Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
We maintain disclosure controls and procedures
designed to provide reasonable assurance that information required to be disclosed in reports filed or submitted under the Exchange Act
is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules
and forms and accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding required disclosures.
Our management, with the participation of our
Chief Executive Officer and our Chief Financial Officer, conducted an evaluation, as of the end of the period covered by this report,
of the effectiveness of our disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e). Based on this
evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of the period covered by this
report, due to a material weakness in our internal control over financial reporting, our disclosure controls and procedures, as defined
in Rule 13a-15(e), were not effective at the reasonable assurance level.
To address
the material weakness referenced above, the Company performed additional analysis and performed other procedures in order to prepare the
audited consolidated financial statements in accordance with generally accepted accounting principles (GAAP). Accordingly, management
believes that the consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects,
our financial condition, results of operations and cash flows for the periods presented.
Management’s Report on Internal Control
Over Financial Reporting.
The Company’s management is responsible
for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United
States of America. The Company’s internal control over financial reporting includes those policies and procedures that:
● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the Company;
● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made
only in accordance with authorizations of management and directors of the Company; and
● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, any system
of internal control over financial reporting, no matter how well defined, may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate. The Company’s management, with the participation
of our Chief Executive Officer and our Chief Financial Officer, assessed the effectiveness of the Company’s internal control over
financial reporting as of December 31, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based on this assessment using
those criteria, management identified the following material weakness existed as of December 31, 2022: inadequate controls to ensure that
data received from third-party service organizations is complete and accurate. As a result, based on the COSO criteria, the Company’s
management has concluded that we did not maintain effective internal control over financial reporting as of December 31, 2022.
Plan for Remediation of Material Weakness
Management is actively engaged in the planning
for, and implementation of, remediation efforts to address the material weakness identified above. Management intends to implement the
following remediation steps:
a. The Company will require each third-party service organization
to provide a SOC-1, Type 2 report to us.
b. If a SOC-1, Type 2 report is not available, the Company will
evaluate each third-party’s relevant system(s) and reporting directly through inquiry and substantive testing of such third-party’s
control environment.
Management believes the measures described above
will remediate the material weakness that we have identified. As management continues to evaluate and improve our disclosure controls
and procedures and internal control over financial reporting, the Company may decide to take additional measures to address control deficiencies
or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures identified.
26
Changes in Internal Controls Over Financial
Reporting .
There was no change in our internal control over
financial reporting (as defined in Rule 13a-15(f) under the Exchange Act), that occurred during the quarter ended December 31, 2022
that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
Amended and Restated Bylaws
In connection
with new universal proxy card rules adopted by the US Securities and Exchange Commission (“SEC”), the Board of Directors (the
“Board”) of the Company approved third amended and restated bylaws of the Company (the “Amended and Restated Bylaws”),
effective as of March 7, 2023. Among other things, the Amended and Restated Bylaws require that any shareholder soliciting proxies in
support of a nominee other than the Board’s nominees must comply with Rule 14a-19 under the Securities Exchange Act of 1934, as
amended, including applicable notice and solicitation requirements. Further, any shareholder directly or indirectly soliciting proxies
from other shareholders must use a proxy card color other than white, with the white proxy card being reserved for the exclusive use by
the Board. This description of the Amended and Restated Bylaws does not purport to be complete and is qualified in its entirety by reference
to the text of the Amended and Restated Bylaws, which is attached hereto as Exhibit 3.2 and incorporated herein by reference.
Executive Severance Plan
On March 8, 2023, the
Compensation Committee adopted the OptimizeRx Corporation Executive Severance Plan (the “Severance Plan”) to provide severance
benefits to certain eligible employees of the Company. Each of the Company’s named executive officers, other than Mr. Febbo, identified
in the Company’s proxy statement filed in connection with its 2022 annual meeting of shareholders (collectively, the “Named
Executive Officers”) has been designated a participant in the Severance Plan.
The Severance Plan provides
that if a Named Executive Officer is terminated without cause or resigns for Good Reason, he/she
will be paid (i) an amount equal to 1.0 times his/her base salary, paid in installments over 12 months, (ii) an amount equal to
his/her target annual bonus in effect at the time of termination, paid in a lump sum, and (iii)
payment by the Company of COBRA premiums for the Named Executive Officer and his/her spouse and eligible dependents for up to 12
months following termination (the payments in (i), (ii) and (iii) collectively referred to as “Severance Benefits”). In addition,
if a Named Executive Officer is terminated without cause or resigns for Good Reason t hree
months prior to or 24 months following a Change in Control, in addition to the Severance Benefits, such Named Executive Officer will be
paid a lump sum payment equal to 2.0 times his/her then current base salary. The Severance Plan also provides that if a Named Executive
Officer is terminated due to death or Disability, such Named Executive Officer (or his/her estate) will be paid an amount equal to his/her
target annual bonus in effect at the time of termination, paid in a lump sum. Terms not otherwise
defined herein have the meanings assigned to them in Severance Plan.
Unless otherwise stated
in a participant’s individual employment agreement, if any payments or benefits under the Severance Plan would be considered “parachute
payments” under Section 280G of the Code, and would be subject to the excise tax imposed by Section 4999 of the Code, then such
payments will either be (i) reduced so than no portion of the payments is subject to the excise tax or (ii) delivered in full, whichever
of the foregoing results in the participant receiving a greater amount on a net after-tax basis, taking into account all federal, state
and local taxes and the excise tax imposed by Section 4999 of the Code.
The foregoing description
of the Severance Plan is not complete and is qualified in its entirety by reference to the complete text of the Severance Plan, a copy
of which is filed as Exhibit 10.18 to this Form 10-K and is incorporated herein by reference.
Amendment to Will Febbo’s Employment
Agreement
On March
8, 2023, the Company entered into a Fourth Addendum (the “Fourth Addendum”) to the employment offer letter dated February
25, 2019, as amended, with William J. Febbo (the “Employment Agreement”) which updates and amends the Employment Agreement
to, among other things, provide that if three months prior to, or 24 months following, a Change in Control, Mr.
Febbo is terminated without Cause or resigns for Good Reason, in addition to other amounts payable to Mr. Febbo pursuant to the
Employment Agreement, Mr. Febbo will be paid a lump sum payment equal to 4.0 times his then current base salary. Terms
not otherwise defined herein have the meanings assigned to them in the Fourth Addendum.
The
above summary of Mr. Febbo’s Fourth Addendum is not complete and is qualified in its entirety by reference to the complete
text of the Fourth Addendum , a copy of which is filed as Exhibit 10.19 to this Form 10-K
and is incorporated herein by reference.
Item 9C. Disclosure Regarding Foreign Jurisdictions
that Prevent Inspections.
None
27
PART III
Item 10. Directors, Executive Officers and
Corporate Governance
Except for the information provided in PART I,
Item 4.1, “Information About Our Executive Officers” and as set forth below, the required information is incorporated by reference
from our definitive proxy statement for our 2023 Annual Meeting of Shareholders, including, but not necessarily limited to, the sections
entitled “Proposal No. 1 Election of Directors, “Committees of the Board of Directors” and “Information Regarding
Security Holders – Delinquent Section 16(a) Reports.”
We have a Code of Business Conduct and Ethics
(the “Code”) that applies to our directors, officers, and employees. Only the Board may grant a waiver of any provision for
a director, executive officer, or any other principal financial officer, and any such waiver, or any amendment to the Code, will be promptly
disclosed as required at www.optimizerx.com . The Code can be found on the Company’s website at www.optimizerx.com
under “Investor Relations—Governance.” The information on the website is not and should not be considered part of this
Form 10-K and is not incorporated by reference in this Form 10-K.
Item 11. Executive Compensation
The required information is incorporated by reference
from our definitive proxy statement for our 2023 Annual Meeting of Shareholders, including, but not necessarily limited to, the sections
entitled “Director Compensation” and “Executive Compensation”.
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters.
Except for the information set forth below, the
required information is incorporated by reference from our definitive proxy statement for our 2023 Annual Meeting of Shareholders, including,
but not necessarily limited to, the section entitled “Information Regarding Security Holders.”
Equity Compensation Plan Information
The following table details information regarding
our existing equity compensation plans as of December 31, 2022:
Plan Category
Number of
securities to be
issued
upon
exercise of
outstanding
options,
warrants
and rights
Weighted- average
exercise
price of outstanding
options, warrants
and rights
Number
of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding securities
reflected in column (a))
(a)
(b)
(c)
Equity compensation plans approved by security holders
2013 Equity Compensation Plan – Options
410,701
33.57
0
2013 Equity Compensation Plan – Restricted Stock Units
128,590
N/A
0
2021 Equity Incentive Plan – Options
896,169
30.03
0
2021 Equity Incentive Plan – Restricted Stock Units
660,484
N/A
921,946
Equity compensation plans not approved by security holders
0
N/A
0
Total
2,095,944
921,946
Item 13. Certain Relationships and Related
Transactions, and Director Independence
The required information is incorporated by reference
from our definitive proxy statement for our 2023 Annual Meeting of Shareholders, including, but not necessarily limited to, the sections
entitled “Certain Relationships and Related Transactions” and “Corporate Governance - Director Independence.”
Item 14. Principal Accounting Fees and Services
The required information is incorporated by reference
from our definitive proxy statement for our 2023 Annual Meeting of Shareholders, including, but not necessarily limited to, the sections
entitled “Ratification of UHY LLP as Independent Registered Public Accounting Firm – Independent Registered Public Accountant
Fee Information” and “Ratification of UHY LLP as Independent Registered Public Accounting Firm – Pre-Approval Policies
and Procedures.”
28
PART IV
Item 15. Exhibits and Financial Statements
Schedules
(a) The consolidated financial statements and
exhibits listed below are filed as part of this Annual Report on Form 10-K.
(1) The Company’s consolidated financial statements, the notes thereto and the report of the Independent
Registered Public Accounting Firm are included in PART II, Item 8. “Financial Statements and Supplementary Data.”
(2) Financial statement schedules have been omitted because they are not applicable, not required, or the
required information is included in the Consolidated Financial Statements or Notes thereto.
(3) Exhibits. Reference is made to Item 15(b) below.
(b) Exhibits . The Exhibit Index, which
immediately precedes the signature page, is incorporated by reference into this Annual Report on Form 10-K.
(c) Financial Statement Schedules . Reference
is made to Item 15(a)(2) above.
Item 16. Form 10-K Summary
None
29
EXHIBIT INDEX
Exhibit
Number
Description
3.1
Articles
of Incorporation of OptimizeRx Corporation (the “Company”) Incorporated by reference to Exhibit 3.1 to the Company’s
Registration Statement on Form S-1 (Registration No. 333-155280) filed on November 12, 2008.
3.2
Certificate
of Correction, dated April 30, 2018. Incorporated by reference to Exhibit 3.5 to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2018.
3.3**
Third
Amended and Restated Bylaws of the Company.
4.1
Description
of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. Incorporated by reference
to Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
10.1†
Fourth
Amended and Restated 2013 Equity Incentive Plan. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed on March 12, 2020.
10.2†
OptimizeRx
2021 Equity Incentive Plan. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on
August 25, 2021.
10.3†
Form
of Stock Option Award for grants under the OptimizeRx Corporation 2021 Equity Incentive Plan. Incorporated by reference to Exhibit
10.2 to the Company’s Current Report on Form 8-K filed on August 25, 2021.
10.4†
Form
of Performance Stock Option Award for grants under the OptimizeRx Corporation 2021 Equity Incentive Plan. Incorporated by reference
to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on August 25, 2021.
10.5†
Form
of Restricted Stock Unit Award for grants under the OptimizeRx Corporation 2021 Equity Incentive Plan. Incorporated by reference
to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on August 25, 2021.
10.6†
Form
of Performance Restricted Stock Unit Award for grants under the OptimizeRx Corporation 2021. Incorporated by reference to Exhibit
10.5 to the Company’s Current Report on Form 8-K filed on August 25, 2021
10.7†
Amended
Employment Agreement by and between the Company and William J. Febbo. Incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed on February 26, 2019.
10.8†
Amendment
to the Employment Agreement with William Febbo. Incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on
Form 10-K for the year ended December 31, 2019.
10.9 †
Addendum
to the Employment Agreement with William J. Febbo. Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report
on Form 10-Q for the quarter ended June 30, 2021.
10.10*†
Third
Addendum to the Employment Agreement with William J. Febbo,. Incorporated by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed on October 19, 2021.
10.11†
Employment
Agreement by and between the Company and Stephen Silvestro. Incorporated by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed on May 3, 2019.
10.12†
Amendment
to the Employment Agreement with Stephen Silvestro. Incorporated by reference to Exhibit 10.5 to the Company’s Annual Report
on Form 10-K for the year ended December 31, 2019.
10.13†
Amendment
to Employment Agreement by and between the Company and Stephen Silvestro dated February 28, 2022. Incorporated by reference to Exhibit
10.2 to the Company’s Current Report on Form 8-K filed on March 4, 2022.
10.14†
Employment
Agreement with Marion Odence-Ford. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed
on February 11, 2021.
10.15†
Amendment
to Employment Agreement by and between the Company and Marion Odence-Ford dated February 28, 2022. Incorporated by reference to Exhibit
10.3 to the Company’s Current Report on Form 8-K filed on March 4, 2022.
10.16*†
Offer
Letter by and between the Company and Edward Stelmakh. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed on September 30, 2021.
10.17†
OptimizeRx
Corporation 2022 Cash Bonus Plan. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed
on March 4, 2022.
10.18**
OptimizeRx
Corporation Executive Severance Plan
30
10.19 **
Fourth
Addendum to the Employment Agreement with William J. Febbo
14.1
Code
of Business Conduct and Ethics Incorporated by reference to Exhibit 14.1 to the Company’s Current Report on Form 8-K filed
on June 25, 2021.
21.1**
List of Subsidiaries
23.1**
Consent of UHY LLP
31.1**
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2**
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS**
Inline XBRL Instance Document
101. SCH
Inline XBRL Schema Document
101. CAL
Inline XBRL Calculation Linkbase Document
101. DEF
Inline XBRL Definition Linkbase Document
101. LAB
Inline XBRL Label Linkbase Document
101. PRE
Inline Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
† Management Contracts and Compensatory Plans, Contracts or
Arrangements.
* Exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any
omitted exhibit to the SEC upon request.
** Provided herewith.
31
SIGNATURES
Pursuant to the requirements of Section 13 or
15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
OptimizeRx Corporation
By:
/s/ William J. Febbo
William Febbo
Title:
Chief Executive Officer
Date:
March 10, 2023
By:
/s/ Edward Stelmakh
Edward Stelmakh
Title:
Chief Financial Officer
Chief Operations Officer
Date:
March 10, 2023
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Signature
Title
Date
/s/ William J. Febbo
Chief Executive Officer and Director
(principal executive officer)
March 10, 2023
William J. Febbo
/s/ Edward Stelmakh
Chief Financial Officer and Chief Operations Officer
(principal financial and accounting officer)
March 10, 2023
Edward Stelmakh
/s/ Gus D. Halas
Chairman
March 10, 2023
Gus D. Halas
/s/ James Lang
Director
March 10, 2023
James Lang
/s/ Patrick Spangler
Director
March 10, 2023
Patrick Spangler
/s/ Lynn Vos
Director
March 10, 2023
Lynn Vos
/s/ Greg Wasson
Director
March 10, 2023
Greg Wasson
32