OptimizeRx Corp 10-Q

Item 1. Financial Statements Our condensed consolidated financial statements included in this Form 10-Q are as follows: 2 Condensed Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022 (unaudited); 3 Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (unaudited); 4 Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022 (unaudited); 6 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (unaudited); 7 Notes to Condensed Consolidated Financial Statements (unaudited). 1 OPTIMIZERX CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, 2023 December 31, 2022 ASSETS Current assets Cash and cash equivalents $ 9,921,475 $ 18,208,685 Short-term investments 53,620,576 55,931,821 Accounts receivable, net 20,838,762 22,155,301 Prepaid expenses and other 3,008,858 2,280,828 Total current assets 87,389,671 98,576,635 Property and equipment, net 149,304 137,448 Other assets Goodwill 22,673,820 22,673,820 Technology assets, net 7,548,337 7,702,895 Patent rights, net 1,777,669 1,940,178 Deferred financing costs 300,000 — Right of use assets, net 148,642 235,320 Other intangible assets, net 3,141,709 3,384,889 Other long-term assets 800,000 — Total other assets 36,390,177 35,937,102 TOTAL ASSETS $ 123,929,152 $ 134,651,185 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable – trade $ 691,159 $ 1,549,979 Accrued expenses 3,108,908 2,601,246 Revenue share payable 3,685,390 3,990,440 Current portion of lease liabilities 27,687 89,902 Deferred revenue 188,394 164,309 Total current liabilities 7,701,538 8,395,876 Non-current liabilities Lease liabilities, net of current portion 120,955 144,532 Total liabilities 7,822,493 8,540,408 Commitments and contingencies (See note 10) Stockholders’ equity Preferred stock, $ 0.001 par value, 10,000,000 shares authorized, none issued and outstanding at September 30, 2023 or December 31, 2022 — — Common stock, $ 0.001 par value, 166,666,667 shares authorized, 18,386,920 and 18,288,571 shares issued at September 30, 2023 and December 31, 2022, respectively 18,387 18,289 Treasury stock, $ 0.001 par value, 1,741,397 and 1,214,398 shares held at September 30, 2023 and December 31, 2022, respectively ( 1,741 ) ( 1,214 ) Additional paid-in-capital 176,206,572 172,785,800 Accumulated deficit ( 60,116,559 ) ( 46,692,098 ) Total stockholders’ equity 116,106,659 126,110,777 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 123,929,152 $ 134,651,185 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 OPTIMIZERX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Net revenue $ 16,331,484 $ 15,085,504 $ 43,152,560 $ 42,795,699 Cost of revenues, exclusive of depreciation and amortization presented separately below 6,531,183 5,664,733 18,093,949 16,283,307 Gross profit 9,800,301 9,420,771 25,058,611 26,512,392 Operating expenses General and administrative expenses 12,887,083 12,661,703 39,161,752 36,373,298 Depreciation, amortization and noncash lease expense 466,706 515,828 1,395,400 1,565,484 Total operating expenses 13,353,789 13,177,530 40,557,152 37,938,782 Loss from operations ( 3,553,488 ) ( 3,756,759 ) ( 15,498,541 ) ( 11,426,390 ) Other income Interest income 688,190 289,967 2,074,081 313,786 Loss before provision for income taxes ( 2,865,298 ) ( 3,466,792 ) ( 13,424,460 ) ( 11,112,604 ) Income tax benefit — — — — Net loss $ ( 2,865,298 ) $ ( 3,466,792 ) $ ( 13,424,460 ) $ ( 11,112,604 ) Weighted average number of shares outstanding – basic 16,637,606 17,981,184 16,907,482 17,994,288 Weighted average number of shares outstanding – diluted 16,637,606 17,981,184 16,907,482 17,994,288 Loss per share – basic $ ( 0.17 ) $ ( 0.19 ) $ ( 0.79 ) $ ( 0.62 ) Loss per share – diluted $ ( 0.17 ) $ ( 0.19 ) $ ( 0.79 ) $ ( 0.62 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 3 OPTIMIZERX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED) Common Stock Treasury Stock Additional Paid in Accumulated Shares Amount Shares Amount Capital Deficit Total Balance January 1, 2023 18,288,571 $ 18,289 ( 1,214,398 ) $ ( 1,214 ) $ 172,785,800 $ ( 46,692,098 ) $ 126,110,777 Stock based compensation expense Options — — — — 1,466,694 — 1,466,694 Restricted stock — — — — 2,913,809 — 2,913,809 Issuance of common stock For options exercised 9,668 10 — — 40,596 — 40,606 For restricted stock units vested 33,272 33 — — ( 170,433 ) — ( 170,400 ) Net loss — — — — — ( 6,397,714 ) ( 6,397,714 ) Balance March 31, 2023 18,331,511 $ 18,332 ( 1,214,398 ) $ ( 1,214 ) $ 177,036,466 $ ( 53,089,812 ) $ 123,963,772 Stock based compensation expense Options — — — — 1,654,770 — 1,654,770 Restricted stock — — — — 1,848,353 — 1,848,353 Issuance of common stock For options exercised 10,000 10 — — 105,090 — 105,100 For restricted stock units vested 35,260 35 — — ( 72,996 ) — ( 72,961 ) Repurchase of common stock ( 526,999 ) ( 527 ) ( 7,521,899 ) ( 7,522,426 ) Net loss — — — — — ( 4,161,449 ) ( 4,161,449 ) Balance June 30, 2023 18,376,771 $ 18,377 ( 1,741,397 ) $ ( 1,741 ) $ 173,049,784 $ ( 57,251,261 ) $ 115,815,159 Stock based compensation expense Options — — — — 1,598,315 — 1,598,315 Restricted stock — — — — 1,607,912 — 1,607,912 Issuance of common stock For options exercised — — — — — — — For restricted stock units vested 10,149 10 — — ( 49,438 ) — ( 49,428 ) Repurchase of common stock — — — — Net loss — — — — — ( 2,865,298 ) ( 2,865,298 ) Balance September 30, 2023 18,386,920 $ 18,387 ( 1,741,397 ) $ ( 1,741 ) $ 176,206,572 $ ( 60,116,559 ) $ 116,106,659 4 OPTIMIZERX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 (UNAUDITED) Common Stock Treasury Stock Additional Paid in Accumulated Shares Amount Shares Amount Capital Deficit Total Balance January 1, 2022 17,860,975 $ 17,861 — $ — $ 166,615,514 $ ( 35,253,658 ) $ 131,379,717 Stock based compensation expense Options — — — — 905,744 — 905,744 Restricted stock — — — — 2,268,354 — 2,268,354 Issuance of common stock For options exercised 28,006 28 — — 258,100 — 258,128 For restricted stock units vested 13,627 14 — — ( 14 ) — — Net loss — — — — — ( 3,761,098 ) ( 3,761,098 ) Balance March 31, 2022 17,902,608 $ 17,903 — $ — $ 170,047,698 $ ( 39,014,756 ) $ 131,050,845 Stock based compensation expense Options — — — — 1,336,810 — 1,336,810 Restricted stock — — — — 2,688,513 — 2,688,513 Issuance of common stock For options exercised 43,701 44 — — 572,303 — 572,347 For acquisition 240,741 241 — — 9,374,214 — 9,374,455 Repurchase of common stock — — ( 12,868 ) ( 13 ) ( 321,041 ) — ( 321,054 ) Net loss — — — — — ( 3,884,714 ) ( 3,884,714 ) Balance June 30, 2022 18,187,050 $ 18,188 ( 12,868 ) $ ( 13 ) $ 183,698,497 $ ( 42,899,470 ) $ 140,817,202 Stock based compensation expense Options — — — — 1,381,512 — 1,381,512 Restricted stock — — — — 2,895,729 — 2,895,729 Issuance of common stock — For options exercised 68,751 68 — — 219,561 — 219,629 For restricted stock units vested 5,438 5 ( 34,565 ) ( 34,560 ) Repurchase of common stock — — ( 693,246 ) ( 693 ) ( 12,239,824 ) — ( 12,240,517 ) Net loss — — — — — ( 3,466,792 ) ( 3,466,792 ) Balance September 30, 2022 18,261,239 $ 18,261 ( 706,114 ) $ ( 706 ) $ 175,920,910 $ ( 46,366,262 ) $ 129,572,203 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 OPTIMIZERX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Nine Months Ended September 30, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 13,424,460 ) $ ( 11,112,604 ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 1,395,400 1,565,484 Stock-based compensation 11,089,853 11,476,662 Increase in bad debt reserve 478,086 132,727 Changes in: Accounts receivable 838,453 6,854,150 Prepaid expenses and other assets ( 728,030 ) 2,199,333 Accounts payable ( 858,820 ) 393,817 Revenue share payable ( 305,049 ) ( 1,704,593 ) Accrued expenses and other liabilities 508,548 ( 1,237,689 ) Deferred revenue 24,084 ( 716,693 ) NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES ( 981,935 ) 7,850,594 CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES: Purchase of property and equipment ( 81,767 ) ( 64,667 ) Purchases of held-to-maturity investments ( 162,777,510 ) ( 37,468,889 ) Redemptions of held-to-maturity investments 165,088,755 — EvinceMed acquisition — ( 2,000,000 ) Acquisition of intangible assets, including intellectual property rights ( 3,796 ) ( 158,321 ) Capitalized software development costs ( 1,561,447 ) — NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 664,235 ( 39,691,877 ) CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES: Cash paid for employee withholding taxes related to the vesting of restricted stock units ( 292,789 ) — Repurchase of common stock ( 7,522,426 ) ( 12,561,571 ) Proceeds from exercise of stock options 145,706 1,050,104 Loan origination costs ( 300,000 ) — NET CASH USED IN FINANCING ACTIVITIES ( 7,969,509 ) ( 11,511,467 ) NET DECREASE IN CASH AND CASH EQUIVALENTS ( 8,287,209 ) ( 43,352,750 ) CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 18,208,685 84,681,770 CASH AND CASH EQUIVALENTS - END OF PERIOD $ 9,921,475 $ 41,329,020 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ — $ — ROU assets obtained in exchange for lease obligations $ 158,191 $ — Reduction of EvinceMed purchase price for amounts previously paid $ — $ 708,334 Shares issued in connection with acquisition $ — $ 9,374,455 Cash paid for income taxes $ — $ — The accompanying notes are an integral part of these condensed consolidated financial statements. 6 OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2023 NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION The accompanying condensed consolidated financial statements include OptimizeRx Corporation and its wholly owned subsidiaries (collectively, the “Company”, “we”, “our”, or “us”). We are a digital health technology company enabling care-focused engagement between life sciences organizations, healthcare providers, and patients at critical junctures throughout the patient care journey. Connecting over 60 % of U.S. healthcare providers and millions of their patients through an intelligent technology platform embedded within a proprietary point-of-care network, OptimizeRx helps patients start and stay on their medications. The condensed consolidated financial statements for the three and nine months ended September 30, 2023 and 2022 have been prepared by us without audit pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments necessary to present fairly our financial position at September 30, 2023, and our results of operations, changes in stockholders’ equity, and cash flows for the nine months ended September 30, 2023 and 2022, have been made. Those adjustments consist of normal and recurring adjustments. The condensed consolidated balance sheet as of December 31, 2022, has been derived from the audited consolidated condensed balance sheet as of that date. Certain information and note disclosures, including a detailed discussion about the Company’s significant accounting policies, normally included in our annual consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with a reading of the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on March 10, 2023. The results of operations for the nine months ended September 30, 2023, are not necessarily indicative of the results to be expected for the full year. NOTE 2 – NEW ACCOUNTING STANDARDS ASU Topic 2021-08 Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606 , Revenue from Contracts with Customers , as if it had originated the contracts. The standard was effective for the Company’s fiscal year beginning January 1, 2023. The adoption of this standard did not have a material effect on our financial position, results of operations, or cash flows. NOTE 3 - CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Cash equivalents include items almost as liquid as cash with maturity periods of three months or less when purchased, and short-term investments include items with maturity dates between three months and one year when purchased. We account for marketable securities in accordance with ASC 320, “Investments - Debt Securities”, which require that certain debt securities be classified into one of three categories: held-to-maturity, available-for-sale, or trading securities, and depending upon the classification, value the security at amortized cost or fair market value. At September 30, 2023 and December 31, 2022, we have recorded $ 53.6 million and $ 55.9 million, respectively, of held-to-maturity United States’ Treasury Bills at amortized cost basis. Our held-to-maturity United States’ Treasury Bills have maturity dates between October 2023 and December 2023 . 7 OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2023 NOTE 4 - CAPITALIZED SOFTWARE COSTS The Company capitalizes certain development costs incurred in connection with software development for internal-use software platforms used in operations and for providing services to our customers. Costs incurred in the preliminary stages of development are expensed as incurred. Once software has reached the development stage, internal and external costs, if direct, are capitalized until the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Capitalized internal use software development costs are included in intangible assets and are amortized on a straight-line basis over the estimated useful life of the software platforms and are included in depreciation and amortization within operating expenses in the consolidated statements of operations. Amortization of capitalized internal use software expense for the nine months ended September 30, 2023 and 2022 was $ 142,662 and $ 254,547 , respectively. The Company accumulates capitalizable costs related to current projects in a construction in process (“CIP”) software account, the balance of which was $ 761,447 and zero at September 30, 2023 and December 31, 2022, respectively. NOTE 5 – REVENUES Under ASC 606, Revenue from Contracts with Customers , we record revenue when earned, rather than when billed. From time to time, we may record revenue based on our revenue recognition policies in advance of being able to invoice the customer, or we may invoice the customer prior to being able to recognize the revenue. Included in accounts receivable are unbilled amounts of $ 4,598,280 and $ 3,582,735 at September 30, 2023, and December 31, 2022, respectively. Amounts billed in advance of revenue recognition are presented as deferred revenue on the condensed consolidated balance sheets. The Company has several signed contracts with customers for the distribution of messaging, or other services, which include payment in advance. The payments are not recorded as revenue until the revenue is earned under its revenue recognition policy. Deferred revenue was $ 188,394 and $ 164,309 as of September 30, 2023 and December 31, 2022, respectively. The contracts are all short term in nature and all revenue is expected to be recognized within 12 months, or less. Following is a summary of activity for the deferred revenue account for the nine months ended September 30. 2023 2022 Balance January 1 $ 164,309 $ 1,389,907 Revenue recognized ( 8,778,893 ) ( 6,013,181 ) Amount collected 9,349,724 5,916,318 Balance March 31 $ 735,140 $ 1,293,044 Revenue recognized ( 9,619,380 ) ( 7,373,802 ) Amount collected 9,336,027 7,122,677 Balance June 30 $ 451,787 $ 1,041,919 Revenue recognized ( 11,400,132 ) ( 9,611,912 ) Amount collected 11,136,739 9,243,207 Balance September 30 $ 188,394 $ 673,214 8 OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2023 NOTE 5 – REVENUES (CONTINUED) Disaggregation of Revenue Consistent with ASC Topic 606, we have disaggregated our revenue by timing of revenue recognition. The majority of our revenue is recognized over time as solutions are provided. A small portion of our revenue related to program development, solution architect design, and other solutions is recognized at a point in time upon delivery to customers. A break down is set forth in the table below. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenue recognized over time $ 14,815,187 $ 14,503,942 $ 40,421,323 $ 39,627,265 Revenue recognized at a point in time 1,516,297 581,562 2,731,237 3,168,434 Total Revenue $ 16,331,484 $ 15,085,504 $ 43,152,560 $ 42,795,699 NOTE 6 – LEASES During the nine months ended, we had operating leases for office space in three multi-tenant facilities in Rochester, Michigan, and Zagreb, Croatia. We also had a lease on office space in Cranbury, New Jersey, which expired in January 2022. The lease in Rochester, Michigan was terminated during the quarter ended June 30, 2023. The lease in Zagreb, Croatia was terminated in the quarter ended September 30, 2023 and replaced with a lease in a new location in Zagreb, Croatia that expires in June 2028. In July 2023, the Company entered into a short-term sublease agreement for office space in Waltham, MA. The term of the sublease commenced on June 15, 2023 and will terminate on July 31, 2024. The Company is obligated to pay approximately $ 5,800 per month over the term of the lease. Lease-related assets, or right-of-use assets, are recognized at the lease commencement date at amounts equal to the respective lease liabilities, adjusted for prepaid lease payments, initial direct costs, and lease incentives received. Lease-related liabilities are recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rate. Amortization of the right of use assets is recognized as non-cash lease expense on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Short-term lease costs include month to month leases, subleases of less than eighteen (18) months, and occasional rent for transient meeting and office spaces in shared office space facilities. For the nine months ended September 30, 2023 and 2022, the Company’s lease cost consists of the following components, each of which is included in operating expenses within the Company’s condensed consolidated statements of operations: Nine Months Ended September 30, 2023 2022 Operating lease cost $ 60,520 $ 72,208 Short-term lease cost 26,995 36,552 Total lease cost $ 87,515 $ 108,760 9 OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2023 NOTE 6 – LEASES (CONTINUED) The table below presents the future minimum lease payments to be made under operating leases as of September 30, 2023: As of September 30, 2023 2023 $ 9,032 2024 36,129 2025 36,129 2026 36,129 2027 36,129 Thereafter 18,065 Total 171,613 Less: discount 22,971 Total lease liabilities $ 148,642 The remaining lease term at September 30, 2023 for the operating lease is 4 years, 9 months, and the discount rate used in calculating the operating lease asset and liability is 6.32 %. Cash paid for amounts included in the measurement of lease liabilities was $ 53,027 and $ 66,244 for the nine months ended September 30, 2023 and 2022, respectively. For the nine months ended September 30, 2023 and 2022, payments on lease obligations were $ 60,095 and $ 75,719 , respectively, and amortization on the right of use assets was $ 60,520 and $ 77,011 , respectively. NOTE 7 – STOCKHOLDERS’ EQUITY Preferred Stock The Company had 10,000,000 shares of preferred stock, $ 0.001 par value per share, authorized as of September 30, 2023. No shares were issued or outstanding in either 2023 or 2022. Common Stock The Company had 166,666,667 shares of common stock, $ 0.001 par value per share, authorized as of September 30, 2023. There were 16,645,523 and 17,074,173 shares of common stock outstanding, net of shares held in treasury of 1,741,397 and 1,214,398 , at September 30, 2023 and December 31, 2022, respectively. During the quarters ended September 30, 2023, June 30, 2023 and March 31, 2023, the Company issued 0 , 10,000 and 9,668 shares of our common stock, respectively, and received proceeds of $ 0 , $ 105,100 and $ 40,606 , respectively, in connection with the exercise of options under our 2013 Incentive Plan. During the quarters ended September 30, 2022, June 30, 2022 and March 31, 2022, the Company issued 68,751 , 43,701 and 28,006 shares of our common stock, respectively, and received proceeds of $ 219,629 , $ 572,347 and $ 258,128 , respectively, in connection with the exercise of options under our 2013 Incentive Plan. 10 OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2023 NOTE 7 – STOCKHOLDERS’ EQUITY (CONTINUED) The Company issued 10,149 , 35,260 and 33,272 shares of common stock in the three months ended September 30, 2023, June 30, 2023 and March 31, 2023, respectively, in connection with the vesting of restricted stock units under our 2013 Incentive Plan and our 2021 Equity Incentive Plan. Some of the participants utilized a net withhold settlement method, in which shares were surrendered to cover payroll withholding taxes. Of the shares issued to participants during the nine months ended September 30, 2023, 19,488 shares, valued at $ 260,710 , were surrendered and subsequently cancelled. The Company issued 5,438 , 0 , and 13,627 shares of common stock in the three months ended September 30, 2022, June 30, 2022, and March 31, 2022, respectively, in connection with the vesting of restricted stock units under our 2013 Incentive Plan and our 2021 Equity Incentive Plan. The Company issued 240,741 shares of common stock valued at $ 9,374,455 during the quarter ended June 30, 2022 in connection with the acquisition of substantially all of the assets of EvinceMed Corp. Treasury Stock During the quarter ended March 31, 2023, the Board authorized a share repurchase program, under which the Company may repurchase up to $ 15 million of its outstanding common stock. This stock repurchase authorization expires on the earlier of March 12, 2024, or when the repurchase of $ 15 million of shares of its common stock has been reached. During the quarter ended June 30, 2023, the Company repurchased 526,999 shares, under this program for a total of $ 7,522,426 , including commissions paid on repurchases. These shares were recorded as treasury shares using the par value method. There were no shares repurchased in the quarter ended September 30, 2023. During 2022, the Board authorized a share repurchase program, under which the Company could repurchase up to $ 20.0 million of its outstanding common stock. During 2022, the Company repurchased 1,214,398 shares of our common stock for a total of $ 20,021,830 , including commissions paid on repurchases. These shares were recorded as treasury shares using the par value method. NOTE 8 – STOCK BASED COMPENSATION Stock Options The compensation expense related to options for the nine months ended September 30, 2023 and 2022 was $ 4,719,779 and $ 3,624,065 , respectively. The fair value of these instruments was calculated using the Black-Scholes option pricing model. There is $ 10,177,841 of remaining expense related to unvested options to be recognized in the future over a weighted average period of 1.75 years. The total intrinsic value of outstanding options at September 30, 2023 was $ 12,600 . During 2022, the Company granted certain performance based stock options, the expense for which will be recorded over time once the achievement of the performance is deemed probable. There was no expense related to these options recorded during the period. Restricted Stock Units The Company recorded of $ 6,370,074 and $ 7,852,597 in compensation expense related to restricted stock units for the nine months ended September 30, 2023 and 2022, respectively. A total of $ 11,247,274 remains to be recognized at September 30, 2023 over a weighted average period of 1.88 years. 11 OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2023 NOTE 8 – STOCK BASED COMPENSATION (CONTINUED) During 2022, the Company granted certain performance based restricted stock units, the expense for which will be recorded over time once the achievement of the performance is deemed probable. There was no expense related to these restricted stock units recorded during the period. The director’s compensation program calls for the grant of restricted stock units with a one year vesting period. There was $ 540,820 and $ 444,365 included in the compensation expense discussed above related to director’s compensation for the periods ended September 30, 2023 and 2022, respectively. Equity Award Modification On April 16, 2023, the Compensation Committee approved a grant to the CEO of 86,685 restricted stock units and 161,698 stock options with a grant date fair value of $ 2.5 million to vest over a three year period. Concurrently, the CEO forfeited his October 2021 grant of 182,398 market-based restricted stock units. The forfeiture and accompanying grant are considered an equity modification according to ASC 718, Compensation-Stock Compensation . The additional compensation value created by the termination and issuance of new equity awarded, as measured using a Monte Carlo simulation was approximately $ 1.9 million in total. Under ASC 718 this results in a non-cash expense in current and future periods to be recognized over a three year period. These expense values are reflected and included in the option and restricted stock expense values discussed above. NOTE 9 – LOSS PER SHARE Basic earnings per share (“EPS”) is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. The number of shares related to options and restricted stock units included in diluted EPS is based on the “Treasury Stock Method” prescribed in ASC 260-10, Earnings per Share . This method assumes the theoretical repurchase of shares using proceeds of the respective stock options exercised, and for restricted stock units, the amount of compensation cost attributed to future services which have not yet been recognized, and the amount of current and deferred tax benefit, if any, that would be credited to additional paid in capital upon the vesting of the restricted stock units, at a price equal to the issuer’s average stock price during the related earnings period. Accordingly, the number of shares that could be included in the calculation of EPS in respect of the stock options and restricted stock units is dependent on this average stock price and will increase as the average stock price increases. 12 OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2023 NOTE 9 – LOSS PER SHARE (CONTINUED) The following table sets forth the computation of basic and diluted net loss per share. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator Net loss $ ( 2,865,298 ) $ ( 3,466,792 ) $ ( 13,424,460 ) $ ( 11,112,604 ) Denominator Weighted average shares outstanding used in computing net loss per share Basic 16,637,606 17,981,184 16,907,482 17,994,288 Effect of dilutive stock options, warrants, and stock grants — — — — Diluted 16,637,606 17,981,184 16,907,482 17,994,288 Net loss per share Basic $ ( 0.17 ) $ ( 0.19 ) $ ( 0.79 ) $ ( 0.62 ) Diluted $ ( 0.17 ) $ ( 0.19 ) $ ( 0.79 ) $ ( 0.62 ) No calculation of diluted earnings per share is included for the three or nine months ended September 30, 2023 or 2022 as the effect of the calculation would be anti-dilutive. The number of common shares potentially issuable upon the exercise of certain options and the vesting of certain restricted stock units that were excluded from the diluted loss per common share calculation are reflected in the table below. Three Months Ended September 30, Nine Months Ended September 30, Weighted average number of shares for the periods ended 2023 2022 2023 2022 Options 7,433 63,471 17,736 99,587 Unvested restricted stock unit awards 3,739 43,751 23,341 76,010 Total 11,172 107,222 41,077 175,597 NOTE 10 – CONTINGENCIES Litigation The Company is not currently involved in any material legal proceedings. 13 OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2023 NOTE 11 – INCOME TAXES As discussed in our annual report on Form 10-K for the year ended December 31, 2022, we had net operating loss carry-forwards for federal income tax purposes of approximately $ 21.5 million as of December 31, 2022. Accordingly, no federal income tax expense or benefit is recorded in the current period. Management monitors company-specific, and macro- economic factors and assesses the likelihood that the Company’s net deferred tax assets will be utilized prior to their expiration. As previously disclosed in our annual report, the Company maintained a valuation allowance against its net deferred tax assets. NOTE 12 – SUBSEQUENT EVENTS In October 2023, the Company completed the acquisition of 100 % of the outstanding shares of Healthy Offers, Inc. (d/b/a Medicx Health), a Nevada corporation. On October 24, 2023, a newly formed wholly-owned subsidiary of the Company consummated the merger with and into Medicx, with Medicx continuing as the surviving company and a wholly-owned subsidiary of the Company (the “Merger”). The aggregate merger consideration the Company paid to the securityholders of Medicx at the closing was $ 95,000,000 , subject to certain customary post-acquisition purchase price adjustments. There were $ 554,741 and $ 589,691 in costs related to the acquisition recorded in operating expense for the three and nine months ended September 30, 2023, respectively. Certain members of Medicx’s management team (“Management Investors”) agreed to use a portion of the consideration received to purchase, in the aggregate, approximately $ 10.5 million of the Company’s common stock. On October, 24, 2023, at the closing of the Merger, each Management Investor executed a common stock purchase agreement (the “Subscription Agreement”). Pursuant to the Subscription Agreement, the Company issued 1,444,581 shares of its common stock in the aggregate to the Management Investors. A portion of the cash purchase price was funded through debt financing. The financing agreement provides for a term loan in the aggregate principal amount of $ 40,000,000 . The term loan is repayable in quarterly installments on the last business day of each fiscal quarter commencing on December 31, 2023 in an amount equal to 1.25 % of the principal amount. The outstanding unpaid principal amount of the term loan, and all accrued and unpaid interest thereon, shall be due and payable on the earliest of (i) the fourth (4th) anniversary of the closing of the financing agreement and funding of the term loan and (ii) the date on which the term loan is declared due and payable pursuant to the terms of the finance agreement. There was $ 300,000 of fees paid in loan origination fees during the three and nine months ending September 30, 2023. 14