Our condensed consolidated financial statements included in this Form
10-Q are as follows:
The accompanying notes are an integral part of
these condensed consolidated financial statements.
The accompanying notes are an integral part of
these condensed consolidated financial statements.
The accompanying notes are an integral part of
these condensed consolidated financial statements.
The accompanying notes are an integral part of
these condensed consolidated financial statements.
The accompanying notes are an integral part of
these condensed consolidated financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
JUNE 30, 2021
NOTE 1 – NATURE OF BUSINESS AND BASIS OF
PRESENTATION
The accompanying condensed consolidated financial statements include
OptimizeRx Corporation and its wholly owned subsidiaries (collectively, the “Company”, “we”, “our”,
or “us”).
We are a digital health company that provides
communications solutions for life science companies, physicians and patients. Connecting over half of healthcare providers in the U.S.
and millions of patients through a proprietary network, the OptimizeRx digital health platform helps patients afford and stay on medications.
The platform unlocks new patient and physician touchpoints for life science companies along the patient journey, from point-of-care,
to retail pharmacy, through mobile patient engagement.
The condensed consolidated financial statements
for the three and six months ended June 30, 2021 and 2020 are unaudited and have been prepared pursuant to the rules and regulations
of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments necessary to present
fairly our consolidated financial position as of June 30, 2021, and our results of operations, changes in stockholders’ equity
for the three and six months ended June 30, 2021 and 2020 and the statements of cash flows for the six months ended June 30, 2021 and
2020 have been made. Those adjustments consist of normal and recurring adjustments. The condensed consolidated balance sheet as of December
31, 2020 has been derived from the audited consolidated balance sheet as of that date.
Certain information and note disclosures, including
a detailed discussion about the Company’s significant accounting policies, normally included in our annual financial statements
prepared in accordance with generally accepted accounting principles have been condensed or omitted. These consolidated condensed 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, 2020, as filed with the U.S. Securities and Exchange Commission on March 8, 2021.
The results of operations for the three and six
months ended June 30, 2021, are not necessarily indicative of the results to be expected for the full year.
NOTE 2 – NEW ACCOUNTING STANDARDS
In December 2019, the FASB issued ASU No. 2019-12,
Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to improve consistent application
and simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies
and amends existing guidance. ASU 2019-12 is effective for annual and interim reporting periods beginning after December 12, 2020, with
early adoption permitted. The Company adopted this standard effective January 1, 2021. The adoption of this standard did not have a material
effect on our financial position, results of operations, or cash flows.
NOTE 3 – REVENUES
Under ASC 606, Revenue from Contracts with
Customers, we record revenue when earned, rather than when billed. From time to time, we may record revenue based on our revenue
recognition policies in advance of being able to invoice the customer, or we may invoice the customer prior to being able to recognize
the revenue. Included in accounts receivable are unbilled amounts of $1,215,703 and $77,516 at June 30, 2021, and December 31, 2020,
respectively. Amounts billed in advance of revenue recognition are presented as deferred revenue on the condensed consolidated balance
sheets.
OPTIMIZERx CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
JUNE 30, 2021
NOTE 3 – REVENUES (continued)
The majority of our revenue is earned from life sciences companies,
such as pharmaceutical and biotech companies, or medical device makers. A small portion of our revenue is earned from other sources,
such as associations and technology companies. A break down is set forth in the table below.
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Revenue from:
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Science Companies
|
|
$
|
13,313,044
|
|
|
$
|
8,336,298
|
|
|
$
|
24,256,404
|
|
|
$
|
15,568,032
|
|
Other
|
|
|
312,595
|
|
|
|
446,932
|
|
|
|
598,446
|
|
|
|
799,800
|
|
Total Revenue
|
|
$
|
13,625,639
|
|
|
$
|
8,783,230
|
|
|
$
|
24,854,850
|
|
|
$
|
16,367,832
|
|
NOTE 4 – LEASES
We have operating leases for office space in three multitenant facilities
with lease terms greater than 12 months, which are recorded as assets and liabilities on our condensed consolidated balance sheets. These
leases include our corporate headquarters, located in Rochester, Michigan, a customer service facility in Cranbury, New Jersey, and a
technical facility in Zagreb, Croatia. Certain leases contain renewal options and, for the headquarters lease, we have assumed renewal.
Lease-related assets, or right-of-use assets, are recognized at the lease commencement date at amounts equal to the respective lease
liabilities, adjusted for prepaid lease payments, initial direct costs, and lease incentives received. Lease-related liabilities are
recognized at the present value of the remaining contractual fixed lease payments, discounted using our incremental borrowing rate. Amortization
of the right of use assets is recognized as non-cash lease expense on a straight-line basis over the lease term, while variable lease
payments are expensed as incurred. Short term lease costs include month to month leases in shared office space facilities, such as WeWork,
or similar locations.
For the three and six months ended June 30, 2021, the Company’s
lease cost consisted of the following components, each of which is included in operating expenses within the Company’s condensed
consolidated statements of operations:
OPTIMIZERx CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
JUNE 30, 2021
NOTE 4 – LEASES (continued)
|
|
Three Months
Ended
June 30,
2021
|
|
|
Six Months
Ended
June
30,
2021
|
|
|
|
|
|
|
|
|
Operating lease cost
|
|
$
|
33,365
|
|
|
$
|
66,730
|
|
Short-term lease cost (1)
|
|
|
16,890
|
|
|
|
32,814
|
|
Total lease cost
|
|
$
|
50,255
|
|
|
$
|
99,544
|
|
|
(1)
|
Short-term
lease cost includes any lease with a term of less than 12 months.
|
For the three and six months ended June 30, 2020, the Company’s
lease cost consisted of the following components, each of which is included in operating expenses within the Company’s condensed
consolidated statements of operations:
|
|
Three Months
Ended
June 30,
2020
|
|
|
Six Months
Ended
June
30,
2020
|
|
|
|
|
|
|
|
|
Operating lease cost
|
|
$
|
32,814
|
|
|
$
|
65,627
|
|
Short-term lease cost (1)
|
|
|
36,186
|
|
|
|
80,815
|
|
Total lease cost
|
|
$
|
69,000
|
|
|
$
|
146,442
|
|
|
(1)
|
Short-term lease cost includes any lease with a term of less than 12 months.
|
The table below presents the future minimum lease payments to be made
under operating leases as of June 30, 2021:
As of June 30, 2021
|
|
|
|
|
|
|
|
2021(a)
|
|
$
|
71,176
|
|
2022
|
|
|
104,572
|
|
2023
|
|
|
101,414
|
|
2024
|
|
|
80,742
|
|
2025
|
|
|
70,224
|
|
Total
|
|
|
428,128
|
|
Less: imputed interest
|
|
|
34,923
|
|
Total lease liabilities
|
|
$
|
393,205
|
|
(a) For the six-month period beginning July 1,
2021.
OPTIMIZERx CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
JUNE 30, 2021
NOTE 4 – LEASES (continued)
The weighted average remaining lease term at June 30, 2021 for operating
leases was 3.93 years and the weighted average discount rate used in calculating the operating lease asset and liability was 4.5%. Cash
paid for amounts included in the measurement of lease liabilities was $62,069 and $57,019 for the six months ended June 30, 2021 and 2020,
respectively. For the six months ended June 30, 2021 and 2020, payments on lease obligations were $71,397 and $68,900, respectively, and
amortization on the right of use assets was $60,013 and $56,357, respectively.
NOTE 5 – STOCKHOLDERS’ EQUITY
During the quarter ended March 31, 2021, in an underwritten primary
offering, we issued 1,523,750 shares of our common stock for gross proceeds of $75,425,625. In connection with this transaction, we incurred
equity issuance costs of $4,754,089 related to payments to the underwriter, advisors and legal fees associated with the transaction, resulting
in net proceeds to the Company of $70,671,536.
During the quarters ended June 30, 2021 and March 31, 2021, we issued
232,806 shares and 510,803 shares of our common stock, respectively, and received proceeds of $1,590,767 and $1,120,011, respectively,
in connection with the exercise of stock options under our 2013 equity incentive plan. Of the shares issued in the quarter ended March
31, 2021, a total of 368,329 shares were issued in a cashless transaction related to 394,739 expiring options using the net settled method
whereby 26,410 options were used to pay the purchase price. The remaining 116,064 shares issued in connection with the exercise of options
were all issued for cash.
During the quarters ended June 30, 2020, and March 31, 2020 we issued
55,731 shares and 35,032 shares of our common stock, respectively, and received proceeds of $174,831 and $112,152, respectively, in connection
with the exercise of stock options under our 2013 equity compensation plan.
We also issued 42,374 shares in the six months ended June 30, 2020
in connection with restricted stock awards as described in more detail in Note 6 – Stock Based Compensation.
Our Director Compensation Plan calls for issuance of shares of common
stock each quarter to each independent director. In 2021, we issued 2,695 shares valued at $124,994 in the quarter ended March 31, 2021
and 2,035 shares valued at $125,091 in the quarter ended June 30, 2021. In 2020, we issued 11,136 shares valued at $100,000 in the quarter
ended March 31, 2020, and 7,748 shares valued at $100,027 in the quarter ended June 30, 2020.
NOTE 6 – STOCK BASED COMPENSATION
We use the fair value method to account for stock-based compensation.
We recorded $954,434 and $1,021,787 in compensation expense in the six months ended June 30, 2021 and 2020, respectively, related to options
issued under our 2013 equity incentive plan. This includes expense related to options issued in prior years for which the requisite service
period for those options includes the current period as well as options issued in the current period. The fair value of these instruments
was calculated using the Black-Scholes option pricing model. There is $6,183,249 of remaining expense related to unvested options to be
recognized in the future over a weighted average remaining period of approximately 2.5 years. The total intrinsic value of outstanding
options at June 30, 2021 was $44,669,554.
OPTIMIZERx CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
JUNE 30, 2021
NOTE 6 – STOCK BASED COMPENSATION (continued)
In addition to the grants to independent Directors described in Note
5 – Stockholders’ Equity, we also recorded $399,672 and $413,369 in compensation expense related to restricted stock awards
that vest over time in the six months ended June 30, 2021, and 2020, respectively. There is $2,588,851 of remaining expense related to
unvested restricted stock awards to be recognized in the future over a weighted average period of 3.4 years. A total of 42,374 shares
related to restricted stock awards that vested in the six months ended June 30, 2020 and were issued during that same period.
NOTE 7 – EARNINGS (LOSS) PER SHARE
Basic earnings per share (“EPS”) is computed by dividing
net income (loss) by the weighted average number of common shares during the period.
The number of shares related to options, restricted stock and other
similar instruments included in diluted EPS is based on the “Treasury Stock Method” prescribed in ASC 260-10, Earnings per
Share. This method assumes the theoretical repurchase of shares using proceeds of the respective stock option exercised, and for restricted
stock, the amount of compensation cost attributed to future services which have not yet been recognized, and the amount of current and
deferred tax benefit, if any, that would be credited to additional paid in capital upon the vesting of the restricted stock, at a price
equal to the issuer’s average stock price during the related earnings period. Accordingly, the number of shares includable in the
calculation of EPS in respect of the stock options, restricted stock and similar instruments is dependent on this average stock price
and will increase as the average stock price increases.
The following table sets forth the computation of basic and diluted
earnings (loss) per share.
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
352,100
|
|
|
$
|
(1,077,468
|
)
|
|
$
|
(285,277
|
)
|
|
$
|
(3,281,399
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding used in computing earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
17,347,096
|
|
|
|
14,667,216
|
|
|
|
16,720,114
|
|
|
|
14,638,359
|
|
Effect of dilutive stock options, warrants, and unvested restricted stock awards
|
|
|
757,711
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Diluted
|
|
|
18,104,807
|
|
|
|
14,667,216
|
|
|
|
16,720,114
|
|
|
|
14,638,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.02
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.22
|
)
|
Diluted
|
|
$
|
0.02
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.22
|
)
|
No calculation of diluted earnings per share is
included for either 2020 period or for the six months ended June 30, 2021, as the effect of the calculation would be antidilutive.
OPTIMIZERx CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
JUNE 30, 2021
NOTE 7 – EARNINGS (LOSS) PER SHARE (CONTINUED)
The number of common shares potentially issuable
upon the exercise of certain options or for unvested restricted stock awards are reflected in the table below.
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares excluded from calculation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested restricted stock awards
|
|
|
98,011
|
|
|
|
79,264
|
|
|
|
94,942
|
|
|
|
48,027
|
|
Options
|
|
|
659,700
|
|
|
|
826,777
|
|
|
|
652,103
|
|
|
|
782,575
|
|
Total
|
|
|
757,711
|
|
|
|
906,041
|
|
|
|
747,045
|
|
|
|
830,602
|
|
NOTE 8 – CONTINGENCIES
Litigation
The Company is not currently involved in any legal proceedings.
NOTE 9 – SUBSEQUENT EVENTS
In July 2021, we received proceeds of $300,548 and issued 123,178 shares
of common stock in conjunction with the exercise of stock options.
In accordance with ASC 855-10, we have analyzed events and transactions
that occurred subsequent to June 30, 2021 through the date these financial statements were issued and have determined that we do
not have any other material subsequent events to disclose or recognize in these financial statements.