $
                            0
                            
                            $
                            0Supplemental
      Disclosure of Noncash Investing and Financing Activities:Distributions
      paid through issuance of notes payable-related party
                            $
                            0
                            
                            $
                            253,750
                            
                            $
                            253,750





The
accompanying notes are an integral part of the financial
statements.


F-6
 Table of Contents


OPTIMIZERxCORPORATION


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
1:  Nature
of Operations




Optimizer
Systems, LLC was formed in the State of Michigan on January 31,
2006.  It then became a corporation in the state of Michigan on
October 22, 2007 and changed its name to OptimizeRx Corporation on October 22,
2007.  On April 14, 2008, RFID Ltd., a Colorado corporation,
consummated a reverse merger by entering into a share exchange agreement with
the stockholders of OptimizeRx Corporation, pursuant to which the stockholders
of OptimizeRx Corporation exchanged all of the issued and outstanding capital
stock of OptimizeRx Corporation for 1,256,958 shares of common stock of RFID
Ltd., representing 100% of the outstanding capital stock of RFID
Ltd.  As of April 30, 2008, RFID’s officers and directors resigned
their positions and RFID changed its business to OptimizeRx’s
business.    On April 15, 2008, RFID Ltd’s corporate name
was changed to OptimizeRx Corporation. On September 4, 2008, a migratory merger
was completed, thereby changing the state of incorporation from Colorado to
Nevada, resulting in the current corporate structure in which OptimizeRx
Corporation, a Nevada corporation is the parent corporation, and OptimizeRx
Corporation, a Michigan Corporation is a wholly-owned subsidiary (together
“OptimizeRx” and the “Company”).




The
wholly-owned subsidiary, OptimizeRx Corporation, is a development-stage website
publisher and marketing company that creates, promotes and fulfills custom
marketing and advertising programs.  The Company help patients better
afford and manage their rising healthcare costs.  In addition, the
Company also provides unique advertising programs to the pharmaceutical and
healthcare industries.  The Company’s websites provide the following
services:  (i) OptimizeRx provides patients an opportunity to
centrally review and participate in prescription and healthcare savings/support
programs; (ii) OFFERx provides a platform to allow manufacturers to create,
promote and fulfill new patient offer programs in over 64,000 pharmacies; and
(iii) ADHERxE provides a platform that allows manufacturers to engage and
monitor patients each month in exchange for activation of their monthly co-pay
coupons.




Note
2:  Significant Accounting
Policies





This
summary of significant accounting policies of the Company is presented to assist
in understanding the company’s financial statements.  The financial
statements and notes are representations of the company’s management, who is
responsible for their integrity and objectivity.  These accounting
policies conform to generally accepted accounting principles and have been
consistently applied to the preparation of the financial
statements.





Basis of
Accounting


The
accompanying financial statements have been prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.  The Company is currently a development
stage enterprise.  All losses accumulated since the inception of
business have been considered as part of its development stage
activities.




Principles
of Consolidation


The
financial statements reflect the consolidated results of OptimizeRx Corporation
(a Nevada corporation) and its wholly owned subsidiary OptyimizeRx Corporation
(a Michigan corporation).  All material inter-company transactions
have been eliminated in the consolidation.





Cash and Cash
Equivalents


For
purposes of the accompanying financial statements, the Company considers all
highly liquid instruments with an initial maturity of three months or less to be
cash equivalents.





F-7
 Table of Contents


OPTIMIZERx
CORPORATION


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
2:  Significant Accounting Policies (continued)





Fair Value of Financial
Instruments


The fair
value of cash, accounts receivable and accounts payable approximates the
carrying amount of these financial instruments due to their short-term nature.
The fair value of long-term debt, which approximates its carrying value, is
based on current rates at which the Company could borrow funds with similar
remaining maturities.





Property and
Equipment


The
capital assets are being depreciated over their estimated useful lives using the
straight line method of depreciation for book purposes. As of October 18, 2007,
the Company acquired the majority of its capital assets at the lower market cost
from Optimizer Systems, LLC.





Research and
Development


The
Company’s key members are part of a continual research and development team and
monitor new technologies, trends, services and partnerships that can provide the
Company with additional services, value to healthcare and pharmaceutical
industries and to the patients we serve.





The
Company is currently in a launch phase with ADHERxE to allow pharmaceutical and
healthcare manufacturers unique ways to engage and monitor patients each month
in exchange for activation of their next savings offer.





The
Company seeks to educate team members through understanding of all market
dynamics that have the potential to affect business both short term and long
term.  The primary goal is to help patients better afford and access
the medications their doctors prescribe, as well as other healthcare products
and services they need. Based on this, the Company continually seeks better ways
to meet this mission through technology, better user experiences and new ways to
engage industries to provide new support program for patients needing their
products.  The Company is always seeking new services and solutions to
offer.  At this time, the three current platforms provide robust
opportunities and growth during the next five years.





Revenue
Recognition


Substantially
all revenue is recognized when it is earned. All revenues are generated through
the Company’s website activities.  The Company’s processes are
monitored by third parties who collect revenues from clients on a per activity
basis and report and forward the revenue to the Company’s account.





Management
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 depreciable lives of such assets and the allowance for doubtful
accounts receivable.  Actual results could differ from those
estimates.





F-8
 Table of Contents


OPTIMIZERx
CORPORATION


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
2:  Significant Accounting
Policies (continued)





Recently Issued Accounting
Guidance


The
Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company’s results of
operation, financial position or cash flow.





Concentration of Credit
Risks


The
Company maintains its cash 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.





Earnings per Common and
Common Equivalent Share


The
computation of basic earnings per common share is computed using the weighted
average number of common shares outstanding during the year. The computation of
diluted earnings per common share is based on the weighted average number of
shares outstanding during the year plus common stock equivalents which would
arise from the exercise of warrants outstanding using the treasury stock method
and the average market price per share during the year. Options warrants, and
convertible preferred stock which are common stock equivalents are not included
in the diluted earnings per share calculation for 2008 and 2007, respectively,
since their effect is anti-dilutive.





Note
3:  Property
and Equipment





Property
and equipment is recorded at cost and consisted of the following at December
31:





2008
                        
                        2007Computer
      equipment
                        $
                        12,594
                        
                        $
                        1,974Furniture
      and fixtures
                        
                        4,293
                        
                        
                        4,293Subtotal
                        
                        16,887
                        
                        
                        6,267Accumulated
      depreciation
                        
                        (1,617)
                        
                        
                        (295)Property
      and equipment, net
                        $
                        15,270
                        
                        $
                        5,972





Depreciation
expense was $1,322 and $256 for the years ended December 31, 2008 and 2007,
respectively.




F-9
 Table of Contents


OPTIMIZERx
CORPORATION


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
4:  Website
Development Costs





The
Company has capitalized costs in developing their website which consisted of the
following at December 31:





2008
                          
                          2007Website
      costs
                          $
                          154,133
                          
                          $
                          154,133Accumulated
      amortization
                          
                          (33,396)
                          
                          
                          (2,569)Website
      development costs, net
                          $
                          120,737
                          
                          $
                          151,564





The
Company began amortizing the website costs, using the straight-line method over
the estimated useful life of 5 years, once it was put into service in December
of 2007.





Amortization
expense was $30,827 and $2,569 for the years ended December 31, 2008 and 2007,
respectively.





Note
5:  Accrued
Expenses





Accrued
expenses consisted of the following at December 31:





2008
                        
                        2007Accrued
      interest
                        $
                        1,683
                        
                        $
                        1,072Accrued
      payroll taxes
                        
                        24,091
                        
                        
                        0Accrued
      expenses
                        
                        6,159
                        
                        
                        10,354Accrued
      audit fees
                        
                        10,000
                        
                        
                        7,500Total
      accrued expenses
                        $
                        41,933
                        
                        $
                        18,926





Note
6:  Notes
Payable – Related Party





Notes payable – related party consisted
of the following at December 31:





2008
                          
                          2007Note
      payable – Dante Panetta
                          $
                          0
                          
                          $
                          50,000Note
      payable – David Harrell
                          
                          4,000
                          
                          
                          24,000Notes
      payable – LLC members
                          
                          0
                          
                          
                          253,750Less:
      current portion
                          
                          (4,000)
                          
                          
                          (277,750)Long
      –Term Debt
                          $
                          0
                          
                          $
                          50,000





The note
payable to David Harrell is due on demand and bears 9% interest.





The note
payable to Dante Panetta is non-interest bearing and was due within five days of
the Company raising $1,000,000 of additional capital.  The note was
paid off during 2008.





The notes
payable to the LLC members were created with a dilution agreement on October 18,
2007 and were non-interest bearing.  The notes were paid off in the
first quarter of 2008.





F-10
 Table of Contents


OPTIMIZERx
CORPORATION


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
7:  Commitments and
Contingencies





The
company leases its offices for $2,500 a month and has signed a lease through May
31, 2009 with an option for a six month renewal.





The
following is a schedule of future minimum rents:





December
      31, 2009
                                $
                                30,000December
      31, 2010
                                
                                27,500Total
      Lease Obligation
                                $
                                57,500





Note
8:  Dividend
Distribution





The
Company recorded a one-time, non-cash deemed dividend on October 18, 2007 of
$33,461. This dividend resulted from the continuous efforts of acquiring assets
from Optimizer Systems, LLC.  Through this dividend, the Company
acquired all assets and liabilities of the LLC.





Note
9:  Common
Stock





OptimizeRx
Corporation has 450,000,000 shares of $.001 par value common stock
authorized as of December 31, 2008. There were 12,262,958 and 10,300,000 common
shares issued and outstanding at December 31, 2008 and 2007,
respectively.





During
2008, 636,000 shares of common stock were sold for
cash.  Additionally, 70,000 shares were issued as compensation for
services during the year ended December 31, 2008.  Pursuant to the
share exchange agreement with RFID Ltd., 100% of OptimizeRx’s stock was
exchanged for 10,664,000 shares of RFID’s common stock.  At the time of the
share exchange, RFID had an additional 1,256,958 shares of common stock issued
and outstanding.





Note
10: Preferred
Stock





During
the year ended December 31, 2008, 35 preferred shares were issued for
$3,500,000.  Issuance costs totaled $515,000 resulting in net proceeds
of $2,985,000. The 35 shares are convertible to 3,500,000 shares of common stock
and bear a ten percent cumulative dividend.  In addition, there was a
warrant issued to purchase 6,000,000 shares of common stock at an exercise price
of $2.00 for a period of 7 years.




The
holders of the preferred stock are entitled to semi-annual dividends payable on
the stated value of the Series A preferred stock at a rate of ten percent per
annum, which shall be cumulative, and accrue daily from the issuance date. The
dividends may be paid in cash or shares of the corporation’s common stock at
management’s discretion.  If after the conversion eligibility date,
the market price for the common stock for any ten consecutive trading days in
which the stock trades for over two dollars per share and trading exceeds
100,000 shares per day, the the preferred shareholders can be required to
convert their shares to common stock.  Each share of Series A
preferred stock shall also be convertible at the option of the holder into that
number of shares of common stock of the corporation at the stated value of such
share at a one dollar conversion price.




F-11
 Table of Contents


OPTIMIZERx
CORPORATION


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
10: Preferred Stock
(continued)





The
holder may cause this conversion at the time the shares are eligible for resale
by the holder.  The conversion price is subject to adjustment as
hereinafter provided, at any time, or from time to time upon the terms and in
the manner hereinafter set forth in the shareholder agreement. The shares are
required to be redeemed on September 5, 2010.  As of December 31,
2008, the cumulative dividend was $110,274, however, it has not yet been
declared.





Note 11:Stock-Based
Compensation




Effective
January 1, 2006, the Company adopted SFAS No. 123 (revised), "Share-Based
Payment: (SFAS 123(R)) utilizing the modified prospective approach. Prior to the
adoption of SFAS 123(R) we accounted for stock option grant in accordance with
APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and accordingly, recognized compensation expense for stock
option grants using the intrinsic value method.





Under the
modified prospective approach, SFAS 123(R) applies to new awards and to awards
that were outstanding on January 1, 2006 that are subsequently modified,
repurchased or cancelled. Under the modified prospective approach, compensation
cost recognized in the first quarter of fiscal 2006 includes compensation cost
for all share-based payments granted prior to, but not yet vested as of January
1, 2006 based on the grant-date fair value estimated in accordance with the
original provisions of SFAS 123, and compensation cost for all share-based
payments granted subsequent to January 1, 2006 based on the grant-date fair
value estimated in accordance with the provisions of SFAS 123(R). For all
quarters after the first quarter of fiscal 2006, compensation costs recognized
will include the compensation costs for all share-based payments granted based
on the grant date fair value estimated in accordance with the provisions of SFAS
123(R).




The fair
value of each option granted in 2008 is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions: dividend yield of 0%, expected volatility of 150%, risk-free
interest rate of 2.59% and expected life of 60 months. The Company recognized
expense of $333,004 on the 365,000 options issued on March 5, 2008.





Note
12: Stock
Warrants





During
the year ended December 31, 2008, OptimizeRx Corporation issued
6,000,000 common stock warrants with an exercise price of $2.00 and a term of
seven years in connection with the preferred stock issuance.  These
warrants were valued using the Black-Scholes pricing model at
$14,160,000.  The warrants are treated as a re-distribution of equity
and are shown as a component of equity.





During
the year ended December 31, 2008, OptimizeRx Corporation issued 1,059,500
common stock warrants were issued in exchange for services.  These
warrants were issued with exercise prices of either $1.00 or $2.00 and a term of
five years.  The Black-Scholes method was used to value these warrants
at $2,745,280 and the warrants are being expensed during 2008.





F-12
 Table of Contents


OPTIMIZERx
CORPORATION


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
12: Stock Warrants
(continued)




The fair
value of each warrant issued in 2008 was calculated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions: dividend yield of 0%, expected volatility of 6%, risk-free interest
rate of 1.85% and expected life of 60 - 84 months.





Note
13:  Related
Party Transactions




The
Company had engaged an officer of the company for management services under a
contract that paid him $48,000 for the period ended April 30, 2008 and $114,500
for the year ended December 31, 2008.  The officer became an employee
of the Company beginning on May 1, 2008.





Upon the
transfer of the assets and liabilities from the LLC to the corporation, the LLC
members were issued promissory notes totaling $253,750 under a dilution
agreement for a portion of their interests in Optimizer Systems,
LLC.




The
company had a $50,000 note payable to a shareholder (see note 6) that was repaid
during the year ended December 31, 2008.  In addition there was a note
to an officer of the company (see note 6) for $4,000 and $24,000 at December 31,
2008 and 2007, respectively.





Note
14: Other Income
(Expenses)





Other
income (expenses) consisted of the following at December 31:





2008
                        
                        2007Interest
      income
                        $
                        5,090
                        
                        $
                        0Interest
      expense
                        
                        (611)
                        
                        
                        (5,525)Stock
      warrant expense
                        
                        (2,745,280)
                        
                        
                        0Total
      other income (expenses)
                        $
                        (2,740,801)
                        
                        $
                        (5,525)





Note
15: Income
Taxes





For the
period ended December 31, 2008, the Company incurred a net loss of approximately
$4,250,000 and therefore has no tax liability. The company began operations in
2007 and has previous net operating loss carry-forwards of
$200,000.  The cumulative loss will be carried forward and can be used
through the year 2028 to offset future taxable income.  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.





F-13
 Table of Contents


OPTIMIZERx
CORPORATION


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008





Note
15: Income Taxes
(continued)





The
cumulative tax effect at the expected rate of 34% of significant items
comprising our net deferred tax amount is as follows:





2008
                        
                        2007Deferred
      tax asset attributable to:Net
      operating loss carryover
                        $
                        1,513,000
                        
                        $
                        68,000Valuation
      allowance
                        
                        (1,513,000)
                        
                        
                        (68,000)Net
      deferred tax asset
                        $
                        -
                        
                        $
                        -





F-14