Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
We maintain disclosure controls and procedures
designed to provide reasonable assurance that information required to be disclosed in reports filed or submitted under the Exchange Act
is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules
and forms and accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding required disclosures.
Our management, with the participation of our
Chief Executive Officer and our Chief Financial Officer, conducted an evaluation, as of the end of the period covered by this report,
of the effectiveness of our disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e). Based on this
evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of the period covered by this
report, due to a material weakness in our internal control over financial reporting, our disclosure controls and procedures, as defined
in Rule 13a-15(e), were not effective at the reasonable assurance level.
To address
the material weakness referenced above, the Company performed additional analyses and other procedures to prepare the audited consolidated
financial statements in accordance with GAAP. Accordingly, management believes that the consolidated financial statements included in
this Annual Report on Form 10-K fairly present, in all material respects, our financial condition, results of operations and cash flows
for the periods presented.
On October 24, 2023, we
completed our acquisition of Medicx Health. We have evaluated the existing controls and procedures of Medicx Health and integrated Medicx
Health into our internal control over financial reporting as of December 31, 2024. Refer to Part II, Item 8. Financials Statements and
Supplementary Data; Note 3 – Acquisitions for additional information.
Management’s Report on Internal Control
Over Financial Reporting.
The Company’s management is responsible
for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United
States of America. The Company’s internal control over financial reporting includes those policies and procedures that:
● pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
● provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
● provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, any system
of internal control over financial reporting, no matter how well defined, may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate. The Company’s management, with the participation
of our Chief Executive Officer and our Chief Financial Officer, assessed the effectiveness of the Company’s internal control over
financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”) in Internal Control — Integrated Framework (2013). Based on this assessment
using those criteria, management identified the following material weakness existed as of December 31, 2024: inadequate controls to ensure
that data received from third-party service organizations is complete and accurate. As a result, based on the COSO criteria, the Company’s
management has concluded that we did not maintain effective internal control over financial reporting as of December 31, 2024.
32
Ongoing Remediation of Previously Identified Material Weakness
As previously
disclosed, a material weakness in our internal control over financial reporting was identified which related to controls to ensure
that data received from third-party service organizations were complete and accurate.
Management, with oversight from the Audit Committee
of our Board of Directors, is committed to remediating the material weakness that has been identified and maintaining an effective system
of disclosure controls and procedures. These remediation efforts, summarized below, are intended to both address the identified material
weakness and to enhance our overall financial control environment. Management is in the process of fully implementing process and control
improvements to address the above material weakness identified in 2023 as follows:
a. The Company requires each third-party service organization to provide to us, at least annually, a SOC-1
Type 2 report, with adequate controls to ensure the data we receive are complete and accurate. We rely upon a SOC-1 Type 2 report from
the service organizations attesting to the vendor’s internal controls.
b. If a SOC-1 Type 2 report is not available, the Company evaluates each third-party’s relevant system(s)
and control environment reporting directly through inquiry and substantive testing of such third-party’s control environment to
ensure the data we receive are complete and accurate.
c. If we are unable to obtain a valid SOC-1 Type 2 report or perform substantive testing of such third-party’s
control environment, the Company implements a thirty-party qualification and program triaging process, which could include modifying customer
contracts, limiting the volume of activity with those third-parties, and establishing other controls to ensure the completeness and accuracy
of information received from those third-parties, such as performing tagging procedures where possible.
To further execute on its remediation efforts
of the material weakness, management took the following additional steps:
d. Hired a Senior Vice President of internal controls and engaged a third-party consulting firm.
e. Developed a framework to assess whether data received from third-party service organizations were complete and accurate.
The material weakness will be considered remediated
when management concludes that, through testing, the applicable remedial controls are designed and implemented effectively.
When fully implemented and operational, we believe
the measures described above will remediate the material weakness we have identified and strengthen our internal control over financial
reporting. This material weakness will not be considered remediated until the newly implemented internal controls operate for a sufficient
period of time and management has concluded, through testing, that these internal controls are operating effectively. We are working to
have the material weakness remediated as soon as possible.
We are committed to continuing to improve our
internal control processes and will continue to review and assess our financial reporting controls and procedures on an ongoing basis.
As we continue to evaluate and improve our internal control over financial reporting, our management may determine whether it is appropriate
or necessary to take additional measures.
Changes in Internal Controls Over Financial
Reporting .
Other than the changes in connection with our
implementation of the material weakness remediation plan discussed above and the integration of Medicx Health into our internal control
over financial reporting there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act), that occurred during the quarter ended December 31, 2024 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
Item 9B. Other Information
Director and Executive Officer Trading Arrangements
During the quarter ended December 31, 2024, no
director or executive officers adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading
arrangement” (as each term is defined in Item 408(a) of Registration S-K).
Item 9C. Disclosure Regarding Foreign Jurisdictions
that Prevent Inspections.
None.
33
PART III
Item 10. Directors, Executive Officers and
Corporate Governance
Except for the information provided in PART I,
Item 4.1, “Information About Our Executive Officers” and as set forth below, the required information is incorporated by reference
from our definitive proxy statement for our 2025 Annual Meeting of Shareholders, including, but not necessarily limited to, the sections
entitled “Proposal No. 1 Election of Directors, “Committees of the Board of Directors” and “Information Regarding
Security Holders Delinquent Section 16(a) Reports.”
We have a Code of Business Conduct and Ethics
(the “Code”) that applies to our directors, officers, and employees. Only the Board may grant a waiver of any provision for
a director, executive officer, or any other principal financial officer, and any such waiver, or any amendment to the Code, will be promptly
disclosed as required at www.optimizerx.com . The Code can be found on the Company’s website at www.optimizerx.com
under “Investor Relations - Governance.” The information on the website is not and should not be considered part of this Annual
Report on Form 10-K and is not incorporated by reference in this Annual Report on Form 10-K.
Item 11. Executive Compensation
The required information is incorporated by reference
from our definitive proxy statement for our 2025 Annual Meeting of Shareholders, including, but not necessarily limited to, the sections
entitled “Director Compensation” and “Executive Compensation”.
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters.
Except for the information set forth below, the
required information is incorporated by reference from our definitive proxy statement for our 2025 Annual Meeting of Shareholders, including,
but not necessarily limited to, the section entitled “Information Regarding Security Holders.”
Equity Compensation Plan Information
The following table details information regarding
our existing equity compensation plans as of December 31, 2024:
Plan Category
Number
of securities to be
issued
upon exercise of
outstanding
options,
warrants
and
rights
Weighted-
average
exercise
price
of outstanding
options,
warrants
and
rights
Number
of securities remaining
available
for future issuance
under
equity compensation
plans
(excluding securities
reflected
in column (a))
(a)
(b)
(c)
Equity compensation plans approved by security holders
2013 Equity Compensation Plan – Options
234,512
38.37
—
2013 Equity Compensation Plan – Restricted Stock Units
8,000
N/A
—
2021 Equity Incentive Plan – Options
1,611,338
15.40
1,161,064
2021 Equity Incentive Plan – Restricted Stock Units
686,326
N/A
—
Equity compensation plans not approved by security holders
—
N/A
—
Total
2,540,176
1,161,064
Item 13. Certain Relationships and Related
Transactions, and Director Independence
The required information is incorporated by reference
from our definitive proxy statement for our 2025 Annual Meeting of Shareholders, including, but not necessarily limited to, the sections
entitled “Certain Relationships and Related Transactions” and “Corporate Governance - Director Independence.”
Item 14. Principal Accounting Fees and Services
The required information is incorporated by reference
from our definitive proxy statement for our 2025 Annual Meeting of Shareholders, including, but not necessarily limited to, the sections
entitled “Ratification of UHY LLP as Independent Registered Public Accounting Firm – Independent Registered Public Accountant
Fee Information” and “Ratification of UHY LLP as Independent Registered Public Accounting Firm – Pre-Approval Policies
and Procedures.”
34
PART IV
Item 15. Exhibits and Financial Statements
Schedules
(a) The consolidated financial statements and exhibits listed below
are filed as part of this Annual Report on Form 10-K.
(1) The Company’s consolidated financial statements, the
notes thereto and the report of the Independent Registered Public Accounting Firm are included in PART II, Item 8. “Financial Statements
and Supplementary Data.”
(2) Financial statement schedules have been omitted because they
are not applicable, not required, or the required information is included in the Consolidated Financial Statements or Notes thereto.
(3) Exhibits. Reference is made to Item 15(b) below.
(b) Exhibits . The Exhibit Index, which immediately precedes
the signature page, is incorporated by reference into this Annual Report on Form 10-K.
(c) Financial Statement Schedules . Reference is made to Item
15(a)(2) above.
Item 16. Form 10-K Summary
None
EXHIBIT INDEX
Exhibit
Number
Description
3.1
Articles of Incorporation of OptimizeRx Corporation (the “Company”) Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 (Registration No. 333-155280) filed on November 12, 2008.
3.2
Certificate of Correction, dated April 30, 2018. Incorporated by reference to Exhibit 3.5 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
3.3
Third Amended and Restated Bylaws of the Company. Incorporated by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
4.1
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. Incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
10.1†
Fourth Amended and Restated 2013 Equity Incentive Plan. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 12, 2020.
10.2†
OptimizeRx 2021 Equity Incentive Plan. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 25, 2021.
10.3†
Form of Stock Option Award for grants under the OptimizeRx Corporation 2021 Equity Incentive Plan. Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 25, 2021.
10.4†
Form of Performance Stock Option Award for grants under the OptimizeRx Corporation 2021 Equity Incentive Plan. Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on August 25, 2021.
10.5†
Form of Restricted Stock Unit Award for grants under the OptimizeRx Corporation 2021 Equity Incentive Plan. Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on August 25, 2021.
10.6†
Form of Performance Restricted Stock Unit Award for grants under the OptimizeRx Corporation 2021. Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on August 25, 2021
10.7†
Employment Agreement with Marion Odence-Ford. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 11, 2021.
10.8†
Amendment to Employment Agreement by and between the Company and Marion Odence-Ford dated February 28, 2022. Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on March 4, 2022.
10.9*†
Offer Letter by and between the Company and Edward Stelmakh. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 30, 2021.
10.10†
OptimizeRx Corporation 2022 Cash Bonus Plan. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 4, 2022.
10.11
Agreement and Plan of Merger dated as of October 11, 2023 by and among OptimizeRx Corporation, Healthy Offers, Inc., the securityholders of Healthy Offers, Inc. who are party to the Agreement, and Michael Weintraub, not in his individual capacity, but solely in his capacity as the representative, agent and attorney-in-fact of the Securityholders. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 16, 2023.
10.12
Support Agreement, dated as of October 11, 2023 by and among the stockholders party thereto, OptimizeRx Corporation and Healthy Offers, Inc. Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 16, 2023.
35
10.13
Financing Agreement, dated as of October 11, 2023, by and among OptimizeRx Corporation, the lenders from time to time party thereto, and Blue Torch Finance, LLC, as collateral agent and administrative agent. Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on October 16, 2023.
10.14
Letter Agreement, dated as of October 11, 2023, OptimizeRx Corporation and Blue Torch Finance, LLC. Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on October 16, 2023.
10.15
Common Stock Purchase Agreement dated October 24, 2023 by and among the Company and the Management Investors. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 25, 2023.
10.16
Amendment No. 1 to Financing Agreement, dated March 29, 2024. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 2, 2024.
10.17*†
Amended and Restated Employment Agreement by and between the Company and William J. Febbo dated April 12, 2024. Incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
10.18*†
Amended and Restated Employment Agreement by and between the Company and Stephen Silvestro dated April 12, 2024. Incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
10.19**†
Amended OptimizeRx Corporation Executive Severance Plan, dated March 7, 2025.
10.20
Amendment No. 1 to the OptimizeRx 2021 Equity Incentive Plan. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 7, 2024
10.21**
Amendment No. 2 to Financing Agreement, dated September 26, 2024.
10.22**
Amendment No. 3 to Financing Agreement, dated February 5, 2025.
10.23†
Separation and Advisory Agreement executed as of January 3, 2025 by and between the Company and William J. Febbo. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 10, 2025.
10.24†
Amended and Restated Employment Letter, dated as of March 7, 2025 by and between the Company and Stephen Silvestro Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 10, 2025.
14.1
Code of Business Conduct and Ethics Incorporated by reference to Exhibit 14.1 to the Company’s Current Report on Form 8-K filed on June 25, 2021.
19.1**
OptimizeRx Corporation Insider Trading Policy
21.1**
List of Subsidiaries
23.1**
Consent of UHY LLP
31.1**
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2**
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
97.1
OptimizeRx Corporation Clawback Policy. Incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
101.INS**
Inline XBRL Instance Document
101.SCH
Inline XBRL Schema Document
101.CAL
Inline XBRL Calculation Linkbase Document
101.DEF
Inline XBRL Definition Linkbase Document
101.LAB
Inline XBRL Label Linkbase Document
101.PRE
Inline Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
† Management Contracts and Compensatory Plans, Contracts or Arrangements.
* Exhibits have been omitted pursuant to Item 601(a)(5) of Regulation
S-K. The Company agrees to furnish supplementally a copy of any omitted exhibit to the SEC upon request.
** Provided herewith.
36
SIGNATURES
Pursuant to the requirements of Section 13 or
15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
OptimizeRx Corporation
By:
/s/ Stephen Silvestro
Stephen Silvestro
Title:
Chief Executive Officer
Date:
March 20, 2025
By:
/s/ Edward Stelmakh
Edward Stelmakh
Title:
Chief Financial Officer Chief Operations Officer
Date:
March 20, 2025
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Signature
Title
Date
/s/ Stephen Silvestro
Chief Executive Officer
(principal executive officer)
March 20, 2025
Stephen Silvestro
/s/ Edward Stelmakh
Chief Financial Officer and Chief Operations Officer
(principal financial and accounting officer)
March 20, 2025
Edward Stelmakh
/s/ Lynn O’Connor Vos
Chairperson
March 20, 2025
Lynn O’Connor Vos
/s/ Patrick Spangler
Director
March 20, 2025
Patrick Spangler
/s/ James Lang
Director
March 20, 2025
James Lang
/s/ Greg Wasson
Director
March 20, 2025
Greg Wasson
/s/ Catherine Klema
Director
March 20, 2025
Catherine Klema
37