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Item 8. Financial Statements and Supplementary Data

2024-04-15 compared with 2023-03-10 · 914 added, 734 removed, 340 unchanged (83% of the section changed)

Financial Statements and Supplementary

Index to Financial Statements Required by Article

8 of Regulation S-X:

Financial Statements and Supplementary Data

to Financial Statements Required by Article 8 of Regulation S-X:

Audited Financial Statements:

Report of Independent Registered Public Accounting Firm;

Consolidated Balance Sheets as of December 31, 2022 and 2021;

Consolidated Statements of Operations for the years ended December 31, 2022 and 2021;

Consolidated Statement of Stockholders’ Equity for the year ended December 31, 2022;

Consolidated Statement of Stockholders’ Equity for the year ended December 31, 2021;

Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021;

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting

To the Shareholders and Board of Directors of

OptimizeRx Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of OptimizeRx Corporation and Subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related

consolidated statements of operations, stockholders’ equity and cash flows for the years then ended, and the related notes (collectively

referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements

referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and

the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted

in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of Company’s

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with

F-1 Report of Independent Registered Public Accounting Firm (PCAOB id 1195 );

F-4 Consolidated Balance Sheets as of December 31, 2023 and 2022;

F-5 Consolidated Statements of Operations for the years ended December 31, 2023 and 2022;

F-6 Consolidated Statement of Stockholders’ Equity for the year ended December 31, 2023;

F-7 Consolidated Statement of Stockholders’ Equity for the year ended December 31, 2022;

F-8 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022;

F-9 Notes to Consolidated Financial Statements

of Independent Registered Public Accounting Firm

the Stockholders and Board of Directors of OptimizeRx Corporation

on the Financial Statements

audited the accompanying consolidated balance sheets of OptimizeRx Corporation and Subsidiaries (the “Company”) as of December

31, 2023 and 2022, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then

ended, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial

statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and

2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally

accepted in the United Sates of America.

These consolidated

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we

engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding

of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides

a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is

a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated

to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and

(2) involved especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any

way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter

below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they related.

Critical Audit Matter - Revenue Recognition

As disclosed in Note 2 to the consolidated financial

statements, the Company recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects

the consideration the Company expects to receive in exchange for those products or services.

Significant judgment is exercised by the Company

in determining revenue recognition for these customer agreements and includes the following:

(1) determining whether services are considered

distinct performance obligations that should be accounted for separately versus together, (2) the pattern and timing of delivery for each

distinct performance obligation, and (3) identification and treatment of contract terms that may impact the timing and amount of revenue

How the Critical Audit Matter Was Addressed

The audit procedures we performed to address

this critical audit matter included the following:

(1) obtaining an understanding of the design and implementation of controls

related to identifying distinct performance obligations, determining the timing of revenue recognition and any estimation of

variable consideration, (2) selection of a sample of customer agreements and testing management’s identification and treatment

of contract terms, and (3) testing the mathematical accuracy of management’s calculations of revenue and the associated timing

of revenue recognized in the consolidated financial statements.

We have served as the Company’s auditor

Sterling Heights, Michigan

March 10, 2023

OPTIMIZERx CORPORATION

Consolidated Balance Sheets

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether

due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

the Stockholders and Board of Directors of OptimizeRx Corporation

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements

that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are

material to the consolidated financial statements and (2) involved especially challenging, subjective, or complex judgments.

The communication

of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are

not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts

or disclosures to which they related.

Audit Matter - Revenue Recognition

disclosed in Note 2 to the consolidated financial statements, the Company recognizes revenue upon transfer of control of promised products

or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or

principal considerations for our determination that performing procedures relating to revenue recognition is a critical audit matter

is that significant judgment is exercised by the Company in determining revenue recognition for customer agreements and includes the

(1) determining whether services are considered distinct performance obligations that should be accounted for separately versus

together, (2) the pattern and timing of delivery for each distinct performance obligation, and (3) identification and treatment of contract

terms that may impact the timing and amount of revenue recognized.

the Critical Audit Matter Was Addressed in the Audit

audit procedures we performed to address this critical audit matter included the following:

(1) obtaining an understanding of the design

and implementation of controls related to identifying distinct performance obligations, determining the timing of revenue recognition,

and estimating any variable consideration, (2) selecting of a sample of customer agreements and testing management’s identification

and treatment of contract terms, (3) testing the mathematical accuracy of management’s calculations of revenue and the associated

timing of revenue recognized in the consolidated financial statements, (4) confirming data utilized to recognize revenue with third-party

service providers to ensure completeness and accuracy of the data used to recognize revenue, and (5) confirming with the Company’s customers

the contract terms and conditions of agreements and completion of the Company’s performance obligations under the contract.

Audit Matter – Business Combination and Valuation of Intangible Assets

disclosed in Notes 3 and 7 to the consolidated financial statements, on October 24, 2023, the Company completed the acquisition of Healthy

(d/b/a Medicx Health or “Medicx”) for total consideration of approximately $95.9 million.

Of the acquired intangible

assets, $34 million of customer relationships and $8.3 million of technology solutions were recorded.

The valuation methods used to determine

the estimated fair value of these intangible assets included the multi-period excess earnings approach for customer relationships and

the relief from royalty method for technology solutions.

Several significant assumptions and estimates were involved in the application

of these valuation methods, including forecasted revenues, royalty rates, gross margins, discount rates, and attrition rates.

principal considerations for our determination that performing procedures relating to the valuation of customer relationships and developed

technology acquired in the acquisition of Medicx is a critical audit matter are (i) the significant judgment used by management when

developing the fair value estimate of the customer relationships and developed technology acquired, (ii) a high degree of auditor judgment,

subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the forecasted

revenues, gross margins, discount rate, and attrition rate for customer relationships and forecasted revenues, royalty rate, and discount

rate for developed technology acquired, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

the Stockholders and Board of Directors of OptimizeRx Corporation

the Critical Audit Matter Was Addressed in the Audit

the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated

financial statements.

These procedures included (i) obtaining an understanding of the design and implementation of controls relating

to the acquisition accounting, including controls over management’s valuation of the customer relationships and developed technology

acquired, (ii) reading the purchase agreement, (iii) testing management’s process for developing the fair value estimate of the

customer relationships and developed technology acquired, (iv) evaluating the appropriateness of the multi-period excess earnings and

relief from royalty methods used by management, (v) testing the completeness and accuracy of the underlying data used in the multi-period

excess earnings and relief from royalty methods, and (vi) evaluating the reasonableness of the significant assumptions used by management

related to forecasted revenues, gross margins, discount rate, and attrition rate for customer relationships and forecasted revenues,

royalty rate, and discount rate for developed technology acquired.

the reasonableness of the significant assumptions used by management related to the forecasted revenues and gross margins for customer

relationships and developed technology involved considering (i) the current and past performance of the Medicx business and (ii) whether

the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge

were used to assist in evaluating (i) the appropriateness of the multi-period excess earnings and relief from royalty methods and (ii)

the reasonableness of the discount rate, royalty rate, and attrition rate assumptions for customer relationships and the royalty rate

assumptions for developed technology acquired.

have served as the Company’s auditor since 2020.

Heights, Michigan

Balance Sheets

Current Assets

Cash and cash equivalents

Short-term investments

Accounts receivable, net

Prepaid expenses and other

Total Current Assets

Property and equipment, net

Technology assets, net

Patent rights, net

Right of use assets, net

Other intangible assets, net

Security deposits and other assets

Total Other Assets

and cash equivalents

Accounts receivable, net of allowance for credit losses of $ 239,172 and $ 352,043 at December 31, 2023 and 2022, respectively

expenses and other

Current Assets

and equipment, net

and customer relationships, net

lease right-of-use assets

deposits and other assets

$ 183,373,898

$ 134,651,185

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities

Accounts payable – trade

Accrued expenses

AND STOCKHOLDERS’ EQUITY

portion of long-term debt

payable – trade

Revenue share payable

Current portion of lease liabilities

Deferred revenue

Total Current Liabilities

Non-current Liabilities

Lease liabilities, net of current portion

Total Liabilities

Commitments and contingencies (See Note 15)

Stockholders’ Equity

portion of lease liabilities

Current Liabilities

liabilities, net of current portion

tax liabilities, net

and contingencies (See Note 16)

Stockholders’

Preferred stock, $ 0.001 par value, 10,000,000 shares authorized, none issued and outstanding at December 31, 2023 and 2022, respectively

Common stock, $ 0.001 par value, 166,666,667 shares authorized, 19,899,679 and 18,288,571 shares issued at December 31, 2023 and 2022, respectively

Treasury stock, $ 0.001 par value, 1,214,398 and none held at December

31, 2022 and 2021, respectively

Additional paid-in-capital

Accumulated deficit

Treasury stock, $ 0.001 par value, 1,741,397 and 1,214,398 purchased at December 31, 2023 and 2022, respectively

paid-in-capital

( 64,257,964 )

( 46,692,098 )

Total Stockholders’ Equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

Stockholders’ Equity

LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 183,373,898

$ 134,651,185

The accompanying notes are an integral part of

these financial statements.

OPTIMIZERx CORPORATION

Consolidated Statements of Operations

Cost of revenues

accompanying notes are an integral part of these financial statements.

Statements of Operations

Cost of revenues, exclusive of depreciation and amortization presented separately below

Operating Expenses

Stock-based compensation

Depreciation, amortization, and noncash lease expense

Other general and administrative expenses

Loss on disposal of a business

Impairment charges

Depreciation and amortization

Other sales, general and administrative expenses

Total operating expenses

Income (loss) from operations

Loss from operations

( 26,401,714 )

( 12,290,738 )

Other income (expense)

Interest expense

( 1,453,764 )

Interest income

Income (loss) before provision for income taxes

Total other income (expense), net

Loss before provision for income taxes

( 25,163,788 )

( 11,438,440 )

Income tax benefit

Net income (loss)

$ ( 17,565,866 )

$ ( 11,438,440 )

Weighted average number of shares outstanding – basic

Weighted average number of shares outstanding – diluted

Income (loss) per share – basic

Income (loss) per share – diluted

The accompanying notes are an integral part of

these financial statements.

OPTIMIZERx CORPORATION

Consolidated Statement of Stockholders’

Equity for the Year

Ended December 31, 2022

Treasury Stock

Balance, January 1, 2022

Loss per share – basic

Loss per share – diluted

accompanying notes are an integral part of these financial statements.

Statement of Stockholders’ Equity for the Year

December 31, 2023

January 1, 2023

( 1,214,398 )

1 unchanged sentence

$ ( 46,692,098 )

Stock-based compensation expense

Restricted Stock

Issuance of common stock:

For stock options exercised

For acquisition

For restricted stock units vested, net of cancelled units

Repurchase of common stock

$ 126,110,777

compensation expense

of common stock:

stock options exercised

restricted stock units vested, net of cancelled units

of common stock

( 7,521,899 )

( 7,522,426 )

Net loss for the year

loss for the year

( 17,565,866 )

Balance, December 31, 2022

December 31, 2023

( 1,741,397 )

2 unchanged sentences

$ 126,553,174

The accompanying notes are an integral part of

these financial statements.

OPTIMIZERx CORPORATION

Consolidated Statement of Stockholders’

Equity for the Year

Ended December 31, 2021

Balance, January 1, 2021

accompanying notes are an integral part of these financial statements.

Statement of Stockholders’ Equity for the Year

December 31, 2022

January 1, 2022

$ 166,615,514

Stock-based compensation expense

Restricted Stock

Issuance of common stock:

For board compensation

For stock options exercised

Public offering of common shares, net of offering costs

For restricted stock units vested

Net income for the year

Balance, December 31, 2021

$ ( 35,253,658 )

$ 131,379,717

compensation expense

of common stock:

stock options exercised

restricted stock units vested, net of cancelled units

of common stock

( 1,214,398 )

The accompanying notes are an integral part of

these financial statements.

OPTIMIZERx CORPORATION

Consolidated Statements

of Cash Flows

( 20,023,044 )

( 20,024,258 )

loss for the year

( 11,438,440 )

December 31, 2022

( 1,214,398 )

$ 172,785,800

$ ( 46,692,098 )

$ 126,110,777

accompanying notes are an integral part of these financial statements.

Statements of Cash Flows

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income

$ ( 17,565,866 )

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

$ ( 11,438,440 )

Adjustments to reconcile net loss to net cash (used in) / provided by operating activities:

Depreciation and amortization

Increase in bad debt reserve

Asset impairment charges

Loss on disposal of business

Increase in bad debt expense

Stock-based compensation

Amortization of debt issuance costs

Change in operating assets and liabilities, net of the effects of acquisitions:

Accounts receivable

1 unchanged sentence

Prepaid expenses and other assets

( 1,174,044 )

Accounts payable

( 1,320,150 )

Revenue share payable

Accrued expenses and other liabilities

Change in operating lease liabilities

Deferred tax liabilities

( 7,695,374 )

Deferred revenue

( 1,225,598 )

NET CASH PROVIDED BY OPERATING ACTIVITIES

NET CASH (USED IN) / PROVIDED BY OPERATING ACTIVITIES

( 7,239,153 )

CASH FLOWS USED IN INVESTING ACTIVITIES:

Purchases of property and equipment

EvinceMed acquisition

Proceeds from sale of property and equipment

Cash paid for acquisitions, net of cash acquired

( 82,947,264 )

( 2,000,000 )

Proceeds from sale of business

Purchase of short-term investments

( 162,777,510 )

Acquisition of intangible assets, including intellectual property rights

Capitalized software development costs

( 55,931,821 )

Redemptions of short-term investments

Capitalized software development costs and other

NET CASH USED IN INVESTING ACTIVITIES

( 25,336,865 )

( 58,176,386 )

CASH FLOWS (USED IN ) / PROVIDED BY FINANCING ACTIVITIES:

Proceeds from public offering of common stock, net of offering costs

Proceeds from long-term debt, net of issuance costs

Repayment of long-term debt

( 1,710,000 )

Repurchase of common stock

( 7,522,426 )

( 20,024,258 )

Proceeds from exercise of stock options, net of cash paid for withholding taxes

Payment of contingent consideration

NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES

( 18,950,777 )

NET CASH (USED IN) / PROVIDED BY FINANCING ACTIVITIES

NET DECREASE IN CASH AND CASH EQUIVALENTS

( 4,356,229 )

NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS

( 66,473,085 )

3 unchanged sentences

Cash paid for interest

ROU assets obtained in exchange for lease obligations

Reduction of EvinceMed purchase price for amounts previously paid

1 unchanged sentence

Cash paid for income taxes

The accompanying notes are an integral part of

these financial statements.

OPTIMIZERx CORPORATION

accompanying notes are an integral part of these financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

OptimizeRx is a digital health technology company

enabling care-focused engagement between life sciences organizations, healthcare providers, and patients at critical junctures throughout

the patient care journey.

Connecting over 60 % of U.S.

healthcare providers and millions of their patients through an intelligent technology

platform embedded within a proprietary point-of-care network, OptimizeRx helps patients start and stay on their medications.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING

Basis of Presentation

The financial statements of the Company have been

prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.

Use of Estimates

The preparation of financial statements in conformity

with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of

assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting

Estimates and assumptions have been made in determining the carrying value of assets, depreciable and amortizable lives of tangible

and intangible assets, the carrying value of liabilities, the valuation allowance for the deferred tax asset, the timing of revenue recognition

1 – ORGANIZATION AND NATURE OF BUSINESS

is a digital health technology company enabling care-focused engagement between life sciences organizations, healthcare providers, and

patients at critical junctures throughout the patient care journey.

Connecting over two million U.S.

healthcare providers and millions

of their patients through an intelligent technology platform embedded within a proprietary point-of-care network, as well as mass digital

communications channels, OptimizeRx helps life sciences organizations engage and support their customers.

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States

of America and are presented in US dollars.

preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates

and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts

of revenues and expenses during the reporting period.

Estimates and assumptions have been made in determining the allowance for credit

losses, carrying value of assets, fair values assigned to acquired long-lived assets, depreciable and amortizable lives of tangible and

intangible assets, the carrying value of liabilities, the valuation allowance for deferred tax assets, the timing of revenue recognition

and related revenue-share expenses, and inputs used in the calculation of stock based compensation.

Actual results could differ from these

Principles of Consolidation

The financial statements reflect the consolidated

results of OptimizeRx Corporation, a Nevada corporation, and its wholly owned subsidiaries:

OptimizeRx Corporation, a Michigan corporation,

CareSpeak Communications, Inc., a New Jersey corporation, Cyberdiet, a controlled foreign corporation incorporated in Israel, and CareSpeak

Communications D.O.O., a Controlled Foreign Corporation incorporated in Croatia.

Together, these companies are referred to as “OptimizeRx”

and “the Company.” All material intercompany transactions have been eliminated.

Actual results could differ from

these estimates.

of Consolidation

financial statements reflect the consolidated results of OptimizeRx Corporation, a Nevada corporation, and its wholly owned subsidiaries:

OptimizeRx Corporation, a Michigan corporation, Healthy Offers, Inc., a Nevada corporation, CareSpeak Communications, Inc., a New Jersey

corporation, Cyberdiet, a controlled foreign corporation incorporated in Israel, and CareSpeak Communications D.O.O., a controlled foreign

corporation incorporated in Croatia.

Together, these companies are referred to as “OptimizeRx” and “the Company.”

All material intercompany transactions have been eliminated.

We operate in one reportable segment and use consolidated

net income as its measure of segment profit and loss.

Overall, our business involves connecting life science companies to patients and

We have a common customer base for all of our solutions, which are primarily all communications with healthcare providers or

patients on behalf of life science customers.

Our customers are geographically located in the U.S., although we have two technology centers

located internationally.

We do not prepare separate internal income statements by solution as our focus is on selling enterprise arrangements

covering multiple solutions that span the entire patient journey with a specific brand.

Reclassifications

Certain items in the previous year financial statements

have been reclassified to match the current year presentation.

Foreign Currency

items in the previous year financial statements have been reclassified to match the current year presentation.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company’s functional currency is the

dollar, however it pays certain expenses related to its two foreign subsidiaries in the local currency, which is the shekel for

its subsidiary in Israel and the kuna for its Croatian subsidiary.

dollar, however it pays certain expenses related to its two foreign subsidiaries in the local currency, which is the shekel for its

subsidiary in Israel and the euro for its Croatian subsidiary.

All transactions are recorded at the exchange rate at the time of payment.

1 unchanged sentence

Statement of Operations due to any fluctuations in the exchange rate.

Cash and Cash Equivalents

For purposes of the accompanying financial statements,

the Company considers all highly liquid instruments, consisting of money market accounts, with an initial maturity of three months or

less to be cash equivalents.

We account for marketable securities in accordance

with ASC 320, “Investments - Debt Securities”, which require that certain debt securities be classified into one of three categories:

held-to-maturity, available-for-sale, or trading securities, and depending upon the classification, value the security at amortized cost

or fair market value.

OPTIMIZERx CORPORATION

and Cash Equivalents

purposes of the accompanying financial statements, the Company considers all highly liquid instruments, consisting of money market accounts,

with an initial maturity of three months or less to be cash equivalents.

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.

Value of Financial Instruments

value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction

between market participants at the measurement date and in the principal or most advantageous market for that asset or liability.

fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions

specific to the entity.

In addition, the fair value of liabilities should include consideration of non-performance risk including our

own credit risk.

addition to defining fair value, the disclosure requirements around fair value establish a fair value hierarchy for valuation inputs,

which is expanded.

The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair

value are observable in the market.

Each fair value measurement is reported in one of the three levels, which is determined by the lowest

level input that is significant to the fair value measurement in its entirety.

These levels are:

1 – Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

2 – Inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for

identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions

are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

3 – Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants

would use in pricing the asset or liability.

The fair values are therefore determined using model-based techniques that include option

pricing models, discounted cash flow models, and similar techniques.

The Company’s stock options and warrants are valued using

level 3 inputs.

Company’s carrying amounts of financial instruments including cash and cash equivalents, accounts receivable, accounts payable, and other

current liabilities approximate their fair values due to their short maturities.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value of Financial Instruments

Fair value is defined as the price that would

be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement

date and in the principal or most advantageous market for that asset or liability.

The fair value should be calculated based on assumptions

that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.

In addition, the fair

value of liabilities should include consideration of non-performance risk including our own credit risk.

In addition to defining fair value, the disclosure

requirements around fair value establish a fair value hierarchy for valuation inputs, which is expanded.

The hierarchy prioritizes the

inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

Each fair value

measurement is reported in one of the three levels, which is determined by the lowest level input that is significant to the fair value

measurement in its entirety.

These levels are:

Level 1 – Inputs are based upon unadjusted

quoted prices for identical instruments traded in active markets.

Level 2 – Inputs are based upon significant

observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets

that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be

corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Inputs are generally unobservable

and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models,

and similar techniques.

The Company’s stock options and warrants are valued using level 3 inputs.

The Company’s carrying amounts of financial instruments

including cash and cash equivalents, accounts receivable, accounts payable, and other current liabilites approximate their fair values

due to their short maturities.

Accounts Receivable and Allowance for Doubtful

Accounts 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.

has a standardized approach to estimate and review the collectability of its receivables based on a number of factors, including the period

they have been outstanding.

Historical collection and payer reimbursement experience is an integral part of the estimation process related

to allowances for doubtful accounts.

In addition, the Company regularly assesses the state of its billing operations in order to identify

issues, which may impact the collectability of these receivables or reserve estimates.

Because the Company’s customers are primarily

large well-capitalized companies, historically there has been very little bad debt expense.

Bad debt expense was $ 363,512 for the year

ended December 31, 2022 and $ 80,000 for the year ended December 31, 2021.

The allowance for doubtful accounts was $ 352,043 and

$ 241,219 as of December 31, 2022 and 2021, respectively.

From time to time, we may record revenue based on our revenue recognition

policies described below in advance of being able to invoice the customer.

Included in accounts receivable are unbilled amounts of $ 3,582,735 ,$ 2,110,865

and $ 757,218 at December 31, 2022, 2021 and 2020, respectively.

OPTIMIZERx CORPORATION

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Receivable and Allowance for Credit Losses

receivable are reported at realizable value, net of allowances for credit losses, which is estimated and recorded in the period the related

revenue is recorded.

The Company does not seek collateral to secure its accounts receivable and amounts billed are are generally due

within a short period of time based on terms and conditions normal for our industry.

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.

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.

If current or expected future economic trends, events, or changes in circumstances indicate

that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance

is adjusted accordingly.

Past-due receivable balances are written off when the Company’s collection efforts have been exhausted.

Company’s customers are primarily large well-capitalized companies, and historically there has been very little bad debt expense.

Bad debt expense was $ 665,973 and $ 363,512 for the years ended December 31, 2023 and 2022, respectively.

The allowance for credit

losses was $ 239,172 and $ 352,043 as of December 31, 2023 and 2022, respectively.

changes in the allowance for credit losses in each of the years ended December 31, 2023 and 2022, were as follows:

Balance at beginning of year

Bad debt expense

Balance at end of year

time to time, we may record revenue based on our revenue recognition policies described below in advance of being able to invoice the

Included in accounts receivable are unbilled amounts of $ 4,198,312 , and $ 3,582,735 , at December 31, 2023, and 2022, respectively.

and Equipment

and equipment are stated at cost and are being depreciated over their estimated useful lives of three to five years for office equipment

and three years for computer equipment using the straight-line method of depreciation for book purposes.

Maintenance and repair charges

are expensed as incurred.

Lease-related

assets, or Operating lease right-of-use (“ROU”) 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

The Company reviews all options to extend, terminate, or purchase its ROU assets at the commencement of the lease and on an ongoing

basis and accounts for these options when they are reasonably certain of being exercised.

Operating lease expense is recognized on a straight-line

basis over the lease term, while variable lease payments are expensed as incurred.

short-term lease recognition exemption is applied for leases with terms at commencement of not greater than 12 months.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property and Equipment

Property and equipment are stated at cost and

are being depreciated over their estimated useful lives of three to five years for office equipment and three years for computer equipment

using the straight-line method of depreciation for book purposes.

Maintenance and repair charges are expensed as incurred.

Intangible Assets

Intangible assets are stated at cost.

assets are being amortized over their estimated useful lives of fifteen to seventeen years for patents, eight years for customer relationships,

fifteen years for tradenames, two to four years for covenants not to compete, and three to ten years for software and websites, all using

the straight-line method.

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

assets are stated at cost.

Finite-lived assets are being amortized over their estimated useful lives of fifteen to seventeen years for

patents, eight years for customer relationships, fifteen years for tradenames, two to four years for covenants not to compete, and three

to ten years for software and websites, all using the straight-line method.

These assets are evaluated when there is a triggering event.

There was no impairment of our intangible assets

in either year presented.

We evaluate goodwill for impairment during our

fiscal fourth quarter, or more frequently if an event occurs or circumstances change.

Our analysis determined that there was no impairment

of our goodwill.

Revenue Recognition

Recognition of revenue requires evidence of a

contract, probable collection of proceeds, and completion of substantially all performance obligations.

We use a 5-step model to recognize

assets, such as property and equipment and amortizing intangible assets are reviewed whenever events or changes in circumstances indicate

that the related carrying amounts may not be recoverable.

Impairment of assets with definite-lives is generally determined by comparing

projected undiscounted cash flows expected to be generated by the asset, or asset groups, to its carrying value.

If the carrying value

of the long-lived asset or asset group is not recoverable on an undiscounted basis, an impairment is recognized to the extent fair value

exceeds carrying value.

Determining the extent of impairment, if any, typically requires various estimates and assumptions including

cash flows directly attributable to the asset, the useful life of the asset and residual value, if any.

When necessary, the Company uses

internal cash flow estimates, quoted market prices and appraisals, as appropriate, to determine fair value.

Actual results could vary

from these estimates.

In addition, the remaining useful life of the impaired asset is revised, if necessary.

We recorded impairment charges of $ 6.7 million

against the value of our intangible assets during the year ended December 31, 2023.

No events or circumstances were noted that would

be indicative of any potential impairment during the year ended December 31, 2022.

represents the excess of the purchase price over the far value assigned to the net tangible and identifiable intangible assets of an

acquired business.

is assessed for impairment at least annually as of December 31, of each year, or more frequently if an event occurs or circumstances

change that would reduce the fair value of a reporting unit below its carrying value.

qualitative assessment can be performed to determine whether it is more likely than not that the fair value of the reporting unit is

less than its carrying value.

If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying

value is compared to its fair value.

fair value of a reporting unit is calculated using the income approach (including Discounted Cash Flow (“DCF”) and validated

using a market approach with the involvement of a third-party valuation specialist.

The income approach uses expected future cash flows

for the reporting unit and discounts those cash flows to present value.

Expected future cash flows are estimated using management assumptions

of growth rates, including long-term growth rates, capital expenditures and cost efficiencies.

Future acquisitions or divestitures are

not included in the expected future cash flows.

The Company uses a discount rate based on a calculated weighted average cost of capital

which is adjusted for company specific risk premiums.

The market approach compares the valuation multiples of similar companies to that

of the associated reporting unit.

The Company then reconciles the calculated fair values to its market capitalization.

The fair value

is then compared to its carrying value including goodwill.

If the fair value is in excess of its carrying value, the related goodwill

is not impaired.

If the fair value is less than carrying value, an impairment charge is recognized, equivalent to the amount that the

carrying value exceeds the fair value.

of revenue requires evidence of a contract, probable collection of proceeds, and completion of substantially all performance obligations.

We use a 5-step model to recognize revenue.

These steps are:

identify the contract with a customer, identify the performance obligations in the contract, determine the transaction

price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when or as the performance

obligations are satisfied.

Revenues are primarily generated from content

delivery activities in which the Company delivers financial, clinical, or brand messaging through a distribution network of eprescribers

and electronic health record technology providers (channel partners), directly to consumers, or from reselling services that complement

the business.

identify the contract with a customer, identify the performance obligations

in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and

recognize revenue when or as the performance obligations are satisfied.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

are primarily generated from content delivery activities in which the Company delivers financial, clinical, or brand messaging through

a distribution network of eprescribers and electronic health record technology providers (channel partners), directly to consumers, or

from reselling services that complement the business.

This content delivery for a customer is referred to as a program.

Unless otherwise specified, revenue is recognized based

on the selling price to customers.

Unless otherwise

specified, revenue is recognized based on the selling price to customers.

The Company’s contracts are generally all

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delivery of messages.

As the content is distributed through the platform

and network of channel partners (a transaction), these transactions are recorded, and revenue is recognized over time as the distributions

Revenue for transactions can be realized based on a price per message, a price per redemption, as a flat fee occurring over a period

of time, or upon completion of the program, depending on the client contract.

The Company recognizes setup fees that are required for

integrating client offerings and campaigns into the rule-based content delivery system and network over the life of the initial program,

based either on time, or units delivered, depending upon which is most appropriate in the specific situation.

Should a program be cancelled

before completion, the balance of set up revenue is recognized at the time of cancellation, as set up fees are nonrefundable.

Additionally,

the Company also recognizes revenue for providing program performance reporting and maintenance, either by the Company directly delivering

reports or by providing access to its online reporting portal that the client can utilize.

This reporting revenue is recognized over time

as the messages are delivered.

Program design, which is the design of the content delivery program, and related consulting services are

recognized as services are performed.

OPTIMIZERx CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Disaggregation of Revenue

Consistent with ASC Topic 606, we have disaggregated our revenue by

timing of revenue recognition.

The majority of our revenue is recognized over time as solutions are provided.

A small portion of our revenue

related to program development, solution architect design, and other solutions is recognized at a point in time upon delivery to customers.

The net contract balance for contracts in progress at December 31, 2023 and 2022 was $ 2.0 million and $ 5.4 million,

respectively.

The outstanding performance obligations are expected to be satisfied during the year ended December 31, 2024.

certain circumstances, the Company will offer sales rebates to customers based on spend volume.

Rebates are typically contracted based

on a quarterly or annual spend amount based on a volume threshold or tiered model.

At the beginning of the year, the rebate percentage

is estimated based on input from the sales team and analysis of prior year sales.

Thereafter, the open contract balance for the customer

is assessed quarterly to ensure the estimated rebate percentage being used for the rebate accrual remains reasonable.

The estimated amount

of variable consideration will be included in the transaction price only to the extent that it is probable that a significant reversal

in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently

For the year ended 2023, there were three contracts with customers that included a rebate clause.

the content is distributed through the platform and network of channel partners (a transaction), these transactions are recorded, and

revenue is recognized over time as the distributions occur.

Revenue for transactions can be realized based on a price per message, a

price per redemption, as a flat fee occurring over a period of time, or upon completion of the program, depending on the client contract.

The Company recognizes setup fees that are required for integrating client offerings and campaigns into the rule-based content delivery

system and network over the life of the initial program, based either on time, or units delivered, depending upon which is most appropriate

in the specific situation.

Should a program be cancelled before completion, the balance of set up revenue is recognized at the time of

cancellation, as set up fees are nonrefundable.

Additionally, the Company also recognizes revenue for providing program performance reporting

and maintenance, either by the Company directly delivering reports or by providing access to its online reporting portal that the client

This reporting revenue is recognized over time as the messages are delivered.

Program design, which is the design of the

content delivery program, and related consulting services are recognized as services are performed.

Disaggregation

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 .

Revenue recognized over time

Revenue recognized at a point in time

Revenue recognized at

a point in time

Total Revenue

Revenue Recognition (Continued)

In some instances, we license certain of our

software applications in arrangements that do not include other performance obligations.

In those instances, we record license

revenue when the software is delivered for use to the license.

In instances where our contracts included Software as a Service, the

revenue is recognized over the subscription period as services are delivered to the customer.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

some instances, we license certain of our software applications in arrangements that do not include other performance obligations.

those instances, we record license revenue when the software is delivered for use to the license.

In instances where our contracts included

Software as a Service, the revenue is recognized over the subscription period as services are delivered to the customer.

In some instances, the Company also resells messaging

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Company receives.

There were no programs recorded on a net basis in the years presented.

In instances where the Company resells these

messaging solutions and has all financial risk and significant operation input and risk, the Company records the revenue based on the

gross amount sold and the amount paid to the channel partner as a cost of sales.

Cost of Revenues

The primary cost of revenue is revenue share

Cost of revenues does not include depreciation and amortization which is listed separately on the statements of operations.

Based on the volume of transactions that are delivered through the channel partner network, the Company provides a revenue share to compensate

the partner, or others, for their promotion of the campaign.

Revenue shares are a negotiated percentage of the transaction fees and can

also be specific to special considerations and campaigns.

Income taxes are computed using the asset and

liability method.

Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences

between the financial reporting and tax basis of assets and liabilities and are measured using the currently enacted tax rates and laws.

A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

The Company recognizes the tax benefit from uncertain

tax positions if it is more likely than not that the tax positions will be sustained on examination by the tax authorities, based on the

technical merits of the position.

The tax benefit is measured based on the largest benefit that has a greater than 50 % likelihood of being

realized upon ultimate settlement.

It is the Company’s policy to include interest and penalties related to tax positions as a component

of income tax expense.

OPTIMIZERx CORPORATION

In instances where the Company resells these messaging solutions and has all financial risk and significant operation

input and risk, the Company records the revenue based on the gross amount sold and the amount paid to the channel partner as a cost of

of Revenues include revenue-share expense and costs associated with licensing data from third parties.

Cost of revenues does not include

depreciation and amortization which is listed separately on the statements of operations.

Based on the volume of transactions that are

delivered through the channel partner network, the Company provides a revenue-share to compensate the partner, or others, for their promotion

of the campaign.

Revenue-shares are a negotiated percentage of the transaction fees and can also be specific to special considerations

and campaigns.

taxes are computed using the asset and liability method.

Under the asset and liability method, deferred income tax assets and liabilities

are determined based on the differences between the financial reporting and tax basis of assets and liabilities and are measured using

the currently enacted tax rates and laws.

A valuation allowance is provided for the amount of deferred tax assets that, based on available

evidence, are not expected to be realized.

judgments are required in order to determine the realizability of these deferred tax assets.

In assessing the need for a valuation allowance,

the Company evaluates all significant available positive and negative evidence, including historical operating results, estimates of

future taxable income and the existence of prudent and feasible tax planning strategies.

Changes in the expectations regarding the realization

of deferred tax assets could materially impact income tax expense in future periods.

Company recognizes the tax benefit from uncertain tax positions if it is more likely than not that the tax positions will be sustained

on examination by the tax authorities, based on the technical merits of the position.

The tax benefit is measured based on the largest

benefit that has a greater than 50 % likelihood of being realized upon ultimate settlement.

It is the Company’s policy to include

interest and penalties related to tax positions as a component of income tax expense.

Concentration

of Credit Risks

Company maintains its cash and cash equivalents in bank deposit accounts, which, at times, may exceed federally insured limits.

has not experienced any losses in such accounts;

however, amounts in excess of the federally insured limit may be at risk if the bank

experiences financial difficulties.

As of December 31, 2023 and 2022 the Company had $ 13,260,816 and $ 15,669,837 , respectively,

in cash balances in excess of federally insured limits, primarily at Bank of America.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Concentration of Credit Risks

The Company maintains its cash and cash equivalents

in bank deposit accounts, which, at times, may exceed federally insured limits.

The Company has not experienced any losses in such accounts;

however, amounts in excess of the federally insured limit may be at risk if the bank experiences financial difficulties.

As of December 31,

2022 and 2021 the Company had $ 15,669,837 and $ 83,312,524 , respectively, in cash balances in excess of federally insured limits, primarily

at Bank of America.

Research and Development

The Company expenses research and development

expenses as incurred.

There was no research and development expense for the years ended December 31, 2022 and 2021.

Stock-based Compensation

The Company uses the fair value method to account

for stock-based compensation.

The fair value of the equity instrument is charged directly to compensation expense and additional paid-in

capital over the period during which services are rendered.

The fair value of each award is estimated on the date of each grant.

For restricted stock awards, the fair value is

based on the market value of the Company’s common stock on the date of grant.

For market based restricted stock units, the fair

value is estimated using a Monte Carlo simulation model.

This valuation technique includes estimating the movement of stock prices and

the effects of volatility, interest rates and dividends.

For options, fair value is estimated using the

Black-Scholes option pricing model that uses the following assumptions.

Estimated volatilities are based on the historical volatility

of the Company’s common stock over the same period as the expected term of the options.

The expected term of options granted represents

the period of time that options granted are expected to be outstanding.

The Company uses historical data to estimate option exercise behavior

and to determine this term.

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

and Development

Company expenses research and development expenses as incurred.

There was no research and development expense for the years ended December 31,

2023 and 2022.

Company expenses advertising costs as incurred.

Advertising costs, included in Other general and administrative expenses were $ 775,548

and $ 743,975 , for the years ended December 31, 2023 and 2022, respectively.

Company uses the fair value method to account for stock-based compensation.

The fair value of the equity instrument is charged directly

to compensation expense and additional paid-in capital over the period during which services are rendered.

The fair value of each award

is estimated on the date of each grant.

restricted stock awards, the fair value is based on the market value of the Company’s common stock on the date of grant.

based restricted stock units, the fair value was estimated using a Monte Carlo simulation model.

This valuation technique included estimating

the movement of stock prices and the effects of volatility, interest rates and dividends.

At the year ended December 31, 2023 there

are no market based restricted stock units outstanding.

options, fair value is estimated using the Black-Scholes option pricing model that uses the following assumptions.

Estimated volatilities

are based on the historical volatility of the Company’s common stock over the same period as the expected term of the options.

The expected term of options granted represents the period of time that options granted are expected to be outstanding.

The Company uses

historical data to estimate option exercise behavior and to determine this term.

The risk-free rate used is based on the U.S.

Treasury yield curve in effect at the time of the grant using

a time period equal to the expected option term.

The Company has never paid dividends and do not expect to pay any dividends in the future.

yield curve in effect at the time of the grant using a time period equal to the expected option term.

The Company has never paid dividends

and do not expect to pay any dividends in the future.

Expected dividend yield

6 unchanged sentences

Weighted average grant date fair value

The Black-Scholes option valuation model and other

existing models were developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully

transferable.

These option valuation models require the input of, and are highly sensitive to, subjective assumptions including the expected

stock price volatility.

The Company’s stock options have characteristics significantly different from those of traded options, and

changes in the subjective input assumptions could materially affect the fair value estimate.

Loss Per Common and Common Equivalent Share

The computation of basic (loss) earnings per common

share is computed using the weighted average number of common shares outstanding during the year.

The computation of diluted (loss) earnings

per common share is based on the basic weighted average number of shares outstanding during the year plus common stock equivalents, which

would arise from the exercise of options and warrants outstanding using the treasury stock method and the average market price per share

during the year.

The number of common shares potentially issuable upon the exercise of certain awards that were excluded from the diluted

loss per common share calculation in 2022 was 93,626 related to options, and 170,859 related to restricted stock units, for a total of

264,485 because they are anti-dilutive, as a result of a net loss for the year ended December 31, 2022.

OPTIMIZERx CORPORATION

Black-Scholes option valuation model and other existing models were developed for use in estimating the fair value of traded options

that have no vesting restrictions and are fully transferable.

These option valuation models require the input of, and are highly sensitive

to, subjective assumptions including the expected stock price volatility.

The Company’s stock options have characteristics significantly

different from those of traded options, and changes in the subjective input assumptions could materially affect the fair value estimate.

Per Common and Common Equivalent Share

computation of basic (loss) earnings per common share is computed using the weighted average number of common shares outstanding during

The computation of diluted (loss) earnings per common share is based on the basic weighted average number of shares outstanding

during the year plus common stock equivalents, which would arise from the exercise of options and warrants outstanding using the treasury

stock method and the average market price per share during the year.

The number of common shares potentially issuable upon the exercise

of certain awards that were excluded from the diluted loss per common share calculation in 2023 and 2022 was 31,727 and 93,626 related

to options, and 52,607 and 170,859 related to restricted stock units, for a total of 84,334 and 264,485 , respectively, because they are

anti-dilutive, as a result of the net losses incurred in each of the years ended December 31, 2023 and 2022.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The computation of weighted average shares outstanding

and the basic and diluted earnings per common share for the years ended December 31, 2022 and 2021 consisted of the following:

Year ended December 31, 2022

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

computation of weighted average shares outstanding and the basic and diluted earnings per common share for the years ended December 31,

2023 and 2022 consisted of the following:

ended December 31, 2023

$ ( 17,565,866 )

1 unchanged sentence

$ ( 17,565,866 )

Year ended December 31, 2021

ended December 31, 2022

$ ( 11,438,440 )

Effect of dilutive securities

Impairment of Long-Lived Assets

The Company continually monitors events and changes

in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable.

When such events or changes in circumstances

are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will

be recovered through undiscounted expected future cash flows.

If the total of the future cash flows is less than the carrying amount of

those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets.

Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

Segment reporting

We operate in one reportable segment.

our business involves connecting life science companies to patients and providers.

We have a common customer base for all of our solutions,

which are primarily all communications with healthcare providers or patients on behalf of life science customers.

Our customers are geographically

located in the U.S although we have two technology centers located internationally.

We do not prepare separate internal income statements

by solutions as our focus is on selling enterprise arrangements covering multiple solutions that span the entire patient journey with

a specific brand.

Recently Issued Accounting Guidance

In December 2019, the FASB issued ASU No.

Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

ASU 2019-12 is intended to improve consistent application

and simplify the accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies

and amends existing guidance.

ASU 2019-12 was effective for us as of January 1, 2021.

The adoption of this standard did not have a material

effect on our financial position, results of operations, or cash flows.

OPTIMIZERx CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES (CONTINUED)

Not Yet Adopted

$ ( 11,438,440 )

Issued Accounting Guidance

ASU Topic 2021-08 Business Combinations (Topic

2 unchanged sentences

ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts.

The standard is effective for the Company’s fiscal

year beginning January 1, 2023, with early adoption permitted.

The adoption of this standard is not expected to have a material effect

on our financial position, results of operations, or cash flows.

NOTE 3 – ACQUISITIONS

On April 14, 2022, we completed the acquisition

of substantially all of the assets of EvinceMed Corp., a privately held leading provider of delivering end-to-end automation for specialty

pharmaceutical transactions.

We completed the acquisition to expand the breadth of the solutions we offer our customers, particularly

where specialty medications are involved, The acquisition included the full Market Access Management Platform for supporting pharma manufacturers,

hub providers and pharmacies to improve patient access, speed to therapy and activation of affordability programs.

With the EvinceMed

platform, OptimizeRx is able to help patients get access to the drugs they need by simplifying the prescribing process for specialty medications,

automating manual steps to determine drug eligibility and affordability, and introducing electronic enrollment and medical documentation

across the OptimizeRx network of electronic health record (EHR) systems, ePrescribing platforms,

and account-based marketing technologies.

The consideration was comprised of $ 2.0 million

in cash, the issuance of 240,741 shares of common stock valued at $ 9,374,455 , and $ 708,334 of amounts previously paid.

The total purchase

price was $ 12,082,789 .

Of the 240,741 shares of common stock, 185,185 were issued at closing and 55,556 were issued but held back to secure

potential adjustments to the purchase price that may result from the indemnification obligations of EvinceMed and the EvinceMed shareholder

The holdback amount will be released twelve months from the closing, subject to any adjustments for the payment by EvinceMed

and the shareholder indemnitors for its and their indemnification obligations.

The purchase price was allocated to acquired technology

totaling $ 4,149,000 with an estimated useful life of 8 years and the remaining $ 7,933,789 was allocated to goodwill.

Goodwill represents

the processes and synergies expected by integrating those processes with our own.

The full amount of goodwill will be deductible for tax

purposes using a 15 year life.

The 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.

November 2023, the FASB issued ASU No.

2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280):

Improvements to Reportable

Segment Disclosures.

ASU 2023-07 requires annual and interim disclosures that are expected to improve reportable segment disclosures,

primarily through enhanced disclosures about significant segment expenses.

The provisions of ASU 2023-07 are effective for fiscal years

beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact of adopting ASU 2023-07.

December 2023, the FASB issued ASU No.

2023-09 (“ASU 2023-09”), Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

ASU 2023-09 addresses investor requests for more transparency about income tax information through improvements to income tax disclosures

primarily related to the rate reconciliation and income taxes paid information.

This update also includes certain other amendments to

improve the effectiveness of income tax disclosures.

The provisions of ASU 2023-09 are effective for annual periods beginning after December

15, 2024, with early adoption permitted.

We are currently evaluating the impact of adopting ASU 2023-09.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

October 24, 2023, the Company acquired 100 % of the issued and outstanding preferred and common stock of Healthy Offers, Inc., a Nevada

corporation d/b/a Medicx Health.

Medicx Health is a healthcare consumer-focused omnichannel marketing and analytics company.

The acquisition

of Medicx Health is expected to enhance and expand the Company’s technology offerings, providing additional opportunities for revenue

acquisition date fair value of consideration transferred was calculated as follows:

Net cash transferred

Fair value of common

stock transferred

Fair value of consideration

goodwill balance reflects the benefits associated with future iterations of the technology platforms, new customer relationships anticipated

as a result of the transaction and market participant synergies from economies of scale and is not deductible for tax purposes.

addition, the Company is required to remit, upon collection from the appropriate authorities, approximately $ 1.0 million related to certain

state and federal income tax receivables which were included on Medicx Health’s balance sheet at the date of acquisition.

has recorded $ 1.0 million in Taxes receivable, to reflect the receivables due to the Company and $ 1.0 million in Accrued expenses, to

reflect the total amount due to the former stockholders of Medicx Health.

following table summarizes the estimated fair value of assets acquired and liabilities assumed at the acquisition date:

Assets Acquired

Accounts receivable

Taxes receivable

Prepaid expenses and other

Property and equipment

Customer relationships intangible

Trademark and patent intangible

Technology intangibles

Operating lease right-of-use assets

Liabilities Assumed

Accounts payable

Accrued expenses

Lease liabilities

Deferred revenue

Deferred tax liabilities

Net assets acquired

Fair value of consideration transferred

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

ACQUISITIONS (CONTINUED)

Company used a third-party valuation specialist to value the intangible assets acquired.

The identifiable intangibles are being amortized

on a straight line basis over the following estimated useful lives:

Customer relationship intangible

Trademark and patent intangible

Technology intangibles

4 to 10 years

The Company recognized $ 4.3 million of acquisition

related costs that were expensed in the current period.

These costs are included in the consolidated statement of operations in the line

item entitled “Other sales, general and administrative expenses.”

results of operations of Medicx Health have been included in the consolidated statement of operations since the date of acquisition.

amounts of revenue and net income of Medicx Health included in the Company’s consolidated statement of operations for the period

from the acquisition date until December 31, 2023, are as follows:

following represents the pro-forma consolidated statement of operations as if Medicx Health had been included in the consolidated results

of the Company for the full years ended December 31, 2023, and 2022:

December 31, 2022

Pro-forma consolidated statement of operations

( 18,616,303 )

( 16,157,521 )

These amounts have been calculated after applying

the Company’s accounting policies, adjusting Medicx Health results to reflect the additional amortization that would have been charged

assuming the fair value adjustments to intangible assets had been applied on January 1, 2022, full year interest expense associated with

the term loan and elimination of interest income on short-term investments that were used to fund the acquisition, one time transaction

related items, including the amounts incurred by the Company, discussed above and $ 9.6 million in transaction related expenses incurred

by Medicx Health.

April 14, 2022, we completed the acquisition of substantially all of the assets of EvinceMed Corp., a privately held leading provider

of delivering end-to-end automation for specialty pharmaceutical transactions.

We completed the acquisition to expand the breadth of

the solutions we offer our customers, particularly where specialty medications are involved, The acquisition included the full Market

Access Management Platform for supporting pharma manufacturers, hub providers and pharmacies to improve patient access, speed to therapy

and activation of affordability programs.

consideration was comprised of $ 2.0 million in cash, the issuance of 240,741 shares of common stock valued at $ 9,374,455 , and $ 708,334

of amounts previously paid.

The total purchase price was $ 12,082,789 .

Of the 240,741 shares of common stock, 185,185 were issued at closing

and 55,556 were issued but held back to secure potential adjustments to the purchase price that may result from the indemnification obligations

of and the EvinceMed shareholder indemnitors.

The holdback amount will be released twelve months from the closing, subject to any adjustments

for the payment by EvinceMed and the shareholder indemnitors for its and their indemnification obligations.

The purchase price was allocated

to acquired technology totaling $ 4,149,000 with an estimated useful life of 8 years and the remaining $ 7,933,789 was allocated to goodwill.

Goodwill represents the processes and synergies expected by integrating those processes with our own.

The full amount of goodwill will

be deductible for tax purposes using a 15 year life.

The increase in goodwill for the period is fully accounted for by this acquisition.

We determined pro forma

data was immaterial for financial reporting purposes.

The initial accounting is provisional and subject to change based on the completion

of formal valuations.

Acquisition costs of approximately $ 19,739 were

expensed as incurred.

OPTIMIZERx CORPORATION

We determined pro forma data was immaterial for financial reporting purposes.

costs of approximately $ 19,739 were expensed as incurred.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

NOTE 4 – INVESTMENT SECURITIES

At December 31, 2022 the Company held $ 55.9 million in U.S.

and agency securities.

All securities have maturity dates of less than one year.

The Company reports them at amortized cost.

The amortized

cost approximates fair value at December 31, 2022 due to the short nature of the securities.

There were no securities held at December 31, 2021.

NOTE 5 – PREPAID EXPENSES

Prepaid expenses consisted of the following as

of December 31, 2022 and 2021:

INVESTMENT SECURITIES

were no investment securities held at December 31, 2023.

December 31, 2022 the Company held $ 55.9 million in U.S.

government and agency securities.

All securities had maturity dates of

less than one year.

The Company reported these securities at amortized cost.

The amortized cost approximates fair value at December 31,

2022 due to the short nature of the securities.

from the maturities of these securities during 2023 were used to partially fund the acquisition of Medicx Health.

See Note 3 - Acquisitions.

5 – PREPAID EXPENSES

expenses consisted of the following as of December 31, 2023 and 2022:

Revenue share and exclusivity payments

Total prepaid expenses

NOTE 6 – PROPERTY AND EQUIPMENT

The Company owned equipment recorded at cost,

which consisted of the following as of December 31, 2022 and 2021:

6 – PROPERTY AND EQUIPMENT

Company owned equipment recorded at cost, which consisted of the following as of December 31, 2023 and 2022:

Computer equipment

1 unchanged sentence

Less accumulated depreciation

Property and equipment, net

Depreciation expense was $ 85,725 and $ 105,360

for the years ended December 31, 2022 and 2021, respectively.

NOTE 7 – INTANGIBLE ASSETS

Our goodwill is related to the acquisitions of

EvinceMed in 2022, RMDY Health, Inc.

in 2019 and CareSpeak Communications in 2018.

Goodwill is not amortizable for financial statement

Changes in the carrying amount of goodwill on

the consolidated balance sheet consist of the following:

and equipment, net

expense was $ 99,849 and $ 85,725 for the years ended December 31, 2023 and 2022, respectively.

7 – GOODWILL AND INTANGIBLE ASSETS

goodwill is related to the acquisitions of Medicx Health in 2023, EvinceMed in 2022, RMDY Health, Inc.

in 2019 and CareSpeak Communications

Goodwill is not amortizable for financial statement purposes.

The Company performed its annual goodwill impairment

review in the fourth quarters of each of the years ended December 31, 2023 and 2022, and also performed an interim impairment review

as of November 30, 2023, following the completion of the transaction with Mercalis, Inc., which is discussed below.

In both cases it was

determined that the fair value of the Company’s single reporting unit was greater than its carrying value.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

7 – GOODWILL AND INTANGIBLE ASSETS (CONTINUED)

fair value of any reporting units, used in the annual assessments in 2023 and 2022, is classified as Level 3 measurements within the

fair value hierarchy due to significant unobservable inputs such as discount rates, projections of revenue, cost of revenue and operating

expense growth rates, long-term growth rates and income tax rates.

in the carrying amount of goodwill on the consolidated balance sheet consist of the following:

Balance at January 1, 2022

Balance January 1, 2023

Revenue recognized

Amount collected

Disposal of business

( 1,310,004 )

Balance December 31, 2023

OPTIMIZERx CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

NOTE 7 – INTANGIBLE ASSETS (CONTINUED)

Intangible Assets

Intangible assets included on the consolidated

balance sheets consist of the following:

December 31, 2022

During the year ended December 31, 2023,

we entered into various agreements, including a Product License Agreement and Platform Assets Purchase Agreement, with Mercalis, Inc.(“Mercalis”),

collectively the “Transaction”.

Under the terms of the Transaction, Mercalis agreed to purchase certain customer contract

assets and liabilities related to the Company’s Access and Patient Engagement technologies.

In addition, Mercalis was granted a

perpetual license to the Access products and a non-exclusive two-year term license to the Patient Engagement products.

Total consideration

due for the Transaction was $ 3,740,000 including $ 2,540,000 related to the Access products.

Access products portion of the Transaction was deemed to be the disposal of a business for accounting purposes and accordingly the Company

recorded a loss on disposal of $ 2,142,319 including the allocation of a portion of the Company’s goodwill balance of $ 1,310,004

and the net book value of the underlying technology assets of $ 3,327,844 .

assets included on the consolidated balance sheets consist of the following:

Patent rights

2 unchanged sentences

Non-compete agreements

Customer relationships

relationships

Total Tradename and customer

relationships

Total intangible assets

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

7 – GOODWILL AND INTANGIBLE ASSETS (CONTINUED)

Patent rights

2 unchanged sentences

Non-compete agreements

Customer relationships

relationships

Total intangible assets

Intangibles are being amortized on a straight-line

basis over the following estimated useful lives.

During the year ended December 31, 2023,

we recorded asset impairment charges of $ 6,737,580 relating to Technology assets patent rights and tradenames that were not considered

to be core solutions on a go forward basis, resulting in lower projected revenues for these solutions, as well as the outcome of the disposal

of the Access products discussed above.

are being amortized on a straight-line basis over the following estimated useful lives.

15 – 17 years

2 unchanged sentences

Technology assets

OPTIMIZERx CORPORATION

Company recorded amortization expense of $ 2,301,779 and $ 1,936,304 in the years ended December 31, 2023 and 2022, respectively.

Expected future amortization expense of the intangibles assets as of December 31, 2023 is as follows:

Year ended December 31,

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2023

NOTE 7 – INTANGIBLE ASSETS (CONTINUED)

The Company recorded amortization expense of $ 1,936,304

and $ 1,859,965 in the years ended December 31, 2022 and 2021, respectively.

Expected future amortization expense of the intangibles

assets as of December 31, 2022 is as follows:

Year ended December 31,

NOTE 8 – DEFERRED REVENUE

The Company has several signed contracts with

customers for the distribution of financial messaging, or other services, which include payment in advance.

The payments are not recorded

as revenue until the revenue is earned under its revenue recognition policy discussed in Note 2.

Deferred revenue was $ 164,309 and $ 1,389,907

as of December 31, 2022 and 2021, respectively.

These contracts are all short term in nature and all revenue is expected to be recognized

within 12 months, or less.

Following is a summary of activity in the deferred revenue account for the year ended December 31, 2022.

8 – DEFERRED REVENUE

Company has several signed contracts with customers for the distribution of financial messaging, or other services, which include payment

The payments are not recorded as revenue until the revenue is earned under its revenue recognition policy discussed in Note

Deferred revenue was $ 171,841 and $ 164,309 as of December 31, 2023 and 2022, respectively.

These contracts are all short term

in nature and all revenue is expected to be recognized within 12 months, or less.

Following is a summary of activity in the deferred

revenue account for the year ended December 31, 2023.

Balance January 1, 2023

2 unchanged sentences

Amount collected

Amount acquired

Balance December 31, 2023

Following is a summary of activity in the deferred

revenue account for the year ended December 31, 2021.

is a summary of activity in the deferred revenue account for the year ended December 31, 2022.

Balance January 1, 2022

3 unchanged sentences

Balance December 31, 2022

NOTE 9 – RELATED PARTY TRANSACTIONS

During the year ended December 31, 2010, the Company

acquired the technical contributions and assignment of all exclusive rights to and for a key patent in process at the time from a former

CEO in exchange for a total payment in shares of common stock and options valued at $ 930,000 at the time of the acquisition and recorded

the patent at that cost.

That patent remains in Patents on the consolidated balance sheet as of December 31, 2022.

Jim Lang, one of our Board Members, is the CEO

of Eversana, a leading global provider of services to the life sciences industry.

Eversana is similar to other customers we generate revenue

from, such as agencies or resellers.

During the years ended December 31, 2022 and 2021, respectively, we have recognized $ 401,972

and $ 218,333 in revenue from contracts engaged with Eversana.

These contracts were sourced by Eversana on behalf of life science customers

The contracts are at market rates and were generated in the normal course of business.

OPTIMIZERx CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

NOTE 10 – STOCKHOLDERS’ EQUITY

Preferred Stock

The Company had 10,000,000 shares of preferred

stock, $ 0.001 par value per share, authorized as of December 31, 2022.

No shares were issued or outstanding in either 2021 or 2022.

The Company had 166,666,667 shares of common stock,

$ 0.001 par value per share, authorized as of December 31, 2022.

There were 17,074,173 and 17,860,975 shares of common stock outstanding,

net of shares held in treasury, at December 31, 2022 and 2021, respectively.

We issued 156,910 shares of common stock and received

proceeds of $ 1,205,881 in 2022 in connection with the exercise of options.

We also issued 1,105,822 shares of common stock and received

proceeds of $ 4,864,231 in 2021 in connection with the exercise of options.

9 – RELATED PARTY TRANSACTIONS

the year ended December 31, 2010, the Company acquired the technical contributions and assignment of all exclusive rights to and for

a key patent in process at the time from a former Chief Executive Officer (“CEO”), in exchange for a total payment in shares

of common stock and options valued at $ 930,000 at the time of the acquisition and recorded the patent at that cost.

That patent remains

in Patents on the consolidated balance sheet as of December 31, 2023.

Lang, one of our Board Members, is the CEO of Eversana, a leading global provider of services to the life sciences industry.

is similar to other customers we generate revenue from, such as agencies or resellers.

During the years ended December 31, 2023

and 2022, we have recognized $ 335,897 and $ 401,972 , respectively, in revenue from contracts engaged with Eversana.

These contracts were

sourced by Eversana on behalf of life science customers of theirs.

The contracts are at market rates and were generated in the normal

course of business.

10 – STOCKHOLDERS’ EQUITY

Company had 10,000,000 shares of preferred stock, $ 0.001 par value per share, authorized as of December 31, 2023.

No shares were

issued or outstanding in either 2022 or 2023.

Company had 166,666,667 shares of common stock, $ 0.001 par value per share, authorized as of December 31, 2023.

There were 18,158,282

and 17,074,173 shares of common stock outstanding, net of shares held in treasury, at December 31, 2023 and 2022, respectively.

issued 24,668 shares of common stock and received proceeds of $ 181,106 in 2023 in connection with the exercise of options under our 2013

Equity Incentive Plan.

We also issued 156,910 shares of common stock and received proceeds of $ 1,205,881 in 2022 in connection with the

exercise of options under our 2013 Equity Incentive Plan.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – STOCKHOLDERS’ EQUITY (CONTINUED)

We issued 141,859 shares of common stock in 2023

and 3,333 shares of common in stock in 2021 in connection with the vesting of restricted stock units and discussed in greater detail in

Note 11, Stock Based Compensation.

The Company had a Director Compensation plan covering

its independent non-employee Directors that was in effect through June 30, 2021.

A total of 4,730 were granted and issued in the

year ended December 31, 2021 in connection with this compensation plan.

These shares were valued at $ 250,085 .

The plan was changed

to grant restricted stock units under the Company’s 2021 Equity Incentive Plan and those grants are discussed in Note 10, Stock

Based Compensation.

During the year ended December 31, 2021,

in an underwritten primary offering, we issued 1,523,750 shares of our common stock for gross proceeds of $ 75,425,625 .

In connection with

this transaction, we incurred equity issuance costs of $ 4,754,089 related to payments to the underwriter, advisors and legal fees associated

with the transaction, resulting in net proceeds to the Company of $ 70,671,536 .

During the year ended December 31, 2022,

the Board authorized a share repurchase program, under which the Company may repurchase up to $ 20.0 million of its outstanding common

Through December 31, 2022, we repurchased 1,214,398 shares of our common stock for a total of $ 20,024,258 , including commissions

paid on repurchases.

and 29,945 shares of common stock in 2022 in connection with the vesting of restricted stock units under our 2013 and 2021 Equity Incentive

Plans and discussed in greater detail in Note 11, Stock Based Compensation.

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 year ended

December 31, 2023 and 2022, respectively, 42,489 and 8,416 shares, valued at $ 458,892 and $ 132,400 , were surrendered and subsequently

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.

Through December 31, 2023, the Company repurchased 526,999 shares of our common stock for a total of $ 7,522,426 ,

including commissions paid on repurchases.

At December 31, 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.

During the year ended December 31, 2022, the Board

authorized a share repurchase program, under which the Company may repurchase up to $ 20.0 million of its outstanding common stock.

December 31, 2022, we repurchased 1,214,398 shares of our common stock for a total of $ 20,024,258 , including commissions paid on repurchases.

These shares were recorded as Treasury Shares using the par value method.

NOTE 11 – STOCK BASED COMPENSATION

12 unchanged sentences

2023, there were no shares available for grant under the 2013 Plan.

OPTIMIZERx CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

NOTE 11 – STOCK BASED COMPENSATION (CONTINUED)

In 2021, the Company adopted a new plan known

6 unchanged sentences

At December 31, 2023, 276,844 shares were available for grant under the 2021 Plan.

The 2021 Plan allows the Company to grant

incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units,

performance awards and other stock-based awards.

Incentive stock options may only be granted to persons who are regular full-time

employees of the Company at the date of the grant of the option.

Non-qualified options may be granted to any person, including, but

not limited to, directors, officers, employees and consultants, who the Company’s Board or Compensation Committee determines.

The exercise price of options granted under the 2021 Plan must be equal to at least 100 % of the fair market value of our common

stock as of the date of the grant of the option.

Options granted under the 2021 Plan are exercisable as determined by the

Compensation Committee and specified in the applicable award agreement.

In no event will an option be exercisable after ten years

from the date of grant.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 – STOCK BASED COMPENSATION

The 2021 Plan allows the Company to grant incentive

stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards and

other stock-based awards.

Incentive stock options may only be granted to persons who are regular full-time employees of the Company at

the date of the grant of the option.

Non-qualified options may be granted to any person, including, but not limited to, directors, officers,

employees and consultants, who the Company’s Board or Compensation Committee determines.

The exercise price of options granted under

the 2021 Plan must be equal to at least 100 % of the fair market value of our common stock as of the date of the grant of the option.

granted under the 2021 Plan are exercisable as determined by the Compensation Committee and specified in the applicable award agreement.

In no event will an option be exercisable after ten years from the date of grant.

Stock Options

6 unchanged sentences

The fair value of these instruments was calculated using the Black-Scholes option pricing model.

In the year ended December 31, 2021, certain participants

utilized a net withhold exercise method in which options were surrendered to cover payroll withholding tax.

Of the cumulative net options

exercised by participants were 31,243 options, valued at $ 100,290 , were surrendered and subsequently cancelled.

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.

was no expense related to these options recorded during the period.

The Company had the following option activity

during the year ended December 31, 2023 and 2022:

Number of Options

Weighted average exercise price

Weighted average remaining contractual life (years)

Aggregate intrinsic

exercise price

Outstanding at January 1, 2022

( 1,105,822 )

Withheld and cancelled

Expired or forfeited

3 unchanged sentences

Exercisable, December 31, 2023

OPTIMIZERx CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

NOTE 11 – STOCK BASED COMPENSATION (CONTINUED)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 – STOCK BASED COMPENSATION

The table below reflects information for the total options outstanding

1 unchanged sentence

Range of Exercise Prices

Number of Options

Weighted average remaining contractual life (years)

Weighted average exercise price

$ 4.20 to $ 10.00

6 unchanged sentences

Range of Exercise Prices

Number of Options

Weighted average remaining contractual life (years)

Weighted average exercise price

$ 4.20 to $ 10.00

3 unchanged sentences

$ 60.00 to $ 96.70

A summary of the status of the Company’s nonvested options as

A summary of the status of the Company’s non-vested options as

of December 31, 2023, and changes during the year ended December 31, 2023, is presented below.

Nonvested Options

Weighted average exercise price

Nonvested at January 1, 2022

2 unchanged sentences

recognized over a period of approximately 1.77 years related to options outstanding at December 31, 2023.

OPTIMIZERx CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

NOTE 11 – STOCK BASED COMPENSATION (CONTINUED)

TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 – STOCK BASED COMPENSATION

Restricted Stock Units

1 unchanged sentence

unit (“RSU”) activity during the years ended December 31, 2023 and 2022:

Number of RSUs

Weighted average grant date fair

Weighted average remaining contractual life (years)

Outstanding at January 1, 2022

Shares issued

Withheld and cancelled

Outstanding at December 31, 2022

9 unchanged sentences

A total of $ 11,106,405 remains to be recognized at December 31, 2023 over a period of 1.95

In the year ended December 31, 2022, certain participants

utilized a net withhold settlement method, in which shares were surrendered to cover payroll withholding tax.

Of the cumulative net options

exercised by participants were 31,243 options, valued at $ 100,290 , were surrendered and subsequently cancelled.

Performance Stock Units

Of the restricted stock units issued in 2021,

182,938 are market-based awards that vest if the Company’s stock price hits certain price targets and maintains that price for 30

A total of 60,191, 60,191, and 62,016 units vest if the stock price hits $98.87, $131.82, and $164.78, respectively.

in Note 2, these market-based restricted stock units were valued using a Monte Carlo simulation model, with expected vesting in 1.60,

2.25, and 2.71 years, respectively, for the three price targets.

During the year ended December 31, 2022, we granted certain performance

based stock units, the expense for which will be recorded over time once the achievement of the performance is deemed probable.

was no expense related to these options recorded during the period.

In the year ended December 31, 2023, certain

participants utilized a net withhold settlement method, in which shares were surrendered to cover payroll withholding tax.

Of the shares

issued to participants during the year ended December 31, 2023 and 2022, respectively, 42,489 and 31,243 shares, valued at $ 458,892

and $ 100,290 , were surrendered and subsequently cancelled.

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.

Non-employee Directors Compensation

Our previous director’s compensation plan

called for the issuance of fully-vested shares of common stock each quarter to each independent director.

In 2021, we issued 4,730 shares

valued at $ 250,085 that immediately vested.

Subsequent to these grants, we adopted a new directors compensation program that calls for

The director’s compensation program calls for

the grant of restricted stock units with a one year vesting period.

We granted 3,715 restricted stock units valued at $ 250,175 in the

second half of 2021 under the new plan.

The Company granted 26,470 restricted stock units to its non-employee

directors, valued at $ 750,130 in 2022.

These restricted stock units vested in 2023.

There were 26,470 restricted stock units, valued

at $ 750,130 , granted to the board of directors in 2022 that will vest in 2023, 12 months from the grant dates.

There were 50,305 restricted stock units, valued at

$ 750,050 granted to the non-employee directors in 2023 that will vest in 2024, 12 months from the grant dates.

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

TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 – LONG-TERM DEBT

Long-term debt consisted of the following at December 31,

2023 and 2022:

Term loan, due in 2027

current portion of long-term debt

( 2,000,000 )

unamortized issuance costs

( 2,059,263 )

Long-term debt, net

On October 11, 2023, the Company entered into

a Financing Agreement (the “Financing”) which provided for a term loan (the “Term Loan”) of $ 40 million, the net

proceeds of which were used to partially finance the Medicx Health transaction described in Note 3 “Acquisitions”.

In connection

with the Financing the Company incurred issuance costs of approximately $ 2.3 million, which were capitalized and are being amortized to

interest expense over the life of the Term Loan.

Amortization of debt issuance costs for the year ended December 31, 2023, was $ 210,737 .

The Company’s obligations under the Financing

are secured by all of the Company’s and its subsidiaries’ assets (including a pledge of all of the capital stock and equity interests

of its subsidiaries).

The Term Loan is repayable in quarterly installments,

beginning December 31, 2023, equivalent to 1.25 % or $ 500,000 , of the original principal amount, with the outstanding unpaid principal

and all accrued but unpaid interest due and payable on the earlier of (i) the fourth anniversary of the closing date of the Term Loan

or (ii) the date on which the Term Loan is declared due and payable pursuant to the terms of the Financing.

The Company may prepay, subject to an Applicable

Premium, 3 % if the prepayment is made on a date that is up to and including the first anniversary of closing, 2 %, if the prepayment is

made up to and including the second anniversary, 1 % if the prepayment is made up to and including the third anniversary and zero thereafter,

all or a portion of the Term Loan and, under certain circumstances, including certain asset disposals and the raising of indebtedness

not permitted under the Financing is required to make mandatory prepayments of the principal balance.

If the prepayment occurs within

12 months of the date of the loan, the Company is also required to pay lost interest from the prepayment date to one year from the loan

funding date.

In addition, the Company is required to make a

mandatory prepayment on March 31, of each year, commencing with 2025, equivalent to Excess Cash Flow multiplied by a percentage factor

of 25%, if the leverage ratio is 3.60 to 1.00 or less, 50% if the leverage ratio is greater than 3.60 to 1 or less than or equal;

to 1.00 and 75%, if the leverage ratio is greater than 4.10 to 1.00.

Excess Cash Flow is defined in the Financing as Consolidated EBITDA

for the previous fiscal year less scheduled principal and interest payments, capital expenditure, cash taxes and any cash expenses/gains

added back to net income in the calculation of Consolidated EBITDA, adjusted for any increase/decrease in working capital during the fiscal

TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 – LONG-TERM DEBT (CONTINUED)

During the year ended December 31, 2023,

the Company made total principal repayments of $ 1.7 million, including a mandatory prepayment of $ 1.2 million as a result of an asset

sale completed during the year.

At the Company’s option the Term Loan, or

any portion thereof bears interest at either:

The greater of (a) 4.00 % per annum, (b) the Federal Funds Rate plus 0.50 % per annum, (c) the one month

Secured Funds Overnight Rate (“SOFR”), plus an adjustment of 26.161 basis point and 1.00 % per annum, and (d) the rate last

quoted by The Wall Street Journal as the “Prime Rate”, plus an Applicable Margin of 7.5 %;

Three-month SOFR plus an adjustment of 26.161 basis points and an Applicable Margin of 8.5 %

As of December 31, 2023, the Loan bears interest

at 14.1 % per annum, with the effective interest rate for the year ended December 31, 2023, including the amortization of debt issuance

costs and Applicable Premium and interest penalties of $ 181,895 associated with the prepayment during the year ended December 31,

2023, was 19.6 %.

The Financing requires the Company to maintain

the following financial covenants:

A maximum leverage ratio, as defined in the Financing as

Fiscal Quarter End

March 31, 2024

June 30, 2024

September 30, 2024

December 31, 2024

March 31, 2025

June 30, 2025

September 30, 2025, and thereafter

Liquidity, as defined in the Financing, of at least $ 5.0 million.

The Company was in compliance with its financial

covenants as of December 31, 2023, and received a waiver from its lender to extend the date for providing the Company's audited financial

statements from March 31, 2024, to April 15, 2024.

The Financing contains customary events of default,

which include, (subject to, in certain circumstances to grace and cure periods), non-payment of principal and interest, non-compliance

with certain covenants, commencement of bankruptcy proceedings and a change in control.

Payments due on the Loan in each of the next four

years subsequent to December 31, 2023, are as follows:

For the year ending December 31,

TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 – LEASES

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recognition of the lease-related assets and liabilities, as well as the related lease expense.

OPTIMIZERx CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

NOTE 12 – LEASES (CONTINUED)

We had operating leases with terms greater than

12 months for office space in three multitenant facilities, which are recorded as assets and liabilities.

The lease on our headquarters

space in Rochester, Michigan expires November 30, 2023 , with a renewal option through 2025, with monthly rent payable at rates ranging

from $ 6,384 to $ 6,688 .

We have assumed renewal of the lease.

We also had a lease on office space in Cranbury, New Jersey, which expired

in January 2022 with a monthly payment of $3,158, as well as a lease of approximately $1,883 per month in Zagreb, Croatia expiring in

Lease-related assets, or right-of-use assets,

are recognized at the lease commencement date at amounts equal to the respective lease liabilities, adjusted for prepaid lease payments,

initial direct costs, and lease incentives received.

Lease-related liabilities are recognized at the present value of the remaining contractual

fixed lease payments, discounted using our incremental borrowing rate.

Operating lease expense is recognized on a straight-line basis

over the lease term, while variable lease payments are expensed as incurred.

12 months for office space in four multi-tenant facilities, which are recorded as ROU assets and Operating lease liabilities.

For the years ended December 31, 2023 and

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The weighted average remaining lease term for

operating leases is 2.7 years and the weighted average discount rate used in calculating the operating lease asset and liability is 4.5 %.

Cash paid for amounts included in the measurement of lease liabilities was $ 89,111 .

operating leases is 3.17 and the weighted average discount rate used in calculating the operating lease asset and liability is 6.7 %.

paid for amounts included in the measurement of lease liabilities was $ 78,875 .

For the year ended December 31, 2023, payments on

lease obligations were $ 91,228 and amortization on the right of use assets was $ 94,564 .

For the year ended December 31, 2022, payments

on lease obligations were $ 101,405 and amortization on the right of use assets was $ 101,433 .

For the year ended December 31, 2021,

payments on lease obligations were $ 142,284 and amortization on the right of use assets was $ 121,129 .

OPTIMIZERx CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 – MAJOR CUSTOMERS AND VENDORS

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No other customers accounted for more than 10 % of revenue in either year presented.

Our accounts receivable included two entities,

including one agency that represented multiple customers, that individually made up more than 10 % of our accounts receivable at December 31,

2022 in the percentages of 13.3 % and 10.8 %.

As of December 31, 2021, our accounts receivable included two agencies that represented

multiple customers that individually made up more than 10 % of our accounts receivable in the percentages of 33.5 % and 12.2 %.

The Company generates its revenues through its

EHR and ePrescribe partners.

There were three key partners and/or vendors through which 10 % or greater of its revenue was generated in

either 2022 or 2021 as set forth below.

The amounts in the table below reflect the amount of revenue generated through those partners.

Our accounts receivable included two agencies,

that represented multiple customers, that individually made up more than 10 % of our accounts receivable at December 31, 2023 in the

percentages of 28.3 % and 14.1 %.

As of December 31, 2022, our accounts receivable included two entities, including one agency that

represented multiple customers that individually made up more than 10 % of our accounts receivable in the percentages of 13.3 % and 10.8 %.

The Company generates a portion of its revenues

through its EHR and ePrescribe partners.

There were three key partners and/or vendors through which 10 % or greater of its revenue was

generated in either 2023 or 2022 as set forth below.

The amounts in the table below reflect the amount of revenue generated through those

NOTE 15 – INCOME TAXES

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due to timing differences between book and tax reporting.

OPTIMIZERx CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – INCOME TAXES (CONTINUED)

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Option exercise benefits (expenses), net of Section 162M limitations

( 3,100,000 )

Transaction costs

Other adjustments

NOLs expiring

Valuation allowance

( 2,900,000 )

( 3,006,000 )

Net provision for federal income tax

Income tax benefit

Current tax benefit (expense) - Federal

Current tax benefit (expense) - State

Total current (expense)

Deferred tax benefit (expense) - Federal

Adjustment of valuation allowance from business combination

Total tax benefit (expense) on income

OPTIMIZERx CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

NOTE 14 – INCOME TAXES

Deferred tax benefit (expense) - State

Total deferred benefit

Total tax benefit on loss

TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – INCOME TAXES (CONTINUED)

The cumulative tax effect of significant items

comprising our net deferred tax amount at the expected rate of 21 % is as follows as of December 31, 2023 and 2022:

Deferred tax asset attributable to:

Deferred tax assets attributable to:

Net operating loss carryover

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Section 174 capitalized expenses

Deferred tax asset

$ 10, 492,000

Deferred tax assets

Deferred tax liabilities attributable to:

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Operating lease right-of-use assets

Deferred tax liability

Deferred tax liabilities

( 12,701,424 )

( 2,330,000 )

Net deferred tax asset

Net deferred tax (liability) asset

$ ( 981,424 )

Valuation allowance

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( 8,162,000 )

Net deferred tax asset, net of valuation allowance

The ultimate realization of deferred tax assets

is dependent upon the Company’s ability to generate sufficient taxable income during the periods in which the net operating losses

expire and the temporary differences become deductible.

The Company has determined that there is significant uncertainty that the results

of future operations and the reversals of existing taxable temporary differences will generate sufficient taxable income to realize the

deferred tax assets;

Net deferred tax liabilities

$ ( 4,337,424 )

The valuation allowance decreased $ 4,806,000 ,

during the year ended December 31, 2023, as we determined that a portion of the deferred tax assets associated with historical NOL's

were realizable.

The ultimate realization of deferred tax assets is dependent upon the Company’s ability to generate sufficient

taxable income during the periods in which the net operating losses expire and the temporary differences become deductible.

has determined that there is significant uncertainty that the results of future operations and the reversals of existing taxable temporary

differences will generate sufficient taxable income to realize the deferred tax assets;

therefore, a valuation allowance has been recorded.

In making this determination, the Company considered historical

levels of income, projections for future periods, and the significant amount of tax deductions to be generated from the future exercise

of stock options.

In making this determination, the Company considered historical levels of income, projections for future periods, and the significant

amount of tax deductions to be generated from the future exercise of stock options.

The tax years 2020 to 2023 remain open for potential

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2014, have been fully released.

OPTIMIZERx CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 – COMMITMENTS AND CONTINGENT LIABILITIES

The Company is not involved in any legal proceedings.

Revenue-share contracts

The Company has contracts with various electronic

health records systems and ePrescribe platforms, whereby we agree to share a portion of the revenue we generate for eCoupons distributed

and banners delivered through their networks.

These contracts grant audit rights related to the payments to our partners, and, in some

cases would require us to pay for the audit if the audit determined there was an underpayment and the underpayment meets certain thresholds,

such as 10 %.

From time to time the Company enters into arrangements with a partner to acquire minimum amounts of messaging capabilities.

As of December 31, 2022, the Company had commitments for future minimum payments of $ 16.4 million that will be reflected in

cost of revenues during the years from 2023 through 2025.

Minimum payments are due in 2023, 2024 and 2025, in the amounts of $ 6.2 million,

$ 5.2 million and $ 5.0 million, respectively.

From time to time, the Company may become involved in legal proceedings

or be subject to claims arising in the ordinary course of our business.

We are currently not a party

to any material legal or administrative proceedings, and we are not aware of any pending or threatened material legal or administrative

proceedings against us.

From time to time, the Company enters into arrangements

with partners to acquire minimum amounts of media, data or messaging capabilities.

As of December 31, 2023, the Company had commitments

for future minimum payments of $ 24.7 million that will be reflected in cost of revenues during the years from 2024 through 2028.

Minimum payments are due in 2024, 2025, 2026, 2027 and 2028 in the amounts of $ 10.6 million, $ 8.3 million, $ 3.3 million, $ 2.4 million

and $ 0.1 million, respectively.

NOTE 17 – RETIREMENT PLAN

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data