What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-05-15 compared with 2023-11-14 · 220 added, 233 removed, 140 unchanged (76% of the section changed)

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a variety of factors, including:

seasonal trends in the pharmaceutical brand marketing industry;

the inability to support our technology

and scale our operations successfully, developing and implementing new and updated applications, features and services for our portals

may be more difficult and expensive and take longer than expected;

the inability to offer high-quality customer support for our portals;

our history of losses, seasonal trends in the pharmaceutical brand marketing industry;

the inability

to support our technology and scale our operations successfully, developing and implementing new and updated applications, features and

services for our solutions may be more difficult and expensive and take longer than expected;

the inability to offer high-quality customer

support for our solutions;

dependence on a concentrated group of customers;

inability to maintain contracts with electronic prescription platforms, agreements with

electronic prescription platforms and electronic health record systems being subject to audit;

inability to attract and retain customers;

inability to maintain contracts with electronic prescription

platforms, agreements with electronic prescription platforms and electronic health record systems being subject to audit;

attract and retain customers;

inability to comply with laws and regulations that affect the healthcare industry;

developments in the healthcare industry;

in the healthcare industry;

inability to manage growth;

inability to identify suitable acquisition targets, complete acquisitions, or integrate acquisitions successfully;

acquisition activities may disrupt ongoing business and may involve increased expenses;

to realize the financial and strategic goals contemplated at the time of a transaction;

inability to realize any synergies or other

anticipated benefits of an acquisition or that such synergies or benefits may take longer than anticipated to be realized;

risk that the

integration with an acquired entity may be more costly or difficult than expected;

inability to attract and retain senior management and

other key employees;

economic, political, regulatory and other risks arising from our international operations;

inability to protect our

intellectual property;

inability to identify suitable acquisition targets, complete acquisitions, or

integrate acquisitions successfully;

acquisition activities may disrupt ongoing business and may

involve increased expenses;

inability to realize the financial and strategic goals contemplated at the time of a transaction;

to realize any synergies or other anticipated benefits of an acquisition or that such synergies or benefits may take longer than anticipated

to be realized;

risk that the integration with an acquired entity may be more costly or difficult than expected;

charges for goodwill or other intangible assets may be increased as we shift our focus away from our non-core businesses;

to comply with the restrictions in our credit agreement;

inability to generate sufficient cash to service debt and fund other obligations;

inability to attract and retain senior management and other key employees;

economic, political, regulatory and other risks arising from

our international operations;

inability to protect our intellectual property;

cybersecurity incidents;

reduction in the performance, reliability and availability of our network infrastructure;

reduction in the performance, reliability

and availability of our network infrastructure;

increases in costs due to inflation and other adverse economic conditions;

decreases in customer demand due to macroeconomic factors;

customer demand due to macroeconomic factors;

lack of a consistent active trading market for our common stock;

and volatility in the market price of our common stock.

volatility in the market

price of our common stock;

and the failure to remediate the identified material weakness or any other material weaknesses identified in

The risks and uncertainties included here are

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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.

Connecting over two million U.S.

healthcare providers and millions of their patients through an intelligent omnichannel

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.

Historically, our revenue was generated primarily

through the facilitation of financial messages to health care providers via their EHR and ePrescribe systems using the OptimizeRx proprietary

network to solve the ever-increasing communication barriers between pharmaceutical representatives and healthcare providers that have

presented in the rapidly changing healthcare industry.

Over time, as the demand for communication of an increasing variety of different

health information between life science companies, providers, and patients continued to rise, our platform has expanded to encompass additional

solutions that enable healthcare providers to access information for patients at the point of care.

These solutions include brand messaging,

therapeutic support messaging, brand support, and innovative patient engagement services, all of which now make up a significant portion

of our total revenue.

We employ a “land and expand” strategy

focused on growing our existing client base and generating greater and more consistent revenues in part through the continued shift in

our business model toward enterprise level engagements, while also broadening our platform with innovative proprietary solutions such

as our artificial intelligence-powered real-world data solution which uses sophisticated proprietary algorithms to derive additional revenue

from our existing network.

Management will continue to optimize our portfolio of solutions to align our resource deployment to the best

market opportunities.

through the facilitation of various types of messages to health care providers via their EHR systems and ERx platforms using the OptimizeRx

proprietary network to solve the ever-increasing communication barriers between pharmaceutical representatives and healthcare providers

that have presented in the rapidly changing healthcare industry.

Over time, the demand for different types of communication and marketing

solutions among life sciences organizations, healthcare providers, and patients led us to expand

upon our initial solutions to increase the variety of health-related information we deliver, as well as the platforms, technology, media

distribution channels, and audiences through and to which we deliver.

In addition, the October 2023 acquisition of Medicx Health

provided the Company with a significant footprint for direct-to-consumer healthcare marketing.

we offer diverse tech-enabled marketing solutions through our AI-generated DAAP, using sophisticated machine-learning algorithms to find

the best audiences in the correct channels at the right time.

Customers are able to execute traditional marketing campaigns on our proprietary

digital point-of-care network, as well as dynamic marketing campaigns that optimize audiences in real time to increase the value of treatment

information for healthcare professionals and patients in response to clinical care events.

We employ a “land and expand”

strategy focused on growing our existing client base and generating greater and more consistent revenues in part through the continued

shift in our business model toward enterprise level engagements, while also broadening our omnichannel network.

Our strategy for driving

revenue growth is also expected to work in tandem with our efforts to increase margin and profitability as revenue drivers such as DAAP

have inherently higher margins than most other messaging solutions we offer.

Customer Concentration

Because the pharmaceutical industry is dominated

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could have a negative impact on our operating results.

Our top five customers represented approximately 44% and 39% of our revenue for

the years ended December 31, 2023 and December 31, 2022, respectively.

In each of 2023 and 2022, we had one customer that each represented

more than 10% of our revenues.

In general, the pharmaceutical brand marketing

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pharmaceutical companies allocate the largest portion of their brand marketing to the fourth quarter of the calendar year.

the first half of the year tends to reflect lower activity levels and lower revenue, with gradual increases in the following quarters.

We generally expect these seasonality trends to continue and our ability to effectively manage our resources in anticipation of these

trends may affect our operating results.

Recent Developments

On October 24, 2023, we acquired 100% of the outstanding

shares of Healthy Offers, Inc.

(d/b/a Medicx Health), a Nevada corporation.

The aggregate merger consideration the Company paid to the

security holders of Medicx at the closing was $95,000,000, subject to certain customary post-acquisition purchase price adjustments.

portion of the cash purchase price was funded through debt financing, with a term loan in the aggregate principal amount of $40,000,000.

This acquisition could materially effect our results of operations in 2023 and beyond and the comparability of results to prior year periods.

The Company’s cash and cash-equivalents as of October 31, 2023 was approximately $15.8 million.

See Part I, Item 1, Note 12 “Subsequent

Events” for further information about this acquisition and the term loan.

the first quarter tends to reflect lower activity levels and lower revenue, with gradual increases in the following quarters.

expect these seasonality trends to continue and our ability to effectively manage our resources in anticipation of these trends may affect

our operating results.

Impact of Macroeconomic Events

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affect the growth of our business and our results of operations.

For example, macroeconomic events including the conditions

in the global capital markets, both in the U.S.

and elsewhere in the world, geopolitical tensions such as the war between Russia and Ukraine

as well as the conflict between Israel and Hamas, COVID-19 pandemic, rising inflation, and the U.S.

Federal Reserve raising interest

rates have led to economic uncertainty in the credit markets and could cause our customers and potential

customers to postpone or reduce spending on technology products or services or put downward pressure on prices .

Historically, during

periods of economic uncertainty and downturns, businesses may slow spending, which may impact our business and our customers’ businesses.

Adverse changes in demand could impact our business, collection of accounts receivable and our expected cash flow generation, which may

adversely impact our financial condition and results of operations.

For example, macroeconomic events including rising inflation and high interest rates have led to economic uncertainty.

In addition, high levels of employee turnover across the pharmaceutical industry

as well as a fewer number of U.S.

drug approvals could create additional uncertainty within our target customer markets.

Historically,

during periods of economic uncertainty and downturns, businesses may slow spending, which may impact our business and our customers’

Adverse changes in demand could impact our business, collection of accounts receivable and our expected cash flow generation,

which may adversely impact our financial condition and results of operations.

Key Performance Indicators

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uses this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical

and believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment.

decrease in the average in twelve months ended September 30, 2023 as compared to the twelve months ended September 30, 2022

is primarily the result of the convergence of numerous macroeconomic factors that resulted in our customers slowing their rate of spend,

particularly for large and/or new implementations, which we believe prolonged sales cycles with the top 20 pharmaceutical manufacturers

that were existing customers.

This was particularly evident during 2022 and the first half of 2023 and the Company has begun to see improvements

since the second half of 2023.

and believe it also provides investors with a transparent way to chart our progress in penetrating this important customer segment.

The increase in the average in twelve months ended March 31, 2024

as compared to the twelve months ended March 31, 2023 is primarily the result of stronger DAAP related revenue streams and the Company’s

October 2023 acquisition of Medicx Health, which added to 2024 revenues and was not included in the 2023 amounts (in thousands).

Rolling Twelve Months

Ended September 30,

Ended March 31,

Average revenue per top 20 pharmaceutical manufacturer

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vertical and believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment.

Our penetration within this core customer group stayed consistent from the twelve months ended September 30, 2022 to the twelve months

ended September 30, 2023.

Our penetration within this core customer group stayed consistent from the twelve months ended March 31, 2023 to the twelve months

ended March 31, 2024.

Rolling Twelve Months

Ended September 30,

Percent of top 20 pharmaceutical manufacturers that are customers

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believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment.

from customers that aren’t top 20 pharmaceutical manufacturers increased faster than our overall revenue, decreasing the percentage

of our overall revenues from top 20 pharmaceutical manufacturers.

Rolling Twelve Months

Ended September 30,

Ended March 31,

Percent of total revenue attributable to top 20 pharmaceutical manufacturers

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The retention rate in the

twelve months ended September 30, 2023 was lower due to the convergence of numerous macroeconomic factors that resulted in our customers

slowing their rate of spend, particularly for large and/or new implementations, which we believe prolonged sales cycles.

This was particularly

evident during 2022 and the first half of 2023 and the Company has begun to see improvements since the second half of 2023.

Rolling Twelve Months

Ended September 30,

twelve months ended March 31, 2024 was higher due to stronger DAAP related revenue and the acquisition of Medicx Health in the fourth

quarter of 2023.

Twelve Months

Ended March 31,

Net revenue retention

Revenue per average full-time employee.

We define revenue per average full-time employee as total revenue over the last twelve months divided by the average number of employees

over the last twelve months (i.e., the average between the number of FTEs at the end of the reported period and the number of FTEs at

the end of the same period of the prior year).

The Company uses this metric to monitor the productivity of its workforce and its ability

to scale efficiently over time and believes the metric provides investors with a way to chart our productivity and scalability.

rate per employee declined year over year due to slower revenue growth and a higher average number of FTEs over the last 12 month period.

We define revenue per average full-time employee (“FTE”), as total revenue over the last twelve months divided by the average

number of employees over the last twelve months (i.e., the average between the number of FTEs at the end of the reported period and the

number of FTEs at the end of the same period of the prior year).

The Company uses this metric to monitor the productivity of its workforce

and its ability to scale efficiently over time and believes the metric provides investors with a way to chart our productivity and scalability.

Our revenue rate per employee increased year over year due to revenue growing at a higher rate than the average number of FTEs over the

last 12 month period (in thousands).

Rolling Twelve Months

Ended September 30,

Revenue per average full-time employee

Results of Operations for the Three and Nine Months Ended September 30,

Results of Operations for the Three Months Ended March 31,

2024 and 2023

The following tables sets forth, for the periods

indicated, the dollar value and percentage of net revenue represented by certain items in our consolidated statements of operations:

Three Months Ended September 30,

Cost of revenues

Operating expenses

Loss from operations

Loss before provision for income taxes

Income tax benefit

$ (2,865,298 )

$ (3,466,792 )

* Balances and percentage of net revenue information may not

add due to rounding

Nine Months Ended September 30,

indicated, the dollar value and percentage of net revenue represented by certain items in our consolidated statements of operations (in

Three Months Ended March 31,

Cost of revenues

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Loss from operations

(15,498,541 )

(11,426,390 )

Other income (expense)

Interest expense

Interest income

Total other income (expense)

Loss before provision for income taxes

(13,424,460 )

(11,112,604 )

Income tax benefit

$ (13,424,460 )

$ (11,112,604 )

* Balances and percentage of net revenue information may not

add due to rounding

Our net revenue reported for the three months

ended September 30, 2023 was approximately $16.3 million, an increase of 8% over the approximately $15.1 million from the same period

Our net revenue reported for the nine months ended September 30, 2023 was approximately $43.2 million, an increase of 1%

over the approximately $42.8 million from the same period in 2022.

The increase in revenue was primarily as a result of growth of our

real world evidence solution.

Revenue continues to be effected by the macroeconomic pressures affecting our customers.

* Balances and percentage of net revenue information may not add

due to rounding

Our net revenue reported for the three

months ended March 31, 2024 was approximately $19,690, an increase of 51% over the approximately $13,003 from the same period

The increase in revenue was as a result of the impact of the fourth quarter 2023 acquisition of Medicx Health, which was

not included in the prior year numbers, plus growth of DAAP related sales.

This increase was partially offset by a reduction of

approximately $1,876 as a result of the disposal of our non-core Access solutions and the sale of certain non-core solutions-related

contracts in the fourth quarter of 2023.

Adjusting net revenues of $21,031 as shown in the pro-forma consolidated statement of

operations data table in Note 1 to the condensed consolidated financial statements by the $1,876 of non-core solutions revenues

included in 2023, the adjusted net revenues were $19,690 in 2024 versus $19,155 in 2023.

Cost of Revenues

Our cost of revenues, composed primarily of revenue

share expense paid to our network partners, was approximately $6.5 million for the three months ended September 30, 2023 compared

to $5.7 million for the same period of 2022.

Our cost of revenues for the nine month period ended September 30, 2023 increased to

$18.1 million from $16.3 million in the same period in 2022.

Our cost of revenues as a percentage of revenue increased to approximately

40% for the quarter ended September 30, 2023 from approximately 37.6% for the quarter ended September 30, 2022.

revenues as a percentage of revenue increased to approximately 42% for the nine months ended September 30, 2023 from approximately

38.0% for the nine months ended September 30, 2022.

This increase in cost of revenue as a percentage of revenue was a result of solution

and channel mix.

Additional discussion is included in the gross margin section below.

share expense paid to our network partners as well as costs associated with licensing data from third parties, was approximately $7,486

for the three months ended March 31, 2024 compared to $5,570 for the same period of 2023.

Our cost of revenues as a percentage of

revenue decreased to approximately 38% for the quarter ended March 31, 2024 from approximately 42.8% for the quarter ended March 31,

This improvement in cost of revenues as a percentage of revenue was a result of solution and channel mix.

Additional discussion

is included in the Gross Margin section below.

Our gross margin, which is the difference between

our revenues and our cost of revenues, increased for the three and nine months ended September 30, 2023, as a result of solution

and channel mix.

During the nine months ended September 30, 2023, there was an increase in high margin revenue solution delivery

compared with a year ago.

our revenues and our cost of revenues, increased for three months ended March 31, 2024, as a result of solution and channel mix.

During the three months ended March 31, 2024, we had higher revenues due to the fourth quarter acquisition of Medicx Health and growth

in our DAAP related sales, leading to increased gross margin.

Our overall margin percentage improved, compared with a year ago, as a result of an increased delivery

of higher margin revenue solutions, such as DAAP, and using more cost-effective channel partnerships.

Operating Expenses

Operating expenses increased to approximately

$13.4 million for the three months ended September 30, 2023 from approximately $13.2 million for the same period in 2022, an increase

of approximately 1%.

Operating expenses increased from approximately $37.9 million for the nine months ended September 30, 2022 to

approximately $40.6 million for the same period in 2023, an increase of approximately 7%.

The detail by major category is reflected in

the table below.

$17,233 for the three months ended March 31, 2024 from approximately $14,496 for the same period in 2023, an increase of approximately

The detail by major category is reflected in the table below (in thousands).

Three Months Ended

September 30,

Nine Months Ended

September 30,

Stock-based compensation

Depreciation, amortization and noncash lease expense

Depreciation and amortization

Other general and administrative expenses

Total operating expense

The greatest increase was in other general and

administrative expenses.

Other general and administrative expenses increased from approximately $8.4 million for the three months ended

September 30, 2022 to approximately $9.7 million for the same period in 2023.

Stock-based compensation decreased from approximately

$4,381 for the three months ended March 31, 2023, to approximately $3,024 for the three months ended March 31, 2024.

was a result of the lower grant date fair value of awards due to declines in the Company’s stock price as well as fewer equity awards

made in the first quarter of 2024.

Depreciation and amortization increased from approximately

$464 for the three months ended March 31, 2023, to approximately $1,067 for the three months ended March 31, 2024.

was a result of the additional amortization from associated with the identifiable intangibles arising from the Medicx Health acquisition.

Other general and administrative expenses increased

from $24.9 million for the nine months ended September 30, 2022 to approximately $28.1 million for the same period in 2023.

increase is mostly as a result of an increase in headcount as well as other investments to support our growth initiatives and operations.

We had a net loss of approximately $2.9 million

for the three months ended September 30, 2023, as compared to a net loss of approximately $3.5 million during the same period in

We had a net loss of approximately $13.4 million for the nine months ended September 30, 2023, as compared to a net loss of

approximately $11.1 million during the same period in 2022.

The reasons and specific components associated with the change are discussed

from approximately $9,651 for the three months ended March 31, 2023 to approximately $13,142 for the same period in 2024.

increase is primarily as a result of increases in compensation expense, due to additional headcount as a result of the Medicx Health acquisition,

professional fees, primarily audit and accounting fees, and partner integration incentives.

income (expense)

expense was approximately $1,546 for the three months ended March 31, 2024 and represents

interest charges on our Term Loan, which was raised to partially fund the acquisition of Medicx Health in the fourth quarter of 2023,

together with the amortization of the related issuance costs.

income decreased from approximately $665 for the three months ended March 31,

2023, to approximately $20 for the three months ended March 31, 2024.

The decrease was

a result of lower invested balances as we realized short-term investments during 2023 in order to

partially fund the acquisition of Medicx Health.

expense was approximately $344, or an effective rate of 5.2%, for the three months ended March 31, 2024.

For further information,

see Part I, Item I.

Financial Statements;

Note 11 — Income Taxes in the Condensed Consolidated Financial Statements.

We had a net loss of approximately $6,899 for

the three months ended March 31, 2024, as compared to a net loss of approximately $6,398 during the same period in 2023.

and specific components associated with the change are discussed above.

Liquidity and Capital Resources

Historically, our primary sources of liquidity

have been cash receipts from customers and proceeds from equity offerings.

As of September 30, 2023, we had total current assets

of approximately $87.4 million, compared with current liabilities of approximately $7.7 million, resulting in working capital of approximately

$79.7 million and a current ratio of approximately 11.3 to 1.

have been cash receipts from customers and proceeds from equity offerings, in addition, during the year ended December 31, 2023,

the Company entered into a Term loan of $40.0 million in order to partially fund the acquisition of Medicx Health.

As of March 31,

2024, the total principal balance outstanding on the Term loan was approximately $37.8 million and we were in compliance with all

of the financial covenants of the Term loan.

As of March 31, 2024, we had total current

assets of approximately $48.4 million, compared with current liabilities of approximately $16.8 million, resulting in working capital

of approximately $31.6 million and a current ratio of approximately 2.9 to 1.

This represents a decrease from our working capital of approximately

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in more detail below.

Following is a table with summary data from the

consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022, as presented.

Nine Months Ended

September 30,

Net cash (used in) / provided by operating activities

Net cash provided by / (used in) investing activities

(39,691,877 )

We believe that funds generated from operations,

together with existing cash, will be sufficient to finance our current operations and meet our obligations under the Term loan for the

next twelve (12) months.

In addition, we believe we can generate the cash needed to operate beyond the next 12 months from operations.

However, we may seek additional debt, equity financing, or lines of credit to supplement cash from operations to fund acquisitions or

strategic partner relationships, make capital expenditures, and satisfy working capital needs.

Following is a table with summary data from the consolidated statements

of cash flows for the three months ended March 31, 2024 and 2023, as presented (in thousands).

Three Months Ended

Net cash provided by /(used in) operating activities

Net cash used in investing activities

Net cash used in financing activities

(11,511,467 )

Net decrease in cash and cash equivalents

$ (8,287,209 )

$ (43,352,750 )

We used approximately $(1.0) million for operating

activities during the nine months ended September 30, 2023, compared with $7.9 million provided by operating activities in the same

period in 2022.

We had a net loss of $(13.4) million for the first nine months of 2023.

Non-cash expenses of $13.0 million and working

capital generated by the collection of receivables partially offset the loss.

The timing of trade and revenue share payments decreased

our balance of prepaid services year over year.

This, in conjunction with the greater net loss, led to the year over year decrease in

cash flow from operations.

Cash provided by investing activities was approximately

$0.7 million for the nine months ended September 30, 2023.

We redeemed $165.1 million in treasury bills which was partially offset

by reinvestment of $(162.8) million in treasury bills.

We also invested in internally developed software in the amount of $(1.6) million.

Cash used in investing activities for the same period in the prior year was $39.7 million.

$37.7 million was invested in treasury bills

with and $2.0 million was invested in EvinceMed technology.

Net increase (decrease) in cash and cash equivalents

We generated approximately $2,118 from operating

activities during the three months ended March 31, 2024, compared with $86 used in operating activities in the same period in 2023.

We had a net loss of $6,899 for the first three months of 2024, which included non-cash expenses of $4,273.

This was offset by cash generated

by the collection of receivables.

Cash used by investing activities was approximately

$153 for the three months ended March 31, 2024.

We invested in internally developed software in the amount of $121 and spent $32

on property and equipment.

Cash used in investing activities for the same period in the prior year was $1,550 as we made a net investment

of $1,326 in treasury bills and invested $194 in internally developed software.

Cash used for financing activities was approximately

$(8.0) million mostly related to a company stock repurchase program approved in March 2023.

During the nine months ended September 30,

2023 we used $(7.5) million to purchase 526,999 shares of common stock.

We used $(0.3) million to pay withholding taxes on behalf of employees

vesting in restricted stock units and $(0.3) million was related to a loan origination fee in connection with the acquisition financing.

This activity was partially offset by the receipt of funds from the exercise of stock options.

Cash used for financing activities for

the same period in prior year was $11.5 million.

We repurchased 706,114 shares of common stock for $12.6 million.

This was partially offset

by the collection of $1.1 million related to the exercise of stock options during the period.

We believe that funds generated from operations,

together with existing cash, will be sufficient to finance our current operations for the next twelve (12) months.

In addition, we believe

we can generate the cash needed to operate beyond the next 12 months from operations.

However, we may seek additional debt, equity financing,

or lines of credit to supplement cash from operations to fund acquisitions or strategic partner relationships, make capital expenditures,

and satisfy working capital needs.

$640, during the three months ended March 31, 2024.

We used $140 to pay withholding taxes on behalf of employees vesting in restricted

stock units and $500 was related to repayments on our Term loan.

Cash used for financing activities for the same period in prior year

was $131, primarily related to paying withholding taxes on behalf of employees vesting in restricted stock units.

Critical Accounting Estimates

We prepare our consolidated financial statements

in conformity with accounting principles generally accepted in the United States.

The preparation of these financial statements requires

the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial

statements and reported amounts of revenues and expenses during the periods presented.

Actual results could differ from those estimates

and assumptions.

Our significant accounting policies are described in Note 2 to the Consolidated Financial Statements in the Annual Report

on Form 10-K for the year ended December 31, 2022 (2022 Annual Report on Form 10-K).

The accounting policies we used in preparing

these financial statements are substantially consistent with those we applied in our 2022 Annual Report on Form 10-K.

Our critical accounting

estimates are described in Management’s Discussion and Analysis included in the 2022 Annual Report on Form 10-K.

in conformity with accounting principles generally accepted in the United States (“GAAP”).

The preparation of these financial

statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the

date of the financial statements and reported amounts of revenues and expenses during the periods presented.

Actual results could differ

from those estimates and assumptions.

Our significant accounting policies are described in Note 2 to the Consolidated Financial Statements

in the Annual Report on Form 10-K for the year ended December 31, 2023 (2023 Annual Report on Form 10-K).

The accounting policies

we used in preparing these financial statements are substantially consistent with those we applied in our 2023 Annual Report on Form 10-K.

Our critical accounting estimates are described in Management’s Discussion and Analysis included in the 2023 Annual Report on Form

Recently Issued Accounting Pronouncements

ASU Topic 2021-08 Business Combinations (Topic

805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , requires contract assets and contract

liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with

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

The standard was effective for the Company’s

fiscal year beginning January 1, 2023.

The adoption of this standard did not have a material effect on our financial position, results

of operations, or cash flows.

In November 2023, the FASB issued ASU No.

(“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

In December 2023, the FASB issued ASU No.

(“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.

currently evaluating the impact of adopting ASU 2023-09.

Off Balance Sheet Arrangements

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through their network.

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

As of September 30, 2023, the Company had commitments for future minimum payments of $11.8 million that will be reflected in cost

of revenues during the years 2023 through 2025.

From time to time the Company enters into arrangements with a partner to acquire minimum amounts of media, data

or messaging capabilities.

As of March 31, 2024, the Company had commitments for future minimum payments of approximately $22.6 million

that will be reflected in cost of revenues during the remainder of 2024 and years 2025 through 2028.

Quantitative and Qualitative Disclosures about Market Risk

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What changed 10-Q

Item 2. Management’s Discussion and Analysis