What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-14 compared with 2024-08-15 · 362 added, 349 removed, 55 unchanged (93% of the section changed)

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains statements

that relate to future events and expectations and, as such, constitute forward-looking statements, within the meaning of the Private Securities

Litigation Reform Act of 1995.

Certain statements, other than purely historical information, including estimates, projections, statements

relating to our strategies, outlook, business and financial prospects, business plans, objectives, and expected operating results, and

the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements

generally are identified by the words “believes,” “project,” “expects,” “anticipates,”

“estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,”

“will be,” “will continue,” “will likely result,” and similar expressions.

Forward-looking statements are based on current

expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the

forward-looking statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking

Quarterly Report on Form 10-Q contains statements that relate to future events and expectations and, as such, constitute forward-looking

statements, within the meaning of the Private Securities Litigation Reform Act of 1995.

Certain statements, other than purely historical

information, including estimates, projections, statements relating to our strategies, outlook, business and financial prospects, business

plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking

statements.” These forward-looking statements generally are identified by the words “believes,” “project,”

“expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”

“may,” “will,” “would,” “will be,” “will continue,” “will likely result,”

and similar expressions.

Forward-looking

statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results

to differ materially from the forward-looking statements.

Forward-looking statements are not guarantees of future performance.

Although OptimizeRx believes that the

expectations reflected in any forward-looking statements are based on reasonable assumptions, these expectations may not be attained and

it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of

risks, uncertainties and changes in circumstances, many of which are beyond OptimizeRx’s control.

Forward-looking statements are subject to risks

and uncertainties.

Actual results could differ materially from those expressed in or implied by such forward-looking statements due to

a variety of factors, including:

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;

OptimizeRx believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, these expectations

may not be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements

due to a variety of risks, uncertainties and changes in circumstances, many of which are beyond OptimizeRx’s control.

Forward-looking

statements are subject to risks and uncertainties.

Actual results could differ materially from those expressed in or implied by such

forward-looking statements due to a variety of factors, including:

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;

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;

attract and retain customers;

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

in the healthcare industry;

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 comply with laws and regulations that affect the healthcare

developments 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;

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;

inability to realize

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

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;

impairment charges for

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

inability 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;

to attract and retain senior management and other key employees;

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

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;

customer demand due to macroeconomic factors;

decreases in customer demand

due to macroeconomic factors;

lack of a consistent active trading market for 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

not exhaustive.

Further information concerning our business, including additional factors that could materially affect our financial results,

is included herein and in our other filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31,

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 future.

risks and uncertainties included here are not exhaustive.

Further information concerning our business, including additional factors that

could materially affect our financial results, is included herein and in our other filings with the SEC, including our Annual Report

on Form 10-K for the year ended December 31, 2023.

Moreover, we operate in a rapidly changing and competitive environment.

New risk factors emerge from time to time, and it is not

possible for management to predict all such risk factors.

Further, it is not possible to assess the effect

of all risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ

materially from those contained in any forward-looking statements.

Given these risks and uncertainties, investors should not place undue

reliance on forward-looking statements as a prediction of actual results.

In addition, we disclaim any obligation to update any forward-looking

statements to reflect events or circumstances that occur after the date of this report.

We are a digital health technology company enabling

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

care journey.

factors emerge from time to time, and it is not possible for management to predict all such risk factors.

it is not possible to assess the effect of all risk factors on our businesses or the extent to which any factor, or combination of factors,

may cause actual results to differ materially from those contained in any forward-looking statements.

Given these risks and uncertainties,

investors should not place undue reliance on forward-looking statements as a prediction of actual results.

In addition, we disclaim any

obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of this report.

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

patients at critical junctures throughout the patient care journey.

Connecting over 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 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

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 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

by large companies with multiple brands, our revenue is concentrated in a relatively small number of companies.

We have approximately

100 pharmaceutical companies as customers, and our revenues are concentrated in these customers.

Loss of one of more of our larger customers

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

industry experiences seasonal trends that affect the vast majority of participants in the pharmaceutical digital marketing industry.

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

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

Unfavorable conditions in the economy may negatively

affect the growth of our business and our 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’ 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.

Key Performance Indicators

We monitor the following key performance indicators

to help us evaluate our business, measure our performance, identify trends affecting our business and make strategic decisions.

updated the definition of “top 20 pharmaceutical manufacturers” in our key performance indicators to be based upon Fierce Pharma’s

most updated list of “The top 20 pharma companies by 2023 revenue”.

We previously used “The top 20 pharma companies by

2022 revenue”.

As a result of this change, prior periods have been restated for comparative purposes.

Average revenue per top 20 pharmaceutical manufacturer.

Average revenue per top 20 pharmaceutical manufacturer is calculated by taking the total revenue the Company recognized through pharmaceutical

manufacturers listed in Fierce Pharma’s “The top 20 pharma companies by 2023 revenue” over the last twelve months, divided

by the total number of the aforementioned pharmaceutical manufacturers that our solutions helped support over that time period.

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

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

increase in the average in twelve months ended June 30, 2024 as compared to the twelve months ended June 30, 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

Average revenue per top 20 pharmaceutical manufacturer

Percent of top 20 pharmaceutical manufacturers

that are customers.

Percent of top 20 pharmaceutical manufacturers that are customers is calculated by taking the number of revenue

generating customers that are pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma companies by 2023

revenue” over the last 12 months, which is then divided by 20—which is the number of pharmaceutical manufacturers included

in the aforementioned list.

The Company uses this metric to monitor its progress in penetrating 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.

Our penetration within this core customer group stayed consistent from the twelve months ended June 30, 2023 to the twelve months

ended June 30, 2024.

Rolling Twelve Months

Ended June 30,

Percent of top 20 pharmaceutical manufacturers that are customers

Percent of total revenue attributable to top

20 pharmaceutical manufacturers.

Percent of total revenue attributable to top 20 pharmaceutical manufacturers is calculated by taking

the total revenue the Company recognized through pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma

companies by 2023 revenue” over the last twelve months, divided by our consolidated revenue over the same period.

The Company 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.

Rolling Twelve Months

Ended June 30,

Percent of total revenue attributable to top 20 pharmaceutical manufacturers

Net revenue retention.

Net revenue retention

is a comparison of revenue generated from all customers in the previous twelve-month period to total revenue generated from the same customers

in the following twelve-month period (i.e., excludes new customer relationships for the most recent twelve-month period).

uses this metric to monitor its ability to improve its penetration with existing customers and believes it also provides investors with

a metric to chart our ability to increase our year-over-year penetration and revenue with existing customers.

The retention rate in the

twelve months ended June 30, 2024 was higher due to stronger DAAP related revenue and the acquisition of Medicx Health in the fourth

quarter of 2023.

Rolling Twelve Months

Ended June 30,

In addition, the October 2023 acquisition of Medicx Health provided

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

Today, 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.

Concentration

the pharmaceutical industry is dominated by large companies with multiple brands, our revenue is concentrated in a relatively small number

of companies.

We have approximately 100 pharmaceutical companies as customers, and our revenues are concentrated in these customers.

Loss of one of more of our larger customers 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.

general, the pharmaceutical brand marketing industry experiences seasonal trends that affect the vast majority of participants in the

pharmaceutical digital marketing industry.

Many pharmaceutical companies allocate the largest portion of their brand marketing to the

fourth quarter of the calendar year.

As a result, the first quarter 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.

of Macroeconomic Events

conditions in the economy may negatively affect the growth of our business and our results of operations.

For example, macroeconomic

events including volatility of inflation and 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’ 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.

Key Performance

monitor the following key performance indicators to help us evaluate our business, measure our performance, identify trends affecting

our business and make strategic decisions.

We have updated the definition of “top 20 pharmaceutical manufacturers” in our

key performance indicators to be based upon Fierce Pharma’s most updated list of “The top 20 pharma companies by 2023 revenue”.

We previously used “The top 20 pharma companies by 2022 revenue”.

As a result of this change, prior periods have been restated

for comparative purposes.

revenue per top 20 pharmaceutical manufacturer.

Average revenue per top 20 pharmaceutical manufacturer is calculated by taking the

total revenue the Company recognized through pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma companies

by 2023 revenue” over the last twelve months, divided by the total number of the aforementioned pharmaceutical manufacturers that

our solutions helped support over that time period.

The Company uses this metric to monitor its progress in “landing and expanding”

with key customers within its largest customer vertical 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 September 30, 2024 as compared

to the twelve months ended September 30, 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).

Twelve Months Ended

September 30,

Average revenue per top 20 pharmaceutical

of top 20 pharmaceutical manufacturers that are customers.

Percent of top 20 pharmaceutical manufacturers that are customers is calculated

by taking the number of revenue generating customers that are pharmaceutical manufacturers listed in Fierce Pharma’s “The

top 20 pharma companies by 2023 revenue” over the last 12 months, which is then divided by 20 - which is the number of pharmaceutical

manufacturers included in the aforementioned list.

The Company uses this metric to monitor its progress in penetrating 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.

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

2023 to the twelve months ended September 30, 2024.

Twelve Months Ended

September 30,

Percent of top 20 pharmaceutical

manufacturers that are customers

of total revenue attributable to top 20 pharmaceutical manufacturers.

Percent of total revenue attributable to top 20 pharmaceutical

manufacturers is calculated by taking the total revenue the Company recognized through pharmaceutical manufacturers listed in Fierce

Pharma’s “The top 20 pharma companies by 2023 revenue” over the last twelve months, divided by our consolidated revenue

over the same period.

The Company 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.

Twelve Months Ended

September 30,

Percent of total revenue attributable

to top 20 pharmaceutical manufacturers

revenue retention.

Net revenue retention is a comparison of revenue generated from all customers in the previous twelve-month period

to total revenue generated from the same customers in the following twelve-month period (i.e., excludes new customer relationships for

the most recent twelve-month period).

The Company uses this metric to monitor its ability to improve its penetration with existing customers

and believes it also provides investors with a metric to chart our ability to increase our year-over-year penetration and revenue with

existing customers.

The retention rate in the twelve months ended September 30, 2024 was higher due to increased adoption of DAAP

year over year as well as the acquisition of Medicx Health in the fourth quarter of 2023.

Twelve Months Ended

September 30,

Net revenue retention

Revenue per average full-time employee.

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 June 30,

per average full-time employee.

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).

Twelve Months Ended

September 30,

Revenue per average full-time employee

Results of Operations for the Three and Six Months Ended June 30,

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 (in

Three Months Ended June 30,

of Operations for the Three and Nine Months Ended September 30, 2024 and 2023

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 (in thousands):

Months Ended September 30,

Cost of revenues

Operating expenses

Loss from operations

1 unchanged sentence

Interest expense

Interest income

Total other income (expense)

other income (expense)

Loss before provision for income taxes

Income tax benefit (expense)

* Balances and percentage of net revenue information may not

add due to rounding

Six Months Ended June 30,

Income tax benefit

and percentage of net revenue information may not add due to rounding

Nine Months Ended September 30,

Cost of revenues

7 unchanged sentences

Income tax benefit

* Balances and percentage of net revenue information may not

add due to rounding

Net revenue reported for the three months ended

June 30, 2024 was approximately $18,812, an increase of approximately 36% over the approximately $13,818 from the same period in

Our net revenue reported for the six months ended June 30, 2024 was approximately $38,502, an increase of approximately 44%

over the approximately $26,821 from the same period in 2023.

The increase in net 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, where the quarter

benefited from an increase list delivery related revenue tied to new DAAP program launches.

The increases in the three and six months

ended June 30, 2024 were partially offset by a reduction of approximately $1,213 and $3,080, respectively, 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.

and percentage of net revenue information may not add due to rounding

revenue reported for the three months ended September 30, 2024 was approximately $21,309, an increase of approximately 30% over

the approximately $16,331 from the same period in 2023.

Our net revenue reported for the nine months ended September 30, 2024 was

approximately $59,811, an increase of approximately 39% over the approximately $43,153 from the same period in 2023.

The increase in

net 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.

The increases in the three and nine months ended September 30, 2024 were partially

offset by a reduction of approximately $1,088 and $4,169, respectively, 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.

Net revenues of $23,852 and $68,603, as shown

in the pro forma financial consolidated statement of operations data table in Note 1 above, includes $1,088 and $4,169 related to the

Access and other non-core solutions revenues for the three and six months ended June 30, 2023, compared to $18,812 and $38,502 for

the three and six months ended June 30, 2024, for which no Access or other non-core solutions revenue was recorded.

Cost of Revenues

Our cost of revenues, comprised primarily of revenue

share expense paid to our network partners as well as costs associated with licensing data from third parties, was approximately $7,108

or 37.8% of net revenues for the three months ended June 30, 2024 compared to $5,993 or 43.4% of net revenues for the three months

ended June 30, 2023 and was approximately $14,595 or 38% of net revenues for the six months ended June 30, 2024, compared to

$11,563 or 43% of net revenues for the six months ended June 30, 2023.

The changes in cost of revenues as a percentage

of revenues 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, was approximately $11,704 or 62.2% of net revenues for the three months ended June 30, 2024

compared to $5,993 or 56.6% of net revenues for the three months ended June 30, 2023 and was approximately $14,595 or 38% of net

revenues for six months ended June 30, 2024 compared to $11,563 or 43% of net revenues for the six months ended June 30, 2023.

We had higher second quarter revenues compared

to the same year ago period 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

$15,453 for the three months ended June 30, 2024 from approximately $12,674 for the same period in 2023, an increase of approximately

For six months ended June 30, 2024 operating expenses were approximately $32,685 compared to approximately $27,137 for the six

months ended June 30, 2023, a increase of 20%.

Access and other non-core solutions revenues for the three and nine months ended September 30, 2023, compared to $21,309 and $59,811

for the three and nine months ended September 30, 2024, for which no Access or other non-core solutions revenue was recorded.

cost of revenues, comprised primarily of revenue share expense paid to our network partners as well as costs associated with licensing

data from third parties, was approximately $7,862 or 36.9% of net revenues for the three months ended September 30, 2024 compared

to $6,531 or 40.0% of net revenues for the three months ended September 30, 2023 and was approximately $22,456 or 38% of net revenues

for the nine months ended September 30, 2024, compared to $18,094 or 42% of net revenues for the nine months ended September 30,

changes in cost of revenues as a percentage of revenues was a result of solution and channel mix.

Additional discussion is included in

the Gross Margin section below.

gross margin, which is the difference between our revenues and our cost of revenues, was approximately $13,447 or 63.1% of net revenues

for the three months ended September 30, 2024 compared to $9,800 or 60.0% of net revenues for the three months ended September 30,

2023 and was approximately $37,355 or 62.5% of net revenues for the nine months ended September 30, 2024 compared to $25,059 or

58.1% of net revenues for the nine months ended September 30, 2023.

had higher third quarter revenues compared to the same year ago period due to the fourth quarter 2023 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 Medicx Audience Activation (“MAA”),

and using more cost-effective channel partnerships.

Operating expenses increased to approximately $22,009 for the three

months ended September 30, 2024 from approximately $13,353 for the same period in 2023, an increase of approximately 65%.

nine months ended September 30, 2024 operating expenses were approximately $54,695 compared to approximately $40,557 for the nine

months ended September 30, 2023, an increase of 35%.

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Stock-based compensation

Depreciation and amortization

Goodwill impairment

Other general and administrative expenses

1 unchanged sentence

Stock-based compensation decreased from approximately

$3,503 for the three months ended June 30, 2023, to approximately $2,903 for the three months ended June 30, 2024, and decreased

from approximately $7,884 for the six months ended June 30, 2023, to approximately $5,926 for the six months ended June 30,

The decrease in both periods 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 such periods.

Depreciation and amortization increased from approximately

$465 for the three months ended June 30, 2023, to approximately $1,073 for the three months ended June 30, 2024, and increased

from approximately $929 for the six months ended June 30, 2023, to approximately $2,140 for the six months ended June 30, 2024.

The increase in both periods was a result of the additional amortization associated with the identifiable intangibles arising from the

Medicx Health acquisition.

$3,206 for the three months ended September 30, 2023, to approximately $2,604 for the three months ended September 30, 2024,

and decreased from approximately $11,090 for the nine months ended September 30, 2023, to approximately $8,530 for the nine months

ended September 30, 2024.

The decrease in both periods 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 such periods.

and amortization increased from approximately $467 for the three months ended September 30, 2023, to approximately $1,095 for the

three months ended September 30, 2024, and increased from approximately $1,395 for the nine months ended September 30, 2023,

to approximately $3,235 for the nine months ended September 30, 2024.

The increase in both periods was a result of the additional

amortization associated with the identifiable intangibles arising from the Medicx Health acquisition.

The Company recorded goodwill impairment in the

amount of $7.5 million in the three months ended September 30, 2024.

This amount represents the excess of the book value of the Company’s

equity over the estimated fair value.

Other general and administrative expenses increased

from approximately $8,706 for the three months ended June 30, 2023 to approximately $11,477 for the three months ended June 30,

2024, and increased from approximately $18,325 for the six months ended June 30, 2023, to approximately $24,619 for the six months

ended June 30, 2024.

This increase in both periods is primarily a result of increases in compensation

expense, due to additional headcount as a result of the Medicx Health acquisition therefore causing a related increase in bonus and commission

expense, professional fees, primarily audit and accounting fees, insurance costs and partner integration incentives.

from approximately $9,680 for the three months ended September 30, 2023 to approximately $10,821 for the three months ended September 30,

2024, and increased from approximately $28,072 for the nine months ended September 30, 2023, to approximately $35,441 for the nine

months ended September 30, 2024.

This increase in both periods is primarily a result of increases in compensation expense, due to

additional headcount as a result of the Medicx Health acquisition, increasing salary, bonus, and commission expense.

There was also an

increase in contractors and consultants.

income (expense)

expense was approximately $1,528 and $3,074 for the three and six months ended June 30,

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.

was $75 for the three and six months ended June 30, 2024 and represents a reduction

in the estimated amount due as a result of a supplier related payment contingency.

income decreased from approximately $721 for the three months ended June 30,

2023, to approximately $106 for the three months ended June 30, 2024, and from approximately

$1,386 for the six months ended June 30, 2023, to

approximately $125 for the six months ended June 30, 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.

benefit was approximately $1,088, or an effective rate of 21.4%, and $744, or an effective rate of 6.4%for the three and six months

ended June 30, 2024, respectively.

For further information, see Part I, Item I.

expense was approximately $1,524 and $4,597 for the three and nine months ended September 30, 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 was $38 and $113 for the three and nine months ended September 30, 2024 and represents a reduction in the estimated amount

due as a result of a supplier related payment contingency.

Interest income decreased from approximately $688

for the three months ended September 30, 2023, to approximately $107 for the three months ended September 30, 2024, and from

approximately $2,074 for the nine months ended September 30, 2023, to approximately $231 for the nine months ended September 30,

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.

Income tax expense

Income tax benefit was approximately $817, or an effective rate of

8.2%, and $1,561, or an effective rate of 7.2% for the three and nine months ended September 30, 2024, respectively.

information, see Part I, Item I.

Financial Statements;

Note 12 — Income Taxes

in the Condensed Consolidated Financial Statements.

Note 13 — Income Taxes in the Condensed Consolidated Financial Statements.

We had a net loss of approximately $9,124 for

the three months ended June 30, 2024, as compared to a net loss of approximately $4,161 during the three months ended June 30,

2023 and approximately $10,908 for the six months ended June 30, 2024 as compared to $10,559 for

the six months ended June 30, 2023.

the three months ended September 30, 2024, as compared to a net loss of approximately $2,865 during the three months ended September 30,

2023 and approximately $20,032 for the nine months ended September 30, 2024 as compared to $13,424 for the nine months ended September 30,

The reasons 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, 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 June 30,

2024, the total principal balance outstanding on the Term loan was approximately $37.3 million and we were in compliance with all

of the financial covenants of the Term loan.

As of June 30, 2024, we had total current

assets of approximately $46.0 million, compared with current liabilities of approximately $15.0 million, resulting in working capital

of approximately $31.0 million and a current ratio of approximately 3.1 to 1.

This represents a decrease from our working capital of approximately

$36.4 million, whilst maintaining the same current ratio at 3.0 to 1 when compared to December 31, 2023.

This decrease in our working

capital is discussed in more detail below.

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 six months ended June 30, 2024 and 2023, as presented (in thousands).

Six Months Ended June 30,

and Capital Resources

Historically,

our primary sources of liquidity 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

As of September 30, 2024, the total principal balance outstanding on the Term loan was approximately $36.8 million

and we were in compliance with all of the financial covenants of the Term loan.

of September 30, 2024, we had total current assets of approximately $46.9 million, compared with current liabilities of approximately

$14.5 million, resulting in working capital of approximately $32.4 million and a current ratio of approximately 3.2 to 1.

This represents

a decrease from our working capital of approximately $36.4 million, whilst maintaining the same current ratio at 3.0 to 1 when compared

to December 31, 2023.

This decrease in our working capital is discussed in more detail below.

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.

is a table with summary data from the consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023,

as presented (in thousands).

Nine Months Ended

September 30,

Net cash provided by /(used in) operating activities

3 unchanged sentences

We generated approximately $4,691 from operating

activities during the six months ended June 30, 2024, compared with $2,455 used in operating activities in the same period in 2023.

We had a net loss of $10,908 for the first six months of 2024, which included non-cash expenses of $8,431.

This was offset by cash generated

by the collection of receivables.

Cash used by investing activities was approximately

$238 for the six months ended June 30, 2024.

We invested in internally developed software in the amount of $161 and spent $77 on

property and equipment.

Cash used in investing activities for the same period in the prior year was $1,674 as we made a net investment

of $3,000 in treasury bills and invested $1,274 in internally developed software.

activities during the nine months ended September 30, 2024, compared with $982 used in operating activities in the same period in

We had a net loss of $20,032 for the first nine months of 2024, which included non-cash expenses of $18,176.

This was offset by

cash generated through improved working capital management.

used by investing activities was approximately $330 for the nine months ended September 30, 2024.

We invested in internally developed

software in the amount of $235 and spent $95 on property and equipment.

Cash provided by investing activities for the same period in

the prior year was $664 as we made a net investment of $2,311 in treasury bills and invested $1,561 in internally developed software.

Cash used for financing activities was approximately

$1,555, during the six months ended June 30, 2024.

We used $555 to pay withholding taxes on behalf of employees vesting in restricted

stock units and made repayments totaling $1,000 on our Term loan.

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

was $7,621, primarily related to the repurchase of 526,999 shares of our common stock for approximately $7,522.

The remaining amount arose

from paying withholding taxes on behalf of employees vesting in restricted stock units, partially offset by receipt of funds from the

exercise of stock options.

Critical Accounting Estimates

We prepare our consolidated financial statements

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.

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.

$2,087, during the nine months ended September 30, 2024.

We used $587 to pay withholding taxes on behalf of employees vesting in

restricted stock units and made repayments totaling $1,500 on our Term loan.

Cash used for financing activities for the same period in

prior year was $7,969, primarily related to the repurchase of 526,999 shares of our common stock for approximately $7,522.

The remaining

amount arose from paying withholding taxes on behalf of employees vesting in restricted stock units, partially offset by the receipt of

funds from the exercise of stock options.

Accounting Estimates

We prepare our condensed consolidated financial statements 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.

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 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 10-K.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU No.

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.

evaluate goodwill for impairment during our fiscal fourth quarter, or more frequently if an event occurs or circumstances change.

The use of different assumptions, estimates, or

judgments in the goodwill impairment testing process may significantly increase or decrease the estimated fair value of a reporting unit.

Generally, changes in DCF estimates would have a similar effect on the estimated fair value of the reporting unit.

During the third quarter of 2024, the Company

experienced sustained decreases in its stock price and market capitalization.

Accordingly, the Company conducted a quantitative impairment

test of its goodwill as of September 30, 2024.

The Company estimated fair value by weighting the results from a market approach and an

income approach.

Significant assumptions inherent in the valuation methodologies included, but are not limited to, prospective financial

information, discount rate, and comparable multiples from publicly traded companies in the same industry.

The assessment resulted in a

non-cash impairment charge of $7.5 million.

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

Issued Accounting Pronouncements

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

In December 2023, the FASB issued ASU No.

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.

currently evaluating the impact of adopting ASU 2023-09.

Off-Balance Sheet Arrangements

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 or banners

through their network.

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

or messaging capabilities.

As of June 30, 2024, the Company had commitments for future minimum payments of approximately $18.5 million

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

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.

Sheet Arrangements

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 or banners through their network.

From time to time, the Company enters into arrangements with a

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

As of September 30, 2024, the Company had commitments

for future minimum payments of approximately $16.7 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

Not applicable.

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-Q

Item 2. Management’s Discussion and Analysis