Source: https://investors.optimizerx.com/node/6906/html
Timestamp: 2020-02-21 18:32:18
Document Index: 521815061

Matched Legal Cases: ['Application No. 611277', 'Application No. 61', 'Application No. 61', 'Application No. 61', 'Application No. 61', 'Application No. 61', 'Application No. 61', 'Application No. 12', 'Application No. 61', 'Application No. 12', 'Application No. 61', 'Application No. 12']

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. $10,991,495
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 14,192,496 common shares as of March 12, 2013
The 2012 year showed continued growth in our company with an 85% increase in revenues of $2,048,699 in 2012, as compared with our prior year. Our net loss also improved from $1,453,977 in 2011 to $364,345 in 2012.
For the fourth quarter of 2012,we more than doubled growth in revenues - from $325,910 in 2011 to $750,719 in 2012. Our bottom line significantly improved with net income of $118,993 in the fourth quarter of 2012, as compared with a net loss of $93,143 in the fourth quarter of 2011.
Our recent success is largely attributable to leveraging our market position to further acquire more brands and electronic health platforms to integrate eCoupon support within participating physician’s electronic prescribing workflow.
We stuck out this year with a solid message to the pharmaceutical industry that was threefold:
1) SampleMD can deliver promotional scale to physicians at point of prescription through interoperability with multiple disparate electronic health platforms;
2) Electronic health platforms (EMRs, eRx, Patient Portals) are the new digital frontier to reaching physicians and patients as opposed to external web sites that have been traditionally the focus of their non-rep marketing; and
3) The ability of our SampleMD solution to integrate within multiple application platforms while adhering to compliance and regulatory requirements by defining and utilizing industry standards was a powerful message to the industry.
Throughout 2012, we promoted brand support programs, including eVouchers, eCopay Coupons and Patient Education, from 20 major pharmaceutical and medical manufacturers. We have also seen our client base increase with new programs initiated with Eli Lilly, Roche Diagnostics, Pfizer, Daiichi Sankyo, Roche Pharmaceutical, Alcon Laboratories and many others. The industry acknowledged SampleMD leadership in the marketplace as we established new partnerships with DrFirst, and new working relationships with Adheris and Krames Staywell.
Additionally, we launched SampleMD’s unique “dashboard reporting” portal to our clients which enables our clients and platform partners to monitor their programs in real time and evaluate performance of individual channels and overall program effectiveness.
Our SampleMD solution also went live in the Allscripts PRO EMR solution. However, automated access to the additional 25,000 Allscripts PRO based clinicians has been limited due to doctors having to actively turn the eCoupon feature on. However, we are working with Allscripts senior management to internally remedy this obstacle because of the clear benefits to the healthcare provider, its patients and the payors looking to improve overall healthcare outcomes. We anticipate Allscripts PRO moving to an “opt-out” feature to turn the eCoupon tool off as opposed to turning it on, thus automating access to these providers in the second quarter of 2013.
We have begun the integration for SampleMD into HealthTronics, the largest Urology EMR in the country, which serves over 2,200 doctors. This specialty network is very significant to some of our current coupons for brands like Cialis and Vesicare, as well as positioning us to acquire other new brands and manufacturers who seek to reach these types of specialists. SampleMD is also in direct discussion with some of the largest remaining EMRs and ePrescribing platforms, along with the largest hospital and health systems.
To further escalate our value and growth, we have formalized a partnership agreement with one of the premier and most respective brands in the industry: PDR, also known and Physicians Desk Reference. This allows both companies to leverage synergistic strengths to offer more solutions and reach to the pharmaceutical industry, as well as more value to the electronic health records (EMR/EHR) platforms. SampleMD will be PDR’s eCoupon and Rep invite platform, and PDR will enable expansion of SampleMD’s reach to additional EMRs and directly to physicians' offices via a PDR branded downloadable desktop application of the SampleMD solution.
Additionally, SampleMD has entered into a partnership and licensing agreement with LDM Group, a leading provider of patient support. In addition to settling the legal issues between our companies and giving us full licensing of their patents, LDM allows us to enter into a major new promotional channel: promotion at point of pharmacy. We will be LDMs exclusive eCoupon partner to offer both savings and educational support right when a patient receives their prescription fill.
Adding strength to our organization, we have re-aligned our management team and added Mr. Shad Stastney as the new Chairman and Chief Executive Officer. Mr. Stastney, 43, has served as an active member of our board since 2009 and has provided us with keen insights and guidance. Mr. Stastney is a founding partner of Vicis Capital LLC, which managed assets that peaked at $5 billion dollars. He graduated from the University of North Dakota in 1990 with a B.A. in Political Theory and History, and from Yale Law School in 1994 with a J.D. focusing on corporate and tax law.
From 1994 to 1997, he worked as an associate at Cravath, Swaine and Moore in New York, where he worked in the tax and corporate group, focusing on derivatives. In 1997, he joined CSFB's then-combined convertible/equity derivative origination desk. From 1998 through 2001, he worked in CSFB's corporate equity derivatives origination group, eventually becoming a Director and Head of the Hedging and Monetization Group, a joint venture between derivatives and equity capital markets. In 2001, he jointly founded Vicis Capital Management, LP, and in 2004, he jointly founded Vicis Capital LLC.
Mr. Harrell became Vice-Chairman and will be responsible for developing corporate strategy and product innovation. David Lester, will continue to manage company operations as Chief Operating Officer.
In summary, we remain committed to working with top organizations to provided better affordability and access to healthcare for the patients we serve. To achieve this, we will continue to work with leading providers in partnering to provide simple to use solutions. As compliance and regulatory requirements (i.e. meaningful use) continue to surround healthcare providers, OptimizeRx continues through its partnerships and internal R&D to become the “HUB” for providing access to these ease of use solutions.
With these continued efforts, we believe that SampleMD continues to be regarded as the innovative industry leader and setting the standards within this new frontier of digital EMR solution marketing for patient care.
SampleMD is a revolutionary virtual "Patient Support Center" that allows doctors and staff to access a universe of sample vouchers, co-pay coupons and the fulfillment and adjudication of claims directly from their or their EMR and/or e-Prescribe systems to search, print or electronically dispense drug samples , co-pay coupons and patient educational support through a national network of pharmacies. SampleMD eliminates the need for physicians to manage and store physical drug samples by offering a more convenient and efficient way to allocate, administer and track samples and co-pay savings provided to their patients.
We continue to extend our marketing efforts to build both brand and capabilities awareness to the market. As mentioned above, we actively participated in industry and partner events such as exlPharma and the ACE – Allscripts Users Conference. During the course of the year, we also initiated and delivered successful email marketing campaigns as well as successful public relations and press release communications initiatives. we have enlisted a successful advertising campaign through Pharma Exec magazine that netted several responses and qualified leads.
We plan to continue these efforts and with our marketing partners, we intend to continue to promote OPTIMIZERx and SampleMD primarily through the following:
§ Industry and Partner event
Email Comapigns
§ Public Relations Campaigns
§ Physician Offices
§ Direct to Consumer Marketing
§ Trade Media Advertising
§ Pharmacy Partners
§ Physician Organizations and Associations
We also work through our existing and new partners, including Dr First, Allscripts and PDR, to promote our services.
We are keen on the opinions and input that we gain from all stake holders by which our products and solutions cross. From the prescribing clinicians that utilize our solutions to add value to the patients they serve, to the partners we use to leverage their channels for distribution and promotion of the services, we are able to greatly assist the pharmaceutical manufacturing clients that depend on our solutions to increase their brand awareness and assist patients in need of their offerings. This “Voice of the Stake Holder” is a mantra that we leverage in analyzing industry trends and market shifts and identifying enhancements and new offerings through our SampleMD™ solution. This effort involves all of our officers and directors as part of our continual research development team while monitoring 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 they serve.
We have developed two new key functions involved with allowing a live chat or conversation between the health provider and product manufacturer or service, as well as a one click way to request a representative visit. This addresses major access barriers that limit doctors interaction with the manufacturer and allows the health system or provider to access needed information when they want it.
Last year we added a Director of Technology and Director of Software Development to strengthen our core technical team while further developing our core portfolio products and solutions, and begin development of new solutions offerings to expand our solutions offerings footprint. We also continue to work with the Engineering and Information Technology department of Oakland University in Rochester Michigan. As the University has opened the doors of its new medical school, it also brings highly skilled technology and application developers whom posses a solid knowledge of medical industry IT requirements.
- 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.
- 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.
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., 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.
As of December 31, 2012, we had 11 full-time employees and 2 part time / co-op employees in addition to 3 contracted programmers through our established a relationship with Oakland University for technical and programming resources.
On November 5, 2012, LDM Group, LLC commenced an action against us in the United States District Court for the Eastern District of Missouri, Eastern Division. The complaint alleges that we infringed on a patent issued on February 21, 2012 in favor of LDM. LDM alleges that its patent is an invention of a method for making available targeted content to a prescription medication patient while the patient is still in the physician’s office. According to LDM, our Integrated SampleMD uses systems and methods that perform the elements of the LDM patent and, therefore, infringes on its patent.
We intend to vigorously defend the action brought by LDM.
On February 6, 2013, we filed a Complaint for Patent Infringement against Physicians Interactive Inc., Physicians Interactive Holdings,Inc. and Skyscape.com, in which we allege that one or more of those entities has infringed on United States Patent No. 8,341,015. As of March 11, 2013, no further action has occurred in that case.
Our common stock is quoted under the symbol “OPRX” on the OTCBB operated by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the OTCQB operated by OTC Markets Group, Inc. Few market makers continue to participate in the OTCBB system because of high fees charged by FINRA. Consequently, market makers that once quoted our shares on the OTCBB system may no longer be posting a quotation for our shares. As of the date of this report, however, our shares are quoted by several market makers on the OTCQB. The criteria for listing on either the OTCBB or OTCQB are similar and include that we remain current in our SEC reporting. Our reporting is presently current and, since inception, we have filed our SEC reports on time.
December 31, 2011 1.37 0.25
September 30, 2011 1.44 0.21
June 30, 2011 1.08 0.45
March 31, 2011 1.09 0.60
On March 11, 2013, the last sales price per share of our common stock was $1.25.
As of March 12, 2013, we had 14,232,496 shares of our common stock issued and outstanding, held by 310 shareholders of record, not including those held in street name.
We are currently in the process of establishing a new stock incentive plan for employees, directors and consultants that provide valuable services to our company. We expect to have the plan adopted by our board of directors in the coming months.
Equity Compensation Plans as of December 31, 2012
Equity compensation plans not approved by security holders 13,411,100 2.14 -
Total 13,411,100 2.14 -
The information set forth below describes our issuance of securities without registration under the Securities Act of 1933, as amended, during the year ended December 31, 2012, that were not previously disclosed in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K:
On October 12, 2012, we issued a five year option to a consultant to purchase 25,000 shares of our common stock at an exercise price of $1.58 per share.
Our total revenue reported for year ended December 31, 2012 was $2,048,699, an increase from $1,111,520 from the prior year.
Our increased revenue for the year ended December 31, 2012 as compared with the prior year is a result of the continued viability of our SampleMD solution and the setup and integration fees for pharmaceutical manufacturers whom are participating within this offering.
Operating expenses increased to $2,413,044 for the year ended December 31, 2012 from $2,565,497 for the year ended December 31, 2011. Our major expenses for the year ended December 31, 2012 were advertising expenses of $57,218, professional fees of $263,396, consulting expenses of $19,148, salaries, wages, and benefits of $1,184,367, rent of $62,362, depreciation and amortization of $187,104, stock based compensation of $285,605 and general and administrative expenses of $353,844. In comparison, our operating expenses for the year ended December 31, 2011 were advertising expenses of $544,071, professional fees of $342,503, consulting expenses of $185,174, salaries, wages, and benefits of $864,655, rent of $37,868, depreciation and amortization of $145,315 and general and administrative expenses of $445,911.
Our expenses decreased in 2012 as compared with 2011 largely as a result of decreased advertising costs, professional fees, consulting expenses and general and administrative costs. .
Other income was $369 for year ended December 31, 2012 an increase from other expenses of $666,785 for same period ended 2011. We had $958,641 in interest expenses in 2011 over only $100 in 2012, which mostly accounted for the difference.
Net loss for the year ended December 31, 2012 was $363,976, compared to net loss of $ $2,120,762 for the year ended December 31, 2011.
Notwithstanding the net loss for the year, we believe that our company is starting to show real signs of improvement. In our fourth quarter 2012, we had revenues of $750,719, as compared to revenues of $325,910 for our fourth quarter 2011.
As of December 31, 2012, we had total current assets of $969,219 and total assets in the amount of $2,175,404. Our total current liabilities as of December 31, 2012 were $679,945. We had working capital of $289,274 as of December 31, 2012.
Operating activities used $624,033 in cash for the year ended December 31, 2012. Our net loss of $363,976 along with $282,019 in accounts payable, $60,000 in accrued expenses, $151,851 in accounts receivable, and $281,353 in deferred revenue were the primary components of our negative operating cash flow, offset mainly by $180,640 in stock-based compensation, $187,104 in depreciation and amortization and $50,874 in prepaid expenses.
Investing activities used $50,870 during the year ended December 31, 2012 largely as a result of website development costs.
On September 16, 2011, we entered into a Securities Purchase Agreement with Vicis Capital Master Fund for sale of up to 50 shares of our Series B Preferred Stock and warrants to purchase up to 3,333,334 shares of our common stock with an exercise price of $3.00 per share.
We have sold 15 shares of Series B Preferred Stock and a warrant to purchase 1,000,000 shares of our common stock at the above exercise price for $1,500,000. This money was used to pay off a promissory note we had with Physicians Interactive and the balance is for working capital.
Our financing deal with Vicis has lapsed according to the terms of the Securities Purchase Agreement. However, we are in discussions with Vicis, who we feel is a committed financial partner, to address our capital needs as we continue to generate revenues and our business expands. There is no written agreement in place for such financing, but we will update our disclosures if and when such financing becomes available.
On January 10, 2013, we entered into a Securities Redemption Option Agreement with Vicis that provides us with an option to purchase all of the outstanding shares and derivative securities held by Vicis for total payment of nine million dollars ($9,000,000). The shares and derivative securities include the Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Common Stock, and warrants to purchase shares of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock held by Vicis. Our option expires on December 31, 2013 and may be extinguished if Vicis sells its securities before we exercise our option.
As of December 31, 2012 with the current level of financing and cash on hand, we have sufficient cash to operate our business at the current level for the next twelve months but insufficient cash to achieve our business goals unless we: a) realize cash revenues on sales generated; and/or b) receive financing from Vicis. We are uncertain what type of financing we will need as we continue to ramp up our revenue stream. As mentioned, we are continually in contact with Vicis about our financing needs and hope to have something in place if we need more cash.
F-2 Consolidated Balance Sheets as of December 31, 2012 and 2011;
F-3 Consolidated Statements of Operations for the years ended December 31, 2012 and 2011;
F-4 Consolidated Statement of Stockholders’ Equity as of December 31, 2012;
F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2012 and 2011; and
We have audited the accompanying consolidated balance sheets of OptimizeRx Corporation as of December 31, 2012 and 2011, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
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, 2012 and 2011 and the results of their operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Cash and cash equivalents $ 284,263 $ 959,166
Accounts receivable 616,798 471,870
Prepaid expenses 68,158 119,032
Total Current Assets 969,219 1,550,068
Property and equipment, net 20,685 23,931
Patent rights, net 793,236 847,941
Web development costs, net 387,215 465,498
Total Other Assets 1,185,500 1,318,488
TOTAL ASSETS $ 2,175,404 $ 2,892,487
Accounts payable - trade $ 54,693 $ 336,712
Accrued expenses 6,000 66,000
Deferred revenue 49,252 330,605
Total Liabilities 679,945 1,303,317
Common stock, $.001 par value, 500,000,000 shares authorized, 14,232,496 and 14,192,496 shares issued and outstanding 14,232 14,192
Stock warrants 20,058,051 20,826,934
Additional paid-in-capital 6,164,666 5,125,558
Accumulated deficit (24,741,490 ) (24,377,514 )
Total Stockholders' Equity 1,495,459 1,589,170
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,175,404 $ 2,892,487
Sales $ 2,048,699 $ 1,111,520
TOTAL REVENUE 2,048,699 1,111,520
Operating expenses (See note 17) 2,413,044 2,565,497
TOTAL EXPENSES 2,413,044 2,565,497
LOSS FROM OPERATIONS (364,345 ) (1,453,977 )
Interest income 469 1,290
Other income -0- 290,566
Interest expense (100 ) (958,641 )
TOTAL OTHER INCOME (EXPENSE) 369 (666,785 )
LOSS BEFORE PROVISION FOR INCOME TAXES (363,976 ) (2,120,762 )
NET LOSS $ (363,976 ) $ (2,120,762 )
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED 14,215,884 13,921,669
NET LOSS PER SHARE: BASIC AND DILUTED $ (0.03 ) $ (0.15 )
Common Stock Preferred Stock Stock Paid-in Accumulated Stockholders’
Shares Amount Shares Amount Warrants Capital Deficit Equity
Balance, January 1, 2011 13,606,676 $ 13,607 50 $ -0- $ 20,281,328 $ 3,355,615 $ (21,756,752 ) $ 1,893,798
Outstanding share adjustment 10,000 10 (10 ) -0-
for preferred dividends 475,820 475 499,525 (500,000 ) -0-
for settlement 100,000 100 114,900 115,000
equity issuance costs (172,500 ) (172,500 )
Issuance of preferred stock and stock warrants 15 644,540 855,460 1,500,000
for consulting 184,149 184,149
to employees 189,485 189,485
Cancellation of stock warrants:
for settlement (98,934 ) 98,934 -0-
Net loss for the year (2,120,762 ) (2,120,762 )
Balance, December 31, 2011 14,192,496 14,192 65 — $ 20,826,934 5,125,558 (24,377,514 ) 1,589,170
Net loss for the year (363,976 ) (363,976 )
Balance, December 31, 2012 14,232,496 $ 14,232 65 $ -0- $ 20,058,051 $ 6,164,666 $ (24,741,490 ) $ 1,495,459
Net loss for the year $ (363,976 ) $ (2,120,762 )
Depreciation and amortization 187,104 145,315
Stock issued for services 49,618 83,992
Stock-based compensation 180,640 189,485
Stock options issued for services 40,007 100,157
Amortization of debt discount -0- 916,667
Bad debt expense 6,923 -0-
Accounts receivable (151,851 ) (245,870 )
Prepaid expenses 50,874 (38,981 )
Accounts payable (282,019 ) 304,303
Accrued interest -0- (15,000 )
Accrued expenses (60,000 ) 54,300
Deferred revenue (281,353 ) 104,885
NET CASH USED BY OPERATING ACTIVITIES (624,033 ) (521,509 )
Purchases of property and equipment (2,230 ) (13,100 )
Payment of security deposit -0- (5,049 )
Website site development costs (48,640 ) (221,770 )
NET CASH USED BY INVESTING ACTIVITIES (50,870 ) (239,919 )
Equity issuance costs -0- (57,500 )
Issuance of preferred stock -0- 855,460
Issuance of warrants in connection with preferred stock -0- 644,540
Payments on loan payable -0- (1,000,000 )
NET CASH PROVIDED BY FINANCING ACTIVITIES -0- 442,500
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (674,903 ) (318,928 )
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 959,166 1,278,094
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 284,263 $ 959,166
Cash paid for interest $ 100 $ 41,974
Common stock issued to satisfy dividends related to preferred stock $ -0- $ 500,000
Common stock issued for settlement of equity issuance costs $ -0- $ 115,000
Accounts receivable are reported at realizable value, net of allowances for doubtful accounts, which is estimated and recorded in the period the related revenue is recorded. The Company has a standardized approach to estimate and review the collectability of its receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to allowances for doubtful accounts. In addition, the Company regularly assesses the state of its billing operations in order to identify issues, which may impact the collectability of these receivables or reserve estimates. Bad debt expense was $6,923 and $0 for the years ended December 31, 2012 and 2011, respectively. The allowance for doubtful accounts was $0 as of December 31, 2012 and 2011.
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 December 31, 2012 and 2011, respectively, since their effect is anti-dilutive.
Prepaid expenses consisted of the following as of December 31, 2012 and 2011:
Insurance $ 6,437 $ 5,937
Website maintenance 0 17,500
Rent 5,049 0
Consulting 31,672 91,811
Employee advances 0 694
Advertising 0 3,090
Legal 25,000 0
Total prepaid expenses $ 68,158 $ 119,032
The Company owned equipment recorded at cost which consisted of the following as of December 31, 2012 and 2011:
Computer equipment $ 22,360 $ 20,130
Subtotal 33,448 31,218
Accumulated depreciation (12,763 ) (7,287 )
Property and equipment, net $ 20,685 $ 23,931
Depreciation expense was $5,476 and $2,230 for the years ended December 31, 2012 and 2011, respectively.
The Company has capitalized costs in developing their website and web-based products, which consisted of the following as of December 31, 2012 and 2011:
SampleMD web development 602,517 553,877
Subtotal, web development costs 756,650 708,010
Accumulated amortization (310,352 ) (183,429 )
Web development costs, net $ 387,215 $ 465,498
Amortization is recorded using the straight-line method over a period of five years. The Company determined that the original OptimizeRx website was no longer useful so the remaining unamortized balance of $59,083 was impaired as of December 31, 2010. Amortization expense for the web development costs was $126,923 and $88,379 for the years ended December 31, 2012 and 2011, respectively.
The Company has capitalized costs in purchasing the SampleMD patent, which consisted of the following as of December 31, 2012 and 2011:
Accumulated amortization (136,764 ) (82,059 )
Patent rights and intangible assets, net $ 793,236 $ 847,941
The Company began amortizing the patent, using the straight-line method over the estimated useful life of 17 years, once it was put into service in July 2010. Amortization expense was $54,705 and $54,706 for the years ended December 31, 2012 and 2011, respectively.
Accrued expenses consisted of the following as of December 31, 2012 and 2011:
Accrued bonuses $ 0 $ 60,000
Accrued audit fees 6,000 6,000
Total accrued expenses $ 6,000 $ 66,000
The Company has signed several contracts with customers for either the distribution or redemption of coupons. The payments are not taken into revenue until either the coupon is distributed to a patient or the coupon has been redeemed depending on the specific contract. The distributions and redemptions are tracked by the company’s administrative tool. Additionally, customer setup contracts that have been paid in full are deferred until the Company has completed the obligations of the contacts. Deferred revenue was $49,252 and $330,605 as of December 31, 2012 and 2011 respectively.
OptimizeRx Corporation has 500,000,000 shares of $.001 par value common stock authorized as of December 31, 2012.
There were 14,232,496 and 14,192,496 common shares issued and outstanding at December 31, 2012 and 2011, respectively.
On June 30, 2011, the Company entered into a settlement agreement with Midtown Partners. Under the settlement agreement, the Company will pay Midtown Partners $57,500 and grant 100,000 shares of its common stock. The cost of the settlement has been recorded as equity issuance costs. As a result of the settlement, the litigation in the Eastern District of Michigan was dismissed.
During the year ended December 31, 2011, the Company issued 475,820 shares of common stock to satisfy $500,000 of preferred dividends. The Company has not declared any dividends in 2012.
On June 1, 2012, the Company entered into a consulting agreement with North Coast Advisors, Inc. for various services. The Company agreed to issue 40,000 shares of common stock as of the date of the contract. However, these shares were not issued until July 12, 2012. The Company also agreed to issue an additional 40,000 shares every six months in alignment with the agreement renewal up to the two years of the agreement. The first 40,000 shares were valued at the Company’s common stock price as of the date of the contract, which was $1.12/share and has been expensed. No additional shares were issued as of December 31, 2012.
On May 12, 2010, the Company’s Board declared and issued 236,598 common shares as payment for all cumulative and current semi-annual dividends. On November 16, 2010, the Company’s Board declared and issued 173,922 common shares for its semi-annual dividend payment. On March 25, 2011, the Company’s Board declared and issued 176,768 common shares for its semi-annual dividend payment. On September 21, 2011, the Company's Board declared and issued 156,306 common shares for its semi-annual dividend payment. The Company has undeclared dividends that were due in February and September 2012 totaling $350,000 as of December 31, 2012.
During the year ended December 31, 2010, 15 preferred shares were issued for $1,500,000. The 15 shares are convertible to 1,500,000 shares of common stock and bear a 10% cumulative dividend. In addition, there was a warrant issued to purchase 3,000,000 shares of common stock at an exercise price of $3 for a period of seven years.
During the quarter ended September 30, 2011, 15 preferred shares were issued to an investor for $1,500,000. The 15 shares are convertible to 1,500,000 shares of common stock and bear a 10% cumulative dividend. In addition, there was a warrant issued to purchase 1,000,000 shares of common stock at an exercise price of $3 for a period of seven years. Based on the fair values of the preferred stock and common stock warrants on the issue date, $855,460 was allocated to preferred stock and $644,540 was allocated to the common stock warrants. See Note 12.
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. On March 25, 2011, the Company’s Board declared and issued 75,758 common shares for its semi-annual dividend payment. On September 21, 2011, the Company's Board declared and issued 66,988 common shares for its semi-annual dividend payment. The Company has undeclared dividends that were due in February and September 2012 totaling $150,000 as of December 31, 2012.
On October 1, 2010, the Company issued 25,000 stock options to an employee with a vesting period of one year and an exercise price of $1.21. The options were valued on the grant date using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of 241%, risk-free interest rate of 1.26% and expected life of 60 months. The options were fully expensed as of December 31, 2011.
On April 27, 2011, the Company issued 100,000 stock options to an individual at an exercise price of $0.73. The options were valued on the grant date using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of 221%, risk-free interest rate of 2.06% and expected life of 60 months. The agreement is for a period of six months. The Company recognized expenses of $83,992 during the year ended December 31, 2011.
During the quarter ended September 30, 2011, there was a warrant issued to purchase 1,000,000 shares of common stock at an exercise price of $3 for a period of seven years. In addition, 15 preferred shares were issued to an investor for $1,500,000. The 15 shares are convertible to 1,500,000 shares of common stock and bear a 10% cumulative dividend. Based on the fair values of the preferred stock and common stock warrants on the issue date, $855,460 was allocated to preferred stock and $644,540 was allocated to the common stock warrants. See Note 11.
During the quarter ended December 31, 2011, the Company issued 20,000 stock options to 2 employees at an exercise price of $1.00. The options were valued on the grant date using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of 204-205%, risk-free interest rate of 0.88-0.93% and expected life of 60 months. The total value of the options was $19,270. The options vest over one year. The Company recognized share-based compensation expense of $2,480 and $16,790 of expense during the years ended December 31, 2012 and 2011, respectively.
On November 21, 2011, the Company issued 100,000 stock options to an individual at an exercise price of $0.73. The options were valued on the grant date using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of 205%, risk-free interest rate of 0.92% and expected life of 60 months. The Company recognized expenses of $8,346 during the year ended December 31, 2011 and $91,811 during the year ended December 31, 2012.
During the quarter ended December 31, 2012, the Company issued 25,000 stock options to a non-employee at an exercise price of $1.58. The options were valued on the grant date using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of 200%, risk-free interest rate of 0.67% and expected life of 60 months. The total value of the options was $40,007. The options vest over 1 year. The Company recognized share-based compensation expense of $8,335 during the three months ended December 31, 2012. The remaining balance will be recognized in the following year.
The Company had the following options outstanding for the years ended December 31, 2012 and 2011:
Outstanding, January 1, 2011 0 $ 0.00
Granted - 2011 505,000 1.01
Exercised - 2011 0 0
Expired - 2011 (100,000 ) (1.00 )
Balance, December 31, 2011 405,000 1.01
Expired - 2012 (455,000 ) (.98 )
Balance, December 31, 2012 25,000 $ 1.58
The Company had the following warrants outstanding for the years ended December 31, 2012 and 2011:
Outstanding, January 1, 2011 11,111,100 $ 2.26
Granted - 2011 3,333,334 3.00
Expired - 2011 (100,000 ) (2.50 )
Balance, December 31, 2011 14,344,434 2.41
Balance, December 31, 2012 14,344,434 $ 2.41
The Company signed a lease for new office space on December 1, 2011 at an approximate rent of $5,000 per month. The new offices are in Rochester, Michigan. The lease is for three years with an option to renew for an additional two years at approximately $5,200 per month with six months advance notice to exercise the option.
Minimum annual rent is as follows for the initial term of the lease:
The Company had two major customers that accounted for 52% and two major customers that accounted for 50% of the Company’s revenues for the years ended December 31, 2012 and 2011, respectively. The Company expects to continue to maintain these relationships with the customers.
For the year ended December 31, 2012, the Company incurred a net loss of approximately $364,000 and therefore has no tax liability. The Company began operations in 2007 and has previous net operating loss carry-forwards of $13,479,000 through December 31, 2011. The cumulative loss of $13,843,000 will be carried forward and can be used through the year 2032 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.
The provision for Federal income tax consists of the following for the years ended December 31, 2012 and 2011:
Current operations $ 123,000 $ 721,000
Valuation allowance (123,000 ) (721,000 )
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows as of December 31, 2012 and December 31, 2011:
Net operating loss carryover $ 4,706,000 $ 4,583,000
Valuation allowance (4,706,000 ) (4,583,000 )
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $13,843,000 for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.
NOTE 16 – OPERATING EXPENSES
Operating expenses consisted of the following for the years ended December 31, 2012 and 2011, respectively:
Advertising $ 57,218 $ 544,071
Professional fees 263,396 342,503
Consulting 19,148 185,174
Salaries, wages and benefits 1,184,367 864,655
Rent 62,362 37,868
Stock-based compensation 285,605 0
General and administrative 353,844 445,911
Total Operating Expenses $ 2,413,044 $ 2,565,497
On January 14, 2013, the Company hired a new CEO. The employment agreement requires annual compensation of $175,000 that will be accrued and deferred until at least January 1, 2014. Additionally, the agreement requires the issuance of 2,000,000 options with an exercise price of $1.00 for a term of five years. The options are not exercisable until at least January 1, 2014.
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2012 through the date these financial statements were issued and has determined that it does not have any material subsequent events to disclose in these financial statements other than the events described above.
No events occurred requiring disclosure under Item 304 of Regulation S-K during the fiscal year ending December 31, 2012.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our chief executive officer and chief financial officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2012. Based on their evaluation, they concluded that our disclosure controls and procedures were effective.
Under the supervision and with the participation of our management, including our chief executive officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this evaluation under the criteria established in Internal Control – Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2012.
The following information sets forth the names, ages, and positions of our current directors and executive officers as of December 31, 2012.
Shad Stastney 44 Chairman, President, Chief Executive Officer and Director
David Lester 55 Chief Operating Officer, Secretary, Treasurer and Director
David A. Harrell 47 Vice Chairman, Chief Strategic Officer and Director
Terence J. Hamilton 47 Director and VP of Sales
For the fiscal year ending December 31, 2012, the board of directors:
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, 2012 to be included in this Annual Report on Form 10-K and filed with the Securities and Exchange Commission.
Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent beneficial shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To the best of our knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments thereof) received by us, the following persons have failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange Act during fiscal year ended December 31, 2011:
Chairman, President, CEO and Director 0 0 0
Vice Chairman, Chief Strategic Officer and Director 0 0 0
As of December 31, 2012, 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.
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, 2012 and 2011.
Vice Chairman, Chief Strategic Officer and Director
(1) Only for his services as a director.
(2) This amount reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year indicated in accordance with ASC Topic 718 – Stock Compensation, Share Based Payments of awards of restricted stock and stock options, as applicable.
The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officers as of December 31, 2012.
The following table sets forth certain information known to us with respect to the beneficial ownership of our Common Stock as of March 12, 2013, 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 14,192,496 shares of common stock issued and outstanding on March 13, 2013. Except as otherwise indicated, the address of each person named in this table is c/o OptimizeRx Corporation, 400 Water Street, Ste. 200, Rochester, MI 48307.
Title of class Name and address of beneficial owner Amount of beneficial ownership Percent of class
Common David Lester(1) 573,000 shares 3.88%
Common David A. Harrell(2) 3,538,750 shares 24.24%
Common Terence J. Hamilton(3) 747,000 shares 5.16%
Common Shad Stastney 0 shares 0%
Total of All Directors and Executive Officers: 4,858,750 shares 31.49%
Common Cypress Trust(4) 740,990 shares 5.2%
Common Vicis Capital Master Fund(5) 886,340 shares 6.2%
(1) Includes 18,000 shares held in his name and warrants to purchase 555,000 shares of common stock at a price of $0.35 per share.
(2) Includes 3,136,250 shares held in his name, options to purchase 202,500 shares of common stock at a price of $1.00 per share, and options to purchase 200,000 shares of common stock at $1.81 per share.
(3) Includes 469,500 shares held in his name and options to purchase 277,500 shares of common stock at a price of $1.00 per share.
(4) 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.
(5) As reported on the Schedule 13D filed by the reporting person.
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, 2012 or in any presently proposed transaction which, in either case, has or will materially affect us.
Our Chief Executive Officer and Director, Shad Stastney, is a partner of Vicis Capital, LLC, which is the investment manager of Vicis Capital Master Fund, our financial partner for some years. Mr. Stastney also owns a minority position in Vicis Capital Master Fund.
2011 $ 24,850 $ 0 $ 2,400 $ 0
2012 $ 26,800 $ 0 $ 2,800 $ 0
10.9 Employment Agreement, dated January 14, 20135
10.10 Patent Assignment, dated February 6, 2013
10.11 Assignment, dated February 6, 2013
5 Incorporated by reference to the Form 8-K, filed by the Company with the Securities and Exchange Commission on January 18, 2013.
WHEREAS, OptimizeRx Corporation, a Nevada Corporation, with a place of business at 407 Sixth Street, Rochester, Michigan, (hereinafter "ASSIGNOR") is the owner of U.S. Provisional Application No. 611277,161 , for "Method of Distributing and Tracking Prescription Drug Samples and Saving Coupons for Prescriptions Via the Internet";
WHEREAS, ASSIGNOR desires to assign all right, title and interest in and to U.S. Patent Provisional Application No. 61 /277,161 to OptimizeRx Corporation, a Michigan Corporation, with a place of business at 407 Sixth Street, Rochester, Michigan (hereinafter "ASSIGNEE"); and
WHEREAS, ASSIGNEE is desirous of acquiring the entire right, title and interest in and to U.S. Provisional Application No. 61/277,161 ;
NOW, THEREFORE, in consideration of the sum of One Dollar ($1 .00) and other good and valuable consideration, the receipt and adequacy of all of which are hereby acknowledged, ASSIGNOR agrees to assign, and hereby does assign, effective February 6, 2013, all right, title, and interest in and to U.S. Provisional Application No. 61/277,161 , together with any utility applications that claim priority, continuations, continuations in part, divisionals, reissues, reexaminations, and extensions thereof, including the right to claim priority under the laws of the United States, the Paris Convention, and any foreign countries, and further, including the right to sue for and to recover for past infringements thereof, unto said ASSIGNEE, its successors and assigns.
ASSIGNOR represents that at the time of execution of this Patent Assignment, ASSIGNOR is the owner of all right, title, and interest in and to U.S. Provisional Application No. 61/277,161 , and that ASSIGNOR has not assigned, transferred, licensed or encumbered ASSIGNOR'S rights therein, and that ASSIGNOR will not hereafter assign or attempt to assign any rights therein, or take any other action inconsistent with this Patent Assignment.
ASSIGNOR agrees to execute such further documents and take such acts as reasonably required by ASSIGNEE or ASSIGNEE'S successor to secure and enforce ASSIGNEE's rights in U.S. Provisional Application No. 61/277,161 , including but not limited to further assignments.
OPTIMIZERx CORPORATION, a
/s/ Shad Stastney
By: Shad Stastney
Title: CEO-OptimizeRx Corporation
COUNTY OF NEW YORK:
On this 6th day of February, 2013, before me, a Notary Public, within and for the County of New York, State of New York, personally appeared Shad Stastney, to me known to be the person described in and who acknowledged executing the forgoing instrument as a free act and deed, and who also represented that he is authorized to execute the same.
IN TESTIMONY WHEREOF, I have hereunto set my hand and seal the date and year last above written.
/s/ Andrew Comito
My Commission Expires: Sept 15, 2016
WHEREAS, David A. Harrell, a citizen of the State of Michigan, residing at Shelby Township, Michigan (hereinafter referred to as "ASSIGNOR') is the owner of U.S. Provisional Application No. 61/273,960 and U.S. Patent Application No. 12/655,558 (now U.S. Patent No. 8,341 ,015);
WHEREAS, ASSIGNOR desires to assign all right, title and interest in and to U.S. Provisional Application No. 61/273,960 and U.S. Patent Application No. 12/655,558 (now U.S. Patent No. 8,341 ,015) to OptimizeRx Corporation, a Michigan Corporation, with a place of business at 407 Sixth Street, Rochester, Michigan, (hereinafter "ASSIGNEE' ); and
WHEREAS, ASSIGNEE, is desirous of acquiring the entire right, title and interest in and to U.S. Provisional Application No. 61/273,960 and US. Patent Application No. 12/655,558 (now U.S. Patent No. 8,341 ,015);
NOW, THEREFOR, in consideration of the sum of One Dollar ($1 .00) and other good and valuable consideration, the receipt and adequacy of which ASSIGNOR hereby acknowledges, ASSIGNOR hereby confirms any prior assignment to ASSIGNEE, and to the extent that ASSIGNOR has not already done so, agrees to assign, and hereby do, sell, assign and transfer unto ASSIGNEE and its successors in interest, the full and exclusive right, title and interest in the United States of America and throughout the world, including the right to claim priority under the laws of the United States, the Paris Convention, and any foreign countries, to the inventions as described in the above-identified applications, to the above-identified applications themselves, and all divisions, continuations, continuations-in-part, or other applications claiming priority directly or indirectly from the above-identified applications, and any United States or foreign Letters Patent, utility model, or other similar rights which may be granted thereon , including reissues, reexaminations and extensions thereof, and all copyright rights throughout the world in the aforesaid applications and the subject matter disclosed therein , these rights, title and interest to be held and enjoyed by ASSIGNEE to the full end of the term for which the Letters Patent, utility model, or other similar rights, are granted and any extensions thereof as fully and entirely as the same would have been held by ASSIGNOR had this assignment and sale not been made, and the right to sue for, and recover for past infringements of, or liabilities for, any of the rights relating to any of the applications, patents, utility models, or other similar rights, resulting therefrom , and the copyright rights.
ASSIGNOR hereby covenants and agrees to execute all instruments or documents required or requested for the making and prosecution of any applications of any type for patent, utility model, or other similar rights, and for copyright, in the United States and in all foreign countries including, but not limited to, any provisional, continuation , continuation-in-part, divisional, renewal or substitute thereof, any derivation proceedings relating thereto, and as to Letters Patent any supplemental examination, derivation proceeding, opposition, post grant review, reissue, re-examination , inter partes review, or extension thereof, and for litigation regarding , or for the purpose of protecting title and to the said invention, the United States application for patent, or Letters Patent therefor, and to testify in support thereof, for the benefit of ASSIGNEE without further or other compensation than that above set forth.
ASSIGNOR hereby authorizes and requests the Commissions of Patents and Trademarks of the United States and any official of any country foreign to the United States whose duty it is to issue patents, to issue Letters Patent, Utility Model Registration or other similar right, including any reissues and extensions thereof to said ASSIGNEE in accordance with this Assignment.
ASSIGNOR hereby represents and warrants that ASSIGNOR has the full right to convey the entire interest of said applications herein assigned and has not granted any rights inconsistent with the rights granted herein.
/s/ David Harrell
COUNTY OF ______:
On this __ day of February, 2013, before me, a Notary Public, within and for the County of ______, State of Michigan, personally appeared David Harrell, to me known to be the person described in and who acknowledged executing the forgoing instrument as a free act and deed, and who also represented that he is authorized to execute the same.
I, Shad Stastney, certify that;
1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2012 of OPTIMIZERx Corp (the “registrant”);
In connection with the annual Report of OPTIMIZERx Corp (the “Company”) on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission (the “Report”), I, Shad Stastney, Chief Executive Officer of the Company, and I, David Lester, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
Name: Shad Stastney
Title: Principal Financial Officer and Director