OptimizeRx (OPRX) 10-Q 5 Nov 18 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Oct. 31, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	OptimizeRx Corp
Entity Central Index Key	1,448,431
Trading Symbol	OPRX
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q3
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		12,013,682

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Current Assets
Cash and cash equivalents	$ 13,523,002	$ 5,122,573
Accounts receivable	3,791,964	2,257,276
Accounts receivable - related party	1,373,054	1,173,614
Prepaid expenses	201,320	255,428
Total Current Assets	18,889,340	8,808,891
Property and equipment, net	149,936	167,305
Other Assets
Patent rights, net	587,848	638,766
Web development and other intangible costs, net	128,381	143,730
Security deposit	5,049	5,049
Total Other Assets	721,278	787,545
TOTAL ASSETS	19,760,554	9,763,741
Current Liabilities
Accounts payable - trade	165,458	457,289
Accrued expenses	814,530	953,947
Revenue share payable	763,084	1,177,136
Revenue share payable - related party		447,670
Deferred revenue	813,316	507,160
Total Liabilities	2,556,388	3,543,202
Stockholders' Equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no issued and outstanding at September 30, 2018 or December 31, 2017
Common stock, $0.001 par value, 166,666,667 shares authorized, 11,970,976 and 9,772,694 shares issued and outstanding at Sept 30, 2018 and December 31, 2017, respectively	11,971	9,773
Stock warrants		1,286,424
Additional paid-in-capital	47,361,086	35,287,464
Accumulated deficit	(30,168,891)	(30,363,122)
Total Stockholders' Equity	17,204,166	6,220,539
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 19,760,554	$ 9,763,741

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
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
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	166,666,667	166,666,667
Common stock, shares issued	11,970,976	9,772,694
Common stock, shares outstanding	11,970,976	9,772,694

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
NET REVENUE
Revenue	$ 3,990,486	$ 2,076,736	$ 9,951,743	$ 5,729,275
Revenue - Related Party	1,424,898	1,025,871	4,675,351	2,391,227
TOTAL NET REVENUE	5,415,384	3,102,607	14,627,094	8,120,502
REVENUE SHARE EXPENSE	2,268,968	1,703,676	6,513,810	4,690,943
GROSS MARGIN	3,146,416	1,398,931	8,113,284	3,429,559
OPERATING EXPENSES	2,923,238	2,028,589	7,807,705	5,320,220
INCOME (LOSS) FROM OPERATIONS	223,178	(629,658)	305,579	(1,890,661)
OTHER INCOME (EXPENSE)
Interest income	21,750	6,872	30,679	23,691
Interest expense
TOTAL OTHER INCOME (EXPENSE)	21,750	6,872	30,679	23,691
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES	244,928	(622,786)	336,258	(1,866,970)
PROVISION FOR INCOME TAXES
NET INCOME (LOSS)	$ 244,928	$ (622,786)	$ 336,258	$ (1,866,970)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
BASIC	11,755,500	9,752,122	10,840,584	9,839,325
DILUTED	12,921,768	9,752,122	11,766,754	9,839,325
NET INCOME (LOSS) PER SHARE
BASIC	$ 0.02	$ (0.06)	$ 0.03	$ (0.19)
DILUTED	$ 0.02	$ (0.06)	$ 0.03	$ (0.19)

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) for the period	$ 336,258	$ (1,866,970)
Adjustments to reconcile net income(loss) to net cash used in operating activities:
Depreciation and amortization	163,418	212,918
Stock and options issued for services	1,721,979	497,033
Changes in:
Accounts receivable	(1,734,128)	355,644
Prepaid expenses	54,108	(454,486)
Accounts payable	(291,831)	26,544
Revenue share payable	(414,722)	(744,526)
Accrued expenses	(139,417)	146,291
Deferred revenue	164,129	342,511
NET CASH USED IN OPERATING ACTIVITIES	(140,206)	(1,485,041)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(23,131)	(29,310)
Web development and other intangible costs	(56,651)	(117,168)
NET CASH USED IN INVESTING ACTIVITIES	(79,782)	(146,478)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock for cash	8,620,417
Repurchase of common stock and stock payable		(390,000)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	8,620,417	(390,000)
NET CHANGE IN CASH AND CASH EQUIVALENTS	8,400,429	(2,021,519)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	5,122,573	7,034,647
CASH AND CASH EQUIVALENTS - END OF PERIOD	13,523,002	5,013,128
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest
Cash paid for income taxes
Non-cash issuance of shares to WPP	$ 447,000

Nature of Business and Basis of

Nature of Business and Basis of Presentation	9 Months Ended
	Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
NATURE OF BUSINESS AND BASIS OF PRESENTATION	NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION We are a leading digital health messaging platform via electronic health records (EHRs), providing a direct channel for pharmaceutical companies to communicate with healthcare providers. Our cloud-based solution supports patient adherence to medications by providing real-time access to financial assistance, prior authorization, education and critical clinical information. Our network is comprised of leading EHR platforms and provides more than half of the ambulatory healthcare providers access to these benefits within their workflow at the point of care. The consolidated financial statements for the three and nine months ended September 30, 2018 and 2017, have been prepared by us without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments necessary to present fairly our financial position, results of operations, and cash flows as of September 30, 2018 and 2017, 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, 2017, has been derived from the audited consolidated balance sheet as of that date. Certain items in the 2017 financial statements have been reclassified to conform with the 2018 presentation. 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, 2017, as filed with the SEC. The results of operations for the three and nine months ended September 30, 2018, 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 periods to conform to the presentation of our consolidated financial statements for the current periods.

New Financial Accounting Standa

New Financial Accounting Standards	9 Months Ended
	Sep. 30, 2018
Accounting Changes and Error Corrections [Abstract]
NEW FINANCIAL ACCOUNTING STANDARDS	NOTE 2 – NEW FINANCIAL ACCOUNTING STANDARDS On January 1, 2018, we adopted the new accounting standard ASC 606, Revenue from Contracts with Customers We have applied the new revenue standard to all contracts as of the date of initial application. The overwhelming majority of our revenue continues to be recognized when transactions occur, such as the delivery of a message. We previously recognized revenue related to set-ups when a program launched, and all related activities had been accomplished. Under the new revenue standard, we are recognizing revenue related to these set ups over the term of the initial contract. Since set up fees are generally small relative to the size of the overall contract and because most contracts are for a year or less, the impact of this change is immaterial. The impact of recording this change as of January 1, 2018 resulted in an increase in deferred revenue of $142,027 at that date and a corresponding decrease in retained earnings as well. The impact of adopting the new revenue standard in 2018 resulted in lower revenues in the nine months ended September 30, 2018. Had the new revenue standard not taken effect, our revenues for the period would have been higher by $151,514 and deferred revenues lower by $151,514. Almost all of these revenues are expected to be recognized by December 31, 2018, so the primary effect of the new revenue standard is to shift revenues between quarters by immaterial amounts. The impact of adopting the new revenue standard in 2018 also resulted in lower revenues in the three months ended September 30, 2018. Had the new revenue standard not taken effect, our revenues for the period would have been higher by $7,252.

Stockholders' Equity

Stockholders' Equity	9 Months Ended
	Sep. 30, 2018
Equity [Abstract]
STOCKHOLDERS' EQUITY	NOTE 3 – STOCKHOLDERS’ EQUITY Effective May 14, 2018, in connection with our listing on the Nasdaq Capital Market, we implemented a reverse split of our common stock by exchanging each three shares of our common stock for one share. Our financial statements and all equity transactions have been retroactively adjusted to account for the reverse stock split. We elected to round fractional shares up to the nearest whole number rather than redeem them for cash, and as a result we issued 908 additional shares as a result of this rounding. Our Director Compensation Plan calls for issuance of 2,084 shares of common stock per quarter to each independent director. In 2018, we issued 6,252 shares valued at $28,875, 8,336 shares valued at $89,945, and 11,489 shares valued at $206,802 for the quarters ended March 31, June 30 and September 30, respectively. In 2017, we issued 6,252 shares in each of the quarters ended March 31, June 30 and September 30 valued at $15,375, $19,312, and $23,250, respectively. In the quarter ended March 31, 2018, we issued 100,000 shares of common stock to a subsidiary of WPP, one of the world’s largest media companies, and a shareholder, in full payment of all amounts due under a co-marketing agreement that covered certain WPP agencies, whereby we shared a portion of our revenue with those agencies related to new programs through those agencies. The shares were valued at $447,000, the market value of the stock on the date of issuance. The amount due was recorded as a liability in revenue share payable at December 31, 2017. During the quarter ended June 30, 2018, in a private transaction, we issued 1,666,669 shares of our common stock for gross proceeds of $9,000,000. In connection with this transaction, we incurred equity issuance costs of $835,526 related to payments to advisors and legal fees associated with the transaction, resulting in net proceeds to the Company of $8,164,474. We also issued 143,405 shares of common stock and received proceeds of $455,942 in connection with the exercise of options in 2018. During the quarter ended September 30, 2018, we issued 10,000 shares of stock, valued at $148,050, for investor relations services. During the quarter ended September 30, 2018, we issued 251,046 shares of common stock in connection with the cashless exercise of a warrant to purchase 348,194 shares.

Share Based Payments - Options

Share Based Payments - Options	9 Months Ended
	Sep. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
SHARE BASED PAYMENTS - OPTIONS	NOTE 4 – SHARE BASED PAYMENTS – OPTIONS We use the fair value method to account for stock-based compensation. We recorded $1,248,307 and $439,095 in compensation expense in the nine months ended September 30, 2018 and 2017, 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 assumptions used in this model were similar to the assumptions set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 related to grants in 2017. As also discussed in the 10-K, we increased the shares of common stock authorized under our stock option plan during 2018 to 1,833,333 million shares. There is $879,250 of remaining expense related to unvested options to be recognized in the future.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	NOTE 5 – COMMITMENTS AND CONTINGENCIES Litigation The company is not involved in any legal proceedings.

Related Party Transactions

Related Party Transactions	9 Months Ended
	Sep. 30, 2018
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	NOTE 6 – RELATED PARTY TRANSACTIONS WPP, a large international media conglomerate, owns approximately 18% of our common shares. As described in more detail in Note 3, Stockholders’ Equity, we issued 100,000 shares of our common stock to a subsidiary of WPP related to the finalization and termination of a co-marketing agreement. Our customers are primarily pharmaceutical companies; however, sometimes their messaging programs are billed through media agencies. Revenues earned on messaging programs billed through media agencies owned by WPP are reflected as related party revenues on the income statement and amounts due from those same agencies are reflected as related party accounts receivable on the balance sheet since WPP, through a subsidiary company, owns a minority portion of our common shares, even though the party receiving the ultimate services is not a related party.

Net Income (Loss) Per Share

Net Income (Loss) Per Share	9 Months Ended
	Sep. 30, 2018
Earnings Per Share [Abstract]
NET INCOME (LOSS) PER SHARE	NOTE 7 – NET INCOME (LOSS) PER SHARE The following tables sets forth the computation of basic and diluted net income per share. Three Months Ended Sept 30 Nine Months Ended Sept 30 2018 2017 2018 2017 Numerator Net income (loss) $ 244,928 $ (622,786) $ 336,258 $ (1,866,970) Denominator Weighted average shares outstanding used in computing net income (loss) per share Basic 11,755,500 9,752,122 10,840,584 9,839,325 Effect of dilutive stock options, warrants, and stock grants 1,166,268 - 936,170 - Diluted 12,921,768 9,752,122 11,766,754 9,839,325 Net Income (Loss) per share Basic $ 0.02 $ (0.06 ) $ 0.03 $ (0.19 ) Diluted $ 0.02 $ (0.06 ) $ 0.03 $ (0.19 )

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2018
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 8 – SUBSEQUENT EVENTS In October 2018, we issued 7,248 shares of common stock and received proceeds of $25,651 in connection with the exercise of options. In addition, in October 2018, we issued 5,000 shares of our common stock in connection with investor relations services. In October 2018, we completed the acquisition of CareSpeak Communications, a leader in interactive health messaging for improved medication adherence and care coordination to expand our reach to communicate directly to patients, resulting in greater medication adherence, persistence and affordability. This strategic acquisition allows us to continue diversifying our revenue streams and scaling our current solution. The purchase price was $6.0 million plus estimated working capital received of $91,411. A portion of the purchase price, $500,000, was payable in shares of our common stock and 30,638 shares were issued in connection with this acquisition. Additional cash payments of up to $3.0 million may be come due as part of an earnout if we achieve $2.0 million of revenues related to the “CareSpeak” product in 2019, and $3.0 million in 2020.

Net Income (Loss) Per Share (Ta

Net Income (Loss) Per Share (Tables)	9 Months Ended
	Sep. 30, 2018
Earnings Per Share [Abstract]
Schedule of basic and diluted net income per share	Three Months Ended Sept 30 Nine Months Ended Sept 30 2018 2017 2018 2017 Numerator Net income (loss) $ 244,928 $ (622,786) $ 336,258 $ (1,866,970) Denominator Weighted average shares outstanding used in computing net income (loss) per share Basic 11,755,500 9,752,122 10,840,584 9,839,325 Effect of dilutive stock options, warrants, and stock grants 1,166,268 - 936,170 - Diluted 12,921,768 9,752,122 11,766,754 9,839,325 Net Income (Loss) per share Basic $ 0.02 $ (0.06 ) $ 0.03 $ (0.19 ) Diluted $ 0.02 $ (0.06 ) $ 0.03 $ (0.19 )

New Financial Accounting Stan_2

New Financial Accounting Standards (Details) - USD ($)	Jan. 02, 2018	Sep. 30, 2018
New Financial Accounting Standards (Textual)
Increase in deferred revenue	$ 142,027
New revenue accounting standard, description		The new revenue standard not taken effect, our revenues for the period would have been higher by $151,514 and deferred revenues lower by $151,514. Almost all of these revenues are expected to be recognized by December 31, 2018, so the primary effect of the new revenue standard is to shift revenues between quarters by immaterial amounts. The impact of adopting the new revenue standard in 2018 also resulted in lower revenues in the three months ended September 30, 2018. Had the new revenue standard not taken effect, our revenues for the period would have been higher by $7,252.

Stockholders' Equity (Details)

Stockholders' Equity (Details) - USD ($)	May 14, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Sep. 30, 2018
Stockholders' Equity (Textual)
Reserve stock split, description	We implemented a reverse split of our common stock by exchanging each three shares of our common stock for one share.
Shares issued	908
Shares of common stock issued				100,000
Shares of common stock issued, value				$ 447,000
Payments to advisors and legal fees								$ 835,526
Net proceeds issuance of common stock								$ 8,164,474
Issuance of common stock exercise								143,405
Issuance of common stock exercise value								$ 455,942
Common stock value issued for services								$ 148,050
Common stock shares issued for services								10,000
Issued shares of common stock in connection with cashless exercise								251,046
Warrant to purchase shares								348,194
Private Placement [Member]
Stockholders' Equity (Textual)
Shares of common stock issued			1,666,669
Gross proceeds of common stock amount			$ 9,000,000
Director [Member]
Stockholders' Equity (Textual)
Compensation plan issuance of shares								2,084
Shares of common stock issued		11,489	8,336	6,252	6,252	6,252	6,252
Shares of common stock issued, value		$ 206,802	$ 89,945	$ 28,875	$ 23,250	$ 19,312	$ 15,375

Share Based Payments - Options

Share Based Payments - Options (Details) - Stock Option [Member] - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Share Based Payments - Options (Textual)
Compensation expense	$ 1,248,307	$ 439,095
Increased the shares of common stock authorized	1,833,333
Remaining expense related to unvested options to be recognized in future	$ 879,250

Related Party Transactions (Det

Related Party Transactions (Details) - shares	3 Months Ended
	Mar. 31, 2018	Sep. 30, 2018
Related Party Transactions (Textual)
Shares of common stock issued	100,000
Percentage of common shares owned by shareholder		18.00%

Net Income (Loss) Per Share (De

Net Income (Loss) Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Numerator
Net income (loss)	$ 244,928	$ (622,786)	$ 336,258	$ (1,866,970)
Weighted average shares outstanding used in computing net income (loss) per share
Basic	11,755,500	9,752,122	10,840,584	9,839,325
Effect of dilutive stock options, warrants, and stock grants	1,166,268		936,170
Diluted	12,921,768	9,752,122	11,766,754	9,839,325
Net Income (Loss) per share
Basic	$ 0.02	$ (0.06)	$ 0.03	$ (0.19)
Diluted	$ 0.02	$ (0.06)	$ 0.03	$ (0.19)

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent Events [Member]	1 Months Ended
	Oct. 31, 2018USD ($)shares
Subsequent Events (Textual)
Shares of common stock issued | shares	7,248
Issuance of common stock in connection with the exercise of options	$ 25,651
Additional issuance of common stock in connection with investor relations services | shares	5,000
Purchase price	$ 6,000,000
Estimated working capital received	91,411
Common stock value were issued in connection with acquisition	$ 500,000
Common stock shares were issued in connection with acquisition | shares	30,638
Additional cash payments	$ 3,000,000
2019 [Member]
Subsequent Events (Textual)
Revenues related to product	2,000,000
2020 [Member]
Subsequent Events (Textual)
Revenues related to product	$ 3,000,000