OptimizeRx (OPRX) 10-Q 7 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 04, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	OptimizeRx Corp
Entity Central Index Key	1,448,431
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		29,672,132

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current Assets
Cash and cash equivalents	$ 7,574,638	$ 8,207,565
Accounts receivable	2,324,343	2,847,450
Prepaid expenses	102,759	70,623
Total Current Assets	10,001,740	11,125,638
Property and equipment, net	89,273	10,239
Other Assets
Patent rights, net	789,332	832,884
Web development costs, net	376,011	340,470
Security deposit	5,049	5,049
Total Other Assets	1,170,392	1,178,403
TOTAL ASSETS	11,261,405	12,314,280
Current Liabilities
Accounts payable - trade	191,397	212,191
Accounts payable - related party		570,000
Accrued expenses	42,402	6,983
Revenue share payable	2,220,703	2,355,608
Deferred revenue	766,107	227,002
Total Liabilities	3,220,609	3,371,784
Stockholders' Equity
Common stock, $.001 par value, 500,000,000 shares authorized, 29,672,132 and 29,030,925 shares issued and outstanding, respectively	29,672	29,031
Preferred stock, $.001 par value, 10,000,000 shares authorized, no shares issued and outstanding
Stock warrants	2,294,416	2,329,508
Additional paid-in-capital	33,623,051	32,185,499
Stock payable		1,132,148
Deferred stock compensation		(13,800)
Accumulated deficit	(27,906,343)	(26,719,890)
Total Stockholders' Equity	8,040,796	8,942,496
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 11,261,405	$ 12,314,280

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	29,672,132	29,030,925
Common stock, shares outstanding	29,672,132	29,030,925
Preferred Stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
NET REVENUE	$ 1,786,137	$ 2,007,409	$ 5,458,944	$ 5,200,419
REVENUE SHARE EXPENSE	723,396	1,044,415	2,539,021	2,683,183
GROSS MARGIN	1,062,741	962,994	2,919,924	2,517,236
OPERATING EXPENSES	1,311,959	875,425	4,133,505	2,698,694
INCOME (LOSS) FROM OPERATIONS	(249,218)	87,569	(1,213,582)	(181,458)
OTHER INCOME (EXPENSE)
Interest income	6,634	368	27,292	968
Interest expense			(163)
TOTAL OTHER INCOME (EXPENSE)	6,634	368	27,129	968
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES	(242,584)	87,937	(1,186,453)	(180,490)
PROVISION FOR INCOME TAXES
NET INCOME (LOSS)	$ (242,584)	$ 87,937	$ (1,186,453)	$ (180,490)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
BASIC	29,433,846	23,259,837	29,374,319	23,060,787
DILUTED		24,348,551
NET INCOME (LOSS) PER SHARE
BASIC	$ (0.01)	$ 0	$ (0.04)	$ (0.01)
DILUTED		$ 0

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss for the period	$ (1,186,453)	$ (180,490)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	153,968	242,004
Stock and options issued for services	435,168	463,662
Changes in:
Accounts receivable	523,107	(639,723)
Prepaid expenses	(32,136)	(58,703)
Accounts payable	(383,794)	(25,448)
Revenue share payable	(134,905)	494,208
Accrued expenses	35,419	19,546
Deferred revenue	539,105	172,982
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(50,521)	488,038
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(85,417)	(499)
Patent rights	(7,268)	(9,150)
Website site development costs	(132,306)	(97,399)
NET CASH USED IN INVESTING ACTIVITIES	(224,991)	(107,048)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock	449,500	4,733,746
Equity issuance costs		(387,300)
Repurchase of common stock payable	(806,915)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(357,415)	4,346,446
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(632,927)	4,727,436
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	8,207,565	3,446,973
CASH AND CASH EQUIVALENTS - END OF PERIOD	7,574,638	8,174,409
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	163
Cash paid for income taxes

Nature of Business and Basis of

Nature of Business and Basis of Presentation	9 Months Ended
	Sep. 30, 2016
Nature of Business and Basis of Presentation [Abstract]
NATURE OF BUSINESS AND BASIS OF PRESENTATION	NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION We are a technology solution company focused on the health care industry. Our objective is to innovate and connect to improve healthcare by leveraging our proprietary technology to provide on demand savings and clinical messaging within physicians’ and patients’ web based platforms, including Electronic Health Records, e-prescribing platforms, pharmacies and Patient Portals. Initially defined as a marketing and advertising company through our consumer website, OptimizeRx.com, we have matured as a technology solutions provider through our direct to physician solution, which allows physicians to automatically display and distribute financial messaging, composed of sample vouchers and/or copay coupons, and clinical messaging electronically within the ePrescription platform to physicians on behalf of their patients. The OptimizeRx solution is integrated into the ePrescribing or Electronic Medical Records applications, but can also be accessed on a desktop computer, as well as most mobile devices. Our solutions provide health care institutions with an alternative option to the traditional inefficiencies and issues associated with storing and managing physical drug samples and pre-printed coupons and provide better access and affordability to patients to improve affordability, adherence, education and outcomes. In turn, we provide pharmaceutical manufacturers with both direct-to-consumer and direct-to-physician channels for more efficiently communicating and promoting their products and savings with a method of transparent return on investment. The consolidated financial statements for the three and nine month periods ended September 30, 2016 and 2015, have been prepared by us without audit pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, all adjustments necessary to present fairly our financial position, results of operations, and cash flows as of September 30, 2016 and 2015, and for the periods then ended, have been made. Those adjustments consist of normal and recurring adjustments. The consolidated balance sheet as of December 31, 2015, has been derived from the audited consolidated balance sheet as of that date. Certain information and note disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with a reading of the financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as filed with the Securities and Exchange Commission. The results of operations for the three and nine month periods ended September 30, 2016, are not necessarily indicative of the results to be expected for the full year. Certain reclassifications have been made in our consolidated financial statements for the prior period to conform to the presentation of our consolidated financial statements for the current period.

Stockholders Equity

Stockholders Equity	9 Months Ended
	Sep. 30, 2016
Stockholders Equity [Abstract]
STOCKHOLDERS EQUITY	NOTE 2 – STOCKHOLDERS EQUITY Our Director Compensation plan calls for the issuance of 6,250 shares of our common stock per quarter to each Independent Director. In connection with this plan, we issued 12,500 shares of our common stock in each of the months of March, July, and September 2016 that were valued at $13,125, $14,375, and $13,750, respectively, based on the fair market value at time of issuance. In January 2015, we issued 12,500 shares of common stock to our Independent Directors in connection with the same compensation plan. Those shares were recorded as stock payable at December 31, 2014. In addition, we issued an additional 12,500 shares each quarter for the quarters ended March 31, June 30, and September 30, 2015. These shares were valued at $16,375, $13,375, and $15,125, respectively, based on the fair market value at the time of issuance. In July 2016, we issued 384,118 shares of common stock to an unrelated party in a private transaction, the proceeds of which were used to redeem shares of common stock payable. We issued 100,000 shares of common stock, valued at $110,000, to Shadron Stastney in connection with the settlement of litigation described in greater detail in Note 5. In February 2015, we entered into a capital markets advisory agreement covering a one-year period, which calls for 90,000 shares of common stock to be issued as compensation. These shares were valued at $112,500 and are being amortized to expense over the period of service. Of these shares, 45,000 were issued in March 2015, and the balance were issued in August 2015. In September 2015, we entered into a new capital markets advisory agreement covering a one year period, which calls for 90,000 shares of common stock to be issued as compensation. The first 45,000 shares were issued in September 2015 and valued at $41,400. These shares were amortized over the six month period ended February, 2016. In September 2015, we entered into a securities purchase agreement pursuant to which we sold 6,011,106 shares of our common stock for $0.7875 per share, or gross proceeds of $4,733,746. The shares were issue to a subsidiary of WPP, the world’s largest marketing services company, as part of a strategic investment by WPP. Placement agents in the offering received commissions and expenses of $387,300, or approximately 8.2% of the gross proceeds. The net proceeds received were $4,346,446. Placement agents also received warrants to purchase up to 240,444 shares of our common stock with an exercise price of $0.7875 per share and a term of 5 years. The warrants were valued at $176,213 and have been recorded as equity issuance costs. In June 2015, we agreed to grant 197,605 fully vested shares of our common stock to two executive officers as bonuses. These shares were not issued, but were recorded as stock payable and could be requested by the officers at any time. A total of 79,042 of these shares were redeemed in cash in February 2016, in lieu of issuing the shares and the remaining 118,563 were redeemed in July 2016. We also issued 50,000 shares of common stock in June 2016 related to shares that were previously reflected in common stock payable. In addition, we issued 69,519 shares during the nine-month period ended September 30, 2016 in connection with the cashless exercise of previous option grants that were approaching expiration. As described in greater detail in Note 4, related party transactions, in February 2016, we made a one-time payment of $720,415 to our previous CEO in lieu of issuing shares owed to him from previous years. A portion of this payment, $357,415, was for 295,384 shares of common stock reflected in stock payable at December 31, 2015. In July 2016, we also made a one-time payment to our Senior Vice President of Sales of $449,500 to redeem 384,188 shares of common stock owing to him from 2014 and 2015 that were reflected in stock payable at December 31, 2015.

Share Based Payments - Options

Share Based Payments - Options	9 Months Ended
	Sep. 30, 2016
Share Based Payments - Options [Abstract]
SHARE BASED PAYMENTS - OPTIONS	NOTE 3 – SHARE BASED PAYMENTS – OPTIONS We use the fair value method to account for stock-based compensation. We recorded $270,117 and $171,864 in compensation expense in the periods ended September 30, 2016 and 2015, respectively, related to options issued under our stock-based incentive compensation plan. This includes expense related to options issued in prior years for which the requisite service period for those options includes the current year, options granted in the current year and options repriced in the current year. The fair value of these instruments was calculated using the Black-Scholes option pricing model. Information related to the assumptions used in this model is set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Related Party Transactions

Related Party Transactions	9 Months Ended
	Sep. 30, 2016
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	NOTE 4 – RELATED PARTY TRANSACTIONS In February 2016, after hiring a new CEO, we paid our previous CEO $720,415 in lieu of issuing him 595,384 shares of common stock based on the 50-day average price of $1.21 per share. A total of 295,384 of these shares were due as a result of previously granted stock awards in 2014 and 2015, for which shares had not yet been issued. These shares were recorded as stock payable on the balance sheet at December 31, 2015. The remaining 300,000 shares were due in connection with the purchase of a patent from the previous CEO in 2010. These shares were recorded as accounts payable – related party on the balance sheet at December 31, 2015. The difference between the value the shares were initially recorded at in 2010 and the amount they were redeemed at in 2016 was recorded as additional paid in capital. In April 2016, we and the previous CEO entered into a separation agreement and an 18-month consulting agreement, both of which we disclosed in a Form 8-K that we filed with the Securities and Exchange Commission. The consulting agreement sets forth the terms of the previous CEO’s continued relationship with our company. He remained our employee through March 31, 2016 and the consulting relationship began April 1, 2016. Under the terms of the consulting agreement, he receives a monthly payment of $15,000, with the potential for up to $54,000 in additional bonus payments during the term of the agreement. This agreement also calls for total payments of $12,425 related to insurance benefits. The separation agreement and consulting agreement replace and supersede all previously disclosed payments related to his severance and board fees. In July 2016, we redeemed 384,118 shares of common stock owed to our Senior Vice President of Sales from stock grants awarded in 2014 and 2015, but not issued at the time of the grant. We redeemed these shares for a payment of $449,500.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2016
Commitments and Contingencies [Abstract]
COMMITMENTS AND CONTINGENCIES	NOTE 5 – COMMITMENTS AND CONTINGENCIES Litigation The company has been involved in the following legal proceedings in 2016. Commencing in September 2014, we have been a party to a lawsuit involving our prior CEO, Shadron Stastney, in the U.S. District Court in the Eastern District of Michigan as a result of a dispute related to his separation agreement. On May 27, 2016, we settled the action. For a complete release of claims and dismissal of the action, we agreed to pay Mr. Stastney $50,000 and to issue him 100,000 shares of our common stock. We further agreed to register 133,333 of his existing shares with the Securities and Exchange Commission on Form S-1 by June 30, 2016. We have tendered the cash and shares to Mr. Stastney and registered his shares in fulfillment of our settlement obligations. In March, 2015, we initiated litigation against LDM Group, LLC and PDR Network, LLC related to the breach by LDM, and PDR as successor, of the settlement agreement signed February 28, 2014 related to previous litigation with LDM. LDM has failed to live up to its obligations under the settlement agreement including, but not limited to, not allowing us to distribute our eCoupon programs in the LDM network, not allowing us to distribute the LDM patient education programs, and not providing other information required under the settlement agreement. In addition, our claims include PDR’s breach of the Master Services Agreement requiring PDR to exclusively use our eCoupon solution. We assert that PDR’s acquisition of LDM and the use of the LDM network to distribute coupons by PDR violates the agreement between the parties. We are seeking enforcement of the agreements and we are seeking damages in an amount at least equal to the amounts paid to date to LDM under the settlement agreement, which is in excess of $1.0 million, as well as damages for lost income and business value as a result of LDM and PDR’s breach of the agreements. The case is currently before the court in the State of Missouri. The parties are currently in the discovery process.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2016
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 6 – SUBSEQUENT EVENTS In accordance with ASC 855-10, we have analyzed our operations subsequent to September 30, 2016 through the date these financial statements were issued and have determined that we do not have any material subsequent events to disclose in these financial statements.

Stockholders Equity (Details)

Stockholders Equity (Details)	1 Months Ended								3 Months Ended			9 Months Ended
	Sep. 30, 2016USD ($)$ / sharesshares	Jul. 31, 2016USD ($)shares	Mar. 31, 2016USD ($)shares	Feb. 29, 2016USD ($)shares	Dec. 31, 2015USD ($)$ / sharesshares	Sep. 30, 2015USD ($)$ / sharesshares	Jun. 30, 2015officersshares	Feb. 28, 2015USD ($)shares	Sep. 30, 2015USD ($)$ / sharesshares	Jun. 30, 2015USD ($)shares	Mar. 31, 2015USD ($)shares	Sep. 30, 2016USD ($)$ / sharesshares	Sep. 30, 2015USD ($)$ / sharesshares	Jun. 30, 2016shares
Related Party Transaction [Line Items]
Common stock payable amount | $												$ 806,915
Common stock, shares issued | shares	29,672,132				29,030,925	6,011,106			6,011,106			29,672,132	6,011,106
Common stock valued | $	$ 29,672				$ 29,031							$ 29,672
Total redeemed shares | shares				79,042
Term of warrant						5 years
Additional shares issued | shares												69,519
Share based compensation expense | $												$ 270,117	$ 171,864
Gross proceeds | $						$ 4,733,746						449,500	4,733,746
Expenses | $						387,300							$ 387,300
Net proceeds received | $						$ 4,346,446
Warrants issued | shares						240,444			240,444				240,444
Warrant exercise price | $ / shares						$ 0.7875			$ 0.7875				$ 0.7875
Value of warrants | $						$ 176,213
Common stock, par value | $ / shares	$ 0.001				$ 0.001	$ 0.7875			$ 0.7875			$ 0.001	$ 0.7875
Redemption of shares | shares		118,563
Common Stock [Member]
Related Party Transaction [Line Items]
Shares issued | shares														50,000
Number of executive officers | officers							2
Common stock vested, Shares | shares							197,605
CEO, Shadron Stastney [Member]
Related Party Transaction [Line Items]
Related party transactions | $				$ 720,415
Common stock payable amount | $					$ 357,415
Common stock, shares issued | shares	100,000				295,384							100,000
Common stock valued | $	$ 110,000											$ 110,000
Director [Member]
Related Party Transaction [Line Items]
Common stock, shares issued | shares	12,500	12,500	12,500									12,500
Common stock valued | $	$ 13,750	$ 14,375	$ 13,125									$ 13,750
Total redeemed shares | shares	6,250	6,250	6,250
Additional shares issued | shares									12,500	12,500	12,500
Additional shares issued, value | $									$ 15,125	$ 13,375	$ 16,375
Capital markets advisory agreement [Member]
Related Party Transaction [Line Items]
Total redeemed shares | shares						90,000		90,000
Share based compensation expense | $						$ 41,400		$ 112,500
Shares issued | shares						45,000			45,000		45,000		45,000
Senior Vice President of Sales [Member]
Related Party Transaction [Line Items]
Payment for redeemed shares | $		$ 449,500
Redemption of shares | shares		384,118

Share Based Payments - Options

Share Based Payments - Options (Details) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Share based payments options [Textual]
Stock-based compensation expense	$ 270,117	$ 171,864

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($)	1 Months Ended		12 Months Ended
	Apr. 30, 2016	Feb. 29, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2010	Jul. 31, 2016
Related Party Transactions (Textual)
Total common granted stock			295,384	295,384
Total payments of insurance benefits	$ 12,425
Redemption of shares						118,563
CEO [Member]
Related Party Transactions (Textual)
Related party transactions		$ 720,415
Shares of common stock issued		595,384
Average price per share		$ 1.21
Shares issued for in connection with purchase of a patent					300,000
Monthly payment of consulting agreement	15,000
Additional bonus payments	$ 54,000
Vice President [Member]
Related Party Transactions (Textual)
Redemption of shares						384,118
Payment for redeemed shares						$ 449,500

Commitments and Contingencies (

Commitments and Contingencies (Details) - USD ($)	1 Months Ended	9 Months Ended
	Jun. 30, 2016	Sep. 30, 2016	Mar. 31, 2015
CEO, Shadron Stastney [Member]
Contingencies (Textual)
Claims pertaining to damages to nonregistration of shares		$ 50,000
Shares of common stock issued		100,000
Existing shares	133,333
LDM Group [Member]
Contingencies (Textual)
Damage related to LDM' s breach of the agreement			$ 1,000,000
PDR Network [Member]
Contingencies (Textual)
Damage related to LDM' s breach of the agreement			$ 1,000,000